Landlord Can Replace Con Ed Steam Heat with Boiler/Burner

Landlord asked the DHCR for permission to replace the steam system supplied by Con Edison with heat and hot water from the owner's boiler/burner system. Tenants appealed and lost. Tenants argued that: (a) landlord replaced the system before getting DHCR approval; (b) the service modification resulted in rent increases based on an MCI rent increase granted by the DHCR for the new boiler steam system; and (c) the work didn't even qualify as an MCI.

The DHCR found that steam for the heat and hot water services delivered to tenants' apartments by the Con Ed steam system before the replacement was still being delivered by landlord's new boiler steam system at no additional cost to tenants; only the way the steam is generated was converted. There also was no change in the heat and hot water services to tenants' apartments. The new boiler/burner steam system was installed as an eligible MCI, which didn't require DHCR prior approval. And, in this case, there was no reduction in required services. Landlord was still providing the service of heat and hot water; only the manner in which heat and hot water were provided was modified. Tenants also pointed out that, in 2002, the DHCR ruled that a steam heating system had no useful life. But, later, the DHCR ruled that public utility-supplied steam heating system equipment didn't have an indefinite useful life and the replacement of such a system may qualify as an MCI.

360 East 65th Street Tenants Association: DHCR Adm. Rev. Docket No. GO410024RT (9/19/19) [2-pg. doc.]