DHCR Decisions
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.: 7384
IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEALS OF DOCKET NOS.: HA 430013-RO
DAVID FRANKEL REALTY, INC. : HA 430116-RT
c/o ROSENBERG & ESTIS, P.C. HA 430253-RT
:
(OWNER) RENT ADMINISTRATOR'S
AND : DOCKET NO.: FE 430038-OM
ARMAND ROMAN AND :
THE TENANTS' ASSOCIATION of
400 East 58th Street :
New York, New York
c/o Finkelstein, Borah, :
Schwartz, Altschuler &
Goldstein, P.C. :
(TENANTS) :
------------------------------------X
ORDER AND OPINION REMANDING PROCEEDING FOR ADMINISTRATIVE REVIEW
On various dates, the above named petitioner-owner and petitioner
tenants timely filed and re-filed petitions for administrative
review (PAR) against an order issued on December 10, 1992, by a
Rent Administrator concerning the housing accommodations known as
400 East 58th Street, New York, New York, wherein the Rent
Administrator granted in part the owner's application for a rent
increase.
Subsequent thereto, the petitioner-owner filed a petition in the
Supreme Court pursuant to Article 78 of the Civil Practice Law and
Rules requesting that the Court direct the Division to
expeditiously determine the petitioner's administrative appeal.
The Court granted the relief requested.
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 these administrative appeals.
The owner commenced this proceeding on May 10, 1991, by filing an
application for a rent increase based on the total claimed cost of
$1,042,052.00 for the following items: professional consultant
engineering fee; wall/roof; steel beam replaced; engineering
consultant fee; window replacement #1; window replacement #2; and
steel door.
ADMIN. REVIEW DOCKET NOS.: HA 430013-RO, HA 430116-RT, HA 430253-RT
The tenants objected to the owner's application stating, in
substance, the following: that many windows on the north side of
the building were replaced in 1978 and 1981 for which the owner was
granted a rent increase and the useful life of those windows had
not been exhausted (a list of tenants whose windows were previously
replaced was submitted); that no explanation is given as to the use
of two different window companies; that the window installation is
time barred having been completed prior to the owner's stated
completion date of May 2, 1989 on its application and the required
completion date on the contract of May 1, 1989 as evidenced by a
check for the (Ecker) windows that was paid on February 13, 1989;
that a discrepancy exists between the original Advance window
contract, listing 939 windows and the final billing statement
listing 859 windows; that a discrepancy exists between the
contracted price ($213,153.00) for the windows and the amount paid
($199,717.50); that no explanation is given regarding the alleged
cost ($3,604.00) of lobby windows, when there are no windows in the
lobby and only one window on the first floor; that a discrepancy in
the cost per window is unexplained; that the replacement windows
are of inferior quality and numerous defects were not corrected by
the owner; that not all windows were replaced, specifically in the
"A", "F" and "G" apartment lines and in the public hallways and
stairwells; that the roofing and exterior work (waterproofing and
pointing) are presented as one total cost but are actually separate
installations; that the waterproofing/pointing was completed prior
to March 17, 1989 according to the related invoices and checks and
is therefore time barred; that the roofing and exterior work
performed is unworkmanlike as the preexisting leaks and dampness
persist on the 17th floor apartments and various other apartments,
despite the work performed; that structural damage occurring during
new construction at the adjacent building resulted in insurance
payment to the owners of the subject building which the tenants
believe is related to the steel beam replacement in the instant
MCI; that the professional consultants cost is not a valid MCI and
is time barred having been incurred in 1988; that the waterproofing
consultant's cost of $8,200.00 was for window consultation and
should be disallowed; and that the replacement of one steel beam is
more of a structural reinforcement, since all structural beams were
not replaced. A list of tenants with leak and window problems was
submitted.
A physical inspection of the subject premises took place on
October 2, and October 15, 1992 wherein the inspector found windows
had not been replaced in apartments in the "A", "F" and "G" lines
and window defects existed. A reinspection was conducted on
November 24, 1992, and leaks were found in apartments PH-A, and
17-A, 17-F and 17-G.
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ADMIN. REVIEW DOCKET NOS.: HA 430013-RO, HA 430116-RT, HA 430253-RT
The owner responded by letter dated August 21 and September 14, 1992
to various requests from the Administrator for additional
information. Included with their response as an exhibit was an
affidavit by the president of the company that installed the
windows stating that the window installation was not completed
until August 1989 when the last window was installed and all punch
list items were completed. The tenants' reply followed on
September 30, 1992 reiterating many issues raised in their response
to owner's MCI application, additionally noting that the copy of
the owner's September 14, 1992 reply served on the tenants was not
accompanied by any of the exhibits purportedly attached.
On December 10, 1992, the District Rent Administrator issued the
order here under review granting a rent increase on an approved
total cost of $642,149.00 for the following items: professional
consultant engineering (adjusted to exclude $8,200.00 listed as
supervision of window replacement); and exterior walls (adjusted to
include parapets, masonry, pointing, lintels and waterproofing).
The Administrator disallowed a total cost of $399,903.00 for the
following items: engineering consultant fees; the windows based on
an inspection indicating that several apartment windows were not
replaced; and the roof surface and roof railing based on a DHCR
inspection conducted on November 24, 1992 finding that roof leaks
remained in apartments PH-A, 17-G, 17-F and 17-A. A notation was
added to the order advising that installations commenced on or
after June 29, 1990 are to be amortized over an 84 months period.
The petitioner-owner contends in substance in its petition, that
the instant order should be modified and the full cost of the
installations approved for the following reasons: that the
calculations employed applying commercial rents over room counts
were a clear departure from the method specified in Section
2522.4(a)(2) of the Rent Stabilization Code and prior decisions by
the Office of Rent Control; that the roof surface and roof railing
installations "automatically" qualify as an MCI pursuant to
Sections 2522.4(a)(2) and Section 2522.4(a) of the Code; that the
owner corrected all leak conditions reported in the tenants'
submissions of November 13, 1992; that the findings in the DHCR
inspection report are erroneous, specifically in that corrected
conditions are not noted and the fact that the moisture meter
tested zero; that the service reduction complaints filed by the
tenants in the upper floors were dismissed by DHCR; that in the
alternative DHCR should follow previous precedent by exempting only
the four apartments affected by the leaks from the rent increase;
that pursuant to Policy Statement 89-6 lot line windows are not
required to be replaced and the windows that were not replaced in
apartments "A", "F" and "G" were lot line windows; and that
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ADMIN. REVIEW DOCKET NOS.: HA 430013-RO, HA 430116-RT, HA 430253-RT
submissions to DHCR dated August 21, 1992 and September 14, 1992
set forth the schedule of windows per apartment per line and a
breakdown of the number of windows in the building and the number
of windows replaced.
In response to the owner's petition, the Tenants' Association
advised its filing of a PAR and requests a consolidation with the
owner's PAR. They also state, in substance, the following: the
method of allocating commercial rents in calculating the MCI rent
increase is proper; alleged submissions by owner dated November 12,
1992, containing evidence regarding lot line windows were never
received by the tenants; that the Administrator based its denial of
the window installations on an inspection that found that
additional windows other than lot line windows were not replaced;
that windows on the north side of the building were replaced
between 1978 and 1981 for which rent increases were imposed and the
useful life, determined to be 25 years, for those windows had not
been exhausted; that the original date of completion for the window
installation is listed as May 2, 1989, exceeding the two year
limitation for filing an MCI; that the owner's attempt to extend
the completion date to August 1989 based on the installation of the
windows in one unit is not credible (and does not follow the
contractual requirement of an eight week period March 1 to May 2,
1992 for the installation); that the windows were installed in a
piecemeal basis, eight windows having been installed prior to
February 1989, the majority of the windows installed as per
contractual requirements between March 1 and May 2, 1989 although
invoices from Advance windows indicate an earlier completion date
for which a rent increase is time barred; that the roof work was
properly disallowed as it did not correct leaks previously
experienced particularly by tenants on the 17th floor which have
continued unabated as of October 1, 1992 with moisture meter
readings in excess of 80%; that the owner claims to have inspected
various apartments and performed corrective repairs but fails to
submit substantiating evidence.
The 76 individual petitions that were consolidated at the request
of the Tenants' Association and the one individual petition are all
identically worded and state in substance the following: that
waterproofing and roofing cannot be granted or disallowed in part
as each installation is performed as one project; that similarly
all attendant consultant fees should be disallowed; that the
waterproofing (last payment check dated February 2, 1989), the
steel beam replacement (completed November 1988) and steel roof
door (invoice dated April 17, 1988) were completed more than two
years before the MCI application was filed (May 10, 1991). Letters
were submitted by the tenants of Apts. 17-F, 17-C and 12-F
regarding the owner's continued failure to repair leak damage.
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ADMIN. REVIEW DOCKET NOS.: HA 430013-RO, HA 430116-RT, HA 430253-RT
In response to the tenants' petition, the owner states in substance
the following: the PAR submitted by tenant McNicholl on behalf of
the Tenants' Association is procedurally defective absent the
requisite signatures of tenants signing as petitioners (as
indicated to have been attached to the petition) and tenant
McNicholl's authorization to act as tenants' representative; that
in the alternative the sole petitioner is tenant Carol McNicholl;
that tenant McNicholl's petition (Docket No. HA 430253-RT) and
tenant Armand Roman's petition (HA 430116-RT) are identically
worded and should be consolidated; that the installations qualify
under the Rent Stabilization Code as major capital improvements;
that the unique design of the building and the complexity of the
work required engineering consultants to oversee separately the
exterior facade work and the window installations and as such it
may qualify as part of the cost of an MCI; that the exterior work,
the steel beam and steel roof door are part of the exterior work
completed in 1990; that the tenants' reliance on checks and
invoices is faulty as many of the dates on the documents could
naturally precede the date the actual work was performed; that the
tenants incorrectly referred to an April 1989 invoice as the basis
for the untimely filing of the steel door when the actual date on
the invoice is May 17, 1989 which is within the two year filing
period; that although the roofing and exterior work was one
project, the cost of each was distinguishable and would not have
merited a denial of the cost of the entire project; that the owner
has repeatedly attempted to gain access without success to tenant
Schoeneman's apartment (17-F) and therefore the November 9, 1992
letter should be disregarded; that it should be noted that DHCR
under Docket No. FJ 420190-S denied tenant Schoeneman's service
complaint for painting and plastering the entire apartment; that
tenant Kimura's (Apt. 12-F) (memo dated January 5, 1993) should
also be disregarded as DHCR under Docket No. FJ 410392-S also
denied that tenant's service complaints; and that tenant Miral's
allegations in her letter (dated January 5, 1993) were corrected by
the owner.
On April 8, 1993, the tenants' filed a supplement to their response
containing individual comments from five (Apts. 17-A, 17-B, 17-D, 17-
E and 17-F) of eight apartments on the 17th floor and a penthouse
apartment (PH-A) concerning continual leak damage. It was noted
that tenant Kramer of Apt. 17-B was constructively evicted during
the period of July 1991 to June 1992 because of a reoccurrence of
leaks. Her submitted comment indicates that the leaks have
reappeared since returning to her apartment.
After careful consideration of the evidence of record, the
Commissioner is of the opinion that the proceeding should be
remanded to the Rent Administrator for further consideration of
several issues that were not definitively determined below.
5
ADMIN. REVIEW DOCKET NOS.: HA 430013-RO, HA 430116-RT, HA 430253-RT
The owner has objected to the consolidation of 76 separate tenant
petitions into one docket number, claiming that the requirements of
Section 2529.1(b)(2) regarding petitions filed by representatives
have not been satisfied. The Commissioner finds, however, that
subsection (b)(1) of that section authorizes treatment of a PAR
filed by two or more owners or tenants as a joint PAR. The
individual PARs herein were duly signed by each tenant and were not
representative in nature.
With regard to the exclusion of a portion of the approved costs
attributable to commercial rents, the Commissioner finds that the
Administrator correctly used the percentage of income generated by
commercial units rather than room count. Although a room count was
used by the Office of Rent Control in apportioning improvements
between residential and commercial tenants, the DHCR is not
required to use the same methodology. The Rent Stabilization Code
does mandate that the monthly rent adjustment for improvements be
calculated by dividing the dollar amount by the number of rooms in
the building. However, since the Code applies only to residential
units, the formula does not apply to commercial units and the
exclusion of a portion of the improvement cost using income
percentage is not prohibited and is in accordance with established
procedure. (Accord: CB 430083-RO-SJR 3305, CE 430107-RO)
The owner's contention that a rent increase should be granted for
the roof or at least for all units except those where the inspector
found leak damage is without merit. A rent increase for a major
capital improvement is warranted only where the installation is
completed in a competent and workmanlike manner. The inspector
found leak damage from the roof in several top floor apartments,
establishing that the roof is indeed defective. Although the
Division has in the past allowed a rent increase for some
improvements even though individual apartments were excluded because
certain repairs were found to be required, the result is appropriate
only where the defects in one unit have no effect on the tenants of
other units. A roof, however, inures to the benefit of the entire
structure and must be free from leaks and other defects in order to
qualify for an MCI rent increase. (Accord: DG 630053-RT, et. al.)
With regard to the windows, the Commissioner finds that additional
investigation by the Rent Administrator is required. The owner
asserts that only lot line windows were excluded from the
installation and explains that "A", "F" and "G" apartments have lot
line windows. The inspector reported that windows other than on
the lot line were not replaced but cited only "A", "F" and "G"
apartments as ones in which not all windows were replaced. The
owner has submitted a sample floor plan for the building which
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ADMIN. REVIEW DOCKET NOS.: HA 430013-RO, HA 430116-RT, HA 430253-RT
seems to support its identification of lot line windows. The
tenants have not alleged that anything but lot line windows were
excluded from the installation and the contract as well as the
floor plan appear to confirm the owner's statement that only lot
line windows were not replaced. On remand, another physical
inspection should take place wherein the inspector should prepare
a diagram showing the lot line for the building and should identify
exactly which windows were not replaced. The allowable exclusion
for lot line windows (as reflected in Policy Statement 89-6) is
based on the premise that such windows are required by applicable
building codes to contain "protectives" (i.e. wired glass). On
remand, the owner should be required to establish that the lot line
windows in this building have such protectives.
Further investigation is also needed with regard to the completion
date of the window installation to determine whether the
application was filed within the required two year limitation
specified in the Rent Stabilization Code. The evidence in the
record indicates that the owner stated in the application that the
window installation was completed on May 2, 1989 but the
application was not filed until May 10, 1991, more than two years
later. The owner later amended the completion date to August 1989
and submitted evidence, including an affidavit by the contractor,
indicating that the installation was completed on August 16, 1989
when the last windows were installed and punch list items were
completed. However, a packing slip dated August 15, 1989 refers to
the delivery of only one window. The cancelled checks establish
that all payments were made by May 1989 but a reconciled billing
statement dated October 1989 resulted in a refund to the owner. On
remand, the Administrator should ascertain when the window
installation was physically completed (and not when all defects
were corrected) and the two year limitation should be measured from
that date. (Accord: EL 630365-RO)
It is undisputed that some windows were installed between 1978 and
1981 and that a rent increase for rent controlled tenants was
granted in 1982. In view of the owner's unilateral removal of the
previously installed windows (for which the useful life had clearly
not expired), any rent increase ordered by the Rent Administrator
for windows should contain an appropriate offset reflective of the
cost of such previously installed windows.
With regard to the tenants' allegation that if the roof is
disallowed because of leaks, all other components of the exterior
renovation and waterproofing should also be disallowed is without
merit. The roof work is sufficiently separate, distinct, and
unrelated to the other work such that evidence of roof leaks does
not establish that the other components of the work are also
defective.
7
ADMIN. REVIEW DOCKET NOS.: HA 430013-RO, HA 430116-RT, HA 430253-RT
The Commissioner also finds that the application for the exterior
rehabilitation work was filed within the two year limitation. The
steel beam replacement was an integral part of this work which
necessarily had to be done first but would not qualify as an MCI by
itself. (The tenants bare allegation that the cost of the beam
replacement was paid for from insurance proceeds is completely
without substantiation). Similarly, the invoice for the steel
fireproof door is dated May 17, 1989 (and not April 17, 1989) and
is therefore timely.
Based on the foregoing, the Commissioner deems it appropriate to
remand this proceeding to the Rent Administrator for further
processing in accordance with the determination herein.
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 these administrative appeals be, and the same hereby
are, granted to the extent of remanding this proceeding to the Rent
Administrator for further processing in accordance with this order
and opinion.
It is further ordered that the automatic stay of so much of the
Rent Administrator's order as directed a retroactive rent increase
is hereby continued until a new order is issued on remand.
ISSUED:
Joseph A. D'Agosta
Deputy Commissioner
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