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

          APPEALS OF                             DOCKET NO. GG410118RO
               NILA GRECO AND                 :             GG410157RT
                                                 DRO DOCKET NO.GB410011RP
               JEMROCK REALTY CO.                 
                                PETITIONERS   : 

               On July 21, 1992, and July 24, 1992, the above-named 
          petitioner-owner and tenant filed Petitions for Administrative 
          Review against an order issued on June 19, 1992, by the Rent 
          Administrator, 92-31 Union Hall Street, Jamaica, New York, 
          concerning the housing accommodations known as 210 West 101 Street, 
          New York, New York, Apartment No. 15A, wherein the Rent 
          Administrator determined the fair market rent pursuant to the 
          special fair market rent guideline promulgated by the New York City 
          Rent Guidelines Board for use in calculating fair market rent 
               The Commissioner notes that this proceeding was filed prior to 
          April 1, 1984.  Sections 2526.1 (a) (4)  and 2521.1 (d) of the Rent 
          Stabilization Code (effective May 1, 1987) governing rent overcharge 
          and fair market rent proceedings provide that determination of these 
          matters be based upon the law or code provisions in effect on March 
          31, 1984.  Therefore, unless otherwise indicated, reference to 
          Sections of the Rent Stabilization Code (Code) contained herein are 
          to the Code in effect on April 30, 1987.

               The Administrative Appeals are being determined pursuant to the 
          provisions of Section 26-513 of the Rent Stabilization Code.

               The issue herein is whether the Rent Administrator's order was 

               The Commissioner has reviewed all of the evidence in the record 
          and has carefully considered that portion of the record relevant to 
          the issue raised by the administrative appeals.  

               This proceeding was commenced by the tenant's filing of a fair 
          market rent adjustment application and a rent overcharge complaint 
          in March, 1984 in which the tenant stated that her rent as of August 
          1, 1979 was $550.00 per month.  In a response dated September 20, 
          1985, the owner advised that the 1978 maximum base rent for the 
          subject apartment was $382.61 and that the tenant's rent as of 
          August 1, 1979 should have been listed as $459.13.  On October 6, 
          1986, in Order Number CDR 24,070, L3112827RT, the Rent Administrator 
          issued an order dismissing the tenant's complaint on the basis that 

          GG410157RT, GG410118RO

          the owner had entered into an Assurance of Discontinuance with the 
          Office of the Attorney General.  The tenant appealed such 
          determination and the owner filed an answer to the tenant's appeal 
          on February 4, 1987.  In an order issued on June 30, 1989, under 
          docket AL410127RT, the Commissioner found that there was no evidence 
          an Assurance of Discontinuance had been entered into and that even 
          if there had been such a settlement, the DHCR was not estopped from 
          exercising its expertise and determining the lawful stabilized rent 
          for the subject apartment.  The Commissioner remanded the proceeding 
          for processing of the tenant's fair market rent appeal and 
          overcharge complaint.

               Upon remand the owner was again served with a copy of the 
          tenant's fair market rent appeal and afforded an opportunity to 
          submit comparability data.  In a response dated October 14, 1991, 
          the owner stated in substance that it never received a copy of the 
          appeal determination remanding the proceeding to the Rent 
          Administrator so that it was denied the opportunity to "answer, 
          contest or otherwise intervene in this appeal process"; that the 
          DHCR failed to notify the owner of the tenant's fair market rent 
          appeal in a timely manner in that the fair market rent appeal was 
          initiated by the tenant in 1984 and is only now being addressed by 
          the DHCR; and that the owner is only required to produce a rental 
          history dating back to 1987 since the owner most recently registered 
          the subject apartment in May, 1991.

               In Order Number DH410018RP issued on November 8, 1991, the Rent 
          Administrator revoked the prior order issued on October 6, 1986 
          under docket L3112827RT dismissing the tenant's complaint and 
          adjusted the initial legal regulated rent by establishing a fair 
          market rent of $497.22 effective August 1, 1979.  The Rent 
          Administrator also listed the 1978 maximum base rent as $414.35 and 
          found that the tenant had paid excess rent of $3,706.56 through July 
          31, 1990 - $4455.04 - $748.48 (arrears found to be owed by tenant) 
          = $3706.56.  On December 6, 1991, the tenant  stated in substance 
          that she never had arrears in rent owing to the owner and that the 
          owner agreed that in 1979 the tenant's base rent should have been 
          $459.13 and not $497.22.  On March 4, 1992, a Notice was issued 
          commencing a proceeding to reconsider the order previously issued on 
          November 8, 1991 and giving both parties a chance to submit 
          additional evidence.  In a response dated January 9, 1992, the owner 
          stated in substance that the November 8, 1991 order failed to 
          acknowledge the owner's submission of October 14, 1991.

               In Order Number DH410018RP issued on June 19, 1992, the Rent 
          Administrator modified the earlier order issued on November 8, 1991, 
          to eliminate the arrears in rent found to be owing so that there was 
          a total excess rent to be refunded of $4521.96 through July 31, 1990 
          ($4455.04 plus excess security of $66.92).  In all other respects, 
          the Rent Administrator's prior order was unchanged.

               In the tenant's petition,the tenant alleges in substance that 
          the 1978 maximum base rent should have been listed as $382.61 in 

          GG410157RT, GG410118RO

          accordance with the owner's calculations, rather than $414.35 as 
          listed in the Rent Administrator's order and that if this were done,
          the initial stabilized rent would have been set at $459.13 and not 
          $497.22 and a higher rent refund would have been determined.  The 
          tenant further alleges that treble damages should have been imposed.

               In the owner's petition, the owner alleges in substance that 
          the Rent Administrator failed to consider the owner's reply dated on 
          or about January 9, 1992 and answer dated October 14, 1991; that the 
          owner was denied due process at every stage of the proceeding;  and 
          that the revocation of the October 16, 1986 Rent Administrator's 
          order was arbitrary and capricious and has no rational basis. 

               The Commissioner is of the opinion that these petitions should 
          be denied.

               Section 26-513 of the Rent Stabilization Law provides in 
          pertinent part that fair market rent adjustment applications are to 
          be determined by the use of special fair market rent guidelines 
          orders promulgated by the New York City Rent Guidelines Board and by 
          the rents generally prevailing in the same area for substantially 
          similar housing accommodations.  In order to determine rents 
          generally prevailing in the same area for substantially similar 
          housing accommodations, it is DHCR's procedure for fair market rent 
          appeal cases filed prior to April 1, 1984 to allow owners to submit 
          June 30, 1974 fair market rent data for complete lines of 
          apartments, beginning with the subject line.  The average of such 
          comparable rentals will then be updated by annual guidelines 
          increases.  Alternatively, DHCR procedure allows owners to have 
          comparability determined on the basis of rents charged after June 
          30, 1974.  In order to use this method, owners were required prior 
          to November 1, 1984 to submit rental history data for all stabilized 
          apartments in the subject premises and subsequent to November 1, 
          1984 to submit such data for complete lines of apartments beginning 
          with the subject line.  Post June 30, 1974 rent data will be 
          utilized if the comparable apartment was rented to a first 
          stabilized tenant within one year of the renting of the subject 
          apartment and if the owner submits proof of service of a DC-2 Notice 
          or apartment registration form indicating that the rent is not 
          subject to challenge.

                    In the instant case, the owner did not submit the required 
          comparability data although given adequate opportunity to do so.  
          Rather in the answer dated October 14, 1991, as indicated above, the 
          owner contested that it was denied the opportunity to answer in the 
          appeal proceeding; that the DHCR failed to notify the owner of the 
          fair market rent appeal in a timely fashion and that the owner was 
          only required to produce a rental history dating back to 1987.  In 
          answer to these contentions, the Commissioner points out that the 
          owner did in fact answer the tenant's petition filed under docket 
          AL410127RT; that an examination of the record in this case discloses 

          that a copy of the Commissioner's decision under such docket 

          GG410157RT, GG410118RO

          remanding the proceeding for further processing was mailed to the 
          owner at the correct address; that even if the owner did not receive
          a copy of this decision, it was afforded a full opportunity to 
          participate in the remanded proceeding and submit any evidence or 
          contentions it wanted thus satisfying due process requirements; and 
          that the owner was notified at least as early as 1985 about the 
          tenant's fair market rent appeal and submitted an answer in 
          September 1985.  With regard to the owner's contention that it 
          should be required to submit only rental data dating back four years 
          at most, it is noted that Section 26-513 of the Rent Stabilization 
          Law, which deals with fair market rent appeals, continues to provide 
          for determination of the fair market rent from the date of the 
          initial stabilized tenancy.  Additionally, the owner was not 
          required to submit comparability data more than four years old, but 
          had the option to do so.  Further all responses submitted by the 
          owner have been considered in this determination.  Finally, the 
          Commissioner is of the opinion that the revocation of the Rent 
          Administrator's 1986 order was proper since the DHCR was not 
          estopped from deciding the fair market rent appeal by the alleged 
          Assurance of Discontinuance. 

               With regard to the tenant's contention that the 1978 maximum 
          base rent should have been listed as $382.61 as calculated by the 
          owner, it is noted that DHCR maximum base rent records list the 
          1972-73 maximum base rent for the subject apartment as $287.18 and 
          further disclose that the owner received maximum base rent increases 
          for every year thereafter until at least 1978-79.  Updating the 
          1972-73 maximum base rent for the subject apartment in accordance 
          with the standard increases for the two year cycles gives a 1978 
          maximum base rent of $414.35 as listed by the Rent Administrator.  
          The owner's calculations to the contrary are incorrect and have 
          therefore not been adopted by the Administrator.

               With regard to the tenant's contention that the imposition of 
          treble damages was warranted, Section 2526.1 of the current Rent 
          Stabilization Code provides that any owner found to have collected 
          an overcharge above the authorized rent shall be liable for a 
          penalty equal to three times the amount of such overcharge but that 
          if the owner established by a preponderance of the evidence that the 
          overcharge was not willful, the DHCR shall establish the penalty as 
          the amount of the overcharge plus interest.  Further treble damages 
          may not be based upon an overcharge having occurred more than two 
          years before the complaint is filed or upon an overcharge which 
          occurred prior to April 1, 1984.  This section does not apply to 
          fair market rent appeals.  Pursuant to Section 26-512(b)(2) of the 
          Rent Stabilization Law, for apartments which are removed from rent 
          control and become subject to the Rent Stabilization Law by virtue 
          of a vacancy occurring after June 30, 1974, the owner is permitted 
          to charge an initial fair market rent as "agreed to by the landlord 
          and the tenant", subject to the tenant's right to challenge the 

          initial rent as exceeding the fair market rent.  If the tenant does 
          not challenge the initial rent, it becomes the legal base rent.  If 
          the tenant challenges the initial rent, a determination may be made 

          GG410157RT, GG410118RO

          that the tenant's initial rent exceeds the proper fair market rent 
          for the apartment.  In such case, the owner is required to give the 
          tenant a refund or credit for the amount collected in excess of the 
          fair market rent.  However, such determination that the initial rent 
          exceeds the fair market rent is considered in the nature of a rent 
          adjustment rather than a rent overcharge and thus the imposition of 
          treble damages and / or interest is not warranted.  It is noted that 
          rent overcharge proceedings where treble damages may be imposed 
          generally involve cases where an initial legal regulated rent (fair 
          market rent) is already established and an owner willfully charges 
          rents higher than permitted by the Rent Guidelines Board upon 
          subsequent renewal leases or refuses to submit a complete rental 
          history thus leading to the conclusion that rent overcharges 
          occurred.  In addition Section 2526.1(g) of the current Rent 
          Stabilization Code provides that "[t]he provisions of this section 
          [Section 2526.1, concerning overcharge penalties and assessment of 
          costs] shall not apply to a proceeding pursuant to Section 2522.3 of 
          this Title (Fair Market Rent Appeal)."

               Pursuant to the above, the imposition of treble damages is not 

               The owner is directed to reflect the findings and 
          determinations made in 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 

               The owner is directed to roll back the rent to the lawful 
          stabilized rent consistent with this determination 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.

               In the event the owner does not take appropriate action to 
          comply within sixty (60) days from the date of issuance of this 
          order, the tenant may credit the excess rent collected by the owner 
          against the next month(s) rent until fully offset.

          GG410157RT, GG410118RO

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

               ORDERED, that these petitions for administrative review be, and 
          the same hereby are, denied, and, that the order of the Rent 
          Administrator be, and the same hereby is, affirmed.


                                          JOSEPH A. D'AGOSTA
                                          Deputy Commissioner



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