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

     ------------------------------------X 
     IN THE MATTER OF THE ADMINISTRATIVE :  ADMINISTRATIVE REVIEW
     APPEAL OF                              DOCKET NO. BE 430044-RO
                                         :  
                                            RENT ADMINISTRATOR'S       
       ROCKAWAY ONE CO.                     DOCKET NO. QS 000566-OM
                           PETITIONER    : 
     ------------------------------------X                             

           ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
       IN PART AND REMANDING TO THE RENT ADMINISTRATOR FOR FURTHER PROCESSING

     On May 22, 1987, the above-named owner filed a petition for administrative 
     review of an order issued on April 17, 1987 by a District Rent Administrator 
     concerning the housing accommodations known as 20-38/40/42/44/46/50 Seagirt 
     Blvd., Far Rockaway, New York, Various Apartments.

     The District Rent Administrator's order appealed herein, granted the owner's 
     application for a rent increase based upon the installation of new oil 
     burners/boilers and hot water heaters but disallowed certain claimed 
     expenditures totalling $22,020.26.  Claimed costs for a boiler/burner, in 
     the amount of $11,370.00 and supplies, in the amount of $2,833.60, were 
     disallowed as not having been properly substantiated by supporting 
     documentation.  The balance of $7,816.66, which was designated by the 
     Administrator as representing attorney's and contractor's fee, was 
     disallowed as not constituting a major capital improvement(MCI) pursuant to 
     the Rent Stabilization Code and regulations.

     The Commissioner has reviewed all the evidence in the record and has 
     carefully considered that portion of the record relevant to the issues 
     raised by the petition for review.

     On appeal, the owner alleges, in substance, that the District Rent 
     Administrator incorrectly disallowed $7,816.66 from the cost of the MCI 
     which was paid to heating consultants; that the Administrator incorrectly 
     characterized this fee to the heating consultants as "attorney's and 
     contractor's fee"; that the fees expended to these consultants to furnish 
     expertise in the selection of a heating contractor and to oversee the 
     installation should be credited to the owner as an expense in computing the 
     increases allowed for the major capital improvement; that pursuant to the 
     provisions of the Internal Revenue Code, such fees are considered 
     depreciable capital expenditures which should therefore be deemed an MCI as 
     defined by the Rent Stabilization Law and Code.  The owner further asserts 
     that various bills for miscellaneous supplies necessary for the installation 
     which had been submitted with the owner's application were sufficient to 
     substantiate their costs; and that the cost of such supplies totalled 
     $1,833.60 and not $2,833.60 as listed in the Administrator's order.









          DOCKET NUMBER: BE 430044-RO
     The owner also submitted a copy of a letter, dated February 24, 1987, from 
     the owner's attorney to the District Rent Office notifying the Division that 
     enclosed they would find copies of final payments made to the boiler 
     contractor for the MCI installation at the subject premises, with a request 
     that the payments be considered in the final calculations for the pending 
     rent increases; copies of cancelled checks in the amount of $11,370.00 were 
     enclosed along with copies of certified mailing receipts addressed to the 
     agency dated February 25, 1987 the owner thereby asserts that these costs 
     are directly attributable to the heating system installation and were 
     improperly disallowed.

     After careful consideration of the evidence of record, the Commissioner is 
     of the opinion that the Administrative Appeal should be granted in part and 
     the proceeding remanded to the Administrator for further consideration.

     It is the D.H.C.R.'s position that certain engineering and/or architectural 
     expenses which are directly related to the MCI installation costs and which 
     are not otherwise duplicated, qualify for a rent increase.  Thus, 
     preparatory inspections as well as the cost of drawing of plans and 
     specifications needed for the particular installation or expenses for any 
     other professional services which are established as being both necessary 
     and customary to the accomplishment of the improvement qualify for an MCI 
     rent increase (Administrative Review Docket No FH 130040-RO).

     Regarding the owner's assertion that the amount of $11,370.00 was an 
     incorrectly disallowed cost, the record reveals that the owner properly 
     substantiated these costs when this proceeding was before the Administrator 
     and should therefore be credited for them.

     Regarding the owner's claimed expenditures in the amount of $2,833.60 for 
     supplies; the Commissioner notes that, generally, bills alone, without any 
     proof of their payment, do not constitute adequate substantiation.

     The Commissioner therefore deems it appropriate to remand this proceeding 
     for such further processing as may be necessary in order to afford the owner 
     the opportunity to establish the validity of the claimed consulting fees and 
     to credit the owner with that portion of the following costs as are 
     validated and found non-duplicative, of those costs previously granted, 
     namely: $11,370.00 representing the balance of costs for the heating system 
     installation, and $7,816.66 representing heating consultant fees.

     THEREFORE, in accordance with the Rent Stabilization Law and Code, it is










          DOCKET NUMBER: BE 430044-RO
     ORDERED, that this administrative appeal be and the same hereby is, granted 
     to the extent of remanding this proceeding to the Rent Administrator for 
     further processing in accordance with this order and opinion.  The order of 
     the District Rent Administrator remains in full force and effect until a new 
     order is issued on remand.

     ISSUED:






                                                                   
                                          JOSEPH A. D'AGOSTA
                                      Acting Deputy Commissioner




                                                    





    

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