December 05, 2000

Twenty-three individuals addressed issues pertaining to the implementation of Proposition H, which passed on the November ballot and restricts landlords' ability to pass through the costs of capital improvements, as follows below:

1. Landlord Andrew Long said that the proponents of Prop. H promised that the Initiative did not apply to seismic work, but only Unreinforced Masonry Buildings (UMB's) are exempted; that the concept of fair return is "window dressing" since no one has receipts from 1978; and that making the law retroactive isn't fair.

2. Landlord Inge Weidmann said that she had a capital improvement passthrough approved 25 days after April 10^th. Ms. Weidmann asked how the law could be changed retroactively and inquired as to the standard for establishing the lack of a fair return.

3. Landlord Karen Crommie spent $21,000 on a paint job for her 3-flat building. She said that she is considering whether to sell or Ellis her building.

4. Landlord Ken Wright told the Board that it is important that they enact regulations on fair return for small landlords because the larger landlords "don't need the income as much."

5. Landlord Ted Loewenberg suggested that the Board consult with the Office of the City Attorney because, in his opinion, the Rent Board is being put in the position of "price-fixing."

6. Tenant William Prout said that much of what has been considered capital improvements constitutes necessary replacements. He asked that the Rent Board "respect the will of the voters" and expressed concern that landlords will go through a "back-door political process."

7. Landlord Marina Franco asked that the Board consider the hardships on small owners without liquid assets. Ms. Franco believes that many landlords will now postpone maintenance, which will turn buildings into "eyesores."

8. Landlord Marian Halley asked about the effect of appeals on the April 10^th "final decision" date, especially if the appeal is based on hardship, or the tenant was ultimately to lose the appeal. Ms. Halley believes that the Tenants' Union was urging tenants to file appeals and drag out the process.

9. Patrick Richard, attorney for the tenants in the case at 614 Lake St. (AL2K0198 & AT2K0199), said that the appellants have now been before the Board twice and asked the Board to "let the case lie."

10. Rebecca Graf of the Housing Rights Committee said that the fair return provisions of Proposition H were specifically included so that small landlords would receive a fair return, and that Prop. H was intended to stop abuses, particularly by larger landlords. She urged the Board to not "drag its feet" on implementing Proposition H.

11. Robert Haaland of the Housing Rights Committee reminded the Board that Prop. H passed with 57.3% of the vote and urged the Board to "cautiously but expeditiously" get on with their duty to draft regulations.

12. Tenant Tommi Avicolli Mecca said that "speed is of the essence". He said that tenants are cynical and asked to be proved wrong in distrusting the political process.

13. Tenant Jeremy Gribler said that he received a capital improvement passthrough for re-painting and re-staining the building, which he believes constitutes maintenance.

14. Landlord Sue Chang owns a 4-unit building where all of her tenants have higher incomes than she does. She said that she needs to upgrade the building but makes no profit. There are currently no circuit breakers, which could pose a hazard.

15. Attorney Greg Blaine inquired as to whether the Board would make public information received from the City Attorney so that the public could conduct research.

16. Tenant Mara Mapp asked why tenants should pay the landlord's mortgage, as well as for deferred maintenance.

17. Ted Gullickson of the Tenants' Union told the Board that it is their duty and obligation to immediately adopt regulations pertaining to fair return.

18. Landlord Nancy Tucker asked how the Board will differentiate between large and small landlords, since they are in business for different reasons, and are faced with different economics.

19. Landlord Peter Holden said that Prop. H is contradictory regarding dates and that the Rent Board web site cites the wrong Building Code chapters.

20. Tenant Carolyn Blair said that her landlord makes $10-14,000,000 but asked the Administrative Law Judge to issue a decision regarding her capital improvements by November 7^th.

21. Tenant Rena Diamond said that she received a rent increase of almost 20% due to capital improvements and annual increases, and that her landlord has had the benefit of a lot of turnover in the building in the past year.

22. Landlord Winston Montgomery reminded those assembled that "housing's not free."

23. Miguel Wooding of the Tenants' Union and Eviction Defense Collaborative said that he is "hesitant to urge the Rent Board to do anything." However, he believes it makes no sense to wait for the outcome of the litigation, and that it should be the other way around.

The tenants' petition alleging substantial decreases in housing services was granted, in part, and the landlord was found liable in the amount of $100 per month due to the loss of the right to park in the driveway. The landlord's appeal was accepted and the case was remanded to the Administrative Law Judge to determine whether it was possible to legally park in the driveway. If not, no rent reduction would be allowed. If so, the ALJ was instructed to re-evaluate the value of such parking. In his Decision on Remand, the Administrative Law Judge found that the tenants could park legally in front of the driveway, and that the value of this service was $80 per month. Both the landlord and tenants appeal the remand decision. The tenants claim that they proved the value of loss of laundry facilities and parking in the driveway to be more than the amount granted by the Administrative Law Judge. The landlord maintains that: it was proved that parking in the driveway constituted an illegal act which, therefore, cannot be a housing service; there is no evidence that the agreement with the prior landlord included the tenants' being allowed to park in front of and block the driveway; the valuation placed on the service by the Administrative Law Judge is too high; and the amount the landlord is held liable for in the Decision is incorrect.

The landlord's petition for rent increases based on increased operating expenses and certification of capital improvement costs to the tenants in twenty units was granted, in part. Two tenants appeal the decision. The tenant in unit # 501 appeals on the grounds of financial hardship. The tenant in unit #502 also alleges hardship, as well as asserting that the replacement of his toilet should not be considered a capital improvement, and that the costs of painting the building are excessive. The appeal of the tenant in unit #501 was continued in order for the Deputy Director to draft a letter and obtain additional information regarding the tenant's interest income and available resources. The Board passed the below motion regarding the appeal of the tenant in unit #502:

The landlord's appeal was filed 13 days late because the landlord was "in shock" upon receiving the decision, and spent time consulting with Rent Board staff and an attorney prior to filing the appeal.

The tenant's petition alleging decreased housing services due to a leaking roof and ancillary water damage was granted, in part, and the landlord was found liable to the tenant in the amount of $219.00. Additionally, the landlord of this Proposition I Affected Unit was found liable to the tenant in the amount of $5,534.00 due to his having imposed a rent increase based on the past rent history of the unit without filing the requisite petition. On appeal, the landlord requests that the Board reconsider the portion of the Decision pertaining to rent overpayments because: the tenant had not been given a rent increase for nine years prior to the increase based on the past rent history of the unit; and the landlord was advised as to the legality of the subject increase twice by Rent Board staff.

The tenant's petition alleging decreased housing services was granted and the landlord was found liable to the tenant in the amount of $316.50. On appeal, the landlord claims that the tenant incorrectly identified the landlord in this action, and that the individual named is not the individual who has been the Master Lessor of the property for the last four years. After discussion, it was the consensus of the Board to continue this matter in order for the Deputy Director to contact the appellant and obtain a Declaration of Non-Receipt of Notice of Hearing.

The landlord's petition for certification of capital improvement costs and rent increases based on increased operating expenses to 30 of 36 units was granted. One tenant appeals the decision on the grounds of financial hardship.

The landlords' petition for certification of the costs of seismic retrofit of the building and a new roof, in addition to 7% base rent increases based on increased operating expenses, was approved for 13 of 16 units. Two tenants, who reside jointly in two units in the building, appeal on the grounds that: an amended Operating and Maintenance Expense schedule was not provided to the tenants prior to the hearing, which resulted in the tenants having been denied their due process rights; information regarding the legality of a rent increase given in 1985 is now available, which could affect the amount of the capital improvement and operating and maintenance expense increases; and the Board should exercise their discretion to waive the Regulations and allow for a longer and more reasonable amortization period for the seismic retrofit.

Since the tenants filed a substantially amended appeal one week prior to this evening's meeting, it was the consensus of the Board to grant the landlord's request for a continuance.

The landlords' petition for certification of capital improvement costs to 26 of 45 units was granted. One tenant appeals on the grounds of financial hardship.

The landlords' petition for certification of capital improvement costs to 13 of 21 units was granted. One tenant appeals the passthrough of the costs of remodeling the shower in her unit, asserting that: the work was necessitated by the prior landlord's deferred maintenance; the work was written off by the prior owner as a repair, rather than capital improvement, which should bar the current owner from alleging that the repair constitutes a capital improvement; the costs of the work were not proved to be reasonable; since the contractor did not paint or clean up, these costs should be deducted from the total cost of the work; the costs should not be borne by one tenant only, since the lack of flooding in the future will protect the structural integrity of the building; an independent estimator should have inspected the work; the amortization period should reflect the amount of time the tenant has lived in the building; and the tenant does not waive her right to appeal on the basis of financial hardship in the future.

The landlord's petition for certification of the cost of painting the building to each of six units was granted, resulting in a monthly passthrough in the amount of $33.41. The tenants in one unit appeal on the grounds of financial hardship.

The Board will discuss this issue at the December 19^th meeting, which will be held in City Hall, Room 263 (Board of Supervisors' Committee Room) at 6:00 p.m.

The Deputy Director brought to the Board's attention a letter received from the Law Offices of Andrew Zacks asking to withdraw a Notice of Intent to Withdraw Residential Units from the Rental Market that had been filed with the Board. The tenant in the case had received compensation and executed a Move Out Agreement and Release of Claims and the owner of the property therefore did not wish for a notice of constraints to be recorded against the property. Since the Ellis Act is silent as to the ability of an owner to rescind an Ellis notice once it is filed with the public entity, an opinion will be sought from the Office of the City Attorney.

December 12, 2000 - NO MEETING

December 19, 2000

7 appeal considerations (1 cont. from 12/5/00)

6:00 Executive Session: Fair Return/Implementation of Prop. H

Old Business: Fair Return/Implementation of Prop. H

President Wasserman adjourned the meeting at 8:07 p.m.