PART 6 - RENT INCREASE JUSTIFICATIONS

 

Section 6.10  Operating and Maintenance Expenses

(Subsection (a) amended effective February 28, 1989; Subsections (b), (c) and (d) amended February 21, 1989; Subsections (e) and (g) amended February 28, 1989; Subsection (f) renumbered February 28, 1989; Subsections (a) and (b) amended and Subsection (h) added May 24, 1994 Subsection (i) added January 31, 1995; amended March 14, 1995; repealed and adopted April 25, 1995, effective February 1, 1995; entire Section renumbered and/or amended in its entirety effective June 6, 1995; Section 6.10(b)(5) amended effective June 20, 1995; entire Section renumbered and/or amended in its entirety effective June 18, 1996; Subsection(e) amended effective March 19, 2002)

Except in extraordinary circumstances, the following guidelines shall apply to increases based upon Operating and Maintenance Expenses:

(a)  A rent increase may be considered justified if it is found that the aggregate cost of Operating and Maintenance Expenses (including but not limited to real estate taxes, business registration and license fees, insurance, routine maintenance and repairs, water, sewer service charge, janitorial service, refuse removal, elevator service, security system and debt service) has increased over a 12-month period preceding the date of filing the petition ("Year 2"), compared to the Operating and Maintenance Expenses incurred in the 12 months prior to Year 2 ("Year 1"), in a percentage amount of the tenant's rent above the percentage amount equal to the allowable annual rent increase. Alternatively, the immediately preceding two calendar years may be used. Use of a particular calculation period in order to create exaggerated results is disfavored. To determine the per unit rent increase, this cost increase is divided by 12 months, then divided by the number of units in the building. Only those tenants in residence during Year 1 may be assessed a rent increase based on an increase in Operating and Maintenance Expenses, except in cases of change of ownership following commencement of tenancy.

(b)  Operating and Maintenance Expense increases shall be based on actual costs incurred by the landlord, prorated on a monthly basis where appropriate, allocated over the period of time the services were substantially rendered and/or the costs were substantially incurred in a manner that allows a fair comparison between Year 1 and Year 2. For example, the cost of refuse removal shall be allocated to the time periods when refuse removal occurred, the cost of insurance premiums shall be allocated to the period of coverage, the cost of repair work shall be allocated to the time when the work was performed, and the cost of property taxes, including supplemental taxes, shall be allocated to the applicable tax year (regardless of when the tax bill was received or paid). Proof of payment shall be required, and prospective increases shall not be considered, except that property taxes based upon supplemental tax bills not yet received and/or due and payable by the landlord shall be taken into account.

(c)  In the event that Operating and Maintenance Expenses have increased (as set forth above), a rent increase based on these expenses will be allowed only if the per unit increase amount exceeds that which has already been allowed by the annual rent increase, in which event only the amount over the annual rent increase amount will be allowed. If the per unit increase does not exceed the amount allowed by the annual rent increases, then only the annual rent increases will be allowed.

(d)  If the amount justified per unit exceeds the tenant's annual rent increase, an additional increase may be allowed. In no event shall this additional increase allowed for Operating and Maintenance Expenses result in an increase which exceeds the tenant's base rent by more than an additional 7% beyond the annual allowable increase.

(e)  If a building is refinanced or there is a change in ownership resulting in increased debt service and/or property taxes, only the landlord who incurred such expenses may file a petition under this Section, and only one rent increase per unit based upon increases in debt service and/or property taxes shall be allowed for each such refinance or transfer, except in extraordinary circumstances or in the interest of justice. In no event shall the petition be denied solely due to the subsequent transfer of the property, unless the successor in interest declines to substitute in as the petitioner.

(f)  However, when the unit is purchased after June 13, 1979, and this purchase occurs within two (2) years of the date of purchase of the unit by the seller of the unit to the landlord, consideration shall not be given to the portion of increased debt service which results from a selling price which exceeds the seller's purchase price by more than the percentage increase in the CPI between the date of previous purchase and the date of current sale plus the cost of capital improvements, rehabilitation and/or energy conservation work made or performed by the seller.

(g)  Generally, an increase in debt service to obtain funds in excess of existing financing, will only be considered as a justification for a rent increase if the proceeds of the borrowing are or have been reinvested in the building for purposes of needed repairs and maintenance, or capital improvements. If any of the proceeds are, however, used for capital improvements, the limitations set forth in Part 7 below shall apply to that portion.

(h)  Landlords of Proposition I Affected Units may petition the Board for a rent increase based on increased operating and maintenance expenses in accordance with, and subject to, Section 6.10 of these Rules and Regulations and Section 37.8 of the Rent Ordinance. Events before the unit was subject to the Rent Ordinance may be considered. Petitions for Proposition I Affected Units based upon increased operating and maintenance expenses that are pending as of, or filed within six months of, April 25, 1995 may, at the request of the landlord, be treated as if filed on any day that the landlord designates on or after May 1, 1994 and before April 25, 1995; provided, however, that the actual date of filing shall be used to determine the effective date of any rent increase pursuant to Sections 5.12 and 5.13 above.

Section 6.11  Comparables

(Amended February 28, 1984; August 9, 1989; August 29, 1989; Section 6.11(d )added, January 31, 1995 effective February 1, 1995; amended February 7, February 14 and March 7, 1995;deleted and adopted April 25, 1995, effective February 1,1995; amended February 17, 2004)

A rent increase may be granted pursuant to this section 6.11 only one time during the life of the unit, and Sections 6.11(a) and 6.11(b) are each mutually exclusive of the other; however, a landlord may petition for an increase under both Sections 6.11(a) and 6.11(b) in the alternative.

(a)  Petition Based on Extraordinary Circumstances

(1)  The provisions of this Section 6.11(a) shall apply only in the following situations:

(A)  where, because of a special relationship between the landlord and tenant, or due to fraud, mental incompetency, or other extraordinary circumstances unrelated to market conditions, the initial rent on a unit was set very low or the rent was not increased or was increased only negligible amounts during the tenancy; or

(B)  where the landlord became owner of record of a Proposition I Affected Unit between September 1, 1993 and December 22, 1994, or where the landlord entered into an agreement to purchase a Proposition I Affected Unit which agreement became non-contingent on or after September 1, 1993 and before November 9, 1994, and, in becoming owner of record or entering into the purchase agreement, the landlord relied on the ability to increase rents without limitation from the Rent Ordinance.

Passage of Proposition I at the November 1994 election does not in and of itself satisfy this Section 6.11(a)(1), though it may be considered.

(2)  A rent increase during a tenancy may be considered justified, even in the absence of an increase in costs of operating and maintenance expenses as limited in Section 6.10 above, if it is established that the rent for the unit is significantly below those of comparable units in the same general area as defined in Section 6.11(a)(3) below. If a rent increase is granted pursuant to this Section 6.11(a), the increase shall preclude the imposition of all annual rent increases, banked increases, and operating and maintenance increases that the landlord could have imposed prior to the filing of the petition. Petitions for Proposition I Affected Units based upon comparable rents that are pending as of, or filed within six months of, April 25, 1995 may, at the request of the landlord, be treated as if filed on May 1, 1994, in which case rents for comparable units as of May 1, 1994 shall be used for comparison; provided, however, that the actual date of filing shall be used to determine the effective date of any rent increase pursuant to Sections 5.12 and 5.13 above. For purposes of the preceding sentence, the landlord may establish rents of comparable units as of May 1, 1994 by presenting evidence of current rents of comparable units, in which case rent on May 1, 1994 may be presumed to equal 98.9% of current rent.

(3)  The length of occupancy of the current tenant, size and physical condition of the unit and building, and services paid for by the tenant are important factors (though not the exclusive ones) in determining whether or not a unit is "comparable" to another, as the term "comparable" is used in the Rent Ordinance and in these Rules. Evidence of reasonably comparable units is required; however, "perfect" comparability is not required. The issue of "rent for comparable units" may be raised by a landlord or a tenant.

(4)  For Proposition I Affected Units, when determining the length of occupancy of the current tenant, occupancy before April 15, 1979 need not be considered if it appears from both the landlord's and the tenant's evidence that it is impractical to do so under the circumstances; however, occupancy before the unit most recently became subject to rent regulation shall not be considered when:

(A)  the requirements of Section 6.11(a)(1)(A) are satisfied, and the rent at the time the unit most recently became subject to rent regulation was not arrived at through arm's length negotiations due to a special relationship, fraud, mental incompetency, or some other reason; or

(B)  the requirements of Section 6.11(a)(1)(B) are satisfied, and an additional rent increase is necessary to relieve the landlord from hardship, also taking into consideration tenant hardship if raised and if not inconsistent with the constitutional rights of the landlord. The landlord may not assert hardship pursuant to this Section unless the landlord has completed a hardship application (which can be obtained from the Rent Board), and filed the hardship application along with the landlord's petition for a rent increase. If the landlord asserts hardship pursuant to this Section, then Rent Board staff shall mail to the tenant a blank hardship application at least twenty days prior to the hearing on the landlord's petition. The tenant may not assert hardship pursuant to this Section unless the tenant has completed the hardship application and mailed it (or delivered it) to the landlord and to the Rent Board at least ten day prior to the hearing on the landlord's petition. The landlord shall have the burden of proving landlord hardship, and the tenant shall have the burden of proving tenant hardship. Except on remand from the Rent Board or pursuant to this Section, the Administrative Law Judge may not consider the hardship of either party.

(b)  Petition Based on the Past Rent History of a Proposition I Affected Unit

(1)  The provisions of this Section 6.11(b) shall apply only to Proposition I Affected Units.

(2)  A landlord may petition for only one of the following increases:

(A)  A 7.2% rent increase during a tenancy may be considered justified, even in the absence of an increase in costs of operating and maintenance expenses as limited in Section 6.10 above, if it is established that no Rent Increases (as defined in Section 37.2(o) of the Rent Ordinance) were in effect between May 2, 1991 and May 1, 1994;

(B)  An 11.2% rent increase during a tenancy may be considered justified, even in the absence of an increase in costs of operating and maintenance expenses as limited in Section 6.10 above, if it is established that no Rent Increases (as defined in Section 37.2(o) of the Rent Ordinance) were in effect between May 2, 1990 and May 1, 1994; or

(C)  A 15.2% rent increase during a tenancy may be considered justified, even in the absence of an increase in costs of operating and maintenance expenses as limited in Section 6.10 above, if it is established that no Rent Increases (as defined in Section 37.2(o) of the Rent Ordinance) were in effect between May 2, 1989 and May 1, 1994.

(3)  By executing a waiver form which can be obtained from the Rent Board, a tenant may waive the right to a hearing on a petition for increase brought under this Section 6.11(b), in which case the Administrative Law Judge shall issue a determination based on the facts as alleged in the petition.

Section 6.12  Defenses

(a)  A rental increase may be considered not justified if it is found that the tenant has requested the landlord to perform ordinary repair, replacement, and maintenance in compliance with applicable state and local law and the landlord has failed to perform such work.

(b)  Where the Board or its Administrative Law Judges find that the landlord has imposed a rent increase in violation of Section 37.3 of the Ordinance, the increase so imposed shall be denied.

Section 6.13  Prohibition Against Agreements to Pay Additional Rent for Additional Occupants

(Adopted April 8, 1986; Amended for Clarification March 24, 1998)

No extra rent may be charged solely for an additional occupant to an existing tenancy (including a newborn child), regardless of the presence of a rental agreement or lease which specifically allows for a rent increase for additional tenants. Such provisions in written or oral rental agreements or leases are deemed to be contrary to public policy.

Section 6.14  Establishing Rental Rates for Subsequent Occupants

(Added March 7, 1989; amended August 29, 1989; Subsection (e) added February 14, 1995; repealed and adopted April 25, 1995, effective February 14, 1995; Subsections (a), (b), (c), (d) and (e) amended and renumbered July 2, 1996; amended and renumbered April 25, 2000)

(a) Definitions. The following terms have the following meaning for purposes of this Section 6.14:

(1)  “Original occupant(s)” means one or more individuals who took possession of a unit with the express consent of the landlord at the time that the base rent for the unit was first established with respect to the vacant unit.

(2)  “Subsequent occupant” means an individual who became an occupant of a rental unit while the rental unit was occupied by at least one original occupant.

(3)  “Co-occupant” for purposes of this Section 6.14 only, is a subsequent occupant who has a rental agreement directly with the owner.

(b)  Subsequent Occupants who commenced occupancy before January 1, 1996; Co-occupants who commenced occupancy before, on or after January 1, 1996.  When all original occupant(s) no longer permanently reside in the rental unit, the landlord may raise the rent of any subsequent occupant who resided in the unit prior to January 1, 1996, or of any subsequent occupant who is a co-occupant and who commenced occupancy before, on or after January 1, 1996, without regard to the limitations set forth in Section 37.3(a) of the Rent Ordinance if the landlord served on the subsequent occupant(s), within a reasonable time of actual knowledge of occupancy, a written notice that when the last of the original occupant(s) vacates the premises, a new tenancy is created for purposes of determining the rent under the Rent Ordinance. Failure to give such a notice within 60 days of the landlord’s actual knowledge of the occupancy by the subsequent occupant(s) establishes a rebuttable presumption that notice was not given within a reasonable period of time. If the landlord has not timely served such a notice on the subsequent occupant(s), a new tenancy is not created for purposes of determining the rent under the Rent Ordinance when the last of the original occupant(s) vacates the premises.

(c)  Subsequent Occupants who are not Co-occupants and who commenced occupancy on or after January 1, 1996, where the last Original Occupant vacated on or after April 25, 2000.  When all original occupant(s) no longer permanently reside in a rental unit, and the last of the original occupants vacated on or after April 25, 2000, the landlord may establish a new base rent of any subsequent occupant(s) who is not a co-occupant and who commenced occupancy of the unit on or after January 1, 1996 without regard to the limitations set forth in Section 37.3(a) of the Rent Ordinance unless the subsequent occupant proves that the landlord waived his or her right to increase the rent by:

(1)  Affirmatively representing to the subsequent occupant that he/she may remain in possession of the unit at the same rental rate charged to the original occupant(s); or

(2)  Failing, within 90 days of receipt of written notice that the last original occupant is going to vacate the rental unit or actual knowledge that the last original occupant no longer permanently resides at the unit, whichever is later, to serve written notice of a rent increase or a reservation of the right to increase the rent at a later date; or

(3)  Receiving written notice from an original occupant of the subsequent occupant’s occupancy and thereafter accepting rent unless, within 90 days of said acceptance of rent, the landlord reserved the right to increase the rent at a later date.

Where the landlord has waived the right to increase the rent under subsection (c)(1) or (c)(3) above, the subsequent occupant to whom the representation was made or from whom the landlord accepted rent shall thereafter have the protection of an original occupant as to any future rent increases under this Section 6.14. Where the landlord has waived the right to increase the rent under subsection (c)(2) above, any subsequent occupant who permanently resides in the rental unit with the actual knowledge and consent of the landlord (if the landlord’s consent is required and not unreasonably withheld) at the time of the waiver shall thereafter have the protection of an original occupant as to any future rent increases under this Section 6.14.

(d)  Subsequent Occupants who are not Co-occupants and who commenced occupancy on or after January 1, 1996, where the last Original Occupant vacated prior to April 25, 2000.  When all original occupants no longer permanently reside in a rental unit and the last of the original occupants vacated prior to April 25, 2000, the landlord may establish a new base rent for any subsequent occupants who are not co-occupants and who commenced occupancy of the unit on or after January 1, 1996 without regard to the limitations set forth in Section 37.3(a) of the Rent Ordinance if:

(1)  The landlord served on the subsequent occupant(s), within a reasonable time of actual knowledge of occupancy, a written notice that when the last of the original occupants vacates the premises, the new tenancy is created for purposes of determining the rent under the Rent Ordinance. Failure to give such a notice within 60 days of the landlord’s actual knowledge of the occupancy by the subsequent occupant(s) establishes a rebuttable presumption that notice was not given within a reasonable period of time; or

(2)  The landlord is entitled to establish a new base rent under the Costa Hawkins Rental Housing Act, California Civil Code Section 1954.53(d), even if no notice was served on the subsequent occupant(s) pursuant to subsection (d)(1) above.

(e)  Subsequent Occupants of Proposition I Affected Units. When all original occupant(s) no longer permanently reside in a Proposition I Affected Unit, the landlord may raise the rent of any subsequent occupant who resided in the unit prior to February 15, 1995 without regard to the limitations set forth in Section 37.3(a) of the Rent Ordinance if the landlord served on the subsequent occupant(s), on or before August 15, 1995, a written notice that when the last of the original occupant(s) vacates the premises, a new tenancy is created for purposes of determining the rent under the Rent Ordinance. If the landlord has not timely served such a notice on the pre-February 15, 1995 subsequent occupant(s) of the Proposition I Affected Unit, a new tenancy is not created for purposes of determining the rent under the Rent Ordinance when the last of the original occupant(s) vacates the premises. For subsequent occupants who commenced occupancy in a Proposition I Affected Unit on or after February 15, 1995, the provisions of subsections (a) through (d) above apply.

(f)  This Section 6.14 is intended to comply with Civil Code Section 1954.50 et seq. and shall not be construed to enlarge or diminish rights thereunder.

Section 6.15  Subletting and Assignment

(Effective March 24, 1998, except paragraphs (a) and (f) which are effective May 25, 1998; amended and renumbered December 21, 1999)

Section 6.15A Subletting and Assignment—Where Rental Agreement Includes an Absolute Prohibition Against Subletting and Assignment

(Amended March 29, 2005; amended December 4, 2015)

This Section 6.15A applies only when a lease or rental agreement includes an absolute prohibition against subletting and assignment.

(a)  For agreements entered into on or after May 25, 1998, breach of an absolute prohibition against subletting or assignment may constitute a ground for termination of tenancy pursuant to, and subject to the requirements of, Ordinance Section 37.9(a)(2)(A) and subsection (b) below, only if such prohibition was adequately disclosed to and agreed to by the tenant at the commencement of the tenancy. For purposes of this subsection, adequate disclosure shall include satisfaction of one of the following requirements:

(1)  the prohibition against sublet or assignment is set forth in enlarged or boldface type in the lease or rental agreement and is separately initialed by the tenant; or

(2)  the landlord has provided the tenant with a written explanation of the meaning of the absolute prohibition, either as part of the written lease or rental agreement, or in a separate writing.

(b)  If the lease or rental agreement specifies a number of tenants to reside in a unit, or where the open and established behavior of the landlord and tenants has established that the tenancy includes more than one tenant (exclusive of any additional occupant approved under Ordinance Sections 37.9(a)(2)(B) or 37.9(a)(2)(C)), then the replacement of one or more of the tenants by an equal number of tenants, subject to subsections (c) and (d) below, shall not constitute a breach of the lease or rental agreement for purposes of termination of tenancy under Section 37.9(a)(2) of the Ordinance.

(c)  If the tenant makes a written request to the landlord for permission to sublease in accordance with Section 37.9(a)(2)(A), and the landlord fails to deny the request in writing with a description of the reasons for the denial of the request, including specific facts supporting the reasons for the denial, within fourteen (14) days of receipt of the tenant’s written request, the subtenancy is deemed approved pursuant to Ordinance Section 37.9(a)(2)(A). If the tenant’s request is sent to the landlord by mail, the request shall be deemed received on the fifth calendar day after the postmark date. If the tenant’s request is sent to the landlord by email, the request shall be deemed received on the second calendar day after the date the email is sent. If the tenant’s request is personally delivered to the landlord, the request is considered received on the date of delivery. For purposes of this subsection 6.15A(c), the 14-day period begins to run on the day after the tenant’s written request is received by the landlord.

(d)(1)  The tenant’s inability to obtain the landlord's consent to subletting or assignment to a person specified in subsection 6.15A(b) above shall not constitute a breach of the lease or rental agreement for purposes of eviction under Ordinance Section 37.9(a)(2), where the subletting or assignment is deemed approved pursuant to subsection (c) above or where the landlord has unreasonably denied, pursuant to subsection (e) below, the tenant’s request to replace a departing tenant and the following requirements have been met:

(i)  The tenant has requested in writing the permission of the landlord to the sublease or assignment prior to the commencement of the proposed new tenant's or new subtenant's occupancy of the unit.

(ii)  The landlord has five calendar days after receipt of the tenant’s written request to request the tenant to submit a completed standard form application for the proposed new tenant or subtenant or provide sufficient information to allow the landlord to conduct a typical background check, including full name, date of birth and references if requested. The 5-day period begins to run on the day after receipt of the tenant’s written request for permission to replace a departing tenant or subtenant. The landlord may request credit or income information only if the new tenant or new subtenant will be legally obligated to pay some or all of the rent to the landlord. Nothing in Section 6.15A shall be construed as allowing a landlord to require a replacement roommate to pay some or all of the rent to the landlord.

(iii)  The tenant has five calendar days after receipt of the landlord’s timely request pursuant to subsection 6.15A(d)(1)(ii) to provide the landlord with the proposed new tenant's or new subtenant's application or typical background check information. The 5-day period begins to run on the day after actual receipt of the landlord’s request.

(iv)  The proposed new tenant or new subtenant meets the regular reasonable application standards of the landlord, except that creditworthiness may not be the basis for denial of the tenant’s request to replace a departing tenant if the new tenant or new subtenant will not be legally obligated to pay some or all of the rent to the landlord;

(v)  The proposed new tenant or new subtenant, if requested by the landlord, has agreed in writing to be bound by the current rental agreement between the landlord and the tenant;

(vi)  The tenant has not, without good cause, requested landlord consent to replacement of a departing tenant pursuant to this section 6.15A more than one time per existing tenant residing in the unit during the previous 12 months;

(vii)  The tenant is requesting replacement of a departing tenant or tenants with an equal number of new tenants.

(2)  This subsection (d) shall not apply to assignment of the entire tenancy or subletting of the entire unit.

(e)  Denial by the landlord of the tenant’s written request to replace a departing tenant shall not be considered unreasonable in some circumstances, including but not limited to the following:

(1) where the proposed new tenant or subtenant will be legally obligated to pay some or all of the rent to the landlord and the landlord can establish the proposed new tenant’s or new subtenant’s lack of creditworthiness;

(2) where the landlord has made a timely request for the proposed new tenant or subtenant to complete the landlord’s standard form application or provide sufficient information to allow the landlord to conduct a typical background check and the proposed new tenant or subtenant does not, comply within five calendar days of actual receipt by the tenant of the landlord’s request;

(3)  where the landlord can establish that the proposed new tenant or subtenant has intentionally misrepresented significant facts on the landlord’s standard form application or provided significant misinformation to the landlord that interferes with the landlord’s ability to conduct a typical background check;

(4)  where the landlord can establish that the proposed new tenant or subtenant presents a direct threat to the health, safety or security of other residents of the property; and,

(5)  where the landlord can establish that the proposed new tenant or subtenant presents a direct threat to the safety, security or physical structure of the property.

(f)  Nothing in this Section shall prevent the landlord from providing a replacement new tenant or new subtenant with written notice as provided under Section 6.14 that the tenant is not an original occupant as defined in Section 6.14(a)(1) and that when the last original occupant vacates the premises, a new tenancy is created for purposes of determining the rent under the Rent Ordinance. Furthermore, nothing in this Section 6.15A shall serve to waive, alter or modify the landlord’s rights under the Costa-Hawkins Rental Housing Act (California Civil Code §§1954.50 et seq.) to impose an unlimited rent increase once the last original occupant(s) no longer permanently resides in the unit.

(g)  Where a lease or rental agreement specifies the number of tenants to reside in a unit, or where the open and established behavior of the landlord and tenants has established that the tenancy includes more than one tenant, a landlord’s unreasonable denial of a tenant’s written request to replace one or more of the tenants by an equal number of tenants, subject to subsections 6.15A(d)(1)(i)-(vii) above, may constitute a decrease in housing services pursuant to Section 10.10 of these Regulations. For purposes of subsection 6.15A(g), a landlord’s non-response to a tenant’s written request within 14 calendar days shall be deemed an approval pursuant to subsection 6.15A(c) and shall not be deemed an unreasonable denial of a tenant’s request to replace a departing tenant.

(h)  In the event the landlord denies a tenant’s request to replace a departing tenant under Section 6.15A, either the landlord or the tenant may file a petition with the Board to determine if the landlord’s denial of the request was reasonable.

(i)  Any petition filed under subsection 6.15A(g) or (h) shall be expedited. 

Section 6.15B  Subletting and Assignment—Where Rental Agreement Contains a Clause Requiring Landlord Consent to Subletting and Assignment

(Amended March 29, 2005; amended December 4, 2015)

This Section 6.15B applies only when a lease or rental agreement includes a clause requiring landlord consent to assignment or subletting.

(a)  If the lease or rental agreement specifies a number of tenants to reside in a unit, or where the open and established behavior of the landlord and tenants has established that the tenancy includes more than one tenant (exclusive of any additional occupant approved under Ordinance Sections 37.9(a)(2)(B) or 37.9(a)(2)(C)), then the replacement of one or more of the tenants by an equal number of tenants, subject to subsections (b) and (c) below, shall not constitute a breach of the lease or rental agreement for purposes of termination of tenancy under Section 37.9(a)(2) of the Ordinance.

(b)  If the tenant makes a written request to the landlord for permission to sublease in accordance with Section 37.9(a)(2)(A), and the landlord fails to deny the request in writing with a description of the reasons for the denial, including specific facts supporting the reasons for the denial, of the request within fourteen (14) days of receipt of the tenant’s written request, the subtenancy is deemed approved pursuant to Ordinance Section 37.9(a)(2)(A). If the tenant’s request is sent to the landlord by mail, the request shall be deemed received on the fifth calendar day after the postmark date. If the tenant’s request is sent to the landlord by email, the request shall be deemed received on the second calendar day after the date the email is sent. If the tenant’s request is personally delivered to the landlord, the request is considered received on the date of delivery. For purposes of this subsection 6.15B(b), the 14-day period begins to run on the day after the tenant’s written request is received by the landlord.

(c)(1)  The tenant’s inability to obtain the landlord's consent to subletting or assignment to a person specified in subsection 6.15B(a) above shall not constitute a breach of the lease or rental agreement for purposes of eviction under Ordinance Section 37.9(a)(2), where the subletting or assignment is deemed approved pursuant to subsection (b) above or where the landlord has unreasonably denied, pursuant to subsection (d) below, the tenant’s request to replace a departing tenant and the following requirements have been met:

(i)  The tenant has requested in writing the permission of the landlord to the sublease or assignment prior to the commencement of the proposed new tenant's or new subtenant's occupancy of the unit;

(ii)  The landlord has five calendar days after receipt of the tenant’s written request to request the tenant to submit a completed standard form application for the proposed new tenant or subtenant or provide sufficient information to allow the landlord to conduct a typical background check, including full name, date of birth and references if requested. The 5-day period begins to run on the day after receipt of the tenant’s written request for permission to replace a departing tenant or subtenant. The landlord may request credit or income information only if the new tenant or new subtenant will be legally obligated to pay some or all of the rent to the landlord. Nothing in Section 6.15B shall be construed as allowing a landlord to require a replacement roommate to pay some or all of the rent to the landlord.

(iii)  The tenant has five calendar days after receipt of the landlord’s timely request pursuant to subsection 6.15B(c)(1)(ii) to provide the landlord with the proposed new tenant's or new subtenant's application or typical background check information. The 5-day period begins to run on the day after actual receipt of the landlord’s request.

(iv)  The proposed new tenant or new subtenant meets the regular reasonable application standards of the landlord, except that creditworthiness may not be the basis for denial of the tenant’s request to replace a departing tenant if the new tenant or new subtenant will not be legally obligated to pay some or all of the rent to the landlord;

(v)  The proposed new tenant or new subtenant, if requested by the landlord, has agreed in writing to be bound by the current rental agreement between the landlord and the tenant;

(vi)  The tenant has not, without good cause, requested landlord consent to replacement of a departing tenant pursuant to this section 6.15B more than one time per existing tenant residing in the unit during the previous 12 months;

(vii)  The tenant is requesting replacement of a departing tenant or tenants with an equal number of new tenants.

(2)  This subsection (c) shall not apply to assignment of the entire tenancy or subletting of the entire unit.

(d)  Denial by the landlord of the tenant’s written request to replace a departing tenant shall not be considered unreasonable in some circumstances, including but not limited to the following:

(1)  where the proposed new tenant or subtenant will be legally obligated to pay some or all of the rent to the landlord and the landlord can establish the proposed new tenant’s or new subtenant’s lack of creditworthiness;

(2) where the landlord has made a timely request for the proposed new tenant or subtenant to complete the landlord’s standard form application or provide sufficient information to allow the landlord to conduct a typical background check and the proposed new tenant or subtenant does not comply within five calendar days of actual receipt by the tenant of the landlord’s request;

(3) where the landlord can establish that the proposed new tenant or subtenant has intentionally misrepresented significant facts on the landlord’s standard form application or provided significant misinformation to the landlord that interferes with the landlord’s ability to conduct a typical background check;

(4)  where the landlord can establish that the proposed new tenant or subtenant presents a direct threat to the health, safety or security of other residents of the property; and,

(5)  where the landlord can establish that the proposed new tenant or subtenant presents a direct threat to the safety, security or physical structure of the property.

(e)  Nothing in this Section shall prevent the landlord from providing a replacement new tenant or new subtenant with written notice as provided under Section 6.14 that the tenant is not an original occupant as defined in Section 6.14(a)(1) and that when the last original occupant vacates the premises, a new tenancy is created for purposes of determining the rent under the Rent Ordinance. Furthermore, nothing in this Section 6.15B shall serve to waive, alter or modify the landlord’s rights under the Costa-Hawkins Rental Housing Act (California Civil Code §§1954.50 et seq.) to impose an unlimited rent increase once the last original occupant(s) no longer permanently resides in the unit.

(f)  Where a lease or rental agreement specifies the number of tenants to reside in a unit, or where the open and established behavior of the landlord and tenants has established that the tenancy includes more than one tenant, a landlord’s unreasonable denial of a tenant’s written request to replace one or more of the tenants by an equal number of tenants, subject to subsections 6.15B(c)(1)(i)-(vii) above, may constitute a decrease in housing services pursuant to Section 10.10 of these Regulations. For purposes of subsection 6.15B(f), a landlord’s non-response to a tenant’s written request within 14 calendar days shall be deemed an approval pursuant to subsection 6.15B(b) and shall not be deemed an unreasonable denial of a tenant’s request to replace a departing tenant.

(g)  In the event the landlord denies a tenant’s request to replace a departing tenant under Section 6.15B, either the landlord or the tenant may file a petition with the Board to determine if the landlord’s denial of the request was reasonable.

(h)  Any petition filed under subsection 6.15B(f) or (g) shall be expedited.

Section 6.15C  Master Tenants

(Subsections (3)(a) through (f) added August 21, 2001; Subsection (3) amended April 16, 2002)

(1)  For any tenancy commencing on or after May 25, 1998, a landlord who is not an owner of record of the property and who resides in the same rental unit with his or her tenant (a "Master Tenant") may evict said tenant without just cause as required under Section 37.9(a) only if, prior to commencement of the tenancy, the Master Tenant informs the tenant in writing that the tenancy is not subject to the just cause provisions of Section 37.9.  A landlord who is an owner of record of the property and who resides in the same rental unit with his or her tenant is not subject to this additional disclosure requirement.

(2)  In addition, for any tenancy commencing on or after May 25, 1998, a Master Tenant shall disclose in writing to a tenant prior to commencement of the tenancy the amount of rent the Master Tenant is obligated to pay to the owner of the property.

(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 master tenant’s violation of this section shall not constitute a basis for eviction under Section 37.9.

(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.

Section 6.15D  Additional Family Members—Where Rental Agreement Limits the Number of Occupants or Limits or Prohibits Subletting

(Added March 29, 2005; amended December 4, 2015)

(a)  This Section 6.15D applies when a lease or rental agreement includes a clause limiting the number of occupants or limiting or prohibiting subletting or assignment, and a tenant who resides in the unit requests the addition of the tenant’s child, parent, grandchild, grandparent, brother or sister, or the spouse or the domestic partner (as defined in Administrative Code Sections 62.1 through 62.8) of such relatives, or the spouse or domestic partner of the tenant. This Section 6.15D does not apply when a lease or rental agreement includes neither a limit on the number of occupants nor any restriction on subletting or assignment.

(b)  If the tenant makes a written request to the landlord for permission to add a person specified in subsection 6.15D(a) above, and the landlord fails to deny the request in writing with a description of the reasons for the denial of the request, including specific facts supporting the reasons for the denial, within fourteen (14) days of receipt of the tenant’s written request, the tenant’s request for the additional person is deemed approved pursuant to Ordinance Section 37.9(a)(2)(B). If the tenant’s request is sent to the landlord by mail, the request shall be deemed received on the fifth calendar day after the postmark date. If the tenant’s request is sent to the landlord by email, the request shall be deemed received on the second calendar day after the date the email is sent. If the tenant’s request is personally delivered to the landlord, the request is considered received on the date of delivery. For purposes of this subsection 6.15D(b), the 14-day period begins to run on the day after the tenant’s written request is received by the landlord.

(c)  The tenant’s inability to obtain the landlord's consent to the addition of a family member specified in subsection 6.15D(a) above shall not constitute a breach of the lease or rental agreement for purposes of eviction under Ordinance Section 37.9(a)(2), where the additional family member is deemed approved pursuant to subsection (b) above, or where the additional family member is a minor child allowed under subsection 6.15D(a) above, or where the landlord has unreasonably denied, pursuant to subsection (d) below, the tenant’s request to add an additional family member allowed under subsection 6.15D(a) above who is not a minor child and the following requirements have been met:

(1)  The tenant has requested in writing the permission of the landlord to add an additional family member to the unit, and stated the relationship of the person to the tenant.

(2)  The landlord has five calendar days after receipt of the tenant’s written request to request the tenant to submit a completed standard form application for the proposed additional family member or provide sufficient information to allow the landlord to confirm the relationship of the person to the tenant and to conduct a typical background check, including full name, date of birth and references if requested. The 5-day period begins to run on the day after receipt of the tenant’s written request for permission to add an additional family member to the unit. The landlord may request credit or income information only if the additional family member will be legally obligated to pay some or all of the rent to the landlord. Nothing in Section 6.15D shall be construed as allowing a landlord to require an additional family member to pay some or all of the rent to the landlord.

(3)  The tenant has five calendar days after receipt of the landlord’s timely request pursuant to subsection 6.15D(c)(2) to provided the landlord with the additional family member’s application or typical background check information. The 5-day period begins to run on the day after actual receipt of the landlord’s request.

(4)  The additional family member meets the regular reasonable application standards of the landlord, except that creditworthiness may not be the basis for denial of the tenant’s request for an additional family member if the additional family member will not be legally obligated to pay some or all of the rent to the landlord;

(5)  The additional family member, if requested by the landlord, has agreed in writing to be bound by the current rental agreement between the landlord and the tenant.

(6)  With the additional family member, the total number of occupants does not exceed the lesser of (a) two persons in a studio rental unit, three persons in a one-bedroom unit, four persons in a two-bedroom unit, six persons in a three-bedroom unit or eight persons in a four-bedroom unit, or (b) the number of occupants permitted under state law and/or other local codes (e.g., Planning, Housing, Fire and Building Codes).

(d)  Denial by the landlord of the tenant’s written request to add an additional family member allowed under subsection 6.15D(a) above shall not be considered unreasonable in some circumstances, including but not limited to the following:

(1)  where the total number of occupants in the unit exceeds (or with the proposed additional occupant(s) would exceed) the lesser of:

(i)  two persons in a studio unit, three persons in a one-bedroom unit, four persons in a two-bedroom unit, six persons in a three-bedroom unit, or eight persons in a four-bedroom unit; or

(ii)  the maximum number permitted in the unit under San Francisco Housing Code Section 503;

(2)  where the proposed additional family member will be legally obligated to pay some or all of the rent to the landlord and the landlord can establish the proposed additional family member’s lack of creditworthiness;

(3)  where the landlord has made a timely request for the proposed additional family member to complete the landlord’s standard form application or provide sufficient information to allow the landlord to conduct a typical background check and the proposed additional family member does not comply within five calendar days of actual receipt by the tenant of the landlord’s request;

(4)  where the landlord can establish that the proposed additional family member has intentionally misrepresented significant facts on the landlord’s standard form application or provided significant misinformation to the landlord that interferes with the landlord’s ability to conduct a typical background check;

(5)  where the landlord can establish that the proposed additional family member presents a direct threat to the health, safety or security of other residents of the property; and,

(6)  where the landlord can establish that the proposed additional family member presents a direct threat to the safety, security or physical structure of the property.

(e)  Nothing in this Section shall prevent the landlord from providing an additional family member occupant with written notice as provided under Section 6.14 that the occupant is not an original occupant as defined in Section 6.14(a)(1) and that when the last original occupant vacates the premises, a new tenancy is created for purposes of determining the rent under the Rent Ordinance. Furthermore, nothing in this Section 6.15D shall serve to waive, alter or modify the landlord’s rights under the Costa-Hawkins Rental Housing Act (California Civil Code §§1954.50 et seq.) to impose an unlimited rent increase once the last original occupant(s) no longer permanently resides in the unit.

(f)  A landlord’s unreasonable denial of a tenant’s written request for the addition to the unit of a tenant’s child, parent, grandchild, grandparent, brother or sister, or the spouse or domestic partner (as defined in Administrative Code Sections 62.1 through 62.8) of such relatives, or the spouse or domestic partner of a tenant, subject to subsections 6.15D(c)(1)-(6) above, may constitute a decrease in housing services pursuant to Section 10.10 of these Regulations. For purposes of subsection 6.15D(f), a landlord’s non-response to a tenant’s written request within 14 calendar days shall be deemed an approval pursuant to subsection 6.15D(b) and shall not be deemed an unreasonable denial of a tenant’s request for the addition to the unit of a family member specified in subsection 6.15D(a) above.

(g)  In the event the landlord denies a tenant’s request for an additional family member under Section 6.15D, either the landlord or the tenant may file a petition with the Board to determine if the landlord’s denial of the request was reasonable.

(h)  Any petition filed under subsection 6.15D or (g) shall be expedited. 

Section 6.15E  Additional Occupants Who Are Not Family Members—Where Rental Agreement Limits the Number of Occupants or Limits or Prohibits Subletting

(Added December 4, 2015)

(a)  This Section 6.15E applies when a lease or rental agreement includes a clause limiting the number of occupants or limiting or prohibiting subletting or assignment, and a tenant who resides in the unit requests the landlord’s permission to add an additional occupant to the rental unit that will exceed the number of people allowed by the lease or rental agreement or by the open and established behavior of the parties. This Section 6.15E does not apply when a lease or rental agreement includes neither a limit on the number of occupants nor any restriction on subletting or assignment. For purposes of this Section 6.15E, the term “additional occupant” shall not include persons who occupy the unit as a Tourist or Transient Use, as defined in Administrative Code Section 41A.5 or persons who are considered family members under Section 6.15D(a).

(b)  If the tenant makes a written request to the landlord for permission to add an additional occupant to the rental unit, and the landlord fails to deny the request in writing with a description of the reasons for the denial of the request, including specific facts supporting the reasons for the denial, within fourteen (14) days of receipt of the tenant’s written request, the tenant’s request for the additional occupant is deemed approved pursuant to Ordinance Section 37.9(a)(2)(C). If the tenant’s request is sent to the landlord by mail, the request shall be deemed received on the fifth calendar day after the postmark date. If the tenant’s request is sent to the landlord by email, the request shall be deemed received on the second calendar day after the date the email is sent. If the tenant’s request is personally delivered to the landlord, the request is considered received on the date of delivery. For purposes of this subsection 6.15E(b), the 14-day period begins to run on the day after the tenant’s written request is received by the landlord.

(c)  The tenant’s inability to obtain the landlord's consent to the addition of a person specified in subsection 6.15E(a) above shall not constitute a breach of the lease or rental agreement for purposes of eviction under Ordinance Section 37.9(a)(2), where the additional person is deemed approved pursuant to subsection (b) above or where the landlord has unreasonably denied, pursuant to subsection (d) below, the tenant’s request to add an additional person allowed under subsection 6.15E(a) above and the following requirements have been met:

(1)  The tenant has requested in writing the permission of the landlord to add an additional occupant to the unit.

(2)  The landlord has five calendar days after receipt of the tenant’s written request to request the tenant to submit a completed standard form application for the proposed additional occupant or provide sufficient information to allow the landlord to conduct a typical background check, including full name, date of birth and references if requested. The 5-day period begins to run on the day after receipt of the tenant’s written request for permission to add an additional occupant to the unit. The landlord may request credit or income information only if the additional occupant will be legally obligated to pay some or all of the rent to the landlord. Nothing in Section 6.15E shall be construed as allowing a landlord to require an additional occupant to pay some or all of the rent to the landlord.

(3)  The tenant has five calendar days after receipt of the landlord’s timely request pursuant to subsection 6.15E(c)(2) to provide the landlord with the additional occupant’s application or typical background check information. The 5-day period begins to run on the day after actual receipt of the landlord’s request.

(4)  The additional occupant meets the regular reasonable application standards of the landlord, except that creditworthiness may not be the basis for denial of the tenant’s request for an additional occupant if the additional occupant will not be legally obligated to pay some or all of the rent to the landlord.

(5)  The additional occupant, if requested by the landlord, has agreed in writing to be bound by the current rental agreement between the landlord and the tenant.

(6)  With the additional occupant, the total number of occupants does not exceed the lesser of (a) two persons in a studio unit, three persons in a one-bedroom unit, four persons in a two-bedroom unit, six persons in a three-bedroom unit, or eight persons in a four-bedroom unit, or (b) the number of occupants permitted under state law and/or other local codes.

(d)  Denial by the landlord of the tenant’s written request to add an additional person allowed under subsection 6.15E(a) above shall not be considered unreasonable in some circumstances, including but not limited to the following:

(1)  where the landlord resides in the same rental unit as the tenant;

(2)  where the total number of occupants in the unit exceeds (or with the proposed additional occupant(s) would exceed) the lesser of:

(i)  two persons in a studio unit, three persons in a one-bedroom unit, four persons in a two-bedroom unit, six persons in a three-bedroom unit, or eight persons in a four-bedroom unit; or

(ii)  the maximum number permitted in the unit under San Francisco Housing Code Section 503;

(3)  where the proposed additional occupant will be legally obligated to pay some or all of the rent to the landlord and the landlord can establish the proposed additional occupant’s lack of creditworthiness;

(4)  where the landlord has made a timely request for the proposed additional occupant to complete the landlord’s standard form application or provide sufficient information to allow the landlord to conduct a typical background check and the proposed additional occupant does not comply within five calendar days of actual receipt by the tenant of the landlord’s request;

(5)  where the landlord can establish that the proposed additional occupant has intentionally misrepresented significant facts on the landlord’s standard form application or provided significant misinformation to the landlord that interferes with the landlord’s ability to conduct a typical background check;

(6)  where the landlord can establish that the proposed additional occupant presents a direct threat to the health, safety or security of other residents of the property;

(7)  where the landlord can establish that the proposed additional occupant presents a direct threat to the safety, security or physical structure of the property; and,

(8)  where an additional occupant would require the landlord to increase the electrical or hot water capacity in the building, or adapt other building systems or existing amenities, and payment for such enhancements presents a financial hardship to the landlord, as determined by a Rent Board Administrative Law Judge.

(e)  Nothing in this Section shall prevent the landlord from providing an additional occupant with written notice as provided under Section 6.14 that the occupant is not an original occupant as defined in Section 6.14(a)(1) and that when the last original occupant vacates the premises, a new tenancy is created for purposes of determining the rent under the Rent Ordinance. Furthermore, nothing in this Section 6.15E shall serve to waive, alter or modify the landlord’s rights under the Costa-Hawkins Rental Housing Act (California Civil Code §§1954.50 et seq.) to impose an unlimited rent increase once the last original occupant(s) no longer permanently resides in the unit.

(f)  A landlord’s unreasonable denial of a tenant’s written request for the addition to the unit of a person specified in subsection 6.15E(a) above, subject to subsections 6.15E(c)(1)-(6) above, may constitute a decrease in housing services pursuant to Section 10.10 of these Regulations. For purposes of subsection 6.15E(f), a landlord’s non-response to a tenant’s written request within 14 calendar days shall be deemed an approval pursuant to subsection 6.15E(b) and shall not be deemed an unreasonable denial of a tenant’s request for the addition to the unit of a person specified in subsection 6.15E(a) above.

(g)  In the event the landlord denies a tenant’s request for an additional person under Sections 6.15E, either the landlord or the tenant may file a petition with the Board to determine if the landlord’s denial of the request was reasonable.

(h)  Any petition filed under subsection 6.15E(f) or (g) shall be expedited. 

Section 6.16  Utility Passthrough

(Added August 24, 2004; Subsection (i) amended September 21, 2004; Amended December 16, 2008, effective January 1, 2009; Subsection (g)(iii) amended August 4, 2009; Subsection (g)(iii) amended July 12, 2016, effective August 13, 2016)

The following provisions shall apply to utility passthroughs where the notice of rent increase for the utility passthrough was served after November 1, 2004:

(a)  Where a landlord pays for gas, electricity and/or steam provided directly to the unit occupied by the tenant and/or to the common areas of the property in which the unit is located, and seeks to recover the increase in the cost of these utilities from the tenant, the landlord may pass through the increased costs of the utilities between the “base year” and the comparison year, as set forth below.

(b)  Determination of Initial “Base Year”

(i)  For all tenancies existing on December 31, 2003, the initial “base year” for purposes of this section shall be calendar year 2002 with the following exception:

(A)  For utility passthrough petitions filed prior to January 1, 2009, where a utility passthrough was in effect for a tenancy on November 1, 2004, the landlord could elect to use calendar year 2002 as the initial “base year” or elect to continue to use the earlier “base year”, provided that the landlord petitioned the Board for approval of the earlier “base year” and the Board determined that the earlier “base year” was proper under Section 4.11 of these Rules.

(B)  For utility passthrough petitions and Utility Passthrough Calculation Worksheets filed on or after January 1, 2009, the initial “base year” for all tenancies with an approved earlier “base year” shall be calendar year 2003.

(ii)  For all new tenancies commencing after December 31, 2003, the initial “base year” shall be the calendar year immediately preceding the year of the inception of the tenancy.

(iii)  A landlord may petition the Board for approval of an alternate “base year” if the landlord became an owner of record after December 31, 2002 and demonstrates a good faith, but unsuccessful, effort to obtain the utility bills from the former landlord and/or the utility company that are necessary to establish the “base-year” utility costs required by subsections (b)(i) or (b)(ii). The Board will not approve an alternate “base year” that creates exaggerated results unless the proposed alternate “base year” coincides with the landlord’s first full calendar year of ownership.

(c)  Subsequent Adjustments to Initial “Base Year”

Different tenants in the same property may have different initial “base years” depending on when they moved into the property or whether the Board has approved use of an earlier “base year” pursuant to subsection (b)(i) above or use of an alternate “base year” pursuant to subsection (b)(iii) above. The initial “base year” utility costs shall be adjusted every five years as follows:

A new “base year” is established at the end of every fifth calendar year after the initial “base year”. For example, where the initial “base year” is 2002, the new “base year” shall be 2007 for petitions and Utility Passthrough Calculation Worksheets filed between January 1, 2009 and December 31, 2013. If the tenancy continues for an additional five years, the “base year” will become 2012 for petitions and Utility Passthrough Calculation Worksheets filed between January 1, 2014 and December 31, 2018, and so on. For another example, where the initial “base year” is 2003, including those tenancies that had an earlier “base year” prior to January 1, 2009, the new “base year” shall be 2008 for petitions and Utility Passthrough Calculation Worksheets filed between January 1, 2010 and December 31, 2010. If the tenancy continues for an additional five years, the “base year” will become 2013 for petitions and Utility Passthrough Calculation Worksheets filed between January 1, 2015 and December 31, 2019, and so on. For another example, where the initial “base year” is 2004, the new “base year” shall be 2009 for petitions and Utility Passthrough Calculation Worksheets filed between January 1, 2011 and December 31, 2015.  If the tenancy continues for an additional five years, the “base year” will become 2014 for petitions and Utility Passthrough Calculation Worksheets filed between January 1, 2016 and December 31, 2020.

(d)  Determination of “Comparison Year”

For purposes of this section, the “comparison year” in all cases shall be the calendar year immediately preceding the filing of the landlord’s Utility Passthrough Calculation Worksheet or petition for approval of utility passthrough.

(e)  Petition Required for Certain Utility Passthroughs

Effective January 1, 2009, the landlord is required to file a Petition for Approval of Utility Passthrough when using a comparison of utility costs for the prior two calendar years (e.g. 2007/2008 in 2009, 2008/2009 in 2010, 2009/2010 in 2011, etc.). The petition shall be on a form prescribed by the Board. The petition shall specify the units on the property that are subject to the petition. The petition will be decided without a hearing unless the Administrative Law Judge determines that a hearing is required.

(f)  Where the landlord is required to file a Petition for Approval of Utility Passthrough, the landlord must file the petition before giving legal notice of a rent increase for a utility passthrough. The petition must be filed no more than twelve months after the “comparison year” listed in the petition. The notice of rent increase shall be in conformance with the requirements set forth in Section 4.10 above and shall further include the dollar amount requested for the utility passthrough. This increase for the utility passthrough shall be inoperative unless and until the petition is approved by the Administrative Law Judge. Any amounts approved by the Administrative Law Judge shall relate back to the effective date of the legal notice, if given. A landlord may choose instead not to serve legal notice of a proposed utility passthrough until after the decision of the Administrative Law Judge is rendered. In any event, no rent increase approved by the Administrative Law for a utility passthrough shall become effective until the tenant’s anniversary date.

(g)  Petition Not Required for Certain Utility Passthroughs

Effective January 1, 2009, the landlord is not required to file a Petition for Approval of Utility Passthrough using a comparison of costs for years other than the prior two calendar years. For example, in 2009, pursuant to subsection (e) above, the landlord must file a petition for “base year” 2007 and “comparison year” 2008 in order to impose a utility passthrough, but need not file a petition for “base years” 2003, 2004, 2005 or 2006 and “comparison year” 2008. However, in order to impose a utility passthrough where a petition is not required under subsection (e), the landlord must comply with the following requirements:

(i)  For each year that the landlord seeks to impose a utility passthrough where a petition is not required under subsection (e), the landlord shall file one Utility Passthrough Calculation Worksheet with the Rent Board for each “base year” used, on a form prescribed by the Board, that shows how the passthrough was calculated. The Worksheet shall be filed within twelve months of the “comparison year” used in calculating the amount of the passthrough. The Rent Board shall review ten percent (10%) of all Worksheets filed with the Board. In addition, if there is no prior utility passthrough petition on file for a property for which a Worksheet is filed, the Rent Board shall review at least one Worksheet for that property. In conducting a Worksheet review, the Board may take whatever action the Board deems necessary including, but not limited to, requiring the landlord to file evidence to support the calculations in the Worksheet, requiring the landlord to file a Petition for Approval of Utility Passthrough, scheduling a hearing, or reviewing additional Utility Passthrough Calculation Worksheets.

(ii)  The landlord must file the Worksheet with the Board before giving legal notice of a rent increase for a utility passthrough. The notice of rent increase shall be in conformance with the requirements set forth in Section 4.10 above and shall further include the dollar amount requested for the utility passthrough. The landlord must provide the tenant with a file-stamped copy of the Utility Passthrough Calculation Worksheet at the time of service of the notice of rent increase.

(iii)  A tenant who receives a utility passthrough under this subsection (g) may file a hardship application with the Board pursuant to Section 10.15 within one year of the effective date of the passthrough, and may be granted relief from all or part of such passthrough based on hardship. Payment of the utility passthrough set forth in the hardship application shall be stayed until a decision is made by the Administrative Law Judge on the tenant’s hardship application. Appeals of decisions on a tenant’s hardship application shall be governed by Ordinance Section 37.8(f).

(h)  Laundry Facilities

Where the utility bills include the cost of gas and/or electricity for laundry facilities and the landlord charges a user fee for the laundry facilities, the landlord may not pass through any increase in the building’s cost of utilities unless the landlord complies with one of the following subsections:

(i)  where the laundry facilities are separately metered in both the “base year” and “comparison year”, the landlord shall not include the utility costs for the laundry facilities in the utility passthrough calculation; or

(ii)  where the laundry facilities are not separately metered in both the “base year” and the “comparison year” and there is a third party vendor that collects the user fees from the laundry facilities, the landlord shall deduct the income actually received by the landlord from the third party vendor from the total utility costs for the building; or

(iii)  where the laundry facilities are not separately metered in both the “base year” and the “comparison year” and there is not a third party vendor that collects the user fees from the laundry facilities, the landlord shall deduct 50% of the user fees actually collected by the landlord from the total utility costs for the building; or

(iv)  where the laundry facilities are not separately metered in both the “base year” and “comparison year”, the landlord shall deduct the actual costs of utilities that serve such laundry facilities, using a methodology that has been approved by the Rent Board.

(i)  Where the utility bills include the cost of gas and/or electricity for laundry facilities and the laundry facilities are not available to or operated for the benefit of the tenant, and the laundry facilities are not separately metered in both the “base year” and “comparison year”, the landlord may not pass through to that tenant any increase in the building’s cost of utilities.

(j)  Calculation of the Utility Passthrough

The landlord shall calculate the amount of the utility passthrough as follows:

(i)  Compile the utility bills for the “base year” and the “comparison year” as defined in subsections (b), (c) and (d) above. The utility passthrough shall be based on actual costs incurred by the landlord during the relevant calendar years, regardless of when the utility bill was received or paid.

(ii)  Calculate the total utility cost for the “base year” and the total utility cost for the “comparison year”.

(iii)  Where the laundry facilities are not separately metered in both the “base year” and the “comparison year”, compile evidence of and calculate the actual cost of utilities that serve the laundry facilities in the “base year” and the “comparison year”.

(A)  Where the landlord cannot prove the actual cost of utilities that serve the laundry facilities and a third party vendor collects the user fees from the laundry facilities, compile evidence of and calculate the income actually received by the landlord from the third party vendor for the use of the laundry facilities in the “base year” and the “comparison year”.

(B)  Where the landlord cannot prove the actual cost of utilities that serve the laundry facilities and the landlord collects the user fees from the laundry facilities, compile evidence of the user fees actually collected by the landlord for the use of the laundry facilities in the “base year” and the “comparison year” and calculate 50% of the amount collected.

(iv)  Where the laundry facilities are not separately metered in both the “base year” and the “comparison year”, subtract the utility costs for the laundry facilities, as calculated in subsection (iii) above, from the total utility cost for the “base year” and the total utility cost for the “comparison year”.

(v)  Subtract the total “base year” utility cost (excluding utility costs for the laundry facilities) from the total “comparison year” utility cost (excluding utility costs for the laundry facilities) to get the utility cost increase. If there is no increase or if there has been a decrease, no passthrough is allowed.

(vi)  Divide the resulting figure, if greater than zero, by twelve (12) to determine the average monthly utility increase for the entire property.

(vii)  Divide the average monthly utility increase by the number of rooms in the property to get the amount of the utility passthrough that may be imposed for each room. For purposes of this section, the number of rooms in a property shall be calculated by presuming that single rooms without kitchens are one room units, studios are two room units, one bedroom units without a separate dining room are three room units, and so on. Each parking space and garage space in the building which is included in a tenant’s rental or for which a user fee is charged shall be counted as one room. Areas used for commercial purposes but for which no user fee is charged to the tenants, including but not limited to management offices and retail space, shall be included in the room count in a manner that most reasonably takes into account the size of the space and its utility usage.

(viii)  To get the monthly utility passthrough for a unit, add the number of rooms in the unit to the number of rooms for parking and/or garage spaces included in the tenant’s rental or for which a user fee is paid by the tenant, and multiply that total number of rooms by the monthly utility increase per room.

(k)  No landlord may pass through any increase in the cost of utilities to a tenant until the tenant has occupied the unit in the subject property for one continuous year.

(l)  Each utility passthrough shall apply only for the twelve-month period after it is imposed.

(m)  Nothing in this section or in these Rules and Regulations shall be interpreted as requiring any landlord to pass through any utility increase or to increase any tenant’s rent.

(n)  The amount of rent due from the tenant for any utility passthrough shall be due on the same date as a rent payment normally would be due.

(o)  A utility passthrough may be imposed only at the time of an annual rent increase. However, no amount passed through to the tenant as a utility increase shall be included in the tenant’s base rent for purposes of calculation of the amount of rent increases allowable under the Ordinance and these Rules and Regulations.

(p)  The provisions of this Section shall be deemed a part of every rental agreement or lease, written or oral, for the possession of a rental unit subject to the Ordinance unless the landlord and the tenant agree that the landlord will not pass through any utility increases, in which case such agreement will be binding on the landlord and on any successor owner of the property.

(q)  Where a utility increase has been lawfully passed through to the tenant, a change in the ownership of the property in which the tenant’s unit is located will not affect the tenant’s liability to pay the amount passed through.