BH 410108 RO
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.: BH 410108 RO
D.R.O ORDER NO.: CDR 30,877
TENANT: KAREN L. THORSON
PRIOR OWNER: 236 EAST 13TH
C/O JED MANAGEMENT CORPORATION
ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
MODIFYING THE ADMINISTRATOR'S ORDER
On August 18, 1987, the above-named petitioner-owner filed a
Petition for Administrative Review against an order issued on
July 14, 1987, by the Rent Administrator, 10 Columbus Circle, New
York, New York, concerning housing accommodations known as
Apartment 9, 240 East 13th Street, New York, New York, wherein
the Rent Administrator determined that there had been an
overcharge and ordered a refund of $14,774.34, including interest
and excess security.
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 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 tenant commenced this proceeding on March 30, 1984 by filing
an overcharge complaint with the New York City Conciliation and
Appeals Board (CAB), the agency formerly charged with enforcing
the Rent Stabilization Law, based in part on the allegation that
her initial rent of $975.00 was an overcharge evidenced by a
prior rent of $240.00 (actually $237.31) and the assertion that
the improvements made on the apartment prior to her occupancy did
not suffice to justify a rent increase of over $700.00.
BH 410108 RO
In answer to the complaint, the owner submitted a lease history
for the apartment and documentation for $7,014.40 in new
equipment and improvements to the subject apartment. Based
thereon, the owner contended it should have been able to charge
the complaining tenant a "first rent" pursuant to Section 66 of
the prior Code. That is, the owner argued that the renovations
were so substantial as to amount to the creation of an apartment
which did not previously exist and was therefore functionally
equivalent to having been vacant on the base date so as to
trigger the "first rent" provisions of Section 66.
In Order Number CDR 30,877, the Rent Administrator determined
that the renovations did not suffice to allow a "first rent," but
allowed a one-fortieth rent increase ($175.36) pursuant to former
Code Section 20C(1) for the $7,014.40 in renovations.
In this petition, the owner contends that the Rent
Administrator's Order is incorrect and should be modified
because the renovations were sufficient to enable the owner to
charge a first rent. The owner concedes that the outer
dimensions of the apartment were not changed, but emphasizes that
due to the renovation a third bedroom was created and the living
room was enlarged. In addition, one doorway was sealed and
another created, the apartment was rewired, new plumbing was
installed, the kitchen was renovated, and other specified
improvements were made.
In support of its contentions the owner cites CAB Opinion Numbers
216 and 916 as well as Division of Housing and Community Renewal
(DHCR) Administrator's Order Number CDR 22,714, as amended. The
owner asserts that in the last-cited opinion the Division had
allowed a first rent based on a reconfiguration of the apartment
by the removal of internal walls even though the outer dimensions
had not been changed. A purported floor plan for the renovations
in the CDR 22,714 proceeding is attached to the owner's petition.
The floor plan submitted shows no changes in the outer
dimensions of the apartment. The owner asserts that the tenant
in that proceeding did not file a petition so that the order is a
final determination and therefore "binding" on the Division.
In answer to this petition, the tenant contends that the order
should be upheld but modified to show a lower cost for the
improvements made by the owner and to extend the computation of
overcharges through May of 1987 when the tenant vacated the
apartment. The tenant submits a copy of a stipulation in a
housing court proceeding whereby the 1986-1988 lease rent and
security deposits were reduced by half, i.e., to $519.19. In
addition, the tenant alleges that the Administrator's opinion
(CDR 22,714) cited by the owner does not state the underlying
facts so that it is impossible to know the basis therefore. In
addition, the tenant analyzes the floor plans in that proceeding
and the present proceeding and concludes that the relocation of
internal walls in the cited proceeding improved the apartment
therein whereas in the present proceeding the change in
configuration actually was detrimental due to an increase in dead
space and a decrease in privacy within the apartment.
BH 410108 RO
The Commissioner is of the opinion that this petition should be
denied and the Administrator's order should be modified.
DHCR policy, inherited from the CAB, has always been to require
a change in the outer walls of an apartment in order to trigger
the first rent provisions of former Code Section 66. See
Administrative Review Docket Numbers ARL 1707-L, ARL 04062-L, and
ARL 01231-L. Indeed, the two CAB Opinions (Numbers 216 and 916)
cited by the petitioner involved situations in which the outer
walls were so modified.
The Administrator's decision cited by the owner (CDR 22, 714)
cites three CAB Opinions: the two cited by the owner and also
Opinion Number 2359. The latter opinion also involves a
situation in which the outer walls of an apartment were changed.
Furthermore, nowhere in CDR 22,714 are the underlying renovations
described. Accordingly, on its face the decision is not a
precedent for any rule or policy not included in the three CAB
Opinions cited therein--all three of which involved changes in
the outer walls of their respective apartments.
Furthermore, the purported floor plan submitted by the owner
includes no identifying marks whatsoever to indicate that it is a
representation of any apartment in the building covered in CDR
More importantly, even if the cited Administrator's order were to
have stated explicitly that a first rent under Section 66 did not
require a change in the outer walls, the order would be in error
and the Commissioner would not be bound to follow that order.
The tenant's contentions regarding the cost of the renovations
could only have been raised in a timely petition by the tenant,
being beyond the scope of the owner's petition. Accordingly,
these allegations will not be considered.
An administrative appeal is not a de novo proceeding, but is
limited to the issues and evidence which were before the
Administrator. Therefore, the Commissioner normally will not
extend the computation period on appeal. However, the
Commissioner notes that the tenant has stated that by stipulating
the rent and security were reduced by 50% i.e., to $519.19 for
the 1986-88 lease, as of May 1, 1986. Furthermore, the tenant
vacated the apartment as of May 31, 1987 and therefore would not
be able to credit the excess rent collected from May 1, 1986
through May 31, 1987. Accordingly, the Commissioner finds it
appropriate in this case, given these special facts, to hereby
modify the Administrator's Order in order to reflect both the
vacature and the stipulation.
The Administrator ordered a refund of $14,774.34 which included a
refund of $542.09 in excess security. Presumably, the entire
security deposit was refunded or otherwise allocated at the time
of the vacature on May 31, 1987. Therefore, only $14,232.25 in
overcharges plus interest remains to be refunded pursuant to the
Administrator's order and this affirmance thereof.
Regarding the substance of the stipulation, the tenant did not
pay rent from May 1, 1986 until vacating as of May 31, 1987.
BH 410108 RO
(The Administrator computed overcharges only through April 30,
1986.) The reason for the non-payment was unrelated to the
tenant's overcharge complaint. Instead, the tenant withheld
rent based on an allegation that the owner had violated the
warranty of habitability. By the stipulation the rent owed for
the thirteen month period commencing May 1, 1986 was reduced by
The stipulation, which was so-ordered by Judge Colgan of the
Civil Court of the City of New York on May 27, 1987, explicitly
states that it was without prejudice to the then-pending
overcharge complaint before the DHCR. Furthermore, the
stipulation states that upon resolution of the DHCR overcharge
proceeding the 50% rent abatement should be adjusted to reflect
the actual lawful rent. In other words, the intent of the
stipulation was that the tenant pay 50% of the lawful stabilized
rent for the thirteen month period May 1, 1986-May 31, 1987. The
tenant paid 13 X $519.00 for that period, being half the rent
charged. Since the lawful rent for that period was determined to
be $496.29, the tenant should have paid 13 X $248.15 for that
period. Accordingly, the owner should now refund an additional
13 X ($519.19 - $248.15), i.e., $3,523.52, for that period. When
added to the $14,232.25 stated above the total refund due is
A copy of this Order will be served on the current tenant.
This order may, upon the expiration of the period in which the
owner may institute a proceedi g 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 judgement or not in excess
of twenty percent thereof per month may be offset against any
rent thereafter due the owner.
THEREFORE, in accordance with the Rent Stabilization Law and
Code, it is
ORDERED, that this petition be, and the same hereby is, denied
and the Rent Administrator's order be, and the same hereby is,
affirmed as modified by this Order and Opinion.