A Chicago alderman is floating more business-friendly alternatives to the progressive-backed real estate transfer tax increase that would still fatten the cut the city takes out of large property sales without hammering the industry as hard as Mayor Brandon Johnson’s current proposal.
At the request of the office building trade group BOMA/Chicago, Second Ward Alderman Brian Hopkins has filed three resolutions calling for Chicago voters to consider different measures than the one Johnson has pushed forward to hike the transfer tax via the March 19 election.
“We asked Ald. Hopkins to introduce those resolutions so we could have a more robust conversation with the City Council and the public about ways to fund this initiative,” BOMA/Chicago head Farzin Parang told The Real Deal.
One resolution, if approved by voters, would call on the state to direct funds to combat homelessness, while another would decrease the real estate transfer tax for sales under $500,000 and increase it for deals over that amount.
The third proposes fighting homelessness with “small increases distributed across a broad mix of funding sources, to lessen the impact on the economy and real estate value.”
The legislation was filed for consideration the day of the City Council’s tense hearing on Bring Chicago Home, a proposal Johnson supports to implement a three-tier tax structure that would significantly increase the transfer tax on property sales over $1 million, and threaten further eroding values of large commercial properties as downtown landlords already face record-high office and retail vacancy rates.
“We are part of a large coalition of impacted industries that have been asking the Mayor’s Office and Bring Chicago Home coalition to engage with us on this issue,” Parang said. “We would like to understand what the plan is to holistically combat homelessness, and we would like to work together to identify the best way to fund the effort. The resolutions identify a few potential funding models for such a discussion.”
Johnson’s Bring Chicago Home proposal has gathered momentum with the support of a coalition of City Council progressives and advocates for combatting homelessness, while business and trade group leaders say it would devastate the commercial real estate industry at a historically vulnerable time.
Hopkins’ office did not respond to a request for comment Friday. His ward includes the Gold Coast, Old Town and parts of the Streeterville, River North and Lincoln Park neighborhoods.
One of Hopkins’ resolutions notes that Chicago has a significant problem with homelessness, and that solving it will likely involve identifying new sources of revenue, but “dramatic increases in the real estate transfer tax have been proposed as the source of this revenue, disproportionately affecting a single portion of the city’s tax base and creating ripple effects throughout the local economy.”
That resolution states that the city would formally request that the state increase its contribution to Chicago’s efforts to fight homelessness but does not state a dollar amount or another goal of the legislation.
Another resolution would ask voters to approve decreasing the real estate transfer tax from the current rate of $3.75 for every $500 of the price to $2.81 for every $500 for the portion of the transfer price under $500,000, while raising the rate on the portion of the price between $500,000 and $1 million to $6.19 for every $500, and increase the rate on the portion of the price exceeding $1 million to $6.56 for every $500.
It draws a contrast with the progressive-backed proposal, which would make transfer taxes cheaper for many home sales by decreasing the rate on deals under $1 million, while raising it for all other deals above that threshold, including quadrupling the rate cut out of deals over $1.5 million to $15 per every $500 of the transfer price over $1.5 million.
Like Bring Chicago Home, Hopkins’ proposal would dedicate the city’s additional revenue generated over the current rate to a fund specifically for homelessness initiatives, according to the resolution.
The resolutions have been assigned to the Rules Committee, though it’s unclear when or whether they will be heard, or if Hopkins will prioritize one over the others.
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