April 04, 2000

Commissioners Present: Becker; Bierly; Gruber; Justman; Lightner; Marshall; Mosser; Murphy; Wasserman.

Approval of the Minutes from the meeting on March 21st was put over to the next meeting as some of the Commissioners had not had a chance to read them.

Attorney Steve Rosenthal, involved in the case at 544 Clayton St. (AL2K0023), stated his opinion that the Board should take advantage of the presence of the parties at the time of an appeal consideration, as the courts do, for purposes of eliciting additional information and/or argument.

The tenant’s petition alleging an unlawful increase in rent from $1,584.42 to $1,700.00 was granted and the landlord was found liable to the tenant in the amount of $1,155.80. The Administrative Law Judge (ALJ) found that the exemption contained in the Costa-Hawkins Rental Housing Act for separately alienable condominium units was inapplicable to this tenancy because the landlord allowed the tenant to enter into this revolving roommate tenancy which commenced prior to January 1, 1996; the tenant was not a sublessee or assignee but, rather, a co-tenant who had a written agreement directly with the landlord as of March 1997; and the tenant resided in the unit commencing in September 1995. Additionally, it was determined that the landlord waived his right to a market rent increase pursuant to Rules Section 6.14 because, after the last original tenant had vacated the unit, the landlord imposed two annual rent increases and entered into two new leases with the petitioner. On appeal, the landlord maintains that: the tenancy or sub-tenancy was not approved by the landlord until after January 1, 1996, and there was no express contractual relationship between the parties until the signing of the 1997 lease; since failure to timely serve a 6.14 notice results in the landlord consenting to the tenancy, the service of a 6.14 notice on the instant tenant indicates that the landlord did not consent to the tenancy; and the rent increase was served pursuant to the provisions of Costa-Hawkins, and the Administrative Law Judge had no authority to make a ruling on the applicability of Rules Section 6.14.

MSF: To deny the appeal. (Becker/Marshall: 2-3; Gruber, Justman, Lightner dissenting)

MSC: To accept the appeal and remand the case for a hearing to determine whether the tenant was an approved tenant or sub-tenant prior to January 1, 1996. (Becker/Lightner: 5-0)

The landlord’s petition for rent increases to the tenants in two units based on comparables was dismissed. The tenants are beneficial owners of the trust that was created by the will to own the property. The Special Title-Holding Trustee and co-executors of the estate intend to sell the property, and wish to begin collecting rent from one of the tenants and raise the rent of the other in order to obtain a higher sales price. The Administrative Law Judge found, however, that the issue is not ripe for adjudication until the Probate Court determines whether the decedent’s intent was to permit the beneficiaries to occupy the property rent-free and/or whether the Special Title-Holding Trustee has the power or authority to charge or raise the tenants’ rents. On appeal, the Trustee claims that: the Rent Board should determine whether it has jurisdiction over this property or not, and deciding that the issue is not "ripe" merely begs the question; since the tenants meet the definition of "tenant" under the Ordinance, all of the provisions of the law should apply, including those pertaining to rent increases based on comparables -- otherwise, petitioner should be free to remove the "non-tenant occupants" without Just Cause; the ALJ misunderstood the provisions of the decedent’s will; the Probate Court has already issued a final order in this matter, and the concerns raised by the ALJ were not addressed; if the decedent intended to establish life estates for the tenants, he would have done so; and the case should merely be postponed so that the petitioner can obtain a statement from the Probate Court.

MSC: To recuse Commissioners Lightner and Becker from consideration of this appeal. (Murphy/Gruber: 5-0)

MSC: To find that the Rent Board has jurisdiction over this property and to hold a hearing on the landlord’s comparables petition. (Murphy/Gruber: 3-2; Hobson, Marshall dissenting)

The tenant’s petition alleging an unlawful increase in rent from $!,030.00 to $1,800.00 was granted. The Administrative Law Judge found that the increase was not warranted pursuant to the provisions of Costa-Hawkins because, although the unit is a single family dwelling, the tenant moved into an existing tenancy that pre-dated 1996; and the landlord had a direct landlord-tenant relationship with the petitioner, who was therefore not a subtenant or assignee. On appeal, the landlord maintains that: the ALJ erred in finding that the tenant was neither a subtenant nor assignee, which are the only two recognized mechanisms for the transfer of a tenancy; that, since the last original tenant broke the lease and evidenced no intent to retain any rights to the tenancy, the instant tenant is an assignee of the prior tenant’s rights and did not become a party to the pre-1996 lease; and subsequent to the last original tenant having vacated the unit, the instant tenant was no longer a co-tenant but, rather, a new tenant or assignee of the prior tenant.

MSC: To accept the appeal and remand the case to the Administrative Law Judge on the record to find that the rent increase is valid. (Lightner/Gruber: 3-2; Becker, Marshall dissenting)

The tenant’s petition alleging an unlawful increase in rent from $468.90 to $1,050.00 was granted because the Administrative Law Judge found that the increase was not warranted under the provisions of Costa-Hawkins nor Rules Section 6.14. The tenant moved into the unit in 1981, but always paid her share of the rent to a family member, who forwarded it to the landlord. It was therefore determined that she was a lawful subtenant who resided in the unit prior to January 1, 1996; and it is undisputed that the prior landlord knew of her presence in the unit, but failed to give a notice pursuant to Rules Section 6.14. On appeal, the landlord argues that: the tenant was never approved by the prior or current landlord, and is an unapproved subtenant; an owner should be allowed to raise the rent, rather than evict, once the last original tenant has vacated a rental unit; and Rules and Regulations Section 6.14 is inapplicable because it was adopted 8 years after the tenant purportedly moved into the unit.

The tenant’s petition alleging that the landlord had failed to discontinue a capital improvement passthrough and included it in base rent when calculating annual increases was granted and the landlord was found liable to the tenant in the amount of $3,134.92. Upon appeal by the landlord, the case was remanded to the Administrative Law Judge to find that a rent increase given in 1990 was not null and void if the amount did not equal more than the annual allowable rent increase, even if the notice was technically defective. Accordingly, in the Decision on Remand, the overpayment amount was reduced to $2,364.90. After the landlord filed a Writ of Administrative Mandamus on the grounds that he had been denied the right to cross-examine the tenant regarding documents submitted post-hearing, the case was reopened in order for him to do so. The Decision remained substantively unchanged although amounts owing from the landlord to the tenant were adjusted to account for offsets taken by the tenant. The landlord again appeals, claiming that: the Findings in the Decision differ in important respects from testimony given at the hearing; since the tenant had not challenged the rent increase, the landlord should not have the burden of proving it not to be excessive; the .78% overage was most likely attributable to a PG&E passthrough; and contradictions in the tenant’s testimony should impinge on his credibility.

The tenants’ petition alleging a substantial decrease in housing services due to the landlord’s failure to allow a replacement roommate pursuant to Rules Section 6.15 was granted and the landlord was found liable to the tenants in the amount of $2,000.00. The landlord appeals, asserting that: the Decision is based on the recently enacted "Leno" amendment to the Ordinance, which was not yet in effect; the "Leno" amendment was not intended to be given retroactive application, which would impair contractual rights and violate substantive due process; the ALJ misinterpreted Rules Section 6.15; the Decision is inconsistent with a recent ruling of the Rent Board Commissioners in a substantially similar case; the tenants never had a right to sublet the premises; and the applicable Statute of Limitations is 3 years, when the change in terms occurred over 7 years ago.

The landlord’s petition for certification of the costs of a new roof was dismissed without hearing pursuant to Rules Section 11.16(a). The landlord had financed the work through a Code Enforcement Rehabilitation Fund (CERF) loan, which does not incur interest, and for which there are no required payments until title to the property changes. On appeal, the landlord asserts that the special nature of the loan should be taken into account, as the work was adequately documented and programs such as these serve to maintain the rental housing stock.

The landlord’s petition for certification of capital improvement costs to the tenants in fourteen units was granted. The tenants in 3 units appealed on the grounds of financial hardship and the cases were remanded for hearing. The instant tenant’s claim was partially granted, and the passthrough was reduced from $57.19 to $30.00 per month, and the effective date was delayed until August 1, 2000. The tenant appeals the remand decision, claiming that: he is turning 65 years of age in July and will be receiving SSI as of that date; the landlord has refused to allow the tenant to get a roommate to share the rent; and the tenant will soon be undergoing major surgery, which may make it impossible for him to continue working.

Executive Director Grubb informed the Commissioners that Room 408 in City Hall has been reserved from 6:00 to 9:00 p.m. for the April 25th Public Hearing on proposed amendments to Rules and Regulations Section 6.14. President Wasserman also asked that interpreters be provided.