DOC. NOS.: BL 430278-RO et al.
                                  STATE OF NEW YORK
                            OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                               JAMAICA, NEW YORK 11433

          APPEAL OF                               DOCKET NOS. BL 430278-RO
                                                              CA 410183-RT
          TWINBOGO COMPANY,                   :               CB 430261-RT
                                  PETITIONER  :   DISTRICT RENT
                      and                         ADMINISTRATOR'S

                                 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 

          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.


          Deputy Commissioner

          DOC. NOS.: BL 430278-RO et al.

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