DOC. NO.: DJ 410258-RO
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 S.J.R. 5723
IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.: DJ 410258-RO
DISENHOUSE ASSOCIATES, : DRO DOCKET NOS.:
PETITIONER : CA 410032RP/
------------------------------------X L000030UC/L002420RV
ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
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,
1984.
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
rehabilitation.
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
1983.
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
unsubstantiated.
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
1983.
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
granted.
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
accomplished.
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
stabilization.
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.
ISSUED:
ELLIOT SANDER
Deputy Commissioner
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