Section 7.18 Repair and Rehabilitation Work Due to Natural Disaster

(Adopted April 17, 1990; amended May 1, 1990, effective for work completed by April 17, 1991)

The cost of natural disaster repair work of a non-structural nature which, in the absence of any accompanying structural work, ordinarily would be considered routine maintenance and repairs, such as plaster patching and painting, may be passed through to the tenants, subject to the following provisions:

(a) Filing: A landlord who seeks to pass through the costs of non-structural disaster repair work must file a petition for certification on a form prescribed by the Board and accompanied by the documentation listed in Sections 7.10(b)(1)(2) and (3) above. A petition for such a passthrough must be filed before giving notice of a rent increase, and any such notices shall be in conformity with the provisions of Section 4.10 and Section 7.10(c) above.

(b) Allowable Costs: Passthroughs of costs for non-structural disaster-related repair work that has not been reimbursed by insurance proceeds shall be limited to seventy-five percent (75%) of all such costs (including interest).

(c) Allocation of Costs: The cost of such repair work shall be allocated to all units in the building, regardless of the extent to which each was damaged. Methods which may be appropriate – depending on the circumstances – include, but are not limited to, allocation based on the square footage in each unit or equal division among all units. Each unit may only be charged its pro rata share of the costs. Costs attributable to units where the rent cannot be raised may not be allocated to the other remaining units.

(d) Amortization Period: The cost of all such disaster-related repairs shall be amortized over a period of ten years.

(e) Allowance of Interest: Interest on money spent to perform such disaster-related repairs shall be limited to the actual interest paid for such money or to ten percent (10%), whichever is lower, and to 10% if interest is not paid, and shall be amortized over ten years.

(f) Passthrough: The limitation described in Section 7.12(d) above shall apply to passthroughs based on repairs made necessary by natural disaster except under extraordinary circumstances such as:

(1) When the landlord's financial position can not sustain the extended period of recovery resulting from such a limitation without threatening loss of the building, or forcing the landlord to spread performance of the repairs over an extraordinarily long period of time such that tenants could reasonably claim that a "decrease in services" has resulted; or other hardship to the landlord.

(2) When the maximum allowable capital improvement passthrough for a given tenant is already in place at the time repair costs are certified. Under such circumstances, any rent increase based on passthrough of repairs caused by natural disaster shall be limited to an additional 5% or $15.00, whichever is greater, in any twelve-month period. Any certified passthroughs exceeding this amount may be accumulated and imposed in subsequent years subject to this limitation.

(g) Work eligible for passthrough under this Section shall not be considered as an operating and maintenance expense under Section 6.10.