A landlord may file an application for a surcharge to cover the cost of a planned major capital improvement to a multiple dwelling as defined in § 321-1 hereinabove. The landlord's application shall include the total cost of the capital improvement; the number of years of useful life of the capital improvement as claimed by the landlord for depreciation for income tax purposes; and the amount of the surcharge sought from the tenant. The Rent Control Board may grant a surcharge only if it finds that the major capital improvement benefits the tenant. The Board may approve the planned major capital improvement; however, the landlord may not implement the surcharge until the landlord submits verification of completion of work and payment (in the form of a detailed invoice and paid bill or cancelled check) and the Rent Control Board provides final approval.
The landlord must give each tenant proposed to be affected by a capital improvement surcharge written notice of the application for surcharge at least 30 days prior to the hearing date of the application.
A. 
In calculating the capital improvement surcharge, the cost of the capital improvement shall be divided by the total square feet of the dwelling to determine the capital improvement surcharge per square foot, if applicable. The tenant shall not be liable for any capital improvement surcharge exceeding the surcharge increase per square foot multiplied by the total square feet occupied by the tenant, if applicable. Where per-apartment costs are known, they should be used as a basis for apportioning the surcharge.
B. 
Only the initial investment and financing costs are eligible for the capital improvement surcharge. Repairs and replacements are to be absorbed by the landlord as operating expenses and are not eligible for the capital improvement surcharge.
C. 
The capital improvement surcharge applicable to each tenant shall not exceed 10% of his base rent, unless such improvement is mandated by local ordinance or state law, and shall be payable in up to 36 monthly installments.
D. 
The capital improvement surcharge shall become effective no sooner than the renewal date of the next lease and no time during a pending or current lease.
Any capital improvement surcharge, as provided herein, shall not be considered rent for the purposes of computing the annual cost-of-living rent increases.