A Staten Island judge ruled Tuesday that New York City mishandled Mayor Zohran Mamdani’s pied-à-terre tax, ordering the Department of Finance to scrap its list of almost a million properties.
State Supreme Court Judge Wayne Ozzi sided with homeowners who sued over the rollout. He found the city did not work hard enough to determine who should actually face the surcharge before starting to collect. The tax itself remains legal, but the collection method sits in flux.
The city appealed Tuesday night and invoked an automatic stay, allowing continued implementation while the case moves forward. The Daily Mail reported the courtroom loss for a signature piece of Mamdani’s “tax the rich” agenda.
Homeowners argued the city ignored state-provided data and caused mass confusion by casting too wide a net. Officials published a list naming roughly 17,000 owners and gave residents just one month to prove a property was their primary residence.
Ozzi did not speak evasively on the harm. He wrote that homeowners “are being substantially harmed and penalized needlessly by D.O.F.’s method of implementing the tax law.”
The levy hits non-primary residences: three-family homes worth at least $5 million and condos or co-ops valued at $1 million or more. Rates top out at 1.3 percent for a single-family home over $25 million and 6.5 percent for a condo or co-op over $5 million. City projections put annual revenue near $500 million. Money owed must arrive by next spring.
Ozzi ordered the city to remove the sprawling public list and replace it with a narrower one showing only properties that actually face the tax. A prior temporary restraining order had already paused action on thousands of notices and required the online list to come down ahead of an earlier hearing, according to the New York Post.
That earlier pause marked an initial win for property owners who described erroneous notices and a flawed assessment process. Thousands of exemption challenges poured in. The latest ruling goes further on the need for a proper restart.
Lawyer Randy Mastro, who represents the homeowners, put the failure bluntly.
“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,”
Mastro said. The lawsuit does not challenge the legality of the tax itself. It targets the rushed process that dumped the burden onto residents.
Fox News noted the judge found the city failed required procedures before mailing notices, calling the action arbitrary, capricious, affected by errors of law, and a violation of due-process rights. The ruling requires cancellation of the previously mailed notices.
Reuters added that Ozzi ordered officials to cancel the 17,000 tax notices, pull a supplemental roll of more than 900,000 properties, and issue new individualized notices based on recent data. The Finance Department’s steps caused “confusion and dismay” and appeared rushed to fill budget gaps, the judge determined.
Breitbart reported the core due-process problem: the Department of Finance unlawfully shifted the burden onto homeowners to prove residency with outdated lists. The refusal to use tax data that was “sufficiently available” forced many owners, some unsophisticated, to consult lawyers or accountants simply to establish basic facts the city already could have checked. Officials must now take down the list, cancel notices, and build an accurate one before sending proper notices, the ruling requires.
Mamdani’s office framed the fight as defense of working New Yorkers against the wealthy. Spokesperson Matthew Rauschenbach said the administration “is fighting every day to deliver for working New Yorkers.”
He added: “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.” With the stay in place, the city will “continue implementing the surcharge fairly, efficiently and in full compliance with the law.”
Just The News noted the same commitment from City Hall even as the judge ordered a full redo of the rollout and replacement of the exemption-style list with one limited to properties actually subject to the tax. Plaintiffs had pointed to panic sparked by the near-million-property release. A prior restraining order had already blocked enforcement, the outlet reported.
Governor Kathy Hochul, a Democrat, signed the tax into law. It formed a headline plank of Mamdani’s revenue plans. Yet the practical rollout landed first on ordinary owners who had to scramble under a short deadline.
Similar courtroom friction has already forced restarts on these notices, as seen when a judge voided the second-home tax notices and required a full restart.
The tax fight sits against a broader strain between City Hall and parts of the business community. Billionaire hedge-fund investor Ken Griffin previously sparred with Mamdani over a video message outside Griffin’s Manhattan penthouse at 220 Central Park South.
Chobani CEO Hamdi Ulukaya urged the mayor in April to keep regular dialogue with business leaders. Last month the administration revealed a Business Advisory Council of 15 leaders. Members are to meet quarterly with Mamdani and Deputy Mayor for Economic Justice Julie Su. The group is meant to advise on finance, technology, real estate, sports, entertainment, retail, and healthcare.
Prominent names include New York Liberty CEO Keia Clarke, Etsy CEO Kruti Patel Goyal, Brandon Blackwood of Brandon Blackwood New York, Northwell Health President and CEO John D’Angelo, Amalgamated Bank President and CEO Priscilla Sims Brown, and restaurateur Marcus Samuelsson. Some approached executives, Bank of America’s Jose Tavarez, former American Express chief Ken Chenault, and private-equity executive Charles Phillips, ultimately did not join.
Kathryn Wylde, former CEO of the Partnership for New York City, described the council as an honest effort to hear from people outside the mayor’s natural base. She noted he is not used to messaging this constituency and does not always anticipate reactions to policies or statements.
Earlier appeals litigation had already shaped the tax’s path, including a decision that cleared the way after a lower court blocked the rollout.
Mamdani has shown a willingness to take other high-stakes legal fights over city policy, including a suit aimed at blocking a teachers union pay-raise plan.
Public pushback has surfaced on other fronts as well. Italian-American leaders objected after parade organizers invited him despite past remarks on a Columbus statue, and mourners at Ground Zero criticized his 9/11 attendance.
Those separate controversies underscore a pattern of friction that follows the mayor into multiple arenas, from cultural disputes to fiscal ones.
The automatic stay means the city can keep moving while it appeals. How collection will work in practice under the stay is unclear. The judge’s core directive, scrap the oversized list, build a precise one, and stop needlessly penalizing owners, still hangs over the process.
Homeowners who never should have been swept into the first round of notices now wait to see whether the next version respects basic data and due process. The revenue target of roughly half a billion dollars a year still drives City Hall. The competence of the rollout remains the open question the court has already answered once.
Political branding that promises to soak only the ultrawealthy collides with the reality of nearly a million properties listed and thousands of families forced to prove they live in their own homes. When the process starts that sloppy, the first people harmed are rarely the ones featured in the campaign speeches.
New Yorkers have seen this movie before: grand revenue promises, rushed execution, and ordinary owners left holding the paperwork.
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