that the estimating annual changes in the rental market that the market data that reasonably reflects the example of the apartments in san francisco the chief economist ed will present briefly and shortly on the exact method that will be used and thinking how to implement that we explored different options including having the process go to the rent board in terms of the original calculation and it was based on on the decisions that the advise was given it will be good forbid the controls office to come up with with the physical formula the second is when the calculation is made we

believe that the controllers formula provides an estimate of the market rate in san francisco. we recognize in a given case the estimate of a unit could provide a better assessment so we made a second amendment to the ordinance that creates an appeal proposals and the appeal process will allow the learning to question a hearing at the market rate if the estimate is too high and otherwise with the respect to the tenant as well. it's important to give each party an opportunity to appeal whatever the formula results in. and the final amendment is something that supervisor cowen referenced which say we recognize this ordinance requires a payment amount that's

far too difficult for a small landlord to pay so for that reason we've created a process where landlords can request a hardship adjustment and we building that's appropriate. it's fair to recognize that not only all landlord are not equal and when you're dealing with a major corporation the impact of the ordinance will be different and if the board will feels that's justified they can order a reduction in an assistance amount or order a different payment plan or other relieve that the red board dad and mom's priority. those changes taken into context of what's happening are appropriate but the main thing is we feel that this is a pretty

modest adjustment >> thank you for that description supervisor campos are those drafted the yet and does the legislation or the amendment in terms of the hardship spell out what constitutes a hardship? the reason i ask and i appreciate you mention and supervisor cowen mention there are obviously differences among landlords and property owners when you're talking about a small property owner that owns a 1 or 2 apartment building and that's their retirement vs. a large property owner who owns a

number of apartments buildings it's important to have flexibility because you could end up in a situation where your unable to pay. so how will that be calculated >> if i may platform i'll urns your turn it over to the city attorney's office. we want to make sure we set policy guidelines at the board guidance in terms of the policy but making sure we left it up to the rent board to figure out the fairest way taking it on a case by case basis. we did meet with the apartment association and folks from the real estate industry to get their feedback and the best way to conduct this analysis i'm

going to turn it over to the city attorney's office >> thank you supervisor campos. first, let me make sure i've heard the question correctly. supervisor wiener >> is there any amendments that indicates how hardship will be determined. >> under the proposed amendments the landlord may file a written request where they building the rental payment dlaefl will constitute a hardship for the landlord. and the rent board or it's designated administrative law judges any order a reduction payment plan that they feel is justified. and the landowner my provide whatever spotting evidence to justify that >> so the amendment basically

leaves in the hands of the rent board. >> that's correct. >> for example, and again comparing a landlord who owns 10 buildings or investors who purchase a 2 unit building and lives in one of the units would the rent board potentially have in its authority to sell the building in order to pay. in terms of you can list the assets in a way and the landlord didn't have the cash but rents the other unite this is i want to make sure we as policymakers are actually setting the rules and with respect to the rent board not leaving it to the rent board to set rules where the

members of the public where they don't know how the rent board is going to take care of this >> supervisor wiener may i will defer to my colleague to talk about the process. >> sure. >> supervisors i'm the executive director of the rent board. we don't have a tremendous amount of work with hardship because we - we have dealt with the hardship buses it's in the context of an over payment in rent or a reduction of the housing services you don't want to displace tenants you do want landlord to basic go bankrupt and the tenants lose their housing. we have a form just like a form for tenant hardships and

landlord. the landlords can't come in on one be building we look all their assets. they give us revenue incomes and expenses and their personal savings it's invasive just like for the tenants. there's no formula those are obviously very fact intensive and for the most part the liability didn't go away. you don't want to force someone into for closure you don't want the landlord to default but if in a situation where there's an

ellis act there meditates to be an up front payment the landlord will make the first payment and if there's an adjust you pursuant to the hardship request they'll then on a second payment it will be a renewed payment or basically be phased in. obviously it will be to the point is for the tenants to relocation we're going to have expediting entities we can do see for the if you were purpose of this legislation >> i'll appreciate this being continued and will appreciate more information if the rent board. not impressing an opinion just wanting to know in policymakers and how this is going to be dealt with its dlent a huge

impact because for the tenants there is a huge swing for the relocation money and it's the ability of the tenant to stay in the city and its hard for folks living in the building who want to stay there for both parties that matters a lot. and want to make sure that in - in dealing with legislation we as the policymakers know how this is going to be >> may i we have to be careful it kits the other way if we as a board create predetermined what the right amount is or you know what suits a hardship without taking into consideration the individual situations then we

run the risk of actually a landlord challenging what happens on the grounds that we're not considering the totality of the facts. based on the guidance we got from the city attorney it's important to establish a policy that reflects principles but allows for consideration of specific circumstances. one thing i didn't want to do was limit the landlords ability to present as much information as they wanted to. the fact we're allowing for a hardship for the opportunity for a landlord to make the case in terms of the hardship they'll individually face is a good thing but this has to be considered in the context of what's happening out there. no legislation is perfect we

needed e need to make sure we have a legally sound legislation as possible but not let the perfect be the enemy of the good we need to look at it the severity and people are being displaced >> supervisor as soon as i said it is in the context of master tenants i'll be happy to get the committee a few of the decisions how to show adjudication of the hardships. >> i'm not suggesting that the rent board should have no discretion every case is unique and it's a mistake to micro manage how it's administered but there's a balance to be struck you can go to the other tremendous we don't know how the

rent board is going to react. >> supervisor cowen you might have answered my question there were benchmarks or policies we can or will use to determine hardship. i'm southwestern direction that the it will be abused >> we don't have one for landlord but tenants don't pay more than thirty to 35 percent we don't have an index for landlords. >> thank you. >> okay. colleagues supervisor campos. >> thank you if i may call on mr. egon from the controllers office and thank mr. egging gone for the technical assistance.

>> good afternoon ted. our office was approached by supervisor campos office with the request can we provide the information that will allow a landlord to understand the market rate of a unit that they were vetoing someone from and the question was could we use average rent for example the size of the unit can we get that data on a neighborhood by neighborhood basis and we advised the supervisor the best measure of what a given units market rate would be what would that have rented for if it was not subject to rent control so this led to the idea of the construction of an index that would be basically a number you

would multiple by the rent of the unit that will vary for how long the unit has been subject to rent control since the last time it was vacant. this index does it varies from one year to the next it's a bigger number and it is reflecting both what the original rent would have been had the unit been subject to the allowable rent since vacant and what was the actual rent for vacant unit not subject to rent control over that same period of time. it's going back in time to estimate the original rate and applying the rent up to the present to estimate the market rate. thank you time of eviction. so the index we're proposing or

have been asked to develop as part of the levenths would be a number that a landlord would multiple by the current rent and multiply that to arrive and relocation payments. i can give you lubrications with units given the current rent and how long since its current vacancy and i can provide a written memo to talk about the data sources we're relying on >> can you give some examples. >> yeah. for example, one of the works that supervisor campos office shared would be a 2 bedroom apartment in the mission couped for 2 seven years by a tenant instill the building is

currently renting for 9 had and $9 so the index would be 33.055. multiple 3.055 times the rent at the time of eviction or $909 is $2,200 plus and the difference is one thousand 8 hundred and 68 that's the difference between the market rate and the relocation payment is that amount one thousand plus times 64 that would need to be split across the two roommates that are sharing the unit one is disabled and one provides an additional payment for the

roommate. a second example is a two-bedroom unit in the inner sunset for 4 thousand one hundred and 60 that's it occupied for many years you must not 2.344 to get 3 thousand 4 hundred and 22 and intrablth the rent to get even though differentiate of 9 hundred plus and that differentiate is the relocation payment and in this case, it's $47,088. again, that's split by the two restrooms one is disabled and will receive an additional 3 thousand plus >> for the lower amount when

subtracting the two is that number what they're currently paying or the rental basis unit push-up to where the allowable rent increases sometimes the landlord are punch i can tell you every year and they don't raise the rent very much. so if you have a landlord is that's not done their allowable rental increases what is the difference this is >> this method relies on an assumption that the resemble rents have been taken so it's multiplied by the rent control and there's no one any need to remember the first year of occupancy. >> is so if you have a landlord

that hadn't raised the rent in terms of the lower amount it's 13wr5ub9d out. >> yeah, but the lower rent will reduce both sides of the vacation then the rent will be lower and so you never refer back to the base rent. >> no when we talked about the evidence it will not be there. >> another way of doing that would be to take the original base rent and increase it on the one hand for the market rate increases over time and on the other hand, for what the allowable rent increases and to compare the two. >> yes. that will be an

alternative and was it considered. >> yeah, but we rely on the basis rent and if it's 27 years ago that might not be realistic. >> in terms of the factor the 3.0 is that compounding the matthew increase rates in san francisco for each calendar year. >> yes and we're relying on the published data. >> supervisor campos. >> i want to note we discussed both alternatives with the apartment associations and to have something that creates clarity i won't speak for them but the formula that is sort of being the preferred one is something that's my understanding they prefer as well but they can speak for themselves. >> i have nothing further

supervisors. >> so you'll be providing us with a report for different scenarios. >> yes. described in detail and the index. >> you know it would be helpful for members of the public to sort of see the numbers otherwise it's very much an abstract. >> i want to see you give examples that represent the other sides felt cities how it's effecting bayview hunters point and the hill. i want to make sure particularly there are ellis act in katrero hill >> those example were provided by supervisor campos office if you know vooeksz you want me to you think the numbers.

>> it will be one citywide factor. >> yes. >> supervisor campos again, i have not have an opportunity to review the language of the amendment but how is this spelled out in the legislation or - >> i think the formula the process that was described by the control is spelled out in the legislation but no - >> no. >> the proposed amendment supervisor campos is correct that an important element of the calculation is spelled out but the entire one is not spelled identity in the electricity's. >> right. >> it's the language provides a general structure and mr. egging ones described how their implemented. >> right it gives the controller

the right to establish the differential schedule so when the controllers is looking at this he shall rely on the examples of the rental apartments in san francisco. >> what i would say we've requested that whether it's the apartment association of the rarely terrors if there's a preferred method we're open to that. i don't know if they have submitted something >> i have a question for cameron's having to do with the diversification among tenants. my understanding is that lets is the total amount is 40 thousand and let's say you have 4 tenants in the unit hypothesisly if one the tenants have been there for 40 years and others been there

less how it the appropriation >> it's different equally. >> and a tenant would be tenants on the lease this is or sub tenants as well? >> the legislation didn't specify. >> do you know what the intent of the author. >> i think the idea is to help everyone that's impacted by the displacement we'll make that issue. >> we know that the tenant hardest hit are the long term tenants so if i have a tenant with multiple tenants and one has been there for thirty years and maybe a newer or sub tenant

i don't know if there's any other way to do that but i've wondering to taking into consideration if it's don't believe. >> we're open to suggestions. >> so thank you. so supervisor >> may i like to ask the budget analyst mr. fred to come and do a brief presentation the question was to provide information that analyze the profits that are being gained from some of the evictions typical the ellis act eviction that provides context for us to understand the financial benefits that some of the landlords have in doing evictions to provide some context for what is fair in terms of relocate. >> chair winn and supervisors

fred from the budget analysis offices. your office reviewed records for 15 properties and objected records from the rent board and determined the ellis act evictions have occurred my using the records we were able to determine the sale price and post evictions and the sale price the most recent sale prices prior to the evictions then the 15 properties we were able to see the profit for selling the property. we issued a report and it has the details on the properties the average level of profits it was $1.5 million or a hundred and 16 percent increase observe the prior sale amount.

those are all inflation amaze a loss of 2 hundred and plus to a profit of a few million dollars. we've looked at the residential values from we started in 2000 to 2013 so for some comparison the change between 2011 and 2013 in home values residential values in san francisco was one hundred and 94 thousand plus dollars or 27.6 percent those are comparable numbers but to give you some context so the level of increases is certainly higher than that for the property we reviewed. those numbers don't factor in,

of course, what the owners spent between the original purchase and post eviction sales. so of that money we're counting for improvements before the sale occurred. we have details on the number of units in the buildings. i can go through that there's different levels of property ability and it's in the report. i'll stop and respond to any questions >> i have have few clarifying. when you say there this assessment the report is not meant to be representative of san francisco properties as a whole nor is the data to compare all the transactions can you amplify >> we looked at the sample that was around the sample was 15

properties so by that we don't want to draw sweeping conclusions but those that are selected the results are as state. >> would it have been improbable to do a more statistically another thing i don't know when i see a establishment that's not meant to be representative could it have been representative. >> yes. it could have been representative with more data we selected one hundred properties initially. the records weren't available on the prior sale. however, because there are randomly selected they chachd