Mayor Zohran Mamdani’s administration suffered a major setback Tuesday after a judge ordered New York City to abandon its flawed rollout of the new pied-à-terre tax and begin the process again.
Staten Island Supreme Court Justice Wayne Ozzi’s ruling deals a significant blow to one of Mamdani’s signature initiatives. It also comes as casino mogul Steve Wynn and former Commerce Secretary Wilbur Ross joined the legal challenge seeking to block the tax.
Ozzi found that the city acted in an “arbitrary” and “capricious” manner by sending notices to New Yorkers who were not actually supposed to be covered by the surcharge on luxury second homes.
Under the ruling, thousands of notices must be “cancelled.” The city Department of Finance must then start over and issue new notices individually, after reviewing each property owner’s circumstances.
Approved by Gov. Kathy Hochul and the state Legislature, the tax targets unoccupied, non-primary residences. It applies to one- to three-family homes valued at $5 million or more, as well as co-ops and condominiums worth at least $1 million.
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Randy Mastro, who brought the lawsuit on behalf of Staten Island homeowners, celebrated the decision, which the administration is expected to appeal.
“We’re gratified that the court has recognized we were right all along. The fact is that this administration failed to follow state law when it burdened New York City homeowners with proving they live in their own homes or be on the hook for paying a new surcharge,” Mastro said.
“Now the administration must go back and do what it should have done from the start: use all the information at its disposal to make an individualized ‘initial determination’ about who truly owes this surcharge before demanding that they pay it.”
The city did not immediately respond to a request for comment.
Ozzi issued his ruling as Wynn, whose primary residence is in Palm Beach, Florida, filed a separate lawsuit in Suffolk County arguing that the tax is “unconstitutional.” According to the state suit filed Monday, Wynn was notified in July that he owed a $183,000 surcharge on his Manhattan property.
The Mamdani administration has said the tax is expected to generate more than $500 million annually for schools, libraries and other essential public services.
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