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tv   Government Access Programming  SFGTV  May 16, 2018 9:00pm-10:01pm PDT

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at least some of the solution's already in the works, so i do want to commend her for her work. and so to begin the hearing, we have brad hearn for the housing rights committee and then two of his tenants, landra amino and mina tenka, and do you have a presentation that you'd like to make? >> good morning.
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fren . >> good morning. my name is landra tonka. i am a disabled tenant who's lived in my current rent controlled unit for 22 years. i'm part of the veritas tenants committee and a volunteer of with tenant's rights hearing committee in san francisco. thank you to supervisor she havy for calling this, and thank you for hosting us.
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i'll layout some broad themes about things endured by tenants, brad and amina will follow with additional details. these issues have been compiled from various sf housing agencies, and the rent board and tenants and tenant advocates. tenants being forced to deal with this take up a large portion of their time and precious time. as we discuss these issues, it's important to state up front that we see a severe lack of enforcement of existing tenants' rights. renters in sf do not have adequate resource to enforce the laws, large landlords skirt the laws that protect tenants, and many tenants can't afford to hire lawyers to help protect them. furthermore most attorneys are
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unwilling to take such cases due to not being equipped to going up against large housing entities. tenant issues and violations have become backlogged while tenants suffer loss of protections. tenants are impacted by very real and serious threats to their health, safety and well-being by speculative landlord behaviors. these impacts include failing to adequately protect the health and safety of tenants including disabled tenants, the elderly, babies and young children including multiple reports of suspected lead poisoning, displacing tenants due to upscaling, turning
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apartment buildings with near full tenancy into assembly line construction sites for extensive periods, prolonging the completion of such projects due to mismanagement while tenants suffer under detrimental health conditions and various violations of their tenant rights. informing tenants they will be compensated for displacement and associated moving costs according to agreed upon terms and failing to compensate them accordingly or in a timely fashion. violating the sf rhenordinance and california state civil codes and disrupting various housing services, requiring tenants to sign away their tenants' rights in order to have reasonable rights regarding this be tenancy be met. violating tenants right to
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provide sigh by various means, and a lack of professional sponsor any to letters and verbal requests from tenants regarding a wide range of tenancy needs, concerns, and violations. we are also gravely concerned about the increasing erosion of sf's limited rent control housing stock by corporate real estate entities. and you will hear more about that in our presentation. we need to create new laws to protect renters and adjust existing laws in order to clarify, uphold and protect existing tenants rights to health, safety and well-being. our suggested response is a combination of holding these problematic actors accountable and preventing their unlawful and harmful business practices from continuing. at the end of our presentation, you'll hear some ideas on policy recommendations. thank you. >> supervisor sheehy: thank you. >> thank you, landra. my name is brad hearn with the
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housing rights committee in san francisco. in your packet, you should have a copy of the slide show and a brief on veritas investments in particular. if not, i'll give it to the clerk. there they are. okay. so i'm going to start our slide show, and amina and i will take you through this. so landra gave an overview of our themes today. this presentation was conceived and created by the veritas tenant campaign, myself and other tenants who are involved. veritas is featured in this presentation, but they're not the focus. we're also concerned about the practices of other companies. the major themes that we're outlining for you today is
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first the exploitation and violation of sf's rent ordinance, in particular, harassment of sections 39.10(b). number two, the hazardus construction practices that tenants are experiencing and the impacts on their public health and safety and the erosion of sf affordable housing stock through the loss of units through conversion to corporate housing. first just some preliminary findings. back in the fall of last year, housing rights committee conducted an initial kind of survey or focus group with about 75 veritas tenants. the full result are in your packets. just a couple results on this slide showing tenants great concern with the safety and health of their living environment. nearly half of participants reporting three day notices to pay for quit that seemed
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unwasu unwarranted, baseless or fair. and the third point, tenants universally claiming 100% of experience severe habitability issues in their units. the first major section on the weakening of rent control in sf's rent ordinance, this is a snapshot of a security and exchange commission loan document that i can share with you. this is an analysis of the s.e.c. analyzed one of the loans that veritas took out in order to buy a portfolio of buildings. not their entire stock in san francisco which numbers between 250 and 300, but this represents a set. so what we're seeing here is the enormous rent increase that occurs from a deeply stablized rent controlled unit to a market rate unit, and you can see on the third line there, the nonrenovated deeply
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stablized units are the rent controlled units. >> supervisor sheehy: and what is the basis for this? is this a loan pass through? >> sure. we'll be getting into that. it's a combination of -- pass throughs are a major component, yet. >> supervisor sheehy: thank you. >> but in addition to that, it also reflected that tenants are being displaced from their units. there's atrition of the rent controlled housing stock, so this also reflected that many of these documents as the loan documents in your packet shows were nearly fully occupied when they were bought, 97 to 100 is occupied, and then to see this kind of aggressive rent increase, because of significant pass throughs or tenants were constructively evicted, or self-evicted. the speculator model, key features that we're observing, an investment vehicle like
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veritas investments partering with large companies, this is actually from a rent board petition for an operating and maintenance pass through for a veritas building showing kind of the intricate financial arrangements that they're utilizing group. another key player in this are banks who are going to lend cash, in particular, jpmorgan chase and goldman sachs. landlords like veritas use an l.l.c. for every single building. this comes up in particular with some of the ellis act evictions that you'll be hearing about later. further on this, this is also a snapshot from a standard and poor analysis of a veritas
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loan. this entire analysis is in your packet and it shows first the breadth of neighborhoods that are being affected by this, from knob hill to the richmond, and on the very last column, that all of these buildings are affordable rents. they were below market. we've seen buildings with units that are occupied with long-term tenants are described and perceived as investment opportunities where superior returns can be achieved. and here, we have an example of a green tree notice for the -- what we call the aggressive bundling of pass through charges. companies like this have entire department and staff devoted just to pass throughs or they outsource it to third parties. there's a particular company in san francisco that specializes just in preparing the documentation of pass throughs. so what you see here is for our rent controlled tenants. this tenant has lived in their
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unit for, i believe, eight years and received all at once general bond, including banked general bond pass throughs from previous years, a water bond pass through, a proposed operating and maintenance pass through, which is what supervisor fewer's legislation is helping to address, and proposed capital improvement pass through for a total rent increase of 16%, which for a rent controlled tenant is definitely not what they expect. we're also seeing -- we've learned that at least moser, veritas and baumo utilize the same software. the issuing of three day notices is automated, and the system sends it out and tells the green tree staff that this
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notice should be posted on a tenant's door. again, with the ellis act, buying an occupied rental building and purchasing a rental building for the purpose of vacating the he lit act. >> supervisor sheehy: so what do they do with the buildings after they ellis act them? they don't rerent, right? >> well, attempts you'll hear from are concerned about the building sitting empty for maybe a period of time and then being brought back onto the market at much higher rents or being converted to condos. >> supervisor sheehy: okay. thank you. >> i'm going to turn it to --
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>> supervisor sheehy: so part of the strategy is to have an abandoned building for a period of time until everybody forgets. is that what you're describing? 'cause they're supposed to wait ten years. >> sure. there's certainly been a priri in vacant units. companies like veritas, we haven't seen that, but we wanted to mention it because the ellis act is used for a variety of reasons. okay. amina's going to take over with the second section now on public health and safety. >> hello. my name is amino rubio, and i'm a veritas tenant for 23 years. veritas performs extensive construction and demolition to their 250 buildings across san francisco. the following examples are
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common occurrences at veritas properties, and we are concerned with those practices persist under large other corporate landlords as well. on the photo on the left we see sewage in a bathtub cited by the department of building inspection for the notice of violation and left unaddressed for at least six months. while the tenant fought eviction to stay in his home. in the middle photo, it shows a mouse on a larger -- on a larger infestation caused by demolition in a veritas building. [inaudible] >> this, this is a mouse. it happened in my unit as construction was undergoing, and it made its way into my apartment. >> supervisor sheehy: you got through security with that? no, i'm joking.
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>> yes, i did. >> supervisor sheehy: i'm joking. >> so the middle photo shows another mouse, which was a larger part of an infestation caused by demolition in a veritas unit below union. and in construction, we always see mice. on the photo on the right shows an amount of a hazardous debris moved from the building to clear -- it's a clear indication that it is tommic. veritas -- toxic. veritas' internal policy it does not disclose environmental policy to tenants. here on the left, demolition above the unit caused a huge crack in the tenant's bathroom ceiling while the tenant was showering. this occurred last month. the tenant reports receiving a three hour notice to move herself and her disabled son out of the unit which was very traumatic.
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there on the bottom middle, construction caused a huge hole in the laundry room ceiling of a building, and a broken water pipe is sticking out of the wall of the building which disrupted water service for the at the pointants. in the next photo, demolition above the laundry ceiling caused the building to collapse which are next to pipes and could have caused an explosion. this results in disruptions to natural light, privacy, with tenants reporting many days and weeks that no workers were present. in my own building, i can say there have been many ongoing occurrences with demolition and construction. it not only affects long-term tenants but it also affected market rate rentals as well.
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i can say when i made veritas aware of some issues when there was construction going on, there was paint chips and saw dust, once i made them aware, i was illegally locked out of my apartment while still paying rent. thank you very much for hearing us and for the opportunity today. >> thank you, amina. this is our last section. here we have two shots of housing in a veritas building, looking very different from the units you just saw. >> that's short-term corporate housing, as well. >> go ahead. >> it's short-term corporate housing, which means these people are paying sometimes even higher than market rents permonth and are not, you know, staying in our city and
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contributing to the community here as much. >> yes, yeah. this is a review taken from a zeus living website. this is a website that veritas works with to do the short-term rental that was furnished. we're seeing this practice in multiple buildings. there at the bottom is a picture of the listing for the unit, and the month they rent them out for 4290 for a 400 square foot studio. and as of today, the office of short-term rentals has no permits on file for the building to be doing short-term rentals. and -- and in this slide, umm, a photo of around 21 and mission, a veritas property with several storefronts sitting empty. you can see the distinctive
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rent sf now sign, which is green tree veritas, and i believe we'll have representatives from mission business association here today maybe perhaps to speak, if they made it in time. they were coming from another meeting. and on the bottom is a map showing the proliveration of the veritas explosion in the city. >> there was a reason sf weekly article two about how these businesses left empty like this is causing problems for other businesses in the surrounding area and really changing the landscape of the communities in a negative way. >> so on policy recommendations, we're asking to support supervisor fewer's
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pass through legislation, urge the city attorney's office to investigate veritas investments and other speculative actors for violations of the rent ordinance and a harassment provision, section 37.1(b), amend san francisco health codes, require environmental health testing and disclose these results to tenants, all the tenants in the building undergoing renovation and demolition. create construction monitoring program within the department of building inspection, restrict conversions of rent controlled units under short-term units to short-term corporate housing, ellis act reform to form a mandatory staff initiated discretionary review that would provide tenants, landlords, neighbors and advocates an opportunity to create a record to allow for better tracking of our city's affordable housing stock. protect our long-term tenant
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commercial tenants who face displacement while vacant storefronts persist. and i would also add that all market rate renters that come into the building are made aware of the issues that are happening that have faced the long-term tenants, so they can make decision whether they want to move into a construction zone or not. thank you. >> supervisor sheehy: thank you. >> thank you very much. >> i'd just like to add something quickly. >> supervisor sheehy: no clapping, please. >> i just wanted to add something quickly, which is that we're seeing a part of large institution right lane real estate speculators and investors partnering with smaller companies in san francisco that are on the rise, and there's this kind of pattern of behavior even though we've only mentioned a few companies here, we're seeing people kind of look to that model because it's giving them, you know, great returns on their investment, and they are
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engaging in similar behaviors. and also, this large-scale construction that they seem to engage in is part of i think of a way of doing business that really doesn't work and is part of the problem because they are trying to do too many things at once. they took at all those homes in different buildings all over the city at construction sites, and they have these huge construction programs going on but there isn't enough over sight by the management about what's going on in each building 'cause they're just trying to do everything from the top down. >> supervisor sheehy: thank you. >> i'd like to add one more thing there. sorry. and when they do this demolition and construction, we have older buildings. it puts a lot of stress on the building entirely, on the whole building. so i would like to see construction limited in some way or stopped or give us a break. >> supervisor sheehy: thank you. do any of my colleagues have
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any questions for the presenters. i was going to ask some questions of some of the city departments that are here, but if you have questions before i do that? so i do see -- are you... >> we'd just like to submit some additional materials after the hearing's over, after the hearing's over. >> clerk: you can submit it to me. >> okay. thank you. >> supervisor sheehy: okay. do we have -- i saw someone get up. >> supervisor fewer: i just have one question that is, so have these tenants -- have you been hearing that tenants have been seeing any benefits from paying these rent increases? i notice that these rent increases that we have on our thing from green tree, these are all bond pass throughs. if we seen the tenant seeing
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any upgrades, meaning an upgrade in living? >> i can tell you, one capital improvement project that they did was to rip out all the windows in our entire building and replace them with exactly the same kind of windows. during that time, tenants suffered health and safety problems and all kinds of violations to their rights just to have windows exactly the same as they were before, and mine actually have latches and locks that are not as nice as the ones that are there before. again it's kind of this assembly line, we're just going to do this whole thing. it seems to me -- from my view so that they can claim they've done a capital improvement, but it isn't necessarily all the time. i'm guessing sometimes it is, but i'm thinking it's not all the time, too. >> supervisor fewer: and do they pass through the costs to the tenants? >> yes. i just got a capital
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improvements pass through last week, actually. >> supervisor fewer: so when you get that, do they ever reach out to you to work collaboratively with you? >> the only thing that has been mentioned in the notice to me it says if you have financial hardship, we can work with you to get help with that at the rent board. but this is still going to be a hardship for people who aren't going to be eligible for that, too because it's such a large increase. a lot of these pass throughs come at once, too. >> supervisor fewer: thank you very much. >> in our building, we've had a paint coat change, we've had carpet, we've had lighting. i don't believe that these are making my life better. i don't believe that the security cameras are making my life better, which are just installed. they're not just installed for security, they're installed to watch the tenants, they're installed to make sure the tenants are living in their units so many days peryear, and
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if we're not, then that evidence is used in court to evict tenants. so i don't think the things they're doing are beneficial. they have made repairs in the units, but the repairs also are done poorly, more than once, twice, and then have to be redone. and those repairs, when they're brought to the management's attention, we have to bring the date, the name of the company, and what was done. and then they can finally rhea ses in their minds okay yes, we have to do this differently. i've gotten to know my resident manager, all the construction workers, and i don't have my friends over because i'm afraid of them waking up to the staff that they're not aware of. every single day, somebody's coming into our space. >> supervisor fewer: so these capital improvements are pass through to the tenants, but beforehand, tenants really don't have a say into whether or not they want these capital improvements done. >> that's correct. >> supervisor fewer: okay.
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>> i actually asked they did not in my building because i have disabilities, and the nature and scope of the construction was going to affect my health. i said why can't you come in and do mine separately not on this assembly line system, and they refused. >> i'm sorry. we're not part of the conversation, what we would like or not like. >> supervisor fewer: just assessed. >> that's correct. >> supervisor fewer: thank you very much. >> supervisor sheehy: okay. thank you. so i did have questions for departments. do we have department of building inspection here -- or which departments do we have? i know planning. [inaudible] >> supervisor sheehy: rent board. okay. maybe we can start with the department of building inspections. thank you. >> thank you. >> thank you. >> hi. good morning, supervisors. my name is matt luten. i'm housing inspector, and i am representing department of
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building inspection today. i would like to apologize. i had 30 minutes notice of this hearing? so if there are questions, i'm happy to answer them specifically. >> supervisor fewer: sure, there are questions. >> supervisor sheehy: yeah, please. >> supervisor fewer: hello, meat. so good to see you. >> nice to see you. >> supervisor fewer: so i just want to know when an owner acquires a new building, what are the things that they have to do to bring it up to code? so when there's a transfer of ownership, does it require them to build -- to start to put everything up to code, what -- and what is sort of the enforcement mechanism around that? >> sure. i would say that the building is always required to be up to code. it doesn't -- the standard doesn't change when shall did-when it changes hands, so it's always required to be up to code. oftentimes, when a building does change hands, through title searches, prospective
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buyers will find that there are outstanding notices of violations, where the violations were just never corrected. and orders of abatement were issued which arelenes against the property that are just sitting there, waiting to be addressed. and in those cases, they are -- they are part of the process, i guess, of buying, that they will bring it up to code -- to address those violations in the notices of violation. >> supervisor fewer: so -- so then -- so you -- we could then kind of consider any investment in the property above what is required by code. would you say it's to increase the value of the property? >> yeah, that would be my assessment, yes. >> supervisor fewer: okay. and so then when tenants come and complain about violations, and we've heard some complaints today from tenants that they're
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not up to standard and that their quality of life has been diminished because of some of these violations, what is the process? so a tenant would first report that to their rent board or would they call dbi to come out and have an inspection? >> yeah. so tenants can always contact dbi. you can go through 311. it's a lot faster to go directly with housing code violation to contact housing inspection services directly? the number is 415-558-6220, and we will -- if you file a complaint, we will get back to you generally within 24 hours and setup an inspection appointment. we'll come out, look at any violations they want to show us or any conditions they want to show us, and we will make the assessment of whether or not it is a violation of the housing code. violations that we verify, we
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will issue a notice of violation giving the owner typically 30 days to comply to bring it correct, all violations. there's some variation when they are life safety hazards. we shorten the time frame for compliance. >> supervisor sheehy: yeah. so when the have the examples of people in units that are adjoining where construction take place, does dbi react to that if somebody's roof is caved in or other damage is done to someone's unit because there's construction happening next door? and then, how do you respond to that when that person is basically forced out of their home? >> i'm not sure of the question. >> supervisor sheehy: so if you look in the presentation, construction was happening in the unit above. >> right. >> supervisor sheehy: the roof opened up with a huge crack.
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the tenant was moved out. what does dbi do in those circumstances? >> so when we are notified that there is a condition like this, we will come out and verify that that's a violation, and that we will provide a timeline where it needs to be corrected. we don't -- we don't get involved with where the tenant needs to go? it is -- it's the owner's responsibility to always maintain code compliance? so they need to do what they need to do to correct the violations, and if that means moving the tenant out, then that's what they need to do. >> supervisor sheehy: does dbi measure the health aspects of some of these? as best owes, lead paint, we've heard of lead poisoning, rodent infestation, are those matters
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that dbi would come and -- >> yes, sure. there's a bunch of different -- certain things fall within certain people's jurisdictions? lead paint falls within housing inspection jurisdiction? so when there is -- there are practices of lead paint being removed, and we just assume that it's lead paint whenever we see it being removed. then we make sure there's proper containment, and if not, we issue notices of violation. generally for, like, hazardous work practices when there is construction happening, the permitting process that we have by people pulling building permits, electrical permits, plumbing permits, that process oversees the workmanship and violations there. so what was the other one?
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other, like, asbestos removal, there is a person who's specifically within the department of public health, environmental health that deals with that. if it's just rodents or creatures for lack of a better word, then that's also public health. >> supervisor fewer: so we heard today that there's -- they feel -- some of the tenants feel there isn't enough management over the construction sites, and that these companies that own 200 or 250 buildings, i mean, it's possible that they could have 100 construction site projects going on. does dbi see that these are the same companies, for example, one company might have -- be working on 100 construction projec projects at one time? does that raise a red flag at all to dbi or do we keep giving out permits to continue
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construction, continue adding, adding on, when we haven't -- or if we do any evaluation on how well those construction projects are being managed? >> yeah. that's a question that's beyond my -- my knowledge within the department. i think that the -- the building inspection division would be the people to go to for that. i'm just pretty limited to housing inspection. >> supervisor fewer: thank you. >> supervisor sheehy: so unless we have more questions from 2k3d bi, then perhaps we have -- i did have questions for planning, perhaps. i don't know if you want to take them from there or come up. >> supervisors, good morning. dan cider from the planning department. thank you for having us today. we're happy to provide or
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guidance when asked. >> supervisor sheehy: i just had a couple of questions. so is there anything in the planning process that looks at the impact of a construction project and large residential building, the impact of the tenants on the project? so when they -- they come before planning and say we want to do all this to the building, is there anything in the code that says -- that has any discussion about what the -- 'cause that seems like the place that may be best to try to -- and if there's not, then that becomes, obviously, a policy gap. if there's no mitigation of impacts or looking at the impacts of other tenants when a building is being remodelled while tenants are living there? >> so it's an interesting question. i think there's two, perhaps two answers to that. the first is that many of the -- in fact, the vast
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majority of the city permits that the city issues -- that the department of building inspection issues are not reviewed by our staff because we don't have a role to play. land use, urban design, these are typically the -- the areas in which we become involved, the physicality of a structure or a building. and a lot of what we've heard about is -- they're certainly very important issues, but they're not issues that are under our purview or review. and i think the second answer would be that because of that, you know, because the planning code is geared almost exclusively towards physical structures, buildings, uses, that it is by design not focused on necessarily residents, where perhaps the admin code or other parts of the municipal code address those issues better. >> supervisor sheehy: and so it doesn't come to planning for instance if you have a studio and they put a wall and turn it
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into a one-bedroom, that would not be a planning code issue? >> we do like to be -- i think aware is the right word, of changes of the bedroom count, but that would not be a planning issue. >> supervisor sheehy: so that would be a dbi issue? >> correct. >> supervisor sheehy: unless i have -- >> supervisor fewer: oh, i do have one question. today we brought up short-term housing and the office of short-term rentals are not catching some of these short-term corporate housing -- housing units. do we have any idea how widespread the problem is? >> one of the things we're working on is the office of development strategy. while i can't speak specifically for the office of short-term rentals, which understanding is a permit from that office isn't required unless rentals are occupancy is less than 30 days. that's what the administrative
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code requires as sort of a threshold in those cases. it doesn't mean the issue is any less relevant, but the regulatory context is what's different. >> supervisor fewer: so you're saying if it's less than 30 days, it goes under the office of short-term rentals, the permit. >> that's correct. >> supervisor fewer: so do we give any kinds of permits out through housing to corporate planning that goes to housing for two or three months. >> our department regulates housing in general terms only as a hotel use or as a permanent housing use, if you will, while -- >> >> supervisor fewer: could be a loophole here. >> there's certainly different ways of looking at it. certainly folks use that as a loophole, and if this body was contemplating a way to address corporate housing in that, that's something we would like to sit down and have a long discussion with. >> supervisor fewer: and
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considering vacancies of these buildings, when a corporation owns so many buildings and so many vacant units, if you own a place, like a mom and pop that owns only four units in a building, then if you're losing rent on one, that's substantial. but i think these corporations can actually absorb some vacancies. do we have any idea how many vacancies one corporation has within their portfolio? >> again, that's a great question. we hope to get a flavor for that baysed on our housing affordability studies. one of our cases and issues that we've been looking at is that oftentimes, ownership structures are often difficult to parse. a single entity is difficult to discern. >> supervisor fewer: so if we were just to look at green tree, for example, and we would see all the green tree
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properties, we wouldn't be able to, though, know, how many vacancies are there within their portfolio because we don't actually have them -- we don't require them to list vacancies within their apartment buildings, is that correct? >> the planning code does not require the folks publish or lit any vacancies. there's a subtle but important difference between property owners and property managers. it's very relevant to this discussions, but the regulatory issue is not the proper tool to get into this today. >> supervisor fewer: if -- i think it's very easy to mask when he own 200 or 250 buildings that -- it's easy to have a lot of vacancies, and maybe these short-term corporate housing units also are really -- should be classified as vacant units if
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they're renting them out for only a couple of months a year or whatever, and it looks like this is a really big loophole here about the corporate housing. okay. thank you very much. >> thank you. >> supervisor sheehy: thank you. and then, can we hear from the rent board. >> good morning, supervisor sheehy, supervisor ronen, supervisor fewer. thank you for allowing us to be here. i'm robert collins, i'm the rent board's executive director. i'm here for any questions, and if you want me to present anything, i'm happy to. >> supervisor fewer: i have one question. >> sure. >> supervisor fewer: if i may. is that we've heard about bundling, and i think we've seen the bundling of so -- for rent increases. so what i'm seeing on this chart presented to me, it looks
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as if there were some pass throughs that maybe previous owners did not pass through to the tenants, but then the new owners can actually capture that. so even though they didn't pay before, it was the previous owner that didn't -- that actually absorbed the cost and didn't pass through, and now, these new owners have just bought a building, and they're looking and saying gee, this hasn't been passed through, now we can pass through all of these, is my describing it correctly? >> yes. i think that is sort of the lay of the land if you would, when it comes to residential property ownership. typically, the new owner steps into the shoes of the old owner and would be able to take advantage of any prior increases that were not effectuated by the old owner in banking or keeping certain pass throughs that could then be kboesed.
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at the same time, they would also be responsible for any illegal rent increases that the prior owner effectuated, so they could be on hook for returning moneys that they never collected but a prior owner collected. so it goes in both directions. it's basically -- you can sort of thinking it as selling the business, and the business is still responsible, and so there's liability and also rights that come and are associated with that, but that is correct, that is the general way in which it works. a prior capital improvement can be passed through by a new owner, for example. or like the examples that you've given, banking or previous pass throughs that were not utilized can be utilized by a future landlord. >> supervisor fewer: and does those pass throughs -- so what i'm looking at in this actually sample of it is is that it actually increases the permanent based rent for every tenant, is that correct? >> well, that's a matter of which pass through.
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so you -- supervisor fewer, you're describing a situation that we've seen quite a bit with changing in ownership of property where an owner will come in and try to take advantage of as manies these pass throughs as possible, so you have these lengthy notice of rent increases on tenants that comprise a variety of different mechanisms to increase the rent. some of them are base rent, and some of them are one time. so it could be a multimonth pass through or multiyear pass through. so to give you an example, the annual allowable increases the base rent, an l and m approved pass through would increase the base rent. water revenue pass throughs, water bond pass throughs, utility pass throughs, rent board fees, security deposit interest rate changes or reimbursements, all those do not increase the base rent. in the case of the bond measure
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pass throughs, they're typically there for one year and then would be required to be discontinued the next year. >> supervisor fewer: so are you seeing that -- that these corporations are actually doing this? i mean, like, they are actually -- okay. okay. so full disclosure, i'm a property owner. i own a pair of flats in the mission, and i don't do any of these pass throughs, quite frankly. i don't even keep track of them or even know that i can. so i'm wondering, are we seeing that these pass throughs are mainly used by corporate landlords? >> sure. so i did pull together some data for the -- specifically for veritas green tree properties, and during the past three years, we, the rent board granted 59 capital improvement petitions involving 1,100 units, about 1,100 units.
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by the way, the figures i'm provided you, all of these units are sort of owned by different l.l.c.'s, but the i am in as we could pull, we had 59 capital improvement permits that we approved on 1,100 units. about 37 tenants filed for hardship from those capital improvement increases. we also granted 40 petitions involving 552 units based on increased operating and maintenance expenses in the last three years for veritas green tree properties. out of those, mostly -- they were mostly due to increased debt service and property tax increases as a result of the recent change in ownership. 96% of the 552 units received the maximum 7% allowable under that petition process, and the other 4% did not receive the
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full maximum. 36 tenants in those units filed for hardship relief from the rent increases, and so that gives you, i think an idea of the ones that we have. and i can also give you the separate figure for the number of hardships that we see for other kinds of pass throughs. >> supervisor fewer: just to make sure i understand that correctly, of the operating maintenance pass throughs, this is just veritas. >> yes. >> supervisor fewer: -- 96% of the units had the max, 7% allowable increase. >> that's correct. >> supervisor fewer: is that what you're telling me? >> supervisor fewer, that's correct. 96% would probably have been at or above the max, and only 4% were below the max of 7%. >> supervisor fewer: okay. thank you very much. >> thank you. >> supervisor ronen: i just had one follow up question if that's okay. i was just curious -- so for
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capital improvement grants, or pass throughs, i understand for the bond pass throughs that that's time limited to about a year, but for capital improvements, those are permanent, even if -- go ahead. >> right. so -- no, it's -- you can see why, i think a big question we get from tenants in these buildings are, what is this? i thought my rent increase was going to be 1.6%. there's all these things, and it's a lot more than 1.6%. not in those terms. there's usually a lot more frustration associated with it. the cap pal improvement pass through -- it has different periods. we had proposition h in 2000, and the court overturned that, and then a bunch of compromises which led to a much more complex law. but in essence, you're looking at 7, 10, and 20 year
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amortization periods, and then you'll be asked to pay that. >> supervisor ronen: okay. thank you. >> supervisor sheehy: so somebody buys a building and it's assessed at a higher rate, somebody can pass -- the new owner it pass that through to the tenants. [inaudible] >> -- so if that in conjunction with any other expenses -- any time, really, that a building has an increase in expenses from one consecutive year to another, the landlord is allowed to petition the rent board for an additional pass through on those units up to an additional 7%. and so some portion of all those expenses could be passed onto tenants. in some cases it's all based on unit counts, in some cases it's a portion of debt increase
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property tax, management repairs, garbage, it's a totality of the expenses for the building. >> supervisor fewer: but a clarification, operating and maintenance expenses actually in the petition, it's really about debt service and property taxes the incorrection in it, because landlords -- but landlords are able to write off their property tax, isn't that correct? >> supervisor fewer, i can o y answer from the rent control perspective. i don't feel comfortable commenting, but from a rent board perspective, the landlord -- you know, most of the operating maintenance petitions that we see are generally the result of a change in ownership because that is what triggers. so the landlord gets generally an increase of 60% of the consumer price index, and then, the way that it's structure is -- and that covers most increases that you'll see in a
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garbage bill, for example, because that covers a lot of koogs. so the vast majority come in when there's been a change of ownership because you would have two or three big categories to change, debt service, finances, and property management. i have an idea, but i don't want to answer the question. >> supervisor fewer: i mean, that's true, you can write off your property tax. the renters can't write that off, but the owners can. >> supervisor ronen: thank you. thank you. thank you so much. >> thank you. >> supervisor ronen: i just -- unfortunately, i had a prior commitment. this is a special meeting today, so i'm going to have to leave in about five minutes. i will go back and watch the rest of the public comment 'cause there's so many of you here, and i really want to hear your experience, but i just wanted to apologize to you and thank you all for coming out today. >> supervisor sheehy: thank you. so if there are no further questions for colleagues, before i open up to public comment, we did reach out to
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veritas. i don't know if somebody from veritas is here. yeah, you're welcome to come up if you want to respond to any of the things that have been raised today. it's up to you, if you guys want to -- or we can go to public comment, either way, but i did want to give you an opportunity. [inaudible] >> supervisor sheehy: okay. that sounds fine. okay. then we will -- i'll open up public comment and let me just read off some of the names. and public comment will be one minute because we have a great many speakers. >> supervisor fewer: you actually also have an opportunity to come on friday if you'd like, also. >> supervisor sheehy: there'll be another hearing on friday. so i have pamela ginsburg -- respond. [inaudible] >> supervisor sheehy: you guys, i don't know.
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i was going to give you more than a minute, but did you want to respond now or after public comment? [inaudible] >> supervisor sheehy: yes, so -- well -- well, okay. okay. before -- you're in public comment now, so -- so that's fine? so we'll -- i'll reopen public comment in a second. >> good morning, supervisors. my name is justin sato. i'm the chief operating officer of veritas investments. i'm responsible for overseeing the daily precisions of veritas investments and its company green tree property management. i joined the leadership of veritas six years ago when we were 20 employees and monitored its growth. i've lived in san francisco, i've raised a family in san francisco and am an active member of the community. i give you this background in support of our statements oz
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our behavior and our character is being challenged publicly here today. one of the last times in this room, we were sepg the good samaritan award for work in housing displaced tenants whose homes had caught on fire. each time this city and its supervisors have reached out to us for assistance, we have responded, willingly and without hesitation.
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>> during my 15 years in san francisco property management, i have seen and witnessed the behavior the of owners you say we are, and i can say that we are not it. veritas's birts building was purchased in 1973, a building we still own today with no plans to sell it. most of our employees are residents in this city and residents in our buildings. we understand the concerns by some of our residents over the disruption some of these
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improvements create. i have personally lived through this type of work in the building i live in through soft story retrofit. however, it's all to make our homes safer and more comfortable. we are committed to the community and our residents. we strive to improve the level of communications with our residents each and every day and have made significant progress over the years. there will always be critics, however, criticism over our character and our intentions are unjustified. we are far from speculative on san francisco. in fact we are members and residents of san francisco with a goal of making it a better and safer place for us to live. thank you for your time. >> supervisor sheehy: well, just a question or two. i guess when i see tenants of the building leaving a building because they don't have water for 30 days or they don't have a working fire escape, just the burden of construction, what is the response to that? >> so the building you brought up specifically, 1064 delores,
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when we purchased the building, it had significant dry rot on the exterior. the fire escapes that you refer to are actually balconies that residents use to as part of their apartments. never did they not have access to their fire escapes during the construction. we did ask them not to use the balconies of their apartment when we address the dry rot repairs. when you do that, you have to erect scaffolding in order to do so. the issues with the windows, we have had a couple of window projects throughout the years, and the reason you do window replacement, is because of water intrusion. we replace windows with like kind because that's what we're obligated to do. we go through the planning department and as they do, like to preserve the look and feel of our building. so we replace windows with what
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was there, but we wouldn't do that unless it was absolutely required because it was some kind of of water intrusion issue. >> supervisor sheehy: i just want to say, i think the speculation thing here isn't about you buying buildings and selling them, it's about you buying buildings, moving tenants out and having dramatically higher rent. so the speculation seems to be a model that people are alluding to, it's a model where you come and do construction, the construction's done in such a way to make the units basically unlivable for the people living there. they leave, and you rerent it at market rate. i just want to talk to you about it speculation. >> that i say not based on -- that is not actual data, that is theoretical data through an underwriting model. he likes to use that as an example, that model, that's not because of pass throughs or any other things that we're doing,