GC410241RO
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. GC410241RO
Hart Realty, : DISTRICT RENT OFFICE
DOCKET NO. AK410475R
TENANT: Niegowski & Lucas;
& Amann & Rao
PETITIONER :
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ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW,
UPON RECONSIDERATION
On March 25, 1992, the above-named owner filed a Petition for
Administrative Review ("PAR") against an order issued on February 19,
1992, by the Rent Administrator, 92-31 Union Hall Street, Jamaica,
New York, concerning the housing accommodations known as Apartment 2D at
82 East 3rd Street, New York, New York,wherein the Rent Administrator
determined the fair market rent pursuant to the special fair market rent
guidelines promulgated by the New York City Rent Guidelines Board for
use in calculating fair market rent appeals.
This proceeding was commenced by a Complaint of Rent Overcharge filed in
November, 1986, in which the tenants stated that they had assumed
occupancy on September 1 of that year as the first "rent-stabilized
tenants" of the subject premises, at a monthly rental of $885.00, while
the fair rental value was between $650.00 and $725.00.
The owner responded that the subject apartment had been renovated at a
cost of $26,602.40, and that even before that renovation, it had been
worth $1000 per month; attached to the response were: ten clipped
newspaper advertisements for apartments; a letter from the owner's real-
estate broker giving his opinion as to the rental value of the
accommodations; and copies of the cancelled check with which the owner
had paid for the aforementioned renovations. The Administrator sent a
copy of that response to the tenants, but it came back marked "moved,
not forwardable."
After the Administrator had sent the owner a request for further
information and a "Summary Notice," the owner submitted copies of bills
and receipts pertaining to the aforementioned renovation, and a copy of
its agreement with the "general contractor" thereof.
In the course of determining the initial stabilized rental for this
apartment in the ensuing order (here appealed), the Administrator ruled
inter alia: that the 1984 Maximum Base Rent for the subject apartment
had been $134.06; that because the owner had "failed to submit
sufficient rental data for consideration as required by Section
2522.3(e)(1) of the [Rent Stabilization] Code," the rent examples it had
GC410241RO
submitted could not be considered for purposes of comparing the rent for
the subject apartment with rents of similar accommodations; and that
because the owner had "failed to submit documentation" of its agreement
with the general contractor (although the owner had "submitted an
agreement"), the $20,000 in renovation costs involved in that contract
would not be included in the total from which a rental increase for
improvements would be calculated. The owner then appealed those three
rulings, contending: that the Administrator had erred in treating the
tenants' overcharge complaint as a fair market rent appeal; that said
complaint itself had estimated the market rate for this apartment to be
$725.00; that "the 1986 rent controlled rent was $143.06 plus the 1986
fuel cost adjustment of $8.37 plus 1/40 of the owner's cost of
renovating the apartment"; that the order erroneously excluded from the
calculation of the amount spent on renovation, the $20,000 submitted as
paid to the general contractor; and that it erroneously excluded six
other items (discussed below) from the same calculation. The owner also
stated that comparable apartments should have been included, submitting
an appraisal and a New York Times advertisement in support of that
contention.
In the absence of a response from the tenants, the Commissioner granted
that petition in part, stating in pertinent part:
"Regarding the contention that it was improper to treat this matter as
a fair market rent appeal, the Commissioner notes that the tenants were
clearly questioning the lawfulness of their rent. As the first tenants
after "decontrol" of the subject apartment, they were of course
challenging the initial market-determined rent; it was within the
Administrator's discretion to recognize that that challenge was
identical to a fair market rent appeal, and therefore to process it as
such. Moreover, petitioner makes no claim that it had served a "DC-2"
form on the complainants, notifying them that they, as the first
stabilized tenants, had the right to file a fair market rent appeal;
petitioner therefore must fail in claiming that the tenants, left thus
unaware of their status, should not have been allowed to challenge their
initial rent. Finally, the Commissioner notes that throughout the
pendency of this matter before the Administrator, the owner made no
objection to, and attempted fully to cooperate with, the Administrator's
treatment thereof as a fair market rent proceeding; as the present
objection to such treatment is not jurisdictional in nature, the owner
cannot be allowed to press it for the first time on this appeal.
"The next issue is whether the tenants' estimate of the correct rent,
expressed in their complaint, can control over the Administrator's
subsequent determination thereof, and the answer is clearly no. The
complaint put the propriety of the rent in issue, and once in issue that
propriety had to be determined in accordance with specific procedures
promulgated by this Division. The result of such compliance with agency
procedures cannot be overturned simply because it may consist of a
rental figure lower that what the tenant had opined.
"Petitioner states that the 1986 controlled rental was "$143.06" per
month. Although that figure may represent a mere typographical error --
the transposition of two digits in the Administrator's order -- the
Commissioner will affirm (1) that under the pertinent guidelines in
GC410241RO
effect for leases commencing, as did the tenants', between October 1,
1985 and September 30, 1986, the base for determining the initial
stabilization rent is the Maximum Base Rent for 1984, not 1986 as
petitioner seems to state, and (2) that the Administrator's computation
of the 1984 Maximum Base Rent is correct."
Regarding, finally, the cost of the renovations in question, the
Commissioner allowed an additional $17,675 out of the $20,000 paid to
the "general contractor," while disallowing various amounts submitted
as having been paid to other suppliers.
The new tenants -- who, having been apprised of the Administrator's
order and the owner's PAR, had unsuccessfully sought participation in
the latter proceeding -- then requested reconsideration of the
Commissioner's determination, to allow consideration of their response
to the PAR.
The request for reconsideration, signed by both of the new tenants,
stated inter alia that one of them was a carpenter involved in
renovating Manhattan apartments, and that the subject apartment "was so
poorly renovated that I had to do months of work on it to make it
livable," the $26,000 claimed to have been spent by the owner being thus
"highly suspect." The owner responded that the conclusion of such an
interested party was worthless because, inter alia, "[v]ery little of
the renovation cost in fact is attributable to carpentry work."
The tenants also submitted an extensive answer to the owner's PAR,
contesting many specific aspects of the subject renovation increase.
It was prefaced in pertinent part as follows.
"[T]he actual cost of the renovation work here [amounted to] a fraction
of the claim. I know ... because I renovate apartments in Manhattan for
a living. Also it is obvious what in an apartment ... has been ...
renovated. One looks at [various features]. Most of this apartment is
original ... .
"If one notes the attached [26] photos, it is easy to see the landlord
has been untruthful. * * * The landlord makes the best case to show
that this apartment is basically unrenovated. In a March 23, 1992
letter (PAR) to DHCR, [the owner] mentions that #3D is unrenovated. Our
photos show that 2D and 3D are essentially the same: unrenovated."
The owner has not replied to the tenants' answer.
The Commissioner is of the opinion that this petition should be denied.
An examination of the evidence of record including the photographic
evidence submitted by the tenants discloses that much of the claimed
renovation work in the subject apartment appears not to have been done.
Therefore the Commissioner's prior order granting an additional rent
increase for renovation work must be revoked.
The owner is directed to roll back the rent to the lawful stabilized
rent consistent with this decision and to refund or fully credit against
future rents over a period not exceeding six months from the date of
receipt of this order, the excess rent collected by the owner.
The owner is directed to reflect the findings and determinations made in
GC410241RO
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
an amount no greater than that determined by this order plus any lawful
increases.
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, denied, that the Commissioner's prior order and opinion be,
and the same hereby is, revoked, and that the Rent Administrator's order
be, and the same hereby is affirmed. The initial legal regulated rent,
effective September 1, 1986, was $304.49.
ISSUED:
JOSEPH A. D'AGOSTA
Deputy Commissioner
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