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

        ------------------------------------X  S.J.R. NO.: 6447
        APPEALS OF                             DOCKET NOS.:FI 230115-RO
          GERRITSEN AVENUE ASSOCIATES       :              FI 230020-RT


        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.  
        The proceeding was then remitted, by Court order, to the Division for 
        consideration of the petitioner's administrative appeal.

        The owner of the subject premises (located at 2265 Gerritsen Avenue, 
        Brooklyn, New York, various apartments) initiated the proceeding below 
        by filing on September 29, 1989, an application for major capital 
        improvement (MCI) rent increases for the stabilized apartments in the 
        premises based on the installation of a boiler/burner, an intercom 
        system, windows, compactors, a roof, and for pointing/waterproofing, 
        asbestos removal and concrete work at the pool at the premises.  The 
        owner submitted certain documentation in support of the application, 
        including copies of contracts, contractors' certifications, 
        governmental sign-offs and approvals, and cancelled checks for the work 

        Various tenants filed answers objecting to the application.

        On June 14, 1991 the owner was directed to submit documentation to 
        complete its application as well as other information relevant to the 

        On June 17, 1991 the owner was served with copies of the answers, and 
        directed to submit a response thereto as well as additional 
        documentation to complete its application.  There is no indication in 
        the record that the owner submitted a response.

        On July 16, 1991 the owner was served with a final notice directing it 
        to submit several items of information and/or evidence, including the 
        previously requested items indicated above.  The owner submitted an 
        answer responding to certain items listed in the notice and requested 
        an extension of time in which to respond to the other items.

        The Rent Administrator's order, issued on August 20, 1991, approved 
        rent increases for the installation of new windows and a new roof and 
        for the removal of asbestos at the premises.  The Administrator 
        disallowed portions of the costs claimed for the windows and the roof 


          DOCKET NUMBER: FI 230115-RO; FI 230020-RT
        as unsubstantiated.  The Administrator further disallowed expenditures 
        made for the following: the boiler/burner and the intercom system based 
        upon a determination that these items were installed more than two 
        years prior to the date the application was filed; the compactors based 
        upon the owner's failure to submit the required governmental 
        certification; the pointing/water proofing based upon the owner's 
        failure to submit a copy of the contract therefor; and the concrete 
        work based upon a determination that such work did not constitute an 
        MCI.  The Administrator noted that the proceeding was processed on the 
        basis of the information and evidence in the record because the DHCR 
        was under a court deadline to issue a determination.

        In its petition the owner contends, in substance, that it was not 
        provided an adequate opportunity to submit the information and evidence 
        requested by the Administrator during the proceeding below; that the 
        July 16, 1991 notice was the first complete notice it received; that 
        the Administrator was required to grant an extension of time in which 
        to submit its response; that there was no rational basis for completely 
        denying a rent increase for the pointing/waterproofing; that the record 
        establishes that the boiler/burner and intercom installations were 
        completed less than two years prior to the filing date of the 
        application; and that the findings as to the windows, roof and 
        compactor were erroneous because it was not given a sufficient 
        opportunity to submit requested information.  The owner submits a copy 
        of the pointing/waterproofing contract with the petition.

        One tenant submitted a response to the owner's petition objecting to 
        the rent increase.

        In their petition the tenants contend, in substance, that the 
        Administrator did not take continuing window problems into 
        consideration; that no new roof was installed; that the installations 
        were incomplete; and that reserve fund contributions and tax abatements 
        which "may" have been granted were not considered.

        After careful consideration of the evidence in the record, the 
        Commissioner is of the opinion that these petitions should be denied.

        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 

        Section 2522.4(a)(8) of the Rent Stabilization Code precludes a rent 
        increase for a major capital improvement when the application is filed 
        more than two years after the completion of the installation, not the 
        date of issuance of any required governmental certificate.  While the 
        applicable section of the Code envisions such government sign-offs be 
        submitted with the application to be filed within two years of the 
        physical completion of the work, the Code provides that where there is 
        a delay in obtaining such approvals, the application is to be accepted 
        provided it is accompanied with proof that a request for such 
        governmental approval has been made within two years of the completion 

          DOCKET NUMBER: FI 230115-RO; FI 230020-RT
        of the installation.  By acknowledging that an owner may seek such 
        governmental approvals within the two year period, the Code clearly 
        provides that the two year period is not tied to the issuance of any 
        governmental certificate.  (Accord: EG 430076-RO; EL 210007-RT)

        The evidence of record in the instant case indicates that the 
        installation of the boiler/burner was completed on September 6, 1987, 
        and the installation of the intercom system was completed on December 
        15, 1986, as evidenced by the completion dates specified in the 
        contractor's certifications for both of the installations, but that the 
        owner did not file its MCI application until September 29, 1989.  

        The owner has not alleged any basis for its claim that the completion 
        date of the intercom installation as found by the Adminstrator is 

        Accordingly, the Commissioner finds that the Administrator correctly 
        denied the owner's application for the above mentioned installations 
        pursuant to Section 2522.4(a)(8) of the Rent Stabilization Code.

        With regard to the owner's contention that it was not afforded 
        sufficient opportunity below to submit requested information and/or 
        evidence regarding the window, roof and compactor installations, as 
        well as other requested data and that its extension request should have 
        been granted, the Commissioner notes that pursuant to a "so ordered" 
        stipulation of settlement reached during an Article 78 mandamus 
        proceeding commenced by the owner, the DHCR was obligated to issue a 
        determination "within 60 days of June 18, 1991."  (S.J.R. No. 5763.)  
        In view of the fact that the DHCR was under a specific time constraint 
        to issue the herein appealed order and absent on offer by the owner 
        during the proceeding below to stipulate to a modification of the Court 
        order, the Commissioner finds that the Administrator acted properly in 
        not granting the extension request and in serving the owner with the 
        three above mentioned notices.  

        The Commissioner further notes that the owner contends in its petition 
        that the Division cannot refuse to provide an owner with a second 
        opportunity to submit requested information, even where there is a 
        "complete default" by an owner.  In support thereof the owner cites 305 
        West 18 Associates v. DHCR, 158 A.D.2d 377, 551 N.Y.S. 2d 231 (1st 
        Dep't 1990), wherein the Appellate Division ruled that "it was 
        arbitrary, under all of the circumstances presented, for the DHCR to 
        have denied the MCI application without according petitioner a final 
        opportunity to establish its entitlement to the rent increases."  The 
        Commissioner is of the opinion that the owner raises a specious 
        argument.  The fact that, as the owner contends, the July 16, 1991 
        final notice was the first "complete" notice the owner received does 
        not excuse the owner's failure to submit the material requested therein 
        since all of the material had been previously requested in the two 
        notices of June 14 and 17, 1991 and the owner had from 1989, when the 
        application was filed, to submit this information.  It is incumbent 
        upon the owner, not the Division, to ensure that its application is 
        complete.  The owner was provided sufficient opportunity to submit the 
        requested information and has not provided a sufficient explanation as 


          DOCKET NUMBER: FI 230115-RO; FI 230020-RT
        to its failure to submit same, nor has it submitted the requested 
        material on appeal, except for the pointing/waterproofing contract 
        hereafter noted.

        Accordingly, the Commissioner finds that the Administrator properly 
        disallowed part of the claimed costs for the window and roof 
        installations as unsubstantiated and properly disallowed expenditures 
        made for the compactor installation based on the owner's failure to 
        submit the requisite governmental approval.

        The Commissioner notes that the Rent Administrator properly disallowed 
        expenditures made for the concrete work performed at and around the 
        pool area since this work does not meet the definitional requirements 
        of an MCI pursuant to Section 2522.4 of the Code.  This work cannot be 
        considered building-wide because it does not inure to the benefit of 
        all tenants since, as the record indicates, a fee is required for the 
        use of the pool.  In addition, there is no indication in the record 
        that the concrete work was required for the operation, preservation and 
        maintenance of the subject building.

        Regarding the owner's contention, in substance, that the 
        Administrator's denial of a rent increase for the 
        pointing/waterproofing was not warranted, the Commissioner notes that 
        during the proceeding below the owner was required to submit a diagram 
        of the subject building indicating the areas where the 
        pointing/waterproofing was performed and a statement from the 
        contractor to the effect that the building had been examined prior to 
        the work and that based upon such examination the work performed was 
        all the work required [so as to render the building free from exterior 
        water seepage for a reasonable period of time], as clearly specified in 
        the contractor certification submitted with the owner's MCI 
        application.  In the above mentioned final notice, the owner was also 
        requested to submit a copy of the executed contract for the 
        pointing/waterproofing; and copies of cancelled checks to substantiate 
        the total claimed cost.  The owner failed to submit the requested 
        information below.  Accordingly, the Commissioner finds that the 
        Administrator properly disallowed expenditures made for the 
        pointing/waterproofing work based on the owner's failure to submit the 
        requested information.

        The Commissioner notes that although the owner submitted a copy of the 
        pointing/waterproofing contract on appeal, it did not submit the other 
        information/evidence requested by the Administrator.

        Regarding the tenants' contention that the Administrator did not take 
        continuing problems with the windows into consideration, the 
        Commissioner notes that one tenant raised contentions below regarding 
        the adequacy of the window installation.  The Commissioner is of the 
        opinion, under the circumstances herein, that this unsupported 
        contention is insufficient to warrant revocation of the Administrator's 
        order.  The owner is hereby directed to correct such defects as may 
        exist with respect to the windows installed in apartment 4S within 45 
        days from the issuance of this order.  This determination is without 
        prejudice to the right of the tenant filing an appropriate complaint 


          DOCKET NUMBER: FI 230115-RO; FI 230020-RT
        with the DHCR should the owner fail to do so and the Administrator may 
        take such action as may be deemed necessary, should the facts so 

        Regarding the tenants' contention that no new roof was installed, the 
        record in the instant case, which includes copies of contracts, 
        invoices, contractor certifications and cancelled checks, indicates 
        that, to the extent authorized by the Administrator, the owner 
        correctly complied with the applicable procedures for  MCI rent 
        increases for the installation of a new roof at the premises.  The 
        tenants have not established that the rent increase should be revoked.
        Regarding the tenants' contention that possible contributions from the 
        reserve fund were not considered, the Commissioner notes that the 
        Administrator specifically inquired into the possibility of the owner's 
        use of the reserve fund for the improvements, and given the absence of 
        any probative evidence as to such use, the Commissioner finds that the 
        petitioners' assertion on appeal has been properly addressed by the 

        Regarding the tenants' contention that tax abatements which may have 
        been granted for the subject improvements should have been taken into 
        account, the Commissioner notes that J-51 tax benefits do not preclude 
        an owner's entitlement to a major capital improvement rent increase 
        adjustment therefor.  Though rent stabilized tenants may presently 
        share in the benefits of 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 
        only to improvement work commenced after June 28, 1988.  In this case 
        all work was commenced prior to said date.

        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, denied, and 
        that the order of the Rent Administrator be, and the same hereby is, 


                                             JOSEPH A. D'AGOSTA
                                         Acting Deputy Commissioner



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