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Legislators tout real estate transfer tax proposal as ‘win-win’ compromise for Lightfoot and the homeless

Chicago Sun Times

Thursday, February 13, 2020  |  Article  |  Neal Earley

Legislature (56)

Both Ramirez and Sen. Ram Villivalam, D-Chicago, the sponsor of the Senate bill, said they met with members of Lightfoot’s staff and called their proposal a “framework” from which to begin negotiations.

State lawmakers are taking another stab at revamping how Chicago taxes real estate sales, hoping for a compromise that gives City Hall the money it needs while still providing more money to help the homeless.

 

A pair of legislators on Monday filed two bills — one in the Senate and one in the House — that will allow Chicago to restructure its tax on property transfers.

During the fall veto session, Mayor Lori Lightfoot lobbied the General Assembly to let the city change the structure of the city’s real estate transfer tax to provide some cash relief to the city.

 

But Lightfoot was met with opposition from Chicago Democrats in Springfield, who wanted a large portion of the money to be spent on affordable housing and services for the homeless, not just for the city’s overall budget.

 

“No mayor wants to talk about dedicating dollars because they want that authority for themselves,” said state Rep. Delia C. Ramirez, D-Chicago, a sponsor of the bill in the House.

 

Both Ramirez and Sen. Ram Villivalam, D-Chicago, the sponsor of the Senate bill, said they met with members of Lightfoot’s staff and called their proposal a “framework” from which to begin negotiations.

 

Villivalam said the proposed legislation gives both sides what they want — Lightfoot gets extra money for the city’s budget, and state lawmakers get dedicated money to combat homelessness in Chicago.

 

“This is the ultimate win-win situation where we look to fund the city’s budget deficit and we address one of the larger, one of the major challenges our city faces,” Villivalam said.

 

Lightfoot’s office issued a statement pledging to work with legislators, the Bring Chicago Home advocacy group “and all other stakeholder on options” on the real estate transfer tax “and other progressive revenue solutions that will help address the city’s long-term financial needs.

 

“We are in discussions with the Bring Home Chicago coalition on ways to partner on a legislative proposal that generates progressive revenue and responds to the needs of all our most vulnerable communities, including homeless residents,” said mayoral spokeswoman Lauren Huffman.

 

While some state lawmakers previously said they wanted at least 60% of the new funds from the proposed structure of the real estate transfer tax to go to helping the homeless, the new bill would set aside only 25% for it.

 

Ramirez said the bill’s rate structure, which will increase the maximum tax for property transfers more than Lightfoot proposed, will bring in more revenue than what was proposed during the veto session.

 

Chicago Mayor Lori Lightfoot

Mayor Lori Lightfoot. File Photo. Fran Spielman/Chicago Sun-Times

In Chicago, real estate transfers are currently taxed at $5.25-per-$500.

 

If passed, the bill would also set new rates for the Real Estate Transfer Tax. The bill would cut the tax for property transfers $1 million and under.

 

Under the proposed rate structure, real estate transfers $500,000 and under will be taxed at $2.75-per-$500 of the transfer price. For properties transferred between $500,000 to $1 million will be taxed at $4.75-per-$500 of the transfer price.

 

Transfers between $1 million and $3 million will be taxed at $7.50-per-$500 of the transfer price. Real estate transfers between $3 million and $10 million will be taxed $14-per-$500 of the transfer price and for transfers over $10 million will be taxed at $20-per-$500 of the transfer price.

 

Editor’s note: This report was updated to include a mayoral statement that arrived after publication.