Mayor Zohran Mamdani’s embattled rollout of New York City’s new pied-à-terre tax was back on track Thursday after an appellate court temporarily cleared the way for the city to continue implementing the program, though the legal fight over the tax remains far from resolved.

The ruling lifts—for now—a restraining order issued Monday by a lower court, allowing City Hall to resume the rollout while a full panel of appellate judges reviews the case. The order was signed by Associate Justice Philip Hom of the Appellate Division in Brooklyn.

Attorneys representing three New York City homeowners challenging the tax quickly blasted the decision. Former First Deputy Mayor Randy Mastro, who is representing the plaintiffs, accused the Mamdani administration of trying to sidestep the lower court’s ruling, calling the effort “an astonishing display of chutzpah.”

“It is a shame that the City can’t own up to its own mistakes and admit that it has badly botched the rollout of this surcharge,” Mastro said after the appellate ruling. “Instead, the administration is doubling down, going to court to ensure that it can continue harassing and threatening New York City homeowners who clearly are permanent residents — something the City would know if it would only do its homework.”

In court filings submitted Thursday, Mastro argued that the city was “compounding their illegal conduct by going to extraordinary lengths to avoid a three-week pause in their harassment campaign of New York City homeowners, all done in their zeal to impose a Surcharge that does not have to be invoiced until November 15, 2026 and collected until January.”

He further accused city officials of “negligence, laziness or intentionality” for failing to use existing government data to determine who actually qualified for the tax before sending out thousands of notices. According to the filing, the city may have been counting on residents missing the exemption deadline in order to collect additional revenue.

“The only reasonable explanation is that the City is trying to ensnare thousands more New York City residents who are not liable for this Surcharge into having to pay it anyway,” Mastro wrote Thursday in a court filing.

During the hearing, Mastro sharply criticized the city’s approach, telling the court, “You can’t terrorize first and then clarify,” adding that “which is exactly what the city is trying to do.”

Staten Island Supreme Court Judge Wayne Ozzi voiced similar concerns when he issued Monday’s temporary restraining order, questioning whether the city had fulfilled its legal obligation to verify eligibility before mailing the tax notices.

“So if they surcharge people who are surcharged only because they didn’t file for an exemption, I don’t think that’s appropriate,” the judge said, according to the hearing transcript.

City attorneys countered that delaying the rollout would create significant administrative problems because Gov. Kathy Hochul signed the legislation only in late May, leaving the Department of Finance with strict statutory deadlines for implementing the tax.

Corporation Counsel Steve Banks also argued that delaying the rollout could deprive the city of “sorely needed revenues for the City to help close its generational budget gap.”

Banks maintained that once the city appealed Judge Ozzi’s ruling, the appeal automatically stayed the lower court’s order, allowing officials to continue the rollout without interruption while the appeal is pending.

The lawsuit, filed last Friday, contends that the city violated the state law authorizing the pied-à-terre tax by failing to use the extensive state records the legislation specifically made available to identify eligible taxpayers before sending notices.

Instead, the complaint argues, City Hall shifted that burden onto homeowners by requiring them to prove they qualified for an exemption within what was initially a one-month filing period, later extended.

Among the plaintiffs are Staten Island residents Rachel O’Brien and Carmine Morano—the wife and father of City Councilman Frank Morano—whose homes appeared on the city’s published tax list alongside thousands of other properties.

A third plaintiff, Chelsea resident Simon Hedley, who has publicly described himself as a supporter of Mayor Mamdani, also received one of approximately 17,000 tax notices, according to the lawsuit. Hedley has since successfully obtained an exemption after applying for one following the filing of the case.