HK430137RO
                                  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.: HK430137RO
                                                  
          SOLOVIEFF REALTY CO.                    RENT
                                                  ADMINISTRATOR'S DOCKET 
                                                  NO.: GE430030B
                                  PETITIONER            
          ----------------------------------x


            ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
            REVOKING ORDER AND REMANDING PROCEEDING TO RENT ADMINISTRATOR

               On November 24, 1993 the above named petitioner-owner filed a 
          Petition for Administrative Review against an order of the Rent 
          Administrator issued October 25, 1993. The order concerned various 
          housing accommodations located at 501 E. 87th Street, New York, 
          N.Y.  The Administrator directed restoration of services and 
          ordered a rent reduction for failure to maintain required services.  

               The Commissioner has reviewed the record and carefully 
          considered that portion relevant to the issues raised by this 
          appeal.

               This proceeding was commenced on May 21, 1992 when 81 tenants 
          in this 179 unit building joined in the filing of a Statement of 
          Complaint of Decrease in Building-Wide Services wherein they 
          alleged that the building pool club, which was in operation before 
          and many years after the 1968 base date, was closed for repairs in 
          1989 and never reopened.  The tenants explained that although 
          membership in the pool club is by annual membership fee, separate 
          and in addition to the apartment rent, the existence of the pool 
          has always been used to attract prospective tenants to the 
          building. The tenants further stated that, in the course of repairs 
          to the brickwork on the building the contractors smashed the roof 
          over the pool to anchor the equipment and the roof was never 
          repaired.

               The owner was served with a copy of the complaint and afforded 
          an opportunity to respond. The owner, as represented by counsel, 
          filed a response on July 9, 1992 and stated that the pool club 
          facility is not a base date service required to be provided because 
          the club is operated and maintained by an independent corporation, 
          that the tenants are not required to be members of the  club, that 
          the pool club is not maintained primarily for use by tenants of the 












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          building but for anyone who pays the applicable fee, and that, even 
          assuming the pool is a service required to be provided, the pool 
          will be available for use within a short period of time.

               Various tenants filed replies wherein they stated, in relevant 
          part, that tenants always paid a lower pool membership fee than 
          non-tenants, that the fees were collected by the same management 
          company collecting the apartment rents, and that the pool had been 
          reopened in July, 1992  but that the enclosing roof was never 
          repaired.  The tenants all stated that the lack of a roof over the 
          pool rendered the pool useless on cool or inclement days and also 
          resulted in dirt blowing into the pool.  One tenant supplied the 
          Administrator with copies of prior DHCR orders (Docket Nos. 5524 
          and ARL08959L) wherein the tenant's registration statement was 
          amended to include the pool as a service required to be provided by 
          the owner.

               The Administrator ordered a physical inspection of the subject 
          building.  The inspection was conducted on August 27, 1993 and 
          revealed that the pool was not open at the time of inspection, that 
          the roof had not been repaired and that there was no water in the 
          pool.

               The Administrator issued the order here under review on 
          October 25, 1993.  The Administrator noted that the Commissioner 
          had issued three orders (ARL02021L, ART02209L and ARL08959L) which 
          affirmed the Administrator's determination that the pool was a 
          recreational facility that the owner was required to include on the 
          registration statement.  The Commissioner, however, remanded the 
          proceeding for further investigation as to whether the garage is a 
          required service.  In the order appealed herein, the Administrator 
          ordered a rent reduction to the level in effect prior to the most 
          recent guideline adjustment and also noted that the rent reduction 
          did not apply to 6 tenants who had withdrawn their complaints.

               On appeal the owner, as represented by counsel, states the 
          following grounds in requesting reversal of the order here under  
          review:

                    1.   The Administrator should not have granted a rent 
                         reduction to all 75 rent stabilized tenants who 
                         joined in the filing of the complaint because some 
                         were never members of the pool club, some were not 
                         members in 1989 when the pool was closed, those who 
                         were members in 1989 received a refund, some 
                         signatories to the complaint were not tenants of 
                         record, and some vacated prior to issuance of the 
                         order,

                    2.   The Administrator based the determination that the 
                         pool is a required service on another proceeding 
                         for which a final order was never issued,






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                    3.   The pool club was not provided "primarily for the 
                         use of building tenants" and since the Rent 
                         Stabilization Code precludes limiting the fees for 
                         such ancillary services to guideline adjustments, a 
                         rent reduction is not appropriate,

                    4.   The pool is neither a required nor ancillary 
                         service within the meaning of the Code because the 
                         pool club is a separate entity from the building 
                         owner,

                    5.   The penalty ordered is so excessive in proportion 
                         to the alleged misconduct that it shocks one's 
                         sense of fairness,

                    6.   The order effects an unconstitutional taking of 
                         property,

                    6.   The Administrator was not required to freeze the 
                         rents until the service is restored. Instead, the 
                         rent should have been reduced by the amount of the 
                         pool membership.

          The petition was served on the tenants on December 21, 1993.  On 
          December 23, 1993 the owner filed a supplement to the petition 
          wherein it requested the Commissioner stay the prospective 
          application of the rent reduction order because many tenants who 
          were granted a rent reduction are not entitled to one and the 
          Administrator's order was based on a non-final determination made 
          by the agency.
               
               Various tenants filed responses to the petition.  Many note 
          that they were members of the pool club and raise the fact that 
          their choice to live in the subject building was based on the 
          owner's offering membership in the pool club at substantially below 
          the market rate, that the owner advertised membership in the pool 
          club as a feature of the building and that such advertising induced 
          the tenants to reside in the building, that the pool is being 
          maintained by the building maintenance staff and that the owner has 
          promulgated and enforced rules and regulations for the pool 
          facility.  Some tenants, who were members of the pool club when it 
          closed, deny receiving a refund of their membership dues, and 
          assert that the pool is still closed.
           
               After careful review of the evidence in the record, the 
          Commissioner is of the opinion that the petition should be granted 
          in part, the order here under review should be revoked and the 
          proceeding should be remanded to the Administrator for further 
          processing.

               












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               Pursuant to Section 2520.6(r)(1) of the Rent Stabilization 
          Code, "required services" are that space and those services 
          required to be maintained on the applicable base date and any 
          additional space or services provided or required to be provided 
          thereafter by applicable law. 

               Pursuant to Section 2520.6(r)(2) of the Code, "ancillary 
          services" are that space and those services not contained within 
          the individual housing accommodation which the owner was providing 
          on the applicable base date and any additional space and services 
          provided or required to be provided thereafter by applicable law.  
          However, where there is a separate charge for a service and there 
          is no common ownership between the operator of the service and the 
          owner and the service was provided on the base date and at all 
          times thereafter by an independent contractor, then the service is 
          not subject to the provisions of the Code. 

               The Commissioner finds that the Administrator made an error of 
          law in basing the determination that the pool facility is a 
          required service on the Commissioner's orders cited in the rent 
          reduction order.  The determination issued in Docket No. ARL08959L, 
          which was the Commissioner's last ruling on the issue, was not a 
          "final" determination because the objection to registration 
          proceeding described above was remanded to the Administrator for 
          further processing and a determination pursuant to that remand has 
          not yet been issued.  The Commissioner's remand order was not a 
          final order subject to judicial review and is therefore not a 
          legally sufficient basis for concluding that the pool is a required 
          base date service.  Therefore, the order here under review is 
          revoked and the proceeding is remanded to the Administrator for 
          further processing.  

               The Administrator should determine whether or not the pool 
          facilities are "required services" or "ancillary services" within 
          the meaning of the Code.  On remand, the Administrator's pertinent 
          inquiry should be whether or not there is or was an identity of 
          ownership between the building owners and owners of the pool. If it 
          is determined that the pool facilities are required ancillary 
          services within the meaning of Section 2520.6(r) and that the owner 
          is not maintaining such service, a rent reduction should be 
          ordered.  The Commissioner notes that, if it is determined that the 
          pool is being used primarily by or for non-tenants but is owned by 
          the petitioner, the fees charged for pool membership are not 
          subject to rent regulation but a rent reduction based on failure to 
          maintain required services would still be warranted. If a rent 
          reduction is warranted based on the Administrator's new 
          investigation, the effective date of the rent reduction should be 
          the first rent payment date following service of the tenant's 
          original complaint on the owner.  However, because of the interim 
          revocation of the rent reduction which precluded the owner from 
          filing a rent restoration application, the Administrator should 
          also investigate whether the owner has restored services and, if 






          HK430137RO

          so, order the appropriate rent restoration.

               THEREFORE, pursuant to the Rent Stabilization Law and Code it 
          is 

               ORDERED, that this petition be, and the same hereby is, 
          granted, and that the Rent Administrator's order be, and the same 
          hereby is, revoked and it is further

               ORDERED, that this proceeding be, and the same hereby is, 
          remanded to the Rent Administrator for further processing 
          consistent with this order and opinion.  Any tenant who owes 
          arrears by reason of the Commissioner's determination may pay off 
          said arrears in twelve (12) equal monthly installments or 
          immediately if the tenant vacates.

          ISSUED:


                                                                             
                                             JOSEPH A. D'AGOSTA
                                             Deputy Commissioner
                                   






    

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