Staten Island judge hears challenge to NYC's pied-à-terre tax rollout

POLITICS Staten Island judge hears challenge to NYC's pied-à-terre tax rollout By N.J. Burkett Tuesday, September 1, 2026 1:38AM N.J. Burkett has the details. NEW YORK CITY (WABC) -- A Staten Island judge heard arguments Monday afternoon in a lawsuit challenging the city's rollout of the pied-à-terre tax, which targets wealthy New Yorkers who own second homes valued at more than $5 million.

The tax is expected to affect New York City residents with qualifying second homes and is intended to help improve the city's budget by raising $500 million.

The plan initially was expected to impact about 17,000 residents. However, that figure was later reduced to 10,800 property owners following a review and the release of state tax documents that provided a clearer picture of who would be subject to the tax.

State officials said they had always estimated the tax would affect this group of homeowners.

Gov. Kathy Hochul addressed the revised figures, saying: "So the larger number that was in the news was a different dynamic. I'll say. What they are talking about is getting down to what we actually projected. we don't see that there'll be a loss in revenue from what we expect to bring in, because we've always been estimating at 10,000. them scaling it back will not have the effect that people are concerned about."

It sparked a lot of confusion and frustration among thousands of others who live in the city full-time and were notified that they may owe the surcharge as well.

Those homeowners asked a judge to block the tax.

Corporation counsel Steven Banks took no questions as he left the courthouse late Monday afternoon.

"The Mamdani Administration has to do it over and get it right," Randy Mastro said, who is representing the homeowners.

The contentious hearing in State Supreme Court lasted more than two hours.

The lawsuit seeks to force the city to roll back the rollout of it's so-called 'Pied-A-Terre Tax.'

The controversial tax surcharge on luxury second homes valued at 5 million or more and co-ops and condos worth more than $1 million.

The city put 17,000 homeowners on notice that they may be subject to the tax and later revised that number downward. The actual number will likely be fewer than half that.

"The city may not quote, 'terrify first and clarify later,'" Mastro told State Supreme Court Justice Wayne Ozzi. "They didn't do any diligence at all. They said, 'You may owe the surcharge. And unless you apply for an exemption, we're going to deem you to owe.' That's what the nasty gram said."

But Banks insisted that the case be thrown out because no one had been 'harmed' and that the lawsuit was filed prematurely.

"It was petitioners who tried to manufacture a claim by not waiting for the administrative process to play itself out," Banks said that they, "rushed to court based on non-final agency determination that turned out caused no injury at all."

"Many consulted with lawyers or accountants. That's a real cost they'll never get back. Also, those who submitted to the city's exemption process had to submit their most private personal information, like their tax returns. I don't want Mayor Mamdani getting my tax return," Mastro said.

If the lawsuit is successful, the city will be forced to scrap the rollout, identify homeowners subject to the tax and issue new notices. The judge is expected to hand down his decision in the coming days.