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

          -------------------------------------X   ADMINISTRATIVE REVIEW
          APPEAL OF
                    BARBARA DESNOO
                                                   RENT ADMINISTRATOR'S
                                                   DOCKET NO.:  LS000023OH



          On  June 11, 1987 the above named petitioner-owner filed a Petition 
          for Administrative Review against an order issued on May 29, 1987 
          by the Rent Administrator (Gertz Plaza) concerning the housing 
          accommodations known as 221 E. 26th Street, New York, New York, 
          various apartments, wherein the Administrator denied the owner's 
          application for rent increases pursuant to the alternative hardship 
          provisions of Section 26-511 c. (6-a) of the Rent Stabilization Law 
          and Section 2522.4 of the Rent Stabilization Code.

          The order of the Rent Administrator appealed herein disallowed 
          $1,127.64 of the owner's claimed expenditures and increased the 
          total rental income from stabilized apartments by $593.80.  These 
          adjustments resulted in a ratio of operating expenses to income of 
          93.7 percent which is below the 95 percent threshold to qualify  
          for an alternative hardship rent increase.

          In this Administrative Appeal the petitioner-owner contends, in 
          substance, that the Administrator's order is in error as it fails 
          to detail the basis for the increase in rental income and the items 
          and the basis upon which the $1,127.64 in expenditures were 

          After a careful consideration of the entire evidence of record, the 
          Commissioner is of the opinion that this petition should be denied.

          In order for an owner to qualify for a rent increase pursuant to 
          the "Alternative Hardship" provisions of the Rent Stabilization Law 
          and Code, it is incumbent upon an owner to establish that the 
          standard rent guidelines adjustments are insufficient for the 
          property to maintain an annual gross rent income level which 
          exceeds the allowable annual operating expenses by an amount equal 
          to at least five percent of such annual income.  The Rent 
          Administrator has the inherent duty to ascertain the validity of 
          the submissions made in any application filed pursuant to Section 
          2522.4 of the Rent Stabilization Code.

          ADMIN. REVIEW DOCKET NO. BF-430238-RO

          The Commissioner notes that in the instant application the 
          stabilized rental income for the calendar year 1984 was determined 
          to be $43,143.05, plus the total amount of the senior citizen tax 
          abatement for apartment 1D and the imputed rental value of 
          apartment 4B while it was vacant for one of two months. The Rent 
          Administrator found the rental value of apartment 4B to be the 
          amount of one month's rent at the time the unit first became 
          reoccupied, which is $593.00.  However, the Commissioner notes that 
          the Rent Stabilization Code, Section 2522.4 (c) (2) (vi) states 
          that the rental value of unoccupied housing accommodations at the 
          owner's choice  for more than one month is the value of the last 
          regulated rent plus the minimum number of rent guidelines increases 
          or, if no such regulated rent existed or is known, the DHCR shall 
          impute a rent equal to the average of rents for similar or 
          comparable housing accommodations subject to this Code in the 
          building during the test year. 

          The rental value  of the unoccupied apartment 4B for one month has 
          been re-calculated pursuant to the above Code section (by averaging 
          the monthly rent of rent stabilized apartments with the same number 
          of rooms as apartment 4B during the period in question) to be 
          $418.41. This adjustment to the rental income of rent stabilized 
          apartments, results in a total rental income value of $40,410.50.

          Furthermore, the Commissioner notes that the instant application 
          lists a sum of $50,430.17 in operating expenses.  The Rent 
          Administrator reviewed the itemized expenses and properly 
          disallowed the following amounts as unsubstantiated expenses:  
          $25.00- fees; $180.00- necessary contracted services; $704.22- non 
          capital repairs; and $195.00- parts and supplies, in view of the 
          owner's failure to submit paid invoices and cancelled checks 
          identifiable to the subject premises although afforded the 
          opportunity to do so.

          Additionally, the Rent Administrator disallowed $23.42 in 
          management fees claimed by the owner as expenses. However, 
          management fees allowed have been re-calculated due to the 
          adjustment in rental income (six percent of the gross rental 
          income) to be $2,613.69.  The net adjustment in expenditures result 
          in recognized total operating expenses of $49,327.64. The amount of 
          the operating expenses apportioned  to rent stabilized rooms is 


          ADMIN. REVIEW DOCKET NO. BF-430238-RO

          The ratio of the recalculated operating expenses to rental income 
          apportioned to rent stabilized accommodations is 94 percent which 
          is below the 95 percent threshold required to qualify for  an 
          alternative hardship increase. 

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

          ORDERED, that this petition be, and the same hereby is, denied; and 
          that the Rent Administrator's order be, and the same hereby is, 


                                                         Joseph A. D'Agosta
                                                        Deputy Commissioner



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