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There\u2019s no business like show business, and there\u2019s no city like New York City when it comes to getting sued. The ongoing saga of New York\u2019s pied-\u00e0-terre tax continued this week, when attorney Randy Mastro, the former first deputy mayor under Eric Adams, filed a lawsuit last week challenging the city\u2019s rollout of the tax. But after a judge sided with him on Monday, the city filed an appeal hours later that automatically put the ruling on hold.<\/p>\n
Mastro filed suit on behalf of three homeowners, arguing the city \u201cbotched\u201d the rollout after it first published a supplemental tax roll list and then sent out letters to nearly 17,000 homeowners the city\u2019s Department of Finance considered potentially subject to the tax. While Mastro\u2019s suit doesn\u2019t challenge the tax itself, it challenges how the DOF is carrying it out.<\/p>\n
\u201cA botched rollout that didn\u2019t involve any of the work the Mamdani administration should\u2019ve done before sending out any of those letters,\u201d Mastro said in an interview with NY1. He argued the city\u2019s approach put the burden on homeowners rather than on itself. \u201cIt tried to flip the burden onto thousands and thousands of homeowners who are New York City residents, who should never have to be put through the burden and expense of having to apply for some exemption because the city didn\u2019t do its job,\u201d Mastro said.<\/p>\n
The mayor and City Hall had plenty to say about Mastro, who served under current New York City Mayor Zohran Mamdani\u2019s predecessor, Adams, and under the Trump-adjacent \u201cAmerica\u2019s Mayor\u201d Rudy Giuliani.<\/p>\n
\u201cSince leaving office, Mr. Mastro has already sued the city five times,\u201d Matt Rauschenbach, a spokesperson for the mayor, told Fortune<\/em>. \u201cWe disagree with the ruling, but we are confident in both the pied-\u00e0-terre surcharge and the City\u2019s ability to implement it fairly and effectively.\u201d<\/p>\n Even the young mayor made similar comments at a press conference a day before the ruling, when the lawsuit was first filed.<\/p>\n \u201cThere are few things more certain in New York City than death, taxes and Randy Mastro filing a lawsuit against this administration,\u201d Mamdani said. \u201cSo we look forward to vigorously defending our city\u2019s position in court as we have done so with the previous lawsuits that he has filed, and I\u2019m sure with the lawsuits that he will continue to file in the months and years to come.\u201d<\/p>\n \u201cWe are confident in our position. And that is a confidence coming from both the legality of the City\u2019s actions as well as the importance of a surcharge on secondary homes worth more than $5 million, a surcharge that will help fund safer streets, that will help fund stronger schools, and it will help fund the city that New Yorkers deserve,\u201d the mayor continued.<\/p>\n Mastro said he received one of the city\u2019s notices himself despite living in Manhattan for decades and having been subject to a strict five-borough residency requirement while serving as first deputy mayor. \u201cI got one, and everyone knows I\u2019m a New Yorker and I\u2019ve lived in New York City for a long, long time,\u201d he said.<\/p>\n After Monday\u2019s ruling, Mastro said it was a vindication for the homeowners he represents. \u201cWe are very gratified by the judge\u2019s 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,\u201d he said in a statement to CNN. Mastro has yet to respond to Fortune\u2019s <\/em>requests for comments.<\/p>\n But Mastro\u2019s win was short-lived. The mayor\u2019s office filed a notice of intention to appeal the ruling that same day, a filing that automatically stays the order under state law. That means the pied-\u00e0-terre rollout can continue while the appeal is pending, even though the judge\u2019s restraining order technically still exists on paper.<\/p>\n Mastro\u2019s argument centers on three claims. First, he says the department was required by law to make an individualized determination for each property before mailing a notice that it might owe the surcharge, and skipped that step entirely. Second, he says the city shifted the burden onto roughly 17,000 homeowners to prove they didn\u2019t owe the tax, rather than doing that work itself upfront. Third, he challenged the city\u2019s decision to publish an online database listing more than 900,000 properties and owners\u2019 names and addresses, arguing nothing in the law required or permitted it. Fortune<\/em> has previously reported on the exposure that database created for homeowners, and on how underassessed many of the flagged properties turned out to be.<\/p>\n Staten Island Supreme Court Judge Wayne Ozzi agreed with all three points\u2014at least temporarily. His Monday ruling ordered the city to take the database down and blocked further enforcement of the tax while the underlying case moves forward.<\/p>\n But hours after the initial ruling, the Mamdani administration filed an intention to appeal, thus staying the ruling and putting the temporary restraining order issued by Ozzi on hold.<\/p>\n \u201cThis surcharge asks those who own second homes valued at $5 million or more to contribute their fair share to the city they benefit from,\u201d Rauschenbach\u2019s statement to Fortune<\/em> continued. \u201cThe Law Department will appeal the ruling immediately which will stay the order, and the City will continue with the pied-\u00e0-terre\u2019s implementation.\u201d<\/p>\n Prior to the city\u2019s filing of an intention to appeal, New York Governor Kathy Hochul told NY1<\/em> the lawsuit only affected the rollout and that the \u201claw is intact.\u201d Fortune <\/em>reported that Hochul\u2019s office was opening its own inquiry into residency fraud tied to the rollout.<\/p>\n The news made its way to the White House by Tuesday, when President Donald Trump, in a post on Truth Social, called the tax itself \u201cpure amateur hour\u201d before expressing disdain for watching the saga play out \u201cespecially [in] a place I once loved.\u201d<\/p>\n \u201cThe NYC Pied-a-Terre Tax is costing New York City and State a fortune in that the money, eventually to be gotten, is very little compared to to [sic] the TAXES PAID by the tens of thousands of people who are fleeing the City, never to return. Florida, Texas, and numerous other States, are making an absolute fortune!\u201d<\/p>\n The president\u2019s post continued, saying he was \u201clooking to see if the Federal Government has any legal right to avert this disaster, before it is too late, for the millions of people who cherish New York and want to see it thrive.\u201d When reached for comment, the White House referred Fortune <\/em>back to the president\u2019s post.<\/p>\n Stuart Saft, a real estate attorney who leads Holland & Knight\u2019s New York Real Estate Practice Group, said the Department of Finance\u2019s rollout compounded problems that were already built into the statute itself.<\/p>\n \u201cHaving read Randy Mastro\u2019s motion and petition, it seems quite obvious that the Department of Finance failed to comply with the very specific instructions in the statute, and that made the rollout even more chaotic than it was going to be,\u201d Saft said. \u201cBut you also have to keep in mind that the statute itself is very badly written, and it\u2019s unclear how the tax is going to be calculated and paid.\u201d<\/p>\n Saft said the law gave the Department of Finance a deadline to determine who owed the tax and notify them, with taxpayers then given 30 days to respond. He argued the timing of the mailing worked against owners rather than for them.<\/p>\n \u201cInstead of waiting, instead of doing the research and sending out the notices so that they would arrive later, giving people the full window to respond, they rushed to get them out in the middle of July, so that people wouldn\u2019t notice they got them and would be away, which was really wrong on their part,\u201d Saft said. He added that many recipients were traveling in late July and early August, and said the timing meant some owners could see their 30-day response window lapse before they even opened the notice.<\/p>\n Saft also disputed the mayor\u2019s original framing of who the tax would hit. \u201cWhen the mayor first announced that this tax had been approved, what he said was that this tax is going to get money from billionaires who do not pay New York City and New York State taxes,\u201d Saft said. \u201cThis isn\u2019t the tax that\u2019s going after billionaires who don\u2019t pay taxes to New York. This is going after New York residents, full-time residents who file New York State and New York City tax returns and pay New York taxes.\u201d Fortune<\/em> has separately reported on how the rollout has instead surfaced cases of residency fraud running in the other direction, with some New York City residents claiming out-of-state addresses to dodge city and state taxes altogether.<\/p>\n Saft was equally unsparing about the underlying assessment math, which values co-ops and condominiums differently than houses. Because the city treats co-op and condo assessments as roughly a fifth of market value, he said, the tax\u2019s $1 million threshold for those properties functions closer to $5 million in real terms, while the $5 million threshold for houses is calculated on full market value. He also objected to how the city apportions a building\u2019s total tax liability among individual co-op shareholders, tying it to share allocation rather than unit value.<\/p>\n \u201cWhoever wrote this terrible piece of legislation doesn\u2019t understand the slightest thing about housing in New York City,\u201d Saft said.<\/p>\n Marisa Friedrich, director of Kaufman Rossin\u2019s Tax Resolution and Advisory practice, said the automatic stay leaves owners in largely the same position they were in before Monday\u2019s ruling.<\/p>\n \u201cFor the moment, the TRO pauses enforcement of the pied-\u00e0-terre tax and orders the City to take down the affected tax roll, but the underlying law remains valid,\u201d Friedrich said. \u201cWhile the next formal court proceeding is set for August 31, taxpayers face ongoing uncertainty as the City actively appeals to lift the temporary pause.\u201d<\/p>\n However, \u201cthe TRO is a temporary pause, not a determination that the surcharge is invalid or that it will never be collected,\u201d she said. \u201cOwners should not assume the issue has gone away. Until the litigation is resolved, owners should not assume the surcharge will not ultimately be enforced.\u201d<\/p>\n Oral arguments over whether Ozzi\u2019s restraining order should stand are scheduled for Aug. 31.<\/p>\n<\/div>\n #Mamdanis #nemesis #sued #block #citys #pied\u00e0terre #tax #city #froze #judges #pause<\/p>\n","protected":false},"excerpt":{"rendered":" There\u2019s no business like show … <\/p>\n","protected":false},"author":1,"featured_media":2073,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[1469,3475,4083,4084,4085,682,1855,4082,1698,736,1275,2961,2480,227,649,738],"class_list":["post-2072","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance-news","tag-block","tag-city","tag-citys","tag-froze","tag-judges","tag-lawsuit","tag-mamdanis","tag-nemesis","tag-new-york","tag-new-york-city","tag-pause","tag-piedaterre","tag-sued","tag-tax","tag-taxes","tag-zohran-mamdani"],"yoast_head":"\nThe heart of the lawsuit<\/h2>\n
A statute critics of the rollout call flawed<\/strong><\/h2>\n
What the stay means for owners right now<\/strong><\/h2>\n