STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
GERTZ PLAZA
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
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IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.: ART 10771-Q &
: ART 10772-Q
DOROTHY DULIN AND DRO DOCKET NO.:ZQS 000595-OM
LEAH TONETTI,
PETITIONERS :
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ORDER AND OPINION DENYING PETITIONS FOR ADMINISTRATIVE REVIEW
On June 6, 1986 the above-named petitioners filed two separate
administrative appeals, consolidated herein, against an order issued on
May 25, 1986 by the Rent Administrator, 92-31 Union Hall Street, Jamaica,
New York, concerning the housing accommodations known as 24-25 28th
Street, Various Apartments, Astoria, New York, wherein the Administrator
determined that the owner was entitled to a rent increase based on a major
capital improvement.
The Commissioner has reviewed all of the evidence in the record and has
carefully considered that portion of the record concerning the issues
raised in the administrative appeal.
The owner (Pangiotis Giakoumis) commenced this proceeding on April 26,
1985 by filing an MCI application based on the installation of a new oil
burner and boiler at the subject premises at a cost of $13,750.00. In
support of costs incurred for the improvement, the owner submitted with
his application invoices and contractor agreements. The work was
completed on August 15, 1984.
Tenants affected by the application were notified and allowed an
opportunity to submit an answer. Review of the record discloses that none
of the tenants filed a response objecting to the application.
On May 15, 1986, the Administrator issued the order here under review
finding that the installation qualified a major capital improvement,
determining that the application complied with the relevant laws and
regulations based upon the supporting documentation submitted by the
owner, and allowing appropriate rent increases for rent controlled and
rent stabilized apartments.
In their petitions, the tenants advise that they had previously submitted
answers to the owner's application and attach copies of same with their
respective petitions. The tenants object to the MCI rent increase on the
following bases:
DOCKET NUMBER: ART-10771-Q & ART-10772-Q
1) The subject work was due to the conversion of a large boiler,
servicing several buildings, to a smaller boiler which
services only one building that was purchased by the current
owner in July, 1984. As such, the current owner should have
modified the existing boiler so that it only services the
subject premises, or negotiated the purchase price of the
building with the cost of the replacement boiler in mind.
2) Given that heat is an essential service which is already
being paid for in the rent, and that the tenants currently
pay an extra $25.45 per month for fuel oil, the added MCI
increase should not be borne by the tenants.
3) The MCI increase should be dropped after the five year
amortization period.
4) The present boiler does not provide adequate heat as the
previous boiler did.
5) There is a question of the J-51 tax credit to be considered.
The owner did not submit an answer to the petitions.
After careful consideration, the Commissioner is of the opinion that the
tenants' petitions 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 law 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
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 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. In either case, the rent increase is computed
based on an amortization of the cash cost of the improvement over five
years or sixty months.
It is the established position of the Division that the installation of a
boiler and/or burner constitutes a major capital improvement for which a
rent increase adjustment may be warranted.
The record in the instant case indicates that the owner correctly complied
with the application procedures for a major capital improvement and
Administrator properly computed the appropriate rent increases.
The assertions that heat is an essential service, and that the tenants are
paying an added fuel cost, do not provide a basis for invalidating the
owner's right to the subject rent increase. Also, the claims about the
owner's failure to modify the existing boiler, or negotiate the building
purchase price with the subject improvement in mind do not warrant
DOCKET NUMBER: ART-10771-Q & ART-10772-Q
reversal of the Administrator's order.
As to the claim that the new boiler does not provide adequate heat, review
of the tenants' answers that are submitted with the petitions reveals that
this claim was not raised by either tenant in the proceeding below,
thereby making this issue inappropriate for consideration in this appeal
proceeding. Further, the record below is devoid of any evidence to
support such claim. Therefore, the Commissioner finds, in the absence of
any evidence to establish the owner's failure to maintain services, that
this order should be issued without prejudice to the tenant's right to
file a complaint for a diminution in services if the facts so warrant.
Regarding the tenants' contention that the rent increase for this major
capital improvement should be subject to a five year amortization period
after which time the increase should be removed from the rent, the
Commissioner notes that it is DHCR's present policy that the owner is
entitled to a permanent rent increase for the subject improvement.
Therefore, the provision in the Rent Law which calls for amortization of
the owner's cost over a five year period pertains to the method of
calculating the rent increase and does not constitute a restriction on the
continued collectibility thereof as a permanent part of the rent
structure.
Although the owner may enjoy certain tax advantages as a consequence of
installations involved herein, this does not preclude an owner's
entitlement to a major capital improvement rent increase adjustment
therefor. The Commissioner notes that recent legislation now provides
that tenants of rent stabilized apartments may share in the benefits of
tax abatement received by an owner pursuant to J-51 of the Administrative
Code. However, such provision does not apply to the instant matter since
the law is specifically applicable to work commenced after June 28, 1988.
However, the tenants of rent controlled apartments may be entitled to
share in such tax abatement benefits and should make application to DHCR's
"Owner Individual Unit" for such rent adjustment as may be warranted.
Based on the entire evidence of record, the Commissioner finds that the
Administrator's order was correct and should be affirmed
The petitioners should note that for the increases granted by the
Administrator's order to be collectible during the term of the lease in
effect at the time of the issuance of the order, such lease must contain a
provision authorizing the collection of an increase pursuant to a DHCR
order. The owner's violation of this provision could result in a rent
overcharge determination.
THEREFORE, in accordance with the Rent Stabilization Law and Code, and the
New York City Rent and Eviction Regulations, it is
ORDERED, that the tenants' petitions be, and the same hereby are, denied,
and that the Rent Administrator's order be, and the same hereby is,
affirmed.
ISSUED:
ELLIOT SANDER
Deputy Commissioner
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