New York State
Division of Housing and Community Renewal
Office of Rent Administration
Gertz Plaza, 92-31 Union Hall St.
Jamaica, New York 11433
Public Information: (718)739-6400

Mario M. Cuomo, Governor
Donald M. Halperin, Commissioner
Joseph A. D'Agosta, Deputy Commissioner for Rent Administration


SUPPLEMENT NO. 1 TO OPERATIONAL BULLETIN 84-4 (MCI)
(JANUARY 30, 1986)

INTRODUCTION

On November 13, 1984, the State Division of Housing and Community
Renewal (DHCR) issued Operational Bulletin No. 84-4 which related
to rent adjustments based upon a Major Capital Improvement (MCI).
Since the issuance of the Bulletin, the DHCR has decided to
implement changes in MCI procedures in accordance with its
authority under Section 33 of the State Rent and Eviction
Regulations (9NYCRR 2102.3), Section 33 of the Rent and Eviction
Regulations for New York City (9NYCRR 2202.3), Section
34(a)(2)(iv) of the Tenant Protection Regulations (9NYCRR
2502.4)(a)(2)(iv), and Section 35A of the Code of the Rent
Stabilization Association of New York City, Inc.

These sections of the Regulations and Code require the DHCR to
take into consideration all factors bearing on the equities
involved when it orders rent adjustments. The changes in MCI
procedures are as follows:

A)   APPLICATION FOR PRIOR OPINION OF THE DHCR

An owner may, at his or her option, apply for the DHCR's prior
opinion in all cases where the owner contemplates filing an
application for a rent increase based upon the installation of an
MCI or a substantial rehabilitation of the premises. Owners are
not required to obtain the DHCR's approval of the proposed work
prior to applying for an MCI increase.

The prior opinion would permit the owner to know with certainty,
prior to making any financial commitment or expenditure, whether
the proposed work qualifies for a rent increase as an MCI or
substantial rehabilitation. Such factors as the useful life of
the existing sub-system, the structural nature of the proposed
work and its necessity for the operation, preservation, and
maintenance of the building will be considered by the District
Rent Administrator or Director of Processing. If an owner files
an application for a prior opinion, tenants will be permitted to
challenge the proposed cost and propriety of the planned
installation. If a Prior Opinion order is issued, it will be
subject to administrative review by any aggrieved party.

Where the MCI installation or substantial rehabilitation will be
financed through the proceeds of a government sponsored loan
program, such as the Article 8A Program, the Prior Opinion
proceeding will be expedited for processing and approval will be
based upon certification to the DHCR by the government agency
involved that the projected work is in accordance with its
standards and qualifications and conforms to code requirements.

Upon obtaining prior approval or upon completing the installation
of the MCI or the substantial rehabilitation, the owner will file
with the District Rent Administrator or Director of Processing an
application to increase the rents based upon the actual cost
incurred, and submit the required documentation in order to
substantiate such cost. including a copy of the Prior Opinion
order, if any. Municipal certificates must be submitted where
required. An application for a rent increase based upon an MCI or
substantial rehabilitation of the premises previously approved in
a prior opinion will be examined only as to actual cost expended
for the improvement.

B)   PERMISSIBLE CHARGES FOR THE INSTALLATION OF AN AIR
     CONDITIONER FOR BOTH RENT CONTROLLED AND RENT STABILIZED
     APARTMENTS IN NEW YORK CITY.

An owner may charge a tenant the following amounts for the
installation of an air conditioner between October 1, 1985 and
September 30, 1986:

(1)  $222.48* per annum per air conditioner ($18.54 per month),
     where the tenant installs his own air conditioner, and
     "free" electricity is included in the rent.

     This initial charge is subject to adjustment on October 1,
     1986 and each subsequent October 1st thereafter. It will be
     adjusted either upward or downward depending upon whether
     the "Price Index of Operating Costs for Rent Stabilized
     Apartment Houses in New York City," prepared for the New
     York City Rent Guidelines Board by the Urban Systems
     Research and Engineering, Inc., shows an increase or
     decrease in the cost of electricity for electrical inclusion
     buildings.

(2)  $222.48 per annum air conditioner ($18.54 per month) plus
     one-fortieth (1/40th) of the cost of the new air
     conditioner, where "free" electricity is included in the
     rent and the owner, with the tenant's written consent,
     installs a new air conditioner for the tenant.

(3)  $5.00 per month per air conditioner, where the tenant
     installs his own air conditioner, which protrudes beyond the
     window line, and pays for his own electricity, and the
     installation of the air conditioner will result in damage to
     the owner's property.

These charges will apply to both Rent Controlled and Rent
Stabilized apartments in New York City, for air conditioners
installed on and after October 1, 1985, regardless of any prior,
differing charges and procedures. Neither of these charges shall
be part of the base rent for the purpose of computing any
guidelines or other increases under the Rent Stabilization Law or
Code.

C)   RESTRICTIONS ON THE USE OF RESERVE FUNDS

Rent increases based on an MCI are made available to owners as an
incentive for them to invest in their property. Accordingly,
money from the reserve fund of a building converted to
cooperative or condominium ownership should not be used as the
basis for an MCI rent increase adjustment. To encourage such
investment, the adjustment will be allowed only if the funds used
for the MCI are contributed previously by the sponsor prior to
the conversion or are obtained by a special assessment of the
shareholders or the owners of condominium units.

It has, therefore, been determined that where an MCI has been
paid for after conversion, out of a cash reserve fund deposited
by the owner/sponsor/landlord, such MCI will not be the basis for
a rent increase. Likewise, if an MCI is installed subsequent to
transfer of title to a cooperative corporation, the corporation
will not be eligible for a rent increase unless the MCI is paid
for by a special assessment of all the shareholders (proprietary
lessees), or the sponsor or holder of unsold shares pays for the
MCI without removing funds from the cash reserve fund. It should
be noted that if a cooperative corporation is eligible to file
for an MCI increase, the application must be filed by the
managing agent of the corporation on behalf of the corporation
and all proprietary lessees, including the sponsor. This will
avoid multiple applications for the same MCI.

D)   INDIVIDUAL APARTMENT IMPROVEMENTS OR INSTALLATION OF NEW
     EQUIPMENT

Operational Bulletin 84-4 is amended to the extent of no longer
requiring the approval of the DHCR for individual apartment
improvements, including the installation of new equipment, based
upon tenant consent, or completed or installed while the
apartment is vacant. However, increased apartment services
continue to require DHCR approval, as for example, a master
television antenna, or cable TV. Owners will be required to note
on the Annual Registration Form that such improvements or
equipment were installed and the rent increased as a result.
Tenants would then have 4 years to challenge such increase.

E)   6% LIMITATION ON MAJOR CAPITAL IMPROVEMENTS, SUBSTANTIAL
     REHABILITATION AND HARDSHIP INCREASES FOR RENT STABILIZED
     APARTMENTS IN NEW YORK CITY

It has been determined that the 6% annual limitation contained in
Section YY51-6.0.c. of the New York City Administrative Code
applies to all increases for MCI's, substantial rehabilitations
and hardships, whether alternative or comparative, and must be
imposed in the processing of such applications for rent
stabilized apartments in New York City.

In addition to the 6% annual limitation, an additional 6%
increase will be allowed towards arrears arising from any delay
in the processing of applications for such increases.

Any rent increases in the above categories which exceed 6% may be
collected in future years in a similar manner as the 15%
limitation contained in Operational Bulletin 84-4, which
continues to apply to rent controlled apartments statewide and
rent stabilized apartments outside New York City.

----------------

*    The 1985 charge (estimated average operating cost) per air
     conditioner of $233.07 per annum ($19.43 per month) reduced
     to reflect a 4.6% decline in the price of electricity for
     electrical inclusion buildings. See "1985 Price Index of
     Operating Cost for Rent Stabilized Apartment Houses in New
     York City," Urban Systems Research and Engineering, Inc.,
     Page 30, May, 1985.

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DHCR Operational Bulletins are issued by the New York State
Division of Housing and Community Renewal (DHCR) and update
agency administration of the rent laws.

Electronic versions of the 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 is advised to obtain true copies of
these documents from DHCR. Also see DHCR Policy Statements,
DHCR Advisory Opinions, the Rent Stabilization Code, the Rent
Stabilization Law and various Rent Control Statutes.

Every attempt has been made to conform to the original Operational
Bulletins 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
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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
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