New York City Mayor Zohran Mamdani's administration faced a legal setback on Monday as a Staten Island Supreme Court Justice issued a temporary restraining order, halting the rollout of a controversial new tax targeting wealthy property owners. Justice Wayne Ozzi's decision prevents the city from taking further action on its pied-à-terre surcharge until a hearing scheduled for August 31, 2026.
"No law permitted or required the City to publish such a list of the names, addresses and property values of more than 900,000 New York City homeowners, or to publicize that list through an irregular, mid-year publication." — Staten Island Supreme Court Justice Wayne Ozzi
The tax, designed to target certain high-value properties not used as primary residences, was projected by the city to generate approximately $500 million annually for New York City. The legal challenge emerged after three homeowners—Rachel O'Brien, Carmine Morano, and Simon Hedley—filed a lawsuit on Friday, contesting the method by which the Mamdani administration implemented the new levy.
The core of the plaintiffs' argument centered on the city's rollout strategy, which they asserted created widespread confusion among property owners and improperly shifted the burden onto them to prove their properties served as primary residences. City officials had initially published an online database containing the names, addresses, and property values of over 900,000 potentially affected homeowners. Mayor Mamdani had publicly encouraged wealthy New Yorkers to "check your mailbox when you’re back in the five boroughs because you’ve got mail," implying widespread applicability.
However, a significant portion of the properties included in the initial online list reportedly did not meet the city's specific criteria for the surcharge. The city later sent revised notices to approximately 17,000 homeowners, warning them of potential five-figure tax bills unless they requested exemptions.
Justice Ozzi sharply criticized the city's handling of the process, stating in his ruling that officials should have made individualized determinations regarding property eligibility before issuing notices to owners. "No law permitted or required the City to publish such a list of the names, addresses and property values of more than 900,000 New York City homeowners, or to publicize that list through an irregular, mid-year publication," Ozzi wrote. The judge's order mandates the removal of the online list and bars city officials from taking any action based on either the list or the mailed notices while the legal challenge remains active.
It is important to note that the lawsuit does not directly challenge the legality or constitutionality of the pied-à-terre tax itself. Instead, the legal dispute focuses specifically on the procedural aspects and the implementation methods employed by the Mamdani administration. The surcharge applies to three-family homes valued at $5 million or more, and to condos and co-ops valued at $1 million or more, provided these properties are not used as primary residences. The tax rates are progressive, increasing with property value. For qualifying single-family homes valued above $25 million, rates can reach as high as 1.3%, while for qualifying condos or co-ops valued above $5 million, rates can go up to 6.5%.
The Mamdani administration has defended its policy and expressed its intention to appeal the court's decision. Matt Rauschenbach, a spokesman for Mayor Mamdani, stated, "We disagree with today’s ruling, but we are confident in both the pied-a-terre surcharge and the city’s ability to implement it fairly and effectively." Rauschenbach further elaborated on the policy's intent, adding, "This surcharge asks those who own second homes valued at $5 million or more to contribute their fair share to the city they benefit from." He confirmed that the city's Law Department would immediately appeal the temporary restraining order.
Conversely, the plaintiffs and their legal team lauded the temporary order. Randy Mastro, the attorney who filed the lawsuit, commented that the ruling had "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." New York City Councilman Frank Morano, whose wife, Rachel, and father, Carmine, are among the plaintiffs, also praised the decision on social media, writing, "Government has to follow the law, too."
This dispute is part of a broader effort by Mayor Mamdani to increase taxes on affluent New Yorkers. The pied-à-terre proposal itself was notably unveiled outside the Manhattan penthouse of billionaire Ken Griffin on Tax Day. Monday's ruling does not permanently eliminate the tax but rather imposes a temporary pause on its implementation while the legal proceedings continue, with the next hearing scheduled for August 31.
