BL110047RT, BL110319RT (refiling of BK130043RT), ART08683-Q
                             STATE OF NEW YORK
                          OFFICE OF RENT ADMINISTRATION
                                   GERTZ PLAZA
                             92-31 UNION HALL STREET
                             JAMAICA, NEW YORK 11433

      APPEAL OF                              DOCKET NOS. BL110047RT
                                             (refiling of BK130043RT) 
           Charles Dempsey,                  (refiling of ART06425Q)

                                          :  DISTRICT RENT OFFICE
                                             DOCKET NO. ZQ002857R
                                             OWNER: Joseph Macari       
                            PETITIONER    : 


      On December 17, 1987 the above-named petitioner-tenant perfected the 
      filing of Petitions for Administrative Review against an order issued on  
      October 28, 1987 by the Rent Administrator, 92-31 Union Hall Street, 
      Jamaica, New York concerning the housing accommodations known as 144-41 
      41st Avenue, Flushing, New York, Apartment No. 6N wherein the Rent 
      Administrator determined that the owner had overcharged the tenant by 

      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 appeals.  

      This proceeding was originally commenced by the filing in July, 1985 of 
      a rent overcharge complaint by the tenant, in which he stated that he 
      had commenced occupancy on January 1, 1977 at a rent of $210.00 per 
      month; that his apartment had been gutted on January 30, 1985 by a fire 
      caused by a contractor working for the owner; that the owner sent him a 
      letter on February 1, 1985 requiring him to vacate; that the owner later 
      gave him a new lease commencing July 1, 1985 at a rent increase of 
      $72.66 per month, even though his existing lease had not run out; and 
      that the appliances were only smoke and water damaged and could have 
      been cleaned.  The tenant later contended that the owner's losses were 
      compensated by insurance; that tenants did not consent to a rent 
      increase, other than in new leases signed under duress; that the Rent 
      Stabilization Code does not provide that tenants must renew at a higher 
      rent if an apartment in destroyed by fire, or that they must accept a 
      premature new lease; that the law mandates a rent of $1.00 per month 
      while apartments are being repaired; that his previous lease should be 
      extended by the five months that it took the owner to repair the subject 

          BL110047RT, BL110319RT (refiling of BK130043RT), ART08683-Q

      apartment; that the apartment previously had six cabinets as well a sink 
      with two basins; that only two cabinets, and a sink with one basin, were 
      installed, with no drawers and no counter top; and that this is inferior 
      to what previously existed. 

      In answers, the owner asserted in substance that the destruction of the 
      roof and the damage done by the fire caused the equipment to rust and 
      warp; that the Fire Department ordered the tenants to vacate; that the 
      leases were voided because of the fire, with tenants paying no rent 
      during the time they were not occupying apartments; that the building 
      was restored and improved immediately after a settlement was made with 
      the insurance company; that the apartment was completely renovated, with 
      a new refrigerator, new stove, new cabinets, new sink, painting, and 
      floor scraped; and that the apartment was first offered to the previous 
      tenant, with a charge being made for the two new appliances, and other 
      improvements other than painting, plus a two year lease without vacancy 
      charge.  The owner submitted a contract for modernization of the 
      kitchen, including a new Formica counter top, and new bathroom sink and 
      vanity, at a cost of $2,595.00, and a cancelled check.

      In an order issued on October 28, 1987 the Administrator, allowing 
      $2,595.00 for improvements, and deeming a two year lease commencing 
      October 1, 1985 rather than July 1, 1985, found an overcharge of $137.20 
      as of October 31, 1987.

      The tenant filed three Petitions for Administrative Review during the 12 
      months prior to the Administrator's order.  Docket No. ART04511Q was 
      rejected on November 4, 1985 because he failed to specify the issuance 
      date of the order [not yet issued] which he was appealing.  He refiled 
      his petition as Docket No. ART06425Q, which was rejected on February 27, 
      1986 for other procedural reasons.  On March 12, 1986 he refiled again 
      as Docket No. ART08683-Q.  While that appeal is herein being terminated 
      as premature, since it was also filed long before there was any order to 
      appeal, the Commissioner notes that its main points are also set forth 
      in Docket Nos. BL110047-RT and BL110319-RT, which are considered herein.

      In those petitions, the tenant contends in substance that he should not 
      have to pay an increase for work for which was paid for out of insurance 
      proceeds, and that the old lease should be extended by the six [actually 
      five] months that it took to make the repairs.

      In answer, the owner asserts in substance that the tenant's appeals, 
      received on December 17, 1987, were untimely for an order issued on 
      October 28, 1987.

      The Commissioner is of the opinion that Docket No. ART 08683-Q should be 
      terminated, and that Docket Nos. BL110047-RT and BL110319-RT should be 
      denied in part and remanded to the Rent Administrator.

      On the issue of timeliness: The tenant filed a timely appeal on November 
      9, 1987 under Docket No. BK130043-RT.  It was rejected on December 9, 
      1987 because it did not include a copy of the order being appealed.  The 
      rejection order gave the tenant 15 days to refile properly.  He did so 
      on December 19, 1987 with duplicate appeals docketed as BL110047-RT and 
      BL110319-RT, so those appeals are timely.

      While the tenant is correct that he was entitled to continue with his 
      1983 lease at a rent of $1.00 per month while the apartment could not be 

          BL110047RT, BL110319RT (refiling of BK130043RT), ART08683-Q

      occupied, such lease expired on September 30, 1985.  It was therefore 
      proper for the Administrator to deem a new lease commencing October 1, 

      DHCR policy, paralleling the provisions in Sections 2522.3(a)(9) and 
      (10) of the Rent Stabilization Code [that rent increases not be granted 
      for Major Capital Improvements to the extent that they are paid for by 
      governmental grants or out of the post-conversion reserve fund of a 
      cooperative corporation], and as reflected in the May 4, 1989 order in 
      Docket No. CF510024RO, is that no rent increase is allowed for 
      individual apartment improvements to the extent that they are paid for 
      out of insurance proceeds representing compensation for loss of the 
      previously existing equipment or facilities.  While the owner has not, 
      in this appeal proceeding, denied the tenant's contention that the 
      owner's "insurance coverage compensated him for his losses," and while 
      the owner in a November 7, 1985 answer in the earlier proceeding 
      mentioned "settling our losses with the insurance company," it cannot be 
      assumed that 100% of the cost was covered by insurance (e.g., the owner 
      may have had current value coverage, or replacement value coverage, or 
      a co-pay percentage, or a deductible, etc.).  This proceeding is being 
      remanded to look further into the matter.  It may also be relevant if 
      the insurance company did not pay for them on grounds that they were 
      repairable, and if the owner nevertheless made improvements and 
      installed new equipment without tenant consent to a rent increase.

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

      ORDERED, that the proceeding in Docket No. ART08683-Q be, and the same 
      hereby is, terminated; and that the petitions in Docket Nos. BL110047-RT 
      and BL110319-RT, be, and the same hereby are, denied in part and granted 
      to the extent of remanding those proceedings to the Rent Administrator 
      for further processing in accordance with this order and opinion.  The 
      automatic stay of so much of the 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 effect, except for any adjustments pursuant to lease 
      renewals, until the Administrator issues a new Order upon remand. 


                                      JOSEPH A. D'AGOSTA
                                      Deputy Commissioner


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