EB410179RO

                                  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  SJR NO. 6860 
          IN THE MATTER OF THE ADMINISTRATIVE :  ADMINISTRATIVE REVIEW
          APPEAL OF                              DOCKET NO. EB410179RO
                                              :  DRO DOCKET NO. TA012177
               1587 1ST AVENUE REALTY CORP.      TENANT: MYER & ACKERMAN      
                        

                                PETITIONER    : 
          ------------------------------------X                             
             ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW


               On February 13, 1990, the above-named petitioner-owner filed a 
          Petition for Administrative Review against an order issued on 
          January 12, 1990, by the Rent Administrator, 92-31 Union Hall 
          Street, Jamaica, New York,  concerning the housing accommodations 
          known as 1587 1st Avenue, New York, New York,  Apartment No. 2S     
          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.
               
               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 Appeal is being determined pursuant to the 
          provisions of Section 26-513 of the Rent Stabilization Law and 
          Section 25 A of the Rent Stabilization Code.

               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 appeal.  

               This proceeding was originally commenced by the filing in 
          February 1981 of a rent overcharge complaint by the tenants.  In 
          such complaint, the tenants stated in substance that they first 
          moved to the subject apartment on May 10, 1980; that the prior 
          tenant died and that the owner had sublet the subject apartment to 
          them and that some renovation work had been done in the subject 
          apartment.










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               In a response to the tenants' complaint dated April 15, 1981, 
          the owner stated in substance that prior to occupancy by the tenants 
          herein, the subject apartment had been occupied by a rent controlled 
          tenant until such tenant's death in September, 1979, that the 
          subject apartment was then renovated at a cost of about $25,000 to 
          $30,000 while it was vacant; that the subject apartment was then 
          rented to Karl Geiger for three years commencing December, 1979; 
          that Mr. Geiger then sublet the subject apartment to the tenants 
          herein effective May 1980; and that the tenants herein were not 
          overcharged.

               On March 6, 1984, both tenants and owner were advised that the 
          tenants' complaint was being re-docketed as a Tenant's Fair Market 
          Rent Appeal.  During the course of the proceeding, it was 
          established that the tenants vacated the subject apartment on July 
          31, 1981 upon the owner's claim that it wished to occupy the subject 
          apartment.

               In August 1989, the owner was afforded an opportunity to submit 
          comparability data and substantiate any improvements made to the 
          subject apartment.  In a response dated September 7, 1989, the 
          owner's managing agent stated in substance that Karl Geiger was the 
          president of the owner corporation - 1587 First Avenue Realty Corp.; 
          that Mr. Geiger occupied the subject apartment upon the death of the 
          rent controlled tenant and completely renovated the subject 
          apartment at a cost of approximately $30,000; and that Mr. Geiger 
          then sublet the subject apartment to the tenants herein who should 
          not be considered rent stabilized tenants so that there was no need 
          to submit further documentation.  The managing agent also submitted 
          a statement from "Geiger Roofing Company, Inc." (owned by Karl 
          Geiger and located at the subject premises) dated September 4, 1979 
          listing work done at the subject apartment and stating that the 
          total cost was $29,750.00.

               On November 21, 1989, the DHCR sent the owner a notice 
          directing it to submit documentation to substantialte the 
          improvements made in the subject apartment such as paid bills, 
          cancelled checks (front and back), certificate of occupancy.  No 
          further proof was submitted on behalf of the owner.

               In Order Number TA012177, the Rent Administrator adjusted the 
          initial legal regulated rent by establishing a fair market rent of 
          $260.33 effective May 10, 1980 and directed the owner to refund to 
          the tenants $7,834.72 in excess rent covering the period from May 
          10, 1980 to July 31, 1981.

               In this petition, the owner contends in substance that the 
          tenants' rent overcharge complaint should have been dismissed and 
          not converted to a fair market rent appeal; that Karl Geiger should 
          be considered the first rent stabilized tenant;  and that the owner 






          EB410179RO

          should have been given a rent increase due to the extensive 
          improvements made in the subject apartment and that even the tenants
          concede that the subject apartment was renovated prior to their 
          occupancy.  Subsequently on March 12, 1990, the owner submitted a 
          supplement to its PAR wherein it included a cancelled check as 
          substantiation of improvements made to the subject apartment. 

               The Commissioner is of the opinion that this petition should be 
          denied.

               The owner's claim that the DHCR had no right to convert this 
          proceeding to a fair market rent appeal is without merit.  Although 
          the tenant used the complaint form normally used for an overcharge, 
          it is apparent from the tenant's complaint and the owner's initial 
          response thereto that the tenant herein was the first rent 
          stabilized tenant and wished to challenge the initial legal 
          regulated rent.  The Commissioner finds that the tenant's fair 
          market rent appeal is not materially defective because of the 
          tenant's failure to allege that the rent exceeded the fair market 
          rent for the subject apartment.  Such allegation is implicit in the 
          complaint questioning the rent.  Further the owner was notified as 
          early as 1984 of the decision to process as a fair market rent 
          appeal and afforded due process and a chance to fully participate in 
          the determination of the fair market rent.  It is noted that the 
          alleged brief occupancy of the subject apartment by Karl Geiger
          (president of the owner corporation) does not preclude the tenants 
          herein from filing a fair market rent appeal since Mr. Geiger cannot 
          be considered a rent stabilized tenant and cannot evade the Rent 
          Stabilization Law and Code by having the tenants sign a sublease 
          rather than a lease for the subject apartment.

               Finally, the Commissioner will not accept the copy of a 
          cancelled check submitted during the appeal proceeding to validate 
          alleged vacancy improvements since this is not a de novo proceeding 
          and the owner was given ample opportunity to submit the required 
          documentation of improvements in the proceeding before the Rent 
          Administrator but failed to do so.  It is noted that the submission 
          of a statement from the owner's roofing company in the proceeding 
          before the Rent Administrator was not sufficient proof since the 
          renovation work was done by the owner's company and closer scrutiny 
          of costs is required in such cases.  Moreover, the owner was advised 
          after such submission of the necessity to submit copies of cancelled 
          checks or paid bills.  Further, the tenants' statement that 
          renovation work was done does not excuse the owner from its 
          obligation to timely document the cost of said renovation work.
          Accordingly, the Rent Administrator's order was warranted.

               The owner is 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.  The 
          owner is further directed to adjust subsequent rents to an amount no







          EB410179RO

          greater than that determined by this order plus any lawful 
          increases.

               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 herein may seek to enforce this order by filing an 
          appropriate action in a court of competent jurisdiction.

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

               ORDERED, that this petition for administrative review be, and 
          the same hereby is, denied, and, that the order of the Rent 
          Administrator be, and the same hereby is, affirmed.

          ISSUED



                                                                        
                                          JOSEPH A. D'AGOSTA
                                          Deputy Commissioner






                     































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