MINUTES OF THE SPECIAL MEETING OF

THE SAN FRANCISCO RESIDENTIAL RENT

STABILIZATION & ARBITRATION BOARD,

 

Tuesday, August 21, 2001 at 6:00 p.m. at

City Hall, Room 406

 

 

 

            I.            Call to Order

 

            Commissioner Becker called the meeting to order at 6:11 p.m.

 

            II.            Roll Call

 

                                                                        Commissioners Present:            Aung; Becker; Gruber; Hobson; Lightner; Mosser.

                                                                        Commissioners not Present:            Marshall; Wasserman.

                                                                        Staff Present:            Grubb; Wolf.

 

      Commissioner Justman appeared on the record at 6:27 p.m.; Commissioner Murphy arrived at 6:33 p.m.; and Commissioner Hobson went off the record at 7:47 p.m.

 

            III.            Approval of the Minutes

 

                                    MSC:            To approve the Minutes of August 7, 2001.

                                                (Gruber/Aung:  4-0)

IV.            Public Hearing

 

Proposed New Section 6.15C(3) Requiring that a Master Tenant Pay a Pro-Rata Share of the Rent

 

      A Public Hearing commenced at 6:13 on proposed Rules and Regulations Section 6.15C(3).  Eleven individuals spoke as follows below:

 

            1.  Master Tenant Michael Quirk spoke against the proposed regulation, explaining that:  he has an unequal relationship with his roommates, in that he is responsible for paying the rent, including eviction; he should be compensated for his additional responsibilities; and he believes that this proposal will drive rooms off the market.

 

            2.  Brook Turner of the Coalition for Better Housing said that his organization supports the proposal, because it is “poor public policy to allow Master Tenants to take advantage of other tenants.”

 

            3.  Master Tenant Emily Shaver expressed her disfavor, saying that she could lose her home if she has to cover someone else’s rent; and that she is not a property owner, and shouldn’t be treated as such.

 

            4.  Janan New, Director of the S.F. Apartment Association, spoke in support of “closing a loophole that allows unsophisticated tenants to be taken advantage of.”  She asked that the Commission “stop the profiteering.”

 

            5.  Landlord Andrew Long spoke in support, since he has had Master Tenants “gouge” new roommates.  Mr. Long said that it is unfair for some folks to live for next to nothing; that such Master Tenants are “greedy little middlemen”; and suggested that they collect deposits to cover expenses, just like owners do.

 

            6.  Michelle Horneff, President of the Professional Property Managers Association, spoke in support, saying:  “Everyone should pay their fair share, and no more than their fair share.”

 

            7.  Tommi Avicolli-Mecca of the Housing Rights Committee expressed “mixed feelings.”  While he agreed that subtenants shouldn’t be burdened with the whole rent, he feared that this proposal will just be “another way for feuding tenants to go at each other.”  Mr. Avicolli-Mecca suggested that subtenants’ share of the rent couldn’t be more than the Master Tenant’s, rather than doing a square footage allocation; and said that the regulation should not have retroactive effect.

 

            8.  Master Tenant Lewis Bording said that “government should stay out”; and that rents are coming down due to market conditions.  Mr. Bording said that this proposal will mean that Master Tenants will no longer choose to rent out rooms, and asked what recourse he had when a subtenant left, owing in excess of $1,000.00

 

            9.  Small property owner Patricia Carter said that Master Tenants have the same problems as small property owners, and that the best thing would be to “get rid of rent control.”

 

            10. Cindy Arnold of Tenants for Home Ownership said that she knows Master Tenants who are living for free, which is unfair, since property owners can’t charge whatever they want.

 

            11. Master Tenant Emily Shaver expressed her belief that it is sufficient that Master Tenants are required to disclose the amount of rent they pay to the landlord, and “they can decide if they want to live there or not.”

 

            After the conclusion of the Public Hearing at 6:35 p.m., the Commissioners engaged in discussion.  Commissioner Lightner said that the arguments of the Master Tenants are all things that landlords deal with all the time; that the proposed regulation is “flexible for a reason; and allows Administrative Law Judges to take any extra burdens into account.  Commissioner Hobson expressed his support for Commissioner Lightner’s “good work” and said there will only be an adverse effect on “bad relationships.”  Commissioners Aung and Becker expressed their belief that the proposal should be prospective only, and not interfere with existing contracts.  Commissioner Murphy said that the City Attorney had informed the Board that they could enact regulations with retroactive effect in the case of Proposition H, and by only allowing prospective application, the Board would be saying “it’s all right if you got in on time.”  Commissioner Lightner reminded the Board that Proposition I had retroactive rent rollback provisions, and the Board briefly engaged in a discussion of vested rights.  Commissioner Justman expressed his view that it is “not consistent with rent control to allow this to go on”, in that the Board should be encouraging the provision of affordable housing, and not providing an “economic windfall” to a non-owner.  He said that this is “the right thing to do.”

 

The Board then agreed on certain minor amendments introduced by Commissioners Lightner and Becker.   Since there was insufficient support for Commissioner Becker’s request for a 6-month period before the rents have to be adjusted, the Board voted as follows below:

 

                                    MSC: To adopt proposed new Rules and Regulations Section 6.15C(3), with amendments.  (Lightner/Gruber:  3-2; Aung, Becker dissenting)

 

The new regulation reads as follows:

 

Section 6.15C  Master Tenants

 

(3)  Partial Sublets.  In the event a Master Tenant does not sublease the entire rental unit, as anticipated in Section 37.3 (c), then the Master Tenant may charge the subtenant(s) no more than the subtenant(s) proportional share of the total current rent paid to the landlord by the Master Tenant for the housing and housing services to which the subtenant is entitled under the sub-lease. 

 

(a)  The allowable proportional share of total rent may be calculated based upon the square footage shared with and/or occupied exclusively by the subtenant; or an amount substantially proportional to the space occupied by and/or shared with the subtenant (e.g. three persons splitting the entire rent in thirds) or any other method that allocates the rent such that the subtenant pays no more to the Master Tenant than the Master Tenant pays to the landlord for the housing and housing services to which the subtenant is entitled under the sublease. In establishing the proper initial base rent, additional housing services (such as utilities) provided by, or any special obligations of, the Master Tenant, or evidence of the relative amenities or value of rooms, may be considered by the parties or the Rent Board when deemed appropriate.  Any methodology that shifts the rental burden such that the subtenant(s) pays substantially more than their square footage portion, or substantially more than the proportional share of the total rent paid to the landlord, shall be rebuttably presumed to be in excess of the lawful limitation. 

 

(b)  The Master Tenant or subtenant(s) may petition the Board for an adjustment of the initial rent of the subtenant.  

 

(c)  If a portion of a capital improvement passthrough or a utility increase is allocated to a subtenant, it must be separately identified and not included in the subtenant’s base rent.  Such amounts are subject to the rules herein and must be discontinued or recalculated pursuant to the applicable rules.  Any amount that is improperly calculated or not properly discontinued shall be disallowed.       

 

(d)  In the event of any dispute regarding any allowable increase, or allocation, or any rental amount paid that is not rent, the subtenant may file a claim of unlawful rent increase to have the matter resolved between the subtenant and Master Tenant, as if the Master Tenant were the owner of the building.  Disallowed or improper increases shall be null and void.  

 

(e)  For any sublease entered into on or before August 22, 2001, where the sublease rent was not calculated as provided for herein, the Master Tenant shall have six months from the effective date of this regulation to notice an adjusted proper rent and refund any overpayments paid after the effective date of this section.  No petitions alleging overpayments may be filed during this time.

 

(f)    For any sublease entered into after August 22, 2001, where the sublease rent was not calculated as provided for herein, the portion of the subtenant’s rent that is in excess of the amount allowed pursuant to this Section 6.15C(3) shall be null and void.

 

            V.            Consideration of Appeals

 

            A.            91A Farallones                                    AL010122

 

      The tenant’s petition alleging decreased housing services and unlawful rent increases was granted and the landlord was found liable to the tenant in the amount of $18.55 due to rent overpayments and $4,875.00 because of leaks and water damage in the unit.  The landlord failed to appear at the hearing.  On appeal, the landlord claims not to have received notice of the hearing, and attaches the requisite Declaration of Non-Receipt of Notice of Hearing.

 

                                    MSC: To accept the appeal and remand the case for a new hearing.  (Lightner/Gruber:  5-0)

 

            B.            1100 Gough St. 15-F                                    AT010123

 

      The tenants’ petition alleging decreased housing services was dismissed due to their failure to appear at the properly noticed hearing.  On appeal, the tenants explain that they believed that their request for arbitration rather than mediation would result in another hearing date being set, and that this is why they failed to appear on the date the mediation had been scheduled.

 

                                    MSC: To accept the appeal and remand the case for a new hearing.  (Lightner/Aung:  5-0)

 

            C.            127 Naples St.                                    AT010124

 

      The tenant’s petition alleging decreased housing services, the landlord’s failure to repair and requesting a determination as to the proper base rent was dismissed due to his failure to appear at the properly noticed hearing.  On appeal, the tenant explains that problems with traffic and public transportation resulted in a trip that should take a half an hour taking more than an hour.

 

                                    MSC: To accept the appeal and remand the case for a new hearing.  (Gruber/Aung:  5-0)

 

            D.            725 Geary #20                                    AL010125

 

      The tenant’s petition alleging decreased housing services was granted and the landlord was found liable to the tenant in the amount of $300.00 due to the lack of a working heater in the unit.  The landlord, who failed to appear at the hearing, appeals on the grounds that the Administrative Law Judge had “one-sided wrongful information”, including the wrong base rent amount.

 

                                    MSC: To accept the appeal and remand the case to the Administrative Law Judge for a hearing only to determine the proper base rent and whether the tenant has already been compensated for the lack of heat in the unit.  If so, any such sums should be offset against the amount determined to be owing from the landlord to the tenant.  (Gruber/Aung:  5-0)

     

            E.            2238 Hyde St. #15                                    AT010126

 

      The landlord filed a petition requesting a determination of the rent for a non-comparable unit pursuant to Ordinance Section 37.9(a)(8)(iv).  The Administrative Law Judge found that the subject unit is not comparable to the replacement unit being offered to the tenant, and that the lawful base rent for the replacement unit is in the amount of $2,848.75.  The tenant appeals, claiming that the Administrative Law Judge’s reliance on the landlord’s “subjective preferences” creates an “insurmountable burden” for the tenant; and that the physical layouts of the two units are not so different as to make them non-comparable.

 

                                    MSC: To deny the appeal.  (Gruber/Lightner:  5-0)

 

            F.  1959 Oak St. #2                                    AT010127

 

      The landlords’ petition for rent increases based on increased operating expenses was granted, allowing for 7% base rent increases to the tenants in six units.  However, since code violations were proved to be in existence at the building at the time of the hearing, and notices of rent increase had not been served on the tenants in five of the units, the rent increases to those units were ordered deferred until such time as the code violations are abated.  Since notice of the rent increase was issued to the tenants in unit #2 effective September 1, 1999, prior to the issuance of the Notice of Violation, no defense to the increase was found to exist as to the tenants in that unit.  The tenants in unit #2 appeal the decision, asserting that it is inequitable that they also have experienced the landlords’ failure to make necessary repairs, but they are being singled out for payment of the operating and maintenance expense increase.

 

                                    MSC: To recuse Commissioner Lightner from consideration of this appeal.  (Becker/Lightner:  4-0)

 

                                    MSC: To recuse Commissioner Murphy from consideration of this appeal.  (Becker/Gruber:  4-0)

 

                                    MSC: To accept the appeal and remand the case to the Administrative Law Judge for a hearing to determine whether code violations existed at the premises at the time the rent increase notice to the tenants in unit #2 was to go into effect; if so, deferral of the rent increase is warranted until such time as the conditions are abated.  (Becker/Gruber:  4-0)

 

            VI.            Communications

 

      The Commissioners received two letters regarding proposed new Rules Section 6.15C(3).

 

            VII.            Remarks from the Public

 

            A.  Tenant Ruben Tensel of 91A Farallones (AL010122) told the Board that he has had massive leaks throughout the house since 1998, but no repairs had been made until recently.  The landlord claimed not to have received notice of the hearing, but Mr. Tensel has evidence that she has received other mail at that address.  He believes that he should not have to live with sub-standard conditions.

 

            B.  Tenant Scott Magness of 1959 Oak St. #2 (AT010127) asked for clarification regarding the status of his appeal.

 

            VIII.            Calendar Items

 

            August 28, 2001 - NO MEETING

 

            September 4, 2001

            10 appeal considerations

 

IX.            Adjournment

 

      Commissioner Becker adjourned the meeting at 8:19 p.m.