Wednesday, May 27, 2009

PULP Analyzes DHCR Submetering Rent Adjustments in Rent Stabilized Housing

The New York State Department of Housing and Community Renewal ("DHCR") oversees rent regulated residential housing. When a rent-regulated landlord is allowed by the PSC to submeter electricity, and begins to charge tenants separately for the electric service based on usage measured by a submeter, the landlord must simultaneously lower the rent, which previously included electricity as a service included without extra charge in the rental agreement ("rent inclusion" of electricity).

When tenants are notified that submetering permission is being sought by the landlord, the standard information given them typically suggests that only a tenant who wastes electricity will pay more than before. But in reality, the rent reductions in the DHCR schedules are far less than typical bills for reasonable electricity usage. See Top Ten Submetering Myths.

As a result of the too-small rent reductions, when electric service is unbundled from rent, tenants are likely to pay significantly more for total rent and electric charges than they did with rent inclusion of the electricity. Only after the submetering is implemented do tenants realize that the amount of rent saved by the rent reduction will not come close to covering the new cost of electric service provided by the landlord.

For many tenants living living on fixed incomes this comes as more than a rude surprise - it may cause financial hardship or even lead to their displacement or eviction. See Submetering Challenged at Claremont Gardens in Ossining.

The current DHCR schedule of rent reductions for submetered tenants in New York City lowers the rent by $29.81 for a one room apartment, and up $60.20 for a six-room apartment. Schedules for other locations around the state are lower. The current schedules are in a 2008 Update Number 1 to DHCR Operational Bulletin No. 2003-1.

PULP prepared a review of the history and methodology underlying the DHCR schedules for rent reductions when rent stabilized apartments are submetered, basically finding that the critical assumptions regarding electric usage and price used to generate the low rent reduction schedule understate normal usage and actual prices, are highly unreliable, and were made to defend a predetermined low schedule that favors landlords.

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