Evanston aldermen  will ask voters in November to adopt the first graduated real estate transfer tax in the state.

The proposal, from Alderman Ann Rainey, 8th Ward, was initially rejected by aldermen Monday night, but then adopted on a reconsideration vote after Rainey told her colleagues, “You had a chance to do something that wasn’t regressive, and you blew it.”

City staff had recommended increasing the existing flat-rate transfer tax from $5 to $7 per $1,000 of a property’s sale price — a 40 percent increase.

Rainey instead proposed keeping the tax the same for properties priced at less than $1.5 million, raising the tax to $7 per $1,000 for properties selling for between $1.5 million and $5 million, and increasing it to $9 per $1,000 for properties selling for more than $5 million.

Rainey said her plan would generate about a half million more in annual revenue for the city than the plan staff had recommended, adding that she didn’t want the majority of residential taxpayers to have to pay more than they do now.

Alderman Robin Rue Simmons, 5th Ward, said there’s no space for an increase in taxes for the average Evanston resident, that families and seniors are losing their homes and living in unacceptable conditions because of the city’s existing tax rates.

Rainey’s plan initially only drew support from Rue Simmons and Alderman Peter Braithwaite, 2nd Ward.

But after Alderman Cicely Fleming, 9th Ward, moved to reconsider the vote, it carried 5-3, with Aldermen Judy Fiske, 1st Ward; Melissa Wynne, 3rd Ward, and Eleanor Revelle, 7th Ward, voting against it.

Those lakefront wards have some of the city’s priciest homes whose owners likely would be hit by the progressive tax proposal.

Related stories

Could Evanston cut the property transfer tax for most? (7/22/18)

City staff calls for 40 percent hike in transfer tax (7/20/18)

Aldermen to discuss ‘progressive’ tax on property sales (7/5/18)

Bill Smith is the editor and publisher of Evanston Now.

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1 Comment

  1. Impact on high end property values, revenue
    Here’s a possible scenario: if the tax hike gets approved, that may have a negative impact on the value of expensive properties. Which they decreases the average sale price during the triennial review, thereby reducing the assessed values for properties closer to the lake, and thereby requiring Evanston to raise it’s tax rate on all properties if it wants to stay revenue neutral. So, the plan to “tax the rich” backfires and the burden to make up the shortfall falls on everybody. Not saying the shove scenario will definitely occur, but it’s certainly plausible and I don’t think the alderman (and most voters) consider the unintended consequences.

    Furthermore, it’s not like those selling expensive homes are paying they same as cheaper homes. They have to pay a rate per every $1k of value and thus pay significantly more. Also, will these thresholds be tied to inflation or is it conceivable they’d be the same 20+ years from now? I assume they will not be.

    As somebody who lives in a home that is a small fraction of the first threshold and won’t be affected personally by the increase (with the caveat states above), I still will not support the measure of obscene taxes on some Evanstonians. I don’t understand why Evanston is so determined to discourage wealthy people to live here. They already provide huge sources of revenue through the very high propoerty taxes. I support policies that benefit all types of Evanston residents and make Evanston an appealing and attractive place to live. And I don’t believe this policy does that and thus will be voting against the increase.

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