Plan to Grant Tenants Decreases for Construction Fallout Halted by Court Ruling

By Jorge Casuso

A Santa Francisco court decision has forced the Santa Monica Rent Control Board to reconsider a regulation that would have allowed tenants to receive rent decreases if construction impacted the habitability of their unit.

Under the proposed regulation the board was set to approve Thursday, tenants could receive decreases of between 10 percent and 100 percent of the rent, and $20 and $250 a month, depending on the severity of the impact.

"The decision certainly does not outlaw what we were going to do," said rent board administrator Mary Anne Yourkanis, "but it does give us cause for concern about the scope of what we were going to do. We're still looking at the ramifications, but the reality is people sue us a lot."

A California Court of Appeal decision - published ten days before the expected rent board vote -- denied decreases to tenants in a San Francisco apartment complex who lost use of their balconies during renovations.

"A landlord who undertakes to perform reasonably necessary repair and maintenance work on rental property, which has the effect of temporarily interfering with or preventing the tenant's full use of housing services, but does not substantially interfere with the right to occupancy of the premises as a residence, does not effectuate a decrease in housing services," the First Appellate District Court wrote.

The appeal court overruled a trial court decision upholding the San Francisco Residential Rent Stabilization and Arbitration Board's ruling to grant $100 rent decreases for four months to 37 tenants who said their decks were not fully usable during renovations at the Golden Gate Center, a 1,200 unit complex in San Francisco.

Tenants said that they were forced to remove all items from the deck during construction and were not allowed to use the decks while the railings were being replaced. Even when tenants were permitted to use the decks, they weren't allowed to use deck furniture or leave their plants out. In addition, they couldn't open their sliding doors during construction and "as a result suffered discomfort from the heat and from the unpleasant paint and food fumes."

Under the proposed Santa Monica regulation, rent decreases would be allowed if construction at the property "significantly impacts the habitability of a unit, interferes with the tenant(s)' quiet enjoyment of their unit, or reduces or removes the housing services of a unit for a period exceeding twenty-four hours."

The proposed regulation was a response to complaints from tenants who contend that extensive renovation is making life miserable. The renovation of apartment buildings across the city has been spurred by a state law that went into full effect Jan.1 and allows landlords to raise the rents of vacated rent-controlled units to what the market will bear.

But on Thursday, landlords and their representatives warned the board that the proposed regulation -- which allows decreases for everything from dust to vibrations due to construction - would backfire by discouraging landlords from fixing up their buildings.

"The whole idea of punishing a landlord for fixing up a property is nothing short of absurd," said Jim Jacobson, who has represented hundreds of landlords before the board. "Landlords aren't doing it because it's fun, but because buildings have been allowed to deteriorate for 20 years under ridiculous regulations by the rent board."

Landlords who own smaller buildings, many of them elderly, would be the hardest hit, landlords predicted.

"The people who are going to get hit the hardest are people with older, smaller properties that haven't been upgraded,"said Wendie Olshan. "The buildings will deteriorate. You are being counterproductive. This discriminates against people with older buildings."

"Since reading the regulation, I've changed my mind about upgrading the plumbing, which my tenants would love," said Dan Richards.

The proposed regulation - which allows decreases of up to 50 percent of the rent for noise and 75 percent for odors - could in fact force a landlord to actually pay a tenant for living in the building.