New York judge rules against Mamdani on taxing second homes

Noman Sabit: A Staten Island Judge on Tuesday ruled against New York City Mayor Zohran Mamdani’s (D) pied-à-terre tax on second homes, arguing the city mishandled the tax’s rollout.

Judge Wayne Ozzi, a Democrat on the state’s Supreme Court, wrote in his ruling that Mamdani’s Department of Finance (DOF) violated the plaintiffs’s — a group of NYC homeowners — due process rights through its process of determining who would pay the tax on second homes worth more than $5 million.

“No crime is involved here, homeowners are being substantially harmed and penalized needlessly by DOF’s method of implementing the tax law,” Ozzi wrote. 

He continued that the mailed notices the DOF sent to homeowners “irresponsibly and unnecessarily caused homeowners to expend time and money” and further “lacked any real guidance as to the proof required.”

Ozzi ordered the city to replace its roll that includes all homes that are subject to the tax with a limited roll “reflecting those properties actually subject to the surcharge.”

He also ordered that all previously mailed notices are canceled and new notices will be mailed “only after an individualized initial determination” can be made.

Ozzi issued a temporary restraining order in August to halt the tax’s rollout, but the city appealed, which halted the order from taking effect. This lawsuit does not challenge the legality of the tax but marks another setback for the rollout of the historic tax signed into law earlier this year.

“The way the Mamdani administration rolled this out is not only a total screwup, totally botched, a debacle,” Randy Mastro, the former first deputy mayor of NYC under former Mayor Eric Adams and the lawyer representing the plaintiffs, said in an interview with a Spectrum News local affiliate when the lawsuit was filed. 

A spokesperson for Mamdani, Matt Rauschenbach, told The Hill the ruling was “wrong.”

“We will invoke a stay of the injunction. With a stay, we will continue implementing the surcharge fairly, efficiently and in full compliance with the law, as we have since day one,” he said.

Rauschenbach added that “the ultra-wealthy are fighting in court to avoid paying their fair share. They have filed lawsuit after lawsuit to protect their privilege, and we will not back down.”

A source from Mamdani’s administration said that the stay — which would pause the enforcement of Ozzi’s ruling — will be invoked Tuesday evening. 

The tax was proposed by Mamdani and New York Gov. Kathy Hochul (D) in April, which they said at the time would help narrow the city’s budget deficit. It would be an annual surcharge on one- to three-family homes, condominiums and co-ops owned by people who have a separate primary residence. 

Mamdani said in July that the tax was to provide the city with needed “long-term solutions” to its fiscal challenges.

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