CD 410039 RO
                             STATE OF NEW YORK
                          OFFICE OF RENT ADMINISTRATION
                                   GERTZ PLAZA
                             92-31 UNION HALL STREET
                             JAMAICA, NEW YORK 11433

      APPEAL OF                              DOCKET NO.: CD 410039 RO

                                             DISTRICT RENT OFFICE
           John Kapetanos,                   DOCKET NO.: 56525

                                             TENANT: R. Kavaliuskas;
                               PETITIONER    A. Ross; C. Balchin    

                                     IN PART

      It is acknowledged that one of the tenants herein is employed by DHCR.

      On April 1, 1988, the above-named petitioner-owner filed a Petition for 
      Administrative Review against an order issued on     March 8, 1988, by 
      the Rent Administrator, 10 Columbus Circle, 
      New York, New York, concerning the housing accommodations known as 89 
      MacDougal Street, New York, Apartment No. 5B, wherein the Rent 
      Administrator determined the fair market rent pursuant to special fair 
      market rent guidelines promulgated by the New York City Rent Guidelines 
      Board for use in calculating fair market rent appeals.

      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 an objection 
      to the apartment registration including a fair market rent appeal.  The 
      tenants took occupancy pursuant to a lease commencing February 17, 1985 
      and expiring February 16, 1986 at a monthly rent of $979.50. 

      The owner was served with a copy of the objection and on October 20, 
      1987 was requested to provide the rents in effect on June 30, 1974 for 
      comparable apartments and to submit evidence of any improvements or new 
      equipment.  The owner responded by sending, on November 17, 1987, a 
      photocopy of the Landlord's Report of Statutory Decontrol (Form R-42) 
      indicating vacancy decontrol in October, 1984.

      On June 20, 1986 the owner was served with a copy of the tenant's 
      complaint, and was instructed to provide complete copies of all leases 

          CD 410039 RO

      for the subject apartment since April 1, 1980, together with proof (paid 
      bills, cancelled checks, etc.) to substantiate any improvements that 
      would affect the legal rent.  On September 24, 1987, the Administrator, 
      in Final Notice of Pending Default, again afforded the owner the 
      opportunity to submit that information.  On October 20, 1987 the owner 
      was afforded a final opportunity to submit the paid bills, cancelled 
      checks, etc. for any new equipment that he installed.  In response to 
      these requests, the owner, on November 17, 1987, submitted only a 
      photocopy of the Landlord's Report of Statutory Decontrol (Form R-42) 
      indicating vacancy decontrol in October 1984.

      In the order herein appealed, the Rent Administrator adjusted the 
      initial legal regulated rent by establishing a fair market rent of 
      $319.40 effective February 17, 1985, the commencement date of the 
      initial rent stabilized lease, and directed the owner to refund to the 
      tenants excess rent in the amount of $25,061.94 including excess 

      In this petition, the owner contends that the Rent Administrator's Order 
      is incorrect and should be modified because it was determined based upon 
      Special Guidelines Order No. 16 and not on the rent for substantially 
      similar housing accommodations (comparables).  

      In support of its petition, the owner submits a photocopy of the initial 
      apartment registration for Apartment 4B, a comparable apartment, and 
      proof of service thereof upon the tenant.  No objection to that 
      registration has been filed.
      The owner further alleges, for the first time on appeal, that a rent 
      increase was warranted to reimburse him for new equipment and vacancy 
      improvements in the subject apartment, totalling $12,500., and submits 
      a copy of the contract and a contractor's affidavit that the work was 
      paid in full, in support of his allegation.

      In answer to this petition, the tenants contend that the Administrator 
      was correct in utilizing the special guidelines because the owner failed 
      to submit any comparability data; that the petitioner has failed to 
      submit required documentation throughout the proceeding and has offered 
      no reasonable excuse for that failure; that the vacancy improvements 
      should not be considered for the first time on appeal.

      The tenants further contend, among other things, that the vacancy 
      improvements, if they were completed at all, exhibited poor workmanship.  
      The tenants submit current photographs of the kitchen cabinets in 
      support of their assertion.

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

      Pursuant to Sections 2522.3(e) and (f) of the Rent Stabilization Code 
      effective May 1, 1987, for fair market rent appeals filed after April 1, 

          CD 410039 RO

      1984, comparability will be determined based on the following:

           (e)...(1) Legal regulated rents, for which the time 
                     to file a Fair Market Rent Appeal has 
                     expired and no Fair Market Rent Appeal is 
                     then pending, or the Fair Market Rent 
                     Appeal has been finally determined, 
                     charged pursuant to a lease commencing 
                     within a 4 year period prior to, or a one 
                     year period subsequent to, the 
                     commencement date of the initial lease 
                     for the housing accommodations involved; 

           (f)       Where the rents of the comparable housing 
                     accommodations being considered are legal 
                     regulated rents, for which the time to 
                     file a Fair Market Rent Appeal has 
                     expired, and such rents are charged 
                     pursuant to a lease ending more than 1 
                     year prior to the commencement date of 
                     the initial lease for the subject housing 
                     accommodation, such rents shall be 
                     updated by guidelines increases for 1 
                     year renewal leases, commencing with the 
                     expiration of the initial lease for the 
                     comparable housing accommodations to a 
                     date within 12 months prior to the 
                     renting of the housing accommodation 

      The record in this case indicates that the notices sent to the owner did 
      not afford him an opportunity to submit comparability data pursuant to 
      the above requirements of the current Rent Stabilization Code, which 
      changed the definition of comparability data to allow the owner to 
      submit rents of comparable apartments which became subject to rent 
      stabilization within four years prior to and one year subsequent to the 
      stabilization date.  Therefore the Commissioner will consider the 
      comparability data submitted with the petition for administrative review 
      at this time.

      The Commissioner finds that the comparability data submitted by the 
      owner concerning Apartment 4B is adequate under Section 2522.3(e) of the 
      Code.  Division records confirm that all other apartments in the same 
      line were rent controlled until Apartment 2B was decontrolled in 1990, 
      beyond the statutory comparability period.
      The owner submitted proof of service of the initial apartment 
      registration upon the tenant of Apartment 4B.  Since that rental sum was 
      not challenged, and the time to file a fair market rent appeal had 
      passed, the initial legal regulated rent for Apartment 4B was $750.00.  
      Accordingly, the initial legal regulated rent of Apartment 5B is 
      recomputed as follows: the Special Guidelines amount of $319.40, 

          CD 410039 RO

      averaged with the Apartment 4B comparable rent of $750.00, results in a 
      revised initial legal regulated rent of $534.70 per month for Apartment 

      The revised lawful stabilized rent is computed on the attached Rent 
      Calculation Chart, which is hereby made a part of this order.  The 
      excess rents collected total $16,955.88.

      Concerning the adjustment for vacancy improvements, the Commissioner 
      finds that this should be denied.  Section 2529.6 of the Rent 
      Stabilization Code provides, in pertinent part, that "review pursuant to 
      this part shall be limited to facts or evidence before a Rent 
      Administrator as raised in the petition."  

      The record establishes that the owner, on three occasions during the 
      proceeding before the Administrator, was sent notices that set forth the 
      requirements for an increase for vacancy improvements.  The owner failed 
      to submit the requisite documentation of improvements during the 
      proceeding before the Administrator.  The owner may not submit such 
      documentation for the first time on appeal.  Accord: 985 Fifth Avenue 
      Inc. v. DHCR, 171 AD2d 572, 567 N.Y.S.2d 657 (AD. 1Dept. 1991), In the 
      Matter of Lemle & Wolff, Inc. v. DHCR, Supreme Court, New York County, 
      Mc Cooe, J., Index Number 18903/91 (unreported), January 15,1992.

      The owner is directed to roll back the rent to the lawful stabilized 
      rent consistent with this decision and to refund or fully credit against 
      future rents over a period not exceeding six months from the date of 
      receipt of this order, the excess rent collected by the owner.

      In the event the owner does not take appropriate action to comply within 
      sixty (60) days from the date of this order, the tenants may credit the 
      excess rent collected by the owner against the next month(s) rent until 
      fully offset.

      The owner is directed to reflect the findings and determinations made in 
      this order on all future registration statements, including those for 
      the current year if not already filed, citing this Order as the basis 
      for the change.  Registration statements already on file, however, 
      should not be amended to reflect the findings and determinations made in 
      this order.

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

      THEREFORE, in accordance with the provisions of the Rent Stabilization 

          CD 410039 RO

      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 
      Administrator be, and the same hereby is, modified to the extent 
      hereinabove indicated.  The total amount of excess rent owed to the 
      tenants is $16,955.88, and the monthly lawful stabilization rents are 
      $534.70 effective February 17, 1985 and $582.82 effective August 1, 


                                      JOSEPH A. D'AGOSTA
                                      Acting Deputy Commissioner


          CD 410039 RO


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