EA 410350 RO; EA 410009 RT

                                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

      ------------------------------------X 
      IN THE MATTER OF THE ADMINISTRATIVE :  ADMINISTRATIVE REVIEW
      APPEAL OF                              DOCKET NOS. EA 410350 RO
                                                         EA 410009 RT

                                          :  DISTRICT RENT OFFICE
           Luan Wag Realty                   DOCKET NO. ZL 3116228 RT
                and                         
           Gerard and Mary Somoza,           TENANT: Gerard and Mary
                                                     Somoza                   
       

                               PETITIONERS: 
      ------------------------------------X                             

       ORDER AND OPINION DENYING OWNER'S PETITION FOR ADMINISTRATIVE REVIEW
             AND GRANTING TENANT'S PETITION FOR ADMINISTRATIVE REVIEW
                            AND MODIFYING DRA'S ORDER

      On January 3, 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 452 West 57th Street,    
      New York, Apartment No. 2E, 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 January 4, 1990, 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 a complaint of rent 







          EA 410350 RO; EA 410009 RT

      overcharge by the tenant who took occupancy of the subject apartment 
      March 1, 1984 at rental of $1016.50 per month.

      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 stated in substance that the tenant was the 
      second stabilized tenant in the subject apartment and was not entitled 
      to file a fair market rent application.  As comparables, the owner cited 
      April 1, 1984 rents for apartments in the "W" line but did not submit 
      proof of service of the Initial Legal Registered Rent Notice (hereafter 
      RR1) with respect to any of these apartments nor a copy of the DC-2 form 
      which was served on the first nor any subsequent stabilized tenant of 
      the subject apartment.  The owner further stated that the "W" line 
      apartments contained 6 rooms whereas the subject apartment in the "E" 
      line was 7 rooms but no "E" line apartments except the subject apartment 
      were rent stabilized.  The owner submitted the initial lease of the 
      first rent stabilized tenant commencing July 1, 1982 though June 30, 
      1984 at a rental of $950.00.

      In Order Number ZL 3116228 RT, the Rent Administrator adjusted the 
      initial legal regulated rent by establishing a fair market rent of 
      $433.58, effective July 1, 1988 and directing a refund of $13,272.25 to 
      the complainants for the period March 1, 1984 through February 28, 1986.  
      However, in the rent calculation chart, the initial legal regulated rent 
      was established at $433.58 effective July 1, 1982.

      In its petition, the owner contends in substance that the Rent 
      Administrator failed to consider its comparability submission which 
      requested that an average of the 1984 rents for the rent stabilized 
      apartments be used in the comparability study.  The owner resubmitted 
      the comparability submission originally submitted to the Rent 
      Administrator. 

      In answer to the owner's petition, the tenant stated in substance that 
      the owner never submitted proof of service of the DC-2 notice on any 
      tenants in the building and the tenant submitted an affidavit from the 
      prior tenant in the subject apartment disavowing receipt of the DC-2 
      notice.

      In their petition, the tenants state in substance that the Rent 
      Administrator incorrectly cited the effective date of the initial lease 
      as July 1, 1988, rather than the correct date of July 1, 1982.

      In response to the tenants' petition, the owner questioned the 
      timeliness of the tenants' petition and reiterated the contentions 
      stated in its own petition.

      The Commissioner is of the opinion that the owner's petition should be 
      denied, the tenants' petition granted and the Rent Administrator's order 
      modified.

      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 


          EA 410350 RO; EA 410009 RT

      the New York City Rent Guidelines Board and by the rents generally 
      prevailing in the same area for substantially similar housing 
      accommodations.  In order to determine rents generally prevailing in the 
      same area for substantially similiar 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 such data for complete lines of apartment 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 the owner's 
      comparability submission failed to meet the criteria for post-June 30, 
      1974 comparability in the following ways, any one of which would be a 
      sufficient reason for the Rent Administrator to disallow the submission:

      A)   The owner's citation of April 1, 1984 rents by the submission of 
           the RR1 forms for the "E" and "W" lines failed to disclose if these 
           rents were pursuant to leases commencing within one year of the 
           initial renting of the subject apartment.

      B)   No proof of service of either a DC-2 notice nor the RR1 forms was 
           submitted.  Neither was there proof that these RR1 forms were 
           properly filed with DHCR since no record of registration prior to 
           1987 for the subject building is found in the DHCR Registration 
           files.

      C)   By its own submission, the owner acknowledges that the "W" line 
           apartments are 6 rooms and therefore they are not comparable to the 
           subject apartment which contains 7 rooms.

      The Commissioner rejects the owner's request that an average of the 1984 
      rents be used because that method does not meet the criteria for post- 
      June 30, 1974 comparability and the owner has failed to prove that those 
      rents are final rents by the submission of proof of service of the RR1 
      forms on the tenants.

      The Commissioner, however, notes that the tenants' petition, which was 
      timely filed, correctly asserts that a typographical error in the 
      language of the order incorrectly stated July 1, 1988 rather than July 
      1, 1982 as the date of the initial lease and the effective date of the 
      establishment of the Initial Legal Regulated Rent.


      Accordingly, the Rent Administrator's order is hereby modified to 
      correct the typographical error on page 2 by changing the date to July 
      1, 1982.

      Because this determination concerns lawful rents only through February 







          EA 410350 RO; EA 410009 RT

      28, 1986, 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.

      The owner is further directed to reflect the findings and determinations 
      made in this order on all future registration statements, including 
      those for the current year if not already filed, citing this Order as 
      the basis for the change.  Registration statements already on file, 
      however, should not be amended to reflect the findings and 
      determinations made in this order.

      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 tenants' petition for 
      administrative review be and the same hereby is, granted and, that the 
      order of the Rent Administrator be, and the same hereby is, modified to 
      state the correct effective date of July 1, 1982.


      ISSUED:



                                                                    
                                      JOSEPH A. D'AGOSTA
                                      Acting Deputy Commissioner


    

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