DOC. NO.: BF 430192-RT
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. BF 430192-RT
DRO DOC NO. LCS00578-OM
VARIOUS TENANTS OF :
157 E 72ND STREET,
PETITIONER :
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ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
On June 26, 1987 the above-named petitioner-tenants filed a
Petition for Administrative Review against an order of the Rent
Administrator issued May 22, 1987. The order concerned housing
accommodations known as 157 East 72nd Street, New York, New York.
The Administrator granted a rent increase based on the installation
of major capital improvements.
The Commissioner has reviewed the record and carefully considered
that portion relevant to the issues raised by this appeal.
The owner commenced this proceeding on February 5, 1985, by filing
an application for a rent increase based on installations of major
capital improvements, to wit:
Remove old chimney and furnish and install
new chimney, March to April 1982
Elevator repairs, April to June 1983
Furnish and install new boiler system,
August 1982 to February 1983
Convert standpipe system, March 1983
Furnish and install sump pump and pit
with drain and overhaul and reassemble
sump pump, February 1982 to May 1983
Parapets, pointing and masonry, May to
December 1982
Rebuilt terracotta column on second floor,
February 1983
DOC. NO. BF 430192-RT
Lobby security system April 1982 to May 1983
New windows, September 1982 to May 1983.
The total cost of the improvements was $338,715.23. On September
4, 1985 the owner certified that each tenant had been served with
a copy of the application and given an opportunity to respond.
Various tenants responded objecting to the increase on the ground
that the improvements were made in anticipation of the conversion
of the building to condominiums and to promote sales. The tenants
argued that the cost of the improvements would be recouped when the
apartments are sold.
The Administrator found no relevant complaint pertaining to the
increase.
The Administrator allowed $286,962.87 of the cost of the
improvements.
The following costs were disallowed:
Temporary hot water $1,082.50/removal of old tank
$2,165.00/sales tax $321.75/rebuilt terra-cotta column
$541.25/security lock $438.41/console for security system
$1,450.00/lobby modernization $31,590.00/elevator repairs
$7,988.44/labor $525.01/standpipe $2,650.00/painting
boiler room $3,000.00.
On appeal the tenants, through counsel, raise three issues in
urging reversal.
1. 157 East 72nd Street Associates does not own the
premises. Premises are owned by cooperative apartment
corporation. Failure to disclose same makes the
application defective.
2. Landlord failed to disclose existence and
status of reserve fund.
3. Upon information and belief the reserve fund
has not been exhausted.
DOC. NO. BF 430192-RT
The owner initially responded to the petition by stating that the
tenants' grounds for reversal do not dispute that the improvements
were made and that they qualify for MCI's. In response to certain
queries from the Commissioner the owner further pointed out the MCI
installations predated the creation of the working capital fund and
that no special assessments were made to pay for the MCI.
After a careful review of the evidence in the record the
Commissioner is of the opinion that the petition should be denied.
The owner is correct in pointing out that the reserve fund issue is
irrelevant. Since the parties agree that the installations herein
predated by several years the conversion of the subject building to
condominium ownership, a reserve fund created in conjunction with
the subsequent conversion could not have been the source of funds
for the work that was done. While major capital improvements paid
for after conversion out of a cash reserve fund may not be the
basis for a rent increase, (See Supplement No. 1 to Operational
Bulletin 84-4) here the tenants do not even assert facts that would
preclude eligibility for the subject rent increase. The tenants
simply allege that the owner failed to disclose the existence of a
reserve fund and that the reserve fund has not been exhausted. The
owner had no obligation to disclose the existence of a reserve fund
if it was not the source of funds used for the improvements and the
owner is not required to use up a reserve fund before qualifying
for a rent increase when the improvements were paid for by funds
contributed by the owner before the conversion.
The tenants' allegation regarding the identity of the owner is also
without merit. The application was filed by 157 East 72nd Street
Associates which is also listed in DHCR's registration records as
the owner of all the rent regulated apartments in the building.
A review of the record reveals that the owner satisfied the
requirements for a rent increase based on the installation of the
various improvements and the tenants have not established any basis
for modifying or revoking the order.
THEREFORE, pursuant to the Rent Stabilization Law and Code and the
Rent and Eviction Regulations, it is
DOC. NO. BF 430192-RT
ORDERED, that this petition be, and the same hereby is, denied and
that the Rent Administrator's order be, and the same hereby is,
affirmed.
ISSUED:
JOSEPH A. D'AGOSTA
Deputy Commissioner
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