DK 430026-RT


                                  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. DOCKET NO.: 5758
          IN THE MATTER OF THE ADMINISTRATIVE     ADMINISTRATIVE REVIEW
          APPEAL OF                               DOCKET NO.:   
                                                  DK 430026-RT             
                      JERRY JONTRY,               RENT ADMINISTRATOR'S
                                                  DOCKET NOS.:
                                                  DD 430078-RP;  
                                  PETITIONER      AB 410083-OM
          ----------------------------------x


            ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW   


          On November 20, 1989, the above-named tenant,  filed  a  petition
          for administrative review of an order issued on October 25, 1989, 
          by a Rent Administrator concerning various housing accommodations 
          in the premises known as 440 East 57th Street, New York, New York 
          wherein the Rent Administrator determined that the owner w s  en-
          titled to a rent increase based  on  major  capital  improvements
          (MCI).

          Subsequent thereto, the  owner  commenced  a  proceeding  in  the
          Supreme Court pursuant to Article 78 of the  Civil  Practice  Law
          and Rules seeking an order, in the nature of mandamus  to  direct
          the Division of Housing and Community Renewal (DHCR) to  issue  a
          determination regarding the petition  for  administrative  review
          (PAR).  On August 19, 1991 the Court, Sklar, J., issued an  order
          directing the DHCR to determine the PAR within ninety days.

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

          The owner commenced this proceeding on February 6, 1986 by filing 
          an application  for  a  rent  increase  based  on  major  capital
          improvements, to wit -  mobilization,  various  itemized  masonry
          work, tiles, recaulking, cleanup and engineering at a total  cost
          of $502,329.00.


          The owner certified that on April 7, 1986 it served  each  tenant
          with a copy of the application and placed a copy  of  the  entire
          application including all  required  supplements  and  supporting
          documentation with the resident  superintendent  of  the  subject
          building.

          The tenants' association, by its attorney, interposed  an  answer
          to the owner's application raising eleven separate objections  to
          the rent increase.







          DK 430026-RT

          On January 11, 1989, the Rent Administrator issued an order  here
          under review finding that some of the  work  qualified  as  major
          capital improvements, determining that the  application  complied
          with the relevant laws and regulations based upon the  supporting
          documentation submitted by the owner,  and  allowing  appropriate
          rent increases for rent stabilized apartments.  

          Of the $502,329.00 claimed by the owner, $284,429.00 was approved 
          as qualifying for major capital improvement rent increases.   The
          remaining costs were disallowed.

          Various tenants and the owner filed petitions for  administrative
          review of the MCI rent increase order.  The petitions  were  con-
          solidated.

          On appeal, the tenants contended in substance, that:

               1.   The work done  did  not  constitute  major  capital
                    improvements but was normal maintenance and  repair
                    work made necessary by the owner's neglect;

               2.   The masonry repair work was needed to preve t  law-
                    suits by pedestrians injured by falling masonry;

               3.   The repair job on the main  roof  was  done  poorly
                    and  structural  damage  and  defective  conditions
                    still existed on the premises;

               4.   Some residents were not charged for the MCI  (co-op
                    owners);

               5.   The upper floor  tenants  still  complain  of  roof
                    leaks; and 

               6.   An engineer's  report  prior  to  the  co-operative
                    conversion  of  the  building  (dated  February  9,
                    1981), showed a defective roof which should have


                    been repaired prior to the conversion.  In  support
                    of their contentions, the tenants submitted a  copy
                    of the inspection report,  which  stated  that  the
                    cost range for the roofing work  in  questions  was
                    $49,500 to $60,000.

          On its appeal, the owner contended in substance, that the  Admin-
          istrator should have allowed total costs of $502,329.00  for  the
          work stating that the installation of  quarry  tiles  on  terrace
          roofs, mobilization and removal of scaffolding,  clean-up  costs,
          and engineering fees all qualified for the MCI increases.   Owner
          argued that the replacement of the terrace roofs was part of  the
          replacement of the main roof area, and that  the  other  expenses
          qualified since they were incurred for work necessary to  install
          the improvements.

          On April 7, 1989 the Commissioner issued an order and opinion  in
          Docket No. DB 410007 et al, remanding the proceeding to the  Rent







          DK 430026-RT
          Administrator for further processing.

          On October 25, 1989 the  Rent  Administrator  in  Docket  No.  DD
          430078-RP issued an Order Pursuant to Remand, here  under  review
          finding that $469,000 of the  work  qualified  as  major  capital
          improvements determining that the application complied  with  the
          relevant laws and regulations based upon the supporting  documen-
          tation submitted by the owner, and ordering an increase of $22.72 
          per room per month for rent stabilized apartments.

          The instant petition seeking review  of  the  Order  Pursuant  to
          Remand (DD 430078-RP) was filed by the tenant of  Apartment  12-B
          on his own behalf and, purportedly, on beha f  of  "various  ten-
          ants", a list of whom is attached to the petition, but the tenant 
          of Apartment 12-B did not submit at the time of the filing of the 
          PAR written evidence of authorization to act in su h  representa-
          tive capacity for the purpose of  filing  the  PAR.   The  tenant
          requests that the Rent Administrator's order be vacated  alleging
          that the tenants have not been given  an  opportunity  to  secure
          access to the owner's entire submission  despite  their  requests
          for same, that a portion, if not all, of the funds used  for  the
          improvements were from the  reserve  funds  of  the  co-operative
          apartment corporation, and  that  the  tenants  were  denied  due
          process by reason of the fact that their former  attorney  joined
          the law firm of the owner during  the  pendency  of  the  owner's
          application without notice to or permission of the tenants.





          In answer to the tenant's petition the owner alleges  inter  alia
          that the tenants' allegation - that they were deprived  of  their
          rights to review the Division's file - is being  raised  for  the
          first time on appeal and that the tenants did not make a  Freedom
          of Information Law (FOIL)  request  to  review  said  file.   The
          owner further contends that no Reserve Funds were used, that  the
          Rent Administrator raised this issue  during  the  original  pro-
          ceeding and resolved the issue in favor of the  owner,  and  that
          the tenant has offered no evidence that Reserve Funds were  used.
          The owner states that the tenants' allegation that a conflict  of
          interest occurred by virtue of their  former  attorney's  joining
          the law firm of the owner without  their  permission  is  without
          merit.  Finally, the owner argues that the petition is  defective
          and should be dismissed in that it was executed  by  an  attorney
          who failed to submit written evidence of authorization to act  in
          such a capacity pursuant to  Section  2529.1(b)(2)  of  the  Rent
          Stabilization Code.

          After careful consideration the Commissioner is  of  the  opinion
          that this petition should be denied.

          The Commissioner notes that on April 7, 1986 the owner  certified
          that it served each tenant with a copy  of  the  application  and
          placed a copy of the entire application  including  all  required
          supplements  and  supporting  documentation  with  the   resident
          superintendent of the subject  building.   The  records  of  this
          Division do not reveal that the tenants ever filed a  Freedom  of







          DK 430026-RT
          Information Law (FOIL) request nor does the  tenant  even  allege
          that a request to inspect documents pursuant to FOIL was made  at
          any time.  Accordingly, the Commissioner finds that  the  tenants
          were not denied due process in the proceedings based on the alle 
          gation that they were not given the opportunity to secure  access
          to the owner's submission.

          On the issue of reserve funds, the  Commissioner  notes  that  an
          examination of this issue by the Rent Administrator  resulted  in
          the determination that reserve funds were not  used  to  pay  for
          major capital improvements.   The  Commissioner  notes  that  the
          tenant has offered no evidence to substantiate the allegation.

          Accordingly,  the  tenant  has  offered  insufficient  reason  to
          disturb the Rent Administrator's determination on this issue.

          On the issue of an alleged conflict of interest on  the  part  of
          the tenants' former  attorney  occasioned  by  the  fact  of  her
          subsequent coincidental employment with the owner's firm, the 



          Commissioner notes that the  petitioner  has  not  indicated  any
          breach of fiduciary duty or revelation of confidential informa-
          tion which may have prejudiced the tenants'  case  nor  does  the
          record reveal that any confidential information was  relied  upon
          by the administrator.  The petitioner has not alleged  any  facts
          or offered any evidence to suggest a violation  f  any  attorney-
          client privilege or other circumstance constituting a  denial  of
          due process.  It is finally noted that apart from the  allegation
          of a denial of due process, the conflict of  interest  allegation
          made by the petitioner is beyond the  scope  of  jurisdiction  of
          this Division and this order is without prejudi e  to  the  peti-
          tioner's right to seek, other relief in an appropriate  forum  if
          facts, additional to those contained in the record, so warrant.

          Rent increases for major capital improvements are  authorized  by
          Section 2522.4 of the Rent Stabilization Code for rent stabilized 
          apartments.  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.

          The record in the instant case indicates that the owner correctly 
          complied with the application  procedures  for  a  major  capital
          improvement and the  Rent  Administrator  properly  computed  the
          appropriate rent increases.  The tenant has not established  that
          the increase should be revoked.


          THEREFORE, in accordance with  the  Rent  Stabilization  Law  and
          Code, it is         

          ORDERED, that this petition be, and the same  hereby  is,  denied
          and that the Rent Administrator's order be, and the  same  hereby
          is, affirmed.








          DK 430026-RT

          ISSUED:


                                                                           
                                                ELLIOT SANDER
                                                Deputy Commissioner


                                          
    

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