STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.: GE430160RO
875 WEST 181 ASSOCIATES RENT ADMINISTRATOR'S
c/o MARK GREENBERG DOCKET NO.: EI530088OM
ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
On May 12, 1992 the above named petitioner-owner filed an
administrative appeal against an order issued on April 9, 1992 by
the Rent Administrator (Gertz Plaza, Jamaica, New York) concerning
the housing accommodations known as 875 West 181 Street, New York,
New York, various apartments, wherein the Administrator denied the
owner's request for a major capital improvement (MCI) rent increase
for an apartment/hallway window installation because as per the
third amendment dated January 23, 1986 to the cooperative offering
plan, "the sponsor agreed to have the windows installed at its sole
cost and expense".
On appeal, the petitioner-owner states, in substance, that the use
of the phase, "sole cost and expense", was merely used to
differentiate the use of his funds in paying for the improvements
in question from the use of any reserve funds or any credit taken
against the reserve fund, and that the sponsor intended to pay for
improvement so that he would be fully eligible to apply for an MCI
In response to the owner's petition, the tenants filed an answer
stating in substance, that the owner agreed to pay for the window
installation at his sole cost and expense as indicated in the third
amendment of the Cooperative Offering Plan, and that the owner
never implied that the cost would be passed along to the tenants.
After careful consideration of the entire evidence of record, the
Commissioner is of the opinion that this administrative appeal
should be denied.
Where an owner makes representations during the conversion process
which obligate the owner/sponsor to perform work at its "sole
expense" or "sole cost and expense", tenants would be justified in
relying on this representation in deciding whether to purchase
their individual apartments. Thus, the owner cannot thereafter
turn to the non-purchasing tenants in an attempt to have them
subsidize the Sponsor for the cost for the work which the Sponsor
assumed in a public offering as its sole responsibility and
obligation (Policy Statement 89-9).
ADMIN. REVIEW DOCKET NO.: GE430160RO
The Commissioner notes that the third amendment to the cooperative
offering plan states that Sponsor agreed to do the major capital
improvement (windows) at his sole cost and expense.
Since it is clear from the record that the Sponsor made a binding
representation in a public offering during the cooperative
conversion process to install the windows at its sole cost and
expense, the owner is precluded from recovering the cost of the
work in an MCI increase pursuant to Policy Statement 89-9.
In this connection the Commissioner notes that Policy Statement 89-
9 does not reflect a change in policy, but rather reflects a line
of administrative rulings (AE730001RT,ART13197L and BL420122RT)
rendered prior to the issuance of this policy statement which
precluded MCI rent increases where the sponsor undertook to perform
the work at no expense to the tenants (who had reason to rely on
the representation made in the public offering), but rather at the
sponsor's sole cost and expense.
On the basis of the entire evidence of record, it is found that the
Administrator's order is correct and should be affirmed.
THEREFORE, in accordance with the applicable provisions of the Rent
Stabilization Law and Code, the Rent and Eviction Regulations for
the City of New York, and Operational Bulletin 84-1, it is
ORDERED, that this administrative appeal be, and the same hereby
is, denied; and that the Administrator's order be, and the same
hereby is, affirmed.
JOSEPH A. D'AGOSTA