DOC. NOS.: BL 430278-RO et al.
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
IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NOS. BL 430278-RO
CA 410183-RT
TWINBOGO COMPANY, : CB 430261-RT
PETITIONER : DISTRICT RENT
and ADMINISTRATOR'S
DIANNE KUZYNS, TENANT-PETITIONER : DOCKET NO. AC 430092-OM
and
42 VARIOUS TENANTS, PETITIONERS :
------------------------------------X
ORDER AND OPINION GRANTING THE OWNER'S PETITION, DENYING THE
PETITION OF THE TENANT D. KUZYNS, AND GRANTING THE PETITION
OF 42 TENANTS IN PART AND REMANDING THE PROCEEDING
TO RENT ADMINISTRATOR
On December 16, 1987, the above-named owner filed a petition for
administrative review of an order issued on November 22, 1987, by
a Rent Administrator concerning the housing accommodation known
as 325 West 86th Street, New York, New York wherein the Rent
Administrator determined that the owner was entitled to a rent
increase based on a major capital improvement but disallowed
costs of $21,555.00 because they were not substantiated and,
additionally, that the increase could not be collected for two
apartments.
On December 23, 1987, 42 tenants of the subject-building filed a
petition for administrative review of the above orders.
On January 22, 1988, the above-named tenant filed separate a
petition for administrative review of the above order.
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 these petitions for review.
The owner commenced this proceeding on March 12, 1986 by filing
DOC. NOS.: BL 430278-RO et al.
an application for a rent increase based on a major capital
improvement, such improvement being the installation of 450
aluminum-frame windows throughout the subject building. The
application stated that the 16-story building consists of 266
rooms in 48 apartments, of which 17 are rent stabilized, 31 are
rent-controlled and 1 apartment is occupied by the
superintendent. Out of a claimed total cost of $111,555.00, the
owner had paid $80,000 as of the date of application.
The owner certified that on April 24, 1986, he served each tenant
with a copy of the application and placed a copy, including all
required supplements and supporting documentation, with the
resident superintendent.
Tenants from 35 apartments filed answers to the application
challenging the increase because, inter alia: the windows were
improperly sealed, allowing leaks during rainstorms and drafts;
their frames were bent; they were hard to open and to close; the
workmanship was defective and inferior to the old windows, which
did not need to be replaced; the moldings were improperly caulked
and often unpainted. Additionally, the tenants from 9B and 11B
stated that the panes fell out onto the floor. The tenant from
7A said that she was unable to use the window guards. The tenant
from 16A said the window was cracked and still not repaired.
On November 22, 1987 the Rent Administrator issued the order
hereunder review finding that the installation qualified as a
major capital improvement, determining that the application
complied with the relevant laws and regulations based upon the
supporting documentation submitted by the owner, and allowing
appropriate rent increases for rent-controlled and rent-
stabilized apartments.
It was further determined that $21,555.00 be disallowed because
these claimed costs were not adequately documented. As a result,
the order granted a $5.64 increase per room for all tenants,
retroactive to June 1, 1986. However, the order recommended
that the increase not be collected for apartments 9B and 16A due
to their unresolved complaints regarding the broken windows.
In its petition, dated December 16, 1987, the owner contends that
the only amount of the costs not substantiated by its
documentation is $400.00. The owner thereby amends its claim to
$111,155.00 but maintains that it had fully documented these
costs in its application, and its subsequent submission of
October 9, 1986. The owner further contends that the
Administrator's "recommendation" that the increase be denied for
apartments 9B and 16A is, firstly, inappropriate for an
administrative order and, secondly, improper, as the owner had
also submitted documentation of adjustments and repairs of the
windows in various apartments, including 9B and 16A. Enclosed
DOC. NOS.: BL 430278-RO et al.
with the petition are copies of the front and reverse sides of
the owner's cancelled checks to the contractor, all relating to
the instant claim, in the amount of $111,155.00, and signed work
orders for the adjustment of windows in the aforementioned
apartments. This documentation is also found in the record
below, with the exception of the check to the contractor of April
15, 1985, for $20,000.00 and the reverse side of a check for
$1,155.00 dated September 15, 1986.
On December 23, 1987, various tenants of the subject-building, as
petitioners, filed a petition for administrative review of the
order. This petition was subsequently rejected on procedural
grounds on January 26, 1988, with leave to amend and refile
within 15 days. As so amended, the petition was refiled and
recorded on February 11, 1988. The petition quotes sections of
24 of the answers previously submitted into the record, and also
resubmitted those answers. In general the petition contends that
the Administrator erred by permitting the increase even though
the tenants had provided sufficient evidence to show that the
workmanship was defective and had actually resulted in a
deterioration of living conditions.
On January 22, 1988, the tenant from apartment 6B, Diane Kuzyns,
filed a separate Petition for Administrative Review. The
petition was filed more than 35 days after the date of issuance
of the order.
On March 14, 1988 the tenants sent a separate reply to the
owner's petition, alleging therein that the Administrator's
exclusion of over $20,000.00 was proper to the extent that it was
attributable to taxes, interest or service charges which, under
the Rent Stabilization Law, are not depreciable and therefore
cannot be passed on to the tenants. Also, in the event the owner
prevails on the increase on appeal, the effective date of the
order is challenged, since the owner admits to making
"adjustments" to various units throughout 1986 and, therefore,
could not be said to have completed the installation until at
least January 1, 1987.
The owner's response denies the allegation that its costs were
partly attributable to taxes, interest and service charges and
claims that the entire amount paid is depreciable. The owner
also submits a work order, dated January 6, 1986, indicating that
the windows in various apartments, including 9B and 16A, were
scheduled for repair.
The Commissioner is of the opinion that the owner's petition
should be granted; that the petition of the tenant Diane Kuzyns
be dismissed; that the petition from various tenants be granted
and that the proceeding be remanded to the Administrator for a
further determination.
Rent increases for major capital improvements are authorized by
DOC. NOS.: BL 430278-RO et al.
Section 2202.4 of the Rent and Eviction Regulations for rent
controlled apartments and Section 2522.4 of the Rent
Stabilization Law 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.
Recognizing that the tenant Diane Kuzyns has filed her petition
more than 35 days after the issuance of the order and that there
is nothing in the record or the petition to justify an extension
of the period of time for filing a PAR, the Commissioner
concludes that petitioner-tenant has failed to comply with the
timeliness requirements and that the petition must therefore be
dismissed. It is noted, however, that Diane Kuzyns is also one
of the signatory petitioners in the joint petition of 42 tenants,
CB 430261-RT, which is considered herein by the Commissioner.
Although the owner's petition speculates as to why the
Administrator disallowed $21,555.00 of its claim, it is clear
that this was entirely due to the absence of copies of checks
totalling this amount from the record, and not, as the tenants
contend, because this included impermissible interest and service
charges. While the Administrator never clearly stated why these
costs were "unsubstantiated," no other cause for the disallowance
is possible. This is because the owner had submitted the
cancelled checks for all payments except for the first check to
the contractor, dated April 15, 1985, in the amount of
$20,000.00, and for the reverse side of a check for $1,155.00,
dated September 15, 1986. Copies of both checks, front and back,
are enclosed with the petition. Although the Administrator
requested confirmation of the payment of a "balance" of
$31,555.00, which the owner complied with by forwarding copies of
the last payments made, the owner was never asked to submit the
first check, which was inadvertently omitted from the packet sent
with the application. Since the Administrator never questioned
the actual cost of the project but only needed documentation of
payment, it was improper to simply deny the owner over $20,000.00
of actual costs without giving the owner a chance to explain the
apparent discrepancy. Furthermore, the Commissioner has
previously held that where the evidence in the entire record is
sufficient to substantiate the cost of a major capital
improvement, the cancelled checks are unnecessary (Accord: ARL
04863-SI). In the instant case, all of the checks would have
DOC. NOS.: BL 430278-RO et al.
been in the record below if the Administrator had specified which
ones were missing. Consequently, the Administrator should have
found that the entire claimed cost of $111,155.00 was documented
as paid.
Nevertheless, the petition of the 42 tenants contends that the
Administrator was incorrect to approve the application without
addressing their complaints about the quality of the
installation, and the Commissioner agrees with this position.
When served with the application, over two-thirds of the tenants
returned answers that specified defects in the workmanship and
materials. These were not pre-formulated responses; they
addressed different items in personalized language, and revealed
a serious effort to document the problems they alone were
experiencing. The failure to properly evaluate these responses
mandates that this proceeding be remanded to the Rent
Administrator for a determination as to whether the windows were
properly installed.
THEREFORE, in accordance with the Rent Stabilization Law and
Code, and the Emergency Tenant Protection Act of 1974, it is
ORDERED, that the owner's petition be and the same hereby is
granted; that the petition of tenant D. Kuzyns be, and the same
hereby is dismissed; and that the petition of 42 various tenants
be, and the same hereby is granted in part and that this
proceeding be remanded to the Rent Administrator for further
processing in accordance with this order and opinion.
ISSUED:
ELLIOT SANDER
Deputy Commissioner
DOC. NOS.: BL 430278-RO et al.
|