Voters to decide Bring Chicago Home tax hike for homeless services

After months of debate, the Chicago City Council is putting one of Mayor Brandon Johnson's campaign cornerstones — a high-end real estate transfer tax to fund homeless services — on next year's ballot.

Why it matters: Chicago voters will decide in March whether to approve the tax that could raise more than $100 million a year to supply wraparound services to unhoused people.

Driving the news: The council voted in support of the Bring Chicago Home ballot initiative Tuesday with progressive alders overwhelmingly backing the measure.

How it works: The proposed ordinance, if adopted, would significantly raise real estate transfer taxes — paid by property sellers — for buildings sold for more than $1 million, while slashing them by 20% on properties that sell for less than that, advocates say.

• Buildings selling for $1 million to $1.5 million would see taxes rise by nearly 167% but just on the portion over $1 million.
• Properties that sell for more than $1.5 million would see taxes spike by 300%, applied only on the portion above $1.5 million.

What they're saying: Johnson said at a pre-meeting rally Tuesday that 96% of taxpayers would see a reduction in transfer taxes.

• "We are going to provide a tax cut and housing for the very people who need the tax cut in the first place."

The other side: Farzin Parang, executive director of Building Owners and Managers Association of Chicago, told Axios there couldn't be a "worse time" for the tax considering "downtown office buildings are experiencing record vacancy and loss in value, with enough empty space to fill 16 Willis Towers."

Reality check: "Both sides have a point," professor Christopher Berry, of the University of Chicago's Harris School of Public Policy, tells Axios.

• The potential benefits could make Chicago a "national model for fixing homelessness," Berry says.
• But he also notes that Chicago already levies some of the highest commercial real estate property taxes in the nation, and that tax increases could affect sales in the industry still recovering from the pandemic.

Zoom out: New York has imposed a similar high-end residential transfer tax since 1989, Berry says. "I don't think anyone looks at New York's market and says 'you can't sell a property for a million dollars anymore in New York.'"

What's next: Expect intense lobbying on both sides as they try to influence voters before they head to the polls in March.