Judge orders pause of Mamdani’s pied-à-terre tax rollout after homeowners sue. NYC says it will appeal ruling

By Katherine Koretski, CNN

New York (CNN) — A Staten Island judge on Monday temporarily blocked the controversial rollout of New York Mayor Zohran Mamdani’s pied-à-terre tax, which paused enforcement of one of his signature campaign promises: taxing the rich.

Shortly after the ruling, New York City filed a motion for permission to appeal, which will stay the order in the lower courts. “The City will continue with the pied-à-terre’s implementation,” Matt Rauschenbach, a spokesperson for the mayor, said in a statement.

The judge’s order paused the rollout of the surcharge on high-value second homes in the city while a lawsuit brought by a group of homeowners moves forward. The group says the city wrongly flagged their primary residences as subject to the tax.

Under the temporary restraining order, the city was ordered to take down the public tax roll and was barred from issuing any additional notices while the order was in effect. The next hearing is set for August 31.

The judge said from the bench the tax notices sent to the homeowners 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.

The ruling came hours after Mamdani, at a Monday morning news conference, vowed to “vigorously defend” the city’s position in court.

“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 in a statement.

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. Gov. Kathy Hochul announced the proposal alongside Mamdani in April and signed it into law.

Mamdani, who took office in January, promised to “govern as a democratic socialist” and campaigned on plans to make the city more affordable and improve New Yorkers’ daily lives. In his first few months in office, Mamdani announced expansion to 2-K, which provides free childcare for 2-year-olds, as well as announced a plan to save up to six minutes for bus riders. He also delivered a rent freeze for tenants in rent-stabilized apartments across the city.

The lawsuit over the pied-à-terre tax, filed Friday in state Supreme Court, Richmond County, was brought by three homeowners — 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, according to a news release.

The suit does not challenge the legality of the tax itself but scrutinizes the city’s release of a tax roll that included the names, and addresses and property values of more than 900,000 New York City residential properties — including those not subject to the tax — as well as notices sent to some residents. About 17,000 property owners received letters alerting them that they may be subject to the surcharge.

“We are very gratified by the judge’s decision, which has vindicated the rights of hundreds of thousands of New York City homeowners who were subjected to a process they never should have been a part of in the first place,” said Randy Mastro, the plaintiffs’ attorney.

Simon Hedley, who says he supports Mamdani and his policies, including taxing the rich, received one of the notices in July. Hedley’s Manhattan home, which he purchased 13 years ago, is his primary and only residence, he says.

Hedley contacted a legal team after receiving the notice and on Saturday, he filed for exemption by uploading a tax return. Monday morning, he received notice 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. It seems to be they were throwing a very large net over the situation,” he said, adding, “(We) were nervous about it.”

In reaction to the judge’s ruling, Hedley said he hopes the city approaches the issue more carefully: “Hopefully they can take a bit of time, take a step back and say, well, let’s approach this in a more thoughtful way, do a little bit more diligence before we start sending out letters.”

This story has been updated with additional information.

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