BI 110151 RO

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

      APPEAL OF                              DOCKET NO.: BI 110151 RO

           34-50 28th Realty,                DRO DOCKET NO.: 59567

                                             TENANT: Steven Baeck             


      On September 9, 1987, the above-named petitioner-owner filed a Petition 
      for Administrative Review against an order issued on August 28, 1987 and 
      amended October 14, 1987, by the Rent Administrator, 10 Columbus Circle,  
      New York, New York, concerning the housing accommodations known as 34-50 
      28th Street, Queens, New York, Apartment No. 5N, wherein the District 
      Rent Administrator determined the fair market rent pursuant to the 
      special fair market rent guideline promulgated by the New York City Rent 
      Guidelines Board for use in calculating fair market rent appeals. 

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

      This proceeding was originally commenced in January 1987 by the filing 
      of a fair market rent appeal by the tenant.  The tenant took occupancy 
      pursuant to a lease commencing November 1, 1986 and expiring October 31, 
      1987 at a monthly rent of $486.11.

      In the order under appeal herein, the District Rent Administrator 
      adjusted the initial legal regulated rent by establishing a fair market 
      rent of $459.55 effective November 1, 1986 the commencement date of the 
      initial rent stabilized lease, and directed the owner to refund excess 
      rent and security in the amounts of $265.00 through August 31, 1987.  In 
      the amended order the excess rent and security amount to be refunded was 
      increased to $318.72 to include the period through October 31, 1987.

      In this petition, the owner contends in substance that the Rent 
      Administrator's formula for applying Special guideline 18 was contrary 
      to the method outlined in the language of the Special guidelines order 
      in that the Rent Administrator applied the 20% increase to the 1986 MBR 
      prior to adding the applicable Fuel cost adjustment rather than applying 
      the 20% increase to the sum of the 1986 MBR plus the applicable fuel 
      cost adjustment.  In addition, the Rent Administrator failed to apply 
      the 6% Rent Guideline Board order increase for a 2 year lease.
      Further, the owner cited the rent of apartment 6N plus real estate 
      brokers assessments of area rents to be considered for comparability.

          BI 110151 RO

      In answer to the owner's petition, the tenant states in substance that
      the order was warranted; that the 6% increase was not applicable and the 
      owner should not be allowed to submit comparables on appeal.

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

      Pursuant to Sections 2522.3(e) and (f) the Rent Stabilization Code 
      effective May 1, 1987, for fair market rent appeals filed after April 1, 
      1984 comparability will be determined based on the following:

           (e)  (1) Legal regulated rents, for which the time to 
                file a Fair Market Rent Appeal has expired and no 
                Fair Market Rent Appeal is then pending, or the Fair 
                Market Rent Appeal has been finally determined, 
                charged pursuant to a lease commencing within a 4 
                year period prior to, or a one year period 
                subsequent to, the commencement date of the initial 
                lease for the housing accommodation involved; and 

                (2) At the owner's option, market rents in effect 
                for other comparable housing for the housing 
                accommodation involved as submitted by the owner

           (f)  Where the rents of the comparable housing 
                accommodations being considered are legal regulated 
                rents, for which the time to file a Fair Market Rent 
                Appeal has expired, and such rents are charged 
                pursuant to a lease ending more than 1 year prior to 
                the commencement date of the initial lease for the 
                subject housing accommodation, such rents shall be 
                updated be guidelines increases for 1 year renewal 
                leases, commencing with the expiration of the 
                initial lease for the comparable housing 
                accommodations to a date within 12 months prior to 
                the renting of the housing accommodations involved.

      The Commissioner finds that in this case the owner was not afforded an 
      opportunity to submit comparability data pursuant to the requirements of 
      the current Rent Stabilization Code.  Therefore, the Commissioner finds 
      that the proceeding should be remanded to the Administrator for further 
      processing in order to afford the owner an opportunity to submit 
      comparability data pursuant to the requirements of the current code.

      Further, the Commissioner finds that the Rent Administrator incorrectly 
      utilized the formula for applying the special guideline increase by 
      applying the 20% increase to the 1986 MBR alone and then adding the fuel 
      cost adjustment.  On remand, the Rent Administrator should recalculate 
      the special guideline portion of the fair market rent calculation by 
      applying the 20% increase to the sum of the 1986 MBR plus the applicable 
      fuel cost adjustment.  In addition, all increases for new 
      equipment/improvements should be calculated after the establishment of 
      the fair market rent utilizing both criteria, if applicable.
      The Commissioner rejects however the owner's addition of a 6% guideline 
      increase above the special guideline increase.  The standard guideline 
      increase is applicable to previously stabilized apartments and is not 
      included in the special guideline utilized to establish first stabilized 

          BI 110151 RO


      THEREFORE, in accordance with the Rent Stabilization Law and Code, it is

      ORDERED, that this petition be and the same hereby is granted to the 
      extent of remanding this proceeding to the District Rent Administrator 
      for further processing in accordance with this order and opinion.  The 
      automatic stay of so much of the District Rent Administrator's order as 
      directed a refund is hereby continued until a new order is issued upon 
      remand.  However, the Administrator's determination as to the rent is 
      not stayed and shall remain in full force and effect, except for any 
      adjustments pursuant to lease renewals, until the Administrator issues 
      a new order upon remand. 


                                      JOSEPH A. D'AGOSTA
                                      Acting Deputy Commissioner



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