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
APPEALS OF DOCKET NOS.: BF130169RO
: BF130170RO/BF130171RO/
HARVY KALT BF130172RO/BF130173RO/
d/b/a/ RUTLEDGE APARTMENTS BL130363RO/DD130197RO/
AND CAROLE J. LAFORTE PETITIONERS : DF130342RO/DI110061RO/
------------------------------------X EH130340RO/FC130019RO/
FE130464RO/FG130382RO/
FH130100RO/EJ110619RT
RENT ADMINISTRATOR'S
DOCKET NOS.:AE110285OM
AA100006OM/BH130120OM
AB1100630M/BI110084OM
AC110242OM/CI130086OM
AE110204OM/DG130062OM
AH110002OM/DG130063OM
AI110039OM/DG130065OM
BF110061OM
ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
EJ110619RT AND REMANDING PETITIONS FOR ADMINISTRATIVE REVIEW
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
FH130100RO.
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.
ISSUED:
JOSEPH A. D'AGOSTA
Deputy Commissioner
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