January 21, 1997

I. Call to Order

Vice-President Lightner called the meeting to order at 6:15 p.m.

II. Roll Call

Commissioners Present: Bierly; Gruber; Lightner; Marshall; Mosser; Palma. Commissioners not Present: Becker; Wasserman. Staff Present: Grubb; Wolf.

Commissioner Moore appeared on the record at 6:19 p.m.; Commissioner Murphy arrived at the meeting at 7:00 p.m.

III. Approval of the Minutes

MSC: To approve the Minutes of January 7, 1997. (Palma/Gruber: 4-0)

IV. Remarks from the Public

Landlord Al Goodwin stated his belief that there no longer is a distinction between the decrease in housing services and failure to repair remedies, and asked that the Board look at this issue. Robert Pender once again invited all of the Commissioners to the Tenants’ Network’s fourth birthday party on Friday, January 24th at 6:00 p.m. at the Unitarian Church at Franklin and Geary.

V. Consideration of Appeals

A. 1353, A & D Filbert St. R001-35A & R001-64 & -65R

The landlord’s petition for certification of capital improvement costs was granted, in part. However, rent overpayments were determined to be owing from the landlord to the tenants due to increases improperly imposed during the "Transition Period" on these Proposition I Affected units. The landlord appeals the decision, asserting that: the cost of replacing a tree was incidental to underground fuel tank removal and should therefore be certified; disallowance of a 1.3% annual increase during the "Transition Period" puts owners of Proposition I Affected Units in a worse position than if they had been under the jurisdiction of the Rent Ordinance; and a rent increase improperly given retroactively should not change the anniversary date for imposition of annual increases. Two tenants also appeal the decision, claiming that the Regulations that allow landlords of Proposition I Affected units to deem the petition as filed at an earlier date, thereby receiving a higher interest rate, are unfair; that the costs of the boiler should be amortized over a ten-year period in that the appliance is not a "water heater"; that the landlord has already been compensated for capital improvement work through the imposition of rent increases during the period prior to Rent Board jurisdiction; and that the underground tank removal does not meet the definition of a capital improvement in that there is no benefit to the tenants. One tenant also alleges financial hardship.

MSC: To recuse Commissioner Lightner from consideration of this appeal. (Marshall/Gruber: 5-0)

MSC: To accept the landlord’s appeal and remand the case to certify the cost of the tree replacement as a capital improvement; and to give additional consideration to the issue of whether the September, 1995 rent increases should be null and void. (Palma/Moore: 4-0) MSC: To accept tenant Corrigan’s appeal and remand the case on the issue of whether 10% is the appropriate rate of interest for the capital improvement work; and the allegation of tenant hardship. (Gruber/Marshall: 4-0)

MSC: To accept tenant Hecht’s appeal and remand the case on the issue of the correct amortization period for the water heater/boiler; and to determine whether the landlord had previously been compensated for the costs of capital improvement work. (Gruber/Palma: 4-0)

B. 706 Kearny St. #33 R001-31A

Two tenant petitions filed by occupants of the same residential hotel room were granted and the landlord was found liable to one of the tenants for rent overpayments in the amount of $450.96. The parties were advised to calculate the amount owing to the other tenant themselves because a lack of documentary evidence made it impossible for the hearing officer to do so. On appeal, the landlords assert that they are new owners of the property, and were never informed by the prior management that two tenants resided in the unit; that if banked amounts are taken into account, the 1994 rent increase may have been within limitations; and that the two tenants are roommates with joint and several liability for the rent.

MSC: To deny the appeal. (Moore/Marshall: 3-2; Gruber, Lightner dissenting)

C. 1576 Great Highway #102 R001-36A

The tenant’s petition alleging substantial decreases in housing services was granted, in part, and the landlord was found liable to the tenant in the amount of $1,125.00 due to a serious leak in the bathroom ceiling. On appeal, the landlord contends that the ceiling only leaked when the upstairs tenant used the shower, and therefore, the rent reduction of $225.00 per month (31%) is excessive.

MSC: To deny the appeal. (Marshall/Moore: 3-2; Gruber, Lightner dissenting)

D. 1266 Stanyan St. R001-38A

The landlord’s petition for certification of capital improvement costs was granted, in part. The portion of the landlord’s petition seeking rent increases based on increased operating expenses was denied, however, because the increase in the landlord’s expenses was not greater than the amount of the allowable annual increase. On appeal, the landlord contends that the hearing officer erred in her calculation of several categories of expenses; that pro-ration of costs down to portions of a month was required, which skewed the results; that the hearing officer should have attempted to determine the explanation for 8 checks submitted without invoices in the repair category at the hearing; and that a termite report given to a prior landlord should not trigger application of the "6-Month Rule" for purposes of certification of the dry rot work.

MSC: To accept the appeal and remand the case to the hearing officer on the record on the following issues: to correct the calculation of garbage expenses; to re-calculate water costs now that proof of payment for the entire 24 months has been provided; to re-calculate debt service costs on the basis of actual amounts that were paid and owing; and to check the calculation of maintenance expenses, ensuring that there are the same number of bills in the base and comparison years. (Gruber/Lightner: 5-0)

MSC: To accept the appeal and remand the case to the hearing officer on the record to apply Rules and Regulations Section 7.12(b) [the "6 Month Rule"] from the time of physical commencement of the work, and not from the date that estimates of work are provided or contracts are entered into. (Gruber/Lightner: 3-2; Marshall, Palma dissenting)

E. 121 Broderick St. R001-37A

The landlords’ petition for certification of capital improvement costs was granted. The portion of the petition requesting rent increases due to alleged increases in operating expenses was denied, however, because the landlord included only interest payments in the category of debt service. When the hearing officer factored in mortgage payments inclusive of principal and interest, the landlords’ expenses actually went down in the comparison year. On appeal, the landlords assert that generally accepted accounting and taxation principles include interest only when considering debt service; that principal paydown is actually equity buildup in the property and not an operating expense; and that by allowing consideration of principal, the Board is encouraging owners to add to their payment of principal in order to create exaggerated results.

MSC: To deny the appeal. (Marshall/Moore: 4-1; Gruber dissenting)

F. 600 Stanyan St. #1 R001-66R

The tenant’s petition alleging substantial decreases in housing services was dismissed due to his failure to appear at the properly noticed hearing. On appeal, the tenant provided verification that he was at work on the day of the hearing. By consensus of the Commission, this matter was continued in order for staff to contact the tenant and obtain additional information. Subsequent to the meeting, the tenant reached a settlement with the landlord and withdrew the appeal.

VI. Communications

In addition to correspondence concerning cases on the calendar, the Commissioners received the following communications:

A. An analysis of various City departments’ web server statistics, showing that the Rent Board has the most highly used web site on the Internet.

B. The monthly office workload statistics for November and December 1996.

C. A Memorandum from Senior Hearing Officer Sandy Gartzman summarizing the mediation statistics for the month of December; of the 11 mediation sessions actually conducted, 9 (82%) resulted in settlement.

D. A Memorandum from the Executive Director with a copy of recent amendments to the Rent Ordinance dealing with lead remediation, passthroughs and temporary evictions to eliminate lead hazards.

E. A letter from a landlord commending the Board’s voicemail system ("Information To Go").

F. A menu for the Board’s new "Fax Facts" system, which went on line as of Friday, January 17th, and which includes almost all Rent Board documents.

G. A letter from Randy Shaw, Executive Director of the Tenderloin Housing Clinic, stating his belief that the Board’s interpretation of Ordinance Section 37.9(a)(10), concerning the removal of units from housing use, is incorrect. This issue will be calendared for discussion and advice will be sought from the Office of the City Attorney.

H. A letter from Lena Emmery, a real estate broker, asking whether buildings containing one residential unit in combination with other units that are commercially zoned will be exempt from rent control pursuant to the provisions of the Costa-Hawkins Bill (AB 1164).

VII. Old Business

Codification of Artist Live/Work Policy

Commissioner Lightner reported that she had spoken to ex-Commissioner Ralph Payne, to see if he remembered why the Board’s 1984 Policy Directive on Artists’ Live/Work Tenancies requires that a building not be subject to the substantial rehabilitation provisions of the Ordinance in order to qualify for exemption from the Ordinance on these grounds. Further discussion of this issue was continued due to the absence of Commissioner Becker.

IV. Remarks from the Public (cont.)

Al Goodwin expressed his concurrence with the kudos for the Board’s web site, but suggested re-formatting of the Ordinance and Rules because they work well on the screen but not as hard copy. He also inquired as to whether the staff’s Policies and Procedures Manual was available for inspection. Robert Pender informed the Board that he had been elected to the State Democratic Central Committee for a two-year term.

VIII. New Business

Election of new Board officers will be calendared for the next meeting at which President Becker will be in attendance.

IX. Calendar Items

January 28, 1997 - NO MEETING

February 4, 1997 (6:00 p.m.) 1 appeal consideration Old Business: A. Codification of Artist Live/Work Policy B. Election of Officers New Business: Budget

X. Adjournment

Vice-President Lightner adjourned the meeting at 8:55 p.m.