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

     APPEAL OF                                 ADMINISTRATIVE REVIEW
                                           :   DOCKET NO. BC810132RO
            SPENCER MANAGEMENT CORP.,          DRO DOCKET NO. NRTC84-51  
                            PETITIONER     :


     On March 16, 1987, the above-named petitioner-owner filed a Petition for 
     Administrative Review of an order issued on March 4, 1987, by the District 
     Rent Administrator, 99 Church Street, White Plains, New York, concerning 
     housing accommodations known as 68 Cooper Drive, apartment 2A, New 
     Rochelle, New York.

     The issue in this proceeding is whether the District Rent Administrator's 
     order was warranted.

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

     This proceeding was commenced on March 13, 1984 by the tenant's filing of 
     a rent overcharge complaint, asserting previous tenants' rent was not 
     shown on the first lease signed.

     On  March 4, 1987 the District Rent Administrator issued order number 
     NRTC84-51 finding that an overcharge had occurred.  In calculating the 
     overcharges the Administrator used the prior rent of $270.00 despite the 
     fact that the owner had stated that the prior tenant renewed his lease for 
     one year at a monthly rent of $294.00.  However, the tenant vacated the 
     subject premises less than two (2) months later without returning the 
     lease renewal agreement.

     On appeal, the owner states, in substance, that the rent in apartment 2A 
     on November 15, 1979 was $294.00 when the new tenant took occupancy.  The 
     owner further states, that the DHCR cannot go backward to determine the 
     base rent on the premise that the lease was invalid because the tenant 
     subsequently vacated the premises.  Also that the Administrator's order 
     failed to reflect the major capital improvement charges granted in January 
     24, 1984, and effective on February 1, 1984 and November 1, 1984,

     After a careful consideration of the entire evidence of the record, the 
     Commissioner is of the opinion that the appeal should be denied.

     Section 2502.5(c)(6) of the Tenant Protection Regulations states: 

          DOCKET NO.:  BC810132RO

               "Where a lease commenced on or after the local 
               effective date, tenant vacates prior to the expiration 
               of the term of the lease and the housing accommodation 
               is rented to and occupied by a new tenant prior to the 
               date on which the prior lease would have expired, the 
               landlord shall provide to the new tenant and execute 
               a valid written lease for a one-or two-year term, at 
               the tenant's option at the applicable guideline rate 
               of rent adjustment; provided, however, that the base 
               for computing such rent adjustment shall be set by 
               adjusting the prior lease rent to the maximum rent 
               that would be permissible if the last lease with the 
               prior tenant had been for a term ending on the date 
               such prior tenant vacated the housing accommodation."

     Accordingly, the Administrator properly used $270.00 as the prior rent.

     Regarding the owner's contention that the Administrator should have 
     credited the owner for the MCI increases which became effective in 1984, 
     the Commissioner notes that the collection of an MCI increase during a 
     current lease term is permitted provided there is an appropriate clause in 
     the lease.  Otherwise, the increase is not collectible until expiration of 
     the then-current lease.  Outside NYC whether the current lease is a 
     vacancy or a renewal lease, it must specifically recite that a MCI 
     application is pending or that specific work is in progress in order for 
     an MCI increase to be collectible during the current lease term.  Based on 
     information in the record, the tenant's lease in effect at the time the 
     MCI became effective i.e., the November 1, 1983 through October 31, 1985 
     lease, failed to include such a specific clause.  Therefore, the increase 
     was not collectible until the expiration of the lease.  Since the 
     Administrator's order only computed overcharges through October 31, 1985, 
     the Administrator properly did not include the MCI increase in the 

     THEREFORE, in accordance with the Tenant Protection Regulations and the 
     Emergency Tenant Protection Act it is 

     ORDERED, that this petition be, and the same hereby is denied, and the 
     District Rent Administrator's order be, and the same hereby is affirmed.


                                                    JOSEPH A. D'AGOSTA
                                                    Deputy Commissioner

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