`                        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 NO.: FK410433RT
          APPEAL OF                                          

                   JAMES W. HIPKISS
                                                  RENT ADMINISTRATOR'S
                               PETITIONER         DOCKET NO.: CF430178OM 
          ------------------------------------X

            ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW

          On November 15, 1991 the above-named petitioner-tenant timely filed 
          a Petition for Administrative Review (PAR) against an order issued 
          on November 1, 1991 by the Rent Administrator (Gertz Plaza) 
          concerning the housing accommodation known as 129 Perry Street, 
          Apartment 2D, New York, NY, wherein the Rent Administrator 
          determined that the owner was entitled to a rent increase based on 
          a major capital improvement (MCI).

          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.

          The owner commenced this proceeding on June 24, 1988 by initially 
          filing an application for a major capital improvement rent increase 
          predicated on the installation of a new boiler and the removal and 
          disposal of existing boiler asbestos, at the subject premises, at 
          a total claimed cost of $21,700.00.  In support of his application, 
          the owner submitted copies of contracts, permits and cancelled 
          checks.

          In answer to the owner's application, several tenants responded 
          objecting to the rent increase.  They contended, in substance, that 
          there has been no substantial rehabilitation nor any major capital 
          improvements done to the building; that the replacement of the 
          boiler falls under ordinary repairs and maintenance and should, 
          therefore, be considered exempt from consideration; that the old 
          boiler had constantly malfunctioned in the past and that tenants 
          had made numerous complaints to the Division; that, as a result of 
          these complaints, inspectors from the Division had placed several 
          violations against the building; that the hot water is not as hot 



















          ADMIN.  REVIEW DOCKET NO.:  FK410433RT


          as is legally mandated; that, according to Con Edison, the 
          inadequate supply of hot water was as a result of the faulty 
          installation of the boiler which was done by plumbers hired by the 
          owner; and that the landlord should be made to reimburse the 
          tenants for not providing adequate hot water instead of being 
          granted an outrageous and unfair rent increase.

          On November 1, 1991 the Rent Administrator issued the order here 
          under review finding that the installation of the new boiler and 
          the removal and disposal of existing asbestos qualified as major 
          capital improvements, 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 both rent controlled and rent stabilized apartments based upon 
          an approved cost of $21,700.00.

          In his petition for administrative review, the tenant contends, in 
          substance, that he should not be obligated to pay a rent increase 
          since the order issued by the Rent Administrator states that a 
          vacancy lease must state a pending MCI and list the items for which 
          a major capital improvement rent increase is sought; and that his 
          vacancy lease does not state anything about a pending MCI.  He also 
          submitted a copy of said lease to substantiate his claim.

          In answer to the tenant's petition the owner contends, in 
          substance, that the tenant is correct in stating that the MCI 
          information was not set forth in the tenant's April 10, 1990 
          vacancy lease; that the requirement to set forth the pending MCI 
          information only applies to the April 10, 1990 vacancy lease and 
          not to the May 1, 1991 renewal lease; that the tenant agreed, 
          pursuant to the renewal lease, to pay for any MCI increases granted 
          during the term of the lease; that the tenant has not been billed 
          and is not obligated to pay the retroactive rent increase granted 
          by the order; and that the tenant is obligated to pay the increase 
          from the December 1, 1991 collection date set forth in the 
          Administrator's order.

          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 2522.4 of the Rent Stabilization Code.  Under rent 
          stabilization, the improvement must generally be building-wide; 


                                      2









          ADMIN. REVIEW DOCKET  NO.: FK410433RT


          depreciable under the Internal Revenue Code, other than for 
          ordinary repairs; be required for the operation, preservation, and 
          maintenance of the structure; and replace an item whose useful life 
          has expired.

          The Commissioner notes that the replacement of a boiler and the 
          removal and disposal of existing boiler asbestos qualify as major 
          capital improvements for which an increase may be warranted.  The 
          record indicates that the owner substantiated his application by 
          submitting copies of the contract, permits and cancelled checks.  
          The record confirms that the owner correctly complied with the 
          applicable procedures for a major capital improvement rent 
          increase.  The Commissioner further notes that on appeal, the 
          tenant does not allege any errors on which the Rent Administrator's 
          order was based, but rather asserts that the collectibility of the 
          increase as to the subject apartment is affected by the specific 
          terms or omissions in his vacancy lease. 

          The Commissioner notes that where the tenant took occupancy of the 
          apartment pursuant to a vacancy lease commencing after the owner 
          had filed its application, as is the case in the instant 
          proceeding, for the MCI increase granted by the Administrator's 
          order to be collectible during the term of the tenant's vacancy 
          lease, such vacancy lease would have to contain a specific clause 
          advising the tenant of the pending proceeding and advising that the 
          rent charged was subject to an additional increase (during the 
          current lease term in effect) as provided by Section 2522.5 (d) (2) 
          of the Rent Stabilization Code and established Division precedent. 
          In the absence of same, and in accordance with Section 2522.4 (a) 
          (5), said increase is not collectible until the expiration of the 
          lease term in effect at the time of issuance of 
          the MCI order, providing the renewal lease contains a general 
          authorization provision for adjustment of the rent reserved by the 
          DHCR order.

          This order and opinion is issued without prejudice to the tenant's 
          right to file a rent overcharge complaint if the owner has 
          collected any rent increase authorized by the Rent Administrator's 
          order for any period prior to the expiration of the lease term in 
          effect at the time the Administrator's order was issued.

          THEREFORE, in accordance with the applicable provisions of the Rent 
          Stabilization Law and Code, it is


                                      3

















          ADMIN.  REVIEW  DOCKET NO.: FK410433RT


          ORDERED, that this administrative appeal be, and the same hereby is 
          denied, and the Administrator's order be, and the same hereby is 
          affirmed.




          ISSUED: 


                                                     ------------------------
                                                        JOSEPH A. D'AGOSTA
                                                        Deputy Commissioner



















    

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