The RSA has just gotten its first look at the some of the ultimate outcomes of the investigations launched by the Tenant Protection Unit (TPU) created by Governor Cuomo within the State Division of Homes and Community Renewal (DHCR) and it’s not a pretty picture.
The RSA received copies of three “Notices of Audit Determination”, each of which involved Individual apartment rent increases (IAI). In each of these cases, the TPU disallowed certain expenses claimed by the owners either because they were not adequately documented or were not considered to be eligible expenses. In each case, the TPU recalculated the legal regulated rent and directed the owner to amend prior rent registrations to reflect a lower legal rent. And, in each of these cases, the actual rent paid by the tenant was not affected because the owners were charging preferential rents which were lower than the legal rent as calculated by the TPU.
These cases raise some serious issues about the justification and the role of the TPU. If the $6 million allocated to the TPU this year alone was intended to protect tenants, then the evidence so far seems to indicate an extraordinary waste of taxpayer dollars because the TPU audits in no way benefitted the tenants in occupancy. However, we suspect that the real purpose of the TPU was to hamstring owners and lay a foundation for further rent restrictions and the TPU is well on its way to meeting that goal. A schedule of allowable costs of IAI’s has never been promulgated and owners must now operate in unchartered waters. We encourage owners to maintain a detailed record of all IAI work going forward including contracts, invoices, receipts and cancelled checks as well as before and after pictures.