Are You Getting The Most Income From Your Properties? An Overview of Rent Board Passthroughs

Though the San Francisco Rent Ordinance tends to favor tenants by suppressing rents, there are ways to increase a tenant’s rent legally through Rent Board petitions.

  • Capital Improvement Passthrough
  • Operating And Maintenance Expense Increase
  • Special Circumstances Increase Based on Rents for Comparable Units
  • Rent Increase Based on the Past Rent History of a Proposition I Affected Unit
  • Utility Passthrough

Though most types of passthroughs require filing a landlord petition and subsequent hearing, there are two passthroughs that no not require landlord petitions:  the general obligation bond measure passthrough and water revenue bond passthrough.

These passthroughs only require that the landlord use the worksheet forms provided by the Rent Board to calculate these rent increases. And are therefore, relatively easy ways to increase your income stream.

Water Revenue Bond Passthrough

A landlord may pass through to tenants 50% of the water bill charges attributable to water rate increases resulting from bonds authorized at the November 2002 election.

Starting July 1, 2005, water bills prepared by the San Francisco Public Utilities Commission, detail the charges that are eligible for passthrough.

The landlord may base the calculation of the Water Revenue Bond passthrough on a single water bill, or on all the bills for any calendar year.  I recommend the latter, since it will require only one petition each year, as opposed to six (for each bi-monthly bill).  If the landlord elects to calculate the Bond Passthrough on a calendar year, the passthrough must be imposed at the time of the annual rent increase, and must be served with thirty-days notice, or 60 days, if the total passthrough combined with any other rent increase is more than 10% of the tenant’s current rent.

Bond Measure Passthrough

A landlord may passthrough to tenants 100% of the landlord’s property tax bill increase resulting from the repayment of general obligation bonds approved by voters between November 1, 1996 and November 30.  For general obligation bonds approved by voters after November 14, 2002, the landlord may passthrough 50% of the increase.

Only tenants in residence as of November 1st of the applicable tax year are eligible for the Bond Measure passthrough.  The passthrough must be imposed at the time of the annual rent increase, does not become part of the tenant’s base rent, and must be discontinued after 12 months, at which time the landlord would send them another notice of increase based on the current year’s allowable passthrough.

While researching this article, I wondered if filling out the Bond Measure passthrough paperwork would be worth the monetary return, so I filled out the worksheet for our property at 3232 Mission Street.  The form was very self-explanatory and took me about 3 minutes to fill out.  The result was a $6.23 monthly passthrough, which adds up to $74.78 per year.  Not bad for three minutes work.  While I realize $74.78 isn’t much in the scheme of things, since we have a rent controlled tenant, it actually translates to about a 10% increase in their rent for that year. Plus, in a city where I feel landlords are placed at the beck and call, I’m willing to take what little I can get.

For more information, please visit these Rent Board sites:

Water Bill Passthrough Information

Water Revenue Bond Passthrough Worksheet

Bond Measure Passthough Information

Bond Measure Passthrough Worksheet