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

      APPEALS OF                             DOCKET NOS.: ART09176U
                                          :               ART09177L
        ANA J. DELA CRUZ                                         
        ROSA ARRIAGA                         RENT ADMINISTRATOR'S
                            PETITIONER    :  DOCKET NO.: USC000425OM


      The above-named petitioner-tenants timely filed administrative appeals 
      against an order issued on March 26, 1986 by the Rent Administrator (92-31 
      Union Hall Street, Jamaica, New York) concerning the housing accommodations 
      known as 335 Wadsworth Avenue, New York, New York, various apartments, 
      wherein the Administrator granted major capital improvement (MCI) rent 
      increases for the controlled and stabilized apartments in the subject 
      premises based on the installation of a new burner and boiler, new concrete 
      on the backyard, main entrance doors, a new intercom system, a new roof and 
      new aluminum replacement windows.  The Administrator disallowed 
      expenditures for the sealing dumbwaiters, new mailboxes installed in the 
      same location and a metal fence and gate.

      In their petitions the tenants contend, in substance, that the MCI rent 
      increases should be denied because the work was necessitated by the 
      previous owner's failure to maintain the premises and building repairs are 
      still needed, specifically water pressure and electricity repairs; tht the 
      dumbwaiters were already sealed before the improvements were made the fence 
      and gate were not installed and there is no light in the basement and 
      therefore these items should not be considered part of the improvements; 
      that "the aggregate annual increase for all MCI orders pertaining to a 
      building should be limited 6%" per year; that the rent increase should not 
      be added to the base rent or become a permanent part thereof; and that the 
      temporary increase combined with the permanent increase results in a 
      financial hardship.

      In response the asserts, insubstance, that the Administrator's order limits 
      the collection of the rent increase to 6% for stabilized apartments; that 
      the limitation for controlled apartments is 15%; and that the fence and 
      gate were not approved for an MCI rent increase and the tenants are not 
      being charged for these items.

      The Commissioner is of the opinion that these petition should be denied.

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


          ADMIN. REVIEW DOCKET NO.: ART 09176-U

      operation, preservation, or maintenance of the structure.  Under rent 
      stabilization, the improvement must generally be 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.

      The Commissioner notes that the petitioner-tenants have not raised 
      objections to the quality or adequacy of the installations in their 
      administrative appeals.

      Regarding the contention that water pressure and electricity repairs are 
      needed, such claim which refers to items unrelated to the installation, is 
      not the subject of a rent reduction order previously issued by DHCR and the 
      Rent Administrator for properly exercised discretion in granting part the 
      owner's application for a rent increase.

      Regarding the tenants' contention that the sealed dumbwaiters, the fence 
      and gate and the basement with no lights should not be considered part of 
      the improvements, the record indicates that expenditures for the 
      dumbwaiters, the fence and the gate were disallowed.  There is no 
      indication that the basement was considered in the determination.

      Regarding the contention that the rent increase for all MCI orders should 
      be limited to 6% per year, Section 26-516 of the Rent Stabilization Law 
      provides in pertinent part, that the collection of certain rent increases 
      including increases for major capital improvements, "shall not exceed six 
      percent in any year from the effective date of the order granting the 
      increase over the rent set forth in the schedule of gross rents, with 
      collectibility of any dollar excess above said sum to be spread forward in 
      similar increments and added to the stabilized rent as established or set 
      forth in future years."  The annual limitation for rent controlled 
      accommodations is 15% as contained in Operational Bulletin 84-4.

      In the instant case DHCR records show that no MCI rent increases were 
      granted prior to the subject increase.  Accordingly, the Administrator 
      properly indicated in the herein appealed order that collection of the 
      15.92% rent increase for stabilized apartments was limited to 6% for the 
      first 12 month period.  The Commissioner notes that the Administrator 
      advised the owner that collection of the rent increase for controlled 
      apartments "shall not exceed 15% for the first 12 month period, with the 
      balance spread to subsequent years so as not to exceed 15% in any 12 month 

      Regarding the contention that the MCI rent increase should not form a 
      permanent part of the rent structure, the Commissioner notes that the 
      permanent nature of the increase has been upheld by the Court of Appeals of 
      the State of New York in Matter of Ansonia Residents Associates v. DHCR.

      Regarding the contention that the rent increase will be financially 
      burdensome, the Commissioner is not unmindful of the possibility that the 


          ADMIN. REVIEW DOCKET NO.: ART 09176-U

      rent increase may prove burdensome to some tenants.  However, the 
      Commissioner is constrained by the applicable statutory and regulatory 
      provisions to grant such increases as are warranted.

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

      ORDERED, that these petitions be, and the same hereby are, denied; and that 
      the order of the Rent Administrator be, and the same hereby is, affirmed.


                                           JOSEPH A. D'AGOSTA
                                       Acting Deputy Commissioner



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