CF 110097-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 S.J.R. NO. 5816 (Mandamus)
IN THE MATTER OF THE ADMINISTRATIVE ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.
CF 110097-RO
M.J. RAYNES, INC.,
DRO DOCKET NOS.
Q-3120392-R/T
PETITIONER CDR 29937 As Amended
----------------------------------x TENANT: HOWARD KIRSCHNER
ORDER AND OPINION REMANDING PROCEEDING ON APPEAL
On June 3, 1988 the above-named petitioner-owner filed a
Peti-tion for Administrative Review against an order issued on
April 29, 1988 by the District Rent Administrator, 10 Columbus
Circle, New York, New York concerning housing accommodations
known as Apartment 1707 at 125-10 Queens Boulevard, Kew Gardens,
New York wherein the District Rent Administrator determined that
the owner had overcharged the tenant.
The issue in this appeal is whether the District Rent
Adminis-trator's order was warranted.
The applicable sections of the Law are Section 26-516 of the Rent
Stabilization Law, Sections 2520.6(r)(4) and 2526.1(a) of the
Rent Stabilization Code.
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 in March,
1984 of a rent overcharge complaint by the tenant, in which he
stated that he had commenced occupancy on July 1, 1974 at a rent
of $500.00 per month. He also contended that the parking garage
was rent stabilized, and that the increase of the rent of his
space from $20.00 to $100.00 was unlawful. He later made
conten-tions about a 2nd garage space and a $500.00 broker's fee.
In answer, the owner asserted that garage rent was not included
in the apartment lease, and that the garage was always under the
management of a concessionaire and not the building owner, so
that the garage space rental was not subject to rent
stabilization.
The tenant enclosed various cancelled checks made out to several
garage operators. Some of the dates, payees and endorsers are as
follows:
Check
Payee Endorser Date
Park-Swift Parking Corp. Park-Swift Parking Corp. 01/03/68
*
Park-Swift Parking Co. Park-Swift Parking Co. 01/02/76
Silver Tower Garage Corp. Silver Towers Garage 02/01/76
Corp., pay to the order
of Lerner Parking Sys-
tems Mgmt., Inc.
Lerner Parking System Lerner Parking Systems 03/05/77
Management, Inc. Management, Inc. pay to
the order of Silver
Towers Garage Corp.
Silver Tower Garage Corp. Silver Towers Garage 03/03/80
Corp.
Kinney Parking Sys. Kinney System, Inc. 04/02/80
The tenant contended that Kinney System was the first lessee of
the garage, and that all previous operators had been agents of
the owner. Rent checks for the apartment were made out to, and
cashed by, Silver Tower Management Co. from 1967 (for another
apartment in the same building) through December, 1974.
----------
Note: * The tenant was living at another apartment in that
building.
In response, the owner submitted a lease for Kinney System, Inc.
to rent the garage and ramp space underlying the subject building
for 12 years commencing April 1, 1980. The owner also stated
that the lease had been assigned to Silver Tower Associates in
connection with their purchase of the property in August, 1985;
that the property has now been converted to a condominium; and
that the garage unit is now owner by Silver Tower Associates. The
owner later submitted a lease wherein 233 East 70th Street
Corporation leased the parking garage from Silver Tower Manage-
ment Company for 10 years commencing August 1, 1974.
In an order issued on April 29, 1988 the District Rent
Adminis-trator found that, because "the evidence in the file
indicates that the garage was managed by various agents for the
same owner," the garage spaces were subject to rent
stabilization. Because no written leases had been furnished for
the spaces, the Administrator deemed maximum-length leases for
the spaces, finding an overcharge of $2,537.02 for one space from
the base date through June 30, 1987, and of $159.78 from August
1, 1983 (after establishing a default rent) through September 30,
1987. The order also directed the owner to offer renewal leases
for the spaces, and stated that the allegation regarding a
broker's fee for exchanging apartments could not be considered
since the cancelled check did not indicate that the $500.00 was
for a broker's fee.
In this petition, the owner contends in substance that there was
no evidence in the record to support a rational determination
that the parking charges were subject to rent stabilization; that
the tenant's allegations that the garage owners were agents of
the owner of the building were unsubstantiated; that the
Adminis-trator's determination was apparently based on the
similarity of the name of the independent contractor Silver Tower
Garage Corpo-ration to the names of Silver Towers Management
Corporation and Silver Towers Associates; that Silver Towers
Garage Corporation actually has no affiliation with the latter
two entities, but is truly an independent contractor; that this
is shown by the enclosed February 25, 1976 "Application for
Garage or Parking Lot License" filed with the New York City
Department of Consumer Affairs wherein Silver Towers Garage
Corporation, when asked whether it owned or re-leased the garage
space, clearly wrote "lease"; and that the 1980 lease agreement
between Kinney Parking and a prior owner clearly indicated that
the garage fees were not subject to rent stabilization, as it
provided that tenants of the building would receive first
preference for spaces at "a rate not more than the rates
prevailing in the neighborhood in similar buildings, and similar
operations."
In answer, the tenant asserts in substance that all garage
oper-ators prior to Kinney managed the garage on behalf of the
owners on a fixed-fee-for-service basis, collecting the income
from the garage tenants as agents for the owners and remitting it
to the owners minus a management fee; that one of the former
garage operators, Jack Lerner, has provided a letter stating this
to be true; that Mr. Lerner's response on the Application for
Garage or Parking Lot License was "leases" only because the
question did not permit the more correct response of "agent for
the owners"; that the owner should have to submit the purported
leases of the garage operators prior to Kinney; that the garage
premises have been sold to a new owner as a condominium; and that
a further inquiry would show that the $500.00 broker's fee was
paid to the on-site managing agent of the owner. With his answer
the tenant has enclosed a letter stating:
"Please be advised that Silvertowers Garage Corp. was
the management company for the garage located at 125-10
Queens Blvd., Kew Gardens. Silvertowers Garage Corp.
never had a lease at any time from the landlord Century
Operating Corp. Each month Silvertowers Garage Corp.
turned over the garage proceeds to the landlord minus
its monthly management fee."
Very truly yours,
Jack Lerner, Pres.
The signature of "Jack Lerner, Pres." appears to be in the same
handwriting as the signature of the Jack Lerner who applied for a
garage license as President of Silver Towers Garage Corp.
The Commissioner is of the opinion that this proceeding should be
remanded to the Rent Administrator.
As noted by the owner, Section 2520.6(r)(4)(xi) of the Rent
Sta-bilization Code provides in pertinent part that:
A service as defined in paragraph (3) of this subdi-
vision for which there is or was a separate charge,
shall not be subject to the provisions of this Code
where no common ownership between the operator of
such service and the owner exists or existed on the
applicable base date, or at any time subsequent
thereto, and such service is or was provided on the
applicable base date and at all times thereafter by
an independent contractor pursuant to a contract or
agreement with the owner. Where, however, on the ap-
plicable base date or at any time subsequent thereto,
thee is or was a separate charge, and there is or was
common ownership, directly or indirectly, between the
operator of such service and the owner, or the ser-
vice was provided by the owner, any increase, other
than the charge provided in the initial agreement with
a tenant to lease, rent or pay for such service, shall
conform to the applicable rent guidelines rate.
The tenant alleged common ownership at an earlier point, and the
owner disputed that allegation. An October 21, 1987 entry on the
Rent Examiner Progress Report in the proceeding before the
Administrator states that "tenant submitted cancelled checks
indicating Silver Tower & Park Swift (one and the same owner) as
owner". The Administrator's determination that the parking
garage was actually being operated on behalf of the owner was
therefore apparently based only on the similarity of the name
"Silver Towers Garage Corporation" to the name Silver Tower Man-
agement Company", to which the tenant paid his apartment rent
(for the subject apartment and another apartment in the building)
from at least 1967 through 1974. This similarity was not
suffi-cient to warrant the Administrator's determination. In
addition, the owner submitted a lease of the parking garage
spaces to 233 East 70th Street Corporation for 10 years beginning
in 1974. However, beginning by at least 1976 the tenant's checks
for parking spaces, made out to Park-Swift Parking Corporation
from 1968 through January, 1976, were made out from February,
1976 through March, 1980 to Lerner Parking Systems Management or
Silver Towers Garage Corporation, which were related to each
other as shown by the fact that each endorsed over checks made
out to the other. On appeal the owner has submitted a 1976
garage license application by Jack Lerner of Silver Towers Garage
Corporation stating that the garage was being leased. The
unnotarized letter by Jack Lerner, submitted by the tenant in
answer to the owner's petition, stating that Silver Towers Garage
Corporation never had a lease and turned the garage proceeds over
to the owner after withholding its management fee, is suggestive
but not sufficient in itself to resolve the question still
existing as to whether the owner of the subject apartment ever
furnished parking service in such a manner that the provision and
rent of parking spaces became subject to rent stabilization. This
proceeding is being remanded for a further inquiry and new
determination in the matter. A hearing may be held if necessary.
Regarding the contention in the tenant's answer about the alleged
broker's fee: this could be considered only if the tenant had
filed his own Petition for Administrative Review objecting to
the Administrator's determination, rather than raising the issue
only in answer to the owner's petition, which did not mention it.
The Commissioner notes that the 1985 apartment registration lists
the complainant in occupancy pursuant to a lease expiring
June 30, 1985; that the 1986 registration lists the apartment as
stabilized but vacant; and that the 1987 registration lists the
apartment as exempt from stabilization as of December 23, 1986 by
virtue of cooperative or condominium conversion. However, as of
May 15, 1987 the tenant was still giving the subject apartment as
his mailing address, and he has submitted an August 1, 1988
garage space invoice billing him at the subject apartment. If the
complainant is still a stabilized tenant then the registrations
will need to be amended; if he is an owner-occupant then his
garage rent is no longer subject to stabilization and the over-
charges; if any, found upon remand may not be calculated past the
time that the tenant stopped being a stabilized tenant.
THEREFORE, in accordance with the Rent Stabilization Law and
Code, it is
ORDERED, that this petition be, and the same hereby is, granted
to the extent of remanding this proceeding to the District Rent
Administrator for further processing in accordance with this
order and opinion. The automatic stay of so much of the Dis-
trict Rent Administrator's order as directed a refund is hereby
continued until a new order is issued upon remand. However, the
Administrator's determination as to the rent is not stayed and
shall remain in effect, except for any adjustments pursuant to
lease renewals, until the Administrator issues a new Order upon
remand.
ISSUED:
ELLIOT SANDER
Deputy Commissioner
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