Chicago Voters Reject Real Estate Tax Change to Fund Homeless Programs

Chicago voters rejected an increase to the city’s transfer tax on high-value properties in a Tuesday referendum, The Associated Press said, leaving unfulfilled a longtime goal of Mayor Brandon Johnson and progressive Democrats who wanted to use new revenue to address homelessness in the country’s third-largest city.

The result came after days of counting ballots, including mail-in votes, that were not able to be reported on Election Day.

Real estate groups had warned that the new rates would have been a potentially catastrophic blow to the downtown office market, which was already losing value and struggling with vacancies.

The vote came at an uncertain political moment in Chicago, a Democrat-dominated city where homelessness has become more visible since the pandemic and an influx of migrants has strained resources. And the result raised questions about the strength of the city’s progressive movement, led by Mr. Johnson, which has become the dominant force in City Hall over the last decade and which mobilized its army of volunteers to knock on doors in support of the tax change.

“yes, it is a loss for Mayor Johnson and is a loss for the progressive movement,” said Dick W. Simpson, a former Chicago City Council member and an emeritus professor at the University of Illinois at Chicago who campaigned for the tax change.

The referendum called for raising transfer taxes on properties that sell for more than $1 million while lowering that rate on properties that sell for less. Supporters described it as a chance to level the playing field and help the city’s most vulnerable residents. Some referred to it as a “mansion tax,” versions of which have been approved by voters in Los Angeles and Santa Fe, N.M.

“Homeless people are everywhere,” said Jason Rodriguez, 41, a resident of the Northwest Side who supported the tax change. “It’s just a common thing, but it shouldn’t be. Nobody should be without a home, without somewhere to sleep.” Mr. Rodriguez said tent encampments had been growing near his home.

Opponents of the tax agreed that homelessness is a problem, but they questioned the wisdom and timing of the proposed solution. Owners of office towers are already hurting from the post-Covid shift toward remote work. And the city has struggled to respond to the arrival of tens of thousands of migrants bused or flown to the Chicago area from the southern border.

“It’s not a mansion tax, it’s a migrant tax,” said Anthony Beale, a Democratic member of the City Council from the South Side who opposed the referendum. He said he believed it would hurt the local economy.

Homelessness has emerged in recent years as a top-tier issue in urban centers across the country, leading to a range of responses. In Minneapolis, where encampments are routinely cleared out, officials declared unsheltered homelessness a public health emergency. Sacramento experimented with giving a lease to a homeless encampment. Austin, Texas, has tried building more tiny homes. New York City, whose shelter population reached a record high over the last year, has placed limits on how long some migrants can stay in city facilities.

Despite that widespread concern, voters in some places have been unsure about whether to authorize more spending on homeless programs. Many observers expected California voters to overwhelmingly approve a ballot measure calling for the state to spend billions to expand treatment centers and supportive housing for people with mental illness and addiction. Though the measure did pass, it did so narrowly, and the race was not called until more than two weeks after the election.

In Chicago, Debbie Daniels, 57, a retired accountant who lives on the Northwest Side, agreed that homelessness is a growing problem. But she said changing the real estate tax would eventually lead to higher costs for renters like her. And if people can’t pay their rent, she said, that could mean more homeless people in the future.

“The landlord is going to push it on us,” Ms. Daniels said. “If the tax passes, it’s coming. It’s going be to the renters of Chicago, and we’ve been here forever.”

Different ways of counting the city’s homeless population have yielded vastly different estimates of the issue in Chicago. The city’s annual homeless count, conducted on a single day in early 2023, showed about 6,100 people living on the streets or in homeless shelters. The Chicago Coalition for the Homeless, a nonprofit group that supports the tax change, estimated that about 68,000 people in the city were homeless in 2021, a figure that includes people living temporarily with others or “doubling up” in a unit where their name is not on the lease.

But those counts were done before most of the migrants arrived. As of Monday, officials said, more than 11,000 of the estimated 37,000 migrants who have come to the Chicago area since June were still living in 23 shelters run by the city or state. City officials began evicting some migrants from shelters on Sunday.

Progressives started pitching a version of their tax plan, which they call “Bring Chicago Home,” in 2018 during Rahm Emanuel’s tenure as mayor, and kept pushing for it throughout the four-year term of Lori Lightfoot. But it was the election last year of Mr. Johnson that made possible what supporters saw as a chance to reorder the city’s priorities.

“This is a long time coming for the people of Chicago,” Mr. Johnson said in the weeks before the vote. “Where two administrations were reticent, or just quite frankly negligent, it’s a different day for Chicago. That’s a good thing.”

The ballot question left open exactly how or on whom the new revenue would be spent. Even with the reduction in the transfer tax for properties that sell for less than $1 million, supporters estimated the referendum would lead to at least $100 million each year in additional revenue for homelessness and affordable housing programs.