Realtors question tax hike that funds transit bailout

City Council yet to vote on transfer tax hike
January 31, 2008 5:13:58 PM PST
A key provision of the mass transit funding bill worked out in Springfield is a hike in the transfer tax for real estate transactions in Chicago.But there is a growing opposition from real estate groups. And some aldermen are feeling the pressure.

"Men should not know how their laws or sausages are made."

It's a quote variously credited to 19th century politicians, and British Prime Minister Winston Churchill. But it's likely even they would be wincing at the way some politicians were dancing around the need to pass another property tax at city hall to give the CTA stable funding. Aldermen are under pressure from the CTA to do it before opposition mounts.

"When the country is facing a recession, you don't raise taxes on real estate," said Alderman Bernard Stone (50th).

But the dean of the Chicago City Council says he likely won't vote against increasing the city's land transfer tax because the money will shore up pensions for CTA employees, as per the deal avoiding CTA doomsday service cuts, inked earlier this month.

"We want CTA drivers to have pensions. We want city employees to have pensions. The problem is the transfer tax is the wrong mechanism to do it," said Brian Bernardoni, Chicago Association of Realtors.

A coalition of realtors, homebuilders and housing advocates is decrying the Springfield deal's call to increase the land transfer tax from $7.50 to $10.50 per $1,000 of a property sale price. On a $250,000 home, the tax jumps from $1,875 to $2,625 -- an increase of 40 percent.

Some aldermen attending another event at city hall refused to take questions on the coming vote. But sources say the CTA is pressuring council to pass the tax hike Wednesday, even though Springfield's deadline for implementing the tax is six months away. It's a dilemma for those who can't abide a new tax that will hit modest neighborhoods harder than more well-off places but can't vote against keeping the buses running.

"I haven't said I'm not going to vote. I'm just saying that it is a bit of unfair. After voting for the property tax and voting for the taxes, to be put in this position to vote again for more taxes, is the last thing that (I) want to hear right now, especially under this economy," said Alderman George Cardenas (12th).

But the real estate coalition is vowing a fight and has its allies

"This could be another Band-Aid solution to a long-term problem, so we are in opposition to any type of real estate transfer tax," said Jerry Roper, Chicago Chamber of Commerce.

Mayor Daley supports the tax increase.

The Realtors Coalition has a web site you can check to see how much it could cost you.