FJ 410303 RT; FJ 410210 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  6282
          IN THE MATTER OF THE ADMINISTRATIVE    ADMINISTRATIVE REVIEW      
          APPEALS OF                             DOCKET NOS.: FJ 410303 RT;
                                                              FJ 410210 RO
            Florence and Rosalind Cohen
                       and                        DRO DOCKET NO.: CA 410440 R
            Jonathan Woodner Company,

                                  PETITIONER
          ----------------------------------X                                   


                     ORDER AND OPINION DENYING OWNER'S PETITION
                                         AND
                         GRANTING IN PART TENANT'S PETITION


          On October 15, 1991 and on October 16, 1991, the above-named 
          petitioners filed Petitions for Administrative Review against an 
          order issued on September 11, 1991 by the Rent Administrator, 92-31 
          Union Hall Street, Jamaica, New York concerning the housing 
          accommodations known as 888 Eighth Avenue, Apartment 12D, New York, 
          New York, wherein the Rent Administrator determined that the 
          tenants had been overcharged.  These petitions have been 
          consolidated for purposes of review since they concern similar 
          issues and are based upon the same set of facts.

          Subsequent thereto, the petitioner-tenants filed a petition in the 
          Supreme Court pursuant to Article 78 of the Civil Practice Law and 
          Rules requesting that the "deemed denial" of the petitioner's 
          administrative appeal be annulled.  This proceeding was then 
          remitted, by a court order, to the Division for a determination of 
          the petition's appeal.

          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 originally commenced by the filing of a rent 
          overcharge complaint by the tenants on January 28, 1988.  In such 












          FJ 410303 RT; FJ 410210 RO

          complaint, the tenants stated that they had not been provided with 
          a copy of the apartment registration form (RR-1 form).

          In response to the tenants' complaint, the owner submitted a rent 
          history and, submitting invoices in the amount of $13,023.00 and 
          cancelled checks as proof, stated that improvements at a cost of 
          $22,325.00 had been performed during a vacancy period.

          In reply, the tenants disputed whether the claimed improvements had 
          been made, or if the work had been done, whether it qualified as 
          improvements rather than repairs or maintenance, and questioned the 
          probative value of the documents submitted by the owner.

          The owner was also directed to submit proof of service of the RR-1 
          form on the tenant in occupancy on the date of the initial rent 
          registration statement.  In a response dated May 14, 1989, the 
          owner submitted an affidavit from the superintendent that he had 
          personally hand delivered the 1984 apartment registrations to all 
          occupied apartments on July 15, 1984 and submitted a copy of the 
          RR-1 form listing the April 1, 1984 rent of the subject apartment 
          as $474.34.

          On July 26, 1991, a staff member of the Division of Housing and 
          Community Renewal (DHCR) conducted an inspection of the subject 
          premises and determined that:

               1)   there were five kitchen cabinets;

               2)   there were three Kenmore appliances: a 
                    refrigerator, a dishwasher and a range;

               3)   it was not possible to ascertain the 
                    installation date of the floors and doors;

               4)   there was a formica sink top, not marble.

          On September 11, 1991, the Administrator issued the order here 
          under review wherein the Administrator determined that the owner 
          had registered the April 1, 1984 rent for the subject apartment, 
          that the owner had served the tenant then in occupancy with a copy 
          of the registration form as required, and that the April 1, 1984 
          Initial Legal Registered Rent was $474.34.  The Administrator 
          allowed $12,774 for improvements made as of November 1, 1987 but 
          found nevertheless, an overcharge of $54,078.08, inclusive of 
          excess security and treble damages.

          In their appeal, the tenants request that the Administrator's order 
          be modified and contend that:
               1)   the 1984 registration was not properly filed 
                    and served on the tenant in occupancy and that 
                    the owner should therefore be barred from 
                    increasing the rent above $474.34;






          FJ 410303 RT; FJ 410210 RO


               2)   because the owner did not submit proper 
                    documentation to confirm costs of alleged 
                    improvements, and because the evidence does 
                    not substantiate that the improvements either 
                    were done or qualify under Code Section 
                    2522.4, the owner should be barred from 
                    collecting rent increases based upon these 
                    improvements; and, to the extent that Code 
                    Sections 2522.4 (c)(g)(4) and (5) permit an 
                    owner to unilaterally secure a rent increase 
                    without applying for DHCR approval, they 
                    should be deemed null and void.

          In response and in its own appeal, the owner contends that it 
          should be credited with a greater amount for improvements than was 
          allowed.  The owner challenges the Administrator's order on the 
          following grounds:

               1)   there appears to be an erroneous calculation 
                    which permitted only $12,774.18 instead of 
                    $13,044.59 in costs as was proved by the 
                    submitted invoices;

               2)   the order does not credit the owner with 
                    $4,780.18 for costs of labor performed by a 
                    preparation crew hired by the owner 
                    specifically for the work done in the subject 
                    apartment;

               3)   treble damages are inappropriate as the owner 
                    proved there was no willful overcharge.

          In response to the tenants' claim that the Code Section which 
          permits unilateral rent increases by an owner should be declared 
          null and void, the owner states that the Civil Court decision cited 
          by the tenants is not binding and need not be addressed.

          In answer to the owner's petition, the tenants contend that:

               1)   the owner's petition should be dismissed as 
                    untimely;

               2)   the owner should not be permitted to 
                    supplement its claim and to introduce new 
                    evidence on appeal;
               3)   the evidence previously submitted did not 
               substantiate the alleged improvements;

               4)   where the record supports a finding of willful 
                    overcharge and the owner has not proved non- 
                    willfulness, treble damages are warranted.












          FJ 410303 RT; FJ 410210 RO


          The Commissioner is of the opinion that the owner's appeal should 
          be denied and that the tenants' appeal should be granted in part.

          Code Section 2529.2 requires that a Petition for Administrative 
          Review (PAR) be filed within thirty-five days after the date an 
          Administrator's order is issued.  A PAR postmarked not more than 
          thirty-five days after the issuance date of such orders, as in the 
          instant case, is deemed timely filed.  Accordingly, the 
          Commissioner finds that the owner's PAR was timely filed.

          The Rent Stabilization Law and Code require owners to file an 
          initial registration for each rent stabilized housing accommodation 
          and to thereafter file annual updates with the DHCR.  Owners must 
          serve copies of the registrations on the tenant in occupancy to 
          properly complete registration.

          Review of the record reveals that the owner filed the initial legal 
          registration for April 1, 1984, with the DHCR, registering an 
          initial legal rent of $474.34, but failed to submit the required 
          proof of service on the tenant then in occupancy.  Pursuant to Code 
          Section 2528.2, it was required that the matter be processed as a 
          timely challenge to the Initial Rent Registration.  Section 
          2526.1(a)(3)(ii) requires that where a tenant files a timely 
          challenge to the Initial Rent Registration, the lawful rent be 
          established on the basis of the rental history from April 1, 1980.  
          The owner herein submitted a complete rental history from April 1, 
          1980 which confirmed the Initial Registered Rent.  Hence, the 
          Administrator did not err in accepting $474.34 as the Initial Legal 
          Registered Rent.

          However, pursuant to Section 2528.4 of the Code, until such time as 
          registration is properly completed, if no initial registration has 
          taken place, the owner is barred from collecting any rent in excess 
          of the legal regulated rent on the date the housing accommodation 
          became subject to registration requirements.

          Pursuant to Policy Statement 92-3, the only acceptable proof of 
          service on the tenant of an initial registration filed prior to May 
          1, 1987 is: a contemporaneously signed receipt from the tenant 
          acknowledging hand delivery of the initial registration form; or a 
          post office receipt certifying the date and the number of pieces of 
          mail to the building included in the "Carrier Route Pre-Sort" 
          service along with a list of the mailing addresses furnished by the 
          RSA or by a bonded mailing house; or a signed and dated form 
          #PO3877, "Acceptance of Registered Insured, C.O.D., and Certified 
          Mail," which proves the date of delivery of first class mail to the 
          Post Office.

          During the course of processing these appeals, the Commissioner 
          notified the owner that a superintendent's affidavit was not 
          sufficient proof of service of the initial registration on the 






          FJ 410303 RT; FJ 410210 RO

          tenant then in occupancy; although afforded the opportunity to 
          submit an acceptable form of proof of service, the owner failed to 
          do so.  Accordingly, pursuant to Code Section 2528.4, the owner is 
          barred from collecting any rent above $474.34 until such time as 
          the owner proves that service of the initial registration has been 
          effected.  The owner's entitlement to rent increases for Major 
          Capital Improvements (MCI), individual improvements pursuant to 
          Code Section 2522.4(a)(1), and rent guideline increases upon lease 
          renewals are prospective and can be collected only after the 
          initial registration requirements have been met.

          With respect to the owner's claim for labor costs and the 
          submission of employee records, the Commissioner finds this portion 
          of the owner's appeal is outside the scope of review.  Code Section 
          2529.6 limits review to facts or evidence which were before the 
          Administrator.  The instant matter was not raised for consideration 
          by the Administrator but is submitted for the first time on appeal.  
          Accordingly, this portion of the owner's appeal is denied.

          Section 2522.4(a)(1) provides that where there has been a 
          substantial increase of dwelling space or an increased in the 
          services, or installation of new equipment or improvements, the 
          monthly stabilization rent for said unit may be increased by 1/40th 
          the cost provided the tenant then in occupancy has consented 
          thereto in writing.  In addition, improvements made during a 
          vacancy may be collected without the new tenant's consent to pay 
          such increase.  Because the Code permits an owner to make such 
          improvements and based thereon to collect a rent increase without 
          either tenant consent or DHCR approval, it is incumbent upon an 
          owner to maintain and preserve such documentary evidence which will 
          substantiate the rent increase in case of tenant challenge.  It has 
          long been the policy of the DHCR upon such challenge to require an 
          owner to confirm claimed costs of any claimed improvement with 
          adequate documentation in the form of cancelled checks and 
          apartment specific invoices.

          In view of the conflicting claims of the owner and the tenant, the 
          Commissioner has re-examined all of the evidence pertinent to the 
          issue of improvements.  The Commissioner finds that the 
          Administrator should have disallowed $524.04 (insufficient proof) 
          claimed by the owner for improvements made during a vacancy period 
          in 1984.  The following items for which the owner submitted 
          adequate documentation qualify as improvements:  venetian blinds - 
          $423.26; dishwasher, refrigerator and range - $1,288.12; kitchen 
          cabinets - $446.00 and $2,169.99; a total of $4,327.37.  The amount 
          of $611.61 for a cultured marble top sink is disallowed since the 
          inspector found a formica counter - top.

          After careful consideration, the Commissioner permits an increase 
          for parquet flooring - $5,332.29 but disallows for purpose of rent 
          increase the remainder of the amount approved by the Administrator:













          FJ 410303 RT; FJ 410210 RO

               1)   the following items are considered to be items 
                    of ordinary, normal repairs or maintenance and 
                    do not qualify as improvements: - weatherstrip 
                    - $11.91, assorted hardware - $47.92, $29.01,  
                    ballast -$18.88, lock - $6.50, toilet seat - 
                    $5.90, ballcock -$22.19, knob - $19.93, wall 
                    plates and electric receptacles - $128.61 - 
                    total $290.85;

               2)   linoleum floors are not considered 
                    improvements - kitchen linoleum - $217.45;

               3)   the invoices submitted in support of the 
                    following items lacked an apartment 
                    designation and are disallowed on that basis: 
                    light fixtures - $157.23, $157.29, doors - 
                    $253.63, $66.03, $263.05, shower doors - 
                    $292.28, toilet, shower faucet, faucet, tooth 
                    brush holder, soap holders - $579.03 - Total 
                    $1,768.54.  

          Accordingly, the Commissioner finds that only $9,659.66 or $241.49 
          per month should be approved for a rent increase prospectively.

          The Rent Stabilization Law provides for a penalty of treble damages 
          for willful overcharges.  The statute creates a presumption of 
          willfulness subject to rebuttal by the owner showing non- 
          willfulness by a preponderance of the evidence.  Review of the 
          record reveals that the owner herein initially alleged that it had 
          spent $22,325.00 for improvements but submitted invoices totalling 
          only $13,023.00 as proof.  Further the owner failed to submit proof 
          of service of the initial registration on the tenant then in 
          occupancy although given an opportunity to do so.  The Commissioner 
          notes that even if every claimed improvement had been approved, 
          there would have remained a substantial overcharge.  The 
          Commissioner finds that the owner failed to meet its burden and 
          that treble damages were warranted in the instant case.



          In view of the owner's failure to properly register the subject 
          apartment, (prove service of the initial registration on the tenant 
          then in occupancy), the Commissioner has recomputed the legal 
          stabilization rent and the overcharge collected by the owner in the 
          rent calculation chart attached hereto and fully made a part of 
          this order.  The legal stabilization rent is frozen at $474.34.  
          The owner is directed to roll back the rent and to refund 
          $129,166.68, inclusive of excess security and treble damages.

          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 






          FJ 410303 RT; FJ 410210 RO

          manner as a judgment or not in excess of twenty percent per month 
          may be offset against any rent thereafter due the owner.

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

          ORDERED, that the owner's petition be, and the same hereby is, 
          denied, that the tenants' petition 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.



          ISSUED:

                                                  ------------------------
                                                  JOSEPH A. D'AGOSTA
                                                  Deputy Commissioner
           
             
                                             






    

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