A Staten Island judge on Monday temporarily blocked New York Mayor Zohran Mamdani's pied-à-terre tax, pausing enforcement of the surcharge on high-value second homes while a lawsuit over erroneous tax notices moves forward. The city filed a motion for permission to appeal shortly after the ruling.
The temporary restraining order came in response to a lawsuit filed Friday by three homeowners who say the city incorrectly flagged their primary residences as subject to the tax. The judge said from the bench that the tax notices caused irreparable harm because they did not explain why recipients had been flagged for the surcharge and warned that homeowners who failed to file for an exemption would be subject to the tax.
Under the order, the city was barred from issuing additional notices and was ordered to take down the public tax roll while the order was in effect. The next hearing is set for August 31.
The pied-à-terre tax places a surcharge on non-primary residences in New York City valued at least $5 million and on condominiums and co-ops valued at $1 million or more. It was enacted as part of the state budget and signed into law in May in an effort to close the city's budget gap.
About 17,000 property owners received letters alerting them that they may be subject to the surcharge. The city released a tax roll that included the names, addresses and property values of more than 900,000 New York City residential properties, including those not subject to the tax.
The lawsuit was brought by Simon Hedley, Rachel O'Brien and Carmine Morano, who allege the city incorrectly identified their homes as potentially subject to the surcharge despite the properties serving as their primary residences. The suit does not challenge the legality of the tax itself but scrutinizes the city's rollout process.
Hedley, who said he supports Mamdani and his policies, received one of the notices in July. His Manhattan home, which he purchased 13 years ago, is his primary and only residence. He filed for exemption on Saturday by uploading a tax return and received notice Monday morning that he was exempt from the tax.
"Part of my issue was, I feel it would have been pretty straightforward for the administration or the Department of Finance just to cross-reference the tax records and not send out the letters in the way they did," Hedley said. "It seems to be they were throwing a very large net over the situation."
Matt Rauschenbach, a spokesperson for the mayor, said the city would continue with the pied-à-terre implementation. "We disagree with today's ruling, but we are confident in both the pied-à-terre surcharge and the City's ability to implement it fairly and effectively," Rauschenbach said.
Randy Mastro, the plaintiffs' attorney, said the judge's decision vindicated the rights of hundreds of thousands of New York City homeowners who were subjected to a process they never should have been part of. Governor Kathy Hochul announced the proposal alongside Mamdani in April and signed it into law in May.