The Passthrough

by Emily Landes

Kim Boyd Bermingham empathizes with owners and tenants. Perhaps that’s what makes her uniquely suited to handle the at times contentious passthrough process.

Kim Boyd Bermingham knows San Francisco. She grew up in the city and still lives in her childhood home, where she also raised her own kids. She attended City College of San Francisco and later graduated from UC Berkeley. Shortly after that, she began working with paralegal Jo Biel at Eviction Assistance.

It was the late 1980s and the AIDS epidemic was ravaging the city. People were getting sick, Bermingham recalled, and when they did, they often stopped paying their rent. It was a difficult time, but ultimately a fulfilling one as Bermingham worked tirelessly to connect those in need with the services and organizations that they needed to stay in their homes. “You don’t realize how much of this job is like working in social services,” she said of that period. “It’s not just a black and white thing you’re working on. It’s your community.”

Bermingham eventually decided to make San Francisco Rent Board petitions her focus, starting the aptly named Rent Board Passthroughs in 1999. She consults on a variety of notices and passthroughs with owners of all sizes, but particularly likes helping mom-and-pop apartment owners who remind her of San Francisco’s roots as a city for immigrants and others who are willing to work hard to get ahead. “Real estate was a way for them to get a foothold in the American Dream,” she said. “I have clients who are Irish, Latino and Palestinian. They come from all over the world. Some of them started by owning corner grocery stores. To me, those are the real San Francisco people.”

But as the city has made passthroughs more and more restrictive over the years, it’s become increasingly difficult for these independent owners to make their way through the system on their own. Even if they have only the best of intentions, they can make an innocent slip up that lands them in hot water at the rent board. “I ultimately want things to be done correctly,” Bermingham said. “It’s not in anyone’s interests that people do things wrong. It’s a lot to keep track of and it’s easy to make mistakes. I feel good about helping the mom and pops make sure they are doing it right.”

She also feels that her background as the child of a single-mother social worker, who nonetheless was able to become a homeowner, and a photographer father who spent years without a steady place to live makes her uniquely empathetic to both owners and residents. She has many friends from her decades working within the landlord community and many who are long-term tenants. “I love our little old ladies who live in the Tenderloin,” she said. “I don’t want those people to be pushed out.”

At the same time, she said tenants don’t always see the full picture when it comes to rent control. When helping clients with rent increase notices, she often notes rents that are under $1,000 a month—even pointing out a recent case where the rent was $270 for a one-bedroom apartment in Noe Valley. “I see low rents like that all the time,” she said. “What the tenant community doesn’t really understand is that a lot of landlords in San Francisco are absorbing people that have very low rents. So, there are a lot of people that are paying higher rents, but there are also a lot of people whose rents are really, really low and they don’t want to pay anything more than that.”

Sometimes these rents are so low because, she said, many owners who are “too soft” on their tenants and don’t take advantage of all their rights. She had one case where a client’s mother owned the building for 30 years and hadn’t raised the rent in 20. She was suffering from dementia and needed to be in a nursing home. On top of that, the building was then required to have a soft-story retrofit to the tune of $200,000. There were no two ways about it: the rent would have to go up. Even though they had not had an increase in decades, the tenants were not happy, Bermingham said. But possible tenant push-back shouldn’t stop owners from filing the increases and passthroughs they are allowed to make sure the building stays up to code. “Tenants kind of get used to not having to pay as much, but when the landlord needs it, it has to happen,” she said.

In fact, many times increases and passthroughs go through uncontested. The key, said Bermingham, is for the tenants to feel as though the owner has been investing in the building all along. That way when a big-ticket item comes in that requires a passthrough, tenants tend to take it in stride. “When the landlords are taking care of things regularly, the tenants feel like they're not just being asked to pay for something big when the landlords don't pay attention to other little problems,” she said. “So, the feeling is, ‘Oh, now you're fixing this thing when you can pass it along to me, but when I asked you to fix this leak or something like that, then it goes ignored?’”

Of course, fixing a leak is considered routine maintenance and cannot be passed through to tenants. But Bermingham said most owners don’t bother to pass through their legitimate capital improvements if the cost of the work is too low. She suggested a threshold of $20,000 in work before considering a passthrough. “It’s not in my interest to charge people to do stuff that’s not going to benefit them,” she said. She will look over potential clients’ numbers for free and let them know what she thinks they stand to gain from a passthrough. If her fees—which typically range from $1,800 to $2,500 per passthrough, depending on the size of the building—are not likely to be recouped in the first three to six months, it probably isn’t worth it, she said.

Right now, a lot of owners who have never done a passthrough before are taking advantage of their ability to do so because of the city’s recent seismic retrofit mandates. Bermingham advised owners who are getting bids on retrofitting projects to make sure that the mandatory work is separated out from any additional work, like adding accessory dwelling units, which cannot be passed through. “I really encourage people to get completely separate contracts and completely separate scopes of work,” she said. “You really have to think very cleanly about it.”

She added that owners taking on any large projects should always get several bids and keep copies of all of them. On projects over $25,0000, if owners cannot show the rent board several bids, they are required to pay an estimator to come out to the site and verify that they have not overpaid for the project. In general, Bermingham feels that the changes to passthroughs over time have been fair, but she balks at this additional and in her mind completely unnecessary fee. “There’s a presumption of insincerity or lack of knowledge on the part of the landlord,” she said. “There’s this automatic call for it that I would love to see changed.”

That one issue aside, Bermingham said that owners might be surprised to find how even-handed the rent board is. “I think that they think it’s a scary process and that the rent board is super tenant oriented, but that has not been my experience,” she said. “It’s very detailed but it’s also very straight forward.”

In her view, there’s no reason to have anxiety about going before the rent board, especially if owners have a little help from an experienced professional who also just so happens to be a longtime San Franciscan who loves helping independent owners follow the rules. “I’ve been doing this for 22 years. I know the people at the rent board. I know what they're looking for,” Bermingham said. “I'm very picky with owners on the front end so that the whole process goes through more smoothly.”

Emily Landes is a freelance writer and the former editor of SF Apartment Magazine.