Greg Hinz: A voter’s guide to two of the trickier issues on the March 19 ballot
By Greg Hinz, Crain’s Chicago Business | February 26, 2024
As in life, good intentions will take you only so far in politics. Eventually, wise voters figure out that declaring an intention to do good is not the same as actually doing so. Ergo, two contests on the March 19 primary ballot in which voters would be well advised to look beyond the flashy exterior and check under the hood.
The first is the Bring Chicago Home referendum being pushed hard by Mayor Brandon Johnson and his progressive allies. A judge has ruled that the proposal’s wording is defective and ordered that no votes be counted. But advocates are vowing to overturn the ruling on appeal and are still working hard for a “yes” vote.
If the appeal succeeds and the measure passes, it would yield what advocates say is $100 million a year for affordable housing and related social services by jacking up as much as 300% the city’s real estate transfer tax on property sold for at least $1 million. The rate would drop just a tad, from 0.75% to 0.6% on property below $1 million.
Now, it’s obvious that Chicago needs more affordable housing. No one with a heart wants people sleeping under viaducts in the cold. It’s equally obvious that many folks are thrilled by the prospect of dinging “rich” people who own million-dollar-plus homes. Mailers sent to voters by referendum advocates say the intent is to “fund affordable housing and homelessness services by asking the wealthy to pay their fair share.”
The truth under this hood: This no longer is the “mansion tax” that once was pitched. In fact, it’s a tax on any property, especially business property. Like the corner grocery store. Or the six-flat apartment building whose owner relies on rents to pay her bills in retirement. Or a downtown office tower that’s struggling to stay afloat post-COVID amid a record-high 26% vacancy rate. All of them easily could sell for more than $1 million.
Advocates say such taxes have worked well in other cities and charge that foes are exaggerating by, for instance, dubbing the proposal a property tax. They’re right about that. It’s a tax on property sales, not a regular property tax.
That said, advocates effectively assume that any business with property worth $1 million must be owned by someone who’s “rich.” The University of Chicago’s Harris School of Public Policy projects that a whopping 75% of proceeds from the tax hike would come from business property, not, say, Lake Shore Drive condo owners. If you think owners of that corner grocery store, small apartment building or vacant office tower ought to be squeezed until their pinkie rings fly off, great. But admit what you’re doing.
The other problem with this proposal is that the specific usage of the money won’t be determined in law until the City Council considers rules — after results of the primary are in. In other words, trust Johnson and the City Council members to do the right thing to serve homeless people — once they have the money, that is. After all, they’re well intentioned. Look at the fine job they’ve done housing homeless refugees this winter.
Given the fact that Johnson recently announced plans to raise another $350 million for homeless people by letting tax-increment financing districts expire, might we perhaps wait and see how that works out? From my experience, even well-intentioned blank checks tend to bounce at City Hall.
The other ballot item that I think needs more scrutiny is the race for a seat on something called the Cook County Board of Review, a little-known but powerful agency that effectively decides how high your property taxes will be by hearing appeals of property valuations proposed by county Assessor Fritz Kaegi.
The board has a terrible reputation for operating in the shadows, with its members doing themselves no favors by routinely accepting campaign contributions from property tax appeals lawyers, appraisers and other types who appear before them. One of those commissioners is Larry Rogers. He insists he’s done no wrong. Beyond that, it’s worth noting that, unlike the independently wealthy Kaegi, Rogers can’t just write himself a check at election.
Kaegi this March has endorsed and is backing — with more than $100,000 of his own money — a woman running against Rogers, Larecia Tucker, in the Democratic primary. Tucker, who now works as an appeals aide in suburban Rich Township, says she decided to run on her own, is independent and will take orders from no one. Rogers charges Kaegi is trying to take control of the three-member board by sticking an ally into a swing seat.
Assessments can be complicated stuff. Kaegi and the existing Rogers-allied board have different philosophies over how to tax big commercial property. But even if Rogers, et al., are too inclined to do favors for businesses that hire contribution-making property tax appeals lawyers, is the solution for Kaegi to effectively pick the members of the board that reviews his work?
Voters will decide.