STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
------------------------------------X S.J.R. NO.: 7341
IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.: GL410079RT
VARIOUS TENANTS OF RENT ADMINISTRATOR'S
171 WEST 57TH STREET DOCKET NO.: EF410155OM
NEW YORK, NEW YORK PETITIONERS :
ORDER AND OPINION REMANDING PROCEEDING ON APPEAL
On December 21, 1992 the above-named petitioner-tenants filed a petition
for administrative review (PAR) against an order issued on November 17,
1992 by the Rent Administrator (92-31 Union Hall Street, Jamaica, New York)
concerning the housing accommodations known as 171 West 57th Street, New
York, New York, various apartments, wherein the Administrator granted major
capital improvement (MCI) rent increases for the stabilized apartments in
the subject premises based on pointing, waterproofing, steam cleaning,
parapet work and roof work. The Administrator also approved costs for a
sidewalk bridge, scaffolding and architectural fees.
Subsequent thereto, the owner filed a petition in the Supreme Court
pursuant to Article 78 of the Civil Practice Law and Rules seeking an order
of mandamus. This resulted in a court-ordered stipulation remitting the
proceeding for a determination of the administrative appeal herein.
In this proceeding the tenants contend, in substance, that notice of the
application was not served on all tenants; that a complete copy of the
application was not available on the premises because all tenancies
(commercial and residential) were not properly listed; that the work was
performed poorly; that useful life requirements have not been met; that
there have been leaks and water damage since the work was completed; that
the roof is not new; that the pointing and waterproofing was not
comprehensive; that the owner did not replace all of the parapets; that the
owner has not submitted sufficient proof for the work performed and has
submitted conflicting information; that costs for architectural services,
scaffolding and the sidewalk bridge should not be eligible for an MCI rent
increase because the owner has not established that these costs were
necessary and because they are unreasonably high; that the owner failed to
file the necessary permits; that the owner is not maintaining services;
that there is a discrepancy regarding the identity of the owner; and that
the DHCR should confirm that the owner has properly registered the
In response, the owner asserts, in substance, that many of the tenants'
objections are being raised for the first time on appeal; that any water
damage problems have been attended to promptly; that the fact that there
may have been some sporadic problems does not mean that the work was
performed poorly; that the roof installation was complete; that all
ADMIN. REVIEW DOCKET NO.: GL410079RT (SJR 7341)
necessary proof was submitted; that a complete copy of the application was
available on the premises; that all tenancies were properly listed; and
that services are being maintained.
In reply, the tenants assert, in substance, that the owner's submission
filed by his attorney, is not responsive; that since the owner's attorney
has no personal knowledge of the facts and fails to indicate the basis for
his information, the owner's answer is of no value and should not be
considered; and that the tenants should be allowed to present all necessary
evidence in support of their PAR. The tenants also repeated the
allegations raised in their PAR.
After careful consideration, the Commissioner is of the opinion that this
proceeding should be remanded for further consideration.
Rent increases for major capital improvements are authorized by Section
2522.4 of the Rent Stabilization Code for rent stabilized apartments.
Under rent stabilization, the improvement must generally be building-wide;
depreciable under the Internal Revenue Code, other than for ordinary
repairs; required for the operation, preservation, and maintenance of the
structure; and replace an item whose useful life has expired.
With respect to the contention that the MCI rent increase application was
not served on all tenants, a review of the record reveals that on August
24, 1990, the Rent Administrator served a Notice to Tenant of Commencement
of Proceeding to Consider the Owner's Application for a Rent Increase Based
on Major Capital Improvement(s) to all tenants in the subject building,
along with answer forms, and provided the tenants an opportunity to submit
responses thereto. Although the tenants specifically contend in their
petition that at least four of them did not receive said notice, none of
the notices were returned by the Post Office to DHCR as undeliverable.
Furthermore, the record shows that several tenants, including two
(apts. 8A 11B) who allegedly did not receive said notice, submitted
responses to the application. The record further shows that none of the
tenants raised any objection to the unavailability for review of the
owner's application nor did they raise any question as to the adequacy of
the work performed during the more than two years that the proceeding was
pending before the Administrator, and thus, such objections may not be
considered for the first time on appeal.
The record further indicates that the Administrator gave appropriate
consideration to the commercial tenancies of the building and, in fact,
allocated $237,193.51 or 41% of the approved cost ($574,179.39) as an
amount to be borne solely by the commercial tenants in the structure in
accordance with established procedure.
Concerning the tenants' contention that the owner is not maintaining
services, the Commissioner notes that DHCR records reveal no complaints of
decrease in services pending for the subject premises. This order is
issued without prejudice to the tenants' right to file an appropriate
complaint for a decrease in rent based on a decrease in services, if the
facts now so warrant.
As to the tenants' contention that the owner did not submit sufficient
proof for the exterior work (pointing and waterproofing, steam cleaning,
parapets, roof), the Commissioner notes that although the record discloses
ADMIN. REVIEW DOCKET NO.: GL410079RT (SJR 7341)
that the owner submitted copies of contracts, cancelled checks, and a
statement from the contractor that all necessary pointing and waterproofing
was performed, the record fails to indicate that a contractor's
certification and the requisite diagram (indicating the areas where
pointing and waterproofing were performed) were submitted by the owner.
Accordingly, the Commissioner is of the opinion that this proceeding should
be remanded to determine whether said documentation was in fact submitted
below. If it cannot be determined that said documentation was submitted as
required, the Administrator should request any evidence deemed necessary.
In this respect the Commissioner notes that the owner, on appeal, has
submitted documentation that various leak damage occurred subsequent to the
time the work in question was completed. Thus, upon the remand of this
proceeding the Administrator, on notice to all parties, should consider the
tenants' allegations with regard to the efficacy of the work performed.
With respect to the contention that the costs for architectural services
should not be allowed because they were either unnecessary or exorbitant,
it is the DHCR's position that certain engineering or architectural
expenses which are directly related to the MCI installation cost, and which
are not otherwise duplicated, qualify for a rent increase. Thus,
preparatory inspections needed, as well as the cost of the drawing of plans
and specifications for the particular installations(s), or expenses for any
other professional services which are established as being both necessary
and customary to the accomplishment of the improvement(s), qualify for an
MCI rent increase.
The record in the instant proceeding reveals that the owner used the
services of two separate architects for the extensive exterior work
performed at the subject premises. Such services included the general
administration of the work, the development of drawings and specifications,
the review of documents and the observation and inspection of the work, as
indicated by copies of invoices for said services and statements from one
of the architects and the managing agent submitted by the owner during the
proceeding below. The Commissioner is of the opinion that such services
would be allowable under the above stated principle. However, it appears
from a review of the documentation that some of the services provided by
the two architects were duplicative and that certain work, e.g., the review
and evaluation of one architect's work by the other architect, was
unnecessary. Accordingly, upon remand, the Administrator should determine
whether any of the services provided by the two architects were duplicative
and/or unnecessary and, based thereon, whether the costs related thereto
are allowable. The Administrator should request any evidence or
information deemed necessary in this regard.
Regarding the contention that the costs for the sidewalk bridge and the
scaffolding should not be allowed, a review of the documentation submitted
by the owner reveals that the rental of the sidewalk bridge and/or sidewalk
shed commenced approximately 16 months prior to the commencement of the
exterior work at the subject premises. Accordingly, upon the remand the
Administrator should determine whether and to what extent those costs (and
related security costs) which were incurred prior to the commencement of
the work were warranted and, based thereon, whether those costs should be
ADMIN. REVIEW DOCKET NO.: GL410079RT (SJR 7341)
With respect to the contention that the owner did not obtain all necessary
permits with respect to the asbestos work, upon the remand the
Administrator should investigate as to the necessity for any municipal
permit or approval, or report of an independent monitor for such asbestos
As to the contention concerning the registration of the subject building,
the Commissioner notes that DHCR records reveal that the building has been
properly registered since 1984.
With respect to the contention that there is a discrepancy as to the
owner's identity, DHCR records reveal that the registered owner and the
entity which filed the application for the MCI rent increase are one and
the same. The fact that the owner's name may have been listed differently
with another muncipal agency is not relevant to this proceeding.
THEREFORE, in accordance with the provisions of the Rent Stabilization Law
and Code, it is
ORDERED, that this proceeding be, and the same hereby is, remanded to the
Rent Administrator for further consideration in accordance with this order
and opinion. The automatic stay of so much of the Rent Administrator's
order as directed a retroactive rent increase for the stabilized tenants
(which stay took effect upon the filing of the petition for administrative
review) is hereby continued until a new order is issued upon the remand.
However, the Administrator's determination as to a prospective rent
increase is not stayed and shall remain in effect until the Administrator
issues a new order upon the remand.
JOSEPH A. D'AGOSTA