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 S.J.R.: 6183
IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NOS.:FI 230139-RO
: FK 210002-RT
LEV REALTY, OWNER and
JOAN WALKER, TENANT, RENT ADMINISTRATOR'S
PETITIONER : DOCKET NO.: DE 230130-OM
------------------------------------X
ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW DOCKET
NO FK 210002-RT; GRANTING IN PART PETITION FOR ADMINISTRATIVE REVIEW
DOCKET NO FI 230139-RO
The above-named petitioners filed petitions for administrative review of an
order issued on August 23, 1991 by a Rent Administrator concerning the
housing accommodations known as 1775 East 18th Street, Brooklyn, New York,
Various Apartments.
Subsequent thereto, the owner filed a petition in the Supreme Court
pursuant to Article 78 of the Civil Practice Law and Rules, having deemed
this petition denied by operation of Law. This resulted in an order of the
Court directing the Division to issue a determination of the owner's
administrative appeal.
The Commissioner has consolidated the tenant's petition, under Docket No.
FK 210002-RT, along with the owner's petition, under Docket No. Fi 230139-
RO, for processing herein.
The owner of the subject premises initiated the proceeding below by filing
an application for a major capital improvement (MCI) rent increase for the
controlled and stabilized apartments in the premises based on the
installation of mail boxes, lobby doors, entrance doors, pointing and
waterproofing and incinerator upgrading at the subject premises. The owner
submitted documentation in support of the application, including copies of
contracts, contractors' certifications, and cancelled checks for the work.
On August 23, 1991 the Rent Administrator issued the order appealed herein
in which the owner was granted an MCI rent increase for the pointing and
waterproofing and lobby door installations. The owner was denied a rent
increase for the mailbox installation as it did not fully qualify with the
requirements for an MCI improvement rent increase. The requested rent
increase for the entrance door and incinerator upgrading installations were
denied as it was determined that these items had not exceeded their useful
life at the time of replacement. The Administrator further noted that
under Docket Nos OM 2317 (11/19/81) and 2AC 574159-206 (8/17/82) rent
increases had been granted for the entrance door and incinerator upgrading
installations.
DOCKET NUMBER: FI 230139-RO; RK 210002-RT
The Commissioner has reviewed all the evidence of the record relevant to
the issues raised by these petitions for review.
In her petition the tenant, in substance asserts, that the cost of the
pointing and waterproofing is not representative of the amount of work done
to the subject premises. The tenant further asserts that the pointing and
waterproofing and lobby doors are items whose upkeep are part of the
general building maintenance for which the owner should not be granted an
MCI rent increase.
In its petition the owner, by its representative, asserts, in pertinent
part, that the Administrator incorrectly denied the application for the
incinerator upgrading and entrance door installations. The owner further
asserts that the Agency's useful life schedule was promulgated by an
Operational Bulletin (90-2) which was issued more than one year after the
owner's MCI rent increase application had been filed with the agency and
therefore the Bulletin should not apply to the order appealed herein.
After careful consideration, the Commissioner is of the opinion that the
tenant's petitions for administrative review should be denied; and that the
owner's petition should be granted in part.
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 Law 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.
The Commissioner notes that the Administrator properly applied these
principles to the owner's MCI application and those installations for which
increases were allowed, with the exception of "lobby" doors, as hereafter
noted, fit the above definition and their costs were substantiated by the
owner. Accordingly, the Commissioner is of the opinion and finds that,
despite the tenant's assertions to the contrary, the Administrator's
approval of the owner's installations for MCI rent increase was correct,
except as indicated hereafter.
The Commissioner notes that it has been the agency policy to prescribe
useful lives for MCI eligible installations and, in fact, Operational
Bulletin 80-2 sets forth already existing agency policy. Pertinent to the
order appealed herein is the 15 year useful life for lobby/vestibule
entrance doors. The record reveals that in November 1981 (under Docket No.
Om 2317), the owner received an MCI rent increase for the installation, in
1977, of lobby entrance doors (as distinct from front entrance/vestibule
doors), albeit the Administrator's order appealed herein reflects the
allowed cost ($4,000.00) of the newly installed lobby doors. Rejected was
the cost ($6,100.00) of the newly installed front entrance/vestibule doors.
Accordingly, the Commissioner is of the opinion that the Administrator's
DOCKET NUMBER: FI 230139-RO; RK 210002-RT
order should be modified to reflect an additional allowable cost of
$2,100.00 for the newly installed front entrance/vestibule doors for which
no rent increase had previously granted. No increase is warranted for the
lobby door, however, since the useful life of the prior installation had
not expired.
The records of the Division discloses that under Docket No. 2AC 574159-206
the owner was granted a rent increase of $.73 per room, per month based on
the 1977 upgrading of the two incinerators which service the subject
premise pursuant to the provisions of Administrators Interpretation No. 18
(February 1977). The record further discloses that in 1987 the owner
performed similar incinerator upgrading work at the subject premises at a
substantiated cost of $24,000.00 consistent with the public policy need to
maintain then current air pollution control standards. Accordingly,
Commissioner is of the further opinion and finds, under the facts and
circumstances of the instant case, that the prior incinerator upgrading
performed ten years earlier does not preclude a subsequent major capital
improvement rent increase. However, as provided for in Administrators'
Interpretation No. 18, relied on by the owner, the indicated "rent increase
for subsequent upgrading with the scrubber or other similar devices shall
be reduced by the amount of the previous grant".
In view of the foregoing, the Commissioner finds that the owner is entitled
to an additional $.60 per room, per month, effective September 1, 1991 for
rent controlled apartments and effective September 1, 1989 for rent
stabilized apartments, to the computed as follows. The additional allowed
cost is to reflect the balance of monies expended for vestibule/front
entrance doors ($2,100.00) and for the cost of incinerator upgrading
($24,000.00). Total of $26,100.00 - 60- 328 rooms = $1.33 less the prior
grant (under Docket No. 2AC 574159-206) (of $.73) per room per month
results in a corrected grant of $.60 per room per month.
The Commissioner further notes that, in addition to the aforementioned
permanent rent increase, the owner is entitled to collect temporary arrears
to cover the period between the effective date, as indicated above, and the
first rent payment date following the issuance of this order.
THEREFORE, in accordance with provision of the Rent and Eviction
Regulations for New York City and the Rent Stabilization Law and Code, it
is
ORDERED, that the tenants petition for administrative review Docket No. FK
210002-RT be, and the same hereby is denied; that the petition for
administrative review under Docket No. FI 230139-RO be, and the same hereby
is ranted in part; and that the Rent Administrator's order be, and the same
hereby is modified in the manner and to the extent hereinabove indicated;
and it is, further
DOCKET NUMBER: FI 230139-RO; RK 210002-RT
ORDERED, that the tenants may pay any arrears in rent resulting from the
order in 12 equal monthly installments.
ISSUED:
JOSEPH A. D'AGOSTA
Acting Deputy Commissioner
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