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
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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 :
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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
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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
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(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.
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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
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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
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restored effective August 1, 1990, the month following the date of the
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inspection.
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Any arrears due to the owner as a result of this order may be paid off
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by the tenants in 12 monthly installments.
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THEREFORE, in accordance with the Rent Stabilization Law and Code, it is
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ORDERED, that this petition be and the same hereby is granted in part in
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accordance with this Order and Opinion.
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ISSUED:
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ELLIOT SANDER
D0C. NO.: DD 210232-RO
Deputy Commissioner
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