Architect Fees for Work Related to MCIs Disallowed

Landlord applied for MCI rent hikes based on the installation of a garage roof. The DRA ruled for landlord but disallowed a portion of the MCI costs allocable to an inspector’s fee for concrete placement cancellation, landscape architect services, painting, architect fees, asbestos, and filing fees.

Landlord appealed and lost. Landlord argued that the DRA improperly increased the cost allocation for the commercial share benefitting from the MCI without explanation, improperly disallowed architect fees, painting of the garage roof replacement, and renovation of the underground garage. But the DHCR found that the painting was cosmetic and not considered an MCI or necessary work directly related to an MCI. It was also long-standing DHCR policy that architectural services must be both necessary and customary to qualify as part of MCI costs. Here, the architectural services were for related necessary work--landscaping, driveways, walkways above the garage, and interior renovation of the underground garage--rather than for the MCI itself. So the architect fees didn’t qualify. Also, landlord didn’t show that an architect’s expertise was needed for this project. Regarding the commercial allocation, the garage’s square footage was listed in the MCI application under professional units, so the DRA correctly included the square footage of the garage in the calculation as commercial space benefitting from the MCI. 

Shalimar & Mandalay Leasing, LP: DHCR Adm. Rev. Docket No. EN110008RO (1/6/17) [3-pg. doc.]