SF Apartment : February 2016

PRESIDENT'S REPORT

Triumph And Tumult

by Eric R. Andresen

In this month’s magazine we recognize the best of the best—the honorees of this year’s SFAA Trophy Awards. It’s hard to believe November 2015’s event at the beautiful St. Regis Hotel was our ninth annual awards ceremony, but what a pleasure it continues to be to acknowledge the individuals and companies in our industry who work so hard and excel.

I was also honored to recognize Supervisor Scott Wiener with the President’s Award, acknowledging his contributions to our incredible city by the bay as well as his steadfast work over the years. Supervisor Wiener has clearly established himself as a level-headed leader, focused on doing what’s right for the city and those of us who live and work here. He has stubbornly stuck to the moral ground time and again, and clearly has all of our best interests at heart. I’m proud to know Scott, to call him a good friend and to support him as a qualified and skilled leader.

All of you will have the opportunity to support Scott, too. He is running for the state senate this year, hoping to replace termed-out Senator Mark Leno in Sacramento. In my opinion Scott has continually proven himself to be worthy of representing us in Sacramento, and I hope all of you will join me in supporting his campaign this year.

Supervisor Wiener was not the only deserving recipient of recognition this year, though. Please take time to read about each of our honorees in the feature on page 22 of this month’s magazine. I’m truly impressed with the caliber and dedication of our winners, and I think you will be too.

Kim Legislation
One of the big challenges this past year was the tenant protection legislation introduced by Supervisor Jane Kim early in 2015. The legislation eventually passed in November, but there were months and months of hearings, meetings, edits and changes before it was eventually voted in by the San Francisco Board of Supervisors.

The legislation that we ended up with is no way near what we had hoped for, as recommended amendments and challenges were ignored by the ordinance’s author. Our frustration continued to grow even after the legislation was voted on, as promises made by Mayor Ed Lee to veto went unfulfilled. Last minute attempts to carve out specific sections also went without support, and we’re now looking at the need for significant and expensive litigation to protect our rights, our properties and our residents.

As of the time of writing this report our legal team is still reviewing the legislation and making recommendations to industry leadership regarding the options we have in court. We clearly want to be thorough, thoughtful and prepared regarding the many likely illegal provisions of the ordinance. I’m proud of the legal team we have, and grateful for their support and expertise. Stay tuned, and make sure that you support our Legal Fund!

2016 Tenancy Agreement
The Kim legislation certainly required some changes to our rental agreement this year as well. As we do every year, several local attorneys and myself sat down in the SFAA offices to review the agreement and make necessary edits and updates. At the forefront of our deliberation was the new legislation and the changes that are required to bring the agreement up to date.

One of the most significant changes is in relation to the number of occupants we must allow. The Kim legislation basically threw out the limitations that we used to have the right to impose regarding occupancy and subletting. And while we are certainly going to be filing legal challenges to many of new regulations and expect to successfully strike down several provisions of the new law, we’re likely going to be stuck dealing with them while we work our way through the courts. In fact, there is a strong likelihood that we will be permanently straddled with the mandatory roommate allowances, so owners really need to pay attention to how new leases are drafted.

As such, the first and most important issue is in regard to the number of occupants you must allow in a unit. The legislation does us a little bit of a favor by helping to establish occupancy standards—two persons in a studio, three in a one bedroom unit, etc. Unfortunately, limits that we may have written into our leases that do not meet these criteria may now be unenforceable. Even our subletting restrictions have been negated by the legislation and will need to be reviewed and carefully applied.

Our recommendations include specifically identifying the size and/or type of unit, and then strictly applying firm subletting regulations within future agreements. What this means is that you must now establish, up front, what you consider the unit to be (studio, one bedroom, etc.). A new line has been added to the updated tenancy agreement to address unit designation. We have also removed any options regarding subletting, establishing instead a strict “no subletting and assignment” policy right from the start. For a full feature on the 2016 SFAA lease, please read Clifford Fried’s article here.

Unfortunately, the rent board has declared that the new Kim legislation is going to be applied retroactively, so we are all going to have to be careful and vigilant in enforcing restrictions in existing tenancies under current and prior rental agreements. SFAA’s team will be providing as much information as we can, and we’ll certainly be offering new classes in an effort to help all of you understand and comply with the new requirements. Keep your eyes out for new articles here, and watch for education program announcements. We also highly recommend that if you have any doubt, please take the time to review your situation with a qualified local landlord attorney.

What to Expect in 2016
2016 is going to be a very, very challenging year for all of us. Not only will we be working on understanding and litigating the Kim legislation, but we will need to be heavily involved in local, state and national political races.

Locally we will be looking at half a dozen board of supervisors races, some of which will likely grow quite challenging. As November’s election includes the presidential race, this means a very strong voter turnout—so we expect that there will be several significant pieces of new legislation on the ballot as well.

At the state level we’re looking at what may be the last meaningful election for the next decade or more. With new term limits now allowing legislators to serve for up to twelve years, 2016 will be the last time we see any competitive elections for many, many years. What this means is that the legislators that we end up with after the November 2016 elections are who we will be dealing with for a long time.

Many of us political “junkies” share a concern regarding a “super-majority” of either party in either house. I am not saying this to favor one party or the other, but rather stating that in order for a democracy to be effective, there needs to be system of checks and balances and a need for compromise and cooperation between the two parties. When one party, no matter which one, has control of both houses and the governor’s office, the system fails and is no longer truly representative of the people.

So this is my heads up and my shout out to all of you—we are going to need your support and your contributions in a big way this year! Our legal challenges to the Kim legislation, in addition to the continuing challenges we’re currently involved with regarding relocation fees are going to have a significant impact on our legal fund. Your support is the only way we can successfully litigate bad legislation, so please be sure to donate to our legal fund this year.

Expect to be hearing a lot from us between now and the November elections regarding local and state political races, as well as campaigns for or against what is likely to be an overload of proposed legislation. We’re going to need all of you to support our Political Action Committees here and in Sacramento. You may not have ever participated in either of our PACs before, but this year is going to be different; all of you need to participate if we are going to be successful.

2016 promises to be another challenging but potentially rewarding year for all of us. Please participate in every way you can and help us continue to protect and preserve your investments in the years to come! Happy New Year to all!
 

Eric Andresen is the current president of the SFAA, and he owns and operates both West Coast Property Management and West Coast Property Maintenance Company. He can be reached at eric@wcpm.com.