Landlord Applied Too Late for MCI Rent Hike Based on A/C Chillers

Landlord applied for MCI rent hikes based on the installation of an air conditioning system. The DRA ruled for landlord in part but disallowed any increase for the installation of air conditioner chillers. Landlord appealed and won, in part. The DRA found that A/C chillers are a separate MCI and that the chillers installation was completed in 2008, which was more than two years before the MCI application was filed in 2011. Landlord argued that the chillers were installed as an integral part of the central air conditioning system. Work for the system was completed in March 2011, one year before landlord filed the MCI application. Landlord also argued that the contractor’s mobilization costs and fees for filing, testing, and inspection were improperly disallowed. The DHCR stated that it was long-standing DHCR policy that the installation of A/C chillers in and of itself qualifies as an MCI. Therefore, landlord’s MCI application for this item was untimely. It was also long-standing DHCR policy to deny any MCI increase for fees, government filings, testing, or inspection. But the contractor’s mobilization costs were necessary and directly related to the A/C MCI and were granted.

Tower Seventh Associates: DHCR Adm. Rev. Docket No. BS410036RO (10/7/16) [2-pg. doc.]