Requires the cost of major capital improvements to be recovered through a monthly surcharge on rents

10 Co-sponsors

• Thomas K. Duane
• Ruth Hassell-Thompson
• Velmanette Montgomery
• José Peralta
• Bill Perkins
• Diane J. Savino
• Eric T. Schneiderman
• José M. Serrano
• Toby Ann Stavisky
• Andrea Stewart-Cousins

Title of bill

An act to amend the administrative code of the city of New York, the emergency tenant protection act of nineteen seventy-four and the emergency rent control law, in relation to extending the length of time over which major capital improvement expenses may be recovered

Purpose or general idea of the bill

Expenses for major capital improvements in rental housing are currently recovered over seven years in calculating the permissible monthly rent increase. This bill codifies the MCI as a surcharge to the legal regulated rent which is separately designated and billed as such and mandates that the authorized surcharge for MCI's ceases after the cost of the improvement is recouped.

Summary of specific provisions

Establishes a methodology for determining MCI rent surcharges based on seven years. MCI'S are calculated as a rent surcharge and do not become part of the base legal regulated rent by which rent increases are calculated, and are separately designated and billed as such. The legislation also codifies current practices regarding the annual 6% cap on MCI increases and the methodology for determining MCI surcharges based on number of rooms. Furthermore, the bill would require that the rent surcharges authorized for major capital improvements cease when the cost of the improvement has been recovered.

Justification

In 1989, the Court of Appeals ruled unanimously that capital improvements to their buildings,However, since the actual cost of the improvement is recovered after seven years of increased rent collection, this ruling means that tenants are forced to continue to pay for improvements long after costs have been fully recovered, and even after they have outlived their useful life. In addition, most MCI'S, such as window replacement or heating system improvements, create energy savings that further increase the profitability of MCI's. This bill seeks to balance the conflicting concerns of maintaining affordable housing and insuring adequate incentives for investment in MCI's in order to preserve and improve our housing stock. Since the court permits MCI's to be collected in perpetuity, landlords are allowed to recoup an amount well beyond their actual costs and are ensured a reasonable return on their investment.

Fiscal impact

None.

Effective date

Immediately.