A New York appeals court gave Mayor Zohran Mamdani's contested pied-à-terre tax new life Thursday by lifting a lower court's restraining order, but the legal battle over the botched rollout is far from settled.

Associate Justice Phillip Hom of the Brooklyn Appellate Division signed the order allowing City Hall to resume the surcharge rollout while the full appeals panel considers the case. The move came just three days after Staten Island Supreme Court Judge Wayne Ozzi had halted the entire process, ruling that the Mamdani administration may have violated state law by skipping required due diligence before mailing notices to homeowners.

The whiplash left homeowners and their attorney, Randy Mastro, a former first deputy mayor, scrambling. Mastro filed opposition papers Thursday and issued a blistering public statement accusing City Hall of doubling down on a process he called illegal from the start.

17,000 notices, 900,000 names, and no homework done first

The pied-à-terre tax, passed in the spring by Governor Kathy Hochul and state lawmakers, targets non-primary residences: homes worth more than $5 million and condos valued above $1 million. The city projected it would generate roughly $500 million a year. Rates range from 0.8% to 6.5%, depending on the property.

To implement it, the New York City Department of Finance mailed 17,000 notices to homeowners telling them they could be subject to the surcharge unless they applied for an exemption. The city also published a database listing roughly 900,000 homeowners who might owe the tax, a list that exposed names, addresses, and property values to the public.

Mamdani himself seemed to relish the moment. In a prior statement, the mayor told wealthy residents to "check your mailbox when you're back in the five boroughs, because you've got mail."

But the rollout ran into trouble almost immediately. Three homeowners, Rachel O'Brien, Carmine Morano, and Simon Hedley, sued the city, arguing that officials had incorrectly flagged primary residences as subject to the surcharge and shifted the burden onto homeowners to prove they didn't owe the tax. O'Brien and Morano are Staten Island residents; O'Brien is the wife, and Morano the father, of City Councilman Frank Morano. Hedley, a Chelsea resident who described himself as a Mamdani supporter, received one of the 17,000 notices.

Mastro, representing the plaintiffs, argued that the city had ignored state data the statute specifically granted it access to, data that could have determined which homeowners actually owed the tax before any notices went out.

Judge Ozzi called the rollout inappropriate, then an appeals judge stepped in

On Monday, Judge Ozzi sided with the homeowners and issued a temporary restraining order halting the rollout. He also ordered the Department of Finance to take down the public database. In a transcript from the hearing, Ozzi was direct about the city's approach:

"So if they surcharge people who are surcharged only because they didn't file for an exemption, I don't think that's appropriate."

The ruling also froze the September 18 dispute deadline, preventing the city from acting on the 17,000 notices already sent. It was a sharp rebuke, and it came from a judge who, as the Washington Examiner noted, is himself a Democrat.

City Hall wasted no time appealing. Corporation Counsel Steve Banks cited "sorely needed revenues for the City to help close its generational budget gap" as the harm that would result from keeping the restraining order in place. The city also argued that filing the appeal automatically triggered a stay of the lower court proceedings, a procedural claim that effectively meant, in the administration's view, that Ozzi's order was already suspended the moment the appeal was filed.

By Thursday, Justice Hom agreed to temporarily lift the restraining order, giving City Hall the green light to continue the rollout until the full appeals panel weighs in. Homeowners are expected back in court on August 31 to seek permanent relief.

Mastro accuses City Hall of trying to 'ensnare' residents who don't owe the tax

Mastro's opposition papers, filed Thursday, did not hold back. He accused the administration of deliberately casting a wide net, and hoping to collect from homeowners who missed the exemption deadline rather than doing the work to figure out who actually owed the surcharge.

"The only reasonable explanation is that the City is trying to ensnare thousands more New York City residents who are not liable for this Surcharge into having to pay it anyway."

Mastro described the city's conduct as "an astonishing display of chutzpah" and attributed the failures to "negligence, laziness or intentionality." At the hearing, he put it more plainly:

"You can't terrorize first and then clarify, which is exactly what the city is trying to do."

In a separate statement, Mastro went further. He said the administration was "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." At a separate point in the proceedings, Mastro told the court bluntly: "The city screwed this up... got it wrong... stop the train and make them do it over."

City Councilwoman Inna Vernikov offered a broader critique of the policy itself. "This is Marxism in practice: consistently promising to better the lives of the middle class by punishing the wealthy," she said.

The Mamdani administration, for its part, has stood behind the tax. "We will diligently implement this law and ensure that we collect what working New Yorkers, and this city, deserve," Mamdani said in a prior statement. A city spokesman, Matt Rauschenbach, said after the original restraining order that the administration was "confident in both the pied-à-terre surcharge and the City's ability to implement it fairly and effectively."

One plaintiff already got an exemption, after suing

One detail in the case undercuts City Hall's position more than any legal brief. Simon Hedley, the Chelsea homeowner who received a surcharge notice and joined the lawsuit, applied for an exemption after the suit was filed. The city granted it. If Hedley was never liable for the tax in the first place, it raises the question of why he received a notice at all, and how many of the other 17,000 recipients are in the same position.

The original exemption deadline gave homeowners just one month to respond, though the city has since extended it. The pied-à-terre tax has drawn scrutiny well beyond City Hall, with questions raised about whether federal action could intervene in the policy.

City Hall did not immediately respond for comment on the appellate proceedings or Mastro's opposition filing.

The full appeals panel has not yet set a date for oral arguments. The August 31 hearing, where homeowners plan to seek permanent relief, will be the next major test. But the pattern is already clear: the Mamdani administration rushed a tax rollout without doing the basic work to determine who actually owed the money, got caught, and is now using the appeals process to keep the machinery running while the courts sort out the mess.

The mayor's broader tax agenda has already drawn resistance on multiple fronts. The pied-à-terre fight is just the most visible example of an administration that treats revenue targets as more important than getting the law right.

And Mamdani's political standing continues to take hits beyond the courtroom. The mayor was recently booed off stage at an NYPD event on Staten Island, the same borough where a judge just told his administration it hadn't done its homework.

When a city mails 17,000 tax notices it can't stand behind and publishes 900,000 names it shouldn't have released, the problem isn't a procedural hiccup. It's a government that decided to collect first and ask questions later, and expects homeowners to clean up the mess.