Day: August 18, 2026

Five days after Mayor Zohran Mamdani said he was confident his officials could juggle a City Council hearing with an ongoing lawsuit over the pied-à-terre tax rollout, his administration declined to show up Tuesday, leaving lawmakers to air questions without anyone from City Hall there to answer them.

In written testimony submitted instead, Department of Finance (DOF) Commissioner Richard Lee said the “pending and active litigation precludes me” from appearing in person and revealed that the administration had asked the Council to postpone the hearing, a request lawmakers declined.

Lee said he “would have welcomed” the chance to field questions directly and would be prepared to testify after an Aug. 31 court hearing in the case.

The lawsuit at the center of the administration’s decision was filed by a group of homeowners challenging how the city rolled out the new surcharge, rather than the legality of the tax itself. The homeowners argue that DOF improperly placed the burden on homeowners to prove that properties identified by the agency are primary residences or otherwise exempt, and also challenge the city’s publication of a supplemental property roll containing information on roughly 960,000 homes.

Staten Island Supreme Court Justice Wayne Ozzi temporarily blocked parts of the rollout earlier this month, but the city appealed and has continued implementing the surcharge while the case proceeds. The parties are scheduled to appear before Ozzi on Aug. 31 for a hearing over whether the rollout can continue while the broader case plays out.

Legal and tax experts recently told amNewYork that the challenge was unlikely to derail the surcharge itself. New York Law School professor Stephen Louis described the plaintiffs’ principal claims as “fairly weak.”

The case also expanded Tuesday. Randy Mastro, a former first deputy mayor in the Adams administration who represents the homeowners, notified Justice Ozzi that the plaintiffs had amended their petition to add four more individuals, all of whom the filing says are longtime city residents who received notices that they may owe the surcharge.

Mastro said adding the four homeowners was intended to counter the city’s argument that part of the case concerning the notices had become moot after one original petitioner received an exemption following the filing of the lawsuit. The court has not ruled on that contention.

‘Outrageous’

Ahead of Tuesday’s hearing, Mamdani had struck a different tone when asked about it at an Aug. 13 press conference and whether he was comfortable with administration officials testifying while the lawsuit was pending.

“I have confidence in our administration officials being able to navigate what are often concurrent obligations, both whether it be to a hearing or to an existing lawsuit,” Mamdani said at the time.

But by Monday, City Hall said the administration had decided not to appear because of the litigation.

“Given the ongoing litigation, our administration has decided to submit written testimony to the City Council tomorrow for its hearing on the pied-à-terre surcharge,” a City Hall spokesperson said, adding that the administration continues to view the surcharge as “an important source of revenue for our city” needed to fund safer streets, cleaner parks and other investments.

The administration’s decision not to appear in person drew sharp criticism from some Council members Tuesday. Council Member Frank Morano, whose family members are plaintiffs represented by Mastro in the lawsuit challenging the rollout, called the administration’s absence “outrageous” and rejected its litigation rationale.

“Litigation doesn’t suspend legislative oversight,” Morano said. “We’re asking basic questions about how a major tax was administered.”

“So when the administration refuses to sit here and answer them, I think New Yorkers are entitled to ask a very simple question: What are they hiding?”

Fellow Staten Island Council Member Kamillah Hanks also criticized the rollout, while stressing that the hearing was not about opposing the tax itself.

“We really aren’t here to dispute the pied-à-terre tax,” Hanks said. “This hearing is about everyday New Yorkers” who, she said, had been treated in a manner that was “completely unacceptable.”

Hanks called the rollout “botched” and said the publication of more than 900,000 names and addresses amounted to a “hit list of the haves and the have-nots” and a “scarlet letter.”

Council Member Eric Dinowitz, who said he supports the surcharge, also criticized the administration’s absence and raised concerns about potential legal and administrative costs for co-op buildings, saying officials should “show up and answer basic questions about the rollout.”

Charles Diamond, an attorney who served in the Adams administration, also rejected City Hall’s litigation rationale. Diamond told lawmakers he had worked for the city for nearly a decade and called it “unacceptable” to use pending litigation as a reason not to testify at an oversight hearing, recalling that he had declined individual litigation-sensitive questions while still appearing before the Council.

“It is utterly, utterly bizarre,” Diamond said of Brewer having to read the finance commissioner’s written testimony into the record.

Finance Committee Chair Linda Lee took a more measured tone, saying lawmakers understood “the sensitivity of testifying while this matter is before the courts,” but said the Council would send written questions to the administration based on lawmakers’ concerns and testimony from the public.

Governmental Operations Chair Gale Brewer said she and Lee would also submit the questions they would have asked DOF officials had they appeared at what she described as a “strange” hearing.

Brewer used her own home to illustrate the confusion surrounding the supplemental roll, saying her name appeared on it even though she has lived there as her primary residence since 1994. She questioned why DOF published such a broad list and argued that the agency should have made greater use of information it already possessed before requiring homeowners to establish that their properties were primary residences.

Brewer also stressed that she, Lee, Speaker Julie Menin and many Council members support the surcharge itself, drawing a distinction between the policy and its rollout.

“It’s the tax we are for,” Brewer said. “It’s the implementation that has some challenges.”

At the end of the hearing, Lee and Brewer spent roughly 16 minutes reading through 20 sets of questions they said they would have asked DOF and the Tax Commission in person, before saying they would submit them to the administration for answers.

Among them: how many of the roughly 17,000 homeowners who received notices have responded, how many have since been determined not to owe the tax, how many applications remain pending or have been denied, and how many properties DOF now expects will ultimately be subject to the surcharge. Lawmakers also asked whether DOF calculated a “false positive rate” before publishing the broader roll and whether, looking back, the agency would publish the same list again.

The chairs also pressed DOF on why it did not make greater use of existing city and state records to identify primary residences before mailing notices, how many notices were returned as undeliverable, what happens to homeowners who miss the Sept. 18 exemption deadline and what appeal rights exist for owners whose exemptions are denied.

After the hearing, a city official provided partial answers to some of those questions. As of Tuesday, 9,884 exemption applications had been started, including 5,001 that had been completed, while 2,318 applications had been approved for an exemption.

DOF defends rollout

DOF defended the rollout in Lee’s written testimony, arguing that state law required the city to publish a supplemental assessment roll because the surcharge was enacted after the city had already issued its regular property assessment roll for the fiscal year.

Lee said the July supplemental roll, which DOF puts at approximately 960,000 properties, “largely involved republishing data” from the city’s May assessment roll. He stressed that inclusion on the supplemental roll does not mean a property will be subject to the surcharge and said much of the ownership and valuation information it contains has long been publicly available through city property records.

Only about 17,000 properties on that broader roll received initial determination letters, according to DOF. Those letters were sent where a property met the relevant value threshold and the agency could not confirm primary residency using information it already had.

Lee stressed that the notices are “not a tax bill” and do not represent a final determination that the owner owes the surcharge.

Homeowners can submit documentation showing that a property is their primary residence, and DOF has extended the deadline for challenges to Sept. 18. The agency said it has also expanded outreach and assistance to homeowners, co-op and condo boards, property managers and elected officials.

Co-op of concerns

According to DOF’s public guidance, the surcharge may apply to one-, two- and three-family homes valued at more than $5 million, and to condominium and cooperative units valued at $1 million or more, if they are not used as a primary residence.

For co-ops, the law introduces an additional wrinkle as buildings are responsible for collecting the surcharge from affected shareholders and remitting it to DOF.

Public testimony Tuesday highlighted concerns about what happens when an individual shareholder fails to pay.

Mary Ann Rothman, executive director of the Council of New York Cooperatives and Condominiums, said state law makes co-ops responsible for collecting the surcharge from affected shareholders and remitting it to DOF. If a shareholder fails to pay, she said, a building could have to tap reserves, assess other shareholders or borrow money to keep its property taxes current. Her organization is seeking a change in state law that would have DOF collect directly from individual shareholders.

Rebecca Poole, also with the organization, said co-ops are already considering changes to proprietary leases and could face legal, insurance or mortgage complications stemming from unpaid surcharges.

Ana Champeny, vice president for research at the Citizens Budget Commission, described the rollout as “rocky,” blaming limited legislative vetting, a compressed implementation timeline and inadequate communication.

But Champeny said DOF’s decision to publish the supplemental roll “appears reasonable” under the state law and noted that the information at the center of privacy concerns was already publicly available in city databases. She also said the city was right to extend the deadline for homeowners to challenge initial determinations.

Citizens Union Executive Director Grace Rauh took aim at the administration’s absence itself, calling its refusal to appear “a blow to basic accountability standards.”

“It is the City Council’s job to ask tough questions, get numbers and data, and give the public a glimpse behind the government’s curtain,” Rauh said in a statement ahead of the hearing. “It is the executive’s job to respond.”

A spokesperson for Mamdani, Matt Rauschenbach, defended the administration’s decision after the hearing, saying City Hall had made a “good faith effort” to move the hearing to a later date and did not believe appearing Tuesday would be “prudent and in the legal interest of the City” while the litigation remained active.

Rauschenbach also pointed to the fact that the hearing focused on issues at the center of the lawsuit, which he noted was brought in part by family members of a Council member, and said Lee remains willing to testify after Aug. 31.

“The Administration’s focus remains on ensuring this surcharge can do what is intended to do: generate the revenue our city needs to serve New Yorkers across the five boroughs,” Rauschenbach said.