Real estate transfer tax referendum campaign heating up

By Justin Laurence, Crain’s Chicago Business | January 12, 2024

As supporters of the campaign to raise the one-time tax on property sales over $1million are pounding pavement and knocking on doors, opponents of the measure are finding their footing and raising money.

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 progressive 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.

With just over two months before voters cast their ballots, money is starting to flow and an outside spending group is preparing to jump into the race with money that Chicagoans will likely never know the origin of.

The referendum question —dubbed “Bring Chicago Home” by supporters —was a key campaign promise of Mayor Brandon Johnson and is needed to dedicate hundreds of millions towards services to combat homelessness, the new mayor and his progressive allies argue.
The campaign to see it approved will be led by the same coalition that propelled Johnson to the fifth floor of City Hall against the real estate community and others in the business world who argue the increased tax will strangle an already squeezed real estate market where vacancies are rising, lenders are calling and buyers are balking —which not only would hurt landlords but would tamper the revenue the supporters hope to raise through the policy.

The supporters of the referendum hired a veteran of progressive political fights, former Executive Director of United Working Families Emma Tai, to run their campaign, which has already begun with door-knocking events across the city.

The campaign committee supporting the effort ended September with just $48,000 in the bank, but has since raised more than $700,000, including $200,000 from SEIU Healthcare Illinois & Indiana and $500,000 from the Michael Reese Health Trust, according to the Illinois State Board of Elections, which tracks political spending.

Tai told Crain’s the campaign will be centered upon the progressive movement’s ability to mobilize a volunteer army to door-knock and a phone bank to help voters understand the referendum question.

“That being said, we understand that we need to be competitive in all the paid media channels as well —digital, TV, radio, mail —and we are making plans accordingly,” she said.

The changes to the initial proposal that resulted in the tiered structure, including the tax decrease for sales under $1 million, was both “good politics and good policy,” Tai argued.

“It was already a wildly popular issue before it included a tax cut for 93% of home buyers,” she said. “The reason homelessness persists in Chicago is because there’s a set of powerful economic interests who benefit . . . from not paying their fair share in taxes to fund the public-sector solutions that are needed to end homelessness.”

Opponents of the measure launched their campaign against it this fall, sending out mailers to property owners warning them their “taxes are going up.”

The Realtors in Opposition to Real Estate Transfer Tax, led by the Illinois Realtors group, ended 2023 with just over $500 in the bank, according to their quarterly report filed on Thursday.

But that’s after spending $117,000 on mailers and digital advertising in the fourth quarter. That’s on top of the $125,000 spent in the third quarter. Anthony Hebron, a spokesman for Illinois Realtors, declined to comment on the groups campaign strategy or fundraising goals.
But the official account could soon be dwarfed by an independent expenditure committee led by campaign veteran Greg Goldner, founder of Resolute Public Affairs.

Goldner has run dark-money campaigns in Illinois politics for over a decade, including two efforts last year that spent almost $400,000 in support of U.S. Rep. Jesus “Chuy” Garcia’s fourth-place finish in Chicago’s mayoral race before spending just under$900,000 in opposition to Johnson in his runoff race against Paul Vallas.

According to sources familiar with his pitch, Goldner has asked developers for six-figure sums.

Goldner confirmed to Crain’s he’ll be involved in the opposition campaign, saying the tax changes have “implications well beyond a few nice homes in the city.”

“This has an impact on neighborhood developments, apartment buildings, job creation,” he said. “A lot of folks are taking a look at what passed and what’s on the ballot and feel that there needs to be a response. Those are the conversations I’m having and will continue to have.”

Goldner declined to say how much money he’s raised for the effort.

The appeal of contributing to Goldner’s account is anonymity. Legal loopholes in Illinois campaign finance laws will allow those who contribute to shield their identity by funneling the money through a nonprofit Goldner establishes for the purpose of contributing to his PAC.

Developers who oppose the real estate transfer tax would then be able to try to kill it without publicly thumbing their nose at Johnson —who has made clear the policy is a top priority. Developers rely on City Hall to move their projects forward, and sometimes ask for subsidies or other help necessary to get a development off the ground.

As the two sides plan their campaign strategy, both sides are looking at the failed2020 statewide ballot initiative to create a progressive income tax in Illinois. Although the measure was defeated statewide with the help of $54 million spent by billionaire Citadel founder and former Chicago resident Ken Griffin, Chicagoans overwhelmingly supported the tax overhaul at a 71% clip.

For supporters of the real estate transfer tax, the Northwest Side, which has swung progressive in recent races, represents a chance to churn out votes, Tai said.

“This is a progressive policy, where there is demonstrated progressive support —we should run up the score,” she said.

The referendum is also part of a lawsuit filed by the Building Owners & Managers Association and other real estate groups last week, which is asking a Cook County judge to impose a temporary restraining order forbidding the Chicago Board of Elections from placing the question on the ballot. No court date has been set to hear the complaint.

BOMA hired Mike Kasper, the longtime attorney of former Illinois House Speaker Mike Madigan and the state Democratic Party, to argue its case.

Editor’s note: The story has been updated to reflect the correct figure that would be hit with the highest tax rate.