San Francisco Rent Board News Archive: 1999

The Rent Board Commission at its June 29th meeting deleted Section 12.18 of the Rules and Regulations. This deletion was adopted by the Commission and went into effect immediately. This section pertained to the rules used by the department to implement Ellis Act provisions. The Commission has referred amendments to the Ellis Act to the Board of Supervisors that will permit the Department to use the provisions contained in the Ordinance as the sole source for guidance as to the implementation of the Ellis Act in San Francisco. Both amendments are intended to clarify what the owner"s responsibilities are in order to comply with the law and eliminate any confusing or conflicting language. A copy of the Ellis amendments (Board of Supervisor"s File No. 991265) to 37.9(a)(13) can be seen by clicking on Ellis. The Board will hear the Ellis amendment to the Ordinance sometime next month. Please reference the File No. if you call the Board (554.5184) to find out when it is scheduled.

Proposed Ellis Act Amendments to Rent Ordinance

[Residential Rent Control, Further Conforming To and Implementing the Ellis Act]
AMENDING CHAPTER 37 OF THE SAN FRANCISCO ADMINISTRATIVE CODE ("Residential Rent Stabilization and Arbitration Ordinance") TO FURTHER IMPLEMENT AND CONFORM TO THE ELLIS ACT (CALIFORNIA GOVERNMENT CODE 7060 et seq.), BY AMENDING 36.9(a)(13) TO REMOVE THE PROVISION THAT THE LANDLORD NOT HAVE OTHER CAUSE under 37.9(a) IN ORDER TO EVICT UNDER 37.9(a)(13); AND BY AMENDING 37.9a TO FURTHER SPECIFY REQUIREMENTS OF NOTICE TO THE RENT BOARD AND TO AFFECTED TENANTS (INCLUDING FORMER TENANTS), TO REQUIRE RENT BOARD RECORDATION OF A NOTICE OF CONTRAINTS WITH THE COUNTY RECORDER, TO REQUIRE THAT THE RENT BOARD MAINTAIN A REGISTER OF ALL RENTAL UNITS WITHDRAWN UNDER THE ELLIS ACT, AND TO PROVIDE FOR INVESTIGATIONS OF COMPLIANCE STATUS; AND WITH TECHNICAL nonsubstantive changes to conform to RELATED renumbering within 37.9A, TO FURTHER IDENTIFY THE ELLIS ACT, and to identify the central permit bureau as part of the department of building inspection.

Note: Additions are underlined; deletions are in((doubleparentheses)).

Be it ordained by the People of the City and County of San Francisco:

Section 1. Chapter 37 of the San Francisco Administrative Code (Residential Rent Stabilization and Arbitration Ordinance) is hereby amended by amending 37.9(a)(13), to read as follows:

SEC.37.9.EVICTIONS. Notwithstanding Section 37.3, this Section shall apply as of August 24, 1980, to all landlords and tenants of rental units as defined in Section 37.2(r).

(a) A landlord shall not endeavor to recover possession of a rental unit unless:

(1) The tenant has failed to pay the rent to which the landlord is lawfully entitled under the oral or written agreement between the tenant and landlord or habitually pays the rent late or gives checks which are frequently returned because there are insufficient funds in the checking account; or

(2) The tenant has violated a lawful obligation or covenant of tenancy other than the obligation to surrender possession upon proper notice and failure to cure such violation after having received written notice thereof from the landlord; or

(3) The tenant is committing or permitting to exist a nuisance in, or is causing substantial damage to, the rental unit, or is creating a substantial interference with the comfort, safety or enjoyment of the landlord or tenants in the building, and the nature of such nuisance, damage or interference is specifically stated by the landlord in the writing as required by Section 37.9(c); or

(4) The tenant is using or permitting a rental unit to be used for any illegal purpose; or

(5) The tenant, who had an oral or written agreement with the landlord which has terminated, has refused after written request or demand by the landlord to execute a written extension or renewal thereof for a further term of like duration and under such terms which are materially the same as in the previous agreement; provided, that such terms do not conflict with any of the provisions of this Chapter; or

(6) The tenant has, after written notice to cease, refused the landlord access to the rental unit as required by state or local law; or

(7) The tenant holding at the end of the term of the oral or written agreement is a subtenant not approved by the landlord; or

(8) The landlord seeks to recover possession in good faith, without ulterior reasons and with honest intent;

(i) For the landlords use or occupancy as his or her principal residence for a period of at least 36 continuous months;

(ii) For the use or occupancy of the landlords grandparents, grandchildren, parents, children, brother or sister, or the landlords spouse or the spouses of such relations, as their principal place of residency for a period of at least 36 months, in the same building in which the landlord resides as his or her principal place of residency, or in a building in which the landlord is simultaneously seeking possession of a rental unit under 37.9(a)(8)(i). For purposes of this Section 37.9(a)(8)(ii), the term spouse shall include Domestic Partners as defined in San Francisco Administrative Code Chapter 62.1 62.8.

(iii) For purposes of this Section 37.9(a)(8) only, as to landlords who become owners of record of the rental unit on or before February 21, 1991, the term landlord shall be defined as an owner of record of at least 10 percent interest in the property or, for Section 37.9(a)(8)(i) only, two individuals registered as Domestic Partners as defined in San Francisco Administrative Code Chapter 62.1 62.8 whose combined ownership of record is at least 10 percent. For purposes of this Section 37.9(a)(8) only, as to landlords who become owners of record of the rental unit after February 21, 1991, the term landlord shall be defined as an owner of record of at least 25 percent interest in the property or, for Section 37.9(a)(8)(i) only, two individuals registered as Domestic Partners as defined in San Francisco Administrative Code Chapter 62.1 62.8 whose combined ownership of record is at least 25 percent.

(iv) A landlord may not recover possession under this Section 37.9(a)(8) if a comparable unit owned by the landlord is already vacant and is available, or if such a unit becomes vacant and available before the recovery of possession of the unit. If a comparable unit does become vacant and available before the recovery of possession, the landlord shall rescind the notice to vacate and dismiss any action filed to recover possession of the premises. Provided further, if a non-comparable unit becomes available before the recovery of possession, the landlord shall offer that unit to the tenant at a rent based on the rent that the tenant is paying, with upward or downward adjustments allowed based upon the condition, size, and other amenities of the replacement unit. Disputes concerning the initial rent for the replacement unit shall be determined by the Rent Board. It shall be evidence of a lack of good faith if a landlord times the service of the notice, or the filing of an action to recover possession, so as to avoid moving into a comparable unit, or to avoid offering a tenant a replacement unit.

(v) It shall be rebuttably presumed that the landlord has not acted in good faith if the landlord or relative for whom the tenant was evicted does not move into the rental unit within three months and occupy said unit as that persons principal residence for a minimum of 36 consecutive months;

(vi) Once a landlord has successfully recovered possession of a rental unit pursuant to Section 37.9(a)(8)(i), then no other current or future landlords may recover possession of any other rental unit in the building under Section 37.9(a)(8)(i). It is the intention of this section that only one specific unit per building may be used for such occupancy under Section 37.9(a)(8)(i) and that once a unit is used for such occupancy, all future occupancies under Section 37.9(a)(8)(i) must be of that same unit, provided that a landlord may file a petition with the Rent Board, or at the landlords option, commence eviction proceedings, claiming that disability or other similar hardship prevents him or her from occupying a unit which was previously occupied by the landlord.

(vii) If any provision or clause of this amendment to Section 37.9(a)(8) or the application thereof to any person or circumstance is held to be unconstitutional or to be otherwise invalid by any court of competent jurisdiction, such invalidity shall not affect other chapter provisions, and clauses of this chapter are held to be severable; or

(9) The landlord seeks to recover possession in good faith in order to sell the unit in accordance with a condominium conversion approved under the San Francisco subdivision ordinance and does so without ulterior reasons and with honest intent; or

(10) The landlord seeks to recover possession in good faith in order to demolish or to otherwise permanently remove the rental unit from housing use and has obtained all the necessary permits on or before the date upon which notice to vacate is given, and does so without ulterior reasons and with honest intent; provided that a landlord who seeks to demolish an unreinforced masonry building pursuant to Building Code Chapters 14 and 15 must provide the tenant with the relocation assistance specified in Section 37.9A(f) below prior to the tenant"s vacating the premises; or

(11) The landlord seeks in good faith to remove temporarily the unit from housing use in order to be able to carry out capital improvements or rehabilitation work and has obtained all the necessary permits on or before the date upon which notice to vacate is given, and does so without ulterior reasons and with honest intent. Any tenant who vacates the unit under such circumstances shall have the right to reoccupy the unit at the prior rent adjusted in accordance with the provisions of this Chapter. The tenant will vacate the unit only for the minimum time required to do the work. On or before the date upon which notice to vacate is given, the landlord shall advise the tenant in writing that the rehabilitation or capital improvement plans are on file with the Central Permit Bureau of the Department of ((Public Works located at 450 McAllister Street)) Building Inspection and that arrangements for reviewing such plans can be made with the Central Permit Bureau. In addition to the above, no landlord shall endeavor to recover possession of any unit subject to a RAP loan as set forth in Section 37.2(m) of this Chapter except as provided in Section 32.69 of the San Francisco Administrative Code. The tenant shall not be required to vacate pursuant to this Section 37.9(a)(11), for a period in excess of three months; provided, however, that such time period may be extended by the Board or its hearing officers upon application by the landlord. The Board shall adopt rules and regulations to implement the application procedure. Any landlord who seeks to recover possession under this Section 37.9(a)(11) shall pay the tenant actual costs up to $1,000 for moving and relocation expenses not less than 10 days prior to recovery of possession; or

(12) The landlord seeks to recover possession in good faith in order to carry out substantial rehabilitation, as defined in Section 37.2(s), and has obtained all the necessary permits on or before the date upon which notice to vacate is given, and does so without ulterior reasons and with honest intent. Notwithstanding the above, no landlord shall endeavor to recover possession of any unit subject to a RAP loan as set forth in Section 37.2(m) of this Chapter except as provided in Section 32.69 of the San Francisco Administrative Code; or

(13) The landlord ((, who does not have cause to evict under any other provision of this Section 37.9(a),)) wishes to withdraw from rent or lease all rental units within any detached physical structure and, in addition, in the case of any detached physical structure containing three or fewer rental units, any other rental units on the same lot, and complies in full with Section 37.9A with respect to each such unit; provided, however, that a unit classified as a residential unit under Chapter 41 of this Code which is vacated under this Section 37.9(a)(13) may not be put to any use other than that of a residential hotel unit without compliance with the provisions of Section 41.9 of this Code; or

(14) The landlord seeks in good faith to temporarily recover possession of the unit for less than 30 days solely for the purpose of effecting lead remediation or abatement work, as required by San Francisco Health Code Article 26. The relocation rights and remedies, established by San Francisco Administrative Code Chapter 72, including but not limited to, the payment of financial relocation assistance, shall apply to evictions under this Section 37.9(a)(14).

(b) A landlord who resides in the same rental unit with his or her tenant may evict said tenant without just cause as required under Section 37.9(a) above.

(c) A landlord shall not endeavor to recover possession of a rental unit unless at least one of the grounds enumerated in Section 37.9(a) or (b) above is the landlord"s dominant motive for recovering possession and unless the landlord informs the tenant in writing on or before the date upon which notice to vacate is given of the grounds under which possession is sought and that advice regarding the notice to vacate is available from the Residential Rent Stabilization and Arbitration Board, before endeavoring to recover possession. A copy of all notices to vacate except three-day notices to vacate or pay rent and a copy of any additional written documents informing the tenant of the grounds under which possession is sought shall be filed with the Board within 10 days following service of the notice to vacate. The District Attorney shall determine whether the units set forth on the list compiled in accordance with Section 37.6(k) are still being occupied by the tenant who succeeded the tenant upon whom the notice was served. In cases where the District Attorney determines that Section 37.9(a)(8) has been violated, the District Attorney shall take whatever action he deems appropriate under this Chapter or under State law.

(d) No landlord may cause a tenant to quit involuntarily or threaten to bring any action to recover possession, or decrease any services, or increase the rent, or take any other action where the landlord"s dominant motive is retaliation for the tenant"s exercise of any rights under the law. Such retaliation shall be a defense to any action to recover possession. In an action to recover possession of a rental unit, proof of the exercise by the tenant of rights under the law within six months prior to the alleged act of retaliation shall create a rebuttable presumption that the landlord"s act was retaliatory.

(e) It shall be unlawful for a landlord or any other person who willfully assists the landlord to endeavor to recover possession or to evict a tenant except as provided in Section 37.9(a) and (b). Any person endeavoring to recover possession of a rental unit from a tenant or evicting a tenant in a manner not provided for in Section 37.9(a) or (b) without having a substantial basis in fact for the eviction as provided for in Section 37.9(a) shall be guilty of a misdemeanor and shall be subject, upon conviction, to the fines and penalties set forth in Section 37.10. Any waiver by a tenant of rights under this Chapter shall be void as contrary to public policy.

(f) Whenever a landlord wrongfully endeavors to recover possession or recovers possession of a rental unit in violation of Sections 37.9 and/or 37.10 as enacted herein, the tenant or Board may institute a civil proceeding for injunctive relief, money damages of not less than three times actual damages, (including damages for mental or emotional distress), and whatever other relief the court deems appropriate. In the case of an award of damages for mental or emotional distress, said award shall only be trebled if the trier of fact finds that the landlord acted in knowing violation of or in reckless disregard of Section 37.9 or 37.10A herein. The prevailing party shall be entitled to reasonable attorney"s fees and costs pursuant to order of the court. The remedy available under this Section 37.9(f) shall be in addition to any other existing remedies which may be available to the tenant or the Board.

(g) The provisions of this Section 37.9 shall apply to any rental unit as defined in Sections 37.2(r)(4)(A) and 37.2(r)(4)(B), including where a notice to vacate/quit any such rental unit has been served as of the effective date of this Ordinance No. 250-98, but where any such rental unit has not yet been vacated or an unlawful detainer judgment has not been issued as of the effective date of this Ordinance No. 250-98.

(h) With respect to rental units occupied by recipients of tenant-based rental assistance, the notice requirements of this Section 37.9 shall be required in addition to any notice required as part of the tenant-based rental assistance program, including but not limited to the notice required under 24 CFR 982.311(e)(2)(ii).

(i) The following additional provisions shall apply to a landlord who seeks to recover a rental unit by utilizing the grounds enumerated in Section 37.9(a)(8):

(1) A landlord may not recover possession of a unit from a tenant under Section 37.9(a)(8) if the landlord has or receives notice, any time before recovery of possession, that any tenant in the rental unit:

(A) Is 60 years of age or older and has been residing in the unit for 10 years or more; or

(B) Is disabled within the meaning of Section 37.9(i)(1)(B)(i) and has been residing in the unit for 10 years or more, or is catastrophically ill within the meaning of Section 37.9(i)(1)(B)(ii) and has been residing in the unit for five years or more:

(i) A disabled tenant is defined for purposes of this Section 37.9(i)(1)(B) as a person who is disabled or blind within the meaning of the federal Supplemental Security Income/California State Supplemental Program (SSI/SSP), and who is determined by SSI/SSP to qualify for that program or who satisfies such requirements through any other method of determination as approved by the Rent Board;

(ii) A catastrophically ill tenant is defined for purposes of this Section 37.9(i)(1)(B) as a person who is disabled as defined by Section 37.9(i)(1)(B)(i), and who is suffering from a life threatening illness as certified by his or her primary care physician.

(2) The foregoing provisions of Sections 37.9(i)(1)(A) and (B) shall not apply where there is only one rental unit owned by the landlord in the building, or where each of the rental units owned by the landlord in the same building where the landlord resides (except the unit actually occupied by the landlord) is occupied by a tenant otherwise protected from eviction by Sections 37.9(i)(1)(A) and (B) and where the landlord"s qualified relative who will move into the unit pursuant to Section 37.9(a)(8) is 60 years of age or older.

(3) The provisions established by this Section 37.9(i) include but are not limited to, any rental unit where a notice to vacate/quit has been served as of the date this amendment takes effect but where the rental unit has not yet been vacated or an unlawful detainer judgment has not been issued.

(4) Within 30 days of personal service by the landlord of a written request, or, at the landlords option, a notice of termination of tenancy under 37.9(a)(8), the tenant must submit a statement, with supporting evidence, to the landlord if the tenant claims to be a member of one of the classes protected by Section 37.9(i). The written request or notice shall contain a warning that a tenants failure to submit a statement within the 30 day period shall be deemed an admission that the tenant is not protected by Section 37.9(i). The landlord shall file a copy of the request or notice with the Rent Board within ten days of service on the tenant. A tenants failure to submit a statement within the 30 day period shall be deemed an admission that the tenant is not protected by Section 37.9(i). A landlord may challenge a tenants claim of protected status either by requesting a hearing with the Rent Board or, at the landlords option, through commencement of eviction proceedings, including service of a notice of termination of tenancy. In the Rent Board hearing or the eviction action, the tenant shall have the burden of proof to show protected status. No civil or criminal liability under 37.9(e) or (f) shall be imposed upon a landlord for either requesting or challenging a tenants claim of protected status.

(5) This Section 37.9(i) is severable from all other sections and shall be of no force or effect if any temporary moratorium on owner/relative evictions adopted by the Board of Supervisors after June 1, 1998 and before October 31, 1998 has been invalidated by the courts in a final decision.

Section 2. Chapter 37 of the San Francisco Administrative Code (Residential Rent Stabilization and Arbitration Ordinance) is hereby amended by amending 37.9A, to read as follows:

SEC.37.9A.TENANT RIGHTS IN CERTAIN DISPLACEMENTS.

(a)Rent Allowed. Any rental unit which a tenant vacates after receiving a notice to quit relying on Section 37.9(a)(13) (withdrawal of rental units from rent or lease under the Ellis Act, California Government Code Sections 7060 et seq.), if again offered for rent or lease at any time, must be offered at a rent not greater than that which would have been allowed had the prior tenant or tenants remained in continuous occupancy during the entire period of the vacancy. If it is asserted that a rent increase or increases could have taken place during the vacancy in question, the owner shall bear the burden of showing by a preponderance of the evidence that the rent could have been legally increased during the period. If it is asserted that the increase is based in whole or part on capital improvements, rehabilitation or substantial rehabilitation, the owner must petition the Rent Board pursuant to the procedures of Section 37.7 of this Chapter. No increase shall be allowed on account of any expense incurred in connection with withdrawing any unit from rent or lease.

(b) Treatment of Replacement Units.If one or more units covered by Subsection (a) is demolished, and one or more new units qualifying as rental units under this Chapter but for the date on which they first receive a certificate of final completion and occupancy are constructed on the same property, and offered for rent or lease within five years of the date the last of the original units became vacant, the newly constructed units shall be offered at rents not greater than those reasonably calculated to produce a fair and reasonable return on the newly constructed units, notwithstanding Section 37.2(((p)(6))) (r)(5) or any other provision of this Chapter. The provisions of this Chapter shall thereafter apply. The Board shall adopt rules for determining the rents necessary to provide a fair and reasonable return.

(c) Rights to Re-Rent.Any owner who again offers for rent or lease any unit covered by Subsection (a) shall first offer the unit for rent or lease to the tenants or lessees displaced from the unit ((on the following conditions)) as follows:

(1) If any tenant or lessee has advised the owner in writing within 30 days of displacement of his or her desire to consider an offer to renew the tenancy and has furnished the owner with an address to which that offer is to be directed, the owner must make such an offer whenever the unit is again offered for rent or lease within one year of withdrawal. That tenant, lessee, or former tenant or lessee may advise the owner at any time of a change of address to which an offer is to be directed.

(2) Notwithstanding Subsection (c)(1), ((I))if the unit is offered for rent or lease ((is made)) within 10 years of withdrawal ((after the date on which the unit became vacant)), the owner ((must)) shall notify the Rent Board in writing of the intention to re-rent the unit and make ((such)) an offer to the tenant or lessee whenever the tenant or lessee requests the offer in writing within 30 days after the owner has notified the City of an intention to ((offer)) re-rent the unit ((again for residential rent or lease pursuant to Subsection (g))). The owner shall be liable to any tenant or lessee who was displaced for failure to comply with this Subsection (((2))) (c)(2), for punitive damages in an amount which does not exceed the contract rent for six months.

(((d)(1)Acceptance of Re-Rental Offer.)) (3) If ((the owner again offers a rental unit for rent or lease, and)) any former tenant or lessee has ((advised the owner pursuant to Subsection (c) of a desire to consider, or)) requested ((,)) an offer to renew the tenancy, either directly to the landlord or after notice from the Rent Board, then the owner shall offer to reinstitute a rental agreement or lease at rents permitted under Subsection (a) and on terms equivalent to those available to that displaced tenant or lessee prior to displacement. This offer shall be deposited in the United States mail, by registered or certified mail with postage prepaid, addressed to the displaced tenant or lessee at the address furnished to the owner as provided ((in Subsection (c))) by the tenant and shall describe the terms of the offer. The displaced tenant or lessee shall have 30 days from the deposit of the offer in the mail to accept the offer by personal delivery of that acceptance or by deposit of the acceptance in the United States mail by registered or certified mail with postage prepaid.

(((2))) (4) If more than one tenant or lessee attempts to accept the offer for a given unit, the landlord shall notify each tenant or lessee so accepting that other acceptances have been received, and shall further advise each such tenant or lessee of the names and addresses of the others. If all such tenants or lessees do not within 30 days thereafter agree and notify the landlord of which tenant(s) or lessee(s) will reoccupy the unit, the tenant(s) or lessee(s) who first occupied the unit previously shall be entitled to accept the landlord"s offer. If more than one eligible tenant or lessee initially occupied the unit on the same date, then the first such tenant or lessee to have originally sent notice accepting the landlord"s offer shall be entitled to occupy the unit.

(((e))) (d) Re-Rental Within One Year. If a unit covered by Subsection (a) is offered for rent or lease within one year ((after it became vacant)) of the date of withdrawal:

(1) The owner shall be liable to any tenant or lessee who was displaced from the property for actual damages which were the proximate result of that displacement, as defined and limited by the standards for compensation or payments applied to public entities with respect to rental dwellings by Sections 7262 and 7264 of the California Government Code, and for punitive damages in an amount which does not exceed the contract rent for six months. Any action by a tenant or lessee pursuant to this paragraph shall be brought within two years of displacement. However, nothing in this paragraph precludes a tenant from pursuing any alternative remedy available under the law.

(2) The City may institute a civil proceeding against the owner who has again offered the unit for rent or lease for exemplary damages for displacement of tenants or lessees. The exemplary damages shall not exceed the contract rent for six months for any unit or units from which a tenant or lessee was displaced by withdrawal of the unit from rent or lease. Any action by the City pursuant to this paragraph shall be brought within three years of the withdrawal of the unit from rent or lease.

(((f))) (e) Payments to Low-Income, Elderly and Disabled Tenants. Where a landlord seeks eviction based upon Section 37.9(a)(13), the relocation payments described in this Subsection shall be limited to tenants who are members of lower income households, who are elderly, or who are disabled, as defined below.

(1) Tenants who are members of lower income households, as defined by Section 50079.5 of the California Health and Safety Code, and who receive a notice to quit based upon Section 37.9(a)(13), in addition to all rights under any other provisions of law, shall be entitled to receive before vacating the premises the following sums:

(A) If the unit is a studio (one or two rooms), $1,500; or

(B) If the unit is a one-bedroom (three rooms), $1,750; or

(C) If the unit contains two or more separate bedrooms, $2,500,

(2) With respect to Subparagraphs (e)(1)(A)(C) above, the Mayor"s Office of Housing or its successor agency shall annually determine the income limits for lower income households, adjusted for household size.

(3) Notwithstanding Subsection (e)(1), and irrespective of the size of the unit, any tenant who receives a notice to quit under Section 37.9(a)(13) and who, at the time such notice is served, is 62 years of age or older, or who is disabled within the meaning of Section 50072 of the California Health and Safety Code, shall be entitled to receive $3,000.

(4) The payments due pursuant to this Subsection (((f))) (e) for any unit which is occupied by more than one tenant shall be divided equally among all the occupying tenants, excluding those tenants who are separately entitled to payments under Subsection (((f))) (e)(3) above.

(5) Any notice to quit pursuant to Section 37.9(a)(13) shall notify the tenant or tenants concerned of the right to receive payment under this Subsection and the amount of payment which the landlord believes to be due.

(((g)(1))) (f) Notice to Rent Board. (1) Any owner who intends to withdraw from rent or lease any rental unit shall notify the Board in writing of said intention. Said notice shall contain statements, under penalty of perjury, providing information on the number of residential units, the address or location of those units, the name or names of the tenants or lessees of the units, and the rent applicable to each residential rental unit. Said notice shall ((include a certification)) be signed by all owners of record of the property under penalty of perjury and shall include a certification that actions have been ((filed)) initiated as required by law to terminate ((all)) existing tenancies ((in the structure in question)) through service of a notice of termination of tenancy. The notice must be served by certified mail or any other manner authorized by law prior to delivery to the Rent Board of the notice of intent to withdraw the rental units. Information respecting the name or names of the tenants, the rent applicable to any unit, or the total number of units, is confidential and shall be treated as confidential information by the City for purposes of the Information Practices Act of 1977, as contained in Chapter 1 (commencing with Section 1798) of Title 1.8 of Part 4 of Division 3 of the Civil Code. The City shall, to the extent required by the preceding sentence, be considered an agency, as defined by Subdivision (d) of Section 1798.3 of the Civil Code.

(2) Within 60 days of delivery to the Rent Board of a Subsection (f)(1) notice of intent to withdraw rental units, the Board shall record a notice of constraints with the County Recorder which describes the property and the dates of applicable restrictions on the property under this Section.

(((2))) (3) Within 60 days of delivery to the Rent Board of a Subsection (f)(1) notice of intent to withdraw rental units, ((T))the owner shall cause to be recorded with the County Recorder a memorandum of the notice required by Subsection (f)(1) summarizing its provisions, other than the confidential provisions, in substantially the following form:

Memorandum of Notice

Regarding Withdrawal of Rental Unit From Rent or Lease

This memorandum evidences that the undersigned, as the owner(s) ((or on behalf of the owner,)) of the property described in Exhibit A attached, has filed a notice, whose contents are certified under penalty of perjury, stating the intent to withdraw from rent or lease all units ((subject to existing tenancies)) at said property, pursuant to San Francisco Administrative Code Section 37.9A(((g))) and the Ellis Act (California Government Code Sections 7060 et seq.).

__________________________

(Signature)

(((3))) (4) ((Where an owner satisfies the requirements of Subsections (g)(1) and (g)(2), t))The date on which the units are withdrawn from rent or lease for purposes of this Chapter and the Ellis Act is 60 days from the delivery in person or by first-class mail of the Subsection (f)(1) notice of intent to the ((public entity)) Rent Board.

(((4))) (5) Within 15 days of delivery of a Subsection (f)(1) notice of intent to the Rent Board, ((T))the owner shall ((notify)) provide notice to any tenant or lessee to be displaced that the City has been notified pursuant to Subsection (((g))) (f)(1), that the notice specified the name and the amount of rent paid by the tenant or lessee as an occupant of the rental unit, and of the amount of rent the owner specified in the notice, together with a notice to the tenant or lessee of his or her rights to reoccupancy and to relocation assistance under Subsections (((f)(1))) (c) and (e) ((of this Section)).

(((5) The owner shall notify the Board in writing of any intention to again offer for rent or lease any rental unit as to which notice was given under Subsection (g)(1), or which is covered by Subsection (a).))

(((h))) (g) Successor Owners. The provisions of this Section 37.9A shall apply to the owner of a rental unit at the time displacement of a tenant or tenants is initiated and to any successor in interest of the owner, subject to the provisions of Chapter 12.75 of Division 7 of Title 1 of the California Government Code (Sections 7060 et seq.).

(((i)(1))) (h)Reports Required. (1) Not later than the last day of the third and sixth calendar months following the month in which notice is given to the Board under Subsection (((g))) (f)(1), and thereafter not later than December 31st of each calendar year for a period of five years, beginning with the year in which the six-month notice is given, the owner of any property which contains or formerly contained one or more rental units which a tenant or tenants vacated pursuant to Section 37.9(a)(13) shall notify the Board, in writing, under penalty of perjury, for each such unit:

(A) Whether the unit has been demolished;

(B) If the unit has not been demolished, whether it is in use;

(C) If it is in use, whether it is in residential use;

(D) If it is in residential use, the date the tenancy began, the name of the tenant(s), and the amount of rent charged.

If the unit has been demolished, and one or more new units constructed on the lot, the owner shall furnish the information required by items (B), (C) and (D) for each new unit. The Board shall maintain a record of the notices received under ((this section)) Subsection (((g))) (f)(1) and all notices received under this Subsection (h) for each unit subject to this reporting requirement.

(2) The Board shall notify each person who is reported as having become a tenant in a vacated or new unit subject to the reporting requirements of Subsection (h)(1) that it maintains the records described in Subsection (h)(1), and that the rent of the unit may be restricted pursuant to Subsection (a) ((of this Section)).

(3) The Board shall maintain a register of all rental units withdrawn from rent or lease under the Ellis Act and the rent applicable to each unit at the time of withdrawal. The Board shall inform tenants displaced from units withdrawn from rent or lease at the address provided by the tenant, when the owner notifies the Board that the unit or replacement unit will again be offered for rent or lease within ten years of the date of withdrawal.

(4) The Board may investigate whether a rental unit that was withdrawn from rent or lease has been again offered for rent or lease, and whether the owner has complied with the provisions of this section.

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(((j))) (i) This Section 37.9A is enacted principally to exercise specific authority provided for by Chapter 12.75 of Division 7 of Title 1 of the California Government Code, ((as)) originally enacted by Stats. 1985, Ch. 1509, Section 1, commonly known as the Ellis Act (California Government Code Sections 7060 et seq. In the case of any amendment to Chapter 12.75 or any other provision of State law which amendment is inconsistent with this Section, this Section shall be deemed to be amended to be consistent with State law, and to the extent it cannot be so amended shall be interpreted to be effective as previously adopted to the maximum extent possible.

The Commission also referred amendments to the Rent Ordinance Sections 37.2 and 37.3 that will comport the Ordinance with state law. The Commission voted on May 4, 1999 to refer these amendments to the Board of Supervisors for their consideration. A copy of the Ellis amendments (Board of Supervisor"s File No. 991315) to 37.2 and 37.3 can be seen by clicking here on Costa Hawkins. The Board will hear these amendments to the Ordinance sometime next month. Please reference the File No. if you call the Board (554.5184) to find out when it is scheduled.

©1999 City & County of San Francisco
07/19/99

[Conform Residential Rent Control Ordinance to Costa-Hawkins Rental Housing Act, Implement]

AMENDING San Francisco Administrative Code CHAPTER 37 (RESIDENTIAL RENT STABILIZATION AND ARBITRATION ORDINANCE) BY AMENDING SECTIONS 37.2 AND 37.3 In order to IMPLEMENT AND CONFORM TO THE COSTA-HAWKINS RENTAL HOUSING ACT (CALIFORNIA CIVIL CODE SECTIONS 1954.50, ET SEQ.), INCLUDING provision of PROPERTY OWNER RIGHTS TO ESTABLISH INITIAL AND SUBSEQUENT RENTAL RATES FOR SEPARATELY ALIENABLE PARCELS, AND INCLUDING CONDITIONS FOR ESTABLISHING THE INITIAL RENTAL RATE UPON SUBLET OR ASSIGNMENT; and amending San Francisco Administrative Code chapter 37A (Residential Rent Stabilization and Arbitration Fee) BY AMENDING SECTION 37a.1, TO provide THAT CHAPTER 37A FEES REMAIN APPLICABLE TO DEFINED RESIDENTIAL UNITS WHICH ARE EXEMPT FROM THE RENT INCREASE LIMITATION PROVISIONS of chapter 37 but which are not exempt FROM OTHER PROVISIONS OF CHAPTER 37 PURSUANT TO THE COSTA-HAWKINS RENTAL HOUSING ACT AND/OR its implementing provisions as contained in San Francisco ADMINISTRATIVE CODE SECTION 37.3(a)(8).

Note: Additions are underlined; deletions are in((double parentheses)).

Be it ordained by the People of the City and County of San Francisco:

Section 1. Chapter 37 of the San Francisco Administrative Code is hereby amended by amending Section 37.2 to read as follows:

SEC.37.2.DEFINITIONS.

(a) Base Rent.

(1) That rent which is charged a tenant upon initial occupancy plus any rent increase allowable and imposed under this Chapter; provided, however, that base rent shall not include increases imposed pursuant to Section 37.7 below or utility passthroughs or general obligation bond passthroughs pursuant to Section 37.2(q) below. Base rent for tenants of RAP rental units in areas designated on or after July 1, 1977, shall be that rent which was established pursuant to Section 32.73-1 of the San Francisco Administrative Code. Rent increases attributable to the Chief Administrative Officer"s amortization of a RAP loan in an area designated on or after July 1, 1977, shall not be included in the base rent.

(2) From and after the effective date of this Ordinance, the base rent for tenants occupying rental units which have received certain tenant-based or project-based rental assistance shall be as follows:

(A) With respect to tenant-based rental assistance:

(i) For any tenant receiving tenant-based rental assistance as of the effective date of this Ordinance (except where the rent payable by the tenant is a fixed percentage of the tenants income, such as in the Section 8 certificate program and the rental subsidy program for the HOPWA program), and continuing to receive tenant-based rental assistance following the effective date of this Ordinance, the base rent for each unit occupied by such a tenant shall be the rent payable for that unit under the Housing Assistance Payments contract, as amended, between the San Francisco Housing Authority and the landlord (the HAP Contract) with respect to that unit immediately prior to the effective date of this Ordinance (the HAP Contract Rent).

(ii) For any tenant receiving tenant-based rental assistance (except where the rent payable by the tenant is a fixed percentage of the tenants income, such as in the Section 8 certificate program and the rental subsidy program for the HOPWA program), and commencing occupancy of a rental unit following the effective date of this Ordinance, the base rent for each unit occupied by such a tenant shall be the HAP Contract Rent in effect as of the date the tenant commences occupancy of such unit.

(iii) For any tenant whose tenant-based rental assistance terminates or expires, for whatever reason, following the effective date of this Ordinance, the base rent for each such unit following expiration or termination shall be the HAP Contract Rent in effect for that unit immediately prior to the expiration or termination of the tenant-based rental assistance.

(B) For any tenant occupying a unit upon the expiration or termination, for whatever reason, of a project-based HAP Contract under Section 8 of the United States Housing Act of 1937 (42 USC 1437f, as amended), the base rent for each such unit following expiration or termination shall be the contract rent in effect for that unit immediately prior to the expiration or termination of the project-based HAP Contract.

(C) For any tenant occupying a unit upon the prepayment or expiration of any mortgage insured by the United States Department of Housing and Urban Development (HUD), including but not limited to mortgages provided under Sections 221(d)(3), 221(d)(4) and 236 of the National Housing Act (12 USC 1715z-1), the base rent for each such unit shall be the basic rental charge (described in 12 USC 1715z-1(f), or successor legislation) in effect for that unit immediately prior to the prepayment of the mortgage, which charge excludes the interest reduction payment attributable to that unit prior to the mortgage prepayment or expiration.

(b) Board. The Residential Rent Stabilization and Arbitration Board.

(c) Capital Improvements. Those improvements which materially add to the value of the property, appreciably prolong its useful life, or adapt it to new uses, and which may be amortized over the useful life of the improvement of the building.

(d) CPI. Consumer Price Index for all Urban Consumers for the San Francisco-Oakland Metropolitan Area, U.S. Department of Labor.

(e) Energy Conservation Measures. Work performed pursuant to the requirements of Article 12 of the San Francisco Housing Code.

(f) Hearing Officer. A person, designated by the Board, who arbitrates rental increase disputes.

(g) Housing Services. Services provided by the landlord connected with the use or occupancy of a rental unit including, but not limited to, repairs, replacement, maintenance, painting, light, heat, water, elevator service, laundry facilities and privileges, janitor service, refuse removal, furnishings, telephone, parking and any other benefits, privileges or facilities.

(h) Landlord. An owner, lessor, sublessor, who receives or is entitled to receive rent for the use and occupancy of any residential rental unit or portion thereof in the City and County of San Francisco, and the agent, representative or successor of any of the foregoing.

(i) Member. A member of the Residential Rent Stabilization and Arbitration Board.

(j) Over FMR Tenancy Program. A regular certificate tenancy program whereby the base rent, together with a utility allowance in an amount determined by HUD, exceeds the fair market rent limitation for a particular unit size as determined by HUD.

(k) Payment Standard. An amount determined by the San Francisco Housing Authority that is used to determine the amount of assistance paid by the San Francisco Housing Authority on behalf of a tenant under the Section 8 Voucher Program (24 CFR Part 887).

(l) RAP. Residential Rehabilitation Loan Program (Chapter 32, San Francisco Administrative Code).

(m) RAP Rental Units. Residential dwelling units subject to RAP loans pursuant to Chapter 32, San Francisco Administrative Code.

(n) Real Estate Department. A city department in the City and County of San Francisco.

(o) Rehabilitation Work. Any rehabilitation or repair work done by the landlord with regard to a rental unit, or to the common areas of the structure containing the rental unit, which work was done in order to be in compliance with State or local law, or was done to repair damage resulting from fire, earthquake or other casualty or natural disaster.

(p) Rent. The consideration, including any bonus, benefits or gratuity, demanded or received by a landlord for or in connection with the use or occupancy of a rental unit, or the assignment of a lease for such a unit, including but not limited to monies demanded or paid for parking, furnishing, food service, housing services of any kind, or subletting.

(q) Rent Increases. Any additional monies demanded or paid for rent as defined in item (p) above, or any reduction in housing services without a corresponding reduction in the monies demanded or paid for rent; provided, however, that (1) where the landlord has been paying the tenant"s utilities and cost of those utilities increase, the landlord"s passing through to the tenant of such increased costs does not constitute a rent increase; and (2) where there has been a change in the landlords property tax attributable to a ballot measure approved by the voters between November 1, 1996, and November 30, 1998, the landlords passing through of such increased costs in accordance with this Chapter does not constitute a rent increase.

(r) Rental Units. All residential dwelling units in the City and County of San Francisco together with the land and appurtenant buildings thereto, and all housing services, privileges, furnishings and facilities supplied in connection with the use or occupancy thereof, including garage and parking facilities. The term rental units shall not include:

(1) Housing accommodations in hotels, motels, inns, tourist houses, rooming and boarding houses, provided that at such time as an accommodation has been occupied by a tenant for 32 continuous days or more, such accommodation shall become a rental unit subject to the provisions of this Chapter; provided further, no landlord shall bring an action to recover possession of such unit in order to avoid having the unit come within the provisions of this Chapter. An eviction for a purpose not permitted under Section 37.9(a) shall be deemed to be an action to recover possession in order to avoid having a unit come within the provisions of this Chapter;

(2) Dwelling units in nonprofit cooperatives owned, occupied and controlled by a majority of the residents or dwelling units solely owned by a nonprofit public benefit corporation governed by a board of directors the majority of which are residents of the dwelling units and where it is required in the corporate by-laws that rent increases be approved by a majority of the residents;

(3) Housing accommodation in any hospital, convent, monastery, extended care facility, asylum, residential care or adult day health care facility for the elderly which must be operated pursuant to a license issued by the California Department of Social Services, as required by California Health and Safety Chapters 3.2 and 3.3; or in dormitories owned and operated by an institution of higher education, a high school, or an elementary school;

(4) Except as provided in Subsections (A) and (B), dwelling units whose rents are controlled or regulated by any government unit, agency or authority, excepting those unsubsidized and/or unassisted units which are insured by the United States Department of Housing and Urban Development; provided, however, that units in unreinforced masonry buildings which have undergone seismic strengthening in accordance with Building Code Chapters 14 and 15 shall remain subject to the Rent Ordinances to the extent that the ordinance is not in conflict with the seismic strengthening bond program or with the program"s loan agreements or with any regulations promulgated thereunder;

(A) For purposes of Sections 37.2, 37.3(a)(10)(A), 37.4, 37.5, 37.6. 37.9, 37.9A, 37.10A, 37.11A and 37.13, and the arbitration provisions of Sections 37.8 and 37.8A applicable only to the provisions of Section 37.3(a)(10)(A), the term rental units shall include units occupied by recipients of tenant-based rental assistance where the tenant-based rental assistance program does not establish the tenants share of base rent as a fixed percentage of a tenants income, such as in the Section 8 voucher program and the Over-FMR Tenancy program defined in 24 CFR 982.4;

(B) For purposes of Sections 37.2, 37.3(a)(10)(B), 37.4, 37.5, 37.6, 37.9, 37.9A, 37.10A, 37.11A and 37.13, the term rental units shall include units occupied by recipients of tenant-based rental assistance where the rent payable by the tenant under the tenant-based rental assistance program is a fixed percentage of the tenants income; such as in the Section 8 certificate program and the rental subsidy program for the Housing Opportunities for Persons with Aids (HOPWA) program (42 U.S.C. 12901 et seq., as amended).

(5) Rental units located in a structure for which a certificate of occupancy was first issued after the effective date of this ordinance, except as provided ((in)) for certain categories of units and dwellings by Section 37.3(a)(8)(A) and Section 37.9A(b) of this Chapter;

(6) Dwelling units in a building which has undergone substantial rehabilitation after the effective date of this ordinance; provided, however, that RAP rental units are not subject to this exemption.

(7) Dwellings or units otherwise subject to this Chapter 37, to the extent such dwelling or units are partially or wholly exempted from rent increase limitations by the Costa-Hawkins Residential Housing Act (California Civil Code Sections 1954.50, et seq.) and/or San Francisco Administrative Code Section 37.3(a)(8).

(s) Substantial Rehabilitation. The renovation, alteration or remodeling of residential units of 50 or more years of age which have been condemned or which do not qualify for certificates of occupancy or which require substantial renovation in order to conform the building to contemporary standards for decent, safe and sanitary housing. Substantial rehabilitation may vary in degree from gutting and extensive reconstruction to extensive improvements that cure substantial deferred maintenance. Cosmetic improvements alone such as painting, decorating and minor repairs, or other work which can be performed safely without having the unit vacated do not qualify as substantial rehabilitation.

(t) Tenant. A person entitled by written or oral agreement, sub-tenancy approved by the landlord, or by sufferance, to occupy a residential dwelling unit to the exclusion of others.

(u) Tenant-Based Rental Assistance. Rental assistance provided directly to a tenant or directly to a landlord on behalf of a particular tenant, which includes but shall not be limited to certificates and vouchers issued pursuant to Section 8 of the United States Housing Act of 1937, as amended (42 U.S.C. 1437f) and the HOPWA program.

Section 2. Chapter 37 of the San Francisco Administrative Code is hereby amended by amending Section 37.3 to read as follows:

SEC.37.3.RENT LIMITATIONS.

(a) Rent Increase Limitations for Tenants in Occupancy. Landlords may impose rent increases upon tenants in occupancy only as provided below:

(1) Annual Rent Increase. On March 1st of each year, the Board shall publish the increase in the CPI for the preceding 12 months, as made available by the U.S. Department of Labor. A landlord may impose annually a rent increase which does not exceed a tenant"s base rent by more than 60 percent of said published increase. In no event, however, shall the allowable annual increase be greater than seven percent.

(2) Banking. A landlord who refrains from imposing an annual rent increase or any portion thereof may accumulate said increase and impose that amount on the tenant"s subsequent rent increase anniversary dates. A landlord who, between April 1, 1982, and February 29, 1984, has banked an annual seven percent rent increase (or rent increases) or any portion thereof may impose the accumulated increase on the tenant"s subsequent rent increase anniversary dates.

(3) Capital Improvements, Rehabilitation, and Energy Conservation Measures. A landlord may impose rent increases based upon the cost of capital improvements, rehabilitation or energy conservation measures provided that such costs are certified pursuant to Sections 37.7 and 37.8B below; provided further that where a landlord has performed seismic strengthening in accordance with Building Code Chapters 14 and 15, no increase for capital improvements (including but not limited to seismic strengthening) shall exceed, in any 12-month period, 10 percent of the tenant"s base rent, subject to rules adopted by the Board to prevent landlord hardship and to permit landlords to continue to maintain their buildings in a decent, safe and sanitary condition. A landlord may accumulate any certified increase which exceeds this amount and impose the increase in subsequent years, subject to the 10 percent limitation. Nothing in this subsection shall be construed to supersede any Board rules or regulations with respect to limitations on increases based upon capital improvements whether performed separately or in conjunction with seismic strengthening improvements pursuant to Building Code Chapters 14 and 15.

(4) Utilities. A landlord may impose increases based upon the cost of utilities as provided in Section 37.2(q) above.

(5) Charges Related to Excess Water Use. A landlord may impose increases not to exceed 50 percent of the excess use charges (penalties) levied by the San Francisco Water Department on a building for use of water in excess of Water Department allocations under the following conditions:

(A) The landlord provides tenants with written certification that the following have been installed in all units: (1) permanently installed retrofit devices designed to reduce the amount of water used per flush or low- flow toilets (1.6 gallons per flush); (2) low-flow shower heads which allow a flow of no more than 2.5 gallons per minute; and (3) faucet aerators (where installation on current faucets is physically feasible); and

(B) The landlord provides the tenants with written certification that no known plumbing leaks currently exist in the building and that any leaks reported by tenants in the future will be promptly repaired; and

(C) The landlord provides the tenants with a copy of the water bill for the period in which the penalty was charged. Only penalties billed for a service period which begins after the effective date of the ordinance [April 20, 1991] may be passed through to tenants. Where penalties result from an allocation which does not reflect documented changes in occupancy which occurred after March 1, 1991, a landlord must, if requested in writing by a tenant, make a good-faith effort to appeal the allotment. Increases based upon penalties shall be prorated on a per-room basis provided that the tenancy existed during the time the penalty charges accrued. Such charges shall not become part of a tenant"s base rent. Where a penalty in any given billing period reflects a 25 percent or more increase in consumption over the prior billing period, and where that increase does not appear to result from increased occupancy or any other known use, a landlord may not impose any increase based upon such penalty unless inspection by a licensed plumber or Water Department inspector fails to reveal a plumbing or other leak. If the inspection does reveal a leak, no increase based upon penalties may be imposed at any time for the period of the unrepaired leak.

(6) Property Tax. A landlord may impose increases based upon a change in the landlords property tax resulting from the repayment of general obligation bonds of the City and County of San Francisco approved by the voters between November 1, 1996, and November 30, 1998 as provided in Section 37.2(q) above. The amount of such increase shall be determined for each tax year as follows:

(A) The Controller and the Board of Supervisors will determine the percentage of the property tax rate, if any, in each tax year attributable to general obligation bonds approved by the voters between November 1, 1996, and November 30, 1998, and repayable within such tax year.

(B) This percentage shall be multiplied by the total amount of the net taxable value for the applicable tax year. The result is the dollar amount of property taxes for that tax year for a particular property attributable to the repayment of general obligation bonds approved by the voters between November 1, 1996, and November 30, 1998.

(C) The dollar amount calculated under Subsection (B) shall be divided by the total number of all units in each property, including commercial units. That figure shall be divided by twelve months, to determine the monthly per unit costs for that tax year of the repayment of general obligation bonds approved by the voters between November 1, 1996, and November 30, 1998.

(D) Landlords may pass through to each unit in a particular property the dollar amount calculated under this Subsection (6). This passthrough may be imposed only on the anniversary date of each tenants occupancy of the property. This passthrough shall not become a part of a tenants base rent. The amount of each annual passthrough imposed pursuant to this Subsection (6) may vary from year-to-year, depending on the amount calculated under Subsections (A) through (C). Each annual passthrough shall apply only for the twelve-month period after it is imposed. A landlord may impose the passthrough described in this Subsection (6) for a particular tax year only with respect to those tenants who were residents of a particular property on November 1 of the applicable tax year. A landlord shall not impose a passthrough pursuant to this Subsection (6) if the landlord has filed for or received Board approval for a rent increase under Section 37.8(e)(4) for increased operating and maintenance expenses in which the same increase in property taxes due to the repayment of general obligation bonds was included in the comparison year cost totals.

(E) The Board will have available a form which explains how to calculate the passthrough.

(F) Landlords must provide to tenants, at least thirty (30) days prior to the imposition of the passthrough permitted under this Subsection (6), a copy of the completed form described in Subsection (E). This completed form shall be provided in addition to the Notice of Rent Increase required under Section 37.3(b)(5). A tenant may petition for a hearing under the procedure described in Section 37.8 where the tenant alleges that a landlord has imposed a charge which exceeds the limitations set forth in this Subsection (6). In such a hearing, the burden of proof shall be on the landlord. Tenant petitions regarding this passthrough must be filed within one year of the effective date of the passthrough.

(G) The Board may amend its rules and regulations as necessary to implement this Subsection (6).

(7) RAP Loans. A landlord may impose rent increases attributable to the Chief Administrative Officer"s amortization of the RAP loan in an area designated on or after July 1, 1977, pursuant to Chapter 32 of the San Francisco Administrative Code.

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(8) Costa-Hawkins Rental Housing Act (Civil Code Sections 1954.50, et seq.). Consistent with the Costa-Hawkins Rental Housing Act (Civil Code Sections 1954.50, et seq.) and regardless of whether otherwise provided under Chapter 37:

(A) Property Owner Rights to Establish Initial and All Subsequent Rental Rates for Separately Alienable Parcels.

(i) An owner of residential real property may establish the initial and all subsequent rental rates for a dwelling or a unit which is alienable separate from the title to any other dwelling unit or is a subdivided interest in a subdivision as specified in subdivision (b), (d), or (f) of Section 11004.5 of the California Business and Professions Code. The owners right to establish subsequent rental rates under this paragraph shall not apply to a dwelling or unit where the preceding tenancy has been terminated by the owner by notice pursuant to California Civil Code Section 1946 or has been terminated upon a change in the terms of the tenancy noticed pursuant to California Civil Code Section 827: in such instances, the rent increase limitation provisions of Chapter 37 shall continue to apply for the duration of the new tenancy in that dwelling or unit.

(ii) Where the initial or subsequent rental rates of a Subsection 37.3(a)(8)(A)(i) dwelling or unit were controlled by the provisions of Chapter 37 on January 1, 1995, the following shall apply:

(aa) A tenancy that was in effect on December 31, 1995 remains subject to the rent control provisions of this Chapter 37, and the owner may not otherwise establish the subsequent rental rates for that tenancy.

(bb) On or after January 1, 1999 an owner may establish the initial and all subsequent rental rates for any tenancy created on or after January 1, 1996.

(iii) An owners right to establish subsequent rental rates under Subsection 37.3(a)(8)(A) shall not apply to a dwelling or unit which contains serious health, safety, fire or building code violations, excluding those caused by disasters, for which a citation has been issued by the appropriate governmental agency and which has remained unabated for six months or longer preceding the vacancy.

(B) Conditions for Establishing the Initial Rental Rate Upon Sublet or Assignment. Except as identified in this Subsection, nothing in this Subsection 37.3(a)(8)(B) or any other provision of law of the City and County of San Francisco shall be construed to preclude express establishment in a lease or rental agreement of the rental rates to be applicable in the event the rental unit subject thereto is sublet, and nothing in this Subsection shall be construed to impair the obligations of contracts entered into prior to January 1, 1996.

(i) Where the original occupant or occupants who took possession of the dwelling or unit pursuant to the rental agreement with the owner no longer permanently reside there, an owner may increase the rent by any amount allowed by this section to a lawful sublessee or assignee who did not reside at the dwelling or unit prior to January 1, 1996.

(ii) This Subsection shall not apply to partial changes in occupancy of a dwelling or unit where one or more of the occupants of the premises, pursuant to the agreement with the owner provided for above (37.3(a)(8)(B)), remains an occupant in lawful possession of the dwelling or unit, or where a lawful sublessee or assignee who resided at the dwelling or unit prior to January 1, 1996, remains in possession of the dwelling or unit. Nothing contained in this Subsection 37.3(a)(8)(B) shall be construed to enlarge or diminish an owner"s right to withhold consent to a sublease or assignment.

(iii) Acceptance of rent by the owner shall not operate as a waiver or otherwise prevent enforcement of a covenant prohibiting sublease or assignment or as a waiver of an owner"s rights to establish the initial rental rate unless the owner has received written notice from the tenant that is party to the agreement and thereafter accepted rent.

(C) Subsection 37.3(a)(8) does not affect the authority of the City and County of San Francisco to regulate or monitor the basis or grounds for eviction.

(D) This Subsection 37.3(a)(8) is intended to be and shall be construed to be consistent with the Costa-Hawkins Rental Housing Act (Civil Code Sections 1954.50, et seq.).

(((8))) (9) Additional Increases. A landlord who seeks to impose any rent increase which exceeds those permitted above shall petition for a rental arbitration hearing pursuant to Section 37.8 of this Chapter.

(((9))) (10) A landlord may impose a rent increase to recover costs incurred for the remediation of lead hazards, as defined in San Francisco Health Code Article 26. Such increases may be based on changes in operating and maintenance expenses or for capital improvement expenditures as long as the costs which are the basis of the rent increase are a substantial portion of the work which abates or remediates a lead hazard, as defined in San Francisco Health Code Article 26, and provided further that such costs are approved for operating and maintenance expense increases pursuant to Section 37.8(e)(4)(A) and certified as capital improvements pursuant to Section 37.7 below.

When rent increases are authorized by this Subsection 37.3(a)(((9))) (10), the total rent increase for both operating and maintenance expenses and capital improvements shall not exceed 10 percent in any 12-month period. If allowable rent increases due to the costs of lead remediation and abatement work exceed 10 percent in any 12-month period, a hearing officer shall apply a portion of such excess to approved operating and maintenance expenses for lead remediation work, and the balance, if any, to certified capital improvements, provided, however, that such increase shall not exceed 10 percent. A landlord may accumulate any approved or certified increase which exceeds this amount, subject to the 10 percent limit.

(((10))) (11) With respect to units occupied by recipients of tenant-based rental assistance:

(A) If the tenants share of the base rent is not calculated as a fixed percentage of the tenants income, such as in the Section 8 voucher program and the Over-FMR Tenancy Program, then:

(i) If the base rent is equal to or greater than the Payment Standard, the rent increase limitations in Sections 37.3(a)(1) and (2) shall apply to the entire base rent, and the arbitration procedures for those increases set forth in Section 37.8 and 37.8A shall apply.

(ii) If the base rent is less than the Payment Standard, the rent increase limitations of this Chapter shall not apply; provided, however, that any rent increase which would result in the base rent being equal to or greater than the Payment Standard shall not result in a new base rent that exceeds the Payment Standard plus the increase allowable under Section 37.3(a)(1).

(B) If the tenants share of the base rent is calculated as a fixed percentage of the tenants income, such as in the Section 8 certificate program and the rental subsidy program for the HOPWA program, the rent increase limitations in Section 37.3(a)(1) and (2) shall not apply. In such circumstances, adjustments in rent shall be made solely according to the requirements of the tenant-based rental assistance program.

(b) Notice of Rent Increase for Tenants in Occupancy. On or before the date upon which a landlord gives a tenant legal notice of a rent increase, the landlord shall inform the tenant, in writing, of the following:

(1) Which portion of the rent increase reflects the annual increase, and/or a banked amount, if any;

(2) Which portion of the rent increase reflects costs for increased operating and maintenance expenses, rents for comparable units, and/or capital improvements, rehabilitation, or energy conservation measures certified pursuant to Section 37.7;

(3) Which portion of the rent increase reflects the passthrough of charges for gas and electricity, or bond measure costs described in Section 37.3(a)(6) above, which charges shall be explained in writing on a form provided by the Board as described in Section 37.3(a)(6)(E);

(4) Which portion of the rent increase reflects the amortization of the RAP loan, as described in Section 37.3(a)(7) above.

(5) Nonconforming Rent Increases. Any rent increase which does not conform with the provisions of this Section shall be null and void.

(6) With respect to rental units occupied by recipients of tenant-based rental assistance, the notice requirements of this Subsection (b) shall be required in addition to any notice required as part of the tenant-based rental assistance program.

(c) Initial Rent Limitation for Subtenants. A tenant who subleases his or her rental unit may charge no more rent upon initial occupancy of the subtenant or subtenants than that rent which the tenant is currently paying to the landlord.

(d) Effect of Deferred Maintenance on Passthroughs for Lead Remediation Techniques.

(1) When lead hazards, which have been remediated or abated pursuant to San Francisco Health Code Article 26, are also violations of State or local housing health and safety laws, the costs of such work shall not be passed through to tenants as either a capital improvement or an operating and maintenance expense if the hearing officer finds that the deferred maintenance, as defined herein, of the current or previous landlord caused or contributed to the existence of the violation of law.

(2) In any unit occupied by a lead-poisoned child and in which there exists a lead hazard, as defined in San Francisco Health Code Article 26, there shall be a rebuttable presumption that violations of State or local housing health and safety laws caused or created by deferred maintenance, caused or contributed to the presence of the lead hazards. If the landlord fails to rebut the presumption, that portion of the petition seeking a rent increase for the costs of lead hazard remediation or abatement shall be denied. If the presumption is rebutted, the landlord shall be entitled to a rent increase if otherwise justified by the standards set forth in this Chapter.

(3) For purposes of the evaluation of petitions for rent increases for lead remediation work, maintenance is deferred if a reasonable landlord under the circumstances would have performed, on a regular basis, the maintenance work required to keep the premises from being in violation of housing safety and habitability standards set forth in California Civil Code Section 1941 and the San Francisco Municipal Code. In order to prevail on a deferred maintenance defense, a tenant must show that the level or repair or remediation currently required would have been lessened had maintenance been performed in a more timely manner.

Section 3. Chapter 37A of the San Francisco Administrative Code Residential Rent Stabilization and Arbitration Fee, is hereby amended by amending Section 37A.1 to read as follows:

SEC.37A.1.SCOPE. This Chapter is applicable to all residential units in the City and County of San Francisco, including residential units which are exempt from the rent increase limitation provisions (but not other provisions) of Chapter 37 pursuant to the Costa-Hawkins Rental Housing Act (Civil Code 1954.50, et seq.) and/or San Francisco Administrative Code 37.3(a)(8). For purposes of this Chapter, residential units are dwelling units and guest rooms as those terms are defined in Sections ((203.4 and 203.7)) 400 and 401 of the San Francisco Housing Code. The term shall not include:

(a) Guest rooms exempted or excluded from regulation under Chapter 41 of this Code;

(b) Dwelling units in nonprofit cooperatives owned, occupied and controlled by a majority of the residents or dwelling units solely owned by a nonprofit public benefit corporation governed by a board of directors the majority of which are residents of the dwelling units and where it is required in the corporate by-laws that rent increases be approved by a majority of the residents;

(c) Housing accommodations in any hospital, convent, monastery, extended care facility, asylum, residential care or adult day health care facility for the elderly which must be operated pursuant to a license issued by the California Department of Social Services, as required by California Health and Safety Chapters 3.2 and 3.3, or in dormitories owned and operated by an institution of higher education, a high school, or an elementary school;

(d) Dwelling units whose rents are controlled or regulated by any government unit, agency or authority, excepting those units which are subject to the jurisdiction of the Residential Rent Stabilization and Arbitration Board;

(e) Any dwelling unit for which the owner has on file with the Assessor a current homeowner"s exemption;

(f) Any dwelling unit which is occupied by an owner of record on either a full-time or part-time basis and which is not rented at any time, provided that the owner file with the Tax Collector an affidavit so stating;

(g) Dwelling units located in a structure for which a certificate of final completion and occupancy was first issued by the Bureau of Building Inspection after June 13, 1979;

(h) Dwelling units in a building which, after June 13, 1979, has undergone substantial rehabilitation as that term is defined in Chapter 37 of this Code.

SEC.37A.2.FINDINGS.The Board of Supervisors hereby finds:

(a) In Section 37.1 of this Code, the Board of Supervisors found that there was a shortage of decent, safe and sanitary housing in the City and County of San Francisco resulting in a critically low vacancy factor. The Board further found that rent regulation was necessary in order to alleviate the ill effects of the City"s housing shortage to meet the need for affordable housing, and to advance the City"s housing policies. The Board now hereby finds that this housing shortage still persists and that rent regulation continues to be a necessary and effective means of mitigating this condition.

(b) By Ordinance No. 276-79, adopted June 12, 1979, the Board of Supervisors enacted the Residential Rent and Arbitration Ordinance (Rent Ordinance, Chapter 37, San Francisco Administrative Code) to regulate residential rents in San Francisco. The Ordinance created the Residential Rent Stabilization and Arbitration Board (Rent Board, Sections 37.1(a), (b) and 37.4) to administer and enforce the Rent Ordinance and thereby safeguard tenants from excessive increases while at the same time assure landlords fair and adequate rents. The Rent Board benefits both landlords and tenants by providing for the orderly and efficient administration of the Rent Ordinance and by protecting tenants from unreasonable rent increases and displacement while assuring that landlords receive fair rents consistent with the Ordinance.

(c) It is fair and reasonable that the costs of administering and enforcing the Rent Ordinance through the Rent Board should be equitably distributed among the City"s residential units.

Therefore, the Board finds that the owner of each residential unit as defined in Section 37A.1 above shall be required to pay an annual Rent Stabilization and Arbitration fee for each unit.

(d) The fee for each residential unit shall equal the projected annual cost of funding the Rent Board plus related administrative costs pursuant to Section 10.194 of this Code including, but not limited to, the Tax Collector and Controller divided by the total number of residential units estimated to pay the fee minus any balance remaining in the fund set forth in Section 10.117-88 of this Code; provided, however, that in calculating the fee, the Controller shall round up any fraction of a dollar to the next whole dollar; provided further, however, that the fee shall in no event exceed $10 per residential unit. For the purposes of this calculation, a guest room shall be counted as one-half of a residential unit and shall be charged half the fee. The Assessor and the Superintendent of the Bureau of Building Inspection shall release to the Information Services Division (IDS) of the Controller"s Office by June 1st information necessary for compilation of the billing list. The Controller shall compile the list, determine the total number of residential units and calculate the fee by July 31st. The fee shall be recalculated on July 31st each year.

(e) The fee herein is for regulatory purposes only. It is not designed or intended for revenue purposes. Any surplus collected in a given year will reduce the fee in the next fiscal year.

SEC.37A.3.PURPOSE.The purpose of this ordinance is to require those who rely upon and/or benefit from the Rent Board"s administration and enforcement of the Rent Ordinance to pay a fee which is directly related to the financial burden placed upon the City in carrying out the Rent Board"s functions and duties.

SEC.37A.4.IMPOSITION OF THE FEE. The owner of each residential unit in San Francisco shall pay annually to the City and County of San Francisco a Residential Rent Stabilization and Arbitration fee to be calculated by the Controller as provided in Section 37.A.2(d) above. The Tax Collector shall bill the fee to the owners of all residential units as a special assessment on the property tax bill. All laws applicable to the collection and enforcement of ad valorem property taxes shall be applicable to the collection and enforcement of the Residential Rent Stabilization and Arbitration fee special assessment.

SEC.37A.5.RESIDENTIAL RENT STABILIZATION AND ARBITRATION FUND. All fees collected under this Chapter shall be deposited in the Residential Rent Stabilization and Arbitration Fund as provided in Chapter 10, Section 10.117-88 of the San Francisco Administrative Code. All funds so collected shall be used solely for the purpose of funding the Rent Board plus related administrative costs pursuant to Section 10.194 of this Code including, but not limited to, the Tax Collector and Controller.

SEC.37A.6.RECOVERY OF THE FEE. The owner may seek recovery of the fee from the tenant of each residential unit who is in occupancy on November 1st using one of the following methods:

(a) The owner may deduct the fee from the next interest payment owed on the tenant"s security deposit pursuant to Chapter 49 of this Code. The owner shall give written notice of the deduction and its purpose at the time the interest payment is due; or

(b) The owner may bill the tenant directly for the fee. The bill shall state the amount for that unit, that the purpose of the fee is to fund the Rent Board and related administrative costs under Chapter 37A of the San Francisco Administrative Code, and that the fee is due and payable within 30 days of the date of the bill.

The owner remains liable for payment of the fee to the Tax Collector whether or not the owner seeks recovery under one of the above methods or in fact does recover from the tenant.

SEC.37A.7.RULES AND REGULATIONS. The Tax Collector may adopt such rules, regulations and administrative procedures as he or she deems necessary to implement this Chapter.

SEC.37A.8.NONPAYMENT; ADDITIONAL REQUEST.

(a) If the full payment required in Sec. 37A.4 above is not received within 60 days of the date of the bill, the bill shall be considered delinquent and an additional request for payment shall be sent to the owner.

(b) Said written request shall advise the recipient that if the payment is not received within 30 days of the mailing of this notice, a 25 percent penalty will be added, plus an interest charge of 1.5 percent monthly after the account has been considered delinquent and that the Board of Supervisors, in a noticed public hearing, will add a charge for the Tax Collector of $49 and record a lien for the entire unpaid balance, including penalty on the payment with interest accruing on the entire unpaid balance, against the owner"s real property. The charge for the Tax Collector consists of $40 for processing a delinquent fee plus $9.00 for releasing the tax lien in accordance with Section 10.237 of this Code.

SEC.37A.9.LIEN PROCEEDINGS; NOTICE. If payment is not received within 30 days following mailing of the additional request, the Tax Collector shall initiate proceedings pursuant to the provisions of Article XX, Chapter 10, San Francisco Administrative Code by reporting the delinquency to the Board of Supervisors and requesting the Board to make the entire unpaid balance, including penalty and interest, a special assessment lien against the real property. Such charges against delinquent accounts shall be reported to the Board at least once each year. The Tax Collector shall also indicate which of such delinquent accounts should be exempted from the lien procedure because of the small amounts involved, or because another procedure is more appropriate.

SEC.37A.10.MANNER OF GIVING NOTICE. Any notice required to be given herein by the Tax Collector to an owner shall be sufficiently given or served upon the owner for all purposes if personally served upon the owner or if deposited, postage prepaid, in a post office letter box addressed in the name of the owner at the official address of the owner maintained by the Tax Collector for the mailing of property tax bills.

SEC.37A.11.SEVERABILITY. The provisions of this Chapter shall not apply to any person, association, corporation or to any property as to whom or which it is beyond the power of the City and County of San Francisco to impose the fee herein provided. If any sentence, clause, section or part of this ordinance, or any fee imposed upon any person or entity is found to be unconstitutional, illegal or invalid, such unconstitutionality, illegality, or invalidity shall affect only such clause, sentence, section or part of this ordinance, or person or entity, and shall not affect or impair any of the remaining provisions, sentences, clauses, sections or other parts of this ordinance, or its effect on other persons or entities. It is hereby declared to be the intention of the Board of Supervisors that this ordinance would have been adopted had such unconstitutional, illegal or invalid sentence, clause, section or part of this ordinance not been included herein, or had such person or entity been expressly exempted from the application of this ordinance. To this end the provisions of this Chapter are severable.

SEC.37A.12.RESERVED.

Section 4. SEVERABILITY. If any part or provision of this Ordinance, or the application thereof to any person or circumstance, is held invalid, the remainder of this Ordinance, including the application of such part or provision to other persons or circumstances, shall not be affected thereby and shall continue in full force and effect. To this end, provisions of this Ordinance are severable.

New Rent Board Fee Approved - 7/9/99

Fee Amendment to Rent Ordinance

The Board of Supervisors approved a new Rent Board fee last month. Click here to view the text of the amendment, which is 37A of the Administrative Code. The new fee, which will apply to any tenancy in effect as of November 1, 1999, will be $16 per apartment unit and $8 per residential hotel room. The fee cannot be collected until after this date. The fee, which is billed to the property owner on the property tax statement, which is issued in November, can be passed along to the tenant. There were some changes to the billing procedure that are discussed below. The fee increase will pay for 3 new counselors and 4 new hearing officers and a new senior hearing officer, as well as additional space for a new hearing room and the new staff.

The new procedures for imposing the fee are as follows:

• The fee is required to be required to be deducted from the interest due the tenant on the deposit held unless the landlord has paid the interest payment annually to the tenant (5%). In those instances, the owner would be permitted to bill separately for the fee. Where no deposit is being held, or the amount of interest owed is too small, the owner could bill directly for the fee;
• Landlords would not have to impose the fee each year, but instead be able to "bank" the fee as is currently permitted with the annual allowable increase. Banking will only be permitted going forward with the new fee rate;
  Request for payment of the fee shall include a written explanation that itemizes the amount due for each year for which payment is sought and has not been paid. Any deductions being made from the interest due the tenant shall be itemized for each year and also show the amount of interest due and/or paid for each year as well as the amount of the Rent Board fee being deducted from any interest owed the tenant.

07/19/99

New Rent Board Fee Approved - 7/9/99_Attachment: Fee Amendments

LEGISLATIVE DIGEST

FILE NO. _______________

[Increasing Annual Maximum Residential Rent Control Fee]

(SUPERVISOR AMMIANO)

AMENDING ADMINISTRATIVE CODE CHAPTER 37A Residential Rent Stabilization and Arbitration Fee BY AMENDING SECTIONS 37A.1, 37A.2, 37A.6, 37A.8, 37A.9, 37A.10, AND 37A.11: TO INCREASE annual maximum residential rent control fees from $10 to $16 per unit; providing THAT AN OWNER SEEKING RECOVERY OF THE FEE SHALL DEDUCT IT from security deposit interest payments OWED THE TENANT, EXCEPT THAT THE OWNER MAY DIRECTLY BILL THE TENANT IF INTEREST IS PAID ANNUALLY; PROVIDING FOR OWNER BANKING AND FUTURE COLLECTION OF THE FEE FROM THE TENANT; REpealing OBSOLETE SECTIONS 37a.8 AND 37a.9 AND RENUMBERING SECTIONS 37a.10 AND 37A.11 AS 37A.8 AND 37A.9; and with OTHER TECHNICAL changes. The actual annual residential rent control fee per unit shall be calculated PURSUANT TO administrative SECTION 37a.2, IN CONFORMANCE with administrative code SectionS 10.117-88 AND 10.194.

Existing provisions of Administrative Code Chapter 37A Residential Rent Stabilization and Arbitration Fee provide for an annual maximum fee of $10.00 per residential unit, billed as a special assessment on property tax bills. Chapter 37A also provides that the owner may deduct the fee from the next interest payment owed on the tenants security deposit (pursuant to Administrative Code Chapter 49), or the owner may directly bill the tenant for the fee. The actual allowable fee each year is calculated by the Controller, to equal only the projected cost of funding the Rent Board plus related administrative costs for that year, but in no event more than the stated maximum (Administrative Code 10.117-88, 10.194, and 37A.2).

This legislation would amend Administrative Code Section 37A by increasing the annual maximum fee to $16.00 per residential unit. It would also provide that the owner shall deduct the fee from the next security deposit interest payment owed the tenant, except that if the owner pays the interest due annually then the owner may alternatively directly bill the tenant. This legislation also adds a provision for the owner to bank and collect the fee in a future year as a deduction against deposit interest due, except that the owner may directly bill the tenant if the interest is then insufficient to pay the fee. (The Controller"s method for calculating the actual fee allowed each year would not change.)

This legislation would also update Chapter 37A by:

(1) Changing cross-references to the San Francisco Housing Code, to reflect numbering changes in that Code;

(2) Codifying the fee exemption for federally subsidized units with Section 8 certificates or vouchers (or related programs) administered by the San Francisco Housing Authority, which are otherwise subject to certain provisions of the rent control ordinance;

(3) Changing references to City Departments which have undergone name changes (i.e., currently, the Department of Building Inspection, and the Department of Telecommunications and Information Services); and

(4) Repealing Sections 37A.8 and 37A.9 as obsolete (due to 1995 Administrative Code amendments which provided that the Tax Collector shall directly collect the fee through a special assessment on property tax bills), and renumbering 37A.10 and 37A.11 as 37A.8 and 37A.9.

[Increasing Annual Maximum Residential Rent Control Fee]

AMENDING ADMINISTRATIVE CODE CHAPTER 37A Residential Rent Stabilization and Arbitration Fee BY AMENDING SECTIONS 37A.1, 37A.2, 37A.6, 37A.8, 37A.9, 37A.10, AND 37A.11: TO INCREASE annual maximum residential rent control fees from $10 to $16 per unit; providing THAT AN OWNER SEEKING RECOVERY OF THE FEE SHALL DEDUCT IT from security deposit interest payments OWED THE TENANT, EXCEPT THAT THE OWNER MAY DIRECTLY BILL THE TENANT IF INTEREST IS PAID ANNUALLY; PROVIDING FOR OWNER BANKING AND FUTURE COLLECTION OF THE FEE FROM THE TENANT; REpealing OBSOLETE SECTIONS 37a.8 AND 37a.9 AND RENUMBERING SECTIONS 37a.10 AND 37A.11 AS 37A.8 AND 37A.9; and with OTHER TECHNICAL changes. The actual annual residential rent control fee per unit shall be calculated PURSUANT TO administrative SECTION 37a.2, IN CONFORMANCE with administrative code SectionS 10.117-88 AND 10.194.

Note: Additions are underlined; deletions are in((doubleparentheses)).

Be it ordained by the People of the City and County of San Francisco:

Section 1. Chapter 37A Residential Rent Stabilization and Arbitration Fee of the San Francisco Administrative Code is hereby amended by amending Sections 37A.1, 37A.2, 37A.6, 37A.8, 37A.9, 37A.10, and 37A.11, to read as follows:

RESIDENTIAL RENT STABILIZATION AND ARBITRATION FEE

SEC.37A.1.SCOPE. This Chapter is applicable to all residential units in the City and County of San Francisco. For purposes of this Chapter, residential units are dwelling units and guest rooms as those terms are defined in Sections ((203.4)) 400 and ((203.7)) 401 of the San Francisco Housing Code. The term shall not include:

(a) Guest rooms exempted or excluded from regulation under Chapter 41 of this Code;

(b) Dwelling units in nonprofit cooperatives owned, occupied and controlled by a majority of the residents or dwelling units solely owned by a nonprofit public benefit corporation governed by a board of directors the majority of which are residents of the dwelling units and where it is required in the corporate by-laws that rent increases be approved by a majority of the residents;

(c) Housing accommodations in any hospital, convent, monastery, extended care facility, asylum, residential care or adult day health care facility for the elderly which must be operated pursuant to a license issued by the California Department of Social Services, as required by California Health and Safety Chapters 3.2 and 3.3, or in dormitories owned and operated by an institution of higher education, a high school, or an elementary school;

(d) Dwelling units whose rents are controlled or regulated by any government unit, agency or authority, excepting those units which are subject to the jurisdiction of the Residential Rent Stabilization and Arbitration Board. However, Section 8 certificate, voucher and related programs administered by the San Francisco Housing Authority, which are subject in whole or in part to the jurisdiction of the Residential Rent Stabilization and Arbitration Board shall remain exempt from the fee;

(e) Any dwelling unit for which the owner has on file with the Assessor a current homeowner"s exemption;

(f) Any dwelling unit which is occupied by an owner of record on either a full-time or part-time basis and which is not rented at any time, provided that the owner file with the Tax Collector an affidavit so stating;

(g) Dwelling units located in a structure for which a certificate of final completion and occupancy was first issued by the Bureau of Building Inspection after June 13, 1979;

(h) Dwelling units in a building which, after June 13, 1979, has undergone substantial rehabilitation as that term is defined in Chapter 37 of this Code.

SEC.37A.2.FINDINGS.The Board of Supervisors hereby finds:

(a) In Section 37.1 of this Code, the Board of Supervisors found that there was a shortage of decent, safe and sanitary housing in the City and County of San Francisco resulting in a critically low vacancy factor. The Board further found that rent regulation was necessary in order to alleviate the ill effects of the City"s housing shortage to meet the need for affordable housing, and to advance the City"s housing policies. The Board now hereby finds that this housing shortage still persists and that rent regulation continues to be a necessary and effective means of mitigating this condition.

(b) By Ordinance No. 276-79, adopted June 12, 1979, the Board of Supervisors enacted the Residential Rent and Arbitration Ordinance (Rent Ordinance, Chapter 37, San Francisco Administrative Code) to regulate residential rents in San Francisco. The Ordinance created the Residential Rent Stabilization and Arbitration Board (Rent Board, Sections 37.1(a), (b) and 37.4) to administer and enforce the Rent Ordinance and thereby safeguard tenants from excessive increases while at the same time assure landlords fair and adequate rents. The Rent Board benefits both landlords and tenants by providing for the orderly and efficient administration of the Rent Ordinance and by protecting tenants from unreasonable rent increases and displacement while assuring that landlords receive fair rents consistent with the Ordinance.

(c) It is fair and reasonable that the costs of administering and enforcing the Rent Ordinance through the Rent Board should be equitably distributed among the City"s residential units.

Therefore, the Board finds that the owner of each residential unit as defined in Section 37A.1 above shall be required to pay an annual Rent Stabilization and Arbitration fee for each unit.

(d) The fee for each residential unit shall equal the projected annual cost of funding the Rent Board plus related administrative costs pursuant to Section 10.194 of this Code including, but not limited to, the Tax Collector and Controller, divided by the total number of residential units estimated to pay the fee minus any balance remaining in the fund set forth in Section 10.117-88 of this Code; provided, however, that in calculating the fee, the Controller shall round up any fraction of a dollar to the next whole dollar; provided further, however, that the fee shall in no event exceed (($10)) $16.00 per residential unit. For the purposes of this calculation, a guest room shall be counted as one-half of a residential unit and shall be charged half the fee. The Assessor and the ((Superintendent)) Director of the ((Bureau)) Department of Building Inspection shall release to the Information Services Division ((IDS)) ISD of the ((Controller"s Office)) Department of Telecommunications and Information Services (DTIS) by June 1st information necessary for compilation of the billing list. The Controller shall compile the list, determine the total number of residential units and calculate the fee by July 31st. The fee shall be recalculated on July 31st each year.

(e) The fee herein is for regulatory purposes only. It is not designed or intended for revenue purposes. Any surplus collected in a given year will reduce the fee in the next fiscal year.

SEC.37A.3.PURPOSE.The purpose of this ordinance is to require those who rely upon and/or benefit from the Rent Board"s administration and enforcement of the Rent Ordinance to pay a fee which is directly related to the financial burden placed upon the City in carrying out the Rent Board"s functions and duties.

SEC.37A.4.IMPOSITION OF THE FEE. The owner of each residential unit in San Francisco shall pay annually to the City and County of San Francisco a Residential Rent Stabilization and Arbitration fee to be calculated by the Controller as provided in Section 37.A.2(d) above. The Tax Collector shall bill the fee to the owners of all residential units as a special assessment on the property tax bill. All laws applicable to the collection and enforcement of ad valorem property taxes shall be applicable to the collection and enforcement of the Residential Rent Stabilization and Arbitration fee special assessment.

SEC.37A.5.RESIDENTIAL RENT STABILIZATION AND ARBITRATION FUND. All fees collected under this Chapter shall be deposited in the Residential Rent Stabilization and Arbitration Fund as provided in Chapter 10, Section 10.117-88 of the San Francisco Administrative Code. All funds so collected shall be used solely for the purpose of funding the Rent Board plus related administrative costs pursuant to Section 10.194 of this Code including, but not limited to, the Tax Collector and Controller.

SEC.37A.6.RECOVERY OF THE FEE. The owner may seek recovery of the fee from the tenant of each residential unit who is in occupancy on November 1st ((using one of the following methods)), as follows:

(a) ((The owner may)) An owner seeking recovery of the fee shall deduct ((the fee)) it from the next interest payment owed on the tenant"s security deposit pursuant to Chapter 49 of this Code((. The owner shall give written notice of the deduction and its purpose at the time the interest payment is due)) , except that where the interest has been paid annually the owner may bill the tenant directly as provided in subsection 37A.6(c); or

(b) When the fee is not collected during the year in which the owner is first entitled to it, the owner may bank the fee and collect it in a future year. Only those fees that become due after the effective date of this Ordinance may be banked. A banked fee may only be collected as a deduction against security deposit interest due the tenant, except that where no interest or insufficient interest exists (due to no deposit or a low amount of deposit) the owner may bill for any balance owing as provided in subsection 37A.6(c). The billing statement must specifically show the fee amount owed by the tenant for each year, and the amount of interest due the tenant (if any) for each year owing.

((b)) (c) To the extent provided in subsections 37A.6(a) and (b), ((T))the owner may bill the tenant directly for the fee. The bill shall state the amount for that unit, that the purpose of the fee is to fund the Rent Board and related administrative costs under Chapter 37A of the San Francisco Administrative Code, and that the fee is due and payable within 30 days of the date of the bill.

The owner remains liable for payment of the fee to the Tax Collector whether or not the owner seeks recovery under one of the above methods or in fact does recover from the tenant.

SEC.37A.7.RULES AND REGULATIONS. The Tax Collector may adopt such rules, regulations and administrative procedures as he or she deems necessary to implement this Chapter.

((SEC.37A.8.NONPAYMENT; ADDITIONAL REQUEST. (a) If the full payment required in Sec. 37A.4 above is not received within 60 days of the date of the bill, the bill shall be considered delinquent and an additional request for payment shall be sent to the owner.

(b) Said written request shall advise the recipient that if the payment is not received within 30 days of the mailing of this notice, a 25 percent penalty will be added, plus an interest charge of 1.5 percent monthly after the account has been considered delinquent and that the Board of Supervisors, in a noticed public hearing, will add a charge for the Tax Collector of $49 and record a lien for the entire unpaid balance, including penalty on the payment with interest accruing on the entire unpaid balance, against the owner"s real property. The charge for the Tax Collector consists of $40 for processing a delinquent fee plus $9.00 for releasing the tax lien in accordance with Section 10.237 of this Code.))

((SEC.37A.9.LIEN PROCEEDINGS; NOTICE. If payment is not received within 30 days following mailing of the additional request, the Tax Collector shall initiate proceedings pursuant to the provisions of Article XX, Chapter 10, San Francisco Administrative Code by reporting the delinquency to the Board of Supervisors and requesting the Board to make the entire unpaid balance, including penalty and interest, a special assessment lien against the real property. Such charges against delinquent accounts shall be reported to the Board at least once each year. The Tax Collector shall also indicate which of such delinquent accounts should be exempted from the lien procedure because of the small amounts involved, or because another procedure is more appropriate.))

SEC.37A.((10)) 8.MANNER OF GIVING NOTICE. Any notice required to be given herein by the Tax Collector to an owner shall be sufficiently given or served upon the owner for all purposes if personally served upon the owner or if deposited, postage prepaid, in a post office letter box addressed in the name of the owner at the official address of the owner maintained by the Tax Collector for the mailing of property tax bills.

SEC.37A.((11)) 9.SEVERABILITY. The provisions of this Chapter shall not apply to any person, association, corporation or to any property as to whom or which it is beyond the power of the City and County of San Francisco to impose the fee herein provided. If any sentence, clause, section or part of this ordinance, or any fee imposed upon any person or entity is found to be unconstitutional, illegal or invalid, such unconstitutionality, illegality, or invalidity shall affect only such clause, sentence, section or part of this ordinance, or person or entity, and shall not affect or impair any of the remaining provisions, sentences, clauses, sections or other parts of this ordinance, or its effect on other persons or entities. It is hereby declared to be the intention of the Board of Supervisors that this ordinance would have been adopted had such unconstitutional, illegal or invalid sentence, clause, section or part of this ordinance not been included herein, or had such person or entity been expressly exempted from the application of this ordinance. To this end the provisions of this Chapter are severable.

SEC.37A.12.RESERVED.

Section 2. The actual annual residential rent control fee per unit shall be calculated pursuant to Administrative Code Section 37A.2, in conformance with Administrative Code Sections 10.117-88 and 10.194. 

A judge issued a ruling Monday June 14, 1999 stating the Conditional Use requirement for certain units being owner-occupied was invalid and has barred the Department of City Planning from enforcing this provision of the Planning Code.

This legislation was not a part of the Rent Ordinance and did not have any effect on an owner"s ability to pursue a lawful eviction pursuant to the Rent Ordinance, although many thought otherwise. The judge did not rule on Proposition G, which was passed by the voters last November 1999, and did affect evictions for owner-move-in purposes. A decision in this matter is not expected for many months. As it currently stands, Proposition G is in full force and effect.

After a Public Hearing at the May 18, 1999 meeting, the Board added the following subsection, which became effective immediately, to clarify as exempt from Rent Board jurisdiction:

This amendment was proposed by Commissioner Lightner, who said that it is directed at situations where the rent on a unit is so low that a tenant retains the apartment for some other purpose after vacating (i.e., had a home office in the unit, buy a house in the suburbs and keep the apartment for use as an office only; storage for folks who no longer live in the building; etc.). The genesis of this language is that: the original "no consistent residential use" was too vague, and sparked concerns about those tenants who travel, etc. The attempt was to target those situations where the landlord was not complicit from the outset in renting a residential space for some other use but, rather, the tenant later changed the use. Since future owners or tenants in revolving roommate situations who were not party to the original agreement with the owner might not know what the original understanding was, it"ll be up to the tenant to prove that commercial use was always intended when it"s a residential dwelling (in reality this"ll be moot since, if there"s no residential use, there"s no rent control, since there"s no commercial rent control).

There are some persons out there who are under the impression that this requires that the unit be the tenant"s principal place of residence and/or removes "pied a terres"(second homes) from our jurisdiction -- it does not. There is no definition of a tenant"s principle place of residence and this amendment does not address this issue.

06/09/99

There is proposed legislation at the Board of Supervisors that would limit the amount of the passthrough to tenants for capital improvement work certified by the Rent Board to 50% of the total amount petitioned for. Owners would continue to use the current system of amortizing the passthrough amount over the appropriate 7 or 10 year time frame, depending upon the type of improvement.

The legislation has been introduced at the Board by Supervisor Katz, but it has not been scheduled for committee hearing yet. Persons interested in this item should contact the Board of Supervisors at 554.5184 to ascertain a copy of the proposed ordinance or to obtain the latest information on the legislation and when it may be heard. Please reference File No. 990441.

4/22/99

The Board of Supervisors recently approved a resolution that requires owners who move into their residential property must first obtain a conditional use permit from the Department of City Planning. This law DOES NOT apply to residential buildings built after June 13, 1979, nor does it apply to buildings with two units or less (illegal units are counted for this purpose). The highlights of the resolution (Board of Supervisors’ File No. 990093) are as follows:

• It applies to any OMI eviction filed as of February 23rd, 1999;

• Please note that this law does not and cannot impede an owner’s ability to do an Ellis eviction;

• The conditional use requirement applies only to buildings of 3 units or more;

• Buildings built after June 1979 are exempt from this resolution;

• Owners must file for a conditional use permit at City Planning;

• The conditional use is supposed to be approved prior to the owner moving into the building;

• questions concerning the conditional use process should be addressed to City Planning at 558.6377.

Persons interested in obtaining more information on this topic should contact the Department of City Planning at 558.6377. While this law has implications for units subject to owner move-ins and “Ellised” units, this resolution is not part of the Rent Ordinance nor is it governed by the Rent Board. Owners are not barred from commencing Ellis Act evictions (Rent Ordinance Section 37.9(a)(13)), or any other eviction for that matter, and are not required to obtain a conditional use approval prior to commencing any eviction action permitted under the Rent Ordinance. It is highly prudent, however, to ascertain information as to the likelihood of getting a conditional use approval prior to commencing an owner move-in eviction. City Planning will have to advise you as to their requirements and the conditional use process—the Rent Board cannot provide this information.

4/22/99

A lawsuit has been file by the landlord community over the provisions of Proposition G and the Conditional Use resolution mentioned above. However, there is no injunction or restraining order in effect, which means that both are legally enforceable. There is no current or pending action with respect to this lawsuit as of this writing.

©1999 City & County of San Francisco 4/22/99

The Rent Stabilization and Arbitration Board Commissioners passed amendments to the language in Section 7.14 of the Rules and Regulations which became effective as of January 19, 1999. These amendments change the source of rates and the calculation method used to determine imputed interest rates for capital improvements when the owner has used his/her own money. These amendments were passed because the indicators that form the basis for determining the imputed interest rates in the former legislation was not always specifically expressed for the designated period (February) each year. Because of the possibility that the use of another month as an indicator might have the same unfavorable results, a new, more reliable source for a Treasury instrument was sought that would offer similar results on a consistent basis.

This amendment now requires the use the rates as posted for Treasury Securities in the Federal Reserve Statistical Release, H.15, as found on the Federal Reserve Internet site. These rates appear to offer similar results to the current methodology being used, yet on a more reliable and consistent basis, unlike the former use of Treasury Notes. The rates will be determined by averaging the last 12 months of the most recently posted rates for seven and ten-year Securities. This eliminates the impact of an unusual spike or drop in the index were only one specific monthly rate to be utilized. Using the average of the last 12 months also appears to more accurately reflect the future trend in rates.

The rates will also be determined in December of each year for the prior 12 months as posted at the Federal Reserve site. This is a change from the use of rates in effect as of the last week in January. This change will allow the department to post for the following year the new imputed interest rates at the same time as the annual allowable increase amount and will give interested parties earlier notice of these rates.

This methodology is being used to determine the interest rates for the next 12 months beginning March 1, 1999. Those rates would be 5.3% for seven-year amortized costs and 5.3% for ten-year amortized costs. The current rates in effect through February 28, 1999 are 5.5% and 5.6%, respectively.

©1999 City & County of San Francisco 1/20/99

This State law provision became effective on January 1, 1999. While it is now in effect, it does not necessarily mean that owners of single family homes and condos can give a new market rate rent increase. There are specific limitations as to when an owner is entitled to do this and anyone contemplating an increase based on this law should be up to speed on the provisions of the law.

The Rent Board Commission is still trying to sort out the particulars of this law—it was not exactly the legislators’ most shining moment in terms of coherent writing. What the Commission has clarified to-date is listed below. The remaining issues will be sorted out in the next few months, and it is anticipated that amendments to the Rent Ordinance and the Rules and Regulations will have to be made in order to conform local law with State law. Public hearings for any Ordiance or Rules changes will have to be held once all the issues have been identified and proposed language has been established. Interested parties should watch the Commission Agenda to see when the Rules changes will be calendared. Ordiance changes must be done through the Board of Supervisors.

Those items that have been clarified to-date include:

1. Single family dwellings with in-law units, whether legal or illegal, constitute two-unit buildings and will not become exempt.
2. If there is another structure on the same lot as a single family dwelling, then the home is not “alienable separate from the title to any other dwelling unit” because it cannot be sold separately, and the single family dwelling will not become exempt.
3. The rental unit fee will continue to be collected on units which are partially exempted by Costa-Hawkins as they will still be subject to eviction limitations under the Ordinance.
4. In a mixed-use building with one residential and commercial unit(s), the commercial units will not be counted, unless they are used for residential purposes and therefore constitute a “dwelling unit”.
5. Since a decrease in housing services is defined in the Ordinance as a rent increase, tenants in units affected by Costa-Hawkins will be precluded from filing petitions alleging decreased housing services and/or failure to repair.

Areas that will require additional discussion include:

1. What is the status of tenancies in rooms that are separately rented in a single family dwelling?
2. Since the legislation does not affect the City’s “authority to regulate or monitor the basis for eviction”, to what extent will allegations of wrongful eviction in affected units be investigated, especially with regard to retaliatory rent increases?
3. What constitutes “serious health, safety, fire or building code violations” sufficient to override exemption of the substandard unit, and does this apply to the “setting of initial rent” in a non-vacancy control jurisdiction such as San Francisco?
4. How does the provision in Section 1954.53(a)(1) which allows for setting of the initial rent only if the previous tenancy was not terminated apply in a jurisdiction with “Just Cause” eviction?

Needless to say, there will be other issues that arise during the course of discussion on Costa Hawkins. Because there are still several issues to be resolved, our staff may not be able to answer all your questions until the Commission has resolved the outstanding issues. If you are contemplating taking any action based on the provisions in Costa Hawkins, I would strongly advise that you seek competent legal counsel before striking off on your own into these uncharted waters.

1/20/99