Engineer Fees Included in MCI Increase for A/C System Installation

Landlord applied for MCI rent hikes based on new central air conditioning equipment. The DRA ruled for landlord in part but disallowed costs associated with a consulting engineer.

Landlord appealed and lost. The DHCR found that the engineering costs weren't necessary to complete the work. Landlord then filed an Article 78 court appeal and argued that the DHCR's decision was arbitrary and unreasonable.

The DHCR agreed to reopen the case for reconsideration, then ruled for landlord. Under the DHCR's well-established policy, found in DHCR Policy Statement 2017-1, professional services have to be both customary and necessary to be included as an added MCI cost. The central air conditioning system here involved the installation of a new mechanical chiller unit in the basement and a new cooling tower on the 18-story building's roof, together with all related pumps, filtering systems, piping, electrical wiring, and general construction. This installation, for 222 apartments, involved complexity beyond the normal scope of work for an air conditioning installation. Therefore, the engineer's fee of $34,550 should be included in the MCI costs, with a resulting increase in the total MCI rent increases.

Estate of Lillian Goldman: DHCR Adm. Rev. Docket No. HM410001RP (2/12/20) [3-pg. doc.]