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

     APPEAL OF                              DOCKET NO.: ART 7585-W
     TENANTS COMMITTEE OF                   DRO DOCKET NO.: WE85-CS-1-41-OM
     69 GLEN ROAD


     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

     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

     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.


                                     ELLIOT SANDER
                                     Deputy Commissioner


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