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
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IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.: DC 430024-RT
:
44 EAST 67TH STREET TENANTS' RENT ADMINISTRATOR'S
ASSOCIATION DOCKET NO.: AC 430067-OM
PETITIONER :
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ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
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
inconsistencies:
(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
owner.
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
contractor.
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
conditions.
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
application.
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
denied.
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.
ISSUED:
JOSEPH A. D'AGOSTA
Acting Deputy Commissioner
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