Rent Administrator Disallows Some IAI Costs Allowed by TPU

The DHCR's Tenant Protection Unit (TPU) commenced an individual apartment improvement (IAI) audit for tenant's apartment in October 2012 and directed landlord to submit proof justifying the cost of IAIs that were applied to substantially increase the apartment's legal regulated rent in 2011. Landlord claimed that it spent over $34,000 on IAIs, much of which consisted of payment to a management company. TPU disallowed the costs paid to the building manager and ordered landlord to reduce tenant's rent, file amended rent registrations, refund any overcharges to tenant, and send tenant an amended lease. TPU then referred the case to the DRA after landlord failed to comply with its ruling. The DRA made several requests to landlord for IAI itemization.

The DRA then ruled that landlord had proven IAI costs of $33,730 but disallowed costs allotted to plexiglass windows, drop ceilings, a/c outlets, and railings after an inspection found no proof of these items. The DRA found a total overcharge of $1,001, including triple damages.

Landlord appealed and lost. Landlord claimed that that DHCR's inspector failed to notice items that had in fact been installed in the apartment. But the DRA reasonably relied on its inspector's report, which included photographs.

Savuti II LLC: DHCR Adm. Rev. Docket No. DV210046RO (9/28/18) [6-pg. doc.]