DF 110410 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. DF 110410-RO
DISTRICT RENT ADMINISTRATOR'S
CIAMPA BELL COMPANY, DOCKET NO. AD 110196-R
TENANT: Roni Hefetz
PETITIONER
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ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
On June 13, 1989, the above-named owner filed a petition for
administrative review of an order issued on May 10, 1989 by a
District Rent Administrator concerning the housing accommodation
known as Apartment 504, 16-70 Bell Boulevard, Bayside, New York
wherein the Administrator determined that an overcharge had
occurred.
The Commissioner has reviewed all of the evidence in the record
and has carefully considered that portion of the record relevant
to the issues raised by the petition for review.
This proceeding was commenced on April 19, 1986 upon the filing of
a general complaint of rent overcharge by the tenant. The tenant
stated that he had taken occupancy of the subject apartment on
October 1, 1985 and that he suspected he was being overcharged.
In its answer, the owner alleged that the subject premises were
part of the 421-A Tax Abatement Program. The owner alleged that
the subject premises were completed on September 21, 1973 and the
building became eligible for the tax abatement benefits on
November 13, 1973. It is further alleged, th t the complainant-
tenant became the first tenant after expiration of the tax
benefits and after a vacancy occurred. Based on Section 421-a
(2)(f)(i) of the Real Property Tax Law, the owner alleged that the
subject apartment was no longer within the jurisdiction of the
Rent Stabilization Law. The owner submitted various documents to
corroborate its factual allegations, to wit: a Certificate of
Eligibility for the Tax Abatement Program, the initial Apartment
Registration (RR-1), the annual Apartment Registration (RR-2A) for
1986, and a complete lease history of the subject apartment. In
addition, the owner submitted copies of two Administrator's orders
issued February 10, 1987 and July 7, 1987 wherein the
Administrator, under a similar set of facts, declared other
apartments in the subject building to be outside the jurisdiction
of the Rent Stabilization Law.
DF 110410 RO
On April 4, 1989, the owner was sent notice of the proposed
imposition of treble damages on the overcharge. The owner was
afforded a final opportunity to submit evidence to rebut a finding
that the overcharge was willful.
In the order here under review, the Administrator determined that
the subject building was within the jurisdiction of the Rent
Stabilization Law and that an overcharge occurred. Also, the
Administrator found that the owner failed to sustain its burden of
proof in showing a lack of willfulness and imposed treble damages.
The lawful stabilization rent was established at $990.26 for the
lease period of October 1, 1987 through September 30, 1989 and the
owner was ordered to refund $11,949.21 in overcharges collected
through May 31, 1989, including treble damages and excess
security.
In its petition for administrative review, the owner requests
reversal of the Administrator's order. First, the owner alleged
that it was deprived of due process. The owner asserts that it
had requested on April 27, 1989 an extension of time to respond
to the final notice of the possible imposition of treble damages
until May 25, 1989. The letter stated that, unless otherwise
advised, the owner would assume the extension was granted. The
owner contends that due process was denied because the extension
request was not specifically rejected and the order was issued on
May 10, 1989. Second, the owner alleges that the subject
apartment is not within the jurisdiction of the Rent Stabilization
Law because the tax abatement benefits had expired and a
subsequent vacancy had occurred. Third, the owner contends, in
the alternative, that treble damages should not have been imposed.
The owner bases this contention on its opinion that the owner had
reasonably interpreted the law and that the owner had reasonably
relied on the two subsequently issued Administrator's orders to
reinforce its opinion. Accordingly, it is contended that the
record does not support a determination that the overcharges, if
any, were willful. The owner alleges that any overcharges were
"hypertechnical" in nature.
The tenant filed an answer to the owner's petition requesting that
the Administrator's order be affirmed.
After careful consideration, the Commissioner is of the opinion
that this petition should be denied.
First, the Commissioner finds that the owner has not been denied
due process protections. The granting or denying of a party's
request for an extension of time to respond is totally a
discretionary decision of the rent agency. A party may not assume
that the request for an extension has been granted. However, in
order to ensure the full protection of the owner's due process
rights, the Commissioner will fully consider the vigorously
presented arguments made by the owner in its petition for review
on the issue of treble damages.
DF 110410 RO
Second, 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 8625 of the Emergency Tenant
Protection Act also provided that the subject buildi g was 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 was 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 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 buildings'
rent regulation status.
The owner relies on Section 421-a(2)(f)(i) of the Real Property
Tax Law to support its assertion that the subject premises should
not be subject to regulation. The Commissioner is of the opinion
that this section does not apply in the instant case. The
original Section 421-a(2)(f) stated that when the tax benefits
expire the subject premises' rents ". . . shall be decontrolled
unless immediately prior to such expiration such rents would have
controlled by the provisions of any law other than pursuant to
this section. . ." Clearly, this section alerts the owner to the
applicability of Section 2520.11(p) of the Rent Stabilization
Code, which provided that the rents of the subject premises were
subject to regulation.
The amended Section 421-a(2)(f)(i), upon which the owner relies,
became effective July 3, 1984. This amendment states that it
applies "with respect to units subject to the provisions of this
section on the effective date of this subparagraph. . ." It is
uncontested that the subject premises' tax benefits expired on
November 13, 1983. Clearly, this amendment did not apply to the
subject premises because the tax benefits expired before the
effectuation date of the amendment.
DF 110410 RO
Finally, the Commissioner is of the opinion that treble damages
were correctly imposed. The owner alleges that the record
indicates no evidence of willfulness. The Commissioner notes that
Section 2526.1 of the Rent Stabilization Code requires the
Administrator to assess treble damages unless the owner proves a
lack of willfulness. The owner began to overcharge the tenant on
October 1, 1985. This overcharge was based, according to the
owner, on ignorance of the law. The overcharge was not, as
maintained by the owner, based on an interpretive view of a
clearly written regulation. Nor was the overcharge, as maintained
by the owner, based on a "hypertechnical" calculation error. Nor
was the overcharge, as maintained by the owner, based on other
Administrator's orders. These orders were issued subsequent to
the owner's initial overcharge. Clearly the owner cannot now
contend that it reasonably relied on these orders in an effort to
show a lack of willfulness. It is also noted that these other
orders were reopened and corrected by the Administrator months
after they were issued. Therefore, the Commissioner finds that
the owner failed to sustain its burden of proof in demonstrating a
lack of willfulness.
Accordingly, the Commissioner finds no basis for reversing or
modifying the Administrator's order.
THEREFORE, pursuant to the Rent Stabilization Law and Code, it is
ORDERED, that this petition be, and the same hereby is, denied,
and that the Administrator's order be, and the same hereby is,
affirmed; and it is
FURTHER ORDERED, that the owner Ciampa Bell Company shall
immediately refund to the tenant all amounts not yet refunded
representing overcharges, treble damages and excess security; and
it is
FURTHER ORDERED, that if the owner Ciampa Bell Company has not
refunded the stated amounts upon the expiration of the period for
seeking judicial review pursuant to Article 78 of the Civil
Practice Law and Rules the tenant may recover such amounts by
deducting them from the rent due to the owner. If the owner has
refunded no such amounts and the tenant has not made any such
deductions from his rent as an offset, then the tenant may file
and enforce a certified copy of this order as a judgment for the
amount of $11,949.21 against Ciampa Bell Company.
ISSUED:
JOSEPH A. D'AGOSTA
Deputy Commissioner
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