ADM. REVIEW DOCKET NOS.: BI 110135 RT and BJ 130146 RO
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 NOS. BI 110135 RT
and BJ 130146 RO
DISTRICT RENT
103-25 68TH AVENUE OWNERS, INC., ADMINISTRATOR'S DOCKET NO.
AND VARIOUS TENANTS RESIDING AT BK 110045 RP
103-25 68TH AVENUE, FOREST HILLS,
NEW YORK
PETITIONERS :
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ORDER AND OPINION TERMINATING OWNER'S PETITION FOR ADMINISTRATIVE
REVIEW AND GRANTING TENANTS' PETITION FOR ADMINISTRATIVE REVIEW IN
PART
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
$121,043.85).
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
Administrator.
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
benefit.
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.
ISSUED:
ELLIOT SANDER
Deputy Commissioner
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