DD410024RT; DD430044RO
                             STATE OF NEW YORK
                          OFFICE OF RENT ADMINISTRATION
                                   GERTZ PLAZA
                             92-31 UNION HALL STREET
                             JAMAICA, NEW YORK 11433

      APPEALS OF                             DOCKET NO. DD410024RT;
           Texas Management, Inc.
                      and        owner,   :  DISTRICT RENT OFFICE
           Remo Bloise,                      DOCKET NO. 050491
                            PETITIONERS   : 


      On April 10, 1989, the above-named petitioner-tenant filed a Petition 
      for Administrative Review against an order issued on March 27, 1989, by 
      a Rent Administrator concerning the housing accommodations known as     
      163 East 92nd Street, New York, New York, Apartment No. 1, wherein the 
      Rent Administrator determined that the owner had overcharged the tenant.

      On April 19, 1989, the above-named petitioner-owner filed a petition 
      against the same order.

      The Administrative Appeals are being determined pursuant to the 
      provisions of Section 2522.4 of the Rent Stabilization Code.

      The issue herein is whether the Rent Administrator's order was 

      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 appeals.  

      The tenant originally commenced this proceeding by filing a complaint of 
      rent overcharge and an objection to the initial registered rent on 
      September 25, 1984.  The tenant took occupancy of the apartment on June 
      16, 1984 at a rent of $650.00 per month.  The tenant also objected to 
      the registration statement's claim that the apartment consisted of three 
      rooms when it had only two, and that it had a stove, when in fact there 
      was no heating system for the apartment.

      The owner responded that when it purchased the building on October 23, 
      1984, the former owner stated that the apartment was "completely gut 

          DD410024RT; DD430044RO

      renovated" prior to the complainant's occupancy, and had set the rent at 
      $650.00 per month as based on the cost of renovations.  Upon information 
      and belief, the owner maintained that the "substantial rehabilitation" 
      of the apartment included new kitchen cabinets and fixtures and new 
      bathroom fixtures.  The owner claimed it was also told that new walls 
      and floors were installed in the building, but that it would contact the 
      former owner as well as the prior managing agent for more documentation 
      of all of the improvements.  The owner contends that further proof of 
      the extensiveness of renovations is the tenant's own statement on the 
      objection form that on April 1, 1984, the apartment "was not there."  
      The owner disputes the claim of lack of heat, and encloses pictures of 
      the apartment's stove and further claims that the apartment has four 
      heating pipes.  Finally, the owner enclosed a diagram of the apartment's 
      floor plan that was hand-drafted without stating its authorship or the 
      number of rooms.

      On or about June 15, 1988, the owner submitted a copy of a bill for 
      apartment renovations performed by Franz Heber, Jr., dated April 13, 
      1984, totalling $18,216.20, on which was written "paid in full."  The 
      owner stated that it was the only bill for the renovations it was able 
      to locate.

      The DHCR conducted an inspection of the subject apartment on July 27, 
      1988.  The inspection report states as follows: that the apartment is a 
      studio apartment consisting of only one room; that it contains a small 
      radiator and two vertical steam pipes; that it contains a stove that is 
      working properly.  

      A second inspection of the apartment was then scheduled to corroborate 
      the improvements listed on the bill.  Upon receiving notice of the 
      inspection, the tenant wrote the Administrator that the claim of 
      $18,000.00 in renovations for a studio apartment was obviously inflated, 
      since the owner had renovated much larger apartments in other buildings 
      at much less cost.

      The inspection was conducted by a DHCR inspector on October 6, 1988.  
      The inspection report stated that the bathroom contained a new tub and 
      basin, as well as a tile floor, on which some areas were cracked; that 
      there were new walls and ceiling throughout the apartment, a new wood 
      floor, new kitchen cabinets and combination sink and a new front door.  
      A second sheet of the inspection report concerned renovation work of the 
      entire building.

      On November 3, 1988 a request for documentation was sent to the owner 
      indicating that it had ten days to submit additional bills and invoices 
      involving the renovations to the subject apartment.  No other response 
      was received.  A subsequent letter from the DHCR, dated February 6, 
      1989, requested cancelled checks to prove payment of the claimed amount.  
      A letter from the owner's attorney, dated March 6, 1989, requested an 
      extension of time to submit documentation until March 29, 1989.  
      However, a letter from the Administrator, dated March 6, 1989, denied 
      this request, pointing out that the first request for documentation was 

          DD410024RT; DD430044RO

      dated January 21, 1988 and that, even after repeated opportunities, the 
      owner had not supplemented the single invoice for $18,216.00.

      In an order issued on March 27, 1989, the Rent Administrator determined 
      that the tenant had been overcharged in the amount of $28,465.59, 
      including excess security and interest on overcharges collected since 
      April 1, 1984.  The order stated that, although the owner had been 
      granted several extensions, it had not submitted additional 
      documentation that would substantiate its claim concerning the "alleged 
      improvemants" amounting to $18,216.00, and as a result the entire claim 
      was denied.

      In its petition, the owner contends that the Administrator failed to 
      include the cost of new improvements, and that the invoice for 
      $18,216.00 submitted by the owner was sufficient to prove that this was 
      the actual cost.  Moreover, the inspections proved that the improvements 
      were actually made, and it was thus wholly unreasonable to deny the 
      claim in its entirety.  Even if the full claim could not be 
      substantiated, the DHCR could have devised some method of determining 
      the reasonable costs of the work performed.

      The tenant's answer to the petition states that the owner's claimed cost 
      for the alleged renovation of the tenant's one room apartment is 
      inconsistent with its claimed cost for renovation of a larger apartment 
      in the adjacent building, which had cost only $8,700.00; that there were 
      no new walls or new floors installed in the building or lobby; that the 
      tenant's statement that the apartment "was not there" before she moved 
      in did not mean, as the owner had claimed in the petition, that the 
      owner's improvements in effect had created a new apartment, but that it 
      was not available because it was being occupied at the time by the 
      janitor and that it had no radiator or other means of heating.

      The tenant's own petition of the order contends that treble damages 
      should have been imposed because the owner had consistently and 
      willfully charged her for a three room apartment in collecting MCI 
      increases even though it should be considered only a single room 
      apartment and that this is evidence of the owner's willfulness in 
      overcharging her.

      The Commissioner is of the opinion that the owner's petition should be 
      granted in part and that the tenant's petition should be denied.

      The main issue in this appeal is the adequacy of proof of the owner's 
      claim for major renovations to the apartment, which were completed prior 
      to the complainant's occupancy.  The Administrator rejected the 
      $18,262.00 claim in its entirety, stating that the owner had failed to 
      submit copies of contracts, bills, agreements, and cancelled checks 
      which would substantiate the extent of the renovations.  The owner had 
      only submitted a one-page invoice listing the renovations and cost.  
      Virtually the entire amount of determined overcharges is due to the 
      rejection of this claim.

          DD410024RT; DD430044RO

      Based upon the totality of the evidence in the record, including the 
      inspection report, the Commissioner finds that it was improper for the 
      Rent Administrator to reject the claim in its entirety, and that the 
      invoice is sufficient to establish the cost of several items in the 
      owner's claim, under the guidelines stated in Policy Statement 90-10, 
      which states in part that an invoice receipt is adequate if marked paid 
      in full if contemporaneous with the completion of the work.  The invoice 
      was marked "paid in full" by the contractor and the inspection report 
      dated October 6, 1988 verified that several specific items were new.  
      The list of qualified improvements is as follows: new bath utilities 
      ($521.69); new kitchen utilities ($840.85); new entrance door ($365.00); 
      new windows $1,276.66); and new wood floor ($1,135.00), for a total 
      allowable claim of $4,139.20.

      However, the other items on the invoice are not described with 
      sufficient specificity to substantiate the nature and extent of the work 
      performed.  The list of items that do not qualify for a rent increase is 
      as follows: material hoisting ($100.00); carpentry labor ($6,000.00); 
      taping, labor only ($700.00); painting, material and labor ($650.00); 
      general clean up ($360.00); electrician, labor and material ($850.00); 
      plumber, labor and material ($1,450.00); extra work ($375.00); material 
      ($2,167.00); demolition and rubbish removal ($850.00).

      The tenant's petition requests treble damages on overcharges, but 
      confines his arguments solely to the owner's claim that the apartment 
      consisted of three rooms and that this was a willful misrepresentation 
      since the owner knew it was really only a one-room apartment, as was 
      confirmed by the order.  The tenant argues that the collection of an MCI 
      increase for three rooms was proof of such willfulness, and treble 
      damages should have been imposed by the Administrator.

      The Commissioner finds this argument unconvincing and finds that the 
      record does not support a finding of willfulness.  It is noted that the 
      major part of the overcharges was due to the rejection of the new 
      equipment claim.  

      Further, the inspection reports of October 6, 1988 supports the finding 
      that a substantial number of the improvements were actually performed.  
      The tenant does not deny that improvements were made to the subject 
      apartment, but simply disputes the cost. The sole reason for the denial 
      of most of the claimed improvements is the owner's failure to document 
      the work performed with sufficient specificity.  Such a failure to 
      supply adequate documentary proof improvements made in an apartment is 
      an insufficient basis for a finding of willfulness and the imposition of 
      treble damages.  Finally, the excessive MCI increases resulting from the 
      incorrect room count, constitutes a very minor part of total 
      overcharges, and does not demonstrate willfulness by itself.

      As a result of the above modification, total overcharges are reduced to 
      $25,426.08 from $28,464.59, as documented in the rent calculation chart 
      attached hereto and made a part hereof.

          DD410024RT; DD430044RO

      This Order may, upon expiration of the period for seeking review of this 
      Order and Opinion pursuant to Article Seventy-eight of the Civil 
      Practice Law and Rules, be filed and enforced as a judgment or not in 
      excess of twenty percent per month of the overcharge may be offset 
      against any rent thereafter due the owner.  Where the tenant credits the 
      overcharge, the tenant may add to the overcharge, or where the tenant 
      files this Order as a judgment, the County Clerk may add to the 
      overcharge, interest at the rate payable on a judgment pursuant to 
      section 5004 of the Civil Practice Law and Rules from the issuance date 
      of the Rent Administrator's Order to the issuance date of the 
      Commissioner's Order.

      If the owner has already complied with the Rent Administrator's order 
      and there are arrears due to the owner as a result of the instant 
      determination, the tenant shall be permitted to pay off the arrears in 
      twenty four equal monthly installments.  Should the tenant vacate after 
      the issuance of this order or have already vacated, said arrears shall 
      be payable immediately.

      THEREFORE, pursuant to the Rent Stabilization Law and Code, it is

      ORDERED, that the owner's petition be, and the same hereby is, granted 
      in part; that the tenant's petition be, and the same hereby is, denied; 
      and that Administrator's order be, and the same hereby is, modified in 
      accordance with this order and opinion. 


                                      JOSEPH A. D'AGOSTA
                                      Deputy Commissioner


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