A file photo of voting booths.

A coalition of real estate industry groups and other commercial groups filed a lawsuit Friday morning against the Chicago Board of Election Commissioners alleging the city’s Bring Chicago Home ballot question is legally invalid in a few ways.

The lawsuit, filed in the Circuit Court of Cook County, primarily alleges that the city has no authority to bundle a real estate transfer tax increase on high-end sales with a tax decrease on less expensive sales and that the ballot question is unconstitutional because it is not specific enough about how the revenue raised will be used. 

The plaintiffs include 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 other groups. 

The plaintiffs are asking the court to prevent the question from appearing on the ballot this spring. Mayor Brandon Johnson's office responded to the lawsuit in a statement late Friday afternoon, calling it meritless.

"The City of Chicago is not a party to this lawsuit. From the City's perspective, Bring Chicago Home will be on the ballot in March 2024, and Mayor Johnson believes it would create even more much-needed resources to address homelessness in our city and provide support for tens of thousands of our unhoused neighbors," the mayor's office said in a statement.

In March, Chicago voters will have the opportunity to vote on the Bring Chicago Home referendum question. If passed, the real estate transfer tax on property sales over $1 million would rise and the tax on property sales lower than $1 million would decrease. Revenue raised from the increased tax would be used to address homelessness in the city.

According to the lawsuit, the Bring Chicago Home referendum question violates a provision of state law that prohibits logrolling, or the practice of bundling favorable and unfavorable legislation together so that the favorable piece will allow the unfavorable piece to pass. 

"There's clearly only one reason why the drafters of this legislation, which is now the referendum, calls for the 20 percent reduction for transactions under a million, and that is only to sweeten the pot and make the rest of the two tax increases more palatable," NBOA President Mike Glasser told The Daily Line.

The ballot question bundles three changes into one measure for voters to decide on. The question asks voters to OK a decrease of the real estate transfer tax to 0.6 percent for properties under $1 million, a rate hike 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. 

State law requires a referendum if a home rule municipality such as Chicago would like to impose or increase a real estate transfer tax. Lowering that tax does not require a referendum, state law dictates. 

“By requiring a home rule municipality to obtain voter approval to either (1) impose a new real estate transfer tax; or (2) increase an existing transfer tax, but permitting any other amendment (such as lowering the tax rate) ‘without approval by referendum,’ [state law] prevents the practice of legislative logrolling,” the lawsuit reads.

The lawsuit alleges the Bring Chicago Home question is an example of logrolling because: “Just four months after two separate Resolutions … proposing to only increase the transfer tax failed to pass, the proposed increase was combined with the proposed decrease in order to ensure sufficient support to pass the City Council.”

Related: City Council approves referendum question on raising real estate transfer tax, delays vote on expanded paid leave

BOMA Chicago Executive Director Farzin Parang told The Daily Line in an interview that lowering the transfer tax on sales below $1 million was puzzling because it would reduce revenue for the city's operating budget, revenue that would not be replaced by the revenue from the increased taxes on high-end sales.

"It is not a progressive tax decrease," Parang said. "We don't understand any public policy rationale for including that other than it being a manipulation of voters."

The lawsuit alleges the referendum question violates the Illinois Constitution because it violates voters’ right to vote on each of the portions of the question separately. Additionally, the lawsuit alleges that the question violates the state constitution because it is not “self-executing,” meaning that the question does not direct on its own the revenue that would be raised to any specific place and would require additional action. 

The resolution (R2023-0004166) that approved the placement of the Bring Chicago Home question on the ballot states that the revenue “is to be used for the purpose of addressing homelessness, including providing permanent affordable housing and the services necessary to obtain and maintain permanent housing in the City of Chicago.”  

The ballot question “provides that the revenue generated will be used for ‘the purpose of addressing homelessness’ without any further explanation to the voters as to what will, and will not, be done with the funds raised, and who will make those decisions,” the lawsuit alleges. 

“Homelessness is a critical issue in our city that should be addressed with a serious plan involving all stakeholders. These important public policy questions should be presented to voters with fairness, detail, and transparency,” Parang said in a news release. “Instead, this referendum is playing politics.” 

Max Bever, public information director for the Chicago Board of Election Commissioners, told The Daily Line that the board was not the appropriate defendant for such a lawsuit.

“The Chicago Board of Election Commissioners is an independent agency appointed by the Circuit Court of Cook County – it is not a Department of the City of Chicago. The Board has nothing to do with initiating this referendum question and it has no stake in the outcome of the referendum or litigation,” Bever said in a statement. “The City of Chicago and the City Council would be proper defendants.”

Parang said that though the board has no stake in the outcome of the referendum, it is still the board's responsibility to ensure an invalid question does not make it on to ballots.

Doug Schenkelberg, the executive director of the Chicago Coalition for the Homeless, one of the member groups in the Bring Chicago Home coalition, said while the coalition was still familiarizing itself with all the details of the lawsuit, it believed in the question’s constitutionality and in its “full integrity.”

“This lawsuit is a political maneuver, orchestrated to protect the interests of greedy landlords and multi-national real estate corporations at the expense of Black, Brown, working class, and homeless Chicagoans,” Schenkelberg said in a statement to The Daily Line. “This legal challenge is a last-ditch, desperate attempt to deprive Chicago voters of their right to have their voices be heard.”