Citadel pushes back after Ken Griffin's penthouse used to tout New York pied-à-terre tax

Ken Griffin's hedge fund empire is pushing back after New York City Mayor Zohran Mamdani used a video filmed in front of Griffin's $238 million Central Park South penthouse to champion a proposed tax on high-end second homes – and issued a veiled threat of Citadel walking away from a multibillion-dollar construction project in Midtown Manhattan.

Mamdani, a democratic socialist, posted the video on Tax Day, April 15 alongside New York Gov. Kathy Hochul, who had backed the mayor's proposal to impose an annual surtax on non-primary residences in New York City valued at more than $5 million.

The so-called pied-à-terre tax is projected to generate roughly $500 million annually and would help close the city's budget deficit. Officials have yet to offer up details on tax rates or timing.

In the video, Mamdani named Griffin directly, calling out the penthouse at 220 Central Park South – which Griffin purchased in 2019 in what was then the highest-priced home sale in US history. In a memo sent Thursday and reviewed by the Wall Street Journal and Reuters, Citadel chief operating officer Gerald Beeson responded sharply on behalf of both Citadel and Citadel Securities.

"It is shameful that he used Ken's name as the example of those who supposedly aren't carrying their fair share of the burdens associated with New York City's often costly and wasteful spending," Beeson wrote in the memo, as per reports.

"In doing so, the mayor has once again manifested the ignorance and disdain of the elite political class towards those who have been consistently committed to building one of the greatest cities in the world."

Read more: New York Mayor Mamdani presses tax hikes on wealthy as $12B budget hole looms

Beeson also noted that Citadel's principals and team members have paid nearly $2.3 billion in combined city and state taxes over the past five years, and that Griffin has personally directed $650 million in charitable gifts to New York City.

The memo then raised the stakes around a major development deal. Beeson wrote that Citadel is preparing to begin redeveloping 350 Park Avenue, a project he said would generate 6,000 construction jobs and support more than 15,000 permanent positions in Midtown – contingent on whether the firm proceeds.

"The project – if we move forward – will entail more than $6 billion dollars of spending," he wrote.

Griffin relocated Citadel's headquarters from Chicago to Miami in 2022, which is now his primary residence. The firm maintains roughly 2,500 employees in New York.

Billionaire investor Bill Ackman, who expressed public solidarity with Griffin after the video was posted, argued on social media that non-resident apartment owners who leave their units vacant are not a drain on city services and help drive economic activity through retail, dining, and cultural spending – and added that Citadel's presence in New York underpins a significant portion of the city's tax base.

The proposed pied-à-terre tax still requires approval from the state legislature and faces opposition from the real estate industry. Similar measures have been floated and defeated before, most recently in 2019.

Even if the tax clears Albany, its implementation would face considerable legal and administrative hurdles. Because New York's property tax system historically undervalues co-ops and condos relative to market prices, city officials would need to establish a new valuation framework for high-end second homes.

Griffin's penthouse, for instance, is currently assessed at $6.99 million by the city and listed at a market value of $15.5 million – far below its $238 million purchase price – meaning it would not qualify for the tax under existing assessed values.

Jonathan Miller, chief executive of appraisal and research firm Miller Samuel, said the tax would trigger complex new demands on appraisers and attorneys.

"The administrative costs haven't been thought through," he told CNBC, adding that the measure "could give birth to a whole new cottage industry." Miller estimated that about 70% of Manhattan properties that sold for $5 million or more over the past five years are non-primary residences, based on a review of roughly 4,100 transactions.

Owners seeking to minimize their tax exposure could also apply pressure on appraisers to value apartments just below applicable thresholds.

"You could wind up having these big clusters of valuations around each tax bracket," Miller said.