SJR6546, ART10098L

                                  STATE OF NEW YORK
                            OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                               JAMAICA, NEW YORK 11433

                                                 S.J.R. 6546
          APPEAL OF                              DOCKET NO.ART10098L
                                              :  DRO DOCKET NO.L3113098R
              FRED & TERRI HODARA                

                                PETITIONER    : 

               On May 6, 1986, the above-named petitioner-tenants filed a 
          Petition for Administrative Review against an order issued on April 
          10, 1986, by the Rent Administrator, 10 Columbus Circle, New York, 
          New York, concerning the housing accommodations known as 24 Fifth 
          Avenue, New York, New York, Apartment No. 205.  That order (no. 
          L3113098R) dismissed a rent overcharge complaint filed by the 
          tenants of the housing accommodation.  The basis for the dismissal 
          was the fact that the legal rent for the subject apartment had been 
          established pursuant to Conciliation and Appeals Board (hereafter 
          CAB) Opinion No. 30,402 which reclassified the subject premises from 
          a hotel to a building subject to apartment rent stabilization.  (The 
          CAB was the agency formerly charged with administering the Rent 
          Stabilization Law and Code).

               On July 29, 1987, the Commissioner issued an Order and Opinion 
          denying the tenants' petition.

               Subsequent thereto, the petitioner-tenants filed a petition in 
          the Supreme Court pursuant to Article 78 of the Civil Practice Law 
          and Rules requesting that the order of the Commissioner be annulled.  
          The proceeding was remitted to the DHCR for further consideration.  
          Subsequently, the petitioner-tenants petitioned the court for a 
          judgment directing the DHCR to determine petitioner-tenants' rent 
          overcharge complaint on the merits and on December 1, 1992, Justice 
          Edith Miller issued an order to that effect.

               This proceeding was originally commenced in March, 1984, by the 
          filing of a rent overcharge complaint by the tenants herein who 
          stated that they first moved to the subject apartment on March 1, 
          1982 pursuant to a sublease at a rental of $430.22 which was 
          increased to $473.22 effective April 1, 1982 and that they then 
          received a two year lease in their own name commencing April 1, 1983 
          at a rental of $650.00.  The tenants stated in their complaint that 
          since the apartment was subject to rent stabilization pursuant to 
          CAB Opinion 30,402, there was no basis for the rent being increased 
          to $650.00 effective April 1, 1983 and there was no basis for the 
          rent increase to $473.22 effective April 1, 1982

          SJR6546, ART10098L

               In response to the tenants' complaint, the owner submitted a 
          rental history and stated that it was entitled to charge a free 
          market rent effective April 1, 1983 under the hotel stabilization 
          code and that no rent overcharge had occurred.

               In Order Number CDR 15,066 issued on April 10, 1986, the Rent 
          Administrator dismissed the tenants' rent overcharge complaint on 
          the basis that CAB Opinion Number 30,402 had ruled that the rents in 
          effect on June 30, 1982 were to be used as base rents for future 
          renewal leases.

               In this petition, the tenants allege in substance that their 
          rent has not been rolled back in accordance with CAB Opinion Number 
          30,402 and that they are still being overcharged.

               The Commissioner is of the opinion after reconsideration and 
          determining the overcharge complaint on the merits that this 
          petition should be denied.

               On March 1, 1984, the CAB issued Opinion Number 30,402, which 
          determined that since July 1, 1982, the owner had failed to provide 
          customary hotel services to all tenants of the subject premises 
          herein and that therefore said premises did not meet the standards 
          of a hotel as promulgated by the Amended Hotel Code.  The CAB 
          accordingly ruled that the premises should be reclassified and be 
          subject to the provisions of the Rent Stabilization Law and Code 
          which apply to apartment units.  In addition, the CAB ruled that 
          based on this diminution of services, the owner forfeited the 
          benefits of first rents and hotel guidelines.  The CAB therefore 
          directed the owner to reduce the rents of all stabilized tenants to 
          the levels in effect on June 30, 1982.  This CAB Opinion was 
          appealed by both the owner and tenants.  By decision dated February 
          17, 1987, the Court of Appeals in 24 Fifth Avenue Associates v. New 
          York State Division of Housing and Community Renewal, 69 N.Y.2d 808, 
          513 N.Y.S.2d 383 remitted the matter to the DHCR for further 
          consideration of the individual complaints of tenants who had 
          complained about the failure to provide hotel services and to adjust 
          their rents to reflect the value of hotel services not provided by 
          the owner.  Further citing Berkeley Kay Corp. v. New York City 
          Conciliation and Appeals Board, 68 N.Y. 2d 851, 508 N.Y.S.2d 407, 
          involving common issues,  the Court found that the CAB exceeded its 
          authority in applying a building-wide rent rollback remedy and 
          expressly prescribed a permissible rent refund remedy pursuant to 
          Section 33(g) of the former Amended Hotel Code, for complaining 
          tenants equal to that portion of past rents which reflect the value 
          of hotel services not provided by the owner.

               Upon remit pursuant to the Court of Appeals decision, the 
          Commissioner issued on May 24, 1991 under docket number BH 430373 RO 
          ( Court of Appeals No. 642, SJR 1704), an Order and Opinion 
          Modifying Prior Opinion of the CAB Opinion No. 30,402.  In said 
          Order it was held that for all rent stabilized tenants at the 
          subject premises who did not file complaints (meaning complaints 

          SJR6546, ART10098L

          regarding the failure to provide hotel services filed before May 1, 
          1987), the rents effective as of July 15, 1982 and thereafter are 
          those actually charged and paid on June 30, 1982 (less the 1.67% 
          temporary surcharge provided by Hotel Order No. 11), plus any 
          applicable increases under Hotel Order Nos. 12 and 13 until March 1, 
          1984, the effective date of the reclassification of the building as 
          an apartment house.  Subsequently, their rents are to be governed by 
          standard apartment-stabilization guidelines increases, based upon 
          leases actually executed between the owner and tenants.

               In the instant case, the tenants herein did not file a 
          complaint regarding the failure to provide hotel services but filed 
          an overcharge complaint only.  Accordingly, the base rent is the 
          rent charged them when they were subtenants as of June 30, 1982 and 
          effective July 15, 1982 - $473.22.  The owner was then permitted to 
          charge them a free market rent when they were issued a lease in 
          their own name effective April 1, 1983 pursuant to Hotel Guideline 
          Order 12 then in effect.  Thus the rent of $650.00 charged pursuant 
          to the two year lease commencing April 1, 1983 was not an 
          overcharge.  Further the rent was then increased to $708.50 for a 
          two year lease effective April 1, 1985.  This increase too was 
          proper as apartment rent guideline order 16 then in effect allowed 
          a 9% increase for a two year renewal lease and $708.50 represents a 
          9% increase over $650.00.  Accordingly, no rent overcharge occurred.

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

               ORDERED, that this petition for administrative review be, and 
          the same hereby is, denied, and, that the order of the Rent 
          Administrator be, and the same hereby is, modified to show that no 
          rent overcharge occurred.


                                          JOSEPH A. D'AGOSTA
                                          Deputy Commissioner


          SJR6546, ART10098L


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