Commissioner Marshall appeared on the record at
6:13 p.m.; Commissioner Justman arrived at the meeting at 6:21 p.m.; and
Commissioners Mosser and Murphy appeared at 6:26 p.m.
III. Approval of the Minutes
IV. Remarks from the Public
The following individuals addressed the Board regarding
implementation issues associated with Proposition H:
1. Nancy Tucker, the landlord involved in the case
concerning 154-156 Tiffany Ave. (AL2K0219), asked the Board whether the
Stay that had been issued on Proposition H meant that her tenants must pay
the approved capital improvement passthrough.
2. Cynthia Arnold, a tenant who voted no on Proposition
H, expressed her concerns regarding the "dilapidated" state of
the Victorian that she lives in, and the possible daunting effect of the
Proposition on her landlord’s willingness to effectuate capital improvements.
3. George Buffington, a tenant facing a capital
improvement passthrough, stated his belief that owners have to keep records
for purposes of taxes and sale, and therefore Proposition H merely provides
them an opportunity to obtain a fair return.
V. Consideration of Appeals
A. 2195 Sacramento #301, 303 AT2K0202
The landlords’ petition for certification of the costs
of seismic retrofit of the building and a new roof, in addition to 7% base
rent increases based on increased operating expenses, was approved for 13
of 16 units. Two tenants, who reside jointly in two units in the building,
appeal on the grounds that: an amended Operating and Maintenance Expense schedule
was not provided to the tenants prior to the hearing, which resulted in the
tenants having been denied their due process rights; and the Board should
exercise their discretion to waive the Regulations and allow for a longer
and more reasonable amortization period for the seismic retrofit.
Since the tenants had filed a substantially amended
appeal one week prior to the meeting on December 5th, it was the consensus
of the Board to grant the landlord’s request for a continuance to this evening’s
meeting.
MSC: To recuse Commissioner Becker from consideration
of this appeal. (Marshall/Lightner: 5-0)
MSF: To deny the appeal. (Gruber/Lightner: 2-3;
Hobson, Justman, Marshall dissenting)
MSC: To accept the appeal and remand the case
to the Administrative Law Judge to allow the tenants to submit written
objections to the amended Operating and Maintenance Expense Petition;
a hearing will be held only if necessary. (Marshall/Hobson: 3-2; Gruber,
Lightner dissenting)
B. 523 - 29th Ave. AL2K0220
The tenant’s petition alleging unlawful rent increase
was granted and the landlord was found liable to the tenant in the amount
of $4,254.12 due to a mis-calculation of allowable banking. On appeal, the
landlord argues that: the rent increase in effect during the period 1992-1993
was confusing, due to the rate having changed; the tenant paid the increase
without complaint for two years; the tenant had received no rent increase
for seven years prior to the subject increase having been imposed; the improper
increase was due to an arithmetic error; and the tenant has been given leeway
when she was late in making rent payments.
After discussion, it was the consensus of the Board
to continue this case in order for staff to identify the nature of the landlord’s
mistake in calculating the allowable banking.
C. 1700 Page St. #8 AT2K0213
The tenant’s petition alleging unlawful rent increases
was denied. On appeal, the tenant claimed that the Administrative Law Judge
incorrectly stated in the Decision that the complete rent history for the
unit is not available, and requested a determination of the lawful rent. The
tenant’s appeal was accepted and the case was remanded in order to check the
rent history. In the Decision on Remand, the ALJ again determined that the
tenant’s rent is within limitations. On further appeal, the tenant submits
a copy of a Rent Board Decision issued in 1991, showing her complete rent
history.
D. 2310 Powell #305 AT2K0215
The landlord’s petition for certification of the cost
of a new roof to 168 units was granted, resulting in a monthly passthrough
in the amount of $28.69. Two tenants in one unit appeal the decision on the
grounds of financial hardship.
MSC: Pursuant to the agreement of the landlord,
to defer imposition of the approved capital improvement passthrough
for one year. If the tenants wish an extension of the deferral beyond
January 1, 2002, they must file another Tenant Hardship Application
with the Rent Board by no later than December 1, 2001.
E. 619 Clayton St. AL2K0216
The tenant’s petition alleging unlawful rent increases
was granted, and the landlord was found liable to the tenant in the amount
of $2,925.00. On appeal, the landlord asserts that the rent overpayment calculation
should have credited the allowable increase amounts, and that she should not
have to bear a cumulative penalty.
F. 1958 Golden Gate Ave., Apt. 3 AT2K0214
The tenant’s appeal was filed 26 days late because
the tenant was out of town and preoccupied defending an eviction lawsuit upon
his return.
The tenant’s petition alleging decreased housing services
and the landlord’s failure to repair was dismissed due to his failure to appear
at the properly noticed hearing. On appeal, the tenant claims not to have
received the Notice of Hearing and provides proof of his having been out of
town at the time the hearing was scheduled.
G. 2135 Sacramento St. AL2K0217
The landlord’s petition for certification of capital
improvement costs to 27 of 36 units was granted, in part. The landlord appeals
as to the disallowance of the $7,486.25 cost of new elevator hoist cables,
claiming that: the work meets the definition of a capital improvement; the
cables will not need to replaced again for 40 to 50 more years; and prolonging
the life of the elevator prolongs the useful life of the building.
H. 3018 Mission St. AL2K0218
The landlord’s petition for certification of capital
improvement costs to 26 of 30 units was granted, in part. The landlord appeals
as to the disallowance of several items of work done to the building’s elevator
systems, maintaining that: these items are not repairs but constitute capital
improvements; work which prolongs the useful life of the property is just
as much capital improvement as work that adapts the property to new uses;
work that only needs to be done every ten years or more cannot be considered
routine repair and maintenance; and the Decision flies in the face of previous
Board decisions concerning elevator work.
I. 899 Pine St. #110 AT2K0212
The tenant’s appeal was filed almost six weeks late
because the tenant incorrectly believed that he had filed the appeal at an
earlier date.
The landlord’s petition for certification of capital
improvement costs to 55 of 200 units was granted, in part. One tenant appeals
the decision on the grounds of financial hardship.
J. 154-156 Tiffany Ave. AL2K0219
The landlords’ petition for certification of the costs
of painting the exterior of the building was granted except that the costs
for extraordinary decoration were deducted as constituting a "luxury"
item. On appeal, the landlords assert that the costs of the paint job should
be allocated based on the size of the units, rather than divided equally,
because the tenants’ unit is substantially larger than the one the landlords
reside in; the tenants therefore derive greater benefit from the work; and
there are four occupants in the tenants’ unit, and only two in the landlords’
unit.
MSF: To deny the appeal. (Marshall/Becker: 2-3;
Gruber, Lightner, Justman dissenting)
MSC: To accept the appeal and remand the case
to allocate the cost of the exterior painting based on the size of the
units; a hearing will be held only if necessary. (Lightner/Gruber: 3-2;
Becker, Marshall dissenting)
K. 795 Geary St. #404 AT2K0221
The landlord’s petition for certification of the cost
of a new roof to 27 of 48 units was granted, in part. Two tenants in one unit
appeal the decision on the grounds of financial hardship, also objecting to
all costs relating to the "ballroom", new lobby furniture, iron
security grates, fencing, roof door, concrete driveway, electrical submetering,
and claiming that the carpet pad in the unit deteriorated as a result of the
work.
MSC: To accept the appeal and remand the case
to ascertain whether any of the costs associated with the ballroom are
being passed through to these tenants; a hearing will be held only if
necessary. (Marshall/Becker: 5-0)
MSC: To deny the appeal based on hardship.
VI. Communications
In addition to correspondence concerning cases on
the calendar, the Commissioners received a new staff roster.
VII. Old Business
President Wasserman informed the public that a Preliminary
Injunction staying the implementation of Prop. H without prejudice to the
adoption of regulations by the Rent Board has been issued by Judge Robertson
in the case of Quigg v. Rent Board (Superior Court Case No. 316928).
After the Rent Board enacts Regulations, or takes other interim action, the
Judge will decide whether to lift the Stay. Since the Court provided little
in the way of guidance, President Wasserman said she is not sure how to "fix"
the Proposition. She invited everyone to become part of the process, and asked
for constructive suggestions with supporting argument. These can be furnished
in writing and/or in person at the Board’s Special Meeting on Proposition
H which will be held on January 9th at City Hall, in Room 263.
The Commissioners then briefly discussed how to go
about enacting regulations. Commissioner Becker said he thought that the Deputy
City Attorney who is defending the lawsuit should proceed with input from
staff. Commissioners Gruber and Lightner thought that the Board needed to
provide guidance. Commissioner Mosser expressed a desire to have economists
brought in to educate the Commissioners about the concept of fair return.
Commissioner Marshall stated her belief that the Board would never agree on
what constitutes a fair return, because it is a political concept. Commissioner
Hobson said that it should not appear that the Board is delaying taking action
on this. Commissioner Murphy said that he believes it "grossly unfair"
for Ted Gullickson of the Tenants’ Union to accuse the Board of "foot-dragging"
when the Proposition was just adjudicated prior to the holidays.
IV. Remarks from the Public (cont.)
4. Rebecca Graf of the Housing Rights Committee
said that the proponents of Prop. H are also frustrated, and will be submitting
suggestions in writing. She suggested that the Board be flexible about the
base year and allow landlords to file for hardship increases if they are
operating at a loss. She said that the Rent Board should hold off on certifying
any more capital improvement passthroughs until this is resolved.
5. Tenant Michael Barrett suggested that the Rent
Board waive their attorney-client privilege, and said that the Judge shouldn’t
be "making the call" since fair return is a subjective concept.
6. Ann Doherty of the Marina Cove Tenants’ Association
told the Board that the tenants in her building are subject to a 6.4 million
dollar passthrough and need protection. She said that there should be a
stay on both sides and the Board should hold off on any more hearings.
7. Tenant Carolyn Blair, who lives at the Northpoint
Apartments, said that rents have doubled over the last five years and that
it is obvious that landlords are making a fair return.
8. Tenant Arnold Cohn said that the Board should
consult with the attorneys on staff, who have expertise in this area. He
suggested that applying the 1-year T-bill rate to the gross rents of the
building should yield a fair return.
9. Tenant Lorraine Calcagni of 1360 Lombard Street
told the Board that it is frightening to be faced with the passthrough of
almost 10 million dollars in costs; almost $100,000 per tenant. Ms. Calcagni
said that she owes thousands of dollars in retroactive increases.
10. Landlord Karen Crommie reminded the Board that
capital improvement passthroughs are subject to a 10% yearly limitation
and asked how retroactivity could be constitutional.
11. Tenant Vance Herring of 1550 Bay Street (Marina
Cove) said that landlords are making a huge profit, and asked about retroactivity.
12. Landlord Nancy Tucker said that, while the proponents
of Prop. H targeted big landlords, no exceptions were written in for small
landlords.
The Board then held a brief discussion with Senior
Administrative Law Judge Sandy Gartzman confirming that, at present, capital
improvement petitions are being processed as they were prior to the passage
of Proposition H. An informational paragraph is being added to all capital
improvement decisions. This issue will be discussed further at next week’s
meeting on Prop. H.
VIII. Calendar Items
January 9, 2001 - FAIR RETURN/IMPLEMENTATION
OF PROP. H
City Hall,
Board of Supervisors Committee Room (Room 263)
January 16, 2001
11 appeal considerations (1 cont. from 12/5/00;
1 cont. from 1/2/01)
Old Business: Fair Return/Implementation of Prop.
H
IX. Adjournment
President Wasserman adjourned the meeting at 8:26
p.m.