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.:CG-110204-RO
                                          :  
         THE CIAMPA ORGANIZATION,            RENT ADMINISTRATOR'S
                                             DOCKET NO.:ZQ-005446-R
                            PETITIONER    : 
      ------------------------------------X  TENANT: Neal Zegan         


        ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW IN PART


      On July 27, 1988 the above-named petitioner-owner filed a Petition for 
      Administrative Review against an order issued on June 23, 1988 by the Rent 
      Administrator, 92-31 Union Hall Street, Jamaica, New York concerning the 
      housing accommodations known as 16-70 Bell Boulevard, Bayside, New York, 
      Apartment No. 722 wherein the Rent Administrator determined that the owner 
      had overcharged the tenant.

      The issue herein is whether the Rent Administrator's order was warranted.

      The applicable sections of the Law are Section 26-516 of the Rent 
      Stabilization Law and Sections 2520.11(e), 2520.11(p), 2522.5(e)(2) 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 December 1985 of 
      a rent overcharge complaint by the tenant, in which he stated that he had 
      commenced occupancy on June 1, 1985 at a rent of $825.00 per month.  He 
      enclosed a Certificate of Occupancy which stated that the subject building 
      had been completed September 21, 1973.

      The owner was served with a copy of the complaint and was requested to 
      submit rent records to prove the lawfulness of the rent being charged.  In 
      answer to the complaint, the owner contended that the subject apartment was 
      destabilized  on January 31, 1985 due to a vacancy after the expiration of 
      Real Property Tax Law (RPTL) Section 421-a tax abatement benefits on June 
      30, 1984.  

      In reply, the tenant enclosed a letter from the counsel to the Tax 
      Incentive Programs of the N.Y.C. Department of Housing Preservation and 
      Development to another tenant, stating that her apartment was subject to 
      rent stabilization because the building was completed and occupied prior to 
      January 1, 1974.










          DOCKET NUMBER: CG 110204-RO
      In an order issued on June 23, 1988 the Administrator calculated the lawful 
      stabilization rent on the basis of the April 1, 1984 rent of $661.40 and 
      found an overcharge of $8,552.50 including treble damages, as of March 31, 
      1987.

      In this petition, the owner contends in substance that the subject 
      apartment is not subject to rent regulation because it was granted tax 
      abatement benefits pursuant to RPTL Section 421-a, which was amended 
      (relevantly in Section 421-a [2][f][i]) by Chapter 346 of the Laws of 1984, 
      Section 1 to deregulate apartments vacated after the expiration of the 
      benefits, and because the complainant commenced occupancy after a vacancy 
      that occurred subsequent to the expiration of the Section 421-a benefits on 
      June 30, 1984; and that treble damages should not have been imposed, since 
      the owner had a good faith basis for believing the subject apartment to be 
      exempt from rent regulation, since the DHCR had, during the course of the 
      proceeding, dismissed a complaint by a tenant in another apartment in the 
      same building, because a vacancy had occurred after the expiration of 421-a 
      benefits.

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

      The Commissioner finds that the subject apartment is within the 
      jurisdiction of the Rent Stabilization Law despite the fact that the 
      owner's tax abatement benefits expired and a subsequent vacancy occurred.  
      Originally, the subject building was rent-regulated solely by virtue of the 
      owner's receiving 421 benefits.  In 1974, Section 5 of the Emergency Tenant 
      Protection Act (Section 8625 of McKinney's Unconsolidated Laws) also 
      furnished a separate basis for the subject building to be rent regulated.  
      Currently, Section 2520.11(p) of the Rent Stabilization Code is the 
      applicable law.  This section states that in order for an apartment 
      building to become deregulated it must have been completed after January 1, 
      1974 and have been subject to regulation solely because the owner was 
      receiving tax benefits.  Clearly, the subject premises in the instant case, 
      completed prior to January 1, 1974, do not qualify as an exception and 
      remain rent regulated.

      When the subject building was constructed in 1973 the Rent Stabilization 
      Law provided that only buildings of six or more units constructed before 
      March, 1969 were subject to rent regulation.  The building was subject to 
      the Rent Stabilization Law beginning in 1973 solely by virtue of the 
      owner's participation in the 421 partial tax exemption program.  However, 
      with the passage of the Emergency Tenant Protection Act of 1974, all 
      buildings built before January 1, 1974 became subject to the Rent 
      Stabilization Law.  The fact that this building had first become subject to 
      the Rent Stabilization Law by virtue of the 421 program did not now 
      distinguish this building from any other building built before January 1, 
      1974.  The continuing receipt of the 421 benefits no longer had any 
      relevance to the building's rent regulation status.

      The owner's argument regarding the exemption of the subject apartment from 
      rent regulation rests upon Section 1 of Chapter 346 of the Laws of 1984, 
      which modified RPTL Section 421-a(2)(f) to read in pertinent part that:




          DOCKET NUMBER: CG 110204-RO
           (f)  Notwithstanding the provisions of any local law for the 
           stabilization of rents in multiple dwellings or the emergency 
           tenant protection act of nineteen seventy-four, the rents of a 
           unit shall be fully subject to control under such local law or 
           such act, unless exempt under such local law or such act from 
           control by reason of the cooperative or condominium status of the 
           unit, for a period of ten years or for the period any such 
           applicable law or act is in effect, whichever is shorter.  
           Thereafter, such rents shall continue to be subject to such 
           control to the same extent and in the same manner as if this 
           section had never applied thereto, except that such rents shall 
           be decontrolled if:

                (i)  with respect to units subject to the provisions of 
                this section on the effective date of this subparagraph 
                such a unit becomes vacant after the expiration of such 
                ten year period or applicable law or act.

      It is the position of the DHCR that the words "with respect to units 
      subject to the provisions of this section on the effective date of this 
      subparagraph" were not meant to deregulate apartments which were built 
      prior to the effective date of the amendment and were independently subject 
      to regulation by virtue of being in a building completed before January 1, 
      1974 and containing six or more units (particularly where, as in the 
      present case, the tax benefits expired before the July 3, 1984 effective 
      date of the 1984 amendments so the apartment was not one of the "units 
      subject to the provisions of this section on the effective date of this 
      subparagraph...").  This position is reflected in the current Rent 
      Stabilization Code, effective May 1, 1987, nearly three years after Chapter 
      346 of the Laws of 1984.  The only relevant mention of RPTL Section 421-a 
      is in Section 2520.11(p), which exempts from regulation:

           (p)  housing accommodations in buildings completed or 
           substantially rehabilitated as family units on or after January 
           1, 1974 or located in a building containing less than six housing 
           accommodations, and which were originally made subject to 
           regulation solely as a condition of receiving tax benefits 
           pursuant to section 421-a of the Real Property Tax Law, as 
           amended, and:

                (1)  the housing accommodations which were subject to 
                the RSL pursuant to section 421-a became vacant.

      This exempts from regulation, upon a vacancy, only apartments which would 
      not otherwise have been stabilized except for the receipt of 421-a 
      benefits.  Because the subject building was completed on September 21, 
      1973, and because it contains at least six apartments, this exemption does 
      not apply.

      This is the same interpretation held by the agency responsible for 
      administering RPTL Section 421-a.  Section 2.7 of the regulations 
      promulgated by the New York City Department of Housing Preservation and 
      Development on August 27, 1987, also three years after Chapter 346, 
      provides in pertinent part that:









          DOCKET NUMBER: CG 110204-RO
           To be eligible for partial tax exemption the land upon which the 
           eligible project is located must meed the following letting, 
           rental and occupancy requirements:

                                        .
                                        .
                                        .

           (2)  Notwithstanding the provisions of any local law for the 
           stabilization of rents in multiple dwellings or the emergency 
           tenant protection act of 1974, the rents of a unit shall be fully 
           subject to regulation under such local law or such act, unless 
           exempt under such local law or such act from regulation by reason 
           of the cooperative or condominium status of the unit, for the 
           entire period during which the property is receiving tax benefits 
           pursuant to the Act, or for the period any such applicable local 
           law or such act is in effect whichever is shorter.  Thereafter 
           such rents shall continue to be subject to such regulation to the 
           same extent and in the same manner as if this section had never 
           applied thereto, except that for dwelling units in buildings 
           completed, as that term is defined herein, on or after January 1, 
           1974, such rents shall be deregulated if:

                (a)  with respect to dwelling units located in multiple  
                     dwellings completed after January 1, 1974 such    
                     unit becomes vacant after the expiration of the
                     lease for the unit in effect when such benefit 
                     period or applicable law or act expires..

      This again is exempting, upon vacancy, only apartments which would have 
      been continuously exempt from the time of their completion but for the 
      receipt of 421-a benefits.

      Because the subject apartment does not fall under any of the exemptions, it 
      is subject to regulation under the Rent Stabilization Law and Code.  The 
      tenant is entitled to stabilization leases at lawful rents, and the owner 
      is required to register the building annually with the DHCR.  While the 
      owner has enclosed a copy of an order (Docket No. Q-003522-R) issued by the 
      Administrator in 1987, finding that another apartment in the same building 
      was no longer subject to rent stabilization due to a vacancy after the 
      expiration of 421-a benefits, the Commissioner notes that a new order 
      (Docket No. BK-110036-RP) was issued in 1989, revoking the prior order and 
      finding that the apartment was subject to rent stabilization.  (There is an 
      appeal currently pending against the new order.)

      Because the language of Chapter 346 of the Laws of 1984 could give rise to 
      a good faith belief that the subject apartment was not subject to rent 
      regulation, and that the DHCR was without jurisdiction, the Commissioner 
      does not consider that the overcharge should be considered to be willful.  
      Interest rather than treble damages has therefore been imposed.  The lawful 
      stabilization rents are the same as set forth in the Administrator's order 
      ($701.08 per month from June 1, 1985 to May 31, 1986, and $746.65 per month 
      from June 1, 1986 to March 31, 1987).  Interest on the $1,487.04 overcharge 
      in the first period is $351.30 as of June 30, 1988 (the end of the month of 




          DOCKET NUMBER: CG 110204-RO
      the Administrator's order).  Interest on the $1,319.80 overcharge in the 
      second period is $202.95 as of June 30, 1988, for a total of $3,361.09.  
      The owner is not holding any excess security, since the tenant vacated.

      The owner is cautioned to adjust the rent, in leases after those considered 
      in this order, to amounts no greater than that determined by this order 
      plus any lawful increases, and to register any adjusted rent, with this 
      order being given as the reason for the adjustment.  Since the tenant has 
      vacated, a copy of this order is being mailed to the tenant-in-occupancy.

      This order may, upon the expiration of the period in which the owner may 
      institute a proceeding pursuant to Article 78 of the Civil Practice Law and 
      Rules, be filed and enforced by the tenant in the same manner as a 
      judgment.

      THEREFORE, in accordance with the Rent Stabilization Law and Code, it is 

      ORDERED, that this Petition be, and the same hereby is, granted in part and 
      that the Rent Administrator's order be, and the same hereby is, modified in 
      accordance with this order and opinion.  The total overcharge is $3,361.09.  
      The lawful stabilization rent is $746.65 per month in the lease commencing 
      June 1, 1986.

      ISSUED:











                                                                    
                                           JOSEPH A. D'AGOSTA
                                       Acting Deputy Commissioner




                                                    
       





    

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