DOCKET NUMBER: ART 7585-W
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 7585-W
:
TENANTS COMMITTEE OF DRO DOCKET NO.: WE85-CS-1-41-OM
69 GLEN ROAD
EASTCHESTER NEW YORK PETITIONER :
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ORDER AND OPINION GRANTING IN PART PETITION FOR ADMINISTRATIVE REVIEW
AND MODIFYING ADMINISTRATOR'S ORDERS
On July 16, 1986 the above named petitioner-tenants filed a Petition for
Administrative Review against orders issued on July 11, 1986 by the
District Rent Administrator, 99 Church Street, White Plains, New York
concerning housing accommodations known as 69 Glen Road, Eastchester, New
York, Various Apartments wherein the Administrator determined that the new
thermal windows installed in the subject premises constituted a major
capital improvement and granted a rent increase adjustment therefor.
The instant matter stems from an application filed with the Division on
October 23, 1985 predicated in the installation of 404 apartment windows,
10 which were separately installed in six apartments between December
1982 and June 1983. The installation of the remaining windows (394),
including half screens was completed in April 1984 and the installation of
20 public area windows was completed in April 1985.
The order of the Administrator appealed herein granted the landlord's
application based upon a review of documentation submitted by the landlord
including proposals dated August 5, 1983 and November 28, 1983, the
landlord's acceptance of the latter at a cost of $157.00 per window,
including screens,the contractor's certification for the primary
installation, paid invoices (including separate invoices for the earlier
installed windows) and cancelled checks in substantiation of the submitted
cost. Said order provided for an increase of $.41 per room per month for
the public area windows plus $2.65 per window per month for the apartment
windows (404).
The Administrator's order contains the notation that tenant replies are
non-sustainable.
In their petition for administrative review the tenants offer their own
interpretation of the rent regulations pertaining to major capital
improvements and contend that the installation here involved does not
qualify as a major capital improvement. They further contend that the
Administrator did not consider the issues presented in their answer to the
application and reiterated on appeal wherein they urged, in substance,
that the work does not meet the definitional requirement of either a major
capital improvement or a substantial rehabilitation since the windows do
not materially add to the value of the structure and the cost thereof only
represents a small percentage (2.6%) of the total market value of the
DOCKET NUMBER: ART 7585-W
property; that the installation is technically not building-wide nor does
it constitute an additional structure but merely represents delayed
maintenance and repairs; that the landlord will be unjustly enriched by
virtue of certain tax advantages and the continuation of the increase as
a permanent part of the rent structure after the landlord's costs have
been recouped; that there is a discerepency between the cost of the
windows contained in the separate proposals and as ultimately billed to
the landlord; and that at best only 50% of the landlord's cost for energy
conservation windows can be passed on to the tenants.
In response to the petition the landlord takes issue with the tenants'
definition of a major capital improvement and notes that the total cost of
the windows and screens contracted for has remained constant.
After a careful consideration of the entire record, the Commissioner is
of the opinion that this petition should be granted in part.
The applicable provisions of the Tenant Protection Regulations (Section
2502.4) and the State Rent and Eviction Regulations Section (2102.4)
provide that a landlord may obtain a rent increase for 1) a substantial
rehabilitation which materially adds to the value of the property and
prolongs the life thereof and/or 2) a major capital improvement required
for the operation, preservation and maintenance of the structure. By its
very definition a major capital improvement does not necessarily have to
encompass a new service.
While an expenditure which would represent only a small percentage of the
market value of the property, as allege by the tenants, would not meet the
definition of a substantial rehabilitation, it is the well established
position of the Division, as reflected in Operational Bulletin 84-4 and
Policy Statement 89-6, that the building-wide installation of new
apartment windows and/or public area windows, to replace windows which are
25 or more years old (as is the case herein) constitutes a major capital
improvement for which the landlord may be entitled to an increase, if it
otherwise so qualifies.
Since the record discloses that the original windows were over 35 years
old and were in such condition as to require replacement, the fact that
the new windows may result in a saving of energy or that the landlord may
enjoy certain tax advantages does not preclude the landlord from obtaining
a rent adjustment based on the full cost ( as allowed herein) of the
installation. (Accord ART 2546-62-W). Furthermore, the New York State
Court of Appeals has recently affirmed the right of the DHCR to grant
major capital improvement rent increases as a permanent part of the rent
structure, the court noting that property owners would have little
incentive to invest in their property if they could recoup little more
than their out of pocket expenses. In the Matter of Ansonia Residents
Association, ET al, v. DHCR) Et al.
Where, as in the instant matter, 10 apartment windows (out of a total of
404) were earlier installed the Commissioner is of the opinion, in
accordance with established policy, that the subsequent replacement of all
remaining apartment windows as part of a unified plan and consecutively
timed project substantially complies with the requirement for a building-
wide major capital improvement. However the Commissioner is of the
further opinion and finds that the cost of the earlier installed windows
should not be included for purpose of computing the allowable increase.
Thus the rent adjustment authorized by the Administrator for the apartment
windows is hereby reduced from $2.65 to $2.55 per window per month to
DOCKET NUMBER: ART 7585-W
reflect an amortization of a total allowable cost of $61,853.00 (rather
than $64,269.00) for such windows based on the following calculations:
$61,853.00 - 60 - 404 (total number of windows) = $2.55 per window per
month.
THEREFORE, in accordance with the provision of the Emergency Tenant
Protection Act and Regulations and the New York State Rent and Eviction
Regulations, it is
ORDERED, that this petition be, and the same hereby is granted in part;
that the Administrators orders be, and the same hereby are modified as of
the effective date there of in accordance with this Order and Opinion; and
that as so modified said orders be, and the same hereby are affirmed; and
it is further
ORDERED, that the landlord refund to the tenants any excess rent collected
as a result of this order within 30 days from the date of issuance hereof.
ISSUED:
ELLIOT SANDER
Deputy Commissioner
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