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

      APPEALS OF                             DOCKET NO.:EA 410073-RO
                                          :             DL 410152-RT
        BLUE APPLE ASSOCIATES                                    
                                             TENANTS: Brenda Morris Reihl


      On January 4, 1990, the above-named petitioner-owner filed a Petition for 
      Administrative Review against an order issued on November 30, 1989 by the 
      Rent Administrator, 92-31 Union Hall Street, Jamaica, New York, concerning 
      the housing accommodations known as 43 East 60th Street, New York, New 
      York, Apartment No. 42B 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 appeals.

      On December 18, 1989 the above-named petitioner-tenant filed a petition for 
      Administrative Review against the aforementioned order.  These petitions 
      are being consolidated for disposition herein.

      The Commissioner notes that this proceeding was filed 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 Appeals are being determined pursuant to the provisions 
      of Section 26-513 of the Rent Stabilization Law.                           
      The issue herein is whether the Rent Administrator's order was warranted.

      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 appeals.

      This proceeding was originally commenced in March 1984 by the filing of a 
      fair market rent adjustment application and complaint of rent overcharge by 
      the tenant who took occupancy of the subject apartment on September 1, 1979 
      at a rental of $575.00 per month.

      The owners were served with a copy of the tenant's application and afforded 
      an opportunity to submit June 30, 1974 or post June 30, 1974 comparability 


          DOCKET NUMBER: EA 410073-RO; DL 410152-RT
      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 net leasee/owner stated in substance that the tenant was 
      the initial stabilized tenant and submitted leases from September 1, 1979 
      through August 31, 1989; a schedule of rent controlled rents on June 30, 
      1974 for apartments B41, B51, B61 and B52 and claimed an increase for a 
      refrigerator installed in October 1984 at a cost of $368.05 but did not 
      submit documentation.

      In Order Number ZL 3114525-RT, the Rent Administrator adjusted the initial 
      legal regulated rent by establishing a fair market rent of $102.85 
      utilizing only the special guideline.

      In its petition, the owner/net leasee contends in substance that the Rent 
      Administrator's order should be modified to apportion the refund between 
      the prior owner (Edward Castle Assoc.) and the petitioner who alleged that 
      it became the net leasee for the subject premises beginning May 1985; and 
      to consider new equipment and extensive renovations to the subject building 
      and apartment which costs were included by the prior owner in establishing 
      the initial rent for the subject apartment in September 1979 and for which 
      the prior owner only recently forwarded the documentation.  The owner/net 
      leasee submitted bills dated between 1978-79 for 11 apartments and common 
      public areas involving plumbing; electrical; carpentry and masonry work 
      plus new appliances; bathroom fixtures of tiling, kitchen cabinets etc. at 
      an approximate cost excess in of $85,000 to be pro-rated for the subject 

      In answer to the owner's petition, the tenant stated in substance that 
      apportionment was not warranted because a review of the bills submitted by 
      the owner in its petition indicates that "principals with authority with 
      the prior owner"... are still active principals.  Further, the owner's 
      submission should also be rejected because it was not submitted to the Rent 
      Administrator prior to the issuance of the order and its explanation for 
      failing to do so is suspect.  Moreover, the bills do not represent new 
      improvements but necessary maintenance and repair.

      The tenant in her petition contends that the Rent Administrator failed to 
      impose treble damages on the overcharge from April 1, 1984 and interest on 
      the overcharge from September 1, 1979 through March 31, 1984; failed to 
      award attorney fees to the tenant; failed to update the refund through 
      November 30, 1989 and failed to reflect an additional $75.00 in excess 
      security due to the lease renewal commencing September 1, 1989.

      In response to the tenant's petition, the owner contends in substance that 
      no treble damages are due because there was no willfulness involved.  The 
      owner also reiterated the arguments stated in its own petition.

      The Commissioner is of the opinion that the owner's petition should be 
      denied and the tenant's petition granted in part.

      Section 26-513 of the Rent Stabilization Law provides, in pertinent part, 
      that fair market rent adjustment applications are to be determined by the 
      use of special fair market rent guidelines orders promulgated by the New 
      York City Rent Guidelines Board and by the rents generally prevailing in 
      the same area for substantially similar housing accommodations.  In order 

          DOCKET NUMBER: EA 410073-RO; DL 410152-RT
      to determine rents generally prevailing in the same area for substantially 
      similar housing accommodations, it is DHCR's procedure for fair market rent 
      appeal cases filed prior to April 1, 1984 to allow owners to submit June 
      30, 1974 fair market rental data for complete lines of apartments, 
      beginning with the subject line.  The average of such comparable rentals 
      will then be updated by annual guidelines increases.  Alternatively, DHCR 
      procedure allows owners to have comparability determined on the basis of 
      rents charged after June 30, 1974.  In order to use this method, owners 
      were required prior to November 1, 1984 to submit rental history data for 
      all stabilized apartments in the subject premises and subsequent to 
      November 1, 1984 to submit data for complete lines of apartments beginning 
      with the subject line.  Post June 30, 1974 rent data will be utilized if 
      the comparable apartment was rented to a first stabilized tenant within one 
      year of the renting of the subject apartment and if the owner submits proof 
      of service of a DC-2 Notice or apartment registration form indicating that 
      the rent is not subject to challenge.

      An examination of the record in this case discloses that in the proceeding 
      before the Rent Administrator, the owner did not raise the issue of 
      renovations or indicate any attempts to secure documentation from the prior 
      owner although afforded an opportunity to do so and has not submitted a 
      reasonable excuse for its failure to do so.  Since this is not a de novo 
      proceeding, the owner's contention that it be allowed increases to the 
      initial rent for renovations in 1978-79 cannot be considered for the first 
      time on appeal.  Accordingly, the Rent Administrator's order was warranted 
      in excluding any  increase based on the 1978-79 bills in establishing the 
      fair market rent. In addition, the owner's comparability submission of the 
      June 30, 1974 rents did not meet the criteria for comparability cited above 
      and was correctly excluded.  The subsequent increase for a refrigerator 
      installed in October 1984 was correctly rejected by the Rent Administrator 
      because the owner failed to submit both documentation and the consent of 
      the tenant in occupancy.

      The current "owner" who stated that it became the "net leasee" for the 
      subject premises in May 1985 failed to submit proof of transfer of title 
      either below or upon appeal.

      Therefore, apportionment of the refund was not warranted.

      Section 2526.1(f) of the Rent Stabilization Codes specifically excludes 
      Fair Market Rent Appeals from the provisions of Section 2526.1 which 
      provide for the assessment of damages (either treble damages or interest).

      Accordingly, the Commissioner rejects that portion of the Tenant's Petition 
      requesting the assessment of treble damages on the portion of the refund 
      collected after April 1, 1984 and the imposition of interest on the portion 
      of the refund collected from September 1, 1979 through March 31, 1984.

      With regard to the tenant's contention that she should have been awarded 
      attorney's fees, it is noted that pursuant to Section 2526.1(d) of the Rent 
      Stabilization Code, the assessment of attorney's fees is discretionary.  
      Under the circumstances of this case including the arguments raised by the 
      parties in support of their contentions, the Commissioner deems it 
      inappropriate to award attorney's fees.  Further, the tenant did not raise 
      the issue of attorney's fees in the proceeding before the Rent 
      Administrator nor is there evidence that the tenant was represented by an 


          DOCKET NUMBER: EA 410073-RO; DL 410152-RT
      attorney either below or on appeal so that this matter cannot properly be 
      considered for the first time on administrative appeal.

      With regard to the tenant's  contention to update the refund through the 
      date of the Rent Administrator's order, an examination of the record in 
      this case discloses that the tenant was not afforded an opportunity to 
      provide an updated rental history immediately prior to the issuance of the 
      Rent Administrator's order.

      Accordingly, the Commissioner has updated the lawful stabilization rents 
      and computed the refund including additional excess security, through 
      November 30, 1989, the last day of the month in which the Rent 
      Administrator's order was issued, as set forth on the amended Rent 
      Calculation Chart attached hereto and made a part hereof.

      Because this determination concerns lawful rents only through November 30, 
      1989, the owner is cautioned to adjust subsequent rents to an amount no 
      greater than that determined by the Rent Administrator's order plus any 
      lawful increases, and to register any adjusted rents with this order and 
      opinion being given as the explanation for the adjustment.

      If the owner does not take appropriate action to comply with this order 
      within sixty days from the date of issuance of this order, the tenant may 
      credit the excess rent against the next month(s) rent until fully offset.

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

      ORDERED, that the owner's petition for administrative review be, and the 
      same hereby is, denied, and that the tenant's petition for administrative 
      review be, and the same hereby is, granted in part, and, that the order of 
      the Rent Administrator be, and the same hereby is, modified in accordance 
      with this order and opinion.  The lawful stabilization rents and the amount 
      of refund are established on the attached chart which is fully made a part 
      of this order.  The amount of the refund through November 30, 1989 is 


                                           JOSEPH A. D'AGOSTA
                                       Acting Deputy Commissioner


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