Landlord Not Limited to Estimated Cost Listed in Prior Opinion

(Decision submitted by Karen Schwartz Sidrane of the Manhattan law firm of Rosenberg & Estis, P.C., attorneys for the landlord.) Facts: Before doing work, landlord asked the DHCR whether aluminum siding would constitute an MCI. The proposed cost of the work was $170,000. The DHCR said no, finding that the proposed aluminum siding wasn't building-wide because not all exposed sides of the buildings were to be covered. Landlord appealed this decision. The court ruled that the proposed siding did constitute an MCI. Landlord then did the work and applied for MCI rent hikes. The DRA ruled for landlord. Tenants appealed, claiming that the cost of landlord's MCI, $453,000, was excessive given the $170,000 estimate in landlord's application for a prior opinion. DHCR: Tenants lose. In general, (1) the amount of MCI increase is based on actual cost, not estimated cost; (2) the DHCR doesn't require landlord to take bids or to use the lowest priced contractor; and (3) the actual proven costs in an arm's-length transaction will normally be the allowed cost for computing MCI increases. Here, the main reason for the difference in the cost in the final application was that the estimate didn't include the cost of related work. Landlord installed aluminum siding, along with aluminum window shutters, window well covers, gutters, painting, balcony roof work, and storm doors. The contract for the actual work also specified the dimensions and specific brand and quality of materials to be used. The estimate hadn't done this.

Various Tenants, 177 White Plains Rd.: DHCR Adm. Rev. Dckt. Nos. HJ 930021 RT et al. (9/12/94) [12-page document]