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

      ------------------------------------X 
      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    : 
      ------------------------------------X                             

          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 












          CH410104RT

      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, 






          CH410104RT

      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 












          CH410104RT

      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:







          CH410104RT


                                                                    
                                      JOSEPH A. D'AGOSTA
                                      Deputy Commissioner






    

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