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 #8 - Major Capital Improvements (MCI)
                   [Questions and Answers for Owners]
                             [Revised 1/95]

What is an MCI?

     When owners make improvements or installations to a building subject to
the Emergency Tenant Protection Act 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 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.

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

Who may apply for a MCI rent increase?

     Owners of rent regulated buildings may apply for an increase upon
completion and payment for the installation or improvement and application or
procurement of all required approvals and/or certificates of operation.  No
increase will be issued until final approvals are received.  In the event that
payment is not complete at the time of filing due to a loan or an installment
agreement, that documentation must be included in the application.

Will violations affect the granting of an MCI?

     The Division of Housing and Community Renewal (DHCR) will not grant an
owner an increase, in whole or in part, if the owner is not maintaining all
required services, or if any immediately hazardous violations are outstanding
from any municipality, county, State or Federal law relating to the
maintenance of such services. DHCR may grant an application upon condition
that such services will be restored within a reasonable time.  No MCI rent
increase will be approved if there is an outstanding building-wide service
reduction order in effect, unless the owner restored the service and DHCR
issued a positive determination.

Who should file for cooperatives/condominiums?

     If a cooperative/condominium corporation has rent regulated tenants and is
eligible to file for an MCI increase, the application must be filed by the
managing agent of the corporation and all proprietary lessees (shareholders)
including that sponsors, if it must be filed by proprietary lessee on behalf
of and with the written consent of all proprietary lessees.  Applications will
not be accepted from individual apartment owners on their own behalf.

How does an owner apply for an MCI and what kind of documentation is needed?

CAPITAL IMPROVEMENTS (DHCR form RA-79) available from DHCR District Offices
or from the main office in Gertz Plaza, 92-31 Union Hall St., Jamaica, NY

     The completed application must contain:

         1. an itemized list of the work performed;
         2. a certification of the cost of the work;
         3. proof of payment of the certified work;
         4. a sworn affidavit that all the work certified was performed in
            compliance with all building, zoning, and safety laws;
         5. copies of all necessary approvals from applicable government
            agencies for the work done; and
         6. an affirmation of maintenance of services and a schedule of
            monthly rents.

How should the cost records for the MCI be kept?

     In order to speed processing, owners are strongly urged to pay for all MCI
costs by check.  If cash payments are made for allowable MCI expenses, they
must be supported by adequate documentation.  Evidence would include:  signed
paid receipts, a contractor's affidavit, bank records, itemized IRS tax
returns, financial books and records for the building, and original estimates,
bids or contracts.  Where the owner fails to submit any evidence of payment,
the claimed cost of the item will be disallowed.

When does an MCI rent increase become effective?

     For rent regulated apartments in ETPA Counties, the MCI rent increase is
generally effective at the end of the current lease unless the lease contains
a provision allowing for the increase during the term of the lease.

How much of an MCI rent increase over base rent can you expect?

     For rent controlled apartments statewide and for ETPA apartments, the
permanent rent increase collectible in any one year may not exceed 15% of the
tenant's rent, as of the issue date of the order, and there is generally no
retroactive portion.  A senior citizen with a valid Senior Citizen Rent
Increase Exemption (SCRIE) is exempt from paying the MCI over the amount of
their exemption.

How do tenants and owners challenge or request a review of the MCI order?

     After receipt of DHCR's order regarding the MCI application, parties are
entitled to file a Petition for Administrative Review (PAR) [DHCR form RAR-2]
requesting that further consideration be given to additional facts related to
the order.  Until DHCR issues the PAR order, all prospective rental increases
can be collected as calculated in the MCI order.  PARs must be filed within 35
days outside of New York City and for rent control cases statewide.

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

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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