Transfer tax hike for affordable housing clears first hurdle

The City Council Rules Committee tonight moved toward asking voters this fall to increase the real estate transfer tax to fund affordable housing in Evanston.

The committee told the city’s legal staff to draft a resolution that would ask voters to raise the tax by $1 – from $5 to $6 per $1,000 of a property’s sale price.

The measure needs the approval of the full council after a public hearing to actually be put before the voters.

Alderman Ann Rainey, 8th Ward, said, “This will be a referendum on the community’s position on affordable housing. It speaks a lot to the community’s desire for it, and in the long run will generate significant funds for it.”

Depending on the value of property sales in a given year, she said the increase could generate $500,000 or more a year. If it had been in effect last year, it would have raised about $800,000.

Ald. Rainey, who first suggested the referendum, said proposals the council is now considering, such as requiring developers to include affordable units in condominium conversion projects, “will put an absolute stop to any new development in my ward.”

“I’m looking for a way to see if the community supports affordable housing,” she said. “This makes a lot more sense than fining developers.”

She said one developer in her ward plans a new 33-unit condominium development to replace 18 dilapidated apartments. “These people are going to be charged $3,000 per unit for the teardown tax, and then we want to hit them with an affordable housing tax when they build new ones.”

“We ought to pay these people to tear the old buildings down,” she added, “because of the cost of police calls there alone.”

“All the big projects are in, Ald. Rainey said, “They’re not going to get hit by this.”

A survey of nearly 100 metro area communities by First American Title Insurance Company, shows only six have transfer taxes higher than Evanston’s current $5 level. The highest were $10 per $1,000 in Berwyn, Cicero and Harwood Heights, followed by an $8 rate in Calumet City and Oak Park.

Fifteen other communities in addition to Evanston are at the $5 level. The rest either have a lower rate, or impose no transfer tax at all.