OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA

                               92-31 UNION HALL STREET
                               JAMAICA, NEW YORK 11433

          ------------------------------------X   ADMINISTRATIVE REVIEW
          APPEAL OF                                           

                  LEMUEL STEWART
                                                  RENT ADMINISTRATOR'S
                               PETITIONER         DOCKET NO.: DI230156OM 


          On November 20, 1991, the above-named petitioner-owner timely filed 
          a Petition for Administrative Review (PAR) against an order issued 
          on November 1, 1991 by the Rent Administrator, Gertz Plaza, 92-31 
          Union Hall Street, Jamaica, New York, concerning the four-unit 
          housing accommodations known as 159 Washington Park, Brooklyn, New 
          York, various apartments.  One of the four units in the buildingis 
          subject to rent control. 

          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 this administrative appeal.

          This proceeding was commenced by the landlord's filing of an 
          application for a major capital improvement rent increase 
          predicated on the waterproofing of the subject building.  In 
          support of his application, the landlord submitted documentary 
          evidence showing that he made expenditures in the amount of 
          $19,500.00 for said work.

          One tenant answered opposing the landlord's application.  She cited 
          several service complaints within her unregulated apartment but 
          failed to identify any pertinent reason why the request for a rent 
          increase, based on the work performed, should not be granted.

          The documentation submitted by the landlord included a copy of the 
          contract which indicated that the following work was performed:

                - stripping the paint from the front facade
                - washing front facade
                - cutting away all deteriorated brownstone from the front    
                - scraping, caulking and painting the wood and windows

          ADMIN. REVIEW DOCKET NO.: FK230074RO

                - stripping and painting the door
                - scraping the loose cement and waterproofing the entire back  
                  wall with Thoroseal
                - scraping the loose mortar and chipping off the loose cement  
                  from the side wall of the building wherever needed
                - pointing the brick joints and patching the cement as needed  
                  on the side wall
                - waterproofing the complete side wall with Thoroseal

          The landlord also submitted copies of the cancelled checks and a 
          Contractor / Vendor Information form (RA-79 Supplement 1) to 
          support his application.  In addition, the landlord also submitted 
          a diagram of the work performed which contained an outline of the 
          subject building and a statement stating "square feet area pointed, 
          waterproofed, front facade restored, including decorative details- 
          rear 800 sq. ft., side 1800 sq. ft., and front 1125 sq. ft."

          In the herein appealed order, the Rent Administrator determined 
          that the waterproofing work, done by the landlord, did not 
          constitute a major capital improvement under the provisions of the 
          code and regulations and denied the landlord's application.

          In his petition for administrative review, the landlord contends, 
          in substance, that the order of the Rent Administrator is 
          arbitrary, capricious, unreasonable and illegal; that he had 
          applied for a rent increase for the one rent controlled apartment 
          in the building; that the sum of $19,500.00 was spent in 
          brownstoning and cementing the front and pointing and waterproofing 
          the rear and one side of the building; that the order issued by the 
          Rent Administrator stating that waterproofing does not constitute 
          a major capital improvement is in error; and that he is submitting 
          a copy of a rent increase order from a two-family home where the 
          apartments are rent controlled, proving that rent increases are 
          granted for waterproofing.  Said order actually indicates that the 
          increase was granted for pointing and waterproofing.

          After a careful consideration of the entire evidence of record, the 
          Commissioner is of the opinion that this petition should be denied.

          Rent increases for major capital improvements are authorized by 
          Section 2202.4 of the Rent and Eviction Regulations for rent 
          controlled 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.


          ADMIN. REVIEW DOCKET NO.: FK230074RO

          It is the established position of the Division that comprehensive 
          pointing and waterproofing as necessary on the exposed sides of the 
          building constitute a major capital improvement for which a rent 
          increase may be warranted, providing the landlord otherwise so 

          As interpreted by the Internal Revenue Service, the relevant 
          sections of the Internal Revenue Code and accompanying regulations, 
          as applied to the matter at issue, provide as follows:
                Payments for the purpose of keeping the property in ordinary  
                efficient operating condition, such as replacement of short  
                lived parts, and that do not add to its value or appreciably  
                prolong its life are in the nature of incidental repairs.    
                Subject to specific facts and circumstances, examples of such  
                repairs and maintenance could include repainting, mending    
                leaks, patching a roof, replastering etc.  Tuck pointing of  
                limited, specific areas of a brick wall showing weathering   
                damage would generally not prolong the life of the property,  
                nor materially add to its value, and would be currently      

                However, if replacement, repair or renovation acts to retard  
                deterioration and prolong the life of a property, then such  
                expense should be capitalized and depreciated.  This is      
                because there is a resulting increase in value, extension of  
                useful life or improvement in useability of the property,    
                factors that tend to indicate a capital expenditure.         
                Examples of such expenditures would include a new or         
                resurfaced roof, complete waterproofing of brick walls or    
                roof (rather than repair of specific leaks), added structural  
                support, etc.   

                The complete pointing and waterproofing of a multiple unit   
                dwelling is in the nature of a permanent improvement or      
                betterment, and thus would appear to be capital in nature and  
                depreciable subject to specific facts and circumstances.     
                Repair of specific leaks and limited tuck pointing of        
                specific trouble spots, if not part of some larger, overall  
                plan of renovation, rehabilitation or improvement of the     
                property, would likely constitute incidental repairs and be  
                a currently deductible expense.

          The above-stated interpretation by the Internal Revenue Service 


          ADMIN. REVIEW DOCKET NO.: FK230074RO

          fully supports the Division's policy to consider comprehensive 
          pointing and waterproofing as necessary on exposed sides of a 
          building as qualifying for treatment as a major capital 
          improvement.  The work performed, for example, must be greater than 
          mere spot patching to repair current leaks or trouble spots so as 
          to be in the nature of an improvement or betterment that prolongs 
          or extends the useful life of the structure.

          The Commissioner notes that waterproofing cannot be substituted for 
          pointing for the purpose of determining whether comprehensive 
          pointing and waterproofing as necessary were performed because 
          pointing involves the physical examination of the mortar between 
          all of the exposed brick and includes a testing of the mortar by 
          scraping out same and replacing removed, missing and/or eroded 
          mortar while waterproofing, as distinguished from pointing for DHCR 
          purposes, is merely the application of a sealing or covering 
          material (such as silicone or, waterproof cement) by brush or spray 
          and is, therefore, less extensive and of a less structural nature 
          than pointing.  Also, waterproofing is more likely to chip and may 
          only last a few years before weathering requires reapplication, 
          whereas pointing lasts a substantially longer period of time.  
          Therefore, the use of waterproof cement and Thoroseal as  
          waterproofing materials on the front and rear walls do not 
          substitute for the absence of brick pointing on the front and rear 
          walls before the waterproof cement was applied.

          The evidence of record in this proceeding does not establish that 
          comprehensive pointing and waterproofing as necessary were 
          performed at the subject premises.

          On appeal, the landlord's statement that pointing and waterproofing 
          of the front and rear walls were performed was not entirely 
          supported by the statement from the contractor.  The contractor's 
          statement did not support the landlord's claim that the front and 
          rear walls ofthe building was pointed.  Additionally, the 
          application submitted by the owner did not contain a statement from 
          the contractor to the effect that prior to the commencement of the 
          work, he had examined all the exposed sides of the building and 
          determined the sections that needed pointing and waterproofing.

          Based on the foregoing, the Commissioner finds that the work herein 


          ADMIN. REVIEW DOCKET NO.: FK230074RO

          did not constitute comprehensive pointing and waterproofing as 
          necessary and does not qualify for a major capital improvement rent 

          THEREFORE, in accordance with the Rent and Eviction Regulations of 
          New York City, it is

          ORDERED, that this petition be, and the same hereby is, denied and 
          that the Rent Administrator's order be, and the same hereby is, 



                                                    JOSEPH A. D'AGOSTA
                                                    Deputy Commissioner


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