The Forms, They Are A Changin’
The Rent Board Rules and Regulations Section 6.14 Form has been the industry document used by landlords to officiate their disapproval of subtenants since the 1990s. Enacted in 1989 by the San Francisco Rent Board Commissioners, Section 6.14 was the legislative response to California’s decision to outlaw vacancy control. (Vacancy control is a strict form of rent control where the price of a unit is permanently fixed by law; even when a new tenancy begins, the owner is required to maintain the registered rent for that unit regardless of tenancy changes or turnover.)
The fight to ban vacancy control led to the enactment of the Costa-Hawkins Rental Housing Act in 1995. This act allows landlords to reestablish rent on vacant units and further permits unlimited rental increases when the last original tenant on the lease vacates, and all remaining subtenants have moved in on or after January 1, 1996. Costa-Hawkins did not become fully effective until 2000. As such, a phase-in period existed from 1989 through 1999, when San Francisco owners relied not on Costa-Hawkins, but Section 6.14.
Section 6.14 does not mirror Costa-Hawkins. For example, Section 6.14 imposes an affirmative obligation on the landlord to serve written notice of a rent increase or a reservation of right to increase rent upon receipt of notice that the last original tenant is going to vacate. Section 6.14 also contains vague language, which allows a subtenant to retain the rent controlled rate when the landlord “affirmatively” represents to the subtenant that he or she may remain in possession at the same rent.
In response to these inconsistencies, and because Costa-Hawkins is now the law of the land, SFAA has adopted a new and updated form to document disapproval of subtenants. Titled “Notice of Objection to Occupancy of Unapproved Subtenants,” this form is now available from SFAA. In addition, there are educational classes being offered to explain how to use this disclosure and to ensure that you, as an owner, maintain your right to increase rent under Costa-Hawkins. In sum, the era of 6.14 is over, so please update your business practices now. Next month, the magazine will have a feature story explaining more about this new form.
Prop. M Stayed
On January 21, 2009, a coalition of individuals and housing industry organizations, including the San Francisco Apartment Association, the San Francisco Association of Realtors and the Coalition for Better Housing, was successful in obtaining a stay of enforcement of specific sections of Proposition M, the so-called “tenant harassment” measure passed by city voters in November.
San Francisco Superior Court Judge Paul H. Alvarado granted Petitioners’ ex parte application and ordered that the San Francisco Rent Ordinance Sections 37.2 and 37.10B(a)(6), (7) and (8) (all created by Prop. M) shall be stayed until a final determination on the merits of Petitioners’ writ of mandate.
“We are very pleased that Judge Alvarado granted the stay we requested,” said Janan New, executive director of SFAA. “His granting of the stay clearly demonstrates that there are serious flaws with this ballot measure, particularly with regard to the free speech rights of landlords.”
Section 37.2 is the new provision of the Rent Ordinance that defines housing service to include “quiet enjoyment of the premises, without harassment by the landlord as provided in Section 10B.” Section 37.10B(a)(6) prohibits “attempts to coerce the tenant to vacate with offer(s) of payments to vacate which are accompanied with threats or intimidation.” Section 37.10B(a)(7) prohibits “continu[ing] to offer payments to vacate after tenant has notified the landlord in writing that they no longer wish to receive further offers of payments to vacate.” Section 37.10B(a)(6) prohibits landlords from “threaten[ing] the tenant, by words or gesture, with physical harm.”
A hearing on the Petition for Writ of Mandate will be held on April 17, 2009, at 9:30 a.m. in Dept. 302.
SFAA would like to extend a special thanks to longtime members, independent owner Norman Larson and Honor Bulkley of Round Hill Pacific for their participation in this important lawsuit.
Security Deposit Interest Drops to 3.1%
The rate for security deposit interest payments has dropped to 3.1% from 5.2%. The new rate is effective March 1, 2009, through February 28, 2010. Since 2004, the San Francisco Rent Board has calculated the rate according to the Federal Reserve Six-Month CD rate, using an average of the 12 most recent monthly rates (rounded to the nearest tenth).
Speak Out Against Daly Legislation
District 6 Supervisor Chris Daly introduced new legislation which he calls a “Renters Economic Relief Package.” The goal of this package is to help renters in San Francisco who may or may not be suffering due to the current economic climate. There are a number of proposed reforms in this package.
The first measure would suspend any rent increases that will cause tenants rents to exceed 33% of their incomes. This would extend the rights of the tenants to claim a hardship and make rent increases more difficult for owners in San Francisco. Another measure would expand the rights of tenants to add roommates to help pay the rent. This provision would allow tenants to increase the number of occupants beyond what is stated in their lease agreement and would be based on occupancy limits in the San Francisco Housing Code. The final provision would limit the amount of “banked” rent increases that can be imposed in any one year. Currently, owners are able to enforce any amount of “banked” rent increases. The new provision would not allow an owner to raise the rent more than 8% using banked increases in any one year.
SFAA is working to ensure such measures are not put into place. We realize the impact it would have on property owners in San Francisco, many of whom may also be going through difficult financial times in the current economy. Please email, call and send letters to your supervisor letting them know that you are against this type of legislation. We must make it clear to the board that such provisions would push owners into worse financial situations which may cause more foreclosures in San Francisco.
Blight Fright
The San Francisco Board of Supervisors signed a new ordinance into law that extends and clarifies the meaning of “blight,” as well as property owners’ responsibilities for fixing up their properties. Among other requirements, the ordinance requires garbage cans to be removed from the front of the property within 24 hours and furniture within 72 hours.
Any member of the public can call the San Francisco Department of Public Works, and the agency will check out the supposed blighted property and make its own determination. Owners will have a set period of time to remedy blighted conditions (which will be dependant on the severity of the problem); if they don’t respond in time they can be fined up to $1,000 a day.
Managers Luncheon March 19
SFAA invites all its members in property management firms to join the Managers Luncheon on March 19, 2009, at Absinthe in Hayes Valley. These luncheons are designed to provide a venue for discussion among those who manage property in the city. Speakers have included sanitation workers with Sunset Scavenger and officers with the Vice Crimes division of the San Francisco Police Department. The March luncheon will focus on the current rental market conditions.
The luncheon costs $40 per person, which includes a three-course prix-fixe lunch. Seating is limited, so please contact Education and Events Director Vanessa Khaleel at 415-255-2288 or via email at vanessa@sfaa.org to RSVP.
Green Fest April 20
Just in time for Earth Day, SFAA will be hosting its first “Green Fest,” an environmental trade show open to all SFAA members. Featuring the latest and greatest in green design and building trends, the festival will take the place of the April membership meeting and will be held at Fort Mason on April 20 at 6 p.m. For more information or to help sponsor the event, contact Education and Events Director Vanessa Khaleel at 415-255-2288 or via email at vanessa@sfaa.org.
Free Tax Preparation
Free tax return preparation will again be offered at 40 locations in San Francisco through the United Way of the Bay Area’s “Earn It! Keep It! Save It! San Francisco” campaign. Anyone with an income of $45,000 or less is eligible. Last year, over 15,000 San Franciscans took advantage of the service and received over $11,297,000 in refunds.
You can help spread the word to your tenants by ordering free outreach flyers with complete details at www.tax-aid.org/outreach.html. English, Spanish, Chinese, Vietnamese, Russian and Tagalog versions are available. Interested taxpayers can also call 2-1-1 to find the nearest location.