Part 3 — INITIAL RENT AND RENT INCREASES; PETITION AND HEARING PROCESS

A.

Valid Decontrol. The Initial Rental Rate for a new tenancy in a Rent Stabilized Unit may be set by the Landlord if the Rent Stabilized Unit was vacant due to one (1) of the following two (2) circumstances.

Voluntary Vacancy. The prior Tenant Household voluntarily terminated the tenancy.

For-Cause Termination. A Landlord legally terminated the prior tenancy as a For-Cause Termination.

B.

Exceptions to Decontrol. Only the Rent charged consistent with this Chapter to the former Tenant, plus any annual adjustment authorized by this Chapter, may be charged for a Rent Stabilized Unit in the following circumstances.

No Cause Termination. A Landlord terminated a tenancy without cause in accordance with Section 1946.1 of the California Civil Code or Section 827 of the California Civil Code.

Continuing Tenancy. An existing Tenant or existing member of the Tenant Household, (including individuals who are not listed on an existing rental agreement), has entered into a new oral or written rental agreement for the same Rent Stabilized Unit.

Unlawful Landlord Activity. A Landlord effectively terminated a tenancy without cause by encouraging the Tenant to terminate the tenancy through unlawful activities prohibited under the Tenant Protection Ordinance, the Apartment Rent Ordinance, or state law.

Any Other Illegal Evasion. A Tenant terminated a tenancy because of illegal conduct by the Landlord or any other means by which a Landlord fraudulently seeks to set a new Initial Rental Rate.

(Ord. 30032.)

A.

Annual Rent Increase Limit. The Rent of any Rent Stabilized Unit may not be increased by more than the Annual General Increase unless otherwise authorized by Petition. If the Landlord has not substantially complied with the City's request to register or re-register a Rent Stabilized Unit pursuant to the procedures in the Regulations, the Landlord may not increase the Rent for the Rent Stabilized Unit.

B.

The "Annual General Increase" is limited to:

The monthly Rent charged for the previous twelve (12) months for the Rent Stabilized Unit multiplied by five percent (5%).

C.

Rent Adjustments Based Upon COVID-19 Rent Increase Moratorium.

Notwithstanding subsection B., Landlords who enter into reduced rent agreements with their Tenants pursuant to the COVID-19 Rent Increase Moratorium Ordinance, Ordinance No. 30405, may calculate their Annual General Increase upon the prior charged rent under their rental contract and not on the monthly rent charged under the reduced rent agreement.

This subsection shall expire twelve (12) months after expiration of the COVID-19 Rent Increase Moratorium Ordinance, Ordinance No. 30405.

D.

Rent Increase Frequency Limit. Not more than one (1) Rent increase, including the Annual General Increase, any increase allowed under Chapter 13 of the Regulations, and any increase authorized by a final decision after a Petition may be imposed in any twelve (12)-month period. An increase in Rent authorized by a decision on a Petition filed pursuant to Section 17.23.350 C. or Part 8 of this Chapter may be imposed after notice has been provided pursuant to California Civil Code Section 827, if the decision states that the initial increase is exempt from the twelve (12) month interval requirement under this Section.

E.

Rental Voucher Unit - Rent Increases. During the time a Rental Unit serves as a Rental Voucher Unit, the Initial Rent shall be subject to this Chapter, but its Rent may be adjusted annually consistent with the published rules of the applicable government agency in lieu of the Rent adjustments allowed under this Chapter.

(Ord. 30032, 30421.)

A.

Limitation on Pass Through Charges. No pass through of charges to Tenants is authorized except as expressly provided in this Chapter. Without altering the generality of the foregoing sentence, no charges for utility services (such as electricity, natural gas, telephone, water, waste water, sewer and refuse or waste management services) may be passed through to Tenants by Landlord. No charges may be passed through that are assigned to Tenants by virtue of ratio utility billing or similar unmetered allocation arrangements. This section is not intended to prohibit the government entity or nonprofit administering the voucher from imposing conditions based on regulations with respect to utility payments on Rental Voucher Units, or to prohibit submetered water, gas or electricity.

Existing Agreements End; New Agreements Prohibited.

i.

Existing written rental agreement, amendment or addenda provisions for payment or pass through of utility service or similar charges or for ratio utility billing to the Tenant ("Passthrough Agreements") that were

executed by the Landlord and the current Tenant prior to January 1, 2018 are void on the date that the Petition Examiner's or Hearing Officer's decision is issued on the petition described in subsection A.2 or A.3, or void after October 31, 2018 if the Landlord does not submit a complete petition on or before October 31, 2018. A renewal by the same parties on the same terms of a Passthrough Agreement initially executed prior January 1, 2018 shall be subject to this subsection A.1.i, not subsection A.1.ii.

ii.

Passthrough Agreements entered into after January 1, 2018 are void.

iii.

Verbal rental agreement, amendment or addenda provisions for payment or pass through of utility service or similar charges or for ratio utility billing to the Tenant are void.

iv.

Notwithstanding subsection A.1.ii, Passthrough Agreements executed prior to May 1, 2018 with a new Tenant shall be shall be subject to subsection A.1.i, not subsection A.1.ii, if the Landlord can prove that he/she has, prior to July 1, 2017 required utility pass through agreements with the same terms for all Tenants in the building.

Landlord Petition for One-time Offset Increase. If a Landlord has a written Passthrough Agreement for water, sewer and/or trash executed by the existing Tenant prior to January 1, 2018, the Landlord may file a petition with the City during the period from July 5 to October 31, 2018 for a one-time increase in rent ("Offset Increase") which increase, if awarded, shall not be subject to the one (1) increase in any twelve (12) month period limitation in Section 17.23.310. The petition process shall be in accordance with the Regulations.

Landlord Petition for One-time Offset Increase for Unmetered Gas and Electricity. If the units in the Landlord's building are not metered for gas and electricity due to the age or type of the building, the Landlord has complied with the requirements of Civil Code Section 1940.9 at the commencement of tenancy and Landlord has a written Passthrough Agreement for gas and/or electricity executed by the existing Tenant prior to January 1, 2018, the Landlord may file a petition with the City during the period from July 5 to October 31, 2018 for a one-time increase in rent for gas and electricity ("Gas/Electricity Offset Increase") which increase, if awarded, shall not be subject to the one (1) increase in any twelve (12) month period limitation in Section 17.23.310. The petition process shall be in accordance with the Regulations.

If the pass through or Passthrough Agreement has been the subject of a Hearing Officer Decision or Voluntary Agreement that disallowed the pass through, no Offset Increase is allowed. If the unit is a Rental Voucher Unit no Offset Increase is allowed.

The Offset Increase amount will be the lesser of: (i) the average of the monthly charges paid by the Tenant in 2017 under the Passthrough Agreement for water, sewer and/or trash, or (ii) $86 for a studio, $91 for a one-bedroom, $102 for a two-bedroom and $149 for a three bedroom.

The Gas/Electricity Offset Increase amount will be the lesser of: (i) the average of the monthly charges paid by the Tenant in 2017 under the Passthrough Agreement for gas and/or electricity, or (ii) $36 for a studio, $58 for a one-bedroom, $70 for a two-bedroom and $84 for a three bedroom.

The Petition for One-Time Offset Increase can be challenged by the Tenant as provided in the Regulations.

For a petition brought under subsection A.1.iv, the offset amount, the references in subsection A.5 and A.6 to the average of the monthly charges paid by the Tenant shall refer to 2018, prior to the date of petition filing.

B.

Limitation on Fees. The following fees may not be charged to Tenants except as provided:

Excess Replacement Fees. No Landlord shall charge a Tenant a replacement fee for a key or security card that exceeds the actual replacement cost plus ten dollars ($10.00) unless approved by Petition or the Regulations.

Excess Bounced Check Service Fees. No Landlord shall charge a Tenant a service charge for a dishonored ("bounced") check that exceeds the amount allowed under California Civil Code Section 1719(a)(1), as amended. Landlord need not provide Tenant with a third party invoice for this service charge.

Late Payment Fees. No Landlord shall charge a Tenant a fee for late payment of Rent exceeding a total of five percent (5%) of the monthly Rent for each payment of Rent that is three (3) or more days late.

Application Screening Fees. No Landlord shall charge a Tenant an application screening fee in excess of the amount allowed under California Civil Code Section 1950.6(b), as amended.

C.

Separate Line-Item Required. No Landlord may pass through any charge to any Tenant allowed under this Part unless the charge is clearly listed on the rental agreement and the Rent invoice (if any) and is accompanied by a true and correct copy of the invoice or bill paid by the Landlord for such charge.

D.

Tenant Petitions Authorized. In the event a Tenant disputes the pass through of a charge or the calculation of the Tenant's share of the charge, the Tenant may file a Petition for a determination as to whether such charge may be passed through pursuant to this Section and whether the calculation of the Tenant's share comports with this Section and any Regulations governing such pass through. Any of the following reasons provide grounds for such a Petition:

There exists a dispute as to the genuineness of the bill or the amount of the charge.

The pass through of the charge is not authorized under this Chapter.

There exists a dispute as to whether the Tenant had the right to use and occupy the Rental Unit during the billing period or any portion of the billing period.

Mathematical errors in the relevant calculations.

Copies of the Landlord's invoice or bill were not provided as required.

E.

Security Deposit. Except as provided in Section 17.23.320.C, a Security Deposit, once established, cannot be raised for the duration of the tenancy. For purposes of this Section only, where several Tenants occupy one (1) Rental Unit, the Tenancy shall be deemed to continue so long as any one (1) of the Tenants who occupied the Rental Unit when the deposit was set continues to occupy the Rental Unit.

(Ords. 30032, 30090, 30110.)

A.

Rent Increase Awards for Landlord Fair Return Petitions. A Landlord may increase rents in excess of the Annual General Increase to the extent a higher rent is authorized in a final Hearing Officer's decision on a Landlord Petition for fair return filed in accordance with Part 8 of this Chapter.

B.

Pass Through Awards for Landlord Specified Capital Improvements Petitions. A Landlord may impose a pass-through charge in addition to Rent to the extent authorized in a final Administrative Decision or Hearing Officer's decision on a Landlord Specified Capital Improvements Petition filed in accordance with Section 17.23.330. Provided however, in no event may the total monthly amount imposed for Specified Capital Improvements exceed three percent (3%) of the monthly Rent validly charged for the Rent Stabilized Unit on the date of the filing of the Petition. Charges for Specified Capital Improvements shall not be considered Rent for purposes of this Chapter and shall not increase when Rent increases, nor shall they be considered part of Rent for the purpose of calculation of the Annual General Increase. Following a valid vacancy decontrol of Rent for a Rent Stabilized Unit in accordance with Section 17.23.300, any awarded charges for Specified Capital Improvements for that unit shall expire.

C.

One-Time Payments for New Additional Housing Services. A Tenant Household may file a joint Petition to allow the Tenant to make a payment of a one-time fee or increase the Tenant's Security Deposit in order to receive or be entitled to certain new or additional Housing Services that are expressly excluded in the written rental agreement, to the extent that these Housing Services that are identified in the Regulations. The one-time payment for new or additional Housing Services may not exceed five percent (5%) of the monthly Rent validly charged at the time of the Tenant request. The one-time payment or additional Security Deposit shall not be considered Rent for purposes of this Chapter and shall not be included when calculating a Rent increase or subject to the one (1) increase in any twelve (12)-month period limitations in Section 17.23.310.

(Ord. 30032.)

A.

Other Fees, Charges, and Costs that May Be Passed Through to Tenants. The following charges may be passed through to Tenants, separate from Rent only in compliance with the requirements below. These charges shall not be considered Rent for purposes of this Chapter and shall not increase when Rent increases, nor shall they be considered part of Rent for the purpose of calculation of the Annual General Increase.

Annual Fees imposed under Chapter 17.23.

Reserved.

New Charges. A Landlord may pass through to a Tenant a share of charges imposed on the Landlord by governmental agencies or by public utilities subject to regulation by the California Public Utilities Commission, subject to the limitations in subsection 3 below where all of the following conditions are met:

a.

The charge is a new charge, as opposed to an increase in an existing charge, which the governmental agency or the public utility requires the Landlord to pay; and

b.

Such pass through has been authorized by resolution of the City Council in which the charge in question was expressly identified; and

c.

The Landlord passes through the charge in accordance with the rules specified in such a resolution adopted by the City Council and the Regulations; and

d.

The Landlord passes through the charge in accordance with the rules specified in such a resolution adopted by the City Council and the Regulations.

Conditions to Pass Through Charges to Tenants. No charge described in subsection 2 above may be passed through to any Tenant pursuant to this Section unless all of the following conditions are satisfied:

a.

The total charge by the Landlord may not exceed fifty percent (50%) of the total amount paid by the Landlord; and

b.

No Landlord may require a Tenant to pay any amount of any charge that is attributable to any period of time that the Tenant was not entitled to use and occupy the Rental Unit; and

c.

No Landlord may require a Tenant to pay any amount of any charge that is attributable to common areas or Rental Units other than the Tenant Household's Rental Unit; and

d.

No Landlord may require a Tenant to pay more than its share of the charge attributable to that Tenant's Rental Unit that is permitted to be passed through to Tenant.

(Ord. 30032.)

A.

Purpose. The purpose of this Section is to provide an incentive for certain improvements by allowing Landlords to petition for a limited pass through to the Tenant of the amortized costs of the improvements

listed in Appendix B to the Regulations ("Specified Capital Improvements") subject to the following conditions:

The charge must comply with the limitations in Section 17.23.320.B.

The Specified Capital Improvement must do one (1) of the following: provide new Housing Services or enhanced Housing Service functionality to the Tenants; increase the safety (including ADA accessibility), sustainability (water or energy conservation) or seismic readiness of the Rent Stabilized Unit (or of a building containing a Rent Stabilized Unit).

The Specified Capital Improvement must have been completed within twelve (12) months prior to the filing of the Petition and must meet the criteria in the Regulations.

B.

Petition Required. A Landlord must petition for and receive an Administrative Decision authorizing a pass through for any costs to be charged to Tenants pursuant to this Section prior to passing through any charges.

C.

No Pass Through for Improvements to Maintain Existing Housing Services. The following may not be passed through to the Tenant unless explicitly authorized by the Regulations: (1) the costs of a Specified Capital Improvement that replaces an existing physical feature of a Rent Stabilized Unit (or of a building containing a Rent Stabilized Unit) with a physical feature of similar kind and quality; or (2) the costs of a Specified Capital Improvement that maintains a similar level of functionality as a prior physical feature of a Rent Stabilized Unit (or of a building containing a Rent Stabilized Unit).

(Ord. 30032.)

A.

Tenant Petitions. There is hereby established a Tenant Petition process, which process and procedures shall be set forth in the Regulations. A member of a Tenant Household may submit a Petition to the Director on any one (1) or more of the following grounds: to allege a Rent increase in violation of the Ordinance; to request a reduction in Rent based on decreased Housing Services; to contest a fee or charge as an unauthorized or excessive pass through; to allege other violations of the Ordinance or Regulations; or other specific grounds that may be provided by the Regulations.

B.

Landlord Petitions. There is hereby established a Landlord Petition process, which process and procedures shall be set forth in the Regulations. A Landlord may submit a Petition to the Director on any one (1) or more of the following grounds: to request a Rent increase in excess of the Annual General Increase in order to obtain a fair return as described in Part 8; to request the ability to pass through a charge for Specified Capital Improvements; or other specific grounds that may be provided by the Regulations.

C.

Joint (Unopposed) Petitions. There is hereby established a Joint Petition process, which process and procedures shall be set forth in the Regulations. A Tenant may file a Petition to request approval of a one- time payment or Security Deposit increase pursuant to Section 17.23.320.C, if the Landlord has signed the Petition. Subject to the conditions in the Regulations, a Tenant may file a Petition for an increase in the Rent of up to five percent (5%) for an additional Tenant if additional occupants are prohibited in the written rental agreement or an increase in the Rent of up to fifty dollars ($50) for a second parking space if only one (1) parking space is reserved for the Tenant in a written rental agreement, provided that no increase in the Rent is allowed for a Tenant's dependent child, foster child, spouse, domestic partner, parent or minor in the Tenant's care, which terms may be further defined in the Regulations.

D.

Petitions Affecting Rental Voucher Units. A Tenant or Landlord filing a Petition that applies to a Rental Voucher Unit must indicate that on the Petition and provide a copy of the Petition to the government agency or nonprofit administering government agency's funds within the time period specified in the Regulations for notice to the other party. The government agency or nonprofit administering government agency's funds shall be entitled to participate in the Petition process, and to file a Petition or response within the time period specified in the Regulations.

(Ord. 30032.)