DOCKET NO.:  GD 910300-RO
                                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   :   SJR 6569
      APPEAL OF                                 ADMINISTRATIVE REVIEW
                                            :   DOCKET NO. GD 910300-RO
            MONA LISA APARTMENTS,               DISTRICT RENT ADMINISTRATOR'S
                                            :   DOCKET NOS. EA 9-1-0027-RP
                             PETITIONER                     BL8-1-0003-OM
      --------------------------------------X            


             ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW

      On April 23, 1992, the above-named owner filed a petition for administrative 
      review of an order issued on March 20, 1992 by a District Rent Administrator 
      concerning various apartments located at 671 Bronx River Road, Yonkers, New 
      York.

      Subsequently and after more than ninety days had elapsed from the time it 
      filed its petition for administrative review, the owner deemed its petition 
      as having been denied, and sought judicial review in the Supreme Court of 
      the State of New York pursuant to Article 78 of the Civil Practice Law and 
      Rules.

      After considering the Article 78 petition, the Court issued an order 
      remitting the proceeding to the New York State Division of Housing and 
      Community Renewal (DHCR) for further consideration.

      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 petition for review.

      The owner commenced this proceeding on October 28, 1987 by filing an 
      application for a rent increase based on a major capital improvement (MCI), 
      including replacement of windows, replacement of the parking deck, 
      installation of parking garage door, and relining of the elevator cab at a 
      total cost of $147,762.00.

      Some of the tenants submitted answers to the Administrator asserting, among 
      other things, that a Yonkers housing inspector informed them that the prior 
      windows were not obsolete; that they just needed caulking, and required 
      weather stripping, and that new windows were not necessary.

      The owner submitted a response to DHCR, dated March 28, 1988, which 
      asserted, among other things, that the old windows needed to be replaced, 
      and that pursuant to Operational Bulletin 84-4 the owner is entitled to an 
      MCI rent increase based on the total cost of the windows as the replacing of 
      the prior windows were necessary.
      To its response the owner attached a letter written by a professional 
      engineer, dated February 15, 1988, which stated that:







          DOCKET NO.:  GD 910300-RO



                Although the windows are only 17 years old, their 
                complete replacement is recommended.

                Inspection of sample apartments indicated that many 
                units require weather stripping and sealing, while 
                several units were warped, did not seat (sic) properly, 
                and leaked air.

                In addition to the physical and dimensional deficiencies 
                outlined, these single glazed units are energy wasteful, 
                and would not meet present Energy Conservation Code if 
                currently installed.

                The installation of double glazed thermal-break units 
                would result in improved comfort level within the 
                apartment.


      The Administrator's order under Docket No. BL 810003-OM, issued October 31, 
      1988, determined that the installation of the parking deck, the garage door, 
      and the relining of the elevator cab do not qualify as an MCI.  The 
      Administrator approved an MCI rent increase for 50% of the cost of the 
      replacement of the windows, as the Administrator stated, "pursuant to 
      Operational Bulletin 84-4, in applications where the replaced windows were 
      less than 25 Years old, the allowable cost will constitute 50% of the 
      substantiated cost."

      The owner's petition of the above-mentioned order, dated November 9, 1988, 
      alleged, among other things, that Operational Bulletin 84-4 states that:  
      "In those cases where the old windows were between 15 and 25 years old, the 
      District Rent Administrator may grant a rent increase based upon the full 
      substantiated cost of the new windows if the District Rent Administrator 
      determines that the replacement were necessary...."  (Emphasis by the 
      owner.)  The subject owner's petition further asserted that the 
      Administrator did not consider the issue of whether or not the windows were 
      necessary.

      The Commissioner's order, under Docket No. CK 810135-RO, issued on December 
      21, 1989, determined that it was not necessary for the Administrator to have 
      determined whether the replacement of the windows were necessary, upon the 
      Administrator's finding that the window replacements were for energy 
      conservation purposes; that the relining of the elevator cab was merely a 
      cosmetic improvement; that the issue of the installation of the garage door 
      should be remanded to the Administrator  to determine whether the garage 
      door is a benefit to all of the tenants, and if the MCI rent increase should 
      be borne exclusively by those tenants who have use of the garage space, and 
      that the issue of the restoration of the parking deck should be remanded to 
      the Administrator to determine whether it was a building-wide improvement.






          DOCKET NO.:  GD 910300-RO


      The subject owner wrote to the DHCR a letter, dated January 3, 1990, 
      requesting reconsideration of the Commissioner's order.  The letter asserted 
      that the Commissioner misinterpreted Operational Bulletin 84-4, in that the 
      owner stated that "the intent of the Bulletin is to allow the full cost of 
      the windows to be included if the replaced windows were between 15 and 25 
      years old and it is determined that their replacement was 'necessary'," 
      (emphasis by the owner) regardless of the fact that the new windows were 
      also for energy conservation purposes.

      The rent agency issued an order, on February 27, 1990, granting the owner's 
      request for reconsideration and reopening of Administrative Review Docket 
      No. CK 810135-RO.  The order stated that:  "The windows being at least 17 
      years old, the Administrator was required to determine the necessity for 
      this replacement, i.e. unsafe, hazardous, inoperable, rotted frames, etc., 
      in addition to determining that the owner would be only entitled to 50% of 
      the cost if replacement was only for energy conservation purposes."  The 
      order afforded the tenants twenty days from the above-mentioned date to 
      respond to the above-mentioned order.

      Various tenants in their response to the above-mentioned order asserted that 
      the prior windows worked properly, and that they did not need to be 
      replaced.

      The subject owner's response, dated March 6, 1990, alleged that the tenants' 
      responses were "self-serving," and "have little evidentiary value," as the 
      tenants did not submit any "documentary evidence to support their 
      allegations."

      To its response the owner attached affidavits from several contractors which 
      alleged that the prior windows were in poor condition and needed to be 
      replaced.

      The Commissioner's order, under Docket No. CK 810135-RO (Reopened), issued 
      on July 13, 1990, remanded the proceeding to the Administrator "For the 
      purpose of affording the owner and the tenants an opportunity to present 
      evidence as to the necessity of the subject window replacement.  Factors 
      taken into account may include...inoperability, hazardousness and the 
      condition of the frames."  The Commissioner also affirmed the portion of the 
      prior order, issued on December 31, 1989, which remanded the issues of the 
      garage door and parking deck restoration to the Administrator.

      The subject owner submitted a letter to the Administrator, dated August 17, 
      1990, which asserted that the owner is entitled to 100% of the cost of the 
      new windows in calculating the MCI rent increase as the replacement of the 
      windows were necessary; that the owner withdraws its MCI application with 
      respect to the parking deck, and that an MCI rent increase should be granted 
      for the garage door as to those tenants who use the garage.

      To its letter the owner attached, among other things, statements from 
      several building contractors and engineers alleging that the prior windows 
      were in poor condition and needed to be replaced; an inspection report from 
      a housing inspector from the City of Yonkers, dated June 17, 1986, of twelve 
      of the ninety-three apartments in the subject building (due to violations of 
      the Yonkers City Code), which noted that in two apartments the windows 
      required adjustments to close; that in three apartments the windows required 
      weather stripping; that in one apartment the bedroom window sill was water 







          DOCKET NO.:  GD 910300-RO

      damaged; that in one apartment the windows throughout required repairs, and 
      that in five apartments the inspector did not note any defects concerning 
      the windows.  In addition, the owner attached a prior inspection report from 
      a Yonkers's housing inspector, dated January 23, 1986, of twenty-one 
      apartments in the subject building.  The inspection report noted that there 
      were defects of the windows in eight of the apartments, in that the windows 
      in one apartment required caulking, three apartments had windows that had 
      damage to the window sills, four apartments had windows that needed 
      weatherstripping, one apartment had windows that required adjusting to close 
      properly, one apartment needed repairs to the living room window panes, one 
      apartment had a bedroom window fire escape lock broken, and in one apartment 
      a bedroom window had to be made "weathertight."

      The subject owner also attached letters from various tenants asserting, 
      among other things, that the old windows formed "condensation," causing 
      water to leak inside; that the windows were hard to lock and hard to clean; 
      that the windows were poor insulators as they allowed cold air in the 
      apartment, and that the old windows were easy to open from the outside by 
      burglars.

      On March 21, 1991, the Administrator mailed to the parties a "Notice of 
      Proceeding to Reconsider Order Pursuant to Remand," which provided that the 
      parties to the proceeding were to respond to the issues that were remanded 
      to the Administrator by the Commissioner's order, issued on July 13, 1990, 
      within twenty days of the above-mentioned date.

      In March and April, 1991, various tenants submitted responses to the above- 
      mentioned notice asserting, among other things, that the prior windows did 
      not require replacing, and that they only needed to be weather stripped and 
      caulked.  However, two other tenants asserted that the prior windows were 
      insufficient for proper warmth and security; that they were difficult to 
      clean, and "prone to frost and condensation," and that they were poor sound 
      insulators.

      On April 4, 1991, the subject owner submitted to the Administrator a letter 
      which alleged that the tenants who had alleged that the replacement of the 
      windows were not necessary, did not submit any evidence to substantiate 
      their allegations, and that their allegations were "self-serving."

      To his letter the subject owner attached a statement by an alleged licensed 
      architect, dated September 17, 1990, which stated that:


                Overall the windows were of inferior grade; improperly 
                installed, and needed replacement.  Specifically, I 
                found in various sample apartments the windows were 
                warped, pitted and loose.  They did not close or open 
                properly.  Some had difficulty locking.  The conditions 
                of the windows warranted that they be replaced.  I 
                recommended, energy efficient double-glazed replacement 
                windows.



      On December 1, 1991, the Administrator mailed to the subject owner a notice 
      which requested that it submit the cooperative offering plan for the subject 
      building, within twenty days of the above-mentioned date.



          DOCKET NO.:  GD 910300-RO


      On December 10, 1991 the subject owner submitted the aforementioned 
      cooperative offering plan, dated June 30, 1982, which stated that:


                All apartment windows are aluminum sliders, with 
                screens, and provision for 'piggyback' storm window 
                attachment.  Exterior window sills are cast stone.

                Although window sashes are generally in acceptable 
                condition, most windows are either not caulked or 
                improperly caulked, and most steel lintels are rusted 
                and require scraping, refinishing and proper recaulking.


      In the order under review herein, the Administrator determined, among other 
      things, that the owner is entitled to an MCI rent increase based upon 50% of 
      the cost of the new windows, as the Administrator determined that the 
      replacement of the windows were not necessary, but were due to energy 
      conservation purposes.

      The subject owner's petition asserts that although the replacement of the 
      windows did in fact contribute to energy conservation, the prior windows 
      were in poor condition, "and that the replacement of windows were 
      necessary."  The subject owner further asserts that the Administrator 
      ignored the statements of the various contractors which alleged that the 
      replaced windows were in extremely poor condition.

      Furthermore, the owner's petition states that:


                The MCI provisions of the ETPA and Regulations are 
                clearly intended to encourage owners to improve the 
                housing stock by providing for a return on the actual 
                cost of the improvement.  It is contrary to the intent 
                of the law to place limitations on the rent adjustment 
                where there is no dispute that the improvement qualifies 
                as an MCI.

                To the extent that Operational Bulletin 84-4 provides 
                for such limitation, it is void as contrary to the 
                express language of the statute and the obvious 
                legislative intent.


      The subject owner further asserts that the choice of twenty-five years as 
      the "useful life" of windows, that is established in Operational Bulletin 
      84-4, is arbitrary, and that the owner alleges that it is not aware of any 
      "scientific studies or research which would support the DHCR's choice of 25 
      years."  The owner also states that:


                [B]y defining 'useful life' solely as a function of 
                years, the DHCR has eliminated other important 
                considerations for replacing windows, including 
                aesthetics and the improved function of modern windows.








          DOCKET NO.:  GD 910300-RO

                Forcing owners to wait 25 years to replace outdated 
                windows, the practical effect of the DHCR's 'useful 
                life' rules, does not necessarily benefit the tenants 
                and may contribute to the deterioration of the building.


      In October, 1992, various tenants' submitted answers to the owner's petition 
      alleging that the original windows were fine; that they did not need to be 
      replaced, and that some of the original windows only needed to be caulked.

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

      The Commissioner is of the opinion that the subject owner has the burden of 
      proof in establishing the necessity of replacing the windows in this 
      proceeding.  The Commissioner finds that the owner's evidence did not 
      properly rebut the tenants allegation that it was not necessary to replace 
      the windows as they only needed to be caulked and weatherstripped.

      Furthermore, the owner's allegation that the windows needed to be replaced 
      is contradicted by the Yonkers's housing inspector's report which noted that 
      only seven or eight apartments (out of ninety-three apartments) had 
      defective windows, and only a couple of those windows had defects of a major 
      nature.  The Commissioner notes that the majority of the windows noted in 
      the Yonkers's housing inspector's report merely needed to be caulked and 
      weatherstripped.

      The Commissioner notes that the aforementioned cooperative offering plan, 
      dated June 30, 1982, stated that the original windows "are either not 
      caulked or improperly caulked, and most steel lintels are rusted and require 
      scraping, refinishing and proper recaulking."

      The Commissioner finds, based on the preponderance of the evidence, that the 
      replacement of the windows were not necessary, pursuant to Operational 
      Bulletin 84-4, and that most of the windows that were replaced only needed 
      minor repairs, e.g., caulking, weatherstripping and scraping.

      Accordingly, the Commissioner finds that the subject owner has not met its 
      burden of proof in establishing the necessity of replacing the windows, as 
      the owner has not established that the replaced windows were structurally 
      defective, i.e., inoperable, hazardous, unsafe, rotted frame, etc.  The 
      Commissioner is of the opinion that based on the evidence submitted in this 
      proceeding the windows were replaced solely for energy conservation 
      purposes.

      The Commissioner notes that the replaced windows did not exceed its useful 
      life period, as established by Operational Bulletin 84-4, as the subject 
      owner admits that the replaced windows were only seventeen years old.



      As the replacement of the windows were for energy conservation purposes and 
      not due to structural defects, and that the replaced windows did not exceed 
      its useful life period, pursuant to Operational Bulletin 84-4, the 
      Commissioner finds that the replacement of the windows in this proceeding do 
      not qualify as an MCI within the definition of the Emergency Tenant 
      Protection Act (ETPA) and the State Tenant Protection Regulations (STPR), 



          DOCKET NO.:  GD 910300-RO

      and therefore the Commissioner is accordingly of the opinion that the above- 
      mentioned Operational Bulletin which provides for rent increases based on 
      50% of the cost of the windows is not contrary to the MCI provisions of ETPA 
      and the STPR.

      Pursuant to Section 2502.4(a)(2)(iii) of the STPR an owner is not eligible 
      for an MCI rent increase where the legal regulated rent has "been adjusted 
      prior to the application based in whole or part upon the grounds set forth 
      in the application."  A literal interpretation of the above-mentioned 
      Section would mean that an owner would be eligible for an MCI rent increase 
      for work on a specific item or equipment for one time only in perpetuity.  
      The above-mentioned interpretation is contrary to the intent of the above- 
      mentioned section which is to encourage the maintenance and rehabilitation 
      of the housing stock, and therefore the Commissioner is of the opinion that 
      based on the intent of the above-mentioned section it is implied that the 
      rent agency may promulgate a useful life schedule for specific items and 
      equipment.

      The Commissioner is also of the opinion that the rent agency's determination 
      that the useful life for windows is twenty-five years, pursuant to 
      Operational Bulletin 84-4, is not arbitrary as the above-mentioned time 
      period is not absolute, and in fact may be less when the owner can show that 
      the replacement of the windows were necessary.  As the subject owner did not 
      show that the replacement of the windows were necessary, the Commissioner 
      finds that using twenty-five years as the useful life for windows, as noted 
      in Operational Bulletin 84-4, was reasonable in this proceeding.

      As to the owner's allegation that "aesthetics" should be included as a 
      criteria in determining whether work qualifies as an MCI, the Commissioner 
      notes that for work to qualify as a major capital improvement, it must 
      satisfy various criteria.  The installation must be required for the 
      continued operation, preservation, and maintenance of the subject premises.  
      Furthermore, the installation must be one which is essentially structural in 
      nature and materially add to the value of the property and appreciably 
      prolong the life thereof.  Accordingly, the Commissioner finds that 
      "aesthetics", by itself, is not a criteria in determining whether work 
      qualifies as an MCI.  The Commissioner further finds that the subject 
      owner's allegation that the new windows function better than the prior 
      windows has not been substantiated.

      Accordingly, the Commissioner finds that the Administrator's order should be 
      affirmed.









          DOCKET NO.:  GD 910300-RO



      THEREFORE, in accordance with the provisions of the Emergency Tenant 
      Protection Act of 1974, and the State Tenant Protection Regulations, it is

      ORDERED, that this petition be, and the same hereby are, denied, and that 
      the order of the Rent Administrator be, and the same hereby is, affirmed. 

      ISSUED:
                                                                                
                                                       JOSEPH D'AGOSTA
                                                  Acting Deputy Commissioner
    

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