CH410104RT
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
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IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO. CH410104RT
: DISTRICT RENT ADMINISTRATOR'S
Susan Alyn, DOCKET NO. 000035687
OWNER: Forage Realty Corp.
PETITIONER :
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ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
IN PART
On August 19, 1988, the above-named tenant filed a petition for
administrative review of an order issued on July 15, 1988 by a District
Rent Administrator concerning the housing accommodations known as 37 1/2
St. Marks Place, New York, New York, Apartment No. B1 wherein the
Administrator determined that the owner had overcharged the tenant.
The Commissioner has reviewed all of the evidence in the record and has
carefully considered that portion of the record relevant to the issues
raised by the administrative appeal.
This proceeding was commenced on September 5, 1984 by the filing of a
timely objection to the 1984 registration. In her objection the tenant
stated that her rent was an overcharge and the room count was
incorrectly stated. The tenant contended that her apartment contained
three rooms not four as noted on the registration form.
In its answer to the objection the owner asserted that no overcharges
occurred based on vacancy improvements. The owner submitted a complete
lease history for the subject apartment. Also submitted were paid bills
and cancelled checks for alleged renovations done to the subject
apartment ($9,550.73). The owner included an additional amount for
labor costs ($5,120.00) for work done by two of its own employees. To
substantiate the claim for labor expenses, the owner submitted a copy of
payroll records for the two employees. Finally, the owner alleged that
all units in this line of apartments were four rooms but in this
particular apartment a wall was knocked down to make two smaller
bedrooms into one large bedroom and therefore, the room count was listed
as four rooms.
In the order here under review, the Administrator determined that the
subject apartment had three rooms. The Administrator allowed a rent
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increase for the documented renovations in the subject apartment (1/40
of $9,550.73) but the labor charges attributed to full-time salaried
employees working in the subject apartment ($5,120.00) were disallowed.
It was determined that the lawful stabilization rent was $596.56 for the
lease period of September 1, 1986 through August 31, 1988 and the total
overcharges through July 31, 1988 were $8,871.69, including interest on
post-April 1, 1984 overcharges plus excess security.
In her petition for administrative review, the tenant alleges, among
other things, that several notification errors and due process errors
were made by the Administrator which resulted in her being denied an
opportunity to submit relevant evidence and requests a remand of the
proceeding to consider the evidence she has submitted with her petition
for administrative review.
With regard to the merits of the case, the tenant alleges that the
owner's substantiation of vacancy improvements was fraudulent and that
the owner alleged different amounts for the renovations at different
stages of the proceeding below. The tenant also alleges that the
substantiation of alleged labor costs by the owner's full time employees
was fraudulent and that the owner employed illegal aliens to perform
painting, carpentry and heavy manual labor at the cheap wage of $4.00
per hour. The tenant alleges that various inconsistencies appear in
dates of invoices, checks and work permits supporting her allegations of
fraud. Accordingly, the tenant disputes that the record shows a lack of
willfulness on the part of the owner in this overcharge.
By subsequent correspondence submitted January 30, 1990, the tenant
submitted documentation of violations found by the Department of
Buildings dated April 10, 1989 and May 2, 1989 for installation of gas
pipes and plumbing work done without permits.
By subsequent corresponence submitted May 18, 1990, the tenant alleged
that the renovation work was done illegally without proper licenses or
permits for the plumbing work, electrical wiring, construction and labor
and that the illegal renovation resulted in a gas leak and other
unlawful hazardous conditions. The tenant requested an expansion of the
"scope of review" limitation on administrative appeals and requested a
delay in the determination of the petition to allow the tenant time to
procure additional evidence from various city agencies regarding the
alleged illegalities in the renovation. The tenant made no additional
submissions thereafter.
The Commissioner is of the opinion that this petition for administrative
review should be granted in part.
With regard to the procedural issues raised by the tenant in her
petition, the Commissioner acknowledges that the record contains no
indication that several of the owner's submissions were forwarded to the
tenant, resulting in a denial of due process to the tenant. Therefore,
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the Commissioner will consider all the materials submitted by both
parties at all stages of this proceeding. The Commissioner notes that
the tenant has had an opportunity to inspect the record below and has
filed a complete and thorough petition for administrative review.
Accordingly, any alleged notice problems occurring in the proceeding
before the Administrator are cured, and the due process rights of all
parties are protected.
With regard to the merits of the case, the Commissioner finds that the
Administrator correctly determined that the owner was entitled to a
rental increase based on vacancy improvements of $9,550.73. Policy
Statement 90-10 describes the requirements that an owner must meet to
support its claim for vacancy improvements. The policy statement lists
four methods by which the owner may adequately document vacancy
improvements. In this case the owner supplied the Administrator with
both invoice receipts marked paid in full contemporaneous with the
completion of the work and cancelled checks contemporaneous with the
completion of the work. The tenant's claim that there are
inconsistencies in the dates of the vouchers and the checks is not
supported by the evidence. The tenant cited no specific examples to
support her claim. All invoices and checks appear to be within the
vacancy period and contemporaneous with the work done. Further, the
tenant claims that some of the work was done without the appropriate
work permits and that a violation was issued by HPD regarding the
plumbing improvements. Again, these claims are not supported by the
documents or evidence submitted by the tenant. The only documentation
submitted by the tenant referred to HPD violations issued in 1989.
There is no indication that these violations relate to work performed in
1983. As a result of this remoteness in time between the violations and
the work done the Commissioner finds insufficient evidence to warrant
reversal of the Administrator's finding with respect to any of the
vacancy improvements.
The tenant reasserted in her petition for administrative review that the
owner's claim for labor costs associated with the vacancy improvements
should be rejected. This issue need not be considered by the
Commissioner because the Administrator gave the owner no credit for
these labor costs in the proceeding below. However, the tenant cites
irregularities in these alleged labor costs as evidence of fraud and
therefore willfulness by the owner in overcharging the tenant.
The Commissioner is of the opinion that a preponderance of the evidence
in the record does not show a lack of willfulness by the owner, and
therefore the Administrator should have added treble damages and not
interest to those overcharges occurring after April 1, 1984. In its
efforts to support its claim for labor costs associated with the vacancy
improvements, the owner alleges that two full-time employees of the
building spent their full 40 hour week exclusively working in the
subject apartment for 16 weeks. The Commissioner notes that the
permissible vacancy improvements for electrical work, plumbing and new
windows all included labor costs in the owner-supplied vouchers. The
owner does not specifically state what work these employees did in the
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subject apartment, nor does the owner submit any evidence whatsoever to
support the claim that the two employees worked exclusively in the
subject apartment. The owner's claim that 1,280 work hours were spent
in the subject apartment doing unspecified work strains credulity.
Clearly, the owner has failed to sustain its burden of proving a lack of
willfulness. Accordingly, the Commissioner finds that treble damages
should be assessed in this case.
As computed by the Administrator in the proceeding below, the pre- April
1, 1984 overcharges are $885.50 and the post-April 1, 1984 overcharge
through July 31, 1988 are $7,241.89. Therefore, the total overcharges
through July 31, 1988 are $22,611.17 ($7,241.89 x 3 = $21,725.67 +
$885.50). The Commissioner notes that excess security has been deleted
from the computations because the tenant has already vacated the subject
apartment.
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. The owner is further directed to adjust subsequent rents to
an amount no greater than that determined by this order plus any lawful
increases.
The Commissioner has determined in this Order and Opinion that the owner
collected overcharges of $22,611.17. This Order may, upon expiration of
the period for seeking review of this Order and Opinion pursuant to
Article Seventy-eight of the Civil Practice Law and Rules, be filed and
enforced as a judgment. Where the tenant files this Order as a
judgment, the County Clerk may add to the overcharge, interest at the
rate payable on a judgment pursuant to section 5004 of the Civil
Practice Law and Rules from the issuance date of the Rent
Administrator's Order to the issuance date of the Commissioner's Order.
A copy of this order is being sent to the current occupant of the
subject apartment.
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 total overcharges through July 31, 1988 are $22,611.17.
ISSUED:
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JOSEPH A. D'AGOSTA
Deputy Commissioner
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