BG 410282 RT

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

      APPEAL OF                              DOCKET NO. BG 410282 RT

                                          :  DISTRICT RENT OFFICE
           Noel Hamilton,                    DOCKET NO. L 3112943 T
           aka Darielle Keith,              
                                             OWNER: River Company             
                            PETITIONER    : 


      On July 6, 1987, the above-named petitioner-tenant filed a Petition for 
      Administrative Review against an order issued on June 2, 1987, by the 
      Rent Administrator, 10 Columbus Circle, New York, concerning the housing 
      accommodations known as 214 Riverside Drive, New York, New York, 
      Apartment No. 709, wherein the Rent Administrator determined that due to 
      a complete renovation of the subject building the initial rent was not 
      subject to a fair market rent appeal.

      The Commissioner notes that this proceeding was filed prior to April 1, 
      1984.  Sections 2526.1 (a) (4)  and 2521.1 (d) of the Rent Stabilization 
      Code (effective May 1, 1987) governing rent overcharge and fair market 
      rent proceedings provide that determination of these matters be based 
      upon the law or code provisions in effect on March 31, 1984.  Therefore, 
      unless otherwise indicated, reference to Sections of the Rent 
      Stabilization Code (hereafter RSC) contained herein are to the Code in 
      effect on April 30, 1987.

      The Administrative Appeal is being determined pursuant to the provisions 
      of Section 26-513 of the Rent Stabilization Law (hereafter RSL).

      The issue herein is whether the Rent Administrator's order was 

      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 by the filing of a Fair Market 
      Rent Application (hereafter FMRA) by the tenant in March 1984.  The 
      owner was served with a copy of the tenant's complaint.   The owner 
      stated in substance that the building was completely renovated in 1974 
      and submitted a copy of a "Certificate of Reasonable Costs" dated 
      February 15, 1975 and amended July 15, 1975 which indicated that the 
      owner was in receipt of a tax abatement under Section J51-2.5 of the 
      Administrative Code of the City of New York.
      In Order Number CDR 30,471, the Rent Administrator rejected the tenant's 
      FMRA because the initial rent of a dwelling unit in a building renovated 

          BG 410282 RT

      under the J51-2.5 program is not challengeable by a FMRA.

      In this petition, the tenant contends in substance that other apartment 
      rents were reduced and not disqualified under Section 2(i)(A)(1)(g) 
      specifically apartment 409; and that if the disqualification was due to 
      being the initial tenant that it was not applicable to the instant case 
      because there was a prior rent stabilized tenant.

      In answer to the tenant's petition, the owner stated in substance that
      the Rent Administrator's order was warranted; that the tenant in 
      apartment 409 had filed an overcharge proceeding and that other 
      apartments' FMRA's were similarly dismissed citing apartment 113.

      The subject building was converted to cooperative ownership under a non- 
      eviction plan effective April 25, 1985.  However the tenant herein chose 
      not to purchase the subject apartment.  The apartment was last 
      registered with DHCR in 1990.

      The Commissioner is of the opinion that this petition should be denied.

      Section 2(i)A(1)g of the former Rent Stabilization Code and Section 
      2521.1(J) of the current Rent Stabilization Code both provide in 
      pertinent part that the initial rent of a dwelling unit in a building 
      subject to the Rent Stabilization Law solely due to the owner's 
      participation in the J51-2.5 Tax Abatement Program (currently designated 
      Section 11-243) shall be the rent charged the initial rent stabilized 
      tenant . . . . and shall not be subject to a fair market rent appeal.

      An examination of the record in this case discloses that the owner had 
      submitted in the proceeding below copies of the "Certificate of 
      Reasonable Costs" issued by the N.Y.C. Dept of Finance approving tax 
      abatements under Subsection "F" of Section J51-2.5 of the Administrative 
      Code of the City of New York issued February 14, 1975 (amended July 15, 
      1975) for renovations to the subject building at a final cost of 

      A review of the rental records for the subject building on file with 
      DHCR disclose that the subject building originally contained a total of  
       38  apartments of which  20  were rent-controlled per the 1972 Maximum 
      Base Rent Schedule established by the Office of Rent Control and that 
      all the rent controlled apartments contained more than 3 rooms.  The 
      subject building's initial registration in 1984 indicates that the total 
      number of apartments was increased to 105 units, all rent stabilized 
      except for 2 exempt units and that the subject apartment contains only 
      3 rooms.

      In addition, an Order Determining Facts or Fixing Maximum Rent pursuant 
      to Section 36 of the Rent and Eviction Regulations  was issued under 
      docket 2AR18740-2AR18844 on April 24, 1975 by the Office of Rent Control 
      which set a maximum rent of $480.00 for the subject apartment which 
      contained 3 rooms after renovations.

      Therefore, the initial rent after renovations was a re-constructed rent 
      controlled rent and not an unchallengeable initial stabilized rent 
      pursuant to Section 2(i)(A)(1)(g) of the Code as the Rent 
      Administrator's order contends since the subject apartment was not under 

          BG 410282 RT

      the jurisdiction of the RSL solely due to the receipt of J51-2.5 tax 
      abatements.  Upon the vacating of the apartment by the rent controlled 
      tenant for whom the District Rent Administrator established the maximum 
      rent of $480.00 in April 1975, the apartment's initial stabilized rent 
      after vacancy decontrol was subject to a FMRA.

      In the instant case, however, the tenant neither indicated the initial 
      rent challenged nor the vacancy rent in September 1976 when filing the 
      FMRA but did note on the FMRA form that the current rent in March 1984 
      was $484.00.

      Therefore, although the tenant was not precluded from challenging the 
      initial rent by Section 2(i)(A)(1)(g) of the RSC, the challenge is 
      dismissed because the rent even in 1984 would not have exceeded the fair 
      market rent calculated above the $480.00 maximum controlled rent 
      established by the Office of Rent Control in April 1975.

      Accordingly, the Rent Administrator's order was warranted.

      With regard to the tenant's contention that the order was based on the 
      misconception that the complainant was the initial tenant of the subject 
      apartment the Commissioner notes that the applicable sections of the 
      Code apply to the initial rent and are not dependent on whether the 
      complaining tenant is or is not the initial tenant.

      Similarly, the Commissioner rejects the tenant's contention in citing 
      proceedings involving other apartments in the building, specifically 
      apartment 409, as not germane to the instant appeal since the proceeding 
      for Apartment 409 involved a complaint of rent overcharge and not a FMRA 
      - the subject of the instant proceeding.

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

      ORDERED, that this petition for administrative review be, and the same 
      hereby is, denied, and that the order of the Rent Administrator be, and 
      the same hereby is, affirmed.


                                      JOSEPH A. D'AGOSTA
                                      Deputy Commissioner


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