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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
------------------------------------X S.J.R. 5993
IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO. GL410051RO
: DRO DOCKET NO.ZGE410001RP
KEN-ROB COMPANY TENANT: CHERYL BUSBEE
PETITIONER :
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ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
On December 7, 1992, the above-named petitioner-owner filed a
Petition for Administrative Review against an order issued on
November 16, 1992, by the Rent Administrator, 92-31 Union Hall
Street, Jamaica, New York, concerning the housing accommodations
known as 236 East 5th Street, New York, New York, Apt. D4, 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 Administrative Appeal is being determined pursuant to the
provisions of Section 2522.3 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 appeal.
This proceeding was commenced under docket number 46113 on
September 28, 1994 by the tenant filing an objection to the
apartment registration in which she questioned the fair market rent
of the subject apartment. The Rent Administrator dismissed the
tenant's fair market rent appeal as untimely filed. On March 1,
1990 under docket number CF410004RT, the Commissioner issued an
Order and Opinion denying the petitioner-tenant's administrative
appeal.
Subsequent thereto, the petitioner-tenant filed a petition in
the Supreme Court pursuant to Article 78 of the Civil Practice Law
and Rules requesting that the order of the Commissioner be annulled.
The Court determined that the proof of service of the initial
registration statement (RR-1 form) submitted by the owner was not
sufficient and ordered that the proceeding be remitted to the
Division for further consideration.
On July 25, 1991, the Commissioner then issued an Order and
Opinion Remanding the Proceeding to the Rent Administrator for
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further processing including affording the owner an opportunity to
submit sufficient proof of service of the RR-1 form in accordance
with the court order.
Subsequent thereto, the petitioner-tenant filed a motion for
contempt to the effect that the fair market rent appeal should be
decided on the merits and that the owner should not be given an
opportunity to submit proof of service of the RR-1 form.
On March 25, 1992, Justice Schoenfeld issued an order directing
the Division to have the tenant's fair market rent appeal considered
timely filed and to determine such appeal on the merits forthwith.
In the remanded proceeding (docket number ZGE410001RP), the
Rent Administrator served the owner with a fair market rent appeal
answering package affording the owner an opportunity to submit
comparability data. In answer the owner cited the subject line
except for apartment A4 which it stated was not applicable due to
"dis-similar layout, due to different configuration of 1st floor
apartments (lobby)". The owner also stated in answer to the fair
market rent appeal that the tenant had been served in 1981 with a
DC-2 Notice and submitted a copy of said DC-2 Notice along with
proof of service on the tenant by certified mail. The owner was
afforded a second opportunity to submit comparability data and
submitted the same information as before.
In Order Number ZGE410001RP, the Rent Administrator adjusted
the initial legal regulated rent by establishing a fair market rent
of $206.17 effective December 1, 1979, the commencement date of the
initial rent stabilized lease. The fair market rent was determined
solely on the basis of the special fair market rent guideline plus
an allowance for apartment improvements. In addition, the Rent
Administrator determined that the tenant had paid excess rent of
$54,567.62 through November 31, 1992, and directed the
owner to refund such excess rent to the tenant. The Rent
Administrator determined that the comparability data submitted by
the owner was not acceptable because the owner cited the subject
line "4" but did not submit complete rental data for apartment A4
and did not submit either the DC-2 forms or RR-1 forms with proof of
service for apartments B4 and F4 (the only apartments in the "4"
line that could be considered comparable. In addition the Rent
Administrator noted that the tenant contended that she took initial
occupancy of the subject apartment as a sub-tenant on December 1,
1979, the date of the initial lease for the subject apartment
following vacancy decontrol; and determined that the owner had
failed to submit evidence rebutting the tenant's contention that the
prime tenant was illusory so that the tenant herein was the bonafide
prime tenant of the subject apartment from the initial occupancy on
December 1, 1979.
In this petition, the owner alleges in substance that the Rent
Administrator should have considered the fact that the tenant herein
had been served with the DC-2 Notice in 1981 and had not filed her
fair market rent appeal within 90 days of receipt of such notice so
that the fair market rent appeal should have been dismissed as
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untimely; that the owner failed to submit the RR-1 forms for
comparable apartments B4 and F4 due to inadvertence and is
submitting such RR-1 forms together with proof of service along with
its appeal; that the Rent Administrator should have specifically
requested copies of the missing RR-1 forms instead of just
requesting the comparability data a second time; that apartment A4
was correctly not included because it has a different configuration
and is not comparable; that the Rent Administrator omitted a 5%
vacancy allowance to which the owner was entitled for the lease
commencing December 20, 1980 pursuant to Guideline 12 in that the
initial tenant was Julius Goodman who sublet to a Lawrence S. Ballow
only and not to the tenant herein so that the owner was entitled to
a vacancy allowance when the tenant herein signed her first vacancy
lease; and that the tenant received a 35 month rent credit of
$292.39 per month for a rent overcharge due to a miscalculation in
a major capital improvement rent increase during the period from
February 10, 1982 to December 19, 1984 whereas there are only 34
months during this period.
In addition, the owner filed a court motion in the Article 78
proceeding to renew the two prior motions that resulted in the court
decisions to have the tenant's fair market rent appeal determined on
the merits forthwith. The owner contended that the fair market rent
appeal should have been dismissed as untimely because it was not
filed within 90 days of service of the DC-2 Notice. In a decision
dated December 21, 1993, Justice Schoenfeld denied the owner's
request that the court direct the Division to consider the "DC-2"
evidence and reiterated his prior finding that the tenant's fair
market rent appeal is to be considered as timely filed and that the
issue of the tenant's right to file a fair market rent appeal is
closed.
The Commissioner is of the opinion that this petition should be
denied.
Pursuant to Section 2522.3(e) of the Rent Stabilization Code,
applicable to fair market rent appeals filed after April 1, 1984,
comparability will be determined based on the following:
(1) Legal regulated rents, for which the time to file a Fair Market
Rent Appeal has expired and no Fair Market Rent Appeal is then
pending, or the Fair Market Rent Appeal has been finally determined,
charged pursuant to a lease commencing within a four year period
prior to, or a one year period subsequent to, the commencement date
of the initial lease for the housing accommodation involved; and
(2) At the owner's option, market rents in effect for other
comparable housing accommodations on the date of the initial lease
for the housing accommodations involved.
The owner's allegations regarding service of the DC-2 form
cannot be considered in accordance with the court determination.
Rather the tenant's fair market rent appeal was properly considered
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on the merits. Further the record shows that the fair market rent
and the amount of the excess rent paid were correctly determined by
the Rent Administrator.
The owner's contentions regarding the submission of
comparability data are without merit. The owner was twice afforded
an opportunity to submit comparability data and each time was
advised of the necessity to submit a copy of the RR-1 form or DC-2
form along with proof of service for each comparable apartment
cited. The owner did not do this in the proceeding before the Rent
Administrator and the owner's submission on appeal cannot be
accepted as this is not a de novo proceeding. Further, data on
Apartment A4 should have been submitted since the owner did not
establish in what way Apartment A4 is distinguished from other
apartments in the "4" line.
The owner's contention that it was entitled to a 5% vacancy
allowance in the lease commencing December 20, 1980, is without
merit. It is noted that during the earlier proceeding (46113), the
tenant submitted an affidavit to the effect that she and her husband
Lawrence Ballow moved to the subject apartment on December 20, 1979
pursuant to a sublease signed by her husband in the presence of the
owner and a real estate agent, but that the alleged prime tenant
Julius Goodman was not at such meeting; that Julius Goodman never
took occupancy of the subject apartment, never had a phone, never
was seen by anybody in the building and must be considered as an
illusory prime tenant; and that she and her husband Lawrence Ballow
were the first rent stabilized tenants to occupy the subject
apartment after the rent controlled tenant had vacated. This
affidavit was made part of the tenant's petition for administrative
review filed under docket CF410004RT and was served on the owner as
part of said petition. However, the owner never submitted any
evidence to refute the statements made in the affidavit.
Accordingly, the Rent Administrator correctly considered that the
tenant and her husband were the real prime tenants effective
December, 1979. Therefore, the lease commencing December 20, 1980
was a renewal lease and the owner was correctly found not to be
entitled to a vacancy allowance for it.
Finally, although the period from February 20, 1982 to December
19, 1984, represents a 34 month period and the excess rent listed by
the Rent Administrator was $292.39 per month for a 35 month period,
the owner was not hurt by this error. This is so because for the
immediately prior period of December 20, 1981 to February 19, 1982,
the Rent Administrator found excess rent of $305.21 per month to
have been paid for a one month period rather than the correct two
month period. Therefore the owner benefitted slightly by this error
and since the tenant did not file her own petition for
administrative review regarding this point, the Commissioner deems
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it appropriate not to make any changes to correct these errors.
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.
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.
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.
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, 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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