And voters might learn a lesson from Los Angeles, where a similar referendum that passed in 2022 has had some unintended consequences.
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Just like in Chicago, the Los Angeles referendum was dubbed the so-called "mansion tax." It was sold to voters on the promise of raising a huge amount of money to address the homeless crisis. But it has not lived up to its billing, and it is having a very negative impact on the commercial real estate market.
The Los Angeles referendum, known as proposition ULA, raised the transfer tax on properties over $5 million, with the promise it would initially raise $800 million per year to help the unhoused.
But a California commercial real estate experts said that has not happened. Instead, it has crippled the commercial real estate market.
"All's we knows we've seen about an 80% plunge in activity on the commercial side of things in Los Angeles since ULA has passed," said California Business Properties Association President Matthew Hargrove.
SEE ALSO | Votes will now be counted for 'Bring Chicago Home' referendum on real estate transfer tax: court
The Chicago Building Owners and Managers Association believes the Bring Chicago Home referendum, which it is suing to block, may not provide the projected $100 million to address the homeless crisis. And it will have a negative impact on Chicago's already struggling commercial real estate market.
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"We didn't see any sales, which is unheard of, until the very end of the year, we had maybe four or five sales, and they were from 60% to 89% losses," said BOMA Chicago Executive Direction Farzin Parang.
If commercial real estate values go down, and with it, their property taxes, that burden will shift to condo and home owners and renters.
"So even though you might think that you're getting a reduction in tax from the transfer tax whenever you sell your home in 10 years, in reality, every year you're going to be paying higher property taxes. It's a backdoor property tax," Parang said.
READ MORE | Homeless advocates speak out in support of Bring Chicago Home referendum; attack ad critiques
Chicago already has some of the highest property taxes in the nation, and Parang said raising the transfer tax will make Chicago even less attractive as a place for investors and developers.
But Mayor Brandon Johnson said Chicago learned lessons from Los Angeles in crafting the referendum now before voters, and he defends the measure.
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"There's an ordinance that will follow, in the event that this particular referendum passes, that ordinance will ultimately establish that revenue stream, the outcomes, how we appropriate is those dollars," Johnson said.
Hargrove said Los Angeles and now, Chicago, are engaged in what he calls ballot box budgeting.
SEE ALSO | 'Bring Chicago Home' real estate transfer tax question on primary ballot is invalid, judge rules
"You have decisions that are made on economic data that is not solid, and you have people driving a conversation again through bumper sticker politics, like mansion tax, that don't fully understand the economics of the real estate market," Hargrove said.
The Bring Chicago Home referendum would hike the real estate transfer tax on buildings over $1 million.
Last week, an appeals court ruled the votes could be counted. But on Monday, lawyers for BOMA appealed to the Illinois Supreme Court to accept an appeal and review the case.