For Bond Measure Passthroughs that first go into effect on or after July 1, 2024, recent legislation has changed the way Bond Measure Passthroughs are calculated. Specifically, rather than using the same "passthrough rate" for all tenants, the passthrough rate will vary depending on when the tenant moved into the unit. Each tenant’s passthrough rate is now based on how much the portion of the property tax rate that pays for general obligation bonds (the “Bond Factor”) has increased between the current year, and the year that a tenant moved into the unit (or Tax Year 2005-06, whichever is later). Different tenants in the same property may have different passthrough rates, depending on when they moved into the property. Unless the current year’s Bond Factor is greater than the Bond Factor in the year the tenancy commenced, no Bond Measure Passthrough is available.
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. For Bond Measure Passthroughs that first go into effect on or after July 1, 2024, the passthrough rate will vary depending on when the tenant moved into the unit. Each tenant’s passthrough rate is based on how much the portion of the property tax rate that pays for general obligation bonds (the “Bond Factor”) has increased between the current year, and the year that a tenant moved into the unit (or Tax Year 2005-06, whichever is later). Different tenants in the same property may have different passthrough rates, depending on when they moved into the property. Unless the current year’s Bond Factor is greater than the Bond Factor in the year the tenancy commenced, no bond passthrough is available. The monthly amount the landlord may pass through to each tenant is calculated by using the formula included in the Bond Measure Passthrough Worksheet.
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.
The passthrough must be imposed at the time of the annual rent increase, on the tenant’s rent increase anniversary date. It does not become part of the tenant’s base rent, and it must be discontinued after the tenant has paid the passthrough for the number of months specified on Line 8 of the passthrough worksheet.
The landlord may only impose bond passthroughs based on property tax bills that were issued within three years prior to the year in which the bond passthrough is imposed. For example, if the landlord imposes a bond passthrough on November 1, 2024, it may include general obligation bond costs for property tax bills issued between January 1, 2021 and November 1, 2024, but cannot include any general obligation bond costs for property tax bills issued prior to January 1, 2021. However, the applicable Bond Measure Worksheet must be completed for each tax year and attached to the notice of rent increase.
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.
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 general obligation bond passthroughs by filing a Tenant Financial Hardship Application.
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