Judge weighing Johnson administration’s intervention in transfer tax lawsuit

Mayor Brandon Johnson’s administration is pushing to intervene in a lawsuit filed by real estate industry groups that aims to invalidate a referendum that could raise the city’s property transfer tax.

The trade groups were irked by the city’s attempt to insert itself into the case at a Wednesday court hearing after Johnson previously noted the city wasn’t involved.

“After releasing a statement that it would not be a party to the case, the city of Chicago waited until the last minute to file to intervene and prolong the case,” Farzin Parang, head of office building trade group Building Owners and Managers Association, said in a statement Wednesday. “We believe the multiple-choice referendum question to increase transfer taxes is manipulative and should be invalidated.”

A city attorney at a Wednesday hearing argued the complaint against the local Board of Elections was brought against the wrong entity.

Industry groups, led by Parang’s group BOMA, filed the lawsuit against the Chicago Board of Elections on Jan. 5. They allege that the wording of the ballot question violates the Illinois Municipal Code and Illinois Constitution because it asks voters to approve a transfer tax decrease as well as two transfer tax increases, all in one question. 

The city of Chicago filed a motion to intervene in the case on Friday which, if granted, would add it to the case as a named defendant. Cook County Circuit Court Judge Kathleen Burke is weighing the city’s motion to intervene and the plaintiffs arguments to keep the city excluded, with a ruling expected in coming days.

The city claims the Board of Elections isn’t equipped to answer the arguments because it doesn’t have the same understanding of the municipal code.

“It’s pretty clear that the city should be allowed to intervene in this case,” the attorney, Susan Jordan, said in her oral argument. The Board of Elections can’t answer industry groups’ allegations about whether the referendum does or doesn’t follow local municipal code; the Board of Elections follows the election code, she said.

If passed by a simple majority of voters, the referendum would increase the real estate transfer tax imposed on sales over $1 million to fund services for people experiencing homelessness, including quadrupling the 0.75 percent rate the city currently charges for deals over $1.5 million.

The rate would drop to 0.6 percent for property trades less than $1 million, affecting the majority of home purchases. Advocates of the plan, known as Bring Chicago Home, estimate that upward of 95% of sales would get a transfer tax decrease. They also estimate that the tax would generate an additional $100 million in dedicated funds for homeless services each year. 

Johnson repeatedly promised to support the transfer tax increase during his election campaign.

Bring Chicago Home advocates gathered outside the courthouse before the hearing Wednesday morning, bringing together various community groups including the Chicago Coalition for the Homeless to speak out against the lawsuit. The group included people who have been homeless, one of whom carried a sign that read, “help keep a roof over my family’s head.”

Real estate groups are “using flimsy arguments to keep us from getting this question on the ballot to voters,” said Jhoanna Maldonado, a Chicago Teachers Union organizer who led the press conference. “This is anti-democratic and we are here to say that we are not intimidated.”

The city is asking the judge to grant it “intervention by right” because the city’s interests won’t be adequately protected without being brought into the case and the city would be bound to or adversely affected by the outcome of the case.

Michael Kasper, the attorney representing the industry groups, argued that the city’s motion to intervene was not timely, given that it was filed nearly five weeks after the lawsuit was early this year.

“These cases move extremely quickly,” he said. The plaintiffs have already filed a motion for judgment on the pleadings, asking Judge Burke to weigh in on the validity of their complaints, meaning Wednesday feasibly could have been the last hearing in the case, Kasper argued.

In its statement, released on Jan. 5 when the lawsuit was first filed, the city acknowledged that it was not a party and expressed confidence that the transfer tax measure, known as Bring Chicago Home, will appear on the March ballot. 

“Mayor Johnson believes it would create even more much-needed resources to address homelessness in our city and provide support for tens of thousands of our unhoused neighbors,” the statement reads. 

In response to plaintiffs’ arguments about the city’s delay in intervening, Jordan said Wednesday that it took industry groups nine weeks to file a lawsuit challenging the ballot language after the City Council resolution passed in the fall.

As for whether the city is bound by the results of the case, Kasper argued that “the city neither prints nor counts ballots.”

If the referendum is struck from the ballot, the city would have no adequate way of remedying that in time for the March 19 election and would not be able to proceed with implementing the new proposed transfer tax, Jordan argued. This, she claimed, means the case affects the city and cannot be fairly and effectively argued without the city’s involvement. 

Together with its motion to intervene in the case, the city and the attorneys with the Board of Elections have also filed motions to dismiss the case. The Board of Elections filed their motion to dismiss the case first on the grounds that it was outside of its jurisdictional authority. 

“You’re suing someone who has no expertise in this area and has no dog in this,” Adam Lasker, one of the attorneys representing the Chicago Board of Elections, said after the hearing. Given that the referendum was passed by a resolution of the City Council, and not by a citizen-backed petition, it is “expressly excluded” from the Board of Elections’ authority, Lasker said.

At the end of Wednesday’s hearing, Judge Burke said she would take the arguments made under review and respond with a ruling in the coming days. Ed Mullen, an election attorney representing the Bring Chicago Home campaign, said his best guess is that the referendum’s opposing campaigns will have an answer by Friday.

“We think that the plaintiff’s suit is without merit,” Jordan said after the hearing, before declining to comment further. Despite this pending lawsuit, the Illinois Realtors association and Bring Chicago Home advocates have together dedicated millions of dollars to reaching voters in the month before the March 19 election.