BK 410278 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
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IN THE MATTER OF THE ADMINISTRATIVE ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.: BK 410278 RO
TERESA BRUSCO-OWNER,
DRO DOCKET NO.: 45735
EXAMINING UNIT
TENANT: PHILLIP BAKALCHUK
PETITIONER
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ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
IN PART
AND
MODIFYING ADMINISTRATOR'S ORDER
On November 2, 1987, the above-named owner filed a Petition for
Administrative Review against an order issued on September 30,
1987 by the Rent Administrator, 10 Columbus Circle, New York, New
York concerning the housing accommodations known as 308 West 88th
Street, New York, New York, Apartment C wherein the Rent
Administrator directed the owner to roll back the rent and to
refund $4,884.88 in overcharges inclusive of excess security and
interest on the overcharges occurring on or after April 1, 1984.
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.
This proceeding was commenced on August 28, 1984 when the tenant
filed an objection to the 1984 Rent/Services Registration,
alleging that the rent being collected was an overcharge.
On June 16, 1987, a copy of the objection along with a demand for
all leases and rental records in effect for the subject apartment
from its base date was sent to the owner.
In response, the owner submitted copies of leases in effect
since April 1, 1980, the base rent date. The owner stated that
major renovations had been done to the subject apartment after
May 31, 1983 and submitted a copy of its 1983 tax return as proof
of the renovation and its cost. The owner also stated that the
complainant had moved.
On August 26, 1987, the Division of Housing and Community Renewal
(DHCR) sent the owner a Request for Additional Information,
advising that the income tax return was unacceptable as proof of
the work done and requesting that the owner submit cancelled
checks and paid bills for all renovations completed in the
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subject apartment.
The owner failed to reply.
In the order here under review, the Administrator established the
lawful rent at $463.36 in the lease commencing June 1, 1984 and
terminating May 31, 1985 and directed the owner to refund
overcharges of $4,884.88 inclusive of interest and excess
security.
In its appeal, the owner contends that it never received the
notice sent on August 26, 1987 or it would have submitted the
required substantiating documents. The owner asserts that the
cost of the renovation was $13,255.00 and that the rent charged
was lower than the rent that could have been charged. Adding
one-fortieth of the cost ($331.38) to the rent before the
renovation ($450.00) and the permitted 15% vacancy increase
results in a higher total rent ($848.88) than was charged
($795.00). The owner submitted documentation in support of its
claim consisting of:
1) a bill and a cancelled check for $5000.00 for
scraping, plastering and compounding entire
apartment
2) a bill and cancelled check for $1,925.00 for
carpentry work in loft and sheet rocking
parts of the apartment
3) a bill and cancelled check for $1,700.00 for
construction of new floors in bathroom and
kitchen
4) a bill and cancelled check for $1,150.00 for
the installation of new windows
5) a bill and cancelled checks in the amount of
$1,200.00 for the installation of kitchen
cabinets
6) cancelled checks, unaccompanied by bills in
the amount of $570.00, $500.00 and $1,200.00
for electrical service, painting and plumbing,
respectively.
The tenant contends that he vacated the subject apartment because
it was unfairly and unjustly expensive.
The Commissioner is of the opinion that this petition should be
granted in part.
Section 20C(1) of the former Code and 2522.4(a)(1) of the
current Code provides that where there has been a substantial
increase of dwelling space, or an increase in services, or the
installation of new equipment or improvements in a stabilized
apartment, the monthly stabilization rent for the unit may be
increased by 1/40th the cost of the improvement provided the
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tenant then in occupancy has consented thereto in writing. In
the case of vacant housing accommodations, tenant consent is not
required and an increase for improvements effected during a
vacancy may be collected from the new tenant.
The Commissioner notes that although the tenant questions the
rent, he does not dispute the owner's allegations regarding the
renovation work. The evidence of record indicates that the
August 26th notice was sent to the owner. However, it appears
that the original of the notice is still in the file. It is
possible, therefore that the notice was not received. Moreover,
the owner did submit some evidence, although not acceptable for
purposes of granting a rent increase, that the work was done.
Accordingly, the Commissioner accepts for evaluation the bills
and cancelled checks submitted by the owner on appeal.
Pursuant to Sections 20C(1) and 2522.4(a)(1), the Commissioner
finds that the following items for which invoices and cancelled
checks have been submitted qualify for rent increases:
1) installation of new windows ($1,150.00) and
2) installation of new kitchen cabinets
($1,200.00).
Division policy consistent with that first instituted by the
Conciliation and Appeals Board (CAB), the agency formerly charged
with enforcing the New York City Rent Stabilization Law, is not
to allow a 20C(1) increase for the replacement of floors unless
(a) the new floor is a clear upgrading of the prior floor or (b)
the floor replacement is part of a "moderate rehabilitation" of
the apartment, e.g. the replacing of walls etc, necessitated a
replacement of the floor. See CAB Opinion Number 21,623 as
amended. Therefore, the expenditure for new floors is
disallowed. It is the Division's policy that scraping,
plastering, compounding and spot sheet rocking do not qualify for
a rent increase under the Code. Furthermore, it is the normal
policy of the Division to disallow rent increases where, as here,
the exact cost of the allowable item has not been proved because
of a lack of itemization. However, Sections 35 of the former
Code and 2522.7 of the current code require the Division to
consider all equities in determining the lawful rent. Therefore,
the Commissioner rejects the $5,000.00 claim to scrape, plaster
and compound entire apartment and hereby determines that
$1,283.33, or two-thirds of the $1,925.00 invoice for carpentry
for loft and spot sheet rocking to be an equitable estimate of
the allowable item (building a loft) covered by that invoice
which was supported by a cancelled check. See Administrative
Review Docket Numbers ARL 01682-L, BC 410344 RO and CH 510027 RO.
Cancelled checks representing claims for electrical service,
painting and plumbing are rejected for lack of specificity and
because such improvements may not qualify for a rent increase
pursuant to the Code.
Accordingly, the Commissioner has recalculated the legal
stabilization rent for the lease period June 1, 1984 through May
31, 1985 to include one-fortieth of the sum of the approved
improvements, $1,150.00 + $1,200.00 + $1,283.33 = $3,633.33,
divided by 40 = $90.83. as follows:
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Base rent $445.54 increased by Guideline 15: 4% for a
one year lease = $17.82 plus $90.83, = $554.19.
The overcharges are recalculated as follows:
Rent collected $825.00 minus lawful stabilization rent
$554.19 = $270.81 overcharge per month X 12 months plus
interest = $3,387.18 plus $270.81 excess security =
$3,657.99 total overcharges.
The Commissioner notes that the complaining tenant has vacated
and that in its most recent registration, the subject apartment
was listed as exempt because it is being occupied by a member of
the owner's family. Nevertheless, a copy of this order is being
sent to 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 judgment.
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 is modified in
accordance with this Order and Opinion.
ISSUED:
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ELLIOT SANDER
Deputy Commissioner
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