EB 410118-RT; EB 410275-RO

                                  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
          APPEALS OF                              ADMINISTRATIVE REVIEW
                                                  DOCKET NOS.: EB 410118-RT/
                                                               EB 410275-RO

                JAYCO REALTY COMPANY              DRO DOCKET NOS.: CJ 410006-RP/
                        AND                                        L 3110833- RT
                    EDITH BLOOM,                                      
                     
                                                   
                                PETITIONERS
          ----------------------------------X


                             ORDER AND OPINION DENYING OWNER'S
                                             AND
                         TENANT'S  PETITIONS FOR ADMINISTRATIVE REVIEW


          On February 15, 1990, the above named  petitioner-owner  filed  a
          Petition for Administrative Review against  an  order  issued  on
          January 12, 1990 by a Rent Administrator, 10 Columbus Circle, New 
          York,  New  York  concerning  housing  accommodations  known   as
          Apartment 6 at 78 Bank Street, New York,  New  York  wherein  the
          District Rent  Administrator  determined  the  fair  market  rent
          pursuant to the special fair market rent  guidelines  promulgated
          by  the  New  York  City  Rent  Guidelines  Board  for   use   in
          calculating fair market rent appeals.

          On February 16, 1990, the above-mentioned petitioner-tenant filed 
          a petition of the same order.

          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
          provision  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 Commissioner has reviewed all of the evidence in  the  record
          and has carefully considered that portion of the record  relevant
          to the issues raised by the administrative appeals.

          This proceeding was originally commenced in March,  1984  by  the
          filing of the tenant's application challenging the initial  legal






          EB 410118-RT; EB 410275-RO
          regulated rent.  The tenant had assumed occupancy  as  the  first
          stabilized tenant on April 1, 1982, pursuant to a one year  lease
          at a rent of $650.00 per month.

          An initial order issued by the Rent Administrator on February 20, 
          1987  was  appealed   by   both   of   the   above   petitioners.
          Additionally, the  petitioner-tenant  filed  a  petition  in  the
          Supreme Court pursuant to Article 78 of the  Civil  Practice  Law
          and Rules requesting judgment amending the  Rent  Administrator's
          order.

          On September 30, 1988,  the  Commissioner  issued  an  order  and
          opinion remanding the proceeding to the  Rent  Administrator  for
          further consideration.

          Subsequently thereto, the Commissioner issued an order on October 
          26, 1988 revoking the order and opinion of  September  30,  1988,
          but which did not disturb the order for a redetermination of this 
          proceeding.

          On January 12, 1990, the Rent Administrator issued an order  upon
          remand wherein it was determined that the initial legal regulated 
          rent was $424.37 effective April 1, 1982, the  commencement  date
          of the initial rent stabilized lease.  As a result the owner  was
          directed to refund a total  of  $24,385.75  in  excess  rent  and
          security to the tenant for the period from April 1, 1982  through
          January 31, 1990, and to adjust the legal rent in accordance with 
          its calculations.

          In  this  petition  the   owner   contends   firstly   that   the
          Administrator failed to grant  an  increase  for  the  additional
          labor costs for work performed by its own employers in connection 
          with the improvements in the subject apartment and, secondly that 
          the Administrator failed  to  give  consideration  to  comparable
          rents.

          In response, the tenant states  that  many  of  the  improvements
          claimed by the owner were not completed or were  performed  in  a
          shoddy manner.  Furthermore,  the tenant contends  that,  instead
          of being to the owner's advantage, the use  of  comparable  rents
          would show that the tenant's rent was substantially  higher  than
          the other stabilized apartments in  the  building  and  that  the
          owner, who  was  in  fact  a  lawyer,  knew  this  and  willfully
          overcharged the tenant.

          The tenant's petition reaffirms the  contention  that  the  owner
          willfully overcharged the tenant and that, therefore, the  tenant
          should  receive  treble  damages.    Additionally,   the   tenant
          questions the 1980 Maximum Base Rent (MBR) cited  in  the  order,
          since  other units in the building have significantly lower MBR's 
          and the last known tenant prior to the complainant was  paying  a
          very low rent.  The tenant further questions the accuracy of  the
          costs of the "alleged new equipment",  noting  that  only  checks
          were submitted, without the required bills, and that some of them 
          post-dated the tenant's occupancy.  The  tenant  also  challenges
          the room count of  the  apartment  -  because  the  bedrooms  are
          "significantly undersized" -  and  protests  the  Administrator's
          failure to consider the serious lack of apartme t  and  building-
          wide services.  Finally,  the  tenant  contends  that  the  order






          EB 410118-RT; EB 410275-RO
          should have included interest due on the excess rent.

          The owner responds that, since the proceeding is  a  fair  market
          rent  appeal,  the  penalties  applicable  to  overcharges  under
          Section 2526.1(g) of the Rent Stabilization Code  do  not  apply.
          The owner further disputes the tenant's  challenge  to  the  MBR,
          stating that it was established  pursuant  to  the  rent  control
          regulations.  With respect to the renovations, the owner contends 
          that it refused to take rent for the  apartment  or  to  let  the
          tenant move in until renovations were completed  in  June,  1982.
          The owner also states that, to its knowledge, all  services  have
          been provided.  The owner acknowledged that the number  of  rooms
          listed on the registration was changed from  five  to  four,  but
          that this was not an  issue  in  the  proceeding.   Finally,  the
          owner contends that no rent has been accepted for  the  apartment
          since April, 1987 and that the tenant is currently in arrears.

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

          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 to determine rents generally prevailing in the same area 
          for substantially  similar  housing  accommodations,  it  is  the
          Division of Housing and Community  Renewal's  (DHCR's)  procedure
          for fair market rent appeal cases filed prior to April 1, 1984 to 
          allow owners to submit June 30, 1974 free 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 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 an initial legal regulated rent notice  (DC-2
          Notice) or apartment registration form indicating that  the  rent
          is not subject to challenge.

          The record in this case establishes  that  the  owner  had  never
          submitted adequate data of comparable rents although notified  of
          the opportunity, and instructed on the requirements for its  use.
          The only submissions were typewritten lists, dated September  19,
          1986 and September 24, 1986, respectively,  which  mostly  stated
          rents in other buildings in the area.  There was no documentation 
          tending to verify the list of rents or to show that the buildings 
          were acceptable as housing similar to the subject building.   The
          rents of only two other apartments in the subject  building  were
          listed and neither was verified by documentation.   For  the  two
          rent stabilized apartments in the subject line, the owner  failed






          EB 410118-RT; EB 410275-RO
          to provide a  rental  history  from  the  date  those  apartments
          became stabilized and failed to provide proof of service of a DC 
          2  notice  or  apartment  registration  form.   Accordingly,  the
          Administrator's rejection of the comparable rents data  submitted
          by the owner was proper.

          The  record  further   establishes   that   the   Administrator's
          determination of the fair market rent by using the  special  fair
          market  rent  guidelines  was   in   accordance   with   standard
          procedures.

          The petitioner-tenant's contention that  the  MBR  was  excessive
          because the last rent paid by the rent controlled tenant was much 
          less is not correct, since the amount of rent actually  paid  has
          no relevance in the  calculations  formula  pursuant  to  Special
          Guidelines Order Number 13 which is based  on  the  Maximum  Base
          Rent rather than the Maximum Collectible  rent  actually  charged
          the tenant.

          With respect to the issue of the  owner's  labor  costs  for  the
          apartment renovations, the record fails to specify or document  a
          certain sum that was spent for these  alleged  labor  costs,  and
          gives no details on which to base an evaluation.    Without  such
          proof, the Administrator properly ignored  this  portion  of  the
          claim.  It should be noted as well  that  the  Administrator  did
          grant an equitable one-half sum of the cost where  the  cancelled
          checks referred to  another  apartment  along  with  the  subject
          premises with no indication of how the costs were apportioned.

          However, the tenant's challenge to the amount of the  costs  that
          were approved by the Administrator is  without  foundation.   The
          petition contends  that  cancelled  checks  are  insufficient  to
          document costs without billing statements, a  position  that  has
          never been adopted by the DHCR.  Moreover, Policy Stateme t  (90-
          10), issued on  June  26,  1990,  specifically  cites  "cancelled
          checks that are contemporaneous with the completion of the  work"
          as one of the criteria that  are  sufficient,  by  themselves  to
          confirm the cost of the improvement.  This  Policy  Statement  is
          offered as sufficient to promulgate the DHCR's official  position
          on this issue, even though it  appeared  four  months  after  the
          issuance of the subject order.  Consequently, the fact  that  the
          cancelled checks corresponded in  each  detail  with  the  dates,
          items and amounts claimed by the owner  is  sufficient  to  prove
          those costs.  Furthermore, as stated above, the checks that  also
          covered the costs of a second apartment's improvement costs  were
          sufficiently detailed to  permit  the  one-half  value  that  was
          allowed by the Administrator in equity.  The tenant's  effort  to
          void certain allowances when the  checks  were  dated  after  she
          moved into the apartment is without merit,  since  the  work  was
          performed before she took occupancy.

          The tenant's claim for treble damages and/or interest is  denied.
          The Rent Stabilization Law does not provide for treble damages or 
          interest on the excess rent determined  in  a  fair  market  rent
          appeal.

          Insofar as the number of rooms in the apartment has had no effect 
          on the lawful rent - since no MCI grants  were  approved  -   the
          issue will not be reviewed.  The tenant is advised that  she  may






          EB 410118-RT; EB 410275-RO
          file an objection to the room count.

          Although there has been a service reduction  order  reducing  the
          rent for the subject tenant, it became  effective  subsequent  to
          the period under review in this proceeding and therefore will not 
          affect the amount of excess rent ordered herein.







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

          ORDERED, that the owner's petition be, and the  same  hereby  is,
          denied, that the tenant's petition be and  the  same  hereby  is,
          denied and that the Administrator's order be, and the same hereby 
          is affirmed. 





          ISSUED:

                                                  ------------------------
                                                  JOSEPH A. D'AGOSTA
                                                  Acting Deputy Commissioner
           
             
    

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