AL 110185-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
IN THE MATTER OF THE ADMINISTRATIVE     ADMINISTRATIVE REVIEW
APPEAL OF                               DOCKET NOS.
                                        AL 110185-RO
         KALED MANAGEMENT,
                                        DRO DOCKET NOS.
Q-3121411-R
                        PETITIONER      CDR 26964
----------------------------------x     TENANT: SUSAN & GERALD PEET

  ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
                             IN PART
                                
                                
On  December  19, 1986 the above-named petitioner-owner  filed  a
Petition  for  Administrative Review against an order  issued  on
November  21,  1986  by the District Administrator,  10  Columbus
Circle,  New  York,  New  York concerning housing  accommodations
known  as Apartment 204 at 135-10 Grand Central Parkway, Jamaica,
New  York wherein the District Rent Administrator determined that
the owner had overcharged the tenants.

The   issue   in  this  appeal  is  whether  the  District   Rent
Adminis-trator's order was warranted.

The applicable sections of the Law are Section 26-516 of the Rent
Stabilization Law and Section 2526.1(a) of the Rent Stabilization
Code.

The  Commissioner has reviewed all of the evidence in the  record
and  has carefully considered that portion of the record relevant
to the issue raised by the administrative appeal.

This  proceeding was originally commenced by the filing in March,
1984 of a rent overcharge complaint by the tenants, in which they
stated that they had commenced occupancy on November 14, 1979  at
a rent of $452.40 per month.  [This amount also includes a garage
space and electricity for an air conditioner.]

The  owner  was served with a copy of the complaint and  was  re-
quested  to  submit rent records to prove the lawfulness  of  the
rent  being charged.  In answer to the complaint, the owner  sub-
mitted a complete rental history from 1968.


In  an  order  issued  on  November 21, 1986  the  District  Rent
Admin-istrator  determined that the tenants had been  overcharged
in the amount of $10,565.56 as of June 30, 1985, and directed the
owner  to  refund such overcharge to the tenants as  well  as  to
reduce the rent.

In  this petition, the owner contends in substance that there was
no  rent  overcharge  in that the District  Rent  Administrator's
order  contained a typographical error showing a rent of  $240.00
being  charged  in  one  lease rather than  the  actual  rent  of
$340.00.

The  Commissioner is of the opinion that this petition should  be
granted in part.

While  the owner is correct about the error in listing a  $340.00
rent  as  $240.00  (thus making $240.00 the  base  on  which  the
Admin-istrator  calculated subsequent  rents),  the  Commissioner
declines to recalculate the lawful rents without also taking into
account  the  effect of C.A.B. Opinion No. 22275, which  provided
for   a  temporary  (one  year)  rent  reduction  for  electrical
inclusion  and which directed the owner to apply for a  permanent
reduction within 60 days after one year after completion  of  the
conversion.

Prior to the electrical conversion which was the subject of  that
order, the owner had been paying for electricity directly to  Con
Edison  for  the entire building and the tenants had been  paying
indirectly  through their rents.  The elimination of  electricity
as  a  service  included  in the rents resulted  in  considerable
direct savings to the owner and it is only just that there should
also be indirect savings to the tenants via rent reductions. This
is   what   the  scheduled  rent  reductions  were  intended   to
accomplish.

It  is further recognized that the owner over the years had  been
permitted  guideline  rent adjustments for providing  electricity
which  are  still included in the rents.  Since the owner  is  no
longer  supplying  electricity it is also only  just  that  these
ad-justments  should  be  eliminated  from  the  rents.   To   do
otherwise  would allow future increases to compound a portion  of
the  rents  obtained  only on the basis of providing  electricity
when, in fact, electricity is no longer provided.

In  order to standardize this conversion procedure, when an owner
applies  for  and is granted permission to convert,  as  occurred
here,  the rents are reduced for one year pursuant to a  schedule
based  on  the number of bedrooms in the apartment.   Thereafter,
based  on  actual pre- and post-conversion electricity  costs,  a
permanent  rent decrease is established which includes  recalula-
tion of the rent without any electrical inclusion adjustments.

In  computing increases (or decreases) according to  Rent  Guide-
lines  Board Orders, the DHCR computes the applicable  percentage
above  the  base rent for the guidelines order (for  each  guide-
line).   As  to electrical inclusion percentages, said  increases
apply only to the lawful rents up to the point at which they  are
removed  retroactively from the base rent,  for  the  purpose  of
cal-culating  future lawful rents, by virtue  of  electricity  no
longer being included in the rent.  By extension, the schedule of
rent  increases (as compounded by Guidelines and other increases)
that  have in the past been granted certain owners to accommodate
the  electrical costs of a first and a second air conditioner are
also   retroactively  removed  for  the  purpose  of  determining
prospective lawful rents.

In   the   present  case,  the  owner  correctly   instituted   a
building-wide rent reduction of rents for one year, in compliance
with  C.A.B.  Order  No.  22275,  but  has  failed  to  file   an
application  for  the  permanent  reduction.   Consequently,  the
temporary  rent  reduction, which in the  complainant's  case  is
$35.00  per  month  effective  February  1,  1984,  becomes   the
permanent reduction.

In  computing the lawful rent after conversion, the final step is
the   recalculation  of  guidelines  and  all  other  permissible
increases  without  the aforementioned electrical  inclusion  in-
creases  and air conditioner surcharges.  Conversely,  the  lease
term computed under Guidelines 15 is given a 7% increase, instead
of 6%, because the apartment was no longer electrical inclusive.

While  the  owner's  calculations as to the lawful  rent  removed
$35.00 per month for normal electricity and $10.00 per month  for
air  conditioner  electricity, both effective February  1,  1984,
they  did  not  remove the Guidelines increases previously  taken
over  previous  lease rents, nor the increases  taken  above  the
$10.00 charge.  The owner has also included a $12.20 increase for
a  new  range, refrigerator and blinds.  In the proceeding before
the  Administrator the owner had claimed only  $5.29  for  a  new
range.   An increase for a new refrigerator and new blinds  would
not be considered when claimed for the first time on appeal, even
if  the  owner  had submitted invoices and cancelled  checks  for
them,  which it didn't do.  The owner has also calculated  lawful
rents based on a rent of $349.45 which it could have charged  the
prior  tenants.   However, the owner waived  the  right  to  base
future rents on a base of $349.45 when it charged only $340.00 in
that lease.

Taking  these factors into account, the Commissioner has recalcu-
lated  the  lawful stabilization rents and the  amount  of  over-
charge.  They are set forth on an amended rent calculation  chart
attached hereto and made a part hereof.


The  owner is cautioned to adjust the rent, in leases after those
considered in this order, to amounts no greater than that  deter-
mined by this order plus any lawful increases, and to register
any adjusted rents, with this order being given as the reason for
the adjustment.  Because the complainants have vacated, a copy of
this order is being sent to the current tenants.

This  order may, upon the expiration of the period in  which  the
owner  may institute a proceeding pursuant to Article 78  of  the
Civil  Practice Law and Rules, be filed and enforced by the  ten-
ants in the same manner as a judgment.


THEREFORE,  in  accordance with the Rent  Stabilization  Law  and
Code, it is

ORDERED,  that this petition be, and the same hereby is,  granted
in  part and that the District Rent Administrator's order be, and
the  same  hereby is, modified in accordance with this Order  and
Opinion.  The lawful stabilization rents and the amount of  over-
charge are established on the attached chart, which is fully made
a part of this order.  The total overcharge is $853.47 as of June
30, 1985.


ISSUED:




ELLIOT SANDER
                                         Deputy Commissioner
    

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