Contractor's Miscellaneous Work Excluded from MCI Costs

Landlord of an 18-building complex applied for MCI rent hikes based on elevator upgrading. The DRA ruled for landlord in part but disallowed the cost of municipal permits and miscellaneous work. Landlord appealed and lost. Landlord claimed that it was improper for the DRA to request a breakdown of project costs since the work was undertaken in a lump-sum contract. But the cost breakdown was necessary to determine whether all items included in the contract qualified as MCIs given the high total cost of the elevator upgrading. It also was customary for a contract to break down the cost into line items for such an extensive scope of work. It is also longstanding DHCR policy to exclude municipal filing fees and related costs for obtaining permits from the MCI costs. An appeals court had upheld another DHCR ruling to disallow DOB filing and inspection costs. The miscellaneous work in question included parts management, supervision, surveys, and scheduling. These were considered ordinary administrative work performed by the contractor and weren't eligible MCI costs.

98-40 57th Avenue: DHCR Adm. Rev. Docket No. YJ110042RO (12/31/14) [2-pg. doc.]