May 12, 2009

Commissioner Justman appeared on the record at 6:05 p.m.; Commissioner Mosbrucker arrived at the meeting at 6:15 p.m.; and Commissioner Murphy appeared at 6:20 p.m.

MSC: To approve the Minutes of April 21, 2009.

(Henderson/Crow: 5-0)

A. Dorothy Kitt, the landlord in the case at 60 Parkridge Drive (AL090115), said that the tenant submitted affidavits raising new issues which were not served on the landlord, and which caused the Administrative Law Judge (ALJ) to change his decision. Ms. Kitt alleged that she was denied due process, as she did not have a chance to respond.

B. Attorney Dave Hysinder, representing the landlord in the case concerning 251 Castro Street (AT090107), told the Board that this is the tenants' second appeal but no evidence was provided to show that there was a modification of the contract or that the landlord acceded to the tenant's extended absences from the unit. Mr. Hysinder said that the tenants have claimed hardship but it is expensive to go back and forth to Palm Springs. Mr. Hysinger argued that the landlord has "meticulously followed the rules" and asked that the Board affirm the ALJ's decision.

C. Attorney Andy Westley, representing the tenants in the case at 251 Castro, told the Board that the ALJ found that the tenants had returned full-time to the unit before the conclusion of the hearings. Mr. Westley maintained that the ALJ erred in his interpretation of waiver, citing only one prong of the waiver standard. Mr. Westley credibly testified that he had told the landlord's attorney that the tenants would be away for another year, after which the landlord withdrew the previous 1.21 petition. Mr. Westley said that this is a classic example of waiver and asked that the decision be reversed.

The landlord's petition for rent increases to 6 of 12 units based on increased operating expenses was granted. One tenant appeals the decision on the grounds of financial hardship.

The tenant's appeal was filed 3-1/2 months late because the tenant is elderly and did not realize that she had the right to file a hardship appeal.

The landlord's petition seeking approval of utility passthroughs was granted. One tenant appeals the decision on the grounds of financial hardship.

The tenant's petition alleging decreased housing services, failure to repair and unlawful rent increases was dismissed due to the tenant's failure to appear at the properly noticed hearing. On appeal, the tenant claims not to have received notice of the hearing, and attaches the requisite Declaration of Non-Receipt of Notice of Hearing.

The landlord's petition for a rent increase based on the rent for comparable units was granted. The tenants in the unit appeal the decision on the grounds of financial hardship.

After discussion, it was the consensus of the Board to continue consideration of this appeal in order for staff to explore possible settlement.

The landlords' petition for certification of capital improvement costs was granted, in part. The costs of work on the front exterior of the building were denied because the landlords did not commence the work within 90 days of the issuance of a Notice of Violation. On appeal, the landlords provide a letter from their contractor stating that the six-month delay in commencement of the job was their fault, as they had scheduled 3 other jobs at the same time.

The landlord's petitions for approval of utility passthroughs for tenants in three buildings were denied because the landlord collects a user fee for the laundry facilities, but could not prove the amount of user fees collected in the base and comparison years. On appeal, the landlord argues that the rates on the laundry machines have not changed in ten years, nor has any other condition that would affect the amount of user fees collected, and so the revenue remained the same in the base and comparison years.

The landlord's petition for a determination pursuant to Rules ß1.21 was granted because it was found that the subject unit was not the tenants' principal place of residence. The tenants' appeal was accepted and remanded to ascertain whether the landlord changed the terms of the tenancy by accepting the tenants' stated, planned, periodic absences. In the remand decision, the ALJ upheld his previous decision. The tenants appeal the remand decision, maintaining that: the landlord failed to meet his burden of proving that the tenants' principal place of residence is in Palm Springs, or at some location other than the San Francisco unit; the landlord waived his right to a 1.21 increase by acceding to the tenants' temporary absence through his agent; the ALJ committed legal error by relying upon the "no waiver" provision in the tenants' lease; the landlord changed the terms of the tenancy by conduct; and the decision presents extreme hardship as it will render the tenants homeless.

The tenant filed a petition requesting a determination of his lawful base rent. The Administrative Law Judge (ALJ) denied the petition because he found that the landlord's accounting of water and garbage service costs did not constitute a demand for payment and was therefore not a rent increase. The tenant's appeal was accepted and remanded for a determination as to the legality of the water and garbage charges. In the remand decision, the ALJ found that landlord-provided water and garbage are housing services represented to the tenant as free of charge at the inception of the tenancy and any attempt by the landlord to collect for such services constitutes an unlawful rent increase. The landlord's appeal of the remand decision was accepted and remanded on the issue of whether the oral agreement legally can amend the terms of the written agreement, with instructions to pay attention to the Statute of Frauds. In the second remand decision, the ALJ found that the oral agreement violates the Statute of Frauds but that the landlord is estopped from asserting the Statute because he induced the tenant to sign the lease. On further appeal, the landlord argues that: oral discussions between the parties prior to entering into the written agreement do not equal an oral agreement; any oral agreement would have been extinguished by novation; the doctrine of estoppel cannot invalidate the terms of the written rental agreement and all of the elements of estoppel have not been met; the tenant did not prove that he was fraudulently induced to enter into the lease; and this matter is outside of the Rent Board's jurisdiction.

The tenant's petition alleging unlawful rent increases and decreased housing services was granted, in part, and the landlord was found liable to the tenant in the amount of $3,600.00 for rent overpayments and $225.00 due to habitability defects on the premises. The landlord appeals, claiming that: the tenant moved out, owing him money after having damaged the property; the tenant lied on her rental application and should not be considered credible; a temporary rent reduction was given to the tenant due to her financial circumstances; the landlord replaced the water heater as expeditiously as possible; and the tenant failed to meet her burden of proof regarding the living room heater.

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

A. The office workload statistics for the month of March, 2009.

B. Articles from the S.F. Daily Journal, BeyondChron, and the S.F. Chronicle.

Executive Director Wolf invited the Commissioners to a party to celebrate the 30th anniversary of the Rent Ordinance at the Rent Board office on June 9th from noon to 3:00 p.m.

The Board discussed a proposal by Commissioner Murphy that would allow a landlord to give a tenant a temporary rent reduction, upon the tenant's request, and provide that restoration of the prior rent amount upon 60 days notice would not constitute a rent increase. The tenant would have had to pay at least six months rent to the landlord to ensure that this was not a "teaser rate" at the inception of a tenancy. Commissioner Murphy explained that the landlord community would like the Rent Board's policy to allow such temporary, voluntary rent reductions in cases of financial hardship to be codified in writing, and said that landlords would lower rents more often if they could restore the original rental amount later. Commissioner Mosbrucker commented that it is not clear that this proposed language applies only to hardship situations, and the Commissioners then discussed whether it should also apply to reduced rents due to market conditions. Commissioner Henderson proposed that there be a form that landlords and tenants fill out to prevent misunderstandings later. Commissioner Mosbrucker volunteered to confer with the other Tenant Commissioners and draft additional language for discussion at the next Board meeting.

D. Landlord Dorothy Kitt asked about the issue of voluntary rent reductions, since many of her tenants have been asking that their rent be reduced. Ms. Kitt was concerned that, in light of rent control, she would be "stuck with the new rent forever" and wondered whether she could restore the prior rent if the economy improved.

E. Andy Braden, representing the landlord in the case at 240 Cumberland (AL090110), told the Board that the utility passthrough regulations don't address the issue of "double-dipping," but when user fees collected from a laundry facility are the same from year to year, it doesn't matter. Mr. Braden said that the new owner has information regarding the amount of fees collected, which could be extrapolated; or, the property manager could swear from his own experience that the conditions have remained unchanged. Mr. Braden said that the landlord is now "stuck," and can't obtain approval for a utility passthrough for the next five years, unless a petition for approval of a different base year is granted. Mr. Braden expressed his frustration that "justice could have been done" because he believes the regulations are inappropriate in this case.

President Gruber adjourned the meeting at 7:50 p.m.