DOC. NO.: DD 210235-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 210235-RO
                                             :   D.R.O. DOCKET NO.: 
              TRUMP MANAGEMENT,              :             CD 210004-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 17, 1989 by the 
         District Rent Administrator, Gertz Plaza, Jamaica, New York, 
         concerning housing accommodations known as various apartments at 580 
         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

          
















          DOC. NO.: DD 210235-RO

         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 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 bythe 
         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.   The 
         long-term tenants stated that all the services the owner seeks to 
         modify were previously provided.  The newer tenants argued that the 
         owner should be required to restore these services.  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.
          










          DOC. NO.: DD 210235-RO


         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 (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 












          DOC. NO.: DD 210235-RO

         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.

         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 






          DOC. NO.: DD 210235-RO

         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 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 










          DOC. NO.: DD 210235-RO

         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 restored effective August 1, 1990, the 
         month following the date of the inspection.

         Any arrears due to the owner as a result of this order may be paid off 
         by the tenants in 12 monthly installments.  

         THEREFORE, in accordance with the Rent Stabilization Law and Code, it 
         is

         ORDERED, that this petition be and the same hereby is granted in part 
         in accordance with this Order and Opinion.

         ISSUED:
                                                                        
                                            ELLIOT SANDER
                                            Deputy Commissioner
    

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