STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
------------------------------------X ADMINISTRATIVE REVIEW
IN THE MATTER OF THE ADMINISTRATIVE DOCKET NOS.:
APPEALS OF DA410100RT, DA410203RT
Maxwell-Kates, Inc. and DA410204RT, DA410205RT
Various Tenants of DC430349RO
315-321 East 12th Street
New York, New York
ORDER AND OPINION REMANDING PETITIONS FOR ADMINISTRATIVE REVIEW
On March 17, 1987, the above-named petitioner-owner completed the
filing of an application for a major capital improvement (MCI) rent
increase for the controlled and stabilized apartments in the
subject premises known as 315-321 East 12th Street, New York, New
York, various apartments, based on the installation of a new boiler
and burner and new roof doors at the premises.
On December 30, 1988 the Rent Administrator issued an order which
purported to grant the owner an MCI rent increase for the subject
installations, but erroneously indicated that the increase was
granted for the installation of aluminum windows.
Subsequent thereto, the Rent Administrator issued an amended order
which corrected the earlier order and indicated that a rent
increase was granted for the subject installations (boiler/burner
and roof doors) at a total approved cost of $59,210.00, and that
the December 30, 1988 issue date of the earlier order remained in
full force and effect. The Commissioner notes that although the
record indicates that the amended order was issued and mailed to
the parties on February 17, 1989, the issue date on said order is
incorrectly indicated as December 30, 1988.
Various tenants filed petitions against the Administrator's
original order of December 30, 1988 complaining, in substance, that
no new windows had been installed at the subject premises. The
Commissioner finds that said complaints have been rendered moot by
the issuance of the Administrator's amended order.
Adm. Rev. Docket No. DA410100RT et. al.
The Commissioner notes that on December 4, 1990 said tenants filed
a supplement to their petitions in which they asserted, among other
things, that they were not advised of their right to file a
petition against the amended order and that the issue date of the
amended order was incorrect. A review of the record indicates that
the tenants were served with copies of the amended order and were
notified of their right to file a Petition for Administrative
Review. However, although the tenants did not file petitions
against the amended order and did not raise objections thereto
until several months after it was issued and mailed, in light of
the possibility of any confusion which may have occurred as a
result of the issuance of the amended order, the Commissioner finds
it appropriate to consider said objections in this proceeding along
with those raised in the owner's petition filed against the amended
The tenants' objections to the amended order are, in substance, as
follows: that the boiler and burner were not new when installed;
that an engineering company the tenants retained to conduct a
physical inspection of the premises indicated in its report that
"(t)he boiler, burner and controls are deteriorating and should now
be refurbished to avoid a major breakdown"; that there have been
frequent heat and hot water problems since the installation; that
there are immediately hazardous class "C" violations regarding heat
and hot water which were on record against the subject premises
prior to the issuance of the Administrator's order; that as a
result of the tenants' numerous heat and hot water complaints filed
with the New York City Department of Housing Preservation and
Development(HPD) subsequent to the installation, the owner, during
a housing court proceeding, was directed to maintain adequate heat
and hot water services; that the roof door installation does not
qualify as an MCI; that the roof doors are of inferior quality and
were not installed in a workmanlike manner; that the owner's
documentation is not sufficient; that the owner is not maintaining
services; and that therefore a rent increase is not warranted.
In response the owner asserts, in substance, that the tenants have
not established that the boiler and burner were not new when
installed; that the inspection conducted by the tenants'
engineering company took place more than two years after the
boiler/burner installation, merely indicates conditions of wear
that would be expected after such a period of time, and fails to
refer to repairs made by the owner in response to the report; that
the allegations regarding immediately hazardous conditions should
not be considered because, among other things, they were not raised
below and they did not exist until after the Administrator's order
Adm. Rev. Docket No. DA410100RT et. al.
was issued; that claims regarding the roof doors are being raised
for the first time on appeal; and that the MCI increase was
properly granted since there were no outstanding building-wide rent
reduction orders in effect.
In its petition the owner contends, in substance, that the
Administrator erroneously failed to include certain expenditures in
the total approved cost.
In response several tenants objected to the rent increase and
raised complaints regarding the quality and adequacy of the
The Commissioner is of the opinion that these petitions should be
remanded for further consideration.
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 DHCR that the installation of
a new boiler and burner and new roof doors constitute major capital
improvements for which a rent increase adjustment may be warranted,
provided the owner otherwise so qualifies. As part of the
application process, the owner must certify that essential services
are being maintained and will continue to be maintained.
The record shows that the owner, in its response to the tenants'
petitions, admits that repairs were made to the boiler and burner
in response to the engineering company's report, and that the owner
has failed to refute the tenants' statements and submissions with
respect to the Housing Court directive to the owner to maintain
heat and hot water service at the premises. In view of the
conflicting statements made by the parties which cannot be resolved
herein, the submission of highly probative evidence regarding the
maintenance of certain services at the premises, and the
possibility that the owner may have falsely certified to the
maintenance and continued maintenance of essential services, the
Commissioner deems it appropriate to remand this proceeding for
Adm. Rev. Docket No. DA410100RT et. al.
further processing to determine whether an MCI rent increase is
warranted and to suspend the rent increase subject to such
determination as may be made upon the remand of this proceeding.
Regarding the tenants' contention that the roof doors were not
installed in a workmanlike manner and are of inferior quality, the
Commissioner notes that the tenants raised complaints about the
quality and adequacy of the roof doors installation during the
proceeding below which were not adequately addressed. Based
thereon, the Commissioner deems it appropriate for these
contentions to be considered by the Administrator upon remand.
Regarding the owner's contention that certain expenditures were
erroneously excluded, the Commissioner notes that in computing the
rent increase the Administrator disallowed expenditures in the
amount of $2,840.00 as unsubstantiated. However, a review of the
record shows that the owner submitted a copy of a cancelled check
in said amount as proof of such expenditure during the proceeding
below. Accordingly, the Commissioner finds that upon remand, should
the Administrator determine that the MCI rent increase was
warranted, the Administrator's original calculations should be
modified to include such expenditure.
THEREFORE, in accordance with the Rent Stabilization Law and Code
and the Rent and Eviction Regulations for New York City, it is
ORDERED, that these petitions be, and the same hereby are, granted
to the extent of remanding this proceeding to the Rent
Administrator for further consideration in accordance with this
order and opinion. The Administrator's determination as to
retroactive and prospective rent increases is stayed effective on
this issuance date of this order and opinion, and such stay shall
remain in effect until a new order is issued on remand.
JOSEPH A. D'AGOSTA