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>>> ALL RIGHT.

THE PLAN TO ENACT HIGHER TAXES ON SALES OF EXPENSIVE REAL ESTATE IS MOVING FORWARD.

THE MAYOR ANNOUNCED THE NEW PROPOSAL CALLED BRING CHICAGO HOME WHICH WOULD RAISE TAXES ON SALES ABOVE A MILLION AND AN ADDITIONAL HIKE ON THOSE ABOVE $1.5 MILLION.

IT WOULD SLASH TAX ON REAL ESTATE THAT SELLS BELOW A MILLION.

JOINING US IS THE EXECUTIVE DIRECTOR OF BUILDING OWNERS AND MANAGERS ASSOCIATION OF CHICAGO.

AND 35th WARD ALDERMAN, CARLOS ROSA, CHAIR OF THE ZONING COMMITTEE.

WELCOME BOTH OF YOU.

AELDERMAN ROSA, YOU HAD A MEETING THIS AFTERNOON.

IN REAL DOLLARS, WHAT DOES THIS MEAN FOR COMMERCIAL AND RESIDENTIAL REAL ESTATE?

>> THERE ARE OVER 60,000 CHICAGOENS EXPERIENCING HOMELESSNESS.

THIS INCREASE FOR PROPERTY OVER A MILLION AND THEN OVER $1.5 MILLION, IT IS GRADUATED AND MARGINAL.

IT WILL GENERATE OVER A $100 MILLION A YEAR IN ROW SOURCES FOR HOMELESSNESS WITH HOUSING AND WRAP AROUND SERVICES.

>> AND WHAT DOES THIS MEAN FOR SOME OF YOUR CLIENTS AS BUILDING OWNERS, COMMERCIAL AND RESIDENTIAL?

>> YES.

OUR ASSOCIATION IS GENERAL AND COMMERCIAL OFFICE BUILDING.

ONE THING PEOPLE DON'T REALIZE ABOUT THE INDUSTRY IS THAT THE PEOPLE THINK IF YOU SELL $100 MILLION OFFICE BUILDING YOU HAVE $100 MILLION AND WHAT ARE YOU COMPLAINING ABOUT?

THEY DON'T REALIZE THESE ARE INSTITUTIONAL ASSETS.

IT IS RARE FOR AN INDIVIDUAL TO HAVE THAT MONEY AND BUY A $100 MILLION OFFICE BUILDING.

YOU HAVE CHICAGOENS FINANCING 70% OF A DEAL.

THEY RECRUIT INVESTMENTS FROM INSTITUTIONAL PLAYERS.

MOST OF REAL ESTATE IS PENGS FUNDS, INSURANCE COMPANIES.

IT IS LARGE ENTITIES THAT CAN INVEST ANYWHERE IN THE WORLD AND WE CONVINCE THEM TO COME TO CHICAGO.

THAT TRANSFER TAX IS CALCULATED ON THE ENTIRE VALUE OF THE SALE.

THE FINANCING AND LENDING GOES BACK TO THE LENDER.

SO THE PAYERS OF THAT SAY IT IS $100 MILLION SALE IS ONLY THE $30 MILLION IN EQUITY.

IT IS A SIGNIFICANT MARGIN.

OUR CONCERN IS IT WILL AFFECT ECONOMIC ACTIVITY FOR INDUSTRY THAT IS AT AN EXISTENTIAL CHALLENGE, ONCE IN A 100 YEAR CRISIS.

>> YOU ARE TALKING ABOUT THE VACANCY IN THE CENTRAL BUSINESS DISTRICT.

>> SO ALT ALDERMAN ROSA, WHAT ABOUT THAT?

COULD THIS MOVE SOME OF THE PROPERTY TAX BURDEN TO HOME OWNERS?

>> NOT AT ALL.

THE ADMINISTRATION HAS BEEN VERY INTENTIONAL.

IT TOOK US MANY MONTHS, LOTS OF DIALOGUE WITH REAL ESTATE INDUSTRY EXPERTS, LOTS OF DIALOGUE WITH LOCAL AND NATIONAL EXPERTS TO LAND AT THIS PROPOSAL.

THIS IS A GRADUATED, MARGINAL PROPOSAL.

IT IS A PROGRESSIVE PROPOSAL.

IT WILL LOWER THE ONE TIME REAL ESTATE TRANSFER TAX ON 96% OF SALES IN THE CITY OF CHICAGO UNDER A MILLION.

FOR PROPERTIES BETWEEN 1 AND 1.5 MILLION, IT WILL GO SLIGHTLY UP A LITTLE BIT AND 1.5 MILLION AND MORE, IT WILL GO UP JUST A LITTLE MORE.

FOR THAT HIGHEST BRACKET, IT SELLS FOR OVER $1.5 MILLION, THERE ARE OTHER CITIES WHERE THEY ARE PAYING 3.75%.

IN PHILADELPHIA, IT IS 3.287%.

SO THERE ARE STATES THAT ARE COMPARABLE, CITIES THAT ARE COMPARABLE TO US THAT ARE PAYING A HIGHER RATE THAN THE ONE THAT WE ARE PROPOSING.

DEALS AREN'T BEING KILLED THERE.

WHAT WE ARE SEEING IS RECORD INVESTMENT IN CITIES ACROSS THE NATION.

YOU OR I, MIDDLE CLASS FOLKS ARE NEVER GOING TO BUY THESE $100 MILLION PROPERTIES.

WHO IS BUYING THESE ARE HEDGE FUNDS.

THEY ARE MAKING MORE MONEY THAN EVER BEFORE.

WHAT WE ARE LOOKING TO DO IS WE WANT TO ENSURE WE ARE INVESTING IN ADDRESSING THE CRISIS OF HOMELESSNESS IN THE COMMUNITY AND THIS IS A SMART WAY TO DO IT.

>> SO THE ARGUMENT IS THAT THE HEDGE FUNDS BUYING THIS CAN ABSORB THE ADDED COST, ROIT?

>> I DON'T KNOW WHAT MARKET HE IS TALKING ABOUT.

THE OFFICE MARKET, THERE ARE NO TRANSACTIONS.

WE HAD THE FIRST OFFICE BUILDING DOWNTOWN SOLD ALL YEAR AND IT SOLD AT A 60% LOSS.

WE ARE SEEING 40 % TO 80% DROP IN VALUE.

I DON'T KNOW WHAT THE CHAIRMAN IS REFERRING TO MAKING HAND OVER FIST.

THE OFFICE MARKET IN REAL ESTATE IS A COMPLETE CATASTROPHE.

THE ARGUMENT THAT WE TRY TO CLARIFY IS THESE ARE NOT HOUSES OR PEOPLE.

THIS IS ECONOMIC ACTIVITY.

IT SUPPORTS PEOPLE THROUGHOUT THE CITY.

OUR INDUSTRY RECRUITS INVESTMENTS AND THOSE ARE ALL UNION JOBS, ENGINEERS IN THE BUILDING, CUSTODIAL WORKERS, SECURITY FOLKS, METAL WORKING, THAT IS ALL UNION WORK.

IT SUPPORTS EVERYONE IN THE ENTIRE CITY.

WHEN YOU LOOK AT THE PROPERTY TAX BASE, A 40% TO 80% LAUTSZ IN VALUE IS A 9% INCREASE IN RESIDENTIAL PROPERTY TAX.

>> IT IS A SHIFT BECAUSE THERE IS ONE PROPERTY TAX LEVY AND THE TAX HAS TO GET THAT AMOUNT NO MATTER WHERE IT COMES FROM.

WE HEARD A STATEMENT FROM NEIGHBORHOOD BUILDING OWNERS ALLIANCE.

THEY SENT US A STATEMENT SAYING ANY OWNER THINKING OF SELLING IN THE NEXT FEW YEARS WILL NEED TO RAISE RENT TO COVER THE IMPACT OF TAX INCREASE, OFTEN BY $100 A MONTH.

THIS IS A GROUP THAT REPRESENTS NEIGHBORHOODS AND RESIDENTIAL.

WHAT ABOUT THAT ALDERMAN ROSA, COULD THIS LEAD TO HIGHER RATES?

>> THE PRIMARY LEADERSHIP IS THESE PEOPLE OWN HUNDREDS OF UNITS, THOUSANDS OF UNITS.

I HAVE SPOKEN WITH THEM MANY TIMES.

THEY TAKE AN EXTREME POSITION ON THESE ISSUES.

THEY TRY AND USE FEAR MONGERING TACTICS THAT HAVE NO BASIS IN REALITY.

YOU WANT TO TALK ABOUT WHAT IS HAPPENING NOW IN THE CITY OF CHICAGO, WE HAVE TO RECOGNIZE THAT OUR REAL ESTATE MARKET IS HOT AND LEADING THE NATION IN A LOT OF DIFFERENT METRICS.

YOU HAVE TO REALIZE WHEN IT COMES TO RETURN TO WORK, WE ARE LEADING THE NATION NOW.

A LOT OF DATA CAME OUT THAT WE ARE LEADING THE NATION IN PEOPLE COMING BACK TO THE CENTRAL BUSINESS DISTRICT, TO GO TO THEIR JOBS.

SO CHICAGO IS SEEING A LOT OF INVESTMENT.

OF COURSE, WE KNOW INTEREST RATES ARE HIGH RIGHT WE KNOW THAT IS COOLING DOWN THE MARKET.

BUT THAT WILL NOT BE FOREVER.

WHAT WE HAVE TO DO IS WE HAVE TO ADDRESS THE ADDRESS THE CRISIS OF HOMELESSNESS IN OUR COMMUNITY.

WE ARE CREATING A LOCAL SOURCE OF FUNDING TO CHIP AWAY AT THE ISSUE YEAR AFTER YEAR.

>> IT HAS BEEN ON THE TABLE FOR A WHILE .

WOE NEED TO CLARIFY FOR VIEWERS THAT IT LOOKS LIKE IT IS ON THE FAST TRACK TO PASS BUT IT BECOMES A REFERENDUM, AND GOES ON A BALLOT AND CHICAGO VOTERS WILL HAVE TO DECIDE.

SO IF IT DOES GET TO THE BALLOT, WILL THERE BE A PUBLIC CAMPAIGN TO SORT OF INFLUENCE VOTERS ONE WAY OR ANOTHER?

>> I WANT TO CORRECT TWO THINGS.

WE ARE NOT LEADING THE NATION ON RETURN TO OFFICE.

THAT IS BASED ON CAPITAL DATA AND SAYS WE ARE HIGHER THAN THE AVERAGE, DOESN'T COUNT THE COMPETITOR CITIES.

THAT IS CAPITAL CUSTOMERS IN THE AREA.

IT IS ABOUT 10% HIGHER THAN WHAT WE ARE SEEING DOWNTOWN.

THE PROBLEM WITH THIS PROPOSAL IS NOT -- EVERYONE IN OUR INDUSTRY AGREES.

HOMELESSNESS IS A MAJOR CRISIS IN THE CITY AND IT WAS BEFORE YOU HAD ALL OF THE ASYLUM SEEKERS, BEFORE YOU INTRODUCED THAT TO THE CRISIS.

THE PROPOSAL HAS NOT BEEN -- THERE IS A LOT OF WORK TO DO.

EVEN IF YOU LOOK AT ANY TAX, YOU WANT TO HAVE A VALUE PROPOSITION, WHAT ARE YOU GETTING FROM THE TAX?

THERE IS NO PROGRAM.

THERE IS NO METRIC OF WHAT WE ARE DOING OR WHERE THE MONEY IS GOING.

>> THAT'S NOT TRUE.

>> I READ THERE WAS 15% OF FEDERAL MONEY FOR HOMELESSNESS HAS BEEN SPENT.

THERE IS NO PROGRAM.

>> YOU ARE TALKING ABOUT IS THIS MONEY GOING TO BE SPENT WHERE IT IS INTENDED, I KNOW