A landlord may pass through to tenants 100% of the increase in the landlord’s property tax bill resulting from the repayment of general obligation bonds approved by the voters between November 1, 1996 and November 30, 1998. For general obligation bonds approved by the voters after November 14, 2002, the landlord may pass through 50% of the property tax increase resulting from repayment of these bonds, provided that the rent increase is disclosed and approved by the voters.
The landlord is not required to file a petition with the Rent Board for approval of the Bond Measure Passthrough. However, the landlord must use the Bond Measure Passthrough Worksheet in order to calculate the passthrough. To impose the passthrough, a copy of the completed Worksheet must be provided to the tenant in addition to a written notice of rent increase. You can download copies of the Bond Measure Passthrough Worksheets at the links shown below. The Worksheets are also available at our office.
Only tenants in residence as of November 1st of the applicable tax year are eligible for the Bond Measure Passthrough. The passthrough must be imposed at the time of the annual rent increase, on the tenant’s rent increase anniversary date. It shall not become part of the tenant’s base rent, and it must be discontinued after the tenant has paid it for the number of months specified on the worksheet.
Bond Measure Passthroughs may be “banked” and imposed in future years, provided that the applicable Bond Measure Worksheet is completed for each banked passthrough and attached to the notice of rent increase. However, for bond passthrough imposed on or after January 1, 2021, the landlord may only impose bond passthroughs for tax bills issued within three years prior to the year in which the passthrough is imposed. For example, if the landlord imposes a passthrough on March 1, 2023, it may include general obligation bond costs for tax bills issued between January 1, 2020 and March 1, 2023, but cannot include any general obligation bond costs for tax bills prior to January 1, 2018.
There is a different Worksheet for each tax year, since the percentage of the property tax rate attributable to repayment of general obligation bonds varies from year to year.
For general obligation bond passthroughs imposed prior to January 1, 2021, the total passthrough is paid by the tenant over a period of 12-months, regardless of the number of property tax bills used in the passthrough calculation (i.e. even if the passthrough is based on multiple tax years, the entire passthrough amount would be paid in 12 monthly installments).
For general obligation bond passthroughs imposed on or after January 1, 2021, the time period for tenants to pay the passthrough is extended to the same number of months covered by the property tax bills used in the passthrough calculation. In other words, if the passthrough is based on property tax bills for the prior three tax years, the passthrough will be paid in 36 monthly installments over a period of three years.
A landlord may elect to pass through the property tax increase attributable to the repayment of bonds as part of an Operating and Maintenance Expense Petition instead of calculating a separate Bond Measure Passthrough. In such cases, the landlord must elect one or the other method, but may not choose both.
Tenants may seek relief from payment of some general obligation bond passthrough amounts by filing a Tenant Financial Hardship Application. However, hardship relief is only available for that portion of a general obligation bond passthrough that is attributable to general obligation bonds approved by the voters on or after November 5, 2019. Since bonds approved by the voters on or after November 5, 2019 were not included in bond passthrough amounts prior to the 2020-2021 tax year, hardship relief is only available for bond passthroughs imposed on or after November 1, 2020, based on tax year 2020-2021 and later.
A tenant may file a petition for an arbitration hearing at the Rent Board to challenge an improper Bond Measure Passthrough. In such a hearing, the landlord shall have the burden of proving the accuracy of the Bond Measure Passthrough calculation. Such petitions must be filed within one year of the effective date of the passthrough.
Tags: Topic 330