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 ADMINISTRATIVE REVIEW
IN THE MATTER OF THE ADMINISTRATIVE DOCKET Nos.: FA210066RT,
APPEALS OF FA210078RT, FA210117RT,
VARIOUS TENANTS OF FA210432RT, FB210273RT,
160 OCEAN PARKWAY FB210274RT, FB210310RT
BROOKLYN, NEW YORK
RENT ADMINISTRATOR'S
DOCKET NO.: DC210129OM
PETITIONERS
-------------------------------------X
ORDER AND OPINION GRANTING PETITIONS FOR ADMINISTRATIVE REVIEW IN
PART
The above-named petitioner-tenants timely filed or re-filed
administrative appeals against an order issued on December 7, 1990,
by the Rent Administrator (92-31 Union Hall Street, Jamaica, New
York) concerning the housing accommodations known as 160 Ocean
Parkway, Brooklyn, New York, various apartments, wherein the Rent
Administrator granted major capital improvement (MCI) rent
increases for the stabilized apartments in the subject premises
based on the installation of new windows and a new intercom system
at the premises.
The Commissioner notes that the subject building is a cooperative.
In these petitions, the tenants contend, variously and in
substance, that the old windows needed repair, not replacement, and
the owner should not receive a rent increase for work performed to
correct defects, that the tenants were promised they would not have
to pay for windows, that the intercom did not need replacing, that
the new windows and the new intercom are defective, that the money
for the improvements came from "a reserve of a loan" and not from
maintenance payments, that the owner received a tax abatement for
the window installation, that the increase should not be permanent,
and that the increase is burdensome.
One tenant contends that the windows were not inspected, one tenant
complains that no hearing was held, and one tenant contends that
the room count for his apartment was incorrect.
ADMIN. REVIEW DOCKET NO. FA-210066-RT ET AL.
In response, the owner asserts, in substance, that the
installations qualify as major capital improvements, that
allegations of defective improvements were found to be invalid by
a DHCR inspector, that the money for the improvements came from a
working capital account funded from maintenance payments and not
from the reserve fund, that any reductions due to tax abatements
should be handled by the DHCR, and that it never meant to forgo
applying for an MCI rent increase.
After a careful consideration of the entire record, the
Commissioner is of the opinion that these petitions should be
granted in part.
Rent increases for major capital improvements are authorized by
Section 2522.4 of the Rent Stabilization Code for rent stabilized
apartments. Under rent stabilization, the improvement must
generally be building-wide; depreciable under the Internal Revenue
Code, other than for ordinary repairs; required for the operation,
preservation, and maintenance of the structure; and replace an item
whose useful life has expired.
It is the established position of the Division that the building-
wide installation of new apartment windows and/or public area
windows to replace windows which are 25 or more years old, and the
installation of a new intercom system constitute major capital
improvements for which a rent increase adjustment may be warranted,
provided the owner otherwise so qualifies.
The record discloses that the owner substantiated its application
in the proceeding below by submitting to the Rent Administrator in
support thereof copies of accepted contractor proposals, invoices,
contractors' certifications and cancelled checks for the
improvements in question. Physical inspections of the subject
premises revealed that the intercom system was working properly.
With regard to the tenants' contentions that the owner paid for the
improvements with a loan, the fact that an owner may have obtained
a loan and used such funds to pay for the improvements does not bar
an owner's entitlement to a major capital improvement rent
increase.
As to the tenants' contention that the owner received a tax
abatement which should have been taken into account, the
Commissioner notes that the owner's application for or receipt of
a J-51 tax benefit based on MCI installations does not preclude the
entitlement to a rent increase therefor. However, pursuant to the
Rent Stabilization Law, tenants of stabilized apartments may share
in such benefits, but only as to improvements commenced after June
28, 1988, as in the instant proceeding. The record herein fails to
indicate whether such benefits have been granted for the intercom
installation. Accordingly, the determination herein is without
prejudice to the rights of the tenants to make application to the
"Owner Individual Unit" of the DHCR for such rent adjustment as may
be warranted.
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ADMIN. REVIEW DOCKET NO. FA-210066-RT ET AL.
Regarding the contention that the MCI rent increase should not form
a permanent part of the rent structure, the Commissioner notes that
the permanent nature of an MCI increase has been upheld by the
Court of Appeals of the State of New York in the Matter of Ansonia
Residents Association v. DHCR.
As to the contention of various tenants that the MCI rent increase
is a hardship, the Commissioner is not unmindful of the possibility
that the rent increase may prove burdensome to some tenants.
However, the Commissioner is constrained by the applicable
statutory and regulatory provisions to grant such increases as are
warranted.
A tenant who has a valid Senior Citizen Rent Increase Exemption
Order (SCRIE) is exempted from that portion of the increase which
would cause the rent to exceed one-third of the tenant's household
monthly disposable income. A tenant who may be entitled to this
benefit may contact the New York City Department of the Aging by
calling (212) 240-7000.
Concerning the allegation of a room count discrepancy, the
Commissioner notes that the owner may not charge the tenant based
on a greater number of legal rooms for MCI purposes. This order is
issued without prejudice to the tenant filing a complaint with this
Division based on a rent overcharge, if the facts so warrant.
The Commissioner notes that in response to the MCI application,
several tenants asserted that the owner had promised that the
tenants would not have to pay for the window installation. In
support thereof, several tenants submitted copies of a letter
addressed to a tenant and signed by the prior managing agent (Jake
LaManna of LaManna & LaManna) in which he stated "As agreed upon,
we will come and repair your windows. When the new windows are
installed, you will not be charged for them." In reply, the owner
submitted a copy of a letter addressed to the apartment corporation
and signed by the current managing agent (Vincent LaManna of
LaManna & LaManna) in which he stated "...the letter signed by the
previous managing agent, Jake LaManna, regarding the new windows
were [sic] intended to mean that no tenant would have to pay an
initial charge for the installation of these windows. It did not
mean that a legal rent increase would not be forthcoming. Clearly
the tenants misunderstood his intentions."
Notwithstanding the owner's explanation of the intention behind the
prior managing agent's statement, the Commissioner is of the
opinion and finds that the owner, through its managing agent, made
an unconditional promise to install new windows at the subject
premises free of charge to all tenants.
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ADMIN. REVIEW DOCKET NO. FA-210066-RT ET AL.
In view of the foregoing, the Commissioner finds that such portion
of the MCI rent increase which related to the window installation
should be deleted from the Administrator's order and that the owner
is entitled to a rent increase for the intercom installation only,
in the amount of $0.31 per room, per month (approved cost of
intercom $3,231.25 ö 60 months = $53.85 ö 172 rooms = $0.31),
effective for the subject rent stabilized apartments as of July 1,
1989, the first rent payment date one month after completion of the
filing of the application by service of notice of same on the
affected tenants.
THEREFORE, in accordance with the provisions of the Rent
Stabilization Law and Code, it is
ORDERED, that these petitions be, and the same hereby are, granted
in part, and the order of the Rent Administrator be, and the same
hereby is, modified in the manner and to the extent indicated above
to delete so much of the rent increase as pertained to the window
installation; and that as so modified said order be, and the same
hereby is affirmed; and it is, further
ORDERED, that with respect to the subject rent stabilized
apartments, the owner shall credit any excess rent collected at the
rate of 20% per month, commencing the first rent payment date after
issuance of this order, until all overpayments have been refunded.
ISSUED:
____________________
Joseph A. D'Agosta
Deputy Commissioner
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