EH 830227 RO
                                  STATE OF NEW YORK
                            OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                              JAMAICA, NEW YORK   11433

          ----------------------------------X     S.J.R. NO. 5746
          APPEAL OF                               DOCKET NO. EH 830227 RO

                 60-70 OWNERS CORPORATION,
                                                  DISTRICT RENT ADMINISTRATOR'S 
                                                  DOCKET NO. NEB 9-1-0015 OM

                                 RENT ADMINISTRATOR

          On August 23, 1990, the above-named  landlord  filed  a  petition
          for administrative review of an order issued on August 8, 1990 by 
          a District Rent Administrator concerning  various  accommodations
          in the premises known as 60-70 Locust Avenue, New  Rochelle,  New
          York  wherein  the  Rent  Administrator  denied  the   landlord's
          application  for  a  rent  increase  based  on  a  Major  Capital
          Improvement (MCI).

          Subsequent thereto,  the  petitioner  filed  a  petition  in  the
          Supreme Court pursuant to Article 78 of the  Civil  Practice  Law
          and Rules requesting  that  the  Court  direct  the  Division  to
          expeditiously  issue  a   determination   of   the   petitioner's
          administrative appeal.

          On July 10, 1991, an order was signed directing the  Division  to
          expeditiously determine the petitioner's administrative appeal.

          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 petition for review.

          On February 8, 1990, the landlord commenced  this  proceeding  by
          filing an application for a rent increase based on major  capital
          improvements, to wit:  pointing and waterproofing, new mailboxes, 
          upgrading elevators,  new  entrance  doors,  new  intercoms,  new
          windows, and a new roof at a total cost of $556,454.50.

          The owner certified that on March 9, 1990 it served all  affected
          tenants with a copy of the application and placed a copy  of  the
          entire  application  including  all  required   supplements   and
          supporting documentation with the resident superintendent of  the
          subject building.

          Tenants affected by the landlord's rent-increase application were 
          afforded an opportunity to interpose answers.   Numerous  tenants
          filed answers to the landlord's application stating, among  other

          EH 830227 RO
          things, that the subject building  had  undergone  a  cooperative
          conversion and that the sponsor had stated in its  offering  plan
          that the sponsor would perform all  the  enumerated  improvements
          "at its sole cost and expense".  Also submitted with their answer 
          was a letter to the tenants from their attorney, dated  March  2,
          1988, explaining to the tenants the status  of  the  negotiations
          with the sponsor.

          On July 24, 1990, the Division of Housing and  Community  Renewal
          (DHCR) received the landlord's reply  to  tenants'  answers.   It
          alleged that in the first amendment  to  the  offering  statement
          the phrase "at its sole cost and expense" clearly applied only to 
          the cooperative units.  It was further alleged that paragraph  VI
          of this amendment was a negotiated agreement between the  tenants
          and the sponsor that called for a phasing in of any MCI increase. 
          The landlord alleged that the intent of this paragraph was  clear
          and that it constituted exclusionary language so as to allow  the
          landlord to receive  an  MCI  rent  increase  for  rent-regulated

          In the order under review herein, issued on August 8,  1990,  the
          Administrator determined that the application  should  be  denied
          because the offering plan stated that the enumerated  work  would
          be done at the sponsor's "sole cost and expense".

          In its petition for administrative review, the landlord  restates
          the contentions made below and specifically points to DHCR Policy 
          Statement  89-9.   Policy  Statement  89-9  states  that  an  MCI
          application will be denied if the offering plan states  that  the
          improvements will be made at the "sole cost an  expense"  of  the
          sponsor.  However, Policy Statement 89-9 goes on to say  that  an
          exception will be made when the offering plan contains
          ..."addition   exclusionary   language   relating   to   an   MCI

          After careful consideration, the Commissioner is of  the  opinion
          that this petition  should  be  remanded  to  the  District  Rent

          The Commissioner is of the opinion that the offering statement 

          does  contain  exclusionary  language  which   allows   for   the
          cooperative sponsor  to  make  an  appropriate  MCI  application.
          Paragraph VI of the first amendment  to  the  offering  statement
          states that "[t]he Sponsor  agrees  to  phase  in  Major  Capital
          Improvement (MCI) increases over a four (4) year  period..."   In
          fact, in the tenant-supplied letter from their own attorney it is 
          stated, "Although the Sponsor refused to  waive  its  rights  for
          major capital improvement assessments to non-purchasers,  it  did
          agree to phase in the collection of same..."  The evidence in the 
          record clearly indicates that the sponsor  intended  to  and  did
          adequately protect its right to apply for an MCI rent increase by 
          virtue of the exclusionary language in the first amendment to the 
          offering statement.

          Accordingly, the Rent Administrator  must  further  process  this
          application determining the merits of each enumerated improvement 
          and calculating the appropriate amount of  a  rent  increase,  if

          EH 830227 RO

          THEREFORE, in accordance with the Emergency Tenant Protection Act 
          and the Tenant Protection Regulations, it is

          ORDERED, that  this  proceeding  be,  and  the  same  hereby  is,
          remanded  to  the  District  Rent   Administrator   for   further

                                                  ELLIOT SANDER
                                                  Deputy Commissioner

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