STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
IN THE MATTER OF THE ADMINISTRATIVE ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.:
KALED MANAGEMENT CORP.,
DRO DOCKET NOS.:
PETITIONER Q 3122279-R; CDR 27,364
ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
On December 30, 1986, the above named petitioner-owner filed a
Petition for Administrative Review against an order issued on
November 25, 1986 by the District Rent Administrator, 10 Columbus
Circle, New York, New York concerning the housing accommodations
known as Apartment 411 at 135-10 Grand Central Parkway, Jamaica,
New York, wherein the District Rent Administrator determined that
the owner had overcharged the tenant.
The Commissioner notes that this proceeding was filed prior to
April 1, 1984. Sections 2526.1(a)(4) and 2521.1(d) of the Rent
Stabilization Code (effective May 1, 1987) governing rent
over-charge and fair market rent proceedings provide that
determina-tion of these matters be based upon the law or code
provision in effect on March 31, 1984. Therefore, unless
otherwise indicated, reference to Sections of the Rent
Stabilization Code (Code) contained herein are to the Code in
effect on April 30, 1987.
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 current Rent
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 on March
25, 1984, of a rent overcharge complaint by the tenant Eve Turof,
in which she stated that she had commenced occupancy in May, 1983
at a rent of $464.37 per month. The owner was served with the
complaint, and responded with a complete lease history from the
base rent date.
The Rent Administrator's order issued on August 22, 1986,
established the lawful stabilized rent of $381.56 for the period
June 1, 1984 through May 31, 1986. The Rent Administrator also
ordered a refund of $3,992.34, including excess security and
interest dating from April 1, 1984.
In its petition, the owner contends that the Rent Administrator
erred in computing the prior tenants' rent history, as well as in
disallowing a 15% vacancy allowance on the initial lease of the
complainant, who had assumed a subtenancy during the final month
of the prior tenant's lease term.
Additionally, the petitioner points to the failure to add a
monthly surcharge of $7.50 for a second air conditioner, as of
the lease term commencing in July 1975. Petitioner submits a
lease rider, dated July 9, 1975, as proof of the prior tenant's
consent to the increase.
In challenging the aforementioned vacancy allowance, the peti-
tioner cites Section 21(b) of the former Code, in which an owner
is authorized to charge an assignee (here the complainant) the
vacancy allowance permitted in the guidelines in effect when the
prime lease commenced, so long as the prime tenant was under a
renewal lease at the time. Since these were the instant
circum-stances, petitioner contends the 15% vacancy allowance
prescribed under Guidelines 13 should be counted, thus
significantly re-ducing overcharges.
In her answer, the tenant states that her second air conditioner
was removed in July, 1986, but that her rent was never decreased.
Additionally, individual electrical metering was installed about
two years before, after which she was told her rent would be
decreased $28.00 per month. However, this did not occur until
after her rent was again increased at the start of her new lease
term. The tenant also contends that her garage space rent is
also excessive, since it has been increased at the same rate as
her apartment. Finally, she alleges that her initial lease,
com-mencing May 1983, including an increase over the prior
tenant's lease, then still in effect, and that her rent was
increased again, improperly, when she signed a new lease as the
prime ten-ant, one month later.
The commissioner is of the opinion that the petition should be
granted in part.
With respect to the owner's petition, the owner had previously
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, DHCR computes to applicable percentage above
the base rent for the guidelines order (for each guidelines). As
to electrical inclusion percentages, said increases apply only to
the guideline period when it occurred. By extension, the
schedule of rent 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 limited to those guidelines
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. 22,275, but has failed to file an
application for the permanent reduction. Consequently, the
temporary rent reduction, which in the complainant's case is
$30.00 per month effective February 1, 1984, becomes the
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.
The Commissioner also notes the Administrator's failure to
include the allowable vacancy allowance once the complainant
assumed her initial lease as the prime tenant. The fact that she
was originally a sub-tenant does not obviate the owner's
entitlement to one vacancy allowance once the previous prime
tenant has left the premises.
As a result, total overcharges are reduced to $2,833.45, as
documented in a revised rent computations chart affixed to this
order and made a part hereof.
This order may, upon the expiration of the period in which the
owner may institute a proceeding pursuant to Article
Seventy-Eight of the Civil Practice Law and Rules, be filed and
enforced by the tenant in the same manner as a judgment or not in
excess of twenty percent thereof per month may be offset against
any rent thereafter due the owner.
If the owner has already complied with the Administrator's order
and there are arrears due to the owner as a result of the instant
determination, the tenant may pay off the arrears in six (6)
equal monthly installments. Should the tenant vacate after the
issuance of this order, said arrears be payable immediately.
THEREFORE, pursuant to the Rent Stabilization Law and Code, it is
ORDERED, that the petition be, and the same hereby is granted in
part; and that the Administrator's order be, and the same hereby
is amended in accordance with this order and opinion.