FJ 210092 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
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IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
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 :
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ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
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
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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
involved.
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
following:
(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
overcharges.
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
increases.
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.
ISSUED:
JOSEPH A. D'AGOSTA
Deputy Commissioner
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