OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                               JAMAICA, NEW YORK 11433

      APPEAL OF                              DOCKET NO.: ART04151L
        MITCHELL ROSE, et al.                RENT ADMINISTRATOR'S
                                             DOCKET NO.: OM4612
                               PETITIONER : 


      On May 1, 1985 the above-referenced tenant filed a petition seeking 
      administrative review of an order issued on April 4, 1985, by a Rent 
      Administrator in the Columbus Circle office of the D.H.C.R., in which the 
      Administrator had granted the owner permission to increase the rents at the 
      housing accommodation known as 324 East 9th Street, New York City, based on 
      the owner's completion of a major capital improvement ("MCI").

      This proceeding originated when the owner filed with the predecessor of the 
      D.H.C.R., on April 15, 1983, his application for the aforementioned 
      permission, based on the installation of a new boiler with integral burner.  
      The application included a listing of each apartment in the building along 
      with the tenant's name and rental amount; one such entry is for "M. Kizyma 
      (Super)", with the rent left blank.

      The above-referenced tenant responded to that application by stating in 
      pertinent part:  "The replacement of a broken boiler has got to be 
      considered within the realm of normal expected building maintenance and in 
      no way, in my opinion, constitutes a building improvement."

      In the ensuing order, here appealed, the Rent Administrator determined that 
      the "new boiler burner and boiler" constituted an MCI within the meaning of 
      the code and regulations allowing rental increases therefor.

      In this petition the tenants allege, in substance, that because the 
      previous system provided utterly inadequate heating, "the work done 
      constitutes normal building maintenance" rather than a capital improvement; 
      that the absence of a superintendent and long-term vacancy of two 
      apartments, render incorrect the Administrator's calculation of the size of 
      the rental increase allowed herein; and that the subject order refers to a 
      new oil burner while the appliance in fact burns gas.

      After careful consideration of the entire record, the Commissioner is of 
      the opinion that this petition should be denied.

      Rent increases for major capital improvements are authorized by Section 
      2202.4 of the Rent and Eviction Regulation for rent controlled apartments 
      and Section 2522.4 of the Rent Stabilization Code for rent stabilized 
      apartments.  Under rent control, an increase is warranted where there has 
      been since July 1, 1970 a major capital improvement required for the 
      operation, preservation, or maintenance of the structure.  Under rent 



      stabilization, the improvement must be generally building-wide; depreciable 
      under the Internal Revenue Code, other than for ordinary repairs; required 
      for the operation, preservation, and maintenance of the structure; and 
      replace an item whose useful life has expired.  It is the established 
      position of the Division that the installation of a new heating system 
      meets the definitional requirements of a MCI.  In fact the tenants concede 
      that the condition of the old system was such that a new boiler/burner was 
      required for the operation, preservation and maintenance of the structure.

      Turning to the second assignment of error, the Administrator's calculations 
      included the subtraction of one apartment from the total number in the 
      building, because it was occupied rent-free by the superintendent.  The 
      petition ascribes error to that substraction, stating that "there has been 
      no superintendent since at least 1975."  Although served with the 
      application and notice of Commencement of Proceeding advising that the 
      entire application and supporting documentation was available for review in 
      the superintendent's or resident manager's office, the tenants made no 
      mention of that entry or that such office did not exist.  Since this issue 
      was not raised in the proceeding before the Administrator said allegation 
      may not, in accordance with the applicable provisions of the Code and 
      administrative precedent, be considered for the first time on appeal.  The 
      Commissioner notes that the Administrator ascribed an appropriate rental 
      value to other apartments in the subject premises including owner occupied 
      residential and commercial space.

      Whereas the record confirms that the heating installation entailed a new 
      gas rather than an oil burner, said point provides no grounds to disturb 
      the subject order, for neither the granting of this MCI increase nor the 
      amount thereof depends on whether the subject installation burns oil or 
      gas.  This apparent mistake of the Administrator, in other words, 
      constitutes harmless error calling for no action by the Commissioner.

      Based upon the entire evidence of record, the Commissioner finds that the 
      Administrator properly found the new boiler/burner qualified as a MCI; and 
      that said order should be affirmed.

      THEREFORE, in accordance with the Rent Stabilization Law and Code, and the 
      Rent and Eviction Regulations for New York City, it is

      ORDERED, that this petition be, and the same hereby is denied and the Rent 
      Administrator's order be and the same hereby is affirmed; and it is further

      ORDERED, that tenants of stabilized apartments who may owe the temporary 
      retroactive portion of the rent increase which was stayed by the filing of 
      the Petition for Administrative Review may pay such portion of the 
      retroactive increase as may now be due and owing in a manner consistent 
      with the Administrator's order or in six (6) equal monthly installments, 
      which ever would result in the earlier payment of such arrears.


                                             LULA M. ANDERSON  
                                           Deputy Commissioner

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