DHCR Decisions
EB 430246 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. 5982
IN THE MATTER OF THE ADMINISTRATIVE ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.: EB 430246 RO
40 CENTRAL PARK SOUTH, INC.,
DRO DOCKET NO.: CG 430133 OM
PETITIONER
----------------------------------X
ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
On February 20, 1990 the above named petitioner-owner filed a
petition for administrative review against an order issued on
January 25, 1990 by a Rent Administrator, Gertz Plaza, Jamaica,
New York concerning the housing accommodations known as 41 West
58th Street, New York, New York, wherein the Administrator
ordered a rent increase of $4.05 per room per month based on the
installation of a new roof.
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 administrative appeal.
The owner commenced this proceeding on July 21, 1988 by filing an
application for a rent increase based on the installation of a
Major Capital Improvement (MCI). Specifically, the owner
indicated that a new roof had been put on the building in
September 1986 at a cost of $56,175. The owner reported on the
application that as of June 31, 1988, the annual rent from the
building consisted of $450,670.44 from apartments and $431,202.12
from commercial units.
In computing the rent increase, the Administrator determined that
the commercial rents consisted of 49% of the total rental income
for the building and that the commercial tenants should bear 49%
of the cost of the roof. The remaining 51% was amortized over 60
months and the result divided by the number of rooms in the
residential units for a permanent rent increase of $4.05 per room
per month.
In the petition for administrative review, the owner asserts that
the method used by the Administrator to allocate costs between
residential and commercial tenancies is arbitrary and capricious
and not sanctioned by the Rent Stabilization Code. The owner
cites Sections 2522.4(a)(4) and (12) of the Code and claims that
these sections require that the total cost of the MCI be divided
by the number of rooms in the building. There is no basis for
allocating a portion of the cost to commercial tenants, according
EB 430246 RO
to the owner, and if such allocation is proper, it must be on a
square footage basis.
Several tenants answered the petition and urged that the
Administrator's order be affirmed.
After careful consideration of the entire evidence of record, the
Commissioner is of the opinion that the Administrator's order
should be affirmed.
It is noted at the outset that the Rent Stabilization Code
applies only to housing accommodations and not to commercial
units. The sections cited by the owner pertaining to the method
for computing the rent increase based on the installation of an
MCI do not specify how the total cost is to be determined in
cases where the building contains commercial units.
The Division has devised a uniform procedure for the computation
of allowable MCI rent increase adjustments. That procedure
allocates a portion of the cost of a MCI to commercial tenants
who benefit from the improvement based on the rental value of the
space occupied by the commercial tenants. (Accord: CB 430083
RO). Since commercial tenancies are not subject to regulation,
an owner has greater flexibility in adjusting commercial rents
to reflect increased costs or added improvements through
appropriate lease provisions that are not allowable for rent
regulated residential units.
THEREFORE, in accordance with the Rent Stabilization Law and
Code, it is
ORDERED, that this petition be, and the same hereby is, denied
and the Administrator's order be, and the same hereby is,
affirmed.
ISSUED:
------------------------
ELLIOT SANDER
Deputy Commissioner
|