OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                               JAMAICA, NEW YORK 11433

      APPEAL OF                              DOCKET NO.: DC 430024-RT
         ASSOCIATION                         DOCKET NO.: AC 430067-OM
                            PETITIONER    : 


      The above-named petitioner-tenants timely refiled an administrative appeal 
      against an order issued on August 17, 1989 by a Rent Administrator (92-31 
      Union Hall Street, Jamaica, New York) concerning the housing accommodations 
      known as 44 East 67th Street, New York, New York, various apartments, 
      wherein the Administrator granted major capital improvement (MCI) rent 
      increases for the controlled and stabilized apartments in the subject 
      premises based on pointing and waterproofing at the subject premises.

      A former owner commenced the proceeding below by filing with the Division, 
      on March 25, 1986, a rent increase application based on pointing work at 
      the subject premises at a claimed cost of $45,000.00.  Thereafter, the then 
      current owner adopted the application by certifying service of the same on 
      the tenants on September 19, 1986.

      In response to the application, the petitioner-tenants association filed an 
      answer on February 12, 1987 stating the following:

           1.  Owner's major capital improvement reveals the following

                (a)  the contract was executed on December 7, 1983, 
                     the same day the application indicates that work
                     commenced, but not completed until the end of 
                     August 1984, some eight months later.

                (b)  it is petitioner's belief that Solil, in whose
                     name the MCI application was made and who 
                     contracted for the MCI work, had sold the 
                     subject premises and is therefore no longer
                     an interested party and, in addition, on the
                     service date of the application Solil was not the

           2.  No contract was filed with the subject application and thus
               substantiation of the work performed is lacking.

           3.  Cancelled checks submitted by the owner with the application
               fail to show full payment pursuant to the terms of Nick Paint
               Co. Inc's proposal.


          ADMIN. REVIEW DOCKET NO.: DC 430024-RT

           4.  The tenants' association engineering report (dated November
               18, 1981) recommended more extensive work to correct the leak
               conditions than was actually performed by the owner's

           5.  On information and belief, many tenants are continuing to
               experience water leaks.

           6.  The work performed by the previous owner failed to correct
               the severe conditions the owner neglected over the years and
               constituted no more than a repair.

           7.  In addition various tenants filed individual answers stating,
               in substance, that pointing work was not performed below the
               tenth floor since leaks were confined to the upper floors;
               that tenants living on the lower floors are asked to pay for
               an improvement not directly benefitting them; that the 
               penthouse terraces create a back-up and must be repaired
               before an increase is granted; that the condition of the
               building must have been reflected in the purchase price and
               therefore the tenants should not now be made to bear the 
               burden of an increase in their rents; and that safety
               repairs, as described in the engineering report, do not
               qualify as a MCI, especially when the owner caused the

      On August 17, 1987 the Rent Administrator issued the order here under 
      review, granting the major capital improvement rent increase application 
      for the full cost of the pointing and waterproofing expended by the former 
      owner.  Said order was predicated upon the substantiating documentation 
      submitted in support of the application.

      In this Petition for Administrative Review,the petitioner tenants' 
      association alleges,in substance, the following:

           1.  the owner failed to file a contract with its MCI application,
               which would substantiate the work itemized on the 

           2.  the cancelled checks submitted do not indicate that full
               payment had been made by the owner.

          ADMIN. REVIEW DOCKET NO.: DC 430024-RT

           3.  the checks made payable to "Nick Paint Co." were written on
           Southern Associates' account which is believed to be an 
               affiliate of the named applicant.

           4.  proof should have been required of Solil's relationship to
               Southern Associates and proof that Southern Associates had
               no relationship to Nick Paint Co. Inc. should also have 
               been required.


          ADMIN. REVIEW DOCKET NO.: DC 430024-RT

           5.  if Solil, the applicant, did not pay the contractor, then it
               did not have standing to apply for an MCI rent increase.

           6.  that many tenants are continuing to experience water 
               seepage into their apartments.

           7.  the tenants living on the lower floors did not benefit from
               the "pointing and waterproofing" which was restricted to the
               upper floors which is indicative that the work was not 
               building-wide, and thus, does not qualify as an MCI.

           8.  the diagram submitted with the application shows only one
               side of the building and also fails to indicate where the 
               work was performed.

           9.  an inspection of the premises was warranted to determine
               quality of the workmanship prior to granting the MCI rent
               increase, and thus, the Rent Administrator erred in issuing  
                    the order without further investigation.

      The owner did not respond to the tenants' petition.

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

      It is the judicially recognized position of the Division that comprehensive 
      pointing and waterproofing, as necessary, on exposed sides of a building 
      qualifies as a major capital improvement for which a rent increase 
      adjustment may be warranted, if the owner otherwise so qualifies.  The work 
      performed must be greater than mere spot patching to repair current leaks 
      or trouble spots so as to be in the nature of an improvement or betterment 
      of the structure.  (Accord: SJR 4599; DB 430282-RT).

      A review of the record in this proceeding discloses that the then owner of 
      the subject premises submitted in support of the application a copy of an 
      accepted proposal/contract for the work in question providing for pointing 
      of 46,000 square feet of brickwork, the contractor's certification, 
      cancelled checks totalling $45,000.00 payable by Southern Associates (the 
      registered owner of the subject premises as of April 1, 1985), a statement 
      from the contractor to the effect that the building was examined prior to 
      the commencement of work and all necessary work was performed, and a 
      diagram which shows by North "N", South "S", East "E" and West "W" 
      designations as well as numbered references to the contractor's proposal, 
      the areas where work was performed.

      The Commissioner is of the opinion that the tenants' allegation below "on 
      information and belief" of continued water seepage lacked specificity as to 
      apartment designation.  Furthermore, the unsubstantiated speculation as to 
      the absence of an arms length transaction is insufficient without any 
      supporting documentation, to overcome the evidence submitted by the owner.


          ADMIN. REVIEW DOCKET NO.: DC 430024-RT

      Accordingly, the Commissioner finds that the Administrator properly found 
      that the pointing work in question qualified as a major capital 
      improvement; and that an appropriate rent increase was granted therefore 
      based on the proven cost of same.

      In this respect the Commissioner notes that Division records disclose that 
      there were no rent reduction orders outstanding against the subject 
      premises based on the owner's failure to maintain services of a building- 
      wide nature nor are any service complaints pending with the Division 
      despite the alleged "severe" problem with leakage (with the exception of 
      one unrelated individual apartment complaint filed more than six years 
      after the work in question was completed).

      THEREFORE, in accordance with the applicable provisions of the Rent and 
      Eviction Regulations for New York City and the Rent Stabilization Law and 
      Code, it is

      ORDERED, that this administrative appeal be, and the same hereby is denied; 
      and that the Administrator's order be, and the same hereby is affirmed.


                                           JOSEPH A. D'AGOSTA
                                       Acting Deputy Commissioner



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