When the owner of a building with rent-stabilized tenants does a major capital improvements (MCI) he can get rent increases after filing an application with the New York State Division of Housing and Community Renewal (DHCR). MCI applications can be opposed by tenants and in many cases the rent increases can be avoided or decreased.
Rent stabilized tenants in a Upper West Side building won a great victory today when the DHCR again revoked a $39.16 per room MCI rent increases for new windows after inspecting the windows and finding that they are defective. The owner installed the new windows in 2004 but when they were originally found to be defective in certain apartments the DHCR permanently exempted those apartments from the increase in 2006. The owner appealed arguing that the exemption should be temporary and that it should be given another chance to repair the windows, although tenants argued it had already had multiple chances. The owner lost its Article 78 appeal before Judge Marilyn Shafer. The owner then appealed to the Appellate Division. In 2010 a divided court ruled in Langham Mansions v. DHCR that the agency should have suspended rather than permanently denied the increase, despite evidence in the record that the owner had repeatedly tried to repair the windows and failed. The matter was sent back to the DHCR and the owner then had four additional years to try to repair the windows. The owner failed to do so and when the DHCR reinspected in 2014 they were found to be defective, as the tenants had claimed they were in 2006. The windows were found to be both difficult to open and had air seepage due to gaps between the bottom sash and frame.
On January 3, 2012, the New York State Court of Appeals will hear argument in the Terrace Court LLC v. DHCR v. Katel, et. al. case. In that case the New York State Division of Housing and Community Renewal ("DHCR") ruled that, after a facade MCI, apartments still experiencing leaks were permanently exempt from the MCI rent increase. The Supreme Court and the Appellate Division affirmed, agreeing with the DHCR and the tenants. The landlord is arguing that such exemptions can never be permanent but that landlords should always be given another chance to complete the work long after the MCI application has been filed. I drafted an amicus brief in the case on behalf of the New York State Tenants & Neighbors Coalition and Metropolitan Council on Housing. I argued that if a facade MCI is not completed when the application is filed that not only should tenants whose apartments still experience leaks be permanently exempt but that no tenant should have to pay the MCI rent increase.