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.: BH 430023-RT
:
HELEN J. KORMAN RENT ADMINISTRATOR'S
230 WEST 79TH STREET DOCKET NO.: AF 430126-OM
TENANTS ASSOCIATION, PETITIONER :
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ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
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
ADMIN. REVIEW DOCKET NO.: BH 430023-RT
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
ADMIN. REVIEW DOCKET NO.: BH 430023-RT
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
increases.
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
revoked.
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.
ISSUED:
JOSEPH A. D'AGOSTA
Acting Deputy Commissioner
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