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Subject: Fwd: Why Palm Beach, Florida Is The 'New Greenwich' For Wall Streeters

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From: BRYAN SUBOTNICK <[REDACTED]>
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Sent: Tue, Jan 21, 2014 4:35 pm
Subject: Why Palm Beach, Florida Is The 'New Greenwich' For Wall Streeters

FINANCE

Why Palm Beach, Florida Is The 'New Greenwich' For Wall Streeters

JACQUELINE DETWILER, DUJOUR
JAN. 21, 2014, 1:18 PM

Neilson Barnard/Getty Images
The Palm Beach finance crowd can paddleboard whenever they please.

Behind a semicircular brick drive and a lawn as manicured as a putting green sits a 30,000-square-foot masterpiece of Italian Renaissance architecture called Casa Nana.

John Porter, a real estate associate for Corcoran who oversees some of the largest sales in Palm Beach County, Florida, points out the spiral staircase, built by famed 1920s architect Addison Mizner for the founder of the National Tea Company. "This home went for $30.2 million in 2003; today that sum wouldn't be in the top 25 highest prices" of houses for sale in this area, Porter says. "Palm Beach real estate has gone from nothing going on to nothing left to sell."
Porter is giving me a tour of the so-called Billionaire's Row, a stretch of South Ocean Boulevard on the island of Palm Beach that is bordered by some of the highest hedges I've ever seen. Through gaps in the greenery appear stone fountains, elephant statues, pools the size of tennis complexes (next to actual tennis complexes), and more clay roofs than one could count. It's a monumental display of wealth, and it is rapidly expanding, not just here but in Delray Beach, Jupiter, Palm Beach Gardens and Boca Raton, as money pours out of the Northeast (and in some cases, from as far as London and Singapore) and into this already wealthy section of southeast Florida. Approximately 70 hedge and private equity funds are now headquartered here, many of which have set up shop in the last two years, jacking up home prices and spurring a countywide initiative to become, as some have said, "the new Greenwich."
For hedge fund managers who might normally be inclined toward Westchester or Connecticut, the allure of South Florida is as plain as grits on toast. The homes are sprawling; the Intracoastal Waterway is a yachter's paradise. It has a glittering social scene. During high season-October through March-there might be several fundraisers on any given night. Perhaps the key factor, however: In Florida, there are no individual income taxes, no estate taxes and no capital gains taxes. A hedge fund manager reporting $1 million in income can expect to pay only the federal government, whereas his counterpart living in Connecticut pays that plus an extra $67,000. And if the poor schmuck were still in New York City? He'd better be ready to fork over $104,300.
As for why all of this is happening now, when Florida has long been a sunny tax haven, so to speak, financiers point to the upcoming application of Section 457A of the Internal Revenue Code. Before 457A was enacted, certain fees and related earnings could grow tax deferred in offshore accounts for up to ten years. But now, according to the section, hedge fund managers will need to funnel all of the fees that were deferred before 2009 and their related earnings back into the U.S. by 2017. If a manager lives in

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