Effective Date of MCI Rent Hike Based on Landlord's Delay

The DHCR granted landlord's application for MCI rent hikes. Landlord, which was the managing agent of the holder of unsold shares in a co-op building, filed an Article 78 appeal, challenging the effective date of the rent hikes for four rent-controlled tenants. Landlord filed the MCI application on Oct. 6, 2003. In August 2004, the DRA notified landlord that it had failed to answer a July 21 notice and gave landlord a final chance to respond. The notice sought additional information as to whether shareholders ever paid a special assessment or whether a reserve fund had been used to pay for the MCI. Landlord's attorney submitted only a brief letter dated Sept. 9, 2004, in response. Tenants then objected, claiming that MCIs were paid for from the reserve fund. The DRA ruled for tenants and denied the MCI application. Landlord appealed, and, after a number of substantive exchanges were submitted, the court ruled for landlord on April 6, 2012, based on proof that the initial reserve fund was depleted in 1996. The work in question wasn't begun until 2000. The rent increases were made effective May 1, 2012. Landlord  argued in court that the rent increases should be made retroactive to Nov. 1, 2006. The DHCR's decision didn't correct any mistake by the DRA. Landlord hadn't submitted sufficient proof for the DRA to grant the MCI increases. The DHCR's decision was based on additional proof submitted by landlord for the first time on appeal, after landlord had repeated opportunities to submit the missing information. 

Heller Realty v. DHCR: 40 Misc.3d 1216(A), 2013 NY Slip Op 51204(U) (Sup. Ct. NY; 7/15/13; Schlesinger, J)