The battle over Chicago’s proposed real estate transfer tax has been heating up for months. Now, after a decision by the Illinois Appellate Court, the referendum which asks voters to weigh in on the tax will again be considered on the March 19 ballot.

This news comes less than two weeks after an Illinois Circuit Court judge struck down the referendum proposal when ruling on a lawsuit from the Building Owners and Managers Association of Chicago (BOMA/Chicago).

BOMA/Chicago alleged that the language of the referendum was unconstitutional, as it laid out three potential tax adjustments under the umbrella of a single question.

Currently, the transfer tax for all properties is 0.75%. But if voters approve the measure, it will increase on properties sold for more than $1 million. The tax will increase to 2% on properties sold for between $1 million and $1.5 million; the tax will increase to 3% on properties sold for more than $1.5 million. However, for properties that sell for less than $1 million, the tax will drop to 0.6%.

According to a WTTW report, that means nearly 94% of properties sold in Chicago would see a tax reduction. Still, the city estimates that the tax restructuring would bring in more than $100 million annually.

Known as the “Bring Chicago Home” resolution, the funds generated would be dedicated to alleviating homelessness, as well as aiding children, veterans and abuse survivors. “Bring Chicago Home” is a centerpiece of Mayor Brandon Johnson’s plan to address those issues, although there are few given specifics on how the projected revenue would be spent.

When the Circuit Court shut down the referendum on Feb. 23, lawyers for the Board of Elections and the City of Chicago immediately appealed that decision and, on March 6, their effort proved successful. Illinois’ Appellate Court ruled that the Circuit Court decision was made in error and held that the courts do not have the jurisdiction to prevent such a referendum.

The ruling cited precedent, saying that, in the past, Illinois courts have declined “exercising jurisdiction over challenges to referenda that are part of the legislative process.”

Regardless, it’s worth noting that the referendum was never technically removed from the ballot and has already appeared for early and by-mail voters; those initial “yes” and “no” votes will be counted.

Legally, at this point, BOMA/Chicago is still reviewing the latest order and considering its options. That’s what Amy Masters, director of government and external affairs for the association, told Chicago Agent on March 8. If BOMA/Chicago were to appeal and that case is chosen by the Illinois Supreme Court, there is a chance the referendum votes could be invalidated down the road. (For context, the Illinois Supreme Court heard roughly 7% of cases filed in 2022.)

In the meantime, though, BOMA/Chicago as well as the Chicago Association of REALTORS® (CAR) and Illinois REALTORS® are focusing on spreading the word to their base to vote “no” on the referendum.

“We are focused on educating voters about why the tax increase will hurt downtown and the rest of the city,” said Masters, adding that Chicago already has one of the highest commercial property tax rates in the nation. “We’re very concerned about adding on another tax, another cost of doing business, by quadrupling the transfer tax [on properties priced over $1.5 million],” she said.

All three associations have reached out to members to make them aware of the referendum. CAR has hosted multiple meetings, both in person and virtually, about legislative updates. Illinois REALTORS® is sending e-mails, mailers and running TV ads; BOMA/Chicago is doing the same, in addition to putting out digital ads.

“Overall,” Masters said,” “We were disappointed that real estate interests who [are being] asked to pay the bill weren’t included in conversations with the city. We know homelessness is a critical issue that needs to be addressed, and we want to be involved with those conversations.”

CAR President Drussy Hernandez also expressed a desire to partake in the administration’s process. “We need to find out where those funds we already have received [to combat homelessness] have gone and how they’re being used,” she said. “What is the game plan that makes this an effective way of spending the additional income?”

Overall, she does not want to extend the transfer tax’s impact on the housing industry. “We want to have affordable housing. We want to have middle-income housing. We need to continue to have construction starts,” Hernandez said.

For now, though, she hopes residents take the opportunity to vote based on the knowledge they have. “Make an informed decision,” she said.

Editor’s note: A previous version of this article was published on March 7, 2024.