Chicago Voters Face Choice on Tax to Fund Homeless Programs

Chicago voters will consider a ballot measure on Tuesday that progressive Democrats see as a solution to homelessness.

The proposal would allow the City Council to increase real estate tax revenue to help fund programs to get people off the street. But the vote will be about a lot more than that.

The ballot measure has prompted arguments about the downtown’s sputtering recovery, the influx of migrants that has strained city services and political coalitions, and the wisdom of entrusting Mayor Brandon Johnson and his fellow progressives with more tax money.

One issue not being contested: Homelessness is a problem in Chicago.

“Everybody in the city I think probably agrees, we have to do something about our housing crisis, on our homelessness,” said Farzin Parang, the executive director of the Building Owners and Managers Association of Chicago, which is helping lead the opposition to the proposal. The group says that the new tax would deal another blow to an office real estate market still mired in a post-pandemic vacancy crisis.

The ballot question is lengthy and nuanced. If approved and enacted, it would reduce the real estate transfer tax on properties that sell for less than $1 million, but impose higher rates on homes and commercial buildings that sell for more than $1 million. The extra money — supporters say it would be at least $100 million each year — would be put toward addressing homelessness, with the details of that spending to be finalized later.

The vote on Tuesday is the culmination of a longtime goal for Chicago’s progressive movement, which has unseated moderate Democrats over the last decade and transformed from a band of scrappy political outsiders into City Hall establishment.

The election last year of Mr. Johnson, a former union organizer who put the real estate tax change in his campaign platform, cemented that shift.

“This is a result of organizing,” said Anthony Quezada, a county commissioner from Chicago’s Northwest Side who supports the measure. “What’s happened in the city of Chicago is nothing shy of a political revolution of sorts.”

But Chicago has changed in other ways since progressives first floated higher tax rates for housing programs in 2018.

Homelessness has become more visible, with larger tent encampments popping up in more places. The downtown Loop, which was bustling before Covid, is still coping with empty storefronts and soaring office vacancy rates. And over the last 18 months, as Republican officials in Texas have sent thousands of migrants to cities led by Democrats, Chicago has been overwhelmed and its liberal coalition has frayed.

More than 37,000 migrants have arrived in the Chicago area, and thousands of them are still living in government-run shelters. However much supporters of the ballot measure have tried to focus the tax conversation on other issues, the migrant issue has reframed the debate.

“You can’t trust that the city is going to use that money for the purposes that they state — to help homelessness,” said Edward Boone, 69, a retired health care worker and Democrat who said he planned to vote against the tax. “Maybe they could be talking about the homeless immigrants that are in the city.”

Mr. Boone, who rents a unit in the Hermosa neighborhood, said he worried that the tax change could lead to landlords charging higher rents. He also said he was frustrated that the City Council allowed for a vote on the tax question, but not on a proposed ballot measure that would have asked voters if they wanted to remain a “sanctuary city.”

Others see the tax change differently. Annelise Rittberg, 28, who joined a recent march in support of the measure, said the stakes of the issue became clearer to her when the heat in her home near Humboldt Park, northwest of downtown, went out for a time this winter.

“That was just one sliver of uncomfortability and being in an environment that was not safe,” said Ms. Rittberg, a political independent who works for a nonprofit. “And all I could think in that moment was, there are dozens of people living in the park right across the street from my house who also don’t have access to a warm and safe place.”

Homelessness and housing affordability have long been challenges in Chicago, the country’s third-largest city. But those issues have manifested differently than they have in some rapidly growing Western cities facing housing shortages. Chicago’s population of about 2.7 million has been relatively stable in recent years, and some neighborhoods have vacant homes.

Different ways of counting the homeless population have yielded vastly different numbers. The city’s annual homeless count, conducted on a single day in early 2023, showed about 6,100 people living on the streets or in shelters. The Chicago Coalition for the Homeless, a nonprofit group that supports the tax change, estimated that about 68,000 people in the city were homeless in 2021, a figure that includes people “doubling up” in a unit or living temporarily with others.

But those counts were done before most of the migrants arrived. As of Sunday, officials said, nearly 11,000 of the estimated 37,000 migrants who have come to the Chicago area were still living in 23 shelters run by the city or state.

With the major parties’ presidential nominations already settled, both sides of the tax debate have been working to get their voters to the polls in what could be a low-turnout Illinois primary election.

Raising the real estate transfer tax, sometimes referred to as a “mansion tax,” is not a novel idea. Los Angeles voters approved a higher transfer tax in 2022 to fund affordable housing and homelessness programs. A similar measure was approved by voters in Santa Fe, N.M., last year. Supporters in Chicago see the vote as a chance to reorder the city’s priorities.

“We simply cannot and should not live in a place where an industry is able to make money off of housing and real estate when there are people that have no place to stay,” said Asha Ransby-Sporn, deputy campaign director for Bring Chicago Home, a group leading the effort to pass the tax.

But the timing, opponents say, could not be worse.

Jeff Baker, the chief executive of Illinois Realtors, which opposes the tax change, said the referendum’s passage would “immediately inject even more uncertainty and downward price pressure” into Chicago’s struggling office real estate market. And he said it could ultimately lead to increased property taxes and rents even for people who would not directly pay the higher transfer tax.

“I think long term,” Mr. Baker said, “you’re looking at even more housing instability, even higher cost of living in the city.”