Mayor Brandon Johnson's ballot measure to jack up taxes on the sale of a host of residential and business properties across the city of Chicago in the name of fighting homelessness has new life, after a state appeals court said judges have no place in reviewing whether the Chicago City Council or other legislative bodies followed the law and the constitution in placing a referendum before voters.
On March 6, a three-justice panel of the Illinois First District Appellate Court in Chicago sided with the mayor and the city, saying a Cook County judge was wrong to declare the city had improperly placed the referendum on the ballot.
But Burke's decision had ordered the Chicago Board of Elections - an independent agency not under the city's control - to not count any votes cast for the referendum.
Burke's decision was understood by observers to have sided with the business groups, who had argued the referendum had illegally combined two questions into one referendum, and then asked voters to answer "yes" or "no."
The appellate ruling was authored by First District Appellate Justice Raymond W. Mitchell, a Democrat and former Cook County judge. Justices Freddrenna M. Lyle and David R. Navarro concurred in the decision.
In the ruling, the appellate justices said they believed Burke got the questions of law incorrect in handling the challenge to the BCH referendum brought by a coalition of business interests in the city, notably led by the Building Owners and Managers Association of Chicago.
They said she wrongly refused to allow the city of Chicago to intervene in the case that had been filed against the Chicago Board of Elections.
But more so, they said Judge Burke had wrongly agreed to hear the case at this point at all, as they said the lawsuit brought by BOMA and the other business groups was "premature."
Under existing precedent, Mitchell wrote, the courts have no ability to hear challenges to the validity of referendums that have been placed on the ballot as "part of the legislative process." Rather, they said state courts can only hear challenges to the validity of referendums after they have been approved and have become law.
The appellate justices also chided Judge Burke for issuing a written order that lacked any real explanation discussing the legal reasoning she used when rendering her judgment in the case. Rather, her order only said her decision was based on "the reasons stated in open court and on the record."
But the appellate justices noted Judge Burke didn't give any further explanation there, either.
"Like the parties, we are left guessing as to the bases for the circuit court’s ruling because the lower court gave no reasons for its ruling," Mitchell wrote.
The lawsuit challenging the referendum had been pending since January, when BOMA and their coalition partners filed suit in Cook County Circuit Court shortly after Mayor Johnson and his allies voted to place the referendum on the March 19 primary election ballot.
If successful, the referendum would empower the Chicago City Council to restructure the city's real estate transfer tax, which is levied on properties when they are sold.
The new RETT would sharply increase the taxes on all properties sold for more than $1 million. At the same time, supporters say the city would decrease the RETT assessed on properties sold for less than $1 million.
The referendum was strongly backed by Mayor Johnson and his democratic socialist allies on the Chicago City Council and other far left-wing organizations, including the Chicago Teachers Union and others.
They asserted the referendum would result in at least $100 million in new tax revenue for the city, which Johnson and others claimed would be put toward funding programs to help alleviate homelessness in Chicago.
Opponents of the referendum, however, noted the ballot measure included no language that would commit the city to actually using the money for the homeless, or any specified purpose. Rather, it would be left to Mayor Johnson and the City Council to determine how to spend the proposed new millions in tax revenue, which could include new revenue to help the city meet a long list of new demands from Johnson's associates at the powerful Chicago Teachers Union.
In recent days, for instance, the Illinois Policy Institute has revealed documents indicating the Chicago Teachers Union intends to use proceeds from the referendum, not to help those living on the streets, but to help fund housing assistance payments to Chicago Public Schools teachers.
According to data published by the Chicago Tribune, CPS teachers in 2019 earned a starting salary of $56,000-$60,000 annually, up to $108,000.
Opponents have also asserted the measure would not just apply to the "mansions" of wealthy Chicagoans, but would apply to a wide swathe of properties, including storefronts and small apartment buildings, among others. They said this would place an even heavier tax burden on small businesses in the city, while further suppressing the development of new homes and pushing prices up, endangering housing affordability in the city.
In a brief filed with the appeals court in support of BOMA's challenge, the Illinois Policy Institute argued the court should also take note of the likely economic harm the referendum would bring to the city.
In that brief, the Policy Institute noted a similar referendum in Los Angeles only brought in about 15% of the revenue city officials had promised, hurting small business owners while generating little public good.
"... The ballot referendum only asks voters whether the City shall adjust the rates," the Policy Institute wrote. "It doesn’t ask voters whether the City should use the money raised to combat homelessness or even how it should do so. This would pummel the City’s already-suffering real estate market without binding the City to use the funds to help the homeless."
The Policy Institute also noted the city has "tens of millions of dollars" at its disposal now to dedicate to homelessness prevention efforts, but chooses not to spend. They further said the city has a long list of other options to pursue, including working with landowners to rehabilitate tens of thousands of vacant and condemned homes, before seeking to exact a new tax.
The appellate justices, however, brushed aside those assertions, saying they were not ruling on the relative wisdom of the city's referendum. Rather, they said, they believed the referendum should go to the election first, before any legal or constitutional challenges to the measure can be heard in court.
Following the ruling, Johnson declared victory: "As we have said from the beginning, and as the Appellate Court agreed today, this was always a question wisely left to the voters of Chicago. I am pleased that Chicagoans will have the opportunity to weigh in on Bring Chicago Home, which is intended to provide a dedicated revenue source to combat homelessness."
BOMA said they were reviewing the appellate ruling, and would evaluate their legal options, which could include an appeal to the Illinois Supreme Court.
"We are disappointed in the outcome of this case, but felt it was important to challenge this misleading and manipulative referendum question," said BOMA Chicago Executive Director Farzin Parang.
"This massive tax increase would hurt homeowners, renters, union workers, and businesses throughout the neighborhoods.
"Even worse, a yes vote on this referendum is a vote to deliver huge blank checks to the city with no plan for how millions will be accountably spent. We have already ramped up our efforts to educate the public about the negative impacts of this tax increase."
The Chicago Southland Black Chamber of Commerce also said they were disappointed by the ruling.
"The Chicago Southland Black Chamber of Commerce maintains that the question itself is improperly written, essentially railroading voters to choose a blanket 'yes' or 'no' answer to a complicated question," that group said in a statement.
"We are currently knee-deep in a tumultuous market," said the chamber's chairman Cornel Darden Jr. "The city of Chicago is seeing residents leaving, businesses shutting their doors, and inflated rental and sale prices on both commercial and residential properties. We are committed to seeing a better Chicago for all. We believe that the homeless, the homeowners, the businesses, and everyone here deserve a better, more comprehensive plan to battle the issue of homelessness. We all deserve better.”