IN RE: Rachel O'BRIEN (2026)

DECISION & ORDER

In a hybrid proceeding pursuant to CPLR article 78 to review the publication by the respondent/defendant New York City Department of Finance of books of annual records of the market values of certain real properties and the issuance by the respondent/defendant New York City Department of Finance of initial determination notices pursuant to Tax Law § 1352(a)(2), and action for declaratory and injunctive relief, the respondents/defendants appeal from a judgment of the Supreme Court, Richmond County (Wayne M. Ozzi, J.), dated September 29, 2026.  The judgment granted the amended petition and granted certain injunctive and declaratory relief to the petitioners/plaintiffs.

ORDERED that the judgment is reversed, on the law, with costs, the amended petition is denied, and the proceeding/action is dismissed.

In May 2026, the New York State Legislature enacted amendments to the Tax Law, the Administrative Code of the City of New York, and the New York City Charter to create a surcharge upon properties in the City of New York “held as second homes” (L 2026, ch 59, § 1, part HH, § 1).  The surcharge applies only to a “covered property” that “is not a primary residence” and meets certain market value thresholds (Tax Law § 1350).  In general, the term “covered property” encompasses one-, two-, and three-family homes, cooperative units, and condominium units (see id. § 1351[b], [c], [e][1], [2], [3];  RPTL 1802[1] ).  For the period between July 2026 and July 2028, the market value thresholds are $5 million for covered class one properties and $1 million for cooperative and condominium units (see Tax Law § 1350[a] ).

The respondent/defendant New York City Department of Finance (hereinafter the DOF) is responsible for administering and collecting the surcharge (see id. § 1354[a];  Administrative Code of City of NY § 11–3205[a] ).  Among its duties, the DOF must publish books of annual records of the market values of covered properties (hereinafter the supplemental roll) (see Administrative Code § 11–3205[d] ).  In addition, on an annual basis, the DOF must make initial determinations as to whether covered properties meeting the market value thresholds were used as primary residences (see Tax Law § 1352[a][1] ).  Upon completing those determinations, the DOF must send initial determination notices to owners of those covered properties that the DOF had concluded were not used as primary residences (see id. § 1352[a][2] ).  The notices must provide the property owners with an opportunity to submit proof of primary residence to the DOF (see id.).  Thereafter, upon considering, inter alia, the information submitted by the property owner, the DOF must make a final determination as to whether the covered property was used as a primary residence (see id. § 1352[a][3] ).

In July 2026, the DOF published a supplemental roll to its website.  Later that same month, the DOF sent initial determination notices to approximately 17,000 property owners.

Shortly thereafter, the petitioners/plaintiffs (hereinafter the petitioners) commenced this hybrid proceeding pursuant to CPLR article 78 to review the publication of the supplemental roll and the issuance of the initial determination notices and action for declaratory and injunctive relief against the DOF and the respondents/defendants City of New York, Zohran Kwame Mamdani, the Mayor of the City of New York, and Richard Lee, the Commissioner of the DOF (hereinafter collectively the respondents).  The respondents answered and asserted affirmative defenses.  In a judgment dated September 29, 2026, the Supreme Court granted the amended petition and granted certain injunctive and declaratory relief to the petitioners.  The respondents appeal.

The respondents' mootness argument fails.  Courts determine matters that are actually controverted (see Matter of Hearst Corp. v Clyne, 50 NY2d 707, 713;  Matter of Kirkland v Annucci, 150 AD3d 736, 737).  Under the mootness doctrine, “courts are precluded from considering questions which, although once live, have become moot by passage of time or change in circumstances” (Kennedy v Suffolk County, 211 AD3d 926, 928 [internal quotation marks omitted];  see Matter of Cody v Verivakis, 236 AD3d 783, 784).  Here, the petitioners Rachel O'Brien and Carmine Morano did not allege having received any initial determination notices, while the other petitioners who received such notices were exempted from the surcharge subsequent to the filing of the original petition/complaint.  The petitioners' claims were not directed to any final determinations, even if favorable to them, but focused in both causes of action solely upon the DOF's initial procedural implementation of the surcharge law and the injuries alleged to flow therefrom, and further sought the annulment of all of the initial determination notices.  As a consequence, the petitioners' claims, as defined and limited by the amended petition/complaint, were not rendered moot by later events.

The respondents' argument that the Tax Law excludes all judicial remedies other than those afforded by RPTL article 7, as provided for in the Administrative Code, also fails.  The express language of Tax Law § 1355(b) and Administrative Code § 11–3206(h) provides an exclusive remedy to persons challenging a covered property surcharge only where a final determination has been rendered by the Tax Commission of the City of New York (hereinafter the Tax Commission), which is inapplicable to the nature of the amended petition/complaint here.

However, the judgment appealed from must be reversed on the ground that the petitioners lack standing.  Injury is an element of standing, and each of the parties argued the presence or absence of cognizable injuries in the context of standing, in both the Supreme Court and in their appellate briefs.

O'Brien, Morano, and the petitioner Simon Hedley were listed on the supplemental roll, and according to the amended petition/complaint, Hedley and the petitioners Steven Shore, Sandra Jacobus Shore, Carla Stearns, and Kenneth Fishel each received initial determination notices.  Those circumstances alone are insufficient to establish injury-in-fact and, hence, standing.  Standing is a threshold determination with two essential elements, the first being that the complainant has an injury-in-fact, and the second being that the injury is within the zone of interests sought to be promoted or protected by the statutory provision under which the government has acted (see Matter of Lawyers for Children v New York State Off. of Children & Family Servs., ––– NY3d ––––, ––––, 2026 NY Slip Op 03218, *2;  Matter of Green v Town of Ramapo, 227 AD3d 994, 994–995).  The injury-in-fact requirement necessitates a showing that the complainant has an actual legal stake in the matter being adjudicated and a cognizable harm that is not tenuous, ephemeral, or conjectural, but sufficiently concrete and particularized to warrant judicial intervention (see Green v Forster & Garbus, LLP, 237 AD3d 1059, 1061).  The burden of establishing standing is upon the party seeking relief from the court (see Society of Plastics Indus. v County of Suffolk, 77 NY2d 761, 769;  Matter of Kopald v Town of Highlands, 241 AD3d 1567, 1569).

As to the publication of the supplemental roll, the petitioners did not allege for injury purposes that any bad actors have misused the information purveyed by the supplemental roll, or that the publication itself subjected them to any crime, harassment, or defined public ridicule.  The publication of the supplemental roll did not cause the petitioners any concrete or definable injury, as the roll did not “impose an obligation, deny a right or fix some legal relationship” (Matter of Essex County v Zagata, 91 NY2d 447, 453 [internal quotation marks omitted] ).  Harm from the published supplemental roll with 900,000 property owner names was described in the amended petition/complaint as having “caused mass confusion among homeowners, including Petitioners, and invited public scrutiny and ridicule.”  But confusion has been held to be too generalized, tenuous, and ephemeral to constitute a cognizable injury-in-fact as to confer standing (see Green v Forster & Garbus, LLP, 237 AD3d at 1061).  Also, an alleged injury will not confer standing if it is based on speculation about what might occur in the future or what future harm might be incurred (see Greco v Syracuse ASC, LLC, 218 AD3d 1156, 1158–1159).  The same is true for concerns about stalking and fraud as expressed in the petitioners' brief on appeal, which is not supported by any witness affidavit or actual evidence.

Likewise, the petitioners' privacy concerns are insufficient to support an injury-in-fact and standing.  Annually, local assessors are required to publish both tentative and final assessment rolls (see RPTL 505, 506, 514, 516) that include for each parcel within a jurisdiction the name of the owner, the assessed value of the property, and the parcel's full market value (see NY City Charter § 1510).  In the City, the DOF prepares and delivers its final assessment rolls to the City Council (see id. § 1514[2] ), which then computes the tax burden for each parcel (see id. § 1517).  These public and published assessments contain much of the same information as the supplemental roll at the heart of this appeal, undercutting the claim that the supplemental roll causes any particularized, concrete harm to the petitioners.  Moreover, the annual record of assessed valuation includes all four classes of properties within the City (see RPTL 1802[1];  Administrative Code § 11–210[a]–[b] ), whereas the supplemental roll more restrictively provides the market values of covered properties, a more limited subset of City realty consisting of only class one properties, cooperative corporations, condominiums, properties held in trust, and certain properties held by a limited liability company, corporation, or partnership (see Administrative Code §§ 11–3201, 11–3205[d] ) for which valuations can be challenged at the Tax Commission (see id. § 11–3206[b][1]–[3] ).  These facts distinguish the circumstances of the petitioners from the circumstances present in Matter of Russell v Town of Mount Pleasant, N.Y. (45 NY3d 677), as cited by the petitioners, where a subscriber list of email addresses was not disclosed for cybersecurity reasons in the context of the Freedom of Information Law (see Public Officers Law §§ 87[2][b];  89[2][b] ).

As to the initial determination notices, we find that the language of those transmitted documents satisfies the requirements of Tax Law § 1352(a)(2) and 19 RCNY 62–06(a)(4).  The mere receipt of the initial determination notices by Hedley, Steven Shore, Sandra Jacobus Shore, Stearns, and Fishel does not qualify as an injury, in and of itself, as the notice instead serves an informational purpose.  By legal analogy, the receipt of debt collection letters, standing alone, does not rise to the level of an injury-in-fact (see Terkeltaub v Credit Control Servs., Inc., 243 AD3d 833, 834;  Green v Forster & Garbus, LLP, 237 AD3d at 1061).

As to the petitioners' allegation that, in response to the initial determination notices, there is harm from the costs associated with properly following the procedures for seeking an exemption from the surcharge from the DOF, standing is, once again, not conferred.  All taxpayers incur time, effort, and costs in determining and complying with their various tax obligations, which vary from person to person, entity to entity, and tax bracket to tax bracket, sometimes widely, depending on each taxpayer's individualized circumstances within the broader federal, state, and local tax matrix.  In any event, the petitioners have not documented and quantified any actual costs incurred.

The petitioners argue that the DOF acted in an arbitrary and capricious fashion by not relying solely upon 2024 income tax information provided by the State for identifying the recipients of the initial determination notices, in violation of the language of 19 RCNY 62–06(a)(2)(i) regarding the use of “the most recent income tax year for which data is sufficiently available.”  The respondents counter that the language of 19 RCNY 62–02(a)(2) does not strictly handcuff the DOF's initial determinations to the most recent income tax data and urge the Court to defer to the DOF's interpretation of the rule, citing Matter of Peyton v New York City Bd. of Stds. & Appeals (36 NY3d 271, 280).  Regardless, the petitioners, to prevail on this issue, must not only establish that the DOF acted arbitrarily, but that such arbitrariness caused cognizable harm to them that is in some way different from that of the public at large (see Society of Plastics Indus. v County of Suffolk, 77 NY2d at 772–773;  Terkeltaub v Credit Control Servs., Inc., 243 AD3d at 834).  The petitioners argue that the DOF, by allegedly violating the directives of 19 RCNY 62–06(a)(2)(i), transmitted the initial determination notices to 17,000 property owners, including some of the petitioners, who should not have received the notice and would not have received the notice had 19 RCNY 62–06(a)(2)(i) been properly followed under their interpretation of the rule.  The harm that is alleged in the amended petition/complaint is the burden shift, where those property owners would then need to incur time, effort, and expense in applying for an exemption from the surcharge.  Those efforts could include in many instances property owners providing confidential information, such as more recent tax returns, that the DOF admits would not enjoy any statutory tax secrecy as would tax returns provided by the State.

Tax Law § 1352(a)(2) requires the DOF to provide notice to the owners of covered properties that it concluded were not primary residences, and to also provide a defined opportunity for owners to seek an exemption from the surcharge by submitting proof of primary residence.  The DOF then renders a final determination as to whether a covered property is or is not a primary residence and, accordingly, either imposes the surcharge or not (see id. §§ 1352[a][3];  1354[a] ).  In providing owners of covered properties the right to provide evidence of primary residency, the State Legislature must have anticipated that the list of notice recipients would not be exact or flawless;  otherwise, there would be no purpose to providing an exemption procedure at all.  Thus, the procedures envisioned by the State Legislature provided for notice, which in and of itself is not harm, and a mechanism for noticed property owners to avoid the surcharge by providing proof of their primary residencies (see Matter of Rosado–Ciriello v Board of Educ. of the Yonkers City Sch. Dist., 219 AD3d 839, 841).  That mechanism, of permitting owners of covered properties to seek an exemption from the surcharge, cannot be classified as harm, as it is a creation of the State statute itself (see Tax Law § 1352[a][2] ), which is not challenged here.  A property owner receiving an initial determination notice, whether thereafter seeking an exemption from the surcharge or not, is in no different position under the zone of interests of Tax Law § 1352(a) under the State law than any other owner of covered property (cf.  Matter of 292 Bedford, LLC v City of New York, 249 AD3d 874, 876), thereby undercutting the petitioners' standing.

It is worth noting that the petitioners' expert, Martha E. Stark, opined in support of the original petition/complaint, among other things, that the DOF should have obtained and relied upon 2025 tax data in compiling the initial determination notice list.  When the 2025 tax data later became available under the evolving circumstances of the implementation of the surcharge law, the DOF used that data to update and revise its initial determinations, and informed several hundreds of property owners that they did not, in fact, owe the surcharge.

Moreover, the petitioners did not allege that any confidential material has been misused by the DOF as to cause a concrete harm.  Rather, the petitioners who submit proof of residency categorize their harm as a risk of inadvertent public disclosure of confidential information at a future time, which is too tenuous and conjectural to qualify as a concrete injury (see Matter of Kopald v Town of Highlands, 241 AD3d at 1569;  Greco v Syracuse ASC, LLC, 218 AD3d at 1158).

The petitioners' lack of standing applies not only to their CPLR article 78 claims, but also to the portion of the amended petition/complaint that sought declaratory relief under CPLR 3001 (see Premier Restorations of N.Y. Corp. v New York State Dept. of Motor Vehs., 127 AD3d 1049).

The parties' remaining contentions either are without merit or need not be reached in light of our determination.

Accordingly, the judgment must be reversed, the amended petition denied, and the proceeding/action dismissed.

DILLON, J.P., CONNOLLY, DOWLING and HOM, JJ., concur.