A realtors’ representative called Evanston’s proposed Real Estate Transfer Tax referendum “irresponsible” during a forum Sunday at Evanston Township High School.
Joe Roth of the North Shore Barrington Association of Realtors stressed that for owners of properties valued at $5 million or more the transfer tax would increase 80 percent if the referendum is approved.
But City Treasurer Hitesh Desai said the referendum would have no impact on 97 percent of property transfers — because the tax rate would stay the same on properties valued at less than $1.5 million.
The referendum would raise the tax on properties valued between $1.5 million and $5 million to $7 per thousand and increase the rate to $9 per thousand for properties valued at more than $5 million.
Desai said that if the proposed tax rates had been in effect last year the city would have gained an additional $800,000 in transfer tax revenue.
Roth also argued that transfer tax receipts have varied by as much as 40 percent in recent years and “the city can’t budget for this type of variation.”
The city has had to adjust its budget in some years when RETT revenues came in short of expectations, but it has also provided a cushion in other years when collections were higher than projected.
He also suggested that the tax hike could discourage new development in Evanston and might raise rents for tenants in buildings subject to the higher tax rate.
Paula Worthington, a senior lecturer in the public policy school at the University of Chicago, said about 35 states have real estate transfer taxes and said Evanston’s current transfer tax rate is “in the middle of the pack” in terms of the range of municipal transfer tax rates in Illinois.
She noted that a similar graduated transfer tax proposal is on the ballot next month in Oakland, California. She said relatively few communities have a graduated transfer tax so there’s not a lot of research on what impact it has on property sales.