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

      APPEALS OF                             DOCKET NOS.: BF130169RO
                                          :  BF130170RO/BF130171RO/
        HARVY KALT                           BF130172RO/BF130173RO/
       d/b/a/ RUTLEDGE APARTMENTS            BL130363RO/DD130197RO/
      ------------------------------------X  EH130340RO/FC130019RO/
                                             RENT ADMINISTRATOR'S 
                                             DOCKET NOS.:AE110285OM              

             BF130169RO, BF130170RO, BF130171RO, BF130172RO, BF130173RO,
             BL130363RO, DD130197RO, DF130342RO, DI110061RO, EH130340RO,
                 FC130340RO, FE130464RO, FG130382RO, AND FH130100RO

      The above-named petitioner-owner and petitioner-tenant timely filed and/or 
      refiled administrative appeals against orders issued by the Rent 
      Administrator (92-31 Union Hall Street, Jamaica, New York) concerning the 
      stabilized housing accommodations known as 89-46 Doran Avenue; 89-21, 89- 
      28, 89-30 and 89-48 Rutledge Avenue; 72-06, 72-08, 72-10, 72-12, 72-16, 73- 
      06, 73-10, and 73-14 Woodhaven Boulevard; and 89-19 74th Avenue ("Rutledge 
      Apartments"), Glendale, New York, various apartments.  The Commissioner 
      notes that the subject premises are part of a garden apartment complex.

      Under Docket Numbers AA100006OM, AB100063OM, AC110242OM, AE110242OM, 
      AE110285OM, AH110002OM, AI110039OM, BF110061OM, BH130120OM and BI110084OM, 
      the Administrator granted a major capital improvement (MCI) rent increase 
      for the installation of roofs at the corresponding premises.  The owner's 
      claimed cost for said installations was adjusted to the cost allowed under 
      the J-51 Schedule of Reasonable Costs of the Department of Housing 
      Preservation and Development based on the relationship existing between the 
      owner and the contractor (the owner's superintendent.  


          ADMIN. REVIEW DOCKET NO.: BF130169RO, et. al.

      Under Docket Numbers DG130062OM, DG130063OM, DG130065OM and CI130086OM, the 
      Administrator denied MCI rent increases for the installation of roofs at 
      the corresponding premises based on a determination that said installations 
      were not building-wide.

      In his petitions the owner contends, in substance, that the claimed costs 
      for the roof installations were improperly adjusted to a lower amount, that 
      the Administrator erroneously disallowed rent increases for certain roof 
      installations, and that the effective dates of certain retroactive 
      increases are incorrect.

      In response to the owner's petitions, several tenants contend, variously 
      and in substance, that rent increases were not warranted, and that the rent 
      increase was not calculated correctly.

      In her petition the tenant contends, in substance, that the superintendent 
      is not a licensed contractor, that a new roof was not installed, that roof 
      patching may have been performed, and that a rent increase was not 
      warranted for said work.  In response to the tenant's petition, the owner 
      asserts, in substance, that the complaints therein should not excuse her 
      from paying the rent increase.

      The Commissioner is of the opinion that the petitions filed under 
      Administrative Review Docket Numbers BF130169RO, BF130170RO, BF130171RO, 
      BF130172RO, BF170173RO, BL130363RO, DD130197RO, DF130342RO, DI110061RO, 
      EH130340RO, FC130019RO, FE130464RO, FG130382RO, and FH130100RO should be 
      remanded to the Administrator for further consideration, and that the 
      petition filed under Administrative Review Docket Number EJ110619RT should 
      be denied.

      Rent increases for major capital improvements are authorized by Section 
      2522.4 of the Rent Stabilization Code for rent stabilized apartments.  
      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 life has expired.

      The Commissioner is of the opinion and the courts have so held that where 
      an owner acts as his own general contractor and work is performed by the 
      owner's own employees as part of their regular compensation, such labor 
      would not be recompensable in the form of a rent increase, irrespective of 
      the fact that the work done might otherwise qualify as a major capital 
      improvement.  In the same vein, the cost of supervising (or general 
      contracting) of such labor and/or subcontractors by the owner's in house 
      management personnel would not be recompensable by a rent increase.

      However, in light of the recent case of Matter of Artha Management, Inc., 
      N.Y.L.J., p. 22, col. 4, May 24, 1989, the Commissioner is of the opinion 
      that it was not appropriate to automatically disallow all labor costs 
      emanating from that contractor.  Nevertheless, because of the relationship 
      and the absence of an arms length transaction, such alleged costs should be 
      most carefully scrutinized.

          ADMIN. REVIEW DOCKET NO.: BF130169RO, et. al.

      With regard to the proceedings in which rent increases were granted in part 
      based on adjusted claimed costs, the record reveals that the owner 
      submitted documentation to the Administrator, including statements from his 
      superintendent listing the total cost of each roof installation, but that 
      no breakdown of costs was indicated.  In view thereof and in light of the 
      case of Matter of Artha Management, Inc., the Commissioner finds that the
      following proceedings should be remanded to the Administrator for further
      consideration of the owner's applications:  Administrative Review Docket 
      Numbers BF130169RO, BF130170RO, BF130172RO, BF130173RO, BL130363RO, 
      DD130197RO, DF130342RO, DI110061RO and EH130340RO.

      As to the owner's contention that the Administrator erroneously denied MCI 
      rent increases for certain accommodations, the record reveals that the 
      subject premises is part of a garden apartment complex and that each 
      address denotes a separate two-family structure.  The Commissioner is of 
      the opinion that the installation of a new roof on each structure would 
      qualify as a major capital improvement entitling the owner to a rent 
      increase for each separate address, provided the work otherwise so 
      qualifies.  Based thereon, the Commissioner finds that the following 
      proceedings should be remanded to the Administrator for consideration of 
      the owner's applications: FC130019RO, FE130464RO, FG130382RO, and 

      Regarding the owner's contention that the effective dates of certain MCI 
      rent increases are incorrect, the Commissioner notes that for rent 
      stabilized apartments in New York City, the MCI rent increase is generally 
      effective as of the first rent payment date 30 days after the tenants are 
      served with the application.  The record reveals that the rent increases in 
      question were determined accordingly.

      Concerning the tenant's contention that the owner did not install a new 
      roof at her building (72-12 Woodhaven Boulevard), and that the 
      superintendent is not a licensed contractor, the record discloses that the 
      owner substantiated its application in the proceeding below by submitting 
      to the Administrator documentation in support thereof.  The fact that the 
      installation was performed by the owner's superintendent does not preclude 
      his entitlement to MCI rent increases, as discussed above, for work which 
      otherwise qualifies.

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

      ORDERED, that the petition for administrative review Docket Number 
      EJ110619RT be, and the same hereby is, denied; and it is further


          ADMIN. REVIEW DOCKET NO.: BF130169RO, et. al.

      ORDERED, that petitions for administrative review Docket Numbers 
      BF130169RO, BF130170RO, BF130171RO, BF130172RO, BF130173RO, BL130363RO, 
      DF130197RO, DF130342RO, DI110061RO, EH130340RO, FC130019RO,  FE130464RO, 
      FG130382RO, and FH130100RO be, and the same hereby are, remanded to the 
      Rent Administrator for further consideration in accordance with this order 
      and opinion.  The automatic stay of so much of the Rent Administrator's 
      order as directed a retroactive rent increase for the rent-stabilized 
      tenants (which stay took effect upon the filing of the petitions for 
      administrative review) is hereby continued until a new order is issued upon 
      the remand.  However, the Administrator's determination as to a prospective 
      rent increase is not stayed and shall remain in effect until the 
      Administrator issues a new order upon the remand.


                                           JOSEPH A. D'AGOSTA
                                           Deputy Commissioner



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