Price for Security Guards Not Included in Labor Cost Adjustment

Landlord applied for labor cost adjustment (LCA) rent increases for rent-controlled tenants. Landlord claimed that it employed several building employees, including guards who were provided by an outside security service. Rent control regulations allow for an increase in maximum rents if landlord's payroll expenses exceed the amount set by a given formula. The DRA ruled for landlord, increasing tenants' rents to reflect uncompensated labor costs. But the DRA disallowed any increase for the security guards. Landlord appealed, and the DHCR ruled against landlord. Security guards aren't building service employees hired for purposes of calculating LCAs. And besides, landlord didn't pay them directly. Landlord paid an independent company for the service and was charged sales tax.

Sixty-Eighth Street Co.: DHCR Adm. Rev. Dckt. Nos. GA 430265-RO, GB 430247-RO (1/12/94) [4-page document]