Stabilization Code provides a formula for rent increases based upon major capital
improvements (see Rent Stabilization Code [9 NYCRR] § 2522.4
[a] [2], [4]).
Furthermore, the Deputy Commissioner's reasoning that the outer perimeter of the
apartment had not actually changed, because the Marrones merely unsealed a doorway, is
unsound in light of the Deputy Commissioner's own factual findings. The Deputy
Commissioner specifically found that "the subject apartment had been configured as a
two-bedroom apartment for at least 20 years" before the petitioner rented it, and that the
two rooms that were added to the apartment had "never" been used while the building
was owned by the Marrones. In light of these factual findings, it is irrational to conclude,
as the Deputy Commissioner essentially did, that the petitioner's apartment was always a
four-bedroom unit because two rooms existed in the building which could have been
made part of the apartment but were not.
The irrationality of the Deputy Commissioner's conclusion is underscored when the
rationale for the first stabilization rent policy is considered. As noted above, the reason
for allowing an owner to charge a first stabilization rent is that where an apartment is so
changed that it essentially ceases to exist, and a new unit is created, the rental history for
the prior unit is no longer relevant. Here, critically, the rental history for the subject unit
is for a two-bedroom apartment. Thus, as far as the rental history is concerned, although
the additional rooms existed within the building, they were not part of the subject
apartment. Accordingly, by unsealing the doorway and incorporating the two rooms into
the subject apartment, the owners "significantly change[d] the perimeter and dimensions