FJ 510191-RO
                                  STATE OF NEW YORK
                      DIVISION OF HOUSING AND COMMUNITY RENEWAL
                            OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                                  JAMAICA, NY 11433




          ----------------------------------x     S.J.R. No.: 6252
          IN THE MATTER OF THE ADMINISTRATIVE     ADMINISTRATIVE  REVIEW
          APPEAL OF                               DOCKET NO.:   
                                                  FJ 510191-RO
              AXELROD            MANAGEMENT            CO.,            INC.
          c/o FINKELSTEIN, BORAH, et al.          RENT ADMINISTRATOR'S
                                                  DOCKET NO.:
                                   PETITIONER     DF 530032-B           
          ----------------------------------x 


                                                       
            ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW  
                                          


          On October 2, 1991, the above-named owner filed  a  petition  for
          administrative review of an order issued on August 28,  1991,  by
          a Rent Administrator concerning the building known as 2300 
          Fifth Avenue, New York, New York, wherein rents were reduced  due
          to a diminution of services.

          Subsequent thereto, the petitioner, deeming its petition  denied,
          commenced a proceeding in the Supreme  Court,  New  York  County,
          pursuant to Article 78 of the Civil Practice Law and Rules.   The
          matter was remitted to the  Division  of  Housing  and  Community
          Renewal (DHCR) based upon a  stipulation  of  settlement  entered
          into on April 6, 1992.

          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 petition for review.

          On June 9, 1989, various tenants of the subject building filed an 
          application for rent reductions  based  on  the  owner's  alleged
          failure to maintain services alleging a  multiplicity  of  defic-
          iencies in the subject building.





          On July 19, 1989, the owner interposed an answer to the  tenant's
          complaint wherein it alleged that  there  was  no  diminution  of
          services in the building.

          On December  7,  1989,  a  physical  inspection  of  the  subject
          building was carried out by the Division of Housing and Community 
          Renewal.  The inspector, in his report, noted that  many  of  the
          alleged service deficiencies did not exist or  had  already  been






          FJ 510191-RO
          cured and that certain others did exist and had not been cured.

          On May 9, 1990, the Rent Administrator informed  the  owner  that
          the DHCR inspection had revealed five items which were not  being
          maintained.  The owner was directed to repair or cure these con-
          ditions and to submit proof thereof to  the  Rent  Administrator.
          The five cited conditions were:

               1.   Third floor stair railing was loose.
               2.   The side entrance  vestibule  door  was  missing  a
                    knob.
               3.    The  ledge  inside  the  main  entrance  door  was
                    broken and door does not lock.
               4.   The building's address is missing a number on  both
                    sides of the building.
               5.   The playground had  large  cracks  in  the  ground,
                    swings  were  missing  and  see-saws  were  missing
                    boards.

          On May 21, 1990, the owner informed the Rent  Administrator  that
          these cited items had been corrected.

          On July 5, 1990, the owner by its attorneys submitted a  Stipula-
          tion of Settlement which had been "So Ordered" by Judge Gould  on
          March 2, 1990 and signed by both parties'  counsels.   The  owner
          stated that twenty-eight of the tenants who were parties  to  the
          DHCR complaint had signed the Stipulation of Settlement.

          On January 23, 1991 a physical inspection of  the  subject  prem-
          ises was carried out by the DHCR.  The inspector  in  his  report
          noted inter alia that the entrance door top left pane was cracked 
          and that the lower right pane was  missing,  that  the  vestibule
          door top right pane was cracked.   The  inspector  further  noted
          that the beam in  front  of  the  northeast  vestibule  door  was
          plastered but not painted and that there  was  "evidence  of  the
          building address of the northeast side was not legible."






          On August 28, 1991, the Rent Administrator issued the order  here
          under review finding that a diminution of services  had  occurred
          and reducing the tenants' rents to the levels in effect prior  to
          the last rent guidelines increases  which  commenced  before  the
          effective date of the rent reductions.

          In its petition for  administrative  review  the  owner  requests
          reversal of the Rent Administrator's  order  alleging  it  to  be
          arbitrary and capricious in that it failed to  consider  a  valid
          and binding Stipulation of Settlement entered into by 28  of  the
          complainants and these 28 tenants should not have  been  included
          in the proceeding.  The owner alleges, inter alia, 

                    The  "defective"  services  were   either   not
                    part  of  the  original  complaint   and   were
                    therefore erroneously included  in  the  order,
                    were deminimus (sic) in  nature  and  not  war-






          FJ 510191-RO
                    ranting  of  a  rent  reduction,  or  were  not
                    listed as  "defective"  on  a  prior  DHCR  in-
                    spection report, and  therefore  occurred  only
                    after the complaint was filed.

          In answer to the owner's petition the tenant  of  apartment  17-N
          contends, in substance, that the tenants are entitled  to  relief
          from both the DHCR and the Court and requests  that  the  owner's
          petition be denied.

          In reply to the tenant's answer the owner submitted the  tenant's
          affidavit, dated September 11, 1991, in support of a  motion  for
          relief in the  Housing  Court  pursuant  to  the  Stipulation  of
          Settlement.

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

          The Commissioner notes that the Stipulation of  Settlement  which
          was "So Ordered" by Judge Gould on  March  2,  1990  settled  all
          claims between the parties to date,  encompassed  the  issues  of
          rent abatements and repairs, and provided that the  proper  forum
          for relief regarding repair issues was to be the  Housing  Court.
          This Stipulation was valid and binding  and  effectively  settled
          this controversy between the owner and the  twenty-eight  tenants
          who were parties to it.  Accordingly, the Commissioner finds that 
          the Rent Administrator's  order  should  be  revoked  as  to  the
          tenants of apartments: 1F, 2D, 3E, 3S, 5C, 5F, 5J,  6B,  6J,  6M,
          6N, 7F, 7J, 8E, 8F, 10M, 11E, 11S, 12D, 12M, 14D, 14F, 15H,  15P,
          16A, 16E, 16P and 17N. 




          In regard to the remaining tenants who were not  parties  to  the
          aforementioned Stipulation of Settlement the Commissioner finds:

               a)   The tenants'  complaint  made  no  mention  of  any
                    deficiencies in regard  to  any  unpainted  ceiling
                    beams in front of  the  northeast  vestibule  door.
                    Accordingly, it was a violation of due process  for
                    the Rent  Administrator  to  base  rent  reductions
                    thereupon in the absence of  notice  to  the  owner
                    and an opportunity  to  correct  the  condition  or
                    interpose an answer regarding this item.
           
               b)   The inspection report of  December  7,  1989  cited
                    five items found to be  deficient  (cf.supra).   No
                    mention was made in this report of any  cracked  or
                    missing window panes in the entrance  or  vestibule
                    door.   The  Rent  Administrator's  notice  to  the
                    owner of May 9, 1990 did not direct  the  owner  to
                    repair  any  cracked  or  missing  panes.   In  the
                    opinion of  the  Commissioner  a  reasonable  owner
                    acting to effectuate repairs would not, relying  on
                    the Rent Administrator's directives  based  on  the
                    inspection report, be on notice as to these  items.
                    Since, therefore, missing and  cracked  panes  were
                    not cited  in  the  December  7,  1989  inspector's






          FJ 510191-RO
               report or in the May 9, 1990  Rent  Administrator's
                    notice, these  conditions  must  have  occurred  or
                    recurred subsequent to those dates  and  the  owner
                    was not on notice.  Accordingly, it  was  a  viola-
                    tion of due process to issue rent reductions  based
                    thereon.

               c)   The remaining item cited by the Rent  Administrator
                    "the building address on the northeast side of  the
                    premises is not legible," is,  in  the  opinion  of
                    the Commissioner  an  insufficient  basis  for  the
                    building-wide rent reductions  which  were  ordered
                    because the scope and extent of  the  cited  condi-
                    tion does not amount to  a  diminution  of  service
                    within the meaning of the Rent Stabilization Code.

          Accordingly, for all of  the  hereinabove-mentioned  reasons  the
          Commissioner finds that the Rent Administrator's order can not be 
          sustained and should be revoked.






          This Order and Opinion  is  without  prejudice  to  the  tenants'
          rights to refile an application for rent reductions  based  on  a
          diminution of services if the facts so warrant.  This  Order  and
          Opinion is issued without prejudice to the rights of the  parties
          in regard to the Housing Court proceeding.


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

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


          ISSUED:



                                                                           
                                                   JOSEPH A. D'AGOSTA
                                                   Acting Deputy Commissioner
    

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