Adm.Review Docket No.: BE 430122 RT
                                  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  SJR 6137
          IN THE MATTER OF THE
          ADMINISTRATIVE                    ADMINISTRATIVE REVIEW     
          APPEAL OF                         DOCKET NO.: BE 430122 RT
                  
            VARIOUS TENANTS,                
                                            
                                            DRO DOCKET NO.: LC 000018 AR
                              PETITIONER
                                            OWNERS:                    
          -------------------------------X  Former:  MOTT & PRINCE, INC.        
                                                     c/o THOMAS SUNG
                                                       (52-56 Henry St.)
                                            Current: DR. JAMES C.W. MOY
                                                       (52 & 54 Henry St.)
                                                     LAN KWONG
                                                       (56 Henry St.)


            ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW



          The above-described petitioner-tenants timely refiled a  Petition
          for Administrative Review against an order issued  on  March  30,
          1987 by the Rent Administrator at Gertz Plaza, Jamaica, New York, 
          concerning housing accommodations known as various apartments  at
          number 52, 54 and 56 Henry Street, New York,  New  York,  wherein
          the Administrator affirmed the orders issued by the District Rent 
          Director for the Lower Manhattan  District  Rent  Office  of  the
          Office of Rent Control, Office of Rent and Housing Maintenance of 
          the  New  York  City  Department  of  Housing  Preservation   and
          Development (the agency formerly charged with enforcing the  City
          Rent Law) wherein the rents of various  rent  controlled  tenants
          residing in the subject buildings were  restructured  (increased)
          under 9 NYCRR 2202.12 (formerly Section  33.9  of  the  Rent  and
          Eviction Regulations)

          Subsequently, the tenants  filed  an  Article  78  Proceeding  in
          Supreme Court, New York County, in the nature of  an  application
          for a writ of mandamus, requesting that a  determination  of  the
          Petitioner's administrative appeal be issued.   


          Thereafter, pursuant to a stipulation, the matter was remanded to 
          the Division for further processing.


          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 in the administrative appeal. 







          Adm.Review Docket No.: BE 430122 RT
          The issue herein is whether the appealed order, which was  issued
          on March 30, 1987, under Docket Number LC 000018 AR was issued in 
          accordance with the mandate contained in the  order  and  opinion
          of August 20, 1984, issued under Docket Number SPTA 22,478-500,
          wherein the proceedings assigned Docket  Numbers  2ACS  1204-1235
          were remanded to the District Rent Administrator.  
           
          The Commissioner notes that the tenants of three apartments which 
          were apparently not subject  to  rent  control  when  the  orders
          affirmed by the appealed order were issued (that is, on March 23, 
          1984) have joined in the Petition for Administrative Review.  The
          Commissioner finds that the affirmed  orders were issued  by  the
          Office of Rent Control,  which  had  no  jurisdiction  over  rent
          stabilized apartments; and therefore, the Commissioner finds that 
          the tenants of apartments numbered 13 and 14 at 54  Henry  Street
          and the tenant(s) of apartment number 7 at 56 Henry  Street  have
          no standing in these proceedings and may not  be  deemed  parties
          hereto.

          The proceedings herein were originally commenced on  October  11,
          1983, by the filing, by the former owner, of applications to have 
          the rents of the subject apartments  restructured  based  on  the
          fact that it had obtained  rehabilitation loans with  respect  to
          each of the three subject buildings under Article 8A of  the  New
          York Public Housing Finance Law. In said applications, the  owner
          alleged that the funds  obtained  through  said  loans  had  been
          utilized to rehabilitate said buildings.

          In response to said applications, various individual tenants  and
          the tenant representative for the tenants of all three buildings
          submitted statements in opposition.  In  substance,  the  tenants
          alleged that the former owner had failed to complete all  of  the
          work in a workmanlike manner; that there were conditions (some of 
          which had a  connection  with  the  specific  components  of  the
          subject rehabilitations and some of which did not) in each of the 
          buildings which constituted  a  decrease  in  services  and/or  a
          failure to provide all essential services; and that the  proposed
          restructured rents were excessive and/or had been miscalculated.

          On   March   23,   1984,   the   aforementioned   District   Rent
          Administrator issued a separate order increasing the rent of each 
          of the affected apartments, in accordance with the  certification
          of the 8A Program Director, as to the present  rent,  the  amount
          of the increase and its effective date. In summary,  all  of  the
          affected apartments in 52 Henry Street had their rents  increased
          by 32.40 per room per month; at 54 Henry Street the increase  was
          $ 30.81 per room per month; and at 56 Henry Street, the  increase
          was $32.78 per room, per month. 

          The tenants filed an administrative appeal against the orders  of
          March 23, 1984. On appeal the Commissioner found that many of the 
          objections asserted  by  the  tenants  on  appeal  had  not  been
          asserted before the District  Rent  Administrator  and  that  the
          Administrator should reconsider the appealed orders in the  light
          of those objections. In  the  order  and  opinion  remanding  the
          proceeding to the Administrator, the  Commissioner  directed  the
          Commissioner  to  "evaluate  the  case  in  accordance  with  the
          applicable law as well as current administrative policy."







          Adm.Review Docket No.: BE 430122 RT
          On November 24,1986, a Notice of Proceeding To  Reconsider  Order
          Pursuant To Remand was sent to the parties by the Administrator.
          In that Notice, the Administrator  stated  that  he  proposed  to
          reopen the rent restructuring proceedings to  "determine  whether
          the improvements  made  to  various  apartments  in  the  subject
          building[s] with an 8A Loan under  the  Private  Housing  Finance
          Law were performed in accordance with the applicable law as  well
          as  current  administrative   policy."   In   said   Notice   the
          Administrator afforded the parties  an  opportunity  to  file  an
          answer to the action which the  Administrator  was  proposing  to
          take. 

          The record herein indicates that both the owner and the  tenants'
          attorneys (MFY  Legal  Services,  Inc.)  requested  and  received
          extensions of time to submit answers to  the  November  26,  1986
          Notice, but that neither of them submitted any such  answer.  The
          record also indicates that two tenants individually answered  the
          Notice. One tenant did  not  directly  address  the  issues,  but
          expressed a reluctance to relocate.  The  other  tenant  asserted
          that there was no gas service at said tenant's apartment, 1RW, at 
          52 Henry Street; that due to a gas leak ,  which  the  owner  was
          allegedly refusing to repair, Consolidated Edison  had  shut  off
          the gas several months ago. Said tenant  also  alleged  that  the
          intercom was inoperable. The record also contains a  letter  from
          the then Director of the 8A Loan Program at  the  New  York  City
          Department of Housing Preservation  and  Development  wherein  he
          stated : "Kindly  be  informed  that  the  improvements  made  to
          various apartments in the subject building [52, 54 and  56  Henry
          Street] , with an 8A Loan under the Private Housing Finance  Law,
          were performed in accordance with the applicable law as  well  as
          current Administrative policy."


          Thereafter, the Administrator  issued  the  appealed  order.  The
          appealed order simply stated  that  the  orders  which  had  been
          issued on March  23,  1984,  and  which  had  been  appealed  and
          remanded under an order and opinion dated August 20,  1984,  were
          affirmed.

          In the Petition now before  the  Commissioner,  the  tenants,  by
          their above mentioned attorneys,  assert, in substance, that  the
          appealed order is defective in that it does  not  set  forth  the
          basis upon which it is issued; and that the  orders  it  affirmed
          were issued in contravention of the Private Housing Finance  Law,
          the Rent and Eviction  Regulations  and  the  constitutional  and
          civil rights of the affected tenants. They also assert  that  the
          Department of Housing  Preservation and Development  (HPD)  Rules
          and Regulations for the processing of loans under Article  8A  of
          the Private Housing Finance Law were not adhered to  herein;  and
          that the HPD Rules for restructuring proceedings do  not  conform
          to the requirements of the Private Housing Finance  Law  and  the
          Rent and Eviction Regulations.

          The owner has not filed an answer to the Petition.

          The Commissioner is of the opinion that the  Petition  should  be
          denied.

          The Commissioner notes that, in implementing the provisions of  9






          Adm.Review Docket No.: BE 430122 RT
          NYCRR 2202.12, as it relates to the restructuring of  rents  upon
          the acquisition of a rehabilitation loan under Article 8A of  the
          Private Housing Finance Law, the  Directors of the District  Rent
          Offices and (after the State assumed the task  of  enforcing  the
          City Rent Law) the Rent Administrators placed great weight on the 
          certifications of the Director of the 8A Program  in  determining
          to  issue  an  order  restructuring  the   rents.   Indeed,   the
          Commissioner notes that it was not the policy of  the  Office  of
          Rent Control to look behind the Program Director's  certification
          and inquire into the  transaction  between  the  lender  and  the
          borrower, or the calculation of the restructured rents,  as  long
          as the certification itself appeared regular  on  its  face.  The
          appropriateness of that  reliance  in  cases  such  as  this  was
          subsequently underscored by the legislature with the addition  of
          Subdivision 7 to Section 452 of the Private Housing  Finance  Law
          (added by Chapter 777, Section 3, Laws of 1986)  which  gave  HPD
          the power to adjust rents based solely on the  debt  service  the
          owner-borrower had to meet and notwithstanding the provisions  of
          any regulation promulgated  under the Emergency Tenant Protection 
          Act of 1974, the City Rent Law, or the  Local  [State]  Emergency
          Housing Rent Control Law. 

          The District Rent Administrator clearly followed  the  policy  in
          effect at the time the March 23, 1984 orders were issued when  he
          issued them upon the certification by the Program  Director  that
          the loans  in  question  had  been  made.  Having  done  so,  the
          Commissioner finds, the District Rent Administrator issued  those
          orders in  conformity  with  9  NYCRR  2202.12  and  the  current
          administrative policy. 

          The mandate given to the Administrator by the order  and  opinion
          of  August  20,  1984,  was  to  determine  whether  or  not  the
          restructuring orders had  been  issued  in  accordance  with  the
          applicable law and the  current  administrative  policy.  As  the
          Commissioner now finds that  the  original  restructuring  orders
          had met those criteria, the Commissioner, finds that the appealed 
          order,  wherein  the  restructuring  orders  were  affirmed,  was
          properly issued and should be affirmed.


          THEREFORE, in accordance with all  of  the  applicable  laws  and
          regulations, it is

          ORDERED, that this Petition be, and the same hereby  is,  denied;
          and that the Administrator's order be  and  the  same  hereby  is
          affirmed. 

          ISSUED:
                                                                    
                                               JOSEPH A. D'AGOSTA
                                           Acting Deputy Commissioner
    

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