NYC lawyers criticize lawsuit regarding Mamdani pied-à-terre tax, calling it a policy issue rather than a legitimate legal case.
In a recent court hearing, a lawyer representing New York City urged a Staten Island judge to dismiss a homeowners’ lawsuit aimed at challenging the administration’s recently implemented pied-à-terre tax. This tax, originating from a provision in the state budget approved in May by Governor Hochul, targets luxury second homes owned by non-residents. The city’s Law Department attorney, Steve Banks, characterized the lawsuit as a policy dispute masquerading as a legal challenge, contending that it serves “nobody.”
During a heated exchange in the Staten Island Supreme Court, Judge Wayne Ozzi presided over arguments from both sides. Banks emphasized the argument that the petitioners rushed into court based on an incomplete agency determination, which he claimed resulted in no actual injury. He asserted that this case lacked genuine controversy, labeling it as a mere policy disagreement rather than a legitimate legal issue.
The pied-à-terre tax imposes a surcharge on properties that are not primary residences, with market values exceeding million for individual homes and over million for co-ops and condominiums. The initiative aims to generate revenue as part of the city’s effort to balance its budget while also targeting the wealthiest segments of the population.
In July, the city notified approximately 17,000 property owners that they may be liable for this tax, provoking backlash as many recipients insisted they were full-time residents. Subsequent to this initial outreach, the city Department of Finance quickly updated its data using information from homeowners’ 2024 tax returns, leading to a revision of the assessments. Last week, the department sent out 1,251 notifications to individuals stating they were no longer subject to the surcharge.
The lawsuit, filed by attorney Randy Mastro—who has previously held positions in the administrations of Rudy Giuliani and Eric Adams—claims that the city improperly placed the burden of proof on homeowners to demonstrate their exemption from the tax. While Mastro clarified that the intent was not to contest the tax itself but to address procedural grievances regarding its implementation, he called for a complete reassessment process due to what he referred to as significant mismanagement.
Banks argued against this approach, suggesting that siding with the homeowners could hinder many individuals who are legitimately subject to the tax from pursuing their appeals. He pointed out that the tax assessment process is iterative, and he defended the legality of the city’s actions throughout the procedure.
Mastro countered that the city issued “threatening” notices without adequately evaluating the circumstances of thousands of homeowners, thereby shifting the responsibility onto them. He criticized the government’s handling of communications, citing concerns about privacy violations in light of sensitive financial information shared with the city. Mastro expressed discontent with the current administration’s stance towards private property ownership, framing it as hostile.
Judge Ozzi has withheld immediate judgment, stating that a decision will be rendered “in due course.” Earlier this month, he temporarily halted the city’s implementation of the tax, although a state appeals court subsequently ruled that the city could continue moving forward with the process as the lawsuit unfolds.
As the situation continues to develop, the city’s approach to the pied-à-terre tax remains a focal point of contention, highlighting broader debates regarding taxation, residency status, and the rights of property owners in New York City.
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