OFFICE OF RENT ADMINISTRATION
                                    GERTZ PLAZA
                              92-31 UNION HALL STREET
                              JAMAICA, NEW YORK 11433

     APPEAL OF                              DOCKET NO.: ED 430235-RO(SJR 5239)
        MARTIN FRIEDMAN                     DRO DOCKET NO.: DI 420003-RP

                           PETITIONER    : 


     On April 26, 1990 the abovenamed petitioner owner  filed  a  Petition  for
     Administrative Review against orders issued on April 4, 1990 by  the  Rent
     Administrator concerning the housing accommodations known  as  35  and  37
     Canal Street, Various Apartments, Lower Manhattan.

     The issue herein is whether these apartments are subject to rent  control.

     The record discloses that  the  apartments  are  located  in  2  adjoining
     buildings (35 & 37  Canal  Street)  which  along  with  another  adjoining
     building (6 Ludlow Street) were built about 1890 and at all relevant times 
     have been commonly owned.

     The apartments in 35 & 37 Canal Street became vacant in 1947 and  remained
     vacant until 1980 when they were rented by the  petitioner's  predecessors
     in interest, in barely habitable condition, to the tenants  under  5  year
     leases in which rents of $750.00 per month were reserved for first 2 years 
     and $875.00 per month for the next 3 years but the owner  agreed  to  take
     only $175.00 per month for the first 2 years  and  $275.00  for  the  next
     three years and the tenants would rehabilitate,  renovate  and  internally
     subdivide the apartments more or less to their own  tastes  at  their  own

     In prior proceedings orders were issued on August 24,  1984  recontrolling
     the apartments (which, on the facts then available,  were  assumed  to  be
     decontrolled because the tenants took occupancy after June 30,  1971)  and
     establishing controlled rents based on the facts that apartments  had  not
     been registered with the Rent Stabilization Association and the then owner 
     had essentially abandoned the premises and  the  tenants  themselves  were
     forced to supply all maintenance and building-wide services (2AD 40438).

     Subsequently the proceedings were reopened based  on  allegations  by  the
     petitioner that, among other things, he  was  an  innocent  mortgagor  who
     became owner via a transfer of stock in lieu of  foreclosure.   The  prior
     orders were affirmed by the Administrator and a petition by the owner  was
     denied by the Commissioner.  An Article 78 was instituted and the matter 


          DOCKET NUMBER: ED 430235-RO (SJR 5239)
     was remitted by the Court and remanded by  the  Commissioner  for  further
     processing in accord with the Court's order (SJR  3114;2832;BF  420273-Ro;
     AJ 420006-RP).

     The instant proceeding (DI 420003-RP)  was  opened  by  the  Administrator
     pursuant to the remit and remand.

     The Commissioner notes that the prior proceedings abovenoted also involved 
     subsidiary   issues   as   to   notice   to   the   petitioner,   possible
     misrepresentations by the tenants and whether 35 & 37 Canal Street were  a
     "horizontal multiple dwelling".

     In  the  instant  proceeding  those  subsidiary  issues  were  essentially
     rendered  moot  since  the  owner  has  vigorously  participated  in  this
     proceeding,  it  was  found  that  the  tenants  had  made  no  deliberate
     misrepresentations and all salient facts are now conceded by  the  parties
     or adduced from physical inspections and,  because  original  rather  than
     derivative rent control jurisdiction is involved, it is immaterial  as  to
     these  tenants  whether  the  premises  are  also  a  horizontal  multiple

     The herein appealed orders  of  the  Rent  Administrator  found  that  the
     apartments were subject to rent control since no  vacancies  had  occurred
     subsequent to June 30,  1971  and  they  did  not  qualify  for  decontrol
     pursuant to 9 NYCRR 2200.2f(17).   The  Administrator  also  modified  the
     prior orders of August 8, 1984 by increasing the rents established therein 
     to reflect Maximum Base Rent adjustments which had been forgone because of 
     uncertainty as to the status of the apartments  during  these  proceedings
     resulting in rents of $259.28 per month for each  apartment.   The  orders
     also noted that the owner may enter the Maximum Base Rent Program and seek 
     future adjustments.

     In his petition the owner urges that the  apartments  should  qualify  for
     decontrol  under  9  NYCRR  2200.2f(8)  as  "housing  accommodations   ...
     completed on or after February 1, 1947" and apparently urges that, because 
     of the abovenoted "concessions" in the tenants' leases whereby  the  owner
     purportedly  forwent  substantial  rent  collections  in  return  for  the
     tenants' work in  rehabilitating  the  apartments,  the  owner  should  be
     credited with the tenants' work and deemed to have created new  apartments
     after February 1, 1947 and June 30,  1971  which  should  be  exempt  from

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

     9 NYCRR 2200.2f(8) applies to  new  construction.   It  is  conceded  that
     these apartments, in one form or another, have  been  in  existence  since
     long prior to 1947.  There is no  evidence  of  "substantial  demolition",
     "conversion" or the creation of  "additional  housing  accommodations"  by
     either  the  owner  or  tenants.   The  apartments  have  been  internally
     subdivided and have enhanced  facilities  but  the  same  floor  areas  as
     before.  As abovenoted, the vacancies occurred prior to June 30, 1971  and
     the apartments have, therefore,  vacant  or  occupied,  been  continuously
     subject to rent control without regard to whether or not they should  have
     been registered with the Rent Stabilization  Association  or  whether  the
     premises are or are not a horizontal multiple dwelling.


          DOCKET NUMBER: ED 430235-RO (SJR 5239)
     Nor is there any basis in the law or regulations for crediting  an  owner,
     for purposes of decontrol or rental value, with work  performed  and  paid
     for entirely by the tenants.  The owner's opinion as to  the  1980  rental
     value of ancient one room apartments in a decrepit building (or buildings) 
     on Canal & Ludlow Streets and the generosity of its "rent concessions"  in
     speculative and dubious.  In  any  case,  the  ultimate  determination  of
     rental value was not for the owner or the tenants but for this  agency  so
     that it is questionable to what extent there  was  consideration  for  the

     The Commissioner finds that the Administrator's orders were correct.

     THEREFORE, pursuant to the Rent and  Eviction  Regulations  for  New  York
     City, it is

     ORDERED, that this petition be, and the same hereby is,  denied  and  that
     the orders of  the  rent  Administrator  be,  and  the  same  hereby  are,


                                            ELLIOT SANDER
                                         Deputy Commissioner


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