Rent Board Report: The Domesticated Kangaroo

As a teenager in the 1980s, growing up within a family heavily involved with San Francisco apartment buildings, I was taught that the Rent Board was a forum of tenant advocacy, a place where owners were demonized, and an administrative body with secret rulings and procedures. In essence, the property owners would often term it a “kangaroo court.” This politburo-style theocracy, founded on the principles of extremist tenant rights, was presented as an anarchistic self-governing interest group whose purpose was to unfairly punish rental housing providers and to shield reckless tenants from their rightful obligations under the rental agreement and law. When I immersed from law school and began attending Rent Board hearings in the mid-1990s, some of these categorizations became justified by way of messy procedures, outwardly hostile hearing officers, and patently wrong decisions, consistently favoring the tenants over the tax-paying housing providers. Without a doubt, this perceived status quo was another injustice to add to the list of the other problems of bad legislators, political judges, and the overall societal criminalization of land-lording.

Yet life doth improve if we are patient. Fast forwarding to the present, the overall picture of the Rent Board presents a vastly different landscape than years past. Specifically, this governmental agency, with significant influence and power, has managed, through effective leadership, to steer above the political fray into a stratosphere of excellence and efficiency rarely, if ever, seen in anything governmental. Here’s why this is true.

First, the Rent Board is under intense scrutiny by both the landlord and tenant communities. The various websites and literature, from the Tenant’s Union to the SFAA and all in between, constantly report on every decision and policy of the Board. Today, most landlords and tenants come to hearings armed with attorneys. About ten years ago, the Rent Board began a program of replacing less qualified hearing officers with a group of decision makers, now aptly called administrative law judges, that are California attorneys who previously practiced in some area of real property law, and in most instances were either landlord or tenant attorneys in San Francisco. Consequently, gone are the days when the judge didn’t know the law and rendered rulings based upon bias or misconception. Now, participants receive well-reasoned and logical decisions that almost always withstand the appellate scrutiny of the local Superior Court and the California Court of Appeal. Indeed, it seems as though Rent Board executives finally understand the importance, both economically and otherwise, of a decision from this agency, and have appropriately reacted by hiring a group of decision makers who can truly live up to the highest standard of performance.

Second, and related to point number one, is the fact that the Rent Board does not want to lose cases that are appealed. As stated above, more and more participants bring lawyers to the hearing, and, consequently, questionable decisions are more likely to get appealed. The appellate process, if it extends beyond a review by the Rent Board Commissioners, involves court time and resources from the City Attorney’s Office, which adversely impacts the budget. Not only do egos get bruised, but a reversal by the courts can undermine the very credibility of the Board. Not surprisingly, the executives have every impetus to ensure that correct decisions are rendered below so as to prevent any onslaught of meritorious appeals.

Third, the ever increasing complexity of the rent laws and procedures has diverted political campaigning to never ending analysis and research. Working as a Rent Board executive, counselor, or judge has never been more difficult than it is today. As we all know, the local, and now even the state, legislature has passed layer upon layer of new laws that make intelligent navigation a feat. The Rent Board must interpret and apply many of these regulations to a constantly growing pool of participants. Gone are the days when the Board only adjudicated a handful of issues. Nowadays, the types of petitions include everything from a variety of rental pass-through applications to determinations of tenant disability status or where a resident principally resides. With the explosive growth in rules and procedures, the Board is confronted with deciding many more of our disputes. Add to this list the fact that many of these laws, like Costa-Hawkins, are drafted without sufficient clarity, thereby making the Board’s job of deciphering legislation a full-time endeavor.

Fourth, the common misconception that the Rent Board serves the interests of renters to the exclusion of all else has been debunked by its ongoing outreach to the landlord community. For example, the executives always accept invitations to speak at our industry’s functions, and the Board usually reserves a booth at housing trade fairs. The Board’s website is user-friendly for both sides, and therefore allows easy access to a comprehensive database by any property owner. The counseling center is active with eager information providers all day; to that end, the notion that confessed landlords receive disparate treatment is easily dispelled by making a trip to the Board’s office, where on any given afternoon it appears as though the counseling is directed mostly at owners seeking free guidance.

Ironically, the Board’s primary function these days seems to be a catalyst for increasing rent. Unlike during certain periods in history, when tenants initiated hearings to further diminish already tightly controlled rents, the average owner now has a multitude of petition options to raise rents beyond the allowable limitations. While owners may feel overwhelmed with the prospect of presenting receipts and invoices in order to recoup expenditures, or proving that a tenant is residing elsewhere, the Board currently devotes a serious chunk of its energies into assisting new and old housing providers with these processes.

The negative perception of the Board, it seems, has its genesis in the fiction that the Rent Board created, and fosters, rent control. Nothing could be farther from the truth. Rent control was passed by the Board of Supervisors in 1979 before a rent board even existed, and it has been amended about 60 times by subsequent measures passed at City Hall and by ballot propositions via the voters. The Board is only the messenger, for which many in our industry seem unfairly willing to kill.

To succeed at the Board, here are a few tips you and your attorney should consider. One, be respectful to the judge and to the tenant. If you are attending a hearing for a landlord petition to increase rent or forced to defend the rent because a tenant has a grievance against you, do not show disdain for the process. The judge is there to do a job, which means applying the law is a fair and just manner. If you show contempt and hostility, you, as opposed to the tenant or the judge, prevent the effective disbursement of justice. Second, don’t expect to always win. Believe it or not, sometimes the law requires the owner to lose. In many instances, the judge must decide the case based upon a set of very close facts, and both sides show up with compelling stories. Don’t assume that just because you lost that meant the Board was biased against you. Third, come prepared. Many owners bring petitions without doing their homework. For pass-throughs, follow the rules, and make sure you have every receipt or document that you need. If you claim a tenant is not principally residing in your unit, suspicions alone will not carry the day; instead, you usually need a private investigator and other forms of compelling evidence. Finally, be patient with the process. The Board has very relaxed rules about admitting evidence, striving to include everything rather than to preclude consideration of what the judge may ultimately deem to be important. (In court, because a jury is often the decision maker, the rules surrounding the admissibility of evidence are strictly adhered to, but there are no juries in Rent Board matters.) Refrain from hurrying the process along, and never lose patience with the manner in which the judge is conducting the hearing.

In sum, I submit these comments to our industry not in an attempt to curry favor with the Board or to present a false perception of reality, but instead to educate the membership as to what they can expect in 2008 from the single most important component of our local government. The directors of this organization have implemented tremendous measures to ensure that political biases are kept out of the decision-making process, and instead focus energies on dealing with the yearly legislative onslaughts and the ever-expanding petitions it must decide. My opinion is seemingly supported by the recently intensified efforts of tenant organizations to over hall the Board’s structure by having Commissioners elected rather than appointed by the Mayor, claiming that this change is warranted because of pandering to landlords. Obviously, if the Board was fraught with tenant bias, our opposition would be in silent glee. Since the agency is fair, it draws the ire of the tenant extremists. While many who are attracted to work at the Board may have personal opinions about tenant rights, the work environment currently in place requires professionalism and intelligent participation transcending the political bantering that we consume our time with; as such, lay down your preconceived biases and you may be pleasantly surprised.

–Dave Wasserman

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