BF 410273-RT et al.
                                  STATE OF NEW YORK
                            OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                               JAMAICA, NEW YORK 11433

          APPEALS OF                         :   DOCKET NOS.: BF 410273-RT
                                             :                BG 510380-RO
           DAVID SAPHRA, Tenants Assoc. Rep. :                BL 530314-RO
                                             :   ORDER NO.: US 000312-OM 
                                PETITIONERS  : 

                                   DOCKET NO. BG 510380-RO

          On June 30 and July 15, 1987,  the  above-named  petitioner-tenant
          and petitioner-owner filed  Petitions  for  Administrative  Review
          against  an  order  issued  on  June  10,   1987   by   the   Rent
          Administrator,  92-31  Union  Hall  Street,  Jamaica,   New   York
          concerning housing accommodations known  as  2-12  Seaman  Avenue,
          New York, New York, various apartments,  wherein  the  application
          for a major capital improvement rent increase was granted in part.

          A review of the record indicates that on  December  23,  1987  the
          owner filed a submission related to Administrative  Review  Docket
          No. BG 510380-RO which was inadvertently docketed  as  a  Petition
          for Administrative Review under  Docket  No.  BL  530314-RO.   The
          Commissioner deems it  appropriate  to  terminate  the  proceeding
          under Administrative Review Docket No. BL 530314-RO  and  consider
          the submission  docketed  thereunder  as  a  response  related  to
          Administrative Review Docket No. BG 510380-RO.

          The Commissioner has reviewed all of the evidence  in  the  record
          and has carefully considered that portion of the  record  relevant
          to the issue raised by the administrative appeal.

          This proceeding was commenced by the owner filing  an  application
          for major capital improvement (MCI) increases  for  the  following
          installations: ceramic tiling (extension  for  bathtubs),  sealing
          cellar and basement windows, new aluminum  windows  building-wide,
          concrete work (paving of courtyard and  ramp  and  new  sidewalk),
          bulkhead doors, new entry  doors,  new  roof,  pointing,  intercom
          system and (bell and buzzer), mailboxes, sealing  dumbwaiters  and
          new heating system  (boiler  and  burner).   The  owner  submitted
          documentary evidence showing that it had made expenditures 

          BF 410273-RT et al.

          totaling $181,755.00 for said installations.   The  owner  advised
          the DHCR that the above improvements  were  performed  by  Dyckman
          Construction Co., and that the President thereof was a  nephew  of
          one of the owners.

          The owner certified that on June 21, 1985 it served tenants with a 
          copy of the application, a copy of Notice Form  RA-79N  and  three
          copies of Answer Form RTP-3, and that it  placed  a  copy  of  the
          entire application for tenant review with  the  superintendent  or
          resident manager.  Numerous tenants responded to  the  application
          urging the denial thereof.

          In the herein appealed order the Rent Administrator  granted  rent
          increases based on an allowed cost  of  $111,400.00  for  the  new
          roof, new boiler and burner, pointing, aluminum windows, new front 
          entrance and bulkhead doors, intercom system and  concrete  paving
          of courtyard and ramp.  The Rent  Administrator  made  adjustments
          totaling  $22,438.00  to  reflect  the   "Reasonable   Cost,"   as
          determined by Section J-51 of  the  Administrative  Code  for  tax
          abatement purposes, for  the  following  items:   the  boiler  and
          burner, pointing, aluminum windows, front  entrance  and  bulkhead
          doors, intercom system and concrete paving of  the  courtyard  and

          The Rent Administrator determined that the new  sidewalk,  sealing
          of dumbwaiters and windows, ceramic tiling and mailboxes  did  not
          constitute major capital improvements and disallowed  expenditures
          in the amount of $47,916.00 related thereto.

          The Rent  Administrator  indicated  that  the  approved  increases
          applied  only  to  the  thirty-nine  (39)  apartments  which  were
          stabilized prior to October 1, 1981 listed as follows:  

               Apartment Numbers 1D, 1G, 1H, 1I, 1J,  1L,  2B,  2C,  2E,
               2I, 3C, 3E, 3F, 3G, 3I, 3J, 3L, 3M, 4A, 4B, 4C,  4D,  4E,
               4F, 4G, 4H, 4I, 4J, 4M, 5A, 5B, 5C, 5D, 5E, 5F,  5G,  5H,
               5J, and 5M.

          In their petition the tenants contend,  in  substance,  that  they
          were not provided with copies of the application and  other  forms
          for review  as  required;  that  the  work  performed  constituted
          maintenance not improvements; that the building  was  not  pointed
          and a new roof was not installed; that windows were not  installed
          building-wide since those in stairways were not replaced; that the 
          condition of the oil burner is in question because  of  lapses  in
          the service of heat and hot water; that tenants who took occupancy 
          after 1981 may be entitled to "rebates" because  their  rents  may
          already reflect construction costs; that the actual  cost  of  the
          work may have been lower than the reasonable cost;  and  that  the
          building and construction records should be checked.


          BF 410273-RT et al.

          One tenant contends, in substance, that  the  retroactive  amounts
          computed by the owner are incorrect.

          In response to the  tenants'  petition,  the  owner  asserted,  in
          substance, that all work indicated in  the  application  had  been
          performed and fully completed and the expenditures related thereto 
          had been validated.

          In its petition, as amplified on appeal, the  owner  contends,  in
          substance, that the effective date of the increase should be 
          April 5, 1985, thirty days after the application was  filed;  that
          the fact that the nephew of one of the owners is the president  of
          Dyckman Construction is not relevant since Dyckman Construction is 
          an independent entity and is not owned by Dyckman Associates;  and
          that there should not have been a downward adjustment  to  reflect
          J-51 costs.

          In response the tenants assert, among other things, that a  change
          in the effective date is unjustified.  

          The Commissioner is of the  opinion  that  the  tenants'  petition
          should be denied; and the owner's petition should be remanded  for
          further processing.

          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 useful life has expired.

          The record in the  instant  case  indicates  that  to  the  extent
          recognized by the Rent Administrator, the owner properly  complied
          with the application procedures for major capital improvement; and
          that the Rent Administrator properly disallowed expenditures  made
          for  those  items  determined  not  to  constitute  major  capital

          The record indicates that the actual costs  of  some  items  which
          would normally have been allowed were adjusted because there is  a
          relationship between the owner and the contracting company.

          In light of the case of Matter of Artha  Management,  Inc.,  NYLJ,
          pg.22, col.4, May 24, 1989, the Commissioner  is  of  the  opinion
          that it was not appropriate to automatically  adjust  the  claimed
          actual costs of the improvements made by that contractor to the
          J-51 reasonable costs merely because of the familial  relationship
          between the principals of the owner  and  the  principals  of  the
          contractor.  However, because  of  the  relationship,  such  costs
          should be carefully scrutinized.


          BF 410273-RT et al.

          The Commissioner notes that while the Rent  Administrator's  order
          indicates that the owner installed a new oil burner and boiler  at
          the subject premises, a review of the record  indicates  that  the
          owner only installed a new boiler.  In view of this discrepancy as 
          well as the tenants' allegations that the work was  not  performed
          as alleged and in light of the case of Matter of Artha Management, 
          Inc., the Commissioner finds that the owner's petition  should  be
          remanded to the Rent Administrator, on notice to all parties,  for
          further consideration of the owner's  MCI  application,  including
          the allegations raised by the parties on appeal, by whatever means 
          deemed appropriate.

          Regarding the tenants' contention  that  they  were  not  provided
          copies of various forms for review, a review of the  record  shows
          that the tenants were served with copies of the  MCI  application,
          Notice Form RA-79N and Answer Form RTP-3 and that several  tenants
          submitted responses to the application.

          Regarding the tenants statement  that  there  are  lapses  in  the
          service of heat and hot water, this Order and  Opinion  is  issued
          without prejudice to the tenants' rights to file  the  appropriate
          application for  a  decrease  in  rent  based  on  a  decrease  in
          services, if the fact so warrant.

          Regarding the tenants contention that tenants who  took  occupancy
          after  1981  may  be  entitled  to  "rebates"  and  one   tenant's
          contention that the retroactive amounts are incorrect, this  Order
          and Opinion is issued without prejudice to their rights to file  a
          complaint of rent overcharge if the facts so warrant.

          Regarding the tenants contention that the actual  costs  may  have
          been lower than the reasonable costs, the Commissioner notes  that
          the basis for computing the MCI increase is the actual cost of the 

          Regarding the owner's contention that the effective  date  of  the
          MCI increase should be  April  5,  1985,  thirty  days  after  the
          application was filed, the Commissioner notes that an owner's  MCI
          application is not complete until the owner has certified that the 
          application and other  related  forms  have  been  served  on  the
          tenants.  The Rent Administrator properly determined the effective 
          date to be August 1, 1985, the first rent payment date thirty days 
          after the owner's application was complete.

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

          ORDERED, that the proceeding commenced under Administrative Review 
          Docket No. BL 530314-RO be, and the same  hereby  is,  terminated,
          and it is further


          BF 410273-RT et al.

          ORDERED, that  the  petition  filed  under  Administrative  Review
          Docket No. BF 410273-RT be, and the same hereby is, denied, and it 
          is further 

          ORDERED, that  the  petition  filed  under  Administrative  Review
          Docket No. BG 510380-RO be, and the same hereby is, granted to the 
          extent of remanding this proceeding to the Rent Administrator  for
          further processing in accord herewith.   The  order  of  the  Rent
          Administrator is stayed to the extent that the  tenants  need  not
          pay the Temporary Rent Increase until a new  order  is  issued  on
          remand but otherwise remains in full force and effect.


                                          JOSEPH A. D'AGOSTA
                                          Acting Deputy Commissioner


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