Adm. Review Docket No.: EH 830131 RO

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

          ----------------------------------X SJR 6106
           APPEAL OF                            DOCKET NO.: EH 830131 R0
             126 FRANKLIN AVENUE ASSOCIATES      
                                               DRO DOCKET NO.:             
                               PETITIONER             NDG 8-1-0-056 OM
           ----------------------------------X TENANT: VARIOUS                   


           This Order and Opinion is issued after an order of the Supreme 
           Court, County of Westchester, Justice LaCava, dated         
           February 21, 1992, which ordered remit of an Article 78 Proceeding 
           and directed the Division to reconsider its former Order and 
           Opinion issued on May 29, 1991, upon which the Court proceeding was 
           based, relating to various apartments at 126 Franklin Avenue, New 
           Rochelle, New York.

           The Commissioner has reviewed all of the evidence in the record and 
           has carefully reconsidered that portion of the record relevant to 
           the issues raised by the administrative appeal and remaining to be 
           resolved on remit from the Court.

           The issues in this proceeding are whether or not the effect of the 
           subject work inured to the benefit of all of the tenants and 
           whether the nature and extent of said work was such as would 
           qualify it as a major capital improvement (MCI).               

           The owner commenced this proceeding on December 4, 1986, 
           by filing an application to increase the rentals for rent 
           stabilized apartments based on the cost of excavating and repairing 
           drains, erecting a two foot high, railroad tie, retaining wall and 
           repaving the building's  outdoor parking lot, which contains 28 

          Adm. Review Docket No.: EH 830131 RO

           parking spaces. The owner claimed costs of $ 22,760.00 for this 
           work. In the application, the owner indicated that the complex 
           contains forty-four rent stabilized apartments. The application 
           also indicated that indoor parking was also provided; that out of 
           the total number of indoor parking spaces (which was not 
           specified), fourteen were rented to tenants; and that of the 
           twenty-eight outdoor parking spaces, twenty were then rented to 
           tenants, four were vacant and four were reserved for visitors. 

           Several tenants filed individual answers opposing the application. 

           In the appealed order, the Administrator found that the work done 
           did not constitute a major capital improvement in that it did not 
           constitute a structural change or replacement of a major building 
           system; and, in addition, because the work done did not inure to 
           the benefit of all of the tenants.

           In the Petition for Administrative Review, the owner, in substance, 
           challenges the Administrator's findings that both by the very 
           nature of the work and the fact that said work did not effect an 
           installation which inures to the benefit of all of the tenants, the 
           cost of the said work does not qualify to entitle the owner to a 
           rent increase based on the installation of a major capital 

           Ten tenants filed answers opposing the owner's Petition. Four of 
           these specifically denied that any parking spaces in the outdoor 
           lot are reserved for visitors.

           In an order and opinion issued May 29, 1991, the Commissioner 
           denied the owner's Petition on the ground that the subject work did 
           not inure to the benefit of all of the tenants.

           Thereafter, the owner filed a Petition in the Supreme Court for 
           Westchester County seeking a review of the Commissioner's Order and 
           Opinion under Article 78 of the New York Civil Practice Law and 
           Rules (126 Franklin Avenue Associates v. New York State Division of 
           Housing and Community Renewal, Supreme Court, Westchester County, 
           Index Number 11588/91). On February 21, 1992, the Hon. John R. 
           LaCava, A.J.S.C., issued a Decision and Order remitting the matter 
           to the Commissioner with the directions that the Commissioner 
           conduct fact-finding on the question of the extent to which the 
           newly resurfaced outdoor lot is actually utilized by the tenants 
           and their guests; and that, in the order and opinion to be issued 
           upon remit, the Commissioner specifically address the issue of 
           whether the nature of the work herein is such as to qualify it as 

          Adm. Review Docket No.: EH 830131 RO

           a major capital improvement. 

           Pursuant to the aforesaid Decision and Order, by written notice, 
           the Commissioner afforded all of the parties the opportunity to 
           submit whatever arguments and/or evidence they wished on the issues 
           as to which the Court had directed the Commissioner to conduct 
           fact-finding; and to specify the number of occasions, if any, on 
           which the tenants, and/or their guests, of each of the forty-four 
           apartments in the subject building have used the outdoor parking 
           lot since its repaving. 

           The owner's response to the aforesaid notice indicates that twenty- 
           two tenants rent twenty-six of the spaces in the outdoor lot and 
           that two parking spaces (not four, as the owner had previously 
           indicated) in the outdoor lot are reserved for visitor 
           parking__with a two hour limit thereon. The tenants' responses in 
           no way contradict the owner's response except that one tenant 
           alleges that cars are left for days in the visitor parking spaces; 
           that is, the use of said spaces is not policed by the owner.

           Based on the responses to the aforesaid written notice, 
           particularly the owner's, the Commissioner finds that only twenty- 
           two of the forty-four tenants in this building utilize the outdoor 
           parking lot and that only two spaces in that lot are, in some 
           fashion, reserved for the use of tenant visitors. With respect to 
           the benefit inuring to all of the tenants, the Commissioner 
           concludes that the only benefit half of the tenants (the half that 
           does not have any parking spaces in the outdoor lot) could be said 
           to derive from the outdoor lot rests in the availability of the two 
           visitor parking spaces. The Commissioner finds that said benefit is 
           so diminutive (only two spaces to accommodate all of the social 
           callers and tradespeople forty-four tenants may have visiting at 
           any given time) and speculative (no tenant in this building can 
           tell a prospective visitor that that visitor has a reasonable 
           prospect of being able to use either of the two visitor spaces at 
           any given time) as to constitute no benefit. The Commissioner does 
           not believe that the statutes and regulations which provide for an 
           MCI rent increase can be construed so as to require that that half 
           of the tenants in this building who derive such an illusory benefit 
           from this work must pay for it, in perpetuity, at a cost of        
           $ 22,760.00. Therefore the Commissioner finds that the effect of 
           the work done does not inure to the benefit of all of the tenants 
           and the Administrator's denial of the owner's application  should 
           be affirmed.     

           The Commissioner notes that in order for work to qualify as a major 
           capital improvement, the nature and extent of the work must be such 
           as to qualify it and the effect of the work must inure to the 
           benefit of all of the tenants. As indicated above, the work herein 

          Adm. Review Docket No.: EH 830131 RO

           does not inure to the benefit of all of the tenants. Therefore, 
           even if the nature and extent of the work had been such as would 
           otherwise have qualified it as a major capital improvement, the 
           Commissioner would still, as indicated above, deny the owner's 
           Petition and affirm the Administrator's order.

           Judge LaCava's Decision and Order directs the Commissioner to 
           address the question as whether the nature and extent of the work 
           performed would, all other things being equal, have qualified the 
           work herein as an MCI. Having been so directed, the Commissioner 
           will address that question. The Commissioner  finds that the nature 
           and extent of the work, as indicated in the application, were not 
           such as would qualify for a major capital improvement.

           Clearly, the resurfacing of the outdoor parking lot was repair work 
           and as such it would not qualify for an MCI rent increase. The work 
           done consisted of applying to the surface of the existing parking 
           lot foundation a new, two inch thick (before compression) coating 
           (the contractor referred to it in the work proposal submitted by 
           the owner as a "cap") of asphalt. That coating does not constitute 
           the load bearing ( or structural) component of this outdoor parking 
           lot system. It may be that if the pavement in a given outdoor 
           parking lot is removed down to the loose soil and replaced with all 
           of the required layers of load bearing material (like concrete) and 
           then coated with a thin layer of asphalt, that the cost of that 
           coating would be a proper element of the cost of the whole project; 
           but the essence of the project would be the replacement of the 
           entire parking lot system of pavement down to the earth beneath it. 

           As to the retaining wall, the Commissioner finds that the 
           installation of a retaining wall composed of railroad ties is not 
           a structural component of the outdoor parking lot. It is more in 
           the nature of a component of the landscaping scheme. Therefore the 
           cost of its installation would not qualify for an MCI rent 

           As to the repair work on the drain areas and the replacement of 
           three tanks, the work on the drain area would not qualify for an 
           MCI increase because it must, based on this record, be taken for 
           what the contractor's proposal described it to be: repair work; as 
           to the replacement of the three tanks, the owner's application does 
           not describe the nature of that work nor break out the cost of the 
           three replacement tanks in such a fashion as to permit the 
           Commissioner to determine whether or not the replacement of the 
           three tanks, on its own, would qualify for an MCI increase. Since 
           the burden of proof in that regard is on the owner, the 
           Commissioner finds that no MCI increase could be granted upon this 
           application based on the cost of the installation of the three 
           tanks, assuming, for the sake of argument, that that work would 

          Adm. Review Docket No.: EH 830131 RO

           otherwise qualify for an MCI increase.

           Therefore, the Commissioner finds that the Petition should be 
           denied and the Administrator's order should be affirmed.

           THEREFORE, in accordance with all of the applicable statutes and 
           regulations, it is

           ORDERED, that this Petition 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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