Program to speed SCRIE payments.

Under a new system begun by the SeniorCitizensRentIncreaseExemption unit, owners will be able to obtain cash refunds of their excess SCRIE in a matter of months, not years. Owners who have dealt with this program cautioned, however, that while the idea is laudable, in practice they could be denied SCRIE at the event of an audit and owe the city a refund.

Dan Margulies, executive director of the Community Housing Improvement Program (CHIP), an owner's group, said, "It should be an improvement because they cut out a step."

In the past, owners could obtain a refund only after an audit, which could take the understaffed unit years to reach. The SCRIE unit audits all the leases and Division of Housing and Community Renewal (DHCR) documents and sees if the amounts claimed by the owner are proper. If they are not correct, adjustments are made.

But the delays, caused in part by the need to verify the rents, have caused a tremendous audit lag and some owners have had to wait as much as a couple of years to receive their rent money. Additionally, there are Major Capital Improvement increases (MCIs), and other adjustments, as well as court orders for the auditors to consider. The rent control records, meanwhile, are kept manually by DHCR on update cards that are obtainable on a request basis only and again take a long time to obtain.

Under these past practices, SCRIE would audit and then tell the Dept. of Finance (DOF) to cut a check. "What we are doing now is changing the process," explained Barrington Wright, director of the SCRIE program. "Owners will now apply to Finance, and fill out a special refund application and submit it together with the original SCRIE certificates." It is expected the owner will have a refund in about four months and when the audit examiners get to the application from DOF, they will recoup if the excess SCRIE is incorrect.

That's what worries Leonard Solomon, who operates over four hundred rental units. Several years ago, Solomon went through an audit that covered about eight years of SCRIE payments and obtained a six figure award. But thousands of dollars were denied because along with other problems, through the years his senior citizen tenants had forgotten to refile for their SCRIE certification.

"Now I make sure my seniors file," he said. "I would be wary about taking the money now because you would owe it to them with interest. While I like the idea of money up front, we should be careful and an owner should do a little investigation on their own." Solomon did commend the auditors, saying they were very nice and cooperative."

There was a period of time, Margulies noted, when the agency would not do paperwork for years. "They would tell owners, |You haven't got the requalification, but go ahead and accept the lower amount from the tenant because eventually they will qualify and you will get the money.' In fact, the tenants didn't requalify and the owners didn't get the excess SCRIE because they didn't get the 3

SCRIE."

Now, Margulies said, the agency tells owners that if six months have passed and the tenant hasn't requalified, to ask for the full rent amount. This would happen because either the tenant did not requalify or the agency had not notified the owner, but in the worst case, does protect the owner from losing more than six months of a full rent.

SCRIE attorney Jack Kupferman said owners should follow up with both tenants and the agency.

The case of Blecher vs. HPD et al. brought the issue of time to the forefront and speeded up the implementation of the new process, Kupferman said.

Rules for Excess SCRIE

* File a Schedule A worksheet and form under EX-1-1293 at the DOF office at 25 Elm Place in Brooklyn.

* The applicant has to be the current owner of the property.

"If you apply for excess SCRIE while you own the building you can get it," explained Kupferman, "but you can't file for the excess after you sell the building. It's always wise for purchasers to inquire about the SCRIE."

* The actual rents for rent control SCRIE authorizations should be reported as accurately as possible by the owner. Tax abatement certificates for rent stabilized apartments, however, contain a specific dollar amount. Solomon noted most of the difficulty is on the rent control apartments because if the seniors don't file, no one tells the owner. Then it's hard to go back to a tenant who has been paying $125 under SCRIE and tell them they now should pay $300.

* Owners must use as much tax abatement to pay up their real estate taxes as possible before applying for excess SCRIE.

* In most cases, certificates to be submitted must be originals. "They can't get excess SCRIE without it," said Kupferman. In any excess SCRIE application, however, there could be one tax abatement certificate that could be a copy. That would be the one used to cover the property tax payment, but went over the tax liability. "Theoretically, there will only be one certificate that may straddle the fence," Kupferman noted.

* An applicant for excess SCRIE is not entitled to it if they are in arrears on any other property. "They have to tell us what other properties they own," he said. Those who own more than 10 percent of the property or corporation must disclose their other ownership positions.

* It is critical that owners keep the rents up to date with SCRIE. "If there are rent adjustments let us know," added Kupferman. "Make sure the DHCR filings are up to date. Owners should request an updated rental history for the rent control apartments as soon as they can." While this is not required for the filing at DOF, it is necessary for the audit conducted by the Department For The Aging (DFTA) and it could take months to get a history.

"Owners should be pleased because they will be getting their money sooner," Kupferman said.

A booklet from the SCRIE Audit Unit describing the new procedure and application forms can be obtained from the audit unit at 212 240-7000 or by writing to DFTA, SCRIE, 150 Williams Street, Fourth Floor, New York, NY 10038.