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.

                                          2






          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.




                                          3












          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

















                                          4
    

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