Landlord Entitled to Gas Surcharge Increases from Former Loft Tenant

Landlord asked the DHCR for a ruling authorizing rent surcharges retroactive to July 1, 2006, based on tenant's gas usage for heat and cooking gas. Tenant's loft unit became subject to rent stabilization in 2001 following loft law coverage. Tenant's initial rent-stabilized lease provided for tenant to pay $80 per month as a gas surcharge. A 1997 Loft Board order had ruled that landlord should be allowed to continue to collect from tenant the pass-along cost of gas usage, based on a fair calculation of usage at 50 percent of the market cost of gas consumption reflected by a gas meter. Tenant argued that the gas surcharge was set permanently at $80 per month. The DRA ruled against landlord, finding that the Rent Stabilization Code didn't entitle landlord to collect a gas surcharge.

Landlord appealed and won, in part. The DHCR found that landlord could collect the gas surcharge under the Rent Stabilization Code (RSC), but that the DHCR wasn't authorized to grant surcharge increases. Landlord then filed an Article 78 court appeal. The court sent the case back to the DHCR for reconsideration.

The DHCR ruled for landlord. There was nothing illegal about the surcharge agreement of the 1997 Loft Board order. Utility surcharges are permitted under RSC Section 2522.10 and are not part of the legal regulated rent. And, in light of the court order, tenant's "fair share" of the gas cost after 2002 would be equal to the initial $80 per month, increased by one-year renewal increases set by the Rent Guidelines Board. This raised the current gas surcharge to $117.73, and tenant owed $3,844 in gas surcharge arrears. Tenant could pay these arrears in monthly installments of $80 over 48 months.

Jerome: DHCR Adm. Rev. Docket No. DP410002RP (4/20/18) [6-pg. doc.]