Docket No. EC430230RO
                                    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. EC430230RO
                                                        and   GB430170RO

                                                  DISTRICT RENT
          S & M Enterprises,                      ADMINISTRATOR'S DOCKET
                                                  NOS. DE420015BT and  
                                                       EC420004BO
                                   PETITIONER
          ------------------------------------X


            ORDER AND OPINION DENYING PETITIONS FOR ADMINISTRATIVE REVIEW


              On March 13, 1990, the above-named landlord filed a petition 
          for administrative review of an order issued on February 9, 1990 by 
          the Rent Administrator, concerning various housing accommodations 
          in the premises known as 245 East 36rd Street, New York, New York.  
          On February 19, 1992, the above-named landlord filed a petition for 
          administrative review of an order issued by the Administrator on 
          January 17, 1992, concerning the above-mentioned premises.

              Since the petitions involve common questions of law and fact, 
          the Commissioner deems it appropriate to consolidate the 
          proceedings for disposition herein.

              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 petitions for review.

              These proceedings were initiated by the rent agency issuing an 
          order on February 9, 1990, under Docket No. DE420015BT, which had 
          revoked the order of eligibility for the subject building's 1988- 
          1989 maximum base rent (MBR), on the grounds that the landlord had 
          failed to meet the violation certification requirements in order to 
          qualify for the 1988-1989 MBR increase.

              On March 13, 1990, the subject landlord filed a petition for 
          administrative review, under Docket No. EC430230RO, of the 
          aforementioned order issued under Docket No. DE420015BT.

              On March 19, 1990, the subject landlord filed with the rent 
          agency a "Request For Reconsideration," of the order issued under 
          Docket No. DE420015BT, and a challenge of the above-mentioned 












          Docket No. EC430230RO

          order.

              The subject landlord's challenge, petition, and "Request For 
          Reconsideration," asserts, among other things, that the landlord 
          has  satisfied the violation criteria required for the granting of 
          an MBR increase; that the rent agency issued an order on April 7, 
          1989, under Docket No. BL425179BR, which granted the subject 
          building's 1988-1989 MBR increase; that the subject tenants filed 
          a challenge of the above-mentioned order; that the subject landlord 
          did not receive a copy of the tenants' challenge, and as a result 
          was denied due process, and that the Administrator's order issued 
          under Docket No. DE420015BT should be revoked.

              On June 11, 1990, the rent agency mailed a notice to the 
          landlord which stated that:

               [T]he reason stated on the challenge order under 
               DE420015BT for revoking the grant order was incorrect.  
               Nevertheless, as there is a finding of harassment listed 
               against the premises, the docket will not be reopened and 
               the denial of the increase remains in effect.

              The subject landlord filed a supplement to the aforementioned 
          petition, dated August 27, 1990, which asserts, among other things, 
          that the rent agency has issued two conflicting orders pertaining 
          to the subject building's 1988-1989 MBR increase; that on February 
          9, 1990 the rent agency issued an order under Docket No. DE420015BT 
          which revoked the order of eligibility for the subject building's 
          1988-1989 MBR increase; that on March 30, 1990 the rent agency 
          issued an order under Docket No. DH420026BT which affirmed the 
          aforementioned order of eligibility; that the tenants have filed a 
          petition for administrative review, under Docket No. EE430009RT, of 
          the Administrator's order issued under Docket No. DH420026BT; that 
          the applicable regulations in the Rent and Eviction Regulations do 
          not condition the granting of an MBR increase on a finding of no 
          harassment; that Section 2206.5 of the Rent and Eviction 
          Regulations provides that upon the Administrator's finding of 
          harassment the Administrator may refuse to credit any adjustments 
          increasing rent mandated by Part 2202 of the aforementioned 
          regulations; that the above-mentioned Part 2202 "govern the 
          Adjustemnts; Determination of Rents and Services" and not the 
          granting of an MBR increase; that "even if a finding of harassment 
          could prevent the granting of an MBR increase such is not 
          mandatory, but discretionary"; that the owner asserts that it is 
          maintaining all required services, and that the rent agency's order 
          issued on April 7, 1989 which granted the subject building's 1988- 
          1989 MBR order of eligibility should be affirmed.

              On January 17, 1992, the Administrator issued an order, under 
          Docket No. EC420004BO, which denied the landlord's challenge, on 
          the grounds that there is an outstanding finding of harassment 
          against the subject building.






          Docket No. EC430230RO


              The subject landlord filed a petition for administrative 
          review, under Docket No. GB 430170RO, of the Administrator's order 
          issued under Docket No. EC420004BO.  The petition asserts, among 
          other things, that the subject landlord owns two separate buildings 
          that also have an outstanding finding of harassment against them; 
          that the rent agency had issued two separate orders, under Docket 
          Nos. FJ420227BR and FF425987BR, granting the 1992-1993 MBR order of 
          eligibility for the two aforementioned buildings owned by the 
          subject landlord; that, as the landlord states, "the outstanding 
          harassment determination clearly is not a bar to granting the owner 
          MBR rent increases."

              After careful consideration, the Commissioner is of the opinion 
          that the landlord's petitions should be denied.

              Section 26-413 b.(3)(a)(iii) of the City Rent and 
          Rehabilitation Law states that when there is a finding of 
          harassment the rent agency may:

               [R]efuse to credit any adjustments increasing rent 
               mandated by section 26-405 of this chapter and dismiss 
               any applications for an adjustment pursuant to said 
               section for such time and under such terms and conditions 
               as the rent agency deems necessary to prevent 
               circumvention or evasion of the provisions of this 
               chapter.

              The Commissioner notes that the aforementioned Section 26-405 
          of the City Rent and Rehabilitation Law contains provisions 
          pertaining to the establishment of maximum rents.  The Commissioner 
          further notes that Part 2202 of the Rent and Eviction Regulations, 
          as mentioned in the aforementioned Section 2206.5(a)(3) of the Rent 
          and Eviction Regulations, also contains provisions pertaining to 
          the establishment of maximum rents (i.e., Section 2202.3(b)(2), 
          2202.3(f)(2), 2202.3(h), 2202.5(e), 2202.11 and 2202.20(a) of the 
          Rent and Eviction Regulations).

              Accordingly, the Commissioner is of the opinion that the Rent 
          and Eviction Regulations do give the Administrator discretion in 
          denying an MBR order of eligibility when there is an outstanding 
          finding of harassment.

              Furthermore, in the case of Seril V. Division of Housing and 
          Community Renewal, the Appelate Division stated that:

               Because the record herein reveals extant findings of 
               harassment, failure to provide essential services, and a 
               continuous, consistent and uncorrected pattern of 'rent 
               impairing violations', we conclude that DHCR did, in 
               fact, have a rational basis for denying the subject 
               applications for the years in question.  DHCR's 












          Docket No. EC430230RO

          determinations were, therefore, neither arbitrary and 
               capricious nor did they constitute an abuse of 
               discretion.  Indeed, any one of the three grounds stated 
               above would have sufficed to support DHCR's denials of 
               the MBR applications for the periods in question.

              See, Seril V. Division of Housing and Community Renewal, 163 
          A.D.2d 131, 557 N.Y.S2d 356, 357 (1st Dep't, 1990).

              The Commissioner notes that the rent agency's records reflect 
          that the subject building has an outstanding finding of harassment 
          against it since October 30, 1985.  The Commissioner further notes 
          that the subject landlord has admitted that the rent agency's 
          finding of harassment still has not been removed.

              Accordingly, the Commissioner finds that the Administrator's 
          order denying the 1988-1989 MBR order of eligibility for the 
          subject building should not be disturbed.

              Furthermore, the Commissioner notes that the rent agency has 
          already denied the 1988-1989 MBR order of eligibility for the 
          subject building due to an outstanding finding of harassment in a 
          prior order issued on January 14, 1993, under Docket No. 
          EE430009RT.  In the proceeding issued under EE430009RT, the 
          Commissioner revoked the Administrator's order issued on March 30, 
          1990, under Docket No. DH420026BT, which had affirmed the 1988-1989 
          MBR order of eligibility for the subject building.

              The Commissioner notes that the only issue in this proceeding 
          is whether the Administrator's denial of the 1988-1989 MBR increase 
          for the subject building was proper.  Accordingly, as to the 
          landlord's assertion that the rent agency granted the establishment 
          of subsequent MBR increases in other buildings that have 
          outstanding findings of harassment against them, the Commissioner 
          finds that that issue is outside the scope of the Commissioner's 
          review in this proceeding.

              However, the Commissioner notes that the two aforementioned 
          orders of the rent agency which granted the 1992-1993 MBR order of 
          eligibility for the two separate buildings also owned by the 
          subject landlord, Docket Nos. FJ420227BR and FF425987BR, were 
          revoked by subsequent orders of the rent agency (GD420020BT and 
          GA420023BT, respectively) due to an outstanding finding of 
          harassment.
              As the Administrator denied the 1988-1989 MBR order of 
          eligibility for the subject building due to an outstanding finding 
          of harassment, the Commissioner finds that it is not necessary to 
          make a determination as to the other substantive or procedural 
          issues raised in the landlord's two petitions pertaining to the 
          denial of the 1988-1989 MBR increase.

              The Commissioner notes that the tenant's challenge to the 






          Docket No. EC430230RO

          establishment of the 1988-1989 MBR increase was not an adversary 
          proceeding between the landlord and the tenants, but was between 
          the rent agency and the tenants, and that the rent agency was not 
          required to serve a copy fo the tenants' challenge on the landlord.

              As the landlord does not allege that it did not have notice of 
          the rent agency's finding of harassment against the subject 
          building, the Commissioner finds that the landlord was not denied 
          due process in this proceeding.

              Accordingly, the Commissioner finds that the subject landlord's 
          petitions should be denied.

              THEREFORE, in accordance with the City Rent and Rehabilitation 
          Law and the Rent and Eviction Regulations, it is

              ORDERED, that these petitions be, and the same hereby are, 
          denied, and that the District Rent Administrator's orders 
          (DE420015BT and EC420004BO) be, and the same hereby are, affirmed.

          ISSUED:



                                                                            
                                             Joseph A. D'Agosta
                                             Acting Deputy Commissioner






    

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