Raising the Rent - Capital Improvements in Oakland's Rent Controlled Units

I am a tenant, just like you. In 2016, my landlord served each tenant in my building with a notice of inspection related to an appraisal. Usually, an appraisal signals either a property sale or an appraisal to secure a loan for a property improvement. Subsequent to the actual appraisal, we received a notice that the exterior of the building would be repainted. Since the exterior paint was a very unattractive pink, the new Malibu beige and contrasting brown trim was welcome from an aesthetic perspective. But, then, I wondered would there also a petition from the landlord to the rent board to pass along the capital improvement costs to the tenants. Indeed, was painting the building exterior a "benefit" to the tenants or to the landlord (e.g. increases the marketability of the building)? 

We waited and heard nothing. But today, each tenant listed on each lease for every unit in our building received a notice from the rent board by mail concerning our landlord's petition to pass the capital improvement costs along to the tenants. There is a two-year time period dating from the date of the capital improvement in which a landlord can petition the board to pass along the improvement costs as a rent increase to the tenants.

See: http://www2.oaklandnet.com/oakca1/groups/ceda/documents/agenda/oak063313.pdf

A tenant or a landlord can download (click here) an Excel file that the landlord is required to use in calculating the rent increase based on capital improvements.

In Oakland, only 70% of the capital improvement costs for the ENTIRE building can be passed on to the tenants. So, for instance, if the capital improvement cost was $10,000, only $7,000 can be passed along to the tenants. To this $7,000, there is an "amortization interest" that is added which is currently about 3.8%. The amortization period is different for different capital improvements. In our case, exterior building paint is amortized over 5 years. Thus, when I entered the numbers, the monthly rent increase per unit spread out over 5 years (or 60 months) was $15.40 per unit. Of course, this amount is on top of annual rent increases (if any) and/or banked rent increases.

Our landlord's petition was filed in mid-January 2018 and received on April 21, 2018, a testament to how backlogged the Oakland Rent Adjustment Board really is. The hearing on the petition is scheduled for July 2018. My landlord has been fair to me, thus far. And, I hope that this will continue but I wondered why, when I saw him in February 2018, he asked me how I liked the new colors to the building exterior. Whether the building is pink or a more fashionable Malibu beige, there are no direct benefits to me (at least how I see it.)  I am more concerned about the safe functioning of the gas furnace, the plumbing leaks, and the recent burglary of my neighbor's apartment when she was (thankfully) away.

Oakland's New BuyOut Agreement Ordinance Still in the Works

Since reporting the initial recommendation to implement an addition to the Rent Adjustment Ordinance on February 20, 2018 concerning regulating buyout agreements in Oakland, the City has proposed a second revision to the proposed buyout ordinance which is still under review by the City Council.

You can download the Supplemental version (e.g. second revision) from the City Council website via the following link:

https://oakland.legistar.com/LegislationDetail.aspx?ID=3300957&GUID=55AF2B27-C5B8-4AA7-82AD-7677366A7657&Options=&Search=

Oakland Joins Berkeley and San Francisco in Regulating Tenant Buy-Out Agreements

An excerpt of an "East Bay Times" report published on 2/15/18 and written by Al Tayadon, describes a new "Move-Out Ordinance" that is supposed to go into effect on May 1, 2018 and was approved by the Oakland City Council on 2/6/18.  The Ordinance was co-sponsored by city councilman Dan Kalb and Abel Guillen and the City Attorney's office.

"A new ordinance requires Oakland landlords to tell tenants their rights before paying or giving them other compensation to move out.

The ordinance, approved by the City Council on Feb. 6, aims to regulate so-called 'move out' agreements that are often done to circumvent state and local legal requirements and restrictions. It requires landlords to submit the agreements to the city’s rent adjustment program.

'Oakland’s rising rents have exacerbated tensions between property owners and tenants residing in units that are rent-controlled or covered by Oakland’s just cause for eviction ordinance,” a report by the city attorney’s office says. 'By emptying their units, property owners can attempt to increase their return on their investment by selling the property or re-renting the units at a higher rate. Property owners who seek to expedite this process may enter into move-out agreements with tenants who are not aware of the full extent of their legal rights under state and local law.'

The ordinance is supposed to go into effect May 1, though city administrators may extend the date if the city’s forms will not be available by then. The ordinance does not apply to existing move-out agreements.

Councilman Dan Kalb, who co-sponsored the legislation with Councilman Abel Guillen and the city attorney’s office, said giving tenants a list of their rights and allowing them to back out of the agreements within 30 days 'evens the playing field.'"

To read the entire news article, click here.

To read a copy of the ordinance and the supplement to the ordinance, see the report and supplemental report from the City Attorney's office via the following link.

San Francisco Fines Landlord $2 Million For Renting Out Dwellings to Low-Income Veterans that Violated Zoning Codes

The City of San Francisco recently settled a lawsuit against landlord Judy Wu concerning substandard housing units that she had leased to low income tenants, many of whom are U.S. military veterans. 

City officials previously described the balance of providing housing to low-income tenants with the necessity of providing habitable housing that met City building codes as a "conundrum."

Oakland's Neighborhood Law Corps and City Attorney Sue Fruitvale Landlord for Violating the Tenant Protection Ordinance.

While this press release is dated Jan. 23, 2017, it is still topical and evidence of the good work done by the Neighborhood Law Corps. Below is a full copy of the press release.

OAKLAND, CA – Oakland City Attorney Barbara J. Parker has secured an injunction against the owners of a Fruitvale area apartment building where for years tenants have complained that they had no heat, no working smoke detectors, bedbug and cockroach infestations, faulty electrical wiring and other habitability problems, including a fire in July 2016 that caused extensive damage to several units.

The injunction issued by the Court on January 19 is the result of a lawsuit that the City Attorney’s new Community Lawyering and Civil Rights Enforcement Unit filed in 2016 in collaboration with the Office’s Neighborhood Law Corps unit. The lawsuit against the owners and operators of the 30-unit apartment building at 1620 Fruitvale Avenue (Alameda County Superior Court Case No. RG16829447) is the latest in a series of actions the City Attorney has filed to enforce Oakland’s 2014 Tenant Protection Ordinance.

“Oakland’s ongoing housing crisis is forcing so many families to survive in their cars, on the streets, in our parks, or in unsafe, substandard buildings,” City Attorney Parker said. “It is critical that the City hold accountable landlords who violate tenants’ rights and turn a blind eye to inhumane conditions that persist at their properties. Every Oakland family has the right to habitable, dignified and safe housing.”

After buying the Fruitvale Avenue property in 2007, the owners have consistently failed to address tenants’ complaints about illegal and inhumane conditions.

The City’s lawsuit includes a declaration from a family that slept in a closet and on their kitchen floor for nearly a year and a half to avoid being bitten by bedbugs. Alameda County Vector Control confirmed pest infestations at the property on numerous occasions, and City of Oakland Code Enforcement cited the owners multiple times over the past few years for sewage backup and other plumbing problems, a lack of working heat and smoke detectors, holes in the walls, broken or missing windows, failure to provide functioning locks and the accumulation of raw sewage under the building, among other issues. The owners failed to remedy the problems.

In August 2016, Code Enforcement again cited the owners after a fire damaged the building and forced tenants to vacate several apartments. A tenant who was at home with her 8-year-old daughter when the fire occurred said she did not hear a fire alarm and did not know what was happening until she saw smoke and flames coming out of the walls of her bathroom. Luckily, she and her daughter were able to escape the building unharmed, and no other tenants were injured. To date, the owners have not fully restored the damaged units.

Alameda County Superior Court Judge Winifred Smith’s final ruling on January 19 enjoins the owners from continuing to operate the building in violation of Oakland’s Tenant Protection Ordinance and state and local public nuisance laws.

The owners have approximately forty days to address the health, safety and habitability issues at the building. If they fail to do so, they will face contempt of court charges and sanctions.

In March 2016, the nonprofit Centro Legal de la Raza filed a lawsuit against the same owners for similar violations at the property (Alameda County Superior Court Case No. RG16806249). Centro Legal also assisted the City Attorney’s Office with declarations and other aspects of its case.

Landlord Harassment and Rent Boards - What's a Tenant to Do?

There is a property in the Fruitvale district of Oakland where tenants have been forced into signing new and materially different lease agreements, services previously provided have been removed, and tenants have received over 30 notices posted on their front doors since Fall 2017. In fact, these tenants have experienced over four water-shuts, wiring for their existing telephone services was dismantled, there is a new no pets policy, and their children  have been mandated to play in a nearby park. A vacant apartment was converted to a “luxury condominium” and advertised for $2,995 rent versus the $900 to $1,400 rent currently collected on existing units.

Certainly, the tenants can petition the Oakland Rent Adjustment Board for a reduction in housing services provided that the petition is timely made (OMC 8.22.090(3)). Quoting from a hearing decision on an actual petition (Case No. T16-006),

“The preferred method of evaluating decreased housing services is consideration of all services provided by an owner and then determining the percentage by which total services provided by the owner have decreased because of the lost housing services. Based on the totality of the circumstances and considering the total bundle of housing services, the value of the decreased housing services is” then calculated by the rent board.

So, for instance, if your apartment had no running water for 24-hours, the rent board could calculate a dollar value to the loss of water in comparison to your total rent as a reduction in housing services. See OMC 8.22.090(3).

But what about waking up to a new notice posted on your front door every few days? This landlord behavior could fall squarely into the enumerated types of “illegal” landlord behavior defined in the Oakland tenant protection ordinance (TPO) (OMC 8.22.640).

In November 2014, Oakland enacted the Tenant Protection Ordinance (O.M.C. 8.22.600) and, more recently, Berkeley followed suit.  Emeryville also enacted new tenant protections against landlord harassment. The question is, “How much do these new ordinances actually protect the tenant?”

Implied into every landlord-tenant lease agreement (if not expressly stated), is a warranty of quiet enjoyment of the property. What does that mean?

First, the warranty is described by state statute, Cal. Civ. Code section 1927, as follows:

“An agreement to let upon hire binds the letter to secure to the hirer the quiet possession of the thing hired during the term of the hiring, against all persons lawfully claiming the same.”

In plain language, this means that if there is a lease agreement, the landlord agrees that the tenant will “quietly possess” the property for the length of the lease. Having a notice posted by the landlord on one’s front door repeatedly and over a short period of time is interference with the tenant’s right to quiet possession of the property.

The remedies available to tenants in Oakland (OMC 8.22.670) for landlord harassment are as follows:

“An aggrieved Tenant may bring a civil action for injunctive relief or damages, or both, . . . [OR]

The City Attorney may enforce the TPO through civil action for injunctive relief or damages, or both, for when the party against whom enforcement is sought has a pattern and practice of violating the TPO. The City Attorney may also request that an administrative citation or civil penalty be issued by the City. The City Attorney has the sole discretion to determine the cases appropriate for enforcement by the City Attorney's Office.”

The operative language is “civil action.” Does a petition to the rent board constitute a “civil action” or do these words really mean a “initiating a lawsuit in the superior court of California?”

Language from a Rent Adjustment Program (RAP) hearing decision (T16-0655) concerning a landlord’s alleged breach of the warranty of quiet enjoyment and harassment, the board held that:

“. . .the RAP is an administrative agency whose power is limited to enforce the provisions of the Rent Adjustment Ordinance. In the case of Larson v. City and County of San Francisco (2011) 192 Cal.App. 4th 12633, the court examined the authority of the San Francisco rent board. The court held that the jurisdiction of administrative agencies is limited to those claims that are quantifiable in nature. The court specifically held that the loss of quiet enjoyment is not such a claim. Larson at p. 1281. Neither are claims of harassment.”

“The Residential Rent and Relocation Board have also stated that the RAP does not have jurisdiction over any such claims. See the Housing, Residential Rent and Relocation Board Decision in Aswad v. Fields, T03-0377. The tenant’s claims for decreased housing services as they relate to the covenant of quiet enjoyment and harassment are not claims that can be made under the Rent Adjustment Ordinance. While these acts may well constitute civil wrongs, these claims must be made in a court of competent jurisdiction. Then tenant’s claims as they relate to the covenant of quiet enjoyment and harassment are dismissed.”

Thus, while Oakland tenants can allege violation of the TPO in a petition to the rent board, the board will dismiss their allegation as being outside the control of the rent board. Still, if the tenant alleges a violation of the TPO, this makes the allegation part of public record and puts the landlord on notice to “back off.” But, the petition must be made in conjunction with something that the rent board does have control over such as an illegal rent increase or a reduction in housing services.

The Oakland rent board is currently flooded with tenant petitions. In fact, petitions made in November 2017 are now being processed by the board. It’s estimated that once a petition is processed, a hearing won’t be scheduled until 6-months later. Once a hearing has been conducted, a hearing decision won't be available until two months after the hearing.  And, to have a hearing, the tenant must be in possession of the property or the rent board will dismiss the petition. Faced with constant harassment, many tenants will give up and find new homes.

For tenants facing similar issues as certain Fruitvale tenants, acting together as a tenant union provides some balance of power against the landlord.  Tenants can also raise their issues by with meeting with their City Council representatives if not bringing the issues to the attention of the City Attorney.  City officials are inundated with city issues --persistence here is key.

Finally, there’s a little known requirement in the TPO.  Not only must the landlord provide a RAP notice to the tenant at the beginning of the tenancy, but a TPO notice must be placed in the common area of the rental building (like a laundry room) or this is a violation of the ordinance. See OMC 8.22.640(E)(2) and this violation can be alleged in a petition to the rent board. 

“If Rental Units subject to this ordinance are located in a building with an interior common area that all of the building's Tenants have access to, the Owner must post a notice in at least one (1) such common area in the building via a form prescribed by the City staff.”

Tenants can attend clinics at the rent board conducted by Centro Legal de la Raza, 250 Frank H. Ogawa Plaza, 6th Floor (Housing Assistance Center) Oakland, CA 94612 (510) 437-1554. Centro Legal Clinic hours: Mondays & Wednesdays from 9:30am to 1:30pm. Other tenant organizations such as Just Cause can be consulted for assistance.

Majestic Marine Mammals

Having just participated in a three-hour whale watching tour off the coast of Monterey lead by a marine biologist, I am captivated by the magical grace of gray and humpback whales.

Closer to home, you can participate in, learn about, volunteer and/or donate to The Marine Mammal Center in Marin County.  Baby seal season is coming soon and the MMC is seeking volunteers to help care for the pups. To find out more, click here!