The Property Management Shop
by Marc Wilson
Q. A couple of months ago I received a notice of violation from the Department of Building Inspection (DBI) concerning peeling paint in front of my eight-unit apartment building. We immediately hired a painter and painted the entire property. Later, we petitioned the Rent Board for a capital improvement passthrough and associated rent increase for the paint job, a new water heater and some other capital improvements performed over the past three years. One of our tenants showed up at the hearing with copies of the files from the DBI. She produced a copy of the notice of violation and subsequent abatement concerning the peeling paint. She argued that the petition for the paint job should be denied because the property received a notice of violation prior to the commencement of the work. Apparently, the Rent Ordinance has a provision that deals with whether a notice of violation was received prior to the work. This provision might affect our ability to successfully petition for a rent increase. I have not received the Administrative Law Judge’s decision. The Administrative Law Judge seemed quite interested in the notice of violation. Is the existence of a notice of violation a defense to a capital improvement petition?
A. To a large extent, Rent Board hearings are educational seminars for ignorant tenants. Your average disgruntled tenant shows up at a Rent Board hearing without having the common decency to have read the Rent Ordinance. He or she usually arrives with a bad attitude, greed, fear and absolutely no supporting documentation concerning his or her claims—all a sure recipe for a fun-filled afternoon. At the hearing, he/she will voice each and every imaginable objection, no matter how utterly ridiculous, to your request for a rent increase. Believe me, I’ve heard it all. Sometimes, what should have been a five-minute hearing deteriorates into a two-hour dog-and-pony show, orchestrated by the tenant. He or she is allowed to “trot out” groundless objection after objection without any consideration for the Rent Ordinance, evidence, facts or the law. The tenant does not do these things on purpose, but rather he/she is simply ignorant of the Rent Ordinance and has no consideration for the value of your time. The Administrative Law Judge (formerly known as a “Hearing Officer”) wants to provide the tenant, as well as the property owner, every opportunity to say what each needs to say, which means the tenant is free to ramble. Administrative Law Judges are paid by the hour and, as a result, there’s no real incentive to keep the hearing on track or to minimize irrelevant discussions. What does all this mean? It means you have to be patient at a Rent Board hearing. I’m not talking about the normal, run-of-the-mill kind of patience here. I’m talking about the patience of Job—please consult your Bible for more details.
There is a section in the Rent Ordinance that addresses deferred maintenance, notice of violations and their relationship to capital improvement petitions. For example, I understand that if you have rotten wood siding that could have been preserved over the years with normal maintenance (i.e., painting), and you then receive a notice of violation concerning this condition, you might very well not prevail in a capital improvement petition for the replacement of the siding. Why? The answer is that if you had maintained the building by performing routine painting over the years, you might not have had to replace the wood siding. The Administration Law Judge will try to determine whether the item replaced was, in fact, at the end of its useful life. Apparently, the existence of a notice of violation before the work is completed is bad news for the property owner because it is considered evidentiary of deferred maintenance. I don’t think you have this problem. What maintenance was needed to prevent your paint from peeling? Your paint is not peeling because of something you did not do previously. The tenant’s defense will not and should not be considered by the hearing officer.
I don’t understand the relevance of a notice of violation with regard to capital improvement petitions. A notice of violation should be supporting information for the owner, not the tenant. The owner is doing the work because it needs to be done. The notice of violation is just more evidence of this fact. Notices of violation are served by the Department of Building Inspection as a service to tenants and owners, and they are served for the safety of all of us. Why use them as an opportunity to profit? You are not a bad person if you receive a notice of violation. If I were a building inspector, there is not a single piece of property in San Francisco that I could not find at least one justifiable cause for a notice of violation—including the office of the Department of Building Inspection. Why should this department be put in a position of unfairly benefiting tenants? DBI works for all of us. Why place owners in a position where they fear the Department of Building Inspection? I used to consider routine DBI inspections as good opportunities to inspect the property and insure safe premises. Now, I have to be afraid that they might invalidate a capital improvement petition? Besides, if you skip three paint jobs and the siding rots away, is the cost to replace some of the siding more than the cost of the three paint jobs? Would the capital improvement petition for three paint jobs exceed the petition to replace part of the siding? I don’t think so.
The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of the SFAA or the SF Apartment Magazine. Marc Wilson has been managing and selling San Francisco apartment buildings for over 15 years. Please send your questions concerning property management issues to Marc Wilson at 1699 Van Ness Avenue, SF, CA 94109. He can be reached at 415-229-1275. © Copyright 2002.