Judge invalidates ‘Bring Chicago Home’ referendum on March 19 ballot

Mayor Brandon Johnson’s cornerstone initiative to tackle homelessness through a referendum question on the March 19 ballot was invalidated by a Cook County judge on Friday as she sided with business and real estate interests who oppose the measure.

The ruling by Judge Kathleen Burke places the future of the “Bring Chicago Home” referendum in significant doubt, while an appeal of the ruling is considered and the business groups who sued to stop the referendum celebrate the ruling. The referendum question is still on Chicago ballots, but any votes on it made through mail-in or early voting won’t be counted for the time being.

In the meantime, the decision delivers a stinging setback for Johnson and his progressive backers, who hoped to rally voters to pass the referendum next month and trigger a tax hike on higher-priced property sales that would raise an estimated $100 million a year for various homeless services.

The lawsuit — filed in January by real estate interests and other corporate leaders in Chicago who think the new tax structure will harm the city’s business and real estate industry — was filed as part of the real estate lobby’s attempts to stymie Johnson’s bid to deliver on a key campaign pledge. The suit was technically filed against the Chicago Board of Elections, which had already printed the referendum on ballots. Burke also denied a motion from the Johnson administration to intervene in the case.

Both the city and the Board of Elections could appeal Burke’s decision, which followed a lengthy hearing in which she painstakingly read through the case’s filings for more than two hours before delivering her decision. Following the hearing, members of the Bring Chicago Home coalition stood up and chanted “68K need a place to stay!” a reference to the number of estimated people experiencing homelessness or sleeping doubled up across the city.

Coalition members said they would push ahead with their campaign and continue to encourage Chicagoans to vote “yes” in the hopes that a successful appeal would mean those ballots would be counted. Their campaign was formally launched in 2018 by those experiencing homelessness and advocacy organizations, but it was supercharged when Johnson took office and made it a priority for the start of his term. It is backed by several progressive philanthropic foundations, labor unions and faith-based organizations.

The referendum, which supporters describe as a “mansion tax,” calls for increasing a tax tied to the sale of all properties, not just mansions, that sell for more than $1 million. Those who oppose the measure include the Building Owners and Managers Association of Chicago, the Chicagoland Apartment Association and the Neighborhood Building Owners Alliance. The groups argue that if the referendum passes it will dampen sales in an already-fragile market and that the city did not have concrete plans for how to spend the additional $100 million in annual revenues the tax is estimated to raise.

In a statement Friday, BOMA Chicago Executive Director Farzin Parang said the group was “gratified” by the ruling, which “underscores the necessity of presenting policy questions to the public with fairness, detail, and transparency.”

“This referendum would be a backdoor property tax on all Chicagoans, and it is important that our elected officials not mislead voters otherwise,” Parang said.

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Attorneys for BOMA argued the referendum would have forced voters to approve or reject three separate policies in one question — an example of logrolling that BOMA said was an effort to “purposely manipulate voters into approving two separate tax increases.”

On Friday evening, the mayor’s office said in a statement that it was “disappointed” in the judge’s ruling but that it would explore “every legal option available.”

“We firmly believe the referendum is legally sound and the final arbiter should be the voters of the City of Chicago,” the statement said.

Election attorney Ed Mullen, who represents a group supporting the referendum, said Burke “didn’t spend much time explaining the basis for the reasoning” and added that people should still vote for the referendum question as long as it remains on the ballot.

“We are definitely going to continue to knock doors,” said Crystal Gardner, the deputy political director for SEIU Local 73, which supports the referendum. “We have canvasses every single weekend. We are not going to let this poor and terrible ruling stop us from engaging residents and voters, because at the end of the day, it’s their vote. That’s their voice, they get to choose.”

Asked whether the coalition may try again to put the question on November ballots if an appeal fails, Emma Tai of the Bring Chicago Home campaign said it’s “one step at a time,” but “we’re going to keep fighting.”

Max Bever, spokesman for the Chicago Board of Elections, said in a statement Friday afternoon that the court had yet to formally enter a written order based on the ruling, and “As such, the Chicago Board of Election Commissioners has not yet moved to appeal this decision and is still evaluating its options.”

Early voting and voting by mail in Chicago, meanwhile, will continue “until the Board is directed otherwise. The Board awaits future direction from the Circuit Court of Cook County on this matter.”

The referendum sought to ask voters to change how one-time taxes are charged at the time of a property’s sales. The city currently charges a 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 be charged the lower 0.6% rate, larger commercial properties such as offices, large apartment buildings, stores and industrial sites would shoulder more of the burden.

The lawsuit took issue with the three-part nature of the referendum question as well as the portion that would decrease the tax rate for lower-value homes. The lawsuit also stated that there was a lack of clarity about what specific programs the estimated $100 million in additional annual revenue would pay for, which tax opponents argued is a “blank check” for the city.

The campaigns both for and against the referendum have continued uninterrupted while the court case was ongoing, with millions of dollars being raised collectively by both sides and money flowing in from outside groups.

Since the start of February alone, a political committee funded by state and national real estate groups has built up a $1.3 million war chest. The CEO of the Illinois Realtors, Jeff Baker, told the Chicago Tribune Editorial Board that money is going to targeted mailers as well as campaign advertisements online and on streaming services.

The group’s website, “Protect Chicago Homes,” states that the decrease for lower-value sales is a distraction from the hike borne by other property owners. “With no plan for how to spend this New Property Tax, they’ll be coming after your house next” to adequately fund affordable housing developments.

In a statement after Burke’s ruling, Baker called for the city to “sit down together to develop a real plan for better homelessness prevention and to further housing stability.”
Until then, he said, the group would continue its campaign to inform voters “how tax burdened Chicagoans are and the need for policy solutions that do not rely on real estate taxes.”

Other opposition groups appear to be gearing up as well. Two ballot initiative committees were formed this week, according to state records. One is Keep Chicago Affordable, which appears to be an extension of the 501(c)(4) nonprofit group Chicago Forward. Both are led by Resolute Public Affairs. It has not yet raised or spent any money.

Nor has the other ballot initiative committee formed by leaders from the conservative Illinois Policy Institute dubbed “Vote No on Chicago Real Estate Tax.” The group similarly opposed Gov. J.B. Pritzker’s failed effort to change the structure of the state’s income tax.

aquig@chicagotribune.com