The Power of Personal

SF Apartment : May 2016

RENT BOARD REDUX

The Power of Personal

by The San Francisco Rent Board

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 2015 through March 2016 commission meetings. For full rent board agendas and minutes, please visit sfrb.org.

November 10, 2015 Meeting

100 Block of Tiffany Avenue
The landlord’s petition for a rent increase from $618.56 to $1,400.00 based on comparable rents was denied because the ALJ found that the landlord failed to prove that the initial rent was set very low due to a special relationship between the former landlord and the tenants. On appeal, the landlord argues that: the decision provides no criteria as to what constitutes a special relationship for purposes of a comps increase; the decision is unsupported by the evidence and testimony provided; the ALJ abused his discretion by not determining a comparable rent for the unit; and the ALJ exhibited bias in favor of the tenants.

During the comment period the tenant in the case asked, “When did it become bad or illegal to be chummy with your neighbors?” The tenant admitted she is not paying market rent, but contended that the landlord didn’t pay market price for the building. The tenant lives separately from her husband, which has led to the landlord’s allegation that she is “hoarding” units—but is the landlord “hoarding” because he owns several buildings?

The rent board had suggested a comps petition when the landlord’s 1.21 petition failed because the board allows married people to have two separate apartments. The landlord’s attorney claimed that there was no evidence to support the denial of the comps petition: the fact that the tenants are paying the same rent 23 years later speaks for itself. The landlord’s attorney expressed her displeasure at the fact that there is “not enough housing in San Francisco but these tenants are hoarding two separate apartments for less than $1,100.”

The tenant’s attorney told the board that a below-market rent doesn’t support a special circumstances petition, and that more evidence than one subpoenaed witness is required to prove a special relationship, who only testified that the tenant and property manager were “social.”

Decision: To deny the appeal, 5-0.

December 15, 2015 Meeting

1200 Block of Jones Street
The landlord’s petition seeking certification of capital improvement costs to 21 of 72 units was granted, in part, resulting in passthroughs in the amount of $26.50 for all but one of the units. Costs associated with corridor, lobby and other renovations were found to be cosmetic in nature and of no benefit to the tenants over existing conditions. On appeal, the landlord maintains that: the cost of the wall covering by the elevator should be certified as it was part of the entire contract; an estimator’s report should have been requested by the ALJ where there were additional questions; the board regularly certifies certain cosmetic improvements; architectural drawings are integral to major construction projects; building code and permit services are certified when in conjunction with seismic projects; proof of all costs and payments were provided; and the lobby refurbishment constitutes an improvement over existing conditions.

During the comment period, a tenant in the Jones Street building pointed out that the board’s discussion focused on the lobby renovation, which was enlarged 200%. For this tenant, the more major and contentious issue is the renovation of 72 apartments for short-term rental, while the long-term tenants received no improvements to their units.

Decision: To deny the landlord’s appeal, 3-2.

January 12, 2016 Meeting

600 Block of 7th Avenue
The tenant’s petition alleging decreased housing services was denied. However, the ALJ found that the subject unit is subject to the rent board’s jurisdiction because it is an unpermitted unit, with no Certificate of Final Completion and Occupancy issued after June 13, 1979. The landlord appeals the determination of jurisdiction, maintaining that: the 2001 certificate of occupancy for the building is governing; Rules §1.17(e), which talks about “units” rather than “structures” is ultra vires; illegal units are not included on certificates of occupancy; and the decision conflicts with Costa-Hawkins.

Decision: For the matter to be continued at the next board meeting to allow the parties to file briefs at least one week before the next meeting on the issues of whether the facts of the case show that the unit is exempt under Rules and Regulations Section 1.17(e), 4-1.

February 16, 2016 Meeting

600 Block of 7th Avenue (continued from January 12, 2016)
The landlord’s attorney told the board that the term “rental units” does not include units located in a structure for which the certificate of occupancy was first issued after the effective date of the ordinance. The date of issuance of the certificate of occupancy (CFCO) is the dispositive factor in the determination of rent board jurisdiction. Despite the fact that the building was built in 2001, and the clear language of the ordinance, the ALJ took the position that the new construction exemption only applies to lawful units, relying on a novel interpretation of Rules and Regulations Section 1.17(e). The landlord’s attorney stated that her client is not trying to game the system, nor get the best of both worlds.

Decision: To deny the landlord’s appeal, 3-2.

800 Block of 47th Avenue
The tenant’s petition alleging decreased housing services was granted, in part, and the landlord was found liable to the tenant in the amount of $2,000.25 due to loss of nonexclusive use of one-half of a garage for storage. Both the landlord and tenant appealed. On appeal, the landlord argues that: the ALJ erred by incorrectly calculating the amount of overpayment owed by the landlord to the tenant, and that because the factual record and stipulation of the parties established that the tenants paid no rent from May 15, 2014 through September 9, 2015, the ALJ should recalculate the overpayment. The tenant claims that the reduction was too low, that it was probably worth more than what the tenant was awarded, and that the rent board was influenced by the Superior Court decision.

The landlord’s attorney stated that the rent board made a technical correction to the decision, and that satisfies all of the concerns raised in the landlord’s appeal. He stated that he would like the board to deny the tenant’s appeal based on the doctrine of invited error; that is, one cannot appeal an error in a lower court that you yourself created. The landlord’s attorney told the board that the tenants provided a copy of a statement of decision from the Superior Court judge to the ALJ, but now argue that the ALJ should not have relied upon the statement of decision.

Decision: To deny both the landlord’s and the tenant’s appeals, 5-0.

March 8, 2016 Meeting

100 Block of Trumbull Street
The tenant’s petition alleging that the landlords improperly increased the tenants’ rent from $1,972.89 to $5,000.00 under the Costa-Hawkins Rental Housing Act was granted. On appeal, the landlords claim that the tenants rented the downstairs in-law unit in addition to their upstairs unit by virtue of a notice of a change of terms of tenancy under Civil Code Section 827, and therefore they reside in a single-family home that is exempt from the rent limitations of the ordinance as a separately alienable dwelling unit.

Decision: To deny the appeal, 5-0.

200 Block of Castro Street
The landlord’s petition for a determination of jurisdiction for each of the three units on their property was granted in part and denied in part. The ALJ found that units #1 and #2, which were constructed partly within and partly outside of the original single-family dwelling, were not exempt from the rent ordinance, and that unit #3, which was created entirely outside of the living space of the original single-family dwelling, was exempt from the rent ordinance. On appeal, the landlords argue that the ALJ erred in finding that units #1 and #2 were not exempt under Rules and Regulations Section 1.17(e).

The landlord’s attorney told the board that there is a split in the law in the rent board’s decisions; there is a case that goes exactly to the policy of increasing the number of rental units in San Francisco and that there have been a number of cases where older buildings have been reconfigured to allow new use. The landlord’s attorney stated that while there is a set of rent board decisions where there is some touching of the interior of an older building that was a single-family unit that was increased, all of those were decided by the same ALJ, and that in none of those cases does the ALJ outline why he read the law inconsistently with prior rent board decisions, including one that was relied upon by the Court of Appeals.

Decision: To deny the appeal, 4-0.

SF Apartment : May 2016

RENT BOARD REDUX