DHCR FACT SHEET #23 Division of Housing and Community Renewal FUEL COST ADJUSTMENT QUESTIONS AND ANSWERS FOR OWNERS Q. WHAT IS A FUEL COST ADJUSTMENT? Local Law 20 (1980) amended the Rent Control Law to permit rent adjustments based on the changes, up or down, in the price of heating fuels. Beginning in 1981, and for subsequent years, the rent adjustment is based on fuel price changes between the beginning and end of the prior year. Q. WHO IS COVERED BY THE FUEL COST ADJUSTMENT LAW? Only rent controlled apartment tenants and owners are covered by this law. Q. WHAT ARE THE FUEL COSTS ADJUSTMENT FILING REQUIREMENTS? Building owners must certify that they are maintaining essential services and that it has been at least 1 2 months prior to filing that DHCR ordered a rent restoration for any reduction in rent for failure to provide heat and hot water or other essential services . Buildings that have not qualified for Maximum Base Rent increases can be eligible for fuel cost adjustments. To obtain the adjustment, the owner must complete, certify and serve upon each eligible tenant, a copy of DHCR's official Owner's Report, Certification, and Notice of fuel Cost Adjustment Eligibility [DHCR form RA-33.10], together with Schedule A, where applicable . The owner must file with DHCR a master copy of the Report, together with Schedule A where applicable, and a schedule of monthly rent increases for all the rent controlled tenants served with copies of the Report. The rent adjustment is collectible when the tenant and DHCR are served with the completed Report forms and schedules. No order from the Rent Administrator is required. Q. CAN THE OWNER COLLECT THE FUEL COST ADJUSTMENT FROM A TENANT WHOSE MAXIMUM COLLECTIBLE RENT (MCR) EQUALS OR EXCEEDS THE MAXIMUM BASE RENT (MBR) FOR THE APARTMENT? Yes, however, the owner must certify that the property will not be yielding an 8 1/2% return on the equalized assessed value after receiving rent increases for the fuel cost adjustment. Q. HOW IS THE FUEL COST ADJUSTMENT COMPUTED? The quantity of fuel delivered during the previous year is divided by the number of rooms in the building, not to exceed the annual maximum consumption standard per room for the type of fuel used. This figure is then multiplied by the price change, divided by 12 months and multiplied by 75%. Seventy-five percent (75%) of the annual fuel cost per room is passed along to the tenant. Q. CAN AN OWNER WHO FAILED TO FOR FUEL COST ADJUSTMENTS FOR PAST YEARS, TILE ON FUTURE ADJUSTMENTS? Yes, an owner may file for future fuel cost adjustments, however, the past fuel cost adjustments are forfeited. Q. CAN AN OWNER WHO FAILED TO FILE IN 1989 FOR A FUEL COST ADJUSTMENT, FILE IN 1990 FOR THE 1989 ADJUSTMENT? No. To get a rent increase based upon price changes that occurred in 1988, the owner had to fib in 1989. If the owner did not file in 1989, the fuel cost for 1989 is forfeited. Q. DO FUEL COST ADJUSTMENTS GRANTED IN 1989 TERMINATE AT THE END OF 1989? No. These increases continue to be collectible, unless modified or revoked by order of the Rent Administrator. Any fuel cost adjustment for 1989 must be added to or subtracted from the 1980 through 1988 adjustments, known as the cumulative monthly rent adjustments. Q. IS THE FUEL COST ADJUSTMENT RETROACTIVE? Fuel cost adjustments are retroactive to January 1st of each year provided the owner files the Report within 60 days after the fuel consumption and price change standards are released. For reports filed with DHCR after the 60 day period, the increase is prospective. Where an owner has obtained one or more fuel cost increases previously and the cost of fuel decreases in a subsequent year, the owner must file a timely report and decrease the tenants fuel cost adjustment or the entire fuel cost adjustment will be suspended for that 12 month period. Is there a penalty If an owner does not file a Fuel Cost Adjustment Report when the cost of fuel decreases? Yes When the cost of fuel decreases, the owner must tile a timely Report and pass the decrease on to the tenants. Failure to serve the tenants and DHCR within 60 days after the fuel consumption and price change standards are released will result in the suspension and revocation of all previous fuel increases for a period of 12 months. Q. IS THE FUEL COST ADJUSTMENT INCORPORATED IN THE RENT FOR AN APARTMENT? No. The law states that the fuel cost adjustment is not to be incorporated in the rent on which Maximum Base Rent increases are computed. Q. CAN THE REPORT BE CHALLENGED IF A TENANT HAS REASON TO BELIEVE THAT THE FUEL COST ADJUSTMENT REPORT IS NOT ACCURATE OR TRUTHFUL? Yes, a tenant has the right to challenge, based on any known error, omission, or misrepresentation on the Report form or any attachments. The tenant should first contact the owner and attempt to resolve the disagreement. If differences remain, the tenant has 33 days after receipt of the Report to file the TENANT'S CHALLENGE TO LANDLORD'S REPORT AND CERTIFICATION OF FUEL COST ADJUSTMENT AND ELIGIBILITY [DHCR form RAC-2202.13]. Q. WHAT IS THE PENALTY IF DHCR FINDS THAT AN OWNER FALSIFIED A FUEL COST ADJUSTMENT REPORT? The law prescribes a penalty for false certification: A refund of fuel cost increases collected in 2 prior years, plus ineligibility for future cost adjustments for 2 succeeding years from the date of the determination that a false certification was made. Other penalties and sanctions of the law may also be imposed. ------------------------------------------------------------ DHCR Fact Sheets (series of thirty) are issued by the New York State Division of Housing and Community Renewal (DHCR) as plain- english informational publications. For official agency policies, see DHCR Policy Statements, Advisory Opinions and Operational Bulletins. Also refer to the Rent Stabilization Code, the Rent Stabilization Law and various Rent Control Statutes. Electronic versions of these documents on TenantNet are for informational purposes only and there is no guarantee they will be accepted by any court (or even DHCR) as true copies of DHCR policy. The reader may obtain true copies of these documents from DHCR. Every attempt has been made to conform to the original Fact Sheets as issued by DHCR; TenantNet makes no representation the enclosed material is current or will be applied as written. The reader is advised that DHCR often fails to properly apply, interpret or enforce housing laws. Since housing laws are complex and often contradictory, it is recommended the reader obtain competent legal advice from a tenant attorney or counseling from a tenant association or community group. (rev. 3/13/96) DHCR documents are public documents; the electronic version of such documents have been developed by TenantNet and any added value, enhancements and/or proprietary features are copyright 1994, 1995 and 1996 by TenantNet. These documents may be freely distributed provided they remain intact as herein presented, including this and the top informational banner referencing TenantNet as the original provider. ------------------------------------------------------------ For more information or assistance, call the DHCR Rent Infoline at (718) 739-6400, or visit your Borough Rent Office. Queens Central Office 92-31 Union Hall St. 4th Fl. Jamaica, NY 11433 (718) 739-6400 Bronx One Fordham Plaza Bronx, NY 10458 (718) 563-5678 Brooklyn 250 Schermerhorn St. 3rd Floor Brooklyn, NY 11201 (718) 780-9246 Lower Manhattan 156 William Street 9th Floor NY, NY 10038 (212) 240-6011, 6012 South side of 110th St. and below Upper Manhattan 163 W. 125th St. 5th Floor NY, NY 10027 (212) 961-8930 North side of 110th St. and above Staten Island 350 St. Mark's Place Room 105 Staten island, NY 10301 (718) 816-0277 Nassau County District Rent Office 50 Clinton Street, 6th Floor Hempstead, NY 11550 (516) 481-9494 Westchester County District Rent Office 55 Church Street, 3rd Floor White Plains, NY 10601 (914) 948-4434 Rockland County District Rent Office 94-96 North Main St. Spring Valley, NY 10977 (914) 425-6575 Albany Regional Office 119 Washington Avenue Albany, NY 12210 (518) 432-0596 Buffalo Regional Office Ellicot Square Building 295 Main St., Room 438 Buffalo, NY 14203 (716) 856-1382 ------------------------------------------------------------