Posted by Jane on December 31, 2001 at 22:04:18:
In Reply to: Capital improvements posted by Sy Pearlman on December 29, 2001 at 21:29:44:
: The landlord recently completed capital improvements to our
: mixed rental building in NYC. Each apartment was assessed for the improvement based on the number of rooms, the payments are to be made monthly (in addition to rent) and we were told that the total cost would be amortized in six years. Is it true, that
: even when the total cost ($250,000) is paid off, we will continue
: to be billed for this capital improvement forever ? Why?
: It's like buying a car on payments, paying off the loan and then
: continuing to pay for the car. Where can I find legal precedents
: or housing law for this situation?
Try the History section right here on Tenant.Net.
This battle was fought and lost, 1983-94. (1983 was the birth of the current DHCR code)
Here's the last word:
BRYANT AVENUE TENANTS' ASSOCIATION v. EDWARD I. KOCH (12/08/94)
COURT OF APPEALS OF NEW YORK
No. 202
620 N.Y.S.2d 825; 84 N.Y.2d 960
decided: December 8, 1994.
BRYANT AVENUE TENANTS' ASSOCIATION, ET AL., APPELLANTS,
v.
EDWARD I. KOCH, &C., ET AL., RESPONDENTS. (AND FIVE RELATED
ACTIONS.)
Andrew Scherer, for appellants.
Iris J. Korman, for respondent DHCR.
Joseph L. Forstadt, for respondents RSA and Katz.
Marcia P. Hirsch, for respondent Hyde Park Associates.
Chief Judge Kaye and Judges Simons, Titone, Bellacosa, Smith, Levine and Ciparick concur.
MEMORANDUM:
The order of the Appellate Division should be modified, without costs, in accordance
with this memorandum, and, as so modified, affirmed. The certified question should
be answered in the negative.
The Division of Housing and Community Renewal's Rent Stabilization Code (9
NYCRR § 2522.4[a][8]) permits the collection of temporary retroactive rent increases
of up to 6% annually in addition to collection of prospective, permanent rent
increases of up to 6% annually for major capital improvements (MCIs). This
regulation authorizes landlords to recoup arrears accumulated during the period of
administrative delay which occurs in the processing of applications for MCI rent
increases, from the filing of the landlord's MCI application until the issuance of the
order granting the permanent MCI increase. However, because the regulation
permits the collection of an aggregate increase in rent in excess of 6% in a single
year, we now hold that it violates Rent Stabilization Law § 26-511 (c) (6).
Section 26-511 (c) (6) is clear on its face: "the collection of any increase in the
stabilized rent for any apartment * * * shall not exceed six percent in any year * * *
with collectability of any dollar excess above said sum to be spread forward in
similar increments." Thus the statute unequivocally places a ceiling on the total
increased rental amount that may be collected in a given year--spreading the excess
forward, thereby protecting tenants from precipitous rent increases. DHCR's
regulatory scheme permits collection of up to a 12% increase in a single year, thus
exceeding the statutory ceiling. The regulation would thereby violate one of the
primary purposes of the Rent Stabilization Law "to protect tenants from eviction as a
result of rapidly spiraling rent increases" (Matter of Ansonia Residents Assn. v New
York State Div. of Hous. & Community Renewal, 75 N.Y.2d 206, 216, 551 N.Y.S.2d
871, 551 N.E.2d 72). Moreover, the regulation leaves little, if any, scope to the
statutory directive that collection of any "dollar excess" over 6% is to be spread
forward (Rent Stabilization Law § 26-511 [c] [6]). Consequently, the regulation
cannot be upheld.
In contrast, the merger of MCI rent increases into the base rent of stabilized tenants
pursuant to the Rent Stabilization Code (9 NYCRR § 2522.4[a][8]), and any resulting
compounding effect caused by the application of rent guideline increases to the
increased base rent, is proper under Rent Stabilization Law § 26-511 (c) and this
Court's decision in Matter of Ansonia Residents Assn. v New York State Div. of
Hous. & Community Renewal (supra). The practice of merging the increase into the
base rent was implicitly condoned by Ansonia and is, in any event, consistent with
the intent of the Rent Stabilization Law because it provides owners with an incentive
to make improvements by assuring them an adequate return on their investment
including recovery of additional expenses likely to be incurred in maintaining such
improvements.
Order modified, without costs, in accordance with the memorandum herein and, as
so modified, affirmed. Certified question answered in the negative. Chief Judge
Kaye and Judges Simons, Titone, Bellacosa, Smith, Levine and Ciparick concur.
December 8, 1994, Decided
Disposition
Order modified, without costs, in accordance with the memorandum herein and, as
so modified, affirmed. Certified question answered in the negative.
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