Vallas: Johnson can’t be trusted with real estate tax hike

Chicago Mayor Brandon Johnson’s real estate transfer tax hike comes with no guarantees he won’t use the money for things other than homeless relief. So why should voters believe he won’t hand the money to his cronies at the Chicago Teachers Union?

Mayor Brandon Johnson’s proposed “Bring Chicago Home” real estate transfer tax hike is the lynchpin of his agenda – a referendum to hike the tax on property sales over $1 million that Johnson and his supporters claim will fund “homelessness.”

In reality, “Bring Chicago Home” is a tax hike that will harm Chicago businesses and renters. There’s no guarantee the funds will be allocated to aid the homeless.

The mayor and his supporters are disseminating falsehoods about the proposed tax increase and its impact on Chicago in advance of the March 19 primary. They say they’ll make the rich pay and that any legal objections are voter suppression.

Here is the truth:

1. This tax primarily targets commercial property and apartment buildings. An analysis by Crain’s Chicago Business from April 2021 to April 2022 revealed commercial properties account for the vast majority of transfer tax revenue on sales over $1 million, by a ratio of 9-to-1. This is a clear indication the tax will predominantly affect commercial property, not residential.

2. Apartment building sales, not mansions, constitute most of the residential real estate transactions subject to the proposed tax increase. That means those most affected by the tax will be renters and Chicago businesses, large and small.

3. This tax increase will further exacerbate Chicago’s already burdensome state and local tax obligations, which lead the nation. Chicago’s commercial property taxes surged by 93% from 2012 to 2022, and its rate is over double the U.S. average among large cities.

4. The referendum fails to outline how the funds will be allocated to aid Chicago’s homeless population. This tax revenue can be used for anything that is related to “homelessness.” Already, the Chicago Teachers Union’s latest contract demands indicate they’d like to use tax revenue to fund housing assistance and subsidies for teachers – who make good money and are far from homeless.

5. Revenues generated from the tax increase are projected to fall far short of proponents’ estimates because of the depressed commercial real estate market, fewer transactions and reduced values. That’s what happened in Los Angeles when they tried this.

When voters see the item at the bottom of their ballots, they should ask themselves:

• Is now an appropriate time to increase taxes on Chicago businesses and renters?
• Can the Johnson administration be trusted with the money? Will he really use the taxes for Chicago’s homeless population, or will it wind up as a slush fund to cover additional city costs?

CTU wants the money for themselves.

More and more costs are arising from the city’s migrant crisis. Residents shouldn’t be surprised if new revenue is used to fund that.

The city does not need to triple the real estate transaction tax to address affordable housing needs. These needs can be met without raising taxes. The city can remove obstacles to new housing, secure unoccupied residential properties, and transfer them to local developers and nonprofits. Additionally, tapping into annual tax increment financing surpluses and using revenues from expiring districts can secure more funding for building improvements and homeless services.

If the mayor and referendum supporters were genuinely committed to addressing the homeless issue, they could have already taken steps to do so with the resources available. The city is sitting on $44 million in federal funds for homelessness it hasn’t used, plus has another $200 million budgeted for that cause.

Or if the intention is not to target commercial property and apartment building owners, why not exclude them from the proposal? Everyone will be affected if businesses and rental property suffer.

This is not about problem-solving; it is about political mobilization by fostering division.

“Bring Chicago Home” will only bring Chicago down.

Paid for by Vote No on Chicago Real Estate Tax