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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