ADM. REVIEW DOCKET NOS. GA430265RO and GB430247RO
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
APPEALS OF DOCKET NOS. GA430265RO and
GB430247RO
DISTRICT RENT
SIXTY-EIGHTH STREET CO., ADMINISTRATOR'S DOCKET
NOS. DL420014AC and
EL420054AC
PETITIONER
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ORDER AND OPINION DENYING PETITIONS FOR ADMINISTRATIVE REVIEW
On January 31, 1992, the above-named landlord filed a petition
for administrative review, under Docket No. GA430265RO, of an
Administrator's order issued on December 27, 1991, under Docket No.
DL420014AC, concerning various housing accommodations known as 315
East 68th Street, New York, New York. On February 14, 1992, the
above-named landlord filed a petition for administrative review,
under Docket No. GB430247RO, of an Administrator's order issued on
January 15, 1992, under Docket No. EL420054AC, concerning the
above-mentioned premises.
The Commissioner notes that the above-mentioned petitions for
administrative review involve common issues of law and fact. The
Commissioner is, accordingly, of the opinion that they should be
consolidated for disposition.
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 petitions for administrative
review.
On December 29, 1989, the subject landlord filed an
application for a Labor Cost Adjustment (L.C.A.) to the maximum
rents of the subject apartments for the 1988-1989 period.
In its application, the subject landlord alleged that it is
employing several building employees, including security guards who
are provided by an outside service.
ADM. REVIEW DOCKET NOS. GA430265RO and GB430247RO
On July 9, 1991, the Administrator mailed to the subject
landlord a revised copy of its L.C.A. which subtracted the cost of
the security guards from the labor costs, and the Administrator
mailed a notice to the landlord which pointed out that the expenses
for security guards are not included in calculating the labor cost
adjustment.
The subject landlord submitted to the rent agency, among other
things, copies of several invoices mailed to it by the Servicelink,
Inc. The invoices listed the amount, including sales tax, that the
subject landlord owed the Servicelink, Inc., for providing it with
security guards.
In the Administrator's order under review herein, issued under
Docket No. DL420014AC, the Administrator increased the maximum
rents of the subject apartments to reflect uncompensated labor
costs incurred by the subject landlord, pursuant to Section 2202.11
of the City Rent and Eviction Regulations. (The Commissioner notes
that the cost of the security guards was disallowed in calculating
the labor cost adjustment.)
On December 26, 1990, the subject landlord filed an
application for a Labor Cost Adjustment (L.C.A.) to the maximum
rents of the subject apartments for the 1990-1991 period.
In its application, the subject landlord reiterated its
allegation that it is employing several building employees,
including security guards who are provided by an outside service.
In the Administrator's order under review herein, issued under
Docket No. EL420054AC, the Administrator increased the maximum
rents of the subject apartments to reflect uncompensated labor
costs incurred by the subject landlord, pursuant to Section 2202.11
of the City Rent and Eviction Regulations. (The Commissioner
further notes that the cost of the security guards was disallowed
in calculating the labor cost adjustment.)
In both of its petitions, the subject landlord asserts, among
other things, that the labor cost adjustment should include the
expenses for the security guards.
After careful consideration, the Commissioner finds that the
landlord's petitions should be denied.
The Rent and Eviction Regulations were amended in 1970 to
provide for the establishment of the Maximum Base Rent system.
ADM. REVIEW DOCKET NOS. GA430265RO and GB430247RO
Included in the formula for establishing Maximum Base Rents is an
allowance for payroll expenses. Section 2202.11 of the City Rent
and Eviction Regulations provides that maximum rents may be
increased where an owner incurs, or is obligated to incur, payroll
expenses for building service employees which exceed the formula
provision for labor costs recognized in establishing the maximum
gross building rental under Section 2201.4 of the City Rent and
Eviction Regulations.
The Commissioner notes that in the instruction sheets to the
L.C.A. applications, promulgated by the rent agency, building
service employees are classified as those whose duties are that of
superintendent, janitor, handyman, elevator operator, doorman and
porter regularly employed throughout the year.
The Commissioner finds that security guards are not building
service employees for purposes of calculating labor cost
adjustments. The Commissioner further finds that the
Administrator, in the orders under review herein, properly
disallowed the expenses for the security guards from the labor
costs.
Even if security guards were classified as building service
employees, the Commissioner is of the opinion that the
Administrator's orders under review herein should still be
affirmed.
Based upon the record in these proceedings, the Commissioner
finds that the security guards were provided to the subject
landlord by an independent company; that the subject landlord paid
the expenses for the security guards directly to the independent
company; that the subject landlord did not pay the security guards'
wages, and that in paying for the cost of the security guards the
subject landlord was charged sales tax.
The Commissioner further finds that the landlord's expenses
for the security guards were not a payroll expense, pursuant to
Section 2202.11 of the City Rent and Eviction Regulations, as
evidenced by the fact that the expenses for security guards were
subject to sales tax.
Accordingly, as the expenses for security guards were not for
building service employees, and were not for payroll expenses, the
Commissioner finds that the landlord's petitions should be denied.
THEREFORE, in accordance with the City Rent and Rehabilitation
Law and the Rent and Eviction Regulations, it is
ORDERED, that these petitions be, and the same hereby are,
ADM. REVIEW DOCKET NOS. GA430265RO and GB430247RO
denied, and that the Administrator's orders be, and the same hereby
are, affirmed.
ISSUED:
JOSEPH A. D'AGOSTA
Deputy Commissioner
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