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 ADMINISTRATIVE REVIEW
IN THE MATTER OF THE ADMINISTRATIVE DOCKET NO.: BH130071RT
APPEAL OF
GEORGE CROSSLAND,
GWENDOLYN BALDEN, RENT ADMINISTRATOR'S
JUDITH OUTCALT, DOCKET NO.: QS000937OM
V. FERDINAND,
W. ROSS,
AND D. WILLIAMS
PETITIONERS
-------------------------------------X
ORDER AND OPINION GRANTING IN PART PETITION FOR ADMINISTRATIVE
REVIEW AND MODIFYING THE ADMINISTRATOR'S ORDER
On August 7, 1987, the above named petitioner-tenants timely filed
a petition for administrative review (PAR) against an order issued
on July 27, 1987, by a Rent Administrator (Gertz Plaza) concerning
the housing accommodations known as 63-19/25/37 and 43 Austin
Street and 92-06 63rd Avenue, Rego Park, NY, various apartments,
wherein the Rent Administrator determined that the owner was
entitled to a rent increase based on the installation of major
capital improvements (MCIs).
The Commissioner has reviewed all of the evidence in the record and
has carefully considered that portion of the record relevant to the
issues raised by this administrative appeal.
The owner commenced this proceeding on November 14, 1985, by
initially filing an application for a rent increase based on the
installation of the following items at a total cost of $225,246.87:
new thermal windows building-wide; scrubbers for incinerators; new
intercom system; landscaping; new oil burner and boiler; painting
of halls and stairways; and new entrance doors.
ADMIN. REVIEW DOCKET NO. BH-130071-RT
Various tenants from 63-19 Austin Street, 63-25 Austin Street, 63-
37 Austin Street, 63-43 Austin Street and 92-06 63rd Avenue,
objected to the owner's application, alleging, in substance, that
the improvements were corrections of building violations; that the
improvement costs were overstated; that there was careless
workmanship in the installation of the windows; that the new
windows were drafty; that there was inadequate heat in winter; that
very little landscaping work was performed; that there was broken
glass from windows on the grounds; that the incinerators did not
work properly and discharged smoke in the building; that the
tenants had already received a 3.2% rent increase for an
incinerator upgrade in 1972; that the intercom system was not new
and did not work properly; that the previous owner of the building
was ordered to provide a new intercom service without cost to
tenants by Judge M. Habater, Queens, Civil Court of New York,
Housing Division, Index # HP1343 in 1983; that the interior
entrance doors were not replaced; and that painting, which was not
completed, was maintenance and not an MCI.
The owner responded to the tenants' objections, which were
summarized by DHCR, by contending, in substance, that broken glass
from the old windows had been cleaned up and new lawns were
planted; that the complex has five (5) front doors and the owner
had replaced dozens of broken locks; and that the window installers
made the adjustments to the windows to alleviate drafts.
On July 27, 1987, the Rent Administrator issued the order here
under review, finding that certain of the installations qualified
as MCIs, determining that the application complied with the
relevant laws and regulations based upon the supporting
documentation submitted by the owner, and granting, in part, the
owner's application and authorizing an increase for new thermal
windows, new incinerator, an intercom system, an oil burner/boiler
and entrance doors. Disallowed by the Administrator were the total
claimed costs of $30,696.87 for landscaping, painting of halls and
stairways, and sales tax upon a finding that these items did not
qualify as MCIs, and $15,819.28 upon a finding that this amount was
not properly substantiated by the supporting documentation.
In this petition, five (5) tenants claiming to be tenant
representatives from each building in the complex contend, in
substance, that the MCI increase attributed to the incinerator and
intercom work should be denied because the installations were only
repairs to remove building violations. The petitioners further
contend that the tenants were charged an MCI increase of 3.2% in
1972 for upgrading the incinerator to meet the standards of the
EPA; that the incinerators are not working properly; that the prior
landlord was required to repair the intercom system pursuant to an
Order by Judge M. Habater, Queens County Civil Court of New York
City, Index # HP1343 (1983), at no charge to tenants, and claim
that the new owner is bound by this ruling; and that the intercom
system is not in working order; and that screens were not replaced.
ADMIN. REVIEW DOCKET NO. BH-130071-RT
In response to the petitioners' allegations, the owner contends, in
pertinent part, that the front door is in proper working order and
locked, and a new scrubber was installed and is in proper working
order.
After a careful consideration of the entire record, the
Commissioner is of the opinion that this proceeding should be
granted in part.
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.
In accordance with established procedures, an owner must submit
sufficient documentation in order to substantiate its application
and the increase requested therein. The requisite documentation
includes a certification of the cost of the work, proof of actual
payment, necessary government approvals where appropriate, and an
owner's affidavit as to the truthfulness of all information
submitted with the application.
The record in this instant case does not provide a conclusive basis
for the Rent Administrator's finding that the incinerator work
constituted a major capital improvement. The record reveals that
the work performed as described in the Estimate to Furnish Labor
and Materials does not include the installation of new scrubbers.
The work descriptions includes items such as repair of brickwork in
the combustion chamber, rebuilding of the system's gas burner,
internal cleaning of scrubbers and the rebuilding of the system's
scrubber blowers. Furthermore, the record does not include the
government permits from the Bureau of Air Resources and Department
of Buildings, required for the scrubber installation and
incinerator upgrade.
Therefore, the Administrator's order should be modified to
eliminate the cost of the incinerator work.
As for the petitioners' allegation that the intercom system is not
new, the Commissioner finds the Rent Administrator's determination
concerning this issue was correct based upon the owner's submission
of requested documentation, such as paid bills, canceled checks,
and the contract. As for the workmanship of the intercom
installation, the Commissioner notes there are no service
complaints regarding the intercom system, nor were there any
building-wide rent reduction orders in effect at the time of the
issuance of the Administrator's order.
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ADMIN. REVIEW DOCKET NO. BH-130071-RT
As for the petitioners' allegation that screens were not installed
with the new windows, the Commissioner notes that this issue was
raised for the first time on appeal, and thus, cannot be considered
at this stage of the proceeding as this is not a de novo
proceeding.
As for the tenants' claim that the intercom work was required
without cost to the tenants by a Court Order, the Commissioner sent
a Notice of Opportunity to Present Further Information and Evidence
to both the Petitioner-tenant and the owner for a copy of the said
Court Order and received no answers. Therefore, the Commissioner
has made an independent determination within the purview of the
specific Rent Laws and Regulations applicable to this matter to
confirm the Rent Administrator's determination that the
installation qualifies as a major capital improvement for which the
owner is entitled to an appropriate increase.
The Commissioner finds that the rent increase for the incinerator
should be suspended retroactively from the effective date of the
Administrator's order and that the permanent rent increase should
be reduced to 8.72 percent per month (subject to the annual
limitation of 6% on both the permanent and temporary retroactive
increases).
1. Allowable cost of Improvements $176,730.72
(Thermal windows, intercom system,
oil burner/boiler and entrance doors)
2. Amortization of cost over 5 years $35,346.14
(60 months) (base, divided by 5)
3. Annual gross rent of stabilized Apts $405,174.00
(as of November, 1985)
*4. Percentage of Rent Increase 8.72%
(item 2 divided by 3)
* To determine the dollar amount of the rent increase, multiply
the rent charged for each apartment as submitted in the rent roll
dated November, 1985 by the appropriate percentage of increase.
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ADMIN. REVIEW DOCKET NO. BH-130071-RT
The owner is directed to refund to all tenants the rent increase
collected for the incinerator. For rent stabilized apartments, a
credit of 20% per month commencing on the first rent payment date
after issuance of the Commissioner's order until all overpayments
have been refunded.
THEREFORE, in accordance with the provisions of the Rent
Stabilization Law and Code, it is
ORDERED, that the tenants' Petition for Administrative Review be,
and the same hereby is, granted in part; and that the
Administrator's order be, and the same hereby is modified in
accordance with the order and opinion, and as so modified, said
order is hereby affirmed.
ISSUED:
____________________
Joseph A. D'Agosta
Deputy Commissioner
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