Chicago ‘mansion’ tax to fund homeless stuck in limbo

CHICAGO: An unusual legal challenge may upend the future of a Chicago ballot measure that would hike a real estate tax on high-end property sales to fund services for homeless people.

Such citywide ballot measures are rare in the nation’s third-largest city, but other cities, including Los Angeles, have approved similar so-called “mansion taxes.”

A Cook County judge last month rejected the measure, but backers of the effort, called Bring Chicago Home, hope it will be overturned.

Early voting for the March 19 (March 20 in Manila) primary in Chicago has already started, so the measure remains on the ballot as it’s being settled in the courts.

The referendum asks Chicago voters to support an increase in a transfer tax for properties over $1 million. It’s a one-time buyer’s fee.

Chicago’s rate is currently 0.75 percent on all property sales. The proposal overhauls the tax structure: 2 percent for properties over $1 million, 3 percent for properties over $1.5 million, and down to 0.6 percent on properties under $1 million.

Most Chicago property sales are under $1 million, so the majority of home buyers will pay less. Analysis by the proponents shows roughly 95 percent of homebuyers would see a decrease.

The Chicago area’s median sales price is roughly $350,000, according to the National Association of Realtors. A buyer would currently pay $2,625 to the city. That would drop to $2,100 under the new structure.

Also, it’s a marginal tax, meaning the increased rate applies to only the portion above $1 million. For example, on a $1.2 million property, $1 million would be taxed at 0.6 percent, with the remaining at 2 percent. Currently, the buyer pays $9,000, which would jump to $10,000.

Backers of Bring Chicago Home estimate the change will generate $100 million annually. It will be set aside solely for homeless services, including mental health care and job training.

Chicago spends about $50 million of city funds for such services. Advocates say having a bigger dedicated funding source would make a huge difference, including for prevention.

“It allows us to move the needle in a way we can’t do now,” said Doug Schenkelberg, executive director of the Chicago Coalition for the Homeless.

Roughly 68,000 Chicagoans experience homelessness, and racial disparities exist, according to the coalition. Roughly half are Black. The definition of homeless covers people without fixed addresses, whether they are sleeping on a friend’s couch or on the streets.