FJ 210092 RO

                                STATE OF NEW YORK
                          OFFICE OF RENT ADMINISTRATION
                                   GERTZ PLAZA
                             92-31 UNION HALL STREET
                             JAMAICA, NEW YORK 11433

      APPEAL OF                              DOCKET NO. FJ 210092 RO

                                          :  DISTRICT RENT ADMINISTRATOR'S
           36 Plaza Street Owners Corp.,     DOCKET NO. DF 210049 R
                                             TENANT: Thomas Marshall          

                            PETITIONER    : 

                                     IN PART

      On October 23, 1991, the above-named current-owner filed a petition for 
      administrative review of an order issued on September 18, 1991, by a 
      District Rent Administrator concerning the housing accommodations known 
      as 36 Plaza Street, Brooklyn, New York, Apartment No. 8B, wherein the 
      Administrator determined that the owner had overcharged the tenant.

      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 appeal.  

      This proceeding was commenced on June 5, 1989 by the filing of an 
      overcharge complaint.  In the complaint the tenant acknowledged that 
      some renovations had been made in the subject apartment but asserted 
      that these renovations could not justify the amount of the rent 
      increase.  The tenant noted that the subject building changed ownership 
      in August 1988 and that the alleged vacancy improvements took place 
      before the tenant took permanent occupancy on December 1, 1986.

      In its answer, the owner alleged, among other things, that the 
      Administrator should only go back to the April 1, 1985 registration 
      which was four years before the filing of the overcharge complaint.  
      Further, the owner alleged that no overcharges occurred.  It asserted 
      that the increase in rent was justified on the basis of vacancy 
      improvements of $10,681.23 done by the prior owner (Sylvia Cooperman) in 
      November of 1986.  It submitted a document entitled "Renovation Cost 
      Worksheet" apparently filled out by the owner and supplied by the 
      "Atlantic Realty Group."  Further documentation was provided by a 
      cancelled check made out to "Atlantic Coast Construction."  However, 
      this check was dated June 8, 1988.  In the alternative, the owner 

          FJ 210092 RO

      asserted that no treble damages should be assessed.

      In the order here under review, the Administrator used the registered 
      rent of April 1, 1985 as the base rental.  Further, the Administrator 
      found that the owner failed to document its list of itemized vacancy 
      improvements.  This decision was based on the fact that the work was 
      done in late 1986 and the check was dated June 8, 1988.  The 
      Administrator noted that Policy Statement 90-10 requires that cancelled 
      checks be contemporaneous with the completion of the vacancy 
      improvements.  The Administrator determined the lawful stabilization 
      rent to be $626.12 for the lease period beginning December 1, 1990.  The 
      overcharges totalled $45,679.58, including interest on overcharges 
      occurring more than two years before the filing of the complaint and 
      treble damages on overcharges occurring after that date.

      In its petition for administrative review, the owner alleges that it 
      sufficiently substantiated the vacancy improvements and complied with 
      Policy Statement 90-10.  In the alternative, the owner alleges that the 
      submissions would have been acceptable when the work was done but that 
      the Administrator was applying the more rigid standard of Policy 
      Statement 90-10 retroactively.  Again, in the alternative, the owner 
      reasserts that treble damages should not have been assessed in 
      accordance with Policy Statement 89-2.  Finally, the owner asserts that 
      the Administrator's order contains a calculation error.

      In his answer, the tenant, among other things, reasserts his claim that 
      the vacancy improvement breakdown included inflated costs.  Further, he 
      asserts that no outside construction company was involved and that 
      building employees performed the work which was done.

      In a supplemental submission, the owner submitted an affidavit from the 
      president of Atlantic Coast Construction (Stephen Cooperman) stating 
      that the previously submitted owner's "Renovation Cost Worksheet" 
      accurately described the work done.  Further, the affiant states that 
      the check was not contemporaneous with the work done because of a 
      billing error by the contractor.

      In a supplemental pleading, the tenant urges affirmation of the 
      Administrator's order and accuses the owner of fraudulent documentation 
      of the vacancy improvements.  The tenant notes the similarity of names 

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

      The Commissioner finds that the Administrator correctly disallowed the 
      alleged vacancy improvements in his order.  Policy Statement 90-10 
      states that the owner must supply the agency with at least one of the 

           (1)  Cancelled check(s) contemporaneous with the 
                completion of the work

          FJ 210092 RO

           (2)  Invoice receipt marked paid in full contemporaneous 
                with the completion of the work
           (3)  Signed contract agreement
           (4)  Contractor's affidavit indicating that the installation was 
                completed and paid in full.

      The "Renovation Cost Worksheet" submitted by the owner meets none of the 
      above standards.  Instead, it appears to be a document filled out by the 
      owner and not by an independent contractor.  As such, this document is 
      merely a self-serving declaration.  Further, the cancelled check does 
      not qualify as documentation.  More than eighteen months passed between 
      the completion of the work and the issuance of the check.  No 
      explanation was offered by the owner for this discrepancy until the 
      filing of the petition for administrative review.  The affidavit of the 
      president of the Atlantic Construction Company offers an explanation 
      which strains credulity.  It is difficult to imagine an oversight in 
      billing procedure accounting for an eighteen month delay for a large 
      amount of money.  As such, the Commissioner finds the owner has supplied 
      no documentation to meet the requirements of Policy Statement 90-10.

      Further, the Commissioner finds that the Administrator's reliance of 
      Policy Statement 90-10 was correct.  In general, DHCR will apply the 
      policies in effect at the time an order is issued, unless a showing of 
      prejudice is made by the affected party.  In this case, there is no 
      prejudice to the owner since application of Policy Statement 90-10 does 
      not involve a retroactive application of a more rigorous standard of 
      proof.  The documentation of vacancy improvements supplied by the owner 
      is insufficient under Policy Statement 90-10 and would have been 
      insufficient in 1986.

      However, the Commissioner finds that treble damages should not have been 
      assessed.  The evidence in the record, while suggestive of an equity 
      interest between the contractor and the prior owner, is insufficient for 
      the Commissioner to conclude that an equity interest existed.  
      Additionally, the tenant has acknowledged that renovations of some cost 
      and magnitude were performed in the subject apartment by the prior 
      owner.  The Administrator's finding of an overcharge was solely a 
      product of the owner's failure to document the work done.  Under these 
      circumstances, the overcharge will be found to be not willful and 
      interest rather than treble damages will be assessed on the computed 

      Therefore, the lawful stabilization rent and the overcharges as 
      determined by the Administrator remain ($16,269.20).  The total 
      overcharges including interest ($3,490.96) and excess security ($306.92) 
      are $20,067.08.
      The owner is directed to reflect the findings and determinations made in 
      this order on all future registration statements, including those for 
      the current year if not already 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 

          FJ 210092 RO

      an amount no greater than that determined by this order plus any lawful 

      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 provisions of the Rent Stabilization 
      Law and Code, it is

      ORDERED, that this petition for administrative review be, and the same 
      hereby is, granted in part, and, that the order of the Rent 
      Administrator be, and the same hereby is, modified in accordance with 
      this order and opinion.  The amount of the rent overcharge through      
      September 30, 1991 is $20,067.08.


                                      JOSEPH A. D'AGOSTA
                                      Deputy Commissioner

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