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

          -------------------------------------X   ADMINISTRATIVE REVIEW
          APPEAL OF
                    310 WEST 74TH STREET           RENT ADMINISTRATOR'S
                    TENANTS ASSOCIATION            DOCKET NO.: AL430116OM



          On February 26, 1988, the above named petitioner timely filed a 
          petition for administrative review (PAR) against an order issued on 
          January 22, 1988, by a Rent Administrator (Gertz Plaza) concerning 
          the housing accommodations known as 310 West 74th Street, New York, 
          New York, 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 the administrative appeal.

          The owner commenced this proceeding on August 21, 1986 by initially 
          filing an application assigned  Docket No. AH430179OM and by 
          subsequently filing another application assigned Docket No. 
          AL430116OM for a rent increase based on the installation of the 
          following items at a total cost of $219,432.00: gas burner and 
          boiler, hot water heater, new roof/waterproofing and an elevator 
          upgrade including controller and selector. 

          The 310 West 74th Street Tenants Association (Tenants Association) 
          objected to the owner's application referenced as Docket No. 
          AH430179OM, alleging, in substance, that the installations were to 
          correct building violations and to comply with a court ordered 
          Stipulation of Agreement between the Tenants Association and the 
          owner to make certain repairs including waterproofing; that the 
          workmanship was of poor quality, specifically that the 
          roof/waterproofing work was not adequate and several apartments 
          experience water seepage; that the owner did not report the number 
          of rooms by apartment in his application; and that the room count 
          submitted by the owner  was incorrect. The Tenants Association 
          submitted an engineer's report dated May 24, 1982 with a survey of 
          the building and recommended repairs.

          ADMIN. REVIEW DOCKET NO. CB-430118-RT

          On January 22, 1988 the Rent Administrator issued an order under 
          Docket No. AL430116OM granting, in part, the owner's application 
          and authorizing an increase for rent controlled and rent stabilized 
          tenants based on approved costs of $196,932.00 upon finding that 
          the gas burner and boiler, hot water heater, new 
          roof/waterproofing, and elevator upgrade qualified as MCIs. 
          Disallowed by the Administrator was $42,500.00 in unsubstantiated 
          costs and $5,0243.87 of the approved cost was attributed to the 
          commercial tenants' share of the MCI cost.

          The Rent Administrator also issued an order under Docket No. 
          AH430179OM on January 22, 1988 stating that the owner withdrew the 
          application on March 27, 1987 and that the application was closed 
          without any further action.

          In this petition, the Tenants Association contends, in substance, 
          that the tenants were never served a copy of the application that 
          is the subject of the issued Order, Docket No. AL430116OM, and 
          therefore they did not have the opportunity to comment on the 
          owner's application; and that the tenants received an order under 
          Docket No. AH430179OM stating that the owner withdrew his 
          application.  The Tenants Association also claims that the 
          installations were poorly installed in that some tenants still 
          experience water seepage into their apartments; that rainwater 
          accumulates on the roof; that heat and hot water services are 
          problematic; and that the elevators break down.  Furthermore, the 
          Tenants Association disputes the owner's room count claiming that 
          there are 60 apartments with 138 rooms, not 59 apartments with 144 

          In response to the Tenant Association's petition, the owner 
          contends in substance, that the application under Docket No. 
          AL430116OM is identical to the application under Docket No. 
          AH430179OM.  The owner explains that the reason for two docket 
          numbers for one application is that the owner resubmitted his 
          application after unsuccessfully inquiring about the status of his 
          original application. The owner also contends that the Tenants 
          Association has not substantiated its allegations regarding the 
          workmanship of the MCI installations; that the new roof may need to 
          be re-pitched but it was properly installed; and that the room 
          count is 96 comprising 62 apartments. 

          The owner requests that the Rent Administrator modify the order to 
          include $12,860.00 of the cost for the roof/waterproofing work 
          which was excluded as unsubstantiated, and submits cancelled checks 
          for said amount.

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


          ADMIN. REVIEW DOCKET NO. CB-430118-RT

          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 evidence of record in the instant case indicates that the 
          tenants were notified of the owner's application in that the two 
          docket numbers were assigned to the same application.  A copy of 
          the application was sent to tenants, albeit under Docket No. 
          AH430179OM, to which the Tenants Association responded with 

          As to the Tenants Association's allegation that there is water 
          seepage into various tenants' apartments, the record reveals that 
          this claim was made in particular by the Tenants Association to the 
          Rent Administrator, but that the Rent Administrator did not conduct 
          a physical inspection of the tenants' apartments with such 
          complaints.  The Commissioner is of the opinion that this 
          proceeding should be remanded to the Rent Administrator to 
          determine whether the water damage in these apartments is 
          attributable to inadequate roof/waterproofing work.

          As for the Tenants Association's allegations regarding the 
          workmanship of the other MCI installations the Commissioner notes 
          that the owner substantiated his application in the proceeding 
          below by submitting to the Administrator documentation in support 
          of the application, including certifications, invoices, proposals, 
          government permits and approvals and cancelled checks.  On the 
          other hand , the Tenant Association has not submitted any evidence 
          to support their allegations.

          As for the Tenants Association's claim that work was performed to 
          eliminate building violations and to comply with  a court ordered 
          Stipulation of Agreement, the Commissioner notes that installations 
          made by the owner that meet the criteria of an MCI as set forth in 
          the rent laws and regulations may be the basis for MCI rent 

          As for the determination of the room count in the subject rent 
          controlled and rent stabilized apartments, the Commissioner finds 
          that the owner did not submit adequate information pertaining to 
          the room count stated in his application.  Specifically, Supplement 
          II, Schedule of Present Monthly Rental Income does not include a 
          room count by apartment.  On remand, the Rent Administrator should 
          determine the room count of the subject premises. 

          ADMIN. REVIEW DOCKET NO. CB-430118-RT

          As for the owner's request to include additional costs claimed to 
          be substantiated by canceled checks, the Commissioner notes that  
          a tenant's PAR is not the proper forum to raise this issue.  The 
          owner's proper recourse was to have timely filed a PAR in which 
          this issue may have been raised.

          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 to 
          the extent of remanding this proceeding to the Rent Administrator 
          for further processing in accordance with this order and opinion.  
          The automatic stay of that part of the Rent Administrator's order 
          directing a retroactive increase is hereby continued until a new 
          order is issued upon remand.  However, the Administrator's 
          determination as to a prospective rent increase is not stayed and 
          shall remain in effect until the Administrator issues a new order 
          upon remand.


                                                         Joseph A. D'Agosta
                                                        Deputy Commissioner


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