Under the San Francisco Rent Ordinance, you cannot simply increase an existing tenant's rent or add these expenses directly to their monthly bill.
Because the unit is under San Francisco Rent Control, passing through capital expenses or operating costs requires following very specific, strict administrative procedures.
1. Roof Repair ($20,000)
A roof replacement/repair is generally considered a Capital Improvement.
- You Must Petition First: You cannot issue a rent increase for the roof repair without prior approval. You must complete the work first, then file a Capital Improvement Petition (Form 526 for 1–5 unit buildings) with the SF Rent Board.
- Amortization & Caps: If approved, the cost is amortized (typically over 10 to 20 years depending on the project type), and the monthly passthrough is capped. For most standard capital improvements, the passthrough cannot exceed 5% or $30 of the tenant’s base rent per month in a 12-month period.
- Does Not Become Base Rent: A capital improvement passthrough must be listed as a separate line item and automatically removed once the amortization period ends. It is not factored into annual percentage rent increases.
- Timeline Limit: You must file the petition within 5 years of completing the work.
2. Property Tax Increase ($4,000 to $12,000)
General property tax increases (e.g., from a reassessment or change in ownership) cannot be directly passed through to a tenant.
- Operating and Maintenance (O&M) Petition: To offset significant increases in operating expenses (like property taxes, insurance, or maintenance), you must file an Operating & Maintenance Petition with the Rent Board.
- The Comparison Rule: An O&M petition requires comparing your operating expenses over two consecutive calendar years. An increase is only allowed if your overall operating costs grew at a rate faster than the allowable annual CPI rent increases.
- Cap: If granted by an Administrative Law Judge, an O&M rent increase is capped at a maximum of 7% per year. Unlike capital improvements, an approved O&M increase does become part of the base rent.
Note on Bond Passthroughs: You can only pass through property taxes without a petition if the increase is specifically tied to voter-approved City General Obligation Bonds. This requires calculating the specific bond tax rate using the Rent Board's official Bond Measure Passthrough Worksheet.
3. Important Rules Regarding Elderly / Vulnerable Tenants
- Tenant Financial Hardship Exemption: Age itself does not automatically block a petition, but elderly tenants on fixed or limited incomes frequently qualify for a Tenant Financial Hardship Exemption.
- How Hardship Works: If you file a petition and receive approval for a passthrough, the tenant can file a hardship application with the Rent Board. If granted, the tenant may be exempted from paying the passthrough temporarily or indefinitely.
- Protected Status Considerations: While protected status (age 60+ or disabled) heavily restricts evictions (such as OMI or Ellis Act evictions), it does not prevent a landlord from filing a valid petition for a rent passthrough; however, the hardship mechanism is specifically designed to protect low-income seniors from being priced out.
Next Steps
- Gather Documentation: Collect all paid invoices, contracts, permits, and cancelled checks for the roof repair, along with property tax statements showing the breakdown.
- File the Petition: Download Form 526 (Capital Improvement Petition for 1–5 Units) from the SF Rent Board website.
- Wait for Approval: Do not issue a rent increase notice for the roof work until the Rent Board issues an official decision granting the passthrough. Serving an unapproved increase can result in a tenant contest or an unlawful rent increase petition against you.
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