The Building Owners and Managers Association of Chicago (BOMA/Chicago) and other local business groups have filed a lawsuit aiming to block the city’s real estate transfer tax (RETT) referendum from taking place.
The proposed referendum, set to appear on the March 19 ballot, asks voters to weigh in on changes to real estate transfer tax policies. Also known as the Bring Chicago Home transfer tax resolution, funds generated from those changes would be dedicated to addressing homelessness.
If approved, the transfer tax would increase on Chicago properties valued between $1 million to $1.5 million, from 0.75% to 2%. The tax would increase to 3% on properties valued at more than $1.5 million. For properties worth less than $1 million, though, the tax would drop to 0.6%.
According to a press release from BOMA/Chicago, the referendum language lists all three of those potential tax adjustments under the umbrella of a single question, on which voters can simply vote yes or no.* And the co-plaintiffs allege that presentation is “unconstitutional.”
“The binding referendum would force voters to approve or reject three separate policies in one question, including a tax decrease, to manipulate voters into approving two separate tax increases,” reads the BOMA/Chicago press release.
The lawsuit is the latest example of the ongoing transfer tax battle. On Jan. 7, supporters of the referendum knocked on doors in the 50th Ward and passed out fliers from the Bring Chicago Home coalition, encouraging voters to vote yes on March 19.
Bring Chicago Home has long advocated for restructuring the RETT and estimates the increased taxes on $1 million-plus properties would bring in more than $100 million annually to help alleviate homelessness, as well as aid children, veterans and abuse survivors. The plan has also been a pillar in Mayor Brandon Johnson’s vision for the city.
BOMA/Chicago Executive Director Farzin Parang acknowledged the social issue in the press release, stating that, “Homelessness is a critical issue in our city that should be addressed with a serious plan involving all stakeholders.”
However, Parang emphasized the wording of the referendum. “These important public policy questions should be presented to voters with fairness, detail and transparency,” he said. “Instead, this referendum is playing politics.”
*According to BOMA/Chicago, the full text of the referendum is as follows:
“Shall the City of Chicago impose:
1. a real estate transfer tax decrease of 20% to establish a new transfer tax rate of $3 for every $500 of transfer price, or fraction thereof, for that part of the transfer price below $1,000,000 to be paid by the buyer of the real estate transferred unless the buyer is exempt from the tax solely by the operation of state law, in which case the tax is to be paid by the seller; AND
2. a real estate transfer tax increase of 166.67% to establish a new transfer tax rate of $10 for every $500 of transfer price, or fraction thereof, for that part of the transfer price between $1,000,000 and $1,500,000 (inclusive) to be paid by the buyer of the real estate transferred unless the buyer is exempt from the tax solely by the operation of state law, in which case the tax is to be paid by the seller; AND
3. a real estate transfer tax increase of 300% to establish a new transfer tax rate of $15 for every $500 of transfer price, or fraction thereof, for that part of the transfer price exceeding $1,500,000 to be paid by the buyer of the real estate transferred unless the buyer is exempt from the tax solely by the operation of state law, in which case the tax is to be paid by the seller?”