Chicago’s new real estate transfer tax is hitting a dead end. This was never a good idea.

Earlier this month, Arne Duncan stood at the podium and said: announced a new anti-violence initiative Reducing shootings in Chicago by 50% in five years.

The founder of gun violence prevention nonprofit Chicago CRED had a convincing and specific plan; a track record of success in this vital area; and thus gained the support of a diverse political constituency, each determined to put aside political and racial divisions and come together to solve Chicago’s most debilitating problem. “I’ve never been in a room like this,” Duncan said, “where the private sector has stepped up in leaps and bounds, philanthropy has surged in leaps and bounds, and there’s a unified citywide violence prevention community.”

Duncan needed money — $400 million worth — to Scaling Community Violence Response for a Safer Chicago, as did those who wanted to try to solve the city’s most vexing problems. On Feb. 1, it announced a $66 million commitment, bringing the effort’s total to nearly $200 million. The impressive contribution resulted from fundraising by the Partnership for Safe and Peaceful Communities and the Chicago Business Club Civic Committee (which included business leaders such as BMO Bank vice president Eric Smith and Hyatt Hotels CEO Mark Hoplamazian). In addition, millions of dollars in contributions came from the Crown, Pritzker and Walton foundations, among others. Hoplamazian said the business community is aware of its responsibilities when it comes to preventing violence. “Our goal,” he said, “is to be the safest big city in America.”

Duncan was right to call that day “pivotal.” A major public-private partnership was underway to bring about social change. And no one had ever raised anyone’s property taxes, or any taxes for that matter.

What does this have to do with Ballot Question 1? A referendum in March asked voters to approve a major increase in the real estate transfer tax, projecting a $100 million annual stream of new revenue to alleviate homelessness, before moving into legislation. Uncertainty by a Cook County judge Friday afternoon?

This is a work full of contrasts.

Both gun violence and homelessness are major crises in Chicago.

Duncan went along with the first, laying out a specific plan that everyone could and would support, that had support from business and resource-rich philanthropists like the Crown family, and that did not create a burden on home buying. With the new taxes, Chicagoans are already saddled with numerous taxes and fees.

Second, the Bring Chicago Home campaign, no matter how sincere, proved so riddled with problems that it could not get past a judge without even appearing before voters.

The judge’s obvious problem? The single-subject rule, or so-called logrolling ban, in the Illinois Constitution is designed to prevent governments from trying to get enough votes for unpopular legislation (like a real estate transfer tax increase) by sweetening the pot. something irrelevant and unattractive (like a property tax abatement elsewhere). Opponents of the tax increase had sued to stop it, and at least for now, Ballot Question 1 remains unclear.

This all happened after an initial lukewarm response to the tax plan in the City Council, as the Bring Chicago Home campaign learned from that failure and its advocates sweetened the deal for voters. it decreases a little Taxes on real estate transactions in Chicago are reduced from the current rate of 0.75% to 0.6% for deals under $1 million and to 2% for deals between $1 million and $1.5 million (2.5 times the current rate). ) and transfer even if they will raise it to 3%. Four times the current rate for transactions above this amount.

Obviously, this decline would be more attractive to anyone who doesn’t plan to buy or sell property worth over $1 million (or actually a little more), and there was a clever way to get voter approval for the next $100 million from those who did. , landing in the city vault. If a flyer promoting the campaign has arrived on your doorstep, you’ve probably read marketing phrases like “Anyone who buys a home under $1 million will get a tax break.”

“It’s not fair,” the judge said. We cannot get tax increases this way. Of course, it is possible that there will be an objection. We’ll have to wait and see where it all ends.

Proponents of approving the request, which aims to “get Chicagoans out of the cold and home,” have little faith in the private sector. Their mailings reference “wealthy real estate developers profiting from the housing crisis.” This is despite the fact that the transfer tax increase is affecting many commercial property owners who are currently behind on their mortgages; real estate developers hoping to build multifamily housing on vacant land; owners of street frontages across the city, including in areas hungry for more retail; and three-unit mom-and-pop homeowners. Not to mention ordinary Chicagoans who are determined to raise their children in the city, don’t want to escape to the suburbs, and hope to buy a decent-sized home but hardly a mansion in a neighborhood like Hyde Park or Lincoln. Square.

They are asking taxpayers to shoulder the burden of creating this new fund themselves, not to join an established coalition of corporate and philanthropic organizations standing shoulder to shoulder.

More importantly, there is no detailed plan on how this money, which will enter the mayor’s budget, will be spent. While there are guardrails that require new funds to be spent on alleviating homelessness, it is a broad word that includes those living on the streets, those suffering from housing insecurity (meaning they are at risk of losing their place of living) and supports. Serving both groups. The money could go toward rent subsidies, the city building affordable housing itself or in partnership with others, and services for these groups by nonprofits. If and when the proposal passes, a “community-led advisory board” that works with city departments would be tasked with making those decisions.

In recent days, the editorial board has heard from those for and against “Bring Chicago Home” that there is, to some degree, another shift in the kind of tax redistribution that voters in Illinois who turned down the graduated income tax question rejected.

“Chicago has to take care of Chicago,” said co-sponsor Ald. Maria Hadden of the 49th argued to us that funding for systemic change in the city should come from an initiative like this, given that most of the money flowing into the city is earmarked for other purposes. Ald. Walter Burnett, 27, told us that homelessness already costs the city and taxpayers money, and this initiative will have unheralded benefits in getting people off the streets and into housing.

Maxica Williams, executive director of the Chicago Coalition for the Homeless, described her past struggles to keep a roof over her head and noted, like Hadden, that 50% of the advisory board will be made up of people with “lived experience.” When it comes to homelessness. Other candid leaders and advocates, such as Mark Ishaug, CEO of Thresholds, and Julie Dworkin, former policy director of the Chicago Coalition for the Homeless, said there is no data to prove that increasing the transfer tax would affect or affect property tax rates. higher rents.

Others, including Jeff Baker, CEO of Illinois Realtors, disputed this. Baker argued to us that the difference between this tax and property taxes is mostly semantic, that a property tax is a property tax and that landlords will have no choice but to pass the increase on to tenants, which will cause rents to increase. then it can actually lead to unintended consequences deterioration housing insecurity

Other business leaders, including private developers hoping to build affordable rental housing on their own, warn Baker that the new tax would be a major deterrent to new development and a particularly ill-timed blow to Chicago’s already troubled massive commercial real estate market. He shares his opinion. from the epidemic.

Dworkin argued that this was already happening, thanks to the pandemic and the increase in working from home. If new construction is deterred by another tax increase and assessed values ​​fall, residential property taxes may only increase, given that the total amount needed will remain unchanged, Baker said.

So you could say this will be a battle of two philosophies.

Whatever your view, voting “Yes” would require a leap of faith: That the tax increase wouldn’t send private-sector homebuilders elsewhere, nor would it make it that much harder for upper-middle-class Chicagoans to buy homes here. He said they would choose a suburb over this expensive market and not add another significant disincentive to moving here. You also had to be confident that Brandon Johnson’s administration and committee would find effective ways to spend this huge amount of new money with all the necessary safety precautions.

We commend advocates for their commitment to this issue. We understand why they want to create a steady stream of revenue for their programs and initiatives to give our fellow Chicagoans as much home as possible.

But we think the best approach here will always be one that resembles Duncan’s strategy on gun violence and doesn’t demonize the private sector and “exurban developers.” We respectfully believe that the people and businesses of this city will not easily tolerate further tax increases, even though they are told it does not affect them. We think this might be possible even if an appeal goes through and is still approved.

If and when that happens, we support a “No” vote.