Legislators seek to outlaw NYC rent hikes tied to major apartment improvements

If a coalition of New York state lawmakers has their way, the major capital improvements (MCI) program, used by some landlords to hike rents on regulated apartments, may soon be a thing of the past.

State Senator Michael Gianaris (who’s been in the news for his role in the Amazon HQ2 debacle) and State assembly member Brian Barnwell have introduced legislation that would completely eradicate the MCI program. It’s a shift from a previous piece of legislation that was introduced by Gianaris and Barnwell, which called for reforming the MCI program and extending protections to tenants who were subject to increases due to apartment renovations. (That legislation ended up going nowhere.)

The new bill goes a step further: It calls for “a complete elimination of the program” as well as a rollback of any rent hikes tied to MCIs that were issued within the last seven years, and refunds to tenants affected by those increased.

As we previously reported, “the existing [MCI] program, which has been in place in the city since the 1970s, allows landlords to hike rents by up to 6 percent every year to recoup the cost of the work carried out on their buildings. These improvements can include adding new windows, or improving the heating system, among other major changes.”

But the program is also easy for landlords to abuse, a problem that was laid bare in a New York Times exposé last fall about President Donald Trump’s finances and those of his family. According to their investigation, the Trumps used the MCI program to raise the rents in rent-stabilized buildings they owned in the outer boroughs—but in many cases, those increases were based on falsified information.

The Trumps aren’t alone in their abuse of the program; it’s a common practice, and one that Gianaris hopes his legislation will stamp out.

“Too many tenants are priced out of their homes because of MCIs whose only improvement seems to be the landlord’s bottom line,” he said during a press conference announcing the legislation. “All New Yorkers deserve high quality, affordable homes and our proposal brings us closer to that goal by ensuring repairs are made without burdening tenants with unreasonable costs.”

Co-sponsors of the new bill include Sens. Jessica Ramos and John Liu, both of whom were elected in the 2018 midterms as part of the push to oust former members of the IDC from New York’s legislature. They’ve also been vocal about their desire to reform New York’s rent stabilization laws—including the MCI program.

Unsurprisingly, the real estate industry isn’t exactly on board with this proposal. “This legislation in no way addresses the affordable-housing crisis or offers a path forward for creating new housing units for New York City residents, who desperately need better access to sustainable, affordable housing,” REBNY president John Banks told Crain’s. “Nor does it recognize that, over the past decade, the incremental costs of operating and maintaining a building have increased by more than twice the rate of rent increases allowed.”