GB610341RO


                                  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 
          IN THE MATTER OF THE ADMINISTRATIVE :  ADMINISTRATIVE REVIEW
          APPEAL OF                              DOCKET NO.GB610341RO
                                              :  DRO DOCKET NO.DI610235R
          ROBERT E. HERMAN for EXPRESS MANAGE-
          MENT                    
                                                 TENANT:  Descorides Cartagena
                                PETITIONER    : 
          ------------------------------------X                             
            ORDER AND OPINION GRANTING IN PART PETITION FOR ADMINISTRATIVE 
          REVIEW AND MODIFYING ADMINISTRATOR.S ORDER 
                

               On February 24, 1992, the above-named petitioner-owner filed a 
          Petition for Administrative Review against an order issued on 
          February 7, 1992, by the Rent Administrator, 92-31 Union Hall 
          Street, Jamaica, New York, concerning the housing accommodations 
          known as 220 Miriam St., Bronx, New York, Apartment No. 4I wherein 
          the Rent Administrator established the lawful stabilization rent at 
          $482.11 effective April 1, 1991 and directed the owner to refund 
          overcharges of $29,877.64 inclusive of treble damages and excess 
          security.

               The Administrative Appeal is being determined pursuant to the 
          provisions of Section 2522.4(a)(1), (2) and 2526.1 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 on September 14, 1989 when the 
          tenant filed a complaint of rent overcharge.  The tenant stated
          that he had commenced occupancy of the subject apartment on April 1, 
          1989 at a monthly rent of $693.00 and that he believed that he was 
          being overcharged because the previous registered rent had been 
          $308.90.

               In answer to the tenant's complaint, the owner stated that the 
          subject apartment had been substantially improved and rehabilitated 
          during the period prior to the tenancy of the previous tenant.  The 
          owner further stated that the complainant was paying the same rent 
          as had been paid by the previous tenant and that such rent had 
          included an increase based on improvements and new equipment as well 
          as guidelines increases.  The owner submitted bills and cancelled 
          checks, indicating that the owner had spent a total of $149, 642.08 
          in individual apartment and building wide improvements (the owner 
          allocated the building wide costs)  to substantiate the improvements 







          GB610341RO

          increase and a copy of the prior tenant's lease.

               Subsequently, the owner was notified that an overcharge had 
          been determined and that treble damages would be assessed on the 
          overcharge.

               In reply, the owner asserted that it had submitted complete 
          records in substantiation of the rent, including leases, bills and 
          cancelled checks, that there was no overcharge and that if any 
          overcharge were to be found, it should not be considered willful.

               In the order issued under Docket No. DI610235R, the 
          Administrator, allowing only $3591.13 for approved individual 
          apartment improvements and disallowing $146051.67 for improvements 
          considered to be building wide major capital improvements or normal 
          maintenance and repair, established the lawful rent at $482.11 as of 
          April 1,1991 through March 31, 1993 and determined that an 
          overcharge of $29,877.64 inclusive of excess security and treble 
          damages had occurred as of February 29, 1992.

               In his appeal, the owner contends that the order should be 
          reversed as there was no overcharge, that the Administrator erred in 
          omitting the prior tenant from the rent chart  and in neglecting to 
          consider the major capital improvements installed by the owner, 
          whose allocation should be included in the vacancy lease of the 
          prior tenant.  The owner asserts that  the prior tenant consented to 
          all of the improvements increases and that no additional increases 
          for improvements were included in the complainant's lease.  In 
          addition , no guidelines increase was taken in the complainant's 
          vacancy lease.  The owner contends that the rent should be 
          established in accordance with Code Sections 2522.6 and 2522.7.  The 
          owner contends that treble damages should not be imposed as there is 
          no evidence of willful conduct in the overcharge found.

                The tenant contends that the order is correct, including the 
          imposition of treble damages because the overcharge was willful.

               The Commissioner is of the opinion that this petition should be 
          granted in part.

               Code Section 2522.4 governs rent increases for both individual 
          apartment and building wide improvements.  The Code distinguishes 
          between individual apartment improvements and building wide 
          improvements quite clearly, establishing different standards as to 
          permissible rent increases for each.  Section 2522.4(a)(1) provides 
          in pertinent part that an owner is entitled to a rent increase where 
          there has been a substantial increase, other than an increase for 
          which an adjustment may be claimed pursuant to paragraph(2) of this 
          subdivision, of dwelling space or an increase in the services, or 
          installation of new equipment or improvements, or new furniture or 
          furnishings, provided in or to the tenant's housing accommodation, 
          on written tenant consent to the rent increase.  In the case of 
          vacant housing accommodations, tenant consent shall not be required.
          Under this section, an owner may take a rent increase equal to 
          1/40th of  the improvement's cost immediately without DHCR approval.  
            For rent increases for building wide improvements as covered by 
          Code 2522.4(a)(2), however, DHCR approval is always required.       
                                                                              


          GB610341RO

                                                                   Pursuant to 
          Section 2522.4 (a)(2) an owner may file an application to increase 
          the legal regulated rents of the building on DHCR-prescribed forms, 
          which the DHCR shall serve upon all affected tenants, on one or more 
          of four possible grounds.  An application for a rent increase based 
          upon a major capital improvement, the type of increase allocated to 
          the instant tenant, must meet specific   criteria established in the 
          Code, including itemization, certification of cost, useful life 
          schedule requirements, proof of payment, necessary governmental 
          approvals, and an affidavit that the installation has been completed 
          in compliance with all applicable governmental codes and 
          regulations.  The approved rent increase based on major capital 
          improvements is limited to 1/60th of the total cost.

               The facts in this proceeding show that the owner chose to 
          collect a rent increase without legal justification, unjustifiably 
          ignoring the regulations established under the law.  Since the owner 
          herein chose not to conform with the Code's requirements for  
          building wide increases, it is not entitled to allocate a portion of 
          the total cost to the complainant.  The Commissioner finds that the 
          Administrator correctly disallowed the following improvements 
          considered to be major capital improvements:  roofing,burner, 
          mailboxes and other building wide improvements.  A rent increase is 
          not permitted under the Code for work considered ordinary repair and 
          maintenance.  The Administrator did not err in disallowing the cost 
          of repairing the entrance door and sanding the floor which are 
          considered ordinary repair and maintenance.

               The Commissioner finds that the Administrator erred in not 
          considering the prior tenancy.  Review of the evidence indicates 
          that the prior tenant took occupancy after April 1988.  Since the 
          prior tenant executed a one year vacancy lease, August 1, 1988 to 
          July 31, l989, the owner was entitled to a one year vacancy 
          guideline increase of  13% pursuant to guidelines number 19.  The 
          increased rent then becomes $402.09 ($308.90 times 13% plus $53.03, 
          the permitted improvements increase).  The owner was then entitled 
          to an 18% increase pursuant to Guidelines # 20 when the complainant 
          executed a one year vacancy lease, making the complainant's initial 
          rent $474.87.  Accordingly, the Commissioner has recomputed the 
          legal rent and the overcharge to be refunded as follows: 
               
          LEASE TERM     RENT     LEGAL         OVERCHARGE                    
                         CHARGED  RENT          CALCULATION 
          8/1/88-7/31/89 $693.00  $402.09       NA
          4/1/89-3/31/90 $693.00  $474.47       $218.53 x 12 mos =$2622.36

          4/1/90-3/31/91 $731.10  $500.57        $230.53 x 12 mos = $2766.36

          4/1/91-3/31/93 $787.27  $535.61        $246.66 x 11 mos = $2713.26




                              Total Overcharge --------------------$ 8101.98
                              Treble Damages                        16203.96
                              Excess Security                         246.66  
                      Total Refund Due 4/1/89-2/29/92 =    $24552.60








          GB610341RO


               With respect to the owner's contention that Sections 2522.6 and 
          2522.7 be considered in establishing the rent for the subject 
          accommodations, the Commissioner notes that Section 2522.6 of the 
          Code does not pertain to the instant situation where there was an 
          established legal rent and the owner attempted to take an increase 
          in an unauthorized manner.  As to consideration of the equities, the 
          Code provides the method by which the owner could have recouped its 
          cost of making major capital improvements.  That it chose not to do 
          it in the prescribed manner does not entitle it to special 
          consideration even though it improved the subject building. 
          There is no provision in the Code that permits an owner unilaterally 
          to allocate expenses for building wide improvements to individual 
          apartments.
            
               With regard to the imposition of treble damages, Section 2526.1 
          of the Code provides for treble damages in all cases of willful 
          overcharge.  Under the Code, there is a presumption of willfulness 
          which can be overcome by the owner's proving that the overcharge was 
          not willful. DHCR policy lists those conditions which will overcome 
          the presumption.  When an owner, as here, takes a rent increase that 
          is not sanctioned by the Rent Stabilization Code,  which results in 
          a rent overcharge , the resultant overcharge will be considered 
          willful and subject to the treble damages penalty.   Accordingly, 
          the Commissioner finds that the Administrator did not err in 
          assessing treble damages.

            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 Commissioner has determined in this Order and Opinion that 
          the owner collected overcharges of $24552.60  This Order may, upon 
          expiration of the period for seeking review of this Order and 
          Opinion pursuant to Article Seventy-eight of the Civil Practice Law 
          and Rules, be filed and enforced as a judgment or not in excess of 
          twenty percent per month of the overcharge may be offset against any 
          rent thereafter due the owner.  Where the tenant credits the 
          overcharge, the tenant may add to the overcharge, or where the 
          tenant files this Order as a judgment, the County Clerk may add to 
          the overcharge, interest at the rate payable on a judgment pursuant 
          to section 5004 of the Civil Practice Law and Rules from the 
          issuance date of the Rent Administrator's Order to the issuance date 
          of the Commissioner's Order.

               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, granted in part, and, that the order of the Rent 
          Administrator be,  and the same hereby is, modified in accordance 
          with this order and opinion.



          GB610341RO

          ISSUED



                                                                        
                                          JOSEPH A. D'AGOSTA
                                          Deputy Commissioner



                     




































    

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