No MCI Increase for Groupwork in Connection with Water Repiping

Landlord applied for MCI rent hikes based on water repiping. The DRA ruled for landlord in part, but excluded from the total MCI costs the costs associated with kitchen and bathroom modernization work. While landlord's application was pending, the HSTPA amended the Rent Stabilization Law in 2019 so that such work no longer qualified for MCI rent hikes.

Landlord appealed and lost. Landlord argued that HSTPA amendments shouldn't have been applied to its pending application, that the DHCR unduly delayed processing its application, and that, in any event, HSTPA permitted MCI rent increases for the disallowed work. But Rent Stabilization Law Section26-511.1(a)(2) now disallowed "groupwork" such as the kitchen and bathroom modernizations, which were not an improvement to the entire building. And landlord filed its MCI application in August 2018, less than one year prior to passage of the HSTPA. And, unlike the retroactive rent overcharge provisions disallowed in the case of Regina Metro. v. DHCR, HSTPA didn't impose any new liability on landlord for its MCI work. And there was no unjust retroactive effect on landlord. The DHCR noted that landlord could collect IAI rent increases for the bathroom and kitchen installations upon vacancy.

4040 BA LLC: DHCR Adm. Rev. Docket No. IM610034RO (8/25/21)[4-pg. document]