George E. Pataki, Governor                     Joseph H. Holland, Commissioner

                     A publication of New York State
                Division of Housing and Community Renewal
                      Office of Rent Administration


            Fact Sheet #22 - Maximum Base Rent Program (MBR)
                   (Questions and Answers for Owners)
                             [Revised 3/96]

     The Maximum Base Rent Program affects housing conditions in New York
City rent controlled apartments. The program helps ensure that apartments
under rent control provide enough income for their maintenance and for
building improvements.

     New York City Local Law 30 of 1970 stipulates that Maximum Base Rents be
established for rent controlled apartments according to a formula calculated
to reflect real estate taxes, water and sewer charges, operating and
maintenance expenses, return on capital value and vacancy and collection loss
allowance. The Maximum Base Rent (MBR) is updated every two years by a factor
that incorporates changes in these operating costs.

Who is eligible for the MBR program?  How do you file?

     Owners with rent controlled apartments may qualify for MBR rent
increases by filing the following forms with DHCR.

     1.   Violation Certification (DHCR Form VC) certifying that all rent-
          impairing violations, and 80% of all non rent-impairing
          violations, on record as of January 1 of the year preceding each
          two year MBR cycle (e.g. 1991, 1993) or six months before filing
          if the forms are filed after June of the relevant odd year are
          cleared, corrected or abated. The NYC Department of Housing
          Preservation and Development, Division of Code Enforcement (NYC
          HPD/DCE), determines the nature and number of violations on the
          buildings.

     2.   Operation and Maintenance and Essential Services Certification
          (DHCR Form OMESC) certifying that the owner made payments and/or
          incurred obligations to pay at least 90% of the expense allowance
          for the operation and maintenance of the building and that the
          owner is maintaining and will continue to maintain all essential
          services.

     3.   When the above certifications are filed, the owner will be billed
          by the Division of Housing and Community Renewal (DHCR) for the
          MBR fee for each rent controlled apartment.

     After the owner removes the requisite violations, certifies the O&M
expenditures, and pays the fee, DHCR issues an MBR Order of Eligibility to
the owner and each rent controlled tenant. The order authorizes the owner to
calculate, on official forms, the Maximum Collectible Rents and Maximum Base
Rents for each rent controlled apartment.

     The effective date of the MBR increase is either January 1 of the
applicable year if forms were timely filed, or 6 months after filing the VC or
3 months after filing the OMESC, whichever is later.

How much will a tenant have to pay?

     The rent that rent controlled tenants actually pay is called the Maximum
Collectible Rent (MCR). The MCR generally is less than the MBR. By law, the
MCR cannot be increased by more than 7.5% per year for each year of the two
year MBR cycle unless there are Major Capital Improvements or individual
apartment rent increases. For example, if a tenant s rent (MCR) on 12/31/93
was $400, and the MBR was $450, then on 1/1/94 (effective date of MBR) the
rent (MCR) would rise 7.5% to $430 and the MBR ceiling would rise by 14.7%
(the 1994/95 MBR factor) to $516.15. On 1/1/95, the MBR would remain the same
(since MBR s cover a two year period), but the MCR would rise by another 7.5%
to $462.25.

     Where issuance of an order results in a retroactive rent increase, the
tenant may choose between making a lump sum payment or paying in installments
equal to  the number of months of the retroactive rent increase.

How does an owner begin collection of the increase?

Collectibility of the MBR increase depends upon:

     1.   DHCR issuance of an MBR Order of Eligibility to the owner and to
          each rent controlled tenant.

     2.   Owner serving the tenant with a Notice of Increase in MBR and MCR
          Computation (DHCR Form RN 26S or RN 26). This notice accompanies
          the owner s Order of Eligibility.

     3.   Owner filing with DHCR a completed Master Building Rent Schedule
          listing the MBRs and MCRs for all rent controlled apartments.

How does a tenant or owner challenge an MBR Order?

     Owners or tenants may challenge Maximum Base Rent Orders by filing
Challenge Re: Maximum Base Rent Order (DHCR Form RA-94 MBR). Tenants may also
challenge waivers granted by NYC HPD/DCE inspectors on the same form.

    For more information or assistance, call the DHCR Rent InfoLine,
(718) 739-6400, or visit your Borough Rent Office.


Central
92-31 Union Hall Street
4th Floor
Jamaica, NY 11433
(718) 739-6400

Brooklyn
250 Schermerhorn Street
3rd Floor
Brooklyn, NY 11201

Upper Manhattan
163 W. 125th Street
5th Floor
New York, NY 10027
North side of 110th St. and above

Lower Manhattan
156 William Street
9th Floor
New York, NY 10038
South side of 110th St. and below

Bronx
1 Fordham Plaza
2nd Floor
Bronx, NY 10458

Staten Island
60 Bay Street
7th Floor
Staten Island, NY 10301