71518 cms report
DESCRIPTION
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C I T Y O F O A K L A N D
Acxenda Report
TO Office of City ManagerATTN Craig G KocianFROM Office of Housing and Neighborhood DevelopmentDATE November 29 1994
RE RESOLUTION AMENDING RESOLUTION NO 63429 CMS WHICH
APPROVED THE RESIDENTIAL RENT ARBITRATION BOARD RULES AND
PROCEDURES AND APPROVING AMENDMENTS TO CLARIFY DEFINI
TIONS TO AMEND THE APPEAL HEARING PROCESS TO CLARIFY
CALCULATION OF CAPITAL IMPROVEMENT COSTS TO CLARIFY
NOTICE PROCEDURES TO TENANTS AND OTHER TECHNICAL CHANGES
After the Economic Development Community Development and HousingCommittee meeting of October 2 1994 the Residential Rent
Arbitration Board conducted a regularly scheduled meeting on
November 10 1994 to seek additional input from interested partiesregarding the changes proposed to the Ordinance and the Rules and
Procedures The Board held a three hour session that provided for
presentation of concerns by citizens and which eventually became a
conversation between members of the Board and interested landlordsand tenants
Based upon the recommendations by the public the Board voted to
include two additional amendments proposed by landlord representatives These are as follows
Rent Increase Guidelines
Capital ImprovementsThe existing provisions allow a landlord credit for capitalimprovements that have been completed and paid for within the
12 month period prior to the date of the proposed rent
increase The recommendation includes a provision to expandthe 12 month period to a 24 month period to complete and pay
for capital improvements prior to the date of the proposedrent increase
Technical ChangesInclude specific references to the date of the ComprehensiveHousing Affordability Strategy CHAS report used as reference
for the overall 32vacancy rate in housing Therefore
December 22 1993 will be included in the third WHEREAS in the
amended Ordinance No 9980 CMS
An additional reference to the Housing Vacancy Survey of the
Federal Home Loan Bank FHLB system dated August 22 1994
reflecting a housing vacancy rate of 34will be added
EDICD HOUSING NOV 2 9 1994
Craig G Kocian 2 November 29 1994
In addition to the two new proposed recommendations the Residen
tial Rent Arbitration Board RRAB recommends that prior proposedchanges to Ordinance No 9980 CMSand the Rules and Procedures
be adopted A proposed Ordinance amending Ordinance No 9980 and
proposed changes to the Rules and Procedures that include these
amendments have been reviewed by the City Attorney and are
attached
The changes reflected in these documents include 1 a reduction of
the annual rate of increase from 60to the CPI for the previoustwelve month period ending June 30th of the current year which is
3 2 a more detailed procedure for notice to tenants 3 changesin methods used to justify increases under capital improvementsdebt service and rental historybanking and 4 a variety of
technical changes to make the process more efficient and fair
The RRAB has considered these proposed changes for several months
as a part of its ongoing duty to hear appeals from Hearing Officer
decisions and recommend policy changes to the City Council The
Board also develops Rules and Procedures which are submitted to the
Council for approval The last amendment to the Ordinance and
Rules and Procedures was adopted in 1984
Below is a summary of the major proposed recommendations that the
Residential Rent Arbitration Board is requesting that the Council
adopt
The substantive changes proposed to the Ordinance are
Rent Increase GuidelinesThe annual rate of rent increase shall be reduced from 60 to
the CPI for the previous twelve month period ending June 30th
of the current year which would provide for a rate of 30
BankingPresently the Ordinance allows landlords to carry forward
rent increases without limit Banking refers to rental
increases that a landlord has chosen not to take yearly and
elects to accumulate and take at one time The proposedprovision limits the ability of the landlord to carry forward
rent increases to an amount equal to three times the current
allowable annual rental rate in one year In no event may the
landlord carry forward such rent increases for more than ten
years
NoticeThe existing rule stipulates that the landlord is required to
notify tenants in writing of the existence of the ResidentialRent Arbitration Ordinance Provisions are being added to
EDICD HOUSING NOV 2 9 1994
Craig G Kocian 3 November 29 1994
specify the wording as well as the form of the notice to
assure the correct information is provided by the landlords
In addition a penalty for failure to comply is added
The substantive changes proposed to the Rules and Procedures are
NoticeThis section presently provides the wording to be incorporatedin the required notice to notify a tenant of the existence of
the Residential Rent Arbitration Ordinance This notice is
proposed to be provided in the language of Oaklandsfive
largest ethnic communities
A section has been added to provide penalties for a landlord
who is not in compliance with the Ordinance and the Rules and
Procedures with regard to providing notice of the existence of
the Residential Rent Arbitration Ordinance to tenants The
penalty applies when a landlord has not given proper notice as
prescribed in the Rules and Procedures The effective date of
any rental increase otherwise permitted by the Ordinance will
then be forfeited for six months
Rent Increase GuidelinesThe Residential Rent Arbitration Board Ordinance provides that
the Rules and Procedures will allow landlords to justifyincreases above the yearly limit on several grounds The
Board has made recommendations to amend some of those provisions based on the actions of the Hearing Officers and the
Board since 1986
Capital ImprovementsThe existing provision allows a landlord to justify a
rental increase above the allowable rental rate based on
increased capital improvement costs These costs may be
amortized over a period of five years Once these costs
have been used to justify a rent increase higher than the
allowable rental rate this amount is continued indefi
nitely The recommendation includes a provision that
after the capital improvement amortization of five years
the dollar amount of the rent increase justified bycapital improvement costs will be reduced from the
allowable rental rate
The existing provisions allows a landlord credit for
capital improvements that have been completed and paidfor within the 12 month period prior to the date of the
proposed rent increase The recommendation includes a
provision to expand the 12 month period to a 24 month
period to complete and pay for capital improvements priorto the date of the proposed rent increase This recom
EDICD HOU31N NOV 2 9 1994
Craig G Kocian 4 November 29 1994
mendation was a request by a landlord representing a
landlord organization
Debt ServiceThe existing rule requires a conventional financinganalysis based on assumptions regarding market rate
financing or costs based on the actual financing The
Board is recommending the actual debt service mortgageonly be used to justify a rental increase under this
provision
Rental HistoryBankingThe existing rule allows a landlord to choose to carryforward allowable rent increases not taken yearly to
take the combined allowable rent increases all at once
For example the allowable increases since the inceptionof the Ordinance May 6 1980 are as follows
1 100 from May 6 1980 through October 31 19832 80from November 1 1983 through September 30 1986
and
3 60from October 1 1986 through the present
Currently a landlord who has a tenant residing in hisherunit since May 1980 and has chosen not to take hisherincreases since 1980 the landlord may raise rent by a
total of 1720in a one year period
The proposed provision limits the rental banking rent increases to three times the current allowable annual rate
in any one year period In no event may a landlord carrysuch increases forward for more than ten years This will
substantially reduce the maximum increase allowed in 1994
from 1720to 1803 x 60 and 860 10 years al
lowable over several years
Included is a staff summary detailing the Boardsrecommendationsan RRAB annual statistical summary for the year 1993 and 1994Consumer Price Indexes and letter from the RRAB
EDICD HOUSIriG N01 29 1994
Craig G Kocian 5 November 29 1994
The changes are shown in the attached copy of the Ordinance and itsRules and Procedures the deleted sections are lined through andadded sections are redlined An amendment which changes andmodifies Ordinance No 9980 and a resolution which adopts theamended Rules and Procedures have been prepared and are recommendedfor approval
I
ANTOINETTE HE TT
Director
Attachments
APPROVED AND FORWARDED TO THEECONOMIC DEVELOPMENT COMMUNITY DEVELOPMENTAND HOUSING COMMITTEE
Office of thC3ty Manager
EDICD HOUSING NOV 2 9 ggq
STAFF SUMMARY
The Residential Rent Arbitration Board the appellate body of this
Citys rent arbitration process has submitted the followingproposed amendment to the Ordinance No 9980 and the Rules and
Procedures These recommendations derive from full discussion and
careful deliberation by this Board The Board members have stated
that implementation of the recommendations contained in this reportwill result in the improvement of the rent arbitration process
The Residential Rent Arbitration Board RRAB has proposed to
amend five major areas of the OrdinanceRules and Procedures
Presented below are the recommendations submitted with backgrounddata that the Board has used to prepare them
I ANNUAL RATE OF INCREASE
The rate of increase is the allowable percentage rental rate set byCity Council Any rental increase that exceeds that percentage is
grounds for a tenant to petition to the Residential Rent Arbitra
tion process to require the owner to justify any increase in excess
of that amount The allowable annual rate of increase is currentlyset at 6Oo per year This rate has been in effect since October
1 1986 An adjustment is necessary to assure that the increase is
more related to current conditions in the rental housing market
The RRAB is recommending a change in the annual rental increase
rate from 60 to the CPI for the previous twelve month periodending June 30th of the current year While there has not
previously been any specific mechanisms established to determine
annual rental increase rates staff and the Board recommend that
the Consumer Price Index CPI is an appropriate measure to fairlyset a limit on the allowable rental increase rate The mechanism
used by other Bay Area cities is the CPI San Francisco HaywardBerkeley East Palo Alto and San Jose The advantage that the CPI
has over other methods researched is that is reported frequentlyand is compiled for the local area Oakland and San FranciscoThe CPI is reportedbimonthly with a publication lag of one month
The increase allowed for the next 12 month period will be 30
II NOTICE
Presently the Notice provision outlined in the Ordinance requiresthe landlord to notify the tenants in writing of the existence of
the RRAB This notice must be in the form of an addendum to any
leaserental agreement It also states that a landlord must
demonstrate in advance to a hearing that heshe has given said
notice to all tenants under disputes However the Ordinance does
not state what is to be included in this notice or what penaltiesif any result from the failure to is comply with this provision
Staff has prepared a model addendum notice but many landlords are
not aware that notice exists Also landlords may not be aware of
what type of information should be provided to tenants to assure
compliance
EDICD 8 NOUSlN NOU 29 t994
2
The Board has developed specific wording that will be required inthe notice to be provided under this section This will provideall landlords with wording to be given in this required noticewhich will be referred to as an addendum notice to a leaserentalagreement Also the Board has recommended that this notice be
prepared by the City and be provided to landlords and tenants inthe six significant languages of Oakland The landlord will beable to make copys of the notice or use it to provide the properform to a tenants Also forms will be available at theResidential Rent Arbitration section
To reinforce the importance of this notice the Board has proposedto establish a new penalty for landlords that are not in compliancewith providing the required notice This new rule stipulates thatif a landlord does not give proper notice as prescribed in theRules and Procedures the effective date of any rental increaseotherwise permitted by the Ordinance will be forfeited postponedfor six months The landlord will still be required to provideproof that the required notice has been given to all tenants
The Board believes these recommendations for changes will reinforcethe importance of providing the required notice of the RRABsexistence to all tenants and communicate clearly to all citizensthe purpose of the Residential Rent Arbitration Ordinance
III BANKING
The existing rules stipulate that if a landlord chooses not toincrease rents in accordance to the amounts allowed by theOrdinance the remaining allowable percentage increase may becarried over to succeeding twelve 12 month periods Basicallythis provision allows a landlord to go back to the inception ofthis Ordinance May 6 1980 or to the original occupancy by a
tenant and to the rent amount that would have been reached if allincreases had been taken Allowable rental increase rates from May1980 through 1994 allow a 1720rent increase
The Board has determined that when a landlord does not take hisherrental increases as provided in the provisions on banking andpasses through a substantial rental increase which is justified itcan be a hardship for a tenant The existing California State Lawrequires a landlord to notify the tenant 30 days before a rentincrease A tenant can be notified only 30 days prior a rentalincrease of up to 1720
The revised rules would limit the carry over rent increase tothree 3 times the current allowable annual rate eg 30 x30 90 in any twelve month period In no event may a landlordcarry a banked increase forward for more than ten 10 years Thiswill substantially reduce the maximum increase allowed in 1994 from172Oo to 180 3 x 600 and to 860 10 years allowable overseveral years
EDICD HOUSING NOV 2 9 1994
3
IV CAPITAL IMPROVEMENT COSTS
Presently this provision allows a landlord to justify a rental
increase based on increased capital improvement costs These
costs may be amortized over a useful life period of five years or
a 60 month period Once a rent has been raised the increased rate
is continued indefinitely
The revised provision specifies that after capital improvementshave been amortized over the period of 60 months the dollar amount
of the rent increase justified by capital improvement costs will be
reduced in the 61st month The deletion of capital improvementcosts after the cost improvements has been completely amortized
represents a balanced approach for all parties involved landlord
and tenants
The existing provisions allows a landlord credit for capitalimprovements that have been completed and paid for within the 12
month period prior to the date of the proposed rent increase The
recommendation includes a provision to expand the 12 month periodto a 24 month period to complete and pay for capital improvementsprior to the date of the proposed rent increase This recommenda
tion was a request by a landlord representing a landlord organization
V DEBT SERVICE
The existing debt service procedures provide that an increase in
rent based upon debt service mortgage payment costs will occur
only in those cases where the total income from the build
ingunits is insufficient to cover the combined housing service
costs and debt service costs The procedure currently requiresthat the lesser of actual mortgage payments or an amount determined
by a calculation based upon a conventional financing analysis to be
used to determine allowable debt service cost The conventional
analysis is determined as follows
1 If a property containedservice will be purchased20 and amortized over 30
one to four units the debt
with a minimum down payment of
years
2 If a property containedservice will be purchased25 and amortized over 25
five or more unit the debt
with a minimum down payment of
years
The interest costs can not exceed the fixed rate reported by the
Real Estate Council in the aforemention assumptions
The purpose of this conventional financial analysis was to assure
that only reasonable and customary financing charges were passed on
to tenants
The Board has determined that these assumptions are no longer
required in debt service analysis When this provision was
4
originally put in the Ordinance there were no variable rate loansThe average interest rates at the inception of this Ordinance May6 1980 ranged from approximately 100 to 150and lowervariable rate loans are available and often used to acquire rentalproperty Fixed rate loans are now much lower averaging from 7Ooto 90 The revision will require that landlords use actual
financing cost at acquisition to determine the rental rate toestablish in a breakeven determination
Current experience is that the actuthan the conventional analysis ofte
financing However if any changesfinancing market a recommendationBoard to review this section of the
al debt service has been lowern due to variable interest rateare noted in the future housingwill be made by staff to theOrdinance
VI TECHNICAL CHANGES
Several technical changes have been recommended to be made in theOrdinance and the Rules and Procedures to clarify the meaning andensure consistency These technical changes include a finding andpurpose of the Residential Arbitration Ordinance changes indefinitions outlined in the Ordinance to clarify the meaning and tocorrespond to definitions in the Rules and Procedures to increasethe filing fee of 1000 to 1500 for a tenant or landlord filinga petitions to the Residential Rent Arbitration Board to specifyseven 7 working days verses the present seven 7 calendar daysspecified in the Ordinance to update the fine for remedy for anypersons convicted of an infraction under the provision of thisordinance in accordance to State Laws to change the annual ratereview to January to May to specify the proper location of meetingplace to specify the Board year to January 1 through December 31of each year and to revise both documents to be conglomerated ina more organized format
EDIfA HOUSING NOV 2 9 1994
RESIDENTIAL RENT ARBITRATION STATISTICAL SIIMMARYJANIIARY 1993 THROIIGH DECEMBER 1993
The following petitions were heard andor acted upon by the Staffand Hearing Officers of Residential Rent Arbitration
2 PETITIONS RESOLVED BY HEARING OFFICERS AND STAFF
PETITIONS
A Petitions Received
through December 1993 460
B Petitions Carriedover from 1992 22
TOTAL 1 482
C Petitions Resolved bystaff via Consultation 456Mediation
D Petitions Resolved byHearing Officers 23
TOTAL 2 479
E Petitions Pending at the
end of December 1993 Total 1 minus Total 2 3
II CONSIILTATION3MEDIATION RESOLVED BY STAFF
A Office Consultations scheduled 345
B Office Consultations unscheduled 630
C Phone ConsultationsMediation 4886
D Referrals to Other Agencies 2355
E Materials Requested by Mail 3451
Ordinance Rules ProceduresBrochures etc
1993
Page 2
III PETITIONS RESOLVED BY THE RESIDENTIAL RENTARBITRATION BOARD ON APPEAL
A Appeals Filed through December 1993 3
B Appeals carried over from 1992 1
C Total appeals heard through December 1993 3
D Appeal Petitions Pending at the end ofDecember 1993 1
V STATIIS OF PETITIONS
A Number of Cases Decided in Favor of Tenant 10
Increases above annual increase amountof 6 but less than landlord requested
Rental HistoryBanking 5Increased Capital Improvements 2Increased Housing Service Costs 0Increased Debt Service 1
Annual Rental Increases 6 0No Rental Increases 0
B Number of Cases Decided in Favor of Landlord 13
Rental History Banking gIncreased Capital Improvements 0Increased Housing Service Costs 0Increased Debt Service 5
Total Number Of Cases Heard Through December 1993 23
DE CD HOUSING NOV 2 9 QQ
1993
Page 3
C Cases Closed Prior to Hearings 456
Reasons for cases closed followingmediationcounseling with staff
Per Petitioners Request 35Mutual Agreement reached with
TenantLandlord 362
Landlord Rescinded Rent Increase 32Rent Increase was not in Violation
according to Ordinance No 9980 12Other 15
VI TOTAL PETITIONS RESOLVED
SEE SECTION I TOTAL 2 479
Others refers to reasons that are out of the normal routine
tenant moved tenant lived innonresidential area tenant diedetc
GEDCD HOOSING Nnv 4 on
RESIDENTIAL RENT ARBITRATION STATISTICAL SIIMMARY
JANIIARY 1994 THROIIGH AIIGIIST 1994
The following petitions were heard andor acted upon by the Staff
and Hearing Officers of Residential Rent Arbitration
I PETITIONS RESOLVED BY HEARING OFFICERS AND STAFF
PETITIONS
A Petitions Received
through August 1994 115
B Petitions Carriedover from 1993 3
TOTAL 1 118
C Petitions Resolved bystaff via Consultation 106
Mediation
D Petitions Resolved byHearing Officers 6
TOTAL 2 112
E Petitions Pending at the
end of August 1994Total 1 minus Total 2 6
II CONSIILTATIONSMEDIATION RESOLVED BY STAFF
A Office Consultations scheduled 100
B Office Consultations unscheduled 228
C Phone ConsultationsMediation 2981
D Referrals to Other Agencies 2035
E Materials Requested by Mail 2552
Ordinance Rules ProceduresBrochures etc
FnIC1R HousinG NOV 29 1994
1994
Page 2
III PETITIONS RESOLVED BY THE RESIDENTIAL RENT
ARBITRATION BOARD ON APPEAL
A Appeals Filed through August 1994 2
B Appeals carried over from 1993 1
C Total appeals heard through August 1994 2
D Appeal Petitions Pending at the end of
August 1994 1
V STATII3 OF PETITIONS
A Number of Cases Decided in Favor of Tenant 04
Increases above annual increase amount
of 6 but less than landlord requested
Rental HistoryBanking 2
Increased Capital Improvements 1
Increased Housing Service Costs 0
Increased Debt Service 1
Annual Rental Increases 6 0No Rental Increases 0
B Number of Cases Decided in Favor of Landlord 02
Rental History Banking 0
Increased Capital Improvements 1
Increased Housing Service Costs 0
Increased Debt Service 1
Total Number Of Cases Heard Through August 1994 6
FnCn HOUSir6 NOV 2 9 1994
1994
Page 3
C Cases Closed Prior to Hearings
Reasons for cases closed followingmediationcounseling with staff
Per Petitioners Request 18
Mutual Agreement reached with
TenantLandlord 26
Landlord Rescinded Rent Increase 34
Rent Increase was not in Violation
according to Ordinance No 9980 22
Other 6
VI TOTAL PETITIONS RESOLVED
SEE SECTION I TOTAL 2
106
112
Others refers to reasons that are out of the normal routine
tenant moved tenant lived innonresidential area tenant diedetc
f
cnrn wi1tG NOV 2 9 1994
tt
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San FraociacoOaklandSanoeo 13901987100 9798
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FRRCRNT CIIANGRYear 1 Month
INDRXRS endlntt endingOCT NOV OCT NOV NOV t1992 1992 1992 1992 1992
1918 1420 32 30 01424792531489 1482 38 33 0143844378
1943 1442 34 31 01 s44354433
IIRDAN WAGR RARNRRS AND CLRRIGAL NORB6NSFRRCRNT CIIANGR
Year 1 MonthINDRXRS ending ending
NOV UCT NOV OCT NOV NUV1991 199L 1992 1992 1992 1992
1358 13961398 31 29 014095 415841651390 1438435 37 32 011108 42454242I381 14231423 33 30 0042U4 4332 4333
Nent 1390 1437 1439 37 35 01 1368 14131418 36 35 02
bec 1977 100 2247 23222326 2201 22742278Neat A 1409 1957 1457 37 34 00 1372 11171418 36 34 01
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INDEYEB enJlnp endlnpMONTHLY DATA JLNY JUNE JULY Jl1NE JULY JlNY
1991 1993 1993 1993 1993 1993
U e Clty Average 1105 1444 1444 30 28 OO19671001 4208 4324 4526
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Oct 19671001 3199 3444 3310Ilonolulu 1539 1564 1506 31 14
19671001 1216 4306 4165Portland 1388 1409 1436 3S 19
19671001 40644125 1203San Dlega 1470 1477 1504 23 lB
19671001 4971 49965007eaattle 1378 1402 1419 30 12
A 1967100 4200 4273 4324
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Vrar 1 Month
INDEYEB andlnq rndingJULY JANE JINY JINdE JINY Jl1LY
1992 1993 1993 1993 1993 1993
1304 1420 1421 20 T7 O14121 42314232
1422 1448 1448 21 l8 OO
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4276 4305 4307
1397 1434 1434 20 26 OO
2240 230723001401 1437 1436 26 2S O1
2269 2327 2325
1376 1421 1420 37 30 O5
2123 2191 2203
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i 1ST HAIF 199319T 2ND 1ST FROHi
I HALF IML F HALF 1 ST IIAIF 2ND HALF1992 1492 1993 1992 1992
II 12701291 1514 37 10
I 3306 3359 3420
I 1546 1572 1394 31 l432043934493
I 1335 1377 1403 15 19I 3905 3968 4045I 137913861409 22 l7
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619 5576310 Sraltlr 206 SSS0643o 415 7416605
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300 LAKESIDE DRIVE 1STH FLOOR OAKLAND CA 9612353
Office of Community Development TTY 8396131
October 26 1993
HONORABLE CITY COUNCIL
Oakland California
Mayor Harris and Members of the City Council
Subject Residential Rent Arbitration Board AnnualRent Increase
Under the provisions of Ordinance No 9980 CMS which established the Residential Rent Arbitration Board and its regulationsthe Ordinance requires that the Legislative and Long Term PlanningCommittee of the City Council review the general rate of rentalincrease
This review is to determine whether a change in the rate isnecessary The current rate is 60 This rate has been in effectsince October 1 1986
The Residential Rent Arbitration Board is recommending a change inthe annual rate It is the belief of staff and the Rent Board thatan adjustment is necessary The following are the allowable
percentages from the inception of the Residential Rent ArbitrationOrdinance No 9980 CMS
100from May 6 1980 through October 31 198380from November 1 1983 through September 30 1986 and60from October 1 1986 to the present
While the annual rate has never been specifically tied to a measuresuch as the Consumer Price Index CPI staff and the boardbelieves that at this time the CPI is an appropriate measure to
fairly set a limit on the allowable rental increase rate allowedyearly by a landlordjowner The advantage that the CPI has overother methods researched is a frequent reporting period coupledwith a fairly manageable reporting area The CPI is reported bimonthly with a publication lag of one month
EDCD HOUSIrlG NOV 2 9 1994
HONORABLE CITY COUNCIL 2 October 26 1993
The Board recommends that the annual permissible rent increase forthe next three years be based on the San FranciscoOaklandSan JoseCPI Each year the average of the CPI for the previdus twelvemonth period ending June 30th of that current year shall be the
permissible annual rent increase effective October ist The CPIfigure will be rounded to the nearest whole number
The CPI reported for the past twelve months ending in June 1993 was
26 Therefore 30is an appropriate standard for annual rate
adjustments during the present economical climate
It is recommended therefore that the current allowable annual rateof 60be decreased to 30effective October 1 1993
Respectfully submitted
GRICHARD COWAN
ActingChairResidential RentArbitration Board
EDICD HOUISING NOV 2 9 1994
OAKLAND CITY COUNCIL
RESOLUTION NO nA C C M S
INTRODUCED BY COUNCILMEMBER
RESOLUTION AMENDING RESOLUTION NO 63429
CMS WHICH APPROVED THE RESIDENTIAL RENT
ARBITRATION BOARD RULES AND PROCEDURES AND
APPROVING AMENDMENTS TO CLARIFY DEFINITIONSTO AMEND THE APPEAL HEARING PROCESS TO CLARI
FY CALCULATION OF CAPITAL IMPROVEMENT COSTSTO CLARIFY NOTICE PROCEDURES TO TENANTS AND
OTHER TECHNICAL CHANGES
DRT
WHEREAS the City Council by the Residential Rent Arbitration
Ordinance No 9980 CMS amended by Ordinance No 10402 CMSadopted November 1 1983 and other subsequent amendmentshereafter the Ordinance requires that the Residential Rent
Arbitration Board Rules and Procedures hereafter Rules and
Procedures be approved by the City Council and
WHEREAS the Rules and Procedures have not been amended since1985 by Resolution No 63429 CMS and
WHEREAS various clarifications are necessary to updatesections to clarify the wording and provisions and
WHEREAS to assure consistency with the Ordinance now
therefore be it
RESOLVED That the Residential Rent Arbitration BoardRules and Procedures are amended to read as follows
RESIDENTIAL RENT ARBITRATION BOARD
RULES AND PROCEDURES
Rl1l1Jd IIA11
10 GENERAL PURPOSE
11 The purpose of these Rules and Procedures is to serve as
a cataloged list of rules which provide a detailed
interpretation of this Ordinance The Rules and Proce
dures were originally adopted by the RRAB and approved bythe City Council on August 4 1981 They were revised on
August 1 1985 unless otherwise noted
EDtD nUUSiNG Nu U 9 1994
DRAFT20 DEFINITIONS
21 Base Rent The monthly rental rate before the latest
proposed increase
22 Current Rent To keep current means that the tenant is
paid up to date on rental payments at the
base rental rate
23 Landlord For the purpose of these rules the term
landlord will be synonymous with owner
or lessor of real property that is leasedor rented to another andro
24 Manager
25 Petitioner
26 Respondent
a
28
A petitioner is the party landlord or
tenant who first files an action under
the ordinance
A respondent is the party landlord or
tenant who responds to the petitioner
2
EDIDD IUj 2 1994
A manager is a paid either salary or a
reduced rental rate representative of
the landlord
Da
30 LANDLORDTENANT COOPERATION
31 Beyond its role in formulating policies and proceduresthe Board believes it has a civic responsibility to
foster a climate of better understanding between land
lords and tenants and not to polarize these two importantsegments Landlords and tenants are encouraged to
communicate openly with each other on the conditions and
terms of rent increases allowed under these guidelines
32 Landlords are n
permission befor
s that willlaridlords should
establish the pr
of required to obtain the tenants
e making i Qresult in a rent increase Howeverbe aware that these Rules and Procedures
inciple that only thoser
j which benefit the tenants may be
33 With the exception of security deposit disputes in
Section 91 once a decision is rendered by the HearingOfficer andor the Board it is the responsibility of the
landlord and the tenants to determine the terms under
which the decision is carried out For example in a
situation where a decision is retroactive and results in
money being owed to the landlord by the tenant or vice
versa it is up to the tenant and the landlord to
determine the method of payment
40 JURISDICTION OF THE BOARD
41 The function and responsibility of the Board is to hear
appeals from the decisions of the Hearing Officers An
appeal may be filed by either party to the actionietenant or landlord or a Hearing Officer Tieora
eneeefie ali
ccriiiietiucrrereaszreise3rioiRUBirteedeeiserseteardt
42 The Board has the flexibility to interpret the provisionsof the Ordinance to the extent necessary to expeditiouslyperform its arbitration duties
43 The Board may add delete or modify the RRABsRules and
Procedures in order to make them consistent with priordecisions or to describe new policy interpretations The
3
EDCD HORSINGs
NOV 29 iQ9d
RRA Rules and Procedures may be amended by a maj r y
vote of the Board and upon approval of the City Council
50 GENERALBOARD PROCEDURES
51 The Board shall hold a regular meeting on the second and
fourth Thursday of each month at 700 pm Unless
otherwise designated the meetings are to be held at Ei
33tPOakland CA 94612 The CityCouriciY City Mariager and the City Clerk shall be
informed of the regular schedule of meetings and an
agenda of each regular meeting shall be posted at least
72 hours before a regular meeting in a location that is
freely accessible to the members of the public
52 A meeting may be adjourned to a time and place to
complete the agenda if voted by the Board members
present When a quorum cannot be convened for a regularmeeting or when a quorum votes to substitute another
time andorplace for a scheduled meeting a rescheduled
meeting may be held Absent Board members Council
members Hearing Officers City Manager and City Clerk
are to be notified of change of meeting time andorplace
53 Meetings called by the Mayor or City Manager or meetingsscheduled for a time and place other than regularbusiness are to be designated Special Meetings Written
notice and the agenda of such meetings shall be given to
the Board members Councilmembers Hearing Officers CityManager City Clerk and to each local newspaper of
general circulation radio or television station that has
requested notice in writing at least twentyfour hours
before the meeting is scheduled to convene The agendaof such meeting shall be restricted to those matters
stated in the Call
54 All meetings shall be open to the public in accordance
withtheBrownActecet wh n exthe
aiscussion s
ngadpersonnel matters or foriil iii v ii iii i ii 9i iv iiiian
other le alreasonthCrW3s55Theorder
ofbusiness at all regular meetings shall be as follows1Call to
order
2 Roll call 4
EDICD HOUSING NOV
2
9 1994
3 Approval of minutes
4 Special call
5 Old Business
6 New Business
7 Consideration of appeals
8 Appeal hearings
9 Staff Reports
10 Communications
11 Adjournment
DRR
56 The meetings shall be conducted in accordance withRobertsRules of Order Revised
57 The Board year shall commence annually on
1raeeair1c1nof the following year At tYe first regurar meetrig
of the Board year the Board shall elect a Chairpersonfrom one of the five neutral Board members If the
Chairperson is absent the Board shall elect a Chairperson Pro Tem from one of the remaining four neutral Board
members The presence of four Board members constitutesa quorum and any decision by the Board shall require a
majority of those members present
58 The position of Secretary to the Rent Arbitration Board
was established by Ordinance No 9980 CMS as amended
The duties of the Secretary to the Board are to processall petitions for review submitted by tenants andorlandlords schedule hearings and perform generaladministrative duties
60 RULES FOR PROCESSING PETITIONS AND RESPONSES
61 Filing Fees Each petition shall be accompanied by the
required filing fee or a signed fee waiver form of indi
gence as specified in the Master Fee Schedule
62 Tenant Petition and Response Requirements Before
accepting a petition from a tenant or accepting a
response from a tenant the following determinations must
be made
a The fee has been paid or the fee waiver form
has been signed by the tenant
5
GED1CD HOUSt NO1 2 9 1994
DRAFTb The proposed rent increase is in excess of
that which is allowed under Section 5 of the
Ordinance
c The tenantsrent is current at the time a
petition or response is filed and throughoutthe appeal process However if a tenant is
lawfully withholding rent due to Health and
Safety Code violations or a breach of habit
ability hisher rent will be considered as
current for administrative purposes of the
RRAB
63 The dwelling unit under consideration meets the defini
tion of a rental unit as defined in Section 2i of the
Ordinance
64 aQenaTeneaaTereile6vorzzcerr6cereeiie6scctaQerEt3eeeaizcearrcTiT63ie36ziceiT3eirc6icirc
eStciceiii6fi6r aa a
aa yy
i
PLRCISIrGT1LTreG e1 j
6
EDICD HOUSit NOV 2 9 1994
DRAT
641
65 LandlordsRent Increase Application and Response
Requirements Before accepting an application for a rent
increase from a landlord or a response from a landlordthe following determinations must be made
a The fee has been paid or the fee waiver form
has been signed by the landlord
b The landlord has paid hisher Oakland BusinessLicense tax
c The landlord has notified all tenants in the
building under consideration of the existence
of the RRAB as required by Section 5d of the
Ordinance
66 The filing date of a petition from a tenant for rent
increase is considered to be the date that the petitionerhas submitted the following
a The appropriate form has been completed and
signed tenant petition
b All fees have been paid or waived
c The documentation has been provided
1 Current rent receipt or statement
2 Residential Rental AgreementLease
3 All documentation pertaining to the issues have been provided
661 Rent increases that are either approved or denied as a
result of a tenantspetition will apply only to the
units listed in the petitions
7
EDICDHOUSINGNOV 29 1994
67 The filing date of a landlordsapplication for rent
increase is considered to be the date that the petitionerhas submitted the following
a The appropriate form has been completed and
signed landlord petitioner
b All fees have been paid or waived
c All documentation has been provided
d Addendum notices have been given to all ten
ants and
e Appropriate business license fees have been
paid
671 Rent increases that are either approved or denied as a
result of the landlordsapplication will apply to all
tenants in the building
68 Landlords and tenants may designate others to representthem If they do so and if the addresses are providedthen the representatives will be sent the same documents
as are sent to the people they represent
69 Tenants will be notified of the prehearing conference
with the landlord and will be given the choice to attend
or not
610 Continuance may be granted to either party for up to an
additional 30 days which would bring the total time to
60 days from filing date to hearing date If the
petitioner is the party requesting the continuance the
case will be closed if the petition requires more than
the additional 30 days If the respondent is the partyrequesting the continuance the case will be heard by the
hearing officer at the end of 60 days regardless if the
respondent is prepared
611 Petitioner or respondent fees may be waived by staff ifthe party requests a fee waiver because of indigence
612 The anniversary date upon which annual rate increases or
rental history will be calculated in the following order
of preference
1 The date the tenant moved into the building
2 For tenants with no rent increase since May1980 use May 1980
8
EDCD HOUSIHG NOV 29 1994
3 In buildings where all rent increases are made
in the same month and the tenants in ques
tion isare receiving an increase in less than
twelve months from hisher movein month then
the anniversary date may be either
a The movein month or
b The same month as the other tenantsand the annual increase is prorated
613 The case files are public and may be inspected bx anyonedurin normal business hourstro1ni1dhti4
70 ROLESGUIDELINES AND JURISDICTION OF THE HEARING OFFICER
71 A Hearing Officer shall conduct hearings at which partiescan present information and at which testimony and
information is secured in order to prepare to render
decisions about allowable rent etc
72
73
9
DCll R Nninr inv o nn
A Hearing Officer must foster an atmosphere in the
hearing to resolve the issues and to improve the
relationships between the parties Prior to closing the
hearing the Hearing Officer should give both partiestenant and landlord equal time for a closing statement
DRW
74
s
75 The Hearing Officer may interpret the provisions of the
Ordinance to the extent necessary to expeditiouslyperform hisher arbitration duties However if said
interpretation involves new policy questions the HearingOfficer must appeal that resulting decision to the Board
76 If health and safety Oakland Housing Code violationsthat are defined as Priority One or Priority Two
items by the City of OaklandsHousing Compliance Officeexist in a building the Hearing Officer has the discre
tion to make any rent increase contingent upon the
correction of such violations The Hearing Officers
decision must be supported by a City Housing InspectorsNotice to Abate The rent increase shall become effec
tive upon receipt of the Verification of Abatement Once
the RRAB office has received the Verification of Abate
ment a final written decision must be sent to the
Landlord Agent and Tenants
80 CONDUCT OF HEARINGS BY THE HEARING OFFICER
81 All hearings will be conducted by the Hearing Officer in
public session
82 redre37 eeserdes3dedeeea3eaenabeabzergds
uii cu vv ui
l
10
nirn Hous NOV 29 1994
CzS
akaiaentawhodnotaoneraxdroxirner
w1berqxredtcsehaiew
azla483Writtennotification
ofthe Hearing Officer s decision andacopyof
the information on appeal procedures will be sent to both
parties within seven 7wrk days of theconclusionof the hearing84 The Hearing
Officershould not have communications with one side when the
other party is not present This prohibition against ex parte
communications applies at all times before the
hearing If only one side is present at the hearing
the Hearing Officer will continue to hear the case
and render a decision After the hearing decision has been
rendered the Hearing Officer may communicate with the
parties85 Witnesses should
beidentified for the record and qualified on the facts
they will present The Hearing Officer can question eachwitness and opposing parties can cross examine86Petitioners respondents
andwitnesses should generally be permitted tomaketheir statements without interrup tion The Hearing Officershould limit rambling irrelevant or repetitive statements8 7Hearing Procedures
Eachhearing willbe conducted in the following order 1
The hearing officer
will read an oral state ment describing the hearing
purpose and proce dures2Petitioners
respondent
s andwitnesses swornto tell thetruth a Translators sworn to
be fairand accurate 3 Summary ofst
a fc ritread4 Petitionermay respond
to st ai Lt11 EDCD
HOUSING
OV
29 1994
DAF5 Respondent may respond to sta
ia
6 Petitioner may make opening statement
7 Respondent may make opening statement
8 Petitioner presents hisher case
9 Respondent may cross examine
10 Respondent presents hisher case
11 Petitioner may cross examine
12 Petitioner may make a closing statement
13 Respondent may make a closing statement
14 Closing statement by the Hearing Officer
88 If the Hearing Officer determines that a rent increase
which is more than was requested is justified the
landlord may not increase the rent beyond the requestedamount without a new 30day notice This additionalamount cannot be retroactive
90 RENT SECURITY DEPOSITS AND INCOME
91 Security Deposits In security deposit disputes the
Hearing Officer shall use Section 19505of the Califor
nia Civil Code as a guide in determining the proper
security deposit
92 The Hearing Officer shall further use hisher discretion
in creating a reasonable payment plan for monies owed if
Section 19505has been violated
93 All sources of income derived from the subject propertyshall be considered Income sources include the total
scheduled rents of all units including managersapartments other tenant chargesie parking feesand any other income derived from the operation of the
building ie laundry cigarette machines etc In
the event that there were vacant units within the time
period under consideration the rental fee for the
previous tenant shall be used in calculations
94 Current rent To keep rent current means that the tenant
is paid up to date on rental payments at the base rental
rate The base rental is the monthly rent before the
latest proposed increase
12
EDICD HOUSI NOV 2 9 1994
AFT95 If the manager lives in one of the units the gross
income includes the managersunpaid portion of the rent
plus the amount the manager pays for rent The unpaidportion of the rent is listed as the managerssalarywhen listing operating expenses
96 If there is no written agreement between the landlord and
the manager which establishes the managers rent and
salary then calculate the rent for the managersunit
1 Add the base rents for all units excluding the
managersand divide by the total square foot
age of all the units excluding the managersunit
2 Multiply the square footage of the managersunit times the average cost per square foot
of the other units
3 If the square footage figures are not avail
able then average the rents of comparableunits in this building
97
100
101
1011 In determining whether there has been an increase in
housing service costs consider the annual operatingexpenses for the previous two years For example if
the rent increase is proposed in 1993 the difference in
housing service costs between 1991 and 1992 will be
considered The average housing service cost percentageincrease per month per unit shall be derived by
dividing this difference by twelve 12 months then bythe number of units in the building and finally by the
average gross operating income per month per unit whichis determined by dividing the gross monthly operatingincome by the number of units Once the percentageincrease is determined the percentage amount must exceed
13
EDfCD HOUSING NOV 2 9 1994
JUSTIFICATION FOR ADDITIONAL RENT INCREASES
DRAvthe allowable rental increase deemed by City Council
The total determined percentage amount is the actual
percentage amount allowed for a rental increase
1012 Any major or unusual housing service costsie a majorrepair which does not occur every year shall be consid
ered a capital improvement
1013 Any item which has a useful life of one year or less or
which is not considered to be a capital improvement will
be considered a housing service costie maintenance
and repair
1014 Individual housing service cost items will not be consid
ered for special consideration For example PGE
increased costs will not be considered separately from
other housing service costs
1015 Documentation ie bills receipts andor canceled
checks must be presented for all costs which are beingused for justification of the proposed rent increase
1016 Landlords are allowed up to 8 of the gross operatingincome of unspecified expenses ie maintenancerepairs legal and management fees etc under housingservice costs unless verified documentation in the form
of receipts andor canceled checks justify a greaterpercentage
1017 If a landlord chooses to use 8 of hisher income for
unspecified expenses it must be applied to both years
being considered under housing service costs forexample 8 cannot be applied to 1980 and not 1981
1018 A decrease in housing service costs ie any items
originally included as housing service costs such as
water garbage etc is considered to be an increase in
rent and will be calculated as suchie the average
cost of the service eliminated will be considered as a
percentage of the rent If a landlord adds service
ie cable TV etc without increasing rent or covers
costs previously paid by a tenant this is considered to
be a rent decrease and will be calculated as such
1019 The transfer of utility costs to the tenant by the
landlord is not considered as part of the rent increase
unless the landlord is designated in the original rental
agreement to be the party responsible for such costs
10110 When more than one rental unit shares any type of utilitybill with another rental unit it is illegal to divide up
the bill between units Splitting the cost of utilities
14
DRAFamong tenants who live in separate units is prohibited bythe Public Utilities Commission Code and Rule 18 of P G
E The best way to remedy the bill is to install
individual meters If this is too expensive then the
property owner should pay the utility bill himselfherself and build the cost into the rent
102
1021
1022 Eligible capital improvements include but are not
limited to the following items
1 Those improvements which primarily benefit the
tenant rather than the landlord For exam
ple the remodeling of a lobby would be eligible as a capital improvement while the con
struction of a sign advertising the rental
complex would not be eligible However the
complete painting of the exterior of a build
ing the complete painting of the common
interior areas the complete interior paintingof internal dwelling units are eligible capital improvement costs
2 In order for equipment to be eligible as a
capital improvement cost such equipment must
be permanently fixed in place or relativelyimmobile For example draperies blindscarpet sinks bathtubs stoves refrigerators and kitchen cabinets are eligible capital improvements Hot plates toasters throw
rugs and hibachis would not be eligible as
capital improvements
3 Repairs completed in order to comply with the
Oakland Housing Code may be considered capitalimprovements If the repairs are considered as
Priorit 1 or 2CEresutxnhehrepmaynotbe consid erect as
capltal mprovemen 15 EDICD
HOUSING
G NOV29
1994 Credit for
capital improvements will only be given for those improvements
which have been completed and paid for within the
3 month period prior to the date of the proposed rent
increase
F4 Use of a landlords personal appliances
furniture etc or those items inherited or
borrowed are not eligible for consideration as
capital improvements
5 Normal routine maintenance and repair of the
rental unit and the building is not a capitalimprovement cost but a housing service cost
For example while the replacement of old
screens with new screens would be a capitalimprovement
1023 Capital Improvement costs are calculated according to the
following rules
1 For mixeduse structures only the percent of
residential square footage will be applied in
the calculations The same principle shall applyto landlordoccupied dwellings ie exclusion
of landlordsunit
2
3 A monthly rent increase of160th of the average
per unit capital improvement cost is allowablethat is the landlord may divide the total cost
of the capital improvement by 60 and then dividethis monthly increase equally among the units
which benefited from the improvement ie a
roof benefits all units
4 If a unit is occupied by an agent of the
landlord this unit must be included when
determining the average cost per unit Forexample if a building has ten 10 units and
one is occupied by a nonpaying manager any
capital improvement would have to be divided byten 10 not nine 9 in determining the
average rent increase This policy applies to
all calculations in the financial statement which
involve average per unit figures
5 Undocumented labor costs provided by the landlord
cannot exceed 25 of the cost of materials
16
l3
EDICD HOUSING NOV 2 9 X94
Items defined as capital improvements will be
given a useful life period of five 5 years or
sixty 60 months and shall be amortized over
6 Equipment otherwise eligible as a capitalimprovement will not be considered if a use fee
is charged ie coinoperated washers and
dryers
7 If the capital improvements are financed with
a loan to make capital improvements which term
exceeds five 5 years sixty 60 months the
following formula for the allowable increase is
monthly loan payment divided by number of units
8 Where a landlord is reimbursed for capitalimprovements ie insurance courtawarded
damages subsidies etc this reimbursement
must be deducted from such capital improvementsbefore costs are amortized and allocated among
the units
1024
103
1031 Uninsured repair costs are those costs incurred as a result
of natural causes and casualty claims it does not include
improvement work or code correction work Improvement work
or code correction work will be considered either capitalimprovements or housing services depending on the nature
of the improvement
1032 Increases justified by uninsured repair costs will be
calculated as capital improvement costs
104 Debt Service Costs Debt Service Costs are the monthlyprincipal and interest payments on the deeds of trust
secured by the property
1041 An increase in rent based on debt service costs will onlybe considered in those cases where the total income is
insufficient to cover the combined housing service and debt
service costs after a rental increase as specified in
Section 5 of the Ordinance The maximum increase allowed
17
EDICD HO151Gs
NOV 29 1994
In some cases it is difficult to separate costs between
rental units common vs rental areas commercial vs
residential areas or housing service costs vs capitalimprovements In these cases the Hearing Officer will
make a determination on a casebycase basis
DRWunder this formula shall be that increase that results in
a rental income equal to the total housing service costs
plus the allowable debt service costs
1042 No more than 95 of the eligible debt service can be passedon to tenants The eligible debt service is the actual
principal and interesttiarehserrems
etio
wdip ieatie asdese eo eed p
0
z6eft6ttiftE3ee3iaa
ti ti a a tgenahprp
0
a3eTedeeTdea a
6aiTt a a c
cair 061omeazee0
tetireee
zcsrcirazzor16vireseitlirrcrredeicrerseeeeaeefp
ti F
cz1acrreAr6n r n F i Luvl
y lell 1L
r
i
1043
1044
18
EDCD HO
If the property has been owned by the current landlord and
the immediate previous landlord for a combined period of
less than twelve 12 months no consideration will be givenfor debt service
DRAFT1045 Ifthe rents have been raised prior to a new landlord taking
title or if rents have been raised in excess of the
percentage allowed by the Ordinance in previous 12month
periods without tenants having been notified pursuant to
Section 5d of the Ordinance the debt service will be
calculated as follows
1 Base rents will be considered as the rents in
effect prior to the first rent increase in the
immediate previous 12month period
2 The new landlords housing service costs and debt
service will be considered The negative cash
flow will be calculated by deducting the sum of
the housing service costs plus 95 of the debt
service from the adjusted operating income
amount
3 The percentage of rent increase justified will
then be applied to the base rentsie the rent
prior to the first rent increase in the 12month
period as allowed by Section 5 of the Ordi
nance
1046 Refinancing and second mortgagesaSpsisTercrPrrcrrrcrcSeuiraeticQe seoze
GrceEfAiuTQacrtitci1 l 1 aa t
1047 As in housing service costs a new landlord is allowed up
to 8 of the gross operating income for unspecified expen
ses
105 Rental HistoryBankincx
1051 If a landlord chooses not to increase rents
pndbyednarice since May 6 T980 e remaining
alowabYe percentage increase may becarriedovertosucceeding twelve 12 month periods zweyer ny such scar
19
GEDIGD HOU5IVU NUv 2 9 1994
directly benefits the tenantiecapital improvementsor housing services such as maintenance and repairs or
if the refinancing was a requirement of the originalpurchase
DRAFT
eayfietrseeeereareter
110 APPEAL PROCEDURES
11 1 The Board will consider each appeal
etie9aeeaYeagibhldama
ribae
112 In the event of a tie vote by the Board the HearingOfficers decision shall be upheld
120 RETALIATORY EVICTIONS
121 If a tenant states that heshe was evicted in retaliation
for any actions the tenant took regarding the Ordinancethen the tenant will be referred to Section 10 of the
Ordinance While no legal advice will be given to the
tenant heshe may be given information about legal service
agencies
I certify that the foregoing is a full true and correct copy of a Resolution
passed by the City Council of the City of Oakland California
600246001493
on
Per
CEDA FLOYD
City Clerk and Clerk of the Council
Deputy
ED1CD HOUSING NOV 2 9 1994