ED 410111-RO
                        STATE OF NEW YORK
                           GERTZ PLAZA
                     92-31 UNION HALL STREET
                     JAMAICA, NEW YORK 11433
APPEAL OF                               DOCKET NO.:
                                        ED 410111-RO
                                        DISTRICT RENT
          S.K.J. REALTY                 ADMINISTRATOR'S DOCKET
                                        BE 410328-R
                        PETITIONER      TENANT: DAVID SELL

                             IN PART
On  April  17,  1990,  the above-named petitioner-owner  filed  a
Petition  for Administrative Review of an order issued  on  March
19,   1990   by   a   Rent   Administrator   concerning   housing
accommodations known as Apartment 1 at 103 West 74th Street,  New
York,  New  York, wherein the Administrator determined  that  the
tenant   had  been  overcharged  in  the  amount  of  $29,509.25,
including treble damages and excess security.

The   issue   in  this  appeal  is  whether  the  District   Rent
Administrator's order was warranted.

The applicable sections of the Law are Section 26-516 of the Rent
Stabilization  Law  and Section 2526.1(a)  of  the  current  Rent
Stabilization Code.

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 appeal.

This proceeding was originally commenced by the filing on May 18,
1987  of  a rent overcharge complaint by the tenant in  which  he
stated  that he had commenced occupancy on October 1, 1986  at  a
rent  of $750.00 per month.  The tenant also claimed to have paid
a  two-month  rent  security  deposit  of  $1,500.00,  which  was

The  owner responded in August, 1987 that the tenant paid $750.00
for  the  first  month's rent and only one  month's  security  of

The  owner  was directed to submit a complete lease history  from
the  base  date,  including  copies of  all  leases.   The  owner
submitted  the requested lease history.  Subsequently, the  owner
submitted  additional  documentation to  establish  the  cost  of
renovations  to the subject-apartment which were completed  prior
to  the  complaining tenant's occupancy.  The  material  included
copies  of  nine  cancelled  checks totalling  $10,830.00,  dated
between January and September, 1986.

In  a  letter dated January 10, 1990, the owner was requested  to
submit  additional  information  to  document  the  cost  of  the
equipment.  Also sent was a Final Notice informing the  owner  of
the treble damages penalty.

In  a  response  dated January 18, 1990, the  owner  submitted  a
signed  but  undated  invoice from one  of  the  companies  which
received payment for the renovations which stated a total cost in
the  amount of $10,283.75.  The invoice listed the equipment  and
labor  in  broad  categories,  without  assigning  cost  to  many
individual items.  The owner also resubmitted the copies  of  the
cancelled  checks previously submitted, of which  only  one  (for
$500.00) was payable to the contractor named on the invoice.

In an order issued on March 19, 1990 under Docket No. BE 410328-R
the   Rent   Administrator   determined   overcharges   totalling
$29,509.25,  including  treble damages and  excess  security.   A
monthly overcharge of $362.86 was determined for the tenant's one-
year  vacancy lease, and for the three-months period of month-to-
month  tenancy following its expiration.  Commencing  January  1,
1988,  the  overcharges were increased to $387.70 per month  with
the  commencement of a two-year renewal lease.   The  overcharges
ceased   on   December  1,  1988  pursuant  to  a  court-approved
stipulation  so ordered on January 17, 1990.  The Administrator's
order  determined  to approve costs for new  equipment  for  only
$2,070.00  out  of  the  total claim.  The Administrator  further
stated  that the J-51 Schedule was used because the owner  failed
to  properly document through itemization the 1/40th cost of  the

In  its petition, the owner contends that the order was incorrect
in  that the amount approved for the renovations was at odds with
the  documentation submitted, which fully substantiated  expendi-
tures of $12,300.00.  The owner claims that although the contract
accounts  for  only  $10,283.75 of the  total  expended  for  the
claimed renovations, the discrepancy of only $2,000.00 could  not
rightfully support a finding that the overcharges were willful.

Therefore, the owner also contends that the imposition of  treble
damages was improper.

The  Commissioner  is  of the opinion that the  owner's  petition
should be granted in part.

In  the instant appeal, the owner claims that the Administrator's
order  was  arbitrary and capricious because it failed to  accept
the owner's "proof" of its expenditures in renovating the subject
apartment  and, moreover, imposed treble damages by finding  that
the resulting overcharge was willful. The Commissioner concludes,
firstly, that the determination to exclude most ($51.75 per month
out  of  $307.50)  of  the claimed cost of  the  renovations  was
proper, and affirms the order on that issue.  This is because the
owner has failed to properly itemize the renovation work so as to
distinguish the type of improvements for which a rent increase is
permitted,  under  Section 2522.4(a) of  the  Rent  Stabilization
Code,  from normal decoration, painting or repairs, for which  no
increase  may  be approved.  The contention that  the  contractor
"cannot  reasonably  be held accountable" for such  apportionment
some  four years after completing the work is of no legal weight;
where  the  owner cannot establish the amount of a  claimed  rent
increase, the Division may recognize its own equitable value.  It
was  proper to do so in this case because there is no claim  that
there  is  any relevant evidence that exists that is not  in  the
record.   Therefore,  since the owner cannot establish  a  better
formula  for  calculating the increases, the Administrator's  own
reasonable estimate will not be disturbed.

While the owner is not entitled to collect the full increase, the
Commissioner  finds  that  the  Administrator  should  not   have
assessed  treble damages on the overcharge resulting from  disal-
lowance of any portion of the claim for the equipment.  The  DHCR
has  already  ruled  that  where an overcharge  results  from  an
owner's   failure  to  adequately  substantiate  claimed   20C(1)
improvements  (Section  2522.4(a)(1) of the  current  Code),  but
where  there  is sufficient evidence to show that the  owner  be-
lieved  in  good faith that it could increase the  rent  for  the
improvements, the DHCR will not consider the overcharge  willful.
(Accord:  DHCR Administrative Review Docket Nos. ARL 01921-L, ARL
02037-K,  ARL 03737-K, which, although decided under  the  former
Code, establish the principle that is to be applied here). In the
instant case, it is undisputed that the renovations were actually
made.   Therefore,  while the owner may not  collect  the  entire
claimed  increase for the reasons already given, the Commissioner
finds  that the owner in good faith believed that it was entitled
to  the entire increase, and that its collection by the owner was
not a willful overcharge.

By  eliminating  the penalty of treble damages, the  Commissioner
must recompute the total refund owed to the tenant.  Where treble
damages  are not assessed, the refund is equal to the  overcharge
plus  9%  interest  on  that portion of the overcharge  occurring
since  April  1, 1984 plus excess security.  As a  result,  total
overcharges  are reduced to $12,886.82, as is documented  in  the
rent calculations chart affixed hereto and made a part hereof.

The  Commissioner  notes  that as a  result  of  this  Order  and
Opinion, the tenant may have already received a refund or  credit
greater  than  is now due here.  Any rent arrears resulting  from
this  Order shall be paid by the tenant in six (6) equal  monthly

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

ORDERED,  that this petition be, and the same hereby is,  granted
in  part;  and the Administrator's order be, and the same  hereby
is, modified to the extent provided above.


                                         Deputy Commissioner

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