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

          -------------------------------------X   ADMINISTRATIVE REVIEW
          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



          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 

          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.


          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 

          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).


          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 

          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 

          ADMIN. REVIEW DOCKET NO. FB-410045-RT ET. AL.

          In addition, the installation of comprehensive 
          pointing/waterproofing, where necessary, has been recognized as an 

          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.  

          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.


                                                         Joseph A. D'Agosta
                                                        Deputy Commissioner



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