DJ610161RO
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.: DJ610108RO
5700-5800-5900 Arlington DRO DOCKET NO.: BJ610524R
Avenue Association
TENANT: Ilona Henderson
PETITIONER
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ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
IN PART
On June 5, 1989, the above-named owner filed a Petition for
Administrative Review against an order of a Rent Administrator issued on
May 12 and amended on May 23, 1989, concerning the housing
accommodations known as Apt. 20F at 5700 Arlington Avenue in the Bronx,
New York, wherein the Rent Administrator determined that the owner had
willfully overcharged the tenant.
The tenant had initiated this proceeding by filing a complaint of rental
overcharge alleging that the rent charged for her "cabana" had been
raised impermissibly.
The owner responded: that the "cabana" is "merely a table with an
umbrella and four (4) chairs"; that the three-building complex in which
the tenant lives has 1,308 tenants, but only 150 cabanas "available to
members of the pool on a first come first served basis"; that said pool
was "operated by a separate, independent contractor," which was also the
case with the prior owner; that the pool is available "only to tenants
of the premises at a seasonal rate to be a member of the pool"; that "a
separate charge for pool membership was always made by a pool operator,
of which there was no common ownership between the owner and the
operator"; and that, in view of foregoing, the seasonal rental of
cabanas is not subject to the Rent Stabilization Code.
In the ensuing order, here appealed, the Rent Administrator found that
the "seasonal rental" was $120.00 in 1986 and $190.00 in 1987, and
determined that the permissible increases between those years (under
order number 18 of the Rent Guidelines Board) was $7.20, leaving an
overcharge of $62.80 for the season, and that the overcharge had been
willful, so that it had to be trebled for payment to the tenant.
In this petition the owner now attacks the finding of overcharge and, in
the alternative, the finding of willfulness. The argument is: that the
number of cabanas has always been much too small for the number of
tenants in the subject complex, indicating that providing cabanas was
never a required service; that that service was not "primarily for the
use of tenants" but rather for "pool members" (other tenants being
ineligible therefor), and thus did not fit the Code's definition of a
required service; that the failure of all tenants to file a timely
protest to the absence of pool and cabanas from the list of services in
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the owner's initial registration, bars a current finding that those were
required services; that if the cabana rentals were indeed "stabilized,"
the owner must be granted a vacancy increase "upon the expiration of
[the] rental agreement every summer . . . on [each] cabana since the
same tenant does not rent it year after year"; regarding willfulness,
that the owner's firm belief that the cabanas were not required (as
evidenced by its failure "for a long period of time" to raise the rent
therefor) shows nonwillfulness, leaving no basis for imposing treble
damages; and that the owner is entitled to a major capital improvement
rent increase for work done in the pool area and to the cabanas.
The Commissioner is of the opinion that this petition should be granted
in part.
Section 2520.6(r) (3) of the Rent Stabilization Code provides as
follows:
Ancillary Services.
That space and those required services not contained within
the individual housing accommodation which the owner was
providing on the applicable base dates set forth below, and
any additional space and services provided thereafter by
applicable law. These may include, but are not limited to ,
garage facilities, laundry facilities, recreational
facilities, and security. Such ancillary services are subject
to the following provisions:
(i) No owner shall require a tenant or prospective tenant to
lease, rent or pay for an ancillary service, other than
security, as a condition of renting a housing accommodation.
(ii) Where an ancillary service is provided to a tenant
pursuant to a lease or rental agreement separate and apart
from the lease or rental agreement for the housing
accommodation occupied by the tenant, the tenant shall not be
required to renew such lease, or rental agreement, for the
ancillary service upon the expiration of such lease or rental
agreement.
(iii) Where an ancillary service is provided to a tenant
pursuant to a lease or rental agreement for a housing
accommodation, whether at a charge separate and apart from the
rental of the housing accommodation, or included in the legal
regulated rent, the tenant may be required to renew the rental
term for the ancillary service upon the renewal of the lease
for the housing accommodation. However, where the owner
requires a tenant to continue such ancillary service, the
owner may not unreasonably withhold consent to the tenant to
sublet for the term of each renewal lease, the space or other
facility constituting the ancillary service.
Further Section 2520.6(r)(4)(xi) of the Rent Stabilization Code provides
as follows:
A service as defined in paragraph (3) of this subdivision (r)
for which there is or was a separate charge, shall not be
subject to the provisions of this Code where no common
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ownership exists or existed on the applicable base date, or at
any time subsequent thereto, and such service is or was
provided on the applicable base date and at all times
thereafter by an independent contractor pursuant to a contract
or agreement with the owner. Where, however, on the
applicable base date or at any time subsequent thereto, there
is or was a separate charge, and there is or was common
ownership, directly or indirectly, between the operator of
such service and the owner, or the service was provided by the
owner, any increase, other than the charge provided in the
initial agreement with a tenant to lease, rent or pay for such
service, shall conform to the applicable rent guidelines rate.
However, notwithstanding such common ownership, where such
service was not provided primarily for the use of tenants in
the building or building complex on the applicable base date
or at any time subsequent thereto, such increases shall not be
subject to any guidelines limitations.
The Commissioner is of the opinion that provision of the cabanas is in
the nature of a recreational facility and thus a required ancillary
service pursuant to Section 2520.6(r) (3). Further the record shows
that on the applicable base date for the subject premises and for some
time subsequent thereto, the cabana service was provided by building
management and not by an independent contractor. In addition the record
shows that the cabana service is provided primarily for the use of
tenants in the subject premises. Therefore rent increases for the
cabana service must conform to the applicable rent guidelines rates
pursuant to Section 2520.6(r)(4)(xi).
Regarding the number of tenants versus the number of cabanas, it is not
a criterion of a required service that it be usable by all tenants; a
limited number of parking spaces, for example, can constitute such a
service.
"Primarily for the use of tenants" is to be interpreted as
distinguishing between tenants and outsiders, rather than between all
tenants and a group of them. As petitioner does not claim that pool
membership was open to nontenants, its argument regarding primary use of
the cabanas must fail.
As to the absence of the cabanas from the registered list of services
provided: under Section 2523.4 of the Rent Stabilization Code, an owner
must maintain all required services (as defined by Section 2520.6(r))
regardless of whether those services are registered. Therefore the
tenants were not bound by the 90-day limitation from the date of initial
registration to file a complaint regarding the cost of the cabana
service. Thus the Administrator did not err in making his own de novo
determination as to whether these cabanas are required and hence rent
stabilized.
With regard to the assertion that each cabana could have been considered
"vacant" after each summer and thus subject to an annual vacancy
increase, the Commissioner is of the opinion that guideline vacancy
increases are not applicable to the seasonal renting of ancillary
recreational facilities such as pools or cabanas.
With regard to the owner's contention that it is entitled to a major
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capital improvement rent increase for pool work and work done to the
cabanas, the owner must file an application with the DHCR and prove such
entitlement before collecting a rent increase for such alleged work.
There is merit, on the other hand, to petitioner's position regarding
treble damages. If an owner proves before the Administrator that the
overcharge was not willful, treble damages are not to be imposed. Here
there was a reasonable basis--that the cabanas were an ancillary service
to an ancillary service (the pool) -- for the owner to have believed
that the cabana rentals were not subject to stabilization despite the
fact that a prior owner treated the service as rent-stabilized.
Therefore the Commissioner will remove the treble-damages penalty and
will instead assess interest on the actual overcharge collected.
The Commissioner hereby determines that the owner collected overcharges
of $74.10. Upon expiration of the period for seeking review of this
order pursuant to Article 78 of the Civil Practice Law and Rules, not in
excess of 20 percent per month of the overcharge may be offset against
any rent thereafter due the owner, until that overcharge has been
recouped. The tenant may add to the overcharge, interest at the rate
payable on a judgment pursuant to section 5004 of the Civil Practice Law
and Rules, from the date of the Rent Administrator's order to the date
of the Commissioner's order.
If the owner has already complied with the Rent Administrator's order
and there are arrears due to the owner as a result of the instant
determination, the tenant shall be permitted to pay off the arrears in
24 equal monthly installments. Should the tenant vacate after the
issuance of this order or have already vacated, said arrears shall be
payable immediately.
The owner is directed to adjust subsequent rents for "cabanas" to an
amount no greater than that determined in this order plus any lawful
increases.
THEREFORE, in accordance with the Rent Stabilization Law and Code, it is
ORDERED, that this petition be, and the same hereby is, granted to the
extent set forth above, the Rent Administrator's order being hereby
modified to the same extent.
ISSUED:
JOSEPH A. D'AGOSTA
Deputy Commissioner
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