OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                               JAMAICA, NEW YORK 11433
                                                  SJR NO:  6872
          ------------------------------------X   ADMINISTRATIVE REVIEW
          APPEAL OF
                    Steven Elghanayan
                    c/o Kucker, Kraus & Bruh
                                                  RENT ADMINISTRATOR'S
                               PETITIONER         DOCKET NO: FE430025RP


          The above-named petitioner-owner timely filed an Administrative 
          Appeal against an order issued on March 31, 1992 under Docket No. 
          FE430025RP by the Rent Administrator (Gertz Plaza) concerning the 
          housing accommodations known as 279 East 44th Street, New York, New 
          York, various apartments.

          Subsequent thereto, the petitioner filed a petition in the Supreme 
          Court pursuant to Article 78 of the Civil Practice Law and Rules 
          requesting that the "deemed denial" of his administrative appeal be 
          annulled. On April 19, 1993, an order was signed by Justice Sklar 
          remitting the proceeding to the Division for an expeditious 
          determination of the owner's administrative appeal.

          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 this administrative appeal.

          The owner commenced the proceeding below on January 7, 1988 by 
          initially filing an application for a major capital improvement 
          (MCI) rent increase, predicated on the installation of new windows. 
          Said application was denied by the Rent Administrator on October 
          17, 1990 under Docket No. CA430033OM on the basis that building- 
          wide service reduction order No. ZBK410058-B was still in effect 
          and the owner failed to file either a restoration or Administrative 
          Review application against said building-wide order.

          On November 20, 1990, the owner filed an administrative appeal 
          against the order issued by the Administrator under Docket No. 
          CA430033OM. The Commissioner's order and opinion determined said 
          Administrative Appeal (Docket No. EK430192RO) and remanded the 
          proceeding to the Administrator to conduct further fact finding, 

          Adm. Rev. Docket No. GE410026RO

          including an inspection, if deemed necessary, to determine whether 
          all required services in the building are being maintained and if 
          found to be maintained, to continue processing the owner's MCI 

          On March 31, 1992, the Rent Administrator issued the order here 
          under review denying the owner's application based on findings that 
          building-wide service reduction order No. BK410058B is still in 
          effect and there are no owner restoration or administrative review 
          applications against said building-wide order; and that a 
          subsequent building-wide service reduction order No. CL430077B is 
          still in effect since both the owner's request for rent restoration 
          (Docket No. ZFG410040OR) and Petition for Administrative Review 
          (Docket No. DI410007RO) were denied.

          In this Petition for Administrative Review, the owner requests 
          revocation of the Administrator's order and contends, in substance, 
          that the Administrator erroneously denied the MCI application on 
          the basis that no owner restoration or Administrative Review 
          Petition was filed against building-wide service reduction order 
          No. BK410058B; that such building-wide order did not impose a rent 
          reduction and as such, pursuant to DHCR Policy Statement 90-8, does 
          not act to bar the petitioners' application; that in the subject 
          order, which is the result of the remand proceeding, the Administra 
          -tor again misinterprets the provisions of Policy Statement 90-8 by 
          holding that the existence of DHCR order CL430077B somehow acts to 
          bar the successful processing of the MCI application; that pursuant 
          to Policy Statement 90-8, the effect of a building-wide service 
          reduction on an MCI application is that an order of denial will be 
          issued only where the rent reduction order was in effect at the 
          time of filing of the MCI application; that neither order NO. 
          CL430077B, nor any other building-wide rent reduction order, was in 
          effect on the date of filing of the MCI application; and that if 
          the owner's application had been processed in a timely fashion, the 
          requested rent increase would have been in effect well prior to the 
          issuance date of the cited reduction order.

          After a careful consideration of the entire evidence of record, the 
          Commissioner is of the opinion that this Administrative Appeal 
          should be denied.

          Regarding the owner's contention that the Administrator erroneously 
          denied the MCI application since building-wide service reduction 
          order No. BK410058B did not impose a rent reduction, it is the 
          policy of the Division as reflected in Policy Statement 90-8 that 
          "where there is a DHCR order in effect determining a failure to 
          maintain a building-wide service which resulted in a rent 

          Adm. Rev. Docket No. GE410026RO

          reduction, such order will constitute a bar to obtaining an MCI 
          rent increase". The record confirms the owner's assertion that  the 
          order issued under Docket No. BK410058B merely directed a 
          restoration of services but did not provide the sanction of a rent 
          reduction and thus the owner was not required to take any further 
          action before the Division. Under such circumstances and in 
          accordance with current Policy Statement 90-8, the Commissioner is 
          of the opinion that said order in of itself should not have acted 
          as a bar to the owner's application.

          Nevertheless the record discloses that a subsequent rent reduction 
          order, based on the owner's failure to provide services of a 
          building-wide nature, was in effect during the course of the 
          proceedings before the Rent Administrator. As a consequence thereof 
          the Administrator appropriately denied the instant application.

          With respect to the owner's contention that the subsequent 
          building-wide rent reduction order was not in effect at the time 
          the application was filed and thus should not have resulted in the 
          denial of the application, the Commissioner notes that the owner 
          has completely misconstrued the intent of the Rent Laws, Code, and 
          Regulations and Policy Statement 90-8. Such laws clearly provide 
          that an owner who has applied for an MCI rent increase shall not 
          have said application granted if there is a finding that a rent 
          reduction is warranted based on a determination by the Division 
          that the owner is not providing required services of a building- 
          wide nature. To accept the owner's argument would lead to the 
          illogical and incongruous situation where an application is filed 
          on one day followed the next day by a determination that the owner 
          is not maintaining services, irrespective of degree or severity. 
          Neither Policy Statement 90-8 nor the Laws and Regulations are 
          intended to reward an owner with a rent increase in such 

          In addition, the record discloses that contrary to the owner's 
          certification to the maintenance of essential services and the 
          continued maintenance of such services, a third inspection 
          conducted by the Division on  January 3, 1992 revealed that all 
          required services are still not being maintained. Said inspection 
          conducted on January 3, 1992 resulted in the denial of the owners 
          rent restoration application under Docket No. FG410040OR, which 
          order is not now subject to review or collateral attack.

          Accordingly, the Commissioner finds that the Administrator properly 
          denied the owner's application for MCI rent increase on remand.

          Adm. Rev. Docket No. GE410026RO

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

          ORDERED, that this petition be, and the same hereby is denied; and 
          that the Rent Administrator's order be, and the same hereby is 


                                                  JOSEPH A. D'AGOSTA
                                                  Deputy Commissioner


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