Portions of Exterior Restoration Work Disallowed

Landlord applied for MCI rent hikes in 2012 based on a number of improvements. The DRA ruled for landlord in part, granting an increase for parapets and related work, as well as a CCTV system. But the DRA denied any increase for new sidewalks with vault repairs, a new garage ramp, and related engineering services, finding this work ineligible for any MCI increase. The DRA prorated the amount of the cost of previous pointing and waterproofing for which an MCI rent increase had been granted separately in 2003 and which was still within its useful life. Landlord and tenants both appealed.

The DHCR ruled against landlord. Under long-standing DHCR policy and precedent, repair work performed on sidewalks located in the public right-of-way doesn't qualify as an MCI. This policy had also been applied to work performed on underground vaults located below the public sidewalk. Landlord's claim that at least some of the vault repairs were needed to maintain the structural integrity of the building was unsupported by proof in the record. Landlord's architect had stated that the vault work was done to maintain the structural integrity of "the sidewalk, entrance and planter area."

The DHCR ruled for tenants in part. Tenants' claim that the entire cost of the exterior restoration work should be disallowed was without merit. Under long-standing DHCR policy, the comprehensive exterior restoration was a distinct MCI with a useful life of 25 years. Since the 2012 exterior restoration work was separate and distinct from the 2003 pointing and waterproofing, landlord wasn't required to submit a useful life waiver request for the entire scope of the work at issue. But landlord should have filed a useful life waiver request for the pointing and parapet work that was part of the 2012 exterior restoration. So the cost of the 2012 pointing and parapet work must be deducted from the total MCI increase approved. The total per-room/per-month MCI rent increase was reduced from $12.77 to $10.57. 

CF E 88 LLC & SM E 88 LLC/Lexington Towers Tenants Association: DHCR Adm. Rev. Docket Nos. FQ410016RO, FQ410035RT (9/9/22)[4-pg. document]