CJ 420006-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



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          IN THE MATTER OF THE ADMINISTRATIVE     ADMINISTRATIVE REVIEW
          APPEAL OF                               DOCKET NO.:             
                                                  CJ 420006-RO
                 MARCELLE GREENFIELD,
                                                  RENT      ADMINISTRATOR'S
                                                  DOCKET NO.: 
                                  PETITIONER      BL 420066-B 
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            ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW  
           IN PART AND REMANDING THE PROCEEDING TO THE RENT ADMINISTRATOR


          On August 29, 1988, the above named petitioner-owner filed a Pet 
          ition for  Administrative  Review  against  an  order  issued  on
          August 1, 1991 by a Rent Administrator concerning housing  accom-
          modations known as various apartments at 124  East  85th  Street,
          New York, New York, wherein  the  Administrator  determined  that
          there had  been  a  decrease  in  services  and,  based  thereon,
          directed a rent reduction.

          The Commissioner has reviewed all of the evidence in  the  record
          and has carefully considered that portion relevant to the  issues
          raised by the administrative appeal.       

          This proceeding was originally commenced on December 10, 1987  by
          the filing by the tenants  f  five  apartments  of  the  subject-
          building of a complaint o decreased services; specifically,  that
          the basement storage area had been eliminated due to the improper 
          renovation of apartment 1-R (duplex), which is  occupied  by  the
          owner, and that the  laundry  facilities  in  the  basement  were
          converted by the owner for use  as  an  office  while  renovating
          (duplex)  apartment  1-R.   The  complaint  also  stated  that  a
          complaint seeking a rent reduction for the loss  of  the  laundry
          service was previously filed in 1980 (Docket No.  2T  657580-589)
          and that the owner has also applied for an Major Capital Improve 
          ment (MCI) rent increase in  connection  with  these  renovations
          (Docket No. BG 410383-OM).


          The owner  submitted  an  answer  to  the  complaint  on  January
          25,1988, stating therein that the renovations complained of  took
          place seven years before, when he changed from an oil  to  a  gas
          heating system.  The system required extensive renovations to the 
          old boiler room, including installing new flue vents.  The  owner
          also claimed that before the renovation,  the  tenants  discarded
          trash in the area and the accumulation was creating  a  dangerous
          fire and health hazard.  There was also no  evidence  of  storage
          usage by any individual tenants.  However, the owner  did  notify







          CJ 420006-RO
          the tenants before the work began, and advised them to remove any 
          possessions stored there.  The owner also enclosed a copy  of  an
          order from the Department of Rent and Housing Maintenance, Office 
          of Rent Control, (Docket No. 2T-657580-589),  dated  January  26,
          1980, wherein it was determined to deny the tenants' request  for
          a rent reduction where the private concessionaire failed to main 
          tain the laundry facilities in the building.  However, the  order
          also directed the owner to permit  a  concessionaire  to  install
          laundry facilities should one be found to operate  it.   Finally,
          the owner affirmed that none of the tenants ever complained about 
          the alleged loss of the basement storage area  until  they  filed
          the complaint seven years later.

          Inspections of the premises by a DHCR employee were scheduled for 
          March 11, 1988 and March 21, 1988, but the  inspector  could  not
          gain access to the building on both occasions.

          In an Order issued under Docket No.  BL  420066-B  on  August  1,
          1988, the Rent Administrator determined that a  service  decrease
          had occurred as a result of the  discontinuance  of  the  storage
          space in the basement, and reduced the maximum legal rent of  the
          rent controlled tenants by $6.00 per month  effective  the  first
          payment day following the issue date of the order and reduced the 
          rent of the rent stabilized tenants to the level in effect  prior
          to the most recent guideline adjustment, effective as of February 
          1, 1988.

          In its petition, dated August 31, 1988, the owner  contends  that
          she is being penalized for decreasing a service that was never in 
          fact provided to tenants.  The owner  asserts  that  there  never
          existed any designated storage space in  the  basement  that  was
          offered to tenants, but that they had taken it upon themselves to 
          use the basement  area  to  discard  abandoned  objects,  thereby
          creating a potential fire hazard that the owner was  mandated  to
          remove in order to be in compliance with the Multiple Dwelling  
          Law and insurance requirements.  The owner states  that  she  did
          not merely remove the hazard but upgraded the  basement  area  in
          the building.


          The owner then details the history of her  involvement  with  the
          building.  She states that when she purchased it in 1979, it  was
          a hundred-year-old twenty one foot five-story walk-up, and  that,
          upon inspection by an insurer, was found to contain a fire hazard 
          because of the amount of furniture and other items stored in  the
          basement.  A letter  from  the  insurer  so  stating  this  dated
          December 13, 1979, is included with the petition.  The owner also 
          notes that the "deteriorating materials" also bred water-bugs due 
          to the trapped moisture.  Then "as a courtesy"  to  the  tenants,
          the owner invited them to remove any of their personal items from 
          the basement prior to the clean-up.  T e  owner  states  categor-
          ically that none of the tenants ever claimed any of the abandoned 
          items, which were unlabeled.  After the basement was cleared  the
          owner consulted with an architect  and  rehabilitated  the  whole
          basement area in accordance with the New York City Building  Code
          requirements.

          The owner claims various improvements as part of the  remodeling,







          CJ 420006-RO
          including the installation of a gas heat and  hot  water  system,
          fire proofing the entire room, separate boxed in  units  for  gas
          and water meters  and  other  installations.   Additionally,  the
          owner  mentions  the  construction  of  a  full-length  fireproof
          hallway passageway throughout the entire basement, as required by 
          the Multiple Dwelling Law, Article 6, Title 2, Section 187  (1B).
          Since all of the remodeling was to be in compliance with the law, 
          the owner feels any rent reduction is unwarranted.  Finally,  she
          asserts that neither she,  nor  the  prior  owner  ever  provided
          locked bins, skids or chicken wire (stora e  requirements  speci-
          fied in the  building  code)  nor  ever  granted  permission  for
          storage of the tenant's possessions in  the  basement.   Enclosed
          with the petition is a computer-generated printout  stating  that
          there were no violations pending against the subject-building  in
          1987 and, as a newly received attachment, a letter  from  IRA  M.
          Starr,  attorney,  dated  October  3,  1988  stating   that,   as
          partner/offices of the owner-entity of the subject-building  from
          the late 1960's through 1979, he affirms that no storage  facili-
          ties were designated or existed in fact in the  basement  of  the
          building and, to the best of his  knowledge,  no  permission  was
          ever granted the tenants for that  purpose.   The  petition  also
          includes the owner request for a stay of the order.

          In separated and identical answer dated November 8, 1988 three of 
          the tenants stated that the "storage room" had been  provided  to
          tenants as an "inducement" to rent as  far  back  as  1964.   The
          designated space was a cinder block room 10 x 15 feet on the west 
          wall of the basement, with a steel fireproof door.  Tenant access 
          was via an outside door, for which all tenants  used  to  have  a
          key, since there was no inside access.  The  washer/dryer,  which
          was also discontinued without the tenants' consent  was  adjacent
          to the storage room.  The  tenant's  representative  also  claims
          that the removal of the storage area  was  part  of  the  owner's
          ongoing harassment of  rent  regulated  tenants  who  refused  to
          purchase their apartments under  the  owner's  sponsorship  plan.
          Also, the owner's claim that the stored  material  constituted  a
          fire hazard is belied by the fact that she knowingly  allowed  it
          for two years as evidenced by the owner's letter to the  tenants,
          dated February 10, 1981 and which is enclosed  with  the  answer,
          advising them of the improvements and requesting that they remove 
          personal  possessions  from  the  basement.   This  letter   also
          indicates that the owner was aware, despite  her  claims  to  the
          contrary, that the room was used for storage by the tenants.  The 
          representative also suggests that the  building  plans  prior  to
          1979 would show  the  existence  of  the  storage  room  and  the
          owner's subsequent  building  plans  would  show  plans  for  the
          demolition of the storage space to make room for the  two  duplex
          apartments.  Finally, the representative's claim  that  the  rent
          reduction should  have been retroactive to  the  date  of  actual
          misappropriation f the space, in February, 1981.

          On January 31, 1989 the Commissioner granted  a  partial-stay  of
          the owner's petition  in  that  the  directive  to  refund  prior
          overcharges to the tenant and, in the alternative,  the  granting
          of permission to the tenants to deduct some from  the  rent  were
          stayed pending the determination of the  petitio,  in  accordance
          with Section 2529.12  of  the  Rent  Stabilization  Code.   In  a
          supplementary affidavit, dated November 3, 1989, the  owner  adds







          CJ 420006-RO
          certain details to her argument.  She contends that  the  claimed
          storage area was originally used to store coal for the building's 
          furnace.   Once  that  became  obsolete,   hazardous   conditions
          developed which the owner was directed to cure by  the  insurance
          carriers under penalty of loss of coverage.  On the  other  hand,
          the tenants present no  evidence  that  any  of  them  were  ever
          authorized to use the space as a  storage  facility.   The  owner
          also notes that thee is nothing in writing; including  any  lease
          provisions, which mentions such a right.  The owner  states  that
          one tenant even  concedes  in  its  answer  that  the  space  was
          'unusable".  Furthermore, although one  of  the  tenants  alleges
          that the owner  "illegally  breached  the  rental  contract",  no
          evidence is presented that such contract ever existed.  In  fact,
          the lease of that tenant which is included with  the  supplement,
          contains no right to use any storage  facility;  and  the  tenant
          does not claim ownership of any of the abandoned items.

          Finally, the  owner  notes  that  storage  is  not  listed  among
          possible "required services" in Policy  Statement  89-1,  nor  is
          there any evidence that it was provided on the base date.  

          Enclosed with the supplement is a copy of the lease to  Apartment
          2-R, covering the period from August 10, 1972 through August  31,
          1974, and eight undated  photographs  showing  the  exterior  and
          interior of the building.

          In a final  supplement  from  the  owner's  new  attorneys  dated
          September 25, 1990, the owner reiterates its contention that  the
          Administrator's order was incorrect because it  did  not  resolve
          the issue of whether the use of the basement area  as  a  storage
          facility was a base-date service.  It seems, says the owner, that 
          the Administrator took the tenant's word  "at  face  value"  that
          they had always had use of the  storage  pace,  even  though  the
          claim is  unsupported  by  any  documentation.   The  owner  also
          contends that, since a hearing would be necessary to resolve  the
          issue, (referring to Bel Air Leasing Co., ARD  No.  ARL  10933-K,
          which also concerned storage space), that  the  order  should  be
          "revoked" until that issue of fact is resolved.  Furthermore, the 
          reliance upon an inspection of the premises could not  have  been
          adequate, since an inspection could  not  establish  whether  the
          service actually existed on the base date.  The owner cites prior 
          Commissioner's opinions holding that a mere inspection would  not
          suffice.

          The Commissioner is of  the  opinion  that  the  owners  petition
          should be granted in part and the proceeding be remanded  to  the
          Rent Administrator for further investigation.

          With respect to the question of the correctness of the order  for
          rent controlled tenants, the sole substantive  issue  is  whether
          the use of the basement should be considered an "essentia "  ser-
          vice.  Section 9 NYCRR 2200.3(b) of the Rent a d  Eviction  Regu-
          lations defines "essential services" for rent-controlled  tenants
          as those essential services which the landlord furnished or which 
          he was obliged to furnish  on  April  30,  1962  and  which  were
          included in the maximum rent for  the  housing  accommodation  on
          that date.








          CJ 420006-RO
          For rent  stabilized  tenants,  the  issue  must  revolve  around
          whether the  practice  constituted  a  "required  service"  under
          Section 2520.6(r) of the Rent Stabilization Code,  which  defines
          required  service  as  those  services  which   the   owner   was
          maintaining or was required to maintain on  the  applicable  base
          date and any additional  services  provided  or  required  to  be
          provided thereafter by applicable law.





          In the instant case, which involves both rent-controlled and rent 
          stabilized tenants, the record fails to establish whether in fact 
          the use of  the  basement  as  a  storage  facility  would  be  a
          preserved right for either group.  Although the  owner  correctly
          asserts that the tenants' offer no documentation to validate  the
          claim, it is well established that the  practice  itself  on  the
          applicable base dates is all that is  required.   Therefore,  the
          owner anticipated correctly when mentioning, in its supplement to 
          the petition, that a formal hearing should be held to resolve the 
          issue.

          It is also noted that the fact that the complaint about the  loss
          of the storage space was not filed until seven  years  after  its
          occurrence would not in an of  itself  deprive  such  tenants  of
          their right to the service.


          THEREFORE, in accordance with  the  Rent  Stabilization  Law  and
          Code, and the Rent and Eviction Laws, 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.  It is further

          ORDERED, that the Administrator's order be revoked.  Any  arrears
          owed by the tenants as a result of this order and  opinion  shall
          be paid by the tenants to the owner in equal monthly installments 
          over the course of the next twelve months.


          ISSUED:


                                                                           
                                                ELLIOT SANDER
                                                Deputy Commissioner


                                          
    

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