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
          APPEALS OF                             DOCKET NOS.:
             ALAN RALPH                       :  CC410357RT/CC410395RT
             FRANCESCA AGNELLI                   CD410055RT/CD410056RT
             COLIN RILEY                         
             JAMES CORIGLIANO   PETITIONERS   :  RENT ADMINISTRATOR'S
          ------------------------------------X  DOCKET NO.: AE430194OM     

               ORDER AND OPINION GRANTING PETITIONS FOR ADMINISTRATIVE
                                   REVIEW IN PART

          The above-named petitioner-tenants timely filed administrative 
          appeals against an order issued on March 15, 1988 by the District 
          Rent Administrator (92-31 Union Hall Street, Jamaica, New York) 
          concerning the housing accommodations known as 213 West 18th Street 
          and 215 West 18th Street, New York, New York, various apartments, 
          wherein the Administrator granted major capital improvement (MCI) 
          rent increases for the controlled and stabilized apartments in the 
          subject premises based on the installation of adequate plumbing and 
          restoration work (tiles, walls) related thereto.  The Commissioner 
          notes that the owner initially included a boiler/burner 
          installation in its application which it subsequently withdrew from 
          consideration during the proceeding below.

          The owner commenced this proceeding in May, 1986, by filing an 
          application for MCI rent increases.  Subsequent thereto, the owner 
          certified that on July 16, 1986 it served copies of the application 
          upon all tenants and also made a copy available for tenant review 
          at the premises.

          In response to the application three tenants objected to a rent 
          increase and to the quality or adequacy of the installations.

          On December 4, 1989 a physical inspection of the subject premises 
          was conducted by a DHCR staff member who reported that restoration 
          work was unsatisfactory in one apartment.  The owner subsequently 
          submitted documentation indicating that it had made repairs to said 
          apartment.

          In the order appealed herein, the Administrator granted MCI rent 
          increases as indicated above.

          In these petitions the tenants contend, variously, that certain 
          complaints raised below were not addressed; that all of the 
          apartments are studios, not two room apartments as indicated by the 
          owner; that, in substance, the owner has not substantiated its 
          entitlement to an MCI rent increase; and that the increase should 
          not be permanent.  One tenant contends that she was not provided an 
          opportunity to respond to the MCI application and should not have 







          ADMIN. REVIEW DOCKET NO.: CC410357RT, et al.
            


          pay for "shoddy" work begun before her lease commenced and not 
          subsequently repaired.  Another tenant contends that he is being 
          overcharged.

          The Commissioner is of the opinion that these petitions should be 
          granted in part.

          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.

          It is the established position of the Division that the 
          installation of adequate plumbing meets the definitional 
          requirements of a major capital improvement for which a rent 
          increase may be warranted.  The record shows that the owner 
          substantiated the application by the submission of various items of 
          documentation, including copies of cancelled checks, governmental 
          approvals and the contractor's certification which indicate that 
          the owner correctly complied with the applicable procedures for an 
          MCI rent increase and that the increase was properly computed based 
          on the proven cost of the installation.

          It is the established policy of the DHCR, as provided for in the 
          Code and as reflected in Policy Statement 90-8, that "where there 
          is a DHCR order in effect determining a failure to maintain a 
          building-wide service which resulted in a rent reduction", such 
          order will constitute a bar to obtaining an MCI rent increase.  The 
          subsequent restoration of rent based on a finding of service 
          restoration will result in the prospective elimination of this 
          sanction.

          The Commissioner notes that as to the subject accommodations at 213 
          West 18th Street, Division records disclose that an order of rent 
          reduction was issued under Docket No. BD410116B on November 10, 
          1987, based upon a finding of a reduction in service of a building- 
          wide nature, which order remains outstanding against said premises.  
          Accordingly, as to premises 213 West 18th Street, the Commissioner 
          finds that the major capital improvement rent increase should not 
          have been granted and should be suspended from the effective dates 
          thereof until such time as an order is issued finding that the 
          services which were the basis of said rent reduction order have 
          been restored, at which time the major capital improvement rent 
          increase at such address shall be restored on a prospective basis 
          as of the effective date of said finding.



          ADMIN. REVIEW DOCKET NO.: CC410357RT, et al.



          Regarding the contention raised by the tenant residing in apartment 
          3D at 213 West 18th Street that she was not provided an opportunity 
          to respond to the MCI application, the record discloses that the 
          tenants in occupancy at the time the instant application was filed 
          were properly notified of the same by the Administrator and 
          afforded an opportunity to respond thereto.

          In the event of a change of tenancy during a major capital 
          improvement proceeding, it is the obligation of the owner to notify 
          the new tenant of the pendency of such proceeding, and to advise 
          the Division of this change in tenancy.  While not fatal to the 
          owner's application, the owner runs the risk of the tenant who was 
          not so notified raising issues on appeal which could have been 
          raised in the proceeding below, thus jeopardizing the finality of 
          the Administrator's order.

          Where, as indicated in the case of the tenant residing in apartment 
          3D, the tenant took occupancy pursuant to a vacancy lease 
          commencing after the owner had filed its application, the 
          Commissioner notes that for the MCI increase granted by the 
          Administrator's order to be collectible during the term of the 
          petitioner's vacancy lease, such vacancy lease would have to 
          contain a specific clause advising the tenant of the docket number 
          of the pending proceeding and advising that the rent charged was 
          subject to additional increase (during the current lease term in 
          effect) as provided by Section 2522.4(a)(5) of the Rent 
          Stabilization Code and established Division precedent.  In the 
          absence of same, said increase would not have been collectible 
          until the expiration of the lease term in effect at the time of 
          issuance (March 15, 1988) of the MCI order, provided the renewal 
          lease contains a general authorization provision for adjustment of 
          the rent reserved by DHCR order.

          However, the Commissioner notes that since the tenant of apartment 
          3D resides at the premises 213 West 18th Street, upon said lease 
          expiration the increase shall be collectible in accordance with 
          this order and opinion.

          Regarding the contention of the tenant occupying apartment 5A at 
          213 West 18th Street that certain complaints raised below were not 
          properly addressed by the Administrator, the Commissioner notes 
          that some of these complaints concerned items directly related to 
          the condition of this tenant's apartment subsequent to the MCI 
          installation which were not addressed below.  The owner is hereby 
          directed to promptly rectify any defective conditions which may 
          exist with respect to these items, if it has not already done so, 
          upon written notification of the tenant of said apartment within 30 
          days from the issuance of this order.  Upon the owner's failure to 
          do so, the determination herein is without prejudice to the tenant 
          filing a complaint with the DHCR based upon a diminution of 
          services.  As noted above, the rent increases for apartment 5A is 
          suspended until such time as there is a finding by the Division 
          that services have been restored.







          ADMIN. REVIEW DOCKET NO.: CC410357RT, et al.



          The Commissioner notes that this petitioner-tenant also (Apt. 5A) 
          raised a heat and hot water complaint below related to the 
          boiler/burner installatin that the owner withdrew from 
          consideration.  This order and opinion is issued without prejudice 
          to the tenant filing a complaint with the DHCR based upon current 
          service decreases, if found warranted.

          Regarding the contentions that all apartments in the subject 
          premises are studio apartments (i.e. one room apartments) and not 
          all two room apartments as indicated in the MCI application, the 
          tenants have not submitted any evidence in support thereof.  It is 
          agreed by all parties that the apartments are the same size even 
          though there  is disagreement on the room count.  The Commissioner 
          notes that in this case, since the total approved cost is divided 
          by an equal number of rooms, it does not materially affect the rent 
          increase granted to an individual apartment.

          Regarding the contention that the MCI rent increase should not form 
          a permanent part of the rent structure, the Commissioner notes that 
          the permanent nature of the increase has been upheld by the Court 
          of Appeals of the State of New York in the Matter of Ansonia 
          Residents Associates v. DHCR.

          Regarding the contention raised by the tenant in Apartment 1A at 
          213 West 18th Street that he is being overcharged, the record is 
          not sufficient to support this contention.  This order is issued 
          without prejudice to the tenant filing a complaint with this 
          Division based on a rent overcharge, if the facts so warrant.

          THEREFORE, in accordance with the applicable provisions of the Rent 
          Stabilization Law and Code, and the Rent and Eviction Regulations 
          for the City of New York, it is

          ORDERED that these petitions be, and the same hereby are, granted  
          in part; that the Rent Administrator's order be, and the same 
          hereby is, modified to the extent of suspending rent increase for 
          premises 213 West 18th Street in accordance with this order and 
          opinion; and that as so modified such order be and the same hereby 
          is affirmed; and it is further

          ORDERED, that the owner shall pay any arrears occurring as a result 
          of this order and opinion as follows: for rent stabilized 
          apartments, a monthly credit of 20% of such arrears for five 
          consecutive months until all overpayments have been refunded, 
          commencing on the first payment date after the issuance of this 
          order and opinion; and for rent controlled apartments, a full 
          refund within 30 days from the issuance date of this order and 
          opinion.

          ISSUED:
                                                                        
                                               JOSEPH A. D'AGOSTA
                                               Deputy Commissioner
    

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