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

          -------------------------------------X   ADMINISTRATIVE REVIEW
          APPEAL OF
                    GABSONS MANAGEMENT CO.
                                                   RENT ADMINISTRATOR'S
                                                   DOCKET NO.:  AA400176OM



          The above-named petitioner-owner timely filed a Petition for 
          Administrative Review (PAR) against an order issued on May 15, 1987 
          by the Rent Administrator (Gertz Plaza), concerning the housing 
          accommodations known as 79 West 12th Street, New York, NY, wherein 
          the Administrator partially granted, in part, the owner's MCI 
          application for major capital improvement rent increases.

          The issue in this appeal is whether the Administrator's order was 

          The owner commenced this proceeding below on January 16, 1986 by 
          initially filing a major capital improvement rent increase 
          application seeking to increase the rent of controlled and 
          stabilized apartments based upon various installations of a new 
          roof, refuse compactor, parapet stone replacement, 
          pointing/waterproofing and window perimeter caulking at a claimed 
          cost totalling $240,100.00.

          The Rent Administrator's order, appealed herein granted rent 
          increase adjustments based on allowable cost totaling $44,200.00, 
          as determined by J-51, for those items recognized as major capital 
          improvements (roof, compactor, parapet stone replacement, pointing 
          and waterproofing).  The owner was denied a rent increase for 
          window perimeter caulking as it did not qualify for an MCI rent 

          In its petition, the owner contends, in substance, that the rent 
          increase adjustment should have been based on its total claimed 
          cost of $240,100.00.

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

          ADMIN. REVIEW DOCKET NO. BF-430262-RO

          Rent increases for major capital improvements are authorized by 
          Section 2522.4 of the Rent Stabilization Code for rent stabilized 
          apartments.  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.  Piecemeal work or ordinary repairs 
          and maintenance does not constitute work for which a rent increase 
          adjustment is warranted under current and past procedures.

          A review of the record reveals that the owner properly filed the 
          MCI application in the proceeding below, and no showing to the 
          contrary has been made by the affected parties.

          Turning to the merits of the subject petition for administrative 
          review, the record in the proceeding below discloses that the owner 
          submitted with its MCI application certain documentation including 
          copies of contracts, contractors' certifications, proposals and 
          cancelled checks for the work herein, in support of such 

          The Commissioner notes that the J-51 program is governed by an 
          independent body of law and regulation.  Thus the Administrator 
          improperly substituted a J-51 Reasonable Cost as certified for tax 
          abatement purposes in lieu of those costs submitted by the owner's 
          contractors.  Accordingly, the Commissioner deems it appropriate to 
          remand this proceeding to the Administrator for further processing 
          so as to recompute the authorized rent increase based on the 
          owner's costs which are found to be properly substantiated and 

          The Commissioner further notes that window perimeter caulking was 
          properly found not to constitute a major capital improvement.  Nor 
          does it constitute other directly related work performed in 
          conjunction with a qualifying major capital improvement.

          THEREFORE, pursuant to the Rent Stabilization Law and Code, it is

          ORDERED, that this petition be, and the same hereby is, granted to 
          the extent of remanding this proceeding to the Administrator for 
          further processing in accord with this order and opinion.  The 
          order and determination of the Administrator remains in full force 
          and effect until a new order is issued on remand.


                                                         Joseph A. D'Agosta
                                                        Deputy Commissioner

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