August 06, 1996

DATE:

AUGUST 6, 1996

TIME:

6:00 P.M.

PLACE:

25 VAN NESS AVENUE (AT MARKET ST.)
SUITE 70, LOWER LEVEL
SAN FRANCISCO, CALIFORNIA

THE RENT BOARD COMMISSIONERS INVITE THE PUBLIC TO COMMENT ON PROPOSED CHANGES TO THE RULES AND REGULATIONS GOVERNING THE RESIDENTIAL RENT STABILIZATION AND ARBITRATION ORDINANCE, CHAPTER 37 OF THE SAN FRANCISCO ADMINISTRATIVE CODE.

THE COMMISSION IS TAKING PUBLIC COMMENT ON THE ATTACHED LANGUAGE ON THE ISSUE(S) BELOW:

SECTION 10.10

These amendments concern as to the issues of the landlord’s actual and constructive notice of decreased housing services.

SECTION 1.12

This is a non-substantive amendment intended to clarify when the owner can impose a banked increase after Proposition H. The intent of this section is to allow landlords to "bank" the 4% they could have imposed prior to the passage of Proposition H and the lowering of the annual increase amount to 1.6%, even if the requisite 2 year-period for banking hadn’t transpired. However, it currently reads as a time limitation for imposition of the increase.

SECTION 8.12

This is a non-substantive amendment to change the name to Department of Building Inspection from its prior name of Department of Public Works.

SECTION 12.18

This is a non-substantive amendment to change a reference to Section 37.2(b)(6) to 37.2(b)(5). This Ordinance Section was renumbered due to a previous change in the Ordinance.

(New text is underlined and bold, [[deleted sections are in double brackets]])

Written comments may be sent to the Rent Board. As the Commission often receives many comments, they should be in the office no later than Tuesday July 30, 1996, so that the Commissioners will have time to review them prior to the meeting. 12 copies are requested. While written comments may be submitted after this date or at the hearing, the opportunity to have your written comments fully considered may be jeopardized. Interested parties will also have an opportunity to speak on the amendments during the public hearing. Please note that a three-minute speaking rule may be imposed.

Section 10.10 Decrease in Services

(a) A tenant may petition for a reduction of base rent where a landlord, without a corresponding reduction in rent, has (1) substantially decreased housing services, including any service added after commencement of the tenancy and for which additional consideration was paid when it was provided, or (2) failed to provide housing services reasonably expected under the circumstances, or (3) failed to provide a housing service verifiably promised by the landlord prior to commencement of the tenancy.

(b) A petition for arbitration based on decreased services shall be filed on a form supplied by the Board. The petition shall be accompanied by a statement setting forth the nature and value of the service for which the decrease is being sought, and the date the decrease began and ended, if applicable.

[[(c) Except in extraordinary circumstances, or where there have been long term verifiable oral or written notices to a landlord of decreased services, no rent decrease will be allowed prior to one year preceding the filing of the petition.]]

(c) No rent decrease as requested in the tenant’s petition will be allowed prior to one year preceding the filing of the petition except where one of the following is found:

(1) extraordinary circumstances;

(2) where there has been long term notice, oral or written, from any source, regarding such decrease occurring in the interior of the tenant’s unit;

(3) where there has been actual notice, oral or written, from any source, and/or constructive notice regarding such decrease occurring in any common area;

(4) where the decreases are shown to predate the tenancy, and where constructive notice is found.

(d) For the purposes of this section, notice is defined as follows:

(1) Actual Notice: Actual notice occurs when any person, or entity, informs the landlord, or the landlord’s agents, orally or in writing, of an alleged, or actual, decrease in housing services as defined in the Rent Ordinance at Section 37.2(g).

(2) Constructive Notice: Constructive notice occurs when a decrease in housing services exists and the landlord could have, or should have, known about the defect. Landlords are responsible for periodic inspections of the common areas of the residential structures that they offer for rent. Therefore, landlords are deemed to have notice of the condition of the common areas of the buildings that they rent. The frequency of periodic inspections depends on the facts and circumstances of each individual building, as modified by the landlord’s actual knowledge and/or notice received. Additionally, landlords are responsible to inspect the interior of each and every unit which they offer for rent, prior to renting, and are deemed to have knowledge regarding the condition thereof. However, when a reasonable inspection, in a vacant unit, or in the common area, fails to reveal a hidden defect, constructive notice shall not be found. (For example, if between tenancies, a landlord inspects an empty apartment and checks to see that the heater works, which actually turns on and begins to heat, that landlord shall not be held to be on constructive notice that the thermostat is not accurate.)

(e) With respect to Newly Covered Units, the earliest permissible effective date for any rent decrease allowed under this Section 10.10 shall be December 22, 1994; provided, however, that the initial base rent, as defined by Section 37.12(a) of the Rent Ordinance shall include all housing services provided or reasonably expected on May 1, 1994, or as of the commencement of the tenancy, whichever is later.

[[(d)]](f) Except where a failure to repair and maintain results in a substantial decrease in housing services, any relief granted by the Board under this section shall preclude relief under Section 10.11 below. This provision shall not limit any civil remedies that would otherwise be available to a tenant or landlord.]] (Renumbered as "(f)" below)

Section 1.12 Annual Rent Increase

(a) Where a landlord is entitled to an annual rent increase to be effective from December 8, 1992 through February 28, 1993, the allowable amount of increase is 1.6%. Thereafter, the annual allowable increase determined by the Board shall become effective each March 1, and shall be no more than 60% of the percentage increase in the Consumer Price Index (CPI) for All Urban Consumers in the San Francisco-Oakland-San Jose region as published by the U.S. Department of Labor for the 12 month period ending November 30. In determining the allowable percentage rent increase, numbers of .04 and below shall be rounded down to the nearest tenth decimal place, and numbers of .05 and above shall be rounded up to the nearest tenth decimal place. In no event, however, shall the allowable annual increase be greater than seven percent (7%). The Rent Board shall publish the annual allowable increase amount on or about January 1. The published increase shall be determined only once for each 12 month period and shall remain in effect until the next scheduled recalculation.

(b) Where a landlord was entitled to an annual rent increase between March 1, 1992 and December 7, 1992, the allowable amount of increase is 4%. The landlord may impose the increase at any time, even if two years have not elapsed since the effective date of the last annual increase. [[If a landlord did not impose the 4% increase to which the landlord was entitled during the period March 1, 1992 to December 7, 1992, the landlord may impose the increase at any time prior to two years from the effective date of the last annual increase.]]

(c) Where a landlord is entitled to an annual rent increase to be effective from December 8, 1992 through February 28, 1993, the allowable amount of increase is 1.6%. Any notice of rent increase which imposes only a 4% or less annual increase effective during the above period is lawful in the amount of 1.6%, and only that portion of the increase above 1.6% is null and void, provided that the increase is given in good faith without knowledge of the effective date of Proposition H. Nothing in this Regulation shall affect any banking rights that the landlord may have.

(d) For rent increases effective during the period December 8, 1992 through February 28, 1993, where a tenant has received a notice of increase in excess of the allowable amount but has not yet paid the requested amount, the notice shall be null and void. Nothing in this Regulation shall affect any banking rights that the landlord may have.

Section 8.12 Application for Certification

Application for certification shall be filed on a form provided by the Rent Board. The application shall include:

(1) A tenant history, including the names of all tenants in possession at the time substantial rehabilitation was noticed, their last known address, their rent at the time they left voluntarily or were evicted, which tenants were evicted, the names and unit number of any current tenants and their current rents;

(2) A detailed description of the substantial rehabilitation work itemizing all costs, including but not limited to site improvements, paving and surfacing, concrete, masonry, metals, wood and plastic, thermal and moisture protection, doors and windows, finishes, specialties, equipment, furnishings, conveying systems, mechanical and electrical work;

(3) Evidence that the building is over 50 years old;

(4) A determination of condemnation, and/or

(5) A determination by the Department of Building Inspection [[Department of Public Works]] that the premises were ineligible for a permit of occupancy;

(6) A current abstract of title;

(7) A complete inspection report issued by the Department of Public Works made prior to the commencement of rehabilitation work;

(8) Proof of purchase price;

(9) Final notice of completion from the Department of Building Inspection [[Department of Public Works]];

(10) Copies of eviction notices to prior tenants;

(11) Copies of invoices, bids and canceled checks substantiating the costs for which the landlord has not been compensated by insurance proceeds;

(12) Sufficient copies of the petition for distribution to each tenant;

(13) Copy of the current assessment;

(14) If claim is made for uncompensated labor, the application shall include a log of dates on which the work was performed, number of hours of work and description of the work performed, and, if claim is made for electrical or plumbing work, a copy of the worker’s contractors license.

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Section 12.18 Procedures Regarding Evictions under Section 37.9(a)(13)

NOTE: THE ONLY CHANGE TO THIS SECTION IS A NUMBERING CHANGE ON PAGE 8, LINE 26.

(a) Notice of Intent to Board [37.9A(g)(1)]

Prior to service of any notice on tenants to terminate their tenancy pursuant to Section 37.9(a)(13) of the Ordinance, the owner shall serve on the Board either by personal delivery or by registered or certified mail a written Notice of Intention to Withdraw on a form approved by the Board, together with a Memorandum of Notice as prescribed by Ordinance Section 37.9A(g)(2). Such Notice of Intention shall contain a statement under penalty of perjury providing the following information:

(1) The names and address of all owners of the property;

(2) The address of all residential units on the property;

(3) The legal description of the property;

(4) The name and address of each tenant residing on the property;

(5) The rent being charged each tenant at the time the notice to vacate is served on the tenants;

(6) The date tenancy commenced and the rent history for each tenant commencing April 1, 1981; and

(7) Any actions which the landlord has been required by law to file to terminate one or more existing tenancies at the property, other than under Section 37.9(a)(13).

(b) Board Determination of Sufficiency of Notice of Intent [37.9A(g)(1) & (3)]

If the owner provides all required information on the Notice of Intent submitted to the Board, the Board shall notify the owner and tenants that the notice and Memorandum are sufficient and that the notice is accepted for filing. The Board shall place on the Memorandum of Notice the statement required by section (c)(1) below and shall return the Memorandum to the owner for recording. If the owner fails to provide a complete notice, the Board shall return the notice to the owner stating in what respects it is incomplete. All information in the notice as submitted, other than the address and legal description of the property, shall be kept confidential and not made available to the public without a court order or the prior written consent of the individuals named therein. This restraint shall not prevent the Board from making public other documents which independently disclose information which would be considered confidential under this section.

(c) Owner’s Obligation To Record Memorandum of Notice [37.9A(g)(2) & (h)]

(1) When the Board accepts a Notice of Intent for filing, the Board shall place on the related Memorandum a statement that restraints on the property under Ordinance Section 37.9A and Government Code Sections 7060.2 through 7060.4 will apply to the owner’s successors in interest.

(2) Prior to the service of any notice to terminate tenancy pursuant to Section 37.9(a)(13) of the Ordinance and after the Board has accepted and filed the Notice of Intent to withdraw residential rental units and returned the related Memorandum of Notice, the owner shall record with the San Francisco County Recorder’s Office a Memorandum of Notice regarding withdrawal of rental unit from rent or lease. The owner shall serve upon the Rent Board by personal delivery or first class mail a conformed copy of the recorded memorandum.

(d) Notice to Terminate Tenancy [37.9A(f) & (g)(4)]

(1) Any notice to terminate tenancy which relies on Rent Ordinance Section 37.9(a)(13) shall include notice of the following:

(A) that the Board has been notified of the owner’s intent to withdraw the units, the tenant’s name and amount of rent paid;

(B) the amount of rent stated on the owner’s Notice of Intent to the Board; and

(C) that the tenant has rights and obligations under Section 37.9A, including the tenant’s right to renew the tenancy if proper notification is given within 30 days after vacating the unit and the tenant’s entitlement before vacating the premises to payment of the sum of $1,500.00, $1,750.00, $2,500.00 or $3,000.00, whichever amount the landlord in good faith believes due in the particular case.

(2) Within five (5) days of service of the notice to terminate tenancy, the owner shall serve a copy on the Board by personal delivery or certified or registered mail.

(e) Obligation of Tenant to Advise Owner and Board of Desire to Consider Renewal of Tenancy [37.9A(c)(1)]

Any tenant who is displaced by the withdrawal of a rental unit and who desires to consider an offer to renew the tenancy pursuant to Ordinance Section 37.9A(c) in the event the unit is again offered for rent or lease may notify the owner and the Board in writing within thirty (30) days after vacating the unit. This notice must include an address to which the owner’s offer is to be directed. Displaced tenants should advise the owner and the Board of any change of address to which the offer is to be directed.

(f) Obligation of Owner To Notify Board Prior to Offering Previously Withdrawn Units For Rent Or Lease [37.9A(c)(2)]

At least thirty (30) days prior to offering to rent or lease any previously withdrawn unit within ten years after the date on which the unit became vacant pursuant to Section 37.9(a)(13) of the Ordinance, the owner must first notify the Board in writing either by personal delivery or by registered or certified mail of the intention to offer the unit for residential rent or lease.

(g) Obligation of Owner to Offer Previously Withdrawn Units to Displaced Tenants [37.9A(c)(1) & (2)]

Whenever a previously withdrawn unit is again offered for rent or lease, the owner must first offer such unit to the displaced tenants who notified the owner and the Board pursuant to Ordinance Section 37.9A(c)(1) of their wish to consider such an offer. If the tenants did not so notify the owner of their wish to consider such an offer, the owner still must first offer such unit to the displaced tenants who request the offer in writing within thirty (30) days after the owner has notified the Board of an intention to offer the unit for residential rent or lease.

(h) Owner’s Liability Under Ordinance Section 37.9A [37.9A(e) & (c)(2)]

(1) If the owner offers a previously withdrawn unit for rent or lease within one year after it became vacant, the owner may be liable to the displaced tenants for actual and

punitive damages as provided by Ordinance Section 37.9A(e).

(2) If the owner fails to offer previously withdrawn units to displaced tenants as prescribed by Ordinance Section 37.9A(c)(2), the owner may be liable to the displaced tenants for punitive damages as provided by Ordinance Section 37.9A(c)(2).

(i) Maximum Rents On Withdrawn Units Subsequently Offered For Rent Or Lease [37.9A(a)]

If one or more units withdrawn under Ordinance Section 37.9(a)(13) are subsequently offered for rent or lease, the maximum rent for such unit(s) is that which would have been allowed had the prior tenants remained in continuous occupancy. The owner must first petition the Board for an arbitration hearing to impose rent increases which exceed the limitations set forth in Part 4 of these Regulations.

(j) Units Constructed On The Same Property As Previously Withdrawn Units [37.9A(b)]

If one or more new residential rental units are constructed on the same property from which units were withdrawn and demolished, and such units are offered for rent or lease within five (5) years of the date the last of the original units became vacant, the newly constructed units shall be subject to the provisions of the San Francisco Rent Ordinance, notwithstanding Section 37.2(p)(5)[[(6)]] or any other provision of the Rent Ordinance. The

Board shall determine the allowable rents on the newly constructed units which are necessary to provide a fair and reasonable return.

(k) Owner’s Obligation to Report the Status of the Withdrawn Units to the Board [37.9A(i)]

(1) For a period of five years from the date the Board accepts the Notice of Intent to Withdraw, the owner and any successor in interest must report to the Board in writing under penalty of perjury by either personal delivery or certified or registered mail of the status of the withdrawn units. Such report must be submitted no later than the third and sixth calendar months following the month in which the Notice of Intent is accepted by the Board and thereafter annually no later than December 31st of each calendar year. Such report shall provide the following information for each such unit:

(A) whether the unit has been demolished;

(B) if not, whether it is in use and whether it is in residential use;

(C) if the unit has been demolished and one or more new units have been constructed on the property, whether any units are in residential use; and

(D) the date any residential tenancy began, the name(s) of the tenant(s) and the amount of rent charged.

(2) The Board shall maintain a record of such reports and may investigate the status of the property when such reports are improperly completed or untimely submitted.

(3) The Board shall endeavor to notify each person who is reported as having become a tenant at the property that the Board maintains a record of such reports and that the rent of the unit may be restricted.