RESOLVING THE LEDGER
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There’s no business like show business, and there’s no city like New York City when it comes to getting sued. The ongoing saga of New York’s pied-à-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’s 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.
Mastro filed suit on behalf of three homeowners, arguing the city “ botched” the rollout after it first published a supplemental tax roll list and then sent out letters to nearly 17,000 homeowners the city’s Department of Finance considered potentially subject to the tax. While Mastro’s suit doesn’t challenge the tax itself, it challenges how the DOF is carrying it out.
“A botched rollout that didn’t involve any of the work the Mamdani administration should’ve done before sending out any of those letters,” Mastro said in an interview with NY1 . He argued the city’s approach put the burden on homeowners rather than on itself. “It 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’t do its job,” Mastro said.
The mayor and City Hall had plenty to say about Mastro, who served under current New York City Mayor Zohran Mamdani’s predecessor, Adams, and under the Trump-adjacent “America’s Mayor” Rudy Giuliani.
“Since leaving office, Mr. Mastro has already sued the city five times,” Matt Rauschenbach, a spokesperson for the mayor, told Fortune . “We disagree with the ruling, but we are confident in both the pied-à-terre surcharge and the City’s ability to implement it fairly and effectively.”
Even the young mayor made similar comments at a press conference a day before the ruling, when the lawsuit was first filed.
“There are few things more certain in New York City than death, taxes and Randy Mastro filing a lawsuit against this administration,” Mamdani said. “So we look forward to vigorously defending our city’s position in court as we have done so with the previous lawsuits that he has filed, and I’m sure with the lawsuits that he will continue to file in the months and years to come.”
“We are confident in our position. And that is a confidence coming from both the legality of the City’s 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,” the mayor continued.
Mastro said he received one of the city’s 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. “I got one, and everyone knows I’m a New Yorker and I’ve lived in New York City for a long, long time,” he said.
After Monday’s ruling, Mastro said it was a vindication for the homeowners he represents. “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 in a statement to CNN . Mastro has yet to respond to Fortune’s requests for comments.
But Mastro’s win was short-lived. The mayor’s 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-à-terre rollout can continue while the appeal is pending, even though the judge’s restraining order technically still exists on paper.
The heart of the lawsuit
Mastro’s 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’t owe the tax, rather than doing that work itself upfront. Third, he challenged the city’s decision to publish an online database listing more than 900,000 properties and owners’ names and addresses, arguing nothing in the law required or permitted it. Fortune has previously reported on the exposure that database created for homeowners, and on how underassessed many of the flagged properties turned out to be.
Staten Island Supreme Court Judge Wayne Ozzi agreed with all three points—at 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.
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.
“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’s statement to Fortune continued. “The Law Department will appeal the ruling immediately which will stay the order, and the City will continue with the pied-à-terre’s implementation.”
Prior to the city’s filing of an intention to appeal, New York Governor Kathy Hochul told NY1 the lawsuit only affected the rollout and that the “law is intact.” Fortune reported that Hochul’s office was opening its own inquiry into residency fraud tied to the rollout.
The news made its way to the White House by Tuesd...
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