Panicked residents of rare affordable building on Billionaires’ Row protest over ‘disastrous’ 450% rent increase: ‘Save our homes!’

On Wednesday morning, a small crowd of New York City co-op owners rallied outside the ultra-luxury Midtown building where tech billionaire Michael Dell owns a $100 million penthouse. 

But it wasn’t at all for computer issues. The 25-or-so attendees held up signs and chanted, “Save our homes!”

Just down the block sits Carnegie House. It’s the longtime home of many rally attendees — and one of Dell’s recent real estate investments. Residents of the co-op, known as the only remaining affordable building on Billionaires’ Row, are facing the looming threat of displacement from a 450% rent hike.

The issue is the co-op’s ground lease. Though residents own their apartments inside, they don’t own the land the building stands on — the ground lease owners do.

While residents who bought into the co-op expected a future rent hike, many say they never expected the radical transformation of their street and its property values. Susan Dell, a Carnegie House resident of 27 years, said she fears being priced out of the city altogether.

“Everywhere you have politicians talking about the necessity of creating fair and affordable housing,” she said at the rally. “Here we have affordable housing, and just want to keep it.”

The current landowner of the Carnegie Hall lease, an entity tied to real estate investors Rubin Schron and David Werner, purchased the ground lease in 2014 for $261 million. They received a $100 million in financing from Michael Dell’s MSD Partners in 2023, the Real Deal reported.

After recent negotiations between the co-op and the landowners failed, an independent arbitration panel ruled in July that the owners could hike the rent from $4.36 million to roughly $24 million, the Wall Street Journal reported.

The monthly maintenance costs of Carnegie House owners, Hirsch said, are slated to jump from around $3,700 to about $9,000.

Tim Collins, a partner at Collins Dobkin & Miller, called the hike “disastrous.”

“It will push this over the cliff, will result in a loss of shareholder equity completely, and potentially even the eviction of the tenants,” Collins said at the rally.

If residents are unable to handle the increase to their monthly maintenance costs and the co-op defaults, the building could revert to rent-stabilized apartments. They’d still owe their mortgages, but they’d lose their equity.

“You’re talking about people’s retirement, their life savings, all gone in an instant,” said Richard Hirsch, president of the Carnegie House co-op board.

Hirsch said they aren’t looking for a rent freeze. He said the co-op board previously offered the landlords an immediate doubling of the rent.

“When you get beyond that, these shareholders just can’t absorb it. If we’re forced to try to absorb that, they’re forcing us into deconversion,” Hirsch said.

The ground lease system for co-ops was designed in the 1950s to make homeownership possible for everyday New Yorkers, but that was decades ago — and not only have NYC land values surged in the decades since, but the leases are also coming due.

The Ground Lease Co-op Coalition, an advocacy group, estimates that more than 25,000 New Yorkers own co-op apartments atop ground leases that could face similar land value-based rent hikes in the future.

“We’re in the barrel at the top of Niagara Falls, and we’re about to go over, but I’m looking back, and I’m seeing like, 100 other barrels behind me,” Hirsch told The Post.

Rally attendee Anton Lekic is in one of those “barrels.” The 67-year-old property manager’s Queens co-op learned this year that their rent hike comes due in 28 years. Already, he said, banks are declining to finance purchases at his building.

“The equity, they say, will be gone. How can it be gone?” Lekic said. “It’s a beautiful building, which we built, we kept up, we changed the roofs, we paid the taxes, we changed the elevators. We did literally everything for that structure to exist.”

Stuck in a no-man’s land outside of current tenant protection laws, the Wednesday rally sought to put pressure on investors like Michael Dell to take action on the issue, and urge the state legislature to extend tenant protections to ground lease co-op owners. 

A 2024 bill introduced by State Sen. Liz Krueger and Assemblywoman Linda Rosenthal to address the issue stalled, and a narrower version failed to reach a floor vote this year.

The Real Estate Board of New York opposed both versions. They argued that agreements should be honored. The group has previously said that some co-op owners have bought into these ground-leased buildings as investments, possibly expecting the government to intervene when lease terms are reset.

“Unconstitutionally meddling in longstanding contracts for the benefit of a small handful of largely wealthy homeowners and real estate speculators in Manhattan is bad public policy amid a housing crisis — or anytime,” said Zachary Steinberg of REBNY in a statement.

Michael Dell could not be reached for comment before press time. Representatives for the landowners did not immediately respond before press time.