BOMA/Chicago Prevails in Lawsuit Opposing Transfer Tax Referendum

Today, BOMA/Chicago and a coalition of associations and companies prevailed in a lawsuit against a manipulative attempt to dramatically increase real estate transfer taxes in Chicago.

The Cook County Court ruled in favor of the plaintiffs who argued that the Transfer Tax Referendum question originally placed on the March 19, 2024, Primary Election ballot was misleading and unconstitutional.

As a result of this ruling, the referendum will be invalidated and the votes will not be tallied.

“We are gratified in the judge’s 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.” 

- Executive Director, Farzin Parang

On January 5, 2024, BOMA/Chicago and the group of plaintiffs filed a lawsuit contending that the three-part referendum would have forced voters to approve or reject three separate policies in one question, including a tax decrease, to purposely manipulate voters into approving two separate tax increases and therefore violating Illinois State Constitution, Illinois Statute Section 8-13-19 and Illinois Supreme Court precedent:

• a real estate transfer tax decrease of 20% to establish a new transfer tax rate of $3 for every $500 of transfer price, or fraction thereof, for that part of the transfer price below $1,000,000 to be paid by the buyer of the real estate transferred unless the buyer is exempt from the tax solely by the operation of state law, in which case the tax is to be paid by the seller; AND

• a real estate transfer tax increase of 166.67% to establish a new transfer tax rate of $10 for every $500 of transfer price, or fraction thereof, for that part of the transfer price between $1,000,000 and $1,500,000 (inclusive) to be paid by the buyer of the real estate transferred unless the buyer is exempt from the tax solely by the operation of state law, in which case the tax is to be paid by the seller; AND

• a real estate transfer tax increase of 300% to establish a new transfer tax rate of $15 for every $500 of transfer price, or fraction thereof, for that part of the transfer price exceeding $1,500,000 to be paid by the buyer of the real estate transferred unless the buyer is exempt from the tax solely by the operation of state law, in which case the tax is to be paid by the seller?

The ripple effects of the proposed tax increase, which would have tripled transfer taxes on properties valued between $1 million and $1.5 million and quadrupled transfer taxes on properties valued more than $1.5 million, would have been detrimental to every neighborhood, resident, investor, developer, employer and union job creator, in the City. Already with the highest commercial property tax in the country, Chicago would have also had one of the highest transfer taxes among cities it competes with for investment had the increases taken effect. Fourteen states do not even impose transfer taxes.

Revenue generated by the tax increase was ostensibly earmarked for fighting homelessness in the City, but the City never published a plan addressing public questions about the fund or ensuring how it would be used transparently and accountably.

Parang adds, "We need all stakeholders in the room if we want to effectively support those who are unhoused. It’s time to come together to develop a viable solution for our most vulnerable residents.”