Cuomo Signals Support For Pied-à-Terre Tax, Pushing Bill Closer To Reality

View from Hudson Yards of Billionaires' Row.

A plan to pass the pied-à-terre tax, which would assess a fee on part-time luxury homeowners in New York City, is closer to becoming a reality after Governor Andrew Cuomo expressed his support for the measure as a way to fund much-needed subway improvements.

During a press conference on Monday, Cuomo referred to the pied-à-terre tax as “the only agreed-to new money” in the state budget. He went on to say that all of the money raised from the tax would go to the MTA.

Cuomo’s budget director Robert Mujica issued a statement last week saying the pied-à-terre tax could raise as much as $9 billion by using the revenue stream to back the sale of bonds. Revenue estimates for the pied-à-terre tax have ranged from well below $380 million by the city’s Independent Budget Office to $650 million a year by City Comptroller Scott Stringer.

The bill calls for a graduated tax starting at 0.5 percent on non-primary residences valued at more than $5 million and increasing to as much as 4 percent on those worth more than $25 million. Originally proposed by State Senator Brad Hoylman in 2014, the proposal saw renewed support among City Council members following a record-breaking $238 million purchase of a Manhattan penthouse by billionaire hedge fund owner Ken Griffin.

According to the the New York City Housing and Vacancy Survey, about 31 percent of the city's housing stock is reserved for "occasional, seasonal or recreational use." The number of such part-time dwellings in 2017 was 75,000, up from 55,000 in 2014.

Last Friday, New York Assembly Speaker Carl Heastie, speaking at a breakfast forum organized by Crain’s New York magazine, said he plans to propose the tax in a budget resolution that fellow Democrats are preparing this month, according to Bloomberg.

"You have people coming in buying $200 million apartments and there’s no mortgage-recording tax because they’re pretty much paying cash, and we still have to provide services. So we’re asking people to contribute a little more,” Heastie said during the event.

The Real Estate Board of New York has over the years been steadfastly opposed to the pied-à-terre tax, arguing that the would suppress sales and lead to lower tax revenues. Similarly, Kathryn Wylde, president of the Partnership for New York City, told the New York Times on Monday, "A broad-based tax like the sales tax or the gas tax would be better received in the business community."

But policy experts have generally rejected those claims, saying that the additional tax would not be enough to discourage wealthy home buyers from investing in New York City real estate.

After nearly two decades of growth beginning with the construction of the Time Warner Center, the tide appears to be turning against the city's luxury boom, evidenced by pushback against supertalls to the public outcry over Griffin's purchase at the uber-exclusive 220 Central Park South.

In addition, a host of costly problems in New York City have galvanized elected officials around the tax. On Monday, Hoylman tweeted all the agencies and services that could stand to benefit from what he has termed the "oligarch tax."