DOC. NO.: DD 210232-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
         IN THE MATTER OF THE ADMINISTRATIVE :     ADMINISTRATIVE REVIEW
         APPEAL OF                             :   DOCKET NO.: DD 210232-RO
                                               :   D.R.O. DOCKET NO.: 
              TRUMP MANAGEMENT,                :                CD 210003-OD
                                   PETITIONER  :
         ------------------------------------X


              ORDER AND OPINION GRANTING OWNER'S PETITION FOR ADMINISTRATIVE
                                      REVIEW IN PART


         On April 17, 1989 the above named petitioner filed a Petition for 
         Administrative Review against an order issued on March 23, 1989 by the 
         District Rent Administrator, Gertz Plaza, Jamaica, New York, concerning 
         housing accommodations known as various apartments at 590 Flatbush Avenue, 
         Brooklyn, New York, wherein the District Rent Administrator 
         denied the owner's application for modification of services.

         The issue in this appeal is whether the Administrator's order is 
         correct.

         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.

         The owner filed an application on April 12, 1988 seeking approval to 
         modify certain services that had previously been found by the 
         Commissioner in Docket No. ARL 00867-K to be required base date services 
         that were not being provided.  The services the owner had been ordered 
         to restore to the subject premises which were the subject matter of the 
         instant application included a water fountain, playground equipment, 
         music in the elevators, and air conditioning in the lobby and 
         elevators.  In the application to modify these services, the owner 
         stated that despite the finding that it was a base date service having 
         been in existence on May 31, 1968, in fact, the water fountain was never 
         put in service because of installation problems, refuse being dumped in 
         the area, and the prohibitive cost.  A rock garden was installed in its 
         place.  The music in the elevators was replaced in 1966, according to 
         the owner, by an audio system linked to the gatehouse which affords 
         tenants additional protection in the event of a disturbance in the 
         elevator.  As for the playground equipment, the owner explained that 
         because of prohibitive liability insurance costs and because the 
         playground area  was never supervised, the baby  swings and see-saw were
          













         D0C. NO.: DD 210232-RO
         replaced by safer equipment consisting of play barrels and slides.  With 
         regard to air conditioning of the lobby and elevators, the owner stated 
         that the buildings are not centrally air conditioned and that a plan by 
         the prior owner to air condition the lobby was abandoned when it was 
         discovered that the system drew exhaust fumes from the garage into the 
         lobby area.  The owner also claimed that air conditioning of the lobby 
         would be ineffective because it would dissipate into the first floor 
         corridors.

         Several tenants submitted answers to the owner's application.  Some 
         stated that they approved of the modifications and others sought to have 
         conditions restored to their former state.  An answer filed by the 
         attorneys for the tenants' association strongly opposed the owner's 
         application and noted that the tenants have been trying to get DHCR to 
         compel the owner to comply with the September 10, 1984 order to restore 
         services, but rather than instituting compliance proceedings, the agency 
         has invited the owner to file the instant application to modify those 
         services.  It is also argued in this answer that there is no authority 
         in the Rent Stabilization Law and Code for a substitution of base date 
         services without prior approval by DHCR and that these services are not 
         de minimis but constitute facilities and amenities to which the tenants 
         are legally entitled.

         In reply the owner contends that the subject buildings were in 
         foreclosure in 1964 when the current owner stepped in to "save the 
         property".  The owner claims that it has made repairs and improvements 
         even though there has been no cash set aside in a reserve account for 
         capital items and that the buildings have been operating at a loss 
         exceeding $60,000 per month.  The owner also asserts that only a few 
         tenants have demanded the restoration of services which are de minimis 
         and play no part in the preservation and maintenance of the property, 
         and that the owner should not be required to restore cosmetic services 
         that were "abandoned by the tenants over 20 years ago".  In addressing 
         each specific item, the owner states that in place of a water fountain 
         that would become a garbage receptacle, there is now a well maintained 
         rock garden; that the music in the elevators was replaced by a security 
         system; that the substituted equipment in the playground provides safer 
         usage; and that because of the openness of the first floor lobby area, 
         air conditioning would not provide better ventilation than a fan.

         The Administrator's order denied the owner's application on the ground 
         that "Section 2520.6(r)(4) of the Rent Stabilization Code provides that 
         an owner is required to maintain that space and those services which 
         owner was maintaining or required to maintain on May 31, 1968 and any 
         additional space or services required to be provided thereafter by 
         applicable law".




         Contemporaneous in part to the owner's application, the Compliance Unit 
         of DHCR commenced a proceeding to enforce compliance with the directive 
         to restore services ordered by the Administrator on September 10, 1984 




         D0C. NO.: DD 210232-RO
         (Order No. 00729) and affirmed by the Commissioner on May 24, 1985 (ARL 
         00867-R).  After a compliance hearing, an order and opinion was issued 
         on July 27, 1989 finding that the owner had failed to restore, inter 
         alia, the air conditioning and water fountain and a civil penalty was 
         imposed.  The owner's petition for judicial review of that order was 
         denied.  Pursuant to Section 2526.2(d), the finding by DHCR on July 27, 
         1989 that the owner has not complied with an order of the agency bars 
         the owner from applying for or collecting any further increase.
           
         In the petition for administrative review, the owner argues that the 
         application was filed under Section 2522.4(e) but was denied based on 
         Section 2520.6(r)(4) and the failure to address the issues raised in the 
         proceeding constitutes a denial of due process.  The owner objects to 
         the Administrator's failure to make a factual finding as to whether or 
         not the services in question were provided on the base date.  If the 
         services had been found to be required, then a determination should have 
         been made as to whether a viable alternate service and/or modification 
         had been or could be provided.  The owner also asserts that the tenants 
         are in no way deprived because the services were discontinued at least 
         20 years ago, that the owner was improperly prohibited in its appeal of 
         the order directing restoration from raising the issue of whether the 
         services were actually provided on the base date, and it was 
         unconscionable to summarily dismiss an application that the owner filed 
         at the suggestion of DHCR.  The owner claims that a substitution should 
         be allowed for services that the tenants did not assert rights to for 
         almost 20 years.

         The Commissioner is of the opinion that the owner's petition should be 
         granted in part.  In doing so the Commissioner specifically notes and is 
         relying on Sections 2520.6(r)(4) quoted above; Section 2522.4(d) of the 
         Code which provides for a decrease in required services with a rent 
         reduction where the decrease is by mutual voluntary consent between the 
         owner and tenant or required by law for the operation of the building or 
         is not inconsistent with the law or Code; Section 2522.4(e) which 
         permits a modification or substitution of services with no change in the 
         rents on the same grounds stated in Section 2522.4(d); and Section 
         2522.7 which provides for consideration of all factors bearing on the 
         equities in proceedings adjusting the legal regulated rents.  Section 
         2522.4(d) and (e) both prohibit any reduction, modification, or 
         substitution of services prior to approval of the owner's application by 
         DHCR.






         The owner was originally directed to restore the water fountain on a 
         record in which the owner had not raised the issue that the fountain had 
         been replaced with a rock garden.  It is an inappropriate defense to 
         raise as part of a compliance proceeding before DHCR that a service 
         found to be reduced (albeit on a default basis) was in fact not wanting 
         at all because an equivalent had been provided twenty years earlier.












         D0C. NO.: DD 210232-RO

         On the other hand in response to an owner's application for subsequent 
         relief from the finding it was also inappropriate to merely find that a 
         service must be continued in its exact form when the nature of the 
         service is not functional, but rather aesthetic in nature.

         In general, services which are primarily aesthetic in nature, while 
         still being services, have historically been within the discretion of 
         the owner to change in connection with redecorating.  The 
         administrative Agency should not get involved in adjudicating issues of 
         this nature unless the replacement level is clearly not commensurate 
         with the prior level of service by application of a reasonable standard.  
         Thus, as in the case at bar, the substitution of the rock garden for the 
         fountain continued the basic function of providing an aesthetically 
         pleasing environment.

         If, alternatively the owner had not provided a rock garden, asserting 
         that his redecorating scheme is of a "minimalist" approach it would be 
         a legitimate item of complaint.

         When an owner first applies to the DHCR as provided for by the RSC the 
         final Order issued provides the owner with guidance as to what is 
         permissible.  When an owner makes changes without prior application it 
         runs the risk that those changes made will ultimately be found to 
         constitute a reduction in services with a concomitant reduction in rent 
         and the owner should not then be heard to complain that it thought it 
         was providing an equivalent service.

         Applying that standard to the instant proceeding the Commissioner finds 
         that the owner's application with respect to the water fountain should 
         have been granted.

         Applying the standards set forth above the Commissioner also finds that 
         modifications may be made in the type of playground equipment provided 
         as long as the new equipment is an adequate substitute for what had been 
         provided.  Based upon facts disclosed by the September 17, 1990 physical 
         inspection of the premises by a DHCR inspector who took photographs of 
         the equipment presently available, the Commissioner finds that the 
         existing playground facilities constitutes an adequate substitute 
         service.  However, an examination of the photographs taken by the 
         inspector shows that the two metal slides are not being maintained 
         properly in that they lack hand railings along the steps and protective


         barriers surrounding the side surface entrance.  This clearly 
         constitutes a hazardous condition that should be remedied immediately 
         and the owner's failure to do so within 30 days of the issue date of 
         this order warrants the filing of a service complaint by the tenants.

         With respect to the remaining issues of this case the Commissioner notes 
         that both Sections 2522.4(d) and (e) provide that no such decrease or 
         modification in service may take place prior to the owner's application.  
         In this case the reductions and modifications did take place prior to 




         D0C. NO.: DD 210232-RO
         the owner's application which the owner was advised to file.  But, this 
         was not an abrupt discontinuance of a vital service, but rather one 
         which took place many years ago and without complaint by tenants for 
         many years thereafter.   The tenants did not, request a rent reduction, 
         at the time of their initial complaint.  When the owner did not restore 
         the service the Compliance Unit of the Agency imposed appropriate 
         penalties including a rent reduction/freeze as well as civil penalties.  
         It was an abuse of discretion not to permit the owner's application 
         under these special facts to go forward just because the application was 
         not first filed.  Similarly, where no modified services were in fact 
         offered by the owner the Administrator could have conformed the 
         pleadings to the facts and processed the application as one 
         conditionally seeking a rent reduction for reduced services.

         As for the music in the elevators, the Commissioner notes that in a 
         recent proceeding before the Compliance Unit of the Division, it was 
         determined that this service had been restored.  Accordingly this part 
         of the application is deemed moot by the Commissioner.

         As for air conditioning in the lobby, and cooling of the elevators, the 
         Commissioner notes that a physical inspection on July 5, 1990 revealed 
         that the lobby air conditioners were operating properly and that fans in 
         the elevators were functioning.   With regard to the feasibility of air 
         conditioning the elevators, the Commissioner has further researched this 
         issue and has determined that there are no standard elevator air 
         conditioning devices on the market.  The inspection conducted pursuant 
         to the compliance proceeding revealed that fans had been installed and 
         were operating properly.  The Commissioner finds that further 
         modification or substitution of this service is, not necessary.   With 
         respect to lobby air conditioning, at the time of the owner's 
         application, no attempt had been made to restore this service.  
         Accordingly, while the Administrator could have converted the owner's 
         application into one seeking a rent reduction for the diminution, it was 
         proper, in the interim for the guidelines freeze based on non-compliance 
         to continue.  This penalty is final and binding, and upon challenge by 
         Article 78, the court has determined that it is no longer subject to 
         review.  Accordingly, any modification would constitute, at this point, 
         an impermissible collateral attack on the judicial confirmation.   Since



         however, the air conditioning has now been restored, the owner's 
         previously suspended eligibility to collect guidelines increases is 











         D0C. NO.: DD 210232-RO
         restored effective August 1, 1990, the month following the date of the 




         D0C. NO.: DD 210232-RO
         inspection.











         D0C. NO.: DD 210232-RO





         D0C. NO.: DD 210232-RO
         Any arrears due to the owner as a result of this order may be paid off 











         D0C. NO.: DD 210232-RO
         by the tenants in 12 monthly installments.  




         D0C. NO.: DD 210232-RO












         D0C. NO.: DD 210232-RO
         THEREFORE, in accordance with the Rent Stabilization Law and Code, it is




         D0C. NO.: DD 210232-RO












         D0C. NO.: DD 210232-RO
         ORDERED, that this petition be and the same hereby is granted in part in 




         D0C. NO.: DD 210232-RO
         accordance with this Order and Opinion.











         D0C. NO.: DD 210232-RO





         D0C. NO.: DD 210232-RO
         ISSUED:











         D0C. NO.: DD 210232-RO
                                     




         D0C. NO.: DD 210232-RO
         ELLIOT SANDER











         D0C. NO.: DD 210232-RO
         Deputy Commissioner
    

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