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


          ------------------------------------X
          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.
          ------------------------------------X

                       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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