Section 4.10 Notice
(Amended February 21, 1984, effective March 1, 1984; amended August 29, 1989; June 18, 1991; Subsection (d) added on January 31, 1995 and February 14, 1995; repealed April 25, 1995,effective February 1, 1995; amended September 21, 1999)
(a) Those landlords not seeking a rental increase which exceeds the limitations set forth in Section 37.3 of the Rent Ordinance shall inform the tenant in writing on or before the date the notice is given of the following:
(1) Which portion of the rent increase reflects the annual increase, and/or banked amount, if any;
(2) which portion of the rent increase reflects the costs of capital improvements, rehabilitation, and/or energy conservation work which have been certified:
(3) which portion of the rent increase reflects the passthrough of charges for gas and electricity, which charges shall be explained;
(4) which portion of the rent increase reflects the amortization of a RAP loan.
(b) Any rent increase which does not conform with the provisions of this Section shall render the entire rent increase null and void, unless the amount requested equals no more than the allowable annual and banked rent increase(s), provided, however, that in the event such increases are given in a good faith effort to comply with the Ordinance and Regulations and do not exceed limitations by more than one-half of one percent of the prior base rent, Administrative Law Judges shall readjust the base rent to reflect the proper percentage increase.
(c) To be effective, any rent increase notices given on or after March 1, 1984 must conform with the provisions of 4.10(a). If, however, the landlord serves a notice of rent increase prior to March 1, 1984 and it takes effect on or after that day, the following rules shall apply:
(1) Notices which requested an increase above seven percent (7%) without filing a landlord’s petition will remain null and void in their entirety;
(2) if the landlord has filed a petition for an amount above seven percent (7%) based on Parts 6, 7, or 8 of these Rules, the correct annual increase will be effective as of the
date the notice given was to become effective and;
(3) notices which request an increase of seven percent (7%) or less without filing a landlord’s petition, will only be null and void as to that portion which exceeds the allowable annual rent increase.
Section 4.11 Computation of Passthrough of Gas and Electricity
(Amended June 17, 1986; amended August 24, 2004)
The following provisions shall apply to utility passthroughs where the notice of rent increase for the utility passthrough was served prior to or on November 1, 2004, except that with respect to such utility passthroughs, the passthrough shall be discontinued twelve months after it was imposed or by December 31, 2004, whichever is later.
(a) No landlord may pass through any increase in the cost of the utilities to a tenant until the tenant has occupied one or more units in the subject building for one continuous year. Each utility passthrough may be charged to the tenant only at the time of an annual rent increase.
(b) Where a landlord pays for gas, electricity, and/or steam and seeks to recover the increase in the cost of these utilities from tenants, the landlord shall calculate the amount of such increase by using either of the following two methods, both of which should always yield the same results:
(1) Method 1: Compile the utilities receipts for the two calendar years preceding the first noticing of the utility passthrough. The calendar year immediately preceding the noticing shall be referred to as the “comparison year;” the calendar year preceding the “comparison year” shall be referred to as the “base year.” The base year will remain the same for all future calculations, except where the pass through is discontinued pursuant to subsection (c) below. Different tenants in the same building may have different base years depending on when they moved into the building and when utility increases were first passed through to them.
(i) Calculate the total utility cost for the comparison year and the total utility cost for the base year.
(ii) Subtract the total base year utility cost from the total comparison year utility cost. If there is no increase or if there has been a decrease, no pass through for the current calendar year is allowed and any increase levied in a prior year must be discontinued.
(iii) Divide the resulting figure, if greater than zero, by 12 to determine
the average monthly utility increase or decrease for the entire building.
(iv) Divide the average monthly utility increase or decrease by the number of rooms in the building. For the purposes of this section the number of rooms in a building shall be calculated by presuming that single rooms without kitchens are one room units, studios are two room units, one bedroom units without a separate dining room are three room units, and so on.
(v) If a utility pass through has been instituted, subsequent passthroughs shall be determined for the immediately following year by calculating the utility cost for the calendar year preceding the noticing of the passthrough. This amount shall become the updated comparison year figure. The passthrough shall then be calculated in accordance with Rules and Regulations Sections 4.11(b)(1)(ii) through 4.11(b)(1)(iv).
(2) Method 2: Alternatively, the landlord may choose, in subsequent years, to use the prior year’s “comparison year” as the current base year and subtract the updated base year amount from the new comparison year total utility cost. The resulting amount would be added to the prior year’s total utility passthrough. The passthrough shall then be calculated in accordance with Rules and Regulations Sections 4.11(b)(1)(iii) through 4.11(b)(1)(v).
(c) Until such time as an annual rent increase is noticed the current pass through shall remain in effect. However, if a landlord does not recalculate and re-notice the pass through at the subsequent annual rent increase, the entire pass through is discontinued until recalculated and re-noticed. At such time as a new pass through is calculated and noticed, a new base year is established which shall be the calendar year preceding the new comparison year.
(d) In the event that more than one year has passed since the imposition of the last PG&E pass through, the landlord must adjust for any increases or decreases that have occurred since the last pass through was implemented, so that the tenant receives the benefit of any utility decrease that occurred in the intervening period.
(e) Nothing in this section or in these Rules and Regulations shall be interpreted as requiring any landlord to pass through any utility increase or to raise any tenant’s rent. However, where the utility costs decrease in years subsequent to the passing through of an increase, the tenant must be given the benefit of such decrease calculated in the same manner as any increase passed through under Ordinance Section 37.2(n). A tenant may petition the Board for an arbitration hearing whenever a pass through charge has been noticed or is in effect and the tenant protests the amount being charged or the calculation procedure being used by the landlord. If the comparison year utility costs fall below the base year costs, the landlord shall not be required to reduce the rent beyond eliminating any utility pass through made in prior years.
(f) If the methods set forth for an increase (or decrease) in utilities in subsection (b) of this Section cannot be applied for reasons beyond the control of the landlord, and in the absence of a relevant agreement between the landlord and the tenant, the landlord may petition the Board for an arbitration hearing to establish an appropriate alternative method, which shall be used for all following years unless another method is approved by the Board.
(g) The amount of rent due from the tenant for any utility pass through shall be due on the same date as a rent payment normally would be due.
(h) No amount passed through to the tenant as a utility increase shall be included in the tenant’s base rent for purposes of calculation of the amount of rent increases allowable under the Ordinance and these Rules and Regulations.
(i) The provisions of this Section shall be deemed a part of every rental agreement or lease, written or oral, for the possession of a rental unit subject to the Ordinance unless the landlord and the tenant agree that the landlord will not pass through any utility increases, in which case such agreement will be binding on the landlord and on any successor owner of the building, unless such agreement is changed in accordance with applicable law.
(j) Where a utility increase has been lawfully passed through to the tenant, a change in the ownership of the building in which the tenant’s unit is located will not affect the tenant’s liability to pay the amount passed through or the tenant’s entitlement to the benefit of decreases in the utilities costs.
Section 4.12 Banking
(Amended May 6, 1986; August 29, 1989; June 18, 1991; September 21, 1999)
(a) A landlord who refrains from imposing an annual rent increase, or any portion thereof, may accumulate said increase and impose that amount on or after the tenant’s subsequent rent increase anniversary date; however, the rent may be increased only one time every twelve (12) months. This banked amount may only be given at the time of an annual increase. Only those increases which could have been imposed on, or subsequent to, April 1, 1982, may be accumulated. A full 12 months must have elapsed from the date that an annual rent increase, or a portion thereof, could have been imposed before this banking section becomes applicable. Banked increases shall not be compounded and shall not be rounded up; provided, however, that in the event that a banked rent increase exceeds limitations by no more than one-half of one percent of the prior base rent and such increase was given in a good faith effort to comply with the Ordinance and Regulations, Administrative Law Judge shall readjust the base rent to reflect the proper banked amounts.
(b) In order to impose an accumulated rent increase the landlord shall: (1) inform the tenant, on or before the date upon which the landlord gives the tenant legal notice, which portion of the rent increase reflects banked amount, and (2) the dates upon which said banked amount is based; provided, however, that failure to include such information shall not render the increase null and void.
Section 4.13 Charges Related to Excess Water Use
(Adopted June 18, 1991)
(a) A landlord may impose increases not to exceed fifty percent of the excess use charges (penalties) levied by the San Francisco Water Department on a building for use of water in excess of Water Department allocations upon compliance with the provisions of Ordinance Section 37.3(a)(5) as follows:
(1) The landlord shall provide the tenant(s) with written certification that the following have been installed in all units:
(i) permanently-installed retrofit devices designed to reduce the amount of water used per flush or low-flow toilets (1.6 gallons per flush);
(ii) low-flow showerheads which allow a flow of no more than 2.5 gallons per minute; and
(iii) faucet aerators (where installation on current faucets is physically feasible); and
(2) The landlord shall provide the tenant(s) with written certification that no known plumbing leaks currently exist in the building and that any leaks reported by tenants in the future will be promptly repaired; and
(3) The landlord shall provide the tenant(s) with a copy of the water bill for the period in which the penalty was charged. Only penalties billed for a service period which begins after April 20, 1991 may be passed through to tenants.
(b) The landlord shall calculate the amount of such passthrough as follows:
(1) Divide the excess water use penalty charge by 2 in order to obtain the total amount permitted to be passed through to qualified tenants in the building.
(2) Divide the penalty amount determined in number (1) above by the total number of rooms in the building to obtain the allowable passthrough per room. For the purposes of this section the number of rooms in a building shall be calculated by presuming that single rooms without kitchens are one room units, studios are two room units, one bedroom units without a separate dining room are three room units, and so on. Living rooms, dining rooms and other rooms of at least 70 square feet may be counted. Kitchens count as a room in all cases.
(3) Multiply the figure calculated in number (2) above by the number of rooms in each unit to obtain the allowable passthrough per unit.
(c) Only those tenants in residency during the billing period in which the penalty was incurred may be assessed the passthrough.
(d) The amount due from the tenant for any excess water use passthrough shall be due on the same date as a rent payment normally would be due.
(e) These are one-time, non-recurring charges unless a new excess use charge is applied on the next water bill, which would require new calculations and a new passthrough amount.
(f) No amount passed through to the tenant as a water use penalty charge shall be included in the tenant’s base rent for purposes of calculation of the amount of rent increases allowable under the Ordinance and these Rules and Regulations.
(g) The tenant’s failure to pay the demanded amount is not a just cause for eviction, as the passthrough is not defined as a rent increase under Section 37.2(o) of the Rent Ordinance. The owner must seek relief for non-payment in a court of competent jurisdiction or through an arbitration/mediation service.
(h) Nothing in this section or in these Rules and Regulations shall be interpreted as requiring any landlord to pass through any increase related to excess water use charges. However, the provisions of this Section shall be deemed a part of every rental agreement or lease, written or oral, for the possession of a rental unit subject to the Ordinance unless the landlord and tenant agree that the landlord will not pass through any excess water use penalty charges, in which case such agreement will be binding on the landlord and on any successor owner of the building, unless such agreement is changed in accordance with applicable law.
(i) Where an excess water use penalty charge has been lawfully demanded of a tenant, a change in the ownership of the building in which the tenant’s unit is located will not affect the tenant’s liability to pay the amount passed through.
(j) Up to 60 days following receipt by the tenant of a notice of an excess use charge passthrough, a tenant may object to the passthrough on the following grounds:
(1) The landlord has not provided written certification that the required water conservation measures have been installed;
(2) The landlord has not provided written certification that no known plumbing leaks exist;
(3) The landlord has not provided a copy of the bill for the period of the penalty charge;
(4) The penalty was incurred during a service period that began prior to April 20, 1991;
(5) The tenancy began after the period of the billing charges accrued;
(6) The landlord has failed to appeal an allotment based on an occupancy level that has changed after March 1, 1991, after having been requested to do so;
(7) The penalty reflects a 25% or more increase in consumption over the prior billing period, unrelated to increased occupancy or other known use and the property has not been inspected by a licensed plumber or the Water Department; and/or
(8) The passthrough is calculated using an incorrect room count.
(k) In order to object to the imposition of a water penalty charge passthrough, the tenant shall follow the below procedure:
(1) A complaint shall be filed on a form supplied by the Board
(2) The Board shall request that the landlord provide certification of compliance with the requirements of Ordinance Section 37.3(a)(5). If the landlord is alleged not to have implemented required water conservation measures, the landlord shall be required to provide certification from a licensed plumber or the San Francisco Water Department.
(3) Based on documentation provided by the landlord, the Rent Board shall approve or deny the passthrough and notify both parties of the determination.
(4) The Board’s determination is not subject to appeal to the Rent Board Commissioners.
(5) The filing of a complaint by a tenant does not relieve the tenant of his or her obligation to pay the passthrough pending a final determination.
Section 4.14 Water Revenue Bond Passthrough
(Effective July 20, 2005)
(a) A landlord may pass through fifty percent (50%) of the water bill charges attributable to water rate increases resulting from issuance of Water System Improvement Revenue Bonds authorized at the November 5, 2002 election (Proposition A), to any unit that is in compliance with any applicable laws requiring water conservation devices. The landlord is not required to file a petition with the Board for approval of a water revenue bond passthrough.
(b) The landlord shall give the tenant(s) legal notice of any water revenue bond passthrough.
(1) The notice shall specify the dollar amount of the monthly passthrough, the period of time covered by the water bill(s) that are used to calculate the passthrough and the number of months that the tenant is required to pay the passthrough.
(2) The notice shall explain that the passthrough is based on increased water bill charges attributable to water rate increases resulting from issuance of water revenue bonds authorized at the November 2002 election.
(3) The charges and the calculation of the passthrough shall be explained in writing on a form provided by the Board, which form shall be attached to the notice.
(4) The notice shall state that the tenant is entitled to receive a copy of the applicable water bill(s) from the landlord upon request.
(5) The notice shall state that the unit is in compliance with any applicable laws requiring water conservation devices.
(c) The landlord shall calculate the amount of the water revenue bond passthrough as follows:
(1) Step 1: Compile the water bill(s) to be included in the calculation of the water revenue bond passthrough. The landlord may base the calculation on a single water bill or, in the alternative, on all of the water bills for any calendar year. Where the landlord elects to calculate the passthrough based on calendar year, the passthrough shall be based on actual costs incurred by the landlord during the relevant calendar year(s), regardless of when the water bills were received or paid.
(2) Step 2: Add up the water bill charges attributable to water rate increases resulting from issuance of Water System Improvement Revenue Bonds authorized at the November 5, 2002 election. These charges are listed as a separate line item on the water bill. Divide that figure by two (since a 50% passthrough is permitted) in order to obtain the total amount permitted to be passed through to tenants in the building.
(3) Step 3: Divide the amount determined in Step 2 above by the total number of units covered by the water bill(s), including commercial units, to obtain the allowable passthrough per unit.
(4) Step 4: Divide the amount determined in Step 3 above by the number of months covered by the water bill(s) to determine the monthly passthrough amount for each unit covered by the water bill(s).
(d) The monthly passthrough amount determined in Step 4 can be imposed only for the same number of months covered by the water bills that are used in the passthrough calculation. For example, if the landlord imposes a water revenue bond passthrough based on a single water bill with a two-month bill cycle, the monthly passthrough remains in effect for two months only. If the landlord imposes a water revenue bond passthrough based on water bills for charges incurred during an entire calendar year, the monthly passthrough remains in effect for twelve months. If the landlord imposes a water revenue bond passthrough based on water bills for charges incurred during two calendar years, the monthly passthrough remains in effect for twenty-four months.
(e) Where the landlord elects to calculate the water revenue bond passthrough based on a single water bill, the passthrough may be imposed at any time, provided that the landlord serves notice of such passthrough within sixty (60) days of receipt of the water bill. Where the landlord elects to calculate the water revenue bond passthrough based on water bills for charges incurred during an entire calendar year, the passthrough may be imposed at any time, provided that the landlord serves notice of such passthrough to be effective on the tenant’s anniversary date.
(f) Only those tenants in residency during the billing period(s) in which the water bill charges were incurred may be assessed the passthrough.
(g) The amount due from the tenant for any water revenue bond passthrough shall be due on the same date as a rent payment normally would be due.
(h) The water revenue bond passthrough shall not be included in the tenant’s base rent for purposes of calculation of the amount of rent increases allowable under the Ordinance and these Rules and Regulations.
(i) Nothing in this section or in these Rules and Regulations shall be interpreted as requiring any landlord to pass through any water rate increases resulting from issuance of Water System Improvement Revenue Bonds authorized at the November 5, 2002 election. However, the provisions of this Section shall be deemed a part of every rental agreement or lease, written or oral, for the possession of a rental unit subject to the Ordinance unless the landlord and tenant agree that the landlord will not pass through any charges based on water rate increases resulting from issuance of Water System Improvement Revenue Bonds authorized at the November 5, 2002 election, in which case such agreement will be binding on the landlord and on any successor owner of the building, unless such agreement is changed in accordance with applicable law.
(j) Where a water revenue bond passthrough has been lawfully demanded of a tenant, a change in the ownership of the building in which the tenant’s unit is located will not affect the tenant’s liability to pay the amount passed through.
(k) Where a tenant alleges that the landlord has imposed a water revenue bond passthrough that is not in compliance with Ordinance Section 37.3(a)(5)(B) and Rules and Regulations Section 4.14, the tenant may petition for a hearing under the procedures provided in Ordinance Section 37.8. In such a hearing, the landlord shall have the burden of proof. Any tenant petition challenging such a passthrough must be filed within one year of the effective date of the challenged water revenue bond passthrough. The filing of a petition by a tenant does not relieve the tenant of his or her obligation to pay the passthrough pending a final determination. Grounds for challenging a water revenue bond passthrough are set forth in Section 10.14 of these Rules and Regulations.
(l) A tenant may file a hardship application with the Board requesting relief from all or part of a water revenue bond passthrough. Any hardship application must be filed within one year of the effective date of the water revenue bond passthrough(s). Payment of the water revenue bond passthrough(s) set forth in the hardship application shall be stayed until a decision is made by the Administrative Law Judge after a hearing on the tenant’s hardship application. Appeals of decisions on a tenant’s hardship application shall be governed by Ordinance Section 37.8(f).
Section 4.15 Effect of Vacancy
(Added April 25, 1995, effective February 1, 1995; renumbered July 20, 2005)
In accordance with Section 37.3(a) of the Rent Ordinance, the Rent Ordinance does not regulate initial rent levels for a new tenancy. The Rent Board does not interpret anything in Section 37.12 of the Rent Ordinance to alter this general principle. However, the Rent Board does find in the spirit of Section 37.12 an intent to preclude a landlord from setting a new Base Rent when that landlord served an eviction notice on or after May 1, 1994 and before December 22, 1994 (the “Transition Period”) and the eviction would not have been permissible under Section 37.9 of the Rent Ordinance. Thus, for Newly Covered Units, if there was a proper termination of tenancy during the Transition Period, then the landlord was/is free to set a new Base Rent without limitation upon reletting the unit, and any rents paid by the new tenant that exceed the initial base rent (as defined in Section 37.12(a) of the Rent Ordinance) need not be refunded to the new tenant. If there was not a proper termination of tenancy during the Transition Period, then the landlord was/is not entitled to set a new Base Rent, and the landlord shall be required to refund any overpayments of rent in accordance with Section 37.12(b) of the Rent Ordinance. A proper termination of tenancy occurs when the tenant:
(a) terminates the tenancy voluntarily;
(b) vacates the unit as a result of an eviction that would have been permissible under Section 37.9 of the Rent Ordinance; or
(c) vacates the unit as a result of a notice of eviction served prior to May 1, 1994.