DH 210437 RO

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

           APPEAL OF                              DOCKET NO.: DH 210437 RO

                       JACOB WINTER,              DRO DOCKET NO.: ZK 3102972 RT

                                                  TENANT: GERALD DIXON 


           On August 30, 1989, the above-named petitioner-owner filed a 
           Petition for Administrative Review against an order issued on July 
           27, 1989 by the Rent Administrator, 92-31 Union Hall Street, 
           Jamaica New York, concerning the housing accommodations known as   
           938 Eastern Parkway, Brooklyn, New York, Apartment No. A3 wherein 
           the Rent Administrator determined the fair market rent pursuant to 
           the special fair market rent guideline promulgated by the New York 
           City Rent Guidelines Board for use in calculating fair market rent 

           The Commissioner notes that this proceeding was initiated prior to 
           April 1, 1984.  Sections 2526.1(a)(4) and 2521.1(d) of the Rent 
           Stabilization Code (effective May 1, 1987) governing rent 
           overcharge and fair market rent proceedings provide that 
           determination of these matters be based upon the law or code 
           provisions in effect on March 31, 1984.  Therefore, unless 
           otherwise indicated, reference to Sections of the Rent 
           Stabilization Code (Code) contained herein are to the Code in 
           effect on April 30, 1987.

           The Administrative Appeal is being determined pursuant to the 
           provisions of Section 26-513 of the Rent Stabilization Law and 
           Section 66 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 appeal.  

           This proceeding was originally commenced in March 1984 by the 
           filing of a fair market rent application and a complaint of rent 
           overcharge by the tenant who took occupancy of the subject 
           apartment on December 1, 1982 at a rental of $425.00 per month 
           which included $50.00 for use of the basement per the lease rider.  
           In March 1983, the rent collected was reduced to $375.00.

          DH 210437 RO

           The owner was served with a copy of the tenant's application and 
           afforded an opportunity to submit June 30, 1974 or post June 30, 
           1974 comparability data for determining the fair market rent of the 
           subject apartment and to submit proof of any improvements made in 
           the subject apartment.

           In response, the owner claimed that the apartment no longer existed 
           in its original state because renovations had converted it into a 
           /duplex by the installation of a set of interior stairs leading to 
           the basement from the subject apartment; the installation of fire - 
           proof doors and new interior walls in the basement converting it 
           into a library room, study and recreation room; the rearrangement 
           of the space within the apartment and installation of new 
           subfloors, tiles, plumbing fixtures and appliances. This work was 
           performed by the tenant and materials were supplied by the owner 
           per the rider to the tenant's vacancy lease.  The owner submitted 
           with its response copies of floor plans for the subject apartment 
           before and after renovations, bills and cancelled checks, copies of 
           the tenant's leases from December 1, 1982 through November 30, 1985 
           and a copy of the Landlord's Report of Statutory Decontrol (Form R- 
           42-Docket 2DR 158809) indicating that the apartment was 
           decontrolled February 1, 1974 and first rented July 20, 1974.

           In Order Number ZK 3102972 RT, the Rent Administrator adjusted the 
           initial legal regulated rent by establishing a fair market rent of 
           $220.32 effective December 1, 1982 (excluding increases for 
           renovations on the basis that the owner had failed to secure the 
           tenant's consent prior to the renovations).

           In this petition, the owner contends in substance that it was 
           entitled to a first rent not subject to challenge based on the 
           total renovation of the apartment from a single apartment to a 
           modern duplex and in the alternative that the Rent Administrator 
           failed to grant increases for renovations pursuant to Section 
           20(C)(1) for which the owner had submitted complete documentation 
           to the Rent Administrator.  With its petition, the owner 
           resubmitted its previous submissions to the Rent Administrator 
           dated October 9, 1985 and July 14, 1989, which included floor 
           plans, bills, cancelled checks, leases from December 1, 1982 though 
           November 30, 1985 and a copy of the R-42 Report of Statutory 

           Mail addressed to the tenant at the subject address dated May 30, 
           1989 and December 27, 1989 were returned by the United States 
           Postal Service (USPS) as "Unforwardable".

           The Commissioner is of the opinion that this petition should be 

           An examination of the record in this case discloses that the owner 
           is correct in its contention that a submission dated July 14, 1989 
           was timely received by the Division of Housing and Community 
           Renewal (DHCR) prior to the issuance of the order but did not reach 
           the docket case file until after the issuance of the order and 
           therefore was not considered by the Rent Administrator in his 

          DH 210437 RO

           Pursuant to Section 66 of the former Rent Stabilization Code, an 
           owner was entitled to charge an initial free market rent not 
           subject to a fair market rent appeal if the apartment was 
           substantially altered so as to create a new dwelling unit.  DHCR 
           policy, and numerous precedents state that in order to qualify for 
           a first stabilization rent, the owner must change the dimensions of 
           the apartment.

           In the instant case, a review of the floor plans both before and 
           after renovations, bills, cancelled checks and the lease rider to 
           the vacancy lease commencing December 1, 1982 which was notarized 
           and signed by both the tenant and owner attesting to the conversion 
           of the apartment to include the basement area accessible by 
           interior stairs enclosed within the unit and the partitioning and 
           enclosing of the basement area as part of the unit, reveal that the 
           housing accommodation was substantially altered and the dimensions 
           increased to form a new duplex unit containing 7 rooms (4 upper 
           level - 3 lower level) from  a uni-level 4 - room apartment.

           The Commissioner, therefore, finds that the owner has proven that 
           it was entitled to charge a "first rent" of $425.00, not subject to 
           a fair market rent challenge.

           The Commissioner notes for the record, however, that although the  
           bills and cancelled checks submitted indicate that the scope of the 
           conversion to a duplex unit occurred from December 1982 through 
           April 1985 (with the majority of the renovations in early 1983), it 
           is clear from the evidence that the apartment was rented in 
           December 1982 with the intention of transforming it with the 
           tenant's aid and consent into the present duplex unit.  Moreover, 
           the tenant had indicated that a lower preferential rent of $375.00 
           was paid during the renovations from approximately March 1983.  
           Further an examination of the rental history during occupancy by 
           the tenant herein discloses that the owner took only appropriate 
           guideline increases.

           Accordingly, there was no rent overcharge.

           Evidence in the case file and registrations on file with DHCR 
           disclose that the tenant vacated the subject apartment prior to the 
           issuance of the Rent Administrator's order in July 1989 and that no 
           subsequent tenants in the apartment were registered with DHCR since 

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

           ORDERED, that this petition for administrative review be, and the 
           same hereby is, granted, that the order of the Rent Administrator 
           be, and the same hereby is, revoked, and it is found that no rent 
           overcharge occurred and that the tenant was not eligible to file a 
           fair market rent adjustment application.  A copy of this order is 
           being served on the current occupant of the subject apartment.

          DH 210437 RO


                                           JOSEPH A. D'AGOSTA
                                           Deputy Commissioner

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