Adm. Review Docket No.: EH 830131 RO
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 SJR 6106
IN THE MATTER OF THE ADMINISTRATIVE ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.: EH 830131 R0
126 FRANKLIN AVENUE ASSOCIATES
DRO DOCKET NO.:
PETITIONER NDG 8-1-0-056 OM
----------------------------------X TENANT: VARIOUS
ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
This Order and Opinion is issued after an order of the Supreme
Court, County of Westchester, Justice LaCava, dated
February 21, 1992, which ordered remit of an Article 78 Proceeding
and directed the Division to reconsider its former Order and
Opinion issued on May 29, 1991, upon which the Court proceeding was
based, relating to various apartments at 126 Franklin Avenue, New
Rochelle, New York.
The Commissioner has reviewed all of the evidence in the record and
has carefully reconsidered that portion of the record relevant to
the issues raised by the administrative appeal and remaining to be
resolved on remit from the Court.
The issues in this proceeding are whether or not the effect of the
subject work inured to the benefit of all of the tenants and
whether the nature and extent of said work was such as would
qualify it as a major capital improvement (MCI).
The owner commenced this proceeding on December 4, 1986,
by filing an application to increase the rentals for rent
stabilized apartments based on the cost of excavating and repairing
drains, erecting a two foot high, railroad tie, retaining wall and
repaving the building's outdoor parking lot, which contains 28
Adm. Review Docket No.: EH 830131 RO
parking spaces. The owner claimed costs of $ 22,760.00 for this
work. In the application, the owner indicated that the complex
contains forty-four rent stabilized apartments. The application
also indicated that indoor parking was also provided; that out of
the total number of indoor parking spaces (which was not
specified), fourteen were rented to tenants; and that of the
twenty-eight outdoor parking spaces, twenty were then rented to
tenants, four were vacant and four were reserved for visitors.
Several tenants filed individual answers opposing the application.
In the appealed order, the Administrator found that the work done
did not constitute a major capital improvement in that it did not
constitute a structural change or replacement of a major building
system; and, in addition, because the work done did not inure to
the benefit of all of the tenants.
In the Petition for Administrative Review, the owner, in substance,
challenges the Administrator's findings that both by the very
nature of the work and the fact that said work did not effect an
installation which inures to the benefit of all of the tenants, the
cost of the said work does not qualify to entitle the owner to a
rent increase based on the installation of a major capital
improvement.
Ten tenants filed answers opposing the owner's Petition. Four of
these specifically denied that any parking spaces in the outdoor
lot are reserved for visitors.
In an order and opinion issued May 29, 1991, the Commissioner
denied the owner's Petition on the ground that the subject work did
not inure to the benefit of all of the tenants.
Thereafter, the owner filed a Petition in the Supreme Court for
Westchester County seeking a review of the Commissioner's Order and
Opinion under Article 78 of the New York Civil Practice Law and
Rules (126 Franklin Avenue Associates v. New York State Division of
Housing and Community Renewal, Supreme Court, Westchester County,
Index Number 11588/91). On February 21, 1992, the Hon. John R.
LaCava, A.J.S.C., issued a Decision and Order remitting the matter
to the Commissioner with the directions that the Commissioner
conduct fact-finding on the question of the extent to which the
newly resurfaced outdoor lot is actually utilized by the tenants
and their guests; and that, in the order and opinion to be issued
upon remit, the Commissioner specifically address the issue of
whether the nature of the work herein is such as to qualify it as
Adm. Review Docket No.: EH 830131 RO
a major capital improvement.
Pursuant to the aforesaid Decision and Order, by written notice,
the Commissioner afforded all of the parties the opportunity to
submit whatever arguments and/or evidence they wished on the issues
as to which the Court had directed the Commissioner to conduct
fact-finding; and to specify the number of occasions, if any, on
which the tenants, and/or their guests, of each of the forty-four
apartments in the subject building have used the outdoor parking
lot since its repaving.
The owner's response to the aforesaid notice indicates that twenty-
two tenants rent twenty-six of the spaces in the outdoor lot and
that two parking spaces (not four, as the owner had previously
indicated) in the outdoor lot are reserved for visitor
parking__with a two hour limit thereon. The tenants' responses in
no way contradict the owner's response except that one tenant
alleges that cars are left for days in the visitor parking spaces;
that is, the use of said spaces is not policed by the owner.
Based on the responses to the aforesaid written notice,
particularly the owner's, the Commissioner finds that only twenty-
two of the forty-four tenants in this building utilize the outdoor
parking lot and that only two spaces in that lot are, in some
fashion, reserved for the use of tenant visitors. With respect to
the benefit inuring to all of the tenants, the Commissioner
concludes that the only benefit half of the tenants (the half that
does not have any parking spaces in the outdoor lot) could be said
to derive from the outdoor lot rests in the availability of the two
visitor parking spaces. The Commissioner finds that said benefit is
so diminutive (only two spaces to accommodate all of the social
callers and tradespeople forty-four tenants may have visiting at
any given time) and speculative (no tenant in this building can
tell a prospective visitor that that visitor has a reasonable
prospect of being able to use either of the two visitor spaces at
any given time) as to constitute no benefit. The Commissioner does
not believe that the statutes and regulations which provide for an
MCI rent increase can be construed so as to require that that half
of the tenants in this building who derive such an illusory benefit
from this work must pay for it, in perpetuity, at a cost of
$ 22,760.00. Therefore the Commissioner finds that the effect of
the work done does not inure to the benefit of all of the tenants
and the Administrator's denial of the owner's application should
be affirmed.
The Commissioner notes that in order for work to qualify as a major
capital improvement, the nature and extent of the work must be such
as to qualify it and the effect of the work must inure to the
benefit of all of the tenants. As indicated above, the work herein
Adm. Review Docket No.: EH 830131 RO
does not inure to the benefit of all of the tenants. Therefore,
even if the nature and extent of the work had been such as would
otherwise have qualified it as a major capital improvement, the
Commissioner would still, as indicated above, deny the owner's
Petition and affirm the Administrator's order.
Judge LaCava's Decision and Order directs the Commissioner to
address the question as whether the nature and extent of the work
performed would, all other things being equal, have qualified the
work herein as an MCI. Having been so directed, the Commissioner
will address that question. The Commissioner finds that the nature
and extent of the work, as indicated in the application, were not
such as would qualify for a major capital improvement.
Clearly, the resurfacing of the outdoor parking lot was repair work
and as such it would not qualify for an MCI rent increase. The work
done consisted of applying to the surface of the existing parking
lot foundation a new, two inch thick (before compression) coating
(the contractor referred to it in the work proposal submitted by
the owner as a "cap") of asphalt. That coating does not constitute
the load bearing ( or structural) component of this outdoor parking
lot system. It may be that if the pavement in a given outdoor
parking lot is removed down to the loose soil and replaced with all
of the required layers of load bearing material (like concrete) and
then coated with a thin layer of asphalt, that the cost of that
coating would be a proper element of the cost of the whole project;
but the essence of the project would be the replacement of the
entire parking lot system of pavement down to the earth beneath it.
As to the retaining wall, the Commissioner finds that the
installation of a retaining wall composed of railroad ties is not
a structural component of the outdoor parking lot. It is more in
the nature of a component of the landscaping scheme. Therefore the
cost of its installation would not qualify for an MCI rent
increase.
As to the repair work on the drain areas and the replacement of
three tanks, the work on the drain area would not qualify for an
MCI increase because it must, based on this record, be taken for
what the contractor's proposal described it to be: repair work; as
to the replacement of the three tanks, the owner's application does
not describe the nature of that work nor break out the cost of the
three replacement tanks in such a fashion as to permit the
Commissioner to determine whether or not the replacement of the
three tanks, on its own, would qualify for an MCI increase. Since
the burden of proof in that regard is on the owner, the
Commissioner finds that no MCI increase could be granted upon this
application based on the cost of the installation of the three
tanks, assuming, for the sake of argument, that that work would
Adm. Review Docket No.: EH 830131 RO
otherwise qualify for an MCI increase.
Therefore, the Commissioner finds that the Petition should be
denied and the Administrator's order should be affirmed.
THEREFORE, in accordance with all of the applicable statutes and
regulations, it is
ORDERED, that this Petition be, and the same hereby is, denied; and
that the Administrator's order be, and the same hereby is affirmed.
ISSUED:
JOSEPH A. D'AGOSTA
Acting Deputy Commissioner
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