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

     APPEAL OF                              DOCKET NO.: GA 430166-RO
       PETER SHARP, et al                   DRO DOCKET NO.: FG 420040-RP
     c/o ROSENBERG & ESTIS, P.C.                           (AL 420008-OH)
                           PETITIONER    :                  

                             AND REMANDING PROCEEDING

     On January 9, 1992 the above-named petitioner-landlord filed a Petition
     for Administrative Review against an order issued on December 31, 1991  by
     the Rent  Administrator,  92-31  Union  Hall  Street,  Jamaica,  New  York
     concerning housing accommodations known as 444 East 52nd Street, New York, 
     New York, Various Apartments.

     The landlord herein,  as  owner  of  the  unsold  shares  in  the  subject
     cooperatively owned  building,  filed  an  application  in  December  1986
     pursuant to the Return on Capital Value  ("hardship")  provisions  of  the
     Rent Regulations, Section 2202.8,  seeking  an  increase  in  the  maximum
     rents of the various apartments occupied by rent  controlled  tenants  who
     had not purchased the shares allocated to their respective accommodations.

     On August 21, 1990, the Rent Administrator issued  orders  which  adjusted
     the rents for the subject apartments by various amounts and  over  various
     periods of time in order to yield an 8 1/2 percent return on the valuation 
     of the property (computed on a per share basis).

     Both the landlord and various tenants filed administrative appeals against 
     said orders which resulted in the issuance, on July 15, 1991, of an  order
     and Opinion (EI 430186-RO; EI 420141-RT) which remanded the proceeding  to
     the Rent Administrator to explain why an equalization ratio of  1.754  was
     used in calculating the building's equalized assessed value (rather than a 
     large equalization ratio claimed by the landlord) and  to  further  review
     the landlord's claimed operating expenses.

     On December 31, 1991 the Administrator issued the orders here under review 
     wherein the capital value of the subject premises  was  determined  to  be
     $3,551,920.00.  Said capital value amount was arrived at by utilizing  the
     transitional assessed valuation of $1,531,000.00 for the 1986/87 tax  year
     (reduced from $1,541,000.00 by the Tax  Commissioner)  multiplied  by  the
     equalization factor applicable to New  York  City  of  2.32  (rather  than
     1.754) at the time the instant application was filed.  Said orders further 
     adjusted the maximum  rents  of  the  subject  accommodations  by  varying
     amounts governed by the limitation of no increases being greater than 
     7 1/2 percent per year (with the exception of apartment 3-F where a 


          DOCKET NUMBER: GA 430166-RO
     greater increase was  necessary to make the property equal  its  operating
     expenses) in accordance with the applicable provisions of the Rent Law and 
     Regulations, Sections 2201.6 and 2202.3(d).

     In this petition for  administrative  review  the  landlord  contends,  in
     substance, that there is  no  lawful  basis  for  using  the  transitional
     assessed value (rather than the actual assessed  value)  for  purposes  of
     calculating the capital value of the subject premises;  that  pursuant  to
     statute the equalized assessed value of the property must equal  the  true
     fair market  value  of  the  property;  and  that  the  DHCR  should  have
     calculated the capital value of the subject premises  by  multiplying  the
     actual assessed value of $1,950,000.00 by the current equalization ratio.

     After a careful consideration of the entire record, the Commissioner is of 
     the opinion that this  petition  should  be  granted,  in  part,  and  the
     proceeding remanded to the Rent Administrator for  further  processing  in
     accordance with this order and opinion.

     Section 2202.8 of the Regulations  provide,  in  pertinent  part,  that  a
     landlord may seek rent increases where the property is not providing  "...
     a return of 8 1/2 percent on capital value which, except  as  provided  in
     subdivisions(b) and (c) of this section, shall be the  equalized  assessed
     value obtained by multiplying the current assessed value of  the  property
     by the current equalization ratio established by the New York State  Board
     of Equalization and Assessment  pursuant  to  Article  12-A  of  the  Real
     Property Tax Law."

     The use of the "equalized" assessed value as a measure of capital value is 
     premised on the grounds that real property in New York  is  assessed,  for
     tax purposes, at less than full value; and that  use  of  an  equalization
     multiplier represents the fair market value of the property.

     In this connection the Commissioner notes that the "transitional" assessed 
     value of a property is not reflective of the full  actual  assessed  value
     of the property but rather is a function of the taxing process created  by
     Section 1805 of the Real Property Tax Law as a means of phasing, in over a 
     five year period, increases in assessed value so as to mitigate the effect 
     of increased real estate taxes on property owners.

     The Commissioner is thus constrained to find  that  the  Rent  Regulations
     mandates the use of the current full value assessment of the property  (as
     opposed to the transitional assessed  value)  multiplied  by  the  current
     equalization factor for purposes of computing the  capital  value  of  the
     subject premises pursuant to the "hardship" provisions of the Regulations.

     The Commissioner notes that a related  "hardship"  proceeding,  predicated
     upon a previously filed application (LC 000008-OH)  is  currently  pending
     before the Administrator to consider the appropriate equalization ratio to 
     be applied in computing and allocating rent increases based on the capital 
     value at the time that application was filed.  Since the rent increases to 
     be computed therein will impact upon  any  may  overlap  rent  adjustments
     under the instant application the Commissioner  deems  it  appropriate  to
     remand this proceeding to the Rent Administrator for the purposes of 


          DOCKET NUMBER: GA 430166-RO
     consolidating both  proceedings  and  the  issuance  of  appropriate  rent
     adjustments  therein  consistent  with  the  determination  herein.    For
     purposes of the instant application capital value  shall  be  computed  by
     multiplying the 1986/87 actual assessed value  of  $1,900,000.00  (reduced
     from $1,950,000.00 by the Tax  Commission)  by  the  1986/87  equalization
     factor of 2.32.  See 50 Holding corp. v. Gabel, 244 N.Y.S 2d 80;  Hopewell
     Properties v. Weaver, 165 N.Y.S. 2d 899, affd 199  N.Y.S  2d  438,  appeal

     THEREFORE, in accordance with the provisions  of  the  Rent  and  Eviction
     Regulations for New York City, it is

     ORDERED, that this petition be, and the same hereby is granted,  in  part,
     and  the  proceeding  remanded  to  the  Rent  Administrator  for  further
     processing in accordance with this order and opinion.  The orders  of  the
     Rent Administrator remain in full force and effect until  new  orders  are
     issued upon the remand.


                                     JOSEPH A. D'AGOSTA
                                     Deputy Commissioner


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