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

          ------------------------------------X  S.J.R. NO.:  6858-B
          APPEAL OF                              DOCKET NOS.: DD610214RT,
                                              :   DD610427RT, DD630015RT
           MOSHOLU PARKWAY NORTH, BRONX,         DOCKET NO.:  AE630201OM
           NEW YORK             PETITIONERS   : 


          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 

          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;


          ADMIN. REVIEW DOCKET NO.: DD610214RT  et. al.

          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 

          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 

          ADMIN. REVIEW DOCKET NO.: DD610214RT  et. al.

          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 

          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 

          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.


          ADMIN. REVIEW DOCKET NO.: DD610214RT  et. al.

          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 

          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

          ADMIN. REVIEW DOCKET NO.: DD610214RT  et. al.

          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 

          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


          ADMIN. REVIEW DOCKET NO.: DD610214RT  et. al.

          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.


                                               JOSEPH A. D'AGOSTA
                                               Deputy Commissioner

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