Topic No. 331: Water Revenue Bond Passthroughs

A landlord may pass through to tenants 50% of the water bill charges attributable to water rate increases resulting from the issuance of Water System Improvement Revenue Bonds authorized at the November 2002 election. Water bills prepared by the S.F. Public Utilities Commission commencing July 1, 2005 specify the water bill charges that are eligible for the passthrough.

The landlord is not required to file a petition with the Rent Board for approval of the Water Revenue Bond Passthrough. However, the landlord must use the Water Revenue Bond Passthrough Worksheet in order to calculate the passthrough.

The landlord may base the calculation of the Water Revenue Bond Passthrough on a single water bill OR, in the alternative, on all the water bills for any calendar year. Where the landlord elects to calculate the Water Revenue Bond Passthrough based on a calendar year, the passthrough must be imposed at the time of the annual rent increase, on the tenant’s rent increase anniversary date. Where the landlord elects to calculate the passthrough on a single water bill, the passthrough need not be imposed on the tenant’s anniversary date; however, the landlord must serve notice of such passthrough within 60 days of receipt of the water bill. In any event, the passthrough shall not become part of the tenant’s base rent.

There are several specific requirements for the notice of rent increase for a Water Revenue Bond Passthrough, including the following:

  • The notice shall specify the dollar amount of the monthly passthrough, the period of time covered by the water bills that are used to calculate the passthrough and the number of months that the tenant is required to pay the passthrough.
  • The notice must include a copy of a completed Water Revenue Bond Passthrough Worksheet.
  • The notice shall explain that the passthrough is based on the issuance of Water System Improvement Revenue Bonds.
  • The notice must state that the tenant can receive a copy of the applicable water bills from the landlord upon request.
  • The notice must also state that the unit is in compliance with any applicable laws requiring water conservation devices such as the Residential Water Conservation Ordinance which is found in Chapter 12A of the San Francisco Housing Code.

In addition to these specific notice requirements, state law requires service of a thirty-day notice if the passthrough, either by itself or combined with any other rent increase in the one year period before the effective date, is no more than 10%. A sixty-day notice is required if the increase, either by itself or combined with any other rent increase in the one year period before the effective date, is more than 10%. If the rent increase notice is served by mail, the required notice period must be extended by an additional five days.

If payment of the Water Revenue Bond Passthrough would present a financial hardship for a tenant, he or she may seek relief from payment of the passthrough by filing a Tenant Financial Hardship Application with the Rent Board. A Tenant Financial Hardship Application must be filed within one year of the effective date of the Water Revenue Bond Passthrough. Once the tenant has filed the Hardship Application, the tenant does not have to pay the Water Revenue Bond Passthrough unless the Rent Board issues a final decision denying the Hardship Application. If the Hardship Application is denied, the tenant will have to pay the water revenue bond passthrough retroactive to the date indicated in the rent increase notice. If the Hardship Application is granted, relief from payment of the water revenue bond passthrough may be for an indefinite period or for a limited period of time, depending on the nature of the tenant’s financial hardship.

A tenant may also file a petition for arbitration at the Rent Board to challenge an improper Water Revenue Bond Passthrough. Such petitions must also be filed within one year of the effective date of the passthrough. A Water Revenue Bond Passthrough may be improper for one or more of the following reasons:

  • The landlord has not properly calculated the passthrough;
  • The passthrough is calculated using an incorrect unit count;
  • The landlord failed to provide a clear written explanation of the charges and the calculation of the passthrough;
  • The tenant’s unit is not in compliance with applicable laws requiring water conservation devices;
  • The tenant requested a copy of the applicable water bills and the landlord has not provided them;
  • The tenancy began during or after the billing periods included in the passthrough calculation;
  • The landlord failed to discontinue the passthrough after it was fully paid.

To obtain a copy of the Water Revenue Bond Worksheet, a copy of Chapter 12A, and/or the Tenant Financial Hardship Application you can visit the Forms Center on our website at www.sfrb.org. These forms are also available at the Rent Board’s office.

 

November 2016