DHCR Decisions
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
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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
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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
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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
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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
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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
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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:
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JOSEPH A. D'AGOSTA
Acting Deputy Commissioner
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