BH 410304-RO
                                  STATE OF NEW YORK
                            OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                               JAMAICA, NEW YORK 11433

          APPEAL OF                               DOCKET NO.:   
                                                  BH 410304-RO                
                 RE  ME   GEC   CORPORATION,             RENT   ADMINISTRATOR'S
                                                  DOCKET NO.: 
                                  PETITIONER      TENANT: BLANCHE McNEILL  


          On August 17, 1987,  the  above-named  petitioner-owner  filed  a
          Petition for Administrative Review against  an  order  issued  on
          August 5,  1987,  by  the  Rent  Administrator  at  Gertz  Plaza,
          Jamaica, New York, concerning the housing accommodations known as 
          Apartment 34 at 517  West  169th  Street,  New  York,  New  York,
          wherein the Administrator established  the  stabilized  rent  and
          directed the owner to  refund  $313.44  including  interest  from
          April 1, 1984.

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

          This proceeding was originally commenced on May 31, 1985, by  the
          filing of a complaint of rent overcharge by the tenant.

          The owner answered the complaint  asserting  in  substance,  that
          there had been no overcharge collected.

          On the chart attached to and  made  a  part  of  the  order,  the
          Administrator established the stabilized rent.

          In its Petition, the  owner  contends,  in  substance,  that  the
          Administrator erred on the rent calculation chart attached to the 
          order by failing to acknowledge  that  the  rent  due  under  the
          tenant's August 1, 1985 through July 31, 1987 renewal lease 

          should have been calculated using a base rent arrived at by 
          adding to the September 30,  1984  rent  of  $195.97,  the  Major
          Capital Improvement (MCI) increase granted under  Docket  No.  OM
          4535, $3.38 (1.85% of the June 1, 1983 rent [$183.15]).

          The Commissioner is of the opinion that the  Petition  should  be

          The Commissioner notes that if the Administrator  had  calculated

          BH 410304-RO
          the rent as the owner suggests (and as the owner appears to  have
          done) the legal rent under the last lease covered  by  the  order
          below (the August 1, 1987 to July 31, 1989 lease) would have been 
          found to have been the rent reserved in that lease,  $262.74  and
          that the total overcharges that would have been found would  have
          been less than $45.00, including interest.

          The owner's contentions, however, are based on two  errors.   The
          first is that the MCI increase was  not,  according  to  the  MCI
          order, to be calculated over the June 1, 1983 rent  (of  $183.15)
          but over the June 1, 1982 rent (of $166.50).   The  second,  more
          crucial error, is that the base rent for  calculating  the  85/87
          renewal lease rent was the rent charged on  September  30,  1984,
          ($195.97) and not that rent increased, retroactively, by the  MCI
          increase granted in the MCI order.  Such a  retroactive  increase
          of the base rent is inappropriate where, as here, the  MCI  order
          contains a schedule for the payment of  the  retroactive  portion
          of the MCI increase.  

          The Commissioner therefore finds that the Administrator  properly
          calculated the rent for the subject apartment in the chart 
          annexed to the appealed order.

          The Commissioner notes that the Administrator's order  may,  upon
          the expiration of the period in which the owner may  institute  a
          proceeding pursuant to Article 78 of the Civil Practice  Law  and
          Rules, be enforced by the tenant in the following manner, not  in
          excess of twenty percent thereof per month may be offset  against
          any rent thereafter due the owner.

          THEREFORE, pursuant to the Rent Stabilization Law and Code, 
          it is,

          ORDERED, that this Petition be, and the same hereby is, denied. 


                                                ELLIOT SANDER
                                                Deputy Commissioner


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