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At a public hearing on Aug. 13, aldermen approved a resolution to place a question on the Nov. 6 ballot asking Evanston residents to approve increases in the real estate transfer tax. The vote was 6-2, with Aldermen Judy Fiske, 1st Ward, and Tom Suffredin, 6th Ward, casting the “no” votes. Alderman Don Wilson, 4th Ward, was absent.
The proposed increases in the real estate transfer tax affect only properties selling for more than $1.5 million. The current rate, $5 for every $1,000 of value, or fraction thereof, would apply to sales prices up to the $1.5 million amount.
The referendum question provides that the rate would increase “to $7 for every $1,000 of value, or fraction thereof, per transaction from $1,500,000.01 to $5,000,000” and “to $9 for every $1,000 of value, or fraction thereof, per transaction from $5,000,000.01 or more.”
Council members have been looking for new revenue streams to help address the looming 2019 budget crisis and to help pay for the new Robert Crown Center. The City will issue $25 million in general obligation bonds this year for Crown expenses and a similar amount next year. The annual debt service is $70,000 for every $1 million of bonds.
Some of the 12 speakers at the hearing opposed the increase in the transfer tax; others requested an amendment to the referendum question.
Rich Faddis of Reclaim Evanston said, “Reclaim Evanston supports the real estate transfer tax increase because of the City’s plan for affordable housing.” The referendum question should be amended, said Mr. Faddis and several other speakers from Reclaim Evanston, to allocate the funds from the increase to affordable housing.
Bonnie Wilson, a real estate agent in Evanston, said approving the referendum would “ensure that Evanston has the highest real-estate-transfer-tax rate on the North Shore and the fifth-highest in Illinois. This is not free money, and it is not the answer.”
Neither Ald. Fiske nor Ald. Suffredin gave reasons on Aug. 13 for their votes, but neither had supported it in prior discussions. By email, the RoundTable asked their reasons.
Ald. Fiske wrote, “I don’t want to increase the transfer tax for individual homeowners on their primary residence for reasons I stated previously [concern that homeowners who downsize will pay the steep tax]. … Regarding commercial property, I am concerned that the higher tax rate may be a disincentive for developers to build the kind of appropriately sized development I have been trying, with some success, to bring to the downtown. Greater height and density is what we get when the price of a transaction is increased.”
Ald. Suffredin wrote, “I just don’t like it and think we should show that we’re willing to make cuts before we even consider it. I’ve voted against the increase in the transfer tax all along. … I’m against raising taxes where we’re already high for the area. … Transfer taxes are an equity swipe at the end of a transaction. … They punish someone who, for example, buys a $900k house, pays taxes every year, renovates/adds on, paying all the permit fees for that, lives in the house for 20 years (again paying crazy Evanston taxes every year) and gets dinged when it’s time to sell because we can’t get it together. It seems an unfair and poor policy.”
Picking up on the request from Reclaim Evanston, Aldermen Ann Rainey, 8th Ward, and Cicely Fleming, 9th Ward, said they would like to amend the referendum to allocate some of the funds to affordable housing. City Attorney Michelle Masoncup said Council members were required to vote on the question as it had been published in the notice for the public hearing. The resolution states the money will go to the General Fund, the City’s main operating fund.
Council could amend the question at a later date to specify the allocation of the funds, Ms. Masoncup said.
The deadline to file the resolution with the County is Aug. 30.