Rules & Regulations Section 1.18 amended 1/4/03

Rules & Regulations Section 1.18 amended 1/4/03

The following language was adopted by the Commission at its February 4, 2003 meeting. This language amends Section 1.18 of the Rules and Regulations and was effective immediately. A brief explanation of the reason for the amendment and the language that was adopted follows.

 

Former Commissioner Aung authored the proposed amendment, because the Section as currently written permits evictions for substantial rehabilitation to occur before any hearing is held or the actual costs of the work are certified. Tenants can therefore be evicted and not realize they have the right to reoccupy the unit, although the subsequent petition for exemption may be denied due to the failure of the owner to meet the expenditure requirements. The proposed amendment provides guidance to landlords and tenants by creating a rebuttable presumption that the costs on the approved construction permits are the estimated cost of the proposed work. The proposal also requires that a landlord who recovers a unit or units pursuant to Section 37.9(a)(12) must file a petition for exemption within a certain period of time after recovery of the unit or be deemed to have wrongfully recovered possession in violation of Section 37.9(f).

 

After discussion resulting in a few amendments to the proposed language, the Board voted as follows:

 

MSC: To pass the proposed amendments to Rules and Regulations Section 1.18, with minor changes. (Becker/Marshall: 5-0)

 

The amended regulation reads as follows below:

 

Section 1.18 Substantial Rehabilitation

(Amended August 29, 1989; September 5, 1989; September 26, 1989; June 18, 1991; renumbered effective February 1, 1995; amended February 4, 2003.)

 

"Substantial rehabilitation" means the renovation, alteration or remodeling of a building containing essentially uninhabitable residential rental units of 50 or more years of age which require substantial renovation in order to conform to contemporary standards for decent, safe and sanitary housing in place of essentially uninhabitable buildings. Substantial rehabilitation may vary in degree from gutting and extensive reconstruction to extensive improvements that cure substantial deferred maintenance. Cosmetic improvements alone such as painting, decorating and minor repairs, or other work which can be performed safely without having the units vacated, do not qualify as substantial rehabilitation.

 

Improvements will not be deemed substantial unless the cost of the work for which the landlord has not been compensated by insurance proceeds equals or exceeds seventy-five percent (75%) of the cost of newly constructed residential buildings of the same number of units and type of construction, excluding land costs and architectural/engineering fees. The determination of the cost of newly constructed residential buildings shall be based upon construction cost data reported by Marshall and Swift, Valuation Engineers, as adapted for San Francisco and posted in January and June of each year in the Department of Building Inspection for purposes of determining permit fees. The schedule in effect on the date of the Notice of Completion of the improvements shall apply. Where the landlord is seeking to recover possession of a rental unit under Section37.9 (a)(12) of the Rent Ordinance, improvements will not be deemed substantial unless the estimated cost of the proposed work for which the landlord will not be compensated by insurance proceeds equals or exceeds seventy-five percent (75%) of the cost of newly constructed residential buildings of the same number of units and type of construction, excluding land costs and architectural/engineering fees, based upon construction cost data reported by Marshall and Swift. For purposes of such evictions under 37.9(a)(12) of the Rent Ordinance, there shall be a rebuttable presumption that the cost stated for the work in the applicable approved construction permits is the estimated cost of the proposed work. For purposes of determining whether improvements are substantial under Section 37.9(a)(12), the determination of the cost of newly constructed residential buildings shall be based upon construction cost data reported by Marshall and Swift, Valuation Engineers, as adopted for San Francisco. The schedule in effect on the date the notice to quit is served shall apply. Where the landlord is seeking to recover possession of several units in the same building under Section 37.9(a)(12) of the Rent Ordinance for one proposed substantial rehabilitation project, the schedule posted and in effect on the date of service of the first notice of termination shall apply. A landlord who recovers possession of a rental unit under Section 37.9(a)(12) must file a petition with the Rent Board for exemption based on substantial rehabilitation within the earlier of: (i) two years following recovery of possession of the rental unit; or (ii) one year following completion of the work. A landlord who fails to file a petition within such time and thereafter obtain a determination of exempt status from the Board shall be rebuttably presumed to have wrongfully recovered possession of the tenant's rental unit in violation of Section 37.9(f).