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

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

ETPA Fact Sheet #6 - Rent Increases for Major Capital Improvements (MCI)
                             [Revised 1/95]

     When owners make improvements or installations to a building subject to
the ETPA or Emergency Housing Rent Control laws, they may be permitted to
increase the rent based on the actual, verified cost of the improvement.

     To qualify as an Major Capital Improvement (MCI), the improvement or
installation must:

         1.  be for other than ordinary repairs;
         2.  be for the operation, preservation and maintenance of the
             building; and,
         3.  directly or indirectly benefit all tenants of the building.

     To be eligible for a rent increase, the MCI must be a new installation and
not a repair to old equipment.  For example, an owner may receive an MCI
increase for a new boiler or a new roof but not for a repaired or rebuilt one.
Some procedures qualify as MCI's as well, such as pointing and waterproofing.

     When an owner submits an MCI rent increase application to the Division of
Housing and Community Renewal (DHCR), they notify the tenants as well. Tenants
then have an opportunity to respond to the owner's application.  The owner may
either keep a copy of the application on the premises so that tenants can
examine it or, a copy with supporting documentation will be available at DHCR
for tenant review.  The tenants responses are considered by DHCR prior to a
final determination.

     DHCR will issue an order either granting an increase in whole, in part, or
denying the increase.  DHCR computes the rent increase for an ETPA or rent
controlled apartment based upon a seven-year period of amortization of the
verified costs of the MCI.  The rent increase is a permanent addition to the
legal regulated rent and does not drop off after the seven year period.  The
tenant's increase is based upon a per room amount.  No increase may be charged
or collected unless and until DHCR issues an order approving the increase. If
DHCR gives that approval after the lease period is underway, the lease should
contain a rider alerting the tenant to the pending application and
specifically describing the improvement.  If that statement is not present in
the lease, the owner cannot charge for the MCI until the lease is renewed.

     In addition, unless specifically ordered by DHCR, an owner cannot collect
an MCI from a tenant for whom DHCR has determined that required services are
not being maintained; or from a tenant who has a rent reduction order in
place. No MCI rent increase will be approved if a building-wide service
reduction order is in effect, unless the owner has filed for a restoration and
a determination issued. Also, if DHCR has an outstanding finding of harassment,
they will not grant an increase.

     A  senior citizen with a valid Senior Citizen Rent Increase Exemption
(SCRIE) is exempt from paying the MCI over the amount of their exemption.

     For ETPA and Emergency Housing Rent Control apartments outside New York
City, the rent increase collectible in any one year may not exceed 15% of the
tenant's  rent.  No increases are retroactive unless the order specifically
provides otherwise.

     For more information or assistance, call or visit your local District
Rent Offices.

50 Clinton St. 6th Fl.
Hempstead, NY   11550
(516) 481-9494

94-96 North Main St.
Spring Valley, NY 10977
(914) 425-6575

55 Church St.
White Plains, NY  10601
(914) 948-4434

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