At New York City Council Hearing on Pied-à-Terre Tax, Complaints of a Sloppy Rollout

As a legal battle over New York’s pied-à-terre tax continues, the New York City Council held a hearing Tuesday evaluating the surcharge on second homes.

Manhattan Councilmember Gale Brewer led the inquiry against what she saw as a dysfunctional rollout of the tax that included publishing up to 900,000 names and addresses of possible second homes in the five boroughs.

The Mamdani administration did not send any representatives to the hearing at  City Hall, including from the Department of Finance tasked with collecting the tax. The hearing was held by the Committee on Finance and the Committee on Governmental Operations, State and Federal Legislation.

“No estimate of the number of pied-à-terres in the city comes even close to 900,000,” Brewer said. “Yet, the city still published the list with the small caveat that the properties on the list may be subject to the charge. The list published by the Department of Finance was so overbroad that it even included my name, and I don’t mind my name and my home address [being included], but I’ve been in that home 365 days a year since 1994.
I don’t leave the city, and I don’t have a second home.”

The committee hoped to get answers from the Mamdani administration on why — when it had credible information from the New York City Comptroller‘s office about how many second homes there are — it still attempted to force thousands of property owners in the city to prove that the addresses are primary residences.

Brewer stated that the “onus” should not have been on the homeowners, but on the city to determine whether the home is a primary residence.

“Homeowners who believe that they received the letters in error initially had only a short window to contest the surcharge,” Brewer said. “
Although the deadline was ultimately extended by four weeks, this still puts the burden on property owners, which upset people tremendously.”

About 17,000 homeowners received letters informing them that they are on the supplemental tax roll, while estimates of second homes in the city are about 14,000, according to Brewer.

Real Estate Board of New York President James Whelan issued testimony against the rollout so far.

“We warned from the beginning that this tax would be extremely difficult to administer,” Whelan said in a prepared statement as testimony. “The rollout has been plagued by confusion, errors and unanswered questions. The city cannot enforce first and explain later. The Mamdani administration should pause implementation until it can demonstrate it is ready to administer the tax fairly, accurately and transparently.”

The court battle against the pied-à-terre tax initially led to a temporary restraining order against the city, halting the rollout on Aug. 10. But an appeals court judge ruled on Monday that the city can continue the implementation as the litigation is pending.

The tax is designed to draw funds for government operations from single- to three-family second homes worth more than $5 million or co-ops and condos worth more than $1 million, and could be put into effect by January 2027.

Co-op owners and their governing bodies found the method of determining which units are pieds-à-terre to be burdensome and invasive, going so far as to call it a form of “doxxing.” Often, shareholders seemed to have landed on the list because of a single penthouse in the building in which they live, according to testimony.

The names and addresses made public by the administration also put homeowners at risk of fraudulent activity, especially seniors, who could be more susceptible to people misusing that information, according to testimony.

Staten Island Councilmember Kamillah Hanks went so far as to describe the list of potential pieds-à-terre as “a hitlist of the haves and havenots.” Frank Morano, another Staten Island council member, was particularly outraged that the administration did not even send a representative to the hearing to answer oversight questions.

The threat of the tax, however, has done little to slow luxury condo sales in New York City, Commercial Observer recently reported.

The next hearing on the pied-à-terre tax is scheduled for Aug. 31.

Mark Hallum can be reached at mhallum@commercialobserver.com.