Landlord Didn't Disclose Relationship with Contractor

Landlord applied for MCI rent hikes based on a number of improvements. The DRA ruled for landlord in part, granting MCI rent hikes for an elevator upgrade, intercom installation, and entrance and lobby doors. The DRA denied any increase for waterproofing, lobby renovation and installation of new mailboxes, repiping, installation of a new boiler/burner and fuel storage tank, asbestos removal, and construction of a new sidewalk bridge. Tenants appealed, claiming that landlord had a duty to fully disclose its relationship with its primary contractor. They said that landlord made false statements, that the owner and CEO of the contracting company was employed by landlord, and that another employee of landlord had beneficial interests in the contracting company.
The DHCR ruled for tenants and revoked the MCI rent hikes. Landlord answered "no" to the question on the DHCR's MCI form as to whether it had a relationship, financial or otherwise, with the contractor that did some of the work. But tenants showed that landlord was listed in New York State Department of State records as the party to whom service of process should be made for the contractor. Also, landlord's vice president also signed as vice president on the contractor's Biennial Statement to the Department of State. Landlord claimed that it had acted as the contractor's attorney when it incorporated the contracting company and merely designated the landlord's address for service. Landlord also admitted that its office provided bookkeeping services for the contractor as a courtesy. Tenants also pointed out that the individual who owned and was the CEO of the contracting company was listed as the building's managing agent on the DHCR rent registration statements, a lease form, and two HPD acknowledgement of complaint forms, all dated in 1999. Landlord admitted that the contractor's owner had worked for landlord in 1999 but that he left to form his own business. Tenants then showed that the contractor incorporated in 1998, before the MCI work was done. Given landlord's lack of disclosure and landlord's clear and willful downplay of its relationship with the contractor, the entire rent increase was revoked, including those portions that were for work not done by this contractor.

514 West 110th Street: DHCR Adm. Rev. Docket Nos. QI430048RT, QJ430063RO (7/3/08)[7-pg. doc.]