DOC. NO.: BI 430105-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


         ------------------------------------X   S.J.R. NO. 3717
         IN THE MATTER OF THE ADMINISTRATIVE :   ADMINISTRATIVE REVIEW
         APPEAL OF                               DOCKET NO. BI 430105-RT
                        FOUR CORNERS         :   DISTRICT RENT ORDER 
                      TENANTS ASSOCIATION,       DOCKET NOS. OM 5050 
                                 PETITIONER  :               (ARL 02966-L);
         ------------------------------------X               2AC 420814-1043


                             ORDER AND OPINION REMANDING
                          PETITION FOR ADMINISTRATIVE REVIEW


         This order and opinion is issued pursuant to an order of the Supreme 
         Court, New York County (Justice Edward H. Lehner), as affirmed by the 
         Appellate Division, remanding an Article 78 proceeding to the Division 
         of Housing and Community Renewal (DHCR) for further processing and a 
         new determination of the tenants' administrative appeal herein.

         The Article 78 proceeding (SJR 3717) was filed by the tenants against 
         a prior order of the Commissioner under Docket No. BI 430105-RT 
         (issued November 10, 1988) which affirmed the Rent Administrator's 
         order granting rent increases for the stabilized apartments (as well 
         as affirming prior orders granting rent adjustments for the controlled 
         apartments) in the subject premises known as London Terrace, 405 West 
         23rd Street 465 West 23rd Street, 410 West 24th Street and 470 West 
         24th Street, New York, New York, for the "rebuilding" of roof water 
         tank enclosures and set back terraces and terrace railings on the 17th 
         and 20th floors of the four buildings, which work was found to qualify 
         as a major capital improvement.

         In their Article 78 petition the tenants contend, among other things, 
         that the work in question is not a major capital improvement (MCI) but 
         rather is in the nature of repairs necessitated by the owner's failure 
         to properly maintain the structures which resulted in vacate orders 
         being placed on the buildings; that an MCI rent increase should not be 
         granted for work performed to remedy conditions which constituted 
         violations of applicable law, thereby rewarding an owner which failed 
         to maintain its property; that the work performed with respect to the
           


















         DOC. NO.: BI 430105-RT



         terraces is not building-wide and does not inure to the benefit of all 
         tenants; that the alleged work performed by the owner does not satisfy 
         the definition of a MCI as it is not for the operation, preservation 
         and maintenance of the property nor is it an improvement to the 
         building(s) since the structures which formerly enclosed the water 
         tanks and roof machinery were removed and only partially replaced, 
         leaving the wooden water tanks and roof machinery exposed to the 
         elements; that not all set-back terraces and terrace railings were 
         replaced; and that the tenants were denied an opportunity to examine 
         the owner's underlying documentation resulting in a denial of due 
         process.

         After a careful consideration of the entire record, the Commissioner 
         is of the opinion that this proceeding should be remanded to the Rent 
         Administrator for further processing in accordance with this order and 
         opinion.

         At the outset the Commissioner notes that Section 2522.4 of the Rent 
         Stabilization Code sets forth various criteria for work to qualify as 
         a major capital improvement, including the requirement that the 
         installation replace an item whose useful life has expired.  In this 
         respect the DHCR has formulated a Useful Life Schedule For Major 
         Capital Improvements (Operational Bulletin 90-2) and has determined, 
         among other things, that brick parapets, exterior walls and structural 
         steel have a useful life of 25 years.

         At the time the work in question was performed the subject premises 
         had been exposed to the elements for approximately 50 years.  The 
         Commissioner thus finds that the "useful life" of the brick water tank 
         enclosure and set-back terraces involved herein had a "useful life" of 
         25 years; and that the "useful life" of said structural  elements had 
         long expired at the time the previously existing brick water tank 
         enclosures were dismantled, notwithstanding that contemporaneously 
         constructed water tank enclosures on neighboring buildings are still 
         extant.

         It is the well established position of the Division and the courts 
         have so held, that the fact that certain work remedies building 
         violations or complies with administrative order does not constitute 
         grounds for the denial of the application, provided the work performed 
         otherwise qualifies as a major capital improvement and the owner 
         establishes an entitlement to a rent increase therefor.  Thus the 
         tenant's contention that the owner's failure to establish proper 
         maintenance of the water tank enclosures and set-back terraces, under





         the circumstances herein, should preclude the owner's entitlement to 




         DOC. NO.: BI 430105-RT

         a major capital improvement rent increase is without merit.  
         Parenthetically, the Commissioner notes that under certain 
         circumstances where a waiver of the "useful life" schedule is sought, 
         an owner may be required to submit proof that the item or equipment 
         being replaced was properly maintained.

         Whereas the complete replacement of the previously existing water tank 
         enclosures and/or set-back terrace walls would meet the definitional 
         requirements of a major capital improvement, it is conceded by the 
         owner that the work in question entailed the removal and only partial 
         replacement of these structures.  The Commissioner is of the opinion 
         that the record, as presently constituted, does not sufficiently and 
         adequately disclose the full extent and nature of the work performed, 
         the extent to which brick structures surrounding the water tanks were 
         rebuilt and the work entailed in connection therewith vis a vis the 
         total cost of the entire project.  In addition, the record fails to 
         disclose the size and layout of the set-back terraces and the manner 
         and extent to which said areas were "rebuilt."

         Accordingly, this proceeding is remanded to the Rent Administrator for 
         such further processing as may be deemed necessary, on notice to the 
         parties, including a physical inspection, to ascertain and evaluate, 
         among other things, the extent, nature and the relative cost of the 
         work performed.
                
         THEREFORE, in accordance with the provisions of the Rent Stabilization 
         Law and Code and the Rent and Eviction Regulations for New York City, 
         it is

         ORDERED, that this petition be, and the same hereby is, granted to the 
         extent of remanding this proceeding to the Rent Administrator for 
         further processing in accordance with this order and opinion.  The 
         automatic stay of so much of the Rent Administrator's order as 
         directed a retroactive rent increase is hereby continued until a new 
         order is issued upon the remand.  However, the Administrator's 
         determination as to the prospective rent increase is not stayed and 
         shall remain in effect until the Administrator issues a new order upon 
         the remand.

         ISSUED:

                                                                              
                                            JOSEPH A. D'AGOSTA
                                            Deputy Commissioner
          








    

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