CE 410134 RO

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

      ------------------------------------X  SJR 6560
      APPEAL OF                              DOCKET NO.: CE 410134 RO

                                             DRO DOCKET NO.: L 3118189 RT
           John Kapetanos,                                   CDR 33, 158

                                             TENANT: Medhat Negm              

                                     IN PART

      On May 10, 1988, the above-named petitioner-owner filed a Petition for 
      Administrative Review against an order issued on April 14, 1988, by the 
      Rent Administrator, 10 Columbus Circle, New York, New York, concerning 
      the housing accommodations known as 89 MacDougal Street, New York,
      New York, Apartment No. 2A, 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 appeals. 

      Subsequent thereto, the tenant, filed a petition in the Supreme Court 
      pursuant to Article 78 of the Civil Practice Law and Rules, in the 
      nature of mandamus, for a judgment directing the Division to render a 
      determination of the petitioner's administrative appeal. 

      The Commissioner notes that this proceeding was filed prior to April 1, 
      1984.  Section 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 Administrative Appeal is being determined pursuant to the provisions 
      of Section 2526.1 of the Rent Stabilization Code.

      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 appeal.  

      This proceeding was originally commenced in March 1984 by the filing of 
      a fair market rent adjustment application and a complaint of rent 

          CE 410134 RO

      overcharge by the tenant who took occupancy of the subject apartment on 
      June 1, 1982 at a rental of $500.00 per month.

      The owner was served with a copy of the tenant's application and 
      afforded an opportunity to submit June 30, 1974 or post June 30, 1974 
      comparability data for determining the fair market rent of the subject 
      apartment and to submit proof of any improvements made in the subject 

      In addition, the tenant had filed a complaint of rent overcharge in 
      January 1984 under docket L 3115122 R which was consolidated with docket 
      L 3118189 RT by notice to all parties on July 17, 1987.

      In response to the tenant's complaints, the owner submitted a bill for 
      a new stove and refrigerator dated July 23, 1986 at a total cost of 
      $617.25 with a copy of the signed consent of the tenant.  The owner 
      failed to submit a notice of initial rent with proof of service, 
      comparability data or documentation for any improvements or new 
      equipment prior to the complainant's occupancy.

      In Order Number CDR 33,158, the Rent Administrator adjusted the legal 
      regulated rent by establishing a fair market rent of $212.59 effective 
      June 1, 1982 utilizing the special guidelines only. 

      In this petition, the owner contends in substance that the Rent 
      Administrator erred in requesting comparability data exceeding the 4 
      year limitation imposed by Section 26-516(g) of the Rent Stabilization 
      Law; that the owner was not notified of the tenant's Fair Market Rent 
      Appeal until 1987 and therefore the legal rent is the $500.00 charged on 
      April 1, 1984; that the comparability should be based on the April 1, 
      1984 registered rents of the subject line which are being submitted 
      herein and that the Rent Administrator should also consider the 
      improvements done prior to the tenant's occupancy totaling $7750.00.  
      Along with his petition the owner submitted a bill dated January 17, 
      1982 for new windows; 2 new doors; ceramic tile; fixing walls and 
      ceiling; scraping; painting and plastering at a total cost of $7750.00; 
      an affidavit dated May 2, 1988 attesting to full payment by the owner 
      herein signed by the contractor; and the initial apartment registrations 
      for apartments 3A, 2C and 1B.

      In addition, the owner resubmitted the bill dated July 23, 1986 for a 
      refrigerator and stove and the tenant's consent form dated July 23, 1986 
      attesting to receipt of the new equipment which had been previously 
      submitted to the Rent Administrator.

      In answer to the owner's petition, the tenant stated in substance that
      the Rent Administrator order should be upheld because the owner failed 
      to submit comparability data or the April 1982 bill to the Rent 
      Administrator; that Section 26-516(g) doesn't apply to the instant case 
      which was filed prior to April 1, 1984 and that the items listed on the 
      April 1982 bill constitute primarily repairs and maintenance for which 
      the owner's proof of payment is suspect.  The tenant conceded that a 
      stove and refrigerator were installed in August 1986 as the owner 
      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 

          CE 410134 RO

      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  rents generally 
      prevailing in the same area for substantially similar housing 
      accommodations.  In order to determine rents generally prevailing in the 
      same area for substantially similar housing accommodations, it is DHCR's 
      procedure for fair market rent appeal cases filed prior to April 1, 1984 
      to allow owners to submit June 30, 1974 fair market rental data for 
      complete lines of apartments, beginning with the subject line.  The 
      average of such comparable rentals will then be updated by annual 
      guidelines increases.  Alternatively, DHCR procedure allows owners to 
      have comparability determined on the basis of rents charged after June 
      30, 1974.  In order to use this method, owners were required prior to 
      November 1, 1984 to submit rental history data for all stabilized 
      apartments in the subject premises and subsequent to November 1, 1984 to 
      submit such data for complete lines of apartments beginning with the 
      subject line.  Post June 30, 1974 rent data will be utilized if the 
      comparable apartment was rented to a first stabilized tenant within one 
      year of the renting of the subject apartment and if the owner submits 
      proof of service of a DC-2 Notice or apartment registration form 
      indicating that the rent is not subject to challenge.

      An examination of the records in this case discloses that the complaint 
      was filed prior to April 1, 1984 and that the prior management agent was 
      advised on March 28, 1984 of the pending complaints and of the 
      requirement to preserve rental records; the prior management was first 
      served on October 9, 1984 with the overcharge complaint; the fair market 
      package was served on the prior managing agent May 20, 1986; July 30, 
      1987, December 3, 1987 and the current owner was served on December 8, 
      1987; and a summary notice with additional requests for documentation of 
      improvements was sent on January 12, 1987.

      In the proceeding before the Rent Administrator, the owner did not 
      submit documentation for improvements to the subject apartment completed 
      in April 1982 nor comparability data although afforded opportunities to 
      do so.  Since this is not a de novo proceeding, the owner's contention 
      that it should be allowed to submit comparability data and documentation 
      for increases to the initial rent cannot be considered for the first 
      time on appeal.

      Furthermore, the comparability data submitted by the owner in its appeal 
      does not meet the criteria for usable comparables as cited above for 
      fair market rent appeals filed prior to April 1, 1984.

      The Commissioner rejects the owner's contention that Section 26-516(g) 
      precluded the Rent Administrator from requesting comparability data 
      beyond the 4 year limitation period.  Section 26-516(g) was promulgated 
      for overcharge cases filed after April 1, 1984 and specifically excludes 
      fair market rent appeals, therefore it is not applicable to the instant 
      case.  Moreover the owner was not required to submit comparability data 
      and had the option of submitting post June 30, 1974 comparability data.

      The owner is correct however in its contention that the Rent 
      Administrator failed to allow increases to the subsequent rent for a new 
      stove and refrigerator installed in July 1986 for which the owner in the 
      proceeding before the Rent Administrator did provide documentation of 
      cost and the tenant's consent.  Further, it is undisputed by the tenant 

          CE 410134 RO

      that a new refrigerator and stove were installed as the owner contends.

      Taking the above factors into account, the Commissioner has recalculated 
      the lawful stabilization rents and amount of refund for the subject 
      apartment, to include an increase of $15.43 (1/40th of $617.25) 
      effective August 1, 1986 for the new stove and refrigerator which were 
      installed with the tenant's consent.

      The lawful stabilization rents and amount of excess rent are set forth 
      on the amended rent calculation chart attached hereto and made a part 

      Because this determination concerns lawful rents only through May 31, 
      1987, the owner is cautioned to adjust subsequent rents to an amount no 
      greater than that determined by this order plus any lawful increases, 
      and to register any adjusted rents with this order and opinion being 
      given as the explanation for the adjustment.

      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 month(s) rent until fully 

      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 
      Administrator be, and the same hereby is, modified in accordance with 
      this order and opinion.  The lawful stabilization rents and the amount 
      of the rent refund are established on the attached chart which is fully 
      made a part of this order.  The amount of the rent refund through May 
      31, 1987 is $18,210.28.


                                      JOSEPH A. D'AGOSTA
                                      Acting Deputy Commissioner


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