Advocates say increasing the city's tax on pricey house sales will help fund essential programs for people without homes. In this file photo, tents are set up at an encampment at Touhy Park in Rogers Park in November 2021. (Credit: Colin Boyle/Courtesy of Block Club Chicago)

Editor’s note: The story has been corrected to note that the proposed tax would be paid by the buyer of a home and applies to the entire value of any property of more than $1 million.

With Chicago’s upcoming mayoral election moving squarely into the spotlight, a wide coalition of advocates and city officials are pushing to make homelessness a central campaign issue.

The Bring Chicago Home initiative, spearheaded by the Chicago Coalition for the Homeless, has been grabbing headlines as advocates push for a ballot referendum that they argue could make a major dent in the city’s homelessness crisis. The push culminated in a dramatic City Council standoff on Monday in which 25 aldermen — mostly allies of Mayor Lori Lightfoot — boycotted a public hearing to stymie the measure.

Now that advocates are plotting their next move, here’s a primer on what they’re proposing, and how they could keep up the fight to bake it into city policy.

What is the Bring Chicago Home initiative?

“Bring Chicago Home” is a campaign launched in 2021 with the goal of raising taxes on high-end real estate sales and using the money to beef up the city’s anti-homelessness efforts. While the Chicago Coalition for the Homeless has been at the vanguard, the Bring Chicago Home coalition also includes SEIU Healthcare, United Working Families, Communities United, ONE Northside and the Jewish Council on Urban Affairs.

The initiative has also been championed by the nine aldermen who are aligned with United Working Families — most vocally by Ald. Maria Hadden (49th), who in July 2021 introduced a resolution to push the tax hike initiative forward. It has since been co-sponsored by 19 of her colleagues on the City Council.

“Nobody can deny that we’re already in a crisis,” Hadden said Tuesday. She added that she has personally seen an uptick in evictions and homelessness in her own Rogers Park ward as the city’s and Cook County’s pandemic-driven rental assistance programs begin to peter out.

What would the proposal do?

Whenever someone buys a property in Chicago under existing rules, the city taxes them at a rate of $3.75 per $500 of the sale value. So, if someone buys a home for $250,000, they will owe the city $1,875 on the transaction.

The Bring Chicago Home proposal would more than triple the tax, to $13.25 per $500, for real estate transactions over $1 million. The proposal would also apply to commercial properties — most of which sell for more than $1 million.

The proposal would restrict the city’s use of the new money so that it could only be used “for the sole purpose of combating homelessness.”

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How much money would it raise?

Proponents say the tax hike on high-end real estate sales could net the city as much as $163 million in new annual spending to combat homelessness. They point to the higher-than-expected revenues the city pulled in from real estate transaction taxes during last year’s housing boom, when transaction taxes generated nearly $57 million more for the city than budgeters in Lightfoot’s administration had expected.

How would the money be spent?

Hadden said the money could be tapped to make permanent at least three anti-homelessness programs the city is already overseeing, including the city’s “rapid re-housing” services and mental health outreach, which are both overseen by the city’s Department of Family and Support Services. It could also set up a permanent version of the Department of Housing’s Emergency Rental Assistance Program, which has already doled out nearly $137 million to tenants behind on rent.

All three programs are being propped up by federal cash from the American Rescue Plan Act. 

The city’s federally backed Chicago Recovery Plan devotes $117 million to a range of homelessness support services. But without a permanent revenue stream to keep the programs going, Hadden warned the city will face a fiscal cliff after the American Rescue Plan Act funds run dry in 2026.

“What would it look like if we didn’t have the outreach, the social work, the counseling, the housing assistance?” Hadden said. “We’ve been helping people on a weekly basis. And if we don’t have the funds that Bring Chicago Home would provide, none of that would happen.”

Who is against it?

Landlord associations and real estate groups like the Chicago Association of Realtors are vocally opposed to the tax hike, saying it would turn away wealthy homeowners and businesses who may otherwise relocate to Chicago.

As of now, the mayor agrees with them. She has opposed the Bring Chicago Home campaign since its 2021 inception, and she said in a Nov. 7 news conference that the hike would be “spun as a property tax increase” and would be broadly unpopular. On Monday, she skipped a meeting Hadden and her allies had forced to surface the ballot initiative. The mayor’s allies also kept away, forcing the council to adjourn for lack of quorum.

Didn’t Lightfoot support a graduated real estate transaction tax before?

As part of her 2019 mayoral campaign, Lightfoot released a plan to replace the city’s flat real estate transfer tax, which she called “regressive,” with a four-tier graduated tax system. But instead of adding a single higher tax level for homes valued over $1 million, as Bring Chicago Home proposes, she pitched a four-tier system that would lower the tax for smaller properties while ticking it up for sales above $1 million and jacking it up further for property sales of $5 million or more.

The mayor tried to lobby Springfield in fall 2019 to allow the switch to a graduated system. But after a crucial bloc of progressive legislators insisted that any extra revenue from the tax be funneled into homelessness programs, Lightfoot resisted, saying the city needed the cash to plug its spending deficit heading into the 2020 budget year.

Lightfoot’s administration abandoned the push after the COVID-19 pandemic hit, as officials said a tax hike could imperil the city’s fragile economic recovery. The mayor’s office did not respond to a request for comment on the latest development.

How can the tax be passed?

While the City Council is responsible for setting the city’s taxes, it lacks the authority on its own to tinker with the structure of real estate transaction tax in a way that would shift it to a graduated system.

Proponents have two legal options to create a graduated real estate tax system: they can lobby in Springfield to change the rules at the state level, or they can get a majority of Chicago voters to approve the change in a referendum.

The Bring Chicago Home coalition has been angling for a referendum. But in order to put the question on the ballot, the City Council would have to approve it by a majority vote. They have until Dec. 11 to do so in time to put the question on the Feb. 28 city election ballot.

So can it still get on the February ballot?

Hadden acknowledges that advocates were left “pretty much out of legislative options” after Monday’s meeting fizzled.

The ballot question did not make the agenda for Thursday’s meeting of the City Council, and the council does not have any other meetings scheduled before the deadline. 

Voters will head to the polls again for a runoff election on April 6. But ballot referendums are not allowed in the runoff, according to city elections officials.

Could the Bring Chicago Home initiative pass some other way?

Advocates can still exercise their other option — to lobby state legislators — but that means the issue would likely have to wait until spring, since it is not on the agenda for the General Assembly’s short fall veto session, which started Tuesday.

The campaign’s path ahead also depends heavily on the outcome of the upcoming city election, Hadden said. If the city elects a new mayor and City Council majority who back the Bring Chicago Home initiative, they could simply try again for a ballot referendum in a friendlier environment.

No matter what, the city’s powerful real estate interests and their allies are likely to fight the tax hike at every turn. For those who agree with them that the Bring Chicago Home plan would endanger the economy, Hadden challenged them to offer their own plan to drum up the approximately $150 million each year Hadden estimated would be needed to “adequately tackle” homelessness.

“Everyone is in agreement that homelessness is a crisis in this city, so how are we going to raise the revenue in order to make sure that we’re meeting the need? That’s really the assignment,” Hadden said. “If folks have blocked our pathway to the solution that we’re proposing, I want to know what their solution is.”

Alex Nitkin is a solutions reporter conducting investigations on efforts to fix broken systems in Chicago, Cook County and Illinois government. Before joining Illinois Answers, he worked as a reporter and editor for The Daily Line covering Cook County and Chicago government. He previously worked at The Real Deal Chicago, where he covered local real estate news, and DNAinfo Chicago, where he worked as a breaking news reporter and then as a neighborhood reporter covering the city's Northwest Side. A New York City native who grew up in Connecticut, Alex graduated Northwestern University’s Medill School of Journalism with a bachelor’s degree.