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How Gramercy Park Became A Private Playground For NYC's Elite

Inside Gramercy Park
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Looking inside Gramercy Park Jessica Lehrman / Gothamist

Walking past the tall, pointy gates guarding Gramercy Park’s tantalizing, two-acre interior, it’s hard not to wonder, “Why can’t I go in there?” The answer is as old as the park itself, which has been a lush manifestation of money, power, and privilege since it was established in 1831. Now, an investigation by Gothamist and WNYC suggests that the sweetheart deal that locks most New Yorkers out of Gramercy Park should be revisited.

Access to the most exclusive greenery in New York City was supposed to come with payment by Gramercy Park landowners of a fair share of property taxes, reflecting the value of living in one of the 39 buildings surrounding the city’s most prestigious and historic front yard. But thanks to an unequal, confusing property tax system and years of inattention, those property owners today are essentially paying the same amount of taxes per square foot as neighbors who don’t have keys to the park, according to our analysis.

“What I would say is that assuming that these comparables are really comparable, the city is clearly not assessing the Gramercy Park properties appropriately,” said Stewart E. Sterk, the director of Cardozo Law School’s Center for Real Estate Law and Policy.

James Parrott, the director of economic and fiscal policies at The New School’s Center For New York City Affairs, called the situation “totally bizarre.”

“It sounds like it’s questionable whether or not there's any continuing public purpose in that arrangement, and it should be revisited for the benefit of all New York City taxpayers.”

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A keyholder takes a stroll (Jessica Lehrman / Gothamist)

The arrangement with Gramercy Park landowners traces to 108 years ago, when the City attempted to levy a tax on the park itself. Then, the Trustees of Gramercy Park, the Gilded Age power brokers who held the deed to the land, produced documents showing that their homes were appraised at $17 million more, in today’s dollars, than those of their neighbors who lacked keys to the park. With higher valuations, they argued, they were obviously paying more taxes—a tax burden that in effect paid for their ability to restrict access to the park. And besides, the trustees argued, Gramercy Park was created with restrictions that prevented it from being developed, so technically it was all but worthless on the open market.

Listen to Christopher Robbins and Lylla Younes discuss the deal that allows Gramercy Park to be private on WNYC:

Judges sided with the keyholders in 1910, and the City has never challenged the ruling. Earlier this year, a state court judge referenced the decision in an opinion about a West Village condo development, noting that Gramercy Park’s “property owners' assessed valuations were increased as a result of the zero valuation for the park.”

That may have been true then, but Gothamist and WNYC found that it hasn’t been the case for at least a decade.

The units in the 39 residential buildings that surround Gramercy Park essentially pay the same amount of property taxes per square foot as units without park access, some of which are in the same historic district. In some cases, Gramercy Park key holders actually pay less.

Looking at residential properties two blocks north of Gramercy Park and three blocks south—the same blocks used in the 1910 decision, according to court records found in the New York State Archives—we found that single-family homes, co-ops and rental buildings all pay essentially the same taxes per square foot, whether the properties have access to Gramercy Park or not. In some years, a class of properties with Gramercy access will pay slightly more for access, and in other years, they'll pay less. For condos, owners without park access actually paid $4 more per square foot in taxes than their neighbors with keys to the park in fiscal year 2018.

[You can see the methodology for our analysis here.]

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The park is dotted with surveillance cameras and signs informing keyholders of the rules (Jessica Lehrman / Gothamist)

By not capturing the full value of Gramercy Park when taxing the keyholding property owners—who include Jimmy Fallon, Janet Malcolm, Richard Gere, the grandson of sculptor Alexander Calder (whose “Janey Waney” sits on the east side of the park), financial executives, the ex-wife of former New Jersey Governor Jon Corzine, and at least one LLC based in Switzerland—the City is potentially losing millions of dollars in revenue each year. In effect, the public may be subsidizing the most famous private park in the world, in a densely populated part of Manhattan where public green space is at a premium.

Timothy Sheares, a deputy commissioner at the City’s Department of Finance, which assesses and collects property taxes, said that today’s tax system is so complex, and so different from what it was 100 years ago, that it’s impossible to tell if the City is collecting the same value from Gramercy Park as it was at the turn of the last century.

“It’s a dated agreement and thus, I don’t know if we can say it as scientifically today, that we’re getting dollar for dollar,” Sheares said, pointing to the web of assessment caps and valuation quirks that are all required by state law. “There is no basis for equity in real estate taxes in the City of New York.”

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(Lylla Younes / WNYC)

Under the City’s tax system, homes with benefits like parking spaces or playgrounds that reside on other lots are called “value-reflected” parcels. The smaller asset itself isn’t taxed, but its value is supposed to be reflected in the overall market value of the home, the first number the City uses to calculate your yearly property tax bill.

Sheares explained that the City does not add a fixed amount to the market values of units that have access to Gramercy Park. And while he insisted that the City accounts for Gramercy Park’s value, he couldn’t say how much park access is worth.

“It’s similar to an amenity in your building. You live in a high rise condominium. The condominium has a gym, the condominium has a swimming pool, but I don’t do either. I don’t swim and I don’t use the gym,” Sheares said. “How are those amenities reflected in the value of my parcel, of my condominium unit?”

While some properties that have access to Gramercy Park have the value-reflected designation on their tax rolls, at least 80 units that are on the park do not. The Finance Department says that this is because their data hasn’t been updated recently. (Apartments at 36 Gramercy Park, none of which have the value-reflected designation, converted from rentals to condos in 2010.)

Perhaps the clearest indicator of the value of park access is the premium keyholders get when they sell their properties. Last year, StreetEasy looked at more than 1,000 sales in the neighborhood from 2010 to 2017 and found that the average sales premium for park access was $292,000. StreetEasy listings for million-dollar condos featuring park access begin with phrases like “Key to the park!”

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A key to the park, and its lock. The keys are reportedly impossible to copy, and the locks are changed once a year (Jessica Lehrman / Gothamist)

"If people are paying more for property on the park, then they should be paying higher property taxes,” said Mark Willis, a senior policy fellow at NYU’s Furman Center for Real Estate and Urban Policy, “and thereby picking up their fair share of the total tax burden based on their share of the total value of property in the city."

Sheares defended his agency’s assessment practices as by the book, and offered one explanation for why there was so little difference in market values and taxes between keyholders and their neighbors: “Perhaps Gramercy Park is not that great of an amenity.”

To get a rough idea of how much revenue the City may be missing out on, we added the StreetEasy sales premium, adjusted for inflation, to the market values of the 1,031 units that have access to Gramercy Park, and projected that those units would have paid an extra $13 million in taxes since 2009.

That figure is a drop in the City’s annual $90 billion budget, but experts nonetheless describe the system as inequitable.

“The City relies on property taxes to finance over 40 percent of all of its functions and services that it provides, and to the extent that a subset of property tax owners are enjoying special benefits, then that effectively shifts the burden to all the other property tax payers,” Parrott said.

(Parrott stressed that he was not speaking in his capacity as an advisory member of the new tax commission created by Mayor Bill de Blasio and City Council Speaker Corey Johnson that is charged with offering recommendations to fix the City’s property tax system.)

“If it's still functioning as a private park and access is limited to residents of certain properties, then I would think that the tax values of those properties should appropriately reflect the value of that,” Parrott said. “Then it’s up to Finance to decide how to value the amenity, and that could be worth millions of dollars. The taxes could increase a hundredfold if it was actually valued appropriately.”

According to Parrott, a fair valuation of the keyholders’ benefits might prompt the Gramercy Park trustees to renegotiate their century-old arrangement with New Yorkers. “So then the City could say, ‘Well this trust faces a choice: You can pay the entire property taxes or we’ll take it over as a public park and you can have access to it along with other New Yorkers.’”

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Doreen Kelly said she has lived on Gramercy Park for over 30 years (Jessica Lehrman / Gothamist)

Joel Marcus, a renowned tax attorney who successfully reduced the assessed value of News Corp’s 6th Avenue building by $77 million, called that notion “a very socialistic idea.”

“You wanna kill paradise and make it a parking lot,” Marcus said. “The principle is clear: the value of Gramercy Park, if it has any value, is reflected in the surrounding properties. So if you think that there’s not enough of an incremental value, maybe they could assess those homes around the park higher, but they cannot tax the park.”

Arlene Harrison, who is the founder and president of the Gramercy Park Block Association, and whose business cards read, “Mayor of Gramercy Park,” did not respond to numerous emails and phone messages about this story.

Harrison is also part of the “Park Trust,” one of five Trustees who manage Gramercy Park and collect annual assessments from surrounding buildings to maintain it.

“I know who you are. I won’t be talking to you,” Harrison told a reporter who approached her at Maialino, the restaurant on the ground floor of the Gramercy Park Hotel that she has called her “office.”

Another Trustee, Philip Howard, also did not respond to requests for comment.

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Sachin Mathew Stanly peers into the park (Jessica Lehrman / Gothamist)

Doreen Kelly said that she splits her time between Connecticut and New York, but that she goes into Gramercy Park every time she’s in the city. She’s lived on Gramercy Park for over 30 years, and she acknowledges the privileges of enjoying a private park in a crowded city.

“I understand that that could be an issue,” Kelly said, when asked if she thought it was elitist to keep the public out of the park, “But it’s been this way for so long, and it’s kind of a little jewel, and I think nobody seems to really mind. A lot of people hang out on the outside of the park.”

Would she pay more taxes to keep the park private?

“I don’t know, it would depend how much it was, you know?” Kelly replied. “If they said your taxes are gonna be quadrupled or something that would be an issue, I think, for a lot of people. But if it’s a few hundred dollars or whatever, that wouldn’t be so unusual.”

On a recent Tuesday morning, Sachin Mathew Stanly tried the gates surrounding the “little jewel” after a successful interview for a summer internship. “I was walking in the morning through here and I saw this park, it was sort of nice. So I was trying to you know, come back, sit and enjoy,” Stanley said. “This is a private park?”

Told the park was off-limits to all but those who have keys, Stanly replied, “It should be the same as all other parks...Public. For everyone.”

How did Gramercy Park come to exist? And how has it survived for nearly 200 years? Read part two of our series here.

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