ADM. REVIEW DOCKET NOS.: GB810176RT ET AL.
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
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IN THE MATTER OF THE ADMINISTRATIVE ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NOS.: GB810176RT
GB810177RT
GB810178RT
GB810179RT
GB810180RT
GB810181RT
GB810182RT
GB810200RT
GB810201RT
GB810202RT
D.R.O. DOCKET NO.:
MEJ-9-1-0001-OM
VARIOUS TENANTS,
Owner: 17-21 Centre Street
PETITIONER Realty Corp.
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ORDER AND OPINION REMANDING PROCEEDING
TO THE RENT ADMINISTRATOR AND
REVOKING THE ADMINISTRATOR'S ORDER
These petitions are being consolidated as they involve common
issues of law and fact.
Ten petitioner-tenants filed timely Petitions for
Administrative Review against an order issued on January 10, 1992,
by the Rent Administrator, 55 Church Street, White Plains, New
York, concerning housing accommodations known as various
apartments, 17-21 Centre Street, Mount Vernon, New York, wherein
the Rent Administrator determined that the owner would be granted
rent increases for Major Capital Improvements (MCIs) consisting of
new roofs on buildings 17 and 21 and new windows throughout the
three building complex. Building 19 was explicitly exempted from
any increase for the new roofs.
The issue in this appeal is whether the MCI increase should
have been granted given the owner's failure to obtain and submit
all approvals required by the municipality for the improvements.
ADM. REVIEW DOCKET NOS.: GB810176RT ET AL.
The applicable section of the Tenant Protection Regulations is
Section 2502.4(a).
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 the administrative appeal.
In these petitions the tenants contend that the Rent
Administrator's Order is incorrect and should be modified because
the Administrator did not address the November 29, 1990 nine page
submission by the tenants in opposition to the owner's application
for MCI-increases. The nine page letter is attached to each
petition, redated and signed on the day the petition was signed.
Accordingly, the letter is herein treated as part of the petitions.
More specifically, the tenants allege that the owner has not
provided adequate heat citing DHCR order numbers MEJ-9-1-0039-B and
MFH-9-1-0160-OR. Attached to the petitions are copies of Mount
Vernon Department of Buildings Violation Number 22816, dated
January 21,1992, which found inadequate heat in one of the
apartments at the subject premises. The tenants allege that there
was plenty of hot water at the time of the violation as well as at
the time of eight additional cited complaints to the Building
Department regarding heat. Therefore, the tenants argue, the owner
can not claim the lack of heat was due to a boiler problem. Other
service decreases are also alleged.
The tenants further argue that it was improper to grant an MCI
increase for a roof and windows when the owner failed to get the
proper permits from the Mount Vernon Building Department. The
tenants resubmit on appeal copies of a permit to install 80 windows
at an estimated cost of $15,000.00, rather than 224 windows at the
MCI application cost of $66,080.00. For the roof there was
allegedly no permit obtained at all. By granting the MCI increase
the tenants allege the Division has "disregard[ed]" the laws of
Mount Vernon and granted the owner "a reward for breaking those
said laws."
Regarding the roof specifically, the tenants further allege
that the contractor's license had expired at the time the work was
"supposedly paid" for.
They also contend that the roof work was merely a "patch job"
and was done by the owner's son and the building superintendent
rather than by the alleged contractor, even though the purported
contract stated the contractor would supply all labor. The tenants
argue that the relationship between the owner and contractor was
suspect.
Regarding the quality of the roof work, the tenants allege it
leaked within about seven months of the installation and was
ADM. REVIEW DOCKET NOS.: GB810176RT ET AL.
repaired by the owner's son and the superintendent. The tenants
allege that the roof continues to leak into three apartments,
although it had a ten year guarantee.
Regarding the windows, the tenants allege that they were
neither requested by the tenants nor necessary. In addition, the
largest of the three checks used to pay for them was alleged to be
drawn on a private checking account. Moreover, the cost is alleged
to be excessive and the windows are alleged to be of low quality.
In answer to these petitions, the owner contends that the
order should be upheld because the nine page letter had been
responded to by the owner before the Administrator, a copy of the
owner's response being attached to its answers to the petitions and
incorporated therein. Regarding the various unrelated service
issues, the owner alleges the building is up to standard, the one
heat violation being due to a repair then in progress. The owner
contends that a small group of tenants is harassing the owner. The
owner emphasizes that: "all the windows were replaced and the roof
repaired." Regarding the lack of permits the owner states:
"If the landlord owes the City of Mount
Vernon additional permit fees this matter
is between the landlord and the City of
Mount Vernon Building Department. The
payment or non-payment of filing fees
have no bearing of any kind on the issues
before the agency namely, were the
increases properly granted."
The Commissioner notes that in its more detailed response to
the Administrator the owner alleged that the roofer is licensed and
supplies permits; that the son and superintendent of the owner were
on the roof doing pointing, not roof work; that five men worked
with the roofers; that the roof installed was "top of the line" and
not mere patch work.
Regarding the windows the owner alleged they were "higher
rated...than the average window installed in other buildings, and
[the contractor] had a good reputation."
The Commissioner is of the opinion that these petitions should
be granted to the extent of remanding this proceeding back to the
Administrator and revoking the Administrator's Order and the rent
increase granted therein.
At the outset the Commissioner notes that ETPA Fact Sheet #6
states in part:
"In addition, unless specifically ordered
ADM. REVIEW DOCKET NOS.: GB810176RT ET AL.
by the DHCR, an owner cannot collect an
MCI from a tenant for whom DHCR has
determined that "required services" are
not being maintained; or from a tenant
who has a rent reduction order in place.
No MCI rent increase will be approved if
a building-wide service reduction order
is in effect, unless the owner has filed
for a restoration and a determination
issued. Also, if DHCR has an outstanding
finding of harassment, they will not grant
an increase."
Similarly, ETPA Fact Sheet #8 states:
"Division of Housing and Community
Renewal (DHCR) will not grant an
owner an increase, in whole or in
part, if the owner is not maintaining
all required services, or if any
immediately hazardous violations are
outstanding from any municipality,
county, State or Federal law relating
to the maintenance of such services.
DHCR may grant an application upon
condition that such services will be
restored within a reasonable time. No
MCI rent increase will be approved if
there is an outstanding building-wide
service reduction order in effect,
unless the owner restored the service
and DHCR issued a positive determination."
Thus, the tenants' allegations of diminished services are
insufficient to prevent an MCI increase. (The rent reduction cited
by tenants, i.e., MED910039B, was restored by order number
MFH910169OR, issued October 22, 1991 and affirmed January 21, 1994
in FH930135RO et al. Thus, that reduction in no way could prevent
the MCI increase herein which was granted on January 10, 1992.
Similarly, the January 21, 1992 violation for heat in a single
apartment, issued by the City of Mt. Vernon, could not suffice to
prevent the January 10, 1992 rent increases herein under appeal.)
However, on remand any then-existing rent reductions for diminished
services could affect the issuance of an MCI increase. The
Commissioner notes that this Order is issued without prejudice to
the tenants' rights to file service or harassment complaints if the
facts so warrant.
Furthermore, the Commissioner notes that tenant approval is
ADM. REVIEW DOCKET NOS.: GB810176RT ET AL.
not required for an MCI increase. Moreover, although the tenants
allege the windows were not necessary, a Con-Ed Energy Audit Report
stated the windows were "in poor condition" and suggested
replacement "in order to reduce infiltration rate."
However, contrary to the owner's assertion that the non -
payment of required Mt. Vernon filing fees has no bearing on the
granting of the MCI increase herein, DHCR policy in general
requires that all necessary governmental approvals must accompany
an MCI application. This policy is memorialized in Supplement No.
1 to Operational Bulletin 84-4 which states that: "Municipal
certificates must be submitted where required." Fact Sheet #24
states that: "no [MCI] increase will be issued until final
approvals are received," and ETPA Fact Sheet #8 states that: "the
completed [MCI] application must contain ...copies of all necessary
approvals from applicable government agencies for the work done."
The Mount Vernon Department of Buildings has confirmed that it
requires permits and sign-offs for roof work as well as windows.
Therefore, the Administrator erred by issuing the MCI increase
before receipt of all governmental approvals.
A staff person at the Building Department has informed the
Division that an owner who makes improvements without permit may
nevertheless apply for a permit after the work is completed (at an
increased fee as a penalty). Accordingly, the Commissioner is of
the view that this proceeding should be remanded to the
Administrator for further processing including the receipt of all
work permits and sign-offs required by the Mt. Vernon Department of
Buildings.
In addition, the roof should be inspected by DHCR personnel to
determine (a) if it constituted a new roof or mere patchwork and
(b) if it was a new roof, whether it was done in a workman-like
manner. The Administrator should also determine to what extent, if
any, the roofing work was done by the owner's son and
superintendent and if there is any ownership relationship between
the owner and the roofer. If the roof is found to be otherwise
eligible for an MCI increase, neither DHCR policy nor its
regulations require proof that the roofing contractor be licensed.
Furthermore, the Commissioner notes that the contract for the
windows is dated September 4, 1989, contemplating the installation
of 224 windows at $295.00 per window. Nevertheless, the owner's
affidavit, sworn to by the owner on May 24, 1990, states that 80
windows will be installed (in one of the three subject buildings)
at an "estimated" cost of $15,000.00 or $187.50 per window.
While it is undisputed that 224 windows were installed,
ADM. REVIEW DOCKET NOS.: GB810176RT ET AL.
clearly, the owner's credibility is, at best, diminished by these
contradictions. On remand, the Administrator should determine the
actual cost of the windows, e.g., whether the price was inflated
for purposes of increasing the MCI increase.
On remand, if the owner is determined, after submitting the
required governmental approvals, to be qualified for an MCI
increase for one or both of the improvements, the rent increases
will be prospective only based on the fact that the application
with respect to both the windows and the roof was incomplete in
that it lacked the required governmental permits and sign-offs.
The fact that the owner submitted a permit for 80 windows in no way
alters this result. The MCI application for the windows was
nevertheless incomplete, lacking the required municipal approvals.
Accordingly, the Administrator's January 10, 1992 order is
hereby revoked without prejudice to the owner's right to a
prospective rent increase on remand.
The owner is hereby directed to refund all rent increases
collected pursuant to Administrator's Order within thirty days of
the issuance of this Order. Copies of this Order will be served on
all ETPA tenants in the complex.
THEREFORE, in accordance with the Emergency Tenant Protection
Act and Regulations, it is
ORDERED, that these petitions be, and the same hereby are,
granted to the extent of remanding this proceeding to the Rent
Administrator for further processing in accordance with this Order
and Opinion and the Rent Administrator's order and the rent
increase granted therein be, and the same hereby are, revoked; and
it is further
ORDERED, that the owner refund to all tenants any excess rent
collected as a result of this Order within thirty days of its
issuance.
NOTE: This Order has the effect of immediately reducing the
regulated rents to the amount in effect immediately prior to the
MCI increases revoked herein, to which may then be added any
authorized rent increases unrelated to the MCI improvements covered
by the Administrator's order. The prospective effect of this rent
reduction will not be automatically stayed by the filing of an
ADM. REVIEW DOCKET NOS.: GB810176RT ET AL.
appeal of this Order by the owner.
ISSUED:
JOSEPH A. D'AGOSTA
Deputy Commissioner
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