Rust v. Tucker

VAN ORSDEL, Associate Justice. These appeals are from orders of the rent commission fixing rental rates on two apartments in the Lamont apartment building in the city of Washington. The testimony of the witnesses examined as to the value of the property varied from $60,000 to $70,000. The commission, based upon a personal inspection of the premises, determined the fair market value of the property to be $52,500. It is unnecessary to enter into the question of valuation in detail, since it is apparent that the decision was reached through a false method of computation. The prevailing schedule of gross rents for the year of 1921, produced a net income, after proper deductions for expenses and depreciation, of 5y2 per cent, on a valuation of $60,000 or 6% per cent, on the valuation found by the commission, $52,500. The reduced rate fixed upon the two apartments, added to the' prevailing' rate received from the balance of the building, would perhaps net about 6 per cent, on the Commission’s valuation. But this is a false system of computation. Instead of revising the rental rates upon the entire building, as the commission might have done, it merely readjusted the rates on the two apartments in question. If the reduction, applied to the two apartments, had been applied to the entire building, the net income would have been reducd to about 3 per cent, on the commission’s valuation. The rates fixed upon the two apartments concerned should have been based upon the value of these apartments “in the proportion which their value bears to the value of the entire property.” Karrick v. Cantrill et al., 51 App. D. C. 176, 179, 277 Fed. 578, 581. The orders of the rent commission are reversed, with costs, and the causes are remanded for further proceedings.