Landlord Wants to Discontinue Swimming Pool and Sundeck

Landlord applied for permission to reduce services. Landlord sought to discontinue providing a swimming pool and sundeck. The DRA ruled for landlord and ordered a permanent 2 percent rent reduction for tenants. Tenants and landlord appealed. Landlord claimed that there should be no rent reduction because the pool and sundeck were operated by an independent contractor. Tenants claimed that the rent reduction was too low because it would cost at least $575 per year to get similar services outside the building. The DHCR ruled against landlord and tenants. The pool and sundeck were ancillary services that were subject to rent reduction for reduced services. The DRA's calculation method for the 2 percent rent reduction was reasonable. The DRA updated the $5,500 cost for providing the pool in 1968, the base date. The amount was increased by rent guidelines increases for two-year leases and estimated vacancy increases every six years. This resulted in a monthly rent amount of $2.18, which would have been the cost per unit if the cost of the pool contract had risen with rent guidelines. The monthly cost for gym membership at a nearby club was $57. This cost included services beyond a pool and sundeck. So the DRA allowed $30 per unit in calculating the cost of getting pool and sundeck services outside the building but not other facilities, such as a gymnasium. The $2.18 increase and $30 cost were averaged to reach the 2 percent rent increase.

Various Tenants of London Terrace: DHCR Adm. Rev. Dckt. Nos. LC430166RO et al. (3/26/04) [3-pg. doc.]