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

     APPEAL OF                              DOCKET NO.: ART 10771-Q &
                                         :              ART 10772-Q
       DOROTHY DULIN AND                    DRO DOCKET NO.:ZQS 000595-OM
                           PETITIONERS   : 


     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

     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,

                                              ELLIOT SANDER
                                           Deputy Commissioner

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