Business groups sue to halt ballot question on raising real estate taxes to pay for homeless services

A coalition of business groups has filed suit to stop the “Bring Chicago Home” referendum question from appearing on March primary ballots, in the real estate lobby’s latest attempt to stymie Mayor Brandon Johnson’s bid to deliver on a key campaign pledge.

The suit was filed Friday in Cook County Circuit Court by opponents of a tax increase on higher-priced property sales, including the Building Owners and Managers Association of Chicago, the Chicagoland Apartment Association, the Neighborhood Building Owners Alliance and other real estate groups. They have fought the proposal, claiming it will dampen sales in an already-fragile market.

Their 12-page suit alleges the referendum question — passed by the City Council in November to dedicate new revenues to address homelessness in Chicago — should not go to voters because it violates the state’s municipal code and constitution.

“Homelessness is a critical issue in our city that should be addressed with a serious plan involving all stakeholders,” BOMA/Chicago Executive Director Farzin Parang said in a news release. “These important public policy questions should be presented to voters with fairness, detail, and transparency. Instead, this referendum is playing politics.”

[ Will Mayor Brandon Johnson’s transfer tax plan deliver for the homeless amid a real estate downturn? ]

Doug Schenkelberg, executive director of the Chicago Coalition for the Homeless, said in a release homeless advocates are confident “the ballot measure is constitutional and believe in its full integrity.”

The suit is “a political maneuver, orchestrated to protect the interests of greedy landlords and multinational real estate corporations at the expense of Black, brown, working class, and homeless Chicagoans,” Schenkelberg said.

The referendum asks voters to change the way property sales are taxed. Currently, the city charges the same, flat 0.75% rate on all property sales. Bring Chicago Home calls for slightly reducing the tax charged on the first $1 million in value — to 0.6% — while increasing the rate on properties valued between $1 million and $1.5 million to 2%, and boosting the rate even more on properties valued above $1.5 million, to 3%.

While the vast majority of sales would have a lower taxed rate, larger commercial properties such as offices, large apartment buildings, stores and industrial sites would shoulder more of the burden.

[ ‘Bring Chicago Home’ proposal aims to boost funding for homeless services. But a similar measure in LA slowed real estate sales. ]

The lawsuit takes issue with the three-part nature of the referendum question and the portion that decreases the tax rate for lower-value homes. And it argues there is a lack of clarity about what specific programs the estimated $100 million in additional annual revenue would pay for.

Recent legal challenges involving other high-profile referendum questions have been unsuccessful. A judge denied a bid from the Illinois Policy Institute to provide a “corrective notice” to voters about what they said was “misleading” language in the statewide progressive income tax referendum. The question was ultimately rejected by voters. Another lawsuit to prevent the proposed “Workers Rights Amendment” from making it on the ballot also failed. Voters approved the amendment last year.

The real estate groups are represented by two politically connected attorneys: Mike Kasper — a longtime top lawyer for former House Speaker Michael Madigan and the state’s Democratic Party — and Michael Del Galdo, who recently represented former Madigan aide Will Cousineau.

It was brought against the Chicago Board of Election Commissioners, which claims it is not the “proper defendant in this case,” and that the city and the council are. Mayor Brandon Johnson’s administration did not immediately respond to a request for comment.

Vote by mail ballots are scheduled to start shipping by Feb. 8. “If there is a court order to remove the question after voting begins, then it’s most likely that the board will just suppress the election results, instead of reprinting ballots/reprogramming early voting machines,” spokesman Max Bever said.

aquig@chicagotribune.com