A Bronx landlord has been taking advantage of a “loophole” in what’s known as Major Capital Investments to spike rents in rent-stabilized apartments, according to tenant organizers.
Tenants in four buildings controlled by Finkelstein Timberger East Real Estate, which owns close to 100 buildings in the Bronx, are challenging a collective $5.5 million in MCI increases. Tenants say the landlord made unnecessary improvements to their apartments, and some are seeing their rent increase by more than 30 percent, the Village Voice reported.
A landlord can raise rents of rent stabilized apartments if they’re able to prove that they’ve made building-wide improvements, known as major capital investments, such as improving the roof, the heating on site, or elevators.
The rent increases are permanent, and while MCIs are often legitimate, critics say they can be easily exploited for the purpose of pricing out rent-stabilized tenants. MCI rent increases are approved by the Department of Homes and Community Renewal.
The tenant organizers say Finkelstein’s business model relies heavily on exploiting the holes in MCI regulations. Normally, landlords must first receive permission from rent-stabilized tenants to renovate or upgrade their apartments, known as Individual Apartment Improvements, in exchange for a rent increase. However, under MCI, if a landlord makes improvements for all the tenants in the building, they can bypass that step.
A tenant at Finkelstein’s 901 Walton Avenue in the Bronx said that as soon as the firm bought the building in February 2014, they immediately sent a letter saying they would be rehabbing the bathrooms, and kitchens, elevator and roof. “None of us asked for it,” the tenant told the Village Voice. “We were fine with what we had.” His rent will increase from $754 to just over $1000 a month.
Steven Finkelstein, the firm’s head, says the renovations are “essential” and that he renovates the whole building at a time to take advantage of the city’s J51 program, which gives owners tax abatements for renovating rent-stabilized apartments.
In another case involving renovations, although not MCIs, A&E Real Estate , one of the city’s biggest landlords, is being sued by tenants across multiple buildings, for allegedly overstating the cost of renovations in their building to increase rent and destabilize apartments. In that case, A&E made the improvements as individual apartment improvements (IAIs). The firm, led by Douglas Eisenberg, has denied any wrongdoing and maintains that most of the claims precede its ownership of the properties. [Village Voice] — Chava Gourarie