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 S.J.R. NO.: 6858-B
IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NOS.: DD610214RT,
: DD610427RT, DD630015RT
VARIOUS TENANTS OF 155-165 EAST RENT ADMINISTRATOR'S
MOSHOLU PARKWAY NORTH, BRONX, DOCKET NO.: AE630201OM
NEW YORK PETITIONERS :
------------------------------------X
ORDER AND OPINION REMANDING PROCEEDING ON APPEAL
The above-named petitioner-tenants filed petitions for
administrative review of an order issued on March 1, 1989 by a Rent
Administrator concerning the housing accommodations known as
various apartments, 155-165 East Mosholu Parkway North, Bronx, New
York.
Subsequent thereto, the owner filed a petition in the Supreme Court
pursuant to Article 78 of the Civil Practice Law and Rules seeking
an order of mandamus. This resulted in a court ordered stipulation
remitting the proceeding for a determination of the administrative
appeals herein.
Since these petitions involve common issues of law and fact, they
have been consolidated herein for a uniform disposition.
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 petitions for review.
This proceeding was commenced by the owner's filing of an
application dated July 30, 1986 based on the installation of major
capital improvements (MCI's), to wit: a new roof, new
boiler/burner and new windows building-wide, at a total claimed
cost of $160,784.00.
The owner substantiated its application by submitting copies of
contracts, contractors' certifications, cancelled checks, and
government certificates and approvals for the work in question.
Due to a legal dispute with the owner, the boiler contractor
refused to sign the RA-79 Supplement I.
The tenants objected to the owner's application by asserting, in
substance, that the rent controlled tenants were entitled to an
offset based on the owner's receipt of J-51 tax abatements for the
work in question; the completion date of the window installation
was misrepresented so that the owner could circumvent the
requirement that 51% of the rent controlled tenants must consent to
an MCI installation before a rent increase can be collected from
them; the window installation was inferior as the new windows were
drafty and had defective locks; no hallway windows were installed;
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the existing hallway windows were unsafe and had no window guards;
the boiler provided uneven heat distribution, improper water
pressure, and no temperature regulations; the boiler contractor did
not sign the contractor's certification section of the owner's
application; the quality of the roof installation was questionable
considering the "fact" that Apt. 6M had leaks; any rent increase
granted should be based on the rent roll at the time of the 8A loan
closing (1983); and even if all of the work had been satisfactorily
completed, the tenants should not receive a rent increase which is
greater than 6%. The tenants requested an inspection of the
building prior to the issuance of an order.
A physical inspection of only two apartments (2N & 6M) occurred on
April 28, and May 15, 1987, which indicated that the kitchen window
sash in apartment 2N was cracked, and in apartment 6M the east wall
and ceiling was cracked, peeling and water-stained evidencing
exterior water seepage and roof leaks.
On March 15, 1988, the owner informed the Division that the window
contractor had refused to make warranty repairs, and that the owner
had hired another contractor to make the necessary repairs in the
Spring per the tenants' request.
A subsequent inspection of apartment 2N made in January 1989 noted,
among other things, defective kitchen and living room windows.
On February 16, 1989, the owner submitted a statement signed by the
tenant of apartment 2N indicating that the repairs had been
accomplished.
On March 1, 1989 the Rent Administrator issued the order here under
review, finding that the installations qualified as an MCI,
determining that the application complied with the relevant laws
and regulations based on the supporting documentation submitted by
the owner, and allowing rent increases for rent controlled and rent
stabilized tenants. Said order was amended on May 16, 1990 to
acknowledge an agreement between the parties to limit the increase
to 7%.
In their petitions the tenants assert, in substance, that the
window installation is unworkmanlike and that despite 41 tenants
complaining of defective windows when the proceeding was before the
Administrator, the windows of only one apartment were inspected;
the completion date of the window installation was misrepresented
to enable the owner to circumvent the rule in effect prior to the
November 1984 which required the consent of 51% of the rent-
controlled tenants before they could be required to pay any MCI
rent increases; the boiler/burner contractor did not sign the
certification on the owner's original application; there have been
chronic heat and hot water problems; the tenants are entitled to an
offset due to the owner's receipt of J-51 tax benefits; and the
rent increase should be based on the August 1983 rent roll (the
month when the owner's 8A loan was closed). The tenant of
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apartment A asserts that no windows were installed in her
apartment. The tenant of apartment 1J asserts that only six of
seven windows were installed in her apartment, all of which were
defective.
The owner responds asserting, in substance, that all of the work in
question qualifies for an MCI rent increase; the roof installation
was completed in a workmanlike fashion, the roof contractor has
responded to all warranty claims and all requests for general
repairs have been honored; there were problems initially with the
boiler/burner which have since been cured; there were numerous
problems with the windows because the window contractor abandoned
its warranty responsibilities which is now a matter in litigation;
from the original list of tenants with window defects, much has
been abated and the owner remains committed to accomplishing the
repairs; and the owner's acceptance of the reduced 7% increase
along with a commitment to continue repairs was to have been the
only penalty the owner was to face. In response to the tenant of
apartment A, the owner concedes that no windows were installed in
that apartment due to the tenant's failure to provide access, but
asserts that the tenant remains responsible for her proportionate
share of the roof and boiler/burner MCI rent increase. In response
to the tenant of apartment 1J, the owner asserts that this is the
first time that it has received notice of this complaint, and if
true, it will correct the situation.
After careful consideration of the entire evidence of the record,
the Commissioner is of the opinion that this proceeding must be
remanded for further processing.
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 building-
wide installation of all apartment windows and/or public area or
lot line windows to replace windows which are 25 or more years old
(as in the case herein) constitutes an MCI for which a rent
increase may be warranted, provided the owner otherwise so
qualifies.
Additionally, a new roof and new boiler/burner are installations
which meet the definitional requirements of an MCI for which a rent
increase may be warranted.
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With regard to the tenants' contention that the increase should be
based on the August 1983 rent roll, which is when the owner's 8A
loan was closed, the Commissioner notes that said loan closing date
is not relevant to and has no effect upon the instant proceeding,
and that the Administrator correctly used the May 1986 rent roll in
accordance with established procedures.
With regard to the rent controlled tenants' assertion that the
owner attempted to circumvent an agency rule requiring a majority
consent before undertaking the window installation by
misrepresenting the completion date of the window installation, the
evidence of record, including a contract change request dated June
5, 1985, cancelled checks dated March 14, 1985 (#6005 - $15,581.00)
and March 27, 1986 (#60942 - $13,153.00), and the contractor's
certification, substantiate the work completion date of March 14,
1985. On the other hand, the tenants have not submitted any
evidence to support their contention. In any event, the
Commissioner notes that pursuant to Section 2202.4(c) of the Rent
and Eviction Regulations, the Administrator may grant an MCI
increase, and that tenant consent is not required for such
increase.
Concerning the effect of the owner's application for or receipt of
J-51 tax benefits based on the subject improvements, this benefit
does not preclude an owner's entitlement to an MCI rent increase
adjustment therefor. Though rent stabilized tenants may presently
share in the benefits of a tax abatement by the owner pursuant J-51
of the Administrative Code, this provision does not apply to the
rent stabilized tenants in the instant case as the law is only
applicable to improvement work commenced after June 28, 1988, and
is not retroactive. However, tenants of rent controlled apartments
may be entitled to share in such tax abatement benefits, as
hereinafter provided.
With regard to the boiler/burner installation, although no
contractor's certification was submitted with the owner's
application, the record contains the owner's affidavit, dated
January 27, 1987, indicating that it had been unable to obtain the
contractor's signature, and a letter from the owner to the agency
specifically delineating the reasons for the contractor's refusal.
The Commissioner finds that the owner's affidavit, in lieu of the
contractor's certification, considered in conjunction with the
other documentation of record, is sufficient to substantiate the
installation of the boiler/burner. However, the Commissioner notes
that the tenants have complained of chronic heat and hot water
problems, and the owner has conceded on appeal that there were
problems initially with the boiler/burner because the new unit was
improperly connected to the building. Accordingly, the
Commissioner finds that this proceeding must be remanded to
determine the adequacy of the boiler/burner installation.
With regard to the roof installation, the Commissioner notes that
the owner, on appeal, has admitted that the roof contractor has had
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to respond to warranty claims and requests for maintenance. The
Commissioner further notes that the owner has not submitted any
written evidence to confirm that the leak condition in apartment 6M
has been rectified. Accordingly, this proceeding must also be
remanded to ensure that the roof is leak-free.
With regard to the window installation, the Commissioner notes that
although forty six tenants complained that the window installation
was unworkmanlike and that the windows were defective when this
proceeding was before the Administrator, the agency only inspected
the windows in one apartment (2N).
On appeal numerous tenants continue to assert that the window
installation was not done in a workmanlike fashion. The record
indicates that the owner has admitted "numerous problems" with the
windows, but failed to submit to the Administrator probative
evidence of what efforts, if any, were made to gain access to the
tenants' apartments to inspect and repair the window problems
complained of. Based upon the insufficient number of apartments
inspected and the owner's admission of defective windows, the
Commissioner finds that the Administrator's approval of the
application was premature. The Commissioner thus deems it
appropriate to remand this proceeding to the Administrator for such
further processing as may be deemed necessary, including a physical
inspection, to ascertain whether the windows, roof and heating
system have been installed in a workmanlike fashion and are
operative.
Based upon the foregoing, the Commissioner finds that the MCI
increase which is the subject of this proceeding should be
suspended upon the issuance date of this order and opinion until a
new order is issued upon remand. Should it be found by the
Administrator upon the remand that the owner is entitled to an MCI
increase, the effective date of such increase may be adjusted as
deemed necessary by the Administrator. Furthermore, upon the
remand the Administrator should reflect such J-51 tax abatement
offset as maybe warranted with respect to the rent controlled
units, if appropriate action has not yet been taken.
THEREFORE, in accordance with the Rent and Eviction Regulations for
New York City and the Rent Stabilization Law and Code, it is
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ORDERED, that these petitions be, and the same hereby are, granted
to the extent of remanding this proceeding to the Rent
Administrator for further processing in accordance with this order
and opinion. The prospective rent increase granted in the
Administrator's order is hereby suspended as of the issuance hereof
and the automatic stay of such portion of the Administrator's order
as directed a retroactive rent increase is hereby continued until
a new order is issued upon the remand.
ISSUED:
JOSEPH A. D'AGOSTA
Deputy Commissioner
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