To shore up support for November’s $600 million housing bond, the Board of Supervisors approved legislation Tuesday changing how landlords can pass on the cost to tenants.
In an 11-0 vote, the board approved legislation introduced by Supervisor Aaron Peskin that allows tenants to apply to for financial hardships if they cannot afford to pay.
Under existing law, landlords can pass on 50 percent of the cost of a property tax bill for voter approved general obligation bonds to tenants. Currently, the hardship exemption is only allowed for things such as utilities, capital improvements or water revenue bonds.
Peskin had previously announced his plan to pass the measure to shore up support behind November’s $600 million affordable housing bond.
Last year, Peskin noted that San Francisco Tenants Union opposed a recent seawall bond over concerns about the passthrough impacts on tenants, resulting in discussions that ultimately led to the legislation.
The 50-50 split in the cost of the bonds dates back to “Solomonic legislation” passed by the board 2002. It was hoped that by splitting up the share of the costs, it would “reduce opposition by either party.”
“It proved pretty good,” Peskin said. “We’ve had a pretty good record of passing bonds.”
The City has also promised not to raise property taxes beyond 2006 levels, by timing new bonds to start as the debt of prior bonds is retiring.
He noted, however, that bonds from the San Francisco Unified School District, San Francisco Community College District, and the BART District are not held to those limits and property taxes do go up as a result of these spending measures.
Peskin said he believes there is a “fair argument” that both landlords and tenants benefit from the citywide bond-funded programs that pay for things like public safety infrastructure and affordable housing. But there are tenants who are struggling to pay the passthroughs, especially when they are accompanied by other allowable passthroughs or those that were banked.
Existing laws allows a landlord to impose a pass-through for any year the tenant was a resident when the bond was passed and to spread the pass-through over 12 months.
“We have seen rent control tenants in particular suffer unmanageable and onerous spikes in their rent and that has been the subject of a number of hearings,” Peskin said.
In addition to allowing tenants to apply for financial hardships exemptions, the legislation also has a “use it or lose it clause” and extends the time period for tenants to pay to three years.
The “use it or lose it” clause addresses the impacts of when landlords may hold on to passing on the costs of several bonds by banking them, and passing on the costs of multiple bonds at the same time. Under the legislation, property owners will have three years to impose the passthrough from the moment the bond first appears on their property tax bills.
Jennifer Fieber, a representative of the San Francisco Tenants Union, told the San Francisco Examiner Tuesday that “the tenant passthrough of bonds has been a long-standing issue with us.”
“We’ve been trying to raise attention to it for years. That’s why we opposed the seawall last year,” Fieber said. “But making low-income tenants pay for affordable housing that includes high-earners AMI’s seemed particular egregious.”
They held out on their endorsement, she said, “until we could at least get a hardship exemption and Peskin followed through.”
According to the Rent Board, renters can qualify for financial hardships if “all adults in the household are low-income recipients of means-tested public assistance, such as Social Security Supplemental Security Income” or if the “the monthly rent charged for the unit is greater than 33 percent of the tenant’s monthly gross household income” and their income is under 80 percent of the area median income, which for a family of four is $98,500. Also, a hardship can be granted if “the tenant has exceptional circumstances that make payment of the rent increase(s) a hardship, such as excessive medical bills.”
“There is still reform needed of the passthrough calculation and reforming construction-related passthroughs but we really appreciate the Peskin office’s responsiveness,” Fieber said.