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

      APPEAL OF                              DOCKET NO.: BE 430192-RO
       REHAB ASSOCIATES                      DOCKET NO.: AC 430019-OM
                            PETITIONER    : 


      The above-named petitioner-owner timely filed a Petition for Administrative 
      Review against an order issued on May 15, 1987 by the Rent Administrator, 
      Gertz Plaza, Jamaica, New York, concerning housing accommodations known as 
      122-126 St. Marks Place, New York, New York, various apartments.

      The owner initiated the proceeding below on March 5, 1986 by filing an 
      application for a major capital improvement rent increase based on the 
      installation of pointing at a total claimed cost of $14,900.00.  In 
      response to the application, various tenants filed answers objecting to the 
      proposed increase without any complaints pertaining to the installation.

      The order of the Administrator appealed herein denied the application based 
      on the fact that the evidence on record indicated that all exterior walls 
      of the subject building were not pointed.

      On appeal, the petitioner-owner requests a reversal of the Administrator's 
      order and contends, in substance, that the fact a building is made 
      watertight by any means of pointing should always be deemed building-wide; 
      that pointing and waterproofing is rarely ever performed over every square 
      inch of surface area and usually only done to areas where water is 
      infiltrating into the building; and that the new Rent Stabilization Code 
      stated that if the owner can satisfactorily demonstrate to the DHCR that 
      certain of such similar components did not require improvements, such 
      installation should qualify as a major capital improvement.

      In response to the owner's petition, various tenants filed answers stating, 
      in substance, that the decision of the Rent Administrator  was fair and 
      should be upheld because: (1) a major portion of the exterior walls of the 
      subject buildings was never pointed; (2) cosmetic repairs were made in an 
      attempt to stop leaking in some apartments, but these were, for the most 
      part, ineffectual; and (3) the building was not rendered watertight as the 
      leaks which the supposed pointing was supposed to correct still exist.

      After a careful consideration of the entire evidence of record, the 
      Commissioner is of the opinion that the Administrative appeal should be 


          ADMIN. REVIEW DOCKET NO.: BE 430192-RO

      Rent increases for major capital improvements are authorized by Section 
      2202.4 of the Rent and Eviction Regulations for rent controlled apartments 
      and Section 2522.4 of the Rent Stabilization Code 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.

      The record contains a diagram indicating the extent to which the exposed 
      sides of the subject building were pointed and a contractor's statement 
      that all exposed sides of the building were examined and 
      pointing/waterproofing performed wherever necessary.  It is the established 
      position of the Division that pointing/waterproofing performed where 
      necessary and also comprehensive in nature constitutes a major capital 
      improvement for which a rent increase adjustment may be warranted, provided 
      the owner otherwise so qualifies.  The record further notes that the owner 
      and the contractor both certified that approximately 9,000 square feet of 
      pointing was done on all exposed sides of the building both above and below 
      the parapet line.  As such, the work should have been considered to be 
      comprehensive enough to qualify for treatment as a major capital 
      improvement.  It was therefore improper for the Rent Administrator to 
      disallow the cost for pointing and waterproofing because all exterior walls 
      of the subject buildings were not pointed.

      The Commissioner notes that no rent reduction order based on the owner's 
      failure to maintain services of a building-wide nature is outstanding 
      against the subject premises as of the time of issuance of this order nor 
      have any service complaints been filed by the tenants either prior to or 
      subsequent to the issuance of the order appealed herein.

      In view of the foregoing, the Commissioner finds that this proceeding 
      should be granted and that the owner is entitled to a rent increase of 
      $0.94 per room, per month, (claimed cost $14,960.00 less sales tax of 
      $400.00 = $14,560.00 less commercial tenants share $3,452.18 = $11,107.82 - 
       60 months = $185.13 - 196 rooms = $0.94) effective for rent stabilized 
      apartments as of June 1, 1986 (the first rent payment date 30 days after 
      service of the application on the tenants) and effective for rent control 
      tenants as of June 1, 1987, (the first of the month following issuance of 
      the Administrator's order).

      The tenants may pay any arrears resulting from this order to cover the 
      period between the effective dates of the increase (June 1, 1986 and June 
      1, 1987) provided for herein and the date of issuance of this order of the 
      Commissioner subject to the statutory limitation on collectibility of 6% 
      (of the 2/86 rent roll) for the permanent increase plus 6% for temporary 
      arrears and 15% (of the June 1, 1987 rent roll) with respect to rent 
      controlled apartments.


          ADMIN. REVIEW DOCKET NO.: BE 430192-RO

      THEREFORE, in accordance with the Rent Stabilization Law and Code, and the 
      New York City Rent and Eviction Regulations, it is

      ORDERED, that this petition be, and the same hereby is granted; that the 
      order of the Rent Administrator be, and the same hereby is revoked; and 
      that the rent of the rent stabilized and rent controlled apartments be, and 
      the same hereby are increased as hereinabove provided subject to the 
      limitations on collectibility set forth herein.


                                           JOSEPH A. D'AGOSTA
                                       Acting Deputy Commissioner



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