Chicago ‘mansion tax’ to fund homeless services in legal limbo

CHICAGO, Illinois: Last month, a Cook County judge rejected a Chicago ballot measure that would hike a real estate tax on high-end property sales to fund services for homeless people, also known as a "mansion tax."

However, backers of the tax, called "Bring Chicago Home," hope it will be overturned through a referendum.

Early voting for the March 19 in Chicago has already started, with the measure remaining on the ballot while being settled in the courts.

Under the referendum, Chicago can choose to support or not support an increase on a transfer tax for properties over US$1 million, which would be a one-time buyer’s fee.

While Chicago’s rate is currently 0.75 percent on all property sales, the proposal will change the tax structure to 0.6 percent on properties under $1 million, two percent for properties over $1 million, and three percent on properties over $1.5 million.

The measure will generate $100 million annually, which will fund homeless services, including mental health care and job training, said backers of Bring Chicago Home.

Some $50 million of city funds are currently spent for such services.

Supporters said that a larger dedicated funding source would make a considerable difference, especially in terms of prevention.

Doug Schenkelberg, executive director of the Chicago Coalition for the Homeless, said, "It allows us to move the needle in a way we cannot do now."

Some 68,000 residents of the city experience homelessness and racial disparities, with around half of them being Black, the coalition said, noting that some 17,000 of Chicago’s homeless population, or 25 percent, are children.

However, real estate groups said that as downtown Chicago is still recovering from the COVID-19 pandemic, the new tax will disproportionately affect the commercial real estate sector.

CBRE Group Inc., a real estate services company, said that the vacancy rate for downtown offices reached a record high of 23.8 percent at the end of 2023.

Amy Masters of the Building Owners and Managers Association of Chicago, said, "We do not think it is right to penalize one industry, the real estate industry."

After the group sued in January, a Cook County judge sided with them in February.