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 ADMINISTRATIVE REVIEW
IN THE MATTER OF THE ADMINISTRATIVE DOCKET Nos.: DH610355RT,
APPEALS OF DH610428RT, DH610437RT,
VARIOUS TENANTS OF DH610438RT, DH630436RT,
1774 EASTBURN AVENUE DI620042RT, DK610120RT
BRONX, NEW YORK 10457
RENT ADMINISTRATOR'S
DOCKET NO.: ZBE610003OM
PETITIONERS
-------------------------------------X
ORDER AND OPINION GRANTING IN PART PETITIONS FOR ADMINISTRATIVE
REVIEW
The petitioner-tenants timely filed petitions for administrative
review (PAR) against an order issued on August 2,1989, by the Rent
Administrator (92-31 Union Hall Street, Jamaica, New York)
concerning the housing accommodations known as 1774 Eastburn
Avenue, Bronx, New York, various apartments, wherein the Rent
Administrator granted major capital improvement (MCI) rent
increases for the controlled and stabilized apartments in the
subject premises based on the installation of new windows, and an
oil boiler/burner at the premises.
The owner commenced this proceeding below by filing its MCI
application in May of 1987. In support of its application, the
owner submitted copies of contracts, invoices, government
approvals, contractors' certifications and cancelled checks.
In response to the MCI application, various tenants filed answers
stating that 1) the work done was required by the New York City
Departments of Health and Housing; and 2) essential services were
not being provided.
On appeal, the tenants state, in substance, that A) the owner's
claimed costs are not reasonable or valid and B) essential services
are not being maintained building-wide.
The tenant of apartment 3E contends, in substance, that his renewal
lease of March 15, 1990 made no mention of any MCI increase.
The tenant of apartment 3H and various other tenants contends,
inter alia, that the installation constitute ordinary repairs and
maintenance costs, do not qualify as MCIs, and are not energy
efficient; the window apertures have been reduced by 16.3%; his
air-conditioners do not fit in the new windows; the old boiler is
still in place; and a hearing is necessary.
ADMIN. REVIEW DOCKET NO. DH-610355-RT ET. AL.
In response to the tenants' petitions, the owner contends, in
substance, that A) the amount paid for the improvements was based
upon the cost of the actual contracts; B) all contracts are within
the J-51 guidelines; C) all essential services are being
maintained; D) the tenant of apartment 3E (along with all the other
tenants) was notified of the MCI application on July 23, 1987.
After a careful consideration of the entire evidence of record, the
Commissioner is of the opinion that these administrative appeals
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 (as reflected in
Policy Statement 89-6) that the building-wide installation of new
apartment and/or public area windows to replace windows that are 25
or more years old (as is the case herein) constitutes a major
capital improvement for which a rent increase may be warranted,
provided the owner otherwise so qualifies. Similarly, the
installation of a boiler/burner has been recognized as an MCI. In
fact various tenants concede that the prior windows and heating
system were in such condition that their replacement was required
for the continued operation, preservation and maintenance of the
structure.
The record discloses that the owner substantiated its application
in the proceeding below by submitting to the Rent Administrator in
support thereof copies of accepted contractor's proposals,
invoices, contractors' certifications and cancelled checks for the
improvements in question together with requisite governmental
approvals and sign-offs for the installation and operation of the
new heating system. The record further discloses that tenants were
notified of the application in accordance with procedures then in
effect (including the tenant of apartment 3E who received the same
notice as all other tenants similarly situated) and afforded the
opportunity to respond thereto. Accordingly, the Commissioner
finds that the owner correctly complied with the applicable
procedures for a major capital improvement rent increase and that
the increase was properly computed based on the proven cost of the
installation.
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ADMIN. REVIEW DOCKET NO. DH-610355-RT ET. AL.
Concerning the arguments raised on appeal by the tenant of
apartment 3H and other apartments the Commissioner notes, and the
record confirms, that these tenants failed to raise any of these
issues while this proceeding was pending before the Administrator.
Fundamentals principals of the Administrative appeal process and
Section 2529.6 of the Rent Stabilization Code prohibit a party from
raising issues on appeals which were not raised below. The tenants
of said apartments could have raised the very issues before the
Rent Administrator which they seek to raise for the first time on
appeal. Accordingly, the Commissioner is constrained to foreclose
consideration of these issues in this appeal proceeding.
It is noted, however, that the DHCR has determined that the Rent
Regulations and Code do not require the owner to make structural
changes or conform specifications of a major capital improvement
(such as the installation of new windows) to fit the size of an
individual tenant's air-conditioners nor do they require the owner
to buy the tenants air-conditioner units which fit the new windows.
With respect to the tenant's request for a hearing, it should be
pointed out that due process simply must provide a party with a
full and fair opportunity to be heard on matters in issue in
administrative proceeding. Notwithstanding that a party believes
questions of fact purportedly exist in the record, the granting of
a hearing is discretionary and not mandated by law. The
Commissioner finds that the evidence and written submissions in the
record are sufficient to render an administrative determination.
With regard to the tenants' contention that the owner is not
providing and/or maintaining essential/required services, the
Commissioner notes that it is the established policy of the DHCR,
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.
In this respect, the records of the Division disclose that a rent
reduction order (Docket No. BA630037B) was issued on September 11,
1987, based upon a finding that services of a building-wide nature
were not being maintained.
On June 12, 1992 the owner filed a rent restoration application
(Docket No. GF620024OR) which was granted on January 28, 1993 with
an effective date of February 1, 1993.
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ADMIN. REVIEW DOCKET NO. DH-610355-RT ET. AL.
Based upon the foregoing, and in accordance with Policy Statement
90-8, the Commissioner is of the opinion and finds that the rent
increase provided for in the Administrator's order should be
suspended for the controlled and stabilized apartments from the
inception dates thereof and that said increase be reinstated,
effective as of February 1, 1993.
THEREFORE, in accordance with the provisions of the Rent
Stabilization Law and Code, the Rent and Eviction Regulations for
the City of New York, and Operational Bulletin 84-1, it is
ORDERED, that these petitions for administrative review be, and are
the same hereby are granted in part; that the order of the Rent
Administrator be, and the same hereby is modified so as to change
the effective date thereof to February 1, 1993 for the reasons
hereinabove indicated; and it is further
ORDERED, that the owner refund to the tenants of rent controlled
apartments any excess rent collected as a result of this order,
within 30 days from the date of issuance thereof; and it is further
ORDERED, that as to the tenants of rent stabilized apartments, the
owner credit any excess rent collected at the rate of 20% per month
commencing on the first rent payment date after issuance of this
order of the Commissioner until all overpayments have been
refunded.
ISSUED:
____________________
Joseph A. D'Agosta
Deputy Commissioner
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