DOC. NO.: DJ 410258-RO
                                 STATE OF NEW YORK
                            OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                               JAMAICA, NEW YORK 11433

         ------------------------------------X   S.J.R. 5723
         APPEAL OF                               DOCKET NO.: DJ 410258-RO

                   DISENHOUSE ASSOCIATES,    :   DRO DOCKET NOS.:
                               PETITIONER    :        CA 410032RP/
         ------------------------------------X        L000030UC/L002420RV


            On October 13, 1989, the above-named petitioner-owner filed a 
            petition for administrative review of an order issued on September 
            11, 1989 by the District Rent Administrator, 92-31 Union Hall 
            Street, Jamaica, New York, concerning the housing accommodations 
            known as 145 Attorney Street (aka 182-184 Stanton Street), New 
            York, New York, Apartment 3C.

            Subsequent thereto, the petitioner filed a petition in the Supreme 
            Court pursuant to Article 78 of the Civil Practice Law and Rules in 
            the nature of mandamus, for a judgment directing the DHCR to render 
            a determination of the petitioner's administrative appeal.

            On June 28, 1991, an order was signed by Justice Edward H. Lehner 
            directing DHCR to determine the petitioner's administrative appeal.

            The record indicates that on November 18, 1984 the tenants of the 
            subject accommodation filed a complaint wherein they stated that 
            the owner had refused to offer them a two year renewal lease; that 
            the owner instead offered them a one year lease; and that they 
            moved into the subject accommodation pursuant to a written lease 
            commencing on October 15, 1983 and expiring on October 14, 1984 at 
            a monthly rental of $800.00.

            On June 25, 1985, the DHCR mailed a copy of the tenants' complaint 
            to the owner together with a notice advising the owner that failure 
            to file an answer within twenty (20) days would be considered a 
            default and would result in a determination based on the record.

            DOC. NO.: DJ 410258-RO

            On July 5, 1985, the owner submitted a response wherein the owner 
            stated that the subject building was issued a new Certificate of 
            Occupancy in 1984; that the owner did not apply for a J-51 tax 
            abatement; that the building is not subject to rent stabilization; 
            and that the owner therefore had no legal obligation to renew a 
            lease for more than one year at a time.  The owner submitted a copy 
            of a Certificate of Occupancy for the subject premises dated June 
            21, 1984.

            On January 6, 1987, the District Rent Administrator issued an order 
            terminating the proceeding under Docket Number L 000030-UC which 
            stated that the owner had failed to submit information/evidence 
            necessary to process the case, as requested on November 3, 1986 and 
            that the subject building remains subject to the regulations and 
            the DHCR's jurisdiction.  It was noted in the order that the 
            termination of the proceeding was without prejudice to its 
            subsequent reopening upon a request in writing by the owner within 
            sixty (60) days.

            On February 1, 1987, the District Rent Administrator issued an 
            order in the proceeding under Docket Number L002420RV which noted 
            the order issued on January 6, 1987 under Docket Number L-000030-UC 
            and which directed the owner to offer the tenants a renewal lease.  
            The owner was further advised to register the subject accommodation 
            with the Division before collecting any lease adjustment.

            The owner thereafter filed a petition for administrative review in 
            which the owner alleged, in substance, that the subject building is 
            not subject to rent stabilization pursuant to Section 5(a)(5) of 
            the  Emergency Tenant Protection Act of 1974 which provides that 
            housing accommodations in buildings rehabilitated as family units 
            on or after January 1, 1974 are exempt from rent stabilization; 
            that the complete rehabilitation of the building included new 
            plumbing, new electrical wiring, new interior walls, new flooring, 
            new windows, new kitchens, and new bathrooms; that the owner 
            combined two separate buildings into one, changing the floor plans 
            and lay-outs of the existing apartments; and that the subject 
            premises was purchased vacant and in dire need of repair.  The 
            owner submitted with his appeal a Department of Buildings Permit, 
            issued June 11, 1982, an Altered Building Application, dated 
            October 14, 1982 and the Certificate of Occupancy dated June 21, 

            By order issued on November 25, 1987 under Docket Number BB 
            410257RO, the Commissioner consolidated the proceedings under 

            DOC. NO.: DJ 410258-RO

            Docket Numbers L000030-UC and L002420RV and remanded the proceeding 
            for further processing to consider the owner's claim on the merits.

            By order issued on December 30, 1987 under Docket Number BB 
            410137RO, the Commissioner determined that that petition was a 
            duplicate of the petition filed under Docket Number BB410257RO and 
            remanded the proceeding for consolidation with the proceeding under 
            Docket Number BB410257RO.

            On remand, the owner was advised by notice dated May 20, 1988 that 
            the owner was required to submit copies of all contracts and paid 
            bills and cancelled checks for the work done as well as a copy of 
            the approved alteration plans.

            In answer submitted June 6, 1988, the owner asserted that the 
            subject building were purchased for $85,000.00 by the owner; that 
            the 1988/89 assessed value of the subject premises was $280,000.00 
            and the transitional assessed value was $140,200.00; that the 
            Department of Buildings Permit issued June 11, 1982 enabled the 
            owner to perform a complete rehabilitation of the existing 
            buildings, both of which were purchased vacant; that prior to 
            demolition, the subject building contained broken walls, rusted and 
            inoperable plumbing, broken and blocked windows and weak floor 
            boards; that the demolition process consisted of removing all 
            existing windows, interior walls, central boiler, electrical system 
            and plumbing system; that pursuant to the Altered Building 
            Application dated October 14, 1982, the rehabilitation included 
            combining the two existing buildings into one structure by removing 
            walls and erecting new walls and sealing up one entrance way; that 
            the rehabilitation included making major repairs to the newly 
            combined structure and revising the plumbing and heating systems; 
            that improvements were made to the common areas of the building and 
            to individual apartments; that within each apartment, the owner 
            installed new aluminum storm windows, new sheet-rock walls, 
            individual gas fired heaters, new individual electric hot water 
            heaters, new gas lines, new cold water risers, new electrical 
            meters, wires, sockets, circuit breaker boxes, plywood flooring, 
            new kitchens and new bathrooms; that in the public areas all 
            existing wood flooring was removed and new floors were laid, a new 
            steel staircase was built, new doors and new mailboxes installed, 
            and new sidewalk was laid; that the facade of the building was 
            restored and window guards were installed on the first and second

            floors; that the rehabilitation work was substantially performed by 
            the owner's employees and therefore many of the checks are payroll 
            checks made out to the owner's employees in their respective names; 
            that the total of such renovation costs was approximately 

            DOC. NO.: DJ 410258-RO

            $245,000.00; that a new Certificate of Occupancy was issued on June 
            21, 1984, confirming that the apartments are now classified as 
            Class "A" apartments; that in view of the scope of the 
            rehabilitation and improvements effectuated in the building, and in 
            light of the fact that such work performed was not merely cosmetic 
            but involved extensive repair or replacement of the major building 
            systems and structural changes throughout the building, and in 
            light of the fact that two vacant, decrepit buildings were combined 
            into one modern luxury housing accommodation, the work performed in 
            the building must be deemed a substantial rehabilitation rendering 
            the building exempt from rent stabilization pursuant to Section 
            5(a)(5) of the ETPA.

            With this answer, the owner submitted copies of cancelled checks 
            and approved alteration plans.

            By submission of June 10, 1988, the tenants asserted that the 
            rehabilitation evidenced by the owner's documentation does not 
            constitute a substantial rehabilitation so as to render the 
            building exempt from rent stabilization; that the work constituted 
            repair/renovation of existing systems in an old building, not a 
            substantial rehabilitation; that the tenants have not seen any of 
            the cost or invoice statements indicating the value of the 
            improvements or the specific work performed; and that the owner 
            represented to them that the apartment was rent stabilized before 
            they signed the lease, and that the lease contained a rent 
            stabilization rider.

            By notice dated July 11, 1988, the owner was requested to submit an 
            affidavit from the contractor setting forth in detail the nature of 
            the work performed including details as to which parts of the 
            building and apartments were replaced and which were left intact 
            from the prior structure.

            By submission of July 29, 1988, the owner submitted an affidavit 
            from the contractor, SAJ Construction Corporation, which included  
            the same description of the work performed as was stated in the 
            owner's answer of June 6, 1988, adding only that all existing 
            flooring was removed and that the wood floors in the public areas 
            were rebuilt with concrete.

            In response to a notice requesting additional information dated 
            June 23, 1989, the owner by letter dated June 30, 1989 advised that 
            the subject building was purchased by Habanot Construction 
            Corporation in April 1982 from 145 Attorney St. Corp; that in 
            February 1983 Disenhouse Associates (the current owner) purchased 
            the building from Habanot Construction Corp; that there is no 

            DOC. NO.: DJ 410258-RO

            relationship between Habanot Construction Corporation or Disenhouse 
            Associates and 145 Attorney St. Corp.; that Habanot Construction 
            Corp. and Disenhouse Associates are owned by the same principals; 
            that Habanot Construction Corporation purchased the building 
            totally vacant in 1982; and that upon information and belief, the 
            building was vacant for at least two years prior to 1982.

            In the order under appeal herein issued September 11, 1989, the 
            Administrator sustained the Administrator's orders of January 6, 
            1987 and February 1, 1987 and determined that the scope of the work 
            performed, although substantial, was not sufficient to qualify the 
            housing accommodations for exemption from rent stabilization.  The 
            Administrator further determined that the owner was required to 
            offer the tenants a renewal lease.

            In this petition, the owner reasserts that the work performed was 
            sufficient to exempt the building from rent stabilization and 
            restates the details of the work performed.  The owner asserts that 
            it performed a gut renovation including improvements to building- 
            wide systems, common areas, public hallways and individual 
            apartments; that complete renovation was required in order to 
            maintain habitability standards; that the two totally gutted 
            buildings were combined into one luxury building through demolition 
            and the creation of new walls, creating a new floor plan with 
            completely different layout of new apartments; that structural 
            changes were implemented wherein units were combined and all were 
            upgraded; that the Department of Buildings permit and altered 
            Building Application indicate that a complete rehabilitation was to 
            be performed; that, upon information and belief, prior to the 
            renovations the building at 182 Stanton Street contained stores and 
            one apartment on the first floor and
            three apartments on each of the next five floors and the building 
            at 184 Stanton Street contained stores on the first floor and four 
            apartments on the second floor through the  sixth floors; that 
            subsequent  to the  renovations there now exist 18 apartments 
            created from the two buildings; that the work performed was not 
            merely cosmetic but involved extensive repair

            and replacement of major building systems; that the plumbing, 
            electric and heating systems were all upgraded and/or newly 
            installed; that new and larger apartments were created with all new 
            bathrooms and kitchen facilities and appliances; that although upon 
            information and belief, no prior Certificate of Occupancy existed, 
            the "new" Certificate of Occupancy dated June 21, 1984 was 
            submitted along with the Altered Building application which 
            describes the prior layout of the two buildings for comparison; and 

            DOC. NO.: DJ 410258-RO

            that the owner acted in good faith in undertaking the 

            The owner also asserts that by order issued on February 3, 1989 
            under Docket Number BD 410145RV, in a case involving a complaint of 
            owner's failure to renew lease filed by another tenant in the 
            subject building, the Administrator determined that the subject 
            building is exempt from rent stabilization based on the substantial 
            rehabilitation and the owner was not required to offer the tenant 
            in that case a renewal lease.  The owner states that, upon 
            information and belief, that order has not been appealed and that 
            the Administrator failed to follow that order, resulting in 
            outstanding contradictory orders.

            In answer to this petition, the tenants assert, among other things, 
            that the work performed was inadequate.  Specifically, the tenants 
            assert that the installation on the outside walls is not 
            sufficient, allowing cold drafts and outside noises to enter the 
            apartments; that drafts also enter the apartments around windows, 
            around electric outlets on outside walls, around the gas fired 
            heaters installed in the windows, and through holes in the exposed 
            brick walls; that all walls were not sheet-rocked, as claimed by 
            the owner, but rather some walls were left unfinished; that 
            insulation between floors is non-existent; that the flooring in the 
            apartments is made of thin, unfinished plywood, the floors are 
            uneven, not level, and weak, and the original beams underneath the 
            plywood may be the problem; that flooring in the hallways and on 
            the stairs is made of uneven concrete, and the stairway railing is 
            made of iron which has never been painted; that the gas fired 
            heaters are not adequate and are not maintained; that the skylight 
            on the roof leaks into the hallway during rainstorms; and that 
            walls and ceilings are not flush, nor
            are the floors and walls, which allows dirt and cement pieces to 
            fall from the apartments above.

            The tenants question whether it is possible for a complete 
            rehabilitation of 2 buildings to take place within a 10 month 
            period, noting that the Altered Building Application is dated 
            October 14, 1982 and the first tenants moved in during August of 

            The tenants further dispute the owner's suggestion that the 
            building is a luxury building, stating that, among other things, 
            the building is not properly maintained; appliances were not 

            DOC. NO.: DJ 410258-RO

            provided by the owner, rather the tenants were offered rebates 
            toward the purchase of appliances; the fixtures in the bathrooms 
            and kitchens are not of good quality; and the general workmanship 
            throughout the building is inferior.  The tenants submit 
            photographs to evidence the condition of the apartment and 
            building.  The tenants question the owner's good faith in 
            undertaking the rehabilitation.

            In reply to the tenants' answer the owner asserts, among other 
            things, that the work performed has been documented and shown to be 
            performed in a workmanlike and professional manner; that the 
            tenants' assertions with respect to various deficiencies are 
            unsubstantiated; that the issuance of the Certificate of Occupancy 
            on June 21, 1984 indicates that the building had passed all City 
            inspections satisfactorily; that all leaks and drafts have been 
            investigated and corrected where necessary; that the tenants' other 
            allegations with respect to various services are unfounded; that 18 
            heating units have been overhauled and serviced and are in perfect 
            working order, and the balance will be serviced over the course of 
            the next few months; and that the tenants have raised no points 
            which would warrant a finding that the building is subject to rent 
            stabilization as these issues are either irrelevant or 

            By notice dated September 16, 1991, the owner was requested to 
            indicate whether the rehabilitation of the building included 
            replacement of the roof.

            By response dated October 7, 1991, the owner submitted an affidavit 
            from the construction manager indicating that a new roof covering 
            the entire roofing area of the two buildings was laid down as part 
            of the rehabilitation of the building.

            A copy of the owner's October 7, 1991 submission was forwarded to 
            the tenants for comment.  In response, the tenants assert that no 
            previous documents submitted by the owner mention the installation 
            of a new roof; that the construction manager states in the 
            affidavit that he cannot provide any documentation regarding the 
            installation of a new roof; that the skylights in sixth floor (top 
            floor) apartments appear to be the original skylights in the 
            building; and that there have been problems with leakage during 
            rainstorms in the top floor apartments coming from the roof and 
            around the skylights since the completion of the renovation in 

            DOC. NO.: DJ 410258-RO

            An inspection of the subject building, including 9 of the 18 
            individual apartments, was conducted on October 16, 1991 by DHCR 
            staff members which indicated that the subject building had been 
            rehabilitated and that the work included the following:  within the 
            individual apartments - new bathrooms with new tile walls and 
            floors and new plumbing fixtures; new individual electric hot water 
            heaters, gas fired heaters and wall mounted space heaters; new 
            electric wiring, outlets and circuit breaker panels; new plywood 
            floors and sheetrock walls; new kitchens with new sink and base 
            cabinets, tiles floors and countertops; and new steel entrance 
            doors;  building-wide - in the public halls, new flooring, stairs, 
            railings, walls and ceilings; bell, buzzer and intercom system; 
            mail boxes, aluminum/glass vestibule and entrance doors; new 
            aluminum windows building-wide; in the basement, new electric 
            service room with main service, individual meters and electric 
            risers; new gas meter room with individual meters and new gas pipe 
            risers to apartments; separate laundry room with washers and 
            dryers; all basement walls had a new cement stucco finish over 
            existing brick work.

            After a careful consideration of the evidence of record, the 
            Commissioner is of the opinion that this petition should be 

            The Commissioner finds that, based on the evidence of record as to 
            the nature and scope of the work performed both building-wide and 
            to individual apartments, the work performed constitutes a 
            substantial rehabilitation as contemplated by Section 5a(5) of the 
            ETPA and Section 2520.11(e) of the Rent Stabilization Code and 
            therefore the subject building is exempt from rent stabilization.

            The record demonstrates that the rehabilitation was commenced in a 
            vacant building that was in a substandard or seriously deteriorated 
            condition; that a Certificate of Occupancy dated June 21, 1984 was 
            issued for this building (originally constructed circa 1900) 
            showing 18 new Class A dwelling units-- thus furthering the 
            laudable social policy of adding upgraded and usable dwelling units 
            to the housing stock; that the rehabilitation work began with a 
            "gut demolition" in that the major building-wide systems (such as 
            plumbing, heating, roof, windows, electrical, etc.) and components 
            within the individual housing accommodations (such as kitchens, 
            bathrooms, floors, ceilings, and non-loadbearing walls, etc.) were 
            replaced or improved; that the owner obtained a Department of 
            Buildings permit and approved alteration plans; that two buildings, 
            each containing stores on the first floor and apartments above, 

            DOC. NO.: DJ 410258-RO

            were combined into one completely residential building by removing 
            some walls, erecting new walls, and sealing up one entrance way; 
            that the owner submitted affidavits from the contractor attesting 
            to the nature and scope of the work performed supported by 
            cancelled checks for work performed; and that the work performed 
            was verified by the Division's own on-site inspection.

            The Commissioner is cognizant of the tenants' allegations as to 
            inadequacies in some of the work performed, as noted above, and of 
            the inspectors' findings of unworkmanlike installation of flooring, 
            and cracked exterior masonry.  However, when the overall nature and 
            scope of the rehabilitation project is considered, the nature of 
            those isolated problems does not give rise to a finding that a 
            substantial rehabilitation of the subject structure was not 

            Regarding the order issued under Docket Number BD 410145RV which is 
            cited by the owner as determining that the subject building is 
            exempt from rent stabilization, it is noted that that determination 
            did not address the issue of substantial rehabilitation but was 
            improperly based on Administrative Appeal Docket Number ARL 4590Q, 
            which determined that an unrelated building was exempt from rent 

            THEREFORE, in accordance with the Emergency Tenant Protection Act 
            and the Rent Stabilization Law and Code, it is

            ORDERED, that this petition be and the same hereby is granted, the 
            Rent Administrator's order issued September 11, 1989 be and the 
            same hereby is revoked and it is found that the subject building is 
            exempt from rent stabilization.  The tenants' lease renewal 
            complaint be and the same hereby is terminated.


                                               ELLIOT SANDER
                                               Deputy Commissioner


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