WHAT ARE MCIS?
What is an MCI and how is it calculated?
MCI stands for “Major Capital Improvement”. When landlords make building-wide improvements, they can try to apply to Homes and Community Renewal (HCR) for an MCI. If approved, landlords are then allowed to put the cost of the improvements into tenants’ rents as a permanent rent increase. Some examples of MCIs include new boilers, windows, electrical rewiring, plumbing, and roofs.
What is the process of an MCI?
You should receive a letter notifying you that the Landlord filed an application for an MCI and what work the landlord claims has been completed. This letter is currently sent only in English.
Landlords have to apply for an MCI within two years of doing the work. The MCI allows landlords to take the cost of needed building-wide or major systems improvements and pass it on to all tenants in the building through permanent increases in their rents. Landlords can apply to HCR for approval to raise the rents of the tenants. (In other words, even when the landlord has recouped their costs through the increases in rents, the rents never go back down.)
Tenants have an opportunity to respond to HCR within 30 days to either challenge it or apply for an extension to fight against the MCI. If tenants do NOT respond, then HCR will likely not do their own inspection to determine whether the improvement or installation was made. This is one of the reasons why it is critical for tenants to respond.
How is my rent increase calculated?
The landlord must tell HCR the total cost of the improvements made to the building. The monthly charge per tenant is equal to: (total cost of renovation) / (total number of rooms building) / 84 x total number of rooms in a tenant’s apartment. The number of rooms count bedrooms, and also may include living rooms and kitchens (but not bathrooms).
Is there a limit to how much my rent can increase at one time?
For rent stabilized apartments in NYC, the rent increase collectible in any one year may not exceed 6% of the tenant's rent at the time the MCI application was filed.
For all rent-controlled apartments, the rent increase collectible in any one year may not exceed 15% of the tenant's rent as of the issue date of the order.
Who has to pay an MCI rent increase?
All tenants in the building pay the MCIs, except: (1) Senior citizen or disabled person receiving SCRIE or DRIE benefits; (2) Any tenant with a HCR Rent Reduction for Decreased Services that was issued prior to HCR’s granting of (and the landlord’s commencement of their collection of) the MCI. Tenants can apply for such rent reductions for conditions in need of repair in their own apartments or for building-wide conditions.
How Can I Challenge an MCI or Avoid Having to Pay One?
If the MCI seems unfair or you can’t afford it, you should challenge it. If there is a tenant association in your building, it should meet immediately to discuss the MCI. If there isn’t a tenant association, then this is a great opportunity to call a meeting!
Respond to an MCI immediately:
*Write to HCR to request an extension of the deadline to file a response. It usually takes more than 30 days to respond effectively to an MCI application. Conclude your request with: “Unless we otherwise hear affirmatively from the HCR, we will assume that the extension has been granted under the terms above.”
*When writing your response or request for an extension, include your case's docket number and send it using either certified mail with return receipt requested or deliver your documents in person at the HCR office. If you are delivering the documents in person, ask the agency to time-stamp a copy so you have proof that it was received. These steps protect you from HCR losing your request or deciding not to respond.
Obtain a copy of the landlord's full application, including supporting documents. The complete application should be available from the super or at the landlord's managing agent's office. However, it is usually better to file a Freedom of Information Law (FOIL) application with HCR to obtain these documents. Instructions are found at http://www.nyshcr.org/AboutUs/DHCRfoil.htm. This is the best way to be sure you are responding to exactly what the landlord has sent to HCR.
What to look for when examining the landlord’s application:
Was the work “Major”?
*Was it necessary for the operation, preservation and maintenance of the building? Ex: if landlord replaced light fixtures with crystal chandeliers, it doesn’t meet this requirement.
*Do ALL of the tenants in the building benefit from it (not just some tenants and not just a basic repair or patch job)?
*Did the previous item exceed its useful life schedule? A life schedule means the length of time HCR determines that a certain appliance/installation should last with proper upkeep.
Was the work an actual “Capital Improvement”?
*Does the new feature work properly now?
*Is the work finished? If not, argue that you should not have to pay for it until it is done.
*Who did the work? If the super did it, or someone within the landlord’s company, the landlord cannot get an MCI for regular, internal labor costs.
Were the costs substantiated?
*Did the landlord provide proof of the cost with enough bills, receipts, canceled checks, contractors’ affidavits?
*Does it add up? Use the formula on the previous page to see how your charge should be calculated. Does the amount the landlord claims to have spent seem to be accurate? Are the costs reasonable for the kind of work?
*Is there a dispute as to how many rooms are in your apartment?
Other things to look for:
*Check the NYC Department of Finance website to see if your building receives a J-51 tax abatement. If so, then any the rent increase for work covered by the J-51 is reduced by a portion of the value of the tax abatement.
*Are there violations in the building? If there are “C” violations and other serious Housing Code violations, the increase is not supposed to go into effect until those violations are cleared.