Homelessness and housing insecurity in Chicago are crises that must be promptly addressed, but many questions surround the Bring Chicago Home proposal, and the proposed graduated real estate transfer tax poses further risk to a commercial sector already in distress.
CHICAGO — The Civic Federation today released a data and policy analysis and position statement on the Bring Chicago Home referendum appearing on Chicago’s March 19 primary election ballot. The referendum, if passed, would change the City of Chicago’s real estate transfer tax upon buyers of properties to a graduated rate from the current flat rate in order to generate an estimated $100 million annually to allow the City of Chicago to expand services aimed at addressing the crises of homelessness and housing insecurity. The Federation finds the proposal lacks sufficient detail around the tax plan and how the funds will be used, rendering it unknowable for voters whether and to what extent the administration’s spending and programmatic vision is adequate to meet the level of need, which has been exacerbated by Chicago’s migrant crisis and reflects a national humanitarian struggle. At the same time, the tax, if passed, could further compromise the economic health of an already troubled downtown commercial sector in Chicago, posing additional risk to the City’s economic future.
The full data and policy analysis and position statement are available here: civicfed.org/bringchicagohome.
“As of now, the plans for use of the funds generated by the Bring Chicago Home referendum are too unclear for any voter to sufficiently scrutinize, which means that in voting yes they are making a leap of faith that the tax will generate sufficient revenue and the City will spend those funds in a well-thought-out manner that delivers ample results for Chicago’s unhoused and housing insecure populations,” said Civic Federation President Joe Ferguson. “That’s a position no voter should have to be in. Meanwhile, the graduated real estate transfer tax will induce further financial strain on many commercial properties whose values have yet to recover from the pandemic. This could have implications for the retention and recruitment of businesses in the City as well as the generation of new business, which translates to jobs.”
The Civic Federation’s report includes a new analysis of the hypothetical amounts of revenue that could have been generated from property sales had the graduated real estate transfer tax been in place in past years, as well as an estimate of how the burden on specific property types, including office buildings, retail, industrial, apartment buildings and hotels, would have changed. The Federation found that the amount of transfer taxes paid in commercial property transactions within the downtown central business district would have nearly doubled for some types of commercial properties.
“The Bring Chicago Home proposal, as presented, makes a major ask of a manifestly vulnerable commercial sector that is fundamental to the health of the regional economy,” Ferguson said. “With stakes as great as these, voters deserve more details, including explanations for how the graduated tax levels were determined, what other alternatives were considered and why they were rejected, and what the potential adverse consequences of the proposal may be, with consideration to the now substantial record developed in other cities. Equally important is how homelessness and housing insecurity will indeed be curbed through this initiative. Ideally, all of this information would be provided prior to a referendum vote and failing that still must be done ahead of implementation.”
In its analysis of Bring Chicago Home’s implementation plans, the Civic Federation found that public information is limited to what is described in the City’s implementation ordinance on the proposal, which includes broadly-framed goals and plans to address homelessness and affordable housing. Eligible uses of funds are defined as “any means of support provided by the City or a delegate agency to people experiencing or at risk of homelessness, including permanent affordable housing and services necessary to obtain affordable housing,” and uses of Bring Chicago Home funds are subject to negotiation and approval from City Council. The plans as outlined do not address significant existing barriers to creating affordable housing, including restrictive zoning regulations and aldermanic prerogative, a discriminatory mechanism that allows alderpeople to veto the development of affordable housing in their wards.
“It is imperative that the City find workable solutions to homelessness and housing insecurity, and that it do so promptly,” Ferguson said. “Equitable expansion of critical services and infrastructure requires a reliable funding source that is directed to detailed, accountable and integrated homelessness service programming accompanied by the safeguards and circuit breakers needed to assure ultimate success. With today’s report and position statement, the Civic Federation attempts to fill some of the information void for voters and spark an effort to a more robust and accountable policy and program.”