New York City Mayor Zohran Mamdani’s controversial rollout of the new pied-à-terre tax has been temporarily halted after a Staten Island judge issued a restraining order, delivering an early legal victory to homeowners challenging the city’s implementation of the luxury second-home surcharge.

Staten Island Supreme Court Justice Wayne Ozzi on Monday granted a temporary restraining order that pauses enforcement of the tax rollout until at least an Aug. 31 court hearing, where the lawsuit brought by several homeowners will be considered.

Under the ruling, the city is prohibited from taking further action on the 17,000 notices issued by the Department of Finance, which warned property owners they could face tax bills totaling tens of thousands of dollars unless they successfully applied for exemptions.

City Hall quickly vowed to challenge the decision and seek to revive the implementation of the tax.

“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,” said Matt Rauschenbach, a spokesman for the mayor.

“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,” Rauschenbach said, claiming “The Law Department will appeal the ruling immediately which will stay the order, and the City will continue with the pied-a-terre’s implementation.”

The tax, approved earlier this year by the New York Legislature and signed into law by Gov. Kathy Hochul, applies to one- to three-family homes worth at least $5 million, along with condominiums and co-ops valued at $1 million or more, provided they are not occupied as primary residences.

The court order added another chapter to what has already been a turbulent rollout and came only hours after Hochul publicly urged the city to improve its handling of the new tax.

“We’re not responsible for the rollout,” Hochul said during an unrelated event in the Bronx. “This is something that we talked to the city about in advance. It’s up to their city tax department.

“We’ll encourage City Hall to try and streamline this.”

Hochul’s remarks represented a notable shift after she had previously championed the tax as a way to ensure that wealthy owners of luxury second homes—including what she described as “Russian oligarchs” and “Saudi princes”—would contribute more in taxes.

The controversy intensified after the city initially published a database listing more than 900,000 homeowners who might be affected by the new tax, following Mamdani’s public message telling affluent property owners to “check your mailbox when you’re back in the five boroughs, because you’ve got mail.”

The publication of the database created widespread confusion because many of the listed properties appeared to fall outside the law’s intended scope, which targets vacant, non-primary residences.

City officials later mailed 17,000 notices informing homeowners that they would be subject to the tax unless they filed exemption requests.

The rollout prompted three homeowners to file suit, arguing that they either received notices for homes that have long served as their primary residences or were improperly included on the publicly released database.

The lawsuit, filed Friday, contends that the city’s rollout “caused mass confusion,” arguing that officials failed to use the extensive state records specifically made available under the law to determine which properties were actually eligible before placing the burden on homeowners to prove they were exempt.

According to the complaint, many longtime New Yorkers were left scrambling to establish that their homes qualified for exemptions before the city’s original one-month deadline expired.

Two of the plaintiffs—Rachel O’Brien and Carmine Morano, the wife and father of City Councilman Frank Morano—are Staten Island residents whose homes appeared on the published database.

The third plaintiff, Chelsea resident Simon Hedley, who has described himself as a supporter of Mamdani, received one of the 17,000 mailed notices, according to court filings.

Before the judge ruled, the city argued that the Department of Finance had already received “3,801 submissions challenging the Department’s initial determination as to primary residence.”

Court filings also revealed that Hedley’s own appeal had already been approved after he uploaded his tax return on Saturday, one day after filing the lawsuit.

City attorneys argued that issuing a restraining order would interfere with thousands of pending appeals and delay relief for homeowners already seeking exemptions.

“Enjoining the Department from taking any action on these appeals would deprive many property owners of receiving prompt responses to their appeals,” the city’s filing stated.

“Issuing a temporary restraining order that pauses the September 18 deadline may lull taxpayers into delaying their filings, and that in turn may mean that those delayed administrative appeals cannot be processed in time to be reflected in the November 15 bills.”

The city also maintained that the plaintiffs “have not raised any legally actionable claim or identified any irreparable injury” sufficient to justify removing the database from public view.

Justice Ozzi nevertheless granted the homeowners’ request for temporary relief.

His order requires the city to remove the online database identifying approximately 900,000 property owners and bars officials from taking further action based on either the published list or the mailed notices until at least the Aug. 31 hearing.

Hedley welcomed the ruling, while also acknowledging that city officials responded quickly once he submitted documentation supporting his appeal.

“I understand it’s still the end of the month, so there’s not a whole lot of uh time,” he said about the Aug. 31 hearing. “Hopefully, they can take the opportunity to roll things out a bit more smoothly.”

The lawsuit was filed by attorney Randy Mastro, who served as first deputy mayor during the administration of Eric Adams.

Before the ruling was issued, Mamdani joked about Mastro’s frequent legal challenges against his administration.

“There are a few things more certain in New York City than death, taxes and Randy Mastro filing a lawsuit against this administration,” Mamdani joked.

Following the court’s decision, Mastro praised the outcome as an important victory for city homeowners.

“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,” he said.

{Matzav.com}