Johnson’s real estate transfer tax plan is dealt a major blow

By Justin Laurence, Crain’s Chicago Business | January 17, 2024

One of Mayor Brandon Johnson’s signature priorities — a major tweak to the real estate transfer tax designed to boost funding for anti-homelessness initiatives — has been dealt a significant setback, failing to garner the coveted endorsement of the Chicago Federation of Labor.

In a vote last week, a motion to endorse the referendum measure came up just decimal points shy of the two-thirds weighted vote necessary to receive the official backing of the federation, an umbrella organization that represents more than 300 unions in Chicago and Cook County.

The rejection came despite personal calls from Johnson to some union leaders expressing how important the issue is to this labor-friendly administration. The opposition, meanwhile, was aided by two traditionally progressive unions that represent workers who staff hotels and buildings that would be affected by the proposed increase in taxes on property sales over $1 million.

On March 19, Chicago voters will decide whether they want to change the city’s real estate transfer tax on property sales from a flat 0.75% tax to a tiered rate that would decrease the tax on sales under $1 million while gradually raising the tax over that threshold, up to 3% on every dollar above $1.5 million. The mayor’s team has said the new revenue would go toward creating housing and other services that combat homelessness, a growing problem in the city. It’s now estimated there are 68,000 homeless people in Chicago.

The proposal, dubbed “Bring Chicago Home” by the Johnson administration, has met with pushback and even legal action, mainly from downtown landlords and business interests.

Had the CFL endorsed the measure, that backing would have been blasted out to its affiliated union members ahead of the election and potentially could have come with financial contributions.

When the CFL’s endorsement list for the March primary was unveiled Tuesday, there was no mention of the ballot measure, but there’s a chance the federation will reconsider and choose to hold a second vote.

Last week’s weighted vote — which apportions votes to unions based on their members and union dues — was supported by the Chicago Teachers Union, SEIU Healthcare Illinois Indiana and some trade unions but failed to reach the two-thirds required amid opposition from mainly building trade unions, including the International Union of Operating Engineers Local 150, but also Unite Here Local 1, which represents hospitality workers.

SEIU Local 1, which represents janitors, airport workers, security workers and door staff, decided to abstain from the vote, according to several sources who were in the room but declined to speak on the record because they are not authorized to comment on internal union matters.

Had SEIU Local 1 given its support, it would have allowed the measure to pass and receive the CFL endorsement. The union endorsed Johnson’s bid for mayor.

Representatives for SEIU Local 1 and Unite Here Local 1 did not immediately return requests for comment.

Bob Reiter, president of the CFL, declined to comment on the federation’s endorsement process.

If Reiter decides to allow the CFL to reconsider Friday’s vote, it would be rare and could lead to tension among labor groups. But the fact that the vote was so close and that some unions were absent from the vote because of poor weather allows an opening, sources within unions told Crain’s.

Stacy Davis Gates, president of the Chicago Teachers Union, which is a staunch supporter of Johnson and the referendum campaign, told Crain’s she hopes the CFL will reconsider.

Endorsing the referendum would show “working families stand behind people who need support.”

“I think it’s a very good idea for us . . . to be seen as partners in the city, and to be in community, especially with those who need our leadership and influence the most,” she said.

The opponents of the referendum effort are raising money through two accounts: one set up by the Illinois Realtors and another run by campaign veteran Greg Goldner, that could allow opponents to stealthily contribute to the cause without their contributions being made public.