NYC Court Tosses Challenge to Pied-à-Terre Tax Rollout
(Bloomberg) — A Brooklyn appeals court threw out a lawsuit challenging the rollout of New York City’s pied-à-terre tax, ruling that the homeowner plaintiffs lacked standing to bring the complaint.
The appellate panel on Wednesday reversed a September ruling from a Staten Island judge who said the city improperly published a supplemental roll of property information and wrongly required homeowners to apply for exemptions. The appeals judges found that the plaintiffs lacked standing because they hadn’t shown they would actually be subject to the tax.
“The petitioners did not allege for injury purposes that any bad actors have misused the information purveyed by the supplemental roll, or that the publication itself subjected them to any crime, harassment, or defined public ridicule,” the appeals court said. “The publication of the supplemental roll did not cause the petitioners any concrete or definable injury, as the roll did not ‘impose an obligation, deny a right or fix some legal relationship.’”
Staten Island Justice Wayne Ozzi twice ordered the tax rollout halted, but his decisions were both times put on hold by the appellate court. The deadline to apply for exemptions from the tax was Oct. 13.
The levy, championed by Mayor Zohran Mamdani and Governor Kathy Hochul, was approved by state lawmakers in May. It applies to single-family homes with market values of $5 million or more, and co-ops and condominiums worth at least $1 million. New York City officials plan to include the surcharge on property tax bills due Jan. 1.
Mamdani hailed Wednesday’s decision, saying in a statement that the court “rejected an attempt by the ultrawealthy to avoid paying their fair share.”
In July, the city sent 17,000 notices to owners of properties potentially eligible for the tax, inviting them to apply for exemptions. Ozzi ruled that the city illegally shifted its own responsibility to correctly identify taxable properties.
City officials said in late September that they had granted 5,200 exemptions out of roughly 9,300 applications reviewed.
The suit dismissed on Wednesday challenged the city’s implementation of the tax, but not the levy’s legality. Two other suits against the state, including one by former US Commerce Secretary Wilbur Ross and casino tycoon Steve Wynn, are arguing the tax is unconstitutional because it discriminates against non-residents of the city. Arguments in those cases are scheduled for Dec. 1.
Randy Mastro, the lawyer who brought the rollout lawsuit and is also behind one of the constitutional challenges, expressed disappointment that the court on Wednesday “took the procedural offramp of standing to avoid addressing the merits of this case.” Mastro predicted that the constitutional case would prove “the ultimate day of reckoning” for the tax. “We remain confident we will prevail and put an end to this unconstitutional surcharge altogether,” he said in a statement.
