9 NYCRR 2502.4

Adjustment of legal regulated rent

(a)

building complex, on forms prescribed by the division, on the following ground: Substantial

rehabilitation.

regulated rent where it finds that:

accommodations as a result of a substantial rehabilitation of the building or housing

accommodations therein which materially adds to the value of the property or appreciably

prolongs its life, excluding ordinary repairs, maintenance and replacements and that the

legal regulated rent has not been adjusted prior to the application based in whole or part

upon the grounds set forth in the application.

percent rent-regulated units may file an application to temporarily increase the legal

regulated rents of the building or building complex on forms prescribed by the DHCR which

includes an itemized list of work performed and a description or explanation of the reason

or purpose of such work, on one or more of the following grounds:

meet all of the following criteria:

ordinary repairs;

(b) it is essential for the preservation, energy efficiency, functionality or

infrastructure of the entire building, including heating, windows, plumbing

and roofing, but shall not be for operational costs or unnecessary cosmetic

improvements;

inures directly or indirectly to the benefit of all tenants, and which includes

the same work performed in all similar components of the building or

building complex, unless the owner can satisfactorily demonstrate to the

DHCR that certain of such similar components did not require improvement;

and

useful life schedule, except with DHCR approval of a waiver, as set forth in

clause (e) of this subparagraph.

Useful Life Schedule for Major Capital Improvements Replacement Item or Equipment Years -

Estimated Life

1) Boilers and Burners

(a) Cast Iron Boiler ............................................. 35

(b) Package Boiler ............................................... 25

(c) Steel Boiler ................................................. 25

(d) Burners ...................................................... 20

2) Windows

(a) Aluminum ..................................................... 20

(b) Wood ......................................................... 25

(c) Steel ........................................................ 25

(d) Storm ........................................................ 20

(e) Vinyl ........................................................ 15

3) Roofs

(a) 2-Ply (asphalt) ............................................. 10

(b) 3-4 Ply (asphalt) ........................................... 15

(c) 5-Ply (asphalt) ............................................. 20

(d) Shingle ..................................................... 20

(e) Single-Ply Rubber ........................................... 20

(f) Single-Ply Modified Bitumen ................................. 10

(g) Quarry Tile ................................................. 20

4) Pointing ..................................................... 15

5) Rewiring ..................................................... 25

6) Intercom System .............................................. 15

7) Mailboxes .................................................... 25

8) Plumbing/Repiping

(a) Galvanized Steel ............................................ 25

(b) TP Copper ................................................... 30

(c) Brass cold water ............................................ 15

(d) Fixtures .................................................... 25

9) Elevators

(a) Major Upgrade...................................... 25

(b) Controllers and Selector ........................ 25

10) Doors ...........................................................

(a) Apartment Entrance .......................................... 25

(b) Lobby/Vestibule ............................................. 15

11) Water Tanks

(a) Metal ....................................................... 25

(b) Wood ........................................................ 20

12) Waste Compactors ............................................ 10

13) Air Conditioners

(a) Individual Units/Sleeves .................................... 10

(b) Central System .............................................. 15

(c) Branch Circuitry Fixtures ................................... 15

14) Siding

(a) Aluminum Siding ............................................. 25

(b) Vinyl Siding ................................................ 15

15) Catwalk ..................................................... 25

16) Chimney

(a) Steel ....................................................... 25

(b) Brick ....................................................... 25

17) Courtyards/Walkways/Driveways

(a) Cement ............................................. 15

(b) Asphalt ..................................................... 10

18) Fire Escapes ................................................ 25

19) Fuel Oil Tanks

(a) In Vaults ................................................... 25

(b) Underground ................................................. 20

20) Water Heating Units

(a) Hot Water/Central Heating ................................... 20

(b) Hot Water Heater (Domestic) ................................ 10

21) Parapets brick ....................................................... 25

22) Resurfacing Exterior Walls .................................. 25

23) Solar Heating System ........................................ 25

24) Structural Steel ............................................ 25

25) Television Security ......................................... 10

For major capital improvements not listed above, the owner must submit evidence with the

application that the useful life of the item or equipment being replaced has expired.

(e)

requirement set forth in clause (d) of this subparagraph must apply to

the DHCR for such waiver prior to the commencement of the work

for which he or she will be seeking a temporary major capital

improvement rental increase. Notwithstanding this requirement,

where the waiver requested is for an item being replaced because of

an emergency, which causes the building or any part thereof to be

dangerous to human life and safety or detrimental to health, an owner

may apply to the DHCR for such waiver at the time he or she submits

the temporary major capital improvement rent increase application.

temporary major capital improvement increase. However, if the

waiver is granted, the useful life requirement will not be a factor in

the determination of eligibility for the temporary major capital

improvement rent increase. Approval of the waiver does not assure

that the application will be granted, as all other requirements set forth

in this paragraph must be met.

the useful life requirements set forth in the Useful Life Schedule, if

the owner satisfactorily demonstrates the existence of one or more of

the following circumstances:

replaced during its useful life because of a fire, vandalism or

other emergency, or "act of God" resulting in an emergency;

item or equipment is beyond repair, or spare parts are no

longer available, or required repairs would cost more than

seventy-five (75) percent of the cost of the total replacement

of the item or equipment. Certification by a duly licensed

engineer or architect, where there is no common ownership or

other financial interest with the owner, shall be considered

substantial proof of such condition(s). The owner may also be

required to submit proof that the item or equipment was

properly maintained. Such proof may include receipts for

repairs and parts or maintenance logs;

(iii)

governmental agency has determined that the item or

equipment needs to be replaced as part of a

government housing program;

(B) If a governmental lender or insurer, for the

purposes of qualifying for a New York State or local

government long-term loan or insured loan, requires

the remaining useful life of the building or building

complex, as well as the component parts of such

building or building complex, to be as great as or

greater than the term of the loan agreement.

proven inadequate, through no fault of the owner, is necessary,

provided that there has been no major capital improvement

rent increase for that item or equipment being replaced.

for a waiver of the useful life requirements, the DHCR may, subject

to all other requirements of this section and the limitations of the

reasonable cost schedule provisions in paragraph (2) of this

subdivision:

life of the item or equipment being replaced, approve 100

percent of the actual, reasonable, and verifiable cost of the

item or equipment, including installation;

replaced during its useful life, grant a temporary increase

based on the actual, reasonable, and verifiable cost of the item

or equipment, including installation, less both (a) the amount

reimbursed from other sources, such as insurance proceeds or

any other form of commercial guarantee, and (b) the amount

of any increase previously granted for the same item or

equipment either as a major capital improvement, or pursuant

to other governmental programs, if such item or equipment has

not exhausted at least seventy-five (75) percent of its useful

life at the time of the installation;

replaced even though it has not exhausted seventy-five (75)

percent of its useful life and that it was installed as part of a

substantial rehabilitation or the new construction of a building

for which the owner set initial building-wide rents, the DHCR

may reduce the increase granted for a major capital

improvement by a proportion of the remaining useful life of

such item or equipment;

replaced even though it has not exhausted one-hundred (100)

percent of its useful life, but has exhausted more than seventy-

five (75) percent of its useful life, the DHCR may reduce the

increase granted for a major capital improvement by a

proportion of the remaining useful life of such item or

equipment.

granted for work done in individual apartments that is otherwise not an

improvement to an entire building.

related to a major capital improvement, which may be included in the computation

of an increase in the legal regulated rent only if such other necessary work was

completed within a reasonable time after the completion of the major capital

improvement to which it relates. Such other necessary work must:

completion of the work for the major capital improvement; and

improvement, other than repairs, on a building-wide basis, which the owner can

demonstrate are necessary in order to comply with a specific requirement of law.

services provided to the building or building complex, other than those specified in

subparagraphs (i)-(iii) of this paragraph, with the express consent of the tenants in

occupancy of at least seventy-five (75) percent of the rent regulated housing

accommodations.

improvements may not exceed the recoverable costs, as determined by DHCR. In

making such determination, DHCR shall, unless for good cause shown or otherwise

specified, refer to such reasonable costs as specified in the Reasonable Cost

Schedule found in the Reasonable Cost Schedule that is in effect at the time that the

contract for work for the major capital improvement was executed.

(ii)The Reasonable Cost Schedule shall provide the recoverable cost of major

capital improvements that fall within the following main three categories:

1. Major Systems;

i. The maximum recoverable costs shall be presented for the

following classes of work: (a) Plumbing; (b) Gas Repipe; (c) Wiring;

Replacement; and (h) Elevator Modernization.

2. Façade, Parapet, Roof;

i. The maximum recoverable costs shall be presented for the

following classes of work: (a) Façade; (b) Parapet; and (c) Roof.

3. Other Systems.

i. The maximum recoverable costs shall be presented for the

following classes of work: (a) Chimney; (b) Doors; (c) Security

System; and (d) Intercom; and may include such other systems as

DHCR may determine.

improvement work. Each class of major capital improvement described in the

Schedule may be inclusive of additional costs that can be associated with the type

of improvements listed within such class.

unit, per unit of measurement or per piece of equipment, as is appropriate given the

nature of the improvement.

specified in the initial Reasonable Cost Schedule shall be based on a survey of such

construction costs undertaken for such installation.

shall be initially published and made available for public review and

comment in conjunction with the promulgation process required for

adoption of this regulation.

Every year after adoption of this regulation, DHCR shall assess and review the

categories of major capital improvements, the classes of work within categories

eligible for major capital improvements and the maximum recoverable costs listed

for the types of major capital improvement costs identified in the Reasonable Cost

Schedule.

owners are required to submit an itemized list of work performed with a

description or explanation of the reason or purpose of such work.

in the actual schedule, if they are found to be:

improvement.

major capital improvement rent increases.

qualifying major capital improvement costs will be the basis for any

temporary major capital improvement rent increase. Qualifying

owners will, therefore, be awarded a temporary major capital

improvement rent increase on the lesser of either: (i) the actual

amount expended, or (ii) the maximum reasonable cost from the

schedule, and such other additional items that are eligible as a major

capital improvement but are not listed as part of the Reasonable Cost

Schedule.

eligible major capital improvements. All costs granted for a temporary

major capital improvement rent increase must be actual, reasonable,

verifiable, and meet all other regulatory requirements.

Schedule. The waiver request will be denied, unless the owner satisfies the

waiver requirements provided herein, and the Division finds the waiver of

the application of the schedule to be reasonable and warranted under the

circumstances set forth in such application.

denied, the owner’s maximum recoupment shall be limited to that required

by the applicable Reasonable Cost Schedule.

claimed for a temporary major capital improvement rent increase may be

awarded, as the costs of items claimed may be disallowed, in whole or in

part, pursuant to all other requirements set forth in this section that must be

met and fully supported.

fully supported and demonstrate that the claimed costs underlying the

temporary MCI rent increase are:

listed in the Reasonable Cost Schedule due to the unique nature of

the installation and the circumstances surrounding such installation,

and such costs are accurate, reasonable, necessary, verifiable, and

eligible for a rent increase under these circumstances, or

hardship and the use of alternative procedures are appropriate to the

interests of the owner, the tenants, and the public, and the costs of

such improvement are accurate, reasonable, necessary, verifiable,

and eligible for a rent increase under the circumstances.

Schedule in writing and accompany the application with the information and

documentation as specified in subparagraph (x) of this paragraph.

improvement rent increase, an owner must apply for a waiver of application

of the Reasonable Cost Schedule. Such application shall include all

necessary requirements set forth in subparagraph (viii) of this paragraph and

must also meet the following requirements:

Landmark Commission):

owner seeks a temporary major capital improvement

rent increase are accurate and reasonable under the

circumstances; and

interest between the contractor installing the

replacement or upgrade and the ownership entity of

the owner; and

licensed architect or engineer.

Commission):

The costs beyond those permitted by the Reasonable Cost Schedule

that were the result of any law, regulation, rule, or requirement under

which the premises have been designated a landmark building.

Another Governmental Agency’s Supervision:

DHCR may also accept the cost of contract where:

housing program, and

supervision of a state, city or local housing entity in

conjunction with that affordable housing program, and

supervising agency reviews the costs to assure they are

reasonable.

DHCR may also accept the cost of contract where capital

improvements were performed to remedy an emergency condition

and for which the owner paid more than the reasonable costs due to

such emergency. The costs must be actual, reasonable, necessary,

verifiable, and eligible for a rent increase under the circumstances.

Reasonable Cost Schedule if, prior to the effective date of

this subparagraph (ix), it has either:

capital improvement work within two years

immediately preceding January 27, 2021, the final

adoption date of Emergency Regulation HCR-26-20-

00012, or

temporary major capital improvement rent increase.

applicable Reasonable Cost Schedule and these provisions,

but the owner need not submit evidence of compliance with

the bidding requirements set forth in clause (b) of

subparagraph (x) of this paragraph; owner may instead

submit for review alternative means of establishing the

reasonableness of the major capital improvement costs

sought to be recovered.

owner was required to make this waiver application within

60 days of June 16, 2020, unless in the context of processing

the major capital improvement application the owner was

directed by DHCR to submit an application for waiver.

As part of the written Waiver application for non-emergency capital improvements,

owners must submit the following:

have been awarded on the basis of analysis and bidding to the fullest

extent possible, but with no less than three bidders having been

solicited to perform the work unless the owner can demonstrate that

the work is so highly specialized that such bids cannot be extended;

work are accurate and reasonable, provided that the architect or

engineer’s basis for such conclusion is fully and credibly supported;

necessary to the underlying major capital improvement and

reasonably priced;

best suited to perform the major capital improvement work, provided

that the architect or engineer’s basis for such conclusion is credibly

supported; and

ascertain the need for the waiver and the certification of such

reasonable, necessary, verifiable, and eligible costs.

requirements including submission of:

any board member, general partner, officer or employee of owner,

and/or principal or employee of any managing agent retained by

owner, has a direct or indirect interest in the bidder or in the

compensation to be received by the bidder pursuant to the proposed

contract. Failure to accurately and fully complete this certification

may result in the rejection of the bid for purposes of determining

owner’s application for waiver of the use of the Reasonable Cost

Schedule, as well as rejection and a dismissal of the major capital

improvement application; and

solicited bids.

necessity, appropriateness, and reasonableness of the costs of all changes to

the original agreed upon scope of work that were performed in connection

with the major capital improvement, along with a description of the changes

in the scope, price, or time of completion of the work related to each change

order.

The owner must submit a statement from an independent engineer or architect

describing the emergency, why the costs were greater than those in the schedule,

that the costs were reasonable for the situation, and why the owner could not obtain

three bids in a timely manner due to the exigent circumstances.

As part of the MCI application process, any request by an owner for a waiver of

application of the Reasonable Cost Schedule shall be made available to the tenants

of the subject building(s) with an opportunity to comment on and contest the

waiver.

The initial Operational Bulletin 2020-1 including all amendments, shall be issued

pursuant to this paragraph and Section 2507.11 of this Title. The Operational

Bulletin 2020-1 and all amended versions shall be available in hardcopy form at 92-

31 Union Hall Street, Jamaica, Queens, New York, and will be available on DHCR's

website at www.hcr.ny.gov.

rent increases based upon major capital improvements pursuant to paragraph (1) of this

subdivision are described on the following Schedule. Other improvements or installations

that are not included may also qualify, where all requirements of Section 2502.4 (b) of this

Title have been met.

SCHEDULE OF MAJOR CAPITAL IMPROVEMENTS

1. AIR CONDITIONER - new central system; or individual units set in sleeves in the exterior wall

of every housing accommodation; or, air conditioning circuits and outlets in each living room and/or

bedroom (SEE REWIRING).

2. ALUMINUM SIDING - installed in a uniform manner on all exposed sides of the building (SEE

RESURFACING).

3. BOILER AND/OR BURNER - new unit(s) including electrical work and additional components

needed for the installation.

4. BOILER ROOM - new room where none existed before; or enlargement of existing one to

accommodate new boiler.

5. CATWALK – complete replacement.

6. CHIMNEY - complete replacement, or new one where none existed before, including additional

components needed for the installation.

7. COURTYARD, DRIVEWAYS AND WALKWAYS - resurfacing of entire original area within

the property lines of the premises.

8. DOORS - new lobby front entrance and/or vestibule doors; or entrance to every housing

accommodation, or fireproof doors for public hallways, basement, boiler room and roof bulkhead.

9. ELEVATOR UPGRADING - including new controllers and selectors; or new electronic dispatch

overlay system; or new elevator where none existed before, including additional components needed

for the installation.

10. FIRE ESCAPES – complete new replacement including new landings.

11. GAS HEATING UNITS - new individual units with connecting pipes to every housing

accommodation.

12. HOT WATER HEATER - new unit for central heating system.

13. INTERCOM SYSTEM - new replacement; or one where none existed before, with automatic

door locks and pushbutton speakerboxes and/or telephone communication, including security locks

on all entrances to the building.

14. MAILBOXES - new replacements and relocation from outer vestibule to an area behind locked

doors to increase security.

15. PARAPET - complete replacement.

16. POINTING AND WATERPROOFING - as necessary on exposed sides of the building.

17. REPIPING - new hot and/or cold water risers, returns, and branches to fixtures in every housing

accommodation, including shower bodies, and/or new hot and/or new cold water overhead mains,

with all necessary valves in basement.

18. RESURFACING OF EXTERIOR WALLS - consisting of brick or masonry facing on entire

area of all exposed sides of the building.

19. REWIRING: - new copper risers and feeders extending from property box in basement to every

housing accommodation; must be of sufficient capacity (220 volts) to accommodate the installation

of air conditioner circuits in living room and/or bedroom; but otherwise excluding work done to

effectuate conversion from master to individual metering of electricity approved by DHCR pursuant

to paragraph (3) of subdivision (e) of this section.

20. ROOF - complete replacement or roof cap on existing roof installed after thorough scraping and

leveling as necessary.

21. SOLAR HEATING SYSTEM - new central system, including additional components required

for the system.

22. STRUCTURAL STEEL - complete new replacement of all beams including footing and

foundation.

23. TELEVISION SYSTEM - new security monitoring system including additional components

required for the system.

24. WASTE COMPACTOR - new installation(s) serving entire building.

25. WASTE COMPACTOR ROOM - new room where none existed before.

26. WATER SPRINKLER SYSTEM (FOR FIRE CONTROL PURPOSES) - new installation(s).

27. WATER TANK - new installation(s).

28. WINDOWS - new framed windows.

the total cost for a building with thirty-five or fewer housing accommodations, or 1/150 of

the total cost for a building with more than thirty-five housing accommodations, for any

determination issued by DHCR after June 14, 2019, and such temporary increase shall be

removed from the legal regulated rent thirty (30) years from the date the increase became

effective inclusive of any increases granted by the applicable rent guidelines board. For

increases pursuant to subparagraphs (1) (iii) and (iv) of this subdivision, in the discretion of

the DHCR, an appropriate charge may be imposed in lieu of an amortization charge when

an amortization charge is insignificant or inappropriate.

(5)

increase shall be collectible prospectively on the first day of the first month beginning

sixty (60) days from the date of mailing notice of approval to the tenant. Such notice

shall disclose the total monthly increase in rent and the first month in which the tenant

would be required to pay the temporary increase. An approval for a temporary major

capital improvement increase shall not include retroactive payments.

rent as a temporary increase and will be removed from the legal regulated rent thirty

granted by the local rent guidelines board. The DHCR shall issue a notice to the

owner and all the tenants sixty (60) days prior to the end of the temporary major

capital improvement increase and shall include the initial approved increase and the

total amount to be removed from the legal regulated rent inclusive of any increases

granted by the applicable rent guidelines board.

in effect, unless a specific provision in the tenant's lease authorizes an increase during

its term pursuant to an order issued by the DHCR.

year from the effective date of the order granting the increase over the rent set forth

in the schedule of gross rents, with collectability of any dollar excess above said sum

to be spread forward in similar increments and added to the rent as established or set

in future years. In no event shall more than one two-percent increase in the legal

regulated rent pursuant to paragraph (1) of this subdivision be collected in the same

year, provided, however, that upon a vacancy, the owner may temporarily increase

the rent to the full temporary major capital improvement increase amount.

approved on or after June 16, 2012 and before June 16, 2019, an owner may not

collect more than two percent in any year from any tenant in occupancy on the date

the major capital improvement was approved, provided the tenant has entered into a

renewal lease commencing on or after June 14, 2019, or is or was entitled to receive

a renewal lease on or after such date. In such event, the adjusted limit on

collectability shall take effect on the first anniversary date on which the increase

became collectible to occur after such lease renewal.

a tenant to whom there has been issued a currently valid senior citizen or disability

rent increase exemption pursuant to local law or ordinance to the extent that such

increase may cause the legal regulated rent of the housing accommodation to exceed

a specified portion, if any, pursuant to such local law or ordinance, of the aggregate

disposable income of all members of the household residing in the housing

accommodation.

consideration all factors bearing on the equities involved, subject to the general limitation

that the adjustment can be put into effect without dislocation and hardship inconsistent with

the purposes of the ETPA, and including as a factor a return of the actual, reasonable, and

verifiable cost to the owner, limited to the reasonable cost schedule in paragraph (2) of this

subdivision and exclusive of interest or other carrying charges, and the increase in the rental

value of the housing accommodations.

section 2507.11 of this Title, as to whether the proposed work qualifies for an increase in the

legal regulated rent.

unless an application is filed no later than two years after the completion of the installation

or improvement unless the applicant can demonstrate that the application could not be made

within two years due to delay, beyond the applicant's control, in obtaining required

governmental approvals for which the applicant has applied within such two-year period.

not be granted by the DHCR to the extent that, after a plan for the conversion of a building

to cooperative or condominium ownership is declared effective, such improvement is paid

for out of the cash reserve fund of the cooperative corporation or condominium association.

However, where prior to the issuance of an order granting the increase, the funds taken from

the reserve fund are returned to it by the sponsor or holder of unsold shares or units or through

a special assessment of all shareholders or unit owners, the increase may be based upon the

actual, reasonable and verifiable cost of the improvement. Nothing in this paragraph shall

prevent an owner from applying for, and the DHCR from granting, an increase for such

improvement to the extent that the cost thereof is otherwise paid for by an owner.

of this subdivision shall be reduced by an amount equal to (i) any governmental grant

received by the landlord, where such grant compensates the landlord for any improvements

required by a city, state or federal government, an agency or any granting governmental

entity to be expended for improvements and (ii) any insurance payment received by the

landlord where such insurance payment compensates the landlord for any part of the costs

of the improvements. Low interest loans or repayable subsidies shall not be considered

grants for the purposes of this paragraph.

of the monthly rent adjustment. Such dollar amount shall be divided by the total number of

rooms in the building. The amount so derived shall then be added to the rent chargeable to

each housing accommodation in accordance with the number of rooms contained in such

housing accommodation.

this subdivision, where the subject building contains commercial rental space in addition to

residential rental space, and the DHCR determines that such commercial space benefits from

the improvement, DHCR shall allocate the approved costs between the commercial rental

space and the residential rental space based upon the relative square feet of each rental area.

paragraph (1) of this subdivision, in whole or in part, if after review by DHCR, it is

determined that the owner is not maintaining all required building wide services, or that there

are outstanding hazardous, immediately hazardous, or other similar violations of any

municipal, county, State or Federal law. Certain tenant caused violations may be excepted.

A tenant’s repeated failure to provide access to remediate a violation may result in the

violation being considered to be tenant caused.

rejected if it is determined that there are one or more unresolved applicable

violations. A rejected application may be refiled within sixty (60) days which shall

stay the two-year filing requirement provided in paragraph (8) of this subdivision and

preserve the original filing date. In the absence of good cause shown, a rejected

application that is refiled outside of the sixty (60) day period will not retain the

original filing date.

that has not addressed the outstanding violations placed against the building or has

had new violations placed against the building in the interim period since rejection,

will again be denied without leave to refile within sixty (60) days.

if one or more violations have been issued and not corrected to the subject building

during the processing of an owner application pursuant to paragraph (1) of this

subdivision. The owner will be allowed sixty (60) days to correct such violation(s).

In the absence of good cause shown, failure to correct the violation(s) within the

allotted time shall result in a denial of the application.

and violations at any other time during the pendency of such application.

filed, a tenant shall have sixty (60) days from the date of mailing of a notice of a proceeding

in which to answer or reply. The DHCR shall provide any responding tenant with the reasons

for the DHCR’s approval or denial of such application.

major capital improvement, the complaint may be resolved in the following manner:

approval of the installation, and the tenants' complaints relate to the subject matter of

the sign-off, the complaints may be resolved on the basis of the sign-off, and the

tenants referred to the approving governmental agency for whatever action such

agency may deem appropriate.

operation of the major capital improvement does not relate to the subject matter of

the sign-off, the complaint may be resolved by the affidavit of an independent

licensed architect or engineer that the condition complained of was investigated and

found not to have existed, or if found to have existed, was corrected. Such affidavit,

which shall be served by the DHCR on the tenants, will raise a rebuttable

presumption that the major capital improvement is properly operative. Tenants may

only rebut this presumption based on persuasive evidence, for example, a counter

affidavit by an independent licensed architect or engineer, or an affirmation by 51

percent of the complaining tenants.

financial interest, between such architect or engineer and the owner or

tenants. The affidavit shall state that there is no such relationship or other

financial interest. The affidavit must also contain a statement that the architect

or engineer did not engage in the performance of any work, other than the

investigation, relating to the conditions that are the subject of the affidavit.

The affidavit submitted must contain the signature and professional stamp of

the architect or engineer. DHCR may conduct follow-up inspections

randomly to ensure that the affidavits accurately indicate the condition of the

premises. Any person or party who submits a false statement shall be subject

to all penalties provided by law.

improvement to determine whether the installation was conducted in a workmanlike

manner or the work was sufficiently comprehensive so as to benefit all tenants.

applications for a temporary major capital improvement increase that have been submitted

and approved. Such process shall include individual inspections and document review to

ensure that owners complied with all obligations and responsibilities under the law for

temporary major capital improvement increases. Inspections shall include in-person

confirmation that such improvements have been completed in such way as described in the

application.

(c) Individual Apartment Improvements

adjustments.

modification, other than an increase for which an adjustment may be claimed pursuant to

subdivision (b) of this section, of dwelling space, or installation of new equipment or

improvements, or new furniture or furnishings, provided in or to the tenant’s housing

accommodation, where the tenant has agreed to such modification or increase and the

owner has obtained written informed consent to such rent increase. In the case of vacant

housing accommodations, tenant consent shall not be required.

modifications must be submitted to the division for verification. As part of such

verification, an owner shall:

division form, when tenant consent is required.

description and/or explanation of the reason or purpose for such work.

the work is to be completed, taken prior to such modification or increase as

well as photographs taken after, and showing that the work has been

completed. Such photographs must be kept as part of the owner’s

permanent records such that the owner must at any future time produce such

photographs upon request by an agency with appropriate jurisdiction.

contractor is required by an appropriate New York State or local

government agency or rule. The costs for an individual apartment

improvement paid to a person or organization conducted to do the

improvement or installation work sharing a common ownership with the

owner or managing agent of the subject building or apartment will be

disallowed.

immediately hazardous violations. In no event shall an owner be permitted

to begin collection of any rent increase pursuant to this subdivision while

there are any hazardous or immediately hazardous violations of the Uniform

Fire Prevention and Building Code (Uniform Code), local Fire Code, or

local Building and Housing Maintenance Codes, pending against the

affected housing accommodation.

owner pursuant to this subdivision shall be limited to a total aggregate cost of fifteen

thousand dollars ($15,000) that may be expended on no more than three (3) separate

individual apartment improvements in any fifteen (15) year period.

entitled to a further rent increase based upon the installation of similar equipment, or new

furniture or furnishings within the useful life of such new equipment, or new furniture or

furnishings.

temporary and shall be removed from the legal regulated rent thirty (30) years from the

date the increase became effective inclusive of any increases granted by the applicable

Rent Guidelines Board that had been calculated based upon such rent increase.

maintain an itemized list of work performed and a description or explanation of the reason

or purpose of such work, inclusive of photographic evidence documenting the condition

prior to and after the completion of the performed work. Such documentation and any

other supporting documentation shall be submitted to the division by the owner within 90

days of the completion of the work, retained in a centralized electronic retention system

and made available in cases pertaining to the adjustment of legal regulated rents.

pursuant to this subdivision while the unit is occupied, the division shall provide a form for

use by the owner, to obtain written informed consent from the tenant that shall include the

estimated total cost of the improvement and the estimated monthly rent increase. Such

form shall be completed and submitted to the division by the owner within 90 days of the

completion of the work and preserved in a centralized electronic retention system. Nothing

herein shall relieve an owner, lessor, or agent thereof of his or her duty to retain proper

documentation of all improvements performed or any rent increases resulting from said

improvements.

the increase in the monthly legal regulated rent for the affected housing accommodations

when authorized pursuant to this paragraph shall for buildings and complexes containing

35 or fewer housing accommodations be 1/40th of the total cost, including installation but

excluding finance charges; and for buildings and complexes containing more than 35

housing accommodations be 1/60th of the total cost, including installation but excluding

finance charges.

14, 2019, the temporary increase in the monthly legal regulated rent for the affected

housing accommodations when authorized pursuant to this paragraph shall for buildings

and complexes containing 35 or fewer housing accommodations be 1/168th of the total cost,

including the cost of installation but excluding finance charges; and for buildings and

complexes containing more than 35 housing accommodations be 1/180th of the total cost,

including the cost of installation but excluding finance charges.

regulated rent, or to modify or substitute essential services at no change in the legal regulated rent,

on forms prescribed by the division on the grounds that:

dwelling space, or a decrease in the services, furniture, furnishings or equipment, or to a

modification or substitution of the essential services provided in the housing accommodation;

or

accordance with specific requirements of law; or

master metering of electricity, with the cost of electricity included in the rent, to individual

metering of electricity, with the tenant paying separately for electricity, and is in amounts set

forth in a Schedule of Rent Reductions for different-sized rent stabilized housing

accommodations included in Operational Bulletin 2014-1 governing electrical conversions

issued pursuant to this paragraph and section 2507.11 of this Title by DHCR, 92-31 Union

Hall Street, Jamaica, Queens, New York, and available at DHCR's website at www.hcr.ny.gov

and determined as follows:

tenant purchasing electricity directly from a utility, such Schedule of Rent Reductions is

based on the median monthly cost of electricity to tenants derived from data from the

United States Census Bureau's "New York City Housing and Vacancy Survey," as

tabulated by the New York City Rent Guidelines Board, 1 Centre Street, Suite 2210 , New

York, New York, and available on its website at rentguidelinesboard.cityofnewyork.us ,

and as further adjusted where appropriate to reflect differences in electric rates outside

New York City. The charge for electricity is not part of the legal regulated rent and is not

subject to this Subchapter. The resolution of any dispute arising from the billing or

collection of such charge is not within the jurisdiction of the Division. A conversion to

direct metering is required to include rewiring the building unless the owner can establish

that rewiring is unnecessary.

purchasing electricity from the owner or a contractor retained by the owner, who purchases

electricity from a utility at the bulk rate, such Schedule of Rent Reductions is based on the

median monthly cost of electricity to tenants derived from data from the United States

Census Bureau's "New York City Housing and Vacancy Survey," as tabulated by the New

York City Rent Guidelines Board, 1 Centre Street, Suite 2210 , Suite 202, New York, New

York, and available on its website at rentguidelinesboard.cityofnewyork.us , adjusted to

reflect the bulk rate for electricity plus a reasonable service fee for the cost of meter

reading and billing, based on the maximum estimated fee included in the "Residential

Electric Submetering Manual" revised October 2001, published by the New York State

Energy Research and Development Authority, 17 Columbia Circle, Albany, New York,

and available on its website at www.nyserda.org, and further adjusted where appropriate to

reflect differences in electric rates outside New York City, and reflected in Operational

Bulletin 2014-1. The owner or contractor retained by the owner is not permitted to charge

the tenant more than the bulk rate for electricity plus a reasonable service charge for the

cost of meter reading and billing. The charge for electricity as well as any related service

surcharge is not part of the legal regulated rent and is not subject to this Subchapter. The

resolution of any dispute arising from the billing or collection of such charge or surcharge

is not within the jurisdiction of the Division. A conversion to submetering does not require

rewiring the building provided the owner submits an affidavit sworn to by a licensed

electrician that the existing wiring is safe and of sufficient capacity for the building.

Increase Exemptions (DRIE): For a tenant who on the date of the conversion is receiving a

SCRIE or DRIE authorized by local law, the rent is not reduced and the cost of electricity

remains included in the rent, although the owner is permitted to install any equipment in

such tenant's housing accommodation as is required for effectuation of electrical

conversion pursuant to this paragraph.

application to the division, is required to reduce the legal regulated rent for the housing

accommodation in accordance with the Schedule of Rent Reductions set forth in

Operational Bulletin 2014-1, and thereafter any subsequent tenant is responsible for the

cost of their consumption of electricity, and for the legal rent as reduced, including any

applicable major capital improvement rent increase based upon the cost of work done

to effectuate the electrical conversion.

without making application to the division, may reduce the rent in accordance with the

Schedule of Rent Reductions set forth in Operational Bulletin 2014-1, and thereafter

the tenant is responsible for the cost of their electricity, and for the legal rent as

reduced, including any applicable major capital improvement rent increase based upon

the cost of work done to effectuate the electrical conversion, for as long as the tenant is

not receiving a SCRIE or DRIE. Thereafter, in the event that the tenant resumes

receiving a SCRIE or DRIE, the owner, without making application to the division, is

required to eliminate the rent reduction and resume responsibility for the tenant's

electric bills.

Vacancy Survey, and tabulation of the survey data by the New York City Rent Guidelines

Board, DHCR shall issue a new Operational Bulletin governing electrical conversions

setting forth rent reductions based on the new survey data, and shall move to amend the

regulations to incorporate by reference the new Operational Bulletin, the new New York

City Housing and Vacancy Survey, and Rent Guidelines Board tabulation. At such time as

NYSERDA issues a new Residential Electric Submetering Manual setting forth a new

maximum estimated submetering service fee, DHCR shall move to amend the regulations

to incorporate that document by reference.

Subchapter.

No such reduction in rent or decrease in services, or modification or substitution of essential

services shall take place prior to the approval of the owner's application by the division, except

that a service decrease, modification, or substitution pursuant to paragraphs (1) and (2) of this

subdivision may take place prior to such approval.

rent where the landlord, by application for increases in rents in excess of the rent adjustment

authorized by the Rent Guidelines Board under the act and as provided for in section 2502.5 of this

Part, establishes a hardship, and the division finds that the rate of such rent adjustment is not

sufficient to enable the owner to maintain approximately the same ratio between operating

expenses (including taxes and labor costs, but excluding debt service, financing costs and

management fees) and gross rents which prevailed on the average over the immediate preceding

five-year period, or for the entire life of the building if less than five years. No application may be

made under this subdivision for an increase if a six-percent rent increase is still in effect based on

an application pursuant to this subdivision or pursuant to subdivision (f) of this section.

same principals three years prior to the date of application may apply to the division, on forms

prescribed by the division, for increases in excess of the level of applicable guideline increases

established under the act, based on a finding by the division that such guideline increases are not

sufficient to enable the owner to maintain an annual gross rent income collectible for such building

which exceeds the annual operating expenses of such building by a sum equal to at least five

percent of such annual gross rent income collectible, subject to the definitions and restrictions

provided for herein.

arising out of the operation and ownership of the property, including but not limited to

rental from housing accommodations, stores, professional or business use, garages, parking

spaces, and income from easements or air rights, washing machines, vending machines and

signs, plus the rent calculated under subparagraph (2)(iii) of this subdivision. In

ascertaining income receivable, the division shall determine what efforts, if any, the owner

has followed in collecting unpaid rent.

taxes (other than income or corporate franchise taxes), fees (including attorney's fees for

services rendered during the test year not related to refinancing of mortgage), permits,

necessary contracted services and repairs for which an owner is not eligible for an increase

pursuant to this section, insurance, parts and supplies, reasonable management fees,

mortgage interest, and other reasonable and necessary administrative costs applicable to the

operation and maintenance of the property.

an institutional or a bona fide mortgage, including an allocable portion of the charges

related thereto. Criteria to be considered in determining a bona fide mortgage other than an

institutional mortgage shall include, but not be limited to, the following: the condition of

the property, the location of the property, the existing mortgage market at the time the

mortgage is placed, the principal amount of the mortgage, the term of the mortgage, the

amortization rate, security and other terms and conditions of the mortgage.

licensed by the State of New York or authorized to do business in the State of New York,

or any commercial bank, trust company, bank and trust company, savings bank or savings

and loan association (which must be licensed under the laws of any jurisdiction within the

United States and authorized to do business in the State of New York), pension funds,

credit unions, insurance companies and governmental entities. The division may determine

that any other mortgage is an institutional mortgage in its discretion.

to finance the purchase of the property;

increase in rent, less the principal of any mortgage or loan used to finance said

improvement;

purchase of the property, or any capital improvement for which the owner has not

collected an increase in rent; and

subsequent to the first valuation of the property after purchase by the owner.

operating expense for such building by a sum equal to five percent of such threshold

income.

December 31st), provided that books of account are maintained and closed accordingly;

or

hardship application. Such period must end on the last day of a month. Nothing herein

shall prevent the division from comparing and adjusting expenses and income during

the test year with expenses and income occurring during the three years prior to the

date of application, in order to determine the reasonableness of such expenses and

income.

an increase in excess of the level of applicable guideline increases, unless:

operating expenses of such building by a sum equal to at least five percent of such annual

gross rental income collectible; and

prior to the date of application; and

increase in rent pursuant to subdivision (a), (b), & (c) of this section; and

the property or any capital improvements for which the owner has not collected an

increase in rent pursuant to subdivision (a), (b), & (c) of this section; and

subsequent to the first valuation of the property after purchase by the owner; and

of application, provided that no application may be made for any hardship if a six-percent

increase is still in effect based on a prior application; and

charges for the test year.

whole or in part, if the owner is not maintaining all essential services as required by

law, or there are violations of record of any municipal, county, State or Federal law to

his knowledge which relates to the maintenance of such services. Any increase granted

herein may be conditioned or revoked upon the owner's failure to continue to maintain

such services during the period for which the increase is granted, provided that where

the division determines that insufficient income is the cause of such failure to maintain

essential services, hardship increases may be granted conditionally, provided that such

services will be restored within a reasonable time as determined by the division.

shall be the difference between the threshold income and the annual gross rent income

collectible for the test year. In buildings that also contain apartments subject to the

Emergency Housing Rent Control Law, appropriate adjustments for both income and

expenses will be made by the division in order to calculate the pro rata rate share for

those apartments subject to this application. However, notwithstanding the above, the

collection of any increase in the rent for any housing accommodation pursuant to this

section shall not exceed six percent of the legal regulated rent in effect at the time

immediately prior to the issuance of the order. The collectability of any amount above

said sum shall be spread forward in similar increments and added to the rent as

established or set in future years. No application may be made for any hardship if a six-

percent increase is still in effect based on a prior application.

managing agent, or a person related to the owner or managing agent, or an employee of

the owner or managing agent, or unoccupied at the owner's choice for more than one

month at the last regulated rent plus the minimum number of guideline increases; or, if

no such regulated rent existed or is known, the division shall impute a rent equal to the

average of rents for similar or comparable apartments subject to these regulations in the

building during the test year.

to maintain all records as submitted with the subject application, and further be

required to retain same for a period of three years after the effective date of the order.

authorized agent as to its accuracy and compliance with this section, under the penalty

of perjury.