A New York appeals court judge lifted a temporary restraining order that had halted Mayor Zohran Mamdani's pied-à-terre surcharge rollout, reviving a tax fight that has already ensnared roughly 17,000 homeowners in a bureaucratic mess of the city's own making.
Associate Justice Philip Hom of the Brooklyn Appellate Division stayed the lower court's order on Thursday, allowing the Mamdani administration to resume implementing the surcharge on second homes valued at $5 million or more while the city's appeal moves forward. The ruling reversed, at least temporarily, a decision issued just three days earlier by Judge Wayne Ozzi, who had found that the city's rollout caused irreparable harm to homeowners and that the plaintiffs demonstrated a likelihood of success on the merits.
The legal back-and-forth centers on a basic question: did New York City do its homework before sending notices to thousands of property owners, or did it dump the burden of proof onto homeowners and hope enough of them would miss a deadline? Three city homeowners, Rachel O'Brien, Carmine Morano, and Simon Hedley, sued to block the rollout, arguing the city skipped the individualized determinations it was legally required to make before flagging properties for the surcharge.
Judge Ozzi's temporary restraining order, issued Monday after a hearing in which both sides squared off, went further than many expected. He ordered the city to pull a disputed supplemental property roll from its website and blocked officials from taking any further action based on the roll or the notices already mailed to homeowners. He also froze enforcement of a September 18 deadline by which homeowners were supposed to file an administrative appeal if they believed the surcharge did not apply to them.
Ozzi found that the notices caused irreparable harm. He ruled that the burden fell on the city, not the homeowner, to make an initial determination of whether a property qualified for the surcharge before sending out demands. He emphasized, however, that he was not making a final determination in the case.
Randy Mastro, the attorney representing the homeowners, told Fox News Digital that the administration had "badly botched" the rollout:
"It is a shame that the City can't own up to its own mistakes and admit that it has badly botched the rollout of this surcharge."
In court on Monday, Mastro was blunter. He told the judge the city "screwed this up... got it wrong" and urged the court to "stop the train and make them do it over." He argued plainly: "The city is to bear the burden. They didn't do their homework."
The Mamdani administration responded by vowing to fight. Matt Rauschenbach, a spokesperson for the mayor, issued a statement after Monday's ruling:
"We disagree with today's ruling, but we are confident in both the pied-à-terre surcharge and the City's ability to implement it fairly and effectively. This surcharge asks those who own second homes valued at $5 million or more to contribute their fair share to the city they benefit from."
By Thursday, the city had filed appellate papers asking the court to confirm that Ozzi's entire temporary restraining order was automatically stayed under state law once the city filed its notice of appeal. Alternatively, the city asked the court to grant a stay while the appeal proceeded. The city also sought permission to appeal if the court determined it was necessary.
The city's filing laid out the financial stakes. It warned that leaving Ozzi's order in place could interfere with property tax bills scheduled for mailing on November 15. The city comptroller, the filing noted, projected the surcharge would generate at least $500 million in revenue through fiscal year 2028. The administration argued that Ozzi's order disrupted the status quo and threatened to derail the Department of Finance's implementation under what it called an already tight timeline.
The Department of Finance had sent initial determination notices to approximately 17,000 property owners. But the city also published a searchable database containing information on more than 900,000 homeowners, a move that drew bipartisan backlash and raised questions about why the city cast such an absurdly wide net for a surcharge that, by Mayor Mamdani's own account, applied to only about 17,000 homeowners in a city of 8.5 million.
City officials maintained that inclusion on the supplemental roll did not mean a property owner would ultimately owe the surcharge. But that distinction offered cold comfort to homeowners who received official-looking notices demanding they prove their own primary residency or face a tax on property they already lived in.
Mastro did not hold back about the administration's motives. He told Fox News Digital that Mamdani was "so desperate to further his agenda" that he continued trying to enforce surcharge notices Mastro called "blatantly illegal." The attorney accused the administration of "doubling down, going to court to ensure that it can continue harassing and threatening New York City homeowners who clearly are permanent residents, something the City would know if it would only do its homework."
The New York Post reported that Mastro went further in opposition papers, accusing the city of "negligence, laziness or intentionality" in ignoring available state data it was legally required to use before sending out the 17,000 notices. Mastro suggested the city may have deliberately hoped to collect extra revenue from homeowners who missed the exemption deadline, a charge that, if true, would mean the administration designed a system to penalize compliance failures it engineered.
Mastro put the point in stark terms in a quote to the Post: "You can't terrorize first and then clarify, which is exactly what the city is trying to do."
One of the three plaintiffs, Simon Hedley, eventually received approval as a primary resident after submitting documentation, which only underscored the homeowners' argument. If the city had done its own review first, Hedley would never have been flagged. Instead, he had to prove what the city should have already known.
On August 11, Mastro sent a letter to Judge Ozzi arguing that most of the judge's restrictions remained in effect despite the city's appeal and warning the administration against pressing ahead with the surcharge. The city, for its part, told the appeals court it was prepared to move forward on an expedited basis. The Mamdani administration also extended the deadline for homeowners to seek an exemption, though the new deadline was not specified.
Homeowners are expected back before Judge Ozzi on August 31, where they will seek permanent relief. Mastro expressed confidence in the outcome, telling Fox News Digital: "We remain confident that when we are back in court in a mere 18 days, the thousands of New York City homeowners who are now illegally burdened with the responsibility of proving they do indeed live in their own homes will finally get the permanent relief they deserve."
The surcharge is far from the only Mamdani initiative drawing legal fire. An immigrant business coalition has prepared a lawsuit challenging the mayor's $70 million taxpayer-funded grocery store plan, and the administration has already been forced to drop costly campaign pledges in a last-minute budget deal with the City Council. A pattern is forming: ambitious policy announcements followed by sloppy execution and courtroom retreats.
Thursday's appellate order removed the immediate legal roadblock, but it did not resolve the underlying dispute. The city can resume its surcharge process for now. Whether it can do so lawfully, by the standards Judge Ozzi laid out, remains an open question the administration has shown little interest in answering.
When a city government sends 17,000 notices demanding homeowners prove they live in their own homes, and then fights in court to keep doing it after a judge calls the process harmful, the problem is not the homeowners. It is the people running City Hall.