00:00Let's put this piano chair tax in context. As I read in the intro here, you're saying that this
00:05could really have ripple effects when it comes to New York City's economy. Just walk us through
00:10what you're seeing. Well, first of all, we're seeing buyers hold off on buying because they're
00:15not sure what's going to happen. There's enormous uncertainty around what this tax will mean.
00:20And no one is talking about what people may do. These purchasers have options. They don't have to
00:26buy. They can rent these big, beautiful apartments. They can stay in hotels. They can do so many
00:31different things. Human behavior will change. As Charlie Munger always spoke about incentive,
00:37people work based off of incentive. And if people feel de-incentivized to buy in New York,
00:43they're not going to purchase here. And New York City, the property taxes are the biggest source
00:48of revenue for New York City's budget. So it could be sort of similar to what AOC did with Amazon,
00:55is what Mayor Mamdani is doing with this, you know, what he did with Ken Griffin, I think.
01:00And you don't want to make people feel like they're not happy to be here or they're not a part
01:05of the city. You want to include them. Well, it's really interesting, your comments on renting,
01:11that, you know, maybe buyers would be more likely to rent out their place. Maybe the people who would
01:16have been buying these second homes in the city would be more likely to rent to sort of get around
01:21that. Are you seeing any of that behavior yet? Or is this too soon? I think it's too soon to
01:26see
01:27a change in that kind of behavior. But what we are seeing is that people who've been out there in
01:31the
01:32market are holding off right now. I've spoken to developers who are saying, you know, we had deals
01:37potentially, but they're saying, look, I'm going to wait right now. I don't know what I want. I'm
01:40going to do. I want to see what happens with this potential tax. Because a tax like this and what
01:45they're talking about could be egregious. And someone, you know, second homebuyer is not going
01:50to just pay that every year. And I think you're going to see, for example, the mansion tax and
01:55the transfer tax brings in about $1.3 billion a year to the city. So what's going to happen to
02:01that number of people aren't buying here? That's going to go down. So that needs to be factored into
02:05it. It's not rich versus poor. We want the city to thrive. You know, people won't build,
02:11you know, contractors are going to get hurt. Union laborers are going to get hurt. Restaurants,
02:15cultural institutions. It's like the whole package that no one's talking about.
02:20Well, as far as talking about it, though, I mean, we don't even really have a formal plan yet. I
02:24mean,
02:24is there active lobbying? I mean, at some point, this has to go through the city council. You've
02:28got to get pen to paper. I would assume there's a lot of runway here to negotiate. I don't know
02:32exactly what Mom Donnie's starting point is, but to negotiate down from that, right?
02:36Yeah. I mean, there are discussions about it. We have heard that this is going to happen.
02:40If you remember 2019, this was also proposed. They were trying to pass something like this.
02:46And because it's hard to sort of implement it and identify who these people are because the system
02:51is so complicated, they decided to drop it. And we're trying to explain to them that this is not
02:57going to be an easy tax to implement. Think about co-ops. That's one tax lot. How are you going
03:02to
03:02implement that with co-ops? So there's a lot of complications that I think people need to think
03:07about. Well, on that front, what about also the condo tax? There's been a lot of discussion about
03:11sort of the inequities and how condominiums have been taxed in the city. The idea that you can have
03:16somebody with, say, a six-figure condominium basically being taxed higher than somebody with
03:22a multimillion-dollar condominium. Would sort of right-sizing that maybe address the issue rather
03:27than just proposing a completely new tax altogether? We need complete property tax reform because our
03:33market is based off of assessed value. And so it's not market value. So if they're going to market
03:39value the five million and above, who's going to assess those numbers? How are they deriving that
03:44market value? It's just, it's super complicated. It's not just you sign it and it's going to go
03:48into effect and they're going to collect all this money. It's not going to happen. It's just a feel-good
03:53tax. It feels like, oh, we're getting the rich. But will you get the rich or are they just going
03:58to
03:58keep going to Palm Beach? You know, I mean, that's what's going to happen. Yeah. Well, that's what I'm
04:03curious to get your perspective on because, I mean, New York has the benefit of being New York City. In
04:08many ways, it feels like the center of the universe. But are you seeing more of a migration or talk
04:14of
04:14more of a migration to, you know, New Jersey, perhaps Hoboken or Jersey City or Connecticut?
04:21Yeah. I mean, that's been happening since the pandemic. People, there's been an out-migration.
04:26And will there be, I mean, look, Ken Griffin said, you know, and Mark Rowan from Apollo also
04:31talked about maybe, you know, we're going to open, you know, maybe the South, maybe we'll build more
04:35in Florida. So we want people who are successful to stay in New York. It's helpful to the city.
04:41And I think people who feel like they're not wanted here aren't going to stay here and not
04:45going to invest here. We want to, it's an inclusive city. We're the melting pot, rich, poor, the middle.
04:51We want to keep everybody here. It's what makes New York, New York, right?
04:55So do you think, I mean, do you think this tax will actually see the light of day? I mean,
04:59it's still, in theory, a theory.
05:01There, there, you know, Romaine, I wish it was go away proof and they'd come up with some other
05:07ideas. But I do think they're going to implement this because they have to do something. And it's
05:13only going to get, say, 10% of what the deficit is. I think they're saying 500 million. But our,
05:18you know, studies show that it would be a lot less than that. We're thinking somewhere around 300
05:22million. So it's like such a little trickle and what they need to get, but it makes people feel
05:27good because they're striking out at rich people.
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