Johnson elevates transfer tax hike with appointments
Transition team picks include backer of Bring Chicago Home’s proposal for raising city charge on deals of $1M or more
Chicago Mayor-elect Brandon Johnson signaled a proposal he supports that would triple real estate transfer taxes on sales of $1 million or more is alive and well with additional appointments to his transition team on Thursday.
They include affordable housing advocates, and one in particular who has advanced the transfer tax discussion, that show he is working to keep progressive campaign promises on housing policy.
For his housing subcommittee, Johnson selected Julie Dworkin, the director of policy at Chicago’s Coalition for the Homeless; Sendy Soto, the senior director of community impact at the Chicago Community Trust; as well as Jonathan Jones, director of diversity for the Mid-America Carpenters Regional Council.
The Chicago Coalition for the Homeless is one of the main backers of a proposal to increase the real estate transfer tax on all real estate transactions over $1 million, to 2.65 percent of the sale price from the 0.75 percent in place now for all deals regardless of price. Called Bring Chicago Home, and often nicknamed the “mansion tax,” it’s been estimated by the coalition to generate an extra $163 million a year that would be earmarked for combatting homelessness.
Johnson has made it clear expanding affordable housing stock is a priority for the administration, according to a statement from Dworkin.
“As a candidate and since being elected, the mayor-elect made it clear that Bring Chicago Home and addressing homelessness was a top priority,” she said. “I am excited to work with the new administration to create the dedicated funding we need to address the crisis of homelessness in our city. I will also bring a lens to the housing transition committee discussion that focuses on getting housing resources to those most in need to support making housing a human right.”
The proposal has been floated for years, and in November was scheduled for discussion but wasn’t brought to a vote due to a lack of a quorum in a City Council meeting under current Mayor Lori Lightfoot.
Johnson has yet to detail his legislative priorities for real estate and housing, though Dworkin’s appointment seemingly reaffirms his commitment to considering some version of Bring Chicago Home’s proposal.
The additional tax would be technically charged to buyers, though market players have said it would impact sellers and how they set prices. Plus the extra tax would come on top of transfer taxes already imposed by Cook County and the state.
The proposal has been controversial for real estate industry groups, many of whom supported Johnson’s opponent Paul Vallas in the election.
Illinois Realtors, Neighborhood Building Owners Alliance, and The Chicagoland Apartment Association all oppose the measure and say it would slow deals. Multifamily groups have emphasized that it could end up raising rents, as building owners pass the additional taxes on to residents. Considering the deals for more than $1 million in Chicago over a recent year long period, sales in the multifamily sector would have accounted for at least 20 percent of the new tax, The Real Deal previously reported.
It’s unclear whether Johnson has the votes for the proposal in City Council, but several other progressive candidates won their elections and will be sworn in with Johnson in May.
The impact of a similar proposal passed into law by voters in Los Angeles last year before taking effect this year has been felt in the marketplace and is currently facing legal challenges from real estate trade groups.