STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEALS OF DOCKET NO.:EA 410073-RO
: DL 410152-RT
BLUE APPLE ASSOCIATES
MARK GREENBERG REALTY AND RENT ADMINISTRATOR'S
BRENDA MORRIS REIHL PETITIONERS : DOCKET NO.: ZL 3114525-RT
TENANTS: Brenda Morris Reihl
ORDER AND OPINION DENYING OWNER'S PETITION FOR ADMINISTRATIVE REVIEW
AND GRANTING TENANT'S PETITION FOR ADMINISTRATIVE REVIEW IN PART
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
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