City appeals ruling to keep pied-à-terre tax rollout on track

What happened

Mayor Zohran Mamdani's administration is appealing a Staten Island court ruling that ordered the city to scrap its first rollout of the pied-à-terre tax, also called the second home surcharge, and start over. The Real Deal reported the appeal in its Oct. 13 newsletter. Last month, Justice Wayne Ozzi of Richmond County Supreme Court ruled against the city in a case brought on behalf of primary resident homeowners by former Deputy Mayor Randy Mastro. City lawyers appealed quickly, and the appellate court issued a stay. The stay lets the rollout move ahead while the appeal is decided.

The case centers on a supplemental tax roll published by the city's Department of Finance (DOF). It lists more than 900,000 properties. DOF also sent more than 17,000 letters telling homeowners they may owe the surcharge. Mastro called the letters "nasty-grams." The surcharge applies to one-, two- and three-family homes valued at more than $5 million, and to condo and co-op units with assessed values of $1 million or more.

In its appeal, the city argues that none of the homeowners who sued were found eligible for the surcharge, so they suffered no harm. It also argues that the property list and letters were not final agency decisions and could not be challenged yet. The city says Ozzi's order to republish a roll listing only properties actually subject to the surcharge would take away owners' chance to contest that finding. It also says canceling the notices would hurt thousands of owners who already applied for exemptions.

Last week DOF extended the deadline for owners to apply for an exemption from the surcharge. The Real Deal said this was the third extension and that the deadline was set to expire Tuesday. In a later report, The Real Deal said the date had passed. Two other suits challenge the surcharge on constitutional grounds. In one, plaintiffs including developer Steve Wynn, former Commerce Secretary Wilbur Ross and Hilary Geary Ross filed in Suffolk County. The state, supported by the city, is seeking to move that case to New York County, where the properties are located.