Insurance Reimbursement Deducted from Total Cost of MCI

Landlord applied for MCI rent hikes based on installation of a new boiler. The DRA ruled for landlord in part but disallowed $71,712 of the MCI cost that was reimbursed to landlord by its insurance company. Landlord appealed and lost. Landlord argued that most of the insurance proceeds were used toward the cost of a temporary boiler after the old boiler was damaged and so should not have been deducted from its MCI cost. It has been long-standing DHCR policy, upheld by the courts, that any amounts reimbursed from other sources such as insurance proceeds must be deducted from the proven cost of eligible MCIs. And the HSTPA amended the Rent Stabilization Law to require reduction of an MCI rent increase for an amount equal to "any insurance payment received by the landlord where such insurance payment compensates the landlord for any part of the cost of the improvements."

383 Warburton Assoc LP: DHCR Adm. Rev. Docket No. JR910018RO (7/12/23)[2-pg. document]