NYC court upholds Carnegie House’s ground-rent increase

A rare spot of affordability on Manhattan’s ultra-luxury Billionaires’ Row is officially going the way of the dinosaurs.

Homeowners at Carnegie House at 100 W. 57th St. are now staring at a nightmare financial scenario. The issue: a breathtaking 450% ground-rent increase they spent the last year fighting that, on Monday, a New York County Supreme Court judge upheld.

Now, with the massive price hike about to happen, co-op residents say their monthly costs will reach stratospheric levels — and others are looking to get out completely, with sale listings in the building asking shockingly cheap prices.

Louis and Barbara Grumet, both 81, bought their roughly 1,250-square-foot two-bedroom for a little over $700,000 in 2011.

Though they were braced for a rent reset down the road, they told The Post they thought it would never arrive like this.

Louis put their current monthly maintenance at “around a little over $3,700,” then said under Monday’s outcome, “we’d pay somewhere over $9,000.”

“It’s more than crazy. It’s not doable.” Louis said.

Beyond the affordability aspect, the couple moved into Carnegie House for medical reasons. Louis was paralyzed and used a wheelchair — and access to local hospitals was a perk. Today, Barbara is also in a wheelchair.

“Barb is paralyzed. And I’ve learned how to walk again, but with a walker,” Louis said. “We lived in a house, and so we moved here because this is a perfect location in terms of our hospitals and our doctors, and also because it’s pretty flat land around here. And we could get around in a wheelchair.”

Carnegie House’s shareholders, including the Grumets, own their apartments — but the land beneath the building is controlled by a separate entity.

Under the lease terms, the annual ground rent gets recalculated periodically based on the fair market value of the land. This time, the new number would push the building’s yearly ground rent from $4 million to about $25 million, residents said, a leap that would ricochet straight into monthly maintenance bills.

Inside the building, the impact is already visible in the prices owners are being forced to accept.

Five homes in the 324-unit address are listed for sale at sharply depressed prices, StreetEasy shows. A studio asking $100,000 last traded for $375,000 in 2010. A roughly 900-square-foot one-bedroom now listed for $189,000 last sold for $545,000 in 2017.

The 324 apartments inside, when considering the new $25 million annual bill, face annual costs of roughly $77,200. Broken down by month, the ground-rent hike stands to add more than $6,400 to residents’ bills.

The fight over Carnegie House has been building for more than a year. The dispute centers on a long-scheduled reset of the building’s ground lease.

That lease, which was always set to be recalculated in 2025 based on the soaring value of Midtown land, was triggered after the land beneath the building was acquired in 2014 by a group tied to real-estate magnates Rubin Schron and David Werner, and billionaire Dell Technologies founder Michael Dell. Dell owns a roughly $100 million home just down the block at One57.

Last summer, homeowners protested outside the building and City Hall, arguing the reset would effectively price them out of homes many had owned for decades, drain their equity, and leave seniors and disabled residents with no viable alternative in the neighborhood.

“When they formed the co-op, I believe the initial 21-year rent was $250,000 for the entire building. Twenty-one years later, it went to $4 million. This is 21 years later, and they wanted to go to some astronomical [figure] … that no one ever dreamed a building like this would go for,” Louis said.

David Saxe, a retired appellate judge now representing Carnegie House, said the worst-case scenario is that the building buckles financially under the weight of the higher ground rent. If that happens, Carnegie House could lose its co-op status entirely and revert to rent-stabilized apartments — a shift that would erase shareholders’ ownership stakes while still leaving them responsible for any remaining mortgage debt.

“The shareholders would essentially lose their equity,” Saxe said, adding the court’s decision was “terribly misguided.”

Richard Hirsch, the co-op board president who moved into Carnegie House in 1997 and paid $350,000 for his two-bedroom apartment, described a long fight.

“We were severely disappointed,” he said of the ruling. “If you look at the full arc of this whole process, we have just been living under this very perverse, unfair power dynamic,” Hirsch said, adding, “we’re just the canary in the coal mine.”

The landlords’ side disputes the residents’ framing of the building as a pure primary-residence community and says it’s open to helping them.

“While more than 100 apartments in the building are owned purely as speculative investments or second homes, we are prepared to work in good faith to reach a global resolution and work with permanent residents demonstrating a need for rental assistance,” a spokesperson for the ownership entity, 57th & 6th Ground LLC, told The Post.

But residents disagree with the categorization of investment property. According to Hirsch, “They can’t sell their apartment, so they’re renting it. They’re not investors. They’re forced to rent it,” he said.

Currently, the building has nine listed units for rent, ranging from $3,000 per month for a studio to roughly $9,000 a month for a three-bedroom unit.

Hirsch estimates “north of 90%, if not more,” of the entire building, will be forced to leave, which he reiterates could be the goal of the developers.

For now, the next battle is over time — whether the co-op can keep an injunction in place long enough to get a real review from the appellate court.

“My greatest concern is that we will not be able to afford to stay in a place that is important to our medical needs,” Louis said.

Barbara added: “My biggest concern right now is just the uncertainty over what may or may not happen in the future.”