For married couple Laval and Roxanne, home is a thin tent in Chicago’s Humboldt Park. And during this past winter, whenever there was a tear in the thin tent fabric, they had to endure a freezing night.
While the couple has applied for permanent housing through a housing assistance program, that goal will be stalled for at least several months due to the housing shortage. Even with additional tarps, the couple has been at the mercy of the elements. And they are not alone.
It is estimated that over 68,000 Chicagoans are homeless, an increase of nearly 3,000 people from 2022. To address this crisis, grassroots organizations are proposing a major policy initiative.
On Tuesday, March 19, Chicago voters will decide on a “mansion tax” ballot initiative that could change the city’s real estate transfer tax to raise funds to alleviate homelessness. A real estate transfer tax is a charge levied on the transfer of ownership or title to a property from seller to buyer. In Chicago, the tax is paid by the buyer.
“[It’s a] real opportunity to make a real difference . . . . It’s a structural change to the housing crisis in Chicago,” Christina Rivero, field director of Bring Chicago Home, told The Progressive.
Bring Chicago Home is a coalition made up of people who have experienced homelessness and civic and community organizations seeking to alleviate homelessness.
Supporters claim the proposal would raise a minimum of $100 million annually for programs addressing homelessness, including providing permanent affordable housing as well as supportive services. These funds would improve “wrap around” services that, they suggest, are just as important as building permanent housing itself. Those services include mental healthcare, substance abuse counseling, job training, educational opportunities, and domestic violence resources.
“You can’t take someone from a tent in the park and say ‘OK, here’s your new apartment, here’s your new room, go nuts, have a wonderful life,’ ” explains Kerry Fleming, leader of the community organization One Northside. “They won’t stay there because they don’t have the ability or support to thrive.” Fleming stressed support services that helped their clients find jobs, beat addictions, and settle childcare issues were necessary for them to lead stable lives.
Currently, the transfer tax on home sales in the city is at a flat rate. The proposed measure would cut that tax for the transfer price for property sold for less than $1 million, a reduction of 20 percent. And because 94 percent of all real estate sales are for properties under $1 million, most residents would see their transfer taxes on those property sales fall.
An increased rate would then be applied to the property value between $1 million and $1.5 million, a hike of 233 percent. There would be a 400 percent increase in the property transfer tax for sales of properties over $1.5 million.
“It will be paid for by folks who have the money to pay for it. So, it is not a regressive tax like we have seen before,” Rivero says.
The referendum has faced stiff challenges just to keep its place on the March 19 ballot. Earlier this month, Circuit Judge Kathleen Burke effectively blocked the measure from appearing before voters. It was only a last-minute March 6 ruling by the Illinois Appellate Court, overruling Burke’s decision, that allowed the proposal to proceed.
The real estate industry has opposed the proposal, claiming there is no guarantee that the money raised by the revamped property transfer tax will actually go towards alleviating homelessness and that it could be diverted to other programs.
Supporters counter that it is specifically spelled out in the text of the initiative that the money raised through the transfer tax is to be “used for the purpose of addressing homelessness, including providing permanent affordable housing and the services necessary to obtain and maintain permanent housing in Chicago.”
“Does it [ballot question one] say that we’re going to spend this thirty cents on that and that $4 on this? No,” says Fleming. But, if it should pass, when the city makes its final budget appropriations, it will have to adhere to the spending guidelines specified in the ballot language, he asserted.
Two other factors would also help guarantee that the money raised is spent towards its intended purpose: The creation of an advisory board to oversee the program and ongoing grassroots pressure to make sure that Chicago’s City Council, the final decision-makers when it comes to spending money, will be held to account.
Another criticism leveled against the measure is that the tax would hinder economic development.
“Our research shows that is not the case,” says Fleming. “We have found, in many cases [where cities have enacted the tax] that development increased rather than decreased.”
People continue to buy homes in Los Angeles, Rivero adds. Los Angeles passed a version of the real estate transfer tax in 2022.
The $100 million annual new revenue, according to advocates, would be enough to house an estimated 7,600 people over ten years. Dividing that 7,600 number into the estimated 68,000 Chicago people who are currently homeless equals just over eleven percent, giving at least a ballpark number on how much of a dent the new tax would make in the problem.
“Is it going to cure homelessness? Of course not. But it is a step. We haven’t taken the step in a very long time,” says Fleming.
Activists are largely bullish on the chances of its passage despite the opposition of the powerful real estate lobby. They have put together a broad coalition of labor unions, religious groups, community organizations, social services agencies, and politicians behind the proposal. There is ongoing aggressive outreach by these groups contacting the public either in person or through social media.
“As we have knocked on thousands of doors for the last few months, and we have seen when we talked with people . . . . We have a 73 percent support rate,” Rivero notes. “When people hear about it, they are more than likely to be supportive of the measure.”
Chicago is not the first city or state to consider such a measure. Los Angeles; New York City; Evanston, Illinois; Connecticut; New Jersey; and Hawaii have all adopted some form of this tax. But should the voters in America’s third-largest city follow suit, it would encourage other cities and jurisdictions to follow their lead.
“For folks not excited by the upcoming election for various reasons, this is something that people should go out and vote for,” says Rivero.