New York City Mayor Zohran Mamdani scored a legal victory Wednesday after a state appeals court cleared the way for his administration to continue implementing an annual tax surcharge on high-value second homes.
The appellate panel overturned a September ruling by a Staten Island judge that had sided with homeowners challenging the city’s rollout of the so-called pied-a-terre tax. The appeals court found that the plaintiffs lacked standing to bring the case because they had not demonstrated that the tax or the publication of property information had caused them a concrete injury.
“The petitioners did not allege for injury purposes that any bad actors have misused the information purveyed by the supplemental roll, or that the publication itself subjected them to any crime, harassment, or defined public ridicule,” the judges wrote.
The panel added that publishing the supplemental property roll did not establish a legal obligation or otherwise alter the homeowners’ rights.
The ruling marks the latest development in a series of legal challenges to Mamdani’s effort to impose an annual surcharge on expensive properties whose owners do not primarily reside in New York City.
Mamdani worked with Gov. Kathy Hochul (D-NY), who just won a reelection bid Tuesday, to advance the tax earlier this year as part of his broader socialist agenda. His administration published a list identifying more than 960,000 homeowners whose properties could potentially be subject to the surcharge, prompting the lawsuit.
The tax would apply to houses valued above $5 million, with annual rates ranging from 0.8% to 1.3%. Condominiums and co-ops valued above $1 million would also be subject to the surcharge, with rates ranging from 4% to 6.5%. Supporters estimate the measure could generate $500 million in annual revenue.
The homeowners’ lawsuit, represented by former New York City First Deputy Mayor Randy Mastro, who served in Eric Adams’s administration, challenged the process used to identify potentially affected properties. Plaintiffs argued that city officials incorrectly flagged their primary residences, failed to make individualized initial determinations before sending notices, and improperly shifted the burden to homeowners to prove they qualified for exemptions.
Wayne Ozzi, a New York state judge in Richmond County, twice ordered the tax rollout halted, but the appeals court halted both decisions. The deadline for homeowners to apply for exemptions was Oct. 13.
The latest ruling does not resolve separate constitutional challenges to the tax, which will head to court for arguments on Dec. 1. The two other lawsuits against the state, including one brought by former Commerce Secretary Wilbur Ross and casino magnate Steve Wynn, argue that the surcharge unlawfully discriminates against people who do not live in New York City.
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Mamdani celebrated Wednesday’s decision as a rejection of efforts by wealthy property owners to avoid the surcharge.
“From Day 1, those with the most have attempted to use every legal avenue available to shield their wealth and avoid contributing more to our city,” he said, adding that the ruling “rejected an attempt by the ultrawealthy to avoid paying their fair share.”