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
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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 :
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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 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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