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

      APPEAL OF                              DOCKET NO.: BH 430023-RT
        HELEN J. KORMAN                      RENT ADMINISTRATOR'S
        230 WEST 79TH STREET                 DOCKET NO.: AF 430126-OM


      On August 4, 1987 the above named petitioner-tenant filed a petition for 
      Administrative Review against an order issued June 30, 1987 by the District 
      Rent Administrator, 92-31 Union Hall Street, Jamaica, New York concerning 
      housing accommodations known as 229 West 78th Street and 230 West 79th 
      Street, AKA 2200 Broadway, New York, New York.

      The issues raised in this appeal are whether the improvements made by owner 
      entitles the owner to a major capital improvement increase and whether the 
      authorized percentage of such increase, the methodology applied to 
      calculate increase and the permanent nature of increase are lawful.

      The relevant sections of law are NYCRR 2202.4, NYCRR 2522.4, NYCRR 2529.1 
      YY 51-6.0, and 26-511 of the Rent Stabilization Law.

      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 administrative appeal.          

      This proceeding was commenced on June 24, 1986 by the owner's filing of an 
      application for a rent increase based upon the installation of a major 
      capital improvement (MCI) wherein the owner stated he had upgraded six 
      elevators between October 1984 and March 1986 at a total cost of $400,000.

      The owner submitted contractor's verification, contract, cancelled checks, 
      Building Departments Permit for Repair of (6) Elevators and an Elevator 
      Equipment Use Permit.  The work included installation of new control 
      boards, selectors and cables for six elevators.

      Various tenants filed answers objecting to owner's application.  Tenants 
      stated that increase was not warranted because old elevators were in 
      disrepair, that new elevators did not work properly, that owner should only 
      be reimbursed for cost of installation and work was just ordinary repairs.  
      Additionally, the Tenants' Committee for 229 West 78th Street and 230 West 
      79th Street filed an answer to MCI application claiming owner lack of 
      maintenance cause condition of elevators' disrepair which necessitated 
      their replacement.  The Tenant's Committee stated that a complaint for


          ADMIN. REVIEW DOCKET NO.: BH 430023-RT

      decrease in building-wide services for failure to maintain elevator was 
      filed against owner.  The Tenant Committee also claimed that rent increases 
      requested by owner was exceeded the 6% annual capand objected to a 
      permanent rent increase.

      The Rent Administrator issued the order here under review finding that the 
      installation qualified as a MCI determining that the application complied 
      with relevant laws and regulations based upon supporting documentation 
      submitted by the owner, and allowing appropriate increases.

      In this petition the tenant (H.Korman) states she is filing the petition as 
      a officer of the 230 West 79 Tenants Association which represents rent 
      controlled and rent stabilized tenants at subject premises and contends the 
      following: the work does not constitute a MCI, that the DHCR failed to 
      properly calculate rent increase for the rent stabilized apartments and 
      failed to properly amortize costs, that increase exceeds 6% annual cap, 
      increase should not be permanent and DHCR failed to consider the equities, 
      statutory limitations, and commercial rent in making their determination.

      In response to tenant's petition, the owner asserts, citing Section 2529.1 
      of the Rent Stabilization Code the petition must be treated as single 
      tenant's petition and not the Tenants Association's because only H. Korman 
      signed the Petition.  Furthermore as a single petitioner and as a rent 
      controlled tenant she has no standing to raise arguments on behalf of rent 
      stabilized apartments.  The owner also answers that a MCI was installed and 
      therefore is entitled to rent increase, that poor maintenance (if true) is 
      not a bar to an MCI increase and that the Administrator correctly 
      calculated rent for stabilized apartments and rent controlled apartments.

      After careful consideration, the Commissioner is of the opinion that 
      petition should be denied.

      Section 2529.1 of the Rent Stabilization Code states that a representative 
      of an owner or tenant filing a Petition for Administrative Review on behalf 
      of others must verify or affirm petition and provide written evidence of 
      authorization to act in such representative capacity for purpose of filing 
      the petition.

      It is not disputed that the petition stated and the attorney for the West 
      79th Street Tenants Association (Tenants Association) represented, that H. 
      Korman filed this Petition for Administrative Review as an officer of the 
      Tenants Association.  On May 6, 1988 in a letter to the DHCR the owner's 
      attorney raised the issue, among others, whether H. Korman was authorized 
      to represent the Tenants Association in this petition inasmuch no written 
      evidence was submitted to support the representation pursuant to Section 
      2529.1.  On June 30, 1988 the Tenants Association's Attorney submitted to 
      the DHCR signatures of rent controlled and rent stabilized tenants 



      authorizing H. Korman to represent them in this PAR proceeding.  In July 
      1988 Nathaniel Geller, Assistant Deputy Counsel for the DHCR responded to 
      owner's inquiry and opined that H. Korman should be acknowledged in the 
      reprsentative capacity and that petition was submitted by the Tenants 
      Association and not H. Korman singularly.

      The Commissioner notes that the relief requested by this order - a building 
      wide reversal of rent increase is denied regardless of whether the 
      petitioner, Helen Korman, filed her petition in an individual or 
      representative capacity.  The Commissioner therefore does not reach this 
      issue for determination.

      The petitioner's contention that the installations made by owner do not 
      constitute a MCI is not supported by the record.  Furthermore, the 
      petitioner's contentions that the owner's poor maintenance contributed to 
      elevator's condition of disrepair and that installations did not constitute 
      an upgrade, are not dispositive.  The Commissioner notes work described in 
      application fit criteria for a MCI pursuant to Section 2202.4 of the Rent 
      and Eviction Regulations for rent controlled apartments and Section 2522.4 
      of the Rent Stabilization Code for rent stabilized apartments.  Under rent 
      control, an increase is warranted where there has been since July 1, 1970 
      a major capital improvement required for the operation, preservation, or 
      maintenance of the structure.  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.

      With regard to the petitioner's contention that the rent increases were 
      improperly calculated for rent stabilized apartments as a percentage 
      increase instead of on a per room basis as set forth in Rent Stabilization 
      Code Section 2522.4(a)(12), the Commissioner notes that this provision was 
      not in effect at the time application was filed and order issued.  Advisory 
      Opinions 87-1 and 87-3 indicate that Section 2522.4(a)(12), the allocation 
      by the DHCR on a per-room basis or monthly rent adjustment pursuant to a 
      building-wide improvement, was postponed to August 1, 1987.  The owner in 
      the instant case filed the MCI application on June 24, 1986 and the order 
      was issued on June 30, 1987.  The Commissioner finds that the District Rent 
      Administrator granted the appropriate increase.

      As for whether the rent increase was properly "amortized" and whether 
      permanent increases constitute unreasonable high rents, the Commissioner 
      relies on precedent set forth in case law and prior PAR opinions.

      Section 26-511 (c)(6)(b) of the Rent Stabilization Law and Section 
      2522.4(a)(4) of the Rent Stabilization Code state a rent increase 
      authorized for a MCI shall be one-sixtieth of the total cost including 
      installation but excluding finance charge.  The requirement that the 



      increase shall be one sixtieth of the total  cost of the MCI sets forth the 
      method of calculating a rent increase and is not a limitation on the time 
      duration of the increase.  Permanent rent increases were upheld in Ansonia  
      Residents v. New York State DHCR, 551 N.Y.S. 2d 871, (1st App. 1989).

      As to the petitioner's contention that the Rent Administrator ordered an 
      increase in excess of 6% a year for rent stabilized apartments, the record 
      shows that the order, in this instant case, granted a permanent increase of 
      6% commencing on July 1, 1987 in year one and  spread foward the remaining 
      2.98% increase in year two.  Correspondingly, the temporary retroactive 
      increase was granted at 6% in year one commencing July 1, 1987 and .74 of 
      1% increase in year two.

      Section 2522.4(a)(8) of the Rent Stabilization Code states the collection 
      of any increase the legal regulated rent for any housing accommodation 
      granted for a MCI in any year from effective date of order, shall not 
      exceed six (6) percent over the rent set forth in the schedule of gross 
      rents with collectibility of any dollar excess to be spread forward in 
      similar increments and added to the legal regulated rent as established or 
      set in future years.  Section 2522.4(a)(8) also states rent increases are 
      limited to 6% for permanent increases and an additional 6% for temporary 

      Therefore, petitioner objection that permanent and temporary increases  
      exceed 6% is without merit as is the position held by petitioner that a 
      prior 3% increase issued for an MCI on subject premises when "compounded" 
      with this current increase exceeds the 6% cap.  A review of prior orders 
      OM-5256 and OM-5257 (CDR 5752) show that the MCI rent increase was granted 
      on March 1, 1984.  This increase is over a year earlier than the effective 
      date of order issued in the instant case (The prior order was modified on 
      July 5, 1990) and therefore has been added to the legal regulated rent.

      As for contentions raised by petition concerning consideration of or lack 
      thereof certain factors by the Rent Administrator in the determination of 
      granting and calculating the MCI increase, in particular, YY51-60(c)(6)(b), 
      2522.4(a)(b) of the Rent Stabilization Code and commercial rents, the 
      Commissioner finds Rent Administrator correctly considered the record and 
      the applicable laws and regulation is making his determination.  
      Furthermore, the petitioner has not submitted evidence to support 
      allegations and has not established that the rent increase should be 

      THEREFORE, in accordance with the Rent Stabilization Law and Code, the New 
      York City Rent and Eviction Regulations, it is

      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.

                                           JOSEPH A. D'AGOSTA
                                       Acting Deputy Commissioner

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