Thursday, March 29, 2012

MCI retro increase on your rent bill?

In April 2011, rent stabilized tenants (not those on SCRIE or DRIE) began paying a PERMANENT Major Capital Improvement (MCI) increase of $7.67 per room.  

DHCR awards landlords their increase as of the date of their completed application - not the date the application is decided. Thus stabilized tenants must also pay retroactively for the 10 months between the time that Stellar filed its completed application and the date its application was implemented (at a much lower increase than Stellar requested).

APARTMENT INCREASES (for your apt. line, click here and scroll down):
  • If your apartment has 1 bedroom, your permanent increase as of April 2011 was  $23.01.  The 10 month retroactive payment total is $230.10.
  • If your apartment has 2 bedrooms, your permanent increase as of April 2011 was $30.68.  The 10 month retroactive payment total is  $306.80.
  • If your apartment has 3 bedrooms, your permanent increase as of April 2011 was $38.35.  The 10 month retroactive payment total is  $383.50.
If you paid the full amount in one swoop a year ago, you're settled and should not get any increase on your April bill.  If you are paying month by month, read on: 

Since April 2012 begins the a new year (we began paying our MCI in April 2011), Stellar may now charge you another 6% of your base rent toward payment of the retroactive 10 month amount.


Stellar is allowed to increase your rent for an MCI by only 6% of your base rent in any given year.  If the permanent MCI increase for your apartment was close to that 6%, you could be charged only a little bit more (bringing it up to that 6%) as partial payment of the retroactive 10 month amount.   Then this year, you would be charged another 6% of your new base rent to pay more of the retroactive amount.   Your new base rent is the base rent you were paying on March 1, 2012. 


For a 2-bedroom apartment, the MCI added $30.68 to the rent - and you owe $306.80 for the retroactive amount due Stellar (for the 10 months before the MCI application was decided).    
  • If your original rent was $600,  then the most Stellar could charge you in the first year was a 6% increase over that $600, which is $36.00.  Since the permanent MCI for your two-bedroom apartment is $30.68,  that leaves only  $5.32 a month toward the $306.80 the first year.  ($36 minus $30.68 = $5.32.)  So you would pay $5.32 a month, which over 12 months comes to $63.84 of the retroactive amount.  That leaves $242.96 to be paid in the year or two after that.   
  • The second year (starting April 2012), Stellar is charging 6% of your new base rent ($600 + $30.68 = new base rent of $630.68).   6% of $630.68 = $37.84.   You'd pay that additional $37.84 every month for 6 or so months until the full retroactive amount of $306.80 is paid off.  Then your rent would go back to being $630.68 - or whatever the last new lease amount says.


Once that retroactive amount is fully paid, you should no longer have any "MCI retro" to pay on your rent bill.

Although Stellar permitted tenants to pay the full retroactive amount in one fell swoop when the MCI was first instituted, that is no longer possible.