Mayor Zohran Mamdani’s attempt to levy a new tax on luxury second homes faced new legal headwinds Tuesday after a Staten Island judge invalidated notices that have already been mailed to property owners and a billionaire casino owner teamed up with a former Trump cabinet secretary on a second pied-à-terre lawsuit.
In a previous lawsuit filed in August, Judge Wayne Ozzi ordered the city to take down a list of more than 900,000 properties potentially subject to the new tax and issue new notices to owners of second homes who may be required to pay the surcharge.
The ruling 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 higher, or condos and co-ops worth at least $1 million. The pair, along with Ross’ wife, accused the state of discriminating against wealthy out-of-towners through a new “property tax that falls exclusively on nonresidents of New York City.”
In July, the city issued notices to roughly 17,000 addresses, informing the owners that they may be subject to the new surcharge. The Department of Finance had also published a list of nearly 1 million properties it considered in assessing the new tax.
Property owners in the initial lawsuit — including the wife and father of Councilmember Frank Morano, a Staten Island Republican — accused the Mamdani administration of sowing “mass confusion” by publishing the list of publicly available records.
Their attorney Randy Mastro, a former deputy mayor under Mamdani’s predecessor, Mayor Eric Adams, hailed the ruling in a written statement.
“The fact is that this administration failed to follow state law when it burdened New York City homeowners with proving they live in their own homes or be on the hook for paying a new surcharge,” Mastro said.
The city must now issue new notices to owners subject to the tax, pending an appeal of Ozzi’s decision. Ozzi ruled that the city must disclose what records it used to make the determination that a home is a “non-primary residence.”
In the separate lawsuit filed against New York state on Monday in Suffolk County, Wynn, Ross and Ross’ 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 a notice stating that they owe the city an additional $83,531.52 in taxes on their New York City co-op due to the surcharge, while Wynn owes an extra $183,094.69 for a property he owns in Manhattan, according to the complaint.
City Hall spokesperson Matt Rauschenbach said the city will appeal Judge Ozzi’s decision and seek a stay on his order to issue new notices.
“With a stay, we will continue implementing the surcharge fairly, efficiently and in full compliance with the law, as we have since day one,” Rauschenbach said.
He also said the city will intervene in the lawsuit against the state to defend the new tax, which officials say could raise $500 million a year.
“The pied-a-terre surcharge demands that the wealthiest people who own second homes in NYC but don’t live in them pay their fair share towards funding safer streets, cleaner parks, and better schools,” Rauschenbach said.
New York State lawmakers enacted the pied-à-terre tax as part of the state’s budget in May. The city’s Department of Finance is tasked with enforcing the provision. In a court filing last month, a Department of Finance attorney said the agency had already exempted 4,000 of the 17,000 homeowners who received notice of the tax.
Gov. Kathy Hochul’s spokesperson Jen Goodman said the governor “believes some of the wealthiest people in the world, and the powerful interest groups fighting 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 cast themselves as sympathetic figures in a fight over paying their fair share on multimillion-dollar second homes, they’re making the case for the pied-à-terre tax as well as anyone could.”
This is a developing story and may be updated.