Arguing that beleaguered Chicago homeowners are “not an ATM machine,” Mayor Rahm Emanuel on Wednesday shot down efforts to raise Chicago’s real estate transfer tax on high-end homes and property in the city — either to reduce homelessness or replace lead-service lines carrying water from the street to homes.
With aldermen from across the city eyeing the transaction tax as a catch-all solution to an array of problems, including paying police and fire pensions, Emanuel did his best to stop all of them from jumping on the bandwagon.
Emanuel noted that his pediatrician father led the crusade against lead paint and it’s an issue he takes seriously.
“Since I was 4 or 5 years old, this issue has been in my home,” the mayor said.
But Emanuel has also pushed through a $2 billion avalanche of tax increases — including multiple property tax increases and a 29.5 percent fee on water and sewer bills — just to begin to solve the city’s pension crisis.
That makes him determined to steer clear of the real estate transaction tax for fear that it will deprive homeowners of equity.
“I don’t think you should treat the homeowners as an ATM machine. … The homeowner should be the last person we should go to for a fee before we try everything else,” the mayor said.
“Separate the issue of water. Separate the issue of homelessness. I agree with those aspirations. I disagree with the methods because I don’t think the first line of defense should be the homeowner’s pocket. I think that’s a mistake. I think it will actually impact other things economically that affect the well being of the city.”
What Emanuel failed to mention is the fact that the proposal to double the transaction tax to fight homelessness would only impact homes or commercial properties sold for $1 million or more. And that the plan to replace lead service lines would only impact homes sold for $750,000 or more.
No city in America has more lead-service lines than Chicago. They carry water to 360,000 Chicago homes. Replacing them would cost each of those homeowners anywhere from $4,000-to-$7,000.
That’s a cost aldermen want the city to share, provided voters approve a referendum on the issue, by imposing a 1 percent tax on the sale of homes valued at more than $750,000.
On Wednesday, Emanuel was asked whether he believes lead-service lines need to be replaced. He ignored the question.
The mayor would only say, “Chicago’s water is safe” and “meets and exceeds federal EPA standards.”
He added, “I know you would like to play the game of what tax? What fee? My view? The homeowner is last, not first.”
Ald. Gilbert Villegas (36th), chairman of the City Council’s Hispanic Caucus, is leading the charge to use the transaction tax to replace lead-service lines.
He introduced that ordinance weeks before homeless advocates proposed their rival plan to more than double the tax on the sale of real estate worth $1 million or more. Ald. Matt O’Shea (19th) also got in on the act Wednesday, with a proposal and companion referendum to hike the transaction tax by 27 percent for police and fire pensions.
Although Emanuel’s power to dictate policy has been weakened considerably by his lame-duck status, Villegas acknowledged that the mayor still has a lot to say.
But that doesn’t mean he’s backing down. Far from it.
“My question is, what’s the mayor’s idea to eradicate this? ” Villegas said.
“I came up with one. And if it gets shot down, it gets shot down. But the reality is, we can’t wish it away. We have to address this issue.”
Although three rival interests are now competing to raise the transaction tax, Villegas made the argument that removing lead from Chicago’s water is the most pressing concern.
“The homeless already receive $80 million from HUD, the state and the city. Pensions already have funds going to that. You have lead with zero. Let’s find a solution. … Not to do anything is irresponsible,” he said.