BA 110399-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
                                
                                
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IN THE MATTER OF THE ADMINISTRATIVE     ADMINISTRATIVE REVIEW
APPEAL OF                               DOCKET NO.:
                                        BA 110399-R
       KALED MANAGEMENT CORP.,
                                        DRO DOCKET NOS.:
                        PETITIONER      Q 3122279-R;  CDR 27,364
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  ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
                             IN PART
                                
                                
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
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 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
periods.

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
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.


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.


ISSUED:




ELLIOT SANDER
                                         Deputy Commissioner
    

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