Supervisor Gonzalez Proposes Allowing Tenants to Pursue Civil Remedies Against Successors in Interest for Rent Ordinance Violations of Prior Owners

The Land Use Committee of the Board of Supervisors will consider on Monday, April 14 at 1 p.m. in Room 263 of City Hall a proposal introduced by Supervisor Matt Gonzalez to substantially extend the reach of the city’s rent control ordinance. The proposal contains no findings that might provide an indication of why the author believes any of the proposed actions are needed. The most extreme feature of the proposal is a provision that will allow tenants to pursue civil remedies against successors in interest for violations of the rent ordinance committed by prior owners.

There are three members of the Board of Supervisors on the Land Use Committee. They are Supervisor Jake McGoldrick (District One—Richmond), Supervisor Sophie Maxwell (District Ten—Potrero Hill) and Supervisor Tom Ammiano (District Nine—Mission).

It is exceedingly important that as many REALTORS® as possible, and their rental property owner clients, to communicate their opposition to the Gonzalez proposal to members of the Land Use Committee prior to the meeting on Monday. The most effective methods of communicating a position to a legislator are by a hand written or typed letter (sent through the mail or by facsimile), and by telephone calls. E-mail messages are somewhat effective, and canned letters and e-mail messages are hardly effective at all.

Please review the provisions of the Gonzalez proposal below and, if you are so disposed, communicate your opposition to the members of the supervisors’ Land Use Committee prior to the meeting on Monday. Also, if you are so disposed, please attempt to recruit your rental property owner clients to do the same. It is of the utmost importance to the real estate community in San Francisco that the Gonzalez proposal be defeated in its entirety. For this to occur, six supervisors must vote against the proposal in its entirety when it comes before the full Board of Supervisors after being considered by the Land Use Committee.

The provisions of the Gonzalez proposal are set forth below. In each case, comments on the provision are provided.

Change the definition of rental units to include units regardless of zoning or legal status.

This provision is meant to apply to illegal secondary units and, possibly, other types of housing, and is believed to be part of an ongoing effort to compel owners of such units to keep the units on the market and tenant-occupied. The change will conform the definition of rental unit in the rent ordinance to the definition currently being used by the rent board.

Provide that parking or storage or similar facilities on the same lot may not be severed by the landlord without just cause or tenant consent, except where necessitated by serious landlord hardship or circumstances beyond the landlord’s control.

This provision will extend the rent ordinance to provide that before any appurtenance to a rental unit (such as parking, storage, the use of common areas or other facilities) can be terminated, there must be a showing of just cause. The provision will not change the current requirement that any such termination constitutes a reduction in “housing services” and must be accompanied by a proportionate reduction in rent.

Extend coverage of the ordinance to non-tourist tenancies in residential hotels by eliminating the 32-day residency requirement for those tenancies.

This provision will extend the coverage of the rent ordinance to include residential hotel rooms with tenancies of less than 32 days.

Limit imposition of banked rent increases to eight percent per year and require more specific notice.

This provision will prevent owners from recovering any more than eight percent of banked rent increases in any one year. It also will establish new disclosure requirements for notifying tenants of the imposition of banked rent increases.

Require more specific notice for rent increases authorized under California Civil Code Sections 1954.50 et seq., and require a rent arbitration hearing for certain increases not authorized by those sections.

This provision will require owners to serve a Rent Board-created rent increase notice on tenants and provide proof of service to the Rent Board. The notice will be required to indicate that the rent increase is allowed under the Costa Hawkins Act, certify that there are no disqualifying notices already in existence for the unit, and require Housing Code work to be completed. The notice also will be required to notify tenants of their right to demand a Rent Board hearing to review the amount of the increase. The provision also states that any increase allowed but not authorized by the Costa Hawkins Act (whatever that may mean) must be the subject of a hearing at the Rent Board before it can be imposed.

Prohibit rent increases or evictions solely for additional occupants, where the total number of occupants is within the Housing Code occupancy limits.

This provision will prohibit owners from raising the rents when an additional tenant or tenants move into a unit. Owners will be required to allow occupancies consistent with Section 401 of San Francisco’s Housing Code, which provides that two persons may occupy a unit of 144 square feet and an additional person may occupy the unit for each additional 50 square feet in the unit. Therefore, an owner will be required to allow nine persons to occupy a single 500 square foot studio apartment.

Expand the statute of limitations from three years to five years from discovery, for refunds of rent overpayments due to null and void rent increases.

This provision will extend to five years from the date of discovery the time allowed for tenants to challenge improper rent increases.

Clarify that all endeavors to recover possession for just cause under Section 37.9(a) must be in good faith without ulterior motive and with honest intent.

This provision will require owners to prove that they are acting in good faith and without ulterior motives and with honest intent whenever they recover possession of a rental unit, even for nonpayment of rent.

Require relocation expenses of $2,000 for each additional occupant (including any minor child) who has lived in a unit for 12 months as of the time of vacation of the unit, where the unit is to be demolished or otherwise permanently removed from housing use, or where the tenant must relocate due to capital improvements or substantial rehabilitation work or an owner move in eviction, with one half paid upon notice and one half paid within 72 hours after vacation of the unit, and with these amounts to be increased annually according to the rate of increase in the “Rent of Primary Residence” expenditure category of the Consumer Price Index (CPI).

This provision will double the relocation payments required to be paid to tenants when they are moved for rehabilitation or improvements, and, it would seem, to remove an illegal unit from the market.

Provide that a tenant’s civil action against a landlord for abridgement of rights under the rent ordinance may also be brought against the landlord’s successor in interest

This provision will expose successors in interest to liability for the unlawful acts of previous owners and is arguably unconstitutional as an illegal restraint on alienation.

Eliminate the ability of a landlord to give a rent increase to tenants whose primary place of residence is not the unit subject to a petition for a Rules Section 1.21 determination.

This provision will reverse the rule recently adopted by the Rent Board which allows owners to petition the board to have controls on rent lifted from any unit which is not the occupant’s primary residence.

Clarify that the amendments protect prospective and current tenants.

This provision will establish a foundation to extend the rent ordinance to tenants other than those in occupancy and is not only contrary to the purposes of the rent ordinance, but violates the Costa Hawkins Act.

Listed below are the names of members of the Board of Supervisors, the districts they represent, and contact information. If you are so disposed, please contact the members of the Rules Committee and thereafter the remaining supervisors to express your opposition to the Gonzalez proposal. Time is of the essence. And, please remember, when writing or speaking to a supervisor, give specific reasons for your opposition.

Thank you very much for your assistance and cooperation.

Supervisors <Name>
Board of Supervisors
City and County of San Francisco
Room 244, 1 Dr. Carlton B. Goodlett Place
San Francisco, California 94102

Supervisor District Office Facsimile E-Mail

April 2003