No MCI Increase for Professional Consulting Services for Elevator Upgrade

Landlord applied for MCI rent hikes based on elevator upgrading. The DRA ruled for landlord in part, granting the increase for the upgrade but denying any increase for costs claimed in connection with cleaning and painting the elevator pit, a one-year warranty, and consulting services.

Landlord appealed and lost. It was long-standing DHCR policy that, for professional services to be included as an added MCI cost, the claimed service must be both necessary and customary to the accomplishment of the underlying MCI. Here, the elevator upgrading wasn't so complex that a professional consulting service was needed. The elevator contractor's agreement guaranteed that the upgrading would follow all applicable laws and codes and applied to subcontractors. The consulting services performed in this case were supervisory and administrative services ineligible for any MCI rent increase. The claimed costs for a one-year elevator warranty were without merit. Landlord's elevator upgrading contract provided for warranty services for one year by the contractor. If the contractor failed to honor the warranty service, that was a contract dispute issue, and landlord's subsequent hiring of an elevator service company wasn't an eligible MCI expense. 

12th Americas Co.: DHCR Adm. Rev. Docket No. HV410050RO (8/31/22)[2-pg. document]