May 06, 1997

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

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

Commissioner Murphy appeared on the record at 6:20 p.m.

MSC: To approve the Minutes of April 22, 1997. (Marshall/Moore: 4-0)

Robert Pender of the Tenants’ Network informed the Commissioners that there will be a march and rally in support of legislation restricting evictions due to owner-occupancy on May 9th at 4:00 p.m. at Castro and 18th Streets.

A. 3856 California St. #1 R002-15R

The landlord’s petition for certification of capital improvement costs to the tenants in sixteen units was granted, in part. One tenant appeals the decision, asserting that: she should not be charged for work that was not performed in her unit, and from which she does not benefit; the decision allows for sums to be allocated to her that were not requested by the landlord in his petition; and, as she is retired and on a fixed income, the amount of the passthrough presents her with a financial hardship.

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

B. 1940 Washington St. R001-53A

The tenant’s petition alleging the landlord’s failure to repair and an incorrectly calculated PG&E passthrough was denied. However, rent overpayments in the amount of $4,952.52 were determined due to the landlord’s failure to discontinue capital improvement passthroughs upon expiration of the amortization periods, inclusion of the passthroughs in base rent, and adding on of the passthrough amounts even though they were already included in the rent. On appeal, the landlord maintains that: the hearing officer failed to offset a refund already issued by the landlord in the amount of $1,400.82; and that equity requires that the landlord be credited with annual increase amounts that he would have imposed had he not detrimentally relied on the tenant’s agreement to an improper base rent as settlement of a prior petition.

MSC: To accept the appeal and remand the case to the hearing officer on the record to offset the amount already paid by the landlord to the tenant from the amount owing. (Marshall/Wasserman: 5-0)

1077 - 1081 Ashbury St.; R001-80R thru -84R
1038 & 1042 Clayton St. (acpt. 2/18/97)

Seven tenant petitions alleging unlawful increases exceeding limitations under the Rehabilitation Assistance Program (RAP) were denied. The hearing officer found that the landlord had properly calculated the increase in the CPI since 1973 and correctly allocated the actual increased costs for the subject units as required pursuant to Ordinance Section 32.73; and that the defenses specified in Ordinance Section 32.73-1 only apply to properties in areas designated as under RAP jurisdiction after July 1, 1977, which is not the case for the subject building. On appeal, the tenants asserted that: costs for work in the nature of capital improvements should be separated from the "maintenance" category; the increases were effectuated in "bad faith", in that they were imposed in order to make the building more salable; and the landlord should not be able to benefit from a "decade of deferred maintenance" by carrying out all repairs in one year, thereby creating exaggerated results. At their meeting on February 18, 1997, the Commissioners voted to accept the appeals and schedule a Board hearing on the issues raised by the tenants in their appeals.

The appeal hearing commenced at 7:00 p.m. At that time, the following motion was made:

MSC: To recuse Commissioner Murphy from consideration of this case. (Wasserman/Marshall: 5-0)

In attendance were the landlords, accompanied by their attorney and a witness, the Realtor who prepared the RAP forms for the prior owner; and three tenants, along with their attorney. At the commencement of the hearing, the attorneys for both sides stipulated as to the facts and figures used in the Decision of Hearing Officer, with the exception of a mistake in the amount of property taxes paid in 1973 pointed out by the landlord’s attorney and which worked to the tenants’ advantage. Therefore, testimony at the hearing consisted of legal argument regarding the issues raised in the tenants’ appeals. The tenants’ attorney contended that: the language in the RAP Ordinance and Rules refers to an "annual" CPI adjustment which, therefore, must be calculated annually or lost; a loan to do capital improvement work should not allow for recovery of such costs under the category of "maintenance", in effect constituting double recovery; the fact that the majority of the costs were incurred in one year created skewed results; such costs should not become part of base rent; and the amount should be recalculated each year in order to reflect any subsequent decreases in expenses. Counsel for the landlord argued that: a landlord’s motive, intent and presence or absence of "good faith" in effectuating allowable increases are irrelevant under RAP; the hearing officer followed the proper procedure in calculating the increases, which is more analogous to "banking" under the Rent Ordinance than calculation of increases due to increased operating expenses; changes in the Regulations for areas designated after 1977 are irrelevant to the instant case; and, whereas the CPI and expense increase calculations had historically been provided to landlords by the Real Estate Department, when the program was transferred to the Mayor’s Office of Housing in 1994 or 1995 only the CPI calculation was provided, resulting in a delay in the issuance of rent increase notices in the subject case.

The hearing concluded at 8:45 p.m. After consideration of oral testimony and documentary evidence, and after lengthy discussion, the Board passed the following motion:

MSC: To reduce the amount of the allowable expenses in the maintenance category by $7,600.00, said sum more properly representing capital improvement costs; to correct the amount of property taxes for the year 1973; to find that the tenants’ base rent is the rent due on the date that the property came under Rent Board jurisdiction, or July 11, 1996, as calculated pursuant to the Board’s Decision on Appeal; and to find that the Notices of Rent Increase effective June 1, 1996 are valid because the failure to comply with the April 1st deadline was not the fault of the owner. (Wasserman/Marshall: 5-0)

In addition to correspondence concerning cases on the calendar, the Commissioners received Mediation Statistics for the month of March from Senior Hearing Officer Sandy Gartzman.

May 13, 1997 - NO MEETING

May 20, 1997
4 appeal considerations
6:30 Appeal Hearing: 2714 Webster St. Q001-55A (acpt. 6/4/96)
New Business: Proposed Procedural Changes

President Lightner adjourned the meeting at 10:15 p.m.