State Housing Agency: Tips for Tenants and Landlords on MCIs

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For a capital project like a new roof to qualify for an MCI rent hike, a state official writes, it must pass strict criteria.

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For a capital project like a new roof to qualify for an MCI rent hike, a state official writes, it must pass strict criteria.

Some landlords perceive the Office of Rent Administration (ORA) as favoring tenants; some tenants view ORA as being partial to owners. It is neither. ORA doesn’t provide either side with legal representation or legal arguments; it provides both with assistance in understanding the complex law that governs rent regulation, including the Notice to Tenant of MCI (Major Capital Improvement) Rent Increase Application and is charged to make a determination in accordance with law after impartially weighing the evidence and arguments of both owners and tenants.

Under the law, where an owner makes building–wide improvements, such as the installation of a new boiler, the owner may be entitled to charge each rent stabilized tenant in the building a rent increase based on MCI. MCIs are intended to ensure that landlords properly undertake and assure the long-term preservation of their rent-regulated properties. Tenants have the right to contest every MCI application, based on the law and based on merit. ORA’s main purpose is to follow and administer the rent laws, to provide for due process to both landlords and tenants. ORA is bound by statute and regulation and cannot adjudicate orders based on criteria not covered under the law.

When an owner applies for an MCI, he or she must include certifications from the owner and vendor/contractor of the cost of work performed; dates the replacement began and was completed; proof of payment; approvals from applicable government agencies for the work done; and that serious building code violations are removed. Moreover, the full range of required tenant services must be maintained by the owner or the collection of the MCI may be disqualified for a reduction of service.

Overall, ORA denies 30 percent of the total claimed costs of MCIs because the improvements or the claimed costs don’t meet the regulatory criteria. To qualify as an MCI, any improvement or installation must:

  1. be depreciable pursuant to the Internal Revenue Code, other than for ordinary repairs;
  2. be for the operation, preservation and maintenance of the building;
  3. directly or indirectly benefit all tenants; and,
  4. meet the requirements set forth in the useful life schedule contained in the applicable Rent Regulations. (This helps to insure that landlords do not benefit by replacing costly items before the end of their useful life.)

Tenants are notified by mail of the owner’s MCI application and given 30 days – or more – if needed and approved – to respond in writing. This is an open process where tenants can review the application and corresponding documents. If tenants need assistance in understanding or responding to the notice they should call the Rent Infoline at 718-739-6400. In DHCR’s experience, most tenant associations and tenant advocacy groups are well-versed in MCI laws and are duly qualified to contest MCI orders in Petitions for Administrative Review and/or in an Article 78 proceeding.

At all times, ORA maintains impartiality. It is bound by documentary evidence, and the Court has the final word in disputes. At times, some information may come to light during a court proceeding that was previously unavailable years earlier when the original MCI application was filed that will influence the order.

It is important that both tenants and landlords be aware of, and advocate for, their rights. And tenants have a powerful advocate in Albany: Governor Cuomo led the fight to increase the luxury decontrol threshold to $2,500 in June 2011 and again to $2,700 in July 2015 and index it to the Rent Guidelines Board-approved annual increases. The Governor has twice pushed to strengthen the rent laws, and in the recent reforms in 2015 was successful in increasing civil harassment penalties imposed on landlords who harass tenants; lowering monthly rent increases on MCI orders granted by extending the Major Capital Improvement amortization period; and limiting the vacancy bonus provided for preferential rent apartments. In addition, Governor Cuomo has created the Tenant Protection Unit to proactively investigate patterns of harassment and violations of the rent laws.

DHCR takes its responsibility under this law extremely seriously whether it involves MCIs, overcharges or harassment. Any tenant who believes he or she has been the subject of harassment or overcharge, should reach out to the Office of Rent Administration and/or the Governor’s Tenant Protection Unit at 718-739-6400.

For more information, refer to the MCI Fact Sheet here and for information on the Useful Life Schedule for Major Capital Improvements see this page. To learn more about the Tenant Protection Unit, visit this site.

Catie Marshall is the deputy commissioner for communications at the New York State Homes & Community Renewal.

  • Jarrett Murphy

    Ingrid McAteer writes: This article was written in response to my article about the strongly pro-landlord stance this state agency takes in passing along MCI rent increases:http://citylimits.org/2015/09/10/tips-for-tenants-battling-rent-increases-in-court/ .

    In fact, however, this article responds to none of the issues I raised, because it can’t. For example, this state agency deliberately withholds from the public all they need to know about the legal basis for contesting MCI rent increases in the notices they send out. The agency also withholds the fact that there is no time limit on appeals that were not yet heard by the Court.

    And, this article says that ORA “is bound by documentary evidence” but, to the contrary, Court records will indisputably show that the agency fought tooth and nail to keep my documentary evidence of an illegal MCI increase out of Court. They failed. I won.

    This article also fails to respond to the fact that there are no virtually penalties for landlords who are caught lying, or that the agency makes building site visits for clarification virtually never. Nor does the stack of cancelled checks referred to above by any means prove compliance with MCI regulations, as my case proved, again.

    Also, the agency’s claim that it ” denies 30 percent of the total claimed costs of MCI” is deliberately misleading as it includes my case, where they knocked down a $79 per room increase to $77. No, that is not a denied MCI. They actually approve 90 percent of increases, mostly in total, some in part. The list of irrelevant or misleading remarks above is longer than this.

    For the truth, read my article.