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Bill Aims to Nix Program that Permits Landlords to Hike the Rent Following Capital Improvements

(L-R) State Sen. Mike Gianaris, Assemblyman Brian Barnwell

Aug. 29, 2018 By Tara Law

Two Queens lawmakers want to scrap a program that permits landlords to hike rents to cover the cost of capital improvements.

State Senator Michael Gianaris and Assemblymember Brian Barnwell introduced a bill in their respective chambers on Aug. 24 that would instead provide building owners with tax credits to offset the costs of upgrades.

Under the current system, landlords of rent stabilized or controlled apartments are permitted to pass on the cost of building improvements to tenants by raising the rent. This policy— known as the Major Capital Improvements program— was implemented in the 1970s.

Owners who improve buildings with upgrades such as new windows, boilers and roofs can increase rents by as much as 6 percent annually to recoup the costs.

However, the rent increases from the MCI program are permanent, which critics say enables landlords to collect higher rents even after recouping the cost of improvements.

Some landlords are even able have the apartments decontrolled by raising rents above the city’s threshold for deregulation, said Gianaris.

Gianaris and Barnwell’s bill would require landlords to repeal existing MCI rent increases upon receiving a petition from a tenant, and block future MCI rent increases.

Gianaris and Barnwell argue that the MCI program is causing tenants to be priced out of their homes.

“The Major Capital Improvement program is responsible for hundreds of millions of dollars in rent increases on rent regulated tenants,” Barnwell said. “It is unacceptable that we maintain a program pushing middle to low income New Yorkers out of their homes while allowing landlords to continue to make monstrous profits.”

Gianaris said that the bill aims to improve housing quality and affordability.

“Too many tenants are priced out of their homes because of MCIs whose only improvement seems to be the landlord’s bottom line,” Gianaris said. “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.” 

The Department of Homes and Community Renewal would be the agency put in charge of approving a landlord’s tax credit–to make sure capital improvements are made.

Gianaris said that the change would enable the department to determine which changes are truly necessary for habitability and what are just a workaround to raise the rent.

Gianaris said that in the past, landlords would “make all kinds of change to take advantage of the [MCI] program.”

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43 Comments

jenastoriat

Do it! I’ve been paying higher rent from one of these increases for years, even though the work done had no effect on my apartment. I complained, but the Housing Dept did nothing, confirmed nothing. Basically, something big breaks and they call it capital “improvement,” write off the expense as a tax deduction and get to hike rents at the same time. Scammy.




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A

That’s a good point. But why should we stop at rents. All salaries should be capped at 1% a year increase by the government. Unfortunately though you will still have taxes deducted from you paycheck as if your still getting paid your actual higher worth. It’s better for everybody.




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Walt

I lived in an apartment for 12 years. The landlord for lack of a better word a slum lord. The rent was reasonable for the area but getting repairs was slow. This year my A/C went out in May. It was hot so he got 2 portable floor units which barely cooled the place. He brought 3 service technicians in but nothing occurred. He kept saying he was looking into it. Finally in late June after a couple of hot spells I text him to step it up. His answer to everything is if you don’t like it leave. Also in the mean time he saw a print out of the yearly HUD report of every city’s apartment average rent for each city in the county. He saw that he could get $200 to $300 more for rent. So that provided the landlord an additional incentive to evict older tenants. So all summer the A/C was not repaired. I feel the landlord was pushing me to leave. So when the lease renewal came up in July he would not accept it. The landlord told me I had 60 days to vacate the premises. Being retired on a fixed income made it difficult to find another apartment in my price range. I spoke to a lawyer and basically said I don’t have much choice. Either leave or face a judge when I get evicted. Though a friend of a friend I luckly found a place. I don’t think landlords should be able to evict good tenants who pay their rent and keep their apartment clean just so they can make the money advertised by HUD. Look out long term renters you maybe evicted by shady landlords looking to make more money.




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Jon

So how would you write the law so that it can be enforced?

It sucks when a lease is not renewed but basically the unwritten law usually goes, “you complain about me, I won’t renew your lease”.




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Anonymous

Property owners currently get tax deductions for any repairs so if they include the capital improvements in the equation that is a plus. Also, you cannot raise rents to cover your costs unless this is specified in the lease contract. Tenants can sue if they’re told their rents are increasing due to any repairs/improvements AND if not stated in their contracts. This also includes not keeping your deposit as well.




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Leif Blau

They are Democrats of course! They love introducing bills for “the people”-none of whom know who the hell they are. Then offer tax breaks to help pay for the repairs. Who foots the bill for these tax breaks? Everyone! Everyone wins right? Meanwhile roads are like Baghdad, the subways are a mess…




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logic

Good point, Trump gave millions of dollars in tax breaks for the very wealthy. I didn’t realize he was a Democrat!




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Anonymous

Trump didn’t give anyone a tax cut, congress did. The tax breaks in this story are state and local, not federal. Try to keep up. I doubt you pay anything, maybe FICA.




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actually

Trump AND his allies in Congress weakened the federal estate tax, a levy paid only by the wealthiest households in the country, estates worth over $5.5 million for individuals and $11 million for couples.

The Trump administration is considering bypassing Congress and cutting capital gains taxes, which would overwhelmingly benefit the wealthy.

Try to keep up.




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Anonymous

Stop counting other people’s money. Jealousy is not good reason for government seizure of private assets. Considering is not doing. Read the tax codes.




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Jon

Ha, yeah , all the under served tenants Trump pressured out of his apartments disagree with you….along with the illegal immigrant labor he didn’t pay.




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Sandor Vasvari

No MIC replace it with tax rebate means less RE tac income for NYC in the long term. I guess NYC does not need the income. LOL




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Anonymous

Property taxes in NYC are a black box calculation, they just raise assessments to cover.




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Anonymous

nonsense… they are easy to figure out. Whenever the city needs more money that steal more from it’s citizens by saying the values of their properties went up… tantamount to theft.




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A

Rent stabilization is just another one of many tools this city and state uses to “socialize” housing by artificially suppressing rents and forcing the middle class land owners to subsidize other’s housing needs. If you think the larger landlords are hurt by these tactics you are sorely mistaken. In neighborhoods like this it’s typically the second generation immigrants that worked for decades (sometimes generations) to invest that effort in real estate.

These progressive tactics are no different than those of the fascist and communist of the past meant to gain and maintain control for a select few (hint: it’s not the low income family that they purport to be fighting for).




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Anonymous

Oh no, why should the landlord make money…? After all, it is a business. When you invest capital you expect a return on your investment. This will simply prevent the improvement of the neighborhood. Landlords will just leave the buildings the way they are…




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joe

must be nice to only pay less than 5k per yr in property taxes for a 3 family home in astoria.




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Jason

Joe, you are wrong about the property tax rates in Astoria. A single-family home in Astoria is roughly $850-1 million dollars. My parents paid roughly $4,500 in property taxes last year for their single-family home. Our neighbors who have lived in their three family home pays about $8,000 in property taxes per year. I have no idea where you are getting your information from it’s incorrect. A three family home in Astoria can run anywhere from $1.3 to $1.6 million – especially in the 30th avenue and Broadway location. And honestly, you have no clue about the demographics of Astoria. Most homeowners are aging 50-70 year olds who purchased their property decades ago. The income that they relied on to pay off their mortgage has stayed relatively the same while the property taxes increased. To them, that $5,000 a year is a huge expense for them.




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Joe

You misunderstood me. Agree 100%. Go see what Gianaris and his family pays in property taxes. It’s public info. Would it surprise you that it’s about 50% of what others pay. Just like Our wonderful (sarcastic) mayor.




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Dr Jose

People need affordable place to live . Landlords should receive tax breaks for up grades, and nothing more. Raising rents is hurting the tenants




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Anyone

Move. Why are you entitled to live in somebody else’s property? I don’t want to pay more taxes to pay your rent. If you can’t afford to live in Astoria then don’t.




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A

@Anyone. You are talking nonsense. So how does this work? Do I just pick? Ok, I would like to live on Park Ave with views of central park… preferably for no more that $800 / mo or do I have to find a landlord making too much profit and report it to the government?




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A

Only landlord I know of who pays less than 5K in taxes is Mayor deB, on his Brooklyn one families, where he charges $5,000. per month rent. My modest two family is nearly $8.000. and counting! Going to check this out on line. Thanks for the info!




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Anonymous

I guess now you know another. You don’t have to look far into the lives of these politicians to find hypocrisy.




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A

Way to incentivize landlords to not make the necessary upgrades to an ever-aging stock of pre-war housing.




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Read

You haven’t read the article or the bill. The landlords face fines if they don’t fix the building and they get a tax break when they fix it




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You May Read But You Don't Comprehend

So instead of tenants paying for improvements to the buildings that they reside in you would have the taxpayers pay for it?




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Anaid

They need to get rid of this 1970’s policy. Landlords should take care of their property w/o having tenants pay for the bill. Landlords are just looking for ways to make more money! Rents are way too expensive already!




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Joe

They need to stop taxing landlords for the rents they could charge given the market and then tell them they can’t get those rents. Can’t have it both ways… educate yourself please




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Anonymous

“Landlords are just looking for ways to make more money”. Brilliant insight, if a property needs capital improvements who do you suggest pay for them? Uneffing believable.




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Rent Is Too Damn High

Really?! This comment is getting downvoted? THere are morons out there that like having to pay a permanent rent increase despite that money being recouped within a year or two?!




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A

you mean the policy of artificially deflating market rents while still raising property taxes as if landlords are able to charge market rents? Can you say have your cake and eat it too




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Jonah

So you want landlords to do what exactly? …get a separate job where in the only purpose is to pay for improvements of their properties?

The tenant IS their income. Who else would pay?




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