ADM. REVIEW DOCKET NOS.: BI 110135 RT and BJ 130146 RO

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

          APPEAL OF                              DOCKET NOS.  BI  110135  RT
                                                         and  BJ  130146  RO
                                                 DISTRICT RENT 
            AND VARIOUS TENANTS RESIDING AT      BK 110045 RP               
            103-25        68TH         AVENUE,         FOREST         HILLS,
            NEW                                                         YORK
                                 PETITIONERS  :  


               On Septemb r  30,  1987  and  October  13,  1987  the  above-
          described tenants and owner  filed  petitions  for  administrative
          review  of  an  order  issued  September  11,  1987  by  the  Rent
          Administrator, concerning various housing  accommodations  in  the
          premises known as 103-25 68th  Avenue,  Forest  Hills,  New  York,
          wherein the Administrator  granted  a  major  capital  improvement
          (M.C.I.) rent  increase  for  the  installation  of  new  aluminum
          thermal windows. 

               The Commissioner notes that these  petitions  involve  common
          issues of law and fact.  The Commissioner is  accordingly  of  the
          opinion that they should be consolidated for disposition. 

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

               The owner commenced this proceeding  on  April  15,  1986  by
          filing an application for a rent increase based on a major capital 
          improvement at a total cost of $121,043.85.   
               An answer was submitted on behalf of  several  tenants  which
          stated that the application should be denied on the grounds that a 
          significant portion of the money used to pay  for  the  work  came
          from a reserve fund of the cooperative corporation; that there are 
          additional reserve funds available which were not  used  for  this
          work; that the installation is incomplete because the owner failed 
          to paint moldings  with  the  windows;  that  the  ratio  of  rent
          stabilized apartments to total apartments as listed in the owner's 

          application, which is 79 out of 106, is incorrect, but  is  really
          78 out of 107; that it is unfair that cooperators in  the  subject

          ADM. REVIEW DOCKET NOS.: BI 110135 RT and BJ 130146 RO
          premises are assessed a fee for forty-eight months to pay for  the
          new windows, but tenants in the rent stabilized apartments have to 
          pay a permanent rent increase,  and  that  not  all  of  the  rent
          stabilized tenants were notified as to  the  owner's  application.
          Additionally, the tenants asserted that an  application  has  been
          made for J-51 tax abatement benefits.  The tenants argued  that  a
          J-51 tax abatement is an offset to an  M.C.I.  rent  increase  for
          rent-controlled apartments and that therefore there should  be  an
          offset for rent-stabilized apartments.    

               On September 11, 1987, the District Rent Administrator, under 
          Docket No.  AD  110044  OM,  issued  an  order  finding  that  the
          installation qualified as a major  capital  improvement,  allowing
          $106,528.25  in  costs  for  the  improvement,   and   disallowing
          $14,505.60 in claimed costs as not being properly substantiated. 

               The owner sent a letter  to  the  Rent  Administrator,  dated
          November 19, 1987, stating that disallowing  the  $14,505.60  from
          the cost of the M.C.I. was an error, contending that the owner was 
          never asked to verify the $14,505.60 in  costs.   The  owner  also
          stated that $25,800.00 from a corporation reserve fund was used to 
          pay for the new windows.     

               On December 28, 1987, the Rent Administrator mailed a "Notice 
          of Commencement of Proceeding to Reconsider Previous Order" to the 
          parties in this proceeding.

               The Rent Administrator, under Docket No. BK 110045 RP,  which
          is the order under review herein, determined that  $95,243.85  was
          the allowable cost of improvements, which figure  was  derived  by
          deducting $25,800.00 (which was taken from the Cooperative Reserve 
          Fund) from the total cost of installing  the  windows  (which  was

               The owner's petition (Docket No. BJ  130146  RO),  which  was
          filed prior to the issuance of the amended order, states that  the
          Administrator  improperly  disallowed  $14,505.60  in  costs,  and
          failed to take into consideration the fact that $25,800.00 of  the
          cost of the windows was funded from a corporate reserve fund.

               Since the Administrator's order  was  amended  to  take  into
          account the $25,800.00  from  the  reserve  fund,  and  added  the
          $14,505.60 to the total cost of the windows, the issues raised  by
          the owner's petition are thereby rendered moot.  Accordingly,  the
          Commissioner is of the opinion that the owner's proceeding  should
          be terminated. 

               The petition submitted under Docket  No.  BI  110135  RT,  on
          behalf of several tenants, reiterates  their  assertions  made  in
          their answer to the Rent Administrator.

               The owner's answer to the tenants' petition asserts that  the
          ratio of  rent  stabilized  apartments  to  the  total  number  of
          apartments was determined pursuant to D.H.C.R.'s own rules and  is
          not subject to administrative review; that it is  irrelevant  that
          cooperatives are assessed a temporary fee, and tenants are charged 

          ADM. REVIEW DOCKET NOS.: BI 110135 RT and BJ 130146 RO
          a permanent rent increase for the  M.C.I.,  because  there  is  no
          relationship between the two; that the failure to  paint  moldings
          with the windows can not be deemed a failure to finish  the  work;
          that there is no requirement by law that the cooperative  use  any
          portion of its funds for the window replacement; that the tenants' 
          request that D.H.C.R. offset M.C.I. rent  increases  by  J-51  tax
          abatements is a matter for  the  legislature  to  decide  and  not
          D.H.C.R., and that the amended  application  which  pre-dated  the
          issuance of the order was  on  behalf  of  all  owners  of  shares
          allocated to stabilized apartments.   

               The Commissioner is of the opinion that the tenants' petition 
          should be granted in part.

               Based  on  the  rent  roll   submitted   with   the   owner's
          application, the Commissioner finds that  the  correct  number  of
          rent stabilized apartments in the subject  premises  on  March  1,
          1986 was 78.  The Commissioner further finds that the total number 
          of apartments in the subject premises on March 1,  1986  was  107.
          Excluding  the  superintendent's  apartment,  the  ratio  of  rent
          stabilized apartments to the total number of apartments is 78/106, 
          which is 73.59%. 

               The apportioned cost of  improvements  is  $70,089.95.   This
          figure  is  derived  by  the   allowable   cost   of   improvement
          ($95,243.85) multiplied by the ratio of rent stabilized apartments 
          to total apartments (78/106 = 73.59%).  

               The amortization of  cost  over  five  years  is  $14,017.99.
          (Apportioned cost of improvements [$70,089.95] divided by five).

               The M.C.I. rent increase effective July  1,  1987  is  3.86%.
          (The amortization of cost [$14,017.99] divided by the annual gross 
          rent of stabilized apartments as of March 1, 1986 [$363,385.68]). 

               Accordingly, the Commissioner finds that the permanent M.C.I. 
          rent increase, effective July 1, 1987, is 3.86% per apartment, per 
          month.  The temporary M.C.I. rent increase is 0.32% effective July 
          1, 1987 and is to terminate on June 30,  1988.   The  Commissioner
          notes that with the exception of the changes  made  in  this,  the
          Commissioner's order, the  Administrator's  order  (BK  110045-RP)
          remains undisturbed. 

               The Commissioner finds  that  the  portion  of  the  tenants'
          petition concerning the issue of corporate  reserve  funds  paying
          for part of the cost of the windows is moot, as the  Administrator
          took this into account in the amended order.  As to  the  tenants'
          assertion that there were additional reserve funds which were  not

          used to pay for the work, the Commissioner finds  that  this  does
          not deprive the owner of its right to an M.C.I. rent increase,  as
          the owner substantiated the cost of the improvement.  The tenants' 
          remedy on this issue is in a court of competent jurisdiction.

               As to the tenants' assertion that  the  work  was  unfinished
          because the moldings, which were installed with the windows,  were
          incomplete, the Commissioner finds that the work was substantially 

          ADM. REVIEW DOCKET NOS.: BI 110135 RT and BJ 130146 RO
          complete so as to qualify for the M.C.I.  rent  increase  for  the
          windows.  The owner is  directed  to  complete  the  work  on  the
          moldings, if not already done, within sixty days of  the  issuance
          date of this order.  Should this directive not  be  followed,  the
          tenants are advised to file an appropriate complaint with the Rent 

               Pursuant to Local Law No. 41 of 1988, where an owner  obtains
          a J-51 tax abatement for  alterations  or  improvements  commenced
          after June 28, 1988, to a building, the M.C.I.  rent  increase  is
          offset by 50% of the total annual amount of the J-51 tax abatement 

               In this proceeding since the windows were installed prior  to
          June 28, 1988, the provisions of Local Law No. 41  do  not  apply.
          At the time of the installation of the windows in this  proceeding
          there was no statute, rule, or policy in effect as  to  offsetting
          M.C.I.  rent  increases  where  an  owner  obtained  a  J-51   tax
          abatement.  Since the City Council determined that Local  Law  No.
          41 is to take effect on June 28, 1988, the Commissioner  does  not
          have the authority to extend the provisions of  the  law  to  work
          that was commenced prior  to  June  28,  1988.   Accordingly,  the
          Commissioner finds that the  M.C.I.  rent  increase  will  not  be
          offset by any J-51 tax abatements that may have  been  awarded  to
          the owner.  

               With regard to the tenants' contention that it is inequitable 
          for cooperatives to pay a forty-eight  month  assessment  for  the
          windows, while the tenants are charged a permanent  rent  increase
          for these improvements, the Commissioner must administer the  Rent
          Stabilization Law and Code, which provide  for  a  permanent  rent
          increase for M.C.I.'s for rent-stabilized tenants.       

               The Commissioner finds based upon the  preponderance  of  the
          evidence that all the tenants affected  by  this  proceeding  were
          served with the owner's application.  The owner certified that  on
          June 16, 1986 he served all affected tenants with a  copy  of  the
          application.  The tenants' assertion is belied by  the  fact  that
          many  tenants  submitted  answers  to   the   Rent   Administrator
          concerning this proceeding.  Even if the tenants'  assertion  were
          true any denial of due process to the tenants would be remedied by 
          the Commissioner's review of the tenants' petition.   

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

               ORDERED, that the owner's petition be, and  the  same  hereby
          is, terminated; and it is   

               FURTHER ORDERED, that the tenants' petition be, and the  same
          hereby is, granted in part in that the Rent Administrator's  order
          issued on September 11, 1987 be, and the same hereby is,  modified
          so as to provide for a permanent M.C.I.  rent  increase  of  3.86%
          (rather than 3.91%) of the March 1, 1986 rent  effective  July  1,
          1987, and that the owner refund  or  credit  to  the  tenants  the
          resultant arrears in the amount of 0.05% of the March 1, 1986 rent 
          effective as of July 1, 1987 through the last month in  which  the

          ADM. REVIEW DOCKET NOS.: BI 110135 RT and BJ 130146 RO
          M.C.I. rent increase of 3.91%  rather  than  3.86%  is  collected,
          within sixty days of the issuance of this order; and it is  

               FURTHER ORDERED, that the Rent Administrator's order be,  and
          the same hereby is, further  modified  so  as  to  provide  for  a
          temporary M.C.I. rent increase of 0.32% (rather than 0.33%) of the 
          March 1, 1986 rent effective July 1, 1987 and terminating on  June
          30, 1988, and that the owner refund or credit to the  tenants  the
          resultant arrears in the amount of 0.12% of the March 1, 1986 rent 
          of each tenant within sixty days of the issuance of this order. 

                                          ELLIOT SANDER
                                          Deputy Commissioner



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