While absurdly pricey real estate deals are nothing new in New York City, the sale of a $238 million penthouse at 220 Central Park South—a figure that eclipsed the last record-breaking condo sale by a full $138 million—has, understandably, triggered a more heated response.
Hedge funder Ken Griffin, who owns pricey properties in several other cities, snagged the most expensive apartment in not just New York City, but the entire country—but he reportedly doesn’t even plan to use the home as his primary residence. A rep for Citadel, the firm Griffin founded, told the Wall Street Journal that he plans to use it as a place to stay “when he’s in town” (his primary residence is Illinois, where he recently paid $58.75 million for Chicago’s priciest home ever sold). They later clarified to the New York Times that Griffin will spend “considerable time” there, but whether it will become his primary residence is unclear.
As Gothamist reports, that revelation has prompted several elected officials to renew calls for the pied-à-terre tax, a version of which has been around for several years.
A small surcharge on second homes valued at $5M or more would generate an estimated $500M per year--funds that could be used to create more desperately needed affordable housing in NYC. https://t.co/IC8xmfdJ84— Mark D. Levine (@MarkLevineNYC) January 25, 2019
Enough.— NYC Council Speaker Corey Johnson (@NYCSpeakerCoJo) January 25, 2019
It’s time for a pied-a-terre tax. We should tax luxury non-primary residences, like this one likely will be.
Are you with me? https://t.co/fGxG88j6k5
It’s ridiculous that this kind of astronomical wealth can exist in our city and never reach the people that actually live here.— Senator Brad Hoylman (@bradhoylman) January 30, 2019
I first proposed a pied-à-terre tax in 2014 because it’s smart policy. Let’s keep it on the table. https://t.co/8VQL5oxwko
Hoylman first proposed such a tax in the state legislature in 2014, after a report from the Fiscal Policy Institute noted that a graduated tax of up to four percent on pieds-à-terre costing $5 million or more could generate at least $665 million in revenue for the city each year. Buyers of these pricey pads typically do not pay local taxes, which would go toward funding schools and other city necessities; they also pay significantly less in property taxes, thanks to New York’s byzantine property tax rules.
City Council member Mark Levine says Hoylman’s bill may be getting “new momentum” after news of the Griffin sale became public. “I see this as a critical policy move to have more equitable sharing of the burden,” he tells Curbed.
Levine also sees this as a neighborhood problem. “The absentee ownership problem saps life from buildings and neighborhoods,” he explains. “You see it in these luxury towers where most of the lights are off at night.… The symbolism of that at a time when there’s a desperate shortage of housing and a desperate shortage of money for all sorts of priorities, including affordable housing, is pretty stark.”
Any tax on pieds-à-terre would have to pass at the state level, and would likely face headwinds from the powerful real estate industry; insiders previously slammed the idea as bad for the market and for New York City more generally. But Levine says there have been “informal conversations” among Council members regarding a resolution in support of such legislation, were it to be revived.
“Every once in a while there’s press about a very expensive home sold in New York City, but this was just at another level,” he says. “I think it really broke through in the public in a way no previous other sale had.”