ADM. REVIEW DOCKET NO.: FG 410356 RO

                                  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  SJR 6063
          IN THE MATTER OF THE ADMINISTRATIVE :  ADMINISTRATIVE REVIEW
          APPEAL OF                              DOCKET NO.:               
                                                 FG 410356 RO   
                                              :
                                                 DRO DOCKET NO.:          
                                                 ZCE 410418 R               
                    
             JONATHAN WOODNER COMPANY                                
                                                  
                                                 Tenants - Allan & Gail     
                                                           Abramowitz
                              PETITIONER      : 
          ------------------------------------X                             

            ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW


               On July 24, 1991, the above-named petitioner-owner  filed  a
          Petition for Administrative Review against  an  order  issued  on
          June 20, 1991 by the Rent Administrator, 92-31 Union Hall Street, 
          Jamaica, New York, concerning the housing accommodation known  as
          888 Eighth Avenue, Apartment No. 10F, New York, New York  wherein
          the  Administrator  determined  that  an  overcharge   had   been
          collected  and  directed  the  owner  to  refund  overcharges  of
          $67,572.13 inclusive of treble damages and excess security.

               Subsequent thereto, the petitioner filed a petition  in  the
          Supreme Court pursuant to Article 78 of the  Civil  Practice  Law
          and  Rules  requesting  that   the   "deemed   denial"   of   his
          administrative appeal be annulled. 

               Pursuant to a stipulation,  dated  February  13,  1992,  the
          matter was remitted  for  an  expeditious  determination  of  the
          petitioner's appeal.

               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 in the administrative appeal.  






                A review of the record indicates that on May 31, 1988,  the
          tenants filed a complaint of rent overcharge wherein they  stated
          that they had moved into the subject apartment on March  1,  1988
          pursuant to a lease commencing March 1, 1988 and  terminating  on
          February 28, 1990 at a monthly rent of $1988.00,  and  that  they
          believed the prior tenants had paid a much lower rent.  







          ADM. REVIEW DOCKET NO.: FG 410356 RO
               On June 15, 1988, a copy of the complaint and  answer  forms
          to fill out were served on the owner. 

               In response, the owner submitted a lease history  commencing
          August 1, 1984 and stated that the  complainant's  rent  included
          all allowable guidelines increases.  The owner asserted that  the
          subject apartment  had  been  totally  renovated  at  a  cost  of
          $25,134.00 and  that  the  rent  included  1/40th  of  the  cost.
          Although the owner did not submit substantiating documentation at 
          that time, subsequently, on January 2, 1991, the owner  submitted
          invoices and cancelled  checks  which  it  alleged  substantiated
          $15,630.89 of the claimed total cost.    

               In reply, the  tenant  disputed  that  all  of  the  claimed
          improvements had been made and further disputed the  validity  of
          the submitted documents. 

               In the order here under review, the Administrator found that 
          the owner had established its entitlement to a rent  increase  of
          only $130.48 for claimed improvements or 1/40th of $5219.10.  The 
          owner was directed to refund overcharges of $67,572.13  inclusive
          of treble damages and excess security. 

               In   its   appeal,   the   owner   seeks   to   modify   the
          Administrator's order and raises the following issues:

                    1)  Although the owner submitted evidence of
                        $25,135.00 in expenditures, the 
                        Administrator incorrectly disallowed all
                        but $5,219.10. 

                    2)  The Administrator determined that the 
                        owner had willfully overcharged and
                        assessed treble damages without any 
                        evidence that the overcharge was 
                        willful.  The owner contends that it 
                        established by a preponderance of the
                        evidence, i.e. the submission of  





                        documents in support of the renovation
                        expenditures, that the overcharge was 
                        not willful; therefore, the DHCR should
                        not have imposed treble damages without  
                        a hearing on the issue of willfulness.

                        Since the finding of willfulness affects
                        the owner's property rights, the owner
                        believes it is entitled to a trial type
                        hearing on this issue.

                    3)  The Administrator erroneously concluded         
                        that the tenant had filed a PAR against 
                        an order granting an MCI increase and    
                        disallowed the collection of the 
                        retroactive portion of the increase.






          ADM. REVIEW DOCKET NO.: FG 410356 RO

               The owner concedes that it  did  not  submit  substantiating
          evidence of the installation of a parquet  floor  at  a  cost  of
          $9,494.86 and therefore acknowledges an overcharge of $10,224.46. 
          However, as the inclusion of the  floor's  cost  was  based  upon
          advice from its superintendent that  the  installation  had  been
          completed, the owner denies that the overcharge was willful.  The 
          owner thus requests  that  the  order  be  modified  to  find  an
          overcharge of only $10, 224.46 and to eliminate  the  finding  of
          willfulness and the assessment of treble damages.

               The tenants contend that the owner is submitting  fraudulent
          and falsified information in an effort to delude the DHCR and  to
          justify the unlawful rent it collected; the owner never submitted 
          substantiating documents of the cost alleged, $25,135.00, did not 
          make all the improvements alleged to  have  been  made,  did  not
          install a parquet floor, and did  not  employ  outside  labor  as
          alleged in the appeal.  Since the owner has failed  to  meet  its
          burden to prove that it did not  act  willfully,  no  hearing  is
          required and the treble damages  which  were  awarded  should  be
          sustained.  The tenants  also  contend  that  they  filed  a  PAR
          against the MCI increase as members of the tenants association.  

               After careful consideration,  the  Commissioner  is  of  the
          opinion that this petition should be denied.

               An owner is entitled to a rent  increase  pursuant  to  Code
          Section 2522.4(a)(1) where there has been a substantial  increase
          of  dwelling  space  or  an  increase   in   the   services,   or
          installation of new equipment or improvements, provided in or  to
          the tenant's housing accommodation, on written tenant consent  to
          the increase.  In the case of vacant housing accommodations, 


          tenant consent shall not be required.  Where the  rent  has  been
          challenged, as in the instant case, an owner must establish  that
          the claimed improvement has actually been made at the cost 
          alleged.  The owner has the burden  of  preserving  its  business
          records and submitting  proof  in  the  form  of  contemporaneous
          invoices  and  cancelled  checks.   Approval   of   the   claimed
          improvement for a rent increase is subject to evaluation by the 
          Rent Administrator.  After evaluating the submitted evidence, the
          Administrator  determined  that  only  $5,219.10  of  the  amount
          claimed qualified for a rent increase pursuant  to  Code  Section
          2522.4(a)(1).     

               Review of  the  record  reveals  that  the  owner  submitted
          invoices with a value of $15,639.14 not $25,134.00 as alleged  by
          the owner in the appeal.  The difference, $9494.86, is  accounted
          for by the alleged installation of  a  parquet  floor  which  the
          owner concedes it cannot substantiate.  Of the  total  submitted,
          only  the  following  items   were   found   qualified   by   the
          Administrator for a rent increase:  1) refrigerator,  dishwasher,
          range and hood in the amount  of  $1261.56,  2)  marble  top  and
          medicine chest in the amount of $611.61, 3) kitchen cabinetry for 
          $2,348.14, and 4) venetian blinds in the amount of $997.79.   The
          Administrator correctly denied amounts covered by  the  following
          invoices:  1) Paniflex - $65.17, 2) Paniflex - $501.14, 3)  Grand
          Lumber $227.33, 4) Grand Lumber -  $117.72,  5)  Grand  Lumber  -






          ADM. REVIEW DOCKET NO.: FG 410356 RO
          $684.68, 6) Best Plumbing specialties  -  $36.55,  7)  Ty  &  Co.
          $142.94, 8) J & D Communication $88.77, 9) Tudor Electric  Supply
          $110.96 and 10) 22" Milano cabinet  for  $194.85  since  physical
          inspection conducted at subject apartment on  February  20,  1991
          disclosed that this item had not been installed  in  the  subject
          apartment.  These amounts were denied on  the  grounds  that  the
          documents  submitted   failed   to   substantiate   the   claimed
          improvements in the subject  apartment.   An  owner  must  submit
          clear evidence of the claimed improvement and  its  cost  in  the
          form of an itemized invoice which specifies the  given  apartment
          and a cancelled check signifying payment.  In the absence of such 
          clear proof, the Administrator correctly disallowed  the  amounts
          claimed.       

               Rent increases for the following items were  also  correctly
          disallowed:

                    1) Painting costs of $100.00 and $645.00.   
                       Painting is considered normal maintenance
                       and thus ineligible for a rent increase.  





                    2) $692.26 for a chateau oven allegedly 
                       installed in February 1986 during a 
                       prior tenancy.  The owner did not submit  
                       that tenant's consent.  Moreover, since
                       the owner did not take the increase at 
                       that time, the owner is deemed to have 
                       waived it.

                    3) $6,804.42 for labor costs.  The owner 
                       submitted no documentation to establish
                       that any work in the subject apartment
                       was performed by "outside" workers or   
                       by its own employees outside the normal 
                       course of their duties.

               In addition, the owner did not submit  copies  of  cancelled
          checks  to  substantiate  its  claimed  labor  costs  but  merely
          submitted a statement of "labor calculation" showing a total cost 
          of $22,681.39 of which 30% - $6804.42 was  apparently  attributed
          to renovations  in  the  subject  apartment  and  also  submitted
          employee  earnings  records.   Accordingly,  labor   costs   were
          properly disallowed. 

          The  Commissioner  finds  no   error   in   the   Administrator's
          determination  that  only  $5219.10   of   claimed   improvements
          qualified for a rent increase.
                       
               The Commissioner notes that since the prior tenant  has  not
          had  the  benefit  of  the  improvements,  a  rent  increase  for
          improvements made during a vacancy period are added to  the  rent
          after computing guidelines increases.

               Pursuant to Section 26-516 of the Rent Stabilization Law, an 
          owner who is found to  have  collected  an  overcharge  shall  be






          ADM. REVIEW DOCKET NO.: FG 410356 RO
          liable to the tenant for a  penalty  equal  to  three  times  the
          amount of the overcharge.  The statute creates a  presumption  of
          willfulness subject to rebuttal by the  owner.   The  owner  must
          prove by a preponderance of the evidence that the overcharge  was
          not a willful act.  Where an owner submits no evidence  or  where
          the evidence is equally balanced, the overcharge is deemed to  be
          willful and treble damages shall be imposed.   The  owner  herein
          failed to satisfy its burden to establish  lack  of  willfulness.
          It is noted that the owner has submitted questionable documentary 
          evidence during the course of  this  proceeding  especially  with
          respect to the alleged installation of the parquet floor.  In 





          addition, a physical inspection disclosed that an item claimed to 
          be installed by the owner was in fact not installed.  
          Accordingly, the  Commissioner  finds  that  application  of  the
          treble damages penalty was appropriate. 

               Due process requires full consideration of all issues raised 
          by the parties to the administrative  proceeding.   However,  the
          resolution of these issues does not necessarily require  an  oral
          hearing which is discretionary and not mandated by law.  Where  a
          finding can be made upon the record before  the  agency,  such  a
          hearing is not mandated.  It is noted that the  owner  had  ample
          opportunity to submit evidence.  The Commissioner finds that  the
          evidence and written submissions in the record are sufficient  to
          render an administrative determination.      

               An examination of Division records reveals that  a  Petition
          for Administrative Review against Order  Number  ZCF  430104  OM,
          which granted a rent  increase  for  Major  Capital  Improvements
          (MCI), was filed.  Since there is a pending  appeal  against  the
          MCI, it was appropriate to stay the collection of the retroactive 
          portion  of  the  increase  until  the  issuance   of   the   PAR
          determination.      

               Upon the expiration of the period in  which  the  owner  may
          institute a proceeding pursuant to Article Seventy-Eight  of  the
          Civil Practice Law  and  Rules,  this  order  may  be  filed  and
          enforced by the tenant in the same manner as a judgment. 

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

               ORDERED, that this petition be,  and  the  same  hereby  is,
          denied, and the Rent  Administrator's  order  be,  and  the  same
          hereby is, affirmed.

          ISSUED:






                                                                        






          ADM. REVIEW DOCKET NO.: FG 410356 RO
                                          JOSEPH A. D'AGOSTA
                                          Acting Deputy Commissioner




                                                    

    

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