DOCKET NUMBER: BD 210061-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

     ------------------------------------X 
     IN THE MATTER OF THE ADMINISTRATIVE :  ADMINISTRATIVE REVIEW
     APPEAL   OF                                DOCKET   NO.:   BD    210061-RO
                                         : 
                                         :  DRO DOCKET NO.: K 3103107-RT
                                         :

     M.C.D. REALTY CORP    PETITIONER    : 
     ------------------------------------X                             
                                         
     ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW IN PART

     On April 3, 1987 the above-named owner filed a petition for Administrative 
     Review of an order issued March 12, 1987 by a District Rent  Administrator
     concerning the housing accommodation known as  Apartment  6C,  1776  Union
     Street, Brooklyn,  New  York,  wherein  the  District  Rent  Administrator
     determined that  the  tenant  had  paid  excess  rent  in  the  amount  of
     $2,151.15 pursuant to a Fair Market Rent Appeal.
                                                   
     The Commissioner notes that this proceeding was initiated 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  overcharge  and  fair  market
     rent proceedings provide that determination of these matters be based upon 
     the law or code provisions  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 Commissioner has reviewed all the  evidence  in  the  record  and  has
     carefully considered that portion of the record  relevant  to  the  issues
     raised by the administrative appeal.

     The original proceeding was initiated by the tenant on March 24, 1984,  by
     filing an overcharge complaint and a fair market rent appeal.  The  tenant
     took occupancy on December 15, 1982 at an initial rent  of  $295.00.   The
     tenant also stated that she had never received a copy of the  DC-2  notice
     advising her of the opportunity to file a Fair Market Rent Appeal  as  the
     first rent stabilized tenant.

     On December 4, 1984 the owner was advised to submit a rent history of  the
     apartment.  The notice specified that the complaint was in the nature of a 
     Fair Market Rent Appeal, and that the owner's proof of (certified) mailing 
     of the DC-1 or DC-2 notice to the tenant was therefore  essential  to  the
     proceeding.  On December 20, 1984 the owner mailed  a  copy  of  the  1984
     apartment registration, RR-1, and a post office  record  sheet  indicating
     its service on the tenant.

     On September 26, 1986 the DHCR sent  notice  to  the  owner  that  it  was
     processing the tenant's Fair Market Rent Appeal, and that the owner must 


     submit complete copies of all leases  or  rent  ledgers  for  the  subject
     apartment since June 30, 1974 or the date on which the last rent 






     DOCKET NUMBER: BD 210061-RO
     controlled tenant vacated the apartment, whichever was later.  The  notice
     restated the need for the owner to provide proof of the mailing of the DC 
     1 or DC-2 notice on the tenant.  Finally, the owner was  notified  of  the
     documentation that the owner would be allowed to submit in determining the 
     fair market rent, including the rents for the apartments  in  the  subject
     line and/or rents prevailing in the same area for similar apartments.   On
     October 27, 1986 the owner submitted copies of the tenants' leases to  the
     DHCR, as well as the 1974 rent roll for the building through July.
     On March 12, 1987 the Rent Administrator issued the order herein appealed, 
     which established an initial fair market  rent  of  $250.01,  found  total
     overcharges of $2,151.15 through December 14, 1986  and  directed  a  rent
     rollback and refund of overcharges.

     The initial rent was established on the basis of  the  last  Maximum  Base
     Rent adjusted by Special Guidelines Order Number 14 because  the  District
     Rent Administrator found that the owner did not submit  sufficient  rental
     data for consideration of comparable apartment  rents.   Accordingly,  the
     1982 Maximum Base Rent of  $217.40  was  adjusted  by  an  additional  15%
     resulting in a Fair Market Rent of $250.01.

     In its  petition,  dated  April  3,  1987  the  owner  contends  that  the
     Administrator erred in calculating the fair market rent in that  the  DHCR
     did not average the rent of the MBR with comparable  rents  paid  on  that
     line in 1974.  The owner here resubmits the same  rent  roll  sheets  that
     were submitted in 1986.  Finally the owner contends that the tenant is not 
     entitled to a fair market  rent  appeal  because  she  received  the  DC-2
     notice.  Attached to the petition is a copy  of  the  DC-2  notice,  which
     states the date of vacancy decontrol as December 15, 1982, and  which  was
     signed by the tenant under the handwritten statement "original received by 
     tenant on December 15, 1982."

     It is the considered opinion of the Commissioner that this petition should 
     be granted in part.

     Section 25 of the former Rent Stabilization  Code  provides  that  a  fair
     market rent appeal application must be filed within 90 days of receipt  of
     the initial legal regulated rent notice (DC-2 notice). Section 26  of  the
     Code provides that said notice shall be served by the owner on the  tenant
     by certified mail.

     In the present case, the owner submits on appeal a photocopy of  the  DC-2
     notice for the subject apartment,  and  states  that  the  tenant  is  not
     eligible for a fair market rent appeal because she had filed it more  than
     90 days after the date she received the notice.  The owner's contention is 
     based on the appearance of the tenant's signature on  the  printed  notice
     under a handwritten statement to the effect that the tenant  received  the
     "original" on December 15, 1982, which is the stated date of decontrol.

     The Commissioner finds that  the  owner's  submission  of  the  notice  is
     procedurally  defective  and  thus  of  no  substantive  weight  in   this
     proceeding.  The owner may not now submit such material on appeal, without 
     explanation of why it was not submitted below,  and  attempt  to  have  it
     incorporated into the record.  As narrated above, the owner  was  directly
     informed on at least three occasions that it  must  submit  proof  of  its
     certified mailing of the DC-2  notice  to  the  tenant  if  it  wishes  to
     challenge the tenant's right to a fair market rent appeal.   Without  such
     proof, the Administrator must proceed with the tenant's appeal, as there 
     is no way the Administrator could know from DHCR records that  the  tenant
     received it.  Therefore, the 90 day statutory time period for  filing  the






     DOCKET NUMBER: BD 210061-RO
     appeal never started to run and the tenant was entitled to  challenge  the
     initial legal regulated rent.  (Accord: ARL 04630).

     Section 26-513 of the Rent Stabilization Law provides, in pertinent  part,
     that fair market rent adjustment applications are to be determined by  the
     use of special fair market rent guidelines orders promulgated by  the  New
     York City Rent Guidelines Board and by the rents generally  prevailing  in
     the same area for substantially similar housing accommodations.  In  order
     to determine rents generally prevailing in the same area for substantially 
     similar housing accommodations, it is DHCR's  procedure  for  fair  market
     rent appeal cases filed prior to April 1, 1984 to allow owners  to  submit
     June 30, 1974 free market rental data for complete  lines  of  apartments,
     beginning with the subject line.  The average of such  comparable  rentals
     will then be updated by annual guideline increases.   Alternatively,  DHCR
     procedure allows owners to have comparability determined on the  basis  of
     rents charged after June 30, 1974.  In order to use  this  method,  owners
     were required prior to November 1, 1984 to submit rental history data  for
     all stabilized apartments  in  the  subject  premises  and  subsequent  to
     November 1, 1984 to submit such data  for  complete  lines  of  apartments
     beginning with the subject line.  Post-June 30, 1974  rent  data  will  be
     utilized if the comparable apartment was rented   to  a  first  stabilized
     tenant within one year of the renting of the subject apartment and if  the
     owner submits proof of service of an initial legal regulated  rent  notice
     (DC-2 Notice) or apartment registration form indicating that the  rent  is
     not subject to challenge.

     In the present case the owner has submitted the June 30,  1974  rents  for
     all apartments in the same line as the subject apartment, which  qualifies
     as comparability data in determining the fair  market  rent.   The  record
     establishes, however, that the Administrator failed to  consider  this  in
     its  calculations,  relying  solely  upon  the  Special  Guidelines  Order
     increases for the subject apartment.  While  the  Administrator  correctly
     calculated the MBR for the year of occupancy as $250.01,  the  failure  to
     apply the comparability test resulted in an insufficient fair market rent, 
     thereby inflating the amount of excess rent owed the tenant.  It  is  also
     noted that, although the tenant took occupancy under Guidelines 14,  which
     authorized  the  addition  of  the  allowable  fuel  cost  adjustment   in
     determining the fair market rent, the owner did not file for a  fuel  cost
     adjustment increase for that Guidelines period.

     The adjusted calculations  for  the  tenant's  fair  market  rent  are  as
     follows:


          A) Apartment 6C:    $163.35..........1976 MBR
          Special Guidelines   + 9%          conversion factor to 1978 MBR
                              $178.05          1978 MBR
                               +_  10%.......conversion factor to 1980 MBR
                              $195.86          1980 MBR
                               +   11%.......conversion factor to 1982 MBR
                              $217.40          1982 MBR
                               +   15%.......Special Guideline Order #14
                                             adjustment for Fair Market Rent
                              $250.01


          B) Comparability:                         #1C            $145.00
             Average of 6/30/74                     #3C            $145.00
             decontrolled rents in the              #5C            $160.22






     DOCKET NUMBER: BD 210061-RO
             subject line:                                         $150.07

             Guidelines Period #6: 7/1/74
             6/30/75 (8 & 1/2 + $150.07)..............$162.83

             Guidelines Period #7: 7/1/75
             6/30/76 (7 & 1/2 + $162.83)..............$175.04

             Guidelines Period #8: 7/1/76
          6/30/77 (6 & 1/2 + $175.04)..............$186.42

             Guidelines Period #9: 7/1/77
             6/30/78 (6 & 1/2% + $186.42).............$198.54

             Guidelines Period #10: 7/1/78
             6/30/79 (4 & 1/2% + $198.54).............$207.47

             Guidelines Period #11: 7/1/79
             6/30/80 (8 & 1/2% + $207.47).............$225.10

             Guidelines Period #12: 7/1/80
         6/30/81 (11% + $225.10)..................$249.86

             Guidelines Period #12a: 7/1/81
             6/30/82 (11% + $249.86)..................$277.34

             Guidelines Period #14: 10/1/82
             9/30/83 (4% + 0% vacancy increase + $277.34)....$288.43

     The Fair Market Rent for the subject apartment is determined by  averaging
     the result  of  the  Special  Guidelines  test  with  the  result  of  the
     Comparability study.  This results in a final Fair Market Rent of $269.22.

             $250.01 + $288.43 : 2 = $269.22

     As a result of the increased fair market rent, the amount of  excess  rent
     as calculated for  the  period  under  review  is  reduced  to  $1,182.92,
     including  excess  security  of  $16.28,  as  documented   in   the   rent
     calculations chart annexed hereto and made part hereof.

     The tenant 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,  institute  a  proceeding  against  the  owner  to
     recover  the  above  amount  of  excess  rent  in  a  court  of  competent
     jurisdiction.

     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 twelve (12) equal monthly  installments.
     Should the tenant vacate after the issuance of this  order,  said  arrears
     shall 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:






     DOCKET NUMBER: BD 210061-RO

                                                                              
                                                     ELLIOT SANDER
                                                   Deputy Commissioner
    

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