Ald. Maria Hadden, attorney Ed Mullen and Bring Chicago Home advocates gather in front of the Illinois Appellate Court on March 1, 2024. [Michael McDevitt/The Daily Line]

The Illinois Appellate Court on Wednesday reversed a lower court’s ruling to suppress the outcome of the city’s referendum to change the real estate transfer tax structure from a flat rate to a graduated rate, allowing the results of the measure known as Bring Chicago Home to be counted. 

The appeals court reversed the previous ruling largely on the grounds that the lawsuit was “premature” and that the referendum is a protected part of the city’s legislative process, since the city must receive voter approval before it is allowed to raise the transfer tax.

“The holding of an election for the purpose of passing a referendum to empower a municipality to adopt an ordinance is a step in the legislative process of the enactment of that ordinance,” the appeals court said in a unanimous judgment and opinion delivered by Judge Raymond Mitchell. “Courts do not, and cannot, interfere with the legislative process.”

Justices Freddrenna Lyle and David Navarro concurred.

Mayor Brandon Johnson, a proponent of Bring Chicago Home, praised the decision.

"I am pleased that Chicagoans will have the opportunity to weigh in on Bring Chicago Home," the mayor said in a statement. "I encourage all Chicagoans to make their voices heard by voting in this election.”

Chicago Coalition for the Homeless Board President Maxica Williams commended the appellate court justices in a statement following the ruling and added, “We look forward to keeping up our efforts to reach hundreds of thousands of voters about their opportunity to vote yes for a fair and sustainable plan to fund housing, care for the homeless, and ask wealthy real estate corporations to pay their fair share.” 

Williams also chairs the Bring Chicago Home ballot initiative committee. 

The Bring Chicago Home referendum asks voters to give the city consent to do three things: approve a decrease in the real estate transfer tax to 0.6 percent for properties under $1 million, a rate increase to 2 percent for sales between $1 million and $1.5 million and a rate hike to 3 percent for property transfers above $1.5 million. The revenue raised will be used to fund services for the homeless, according to the City Council resolution that placed it on the ballot.

But real estate and other commercial groups sued to stop the question from appearing on the March 19 primary ballot and Cook County Circuit Court Judge Kathleen Burke sided with the plaintiffs nearly two weeks ago.

Plaintiffs included the Building Owners and Managers Association of Chicago (BOMA), Chicagoland Apartment Association, Neighborhood Building Owners Alliance (NBOA), Women Construction Owners and Executives’ Chicago chapter, Southland Black Chamber of Commerce Foundation, Chicagoland Association of Shopping Center Owners and the Chicago Home Builders’ Association.

The lawsuit argued that the ballot question was illegal because it constituted logrolling, was vague about how the new revenue would be spent and violated voters’ constitutional rights to weigh in on each proposed increase and decrease separately.

Burke did not give her reasoning in court or in her order for siding with plaintiffs, a fact the appeals court noted.

“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,” the decision states.

Related: Cook County judge sides with real estate groups to invalidate Bring Chicago Home referendum, ballot question now in limbo

The case could possibly be appealed to state Supreme Court, but it's unknown if the plaintiffs will pursue that. 

“We are disappointed in the outcome of this case, but felt it was important to challenge this misleading and manipulative referendum question,” BOMA Executive Director Farzin Parang said in a statement to The Daily Line. “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 defendant, the Chicago Board of Elections, and the city of Chicago — which had petitioned to intervene in the case but was denied by the lower court — were both treated as parties in the appeal case. The appeals court stated the circuit court “committed an abuse of discretion in denying the City’s petition” since it stated the city’s petition was timely and germane.

The appeals court agreed with the Board of Elections, which has argued from the beginning that the plaintiffs should have sued the city of Chicago instead, as the city has an opposing interest in the case and could properly defend the referendum.

“The Board lacks the authority to defend the integrity of the referendum,” a recent reply brief from the board stated. “The Election Code does not confer on the Board any authority to decide whether a City Council resolution initiating a referendum is lawful, nor whether the referendum language itself is lawful so that it can appear on the ballot.” 

In its own reply brief, the city stated: “While the Board raised procedural defects and argued that the circuit court lacked subject matter jurisdiction … it expressly declined to make any arguments on the merits of the claims that the referendum was unlawful, explaining that it had no authority to weigh in on those arguments.” 

The appeals court concluded that the city had “a clear and direct interest in defending the referendum” and should be treated as a party.

Last week, more than 100 organizations and individuals submitted two amicus briefs in support of defeating the lawsuit and counting the election results. 

Related: Community organizations, unions, elected officials file amicus briefs in support of Bring Chicago Home as appeal could be decided this week

The briefs argued against logrolling allegations by claiming that the implementation of a graduated tax rate was popular and constituted a single proposal — not three separate questions. They also argued that the plaintiffs sued out of fear they wouldn’t be successful in persuading voters to reject the referendum.

Earlier this week, the Illinois Policy Institute filed an amicus brief in support of the plaintiffs, as did a group including the Illinois Chamber of Commerce, Chicagoland Chamber of Commerce, Illinois Manufacturers Association, Illinois Hotel and Lodging Association, Southside Builders Association, Asian Real Estate Association of America Greater Chicago, Latino Real Estate Investors Council, Parking Industry Labor Management Committee and other similar groups. 

Both briefs focus largely on the potential negative economic consequences of the tax proposal if it were to be adopted despite the initial complaint arguing the referendum’s wording itself was improper.  

Both briefs also reiterated arguments about the vagueness of how revenue from Bring Chicago Home would be spent.

The Illinois Policy Institute, for instance, argued: “The ballot language contains no specific plan or roadmap to help the homeless, much less binding language to ensure the City spends the money raised responsibly.”

The Illinois Chamber of Commerce-led brief also argued that the three-pronged approach to the question and inclusion of the tax decrease represented a compromise after similar proposals that only included tax increases were rejected by the City Council.  

Therefore, their brief argued “the political utility of combining the tax decrease is self-evident: the City Council finally approved the referendum containing increases” after multiple failed attempts that only included increases.

The appeals court avoided wading into the merits of the transfer tax proposal.

“Nothing in this decision is intended to suggest that we have any opinion one way or the other on the merits of the referendum at issue,” the appellate court justices said. “That is a question wisely entrusted not to judges but to the people of the city of Chicago.”

Instead, the appeals court ruled that the plaintiffs’ complaint was “premature” since the referendum is merely advisory, and Bring Chicago Home would still need to be enacted by the City Council. 

“Courts are empowered to rule on the validity of legislative enactments only after they have been enacted,” the justices ruled. “Whether a bill or referendum actually passes and becomes law is purely speculative and the ‘issues upon which opinion of this court is sought may never progress beyond the realm of the hypothetical.’”