Parts of Prop. M Struck Down
Judge Charlotte W. Woolard of the San Francisco Superior Court ruled in favor of a challenge to Proposition M, passed by San Francisco voters on November 4, 2008. Judge Woolard ruled that the attorney’s fees provision was a violation of the equal protection clause because it created a single class of litigants or a single class of lawsuits. At the same time, Prop. M deprives landlords of any right to collect their fees should they prevail. This unequal treatment is unconstitutional.
“San Francisco’s tenant lawyer stimulus package is dead,” declared Clifford E. Fried, one of the attorneys for the group that challenged Proposition M. “The attorney’s fees component of the new law was nothing more than another way for tenant lawyers to profit at the expense of landlords trying to navigate the complex set of rules that govern landlord-tenant relationships in San Francisco.” The lawsuit challenging Prop. M was brought by a coalition of individuals and housing industry organizations, including SFAA, the San Francisco Association of Realtors and the Coalition for Better Housing.
Prop. M, spearheaded by Supervisor Chris Daly, amended the San Francisco Rent Stabilization and Arbitration Ordinance under the guise of prohibiting harassment of tenants by landlords. It also authorized the recovery of attorney’s fees to tenants who prevailed in an eviction lawsuit without providing similar rights to landlords who won their eviction suits.
Judge Woolard also declared that portions of the proposition were unconstitutionally vague. Prop. M sought to prohibit landlord conduct undertaken “with ulterior motive or without honest intent.” The language was an attempt to prevent landlords from communicating with their tenants with the intent of making an offer to buy out a tenancy in exchange for offers of payments. Judge Woolard’s ruling validates the challengers’ argument that such a prohibition is a violation of a landlord’s First Amendment right of free speech.
Left standing, however, is the portion of Prop. M that prohibits conduct carried out by the landlord in “bad faith.” Therefore, there are still concerns that landlords will not understand the meaning of “bad faith” harassment. The prohibition against bad faith harassment implies that the proscribed conduct, when undertaken in good faith, is permissible.
“We are extremely pleased with the court’s ruling,” said Janan New, executive director of SFAA. “Judge Woolard clearly saw that the intent of this ballot measure is punitive and would prevent landlords from simply communicating with their tenants except through an attorney. It makes no sense to prohibit what is 99% of the time a mutually positive relationship.”
Mandatory Green Carts Are a Go
The San Francisco Board of Supervisors recently approved the nation’s strictest recycling law, mandating composting for every residence and business in the city. The move is part of the city’s push for 100% recycling by 2020. Garbage collectors will leave tags on containers when they spot incorrectly sorted material, though those collectors are only going to view what’s on top of the container and have no intention of going through them. After several notices of incorrectly sorted trash, fines of up to $100 can be issued at residences and up to $500 at businesses.
The ordinance had originally included language that would have made landlords responsible for tenants’ sorting, but it was removed after SFAA objected. Landlords will also have some extra time to secure the green carts and make them part of existing recycling programs. The ordinance will take effect this fall for single-family residences, while there will be a moratorium on fines until at least July 2011 for tenants and owners in multifamily properties.
Only 22% of the city’s large apartment buildings have composting bins, according to Sunset Scavenger, although officials have seen a huge increase in the last year. By the city’s records, it currently diverts 72% of its waste, which is the best in the nation. If recyclables and compostables going into landfills were diverted, the city’s recycling rate would jump to 90%.
Khaleel Promoted to Deputy Director of the SFAA
Formerly the director of education and events for the SFAA, Vanessa Khaleel will now be in charge of day-to-day operations at the organization. In addition to managing daily operations, her responsibilities will continue to include development and oversight of events and education programs such as Landlord 101 and CCRM designation, as well as producing the managers’ luncheon on timely topics of interest to the landlord community. Khaleel also produces the SFAA Trade Show, taking place on September 21, 2009, and the SFAA Trophy Awards on November 19, 2009, which showcases the best of San Francisco’s rental
housing community.
“I am looking forward to a greater level of responsibility and the range of experiences that overseeing the day-to-day operations will allow me,” said Khaleel. “SFAA provides important resources to San Francisco’s diverse landlord community. I’m proud to be a part of the association and to help deliver those services.”
A third-generation Bay Area native, prior to joining the SFAA, Khaleel worked for eight years as an onsite property manager for new developments and managed renovations on rent controlled properties. She holds a California Certified Residential Manager designation through CAA.
Facing Foreclosure
As homes across California continue to face foreclosure, the State Legislature has introduced a number of bills this year to limit the impact on tenants. Currently there are three bills pending that propose three very different solutions.
If passed, AB 603 (D-Price) would be extremely harmful to property owners, investors and banks. The bill requires “just cause eviction” for all rental properties that have gone into foreclosure. It specifically prohibits an owner who acquires property as a result of a default on the mortgage from taking any action to terminate any tenancy within one year of acquiring the property. Even if an investor buys the property with the intent to utilize it as rental property, the new owner cannot proceed with a termination notice against the existing tenants unless a specific allowable cause is listed. CAA has taken an oppose position on the bill.
SB 120 (D-Lowenthal) is a bill that seeks to clarify that banks are considered “successors in interest.” This would mean that the banks become responsible for the return of security deposits to the tenants who live in a foreclosed property. At the same time, the bill would ensure that there are no rights granted to squatters, trespassers or other people who unlawfully occupy the property. The legislation also protects tenants from utility shutoffs by allowing tenants to make the utility payment (in place of the previous owner who was making that payment), and the tenant may deduct that payment from rent due. The tenant must provide to the successor in interest a copy of the utility receipt as evidence of payment. CAA has taken a neutral position on the bill.
AB 331 (D-Hall) is CAA-sponsored legislation that seeks to mitigate the negative actions of some bad actors, which has cast a negative light on the entire rental housing industry. The problem this bill seeks to address is the situation where a homeowner, knowing the home may soon be foreclosed upon, rents it out to an unsuspecting tenant. In many reported cases, the owner, who is already several months behind on the mortgage payment, pockets the rent and the security deposit. The first time the unsuspecting tenant learns anything is amiss is when she receives a termination notice from the bank or other successor in interest. In these instances, despite the fact the tenant has met her obligations, she loses her housing due to the unscrupulous acts of the dispossessed homeowner.
AB 331 would require a property owner who rents a single-family home, duplex, triplex or fourplex to disclose to a prospective tenant if a notice of default has been recorded against the property. AB 331 passed out of the Assembly Judiciary Committee in May and is moving successfully through the legislative process.
See You at CCRM
SFAA is once again sponsoring its popular CCRM Property Management Series for fall 2009. The fall series starts August 27 and runs through October 29 at the Jewish Community Center in San Francisco. This course will give you the knowledge you need to understand and perform the day-to-day tasks of property management.
The last CCRM series sold out, so register today and don’t miss out. You can register online at www.sfaa.org. For more information, please contact Vanessa Khaleel at 415-255-2288 x16 or vanessa@sfaa.org.
Let the Voting Begin
SFAA is now accepting nominations for the 2009 Trophy Awards. The Trophy Awards will honor the best of San Francisco’s rental housing community on November 19, 2009, at the Palace Hotel.
Nominate your favorite firms, employees and properties for any of the following Trophy Award categories: Independent Owner, Property Management Firm, General Manager, Resident Manager, Green Building, Assistant Manager, Residential Amenities, Leasing Consultant, Repositioned Property, Administrative Professional, New Development, Maintenance Manager, Industry Partner and Maintenance Technician.
Nominate online at www.sfaa.org. For more information about the 2009 Trophy Awards, contact Vanessa Khaleel at 415-255-2288 x16 or vanessa@sfaa.org.
Housing Production Way Up in 2008
A report on San Francisco’s housing inventory shows that in 2008 new housing production reached its highest point since 1965. In total, 3,340 new units were added to the city’s housing stock, almost all of which was new construction, although about 10% was added through expansion of existing structures or converting a building from a nonresidential use. Only 77 units were lost citywide, mostly through unit mergers, demolition and removal of illegal units.
Nearly half of all units were built in the South of Market planning district last year, with the downtown area coming in second with 34% of new units. That means that about 80% of all new housing in the city was created in these two areas. Also, the large majority of new buildings (about 83%) were slated for 20-plus units.