ADM. REVIEW DOCKET NOS.: EL 410145 RO AND EL 410165 RT

                                  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
          APPEALS     OF                                  DOCKET      NOS.:
                                                 EL 410145 RO and 
                                              :  EL 410165 RT
                                                 DRO       ORDER       NO.:
                                                 EG        410016        RP
              LONDON                    TERRACE                    GARDENS/
              CLARENDON MGT CORP. AND
              ANN        MCKENZIE        AND        MALCOLM         MELLON,
                 

                              PETITIONERS     : 
          ------------------------------------X 

                                          ORDER AND OPINION DENYING OWNER'S PETITION FOR ADMINISTRATIVE 
           REVIEW AND DENYING TENANTS' PETITION FOR ADMINISTRATIVE REVIEW
                                          
                                          
               The  above-named  petitioners  filed  timely  Petitions  for
          Administrative Review against an  order  issued  on  November  7,
          1990, by  the  District  Rent  Administrator,  92-31  Union  Hall
          Street, Jamaica,  New  York,  concerning  housing  accommodations
          known as Apartment PH at 455 West  23rd  Street,  New  York,  New
          York, wherein the District Rent Administrator determined the fair 
          market rent pursuant to a comparability  study  and  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  initiated
          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 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 by the filing of  a
          rent overcharge complaint by the tenants in April 1982  with  the
          former New York City Conciliation and Appeals  Board  (CAB).   In
          such complaint the tenants stated in substance  that  the  former
          tenant Bruce Granovetter was the first tenant after decontrol  of
          the subject apartment, that Mr.  Granovetter  had  filed  a  fair
          market rent appeal under CAB Docket Number  T/A  8387,  that  the
          fair market rent appeal was then discontinued by Mr.  Granovetter






          ADM. REVIEW DOCKET NOS.: EL 410145 RO AND EL 410165 RT
          in exchange for a cash payment, that the tenants herein are being 
          overcharged and that the discontinuance of the fair  market  rent
          appeal should not have been allowed.  The tenants further  stated
          that they first moved to the subject  apartment  on  November  1,
          1980 at a rent of $2,115.00 per month  pursuant  to  a  one  year
          lease.  

               In answer to the complaint, the owner submitted all required 
          rent records.  With regard to the fair market rent appeal  aspect
          of the tenants' complaint, the owner stated in substance that the 
          opportunity to challenge the initial stabilized rent  is  limited
          to the first rent stabilized tenant and cannot be utilized by the 
          tenants herein.  The owner submitted proof that said  first  rent
          stabilized tenant discontinued his fair market rent appeal by way 
          of a stipulation filed in court. 

               In Order Number CDR 08953 issued on October  15,  1985,  the
          District  Rent   Administrator   determined   that   the   lawful
          stabilization rent was $1,997.50 as  of  November  1,  1980  (the
          date of first occupancy by tenants herein), determined  that  the
          tenants  had  been  overcharged  in  the  amount   of   $4,859.99
          (including interest paid on the overcharge from April 1, 1984 and 
          excess security) and directed the owner to roll back the rent  to
          the lawful stabilized amount and to refund the overcharge to  the
          tenants.  

               The tenant (Ann McKenzie) thereafter filed  a  petition  for
          administrative review of the Administrator's order in  which  the
          tenant contended in substance that a determination  of  the  fair
          market rent should be made for her  apartment,  that  the  former
          tenant of the subject apartment discontinued his fair market rent 
          application after he had vacated and such  discontinuance  cannot
          bind the tenant herein as to  the  legality  of  the  first  rent
          stabilized rent, that a charge  of  $19.88  per  month  effective
          November 1, 1984 was imposed due to the installation  of  an  air
          conditioner and this charge was already reflected in the rent and 






          that the rent calculation  chart  in  the  Administrator's  order
          incorrectly listed some of the rent amounts actually paid by  the
          tenant so that the  amount  of  the  overcharge  was  incorrectly
          determined.   

               By order issued on December 31, 1986, the Commissioner found 
          that the tenant was barred from  challenging  the  initial  legal
          regulated rent based on the withdrawal of a fair market rent 
          appeal application by the prior tenant before a determination  on
          the  merits.   The  Commissioner  recalculated  the   amount   of
          overcharge based on the actual rental amounts paid by the tenant. 
          The  Commissioner  noted  that  an  owner  of  a  building  where
          electricity is included  in  the  rent  is  entitled  to  a  rent
          increase due to the installation of an air conditioner.   

               Subsequent thereto, the  tenant  filed  a  petition  in  the
          Supreme Court pursuant to Article 78 of the  Civil  Practice  Law






          ADM. REVIEW DOCKET NOS.: EL 410145 RO AND EL 410165 RT
          and Rules requesting  that  the  order  of  the  Commissioner  be
          annulled.  The Supreme Court affirmed the  Commissioner's  order.
          Subsequent  thereto,  the  tenant  appealed  the  Supreme   Court
          determination to the Appellate Division.   By  order  entered  on
          April 10, 1990, the Appellate Division reversed the Supreme Court 
          judgment and remitted the proceeding to the DHCR to  establish  a
          fair market  rent  for  the  subject  apartment.   The  Appellate
          Division determined that where a prior tenant was not served with 
          a notice of initial legal  regulated  rent,  the  prior  tenant's
          withdrawal  of  his  fair  market  rent   appeal   prior   to   a
          determination cannot defeat the right of a subsequent tenant to a 
          determination of the fair market rent.  

               By order issued on July  6,  1990,  pursuant  to  the  court
          directive,  the  Commissioner  remanded  the  proceeding  to  the
          Administrator for further processing to establish the fair market 
          rent.

               In answer to a  notice  from  the  Division,  the  owner  by
          submission dated October 5, 1990, cited as comparable  apartments
          the penthouse apartments at a number of other  buildings  in  the
          complex  and  submitted  documentation  of  improvements  to  the
          subject apartment.  

               By order issued  on  November  7,  1990,  the  Administrator
          adjusted the initial legal regulated rent by establishing a  fair
          market  rent  of  $954.47  effective   October   1,   1979,   the
          commencement date of  the  initial  rent  stabilized  lease,  and
          determined the lawful stabilized rent for the applicant  for  the
          period  from  November  1,  1980  to  October   31,   1990.    In
          determining the fair market rent, the Administrator utilized  one


          of the apartments cited by the owner - the penthouse  at  450  W.
          23rd Street - in the comparability study, but determined that the 
          other apartments cited by the owner could not be utilized in  the
          comparability study because the owner failed to submit  a  notice
          of initial legal regulated rent with proof of  service  (for  the
          penthouse at 420 W. 23rd Street) or because the apartments were 
          stabilized and not free, unregulated rents as of  June  30,  1974
          (penthouses at 415, 435, 445 and 460 W. 23rd Street).  The 
          Administrator allowed an increase pursuant to Section  20C(1)  of
          the  Code  for  sink  and  cabinets,  refrigerator,   stove   and
          dishwasher, but disallowed an increase for 3 toilet bowls 
          because the bills did not specify the subject building or subject 
          apartment and disallowed an increase for repair of tiled  terrace
          as normal decorating and maintenance.  The Administrator  further
          determined  that  the  lawful  charge  for   the   tenant's   air
          conditioner  installed  in  November  1984  was  the   1985   air
          conditioner season charge of $19.42 per month effective  November
          1984 and directed the owner to refund any  amount  collected  for
          that air conditioner in excess of $19.42 per month for the period 
          from November 1, 1984 to October  31,  1988  and  any  amount  in
          excess of $21.17 ($19.42 increased by 9%  pursuant  to  Guideline
          18) for the period from November 1, 1988  to  October  31,  1990.
          The Administrator found that the amount collected  for  a  second
          air conditioner commencing July 1, 1988 was lawful.        

               In its petition, the owner asserts that, notwithstanding the 






          ADM. REVIEW DOCKET NOS.: EL 410145 RO AND EL 410165 RT
          order of the  Appellate  Division,  the  tenants  should  not  be
          entitled to a fair market rent appeal; that the instant case  can
          be distinguished from the scenario  portrayed  by  the  Appellate
          Division where an owner seeks to circumvent the  requirements  of
          the law; that the Division lacks  the  authority  to  convert  an
          overcharge complaint into a fair market  rent  appeal;  that  the
          tenants failed to allege that the initial legal rent exceeds  the
          fair market rent and such facts which  support  such  allegation;
          that the agency's delay in deciding the  case  coupled  with  the
          agency's changing the issue in midstream has unduly burdened  the
          owner; that the owner does not dispute the agency's  analysis  of
          the  comparable  rents,  except  to  the  extent   that   it   is
          questionable  whether  comparables  are  appropriate;  that   the
          apartment is unique and the owner was  therefore  entitled  to  a
          market rent; that the use  of  Section  20A(4)  of  the  Code  to
          disallow a guideline increase above the initial  rent  until  the
          expiration of the prior tenant's lease on September 30, 1981  was
          inappropriate because, as evidenced by a letter  from  the  prior
          tenant to the owner dated December 19, 1980,  the  lease  between
          the prior tenant and the owner was terminated as of  October  31,
          1980 by mutual agreement of the parties and therefore  the  owner
          was entitled to an increase as of November 1, 1980 for the  


          applicant's initial lease;  that  the  toilet  bowls,  tanks  and
          fixtures and quarry tile  constitute  improvements  warranting  a
          rent increase; that in  previous  cases  the  Division  has  held
          bathroom fixtures to be eligible improvements (e.g.,  BD  2110245
          RO); that the purchase orders, which appeared as the bottom  half
          of the invoices submitted, indicated the specific  apartment  and
          correspond to the invoices in question; and that the amount of
          $19.88 per month charged  by  the  owner  for  the  tenant's  air
          conditioner installed in November 1984 was the rate for the  1984
          air conditioner season and if correct, the tenant  has  not  been
          overcharged on air conditioner usage as the owner charged  lawful
          guideline increases on  this  charge  for  the  tenant's  renewal
          leases commencing November 1, 1988 and November 1, 1990. 
                
               In their petition, the tenants assert  that  they  were  not
          afforded adequate time to file objections with the  Administrator
          in that the owner's final submission was allegedly  forwarded  to
          the tenants on October 23, 1990 with 10 days to reply, but due to 
          delay in the mail, the tenant had no time  to  reply  before  the
          order was issued.  Regarding the comparability data  utilized  by
          the Administrator, the tenants acknowledge that the penthouse  at
          420  West  23rd  Street  was  properly  not   included   in   the
          comparability study, but contend that the penthouse apartments at 
          415, 435, 445 and 460 W. 23rd  Street,  rather  than  solely  the
          penthouse at 450 W. 23rd Street, should have been included in the 
          comparability study because they were  decontrolled  long  before
          the advent of rent stabilization and they represented free market 
          rents.  

               In answer to the tenants' petition, the owner asserts, among 
          other things, that the tenants have offered no  legal  basis  for
          their challenge to the comparability study.

               The Commissioner is of the opinion that the owner's petition 
          should be denied and the tenants' petition should be denied.






          ADM. REVIEW DOCKET NOS.: EL 410145 RO AND EL 410165 RT

               Regarding the owner's  assertion  that  notwithstanding  the
          order of the  Appellate  Division,  the  tenants  should  not  be
          entitled to a fair market rent  appeal,  the  Commissioner  finds
          that the owner is improperly seeking to challenge  the  order  of
          the  Appellate   Division   in   this   proceeding   before   the
          administrative agency, rather than by appropriate action  in  the
          judicial forum.  The  order  of  the  Appellate  Division,  which
          specifically remitted the proceeding to the Division to establish 
          a fair market rent for the subject apartment, is binding  on  the
          Division and was properly followed by the Administrator.




               It is apparent from the tenants' initial complaint,  wherein
          the tenants attached a copy of the  prior  tenant's  fair  market
          rent appeal application and challenged the discontinuance of that 
          appeal,  as  well  as  from  subsequent  correspondence  and  the
          subsequent  judicial  proceeding,  that  the  tenants  sought   a
          determination of the fair market rent.  In  addition,  since  the
          directive to tenants in Section 25(c) of the Code to provide 
          supporting facts is qualified by the phrase "to the best  of  his
          information and belief," it cannot  be  read  to  create  a  firm
          requirement and the tenants' failure to present such  facts  does
          not bar processing of the tenants' fair market rent appeal.  
          (Accord:  ARL 6666-L).  The Commissioner further finds the  owner
          was not unduly burdened by  the  change  in  processing  from  an
          overcharge complaint to a fair market rent appeal inasmuch as the 
          owner was aware from the initiation of the complaint  and  during
          the subsequent judicial proceeding that the tenant was seeking a
          fair market rent appeal and on remand to the Administrator the 
          owner was afforded an opportunity to submit an answer to the fair 
          market rent appeal and the owner did  submit  comparability  data
          and improvement data. 

               The owner has failed to submit any evidence to document  its
          assertion that the subject apartment is unique or contains unique 
          features.  The owner acknowledged in its submission of October 5, 
          1990 that the subject apartment is "similar" to  other  penthouse
          apartments in the complex.  The Commissioner therefore finds  the
          owner's contention that the subject apartment  is  unique  to  be
          without merit.

               Section 20A(4) of the  Code  provides  that  for  apartments
          which  were  subject  to  rent  control  on  June  30,  1974  and
          thereafter became subject to rent stabilization as a result of  a
          vacancy, the owner may not  increase  the  rent  charged  in  the
          initial lease or other rental agreement for a period of one  year
          or until the expiration of the initial lease, whichever is later.

               In this case, the prior tenant vacated the subject apartment 
          prior to the expiration of his lease term and the  Administrator,
          pursuant to Section 20A(4), denied a guideline increase  for  the
          tenants' initial lease until the expiration of the prior tenant's 
          lease term.  The Commissioner finds that the early termination of 
          the prior tenant's lease by mutual agreement of the parties  does
          not change the expiration date of the initial lease as originally 
          entered into by the parties and does not affect  the  application






          ADM. REVIEW DOCKET NOS.: EL 410145 RO AND EL 410165 RT
          of Section 20A(4) which specifically  applies  to  the  situation
          where the prior tenant vacates prior to  the  expiration  of  the
          lease term.  



               Regarding the Administrator's  denial  of  a  rent  increase
          pursuant to Section 20C(1) of  the  Code  for  toilet  bowls  the
          Commissioner has previously held  that  a  toilet  bowl  in  good
          condition is an essential service that must be  provided  by  the
          owner  and  does  not  constitute  an  improvement  warranting  a
          Section 20C(1) increase. (Accord: ART  01487-L;  FA  210103  RO).
          The case cited by the owner (DB 210245 RO) is distinguished  from
          the instant case in  that  that  case  allowed  an  increase  for
          complete modernization of the bathroom plumbing, of which  a  new
          toilet was a part.  Regarding the tile work on the terrace,  that
          work consisted of the following:  removal and cleaning of tile to 
          be re-used, additional tile if necessary, waterproofing  membrane
          and resetting tile with cement to be patched  to  the  drain  and
          repair of parapet wall with  new  bricks  where  necessary.   The
          Commissioner finds that this work constituted normal  repair  and
          maintenance and as such does not warrant a Section 20C(1)   
          increase.      

               For air conditioners installed prior  to  October  1,  1985,
          where electricity is included in the rent, owners were  permitted
          to collect an initial charge for air conditioning as  established
          by the CAB and subsequently by the Division, which was subject to 
          guidelines increases upon lease renewals.  For  air  conditioners
          installed after the end of one year's season, after September 30, 
          but before the commencement of the  next  year's  season  on  the
          following  June  1,  the  proper  increase   was   the   increase
          established for installations during the next year's season.   

               In this case, the  proper  increase  for  the  tenants'  air
          conditioner installed in November 1984 was the rate for the  1985
          season, or $19.42 per month.  The  Commissioner  finds  that  the
          Administrator properly  determined  the  lawful  charge  for  the
          tenants' air conditioner to be the  1985  charge  of  $19.42  per
          month for the period from November 1, 1984 to  October  31,  1988
          (the owner did not collect  a  guideline  increase  for  the  air
          conditioner under the tenants' renewal lease commencing  November
          1, 1986) and properly determined the lawful charge to  be  $21.17
          per month for the renewal lease period from November 1, 1988 to 
          October 31, 1990 based on a lawful  guideline  increase.   It  is
          noted that the subsequent charge for this air conditioner must be
          based on the lawful charge as  determined  by  the  Administrator
          plus appropriate guideline increases.   
               
               Regarding  the  tenants'  allegation  that  they  were   not
          afforded adequate time to file objections with the Administrator, 
          the record indicates that the owner's October 5, 1990  submission
          was forwarded to the tenants for comment on October 9,  1990;  an
          amended Summary Notice was forwarded to the tenants on October 9, 


          1990 for comment; in response to  a  request  from  the  tenants'
          attorney, copies of DHCR rent control  records  for  the  subject
          apartment were sent to  the  tenants  on  October  14,  1990  for






          ADM. REVIEW DOCKET NOS.: EL 410145 RO AND EL 410165 RT
          comment; the owner's October 18, 1990 submission was forwarded to 
          the tenants for comment on October 23, 1990.  These notices  were
          limited to a 10 day response period because of a pending mandamus 
          proceeding.  By letter of October 26, 1990, the tenants,  through
          their  attorney,  responded  that  they  had  received  all   the
          requested material a few days earlier and would  reply  within  a
          few days.  No subsequent submission was received from the 
          tenants.  The Administrator's order was  issued  on  November  7,
          1990, after the expiration of the 10 day response period to the 
          final notice to the tenants.  The tenants have failed to document 
          any prejudice to the tenants in the processing of the case.   The
          Commissioner finds the tenants' allegation  that  they  were  not
          afforded  adequate  time  to  submit  any   objections   to   the
          Administrator to be without merit.    

               Regarding  the  tenants'  assertion   that   the   penthouse
          apartments at 415, 435, 445 and 460 W. 23rd Street,  rather  than
          solely the penthouse apartment at 450 W. 23rd Street, should have 
          been used in the comparability study,  the  record  includes  the
          following documentation for those apartments:  

               1) For the penthouse at 415 W. 23rd Street: a  rent  control
          registration  card  indicating  that  the  apartment  was  luxury
          decontrolled on April 1, 1965 under Section 2(F)14  of  the  Rent
          and Eviction Regulations and a renewal lease commencing  June  1,
          1972 and expiring May 31, 1975.  

               2) For the penthouse at 435 W. 23rd Street:  a rent  control
          registration  card  indicating  that  the  apartment  was  luxury
          decontrolled on April 1, 1965 under Section 2(F)14  of  the  Rent
          and Eviction Regulations and a renewal lease for the period  from
          September 1, 1973 to August 31, 1976 based on an  original  lease
          dated July 30, 1968.  It is noted that, based on  the  amount  of
          additional security indicated in the renewal lease, the  increase
          for the  renewal  lease  conforms  to  the  lawful  stabilization
          guidelines amount.

               3) For the penthouse at 445 W. 23rd  Street:   an  Order  of
          Decontrol (Docket Number D17098/9) indicating that the  apartment
          was decontrolled effective October 29, 1959 under Section  11  of
          the Rent and Eviction Regulations and a  renewal  lease  for  the
          period from March 3, 1973 to March 31, 1976 based on an  original
          lease dated May 24, 1961.   




               4)  For the penthouse at 460 W. 23rd  Street:   the  owner's
          Schedule A indicating that the subject apartment was not  subject
          to rent control on June 30, 1974 and  a  renewal  lease  for  the
          period from May 1, 1973 to April 30, 1976 based  on  an  original
          lease dated November 12, 1963.  It is noted that,  based  on  the
          amount of additional security indicated in the renewal lease, the 
          increase  for  the  renewal  lease   conforms   to   the   lawful
          stabilization guidelines amount.  

               The record indicates that the penthouse apartments  at  415,
          435, 445 and 460 West 23rd Street were decontrolled prior to  May
          31, 1968; that the leases in effect on June 30, 1974 were 






          ADM. REVIEW DOCKET NOS.: EL 410145 RO AND EL 410165 RT
          stabilized renewal leases of vacancies which  occurred  prior  to
          July 1, 1971; that these apartments were not vacated between July 
          1, 1971 and June 30, 1974  and  therefore  were  not  subject  to
          vacancy destabilization pursuant to Chapter 371 of the Laws of 
          197l, but were subject to rent stabilization on  June  30,  1974,
          and therefore the June 30, 1974 rents were not free market  rents
          which  could  be  used   in   the   comparability   study.    The
          Commissioner finds that the Administrator properly  did  not  use
          these apartments in the comparability study.     

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

               ORDERED, that these petitions for administrative  review  be
          and  the  same  hereby  are  denied   and   the   District   Rent
          Administrator's order be and the same hereby is affirmed.

          ISSUED:






                                                                        
                                          ELLIOT SANDER
                                          Deputy Commissioner




                                                    

    

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