GB 410308 RO
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
APPEAL OF DOCKET NO.: GB 410308 RO
APAR REALTY COMPANY,
DRO DOCKET NO.: TC 085101 G
TENANT: GERALDINE JENDER
PETITIONER
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ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
The above-named petitioner-owner timely filed a Petition for
Administrative Review against an order issued on November 15,
1989 by the Rent Administrator, 92-31 Union Hall Street, Jamaica,
New York concerning the housing accommodation known as 643 West
207 Street, Apartment 5A, New York, New York wherein the Rent
Administrator determined that the tenant had been overcharged.
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 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 administrative appeal.
This proceeding was originally commenced by the filing of a Fair
Market Rent Appeal on January 12, 1983 which, because the
Division's records indicated that the subject apartment had been
vacancy decontrolled on October 3, 1973, was converted to an
overcharge complaint in July 1984 and re-docketed as such in
July 1985.
In response to the complaint, the owner asserted that since it
had rehabilitated the subject building with the aid of financing
by the Community Preservation Corporation, it was entitled to
charge a free market rent.
The record discloses that the owner was requested to submit
1) leases for the period October 3, 1973 through
October 31, 1982,
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2) a copy of CDR # 5865, on order which had granted a rent
increase for Major Capital Improvements (MCI) and
3) the specific renovation cost for the subject apartment.
The owner was advised in a notice dated July 14, 1986 that
failure to submit a full rental history would result in the
establishment of the lawful rent by use of default procedures and
was also advised that treble damages could be imposed.
In response to the complaint, the owner submitted a copy of a
loan commitment from the New York City Community Preservation
Corporation (CPC), a private bank which provided rehabilitation
financing in targeted neighborhoods, and a copy of a proposed
contract to rehabilitate the subject property to substantiate its
entitlement to a free market rent.
In the order here under review, the Administrator established the
lawful stabilization rent at $223.85 for November 1, 1982 through
October 31, 1983 and directed the owner to refund overcharges of
$13,994.57 inclusive of excess security and treble damages on the
overcharges collected on and after April 1, 1984.
In the appeal, the owner requests that the Administrator's order
be reversed. The owner contends:
1) that it was not informed that the matter was
not being processed as a Fair Market Rent
Appeal or that it was required to submit
prior rent history documentation;
2) there is no basis for imposing treble damages
because treble damages o not lie for pre-
April 1, 1984 complaints unless there has
been express notification of possible
liability. Moreover, there was no attempt to
willfully overcharge as the rent reflected
the owner's understanding of the terms of its
loan;
3) the Administrator should have searched the
CAB's record to determine if that agency had
made a rent adjustment pursuant to the terms
of the CPC loan agreement; and
4) the Administrator failed to credit the owner
with the granted MCI increase.
The Commissioner is of the opinion that this petition should be
denied.
Review of the record reveals that the owner was kept apprised of
the ongoing processing of the tenant's complaint. Although the
record indicates that a FMRA-related notice was incorrectly sent
to the owner in September 1989, the owner was not prejudiced
thereby. The owner had been notified of the conversi n and re-
docketing of the Fair Market Rent Appeal (FMRA) to an overcharge
proceeding and was given ample opportunity to submit a rental
GB 410308 RO
history. The record indicates that the owner responded to
various notices and requested more time in which to submit the
rental history. The owner was advised that failure to do so
would result in the establishment of the rent using Section 42A
default procedures and that treble damages for overcharges
occurring on and after April 1, 1984 would be imposed if the
owner could not establish that such overcharges were not willful.
Accordingly, the Commissioner finds that the Administrator did
not err in establishing the lawful stabilization rent.
With respect to treble damages the Rent Stabilization Law
provides for the imposition of a penalty of treble damages for
all willful overcharges collected on or after April 1, 1984. The
law creates a presumption of willfulness that is overcome by the
owner's affirmative showing of lack of willfulness by a
preponderance of the evidence. The owner herein failed to meet
its burden. Since the owner had been advised of the possible
imposition of the treble damages penalty, the Administrator was
correct in assessing the penalty.
With regard to the Division's responsibility to search CAB's
records, the Commissioner notes that the Rent Stabilization Law
gives an owner the responsibility of maintaining rental records
and of producing them upon request. In view of the owner's
failure to submit requested documents, the Division attempted to
learn the basis of the rent collected by the owner, even
directing an inquiry to the "CPC" to determine whether the owner
had complied with the general conditions of the mortgage
commitment, in particular, paragraph 1, clause IV (4) and
paragraph 5, clause VII, which specified the owner's
responsibility in the structuring of the appropriate legal rent,
including applying for approval and setting of the allowable
monthly rent increase. The record contains no response to the
inquiry. Further an examination of DHCR and CAB records did not
disclose any application by the owner with the CAB for an
adjustment of the stabilized rents pursuant to the terms of the
CPC loan agreement.
In conformance with the application of Section 42A default
procedures to establish the rent, the rent is "frozen", barring
all rent increases for the period covered by the Administrator's
order. Accordingly, the Administrator did not err in excluding
the MCI rent increase.
Because this determination concerns lawful rents only through
October 31, 1986, the owner is cautioned to adjust subsequent
rents to an amount no greater than that determined by the Rent
Administrator's order plus any lawful increases, including the
MCI rent increase.
This order may, upon the expiration of the period in which the
owner may institute a proceedi g pursuant to Article Seventy-
Eight of the Civil Practice Law and Rules, be filed and enforced
in the same manner as a judgment.
THEREFORE, in accordance with the provisions of the Rent
Stabilization Law and Code, it is
ORDERED, that this petition be, and the same hereby is, denied,
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and that the order of the Rent Administrator be, and the same
hereby is, affirmed.
ISSUED:
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JOSEPH A. D'AGOSTA
Acting Deputy Commissioner
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