San Francisco Rent Board News Archive: 2000

COMING CHANGES TO STATE LAW EFFECTIVE JAN. 1, 2001—12/15/00

Senate Bill SB 1745 becomes effective January 1, 2001. This law requires that a 60-day notice be given when a proposed rent increase will result in a 10% or greater increase for the past 12 months of a tenancy. This means that one must calculate the total of all increases given during the 12 months prior to the effective date of the proposed rent increase. This legislation appears to require the inclusion of the proposed rent increase as well when calculating the 10% cap.

This should not be an issue for most owners unless there is a capital improvement passthrough that is being imposed during the year. Please check with your attorney if you have questions or watch this site as more information becomes available. In order to ensure that all notices meet the state standard, we recommend that you give all notices at least 60 days in advance of the effective date of the increase.

Proposition H Implementation Advisory-11/8/00

On November 7, 2000 the voters of San Francisco passed Proposition H. Proposition H will have a major impact on allowable rent increases for capital improvement costs in San Francisco once it is effective. Proposition H basically prohibits most capital improvement rent increases unless they are necessary to provide the landlord with a constitutionally required fair return. The measure provides in relevant part:

The proposition becomes effective about thirty (30) days after the election result is certified. The effective date of Proposition H will therefore be sometime in December 2000.

Prior to the effective date, the Rent Board will continue to hold hearings and issue decisions on capital improvement petitions without a fair return analysis. The Rent Board will also accept filings of new capital improvement petitions without a fair return analysis until the effective date. On the effective date, however, the Rent Board will process pending capital improvement petitions and accept new filings of capital improvement petitions without a fair return analysis only for seismic strengthening work for Unreinforced Masonry Buildings (UMBs) under Building Code Chapters 14 and 15. All other capital improvement petitions that are pending on the effective date or filed after the effective date must include a fair return analysis as required by Proposition H. The Rent Board will develop a fair return analysis form prior to the effective date of Proposition H.

Proposition H applies to all capital improvement petitions filed after April 10, 2000 or where no final decision was issued by April 10, 2000. There are approximately 500 capital improvement decisions issued since April 10, 2000. Proposition H requires that the rent increases certified in those decisions be set aside unless the landlord can prove the increase is necessary in order to provide a constitutionally required fair return. The Rent Board will establish procedures for implementing this requirement prior to the effective date of Proposition H. In no event, however, may tenants deduct any payments for capital improvements certified in these decisions from the rent prior to January 1, 2001.

Up-to-Date Information on Implementation of Proposition H

Information concerning the Rent Board’s development of forms and procedures, as well as the status of any legal actions that may be filed to challenge or to stay implementation of Proposition H, may be obtained from the Rent Board in the following ways:

• Website: http://sfrb.org under "What’s New"
• 24-Hour Recorded Information Line—415.252.4600, Menu No. 46 "Proposition H—Current Status"
• Fax Back—415.252.4660, Document Number 014, "What’s New/Amended"

We will keep the information available from these resources current. Should you have questions that may not be answered in these resources, you can also call our counseling staff at 415.252.4602 between 9-12 and 1 to 4 each workday.

Proposition H Text, Passthrough Limitation - 10/24/00

Housing Study Consultant Selected - Sept. 2000 - 10/24/00

Costa Hawkins Amendments to Rent Ordinance Become Law July 2, 2000 - 7/2/00

Costa Hawkins Amendments to Rent Ordinance Become Law July 2, 2000

The following is a complete version of the Ordinance, No. 116-00, as adopted by the Board of Supervisors to conform the Rent Ordinance with State Legislative amendments known as the Costa-Hawkins amendments. The legislative digest is followed by the Ordinance as amended, with additions underlined and deletions are in ((double parenthesis)).

These amendments become effective July 2, 2000.

LEGISLATIVE DIGEST

FILE NO. 991315

[Conform to Costa-Hawkins Rental Housing Act; Clarify Rent Ord. Fee Provisions]

AMENDING san francisco administrative code CHAPTER 37 "RESIDENTIAL RENT STABILIZATION AND ARBITRATION ORDINANCE" BY AMENDING §37.2 AND §37.3 In order to IMPLEMENT AND CONFORM TO THE COSTA-HAWKINS RENTAL HOUSING ACT (CALIFORNIA CIVIL CODE §§1954.50, et seq.), BY REMOVING THE RENTAL RATES OF MOST SINGLE-FAMILY HOMES AND CONDOMINIUMS FROM RENT CONTROL AFTER SPECIFIED DATES, AND BY AUTHORIZING rent increases in rent controlled units UPON SPECIFIED SUBLETTING OR ASSIGNMENT. however, SPECIFIED UNITS WITH SERIOUS LONG-TERM HEALTH, SAFETY, FIRE OR BUILDING CODE VIOLATIONS are excluded; UNLESS A TENANT WHO IS PARTY TO A RENT/LEASE AGREEMENT NOTIFIES THE OWNER IN WRITING, AN OWNER"S ACCEPTANCE OF RENT DOES NOT WAIVE THE OWNER"S RIGHT TO

ESTABLISH INITIAL RENT or to ENFORCE A SUBLEASE/ASSIGNMENT PROHIBITION;

TERMINATION OR NONRENEWAL OF AN OWNER"S CONTRACT OR RECORDED AGREEMENT WITH A GOVERNMENT AGENCY THAT PROVIDES RENT LIMITATIONS FOR QUALIFIED TENANT(S) REQUIRES 90 DAYS WRITTEN NOTICE TO THE TENANT(S), AND THE OWNER MAY NOT SET THE INITIAL RENT FOR THE AFFECTED UNIT FOR THREE YEARS EXCEPT AS SPECIFIED. ALSO, amending san francisco administrative code chapter 37A "Residential Rent Stabilization and Arbitration Fee" BY AMENDING §37a.1 TO provide THAT THE FEES REMAIN APPLICABLE TO DEFINED UNITS THAT ARE EXEMPT FROM THE RENT control PROVISIONS but not FROM THE OTHER PROVISIONS OF CHAPTER 37.

Pursuant to the Costa-Hawkins Rental Housing Act ("Costa-Hawkins," California Civil Code §§1954.50 et seq.), most single-family homes and condominiums are no longer subject to the rent control provisions of the San Francisco "Residential Rent Stabilization and Arbitration Ordinance" (Administrative Code Chapter 37).

The California Legislature recently amended Costa-Hawkins through passage of Senate Bill 1098, which has now been signed by the Governor. These amendments will take effect January 1, 2000. ("SB1098," Stats. 1999, Ch. 590, amending Civil Code §1954.53 and adding §1954.535.)

This legislation would conform the Administrative Code to Costa-Hawkins, including the 1999 amendments, and implement pertinent provisions.

Administrative Code Chapter 37 would be amended through Sections 1 and 2 of this legislation. Section 1 would amend the definition of "rental units" in §37.2(r)(5) and (7) to identify and recognize Costa-Hawkins, together with the implementing provisions in §37(d). Section 2 would amend §37.3 to further recognize and implement Costa-Hawkins, as follows:

§37.3(d)(1), which parallels pertinent provisions of Civil Code §1954.52, would provide that an owner may establish the initial and all subsequent rental rates for most single family homes and condominiums, without observing the rent increase limitations otherwise provided under Chapter 37. Exceptions to this rent decontrol include --

Units with a pre-January 1, 1996 tenant, as defined; and,

Units with serious long-term health, safety, fire or building code violations, as defined.

§37.3(d)(2), which parallels pertinent provisions of Civil Code §1954.53, would authorize rent increases in rent controlled units upon specified subletting or assignment, although such increases might not otherwise be permitted under Chapter 37. However, unless a tenant who is party to a rent/lease agreement notifies the owner in writing, an owner"s acceptance of rent alone does not waive the owner"s right to establish initial rent upon sublease/assignment or to enforce a sublease/assignment prohibition. Exceptions to allowable rent increases upon subletting/assignment include:

Units with a pre-January 1, 1996 tenant, as defined; and,

Units with serious long-term health, safety, fire or building code violations, as defined.

§37.3(d)(3), which parallels the SB1098 amendments to Civil Code §1954.53(a)(1)(A) and (B) and the addition of Civil Code §1954.535, would provide that if an owner terminates or does not renew a contract or recorded agreement with a government agency that provides rent limitations for qualified tenants (such as a Section 8-type contract), then such tenants are entitled to 90 days written notice of the contract/agreement termination/nonrenewal. Further, the owner may not then set the initial rent for an affected unit for three years (that is, such a unit is subject to the rent control provisions of Chapter 37), except that in limited situations the rent may be governed by a subsequent government contract/agreement.

Section 3 of this legislation would amend §37A.1 of Administrative Code Chapter 37A "Residential Rent Stabilization and Arbitration Fee," to provide that the fees remain applicable to defined units exempted by Costa-Hawkins from the rent increase limitation provisions (but not from the other provisions) of Chapter 37.

This legislation also includes technical non-substantive amendments to conform renumbering.

[Conform to Costa-Hawkins Rental Housing Act; Clarify Rent Ord. Fee Provisions]

AMENDING san francisco administrative code CHAPTER 37 "RESIDENTIAL RENT STABILIZATION AND ARBITRATION ORDINANCE" BY AMENDING §37.2 AND §37.3 In order to IMPLEMENT AND CONFORM TO THE COSTA-HAWKINS RENTAL HOUSING ACT (CALIFORNIA CIVIL CODE §§1954.50, et seq.), BY REMOVING THE RENTAL RATES OF MOST SINGLE-FAMILY HOMES AND CONDOMINIUMS FROM RENT CONTROL AFTER SPECIFIED DATES, AND BY AUTHORIZING rent increases in rent controlled units UPON SPECIFIED SUBLETTING OR ASSIGNMENT. however, SPECIFIED UNITS WITH SERIOUS LONG-TERM HEALTH, SAFETY, FIRE OR BUILDING CODE VIOLATIONS are excluded; UNLESS A TENANT WHO IS PARTY TO A RENT/LEASE AGREEMENT NOTIFIES THE OWNER IN WRITING, AN OWNER"S ACCEPTANCE OF RENT DOES NOT WAIVE THE OWNER"S RIGHT TO ESTABLISH INITIAL RENT or to ENFORCE A SUBLEASE/ASSIGNMENT PROHIBITION; TERMINATION OR NONRENEWAL OF AN OWNER"S CONTRACT OR RECORDED AGREEMENT WITH A GOVERNMENT AGENCY THAT PROVIDES RENT LIMITATIONS FOR QUALIFIED TENANT(S) REQUIRES 90 DAYS WRITTEN NOTICE TO THE TENANT(S), AND THE OWNER MAY NOT SET THE INITIAL RENT FOR THE AFFECTED UNIT FOR THREE YEARS EXCEPT AS SPECIFIED. ALSO, amending san francisco administrative code chapter 37A "Residential Rent Stabilization and Arbitration Fee" BY AMENDING §37a.1 TO provide THAT THE FEES REMAIN APPLICABLE TO DEFINED UNITS THAT ARE EXEMPT FROM THE RENT control PROVISIONS but not FROM THE OTHER PROVISIONS OF CHAPTER 37.

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 tenant’s 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 tenant’s 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. 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; rights permitted the tenant by agreement, including the right to have a specific number of occupants, whether express or implied, and whether or not the agreement prohibits subletting and/or assignment; 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 landlord’s property tax attributable to a ballot measure approved by the voters between November 1, 1996, and November 30, 1998, the landlord’s 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 tenant’s share of base rent as a fixed percentage of a tenant’s 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 tenant’s 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(d) 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 Rental Housing Act (California Civil Code Sections 1954.50, et seq.) and/or San Francisco Administrative Code Section 37.3(d).

(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.

(v) Utilities. The term "utilities" shall refer to gas and electricity exclusively.

Section 2. Chapter 37 of the San Francisco Administrative Code (Residential Rent Stabilization and Arbitration Ordinance) 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 and as provided by Subsection 37.3(d):

(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 showerheads 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 landlord’s 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 tenant’s occupancy of the property. This passthrough shall not become a part of a tenant’s 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.

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

(A) If the tenant’s share of the base rent is not calculated as a fixed percentage of the tenant’s 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 tenant’s share of the base rent is calculated as a fixed percentage of the tenant’s 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) Costa-Hawkins Rental Housing Act (Civil Code Sections 1954.50, et seq.). Consistent with the Costa-Hawkins Rental Housing Act (California Civil Code Sections 1954.50, et seq.) and regardless of whether otherwise provided under Chapter 37:

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

(A) 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 owner’s 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.

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

(i) 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.

(ii) 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.

(C) An owner’s right to establish subsequent rental rates under Subsection 37.3(d)(1) 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.

(2) Conditions for Establishing the Initial Rental Rate Upon Sublet or Assignment. Except as identified in this Subsection 37.3(d)(2), nothing in this Subsection 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, subject to the following:

(A) 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 Subsection to a lawful sublessee or assignee who did not reside at the dwelling or unit prior to January 1, 1996. However, such a rent increase shall not be permitted while:

(i) The dwelling or unit has been cited in an inspection report by the appropriate governmental agency as containing serious health, safety, fire, or building code violations, as defined by Section 17920.3 of the California Health and Safety Code, excluding any violation caused by a disaster; and,

(ii) The citation was issued at least 60 days prior to the date of the vacancy; and,

(iii) The cited violation had not been abated when the prior tenant vacated and had remained unabated for 60 days or for a longer period of time. However, the 60-day time period may be extended by the appropriate governmental agency that issued the citation.

(B) This Subsection 37.3(d)(2) 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(d)(2)), 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(d)(2) shall be construed to enlarge or diminish an owner"s right to withhold consent to a sublease or assignment.

(C) 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.

(3) Termination or nonrenewal of a contract or recorded agreement with a government agency limiting rent. An owner who terminates or fails to renew a contract or recorded agreement with a governmental agency that provides for a rent limitation to a qualified tenant, shall be subject to the following:

(A) The tenant(s) who were beneficiaries of the contract or recorded agreement shall be given at least 90 days" written notice of the effective date of the termination and shall not be obligated to pay more than the tenant"s portion of the rent, as calculated under that contract or recorded agreement, for 90 days following receipt of the notice of termination or nonrenewal.

(B) The owner shall not be eligible to set an initial rent for three years following the date of the termination or nonrenewal of the contract or agreement.

(C) The rental rate for any new tenancy established during the three-year period in that vacated dwelling or unit shall be at the same rate as the rent under the terminated or nonrenewed contract or recorded agreement, plus any increases authorized under this Chapter 37 after the date of termination/nonrenewal.

(D) The provisions of Subsections 37.3(d)(3)(b) and (c) shall not apply to any new tenancy of 12 months or more duration established after January 1, 2000, pursuant to the owner"s contract or recorded agreement with a governmental agency that provides for a rent limitation to a qualified tenant unless the prior vacancy in that dwelling or unit was pursuant to a nonrenewed or canceled contract or recorded agreement with a governmental agency that provides for a rent limitation to a qualified tenant.

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

(5) This Subsection 37.3(d) 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.).

((d)) (e) 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(d). For purposes of this Chapter, "residential units" are dwelling units and guest rooms as those terms are defined in Sections 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 Code 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.

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.

Minutes from the Housing Study Public Hearing of May 24, 2000 - 5/24/00

MINUTES OF THE PUBLIC HEARING REGARDING THE SAN FRANCISCO HOUSING STUDY

Wednesday, May 24, 2000 at 12:00 noon in

Room 400, City Hall, 1 Carlton B. Goodlett Place

Rent Board Executive Director Joseph P. Grubb, the "Moderator", called the Public Hearing to order at 12:07 p.m. Deputy Director Delene Wolf was also in attendance and took Minutes of the Hearing. Mr. Grubb welcomed the attendees and explained that the purpose of the Public Hearing was to enable the public to comment on the scope and nature of the proposed study. Mr. Grubb informed the public that the comments gathered as a result of this hearing would be included with the Study Protocol, a compilation of recommendations previously submitted by various housing advocates. The scope of the Study shall take into account public comments and the Study Protocol, but shall not be limited to just these recommendations. Rather, the Study will be a neutral, comprehensive fact-based study on the extent and sources of the current housing shortage and its socio-economic implications. After Mr. Grubb’s introductory remarks were concluded, 53 individuals testified as follows below:

Norman Rolfe said that the Study should determine what percentage of individuals’ incomes is going to rent, and how much additional affordable housing would be required in order for that income to rent ratio to revert to no more than 25%. He reminded those in attendance that the proposed living wage of $11.00 per hour results in an income of only $22,800 per year. He said that the Rent Ordinance should not be weakened until there is enough housing. He also questioned how many wealthy individuals have "pied a terres" in the City.

Small property owner Andrew Moore asked that the impact of rent control on small owners be examined; said that there is a difference between an owner of a house with an in-law unit and the owner of a multi-unit apartment building; expressed his belief that rent increases pegged at 60% of CPI are forcing owners out; and asked that San Francisco rent control be compared with that in other cities. He said that politics should not play a role in the Study.

Ernestine Weiss said that: capital improvement passthroughs are exorbitant; a cap should be placed on vacancies; it is left up to tenants to complain regarding corporate rentals; the condo conversion law should be strengthened; and, in Seattle, builders are required to furnish units for seniors.

Small owner Robert Celso complained that he bought a duplex in 1980, but can’t retire from his job as a landlord, because he will "face fines and worse." He believes that the City demonizes he and other small landlords. When his mortgage is paid off, Mr. Celso wants out of the rental business, and plans to Ellis his building, thereby removing an affordable unit.

Tenant Alton Cabral said that he was evicted due to owner move-in 3 years ago. Mr. Cabral believes that a "loophole" in Prop. G allows for eviction if the landlord has elderly relatives. He believes that a year is a long time for a study, since tenants don’t get a year to move out of a building. Mr. Cabral believes there should be more laws to protect seniors.

Small landlord W. E. Winn, Jr. said that it became impossible to function under the restrictive Prop. I regulations, so he ceased renting the 6 rental units in his building. He advised those who "could afford to get out" to do so.

Small landlord Catherine P. Gallagher stated her belief that property is no longer a viable investment because tenants can sublet illegally and thereby become the landlord. She said that she has been trying to move into her building for the last 10 years but that the tenants want $50,000 to move.

Small landlord Naomi Richen said that taxpayer-supported advocacy groups are available to help tenants while the District Attorney will prosecute landlords for honest mistakes. She believes that there is no chance to make a reasonable return and so she will keep her units for guests when they become vacant. Since "price controls cause shortages" she asked that impartial economists conduct the study. She stated that there are 2 ways to destroy a City: "bombs and rent control."

Small owner Patricia Carter said that a 1988 act of kindness on her part turned into a "nightmare." She can’t move in or sell her building, and now lives with a friend. As a retired military person, she can barely make the payments on her property, let alone hire an attorney. Only when the tenant dies or moves will she be able to live in her property. She believes there is no coordination in the way the City deals with problems.

83-year old small owner Leslie Genty said he can’t move in to his building, and is paying "way more rent" than his tenants.

Small landlord Maurine Robinson is a retired teacher with 2 units; she lives in one. It took her 2 years to get a tenant out of her building, and the tenant squatted there for one month after Ms. Robinson thought she was out. She lives alone, and is upset and afraid all the time, as if she lives in a "battle zone."

Maureen Reen told the assembled that they now had to listen to a "small tenant after all these small owners." She has paid rent for 40 years but "has no say." She believes that, "without laws, it’s chaos. It’s a business for the landlord, for the tenant, it’s survival."

Small owner Karen Crommie said that the Study’s emphasis should be on economics. She would like the following questions addressed: how many rental units are being held off the market?; how many tenants have other places of residence?; and how much money are owners losing each month? Ms. Crommie believes that low-income individuals should be subsidized by everyone. She believes the Study should be conducted by an outside, not local, firm to avoid a conflict; and that the Study should draw conclusions. She provided 4 suggestions for research firms.

Marie Pennington said that big owners, not small, are the problem.

Jul Niemier is a small owner who recently purchased a building that has 2 units that are not up to code, but are "completely livable." He believes that code requirements should be relaxed in order to utilize all safe, available housing, and that building codes are driven by unions trying to create work for themselves.

Tenant Susan Vaughan remarked on the fact that there were not a lot of minority individuals in attendance at the hearing – she believes that immigrants are having to leave the City and go where it’s more affordable. She said that rent control in New York and Cambridge should be examined. Ms. Vaughan pays 1/3 of her income towards rent, and said that "if prices go up, tenants are priced out."

Chip Gibbons said that, since everyone else was "trashing each other", he’d "trash the City." Mr. Gibbons believes that failure to enforce the planning code makes fewer units available since many units zoned for residential use are put to other uses. He said that "businesses pay taxes, but bureaucracy needs taxes like a junkie needs heroin." Jobs are being created without any place for the workers to live.

Small landlord Nancy Tucker remarked on the "black market in apartments" because of illegal sublets and said that master tenants engage in rent gouging. Ms. Tucker cited the problem of "pied a terres" and said that conversions to office space are occurring because the rents are so cheap. She asked that the Study conduct a count of empty units, and be economically, and not socio-economically, based. Ms. Tucker finds it appalling that such a Study hasn’t been conducted before and said the research firm must be from outside the Bay Area or they will be "contaminated by local politics."

Tom Ramm, Co-Chair of the Small Property Owners of San Francisco, said that the Study should be conducted by a firm from outside San Francisco with extensive experience with housing and rent control studies and should: concentrate on economic issues, and not social sciences; be free of political influence; differentiate between impacts on large and small owners; look at the effects of rent control on construction and retention of units; and draw conclusions regarding the effects of 20 years of rent control on San Francisco. Mr. Ramm believes that the "disabled and low-income are subsidizing the young, healthy and rich."

Landlord Frank Santiago is "not against subsidized housing", and has had Section 8 tenants since 1937. However, Mr. Santiago believes that Section 8 is not working in San Francisco, since the Housing Authority has not been honest with owners. Mr. Santiago also believes that there are "massive abuses" of Rules and Regulations Sections 6.14 and 6.15 because two of his original tenants left behind a subtenant who was unknown to the owner.

Small owner John Burke posed several questions: why can’t Supervisors who own property vote, but tenants on the Board of Supervisors can?; why are new buildings exempt from rent control, since older buildings don’t have fewer expenses?; and why are rent increases pegged to only 60% of the CPI when no business survives at 60% of inflation? He cited 3 professors who have found that rent control can’t achieve its stated goals and hurts, rather than helps, the economy.

Ted Gullickson of the Tenants’ Union said that he was looking forward to an unbiased study with "lots of good data." He asked that the following be added to the Study protocols: how many tenants have been evicted due to the increase in housing costs?; what is the value differential between an empty and occupied building?; how many tenants have paid off their landlord’s mortgage?; how much price-fixing and profiteering is engaged in by the real estate industry?; since interest rates are low and inflation is nil, what is the rationale for the increase in rents?; and how much are landlords making off of tenants during the housing crisis?

Small landlord Verna Tam said that "not all apartments are expensive", since hers are low. She said that landlords have no rights when tenants break the rental contract if they’ve allowed the condition to continue. She doesn’t believe it’s fair that it costs between $15 – 20,000 to evict a tenant when a store owner has the right to get rid of a "misbehaving customer." She asked if contracts are enforceable in San Francisco.

Tenant David McGuire of Mission Agenda lives in a single room occupancy hotel and said that "tax returns are the best modern American fiction." He believes that the Study will be the "usual charade and hoax" and said that low rents are necessary to retain writers, artists and dancers. Mr. McGuire believes that we’re living in the "current Gold Rush" and that it’s "the end of living, and the beginning of survival."

John Di Donna said that the homeless build their own shanty towns in other countries and that housing is a necessity for all. He believes that landlords should be subsidized for providing a necessary service.

Landlord George Wong believes that rent control is a tool to ruin the landlord/tenant relationship, since it "victimizes the good tenant and benefits the professional tenant." He says he has been the "landlord of the year" 3 years in a row. He is a professional psychic who believes in the elimination of rent control and is available for the Study.

Tenant Bill Lonsdale said that the scope of the Study will have a lot to do with the outcome, and that the process needs to remain open. He suggested that there be a Public Hearing on the scope of work and said that there are not enough funds for a complete study. He thought that the timing is fortunate in that the census is almost completed, and could be a useful source of demographic information.

Small owner Marilyn Cosentino said that things have become adversarial between landlords and tenants. Since tenants are paying so much below market rent, they have no desire to leave. She believes that the single largest difference between large and small owners is that small landlords do not have the benefit of turnover. She asked that pied a terres be looked at and requested a "non-local economist" who will draw conclusions from the data -- $175,000 is not enough.

Chooi Eng Grosso used to be a tenant, and is now a homeowner. She said that inequities result from a "preponderance of tenants in the voting pool." She thinks that home ownership opportunities should be increased and that the "lid should be lifted" from TIC’s and condos.

Miguel Wooding of the Eviction Defense Collaborative and the Tenants’ Union said that an economic analysis with no look at social issues IS biased. He asked that the following be examined: tax benefits to landlords; profiles of

owner-occupants and landlords in terms of income, whether they own other buildings, and whether they live somewhere else.

Tenant Anastasia Yovanopoulos rented a $300 flat in Noe Valley in 1978, which now rents for $1100. She asked that individual units be looked at to see how much rents have gone up and where. She wants socioeconomic trends to be studied and asked that the disabled and those on fixed incomes not be forgotten. She said that "rats and rodents are not roommates."

Ron Saturno is involved with the Neighborhood Watch Program in Hayes Valley, and said that everyone is right from their own perspective. He believes that rent control doesn’t work for most, since tenants can’t find an affordable place to live; and small, elderly owners struggle with restrictions to subsidize affluent tenants. He believes that the law could be re-written and made more fair; that units are kept vacant because landlords don’t have enough money to renovate; and that it is easier to use a unit for storage or as an office, not have to deal with a problem tenant, and receive a tax break. Mr. Saturno said that the effort involved in filing petitions at the Rent Board isn’t worth it.

Tenant Roger Rudd thinks that the City ought to crack down on illegal in-law units that do not have operative heat, low ceilings, and exposed heating ducts. Mr. Rudd was concerned about enforcing the implied warranty of habitability. He suggested that housing be built in the Presidio with preference going to San Francisco residents. Mr. Rudd was concerned about $10 – 20 credit checks, and what landlords were going to do with tenants’ personal credit information.

Prop. I landlord Peter Holden said that it would be hard to act on all these suggestions. He would like to see a breakdown of the housing inventory and rents paid, as well as a social census of the tenant population and income. He said that he wouldn’t have bought his building if Prop. I had already been in existence at the time.

Nancy Noonan is a tenant in a large complex. She believes that when one buys property, it is incumbent upon you to research existing laws and decide if you want to "take this on." She feels that an outsider would need too long a time to "understand San Francisco" and that, if revoked, rent control would just be voted back in.

Darran Cannady rented for almost 20 years before becoming a small owner about 5 years ago. He has a good relationship with his tenant and feels there should be funds to teach people how to be good landlords. He believes the amount of money dedicated to the Study should be increased. Mr. Cannady is concerned about "dot commers" and "supposed live-work."

Brook Turner, Executive Director of the Coalition for Better Housing, supports the Study. Mr. Turner believes that the housing crisis is the result of inadequate supply. He asked that the scope of the problem be examined, as well as what works, and what doesn’t. He said that the landlord and tenant communities have contributed to the Protocol Document, and asked that it be paid close attention to. He thanked Supervisor Brown and Moderator Joe Grubb.

Landlord Richard Hanlin said that 5 years ago he rented a one-bedroom apartment for $1200 per month. His tenant works in Silicone Valley and is now substantially wealthier than he is. Mr. Hanlin does not believe that rent control was designed with this person in mind.

Small landlord Carole Bayer said that a non-resident tenant of hers moved to Los Angeles in 1982, and sublets to roommates, one of whom runs a small business out of the unit. She does not think it fair that a Master Tenant can charge their roommates the total rent in order to get a "free ride." She asked how many roommates a tenant can have in 1 year, and said that a tenant should have to make the landlord aware of a change in roommates – it shouldn’t be the landlord’s burden. She does not think it’s fair that a landlord’s relatives can’t move into a building unless the landlord also lives there.

Michele Balk appeared on behalf of Randall Oileu, her next-door neighbor. She asked why there is no provision for owner move-in eviction for catastrophically ill owners, when similarly situated tenants are protected. She said that Mr. Oileu’s tenant is making money off the landlord’s property, when the landlord is being financially burdened by the cost of cancer treatments.

Tony Hestor from Mission Agenda said that he was speaking on behalf of poor people, who are rapidly being displaced by greedy out-of-towners. He remarked on a 30-day notice to vacate being "nothing", and asked if it was desirable for San Francisco to turn into a "3rd World City", consisting only of the very rich and very poor.

Russ Charpentier asked that the situation of low-income property owners with wealthy tenants be considered along with the reverse scenario. He expressed his belief that those owners will leave the City as well, which is not of benefit to tenants. He expressed his preference for an outside consultant and wished the Moderator "good luck."

Small landlord Linda Dunn recommended that the Study be economically based and data driven, since she believes that current policy is based on inflammatory rhetoric rather than hard data. She stated that there is much evidence that rent control works to the detriment of the housing stock. She believes that diversity and affordable housing should be maintained but feels that this is a City-wide problem, and not one just to be shouldered by landlords of pre-1979 buildings.

Jake McGoldrick asked that a comprehensive body of data be collected as more than an "academic exercise" but, rather, to lead to solutions. He believes that the housing development side of the issue, including the financial and construction industries, need to be analyzed. He wants to look at issues of: density; zoning allowances; sources of available funds; how much money is diverted from housing development; regional cooperation and revenue-sharing instead of competition between counties; and the jobs to housing ratio.

Ms. Detting, a small landlord, complained about a tenant who she considers to be "the devil himself." She said that she couldn’t go into her own building for over 12 years, and that she tried to Ellis, but it would be considered retaliatory. She feels that rent control is the "most evil law", since landlords cannot get out of their relationship with their tenants, whereas "if you’re married, you can get a divorce."

John Bardis of the Citizen Action Committee said that there is nothing more critical than the housing crisis, but that $175,000 "won’t do it justice." He thinks it would be wise to continue this hearing; put the RFP out for Public Hearing to ensure it’s what the public expects; and/or send 3 alternative RFP’s with different scopes back to the Board of Supervisors – otherwise, people will be "more frustrated."

Michelle Horneff of the Professional Property Management Association had the following suggestions: that an outside (national) company conduct the Study; that a city without rent control be used as a control group; that the issue of principal place of residence for tenants be looked at; and that the Study determine whether rent control is doing what it’s supposed to be doing.

Janan New of the San Francisco Apartment Association explained that their organization had had input into the Protocol Document. She therefore thanked Supervisor Brown and his staff for their leadership; Supervisor Bierman and her staff for bringing the tenant community into the process; members of the public who "filled in the holes"; and the Executive and Deputy Directors of the Rent Board for their patience.

Homeowner Geoff Mikone said that the issue of how many people can live in San Francisco is the equivalent of an irresistible force meeting an immovable object: not everyone who wants to can live here.

Louise Vasquez said that small landlords such as herself are a "dying breed", and that new owners won’t tolerate all these rules. Since Ms. Vasquez feels "abused, harassed and discriminated against", she questions the utility of a study. She believes that more businesses and condominiums are inevitable; says that her tenants are making "six figures"; and feels the solution is to just "get rid of the Rent Board."

Carol Bayer spoke again, stating that for rents that are considerably less than "market", there should be some relief.

Tenant Jean Lynch said that she has been a tenant for 20 years. She remarked that she keeps hearing the word "subsidized" from the landlords, but that there is a 5-7 year waiting list for public housing. She believes that there are many individuals living in public housing who don’t belong there, while veterans and families are on the streets.

The Public Hearing was concluded at 2:32 p.m. At that time, Mr. Grubb thanked everyone who spoke, and informed the public that the RFP/RFQ will probably go out some time in June. Hopefully, the firm that will conduct the Study will be selected and the contract awarded in August. He will keep everyone informed as to progress and developments in the Study on the web site.

Rule 6.14 Adopted By the Commission, April 26, 2000