President Wasserman called the meeting to order at 6:11 p.m.
II. Roll Call
Commissioners Present: Becker; Gruber; Hobson; Lightner; Marshall; Mosser; Murphy; Wasserman.
Staff Present: Grubb; Lee; Wolf.
Commissioner Justman appeared on the record at 6:24 p.m.
III. Approval of the Minutes
MSC: To approve the Minutes of November 28th and December 5,
2000. (Gruber/Lightner: 5-0)
IV. Vote on Whether to Go Into Closed Session Regarding the Case of Quigg v.
President Wasserman read the following Tentative Ruling issued by Judge Robertson this afternoon: "Plaintiffs’ (Petitioners’) motion for preliminary injunction is granted without prejudice to Respondents seeking modification or dissolution after adoption of appropriate regulations eliminating the unconstitutional effect of this Proposition." It is anticipated that a final ruling will be issued by Judge Robertson tomorrow or soon thereafter, which will provide further guidance on which aspects of Proposition H the Judge considers to be unconstitutional. The Board then voted as follows:
V. Closed Session re Quigg, supra, Pursuant to Government Code Section
The Board went into closed session from 6:15 to 6:45 p.m. with Deputy City Attorneys Marie Blits and Rafal Ofierski to discuss the case of Quigg v. Rent Board (Superior Court Case No. 316928).
President Wasserman explained that, as the Board will be involved in litigation concerning this case for quite some time, it was felt by all members of the Board that piecemeal disclosure of the contents of privileged conversations with the City Attorney could lead to the Board’s losing its privilege. Therefore, the Board voted as follows:
MSC: Not to disclose conversations held in closed session regarding Quigg, supra, to the extent that such conversations are protected by the attorney/client privilege.
VII. Report on Any Actions Taken in Closed Session Regarding Quigg, supra,
Pursuant to Government Code Section 54957.1{a}{2} and S.F. Administrative
President Wasserman reported that the Board consulted with counsel and asked for additional advice from the Office of the City Attorney upon issuance of the final ruling in the case of Quigg v. Rent Board, supra.
Twenty-two persons addressed the Board regarding implementation issues relating to Proposition H, as follows below:
1. Small landlord and attorney Greg Blaine urged the Board to promulgate Rules that apply a fair return analysis to the dollars expended on capital improvements, and not to the entire property, in order to look at the return on invested capital.
2. Tenant George Buffington said that he supports Prop. H and would like to see it enacted with only absolutely necessary deletions and amendments. He thanked the Board for their efforts.
3. Robert Pender of the Tenants’ Network reminded the Board that Parkmerced got a large capital improvement passthrough approved approximately 10 years ago, but the tenants got it reduced. Mr. Pender says that he would have to move if he were to receive another large rent increase.
4. Tenant Arnold Cohn told the Board that they were given a mandate by the voters to implement Proposition H, and it was their responsibility to come up with an alternative base year since "no one has records back to 1978."
5. Robert Haaland of the Housing Rights Committee said that their organization has seen many heartbreaking stories having to do with capital improvement passthroughs. He asked that the Board be fair to both tenants and landlords, and provide landlords with a fair return.
6. Rebecca Logue-Bovee of the Housing Rights Committee asked the Board to go forward with implementing regulations that are fair to landlords and that will be upheld in the courts.
7. Tenant Rob Eshelman said that the voters overwhelmingly approved Prop. H and asked that the Board be fair to both sides.
8. Carolyn Blair of the Housing Rights Committee and Tenants’ Union told the Board that she worked hard to get Proposition H on the ballot.
9. Alma Morris, a tenant at 1340 Lombard Street, told the Board how the tenants at that complex experienced two years of renovation work, and then a prospective 100% capital improvement passthrough.
10. Landlord Sue Chang owns a 5-unit building in the Marina, and doesn’t believe that tenants mean it when they say they want to be "fair." Ms. Chang told the Board that her family members couldn’t move in to the building because of Proposition G, and now she cannot afford to make necessary electrical improvements because of Proposition H.
11. Janan New, Director of the S.F. Apartment Association, said that issues pertaining to "fair return" are extremely complicated and urged the Board to "slow down" in order to understand the best approach. Since the Board hasn’t looked at fair return since 1983, and the economy has significantly changed since then, she recommended that the Board call in economists and outside experts.
12. Lorraine Calcagni, a tenant at 1360 Lombard Street, told the Board that her landlord spent $8.4 million, which resulted in a passthrough per tenant of $98,000, or $818 per month, an average increase of 130% over current rent. She said that this situation generated Proposition H. The landlord has an additional $1.2 million passthrough coming.
13. Landlord Chuck Rategan owns a two-unit building. Prior to the passage of Proposition H, Mr. Rategan was considering adding a deck when he does necessary stairway work. Now, he will do the minimum solution only, and simply provide egress from the building, even if his tenants would prefer having a deck.
14. Landlord Bill Quan said that use of 1978 as a base year is unfair because prior owners may have died, or moved away. He also does not believe that new owners should have to refund capital improvement passthroughs because investment decisions in buildings were predicated on existing rent rolls.
15. Landlord representative Michelle Horneff thanked the Board for "asking questions and trying to ascertain the proper course before moving forward."
16. Landlord Karen Crommie told the Board that she received a Decision granting a capital improvement passthrough in May, which is now invalid. She asked what language she should use to refund the amounts paid by the tenants, without forfeiting her rights should Proposition H be overturned by the courts. She also asked who would take responsibility for the 9-month delay in getting a hearing on her petition, which resulted in her being affected by the restrictions of Prop. H.
17. Landlord Marian Halley said that the Board should distinguish between large and small landlords, if possible. She said that the Edwardians and Victorians for which San Francisco is famous are owned by small landlords, and they should be able to keep them beautiful. She also said that 60% of the CPI is less than the allowable annual increase in other jurisdictions.
18. Landlord Andrew Long said that his brick building needs a new foundation, but he won’t do the work if he can’t pass through the cost. He said he will pay for earthquake insurance instead, or Ellis the building and sell the units as TIC’s.
19. Landlord Tess Welborn said that she spent $24,000 to paint and upgrade her building. Ms. Welborn took out a 9% loan to do the work, for which she will receive no return. She feels that these issues should have been considered after the issuance of the Housing Study.
20. Landlord Peter Holden owns a 4-unit building. He believes that the promises that were made of a fair return and seismic retrofit work being excluded were "illusory." He said that "improvements have to be made."
21. Landlord Nancy Tucker said that tenants only voted for Prop. H to save themselves money. She asked whether fair return would be per unit, per building, or based on all properties owned by a landlord.
22. Tenant Charlie Ming said that landlords are investors, and their investment is unsecured. He does not believe that the cost of improvements should be passed on to tenants because the property has an increased value. He suggested that landlords obtain home equity loans to finance the work.
The landlord’s appeal was filed two months late because, allegedly, the individual named by the tenant on the petition is not the Master Lessor of the property. Therefore, the actual landlord in this case maintains that he did not receive notification of any of the proceedings.
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. Consideration of this matter was continued from the meeting on December 5th in order for the landlord to furnish the requisite Declaration of Non-Receipt of Notice of Hearing.
B. 3459 Divisadero AT2K0206
The landlord filed a petition seeking a determination of the current lawful base rent for the unit, which was found to be $1,112.00. On appeal, the tenant maintains that: he was unable to provide copies of rent checks for the years 1992 and 1993 because his credit union destroys all checks after seven years; there are errors in the Decision as to the rent history and the circumstances surrounding the inception of the tenancy; the tenant has been paying an unlawful increase in the amount of $100.00 per month since May, 1993, when he obtained a roommate; and the September 1995 lease is unsigned and should not be considered binding.
MSC: To recuse Commissioner Hobson from consideration of this appeal. (Marshall/Lightner: 5-0)
MSC: To deny the appeal. (Gruber/Lightner: 4-1; Marshall dissenting)
C. 2000 Broadway #703 AL2K0207
The tenants’ petition alleging an unlawful rent increase from $3,106.04 to $4,000.00 was granted because the Administrative Law Judge found that the petitioners were tenants who had a contractual relationship with the landlord, and not subtenants subject to an increase pursuant to the provisions of Costa-Hawkins. Additionally, a rent reduction in the amount of $200 per month in the event that the tenants lose their parking spaces in the building was granted. A claim of decreased housing services due to loss of roof access was denied. The landlord appeals, arguing that: the tenants are assignees and, therefore, an increase is warranted under Costa-Hawkins; the landlord did not lose the right to a Costa-Hawkins increase by conducting credit and background checks and making the tenants sign a lease agreement; there is no evidence of a waiver of rights by the landlord in this case; and there is no reduction in services because the parking became decontrolled at the same time that the apartment rent became decontrolled. The landlord also argues in the alternative that, if the parking spaces are deemed to be controlled, the rent reduction granted must be at the controlled, rather than market, rent.
MSC: To deny the appeal. (Becker/Marshall: 3-2; Gruber, Lightner dissenting)
D. 929 Pine St. #1 AT2K0208
The tenant’s petition alleging an unlawful rent increase from $842.35 to $1,320.00 was denied because the Administrative Law Judge found that the original occupant under the rental agreement no longer permanently resides on the premises. On appeal, the tenant claims that: the testimony of the subtenant in the unit is self-serving and should not be relied upon because the subtenant desires the unit for himself; the tenant travels often but has not vacated the subject premises; and the indicia for determining "principal place of residence" outlined in Rules Section 12.14 should be used in this case.
E. 698 Bush St. #408 AT2K0209
The tenant’s petition alleging decreased housing services was dismissed due to her failure to appear at the properly noticed hearing. On appeal, the tenant provides evidence that she suffered an acute asthma attack and needed medical attention on the day of the scheduled hearing.
The tenant’s petition alleging decreased housing services because of discomforts suffered in conjunction with temporary scaffolding in front of the building was denied because the Administrative Law Judge found the problems not to be substantial. On appeal, the tenant asserts that: testimony and exhibits presented by the tenant at the hearing should have been addressed by the Administrative Law Judge in the Decision; the scaffolding was only removed by the landlord after a call from a Building Inspector; the landlord retaliated against the tenant by removing notices to the mail carrier taped to the tenant’s mailbox; and there are factual errors in the Decision.
MSC: To recuse Commissioner Becker from consideration of this appeal. (Becker/Gruber: 5-0)
MSC: To deny the appeal. (Gruber/Lightner: 4-1; Hobson dissenting)
G. 815 O’Farrell St. #608 AT2K0211
The tenant’s appeal was filed 11 days late because the tenant is an elderly veteran who did not realize he could appeal the Decision until he spoke with another tenant in the building.
The landlord’s petition for certification of capital improvement costs to 26 of 45 units was granted. One tenant appeals the Decision on the grounds of financial hardship.
In addition to correspondence concerning cases on the calendar, the Commissioners received copies of pleadings in the case of Quigg v. Rent Board.
Executive Director Grubb informed the Board that the annual allowable increase amount commencing March 1, 2001 through February 28, 2002 will be 2.8%.
Discussion of this issue was continued to the meeting on January 2, 2001, at which time the Board will have the Court’s final ruling granting the motion for preliminary injunction in the case of Quigg v. Rent Board, supra.
December 26, 2000 - NO MEETING
January 2, 2001
11 appeal considerations (1 cont. from 12/5/00)
Old Business: Fair Return/Implementation of Prop. H
January 9, 2001
Executive Session: Quigg. v. S.F. Rent Board
Old Business: Fair Return/Implementation of Prop. H
January 16, 2001
10 appeal considerations (1 cont. from 12/5/00)
Old Business: Fair Return/Implementation of Prop. H
President Wasserman adjourned the meeting at 8:00 p.m.