March 06, 2001
THE SAN FRANCISCO RESIDENTIAL RENT
STABILIZATION & ARBITRATION BOARD
PROPOSED AMENDMENTS TO RENT BOARD RULES
AND REGULATIONS ยง7.14 PURSUANT TO NOVEMBER 2000 PROPOSITION H, TO BE EFFECTIVE
ONLY IF THE STAY OF IMPLEMENTATION OF PROPOSITION H ORDERED ON DECEMBER 20,
2000 IN QUIGG VS. CITY AND COUNTY OF SAN FRANCISCO, ET AL., SUPERIOR
COURT CASE NUMBER 316928, IS NO LONGER IN EFFECT.
Section 7.14 Allowance of Interest
(Amended
October 4, 1994; amended Subsection (b)(2) and
adding
subsection (b)(3), January 19, 1999)
A landlord who
expends funds for seismic retrofit capital improvement work or non-seismic
capital improvements or rehabilitation work shall be entitled to a reasonable
rate of interest. Any allowance of interest, whether imputed or real, in favor
of a landlord pursuant to this section shall be limited to no more than ten
(10) percent and shall be amortized over a period equal to the amortization
period of the improvement, subject to the limitations contained in Section 7.12(d).
The following rules shall apply to any request for the allowance of interest.
(a) Allowance of Actual Interest
Incurred. The landlord has the burden of proof to establish the actual rate
of interest. To meet this burden, the landlord must submit, at a minimum, either
the applicable loan agreement, promissory note or other admissible documentary
evidence substantiating the rate of interest. In addition, the landlord has
the burden to show that the actual rate of interest for which an allowance is
sought is reasonable under the circumstances.
(b) Allowance of Imputed Interest.
In cases where the landlord does not incur or prove in accordance with subsection
(a) any actual interest interest expense on funds used for seismic retrofit
capital improvement work or non-seismic capital improvements or rehabilitation
work, the landlord shall be entitled to an allowance of imputed interest. The
rate of imputed interest shall be determined in accordance with the following
rules:
(1) On
March 1 of each year, in accordance with subparagraph (b)(2), the Board shall
publish two three rates of imputed interest. Subject to the ten (10)
percent limitation contained in the first paragraph of this rule, the published
rates shall constitute the rates of imputed interest to be allowed on petitions
filed on or after March 1 through February 28 (or February 29, as the case may
be) of the following year.
(2) The first
rate shall be the average of the twelve most recent monthly rates (rounded to
the nearest tenth) as posted by the Federal Reserve on their Federal Reserve
Statistical Release Internet site for seven-year Treasury Securities and shall
apply to certified non-seismic capital improvement costs amortized over
a seven-year period in accordance with Section 7.12(c).
The second rate shall be the average
of the twelve most recent monthly rates (rounded to the nearest tenth) as posted
by the Federal Reserve on their Federal Reserve Statistical Release Internet
site for ten-year Treasury Securities and shall apply to certified capital improvement
costs amortized over a ten-year period in accordance with Section 7.12(c) for
non-seismic capital improvement work and for seismic retrofit capital improvement
work which is included in petitions filed before December 21, 2000.
The third rate shall be the average of
the twelve most recent monthly rates (rounded to the nearest tenth) as posted
by the Federal Reserve on their Federal Reserve Statistical Release Internet
site for twenty-year Treasury Securities and shall apply to certified seismic
retrofit capital improvement costs amortized over a twenty-year period in accordance
with Section 7.12(c) for petitions filed on or after December 21, 2000.
(3) These
rates shall be calculated by December 15th of each year using the average of
the twelve most recent monthly rates posted by the Federal Reserve for seven,
and ten and twenty-year maturity Treasury Securities as of this date.
(c) Government
Subsidies or Guarantees. Notwithstanding subparagraphs (a) and (b) of this
Section, if the interest is less than 10 percent due to governmental or any
other subsidy or guarantee, the landlord shall only be entitled to the actual
rate of interest incurred.
(d) This Section was amended on
October 4, 1994 and is effective for petitions filed on or after October 18,
1994. The Board shall publish the applicable rate of interest for petitions
filed between October 18, 1994 and February 28, 1995 before October 18, 1994.