DOCKET NUMBERS: SJR 4835; BH 410138-RO etal
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 SJR 4835
IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NOS.:B 4410138-RO;
: CE 430129-RO;DB 410238-RO
JOSEPH FISCHER (Owner), DC 410141-RO & DC 410025-RT
ARTHUR BRANDT (Former Owner)
& MONICA BERNELL TENANT PETITIONER : DRO DOCKET NO.:000059343;
------------------------------------X AE 420002-UC & l 3110495-R
(CDR 34587)
ORDER AND OPINION REMANDING PROCEEDINGS ON APPEAL
The abovenamed petitioner, owner, former owner and tenant, filed timely
Petitions for Administrative Review against orders issued on July 28,
1987, April 19, 1988 and January 31, 1989 by the Rent Administrator
concerning the housing accommodations known as 47 & 49 Charles Street,
Various Apartments, and 253 West 4th Street, Carriage House, Manhattan.
The owner instituted an Article 78 proceeding based on a "deemed denial"
of petition BH 410138-RO and the matter was remitted by the Court.
The Commissioner deems it appropriate to consolidate the petitions herein.
The issues herein are whether the apartments are unregulated because they
are each located in a building containing less than 6 residential
apartments or are stabilized because they are in a "horizontal multiple
dwelling" containing at least six de facto residential units and/or
because of fraudulent misrepresentations by the former owner to the Rent
Stabilization Association and, if stabilized, whether the Administrator's
determination as to rents and overcharges for the carriage house apartment
was prior. Since all the affected tenants took occupancy after June 30,
1971, there is not presently any rent control issue.
Involved herein are 2 adjacent buildings, (47 &49 Charles Street) and a
converted former carriage house (253 West 4th Street) located behind 49
Charles Street and admittedly an "annex" thereof which at all relevant
times have been commonly owned.
The record, procedurally and factually, is complex and confused partially
because 3 proceedings were processed separately but resulted in 3
interdependent orders.
In proceeding 000059343 the tenants of Apartment 3 (or third floor) in 47
Charles Street (Rick Dunnington & Greg Ballweg) filed an objection to the
apartment registration, or complaint of non registration, on February 25,
1986 alleging that they took occupancy in 1975; that the building had
always been treated as rent stabilized; that it is a 3 family building but
is adjacent to another 3 family building (49 Charles Street) and shares a
common heating system.
On July 28, 1987 the Administrator issued the first of the herein appealed
orders finding that the apartment is stabilized based on a physical
inspection conducted on June 25, 1987 which showed that it is part of
complies of 3 buildings each containing at least 2 apartments (which is
DOCKET NUMBER: SJR 4835; BH 410138-RO etal
wrong but not materially so as discussed more fully infra) and which have
a common electric system and seven connection (which is questionable also
as discussed more fully infra).
The owner (Joseph Fischer) filed a petition (BH 410138-RO) alleging that
the abovenoted inspection is erroneous and reiterating allegations made in
response to the tenants' objection and in proceeding AE 420002-UC.
In proceeding AE 420002-UC the owner (Joseph Fischer) on May 21, 1986
filed applications for determinations that the 3 premises were exempt from
stabilization (RS-3 forms) alleging that each building contains less than
6 apartments and that, if they ever were subject to stabilization, it was
only because of fraudulent applications by the prior owner (Arthur Brandt)
for J-51 tax benefits, and a false registration with the Rent
Stabilization Association in connection therewith, which J-51 benefits
were granted but subsequently revoked ab initio.
On April 19, 1988 the Administrator issued the second herein appealed
order finding that the 2nd and 3rd floor apartments in 47 Charles Street
were stabilized based on the findings in 000059343 abovenoted. No
separate findings were made as to 49 Charles Street or 253 West 4th
Street.
The Commissioner notes that in this proceeding 2 physical inspections were
made on April 14 and 29, 1987 by another inspector the combined report of
which recites that 47 and 49 Charles Street each contain 1 commercial and
2 residential apartments and that each building has its own heating
system, water and sewer connections, electric and gas meters and
basements.
The owner (Joseph Fischer) filed another petition (CE 430129-RO) referring
to his prior petition and substantially reiterating his prior allegations.
In proceeding L 3110495-R the tenant of the carriage house apartment in
253 West 4th Street (Monica Bennell) had filed a complaint of overcharge
on March 6, 1984 alleging that she had taken occupancy on April 15, 19790
pursuant to a 2 year lease with one P.J. Feldstein "as agent for the
landlord" at a rent of $650.00. No rental history was submitted.
On January 31, 1989 the Administrator issued the 3rd herein appealed order
which found the apartment stabilized pursuant to the determination in AE
420002-UC. The order further established an initial rent of $545.00 which
was found to be the last rent paid by the prior tenant (William Atherton)
and found total overcharges of $10,213.73 including interest on
overcharges after April 1, 1984. The order characterized P.J. Feldstein
as "Agent/Net lessor" of Arther Brandt.
The Administrator also permitted a 10% equity increase under Guideline 15
pursuant to Section 35A of the former Code because there had been no
renewal leases since 1984, the landlord attempting to evict the tenant as
unregulated.
The owner (Joseph Fischer) filed a petition (DB 410238-RO) incorporating
his prior petitions by reference and urging that there was no legally
sufficient proof as to the rent of the abovenoted prior tenant.
The Commissioner notes (as discussed more fully infra) that Mr. Fischer
did not collect any rent from Ms. Bernell.
DOCKET NUMBER: SJR 4835; BH 410138-RO etal
The former owner (Arthur Brandt) also filed a petition (DC 410141-RO)
complaining that overcharges were not apportioned between him and the
abovenoted P.J. Feldstein who was the net leasee of the building and who
was not made a party to this proceeding and that neither of them were
served and afforded opportunities to be heard in AE 420002-UC.
The tenant (Monica Bernell) also filed a petition (DC 410025-RT) urging
there was no basis for the abovenoted Section 35A adjustment since she had
never been offered additional renewal leases despite demands therefor;
that treble damages and attorney's fees should have been imposed and that
Arthur Brandt should be liable for all overcharges.
With respect to the physical arrangement of the premises, separate
Certificates of Occupancy were issued for 47 and 49 Charles Street in
January 1972 (apparently based on alterations rather than new construction
reciting the legal occupancy of each building as an ordinary cellar, a
restaurant in the basement (or ground floor), a doctor's office on the
first floor and one residential apartment each on the 2nd and 3rd floors.
253 West 4th Street, as abovenoted, is an "annex" of 49 Charles Street and
contains one residential apartment. Thus, aside from the restaurants (or
restaurant), there are in the 3 buildings a total of 2 commercial units
and 5 residential apartments.
The owner alleges that the basements (or groundfloors) are "consolidated"
to accommodate one restaurant occupying both buildings.
The owner further alleges that the buildings are otherwise occupied in
accordance with their Certificate of Occupancy except that the first floor
commercial unit in 47 Charles Street is rented as an art gallery under a
commercial lease but may have been sublet to others who may also be using
it for residential purposes and, if so, the owner intends to institute
eviction proceedings.
Tenant Dunnington alleged that the commercial apartment in 47 Charles
Street had always been used for residential purposes. 47 and 49 Charles
Street were originally on 2 separate tax lots which were merged into one
in 1968 at the request of the City Register apparently for convenience in
sending out tax bills the buildings being commonly owned.
Arthur Brandt took title to the 3 buildings in March 1968 and net leased
them (along with other buildings) to P.J. Feldstein in January 1974.
Arthur Brandt in December 1977 filed applications with the City Department
of Housing Preservation and Development (HPD) for the subject buildings
(among others) for J-51 tax benefits.
In January 1978 (allegedly to facilitate said applications according to
Joseph Fischer) Arthur Brandt enrolled the buildings with the Rent
Stabilization Association as containing 7 apartments to be subject to
stabilization which enrollment was accepted in February 1978.
In March 1978 HPD granted J-51 benefits.
In May 1982 Arthur Brandt sold the buildings (among others) to a third
party receiving as part of the transaction a 21 year net lease of 253 West
4th Street subordinated to the tenancy of Ms Bernell but entitling him to
collect the rent from Ms Bernell.
DOCKET NUMBER: SJR 4835; BH 410138-RO etal
In 1983 and 1984 Arthur Brandt was indicted and convicted of fraud in
connection with the abovenoted J-51 applications and the J-51 benefits
were revoked ab initio.
In October 1985 Joseph Fischer bought the buildings from the abovenoted
third party.
In January 1986 Arthur Brandt entered into a Stipulation of Settlement
with the City acquiescing in the revocation of the J-51 benefits and
agreeing to pay back taxes with penalties and interest.
The Commissioner is of the opinion that the proceedings must be remanded
for further processing.
The buildings together contain 5 legal residential apartments and 2 legal
commercial apartments (in addition to a restaurant). If, at all relevant
times, they were occupied strictly according to their legal status it is
arguable that they are not subject to stabilization and it is immaterial
whether they are also a horizontal multiple dwelling.
However, the de facto as well as the de jure usage of the premises is
relevant in determining regulatory status. At least one of the commercial
apartments is admittedly capable of being, and allegedly has been and may
still be, used for residential occupancy.
As abovenoted, the prior owner, who presumably knew the then status and
usage of th premises, enrolled the premises with the Rent Stabilization
Association as containing 7 apartments and there are, in fact, 7
potentially stabilized apartments. In remand the facts and circumstance
surrounding the enrollment should be investigated.
If it should be found that there are are ore were more than 5 apartments
being used for residential purposes, the issue of a horizontal multiple
dwelling becomes material.
As abovenoted, there are 2 substantially contradictory inspection reports
in the record which should be reevaluated, by a further inspection, if
necessary, as discussed infra.
The Commissioner notes that consideration should be given not only to what
common elements exist (or do not exist) presently but also on the base
dates and when the tenants took occupancy.
If the apartments are found subject to stabilization it is necessary to
determine rents for Dunnington and Ballweg. In that case consideration
should be given, to apportionment of overcharges as discussed more fully
infra.
If the carriage house is subject to stabilization, in view of all the
foregoing, the Administrator should also reconsider the questions of the
equity adjustment and treble damages and attorney's fees. The
relationship between Brandt and Feldstein (whether strictly net leasor -
lease or also principal agent) should be clarified and, if appropriate,
overcharges apportioned.
DOCKET NUMBER: SJR 4835; BH 410138-RO etal
On remand the Administrator should explore the foregoing by whatever
means are found appropriate, including additional inspections (which
should encompass the actual usage of all apartments) and/or hearings if
necessary, on notice to all parties including all prior owners and
managing agents and present tenants. Care should be taken as to what
elements are consolidated or processed separately and the parties clearly
advised thereof.
THEREFORE, pursuant to the Rent Stabilization Law and Code, it is
ORDERED, that these petitions be, and the same hereby are, granted to the
extent of remanding the proceedings to the Rent Administrator for further
processing in accord herewith. The orders of the Rent Administrator
remain in full force and effect except that any overcharges are stayed
until new orders are issued on remand.
ISSUED:
ELLIOT SANDER
Deputy Commissioner
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