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At San Francisco City Hall recently, Supervisor Sandra Lee Fewer targeted operational and maintenance pass-throughs — O&Ms — with legislation that invalidates debt-service and property tax pass-throughs on operating and maintenance petitions filed at the Rent Board on or after Dec. 11, 2017. Unfortunately, the legislation passed is to become law.
Prior to Fewer’s legislation, San Francisco landlords were able petition the Rent Board to pass portions of their property tax bills and debt service to tenants. If their petition was approved by the Rent Board, landlords could raise rents permanently by up to 7 percent on top of the annual allowable increases.
Charley Goss, government affairs manager for the San Francisco Apartment Association, told the San Francisco Chronicle that debt-service and property tax pass-throughs were an essential tool landlords rely on to keep their operations going in such an expensive city. “This has been a vehicle in San Francisco that we feel has helped members maintain their buildings and keep people investing in private property in San Francisco,” he said.
We agree. Gaetani knows these pass-throughs were important for landlords — especially owners of smaller multi-unit properties — to recoup their costs and investments in a property.
The new legislation prohibits property owners from adding fees to rent-controlled units due to an increase in property taxes or debt services. Additionally, the legislation calls for stricter review of other pass-throughs.
Managing the increasing complexity of O&Ms is one of Gaetani’s specialties as the premier property management company in San Francisco. For expert information about navigating these changing waters — and making sure you recoup everything to which you are entitled — please contact us.