April 20, 2004 (Public Hearing)March 30, 2004
NOTICE OF PUBLIC HEARING
DATE: April 20, 2004
TIME: 6:30 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 LANGUAGE THAT FOLLOWS AMENDING SECTIONS 1.19, 4.11 and 10.12 AND ADDING SECTIONS 6.16 and 10.13. The proposed amendments are intended to provide a more accurate methodology for calculating utility passthroughs and require the landlord to file a petition for Rent Board approval of a proposed utility passthrough before it is imposed. There are two versions of the proposed amendments, which are identical in all respects except for the specific calculation methodology set forth in new Section 6.16(h). Version 1 provides for a calculation methodology "without indexing" of the base year utility cost. Version 2 provides for a calculation methodology "with indexing" of the base year utility cost and requires an adjustment of the base year utility cost to reflect a constant dollar value with the comparison year.
PROPOSED AMENDMENTS TO THE RENT BOARD RULES AND REGULATIONS REGARDING UTILITY PASSTHROUGHS
-VERSION 1 (without indexing) -
[additions in underline; deletions in strikethrough]
- Amend Section 1.19 to reference new Section 6.16 as well as Section 4.11. Also amend the reference to Ordinance Section 37.2(o) to reflect the correct section of 37.2(q).
Section 1.19 Tenant's Utilities
For the purpose of Ordinance Section 37.2(o) (q) and Sections 4.11 and 6.16 of these Rules, "Tenant's Utilities" means charges for natural gas or electricity provided by Pacific Gas and Electric Company directly to the unit occupied by the tenant or to the building in which the unit is located and benefiting the tenant, whether paid by the tenant alone, by the landlord alone, or part by the tenant and part by the landlord.
- Amend Section 4.11 by adding the following language to the beginning of Section 4.11:
Section 4.11 Computation of Passthrough of Gas and Electricity
The following provisions shall apply to utility passthroughs where the notice of rent increase for the utility passthrough was served prior to [the effective date of Section 6.16], except that with respect to utility passthroughs that are in effect on [the effective date of Section 6.16], such a utility passthrough shall be discontinued twelve months after it was imposed or by [60 days after the effective date of Section 6.16], whichever is later.
{NOTE: Text of Section 4.11 to remain the same}
- Add the following new Section 6.16:
Section 6.16 Utility Passthrough
The following provisions shall apply to utility passthroughs where the notice of rent increase for the utility passthrough was served on or after [the effective date of Section 6.16]:
(a) Where a landlord pays for gas, electricity and/or steam provided directly to the unit occupied by the tenant and/or to the common areas of the property in which the unit is located, and seeks to recover the increase in the cost of these utilities from the tenant, the landlord must file a petition for approval of the utility passthrough on a form prescribed by the Board. The petition shall specify the units on the property that are subject to the petition. The petition will be decided without a hearing unless the Administrative Law Judge determines that a hearing is required.
(b) For all tenancies existing on December 31, 2003, the "base year" for purposes of this section shall be calendar year 2002, except that where there is a utility passthrough in effect for the tenancy on [the effective date of this amendment] and the base year for that passthrough was properly determined pursuant to Section 4.11 of these Rules, the landlord may continue to use that tenant's same base year for future utility passthrough calculations. For all new tenancies commencing after December 31, 2003, the "base year" shall be the calendar year immediately preceding the inception of the tenancy. However, a landlord may petition the Board for approval of an alternate base year if the landlord became an owner of record after December 31, 2002 and can demonstrate a good faith, but unsuccessful, effort to obtain the base year utility costs specified in this subsection. An alternate base year that creates exaggerated results will not be approved unless the proposed alternate base year coincides with the landlord's first full calendar year of ownership. Different tenants in the same property may have different base years depending on when they moved into the property and whether the Rent Board has approved an alternate base year. The base year will remain the same for all future utility passthrough calculations for any tenant.
(c) For purposes of this section, the "comparison year" in all cases shall be the calendar year immediately preceding the filing of the landlord's petition for approval of the utility passthrough.
(d) The landlord must file a petition before giving legal notice of a rent increase for a utility passthrough. The petition must be filed no more than twelve months after the "comparison year" listed in the petition. The notice shall be in conformance with the requirements set forth in Section 4.10 above and shall further include the dollar amount requested for the utility passthrough. This passthrough shall be inoperative unless and until the petition is approved by the Administrative Law Judge. Any amounts approved by the Administrative Law Judge shall relate back to the effective date of the legal notice, if given. A landlord may choose instead not to serve legal notice of a proposed utility passthrough until after the decision of the Administrative Law Judge is rendered. In any event, no rent increase approved by the Administrative Law for a utility passthrough shall become effective until the tenant's anniversary date.
(e) No landlord may pass through any increase in the cost of utilities to a tenant until the tenant has occupied one or more units in the subject property for one continuous year.
(f) Where the utility bills include the cost of gas and/or electricity for laundry facilities and the landlord charges a user fee for the laundry facilities, the landlord may not pass through any increase in the building's cost of utilities unless the landlord complies with one of the following:
(i) where the laundry facilities are separately metered in both the base year and comparison year, the landlord shall not include the utility costs for the laundry facilities in the utility passthrough calculation; or
(ii) where the laundry facilities are not separately metered in both the base year and the comparison year and there is a third party vendor that collects the user fees from the laundry facilities, the landlord shall deducts the net income actually received by the landlord from the third party vendor from the total utility costs for the building; or
(iii) where the laundry facilities are not separately metered in both the base year and the comparison year and there is not a third party vendor that collects the user fees from the laundry facilities, the landlord shall deduct 50% of the user fees actually collected by the landlord from the total utility costs for the building.
(g) Where the utility bills include the cost of gas and/or electricity for laundry facilities and the laundry facilities are not available to or operated for the benefit of the tenant, and the laundry facilities are not separately metered in both the base year and comparison year, the landlord may not pass through to that tenant any increase in the building's cost of utilities.
(h) The landlord shall calculate the amount of the utility passthrough as follows:
(i) Compile the utility bills for the "base year" and the "comparison year" as defined in subsections (b) and (c) above.
(ii) Calculate the total utility cost for the comparison year and the total utility cost for the base year. The utility passthrough shall be based on actual costs incurred by the landlord during the relevant calendar years, regardless of when the utility bill was received or paid.
(iii) Subtract the base year utility cost from the comparison year utility cost to get the utility cost increase. If there is no increase or if there has been a decrease, no passthrough is allowed.
(iv) Divide the resulting figure, if greater than zero, by twelve (12) to determine the average monthly utility increase for the entire property.
(v) Divide the average monthly utility increase by the number of rooms in the property to get the amount of the utility passthrough that may be imposed for each room. For purposes of this section, the number of rooms in a property shall be calculated by presuming that single rooms without kitchens are one room units, studios are two room units, one bedroom units without a separate dining room are three room units, and so on. Each parking space and garage space in the building which is included in a tenant's rental or for which a user fee is charged shall be counted as one room. Areas used for commercial purposes but for which no user fee is charged to the tenants, including but not limited to management offices and retail space, shall be included in the room count in a manner that most reasonably takes into account the size of the space and its utility usage.
(vi) To get the monthly utility passthrough for a unit, add the number of rooms in the unit to the number of rooms for parking and/or garage spaces included in the tenant's rental or for which a user fee is paid by the tenant, and multiply that total number of rooms by the monthly utility increase per room.
(i) Each utility passthrough shall apply only for the twelve-month period after it is imposed.
(j) Nothing in this section or in these Rules and Regulations shall be interpreted as requiring any landlord to pass through any utility increase or to increase any tenant's rent.
(k) The amount of rent due from the tenant for any utility passthrough shall be due on the same date as a rent payment normally would be due.
(l) A utility passthrough may be imposed only at the time of an annual rent increase. However, no amount passed through to the tenant as a utility increase shall be included in the tenant's base rent for purposes of calculation of the amount of rent increases allowable under the Ordinance and these Rules and Regulations.
(m) The provisions of this Section shall be deemed a part of every rental agreement or lease, written or oral, for the possession of a rental unit subject to the Ordinance unless the landlord and the tenant agree that the landlord will not pass through any utility increases, in which case such agreement will be binding on the landlord and on any successor owner of the property.
(n) Where a utility increase has been lawfully passed through to the tenant, a change in the ownership of the property in which the tenant's unit is located will not affect the tenant's liability to pay the amount passed through.
-Amend Section 10.12 by adding the following language to the beginning of Section 10.12:
Section 10.12 Documentation of Gas and Electrical Increases
The following provisions shall apply to utility passthroughs where the notice of rent increase for the utility passthrough was served prior to [the effective date of Section 6.16]:
(a) A tenant may petition for an arbitration hearing if the landlord has failed to provide the tenant with a clear explanation of the charges for gas and electricity on which an increase is being based.
(b) The landlord shall have the burden of proving the calculations upon which this increase is based.
(c) A petition based on this section shall be accompanied by the notice of increase.
- Add the following new Section 10.13:
Section 10.13 Improper Utility Passthrough
The following provisions shall apply to utility passthroughs where the notice of rent increase for the utility passthrough was served on or after [the effective date of Section 6.16]:
(a) A tenant may petition for an arbitration hearing if the landlord has increased the tenant's rent based on an increase in utility costs, but (1) has failed to file a petition for approval of the utility passthrough pursuant to Section 6.16 of these Rules, or (2) has failed to discontinue the utility passthrough after twelve months.
(b) The landlord shall have the burden of proving that the utility passthrough has been approved and/or imposed in accordance with Section 6.16 of these Rules.
(c) A petition based on this section shall be accompanied by the notice of increase.
PROPOSED AMENDMENTS TO THE RENT BOARD RULES AND REGULATIONS REGARDING UTILITY PASSTHROUGHS
-VERSION 2 (with indexing) -
[additions in underline; deletions in strikethrough]
- Amend Section 1.19 to reference new Section 6.16 as well as Section 4.11. Also amend the reference to Ordinance Section 37.2(o) to reflect the correct section of 37.2(q).
Section 1.19 Tenant's Utilities
For the purpose of Ordinance Section 37.2(o) (q) and Sections 4.11 and 6.16 of these Rules, "Tenant's Utilities" means charges for natural gas or electricity provided by Pacific Gas and Electric Company directly to the unit occupied by the tenant or to the building in which the unit is located and benefiting the tenant, whether paid by the tenant alone, by the landlord alone, or part by the tenant and part by the landlord.
- Amend Section 4.11 by adding the following language to the beginning of Section 4.11:
Section 4.11 Computation of Passthrough of Gas and Electricity
The following provisions shall apply to utility passthroughs where the notice of rent increase for the utility passthrough was served prior to [the effective date of Section 6.16], except that with respect to utility passthroughs that are in effect on [the effective date of Section 6.16], such a utility passthrough shall be discontinued twelve months after it was imposed or by [60 days after the effective date of Section 6.16], whichever is later.
{NOTE: Text of Section 4.11 to remain the same}
- Add the following new Section 6.16:
Section 6.16 Utility Passthrough
The following provisions shall apply to utility passthroughs where the notice of rent increase for the utility passthrough was served on or after [the effective date of Section 6.16]:
(a) Where a landlord pays for gas, electricity and/or steam provided directly to the unit occupied by the tenant and/or to the common areas of the property in which the unit is located, and seeks to recover the increase in the cost of these utilities from the tenant, the landlord must file a petition for approval of the utility passthrough on a form prescribed by the Board. The petition shall specify the units on the property that are subject to the petition. The petition will be decided without a hearing unless the Administrative Law Judge determines that a hearing is required.
(b) For all tenancies existing on December 31, 2003, the "base year" for purposes of this section shall be calendar year 2002, except that where there is a utility passthrough in effect for the tenancy on [the effective date of this amendment] and the base year for that passthrough was properly determined pursuant to Section 4.11 of these Rules, the landlord may continue to use that tenant's same base year for future utility passthrough calculations. For all new tenancies commencing after December 31, 2003, the "base year" shall be the calendar year immediately preceding the inception of the tenancy. However, a landlord may petition the Board for approval of an alternate base year if the landlord became an owner of record after December 31, 2002 and can demonstrate a good faith, but unsuccessful, effort to obtain the base year utility costs specified in this subsection. An alternate base year that creates exaggerated results will not be approved unless the proposed alternate base year coincides with the landlord's first full calendar year of ownership. Different tenants in the same property may have different base years depending on when they moved into the property and whether the Rent Board has approved an alternate base year. The base year will remain the same for all future utility passthrough calculations for any tenant.
(c) For purposes of this section, the "comparison year" in all cases shall be the calendar year immediately preceding the filing of the landlord's petition for approval of the utility passthrough.
(d) The landlord must file a petition before giving legal notice of a rent increase for a utility passthrough. The petition must be filed no more than twelve months after the "comparison year" listed in the petition. The notice shall be in conformance with the requirements set forth in Section 4.10 above and shall further include the dollar amount requested for the utility passthrough. This passthrough shall be inoperative unless and until the petition is approved by the Administrative Law Judge. Any amounts approved by the Administrative Law Judge shall relate back to the effective date of the legal notice, if given. A landlord may choose instead not to serve legal notice of a proposed utility passthrough until after the decision of the Administrative Law Judge is rendered. In any event, no rent increase approved by the Administrative Law for a utility passthrough shall become effective until the tenant's anniversary date.
(e) No landlord may pass through any increase in the cost of utilities to a tenant until the tenant has occupied one or more units in the subject property for one continuous year.
(f) Where the utility bills include the cost of gas and/or electricity for laundry facilities and the landlord charges a user fee for the laundry facilities, the landlord may not pass through any increase in the building's cost of utilities unless the landlord complies with one of the following:
(i) where the laundry facilities are separately metered in both the base year and comparison year, the landlord shall not include the utility costs for the laundry facilities in the utility passthrough calculation; or
(ii) where the laundry facilities are not separately metered in both the base year and the comparison year and there is a third party vendor that collects the user fees from the laundry facilities, the landlord shall deducts the net income actually received by the landlord from the third party vendor from the total utility costs for the building; or
(iii) where the laundry facilities are not separately metered in both the base year and the comparison year and there is not a third party vendor that collects the user fees from the laundry facilities, the landlord shall deduct 50% of the user fees actually collected by the landlord from the total utility costs for the building.
(g) Where the utility bills include the cost of gas and/or electricity for laundry facilities and the laundry facilities are not available to or operated for the benefit of the tenant, and the laundry facilities are not separately metered in both the base year and comparison year, the landlord may not pass through to that tenant any increase in the building's cost of utilities.
(h) The landlord shall calculate the amount of the utility passthrough as follows:
(i) Compile the utility bills for the "base year" and the "comparison year" as defined in subsections (b) and (c) above.
(ii) Calculate the total utility cost for the comparison year and the total utility cost for the base year. The utility passthrough shall be based on actual costs incurred by the landlord during the relevant calendar years, regardless of when the utility bill was received or paid.
(iii) Adjust the base year utility cost to reflect a constant dollar value with the comparison year by using the following methodology:
(A) Find the "annual" Consumer Price Index (CPI) figure for the San Francisco-Oakland-San Jose, CA area published by the U.S. Department of Labor, Bureau of Labor Statistics, for both the base year and the comparison year. The annual CPI figures beginning with 2002 are available from the Rent Board.
(B) Subtract the base year CPI from the comparison year CPI to get the difference in the CPI.
(C) Divide the difference in the CPI by the base year CPI to get the percent increase in the CPI.
(D) Multiply the percent increase in the CPI by the base year utility cost and add the result to the base year utility cost to get the adjusted base year utility cost.
(iv) Subtract the adjusted base year utility cost from the comparison year utility cost to get the adjusted utility cost increase. If there is no increase or if there has been a decrease, no passthrough is allowed.
(v) Divide the resulting figure, if greater than zero, by twelve (12) to determine the average monthly utility increase for the entire property.
(vi) Divide the average monthly utility increase by the number of rooms in the property to get the amount of the utility passthrough that may be imposed for each room. For purposes of this section, the number of rooms in a property shall be calculated by presuming that single rooms without kitchens are one room units, studios are two room units, one bedroom units without a separate dining room are three room units, and so on. Each parking space and garage space in the building which is included in a tenant's rental or for which a user fee is charged shall be counted as one room. Areas used for commercial purposes but for which no user fee is charged to the tenants, including but not limited to management offices and retail space, shall be included in the room count in a manner that most reasonably takes into account the size of the space and its utility usage.
(vii) To get the monthly utility passthrough for a unit, add the number of rooms in the unit to the number of rooms for parking and/or garage spaces included in the tenant's rental or for which a user fee is paid by the tenant, and multiply that total number of rooms by the monthly utility increase per room.
(i) Each utility passthrough shall apply only for the twelve-month period after it is imposed.
(j) Nothing in this section or in these Rules and Regulations shall be interpreted as requiring any landlord to pass through any utility increase or to increase any tenant's rent.
(k) The amount of rent due from the tenant for any utility passthrough shall be due on the same date as a rent payment normally would be due.
(l) A utility passthrough may be imposed only at the time of an annual rent increase. However, no amount passed through to the tenant as a utility increase shall be included in the tenant's base rent for purposes of calculation of the amount of rent increases allowable under the Ordinance and these Rules and Regulations.
(m) The provisions of this Section shall be deemed a part of every rental agreement or lease, written or oral, for the possession of a rental unit subject to the Ordinance unless the landlord and the tenant agree that the landlord will not pass through any utility increases, in which case such agreement will be binding on the landlord and on any successor owner of the property.
(n) Where a utility increase has been lawfully passed through to the tenant, a change in the ownership of the property in which the tenant's unit is located will not affect the tenant's liability to pay the amount passed through.
-Amend Section 10.12 by adding the following language to the beginning of Section 10.12:
Section 10.12 Documentation of Gas and Electrical Increases
The following provisions shall apply to utility passthroughs where the notice of rent increase for the utility passthrough was served prior to [the effective date of Section 6.16]:
(a) A tenant may petition for an arbitration hearing if the landlord has failed to provide the tenant with a clear explanation of the charges for gas and electricity on which an increase is being based.
(b) The landlord shall have the burden of proving the calculations upon which this increase is based.
(c) A petition based on this section shall be accompanied by the notice of increase.
- Add the following new Section 10.13:
Section 10.13 Improper Utility Passthrough
The following provisions shall apply to utility passthroughs where the notice of rent increase for the utility passthrough was served on or after [the effective date of Section 6.16]:
(a) A tenant may petition for an arbitration hearing if the landlord has increased the tenant's rent based on an increase in utility costs, but (1) has failed to file a petition for approval of the utility passthrough pursuant to Section 6.16 of these Rules, or (2) has failed to discontinue the utility passthrough after twelve months.
(b) The landlord shall have the burden of proving that the utility passthrough has been approved and/or imposed in accordance with Section 6.16 of these Rules.
(c) A petition based on this section shall be accompanied by the notice of increase.