Look,” says Marc Sarnoff, a Miami city commissioner, “you’ll work three days a week for the gov- ernment down here, but in New York you’ll work five and a half days a week for the government.” That’s how the pitch begins.
As the chairman of Miami’s Downtown Development Authority (DDA), Sarnoff is a salesman for the city itself, heading the Fi- nance Sector Initiative to bring Wall Street wealth down south. He prefers to make his presentations at home. “When you’re up in New York selling, you’ve gotta say 500 words,” he says. In Miami, “You have to say five words. The thing sells itself.”
If the oceanfront views and weather aren’t enough—“I don’t want to lie to them. It’s not San Diego,” he admits, citing the humid summers—Sarnoff has a full spiel. Because while the absence of a city or state income tax may be the icing on a cake of eternal sunshine for some, masters of the universe consider the rest icing and the extra money the whole cake.“The difference for a $3 million annual salary is about $600,000 [see “Florida Tax Paradise”]. Some people will say that’s not real money,” says Sarnoff. “But it is that house that your mother-in- law needs. And you don’t need to have her living under your roof,” he adds, leaning on the punch line. “They all laugh at that.”
It’s not just banter; it’s working. Sarnoff says about 140 high earners have moved to Miami since May 2013, helped along by the DDA’s campaign. Financial database eVestment counted 12 Miami-based funds as of last year—and rising as we speak, says Sarnoff—out of more than 70 in the state. Sears CEO Eddie Lampert helped lead the recent flocking to Florida when he moved his ESL fund—no. 34 on The Hedge Fund Journal’s top 50 with $11 billion under management—from Greenwich, Connect- icut, in 2012, joining existing heavyweights like Bruce Berkowitz’s Fairholme Capital Management, a mutual fund with $10.5 billion already under its Miami roof. Fresh off his winning bet on Netflix, Carl Icahn’s son, Brett, is going out on his own, and he, too, picked Miami. Along with his partner, David Schechter, the younger Icahn will re- portedly manage $1 billion under his new, yet-to-be-named hedge-fund-management company. (Dad will own 35 percent.) Meanwhile, Lloyd Blankfein and Leon Black have gotten in on the Faena Miami Beach development, where residences tick upwards of $50 million. “They were little islands before,” says Sarnoff of the budding scene of power players. “Now you’re creat- ing a community.”
Proximity to Latin America doesn’t hurt growth, either. “The best thing about Miami is that it’s right beside the United States,” jokes Alejandro Rebelo, a partner at XP Securities, the largest broker-dealer in Brazil, which recently moved six employees down from New York and has expanded to 25 people in Miami. It hopes to have 100 employees in its Brickell Avenue office by mid-2015.
Then there’s the turning of the political tide. “When Bill de Blasio was elected New York City mayor, it was a day of celebration here in South Florida,” says Kelly Smallridge, president and CEO of the Palm Beach Business Development Board, which covers nearby Boca Raton, Delray Beach and West Palm. “De Blasio wants to tax the wealthy, and we are interested in rolling out the red carpet for the wealthy.”
Palm Beach County in many ways foretold the Miami boom, having targeted corporate relocations since the late ’90s. Smallridge says there are about 60 hedge funds with a physical presence in Palm Beach, which she estimates is twice as many as five years ago. Florida’s Republican governor, Rick Scott, himself a former Greenwich resident in his days as a venture capitalist, has even sent personal letters to certain finance targets. A postcard would probably do. “The more it snows, the more my phone rings,” says Smallridge. “The snow is definitely our fertilizer down here.”