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. BE 430044-RO
:
RENT ADMINISTRATOR'S
ROCKAWAY ONE CO. DOCKET NO. QS 000566-OM
PETITIONER :
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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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