In the Matter of the Application of 250 Riverside Drive Tenants' Association and Matthew Begun, Petitioners, For a Judgment Pursuant to Article 78 of the Civil Practice Law and Rules,
New York State Division of Housing and Community Renewal, and DEBORAH ASSOCIATES, Respondents.
For Petitioners: Adele Bartlett, Esq.
For Respondent New York State Division of Housing and Community Renewal: Gary R. Connor, General Counsel Of Counsel: Kathleen Lamar
For Respondent Deborah Associates: Robert M. Olshever, P.C. by: Robert M. Olshever, Esq.
Michael D. Stallman, J.
Petitioner 250 Riverside Drive Tenants' Association represents tenants of rent-regulated apartments in the premises located at 250 Riverside Drive, New York, New York (premises); petitioner Matthew Begun is an individual rent-regulated tenant in the premises (both petitioners together, petitioners). Petitioners bring this Article 78 proceeding to overturn a determination of respondent New York State Division of Housing and Community Renewal (DHCR), which granted a Major Capital Improvement (MCI) rent increase to respondent Deborah Associates (Deborah), which was the owner of the premises, and petitioners' landlord. Petitioners also seek to overturn the denial of their Petition for Administrative Review (PAR).
Commencing in 2006, and concluding in 2007, Deborah claims to have had extensive exterior restoration work performed on the premises, including the removal and replacement of all of the premises' parapet walls, repair and replacement of balustrades on several balconies on the premises, and waterproofing and pointing where necessary, including some waterproofing work on the bulkhead and roof. Deborah also installed a new security camera monitoring system in the premises.
The work on the exterior of the premises was performed by L & Z Restoration Corp. (L & Z), pursuant to a proposal, dated May 1, 2006 (Petition, Ex. C), which listed a lump sum of $525, 085 for all of the work delineated. The proposal was signed by L & Z's president, Zbigniew Jacubiak (Jacubiak), and accepted by Deborah. The proposal is the only contract between Deborah and L & Z. The cost of the security system was $6, 704, and was performed by another contractor in 2006.
In 2008, Deborah filed an application with DHCR for an MCI rent increase for the premises, based on the totality of the exterior work, and for the security camera monitoring system. Deborah supported its application with the proposal, cancelled checks for the work performed, and a "Supplement 1 - Owner and Contractor/Vendor Affirmation" (Contractor Affirmation), in which Jacubiak affirmed that L & Z had performed all of the work, and had been paid in full. The Contractor Affirmation also included a diagram of the exterior footprint of the premises, indicating, apparently, that work was performed on the parapets of all of the exterior walls; Department of Buildings (DOB) permits; and documentation that DOB had signed off on the work. The application also requested an MCI rent increase based on architectural fees and expediting services. Evidence for the installation of the security camera monitoring services was included, for a total overall expenditure by Deborah of $548, 775. Deborah also provided, upon request of DHCR, a cost breakdown for the project.
Petitioners objected to the MCI application in June 2008. They complained that the documentation did not support the performance of extensive exterior restoration work, and that some of the work on portions of the building was incidental, and not the kind of building-wide repairs as required for an MCI. Petitioners also objected to the MCI request regarding the security cameras, in that the system did not replace an already existing system, and did not improve the existing intercom system.
Petitioners made numerous objections to L & Z's proposal, claiming, essentially, that it was not specific enough to show where the work was to be performed. Petitioners also brought to DHCR's attention a perceived flaw in the MCI application, in that several documents allegedly signed by Jacubiak each appeared to have been signed by a different hand.  Petitioners also objected to the cost breakdown provided by Deborah as incomplete and speculative, as it allegedly did not include all the work allegedly performed, and included things which were not done, such as scaffolding.
DHCR apparently misplaced the file in this matter, and asked the parties to reconstruct their respective paperwork. When Deborah resubmitted its Supplement 1 form, the words "exterior restoration work" had been replaced with the words "exterior restoration work, including parapet replacement."
DHCR's Rent Administrator issued an order granting the MCI increase on May 20, 2010, based on the exterior restoration work performed and the installation of the cameras. DHCR granted Deborah a rent increase in ...