FD 410318 RO
STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO. FD 410318 RO
: DISTRICT RENT OFFICE
Trafalgar Properties, Inc., DOCKET NO. BA 410624 R
TENANT: Joanne Tolassi
ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
On April 29, 1991, the above-named owner timely refiled a Petition for
Administrative Review against an order issued by a Rent Administrator on
August 24, 1990, concerning the housing accommodations known as 105 East
2nd Street, Apt E, New York, New York, wherein the Administrator found
that the owner had overcharged the tenant.
The Administrative Appeal is being determined pursuant to Sections
2522.4 and 2526.1 of the 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 issue
raised by the Administrative Appeal.
The proceeding originated with the tenant's overcharge complaint of
February 12, 1987. In answering same the owner stated that during the
vacancy before the complainant's occupancy, the apartment had been
substantially altered and comprehensively rehabilitated at a cost of
over $14,000, such rehabilitation having included new walls and a new
bathroom, inter alia. The owner included a listing of the contractors
employed and the "work performed" by each, to wit: "Ayala, Reno Prep,"
"Best, Appliances," "Dukovny, Kitchen lino," "Gifford, Dynavent,"
"Johnson, Debris removal," "Marshall, Electrics," Menzies, GC" and
"Uiberall, Plumbing." The owner also submitted copies of proposals,
bills and contracts, and cancelled and endorsed checks, to document the
above; among those was an unsigned memorandum ("contract" herein) headed
"Simon Menzies," describing the work as "general contracting services"
and stating: that the payments would be made throughout 1985 as funds
became available; that Menzies was permitted to authorize contractors to
bill the owner directly; and that Menzies understood that the apartment
FD 410318 RO
was to be rented as of February 1, 1985, and would schedule the work
accordingly. The contract was accompanied by documentation of $8400
paid to Menzies, in eleven installments from February 1 to August 16,
In replying to the owner's answer, the tenant stated inter alia: "Also
noted is the workmanship, and subsequent price of renovations seem
dubious at best to present tenants."
The aforementioned Administrator's order followed. It allowed a vacancy
increase equal to 1/40 of the cost of the aforementioned vacancy
improvements, less the $8400 paid to Menzies, citing an absence of proof
as to what the latter fee was for and whether it was necessary. From
the overcharge calculation made in that order, the owner now appeals.
In this petition, the owner alleges in substance: that the
Administrator's aforementioned refusal to include the $8400 paid to Mr.
Menzies in calculating the vacancy-improvement increase was incorrect;
that the Administrator should have realized that "standard general
contracting services" were to be provided, employment of a general
contractor being common in construction projects; that supervision of
the entire project is necessary where, as here, there are seven other
contractors involved; that the Administrator could have had his doubts
resolved as to the need for such services by requesting additional
information to clarify same; that Mr. Menzies had procured the sub-
contractors; and that in addition to coordinating the work of others,
Menzies had removed and rebuilt all interior walls and completely
renovated the bathroom.
In an accompanying affidavit Mr. Menzies (a) sets forth his duties as
general contractor, (b) states that he also had to provide any
renovation work not performed by the subcontractors, (c) sets forth the
details of the aforementioned wall and bathroom work (including inter
alia the installation of new bathroom fixtures), and (d) evaluates the
wall work at $2100 and the bathroom work at $4200.
On October 29, 1990, the tenant responded to the initial filing of this
petition, stating (1) that the work in question was purportedly done
after the date of the tenant's occupancy, and that that was simply not
true and (2) that any work performed prior to the tenant's occupancy was
highly overpriced, according to "two independent contractors" consulted
by the tenant, and as exemplified by "gaping holes" left in the tenant's
floor inter alia and (3) that the Administrator had awarded the tenant
an insufficient amount for "excess security" in view of what she had
paid to a broker "in my landlord's employ."
Petitioner's reply of November 1990 states: that the work was clearly
performed before the tenant took occupancy; that lower estimates that a
tenant may submit may not be considered in determining the validity of
an owner's bills for improvements; and that the owner is not responsible
for the broker's fee arrangement herein. (The reply does not address
the tenant's allegation of holes left after the wall work).
FD 410318 RO
Since the refiling of this petition, the tenant has written the
Commissioner as follows. (a) Only one wall was removed, "for which
there is still necessary floor work." Inspection of the apartment and
comparison with "other 'unrenovated' apartments in the building" will
corroborate this. (b) The bathroom sink has twice fallen off the wall.
The Commissioner is of the opinion that this petition should be granted
The sole issue is whether the owner should receive credit for the
additional $8400, during the vacancy before the tenant's occupancy, that
was paid to Menzies. (The tenant's argument concerning excess security
cannot be considered here because the tenant failed to appeal that
determination by means of her own petition.)
As summarized earlier, petitioner presents two separate arguments
corresponding to the two components of the Menzies bill. The first is
that if the Administrator failed to realize, from "the context of the
documents" the owner had submitted, that the "common practice" of
employing someone to provide "standard general contracting services" was
referred to in those documents, he should at least have sought
clarification of the "general contractor" references through a request
for further information. The other argument pertains not to supervisory
or coordinating services, but to the aforementioned wall and bathroom
jobs. "Upon information and belief," the petition states, "the
complainant is aware of these improvements and will not deny they were
For the reasons set forth below, the Commissioner will increase the rent
based on partial recognition of Menzies' "general" services, but not for
any renovation done by him directly.
The Menzies contract describes the work as "general contracting
services," adding that Menzies "is permitted to authorize contractors to
bill [the owner] directly." The Commissioner agrees that the number of
contractors involved, and the clear implication in the last-quoted
clause that Menzies had authority over them, put the Administrator on
notice to enquire as to the meaning of "general contracting services" in
this contract. Because he did not so inquire, the Commissioner will
consider for that purpose, Menzies' affidavit accompanying the instant
petition, which states in pertinent part that his duties were to
"supervise the entire renovation project by correlating the efforts of
the various specialist subcontractors." That description is sufficient
to render erroneous the total exclusion of moneys spent thereon from the
Administrator's calculation of the compensable vacancy improvement.
There was no evidence before the Administrator, on the other hand, to
indicate that walls had been replaced or the bathroom renovated. (A
submission by the owner's counsel mentioned those items, but not one
contract, bill or check corroborated that assertion.) And unlike the
supervision referred to above, those specific jobs are not implied by
the term "general contracting." With no evidence before the
FD 410318 RO
Administrator, petitioner's instant claim and the affidavit pertaining
thereto come too late for the Commissioner's consideration, since this
is not a de novo proceeding and the owner has not given a reasonable
explanation for failing to include these items in the proceeding before
the Rent Administrator.
The remaining question concerns the amount the owner reasonably paid for
Menzies' coordination of the other contractors' work. In determining
that amount the Commissioner is assuming, contrary to what the petition
states, that Menzies did not procure the others' services, and did not
supervise those of the contractor Ayala.
Each contract, bill and check in the record is between the owner and the
contractor responsible for a specific job (e.g., Marshall for electrical
work). The clause in Menzies' contract allowing the latter to permit
contractors to bill the owner directly did not, without more, establish
before the Administrator that Menzies had procured their services. (The
Commissioner would add that Menzies' aforementioned affidavit, detailing
his responsibilities as a general contractor, makes no mention of such
As to Ayala, the contract with the owner provides only that he will, "on
Christmas Day," remove old appliances and other debris "for contracting
work to begin December 26, 1984." The record thus provides no basis to
conclude that any intermediary supervised Ayala's work, or that there
was any need to "coordinate" same with other projects that had yet to
We are left with a fee for coordinating the work of six subcontractors,
who were paid a total of $5386.15. In the Commissioner's opinion, ten
percent of the cost of the job supervised is a reasonable fee for such
duties. An additional $538.62 has therefore been allowed -- in the
calculation chart appended to this order and opinion and hereby
incorporated therein -- for renovations and improvements under the lease
commencing February 1, 1985.
The Administrator's determination, in sum, will be disturbed only by the
addition of that $538.62. The remainder of the $8400 that petitioner
seeks to be added was not substantiated before the Administrator.
The Commissioner notes that although the Administrator's order was
issued on August 24, 1990, the overcharge calculation therein stops at
September 30, 1989. The Commissioner will not here extend that period
of overcharge computation. Interest, however, is calculated herein
through the date of the Administrator's order. Because of that and
because of intervening corrective changes in the way the Commissioner
calculates interest, the total refundable overcharge herein is higher
than that determined by the Administrator, despite the fact that the
Commissioner has lowered the monthly overcharge as to each lease under
Because this determination concerns lawful rents only through August 24,
FD 410318 RO
1990, the owner is cautioned to adjust subsequent rents to an amount no
greater than that determined by this order plus any lawful increases,
and to register any adjusted rents with this order and opinion being
given as the explanation for the adjustment.
This order may, upon the expiration of the period in which the owner may
institute a proceeding pursuant to Article 78 of the Civil Practice Law
and Rules, be filed and enforced in the same manner as a judgment, or
not in excess of twenty percent per month thereof may be offset against
any rent thereafter due the owner.
THEREFORE, in accordance with the Rent Stabilization Law and Code, it is
ORDERED, that this petition be, and the same hereby is, granted to the
extent set forth above. The lawful rent was $881.42 per month as of the
date of the Administrator's order; the total overcharge through
September 30, 1989, plus "excess security" and interest through the date
of said order, is $18,803.10.
JOSEPH A. D'AGOSTA
Acting Deputy Commissioner
FD 410318 RO