CB-210271-RO
                                  STATE OF NEW YORK
                      DIVISION OF HOUSING AND COMMUNITY RENEWAL
                            OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                              JAMAICA, NEW YORK  11433


          -----------------------------------X
          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
                                                           (CDR 32,247)

                                   PETITIONER   Tenant: Katz/Sterling
          -----------------------------------X


            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 












          CB-210271-RO

          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- 
          month tenant.

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

          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 






          CB-210271-RO

          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 
          reduced.

          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 
          "comparability."

          The first statutory criterion is based on Special Guidelines Order 
          Number 14 which was in effect when the tenant herein took 
          occupancy.

          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 












          CB-210271-RO

          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.



          ISSUED:

                                                                           
                                             JOSEPH A. D'AGOSTA
                                             Acting Deputy Commissioner

















    

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