Section 6.16 Utility Passthrough

(Added August 24, 2004; Subsection (i) amended September 21, 2004; Amended December 16, 2008, effective January 1, 2009; Subsection (g)(iii) amended August 4, 2009; Subsection (g)(iii) amended July 12, 2016, effective August 13, 2016)

            The following provisions shall apply to utility passthroughs where the notice of rent increase for the utility passthrough was served after November 1, 2004:

(a) Where a landlord pays for gas, electricity and/or steam provided directly to the unit occupied by the tenant and/or to the common areas of the property in which the unit is located, and seeks to recover the increase in the cost of these utilities from the tenant, the landlord may pass through the increased costs of the utilities between the “base year” and the comparison year, as set forth below.

(b) Determination of Initial “Base Year”

(i) For all tenancies existing on December 31, 2003, the initial “base year” for purposes of this section shall be calendar year 2002 with the following exception:

(A) For utility passthrough petitions filed prior to January 1, 2009, where a utility passthrough was in effect for a tenancy on November 1, 2004, the landlord could elect to use calendar year 2002 as the initial “base year” or elect to continue to use the earlier “base year”, provided that the landlord petitioned the Board for approval of the earlier “base year” and the Board determined that the earlier “base year” was proper under Section 4.11 of these Rules.

(B) For utility passthrough petitions and Utility Passthrough Calculation Worksheets filed on or after January 1, 2009, the initial “base year” for all tenancies with an approved earlier “base year” shall be calendar year 2003.

(ii) For all new tenancies commencing after December 31, 2003, the initial “base year” shall be the calendar year immediately preceding the year of the inception of the tenancy.

(iii) A landlord may petition the Board for approval of an alternate “base year” if the landlord became an owner of record after December 31, 2002 and demonstrates a good faith, but unsuccessful, effort to obtain the utility bills from the former landlord and/or the utility company that are necessary to establish the “base-year” utility costs required by subsections (b)(i) or (b)(ii). The Board will not approve an alternate “base year” that creates exaggerated results unless the proposed alternate “base year” coincides with the landlord’s first full calendar year of ownership.

(c) Subsequent Adjustments to Initial “Base Year”

            Different tenants in the same property may have different initial “base years” depending on when they moved into the property or whether the Board has approved use of an earlier “base year” pursuant to subsection (b)(i) above or use of an alternate “base year” pursuant to subsection (b)(iii) above. The initial “base year” utility costs shall be adjusted every five years as follows:

            A new “base year” is established at the end of every fifth calendar year after the initial “base year”. For example, where the initial “base year” is 2002, the new “base year” shall be 2007 for petitions and Utility Passthrough Calculation Worksheets filed between January 1, 2009 and December 31, 2013. If the tenancy continues for an additional five years, the “base year” will become 2012 for petitions and Utility Passthrough Calculation Worksheets filed between January 1, 2014 and December 31, 2018, and so on. For another example, where the initial “base year” is 2003, including those tenancies that had an earlier “base year” prior to January 1, 2009, the new “base year” shall be 2008 for petitions and Utility Passthrough Calculation Worksheets filed between January 1, 2010 and December 31, 2010. If the tenancy continues for an additional five years, the “base year” will become 2013 for petitions and Utility Passthrough Calculation Worksheets filed between January 1, 2015 and December 31, 2019, and so on. For another example, where the initial “base year” is 2004, the new “base year” shall be 2009 for petitions and Utility Passthrough Calculation Worksheets filed between January 1, 2011 and December 31, 2015.  If the tenancy continues for an additional five years, the “base year” will become 2014 for petitions and Utility Passthrough Calculation Worksheets filed between January 1, 2016 and December 31, 2020.

(d) Determination of “Comparison Year”

            For purposes of this section, the “comparison year” in all cases shall be the calendar year immediately preceding the filing of the landlord’s Utility Passthrough Calculation Worksheet or petition for approval of utility passthrough.

(e) Petition Required for Certain Utility Passthroughs

            Effective January 1, 2009, the landlord is required to file a Petition for Approval of Utility Passthrough when using a comparison of utility costs for the prior two calendar years (e.g. 2007/2008 in 2009, 2008/2009 in 2010, 2009/2010 in 2011, etc.). The petition shall be on a form prescribed by the Board. The petition shall specify the units on the property that are subject to the petition. The petition will be decided without a hearing unless the Administrative Law Judge determines that a hearing is required.

(f) Where the landlord is required to file a Petition for Approval of Utility Passthrough, the landlord must file the petition before giving legal notice of a rent increase for a utility passthrough. The petition must be filed no more than twelve months after the “comparison year” listed in the petition. The notice of rent increase shall be in conformance with the requirements set forth in Section 4.10 above and shall further include the dollar amount requested for the utility passthrough. This increase for the utility passthrough shall be inoperative unless and until the petition is approved by the Administrative Law Judge. Any amounts approved by the Administrative Law Judge shall relate back to the effective date of the legal notice, if given. A landlord may choose instead not to serve legal notice of a proposed utility passthrough until after the decision of the Administrative Law Judge is rendered. In any event, no rent increase approved by the Administrative Law for a utility passthrough shall become effective until the tenant’s anniversary date.

(g) Petition Not Required for Certain Utility Passthroughs

            Effective January 1, 2009, the landlord is not required to file a Petition for Approval of Utility Passthrough using a comparison of costs for years other than the prior two calendar years. For example, in 2009, pursuant to subsection (e) above, the landlord must file a petition for “base year” 2007 and “comparison year” 2008 in order to impose a utility passthrough, but need not file a petition for “base years” 2003, 2004, 2005 or 2006 and “comparison year” 2008. However, in order to impose a utility passthrough where a petition is not required under subsection (e), the landlord must comply with the following requirements:

(i) For each year that the landlord seeks to impose a utility passthrough where a petition is not required under subsection (e), the landlord shall file one Utility Passthrough Calculation Worksheet with the Rent Board for each “base year” used, on a form prescribed by the Board, that shows how the passthrough was calculated. The Worksheet shall be filed within twelve months of the “comparison year” used in calculating the amount of the passthrough. The Rent Board shall review ten percent (10%) of all Worksheets filed with the Board. In addition, if there is no prior utility passthrough petition on file for a property for which a Worksheet is filed, the Rent Board shall review at least one Worksheet for that property. In conducting a Worksheet review, the Board may take whatever action the Board deems necessary including, but not limited to, requiring the landlord to file evidence to support the calculations in the Worksheet, requiring the landlord to file a Petition for Approval of Utility Passthrough, scheduling a hearing, or reviewing additional Utility Passthrough Calculation Worksheets.

(ii) The landlord must file the Worksheet with the Board before giving legal notice of a rent increase for a utility passthrough. The notice of rent increase shall be in conformance with the requirements set forth in Section 4.10 above and shall further include the dollar amount requested for the utility passthrough. The landlord must provide the tenant with a file-stamped copy of the Utility Passthrough Calculation Worksheet at the time of service of the notice of rent increase.

(iii) A tenant who receives a utility passthrough under this subsection (g) may file a hardship application with the Board pursuant to Section 10.15 within one year of the effective date of the passthrough, and may be granted relief from all or part of such passthrough based on hardship. Payment of the utility passthrough set forth in the hardship application shall be stayed until a decision is made by the Administrative Law Judge on the tenant’s hardship application. Appeals of decisions on a tenant’s hardship application shall be governed by Ordinance Section 37.8(f).

(h) Laundry Facilities

            Where the utility bills include the cost of gas and/or electricity for laundry facilities and the landlord charges a user fee for the laundry facilities, the landlord may not pass through any increase in the building’s cost of utilities unless the landlord complies with one of the following subsections:

(i) where the laundry facilities are separately metered in both the “base year” and “comparison year”, the landlord shall not include the utility costs for the laundry facilities in the utility passthrough calculation; or

(ii) where the laundry facilities are not separately metered in both the “base year” and the “comparison year” and there is a third party vendor that collects the user fees from the laundry facilities, the landlord shall deduct the income actually received by the landlord from the third party vendor from the total utility costs for the building; or

(iii) where the laundry facilities are not separately metered in both the “base year” and the “comparison year” and there is not a third party vendor that collects the user fees from the laundry facilities, the landlord shall deduct 50% of the user fees actually collected by the landlord from the total utility costs for the building; or

(iv) where the laundry facilities are not separately metered in both the “base year” and “comparison year”, the landlord shall deduct the actual costs of utilities that serve such laundry facilities, using a methodology that has been approved by the Rent Board.

(i) Where the utility bills include the cost of gas and/or electricity for laundry facilities and the laundry facilities are not available to or operated for the benefit of the tenant, and the laundry facilities are not separately metered in both the “base year” and “comparison year”, the landlord may not pass through to that tenant any increase in the building’s cost of utilities.

(j) Calculation of the Utility Passthrough

            The landlord shall calculate the amount of the utility passthrough as follows:

(i) Compile the utility bills for the “base year” and the “comparison year” as defined in subsections (b), (c) and (d) above. The utility passthrough shall be based on actual costs incurred by the landlord during the relevant calendar years, regardless of when the utility bill was received or paid.

(ii) Calculate the total utility cost for the “base year” and the total utility cost for the “comparison year”.

(iii) Where the laundry facilities are not separately metered in both the “base year” and the “comparison year”, compile evidence of and calculate the actual cost of utilities that serve the laundry facilities in the “base year” and the “comparison year”.

(A) Where the landlord cannot prove the actual cost of utilities that serve the laundry facilities and a third party vendor collects the user fees from the laundry facilities, compile evidence of and calculate the income actually received by the landlord from the third party vendor for the use of the laundry facilities in the “base year” and the “comparison year”.

(B) Where the landlord cannot prove the actual cost of utilities that serve the laundry facilities and the landlord collects the user fees from the laundry facilities, compile evidence of the user fees actually collected by the landlord for the use of the laundry facilities in the “base year” and the “comparison year” and calculate 50% of the amount collected.

(iv) Where the laundry facilities are not separately metered in both the “base year” and the “comparison year”, subtract the utility costs for the laundry facilities, as calculated in subsection (iii) above, from the total utility cost for the “base year” and the total utility cost for the “comparison year”.

(v) Subtract the total “base year” utility cost (excluding utility costs for the laundry facilities) from the total “comparison year” utility cost (excluding utility costs for the laundry facilities) to get the utility cost increase. If there is no increase or if there has been a decrease, no passthrough is allowed.

(vi) Divide the resulting figure, if greater than zero, by twelve (12) to determine the average monthly utility increase for the entire property.

(vii) Divide the average monthly utility increase by the number of rooms in the property to get the amount of the utility passthrough that may be imposed for each room. For purposes of this section, the number of rooms in a property shall be calculated by presuming that single rooms without kitchens are one room units, studios are two room units, one bedroom units without a separate dining room are three room units, and so on. Each parking space and garage space in the building which is included in a tenant’s rental or for which a user fee is charged shall be counted as one room. Areas used for commercial purposes but for which no user fee is charged to the tenants, including but not limited to management offices and retail space, shall be included in the room count in a manner that most reasonably takes into account the size of the space and its utility usage.

(viii) To get the monthly utility passthrough for a unit, add the number of rooms in the unit to the number of rooms for parking and/or garage spaces included in the tenant’s rental or for which a user fee is paid by the tenant, and multiply that total number of rooms by the monthly utility increase per room.

(k) No landlord may pass through any increase in the cost of utilities to a tenant until the tenant has occupied the unit in the subject property for one continuous year.

(l) Each utility passthrough shall apply only for the twelve-month period after it is imposed.

(m) Nothing in this section or in these Rules and Regulations shall be interpreted as requiring any landlord to pass through any utility increase or to increase any tenant’s rent.

(n) The amount of rent due from the tenant for any utility passthrough shall be due on the same date as a rent payment normally would be due.

(o) A utility passthrough may be imposed only at the time of an annual rent increase. However, no amount passed through to the tenant as a utility increase shall be included in the tenant’s base rent for purposes of calculation of the amount of rent increases allowable under the Ordinance and these Rules and Regulations.

(p) The provisions of this Section shall be deemed a part of every rental agreement or lease, written or oral, for the possession of a rental unit subject to the Ordinance unless the landlord and the tenant agree that the landlord will not pass through any utility increases, in which case such agreement will be binding on the landlord and on any successor owner of the property.

(q) Where a utility increase has been lawfully passed through to the tenant, a change in the ownership of the property in which the tenant’s unit is located will not affect the tenant’s liability to pay the amount passed through.