Topic No. 308: Special Rules for Properties with Six or More Residential Units

The following rules apply to capital improvement petitions filed after November 13, 2002 for properties with six or more residential units. Commercial units do not count toward the number of units on the property, although a portion of the capital improvement cost must be allocated to commercial units that benefit from the capital improvement work.

If the cost of a project is reasonably expected to exceed $25,000.00 multiplied by the number of units on the parcel or in the building, the landlord shall immediately inform each tenant and the Rent Board in writing of the anticipated costs of the work. The landlord's notice must occur within 30 days after such determination by the landlord.

In general, only 50% of the certified capital improvement costs may be passed through to the tenants. The amount of the passthrough may not exceed the greater of $30.00 or 10% of a tenant's petition base rent in any 12-month period. However, a majority of tenants in any unit may elect an alternative passthrough based on 100% of the capital improvement costs. Election of the 100% passthrough alternative may be advantageous for tenants in certain situations, depending on such factors as when the tenant is going to vacate the unit, the certified costs of the capital improvements, the amount of the tenant's base rent, the tenant's financial situation and whether the tenant is concerned with capital improvement petitions that may be filed by the landlord in the future. Information concerning allowable rent increases under the 100% alternative passthrough can be obtained at the Rent Board, or tenants can consult private counsel and/or a tenants' rights organization.

The capital improvement costs must be amortized over 7 years or 10 years, depending upon the type of improvement. The amortization schedules for various types of improvements can be found in the Capital Improvement Petition form for Properties with 6 or More Residential Units. To receive a copy of the petition form, you can fax it to yourself through our Fax Back system by calling (415)252-4660 or visit our website at www.sfrb.org. The petition form is also available at our office.

The capital improvement passthrough does not become part of the tenant's base rent and must be discontinued at the end of the applicable amortization period. If the landlord fails to discontinue the passthrough at the proper time, the landlord is liable to the tenant for the overpayments.

June 2006

 

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