May 16, 2000

MINUTES OF THE REGULAR MEETING OF

THE SAN FRANCISCO RESIDENTIAL RENT

STABILIZATION & ARBITRATION BOARD,

Tuesday, May 16, 2000 at 6:00 p.m. at

25 Van Ness Avenue, Suite 70, Lower Level

I. Call to Order

President Wasserman called the meeting to order at 6:07 p.m.

II. Roll Call

Commissioners Present: Becker; Bierly; Gruber; Hobson; Marshall; Murphy; Wasserman.

Commissioners not Present: Justman; Mosser.

Staff Present: Grubb; Wolf.

Commissioner Lightner appeared on the record at 6:16 p.m.

III. Approval of the Minutes

MSC:To approve the Minutes of May 2, 2000.

(Gruber/Murphy: 5-0)

IV. Remarks from the Public

A. Landlord Maya Zusman, involved in the case at 729 Banks Street (AL2K0071), informed the Board that she didn’t submit evidence in support of her appeal because she thought that there would be a hearing, and asked that consideration of her appeal be continued so that she could do so.

B. Robert Pender of the Tenants’ Network informed the Commissioners that two petitions are being circulated by the tenant community for the November ballot: one having to do with extending the 200 limit on condominiums indefinitely; and one limiting capital improvement passthroughs. The Senior Action Network will be traveling to Sacramento on May 24th to discuss possible amendments to the Ellis Act with the four Bay Area legislators.

C. Vesta Kirby, appellant in the case at 1616 Taylor #7 (AT2K0038), told the Board that she went back to school in order to increase her income, since her hardship actually began in 1990; and that the prior operating expense increase combined with the current capital improvement passthrough have resulted in a $130 per month increase in her rent over an 8-month period.

D. Christian Lackner, tenant at 2526 Van Ness #11 (AT2K0066), inquired as to whether the Commissioners had received his response to the ALJ’s Memorandum concerning his appeal. Mr. Lackner informed the Board that he is prepared to take this case to the Superior Court because he will no longer be able to store items in the same way that he used to, while paying the same amount for the service.

E. David Golden, attorney for the tenant at 729 Banks Street (AL2K0071), told the Board that there is no dispute that a housing service previously provided to the tenant had been reduced and that she is therefore entitled to a rent reduction.

V. Consideration of Appeals

A. 1369 Hyde St. #52 AT2K0024

(cont. from 5/2/00)

The landlord’s petition for certification of capital improvement costs to 70 of 84 units was granted, in part. A tenant petition alleging decreased housing services due to the landlord’s refusal to give consent to a replacement roommate was denied. Five tenants appealed on the grounds of financial hardship. Nineteen tenants jointly appealed on various other grounds. The hardship appeal of the tenant in unit #52 was continued in order for the tenant to respond to an allegation made by the landlord’s attorney that the tenant has a roommate and, if so, to obtain a Hardship Application from that individual.

MSC: To recuse Commissioner Lightner from consideration of this appeal. (Lightner/Becker: 5-0)

MSC: To accept the appeal and remand the case for a hearing on the tenant’s claim of financial hardship. (Murphy/Marshall: 5-0)

B. 1311 Chesnut St. AL2K0037

The landlord’s petition for rent increases based on increased operating expenses was granted. The portion of the petition requesting certification of capital improvement costs was denied because the landlord failed to prove payment on a Promissory Note payable to a company owned by her father; neither did she provide invoices documenting the quantity or types of materials purchased. On appeal, the landlord claims that: the Administrative Law Judge failed to indicate that the documentation submitted was inadequate, and did not request copies of invoices in addition to canceled checks; and, since the time of the hearing, the two outstanding payments on the Promissory Note have been made. The landlord asserts that, even if that had not been the case, a valid Promissory Note constitutes "constructive payment".

MSC: To accept the appeal and remand the case for a hearing to consider proof of payments made on the Promissory Note since the time of the hearing and to explore whether such payments can be expected to continue; and to allow the landlord to provide invoices documenting the quantity and types of materials purchased. (Marshall/Lightner: 5-0)

C. 210 Diamond St. AT2K0036

The tenant’s appeal was filed one day late because the tenant is a full-time student who was busy with exams, and the Decision was addressed to the wrong zip code.

MSC: To find good cause for the late filing of the appeal. (Marshall/Becker: 5-0)

The landlords’ petition for certification of capital improvement costs and rent increases based on increased operating expenses was granted, in part. The tenant appeals the certification of painting the exterior of the building, which he claims was a luxury item done solely to increase the sales price of a unit in the building; and that the loan documentation from the prior owner is inadequate to justify an increase based on debt service.

MSC: To recuse Commissioner Hobson from consideration of this appeal. (Becker/Marshall: 5-0)

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

D. 1616 Taylor #7 AT2K0038

The landlord’s petition for certification of capital improvement costs was granted, in part. One tenant appeals the decision on the grounds of financial hardship; she also maintains that the Decision is in error as to the commencement date of her tenancy.

MSC: To accept the appeal and remand the case for a hearing on the tenant’s claim of financial hardship only; any deferral granted shall not extend longer than one year from the date of the hardship hearing. (Becker/Marshall: 3-2; Gruber, Lightner dissenting)

E. 271 - 6th Ave. #1 AL2K0039

The landlord’s petition for certification of the cost of new carpeting for one unit was granted, resulting in a monthly passthrough in the amount of $15.51. On appeal, the landlord claims that the actual cost of the carpet and installation was greater than that certified by the Administrative Law Judge.

MSC: To accept the appeal and remand the case to the Administrative Law Judge on the record on the issue of the cost of the carpeting. (Becker/Lightner: 5-0)

F. 1328 Waller #2 AT2K0030; AL2K0064

The landlord’s petition for certification of capital improvement costs was granted. The tenant’s petition alleging decreased housing services during the period when his bathroom was being remodeled was denied. The landlord’s petition for a 7.2% rent increase based on the past rent history of this Newly Covered Unit was denied because a rent increase went into effect on May 1, 1994. The tenant appeals the capital improvement passthrough on the grounds of financial hardship. The landlord appeals the denial of the 7.2% rent increase because the Regulation provides that a landlord is entitled to this amount if there had been no rent increase between May 2, 1991 and May 1, 1994, and she argues that May 1st of 1994 does not fall between these dates.

MSC: To deny the landlord's appeal regarding the 7.2% comparables increase based on the past rent history of the unit. (Wasserman/Marshall: 3-2; Gruber, Lightner dissenting)

MSC: To accept the tenant's appeal and remand the case for a hearing on the financial hardship claim. The Administrative Law Judge shall look closely at the tenant's assets. (Becker/Marshall: 5-0)

G. 2526 Van Ness #11 AT2K0066

The tenant filed a petition alleging an unlawful rent increase because the tenant claimed that the landlord had failed to refund amounts found owing to him in a prior Decision; the tenant contended that he had not been properly served with the notice of rent increase; the tenant maintained that the notice was technically defective in that it did not itemize banked increases by year; and the tenant contended that the landlord was not entitled to restore a rent reduction for loss of storage space because improvements to the space had not been effectuated. On appeal, the tenant asserts that the amount of overpayments determined to be owing from the landlord are still incorrect; that he was not served with the notice of rent increase until several months later than the date determined in the Decision; and the full use of the storage space has not been restored.

Since a response by the tenant to a Memorandum from the Administrative Law Judge had not been served on the landlord, consideration of this case was continued to the next meeting.

H. 1300 - 41st Ave. #1 AT2K0068

The landlords’ petition for certification of capital improvement costs to five units was granted. The tenants in one unit appeal the decision, claiming that the work was necessitated by leakage of water from the windows and that replacement of a roof after more than 10 years does not constitute a capital improvement.

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

I. 1520 Gough St., Apt. 602 AT2K0069

The landlords’ petition for certification of capital improvement costs to 21 of 38 units was granted. One tenant appeals the decision on the grounds of financial hardship.

MSC: To accept the appeal and remand the case for a hearing on the tenant’s claim of financial hardship. (Marshall/Becker: 5-0)

J. 1416 - 38th Ave. AT2K0067

The landlords’ petition for certification of capital improvement costs was granted; a consolidated petition for a rent increase based on increased operating expenses was denied; and rent overpayments in the amount of $44.00 were determined to be owing from the landlords to the tenant. On appeal, the tenant asserts that the Decision is incorrect as to the amount of his rent.

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

K. 729 Banks St. AL2K0071

The tenant’s petition alleging substantial decreases in housing services was granted and the landlord was found liable to the tenant in the amount of $220.00 due to the recission of the tenant’s right to park her car in the garage. On appeal, the landlord claims that the tenant’s parking privileges were revoked because the tenant was damaging the landlord’s property.

MSC: To deny the appeal. (Becker/Marshall: 3-2; Gruber, Lightner dissenting)

VI. Communications

In addition to correspondence concerning cases on the calendar, the Board received the following communications:

1. An anonymous letter apparently objecting to a proposed increase based on increased operating expenses.

B. A copy of the decision in the Second District Court of Appeal case of Cabinda v. Santa Monica Rent Control Board (No. B133077, 00 C.D.O.S. 3743 {5/1//00}), where it was determined that regulations adopted by the Santa Monica Rent Control Board governing vacancy decontrol were preempted by Costa-Hawkins.

VII. Director's Report

Executive Director Grubb informed the Commissioners that the agency is facing a $360-370,000 deficit for the next fiscal year. This is the result of one of the Senior Administrative Law Judge's salaries having inadvertently been deleted from last year's budget, cost of living increases, position upgrades, and the new Administrative Law Judge positions having been budgeted in for only 3/4 of the year. If the Department fails to obtain an increase in the rental unit fee, positions will be lost; although there are sufficient funds to keep the current staffing level in place until September 1^st. The departmental budget goes before the Finance Committee the week of June 15^th. A fee increase could be moved at the Public Hearing that will take place at that time.

8. Old Business

Revenue Offset for Operating & Maintenance Expense Increases

The Commissioners briefly discussed an amendment to Rules and Regulations Section 6.10(a) introduced by Commissioner Becker which would offset increases in revenues generated by a building from any rent increase proven justified by an increase in the landlord's operating expenses. Commissioners Lightner and Murphy stated that, since operating expense increases are capped at 7%, the cap would have to be removed before they would be receptive to such a proposal. Commissioner Lightner also said that there is a fallacious belief that all landlords are currently making tremendous profits; since rents are so high, tenants cannot afford to move. Discussion of this issue will be continued at the next Board meeting.

IV. Remarks from the Public (cont.)

F. Landlord Marian Halley, involved in the case at 1328 Waller (AT2K0030; AL2K0064), told the Commissioners that she could not find out the answer to a question that she had regarding Past Rent History rent increases by looking through binders of prior decisions, and that decisions of the Administrative Law Judges and the Rent Board should be indexed by issue.

G. Tenant Vesta Kirby, appellant at 1616 Taylor #7 (AT2K0038), inquired as to the date of termination of the deferral of the capital improvement passthrough.

H. Attorney Steven MacDonald informed the Board that the Landlord-Tenant Subcommittee of the State Bar will be discussing the ethics of Ellis Act evictions at their next meeting.

Recission of Notice of Constraints (665 Clay St.)

The Board received a letter from an attorney for the Chinatown Community Development Center, which has purchased the building at 665 Clay Street, which was Ellised by the prior owner. Since the new owner has every intention of keeping the tenants in place, and not Ellising the building, they are rescinding the Notice of Constraints on the property. Since their title company has requested that the Rent Board authorize its Executive Director to execute and acknowledge the recission, the Board passed the following motion:

MSC: To authorize the Executive Director to execute a recission of the Notice of Constraints on the property at 665 Clay Street. (Marshall/Lightner: 5-0)

X. Calendar Items

May 23 & 30, 2000 - NO MEETINGS

June 6, 2000

9 appeal considerations (1 cont. from 5/16/00)

Old Business: Revenue Offset for O&M Increases

XI. Adjournment

President Wasserman adjourned the meeting at 8:15 p.m.