November 18, 2008

Commissioners Present: Beard; Crow; Gruber; Henderson; Hurley; Mosbrucker.

Commissioners not Present: Justman; Marshall; Murphy.

Staff Present: Gartzman; Lee; Wolf.

Commissioner Mosser appeared on the record at 6:11 p.m.

MSC: To approve the Minutes of October 28, 2008.

(Mosbrucker/Henderson: 5-0)

A. Attorney Karen Uchiyama, representing the landlord in the case at 1135 Taylor St. (AL080105), told the Board that the landlord was withdrawing the portion of the appeal having to do with the defective electrical service. Ms. Uchiyama said that the Administrative Law Judge (ALJ) erred in finding that the Golden Gateway decision doesn't apply to remodeling and improvement work but only to repair and maintenance, which sends a message to landlords not to upgrade their properties. Ms. Uchiyama told the Board that the ALJ missed the policy arguments behind Golden Gateway. She also said that all the work was done pursuant to the original permit, so it was not untimely or drawn out.

B. Jim Rausch, the property manager for the building at 1220 – 14^th Ave. (AL080106), submitted a statement on behalf of the landlord, who was unable to attend.

C. Katie Rush, an attorney for the Aids Legal Referral Panel, spoke in support of the appeal of the tenants at 251 Castro (AT080108). Ms. Rush told the Board that extreme hardship will result if the appeal isn't granted, and that stable housing is especially crucial for tenants with AIDS. Ms. Rush said that the loss of housing can result in a rapid decline in health or homelessness, and that these tenant appellants have no replacement housing options. She foresaw them having to choose between housing and health care.

D. Andy Wesley, attorney for the tenants at 251 Castro, told the Board that the tenants have no other housing, nor do they own any other property. Mr. Wesley said that the tenants returned to the unit mid-way through the hearings, which had always been their intent.

E. Ron Schivo, attorney for the landlord in the case concerning 2893 – 24th St. (AT080099 & AT080110), told the Board that the original tenant resides in Hawaii and she hid the fact that there was a sub-tenant on the premises. Mr. Schivo asserted that disposition of the appeal should be limited to the facts at the time of the hearing, and not claims filed later. Mr. Schivo said that a Costa-Hawkins analysis of the facts would lead to the same result and asked that the Decision be affirmed.

The landlord's petition for certification of capital improvement costs to one of two units was granted, resulting in a passthrough in the amount of $313.54. The tenant appeals the decision on the grounds of financial hardship.

The landlord's petition for certification of the costs of deck work for four units in the 24-unit building was granted only as to the costs of one of the decks, as the other work was found to be in the nature of repair rather than capital improvement. The landlord appeals, claiming that the work on the deck in unit #206 constituted an improvement to the building.

The tenant's petition alleging decreased housing services due to long-term construction noise on the premises and faulty electrical service was granted and the landlord was found liable to the tenant in the amount of $4,818.75. On appeal, the landlord claims that: the rent reductions are barred by the Golden Gateway and Doric decisions; housing services were not removed but, rather, temporarily interrupted; the landlord's right to a capital improvement passthrough should have no bearing on whether the tenant should be granted a rent reduction; the decision constitutes an unconstitutional "taking" of the landlord's property; the landlord is being punished for improving the building; the tenant's rent is so low that no rent reduction would be warranted, no matter the condition of the building; the tenant suffered mere inconveniences, while the property remained habitable; the tenant failed to provide continuing notice to the landlord; the landlord's attempts to mitigate the problem were refused by the tenant; the electrical defects were caused by a tenant in a neighboring unit; and there is no justification for the time period for which rent reductions were granted.

MSC: To deny the appeal. (Mosbrucker/Henderson: 3-2; Gruber, Hurley dissenting)

The original tenant's appeal was filed five days late because the tenant did not receive a copy of the Decision at her Hawaii address.

The landlord's petition seeking a determination pursuant to Rules ß1.21 was granted because the ALJ found that the original tenant no longer occupied the unit as her principal place of residence and a subsequent occupant was a guest, rather than a tenant. On appeal, the second tenant maintains that: the ALJ exhibited bias against him; there are factual errors in the decision; he is a tenant at the subject unit, with the consent of the landlord; he has paid rent on behalf of himself and the original tenant, which was accepted by the landlord; his due process rights have been violated; and the landlord has waived the right to a rent increase under the facts of this case. The original tenant also appeals, claiming that: she forwarded rent checks to the subsequent occupant, who began writing his own checks to the landlord in order to force her out of the unit; and she cannot return to the subject unit until she completes medical treatments in Hawaii and establishes eligibility for health insurance from her employer.

The landlord's petition seeking a determination pursuant to Rules ß1.21 was denied because the ALJ found that the subject unit is the tenants' principal place of residence. On appeal, the landlord argues that: the preponderance of the evidence shows that the tenants principally reside at a condominium they own in Hawaii; and the tenants failed to prove that their principal place of residence is the San Francisco unit.

The landlord's petition for a determination pursuant to Rules ß1.21 was granted because the ALJ found that the subject unit was not the tenants' principal place of residence. The tenants appeal, claiming that they temporarily resided at a home in Palm Springs for a two-year period for health reasons, but that they never cut their ties to the San Francisco unit, which is their principal place of residence; the tenants were not allowed to make crucial waiver, estoppel and reliance arguments at the hearing; the tenants will be made homeless should the decision be allowed to stand; and the landlord did not meet his burden of proof.

The tenant's petition alleging an unlawful rent increase was denied because the ALJ found that a $200.00 rent reduction was temporary and agreed to by the landlord due to the financial difficulties being experienced by the tenant. On appeal, the tenant claims that: he was denied due process at the hearing; there are errors in the Decision; the ALJ exhibited bias against the tenant; the rent was renegotiated based on market conditions, and not due to financial hardship; and the rent increase should not go into effect until 60 days from now.

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

A. A copy of Proposition M, concerning tenant harassment, which passed on the November ballot and is anticipated to go into effect around mid-December.

B. An article from the S. F. Chronicle regarding a multi-million dollar jury verdict against a landlord for failure to return security deposits.

C. A letter from tenant Allen White with suggested revisions to the SRO Hotel Visitor Policy.

D. The office workload statistics for the month of September, 2008.

The Board continued their discussion of possible changes to the methodology for calculation of utility passthroughs. Senior Administrative Law Judge Sandy Gartzman walked the Board through proposed draft language, and answered questions from several Commissioners. The new proposal would: eliminate all pre-2002 base years for utility passthroughs calculated on or after January 1, 2009, which would affect the Golden Gateway Center and eleven other properties. Tenants with pre-2002 base years would have a base year of 2003 commencing January 1, 2009. A new base year would be established for all tenancies at the end of every fifth calendar year after the initial base year. No petition would be required except where the landlord is comparing utility costs for the two most recent calendar years. For other base years used, the landlord would be required to file a Utility Passthrough Calculation Worksheet with the Board, which would be provided to the tenant; 10% of these would be reviewed, as well as at least one Worksheet for properties with no prior utility passthrough petition on file; and tenants would be able to file a hardship application within one year of the effective date of the passthrough. Tenants would be able to file petitions challenging utility passthroughs on several grounds within one year of the effective date of the passthrough.

Discussion of this proposal and any alternate proposals will be continued at the December 2nd Board meeting.

F. Tenant Sarah Warner of 1135 Taylor (AL080105) asked for a clarification regarding the ruling on her landlord's appeal.

G. Tenant Linda Post asked a question concerning the process by which a tenant finds out the amount of their utility passthrough.

The Staff Holiday Party will be on Thursday, December 18th at noon at Don Ramon's restaurant.

President Gruber adjourned the meeting at 7:50 p.m.