Real estate fund manager CIM Group has to pay New York City more than $4 million, thanks to an eyeing from the government.
CIM’s 49 East 34th Street building, which had been operating as a hotel in Midtown Manhattan, illegally collected a tax break worth $4.4 million since its opening in 2007, according to a report from Curbed NY.
The building initially began as a condo project, and was therefore eligible for a 421-a property tax exemption, but was later sold to CIM group and used for short-term rentals. The building will close March 11th, and CIM group will be responsible for paying back the city both the $4.4 million in tax breaks it received, as well as $275,000 to cover the cost of the investigation, Curbed notes. CIM also has to convert it into rent-regulated apartments.
The 421-a break has been a source of controversy among New Yorkers because, first introduced in the 1970s, it was intended to give tax breaks to developers building multifamily housing in the city. Critics see the abatement as a giveaway to the wealthy.
Mayor Bill de Blasio — who says he is making housing a central theme for his administration this year — hasn’t taken a stand regarding the tax program.
The Observer reports that supporters says the abatement is a catalyst for securing developers who will build affordable housing, while critics note that One57, a luxury apartment building bordering Central Park, received the tax break despite its units selling for millions of dollars.
Marielle Mondon is an editor and freelance journalist in Philadelphia. Her work has appeared in Philadelphia City Paper, Wild Magazine, and PolicyMic. She previously reported on communities in Northern Manhattan while earning an M.S. in journalism from Columbia University.