Legislation recently passed that amended the definition of “rental unit” in Rent Ordinance Section 37.2(r)(4) to include properties where the owner has obtained tax-exempt multifamily revenue bonds. The amendments were effective August 28, 2023.
Background
In general, dwelling units whose rents are controlled or regulated by another government agency are entirely exempt from the Rent Ordinance (a “rent-regulated unit”). Thus, if a landlord enrolls in a government program to obtain tax-exempt multifamily revenue bonds, the landlord may follow the rent regulations of that government program instead of the Rent Ordinance.
What does this legislation change?
Ordinance Section 37.2(r)(4) was amended to state that if a unit was already tenant-occupied and subject to the Rent Ordinance at the time the landlord obtained tax-exempt multifamily revenue bonds, the unit will remain subject to the Rent Ordinance and will not be exempt as a “rent-regulated unit.” However, once all the occupants who lived in the unit at the time of the bond financing cease to permanently reside there, or if all the tenants in the unit agree to opt out of the Rent Ordinance in writing, then the unit will become exempt from the Rent Ordinance as a “rent-regulated unit” and the landlord can set the rents under the applicable government program.