Co-op shareholders at Carnegie House have lost a legal battle over the ground lease for their building after the New York County Supreme Court ruled in favor of landowners Rubie Schron and David Werner. The decision upholds a significant rent increase, which will raise the annual ground rent from $4.36 million to about $24 million, according to reporting by the Wall Street Journal.
The court’s ruling affects hundreds of shareholders who may struggle to keep up with higher payments. Richard Hirsch, president of the Carnegie House board of directors, commented on the situation: “In the middle of a housing crisis, our billionaire landowners are pulling out all the stops to push out middle-class New Yorkers for their own gain.” He also indicated that an appeal is planned.
Hirsch’s personal monthly costs could nearly triple from $5,000 to $13,000 as a result of the increased rent. A spokesperson for Schron and Werner stated they are “prepared to work with permanent residents demonstrating a need for rental assistance.”
The ground lease at 100 West 57th Street expired on March 15 and was renewed, but negotiations over new terms broke down last year when both sides could not agree on rent during a scheduled reset. Initial discussions set potential rent at $40 million—ten times higher than before—while the co-op board countered with offers starting at $5.4 million and later increasing by $50,000.
Schron and Werner then proposed $25 million as an alternative arrangement. Under this proposal, 75 percent of rent would be paid by the co-op (with 10 percent covered by proceeds from the building’s garage), while owners of retail space would cover 25 percent.
In September 2024, both the board and an LLC controlling retail space filed suit seeking to halt lease negotiations temporarily. However, that request was denied two months later; in March, the case was dismissed entirely.
If Carnegie House cannot meet its obligations under the new lease terms, it risks losing its ground lease entirely. In that scenario, ownership would revert to rent-stabilization status—a move expected to wipe out owner equity while leaving shareholders responsible for existing mortgage payments.
Uncertainty over future costs has already affected residents’ ability to secure mortgages; unit values have dropped below neighborhood market rates during this dispute.
Schron and Werner purchased Carnegie House’s underlying land in 2014 for $261 million.
