CB 110155 RO
                                  STATE OF NEW YORK
                            OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                              JAMAICA, NEW YORK   11433

          APPEAL OF                               DOCKET NO.: CB 110155 RO

                   NATHAN KATZ REALTY,
                                                  DRO DOCKET NO.: 042965
                                                  TENANTS:  RAYMOND GARCIA

                                       IN PART

          On February 9, 1988, the above-named petitioner-owner filed a 
          Petition for Administrative Review against an order issued on 
          January 13, 1988 by the Rent Administrator, 10 Columbus Circle New 
          York New York, concerning the housing accommodations known as 37-06 
          81st Street, Queens, New York, Apartment No. 5G wherein the Rent 
          Administrator determined the fair market rent pursuant to the 
          special fair market rent guideline promulgated by the New York City 
          Rent Guidelines Board for use in calculating fair market rent 

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

          The issue here 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 
          issues raised by the administrative appeal.

          This proceeding was originally commenced on September 5, 1984 by 
          the filing of a fair market rent adjustment application by the 
          tenant who took occupancy of the subject apartment on July 1, 1984 
          at a rental of $600.00 per month.

          The owner was served with a copy of the tenant's application and 
          afforded an opportunity to submit comparability data determining 
          the fair market rent of the subject apartment and to submit proof 
          of any improvements made in the subject apartment.

          CB 110155 RO

          In response, the owner stated in substance that new equipment 
          totaling $1,080.06 was installed in the subject apartment and that 
          the owner was entitled to charge a fair market rent of $600.00.  As 
          comparables, the owner cited June 30, 1974 rents for apartments in 
          the subject line but all apartments were subject to rent control on 
          that date.  The owner submitted bills showing it made expenditures 
          totalling $1,080.06 in the subject apartment immediately prior to 
          occupancy by the tenant herein.

          In Order Number 042965 the Rent Administrator adjusted the initial 
          legal regulated rent by establishing a fair market rent of $410.44 
          (including $24.94 for new equipment).

          In this Petition, the owner contends in substance that the tenant 
          is precluded from filing a fair market rent appeal because the 
          tenant was served personally with a DC-2 Form (Notice of Initial 
          Legal Regulated Rent) and signed and dated it as proof of receipt.  
          Therefore, the fair market rent is the $600.00 lease rent.

          Furthermore, the Rent Administrator miscalculated the Fair Market 
          Rent established in the order in the following ways:

               1)   miscalculated 1/40th of $1,080.06 as $24.94 
                    for new equipment.  The correct increase is 
                    $27.00 ($1,080.06 divided by 40 = $27.00).

               2)   Miscalculated the Special Guideline No. 15 
                    increase of 20% above the 1982 Maximum Base 
                    Rent (MBR) of $321.28 as $385.50.  The correct 
                    calculation is $321.28 X 20% = $385.54.

          The tenant failed to submit a response to the petition.

          The Commissioner is of the opinion that this petition should be 
          granted in part.

          Section 26-513 of the Rent Stabilization Law provides, in pertinent 
          part, that fair market rent adjustment applications are to be 
          determined by the use of special fair market rent guidelines orders 
          promulgated by the New York City Rent Guidelines Board and by the 
          rents generally prevailing in the same area for substantially 
          similar housing accommodations.

          An examination of the record in this case discloses that the owner 
          is correct in its contention that the Rent Administrator 
          miscalculated the increase due for new equipment and the increase 
          calculation under Special Guideline No. 15.

          The Commissioner rejects the owner's contention that the tenant's 
          signature on the Notice of Initial Legal Regulated Rent is adequate 
          proof of service and that the tenant is precluded from challenging 
          the Initial Rent.

          CB 110155 RO

          Section 2522.3(a) provides in pertinent part that after service of 
          the notice required by Section 26 of the former Rent Stabilization 
          Code (Notice of Initial Legal Regulated Rent also designated as the 
          DC-2 Notice) on the first tenant taking occupancy of a formerly 
          rent controlled unit, the time within which such a tenant may file 
          a FMRA is limited to 90 days after such notice was mailed to the 
          tenant by the owner by certified mail.

          In the instant case, the owner failed to show that the tenant was 
          served the notice by certified mail as requested.

          Moreover, in the instant case, the tenant filed a tenant objection 
          to the rent within 90 days of personal service of the Notice and 
          therefore the challenge was timely.

          Taking the aforementioned factors into account the Commissioner has 
          adjusted the initial legal regulated rent as established in the 
          order from $410.44 to $412.54 ($321.28 X 20% = $385.54 + $27.00 = 
          $412.54) and recalculated the amount of refund for the subject 

          The lawful stabilization rent and amount of refund are set forth on 
          the amended Rent Calculation Chart attached hereto and made a part 

          Because this determination concerns lawful rents only through June 
          30, 1985, the owner is cautioned to adjust subsequent rents to an 
          amount no greater than that determined by the Rent Administrator's 
          order plus any lawful increases, and to register any adjusted rents 
          with this order and opinion being given as the explanation for the 

          If the owner has already complied with the District Rent 
          Administrator's order and there are arrears due to the owner as a 
          result of the instant determination, the tenant shall be permitted 
          to pay off the arrears in twenty four equal monthly installments. 
          Should the tenant vacate after the issuance of this order or have 
          already vacated, said arrears shall be payable immediately.

          If the owner does not take appropriate action to comply with this 
          order within sixty days from the date of issuance of this order, 
          the tenant may credit the excess rent against the next months(s) 
          rent until fully offset.

          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, granted in part and, that the order of the Rent 

          CB 110155 RO

          Administrator be, and the same hereby is, modified in accordance 
          with this Order and Opinion.

          The total amount of excess rent thorough June 30, 1985 is 


                                                  JOSEPH A. D'AGOSTA
                                                  Acting Deputy Commissioner

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