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.:DE 110214-RO
                                          :  
         THE CIAMPA ORGANIZATION,            RENT ADMINISTRATOR'S
                                             DOCKET NO.:ZAJ 110362-R
                            PETITIONER    : 
      ------------------------------------X  TENANT: James Modica       

        ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW IN PART

      On May 4, 1989 the above-named petitioner-owner filed a Petition for 
      Administrative Review against an order issued on March 30, 1989 by the Rent 
      Administrator, 92-31 Union Hall Street, Jamaica, New York concerning the 
      housing accommodations known as 16-66 Bell Boulevard, Bayside, New York, 
      Apartment No. 530 wherein the Rent Administrator determined that the owner 
      had overcharged the tenant.

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

      The applicable sections of the Law are Section 26-516 of the Rent 
      Stabilization Law and Sections 2520.11(e), 2520.11(p), 2522.5(e)(2) and 
      2526.1(a) of the Rent Stabilization Code.

      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.        

      This proceeding was originally commenced by the filing in October, 1986 of 
      a rent overcharge complaint by the tenant, in which he stated that he had 
      commenced occupancy on September 1, 1986 at a rent of $925.00 per month.  
      He enclosed a copy of the 1986 apartment registration, which stated that 
      the apartment had become exempt on December 1, 1984 due to the expiration 
      of 421-a benefits.  

      The owner was served with a copy of the complaint and was requested to 
      submit rent records to prove the lawfulness of the rent being charged.  In 
      answer to the complaint, the owner contended that the subject apartment was 
      destabilized due to a vacancy after the expiration of Real Property Tax Law 
      (RPTL) Section 421-a tax abatement benefits on June 30, 1984.  The owner 
      enclosed a Certificate of Eligibility which stated that the building was 
      completed on November 15, 1973.

      In an order issued on March 30, 1989 the Administrator calculated the 
      lawful stabilization rent on the basis of the April 1, 1984 rent of $698.49 
      and found an overcharge of $10,841.76, including treble damages, as of 
      September 1, 1988.










          DOCKET NUMBER: DE-110214-RO
      In this petition, the owner contends in substance that the subject 
      apartment is not subject to rent regulation because it was granted tax 
      abatement benefits pursuant to RPTL Section 421-a, which was amended 
      (relevantly in Section 421-a [2][f][i]) by Chapter 346 of the Laws of 1984, 
      Section 1 to deregulate apartments vacated after the expiration of the 
      benefits, and because the complainant commenced occupancy after a vacancy 
      that occurred subsequent to the expiration of the Section 421-a benefits on 
      June 30, 1984; that treble damages should not have been imposed, since the 
      owner had a good faith basis for believing the subject apartment to be 
      exempt from rent regulation, since the DHCR had, during the course of the 
      proceeding, dismissed  complaints by tenants in another apartment in the 
      same building, and in another building owned by the owner, because a 
      vacancy had occurred after the expiration of 421-a benefits; that the 
      Administrator's rent calculations failed to consider a one-year renewal 
      lease of the prior tenants commencing July 1, 1984 at a rent of $733.32, 
      which lease is now enclosed, and that this lease should be accepted on 
      appeal, since the Administrator failed to request a copy of it even though 
      the owner, while claiming exemption from the Rent Stabilization Law and 
      Code, had expressly stated that the Administrator should contact it if any 
      further questions arose.  With its petition the owner has enclosed the 
      renewal lease, as well as a proposed rental history chart showing the prior 
      tenants' rent as being a 4% increase over $698.49, plus a 421-a 2.2% 
      increase of $6.89.

      The tenant did not submit an answer, although given an opportunity to do 
      so.

      The Commissioner is of the opinion that this petition should be granted in 
      part.

      The Commissioner finds that the subject apartment is within the 
      jurisdiction of the Rent Stabilization Law despite the fact that the 
      owner's tax abatement benefits expired and a subsequent vacancy occurred.  
      Originally, the subject building was rent-regulated solely by virtue of the 
      owner's receiving 421 benefits.  In 1974, Section 5 of the Emergency Tenant 
      Protection Act (Section 8625 of McKinney's Unconsolidated Laws) also 
      furnished a separate basis for the subject building to be rent regulated.  
      Currently, Section 2520.11(p) of the Rent Stabilization Code is the 
      applicable law.  This section states that in order for an apartment 
      building to become deregulated it must have been completed after January 1, 
      1974 and have been subject to regulation solely because the owner was 
      receiving tax benefits.  Clearly, the subject premises in the instant case, 
      completed prior to January 1, 1974, do not qualify as an exception and 
      remain rent regulated.

      When the subject building was constructed in 1973 the Rent Stabilization 
      Law provided that only buildings of six or more units constructed before 
      March, 1969 were subject to rent regulation.  The building was subject to 
      the Rent Stabilization Law beginning in 1973 solely by virtue of the 
      owner's participation in the 421 partial tax exemption program.  However, 
      with the passage of the Emergency Tenant Protection Act of 1974, all 
      buildings built before January 1, 1974 became subject to the Rent 
      Stabilization Law.  The fact that this building had first become subject to 
      the Rent Stabilization Law by virtue of the 421 program did not now 




          DOCKET NUMBER: DE-110214-RO
      distinguish this building from any other building built before January 1, 
      1974.  The continuing receipt of the 421 benefits no longer had any 
      relevance to the building's rent regulation status.

      The owner's argument regarding the exemption of the subject apartment from 
      rent regulation rests upon Section 1 of Chapter 346 of the Laws of 1984, 
      which modified RPTL Section 421-a(2)(f) to read in pertinent part that:

           (f)  Notwithstanding the provisions of any local law for the 
           stabilization of rents in multiple dwellings or the emergency 
           tenant protection act of nineteen seventy-four, the rents of a 
           unit shall be fully subject to control under such local law or 
           such act, unless exempt under such local law or such act from 
           control by reason of the cooperative or condominium status of the 
           unit, for a period of ten years or for the period any such 
           applicable law or act is in effect, whichever is shorter.  
           Thereafter, such rents shall continue to be subject to such 
           control to the same extent and in the same manner as if this 
           section had never applied thereto, except that such rents shall 
           be decontrolled if:

                (i)  with respect to units subject to the provisions of 
                this section on the effective date of this subparagraph 
                such a unit becomes vacant after the expiration of such 
                ten year period or applicable law or act.

      It is the position of the DHCR that the words "with respect to units 
      subject to the provisions of this section on the effective date of this 
      subparagraph" were not meant to deregulate apartments which were built 
      prior to the effective date of the amendment and were independently subject 
      to regulation by virtue of being in a building completed before January 1, 
      1974 and containing six or more units (particularly where, as in the 
      present case, the tax benefits expired before the July 3, 1984 effective 
      date of the 1984 amendments so the apartment was not one of the "units 
      subject to the provisions of this section on the effective date of this 
      subparagraph...").  This position is reflected in the current Rent 
      Stabilization Code, effective May 1, 1987, nearly three years after Chapter 
      346 of the Laws of 1984.  The only relevant mention of RPTL Section 421-a 
      is in Section 2520.11(p), which exempts from regulation:

           (p)  housing accommodations in buildings completed or 
           substantially rehabilitated as family units on or after January 
           1, 1974 or located in a building containing less than six housing 
           accommodations, and which were originally made subject to 
           regulation solely as a condition of receiving tax benefits 
           pursuant to section 421-a of the Real Property Tax Law, as 
           amended, and:

                (1)  the housing accommodations which were subject to 
                the RSL pursuant to section 421-a became vacant.

      This exempts from regulation, upon a vacancy, only apartments which would 
      not otherwise have been stabilized except for the receipt of 421-a 










          DOCKET NUMBER: DE-110214-RO
      benefits.  Because the subject building was completed on November 15, 1973, 
      and because it contains at least six apartments, this exemption does not 
      apply.

      This is the same interpretation held by the agency responsible for 
      administering RPTL Section 421-a.  Section 2.7 of the regulations 
      promulgated by the New York City Department of Housing Preservation and 
      Development on August 27, 1987, also three years after Chapter 346, 
      provides in pertinent part that:

           To be eligible for partial tax exemption the land upon which the 
           eligible project is located must meed the following letting, 
           rental and occupancy requirements:

                                        .
                                        .
                                        .

           (2)  Notwithstanding the provisions of any local law for the 
           stabilization of rents in multiple dwellings or the emergency 
           tenant protection act of 1974, the rents of a unit shall be fully 
           subject to regulation under such local law or such act, unless 
           exempt under such local law or such act from regulation by reason 
           of the cooperative or condominium status of the unit, for the 
           entire period during which the property is receiving tax benefits 
           pursuant to the Act, or for the period any such applicable local 
           law or such act is in effect whichever is shorter.  Thereafter 
           such rents shall continue to be subject to such regulation to the 
           same extent and in the same manner as if this section had never 
           applied thereto, except that for dwelling units in buildings 
           completed, as that term is defined herein, on or after January 1, 
           1974, such rents shall be deregulated if:

                (a)  with respect to dwelling units located in multiple  
                     dwellings completed after January 1, 1974 such    
                     unit becomes vacant after the expiration of the
                     lease for the unit in effect when such benefit 
                     period or applicable law or act expires..

      This again is exempting, upon vacancy, only apartments which would have 
      been continuously exempt from the time of their completion but for the 
      receipt of 421-a benefits.

      Because the subject apartment does not fall under any of the exemptions, it 
      is subject to regulation under the Rent Stabilization Law and Code.  The 
      tenant is entitled to stabilization leases at lawful rents, and the owner 
      is required to register the building annually with the DHCR.  While the 
      owner has enclosed copies of two orders (Docket Nos. Q-003522-R and 
      Q-003528-R) issued by the Administrator in 1987, finding that two 
      apartments belonging to the owner were no longer subject to rent 
      stabilization due to the expiration of 421-a benefits, the Commissioner 
      notes that new orders (Docket Nos. BK-110036-RP and BK-110033-RP) were 
      issued in 1989, revoking the prior orders and finding that the apartments 
      were subject to rent stabilization.  (There are appeals currently pending 
      against the new orders.)



          DOCKET NUMBER: DE-110214-RO
      The Commissioner considers it appropriate to accept the lease which the 
      owner has submitted on appeal.  While the owner responded to the 
      Administrator's various requests for the first lease after the building was 
      completed, for proof of service of the RR-1 form on the tenants in 
      occupancy on April 1, 1984, and for all documents related to the 421-a 
      program, the record does not contain any indication that the owner was 
      requested to submit a rental history from the base date.               

      However, the lawful stabilization rent in the renewal lease from July 1, 
      1984 to June 30, 1985 is $726.43, rather than the $733.32 charged by the 
      owner.  In addition to a 4% increase above the $698.49 rent charged in the 
      base date lease from July 1, 1982 to June 30, 1984, the owner charged 
      $6.89, this being 2.2% of the initial rent of $313.00 in a lease commencing 
      February 1, 1974.  Because the 2.2% increases were collectible on the 
      anniversary date of that lease for each of nine years, according to DHCR 
      precedent, Section 4.2 of the New York City Department of Housing 
      Preservation and Development's ["H.P.D."] Rules and Regulations Governing 
      421 Partial Tax Exemption, and the Appellate Division, First Department in 
      Matter of Glenwood Management Corp. (N.Y.L.J. May 4, 1992, P. 26, col. 3), 
      the owner could have charged the $6.89 in increases on February 1 in 1975, 
      1976, 1977, 1978, 1979, 1980, 1981, 1982 and 1983.  On March 1, 1989 the 
      owner was requested to submit, in addition to the Certificate of 
      Eligibility and the initial lease, "[a]ll papers related to 421-a."  The 
      owner did not submit anything that would rebut a presumption that the 
      annual increases to which it was entitled each February 1st from 1975 
      through 1983 were taken, so it is presumed that the rent of $698.49 
      registered for April 1, 1984 included all nine of the increases.  
      Accordingly, no 421-a increase is allowed to be added on July 1, 1984.
      The lawful rent in the complainant's initial lease from September 1, 1986 
      to August 31, 1987 is therefore $809.97 per month [$726.43 plus 11 1/2%].
      The overcharge in that lease is $1,571.89 [$925.00 minus $809.97 equals 
      $115.03 overcharge per month, times 12 months equals $1,380.36, plus 
      $191.53 interest as of August 31, 1988].  The lawful rent in the lease from 
      September 1, 1987 to August 31, 1988 is $858.57 per month [$809.97 plus 
      6%].  The overcharge in that lease is $1,534.48 [$980.50 minus $858.57 
      equals $121.93 overcharge per month, times 12 months equals $1,463.16, plus 
      $71.32 interest as of August 31, 1988].  The total overcharge plus interest 
      for the two leases is therefore $3,106.37.  The owner is not holding any 
      excess security, since the tenant vacated.

      The owner is cautioned to adjust the rent, in leases after those considered 
      in this order, to amounts no greater than that determined by this order 
      plus any lawful increases, and to register any adjusted rent, with this 
      order being given as the reason for the adjustment.  Since the tenant has 
      vacated, a copy of this order is being mailed to the tenant-in-occupancy.

      This order may, upon the expiration of the period in which the owner may 
      institute a proceeding pursuant to Article 78 of the Civil Practice Law and 
      Rules, be filed and enforced by the tenant in the same manner as a 
      judgment.

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










          DOCKET NUMBER: DE-110214-RO
      ORDERED, that this Petition be, and the same hereby is, granted in part and 
      that the Rent Administrator's order be, and the same hereby is, modified in 
      accordance with this order and opinion.  The total overcharge is $3,106.37.  
      The lawful stabilization rent is $858.57 per month in the lease from 
      September 1, 1987 to August 31, 1988.

      ISSUED:











                                                                         
                                           JOSEPH A. D'AGOSTA
                                           Acting Deputy Commissioner




                                                    
       
    

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