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 NO. GG410118RO
NILA GRECO AND : GG410157RT
DRO DOCKET NO.GB410011RP
JEMROCK REALTY CO.
PETITIONERS :
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ORDER AND OPINION DENYING PETITIONS FOR ADMINISTRATIVE REVIEW
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
appeals.
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
warranted.
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
warranted.
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
increases.
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.
ISSUED
JOSEPH A. D'AGOSTA
Deputy Commissioner
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