SF Apartment : April 2017

RENT BOARD REDUX

A Hot Mess

Editor’s Note: The following San Francisco Rent Board cases are real, though they have been edited for space and clarity. They have been selected to highlight some of the more interesting cases that the board reviewed at its November 2016 through February 2017 commission meetings. For full rent board agendas and minutes, please visit sfrb.org.

2500 Block of 35th Avenue
The tenants’ petitions for decreased housing services were granted in part and denied in part. The landlord was found liable to the tenants in the amount of $2,925.00 for lack of adequate heat. On appeal, the landlord argues that the tenants made untruthful statements, and that the landlord should not be penalized for accommodating the tenants and providing a quick response to the tenants’ request.

The landlord stated that there were key errors in the facts the Administrative Law Judge (ALJ) cited in her decision regarding inadequacy of heating. She stated that the thermostat was on the second floor, and texts and emails proved that the first floor was always 3 to 5 degrees higher than the thermostat setting on the second floor.

Decision: To deny the appeal, 5-0.

900 Block of Sanchez Street
The landlord’s petition for a rent increase from $1,835.00 to $3,980.42 based on comparable rents was granted. The ALJ found that a special relationship existed between the landlord and the tenant because the tenant moved into the subject unit as the landlord’s property manager, and the rent was set low as a result of this relationship. The tenant appealed, arguing that the landlord and the tenant set a proposed rent of $2600.00 for the unit prior to the commencement of the tenancy, that all subsequent agreements were predicated upon this initial market valuation, that the ALJ’s sole basis for comparison and determination of the rent was the comparable rent at only one property, and that the ALJ disregarded the comparable rent amount provided by the tenant for a different property.

Decision: To grant the appeal and remand the case to the ALJ to allow the landlord to contest the tenant’s evidence that the parties agreed to an initial rent of $1,835.00 based on a market rent of $2,600.00, 5-0.

1300 Block of San Bruno Street
The landlord’s petition seeking a rent increase for capital improvements was denied due to lack of Rent Board jurisdiction over the subject unit. The ALJ found that the landlord met his burden of proving that the subject unit is a single-family dwelling whose title is separately alienable from any other dwelling unit under Civil Code Section 1954.52(a)(3). On appeal, the tenant argues that the subject unit is one attached unit of a 3-unit structure and subject to Rent Board jurisdiction.

E. Singer, one of the tenants, told the Board that the lots have always functioned as one lot, and that there is still a bedroom connected to the tenants’ unit that sits on top of their unit. Ms. Singer stated that she lives in one of the areas hardest hit by the rent crisis and that she will have to close her business if it is found the property is not under rent control.

M. Bacigalupi, the landlord, told the Board that he has lived next door to the property his whole life, and it is clear that the property is a single-family dwelling.

Decision: To deny the appeal, 3-2.

500 Block of Wildwood Way
The tenants’ petition alleging a rent increase beyond the allowable limits was denied. The ALJ found that the subject unit was exempt from the rent control provisions of the Rent Ordinance under Civil Code Section 1954.52(a)(3)(A) of the Costa-Hawkins Rental Housing Act as a single-family dwelling. The tenants appealed, arguing that the landlord cannot unilaterally expand the scope of the tenancy without the tenants’ consent, that the tenants declined to accept the expanded tenancy for the entire single-family dwelling, and that the rent increase was retaliatory and in conflict with HUD and Housing Authority regulations.

A. Volkov, the attorney for the tenants, asked at what point, if ever, can the landlord say they have no intent to rent the unit. Mr. Volkov stated that six months is an extremely short period of time to use as proof that the unit is no longer available for re-rental.

E. Singer, the attorney for the landlord, stated that the downstairs unit was illegal, that the new landlord saw that there was no one living in the downstairs unit when it was shown and there were no indications of a separate residential unit at the time of purchase. Mr. Singer asked that the Board uphold the decision.

Decision: To deny the appeal, 3-2.

3000 Block of Mission Street
The tenant’s petition alleging an unlawful rent increase under the Costa-Hawkins Rental Housing Act was granted. The ALJ found that the landlord consented to the petitioner’s occupancy as a tenant and intended to create a direct landlord-tenant relationship with her, and the rent increase was therefore not authorized by Civil Code Section 1954.53(d)(2) and is null and void. The landlord appealed, arguing that the tenant petitioner never paid rent directly to the landlord, that the landlord refused payment of the rent from the tenant when her partner passed away, and that a tenancy may be created by occupancy with consent only when the tenant pays rent to the owner.

J. Colon, the tenant, requested that the decision be vacated, as it was based on a fallacy. Mr. Colon stated that the 3R report contradicted the ALJ, and there was no documentation in the 3R report between 1908 and 1988. He told the Board that the original assumption was that the building was constructed in 1908 as a two-story residence when in reality it was a single-story building, a store.

Decision: To grant the appeal, 3-2. To deny the appeal, 3-2.

1900 Block of Broadway Street
The landlord’s petition seeking a 7% rent increase based on increased operating and maintenance expenses to the tenants in 18 units was granted in part and denied in part. The ALJ found that the additional funding to pay off an existing loan would not be considered under Rules and Regulations Section 6.10(g), since the proceeds of refinancing the property in excess of the existing mortgage were not reinvested in the building for the purposes of needed repairs and maintenance or capital improvements. On appeal, the landlord argues that the ALJ erred in characterizing the additional debt service as a settlement of the estate rather than an agreement and general release to redistribute equity shares of the limited partnership’s members; that refinancing was the only legally viable method of achieving the members’ equity division without selling the property; that such equalizing payments are ordinary and customary and that certain members’ net equity valuations remained the same after refinancing.

T. Hamer, speaking for the landlord, stated that the entire mortgage was used to purchase the additional interest in the property, and the landlord is only asking for equity and fairness.

M. Corbett, attorney for the landlord, argued that the added debt service had to be taken on, or else the landlord would have had to sell the building, and that 6.10(g) does not apply to the landlord’s operating and maintenance expense petition.

S. Goodwin, a tenant, stated that it was clear at hearing that a refinance by an existing owner cannot be passed through to the tenants unless the tenants or the building benefitted from the refinance. Ms. Goodwin stated that the only person who benefitted here was the landlord, and no exception should apply.

Decision: To deny the appeal, 5-0.

To learn more about the San Francisco Rent Board, call 415-252-4602 or go to sfrb.org.