Cure Violations for Upcoming MBR Cycle for Rent-Controlled Apartments
The Maximum Base Rent Program affects housing conditions in New York City rent-controlled apartments. The program helps ensure that apartments under rent control provide enough income for their maintenance and for building improvements. Local Law 30 of 1970 stipulates that Maximum Base Rents be established for rent-controlled apartments according to a formula calculated to reflect real estate taxes, water and sewer charges, operating and maintenance expenses, return on capital value, and vacancy and collection loss allowance. The Maximum Base Rent (MBR) is updated every two years by a factor that incorporates changes in these operating costs.
In anticipation of the upcoming 2024–2025 MBR cycle, it’s not too soon for owners of buildings that contain rent-controlled units to begin preparations. Once every two years, the DHCR sends a notice to recent MBR filers advising them that the MBR Application cycle has begun. The notice lists the number of rent-impairing and non-rent-impairing violations, if any, that are on record with HPD as of Jan. 1 of that year. If your building has no HPD violations, you’re required to file the application online. But if your building has violations, you can file the MBR application online or through paper filing. For paper filings, the following forms are required:
Violation Certification (DHCR Form VC). The VC form requires an owner to certify either that:
- The owner has cleared, corrected, or abated all rent-impairing and 80 percent of all other HPD Division of Code Enforcement violations that were on record as of Jan. 1, 2023, if the form is filed by June 30, 2023, or six months prior to the owner's certification if the form is filed later than June 30, 2023; or
- Within 30 days of the date of filing, the owner will clear, correct, or abate all rent-impairing and 80 percent of all other HPD DCE violations that were on record as of Jan. 1, 2023.
HPD’s Division of Code Enforcement determines the nature and number of violations on the buildings, and the DHCR evaluates the owner’s evidence of violation correction.
Operation and Maintenance and Essential Services Certification (DHCR Form OMESC). This form certifies that the owner made payments and/or incurred obligations to pay at least 90 percent of the expense allowance for the operation and maintenance of the building and that the owner is maintaining and will continue to maintain all “essential services.”
Essential services, for purposes of eligibility for MBR increases, are defined as heat during the part of the year when required by law, hot water, cold water, superintendent services, maintenance of front or entrance door security (including, but not limited to, lock and buzzer), garbage collection, elevator service, gas, electricity and other utility services, to both public and required private areas and such other services when failure to provide and or maintain such would constitute a danger to the life or safety of, or would be detrimental to the health of the tenant or tenants.
When the above certifications are filed, the owner will be billed by the DHCR for the MBR fee for each rent-controlled apartment.
MBR Order of Eligibility
After the owner removes the requisite violations, certifies the operation and maintenance expenditures, and pays the fee, the DHCR issues an MBR Order of Eligibility to the owner and each rent-controlled tenant. The order authorizes the owner to calculate, on official forms, the Maximum Collectible Rents and Maximum Base Rents for each rent-controlled apartment.
It’s important to note that the effective date of your MBR Order depends on when you file these certification forms, provided that your certifications prove to be correct. The timing is prescribed in the law. Therefore, the later these certifications are filed, the later the effective date of the MBR Order. For an MBR Order effective Jan. 1, 2024, the Violation Certification (VC), if required, must be filed no later than June 30, 2023; and the OMESC must be filed no later than Oct. 1, 2023.
Document All Work Done to Clear Violations
The DHCR pays close attention to the VC forms, so be prepared to submit specific documentation in support of the removal of those violations on record. Specifically, owners must establish that they meet the DHCR criteria for violation removal for those violations on record as of Jan. 1, 2023.
The DHCR may require that owners produce contracts for labor and invoices for materials used for the removal of the violations that are on record. If the work was done by a building employee, the owner should be prepared to submit its work logs or an affidavit outlining the work that the employee performed and, most important, the dates when the repairs were completed.
Owners can request a waiver of a specific violation. The owner must identify by item number each of the violations sought to be waived for Maximum Base Rent purposes. There’s no prescribed form to request a waiver of violations. But attached to any such request must be documentary evidence, since the determination of the request for waiver will be made based on the documentary evidence submitted with the request. Such evidence may include but is not limited to:
- Copies of registered letters to tenants together with postal registry receipts for tenant-induced violations, or proof of inability to gain access to make repairs;
- Letters from tenants indicating violation removal;
- Court proceedings;
- Paid bills with cancelled checks;
- Affidavits from contractors who completed the repairs; and/or
- Affidavits from licensed architects and/or engineers.
All evidence submitted should contain dates when the violations were cleared. Owners must demonstrate that the work was performed before Jan. 1, 2023, or six months before the filing of the VC form, if the VC form is being filed late. The DHCR will accept late filings, but owners will be penalized by a later effective date of the Order of Eligibility.