MCI Increase Denied for Boiler Replacement Using #4 Fuel Oil

Landlord applied to the DHCR for MCI rent hikes based on an elevator upgrade and boiler installation. The DRA ruled for landlord in part, granting rent increases only for the elevator work. Since the replacement boiler used #4 fuel oil, which was prohibited by NYC rules, no MCI increase was permitted for this work. The DRA also disallowed any increase for the cleaning and painting of the motor room relating to the elevator upgrade.

Landlord appealed and lost. It was the DHCR's established position that installation of a new boiler/burner or fuel oil tank in NYC may qualify as an MCI. But in April 2011, NYC adopted a new heating oil regulation restricting the use of fuel oil grade numbers 4 and 6 and requiring any new boiler installation to burn only #2 fuel oil, natural gas or its equivalent. The city required landlords to phase out the use of #6 fuel oil by July 2015 and convert #4 fuel oil to either #2 fuel oil or natural gas by 2030. As a result, the DHCR considered any recent boiler replacement that used #4 fuel oil to be in the nature of an interim repair.

Landlord also argued that since the MCI work was performed in 2018, application of post-HSTPA law to the MCI application was improperly retroactive. The DHCR disagreed and pointed out that, since HSTPA amendments to the rent laws were enacted on June 14, 2019, a number of courts had repeatedly ruled that the DHCR's application of HSTPA Part K to pending MCI proceedings didn't violate a landlord's due process rights. 

200 West 58th Street LLC: DHCR Adm. Rev. Docket No. KT430035RO (5/17/24)[5-pg. document]