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 NO.: BE430403RO


               REHAB ASSOCIATES, c/o BAYFIELD  :   RENT ADMINISTRATOR'S
               DEVELOPMENT CO.,                    DOCKET NO.:  LCS00528OM

                                   PETITIONER, :
          -------------------------------------X

                  ORDER AND OPINION REMANDING PROCEEDING ON APPEAL

          The above-named owner timely refiled a petition for administrative 
          review of an order issued on March 2, 1987 by a District Rent 
          Administrator concerning the housing accommodations known as 
          various apartments, 316 East 92nd Street, New York, New York. 

          The owner of the subject premises commenced this proceeding by 
          filing an application with the Administrator requesting a rent 
          increase based on the installation of several major capital 
          improvements (MCIs) at a total claimed cost of $200,138.18.

          On March 2, 1987, the Rent Administrator issued an order under 
          Docket No. LCS00528OM, which granted in part the owner's 
          application and authorized rent increases based upon an approved 
          cost of $118,718.17 for the following items: oil burner/boiler; 
          adequate plumbing; adequate wiring; intercom system; chemically 
          cleaned exposed bricks; apartment entrance doors; and entrance and 
          vestibule doors.  The Administrator disallowed claimed expenditures 
          in the amount of $81,420.01 for the following items based on 
          determination that they did not qualify as MCIs: gas risers, mains 
          and branches; mailboxes (same location); lighting for entrance and 
          courtyard; window guards and railings; light fixtures for public 
          halls and vestibule; sidewalk carpeting in halls and vestibule; 
          vestibule upgrading; new wood cornice; painting of halls; parapet 
          repairs, sheetwork in public halls; building entrance upgrading; 
          and cellar repairs.

          In its petition, the owner asserts, in substance, that the gas 
          piping installation qualifies as an MCI as new meters, mains and 
          risers were installed along with new piping to the stoves of each 
          tenant's apartment; that the vestibule and hallway remodelling was 
          necessitated as a result of other qualifying MCI installations; and 
          that concurrent improvements (basement and public hall lighting; 
          lighting for the entrance and courtyard; light fixtures 












          ADMIN. REVIEW DOCKET NO.: BE430403RO

          for public halls and vestibule; window guards and railings; 
          vestibule upgrading; new wood cornice; parapet repairs; building 
          entrance upgrading; cosmetic work; and cellar repairs) were 
          disqualified contrary to Section 33.1e of the Rent Regulations.

          In response to the owner's petition, the tenant of apartment 3RC 
          asserts, in pertinent part, that the electrical wiring in his 
          apartment is insufficient as lights in the apartment dim whenever 
          the refrigerator switches to a new cycle or another appliance is 
          turned on; when the hot water faucet is turned on, it takes several 
          minutes to run hot; occasionally there is no hot water in the 
          morning; and holes remain in the walls and ceilings where the water 
          and gas pipes were removed.  The tenant of apartment 3FC asserts, 
          in pertinent part, that her bathroom remains unfinished; that there 
          is no electrical outlet in her bedroom; and that several of her 
          walls are cracked.

          After careful consideration of the entire evidence of record, the 
          Commissioner is of the opinion that this proceeding should be 
          remanded to the Rent Administrator for further processing.

          MCI rent increases 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, an MCI 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.

          With regard to the owner's installation of gas risers, main and 
          branches building-wide, the Commissioner notes that gas line 
          installations may, in some circumstances, constitute an MCI, but 
          that this must be determined on a case by case basis.  The 
          Commissioner finds that the underlying record is insufficient to 
          support a denial of the owner's MCI rent increase application for 
          this work.  Accordingly, this proceeding must be remanded for 
          further processing to determine whether the above-mentioned 
          installation qualifies for an MCI rent increase.

          It is the established position of the Division that entrance, 
          basement, public hall and courtyard lighting; hallway, entrance and 
          vestibule upgrading; cellar, sidewalk and parapet repairs; new wood 
          cornice; mailboxes (same location); painting; carpeting; and 
          sheetrock do not qualify as MCIs.







          ADMIN. REVIEW DOCKET NO.: BE430403RO

          However, Section 2522.4(a)(ii) of the Code and Section 2202.4(e) of 
          the Rent and Eviction Regulations (formerly Section 33.1e) 
          permit a rent increase for other work performed in conjunction with 
          a qualifying MCI.  Such other work must improve, restore or 
          preserve the quality of the structure.

          The Commissioner notes that this work was performed prior to the 
          effective date of the Code and is therefore not eligible for a rent 
          increase as "concurrent improvements".  The owner had no 
          expectation of such an increase for the rent stabilized apartments 
          at the time said work was performed.

          Section 33.1e of the New York City Rent Regulations, since 
          recodified as Section 2202.4(e) , was intended to encourage 
          landlords to correct conditions arising from years of neglect of 
          residential housing accommodations by providing rent increases 
          where the landlord has incurred in connection with and in addition 
          to a current MCI "other expenditures to improve, restore or 
          preserve the quality of the structure".  Rent Control Advisory 
          Sheet 1-31.1e specifies that the guideline to be used is that the 
          "net result must be one from which it clearly appears from the 
          nature of the work done or to be done that the quality of the 
          housing has been or would be materially upgraded".  Furthermore, 
          for work to be "concurrent", it must be completed within an 
          interval not to exceed one year.

          Whereas Section 2522.4(a)(ii) of the Code and Operational Bulletin 
          84-4, issued November 13, 1984, limit the application of 
          "concurrent improvements" to costs incurred within a reasonable 
          period of time of an MCI and only if the work performed bears a 
          direct relationship to the underlying MCI, the Commissioner notes 
          that it would be inappropriate to apply this new rule with respect 
          to rent controlled apartments as to expenditures incurred by the 
          landlord prior to the promulgation thereof where it is determined 
          that the landlord incurred costs based on the officially 
          promulgated and then effective interpretation under Rent Control 
          Advisory Sheet 1-33.1e, provided the landlord otherwise satisfies 
          the financial requirements thereof.  

          Upon the remand, the Administrator may take such action as may be 
          deemed necessary, on notice to the parties, in order to give 
          consideration to the documentation and allegations of record and 
          such additional evidence or allegations as may be raised upon the 
          remand.














          ADMIN. REVIEW DOCKET NO.: BE430403RO

          With regard to the various contentions made by the tenants in 
          response to the owner's petition, the Commissioner notes that the 
          scope of the tenants' answers is limited to those issues raised by 
          the owner on appeal.  Since the tenants have raised issues which 
          are extraneous to the owner's petition and have failed to submit 
          their own petitions for review of the Administrator's order, the 
          Commissioner is constrained to reject the tenants' contentions.

          The Commissioner notes that a review of Division's records 
          discloses that there are no pending service complaints with respect 
          to the subject premises, and that there are no orders outstanding 
          against the subject premises based upon a finding that the owner is 
          not maintaining services of any nature.

          This order is issued without prejudice to the tenants' right to 
          file an application for a rent reduction based on any current 
          diminutions in services, if the facts so warrant.

          THEREFORE,  in accordance with the provisions of the Rent 
          Stabilization Law and Code and the Rent and Eviction Regulations 
          for the City of New York, 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 Rent Administrator's order remains in full force and effect 
          until a new order is issued upon the remand.

          ISSUED:








                                                                            
                                                  JOSEPH A. D'AGOSTA
                                                  Deputy Commissioner







    

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