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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 SJR NO. 5922
IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO. FE 430139 RO
: DRO DOCKET NO.ZDG 430209 OM
KEN-ROB COMPANY
PETITIONER :
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ORDER AND OPINION REMANDING PROCEEDING ON APPEAL
On May 9, 1991, the above-named petitioner-owner filed a
Petition for Administrative Review against an order issued on April
24, 1991, by the Rent Administrator, 92-31 Union Hall Street,
Jamaica, New York, concerning the housing accommodations known as
236-240 East 5th Street, New York, New York, Various Apartments.
Subsequent thereto, the petitioner-owner filed a petition in
the Supreme Court pursuant to Article 78 of the Civil Practice Law
and Rules requesting that the "deemed denial" of the petitioner's
administrative appeal be annulled. This proceeding was then
remitted to the Division for a determination of the petitioner's
appeal.
The Administrative Appeal is being determined pursuant to the
provisions of Section 2202.4 of the Rent and Eviction Regulations
and Section 2522.4 of the Rent Stabilization Code.
The issue herein is whether the Rent Administrator's order
was warranted.
The Commissioner has reviewed all of the evidence in the
record and has carefully considered that portion of the record
relevant to the issue raised by the administrative appeal.
The owner commenced this proceeding on July 27, 1989, by
filing an application for a rent increase based on a major capital
improvement (hereafter MCI), to wit: electric rewiring, new
hallway windows, and repiping basement overheads at a total cost
of $83,938.00. The owner submitted proof of the above costs and
documentary evidence in support of its application.
On April 24, 1991, the Rent Administrator issued the order
here under review finding that the rewiring, except for $3725.00
attributed to the construction of a new electric room and steel
stairs leading into such room, qualified as a MCI, that the new
hall windows qualified as an MCI, and that the basement repiping
at a cost of $21,500 did not qualify as an MCI. Appropriate rent
increases were granted for those items found to qualify as MCIs.
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In its petition, the owner contends in substance that the
repiping consisted of new hot and cold water overhead mains with
all necessary valves and should have been considered an MCI in
accordance with the DHCR Schedule of Major Capital Improvements
No. 20, that the construction cost of the electric room and stairs
should have been included as other necessary work performed in
connection with and directly related to a MCI pursuant to Section
2522.4 (a) (2) (ii) of the Rent Stabilization Code and that the
electric room was required by Con Edison for the electric
rewiring.
In an answer to the owner's petition dated June 1, 1991, the
tenants allege in substance that the main purpose of the new
electric room is to allow storage space to the owner in that the
room encompasses approximately 325 square feet and only about 15
square feet of this space is taken up by electric equipment, that
Con Edison's layout plan does not include a recommendation for
constructing an electric room but merely recommended moving the
meters to one area, that in regard to the repiping, the letter of
completion dated April 6, 1989 appears false and misleading in
that it contains no letterhead or signature of the Borough
Superintendent and refers to Plumbing Repair Approval Number
100000776 for a job performed at a total estimated cost of $7400
whereas in the MCI application, the owner submitted a total cost
of $21,500, that the invoices and payment dates do not coincide
with the completion date on the MCI application, and that the cost
of asbestos removal in the subject premises may have been
improperly included in the repiping charges.
The Commissioner is of the opinion that this proceeding
should be remanded to the Rent Administrator.
Rent increases for major capital improvements are authorized
by Section 2202.4 of the Rent and Eviction Regulations for rent
controlled apartments and Section 2522.4 of the Rent Stabilization
Code for rent stabilized apartments. Under rent control, an
increase is warranted where there has been since July 1, 1970, a
major capital improvement required for the operation,
preservation, or maintenance of the structure. 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.
DHCR policy as enunciated in its Schedule of Major Capital
Improvements No. 20 regarding repiping is that the following
constitutes an MCI: " new hot and / or cold water risers, returns,
and branches to fixtures in every housing accommodation including
shower bodies, and / or new hot and / or new cold water overhead
mains, with all necessary valves in basement".
In the instant case, the Commissioner is of the opinion that
the basement repiping done by the owner which consisted of new hot
and new cold water overhead mains, with all necessary valves in
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basement, would constitute an MCI. However the proceeding must be
remanded to consider the tenants' allegation in their June 1, 1991
answer to the owner's petition as described above. It is noted
that the owner on July 2, 1991, was served with a copy of the
tenants' answer. In the remanded proceeding, the owner should be
given twenty days to submit a response to the tenants' answer.
In addition, in the remanded proceeding, the Rent
Administrator should reconsider whether the installation of the
new electric room and stairs should be considered as part of the
MCI of rewiring or as other necessary work performed in connection
with and directly related to an MCI. The tenants' answer dated
June 1, 1991 as it relates to the installation of the electric
room and stairs should be considered and again the owner should be
afforded twenty days to submit any response to said answer as well
as any additional proof it may have that Con Edison required this
installation due to electric rewiring.
THEREFORE, in accordance with the provisions of the Rent
Stabilization Law and Code, and the Rent and Eviction Regulations
for New York City, it is
ORDERED, that this petition for administrative review be, and
the same hereby is, granted to the extent of remanding this
proceeding to the Rent Administrator for further consideration in
accordance with this order and opinion. The order of the Rent
Administrator remains in full force and effect until a new order
is issued on remand.
ISSUED
ELLIOT SANDER
Deputy Commissioner
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