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.: FB410045RT
APPEALS OF FB410046RT, FB410186RT
FB410187RT, FB410189RT
VARIOUS TENANTS OF FB410191RT, FB410192RT
106 WEST 69TH STREET FC410212RT, FC410331RT
NEW YORK, NEW YORK FC410332RT, FC410464RT
RENT ADMINISTRATOR'S
DOCKET NO.: BI430154OM
PETITIONERS
-------------------------------------X
ORDER AND OPINION DENYING PETITIONS FOR ADMINISTRATIVE REVIEW
The above-named petitioner-tenants timely filed and/or refiled
petitions for administrative review (PARs) of an order issued on
January 11, 1991 by a Rent Administrator concerning the housing
accommodations known as various apartments of 106 West 69th Street,
New York, New York.
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 these PARs.
Since these petitions involve common issues of law and fact, the
Commissioner deems it appropriate to consolidate said petitions for
a uniform disposition.
This proceeding was commenced on September 17, 1987, by the owner's
filing of an application for a rent increase based on the
installation of major capital improvements (MCIs), to wit:
pointing and waterproofing including the replacement of all
defective lintels and parapet walls, and replacement windows
building-wide, at a total cost of $116,840.00.
An attorney on behalf of twenty seven tenants (apartments 1A, 1D,
2A, 2B, 2C, 3A, 3B, 3D, 4A, 4B, 4D, 5B, 5C, 5D, 6A, 6C, 6D, 7A, 7B,
7C, 7D, 8A, 8B, 8C, 8D, 9A, and 9B) and the tenant of apartment 5C
filed objections to the owner's MCI application. The tenants
alleged, in substance, that the pointing and
ADMIN. REVIEW DOCKET NO. FB-410045-RT ET. AL.
waterproofing installation was not completed on all exposed areas;
the new masonry was not done to the entire front of the building;
the parapet wall had been repaired, not replaced; the structural
and steel work had been completed at the request and expense of the
commercial tenants; the windows were replaced for the purpose of
converting the subject premises to a cooperative; the former
windows may not have exceeded their useful life at the time of
replacement; and the documentation supporting the window
installation was incomplete. The tenant of apartment 5C responded
by asserting, in substance, that he believed that the total rent
increase requested was in excess of the statutorily prescribed
monthly cap for a rent controlled tenant; the window woodwork had
not been painted, so he painted it himself; water entered his
apartment during wind-driven rainstorms; the parapet repairs were
performed to conform to local law; not all of the parapet walls
were rebuilt; and the installations generally were not MCIs, but in
the nature of repairs.
By letter dated August 9, 1990, the owner, through its agent,
responded by asserting, in substance, that a signed copy of the
pointing and waterproofing contract was unavailable as the work had
been completed for the previous owner; irrespective of a signed
contract, proof of complete payment by the prior owner to the
contractor (in the form of cancelled checks) was made a part of its
application; the replaced windows were the original windows of the
30 year old building and had exceeded their useful life; and 324
new windows were installed in the subject premises. The record
contains copies of a letter from a previous owner which states that
the window count is 324 and that number had been installed in the
subject premises; and a note from a previous owner which states
that the tenants' complaints were being addressed.
By notice dated September 13, 1990, the tenant of Apt. 5C was
requested to comment as to whether leaks still existed in his
apartment.
On October 4, 1990, the tenant of Apt. 5C informed DHCR that no
additional waterproofing had been performed and that several walls
in his apartment continued to show evidence of water ingress.
By letter dated October 25, 1990, the owner's agent indicated that
the owner had rectified the complaints of the tenant of apartment
5C. Enclosed was a copy of a note, dated October 22, 1990 and
signed by the former owner, which states that the tenant's
complaint regarding water ingress had been corrected.
Apartment 5C was inspected on December 24, 1990, wherein the
inspector discovered water damage and cracked, chipped paint.
2
ADMIN. REVIEW DOCKET NO. FB-410045-RT ET. AL.
On January 11, 1991, the Rent Administrator issued the order here
under review, finding that the installations qualified as an MCI,
determining that the application complied with the relevant laws
and regulations based upon the supporting documentation submitted
by the owner, and allowing rent increases for rent controlled and
rent stabilized tenants. The Administrator barred the owner from
collecting the increase from apartment 5C until all repairs were
completed.
In their petitions the tenants contend, in substance, that: the
work completed is not an MCI, but rather in the nature of necessary
repairs/maintenance (Apts: 1A, 2A, 2B, 5B and 7C); the owner
should substantiate the costs of the installations (Apt. 7C); the
pointing/waterproofing costs are questionable (Apt. 1A); the
pointing/waterproofing installation was not completed building-wide
(Apts. 1A, 2A, 3B, 4D and 5B); the pointing has proven ineffective
as leaks continue (Apt. 1A); the old windows had not exhausted
their useful life (Apt. 2B); the work was done to correct
violations of local law (Apts. 2B, 7B); the windows were installed
in anticipation of a co-op conversion to enhance the market value
of the subject premises and to reduce the owner's fuel/heating
costs (apartments 1A, 2A, 2B and 5B); the new windows are defective
and inoperable (Apt. 4D); the new windows were not installed
building-wide (Apts. 1A and 6B); the tenant of Apt. 6B installed
her kitchen window with the then owner's permission; the former
owner recouped the costs of the window installation when the
building was sold (Apt. 7C); the current owner paid for the new
windows as their cost was included in the sales price (Apts. 1A,
7B); the costs of improvements should not form a part of the base
rent (Apts. 1A, 2A, 5B and 7C); the tenants were originally
presented with a "black book" estimate for the windows which was
lower than the approved costs in the order (Apts. 5B and 7B); it is
unfair that rent controlled tenants are not required to pay the
retroactive portion of the rent increase (Apts. 2A, 5B); the
tenants were charged the rent increase based on an incorrect room
count (Apts. 1A, 6B); notice of the owner's pending MCI rent
increase application was not given in their vacancy leases (Apts.
2D, 4C); the tenant of Apt. 2D rented her apartment "as is" and
expended over five thousand dollars ($5,000.00) for necessary
improvements; and the owner may have received a tax abatement for
the installations (Apt. 4C).
3
ADMIN. REVIEW DOCKET NO. FB-410045-RT ET. AL.
The owner, through its agent, responded to several of the petitions
by asserting, in substance, that the work qualified as an MCI; the
costs of the installations were properly substantiated; the
pointing had been completed where necessary, building-wide; the
window installation had been completed by the prior owner; the
former windows had exhausted their useful life at the time of their
replacement; none of the tenants complained of defective windows;
the rent increase for apartment 1A has been adjusted to accurately
reflect its room count; for those tenants whose vacancy leases did
not apprise them of the owner's pending MCI rent increase, they
will be charged the rent increase only on the commencement of their
renewal leases; if the tenants are entitled to a prorated share of
any tax abatement granted, they will be so notified; all MCI rent
increases are calculated based on the number of rooms in the
subject housing accommodation; and as to the retroactive increase,
Section 2522.4 of the Rent Stabilization Code indicates that the
legal regulated rent is to be adjusted effective on the first rent
payment date occurring thirty (30) days after the filing of the
application unless otherwise set forth in the order.
After a careful consideration of the entire evidence of record, the
Commissioner is of the opinion that these petitions should be
denied.
At the outset the Commissioner notes that fundamental principles of
the administrative appeal process and Section 2529.6 of the Rent
Stabilization Code prohibit a party from raising issues on appeal
which were not raised below. The tenant of apartment 6B could have
raised the very same issues before the Rent Administrator which she
seeks to raise for the first time on appeal. Accordingly, the
Commissioner is constrained to foreclose consideration of these
issues in this appeal proceeding.
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.
It is the well established position of the Division (as reflected
in Policy Statement 89-6) that the building-wide installation of
all apartment windows and/or public area or lot line windows to
replace windows which are 25 or more years old (as is the case
herein) constitutes an MCI for which a rent increase may be
warranted.
4
ADMIN. REVIEW DOCKET NO. FB-410045-RT ET. AL.
In addition, the installation of comprehensive
pointing/waterproofing, where necessary, has been recognized as an
MCI.
The evidence of record indicates that the owner substantiated its
application by submitting copies of contracts, proposals, cancelled
checks and a governmental approval for the work in question. On
the other hand, the tenants have not submitted any evidence, either
during the proceeding below or on appeal, to support any of their
bare allegations that the improvements were not made building-wide
or that the replaced windows had not exceeded their useful life.
The Commissioner finds that the owner correctly complied with the
application procedures for a major capital improvement and the Rent
Administrator properly computed the appropriate rent increases.
Additionally, the Administrator's order was properly made
retroactive with respect to the stabilized apartments in accordance
with the applicable provisions of the Rent Stabilization Code. The
Commissioner notes that pursuant to the Rent and Eviction
Regulations, the effective date of an MCI order for rent controlled
tenants is the first rent payment date following the issuance of
the Administrator's order. Therefore, no retroactive increase
applies to the rent control tenants. The tenants have not
established that the increase should be revoked.
The Commissioner further notes that although no contractor's
certification was submitted for the window installation, the owner
did present documentation showing diligent efforts to obtain this
certification and justification for its failure to do so. The
Commissioner finds that the owner's affidavit in lieu of the
certification, in conjunction with the other documentation, is
sufficient to substantiate this installation.
Regarding the alleged discrepancy between the originally quoted
"black book" estimate of the cost per window and the rent increase
per room permitted by the order, the Commissioner notes that the
rent increase approved in the Administrator's order included the
cost for pointing/waterproofing as well as the cost for the
windows, and was calculated on a per room, not a per window, basis.
With regard to the tenants' contention that the windows are
defective and that the pointing/waterproofing installation is
ineffective, the Commissioner notes that none of the tenants
complained of defective windows during the proceeding before the
Administrator, and that only one tenant complained of leaks. In
this respect it is significant to note that the records of the
Division disclose that no rent reduction has been issued against
the subject premises based on the owner's failure to maintain
services of a building-wide nature nor was any such complaint
pending at the time the Administrator's order was issued.
Therefore, the Commissioner rejects this contention.
5
ADMIN. REVIEW DOCKET NO. FB-410045-RT ET. AL.
This order and opinion is issued without prejudice to the tenants'
right to file a rent reduction application based on a decrease in
service(s), if the facts so warrant.
Concerning the tenants' allegation that the owner is charging them
the increase based on an incorrect room count, the Commissioner
notes that the owner may not charge the tenants based on a greater
number of the legal rooms for MCI purposes. This order and opinion
is issued without prejudice to the tenants' right to file
individual complaints of rent overcharge, if the facts so warrant.
Concerning the affect of the owner's application for or receipt of
the J-51 tax benefit based on the subject improvements, this
benefit does not preclude an owner's entitlement to an MCI increase
adjustment therefor. Though rent stabilized tenants may presently
share in the benefits of a tax abatement received by an owner
pursuant to J-51 of the Administrative Code, this provision does
not apply to the rent stabilized tenants in the instant matter as
the law is applicable to improvement work commenced after June 28,
1988, and is not retroactive. However, tenants of rent controlled
apartments may be entitled to share in such tax abatement benefits
and should make application to the DHCR "Owner Individual Unit" for
such rent adjustment as may be warranted.
In the event of a change of tenancy during an MCI proceeding, it is
the obligation of the owner to notify the new tenant of the
pendency of such proceeding, and to advise the Division of this
change in tenancy. While not fatal to the owner's application, the
owner runs the risk of the tenant who was not so notified raising
issues on appeal which could have been raised in the proceeding
below, thus jeopardizing the finality of the Administrator's order.
Where, as in the instant case, the tenants (2D and 4C) took
occupancy pursuant to a vacancy lease commencing after the owner
had filed its application, the Commissioner notes that for the MCI
increase granted by the Administrator's order to be collectible
during the term of the petitioners' vacancy leases, such vacancy
lease would have to contain a specific clause advising the tenant
of the docket number of the pending proceeding and advising that
the rent charged was subject to additional increase (during the
current lease term in effect) as provided by Section 2522.4(a)(5)
of the Rent Stabilization Code and established Division precedent.
In the absence of same, said increase was not collectible until the
expiration of the lease terms in effect at the time of issuance
(January 11, 1991) of the MCI order provided the renewal leases
contained a general authorization provision for adjustment of the
rent reserved by the DHCR order.
A tenant who took occupancy after the effective dates of the
increase, as provided for in the Administrator's order, is not
obligated to pay any arrears for a period prior to the date of
occupancy. 6
ADMIN. REVIEW DOCKET NO. FB-410045-RT ET. AL.
As to any apartment which was subject to Rent Control at the time
the instant application was filed and which subsequently became
subject to Rent Stabilization jurisdiction, the Commissioner notes
that since the free market rent charged the first stabilized tenant
included any and all services then being provided, and in the
absence of a fair market rent appeal, the rent increase provided
for in the Administrator's order is not collectible from the first
stabilized tenant or any subsequent tenant of such apartment.
As to the tenants' contention pertaining to the permanent nature of
the increases granted, the New York Court of Appeals has concluded
that the Rent Law authorizes the Division to grant a rent increase
for major capital improvements which form a permanent part of the
rent structure. In the matter of Ansonia Residents Association,
et. al v. DHCR, et. al., 75 N.Y.2d 206, 551 N.Y.S.2d 871 (1989).
With regard to the tenant's contentions that the improvements were
made for the purpose of converting the premises to a co-operative,
to enhance the market value of the building, to correct outstanding
violations, and that the costs of the improvements may have been
included in the building's purchase price to the current owner, the
Commissioner notes that these facts do not affect the propriety of
the Administrator's order and are not a bar to the owner receiving
a rent increase adjustment from the non-purchasing tenants, if the
facts otherwise so warrant.
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 the tenants' petitions be, and the same hereby are,
denied, and that the Rent Administrator's order be, and the same
hereby is, affirmed.
ISSUED:
____________________
Joseph A. D'Agosta
Deputy Commissioner
7
|
