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

     APPEAL OF                              DOCKET NO.: EC-130402-RO
                                            DISTRICT RENT ADMINISTRATOR'S
       BIRCHWOOD ASSOCIATES,                DOCKET NO.: ZDB 130038-OM
                           PETITIONER    : 


     The above-named petitioner-owner timely  filed  an  administrative  appeal
     against an order  issued  on  February  15,  1990  by  the  District  Rent
     Administrator (Gertz Plaza, Jamaica, New  York),  concerning  the  housing
     accommodations known as 37-31 73rd Street, Jackson Heights, New York,
     various  apartments,  wherein  the  Administrator   denied   the   owner's
     application for major capital improvement (MCI)  rent  increases  for  the
     controlled and stabilized apartments in the subject premises based on  the
     installation of a new roof, parapet  repairs,  waterproofing,  insulation,
     new light fixtures in the hall, new hallway and  stairwell  fixtures,  and
     the painting of terraces and halls.

     The landlord commenced the proceeding below by filing its MCI  application
     in February of 1989.  In response  to  the  application,  various  tenants
     filed answers stating, among other things, that (I) The work  done  herein
     did not constitute  improvements  but  necessary  repairs;  and  (II)  The
     landlord undertook to do the work herein at its own expense as part of the 
     cooperative conversion of the  subject  premises.   In  support  of  their
     contentions, the tenants submitted a copy  of  a  portion  of  the  Fourth
     Amendment to the Cooperative Conversion Plan for the premises.

     The District Rent Administrator's order, appealed herein, stated that  the
     improvements claimed in the owner's application were those  set  forth  in
     the Cooperative Conversion Offering Plan whereby it was  represented  that
     the costs would be paid by the sponsor at its expense.  The District  Rent
     Administrator determined, therefore, that these costs cannot be passed  on
     to the tenants.  In addition, the order stated that  the  installation  of
     new light fixtures in the hall, new hallway and  stairwell  fixtures,  and
     the painting of terraces and hallways did not  constitute  MCI's  but  are
     considered to be repairs and maintenance.

     On appeal, the petitioner-owner states, in substance,  that  (A)  The  new
     roof, parapet repairs, waterproofing,  and  insulation  have  always  been
     considered as qualifying for an MCI; (B) The new  hallway  light  fixtures
     improved appearance, security, and energy conservation and should also  be
     considered as qualifying for an MCI; (C) The owner relied upon the  policy
     of the DHCR that existed at the time  of  the  repairs  and  installations
     herein; and (D) Any policy change  pertaining  to  a  building  undergoing
     cooperative conversion should not be imposed retroactively as it would  be
     a deprivation of the landlord's property without due process.


          DOCKET NUMBER: EC 130402-RO
     In response  to  the  owner's  petition,  various  tenants  filed  answers
     stating, in substance, that (1) The work done by the landlord  constituted
     necessary repairs;  and  (2)  The  Fourth  Amendment  to  the  Cooperative
     Conversion Plan stipulates that the work herein was  to  be  done  in  the
     building as a condition of going co-op.

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

     The Fourth Amendment to the Cooperative Conversion Plan  for  the  subject
     premises submitted by  the  tenants  (dated  March  3,  1987)  states,  in
     pertinent part, that the "Sponsor agrees to make,  at  its  cost,  certain
     additional improvements to the building including repair and  pointing  of
     parapets as needed, and installation of a new roof.   Sponsor  will  paint
     and/or wallpaper and install new lighting fixtures in the  lobby  and  all
     residential corridors in the building.  The lobby will be refurnished  and
     refurbished.  New carpet will be installed in the  residential  corridors.
     Sponsor will use best  efforts  to  complete  the  said  improvements  and
     repairs prior to the closing."

     DHCR Policy Statement 89-9 covers the situation where  the  offering  plan
     states that improvements will be made at  the  sponsor's  "sole  expense".
     The Policy Statement provides (in relevant part)  as  follows:   "Any  MCI
     application for a cooperative or condominium converted building, where the 
     offering plan includes  this  (or  similar)  language  without  additional
     exclusionary language relating to an MCI application, will  be  denied  to
     the extent that the costs for the improvements mentioned are  included  in
     the application."

     In this connection the Commissioner  notes  that  Policy  Statement  89-9,
     dated August 28, 1989, does not reflect a  change  in  policy  but  rather
     reflects a line of administrative rulings (AE  730001-RT;  ART  13,197-9-L
     and BL  420122-4-RT)  rendered  prior  to  the  issuance  of  this  policy
     statement which precluded major capital improvement rent  increases  where
     the sponsor undertook to perform the improvement  at  no  expense  to  the
     tenants or at the sponsor's sole cost and expense.

     In addition, despite the petitioner's non-specific contention of a  change
     in policy, no contrary policy of DHCR existed at the time the work  herein
     was done, and thus no showing has been made that the petitioner relied  on
     any contrary policy.

     On the basis of the entire evidence  of  record,  it  is  found  that  the
     Administrator's order is correct and should be affirmed.

     THEREFORE, in accordance  with  the  applicable  provisions  of  the  Rent
     Stabilization Law and Code, the Rent and Eviction Regulations for the City 
     of New York, and Operational Bulletin 84-1, it is


          DOCKET NUMBER: EC 130402-RO
     ORDERED, that the 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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