STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
------------------------------------X SJR No. 7002
IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO. DL410114RT
: DISTRICT RENT OFFICE
Stanley and Joanne Marder, DOCKET NO. 019242
OWNER: 24 Fifth Avenue
ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
BUT MODIFYING ADMINISTRATOR'S ORDER
On December 13, 1989, the above-named petitioner-tenants filed a
petition for administrative review of an order issued on November 8,
1989 by a Rent Administrator concerning the housing accommodations known
as 24 Fifth Avenue, New York, New York, Apartment No. 1703, wherein the
Administrator denied the petitioner-tenants' objection to the apartment
Subsequent thereto, the owner filed a petition in the Supreme Court
pursuant to Article 78 of the Civil Practice Law and Rules requesting
that the Court direct the Division of Housing and Community Renewal
(DHCR) to expeditiously issue a determination of the petitioners'
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 commenced by the filing of an objection to the
apartment registration form which had been served on the petitioner-
tenants on June 26, 1984. The petitioner-tenants had taken occupancy of
the subject apartment on November 1, 1982 pursuant to a "hotel apartment
lease" at a market rent of $3,000.00 per month. After service upon
petitioner-tenants of the apartment registration form, the petitioner-
tenants filed the objection to the rental amount listed on the form and
to apartment services listed on the form.
In the order issued on November 8, 1989, the Administrator determined
that the owner was entitled to a free market rent on November 1, 1982.
The Administrator dismissed the proceeding but stated that the dismissal
was without prejudice to the tenants' seeking remedies pursuant to Order
Number 30,402 of the New York City Conciliation and Appeals Board (CAB),
the agency formerly charged with enforcing the Rent Stabilization Law
and Code, if the tenants were so eligible.
CAB Order Number 30,402, issued March 1, 1984, found that as of July 15,
1982 the owner was not providing hotel services, that the subject
building should not be classified as a hotel and ordered its
reclassification as an apartment house. That order further stated that
the reclassification should result in a building wide rent-rollback to
the rent charged and paid on June 30, 1982. The Court of Appeals in
Matter of 24 Fifth Avenue Associates v. DHCR, 69 N.Y.2d 808 (1987),
modified the CAB's order by revoking the building-wide rent rollback.
Instead, rent adjustments were to be made for complaining tenants for a
reduction of services only.
In their petition for administrative review under Docket No. DL410114RT,
the petitioner-tenants claim, among other things, that the owner was not
entitled to charge a free market rent on November 1, 1982 because as of
July 15, 1982 the owner was not providing hotel services and the subject
building did not meet the definition of a hotel. The petitioner-tenants
assert that they have never contended that they should be part of or
subject to any determination by DHCR or the courts under CAB Order
Number 30,402 and cite a decision in an Article 78 proceeding involving
another complaint filed by the tenants (ART9815-L/L-3114880-R) which the
tenants state ordered DHCR to decide that overcharge complaint
"independently" of DHCR's determinations in any other cases. The
tenants contend that the owners "fraudulently" registered the building
as a hotel and as a result received many benefits. The tenants claim
that DHCR must consider this as a "unique or peculiar" circumstance in
keeping with Section 26-513 of the Rent Stabilization Law (Section 12 of
the Omnibus Housing Act) which has resulted in a monthly rental amount
not consistent with prevailing monthly rentals. Pursuant to that
section as well as other sections of the Rent Stabilization Law and Code
dealing with rent adjustments, the tenants claim that, since at the time
they took occupancy the building no longer met the definition of a
hotel, their initial lawful stabilization rent should have been reduced
to the amount in effect on June 30, 1982.
In its answer to the tenants' petition for administrative review, the
owner urges affirmation of the Administrator's decision. The owner
asserts, among other things, that upon taking occupancy of the subject
apartment, the tenants signed a "hotel apartment lease" which did
include some services and also noted that various other services were
available to the tenants at an additional cost. The owner asserts that
it properly charged the tenants a free market rent and that Section 12
of the Omnibus Housing Act, referring to "unique and peculiar"
circumstances, is not applicable here where the tenants entered into
free market leases. The owner states that the Court of Appeals
determined in Matter of 24 Fifth Avenue Associates that the subject
building was properly reclassified from a hotel to an apartment house
prospectively as of March 1, 1984 and therefore the rent set in the
tenants' initial lease entered into prior to the March 1, 1984
prospective reclassification was lawful. In addition to 24 Fifth Avenue
Associates, the owner cites the case of the Matter of Berkeley Kay Corp.
v. CAB, 68 N.Y.2d 851 (1986), involving common issues, to support its
position that is was entitled to a free market rent. The owner concedes
that the tenant may be entitled to a rent reduction based on diminished
services but asserts that that does not affect the lawfulness of the
free market rent charged the tenants when they took occupancy.
In their reply to the owner's answer to the petition for administrative
review, the tenants reassert their claim that they are entitled to an
independent evaluation of their complaint based on the "unique or
peculiar" circumstances in their case, and under the Commissioner's
discretionary powers to examine the equities involved in a particular
case to protect tenants against unreasonable rents. The tenants
reassert that the law as well as the equities entitle them to a
reconsideration of their initial rental. Finally, the tenants make a
vigorous point-by-point rebuttal of the arguments raised by the owner in
its answer to the petition for administrative review.
On April 22, 1993 the owner filed a supplemental pleading. The owner
notes that since the prior set of submissions by the parties was filed,
the DHCR issued a new administrative review order on May 24, 1991 under
Docket Number BH430373RO which was issued upon remit pursuant to the
Court of Appeals decision in 24 Fifth Avenue Associates. The owner
asserts that under any interpretation of that administrative review
order, the owner was entitled to a free market rent.
A series of additional supplemental pleadings followed in which the
parties reiterated their arguments and responded to the other parties'
After careful consideration, the Commissioner is of the opinion that the
tenants' petition should be denied but the Administrator's order should
Under the Old Hotel Code, a hotel was defined as:
Any Class A or Class B multiple dwelling containing six or
more dwelling units which on June 1, 1968 was commonly
regarded as a hotel, transient hotel or residential hotel,
which customarily provides or makes available hotel services
such as maid service, furnishing and laundering of linen,
telephone and bellboy service, secretarial or desk service and
use and upkeep of furniture and fixtures. (Emphasis Added)
Effective July 15, 1982, an amended Hotel Code was adopted and the words
"or makes available" were deleted. The amended definition is as
Any Class A or Class B Multiple dwelling containing six or
more dwelling units which on June 1, 1968 was and still is
commonly regarded as a hotel, transient hotel or residential
hotel, which customarily provides hotel services such as maid
service, furnishing and laundering of linen, telephone and
bellboy service, secretarial or desk service and use and
upkeep of furniture and fixtures.
Accordingly, actual services had to be provided rather than just be made
available in order for the building to qualify as a hotel.
On June 30, 1983, the state enacted the Omnibus Housing Act of 1983
(Chapter 403, Laws of 1983) which provided in Section 43 as follows:
YY51-3.1(b): Upon application by a tenant or owner, the
Conciliation and Appeals Board, and on or after April first,
nineteen hundred eighty-four, the Division of Housing and
Community Renewal, shall determine if such building ... is a
hotel covered by this law, based upon the services provided
and other relevant factors. If it is determined that such
building is not a hotel, it shall thereafter be subject to
this law pursuant to subdivision b of section YY51-3.0.
Under the authority of this Section, on March 1, 1984 the CAB under
Order Number 30,402 found that the subject building did not meet the
statutory definition of a hotel and reclassified the building as an
apartment house, effective as of March 1, 1984.
The Commissioner rejects the tenants' claim that the owner was acting
fraudulently and therefore "unique or peculiar" circumstances existed
which demand the Commissioner's exercise of discretion and an
independent determination based on the equities. Rather, the subject
building merely failed to meet the definition of a "hotel" under the
amended Hotel Code.
The prospective nature of the application of the apartment stabilization
provisions of the law is indicated by the Berkeley Kay decision where
the Court of Appeals stated that the Omnibus Housing Act "...cannot
affect the substantive rights of landlords that accrued prior to the
effective date by authorizing retroactive reclassification of the
premises or rollback of rents." Citing the Berkeley decision, the Court
of Appeals in the 24 Fifth Avenue case found that the CAB had exceeded
its authority in applying a building-wide rent rollback remedy and
expressly prescribed a permissible rent refund remedy pursuant to
Section 33(g) of the former Amended Hotel Code for complaining tenants
to reflect the value of hotel services not provided by the owner.
Upon remit pursuant to the Court of Appeals decision, the Commissioner
on May 24, 1991 issued an order under Docket Number BH430373RO wherein
it was held that for complaining tenants who moved into their apartments
on or after July 15, 1982 and before August 15, 1983 following a
voluntary vacancy, the rent upon which to base the rent reductions for
service decreases provided for in the rent reduction tables in that
order is the initial rent charged and paid by such complaining tenants.
That order further provided that any additional tenants who filed
complaints before May 1, 1987 regarding the failure to provide hotel
services would have the right to have their complaints similarly
Accordingly, the Administrator correctly determined that the owner was
entitled to charge the tenants a free market rent since the tenants took
occupancy on November 1, 1982 and, based thereon, properly dismissed the
tenants' objection to registration. However, the Commissioner finds
that the petitioner-tenants in this case are additional tenants who
filed complaints of failure to provide hotel services before May 1, 1987
and therefore the tenants are entitled to an adjustment of their rent in
accordance with the rent-reduction calculation tables in the order under
Docket No. BH430373RO. A copy of that order is attached hereto.
The Commissioner also notes that the Article 78 remit under Docket No.
ART09815L does not require the Commissioner to ignore precedent. In
that case, DHCR agreed that "... the tenant's allegations have raised
sufficient issues to warrant reconsideration of the issues present."
That case, involving the tenants' complaint under Docket Number
L3114880R, is currently open at the administrative review level.
THEREFORE, in accordance with the Rent Stabilization Law and Code, it is
ORDERED, that this petition for administrative review be, and the same
hereby is, denied, and the Administrator's order be, and the same hereby
is, modified in accordance with this order and opinion.
JOSEPH A. D'AGOSTA