Mamdani's pied-à-terre tax rollout slapped down by NY state Supreme Court judge

(The Center Square) — New York City Mayor Zohran Mamdani's plans to charge wealthy out-of-towners with a new tax were dealt a blow on Tuesday after a state judge ordered the administration to redo its rollout.

The ruling by state Supreme Court judge Wayne M. Ozzi sided with a group of homeowners who claimed the tax unconstitutionally discriminates against out-of-state property owners, impedes interstate commerce and retroactively creates tax liabilities for co-op boards because of actions by their shareholders.

In the ruling, Ozzi said "homeowners are being substantially harmed and penalized needlessly" by the city's new tax on second homes in New York City valued at more than $5 million.

He ordered the administration to remove the current list of property owners to whom the tax won't apply and replace it with one listing only those who will be subject to the tax.

The new tax, a key plank of Mamdani's "tax the rich" campaign, calls for charging property owners a 4% surcharge on one- to three-family second homes valued over $5 million and on co-ops and condos valued at $1 million.

The plaintiffs in the lawsuit claim the city's decision to release a list of nearly 1 million properties that might be subject to the new pied-à-terre tax set off a "panic" among homeowners.

About 17,000 property owners may ultimately be subject to the tax, which is expected to generate around $500 million in new revenue each year, city officials said.

Last month, Ozzi issued a temporary restraining order blocking the city from enforcing the new rules, but the city's Law Department appealed.

A Mamdani spokesperson said City Hall plans to appeal the latest ruling and remains committed to enforcing the new tax.

“Our administration is fighting every day to deliver for working New Yorkers," the statement said. "The ultrawealthy 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."

“City Hall botched this rollout and should have just admitted the errors and fixed its own mistake, instead of wasting time and taxpayer dollars by fighting it in court,” former Deputy Mayor Randy Mastro, an attorney who represented the homeowners in the lawsuit, said in response to Tuesday's ruling.

Meanwhile, a former Trump administration cabinet secretary and a billionaire casino owner filed another lawsuit seeking to scuttle the mayor's tax plan.

Former Commerce Secretary Wilbur Ross and Stephen Wynn, founder of Wynn Resorts, filed a lawsuit Tuesday accusing the state and city government of discriminating against wealthy out-of-towners with a "property tax that falls exclusively on nonresidents" of New York City.

“We warned from the moment this tax was proposed that it was being rushed forward without sufficient consideration of its legal, practical, and economic consequences,” James Whelan, president of the Real Estate Board of New York, said in a statement. "This lawsuit raises serious constitutional questions, but it also highlights broader concerns about a policy that has been marked by confusion, administrative challenges, and unintended consequences."