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small crowd of New York City co-op owners gathered outside the Midtown building where tech billionaire Michael Dell owns a $100 million penthouse, holding signs and chanting "Save our homes!" The rally was in response to a looming threat of displacement from a 450% rent hike at Carnegie House, one of the last remaining affordable buildings on Billionaires' Row.
Residents own their apartments inside Carnegie House but not the land it sits on. Michael Dell's MSD Partners is an investor in the property, which was purchased by real estate investors Rubin Schron and David Werner for $261 million in 2014. An arbitration panel recently ruled that the rent could be hiked from $4.36 million to around $24 million.
The monthly maintenance costs of Carnegie House owners are set to jump dramatically, with some facing increases from around $3,700 to about $9,000. Lawyer Tim Collins called the hike "disastrous," saying it would push the co-op over the cliff and potentially result in the eviction of tenants.
If residents can't handle the increase and the co-op defaults, the building could revert to rent-stabilized apartments, but they'd still owe their mortgages and lose their equity. Richard Hirsch, president of the Carnegie House co-op board, said they're not looking for a rent freeze and have offered to double the rent.
The ground lease system was designed in the 1950s to make homeownership possible for everyday New Yorkers, but it's now coming due as NYC land values surge. The Ground Lease Co-op Coalition estimates that over 25,000 New Yorkers own co-op apartments atop ground leases that could face similar rent hikes.
Bills to provide protections to residents of ground-lease buildings have failed to pass, leaving many in a precarious situation. Rally attendee Anton Lekic's Queens co-op is facing a looming deadline and has already seen banks decline to finance purchases due to concerns about the equity being gone.
The Wednesday rally aimed to put pressure on investors like Michael Dell to take action 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 stalled, and a narrower version failed to reach a floor vote this year.
