Major Capital Improvements, or MCIs Fact Sheet
When tenants learn that their landlord has applied to the state Division of Housing and Community Renewal for a rent increase based on a Major Capital Improvement, their reaction is almost always the same: shock at the injustice of the situation.
“This isn’t a Major Capital Improvement,” they say. “Nothing is being improved here. The landlord is only replacing or maintaining something that was already present in the building.”
This is a very reasonable point. But unfortunately, the law is unjust, and so-called Major Capital Improvements don’t have to be improvements to be legally valid grounds for rent increases. Both the rent control and the rent stabilization laws allow landlords to raise rents when they do certain kinds of work on a building, regardless of whether the purpose of the work is to provide services that were already included in the rent.
What’s more, the laws allow a landlord to raise rents permanently based on a Major Capital Improvement. After a MCI rent increase has been in effect for 84 months, the landlord has normally received enough additional rent to pay for the improvement, but he or she then continues to receive the additional rent as pure profit forever. Even after the improvement itself has ceased to function or been replaced, it lives on as a permanent rent increase.
And because an MCI rent increase is not a surcharge but part of the base rent, it increases the amount of all future rent increases allowed by the Rent Guidelines Board or the Maximum Base Rent system. If DHCR allows a $50 increase based on an MCI, and the Rent Guidelines Board allows a 4 percent increase when the tenant renews his or her lease, this will result in a extra $2 per month (4 percent of $50) on the new lease. This can add up to a very significant amount as increases compound over the years.
So what follow here is not a description of what is fair or what the laws should allow. It is a description of what the law does allow as of October 2000.
The state legislature is considering several bills that would, if passed, make the MCI system more fair. Tenants who are fighting MCIs in their own buidlings should contact their State Senators and Assembly Members to let them know how important it is that this legislation passes. Real-life stories of unfair MCIs provide the best argument that the laws must be changed. But until the laws do change, tenant must deal with existing law. Go to MCIs Fact Sheet for more Information.