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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 NOS.: FI 210079 RT
FJ 210182 RO
121 NORTH 5TH STREET CORPORATION
AND DRO DOCKET NO.: BJ 210169 RV
GAIL VACHON / JON RUBIN,
PETITIONERS
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ORDER AND OPINION DENYING OWNER'S PETITION
FOR ADMINISTRATIVE REVIEW
AND
GRANTING TENANTS' PETITION FOR ADMINISTRATIVE REVIEW
On September 20, 1991 and on September 18, 1991, the above-named
petitioners filed Petitions for Administrative Review against an
order issued on August 16, 1991 by the Rent Administrator, 92-31
Union Hall Street, Jamaica, New York concerning the housing
accommodations known as 121 North 5th Street, Apartment 2L,
Brooklyn, New York wherein the Rent Administrator determined that
the tenant was entitled to a renewal lease pursuant to the Rent
Stabilization Code and that an additional space rented by the
tenant did not constitute an ancillary service. The owner's
petition was rejected on October 9, 1991 and the owner timely
refiled its petition.
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.
This proceeding was commenced on October 26, 1987 when the tenants
filed a complaint alleging that the owner had failed to offer a
renewal lease.
In response to the complaint, the current owner asserted that since
the subject apartment is not rent stabilized, the tenants are not
entitled to a renewal lease. The owner explained that the former
owner, in reliance on the written opinion of the DHCR that a change
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in the number of rental units from six to five would serve to
remove the premises from the jurisdiction of the Rent Stabilization
Law, had effected the alteration before leasing the subject
apartment to the complainants. Having informed the tenants of the
change in status of the subject accommodations, the owner asserts
that the tenants had no expectation ab initio of receiving any
benefits attaching to a rent stabilized apartment. In support
thereof, the owner submitted a copy of a letter from the then -
Deputy Counsel of the DHCR in which he stated that the alteration
proposed by the owner would have the effect desired by the owner.
While this proceeding was pending, the owner commenced a holdover
proceeding seeking to recover possession of a small space rented in
addition to the subject apartment by the tenants. In that
proceeding, the Court held that the space was neither a housing
accommodation nor part of one but was raw space rented to the
tenants as storage space and rendered a final judgment awarding
possession of the space to the owner.
The tenants took an appeal to the Supreme Court, Appellate Term
from the judgment. Although the issue was not before it, the Court
reasoned that the status of the subject apartment, stabilized or
not, was essential to a determination as to who was entitled to
possession of the raw space. Because the subject building
contained six housing accommodations on the date it first became
subject to the RSL, the court found that the tenants were entitled
to rent stabilized status and remanded the matter pending DHCR
determination of the issue of whether the subject space is a
required or ancillary service as defined by the Rent Stabilization
Code.
In the order here under review, the Administrator determined that
the subject housing accommodations is subject to the RSL and that
the raw space is not an ancillary service under the jurisdiction of
the RSL. The Administrator directed the owner to offer the tenant
a renewal lease and to register the subject building.
In its appeal, the owner contends that the Administrator erred in
finding the premises subject to the RSL without giving sufficient
consideration to the written opinion of the prior Deputy Counsel
advising that units in the subject building would be removed from
the jurisdiction of the Emergency Tenant Protection Act of 1974
after the tenants in occupancy at the time of conversion from six
units to five units left the premises.
In their appeal, the tenants contend that the Administrator erred
in determining that the space rented concomitantly with the
original leasing of the apartment was not an ancillary service.
The tenants further contend that the Administrator ignored the
guidance provided by the Supreme Court, Appellate Term in directing
that a determination be made as to whether the rented space is a
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required or ancillary service.
In reply, the owner contends that the tenants are attempting to
gain benefits not granted under the contract for the space which
limited the rental to a specified term or by the definition of
ancillary services provided by the Rent Stabilization Code. The
owner asserts that the tenants have misunderstood the directive of
the Court as requiring a finding that the space constitutes a
required or ancillary service as defined by Section 2520.6(r)(3) of
the Code.
After careful consideration, the Commissioner is of the opinion
that the owner's petition should be denied and that the tenants'
petition should be granted.
The Supreme Court, Appellate Term found on the facts and on the law
that the apartment was subject to the RSL and that the tenants
herein were entitled to its benefits.
Under the Code if a building contained six or more dwelling units
on the date the building became subject to the RSL (such as the
subject premises herein) any subsequent decrease in the number of
units will not change the rent stabilization status of the building
and vacancy destabilization will not occur.
The tenants cannot be deprived of the benefits provided by the law
by an opinion based on an incorrect interpretation. A review of
the record reveals that the Deputy Counsel's opinion in 1984 was
not thereafter followed by the DHCR in decisions issued before the
owner made the alteration herein. See BJ 430066 RO.
With respect to the court's directive regarding the status of the
space here at issue, Section 2520.6(r)(3) of the Code defines
ancillary services as that space and those required services not
contained within the individual housing accommodation which the
owner was providing on applicable base dates and any additional
space or services provided or required to be provided thereafter by
applicable law. Ancillary services may include, but are not
limited to, garage facilities, laundry facilities, recreational
facilities, and security. The Code does not require, as the owner
argues, that ancillary services must be available on a building-
wide basis. Contrary to the owner's assertions, the space fits the
Code's definition of an ancillary service and is subject to the
jurisdiction of the RSL. Pursuant to Section 2520.13 of the Code,
the tenants' statutory rights cannot be diminished by contractual
limitations.
THEREFORE, in accordance with the Rent Stabilization Law and Code,
it is
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ORDERED, that the owner's petition be, and the same hereby is,
denied, that the tenants' petition be and the same hereby is
granted and the Rent Administrator's order be, and the same hereby
is, modified in accordance with this Order and Opinion to state
that "raw space" rented by the tenants on the same floor as the
subject apartment is an ancillary service subject to the Rent
Stabilization Law and Code. In all other respects, the Rent
Administrator's order is affirmed.
ISSUED:
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JOSEPH A. D'AGOSTA
Acting Deputy Commissioner
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