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
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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, :
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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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