Costa-Hawkins Update - 1/20/99

This State law provision became effective on January 1, 1999. While it is now in effect, it does not necessarily mean that owners of single family homes and condos can give a new market rate rent increase. There are specific limitations as to when an owner is entitled to do this and anyone contemplating an increase based on this law should be up to speed on the provisions of the law.

The Rent Board Commission is still trying to sort out the particulars of this law—it was not exactly the legislators’ most shining moment in terms of coherent writing. What the Commission has clarified to-date is listed below. The remaining issues will be sorted out in the next few months, and it is anticipated that amendments to the Rent Ordinance and the Rules and Regulations will have to be made in order to conform local law with State law. Public hearings for any Ordiance or Rules changes will have to be held once all the issues have been identified and proposed language has been established. Interested parties should watch the Commission Agenda to see when the Rules changes will be calendared. Ordiance changes must be done through the Board of Supervisors.

Those items that have been clarified to-date include:

1. Single family dwellings with in-law units, whether legal or illegal, constitute two-unit buildings and will not become exempt.
2. If there is another structure on the same lot as a single family dwelling, then the home is not “alienable separate from the title to any other dwelling unit” because it cannot be sold separately, and the single family dwelling will not become exempt.
3. The rental unit fee will continue to be collected on units which are partially exempted by Costa-Hawkins as they will still be subject to eviction limitations under the Ordinance.
4. In a mixed-use building with one residential and commercial unit(s), the commercial units will not be counted, unless they are used for residential purposes and therefore constitute a “dwelling unit”.
5. Since a decrease in housing services is defined in the Ordinance as a rent increase, tenants in units affected by Costa-Hawkins will be precluded from filing petitions alleging decreased housing services and/or failure to repair.

Areas that will require additional discussion include:

1. What is the status of tenancies in rooms that are separately rented in a single family dwelling?
2. Since the legislation does not affect the City’s “authority to regulate or monitor the basis for eviction”, to what extent will allegations of wrongful eviction in affected units be investigated, especially with regard to retaliatory rent increases?
3. What constitutes “serious health, safety, fire or building code violations” sufficient to override exemption of the substandard unit, and does this apply to the “setting of initial rent” in a non-vacancy control jurisdiction such as San Francisco?
4. How does the provision in Section 1954.53(a)(1) which allows for setting of the initial rent only if the previous tenancy was not terminated apply in a jurisdiction with “Just Cause” eviction?

Needless to say, there will be other issues that arise during the course of discussion on Costa Hawkins. Because there are still several issues to be resolved, our staff may not be able to answer all your questions until the Commission has resolved the outstanding issues. If you are contemplating taking any action based on the provisions in Costa Hawkins, I would strongly advise that you seek competent legal counsel before striking off on your own into these uncharted waters.