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.: 7024
      IN THE MATTER OF THE ADMINISTRATIVE :  ADMINISTRATIVE REVIEW
      APPEAL OF                              DOCKET NO.: HB430004RO
                                          :  
         HENRY KASSIS                        RENT ADMINISTRATOR'S
                                             DOCKET NO.: FJ430076OM
                            PETITIONER    : 
      ------------------------------------X                             

                  ORDER AND OPINION REMANDING PROCEEDING ON APPEAL

      On February 1, 1993 the above-named petitioner-owner filed an 
      administrative appeal against an order issued on December 29, 1992 by the 
      Rent Administrator (92-31 Union Hall Street, Jamaica, New York) concerning 
      the housing accommodations known as 251 Lexington Avenue, New York, New 
      York, various apartments, wherein the Administrator granted major capital 
      improvement (MCI) rent increases for the controlled and stabilized 
      apartments in the subject premises based on the installation of a new 
      intercom, a new roof and a new boiler/hot water heater.  The Administrator 
      disallowed expenditures for certain wiring and other electrical work in the 
      boiler room; architectural drawings; a new staircase including handrails, 
      platforms and floor; boiler room work; new vinyl flooring; and part of the 
      roof installation.

      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 owner's administrative appeal herein.

      In this petition the owner contends, in substance, that the New York City 
      Department of Buildings required that the boiler and hot water heater be 
      moved from the front of the basement to the rear of the building and also 
      required plans for said work; that the work in the basement was mandatory 
      for the construction of the boiler room and the new building-wide 
      staircases, including handrails, platforms and vinyl flooring; that said 
      work was necessary in order to obtain the approval from the Department of 
      Buildings for the new plans; that the work was performed contemporaneously 
      with the installation of the boiler and hot water heater; and that 
      expenditures for this work and for the architectural drawings should be 
      allowed.

      The owner also contends that expenditures for the following items should be 
      allowed: additional wiring to the boiler performed contemporaneously with 
      the boiler installation; new fixtures installed to provide greater light 
      for security; a new end box and lighting switches required by law; and 
      sales tax.







          ADMIN. REVIEW DOCKET NO.: HB43004RO (SJR 7024)


      In response to the petition, various tenants assert, in substance, that the 
      owner did not perform the work claimed; that certain installations do not 
      work properly; and that the Administrator properly disallowed the above 
      mentioned items.

      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 
      2202.4 of the Rent and Eviction Regulations for rent controlled apartments 
      and Section 2522.4 of the Rent Stabilization Code for rent stabilized 
      apartments.  Under rent control, an increase is warranted where there has 
      been since July 1, 1970 a major capital improvement required for the 
      operation, preservation, or maintenance of the structure.  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.

      Pursuant to the applicable provisions of the Regulations and the Code, an 
      owner may be  entitled to a rent increase for installations which the owner 
      can demonstrate are necessary in order to comply with a specific 
      requirement of law and for work performed in conjunction with a qualifying 
      major capital improvement.

      The record is not sufficient to establish either that the work described by 
      the owner was required by law or that there was any necessity for the 
      boiler relocation to justify passing this cost to the tenants in the form 
      of a permanent rent increase.  The Commissioner further notes that although 
      the owner contends that the staircase installation was building-wide, the 
      record is not sufficient to support this contention.  Based thereon, the 
      Commissioner is of the opinion that this proceeding should be remanded for 
      further consideration to determine whether a rent increase is warranted for 
      the boiler room work, the new staircases (including handrails and 
      platforms), and the additional wiring (including fixtures, end box and 
      switches).

      As to the installation of vinyl flooring at the premises, the Commissioner 
      notes that such work does not qualify for an MCI rent increase.

      With respect to the owner's contention that sales tax should not be 
      excluded, the Commissioner notes that sales tax is not an allowable 
      expenditure for an MCI rent increase.

      THEREFORE, in accordance with the provisions of the Rent Stabilization Law 
      and Code and the Rent and Eviction Regulations for New York City, it is

      ORDERED, that this petition be, and the same hereby is, remanded for 
      further consideration in accordance with this order and opinion.

      ISSUED:
                                                                    
                                           JOSEPH A. D'AGOSTA
                                           Deputy Commissioner
    

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