Gas Piping Work Not Included in DHCR Reasonable Cost Schedule Ineligible for MCI Increase

Landlord applied to the DHCR for MCI rent hikes based on replacement of the gas piping system throughout the building complex. The DHCR ruled for landlord. The Tenants Association, representing more than 2,000 rent-regulated tenants, filed an Article 78 court appeal and won in part. Tenants claimed that the DHCR improperly calculated the portion of the MCI rent increase offset by allocation to commercial space and common areas at the buildings. Tenants also argued that the DHCR improperly denied their request to participate in an inspection of the claimed work. Tenants also said that the DHCR erroneously considered ineligible costs not expressly included in the DHCR's Reasonable Cost Schedule in setting the MCI rent increases. 

The court pointed out that, in a recent appellate ruling concerning the  same building complex, the First Dept. held that related expenses that are not specified in the Reasonable Cost Schedule but which the landlord claims are necessary for the claimed improvement were "out of harmony with the statute, and thus ultra vires" since the DHCR's schedule sets the ceiling for what can be recovered. Therefore, since expenses for related millwork allegedly related to the gas re-piping didn't appear on the reasonable Cost Schedule as an MCI, the case was sent back to the DHCR for recalculation of the MCI increases. Otherwise, the court found that tenants were given an opportunity to have their representative present at the DHCR's inspection of the work. And the court rejected tenants' claim concerning commercial and common area space cost allocations, finding that the DHCR reasonably included common spaces in its calculation of residential rent space.

Stuyvesant Town Peter Cooper Vill. Tenants Ass'n v. DHCR: Index No. 154685/2024, 2025 NY Slip Op 31240(U)(Sup. Ct. NY; 4/7/25; Saunders, J)