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

      APPEALS OF                             DOCKET NOS.: DE 210049-RT
                                          :               DE 210051-RT
        VARIOUS TENANTS OF 2 GRACE COURT,                 DE 220048-RT
        BROOKLYN                                          DE 220050-RT
                            PETITIONER    :               DE 220052-RT
      ------------------------------------X               DE 220374-RT

                                             RENT ADMINISTRATOR'S
                                             DOCKET NO.: AL 230097-OM


      The above-named petitioner-tenants filed petitions for administrative 
      review of an order issued on March 30, 1989 by a Rent Administrator 
      concerning the housing accommodations known as 2 Grace Court, Brooklyn, New 
      York, various apartments.          

      Since the petitions involve common issues of law and fact, the Commissioner 
      deems it appropriate to consolidate said petitions for disposition.

      The Commissioner has reviewed all the evidence in the record and has 
      carefully considered that portion of the record relevant to the issues 
      raised by the petition for review.

      By application dated February 20, 1987, the owner requested an MCI rent 
      increase based on the installation of an intercom, elevator rehabilitation 
      and modernization, concrete/brickwork, new entry doors and waterproofing.

      In response to the owner's application, several tenants asserted, in 
      substance and pertinent part, that the newly installed intercom system does 
      not function properly and that the former intercom system worked better 
      than the new one even at the time of its replacement.  Several tenants 
      further assert that the owner was previously granted an MCI rent increase 
      based on an intercom system installation completed late in 1971.  Regarding 
      the walkways and courtyard, several tenants assert that the improvements 
      were cosmetic and or necessitated due to damage caused by the premises' 
      workmen who allegedly used the area as a dumpster while working.

      On November 14 and 17, 1988 the agency sent an inspector to inspect various 
      apartments for leaks.  The report of the agency inspection indicates that 
      no evidence of leakage was found in several apartments.

      By order issued March 30, 1989, the Administrator granted the owner's MCI 
      rent increase application based on the installation of a new concrete 
      courtyard and walkway, and an intercom system; partial rent increase grants 
      were approved for the parapet pointing and brickwork and building entrance 


          ADMIN. REVIEW DOCKET NO.: DE 210049.RT,  et al

      door installations.  The Administrator denied those costs expended to 
      refurbish elevator cabs, demolishing and removing cement planter boxes, 
      rebuilding a water fountain wall, and for work done on the concrete floor 
      in the basement and new steps by the outside yard.

      The tenants in their petitions assert, in substance and pertinent part, 
      that the newly installed intercom system does not function properly.  
      Several tenants further assert that under Docket Number 2AC 461255-386, 
      issued in 1972, the owner was granted an MCI rent increase for the very 
      same installation.  Regarding the walkways and courtyard, the tenants 
      assert that they are not "new" but have always been there.  The tenants of 
      apartment 2K assert that complaints they submitted when this proceeding was 
      before the Administrator below were not addressed.  These tenants further 
      assert that an MCI rent increase previously granted under Docket No. BB 
      230161-0M when combined with the increase granted by the order appealed 
      herein, exceeds the codes 6% MCI rent increase cap.

      The owner responds to several of the petitions asserting, in substance and 
      pertinent part, that the newly installed intercom system functions properly 
      and replaces one for which its useful life had expired.  Regarding the 
      courtyard, the owner asserts that the installation included landscaping, 
      lighting, sidewalk repairs and new security doors and asserts that the MCI 
      rent increase was properly granted.

      After careful consideration 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 Law 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.

      With regard to the rent increase granted for concrete work, the record in 
      the instant case indicates that the owner correctly complied with the 
      applicable procedures for a major capital improvement and the Rent 
      Administrator properly computed the appropriate rent increases.  The 
      tenants have not established that the rent increases should be revoked.  
      Accordingly, the Commissioner notes that the rent increases granted for the 
      concrete work was correct when issued and should be affirmed.

      Regarding the petition from the tenants of apartment 2K, the Commissioner 
      notes that the record below does not contain an answer to the owner's MCI 
      application from the tenants of this apartment.

      The Commissioner notes that the order itself limits the collection of the 
      increase resulting therefrom or any other prior MCI order to not more than 

          ADMIN. REVIEW DOCKET NO.: DE 210049.RT,  et al

      6% in any one year, with any overage collectable in succeeding years.  The 
      Commissioner further notes that this tenant has not asserted that the owner 
      has in fact requested that those MCI rent increase monies in excess of 6% 
      be remitted and there is no evidence in the record which suggests this is 
      the case.

      Accordingly, the Commissioner is of the opinion that, as regards the Code's 
      6% MCI rent increase cap, the Administrator's order was correct when issued 
      and should be affirmed.  In any event, if an owner has been collecting rent 
      increases exceeding the 6% cap, tenants have the recourse of filing 
      complaints of rent overcharge

      The Agency's current MCI useful life schedule for intercoms indicates that 
      an intercom's useful life is 15 years.  The Commissioner notes that the 
      order issued under Docket Number 2AC 461255-386 was based on the 
      installation of adequate wiring and rewiring of existing bell and buzzer 
      and locked door system with intercom at a time when the agency did not have 
      a useful life schedule.  However, there is no evidence in the record which 
      would suggest that the replaced intercom had prematurely exhausted its 
      useful life, as several tenants asserted when this proceeding was before 
      the Administrator below.  In fact, the tenants in their petitions, assert 
      that the former intercom was functioning well at the time of its 
      replacement.  In addition, by agency notice dated July 30, 1992 the tenants 
      were, and by agency notice dated September 14, 1992 the owner was, 
      requested to submit further evidence regarding the nature of the intercom 
      installation, within fourteen days of the notice; to date no further 
      evidence has been received by the Agency.  

      Accordingly, the Commissioner is of the opinion that, the record as 
      presently comprised does not show by a preponderance of the evidence that 
      the former intercom system had exhausted its useful life at the time of its 

      Accordingly, the Commissioner is of the opinion and finds that the 
      Administrator's order should be modified in that so much of the MCI rent 
      increase attributable to the installation of an intercom should be revoked.  
      Accordingly, the total previously approved cost of $76,661.00 is reduced in 
      the amount of $10,656.00 which represents the previously approved cost of 
      the intercom installation.  The above adjustment results in a reduced rent 
      increase of $1.89 per room per month for rent controlled and rent 
      stabilized tenants (computed in accordance with the formula set forth in 
      the Administrator's order).

      The Commissioner notes that any excess rent paid by the tenants may be 
      credited to the monthly rent due on the first rent payment date following 
      the issuance of this order.

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


          ADMIN. REVIEW DOCKET NO.: DE 210049.RT,  et al

      ORDERED, that so much of the Administrator's order as granted an MCI rent 
      increase for the installation of cement walkways and courtyard be, and the 
      same hereby is, affirmed, and it is further 

      ORDERED, that so much of the Administrator's order as granted an MCI rent 
      increase based on approved costs of $10,656.00, for the installation of an 
      intercom be, and the same hereby is, revoked and the rent increase reduced 
      accordingly in accordance with this order and opinion.


                                           JOSEPH A. D'AGOSTA
                                       Acting Deputy Commissioner


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