A state appeals panel in Brooklyn on Wednesday reversed a ruling that had gone against New York City on Mayor Zohran Mamdani's surcharge on high-priced second homes, and the city can continue implementing the tax for now. The homeowners who sued had won the first round on Staten Island.
The panel held that the plaintiffs lacked standing, meaning they had not shown a concrete injury from the tax, according to the Washington Examiner and CNN. Fortune and ABC7, the latter quoting the homeowners' attorney, report that the panel did not rule on the merits. No court decision was read for this story; the decision is quoted here only secondhand through amNewYork.
Other lawsuits over the tax remain pending, according to ABC7.
What the Brooklyn Panel Did
The Appellate Division ruled for the city on Nov. 4, amNewYork reported, quoting the decision's bottom line: "Ordered that the judgment is reversed, on the law, with costs, the amended petition is denied, and the proceeding/action is dismissed."
According to Fortune, the Second Department reversed a Sept. 29 judgment by Staten Island Supreme Court Justice Wayne Ozzi. Fortune reported that the earlier judgment granted the homeowners injunctive and declaratory relief and ordered the city to redo its notices. Those specifics, including the date and the judge's name, appear only in Fortune's account. amNewYork and CNN reported that the Staten Island judge found the city had mishandled the rollout.
The panel's reasoning was that the plaintiffs failed to show a concrete injury, either from the tax or from the city's publication of property information, according to the Washington Examiner, a finding CNN also reported. The Examiner's article is paywalled, and only its first two paragraphs were available. Fortune reported that the homeowners did win two smaller points: the judges rejected the city's argument that exempting the petitioners made the case moot, and rejected the argument that such challenges belong before the city's Tax Commission.
The city appealed the Staten Island ruling right away and kept implementing the tax while the case was pending, amNewYork reported, citing the New York Times.
Who Pays, and How Much
According to amNewYork, the surcharge covers one-, two- and three-family second homes worth more than $5 million, along with co-ops and condos valued at $1 million or more. Fortune reported that Mamdani has said the tax will raise $500 million a year. No other outlet reviewed for this story carried that figure, and Fortune's phrasing is unclear. It is also not clear from the coverage whether bills have actually gone out.
In a statement reported by CNN, the mayor said the court had "rejected an attempt by the ultrawealthy to avoid paying their fair share." Fortune quoted him adding that "owning a second home worth over $5 million should come with a responsibility to the city that makes it valuable."
The Homeowners' Lawyer
The homeowners are represented by Randy Mastro, a former first deputy mayor under Eric Adams, according to amNewYork. Mastro alleged that the city wrongly flagged primary residences as possibly subject to the surcharge, CNN reported. That is his claim, not a court finding.
ABC7 reported that he said "the court today took the procedural offramp of standing to avoid addressing the merits of this case."
The Other Lawsuits
ABC7 reported that two other lawsuits are pending. One argues the law violates state constitutional limits on the city's real estate tax collection. The other argues it is discriminatory under the U.S. Constitution because it applies only to non-New York residents. ABC7 reported that success in those cases could invalidate the tax entirely.
Mastro has said another court will decide next month whether the surcharge is legal, according to the reporting reviewed. That timing and the court involved have not been verified. ABC7 indicated it would be one of the two pending suits but did not say which.
It has not been confirmed whether the Staten Island homeowners will appeal to the Court of Appeals. The reporting reviewed also did not name the judges on the panel or give a docket number. For now, the city continues implementing its tax, and Mastro says a further ruling could come in December.
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