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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.: BB 410005-RT
DRO DOCKET NO.: ZAA 400055-OM
OWNER, S. Z. 70 ASSOCIATES
PETITIONER LOWER EAST REDEVELOPMENT, INC.
ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
On January 29, 1987, the above named petitioner-tenant filed a
Petition for Administrative Review against an order issued on
December 29, 1986, by the Rent Administrator, 92-31 Union Hall
Street, Jamaica, New York, concerning housing accommodations
known as Various Apartments, 70 East 3rd Street, New York, New
York wherein the Rent Administrator determined that the owner was
entitled to a rent increase for certain Major Capital
Improvements (MCI's), i.e., rewiring, new roof, mail boxes,
intercom; but denied an MCI increase for hallway renovation.
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.
The owner commenced this proceeding by filing an application for
an MCI increase.
In answer to the application, various tenants, including the
petitioner herein, objected to the rent increase. The petitioner
objected on the ground that his rent was the initial legal
regulated rent and was established after each of the improvements
was made. That is, his negotiated first stabilized rent
included the costs of the various MCI's, as well as renovations
made solely to the tenant's apartment.
The tenant alleged that the owner had made a unilateral offer to
waive collection of the MCI increase until the end f the then-
current lease, but stated that this offer was unacceptable. In
addition, the tenant alleged certain decreases in services
unrelated to the MCI's. However, the tenant made no allegation
denying the existence of the MCI's or questioning the quality
Attached to the tenant's answer was a Notice to Rent Stabilized
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Tenant of Right to File a Fair Market Rent Appeal
[Form No. DC-2A(9/85)] in which the owner stated that the
petitioner was the first stabilized tenant after vacancy
decontrol on July 18, 1985.
Also attached to the petitioner's answer was a copy of a letter
from the owner stating that the MCI application had been served
on April 17, 1986. The record shows the tenant's initial lease
commenced December 1, 1985. (All MCI's had been completed by
August 30, 1985.)
In the order herein under review the parties were notified that
"[u]nless there is an authorized provision in the current lease
of the tenant in occupancy, the increase granted in this Order
cannot become effective until the expiration of such lease."
In this petition, the tenant contends the Administrator's order
is incorrect and should be modified for the reasons stated in his
answer to the owner's application, emphasizing that all MCI's
were completed before he took occupancy and that he would not
have agreed to the negotiated rent had he been informed that it
was subject to be raised for the existing improvements.
In addition, he contends that because the April 17, 1986 service
of the MCI application on the tenant was after the 90 day period
in which he could have filed a Fair Market Rent Appeal (FMRA) he
no longer had that method of challenging his initial rent.
Accordingly, he asks that the Division now "investigate if the
landlord did, indeed, set a fair market price on my apartment."
Attached to the tenant's petition is a copy of a January 26, 1987
letter from the owner stating its
"intention not to pass these MCI rent increases along
to tenants, such as yourself, who moved in after most
of these improvements had been completed.
"Therefore, please rest assured that, while you reside
in you present apartment, you will not be asked to pay
MCI increases based on improvements made prior to your
occupancy in 70 East Third Street."
The tenant contends that he requires a Division order on this
subject in order to protect him from a new owner who might not
honor the owner's unilateral promise not to enforce the MCI order
and also to protect future tenants from this increase. (An
earlier letter attached to the above-quoted letter, in which the
owner agreed only to waive t e MCI increase during the then-
current lease term, states, in part, that the owner "will
increase your rent as a matter of record to the extent permitted
by the DHCR.")
In an answer dated April 8, 1987 the owner states that it had not
received a copy of the tenant's petition. On December 5, 1990 a
copy of the petition was again served on the owner. To date no
response has been received.
The Commissioner is of the opinion that this petition should be
granted in part.
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Division policy is that the apartment of a first stabilized
tenant is permanently exempt from any additional MCI increase for
an improvement completed before the commencement date of the
first stabilized lease. Such a lease's rent is a negotiated fair
market rent which presumably reflects the value of the apartment
with all existing improvements. [If the initial stabilized lease
stated explicitly that the initial negotiated rent did not
include the specified costs of specified MCI's a different result
would follow. But the lease of the tenant herein shows no such
Had this issue been raised for the first time in the tenant's
petition, it could have been denied on the basis that it did not
allege an error of fact or law in the Administrator's order.
(Such a denial order would have nevertheless notified the owner
of the Division's policy.) In the present case, since the issue
was raised before the Administrator, it should have been
addressed in the Administrator's order. (The above-cited lease
authorization paragraph of the Administrator's order does not
address this special case.)
In so far as the tenant has petitioned for a determination of the
fair market rent, that portion of the petition is hereby denied.
The tenant stated to the Administrator that he had considered
filing an FMRA but failed to do so, at least in part, because the
apartment was not registered. In his petition he implies that he
would have filed a FMRA had he received the owner's MCI
application within the ninety day period allowed for the filing
of a FMRA. The Commissioner finds that neither reason is
sufficient to extend the ninety day period. If the tenant felt
his $850.00 initial rent exceeded the fair market rent a FMRA
could have been filed on that allegation alone. The fact that
the apartment was not registered would not prevent such filing.
(The Division's records indicate that the owner has still not
registered the subject premises. The owner is hereby advised
that the Code imposes penalties for such failure.)
When the tenant received the owner's MCI application the proper
remedy was that taken by the tenant--not the late filing of a FMRA.
Finally, the petitioner's allegations regarding diminution of
service are beyond the scope of this review. However, this order
is without prejudice to the tenant's right to file a service
complaint, if the facts so warrant.
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 the Rent Administrator's order be, and the same
hereby is, modified in accordance with this Order and Opinion to
state that this tenant's apartment is permanently exempt from the
MCI increase granted in ZAA 400055-OM.
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JOSEPH A. D'AGOSTA