January 06, 2004
MINUTES OF THE REGULAR MEETING OF
THE SAN FRANCISCO RESIDENTIAL RENT
STABILIZATION & ARBITRATION BOARD,
Tuesday, January 6, 2004 at 6:00 p.m. at
25 Van Ness Avenue, Suite 70, Lower Level
I. Call to Order
President Wasserman called the meeting to order at 6:11 p.m.
II. Roll Call
Commissioners Present: Becker; Gruber; Henderson; Lightner; Mosbrucker; Mosser; Wasserman.
Commissioners not Present: Justman.
Staff Present: Grubb; Wolf.
Commissioner Marshall appeared on the record at 6:15 p.m.; Commissioner Murphy arrived at the meeting at 6:21 p.m.
III. Approval of the Minutes
MSC: To approve the Minutes of December 16, 2003.
(Becker/Gruber: 5-0)
IV. Remarks from the Public
A. Landlord Sue Cauthen of the case at 1321 Montgomery (AL030356) requested that the Board continue her appeal in order for her to more fully rebut the tenant’s response to her appeal, which was filed one day late and during the holidays. Ms. Cauthen informed the Board that she is a small landlord, who has never been brought before the Rent Board before. Ms. Cauthen mis-calendared the hearing date and takes responsibility for her error, but is hoping for the opportunity to be heard.
B. Robert Pender, Vice-President of the Parkmerced Residents’ Organization (PRO), read a speech he’d presented to the Board of Supervisors regarding the history of PRO. Mr. Pender is running for the Democratic Central Committee and asked for the Board’s support.
C. Tenant Gary Near of 1408 California (AT030347) spoke for six minutes on behalf of himself and co-tenant Terry Perrin. Mr. Near said that he was taping the meeting himself because the Board does not tape their meetings; Mr. Near believes this is in violation of the Board’s Rules and Regs. Mr. Near reminded the Board that he had requested continuance of his appeal consideration on December 16, 2003 because the Administrative Law Judge did not address a petition filed by seven tenants saying that the decision approving the landlord’s capital improvement costs was unwarranted. Mr. Near believes that the Memorandum of Administrative Law Judge was not authored by the ALJ who heard the case because the Memo was not signed and “contained statements that could only be authored by someone who hadn’t attended the hearings.”
D. Attorney Michael Rossoff told the Board that his comparables case, Rossoff v. Rent Board, concerns unique facts and that the Administrative Law Judge failed to recognize the reason for the very low rents. Mr. Rossoff reminded the Board that in the Vega case, rent increases were granted for subsequent purchasers. Mr. Rossoff also said that the Concord Communities case also looks to whether tenants should benefit from the “windfall” of low rents into perpetuity, and that it is “inconsequential” who holds title.
E. Andy Braden yielded his three minutes to Gary Near, who said he was “stunned” by the landlord’s representative having been able to call one of the Senior Administrative Law Judges. Mr. Near considers this an “abomination” and “miscarriage of justice.” Mr. Near told the Commissioners that they were “condoning fraud.”
F. Tenant Raymond Backle addressed the Board regarding the case at 1139 Market St. (AL030353) concerning the National Hotel. Mr. Backle said that he believes the Decision of the Administrative Law Judge was fair to the property owner because she had two years to install sprinklers in the residential hotel.
G. Tenant Randall Collell resides at the Windsor Hotel. Mr. Collell said that the tenants at the National Hotel have had to wait two years for sprinklers; the tenants at his hotel have been waiting for one year. In the meantime, smoke alarms are insufficient and “folks can die.” Since tenants have to pay rent on time, “landlords should be held accountable.”
H. Otto Duffy of the Tom Waddell Health Center said that they hear fire sirens going by all day. When a building is sprinklered, the damage is limited to one room, and the whole building doesn’t go up. Mr. Duffy asked that the Board “send a message that the City takes this seriously.”
I. Attorney Andrew Zacks, representing the landlord in the case concerning the National Hotel, said that the Decision establishes a “special rule” that applies only to residential hotels, that the deadlines were “impossible to meet” and that applications still haven’t been approved. Mr. Zacks said that a sprinkler system has been installed at the National Hotel but that the City can’t provide sufficient water. Mr. Zacks considers it outrageous that the Administrative Law Judge in his memo depicted the City’s partial responsibility as “irrelevant” and asked that the Board reconsider the Decision.
J. Earl Brown of the Central City SRO Collaborative said that “thousands” of residential hotel rooms have been lost to fires, which is why the Sprinkler Ordinance was enacted in the first place. Mr. Brown told the Board that the deadline was extended in order to give landlords more time to comply, and that “housing services were reduced, regardless of the reason.” If the Sprinkler Ordinance is unlawful, “go to court, but don’t punish tenants.”
V. Vote on Whether to Go Into Closed Session Regarding the Case of Rossoff v. Rent Board (Superior Court Case No. 401226) Pursuant to S.F. Administrative Code Section 67.11{a}
MSC: To go into Closed Session. (Marshall/Lightner: 5-0)
MSC: To recuse Commissioners Gruber, Mosser and Lightner from the Closed Session. (Marshall/Lightner: 5-0)
VI. Closed Session re Rossoff, supra, Pursuant to Government Code Section
54956.9{a}
The Board went into Closed Session from 6:50 to 7:20 p.m. with Deputy City Attorneys Rafal Ofierski and Marie Blits to discuss the case of Rossoff v. Rent Board (Superior Court Case No. 401226).
VII. Vote on Whether or Not to Disclose and Possible Disclosure of Any/All
Conversations Held in Closed Session Regarding Rossoff, supra.
MSC: Not to disclose the Board’s discussion regarding the Rossoff case.
(Marshall/Murphy: 4-0)
VIII. Report on Any Actions Taken in Closed Session Regarding Rossoff, supra,
Pursuant to Government Code Section 54957.1{a}{2} and S.F. Administrative
Code Section 67.14{b}{2}
President Wasserman reported that the Board held a Closed Session to discuss the Rossoff case with its attorneys and voted not to appeal the Judge’s decision, but not to disclose the content of the discussions. Commissioners Gruber, Mosser and Lightner were recused from the discussions.
IX. Old Business
A. Rossoff v. Rent Board (Superior Court Case No. 401226)
In accordance with the Judgment granting the Peremptory Writ of Mandate in the above-captioned case, the Board voted as follows below:
MSC: To recuse Commissioners Gruber, Mosser and Lightner. (Becker/Marshall: 5-0)
MSC: To remand the case to the Administrative Law Judge for a new hearing to establish the comparable rents for units 1, 5, 8 and 11 at 1375 Green Street, San Francisco, California, including parking for units 1, 5 and 8. (Becker/Murphy: 4-0)
X. Consideration of Appeals
A. 434 Leavenworth #209 AT030352
The tenant’s appeal was filed nineteen days late because the tenants do not speak English and their adult daughter handles all of their mail for them.
MSC: To find good cause for the late filing of the appeal (Becker/Lightner: 5-0)
The landlord’s petition for certification of capital improvement costs to 52 of 70 units was granted. The tenants in one unit appeal the decision on the grounds of financial hardship.
MSC: To accept the appeal and remand the case for a hearing on the tenants’ claim of financial hardship. (Becker/Gruber: 5-0)
B. 390 Arguello Blvd. #2 AT030351
The tenants’ petition alleging decreased housing services was granted and the landlord was found liable to the tenants in the amount of $778.75 due to removal of the right to store large extension ladders on the premises. A claim of unlawful rent increase was denied because it was found that the tenants’ initial base rent was $1550 and the amount of $1400 they paid was a reduced amount to compensate them for management services one of the tenants provided to the building. The tenants appeal on the issue of the allegedly unlawful rent increase, claiming that: the increase from $1400 to $1550 was a rent increase, and not a change in the accounting method used for the managerial discount; with the $150 compensation, the initial base rent for the unit was actually $1250 per month; the landlord expensed the $150 per month on her income taxes; the $1550 amount represented a large increase from the rent the tenants were paying on their prior apartment; and the tenants did not raise the issue earlier because they had misplaced their copy of the lease.
MSC: To deny the appeal. (Lightner/Gruber: 3-2; Becker,
Marshall dissenting)
C. 3159 Cesar Chavez, Apt. 3 AL030354
The landlord filed a petition seeking a determination pursuant to Rules Section 6.14. The Administrative Law Judge found that no rent increase was warranted because the tenants have not vacated the subject unit, and permanently reside there as well as at a home they purchased in Richmond. The landlord appeals, claiming that a tenant can only have one principal place of residence, and a rent increase is therefore warranted pursuant to Rules Section 1.21.
MSC: To deny the appeal without prejudice to the landlord filing a petition for determination pursuant to Rules and Regulations Section 1.21. (Marshall/Becker: 5-0)
D. 1139 Market St. AL030353
Six tenant petitions alleging decreased housing services due to the landlord’s failure to install a sprinkler system in this residential hotel were granted and the landlord was found liable to the tenants in the amount of $20.00 per month. On appeal, the landlord asserts that: the Residential Hotel Sprinkler Ordinance (the RHSO) does not provide remedies for tenants under the Rent Ordinance; because the Rent Board lacks subpoena power, the landlord was prevented from proving that delays were caused by the City’s failure to timely process permit applications; there was no method for determining standards for compliance prior to August 21, 2002; sprinkler systems do not constitute housing services; the RHSO is not lawfully part of the City’s Housing Code; no Notice of Violation was ever issued; the Water Dept. cannot provide an adequate water supply to the premises; the deadlines imposed by the RHSO were impossible to meet; the Senior Administrative Law Judge who reviewed the decision is biased against the landlord’s attorney; sprinkler systems constitute capital improvements, and not housing services; and the Administrative Law Judge relied on a standard of habitability that is contrary to State law.
MSC: To recuse Commissioners Gruber and Mosser from consideration of this appeal. (Marshall/Becker: 5-0)
MSC: To accept the appeal and remand the case to the Administrative Law Judge for a hearing to determine whether the landlord proceeded reasonably considering the totality of the circumstances, including the fact that she failed to timely file the permit application, and to determine how much the City impeded performance, if at all. If it is established that the landlord has otherwise complied with the Ordinance, but that the City cannot provide water at the appropriate poundage, there shall be no on-going rent reduction. (Wasserman/Lightner: 5-0)
E. 1321 A Montgomery AL030356
The tenant’s petition alleging decreased housing services was granted and the landlord was found liable to the tenant in the amount of $1,400.00 due to a leaking window and moldy walls in the unit. The landlord appeals, claiming that: the tenant had a retaliatory motive in filing the petition and misrepresented his reasons for vacating the unit; erroneous Findings in the Decision are not supported by the evidence nor proved by the tenant; the problem was not of such a magnitude as to render the bedroom uninhabitable, some of the problem was dirt and not mold and the amount granted is excessive; the tenant’s testimony regarding the other occupant of the unit constituted hearsay; the landlord thought the problem rectified after receiving no further complaints from the tenants; no Notice of Violation was issued; the tenant’s negligence contributed to the problem; and any delays in effectuating the repairs were due to conflicting advice the landlord received.
The landlord requested a continuance in order to be able to rebut the tenant’s response to her appeal, which was granted by the Board.
F. 2340 Filbert #11 AT030357
The landlord filed a petition seeking a determination as to whether the tenant is subject to an unlimited rent increase pursuant to Costa-Hawkins. The Administrative Law Judge granted the landlord’s petition, finding that the original tenant no longer permanently resides at the premises and the subtenant was not in possession prior to January 1, 1996. The tenant’s appeal of the decision was denied and the tenant filed a Writ in Superior Court. The Superior Court issued a Judgment granting the Writ and remanding the case for a further factual finding as to whether the owner received “written notice” of the subtenant’s tenancy pursuant to Civil Code Section 1954.53(d)(4). The remand decision makes the factual finding ordered by the court and upholds the original decision in finding the rent increase to be justified. The tenant appeals the remand decision, arguing that: the landlord waived her right to the rent increase by accepting rent from the tenant after having knowledge of the subtenant’s occupancy; and the Administrative Law Judge should have recused herself from hearing this case on remand after issuing a Memorandum to the Board in response to the tenant’s appeal.
MSC: To deny the appeal. (Gruber/Lightner: 3-2; Becker, Marshall dissenting)
G. 1414 Taraval #2 AL030348
(cont. from 12/16/03)
The tenants’ petition alleging decreased housing services was granted and the landlords were found liable to the tenants in the amount of $120 due to a rodent infestation in the unit. On appeal, the landlords claim that: the delays in eradicating the problem were the fault of the tenants; the tenants failed to avail themselves of pest control items purchased for them by the landlords; and the tenants failed to make themselves available for the exterminator.
MSC: To deny the appeal. (Becker/Marshall: 5-0)
XI. Communications
In addition to correspondence concerning cases on the calendar, the Commissioners received the office workload statistics for the month of November, 2003.
XII. Director’s Report
Deputy Director Wolf informed the Board that the California Supreme Court denied the landlord’s Petition for Review in the Perlstadt case. The Court of Appeal had upheld the Board’s ruling that the tenants could use two adjoining apartments as their principal place of residence, which precluded a rent increase under Rules and Regulations Section 1.21.
Executive Director Grubb told the Board that legislation introduced by Supervisor Peskin, which would limit operating and maintenance expense increases to a maximum 7% increase per owner once every five years, passed first reading at the Board of Supervisors. It will go for second reading next week.
Mr. Grubb also told the Commissioners that the factor that we use for calculating the interest rate on security deposits (the discount window rate) has been discontinued by the Feds. Mr. Grubb was advised that the discount window primary credit rate is similar, and is still in effect. However, this issue will have to go back to the Board of Supervisors for an amendment to Chapter 49, which means that no new rate will be in effect by March 1st.
IX. Old Business (cont.)
B. Rules and Regulations Section 4.11
At the request of Supervisor Peskin, and subsequent to a Public Hearing before the Land Use Committee, Senior Administrative Law Judge Sandy Gartzman brought several issues pertaining to utility passthroughs to the Board’s attention. The Board discussed those issues with Ms. Gartzman at the meeting on December 2nd. Subsequently, Ms. Gartzman, in conjunction with Senior Staff, drafted proposed regulations to address the issues raised. The draft regulations contain certain policy decisions, subject to approval by the Board, which include: the elimination of Method 2, so that there would be only one method for calculating a PG&E passthrough; incorporation of indexing for inflation; continuing to allocate utility cost increases by the number of rooms in the unit; requiring separate metering in order to include costs associated with coin-operated laundry facilities, fee-based parking and storage areas, and other commercial spaces; energy conservation measures on the part of the landlord are not required; and a landlord must file a petition in order to impose a utility passthrough. The Board will continue their discussion of possible amendments to Rules §4.11 at the January 20th meeting.
IV. Remarks from the Public (cont.)
K. Landlord’s Representative Andy Braden asked if input regarding the proposed amendments to Rules §4.11 was welcome from the public, and was assured that it was. He also confirmed that the current law is in effect for notices going out now.
XIII. Calendar Items
January 13, 2004 - NO MEETING
January 20, 2004
5 appeal considerations (1 cont. from 1/6/04)
Old Business:
A. 434 Leavenworth #209 (AT030352)
B. Rules and Regulations Section 4.11 (PG&E Passthroughs)
C. Rules and Regulations Section 6.11 (Comparables Increases)
New Business: AB 647 (Unabated Code Violations)
XIV. Adjournment
President Wasserman adjourned the meeting at 9:20 p.m.