NYC presses ahead with Mamdani’s pied-à-terre tax rollout as it fights judge’s order to start over

New York City will press ahead with its rollout of the controversial pied-à-terre surcharge as planned while appealing a judge’s decision ordering Mayor Mamdani’s administration to restart the process. 

Court papers filed in the Second Division, Appellate Department by the city Law Department late Tuesday triggered an automatic stay of the decision published hours earlier by Staten Island Supreme Court Justice Wayne Ozzi, which found the city had unnecessarily cost owners of high-value second homes time and money when it first notified them about their surcharge eligibility over the summer.

“The auto stay allows the city to continue, as we have been, with the implementation of the pied-à-terre surcharge,” Mamdani spokesman Matthew Rauschenbach said in an email Wednesday.

Randy Mastro, a former Giuliani and Adams admin official who represents the homeowners in the suit, said, “You appeal losses, and the Mamdani administration lost big time yesterday. But its time and resources would be better spent admitting error and doing the surcharge notices right.”

A signature policy of Mayor Mamdani’s plan to tackle the affordability crisis by imposing higher taxes on the rich, the pied-à-terre tax took effect in May after it was passed with Gov. Hochul’s backing as part of the State budget.

People who own secondary properties in the city valued over $5 million, or co-ops and condos with a market value over $1 million, are subject to the surcharge, barring exceptions, like people with a relative living in the property. The city is expected to send out bills by Nov. 15, with the first surcharge payments due by Jan. 1, 2017.

Ozzi’s Tuesday decision granted a request for a declaratory judgment sought by high-value second property owners, finding the initial notices the city mailed out to be arbitrary and capricious, legally erroneous, and in violation of their due process rights.

The homeowners had complained about having to prove they were eligible for an exemption, among various inconveniences. Ozzi also ordered the city to remove an online roll of property owners potentially subject to the surcharge and said it could be replaced with a limited list detailing properties alone.

The suit took issue with the city’s rollout of the surcharge, while two lawsuits filed against the state on Tuesday challenged the legality of the tax itself, including one filed by Mastro.

The latest suits, which were filed in Suffolk County, argue the tax discriminates against property owners who already contribute toward public services they rarely use. At an unrelated press conference Tuesday, Mamdani said the city would seek to intervene in those to defend the law.

“It’s a tax about ensuring that those who own a luxury second home in our city pay their fair share towards making sure that our streets are safer, our schools are stronger, that our city is in fact the greatest city in the world,” the mayor said.

Emily Eisner, the executive director of the Fiscal Policy Institute and a proponent of the legislation, on Wednesday criticized the multitude of lawsuits, saying the city’s revenue had not kept pace with economic growth for at least 15 years, resulting in a tax code completely detached from “immense and increasing inequality.”

“While the legal challenges will ultimately be decided through the courts, they are prime examples of the high-profile and highly effective battle that the high-earner class is waging on progressive taxation in the United States,” Eisner said.