Debt Service Arrears Included in Operating Expenses

Landlord applied to the DHCR for rent increases in a Mitchell-Lama building. The DHCR ruled for landlord and tenant appealed. The court ruled against tenant, upholding the rent increases, and tenant appealed again. The appeals court again ruled against tenant. In calculating rent increases, the DHCR included debt service arrears as current operating expenses of the building. This was reasonable. It wasn't the Legislature's intent to provide low and middle income housing at any cost. Landlord housing companies should be able to charge rents that enable them to pay their expenses, including debt service, and to receive a return on their investment.

McCarthy v. DHCR: NYLJ, p. 25, col. 6 (6/5/95) (App. Div. 1 Dept.; Rubin, JP, Kupferman, Asch, Tom, JJ)