Mayor Zohran Mamdani’s attempt to levy a new tax on luxury second homes faced new legal hurdles Tuesday after a Staten Island judge struck down notices that had already been sent to homeowners and a billionaire casino owner joined forces with a former Trump Cabinet secretary in a second pied-à-terre lawsuit.
In a previous lawsuit filed in August, Judge Wayne Ozzi ordered the city to remove a list of more than 900,000 properties potentially subject to the new tax and issue new notices to second-home owners who might be required to pay the surcharge.
The decision came shortly after Stephen Wynn, founder of Wynn Resorts, and Wilbur Ross, former U.S. Commerce Secretary, opened their own legal front against the new tax, which applies to homes valued at $5 million or more, or condos and co-ops worth at least $1 million. The couple, along with Ross’s wife, accused the state of discriminating against the wealthy from out of state through a new “property tax that falls exclusively on non-residents of New York City.”
In July, the city sent notices to about 17,000 addresses, informing property owners that they could be subject to the new surcharge. The Finance Ministry also released a list of nearly a million properties that it considered in assessing the new tax.
Property owners involved in the original lawsuit — including the wife and father of Councilman Frank Morano, a Staten Island Republican — accused the Mamdani administration of sowing “massive confusion” by releasing the list of publicly available documents.
Their attorney Randy Mastro, a former deputy mayor under Mamdani’s predecessor, Mayor Eric Adams, praised the decision in a written statement.
“The fact is, this administration failed to follow state law when it put the onus on New York City homeowners to prove they lived in their own home or face a new surcharge,” Mastro said.
The city must now issue new notices to property owners subject to the tax, pending an appeal of Ozzi’s decision. Ozzi ruled that the city must disclose the documents it used to determine that a home is a “non-primary residence.”
In the separate lawsuit filed Monday against New York State in Suffolk County, Wynn, Ross and Ross’s wife, Hilary Geary Ross, challenged the new pied-à-terre tax on constitutional grounds.
They say they already pay “significant” property taxes to the city and use fewer services than full-time residents. All three live full-time in Florida and own real estate in the five boroughs, according to the complaint.
The Rosses received notice that they owed the city an additional $83,531.52 in taxes on their New York co-op because of the surcharge, while Wynn owed an additional $183,094.69 for a property he owns in Manhattan, according to the complaint.
City Hall spokesman Matt Rauschenbach said the city will appeal Judge Ozzi’s decision and seek a stay of his order to issue further opinions.
“With a reprieve, we will continue to implement the surcharge fairly, efficiently and in full compliance with the law, as we have since day one,” Rauschenbach said.
He also said the city would intervene in the lawsuit against the state to defend the new tax, which officials say could raise $500 million a year.
“The pied-à-terre surcharge requires wealthier people who own second homes in New York but don’t live there to pay their fair share to fund safer streets, cleaner parks and better schools,” Rauschenbach said.
New York state lawmakers passed the pied-à-terre tax as part of the state budget in May. The city’s Department of Finance is responsible for enforcing this provision. In a court filing last month, a Department of Finance lawyer said the agency had already exempted 4,000 of the 17,000 homeowners who received a tax notice.
Gov. Kathy Hochul’s spokeswoman, Jen Goodman, said the governor “believes that some of the richest people in the world, and the powerful interest groups that fight on their behalf, can afford to help pay for the police officers, trash pickup and snow removal that keep New York City running.” »
She added: “When Steve Wynn and Wilbur Ross try to present themselves as sympathetic figures in a fight to pay their fair share on multimillion-dollar vacation homes, they are making the case for the pied-à-terre tax as well as anyone could. »
This is a developing story and may be updated.
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