Second homeowners will not be getting a pied-à-terre tax reprieve.
Four justices of the New York Supreme Court’s Appellate Division on Wednesday overturned the lower court order by Judge Wayne Ozzi that the city scrap its rollout of the controversial second home surcharge, remove the supplemental roll listing 900,000 properties and nullify notices sent to potentially eligible homeowners.
The panel ruled that the petitioners in the underlying suit, including Kenneth Fishel of Renaissance Properties, lack standing because they weren’t injured by appearing on the list or receiving notices. The judges also highlighted that the supplemental roll is similar to assessment rolls published annually by the Department of Finance and noted that taxpayers regularly incur time, effort and costs to comply with their annual obligations outside of the surcharge, even though petitioners didn’t quantify any costs.
Former Deputy Mayor Randy Mastro, who represents petitioners in the underlying suit, had argued that the receipt of “nasty-grams” and inclusion on the list amounted to harm because of the resources required to secure exemptions, which all of his clients ultimately received. DOF exemptions have shrunk the universe of properties potentially eligible for the tax to fewer than 9,000 homes, with more appeals likely on the way when the Tax Commission hears cases.
“It’s a shame that, after the City admittedly botched the rollout of this surcharge, the court today took the procedural offramp of standing to avoid addressing the merits of this case,” Mastro said in a statement. “What the City has done here is unconscionable – trying to ensnare thousands of people who don’t owe this surcharge into having to prove they live in their own homes or else have to pay it. But now, this lawless and chaotic data collection scheme will go unremedied.”
“Today, an appeals court rejected an attempt by the ultrawealthy to avoid paying their fair share and ruled in favor of the City in a lawsuit challenging the rollout of the pied-a-terre surcharge,” Mamdani said in a statement. “From day one, those with the most have attempted to use every legal avenue available to shield their wealth and avoid contributing more to our city. But owning a second home worth over 5 million dollars should come with a responsibility to the city that makes it valuable.”
Mastro also represents plaintiffs in a concurrent suit filed in Suffolk County, which challenges the surcharge on constitutional grounds. Another challenge brought by developer Steve Wynn and former commerce secretary Wilbur Ross doesn’t feature Mastro as its lawyer, but makes similar claims.
“We will continue working with our partners in Albany to defend this law against the ongoing challenges in Suffolk County – brought by some of the same uberwealthy interests whose arguments just lost in court today,” Mamdani said in a statement.
The former deputy mayor plans to pursue the constitutional avenue to challenge the surcharge further, arguing that the “ultimate day of reckoning” for the surcharge will happen next month when that case is decided. “We remain confident we will prevail and put an end to this unconstitutional surcharge altogether,” he said in a statement.
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