By Vincent BradshawThe Daily Northwestern

Evanston voters will decide Nov. 7 if they want to add to the city’s Affordable Housing Fund by increasing the tax for selling property by 20 percent.

The referendum comes about two weeks after the City Council passed an ordinance requiring certain developers to pay a fee that will be used to make city housing more affordable.

Under the Inclusionary Housing Ordinance, developers who plan to build 25 housing units or more will pay $40,000 multiplied by 10 percent of the total number of units. The money will go to the housing fund, in addition to money that may be collected from the real estate transfer tax.

The referendum proposes to increase the transfer tax from $5 to $6 for every $1,000 of the sale price of all property. The additional dollar from every sale would go into a special fund for affordable housing. Money from the current transfer tax goes into the city’s general fund, which helps pay for many city services.

Only the seller of the property pays the transfer tax, and it is applied only when the property is sold. A homeowner who sells his $400,000 home would pay $400 more than he would pay under the current tax.

Dan Schermerhorn, president of Schermerhorn and Co., an Evanston real estate company, said the increase is unnecessary.

The council should collect money for affordable housing from current real estate tax, he said.

“You can only go into the pocket of the homeowner in so many ways,” Schermerhorn said. “They don’t need to take from the owner again, because the owner will have to take that much less from the final sale.”

Steve Carlson, an Evanston resident, said he received mailings about the referendum. Carlson said he supported the referendum because it would keep economic diversity in the city.

“We need to do everything we can to keep affordable housing,” he said. “A lot of people moved here for the socioeconomic diversity of the city, and now all our new developments will push poor people out.”

The change would come at a time when the previously-booming housing market is slowing down, according to the Federal Reserve, resulting in a growing number of unsold homes. Homeowners nationwide have slashed sale prices.

The council OK’d the referendum in August, after developers were concerned that the inclusionary housing proposal would tax only developers, not the whole community. Ald. Ann Rainey (8th) proposed the referendum to spread the responsibility of affordable housing.

Aldermen do not know exactly how the money from the ordinance or tax will be distributed. The money likely will be used for down payments and construction, Ald. Edmund Moran (6th) said. The construction, he said, could take place anywhere in Evanston.

He also said the money could help rehabilitate older buildings for affordable housing or to create educational programs about the market.

But the ordinance could change drastically in the next few weeks. Ald. Anjana Hansen (9th) said she plans to re-introduce language that was removed from the final draft.

Hansen said she wants to require developers to include affordable units in their housing stock. As it stands, the Inclusionary Housing Ordinance does not group together people of different economic backgrounds under one roof. Developers will pay a fee, but none of the affordable housing will be on-site, which was a part of all proposals until Monday’s meeting.

During the meeting, Hansen said she was against the removal but still voted to pass the ordinance.

“By voting on the ordinance, I felt I could talk to Ald. Jean-Baptiste (who proposed much of the final ordinance) afterward to put back in some of that language,” she said. “Even if the language won’t be put back in there, we have an ordinance.”

Resident Sue Carlson, who works with Evanston’s Affordable Housing Future, a group that supports inclusionary housing, said she was disappointed that the final ordinance does not create economic diversity within the building. The council’s process left her with more questions than answers, Sue Carlson said.

The key to making the ordinance and the referendum work is how the city will use the money, Carlson said.

“What happens when those people sell their homes?” she asked. “There’s an inherent unfairness in giving families that money without an obligation to return that money when the house is sold.”

The council has 90 days before the ordinance is finalized. In that time, the city’s legal staff will look into how the money will be used and will make a final recommendation.

Reach Vincent Bradshaw at [email protected].