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  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 : 
      ------------------------------------X                             

                  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 
      building.

      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 
      allowed.









          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 
      work.

      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.

      ISSUED:










                                                                    
                                           JOSEPH A. D'AGOSTA
                                           Deputy Commissioner




                                                    
    

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