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Aponte vows to lower improvement rent hikes.

At the Owners Advisory Committee meeting last week, Division of Housing Preservation and Development Commissioner Angelo Aponte announced he has begun the formal process to amend the stabilization code to decrease the rent increase for-improvements from 1/40 to 1/72 of the cost.

"Apparently the state is taking the position that the only incentive for private, un-subsidized investment and apartment renovation and rehabilitation should be eliminated," said Dan Margulies, executive director of the Community Housing Improvement Program (CHIP).

There had been no prior consultation on this issue and Marguiles said the owners and owner representatives were shocked. "It doesn't hurt any tenants in place and the increases are only granted with the tenants consent," he explained. "The owner can nurse the old stove along or with a small increase you can get a brand :new stove."

These regulations provide that if an owner buys new items such as a refrigerator, a new kitchen cabinet, or toilet at the present time, 1/40 of the cost is added to each month's rent bill forever. Under the proposed regulations, that increase would drop to 1/72 of the cost of the improvement.

"If you are planning any kind of investment predicated on obtaining individual rental increases through improvement you probably shouldn't buy the building," said Margulies.

While public hearings must take place, Margulies said there is no way to determine yet when and if the new regulations will take effect.

Rents guidelines were conceived to cover operating cost increases, maintenance and repairs but not replacement, Margulies said. "That's why the Major Capital Improvement and individual apartment improvement programs exist," he said.

"What this policy means," Margulies added, "is that instead of replacing things timely, owners will have to patch, the tenants will suffer with older equipment and more frequent breakdowns and perhaps more critically, prudent investors will not buy buildings where they once would have relied on 1/40th increases as apartments turned over to rehab them and increase the rent roll."
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Title Annotation:Division of Housing Preservation and Development Commissioner Angelo Aponte advocates change in rent stabilization code
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:Feb 17, 1993
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