STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
IN THE MATTER OF THE ADMINISTRATIVE ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO. CB-210271-RO
John Guarrera, DISTRICT RENT OFFICE
DOCKET NO. K-3105768-T
PETITIONER Tenant: Katz/Sterling
ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
On February 2, 1988, the above named petitioner-owner filed a
Petition for Administrative Review against an order issued on
December 31, 1987, by the District Rent Administrator,
10 Columbus Circle, New York, New York concerning housing
accommodations known as apartment 3L at 179 7th Avenue, Brooklyn,
New York wherein the District Rent Administrator determined the
fair market rent pursuant to the Special Fair Market Rent Guideline
Order promulgated by the New York City Rent Guidelines Board for
use in calculating fair market rent appeals.
The issue in this petition is whether the fair market rent was
correctly determined by the District Rent Administrator.
The Commissioner notes that this proceeding was initiated 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 (Code) contained herein are to the Code in
effect on April 30, 1987.
The Commissioner has reviewed all of the evidence in the record and
has carefully considered that portion of the record relevant to the
issues raise by the administrative appeal.
This proceeding was originally commenced by the filing on March 16,
1984 of a tenant's fair market rent appeal with the NYC
Conciliation and Appeals Board (CAB), one of the predecessor
agencies to the DHCR. The tenants stated that they took occupancy
pursuant to a lease commencing July 1, 1983 at a rental of $650.00
per month and that the rent being charged was not the legal rent.
In Order Number K-3105768-T, the District Rent Administrator
determined the fair market rent of the subject apartment to be
$353.85 effective July 1, 1983, the date of commencement of the
initial rent stabilized lease, and directed the owner to refund
excess rent in the amount of $8,588.35. The Administrator
determined the fair market rent solely on the basis of the special
fair market rent guidelines order based on the owner's failure to
submit documentation of the June 30, 1974 rent for apartments 2L
and 4L which the owner had cited as comparable apartments.
In this petition, the owner contends that the Administrator's Order
is incorrect in several respects. The owner alleges that the
tenants' original fair market rent appeal should be dismissed as
untimely since the owner served a letter which was equivalent to a
DC-2 notice. The owner further alleges that he attempted to obtain
a proper DC-2 form from the CAB, but was told it was unavailable.
Second, the owner alleges that he submitted rent ledgers including
the June 30, 1974 rent for apartments 2L and 4L which were not
considered by the Administrator. Third, the owner submitted an
invoice for electrical work performed on April 1, 1983 at a cost of
$420.00 which the owner states the Administrator failed to
consider. Forth, the owner alleges that the Administrator failed
to consider two appraisals by real estate brokers regarding the
fair market value of the subject apartment. Finally, the owner
alleges that the Administrator failed to properly give the owner an
increase in rent for the period of time the tenant was a month-to-
The Commissioner is of the opinion that this petition should be
Section 26 of the Code provides that an owner must serve the tenant
with a notice of right to appeal the initial legal regulated rent
on a form prescribed by the CAB (DC-2 notice). It is the owner's
burden to obtain a proper DC-2 notice and serve it on the tenant.
DC-2 notice forms were readily available from the CAB even during
the period of time when DHCR began to tak over the responsibilities
of the CAB. Accordingly, the Administrator was correct in its
determination that the tenant's fair market rent appeal was timely.
The record in this case indicates that by submission received by
the DHCR on May 7, 1986, the owner submitted rent ledgers
documenting the June 30, 1974 rent for apartments 2L and 4L.
Accordingly, the Administrator erred in not considering the
comparability data below.
In addition, a hearing concerning the rental history of apartment
4L was held on July 10, 1992. The Administrative Law Judge
determined the rental history for apartment 4L to be as the owner
stated it to be before the Administrator. The Administrative Law
Judge determined the June 30, 1974 rent for that apartment to be
$490.00 in spite of the fact that the rent was subsequently
Section 26-513 of the Rent Stabilization Law directs that the fair
market rent be determined on the basis of 2 criteria: (1) a special
guidelines order promulgated by the New York City Rent Guidelines
Board solely for use in determining Fair Market Rents; and (2)
"rents generally prevailing in the same area for substantially
similar housing accommodations," language commonly referred to as
The first statutory criterion is based on Special Guidelines Order
Number 14 which was in effect when the tenant herein took
Pursuant to Special Guidelines Order Number 14, the Maximum Base
Rent of $230.22 must be adjusted by an additional 15%. This
results in a Fair Market Rent of $264.75.
The application of the second statutory criterion (the
comparability test) results in a fair market rent of $949.90 per
month. That amount is the average of the June 30, 1974 rents of
comparable apartments (2L & 4L) of $482.50 plus annual guidelines
increases to reflect increased costs since June 30, 1974 up to the
date of the tenant's initial lease term plus a full allowance for
the tenant's initial lease term. This results in a current
comparable rents of $949.90.
The fair market rent for the subject apartment is determined by
averaging the result of the Special Guidelines test with the result
of the comparability study. This results in a fair market rent of
($264.75 + $949.90 divided by 2 = $607.33).
Pursuant to Section 20C(1) of Code, the owner was entitled to a
monthly rent increase in the amount of $89.10, calculated on the
basis of 1/40th of the total cost of $3,563.91. This results in a
final Fair Market Rent of $696.43.
Since the $650.00 per month free market rent challenged by the
tenant does not exceed the $696.43 Fair market Rent established in
this case, the tenant's fair market rent appeal must be denied.
With regard to the owner's other contentions, they are without
merit. The appraisals submitted by the owner have no value in
determining a fair market rental for these tenants and were
properly disallowed by the Administrator. The Administrator
correctly did not grant the owner an increase in rent for the
period of time the tenant was without a lease and remained as a
month-to-month tenant from July 1, 1975 to October 31, 1975 as no
such increase is allowed under the Rent Stabilization Law and Code.
It is also noted that the owner was given a Section 20C(1) increase
for the $420.00 electrical work claimed by the owner to have been
omitted, but was denied an increase for electrical supplies in the
amount of $50.00.
THEREFORE, in accordance with the provision of the Rent
Stabilization Law and Code, it is
ORDERED, that this petition be and the same hereby is granted, the
Administrator's order be and the same hereby is revoked and the
tenant's fair market rent appeal be and the same hereby is denied.
JOSEPH A. D'AGOSTA
Acting Deputy Commissioner