EK410099RO; EJ410498RT
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
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IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEALS OF DOCKET NO. EK410099RO;
EJ410498RT
A. Gumowitz Real Estate, Owner,: DISTRICT RENT OFFICE
and Seth Miller and Jennifer DOCKET NO. EH410035RP
Rowen, Tenant,
PETITIONERS :
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ORDER AND OPINION GRANTING OWNER'S PETITION FOR ADMINISTRATIVE
REVIEW IN PART, DENYING TENANT'S PETITION FOR ADMINISTRATIVE
REVIEW AND MODIFYING ADMINISTRATOR'S ORDER
On November 14, 1990, the above-named petitioner-owner filed a Petition
for Administrative Review against an order issued on October 15, 1990,
by the Rent Administrator, 92-31 Union Hall Street, Jamaica, New York,
concerning the housing accommodations known as 235 West 76th Street,
New York, New York, Apartment No. 15A, 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.
On October 25, 1990 the tenant filed a Petition for Administrative
Review against the same order, under Docket No. EJ410498RT. Both
appeals are being determined in the instant order.
These administrative appeals are being determined pursuant to the
provisions of Sections 2522.3, 2522.4, et al., 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 issues
raised by the administrative appeals.
The proceeding was originally commenced with the filing by the tenant of
an overcharge complaint form on November 19, 1987 contending, among
other things, that the tenant was being charged more than the fair
market rent.
The tenant took occupancy on September 15, 1987 pursuant to a lease
commencing on September 1, 1987 and terminating on August 31, 1989 at a
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monthly rent of $3500.00. In support of his contentions the tenant
submitted copies of rent and security checks, Forms RR-1 and DC-2A, and
his initial lease.
In response to the tenant's complaint, the owner contended, among other
things, that since the tenant was the first occupant of the subject
housing accommodation after it was vacancy decontrolled and did not file
a fair market rent appeal within ninety days of service of Form DC-2A,
the tenant was therefore time-barred from such filing. The owner
further stated that it had not been served with the appropriate notice
and/or answer forms advising it of the procedure to follow to respond to
a fair market rent appeal, nor was it provided with the opportunity to
submit comparability data which it would be allowed to submit in the
event the proceeding was to be considered a fair market rent appeal.
The owner included copies of the relevant lease for the subject housing
accommodation; proof of service of the Form DC-2A, which had been
returned "Unclaimed" by the Post office; a signed receipt from the
tenants for a copy of same; and copies of Form RR-1, apartment
registration, and Form RA-42V, Owner's Report of Vacancy Decontrol, and
Form DC-2A. The owner also submitted copies of paid bills and cancelled
checks for the following items:
Kitchen cabinets and counters $2,165.00
Plumbing installation of pipes and fixtures $1,293.58
Refrigerator $ 952.00
Electrical rewiring and outlets $1,285.00 and $1,320.00
Tile in three bathrooms $3,800.00
3 Toilets $ 243.56
Floor scraping $ 974.25
Painting $1,514.99
Gas range $ 357.00
Sink vanity and medicine cabinets $ 736.10
1 cabinet $ 108.25
On January 30, 1990, under Docket No. BK420583-R, the Administrator
established that the apartment became subject to the Rent Stabilization
Law by virtue of the first stabilized tenancy commencing on September 1,
1987 at a monthly rent of $3,500.00 and that the statutory criteria for
processing a Fair Market Rent appeal had been met. Based on the owner's
failure to submit comparability data, the Administrator determined the
tenant's fair market rent solely pursuant to Special Guidelines Order
No. 18, established the fair market rent at $802.72 per month effective
September 1, 1987, which included an allowance of $319.96 for apartment
improvements, and ordered a refund in the amount of $85,315.00.
On February 27, 1990 the owner filed a petition for administrative
review and requested reconsideration of that order, contending that
despite its request, at no time was the owner provided with the
appropriate response forms for a fair market rent appeal. With its
petition the owner submitted rental data for the subject A line, the E
line and the D line of apartments in the subject building and for market
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rents in other buildings.
On May 29, 1990 the Administrator reopened the proceeding and served the
owner with a fair market rent appeal package to afford it due process.
On June 20, 1990, the owner submitted the following materials, among
other things, pursuant to DHCR's service of the fair market rent appeal
package: an owner's report of Vacancy Decontrol and a photocopy of form
DC-2A dated and initialled by the tenant for Apartment 11A, and an
Owner's Report of Vacancy Decontrol with a signed certified mail return
receipt which is undated and has no postal stamp for Apartment 4E.
Together with these documents, the owner resubmitted invoices and checks
for the vacancy improvements performed on the subject apartment.
On August 23, 1990, under Docket No.EB420396-RO, the Commissioner found
that examination of the record confirmed the owner's contention that it
had not been provided with a fair market rent appeal package and the
opportunity to submit comparability data, despite several requests, and
remanded the matter to the Administrator for further consideration.
On August 24, 1990 the Division sent a Request for Additional
Information/Evidence to the owner, affording the owner an additional
opportunity to supplement its submission. Specifically, the owner was
requested to provide adequate proof of service of Form DC-2 or RR-1 upon
the first stabilized tenant of Apartments 11A and 4E, in order to have
those rents considered for comparability, including a date-stamped
receipt for certified mail corresponding to the article number on the
green return receipt previously submitted for Apartment 4E.
In reply to the owner's submission, the tenant, among other things,
objected to the amount of $3,800.00 which was paid to the superintendent
for tile work in three bathrooms. The tenant stated that it is improper
to include the services of a building employee in the charges for
apartment improvements.
The tenant's response was served on the owner. On October 11, 1990, the
owner submitted an initial apartment registration form with proof of
service upon the tenant of Apartment PH-1 for comparability purposes.
The owner further contended that the tiling work done by the
superintendent was compensable as a vacancy improvement, since it was
billed and paid for separately from his customary work, and was not done
as part of his regular duties. The owner submitted an affidavit from
the superintendent attesting to his expertise in tile setting and
stating that he was paid for the work in the subject apartment
separately from his salary. It is noted that the bill from the
superintendent which the owner submitted listed the subject building as
his business address. The owner's October 11, 1990 submission was never
forwarded to the file for review by the Administrator, and hence is
being considered on appeal, since it clearly was stamped "Received" by
the DHCR on October 11, 1990.
On October 15, 1990, under Docket No. EH410035-RP, the Administrator
revoked the order of January 30, 1990, under Docket No. BK420583-R, and
EK410099RO; EJ410498RT
found that pursuant to Special Guidelines Order Number 18, the 1986
Maximum Base Rent of $863.50 and $12.60 fuel cost adjustment were to be
adjusted by an additional 20% ($863.50 + $12.60 x 1.20= $1,051.32).
Pursuant to Section 2522.4(a)(1) of the Code, the Administrator
determined that the owner was entitled to a monthly rental increase in
the amount of $211.51 calculated on the basis of 1/40th of allowable
costs of $8,460.49, effective September 1, 1987. This resulted in a
fair market rent of $1,262.83 ($1,051.32 + $211.51 = $1,262.83)
effective September 1, 1987.
Concerning bills for painting and floor scraping ($2,489.24) and tile
work performed by the superintendent ($3,800.00), the administrator
found that an owner was not entitled to an increase pursuant to Section
2522.4(a)(1) of the Code for work which constitutes normal decorating or
maintenance, for any painting prior to a new tenant's occupancy or for
work performed by the building's employees.
The Administrator further found that apartments 8A, 11A and 4E were
decontrolled within the required time frame. However, Apartment 8A,
decontrolled in November 1985, had a fair market rent appeal pending and
could not be considered a final rent for use in a comparability study.
Additionally, the Administrator determined that Apartment 4E,
decontrolled in October 1986, and Apartment 11A, decontrolled in January
1988, could not be considered for comparability purposes because the
owner failed to submit either a DC-2 or RR-1 with contemporary proof of
service for either housing accommodation. Additionally, the
Administrator determined that the apartments in neighboring buildings
cited by the owner failed to meet the requirements of the Rent
Stabilization Code.
The Rent Administrator adjusted the initial legal regulated rent by
establishing a fair market rent of $1,262.83 effective September 1,
1987, the commencement date of the initial rent stabilized lease. In
addition, the Rent Administrator determined that the tenant had paid
excess rent of $68,539.20 through January 31, 1990, and directed the
owner to refund such excess rent to the tenant.
In its petition, the owner makes the following allegations:
- that the DHCR should take administrative notice of its own
records, which would indicate lawful rents for housing accommodations in
other buildings submitted by the owner for comparability purposes as
"market rents";
- that the owner submitted adequate comparability data for the A,E
and D lines of apartments in the subject building and it is both
arbitrary and capricious for the DHCR to exclude apartments which were
rented outside the permissible time limits established by DHCR;
- that the fair market rent appeal filed by the tenant in Apartment
8A was filed for the sole purpose of assisting the tenant in Apartment
15A (the complainant herein) with the express intention of having the
EK410099RO; EJ410498RT
rent for Apartment 8A not considered as a comparable rental; that such
appeal was untimely, having been filed several years after the tenant of
that apartment admittedly received the initial apartment registration
form; and that said appeal was withdrawn by the tenant pursuant to an
agreement wherein the tenant was represented by counsel. The owner
submitted a copy of this agreement and a withdrawal letter from the
tenant. Based thereon, the owner asserts that the initial rent of that
apartment becomes the legal stabilized rent and should be allowed for
purposes of comparability;
- that Apartments 11A, 4E, and PH-1 are appropriate rentals for use
as comparables;
- that the DHCR made no further inquiry regarding the documentation
submitted for Apartment 4E;
- that it is wrong for the DHCR to disallow, as a vacancy
improvement, work done by an employee of the owner, when the work done
has nothing to do with the employee's obligations and job description;
- that the DHCR failed to include the cost of an approved major
capital improvement in the tenant's rent;
- that the Administrator miscalculated the 1986 MBR and fuel cost
adjustment; and
- that the Administrator failed to consider the owner's timely
October 9, 1990 filing, submitted in response to a DHCR request, thus
denying the owner due process of law.
In response to the owner's petition, the tenant alleges, among other
things, that the buildings submitted as comparables by the owner are all
of a much higher calibre than the subject building; that the owner did
not meet the DHCR's requirements for documentation for the material
submitted; that with respect to the improvements provided by the
building superintendent, the owner's position is groundless, since,
among other things, work done by building employees is automatically
excluded; and that the bathrooms were not retiled, but merely repaired.
In his petition for administrative review, Docket No. EJ410498RT, the
tenant alleges that the owner did not file a timely petition for
administrative review of the order issued on January 30, 1990, under
Docket No. BK420583-R. The tenant further alleges that the owner's
claim not to have copies of the correct response forms for fair market
rent appeals is spurious; that it is a tactic to delay resolution of the
proceedings. The tenant requests reinstatement of the order of January
30, 1990.
The Commissioner is of the opinion that the owner's petition should be
granted in part, that the tenant's petition should be denied, and that
the order of the Administrator should be modified.
EK410099RO; EJ410498RT
Pursuant to Section 2522.3(e) and (f) of the Rent Stabilization Code,
effective May 1,1987, for fair market rent appeals filed after April 1,
1984, comparability will be determined based on the following:
(e) (1) Legal regulated rents, for which the time to file a Fair
Market Rent Appeal has expired and no Fair Market Rent Appeal
is then pending, or the Fair Market Rent Appeal has been
finally determined, charged pursuant to a lease commencing
within a four year period prior to, or a one year period
subsequent to, the commencement date of the initial lease for
the housing accommodation involved; and
(2) At the owner's option, market rents in effect for other
comparable housing accommodations on the date of the initial
lease for the housing accommodation involved as submitted by
the owner.
(f) Where the rents of the comparable housing accommodations being
considered are legal regulated rents, for which the time to
file a Fair Market Rent Appeal has expired, and such rents
are charged pursuant to a lease ending more than 1 year prior
to the commencement date of the initial lease for the subject
housing accommodation, such rents shall be updated by
guidelines increases for 1 year renewal leases, commencing
with the expiration of the initial lease for the comparable
housing accommodations to a date within 12 months prior to the
renting of the housing accommodations involved.
The owner objects to the Administrator's exclusion of all three proposed
comparables in the same building, #8A, #4E, and #11A. Section 2522.3(e)
of the Rent Stabilization Code, cited above, states the time limitations
for the initial stabilized rental of a comparable apartment. With
regard to Apartment #4E, the record indicates that the owner submitted
to the Administrator a Notice of Vacancy Decontrol for that apartment
and a copy of a signed certified mail return receipt which has no postal
stamp and is undated. (The owner also states that an affidavit from the
managing agent attesting to service of the notice was submitted.)
Regarding the owner's assertion that the Administrator failed to send a
follow-up notice to the owner regarding the insufficiency of the
documentation for Apartment 4E, it is noted that the Administrator did
send such notice on August 24, 1990. The Commissioner finds that the
owner's documentation, particularly the undated return receipt with no
postmark, is inadequate to prove service of the DC-2A notice on the
tenant of Apartment 4E, and therefore, that apartment was properly not
used as a comparable. With regard to Apartment #11A, the owner
submitted a DC-2A notice dated and initialed by the tenant. The owner
contends that this submission documents the tenant's receipt of the DC-
2A, notice and accordingly Apartment 11A must be utilized for
comparability purposes. The Commissioner finds that this documentation
is inadequate to prove service of the DC-2A notice on the tenant of
Apartment 11A since it fails to show that service was made by Certified
Mail, as required under the Rent Stabilization Code, and therefore that
EK410099RO; EJ410498RT
that apartment was properly not used as a comparable. With regard to
Apartment #8A, the withdrawal agreement signed by the tenant of that
apartment was entered into after the issuance of the Administrator's
order in this case and therefore, at the time the owner was asked to
submit comparability data, the submission of Apartment 8A as a
comparable was improper because of the pending fair market rent appeal.
With regard to the owner's proposed comparables for apartments in
buildings in the same general area, the owner submitted those apartments
as market rents under Option B. However, the owner has indicated that
those apartments are rent stabilized; they are, therefore, not
appropriate for consideration as market rents. In addition, the owner
failed to submit adequate data for those apartments to be considered as
legal regulated rents under Option A. Although the owner has requested
that the comparability study be based on DHCR's registration records,
the owner is required to submit the comparability data which the owner
wishes to have considered in the comparability study. Court precedent
has held that comparability in fair market rent appeal cases must be
based on individualized studies and that where no comparability data is
available, the fair market rent may be determined based on the special
fair market guidelines alone. The DHCR is not obligated to search its
records for usable comparability data, which might not be available in
every case. If an owner wishes to exercise the option of having the
comparability data considered in the determination of the fair market
rent, the burden is on the owner to submit such data, including data for
complete lines of apartments, leases or other rental documentation, as
well as proof of service of initial legal regulated rent notices (DC-2
notices) or apartment registration forms, which is not available from
DHCR records. The Commissioner therefore finds that this portion of the
owner's petition should be denied.
With regard to the owner's attempted use of Apartment PH-1 as a
comparable housing accommodation, the Commissioner notes that the use of
this five-room penthouse apartment is inappropriate. The Division's
position is that in order to be considered comparable, a housing
accommodation must be similarly sized with a similar layout to the
subject apartment. Accordingly, even if timely submitted, PH-1, as a
five room penthouse apartment, cannot be utilized as a comparable for
the six-room housing accommodation that is the subject of this case.
Regarding the Administrator's disallowance of the work performed by the
superintendent, the Commissioner finds that that was error. The owner
has adequately substantiated this expense with a bill and cancelled
checks. The instant case is distinguishable from the preponderance of
comparable cases in that the work under consideration was not part of
the regular duties of this employee, and his labor caused an expense in
addition to his regular salary. Therefore, an allowance for tile work
of $95.00 ($3,800.00 40) will be granted, resulting in a total increase
for improvements of $306.51.
With regard to the owner's assertion that the Administrator improperly
applied the Special Guidelines order, the Commissioner finds that the
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record supports the Administrator's determination. The agency's records
verify a 1986 MBR of $863.50 (851.86 + $11.64 allowance for heating
system modernization under Docket No. 2AL 421610 = $863.50) and a 1987
fuel cost adjustment of $12.60. As the tenant took occupancy in
September 1987, the applicable fuel cost adjustment in the instant case
was the 1987 fuel cost adjustment. Accordingly, the MBR and the fuel
cost adjustment used by the Administrator were correct.
The owner is correct in its contention that the DHCR erred in omitting
an approved rent increase for major capital improvement. On February
14, 1989, under Docket No. AF30098 OM, an order approving a rent
increase for major capital improvement of $23.55 per room per month,
effective October 1, 1986 and collectible March 1, 1989, was issued.
The Commissioner finds that such increase should be included in the
calculation of the fair market rent, and has been incorporated into the
Rent Calculation Chart appended hereto, which is hereby made a part of
this order. The Commissioner notes that the Administrator erroneously
calculated excess rent through January 31, 1990, rather than through the
month of issuance of his order, i.e., October, 1990. That error has
been corrected in the attached chart.
Concerning the tenant's petition for administrative review, the
Commissioner finds that the owner's petition for administrative review
against the order Docket No. BK420583-R was timely filed and that it was
appropriate to remand the proceeding. The tenant's bare allegations
concerning the intentions of the owner are unsupported by the record.
Accordingly, the Commissioner is of the opinion that the tenant's
petition should be denied.
The owner is directed to roll back the rent to the lawful stabilized
rent consistent with this decision and to refund the excess rent
collected by the owner. The total amount of excess rent is $82,366.32.
In the event the owner does not take appropriate action to comply within
sixty (60) days from the date of issuance of this order, the tenant may
credit the excess rent collected by the owner against the next month(s)
rent until fully offset.
The owner is directed to reflect the findings and determinations made in
this order on all future registrations 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 greater than that determined by this order plus any lawful
increases.
THEREFORE, in accordance with the provisions of the Rent Stabilization
Law and Code, it is
ORDERED, that the owner's petition for administrative review be, and the
same hereby is, granted in part, that the tenant's petition for
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administrative review be, and the same hereby is, denied, and that the
order of the Rent Administrator be, and the same hereby is, modified
pursuant to this order and opinion.
ISSUED:
JOSEPH A. D'AGOSTA
Deputy Commissioner
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