By Dominic Fracassa : sfexaminer – excerpt
…In San Francisco, like many other cities, when the various costs of running an apartment building outpace the annual allowable rent increases set by the city’s Rent Board, landlords can request to pass on a portion of those expenses to their tenants.
But in recent years, a pattern involving these so-called pass-through expenses has emerged that’s causing alarm among tenants-rights organizations. Landlords, particularly large property management companies, increasingly are passing on the costs of their debt service — payments on the loan taken out to buy the building — and property taxes to tenants.
That could soon change. Tenants-rights groups, including the Housing Rights Committee of San Francisco, the Tenderloin Housing Clinic, the San Francisco Tenants Union and Legal Assistance to the Elderly, have secured a commitment from Supervisor Sandra Lee Fewer to sponsor legislation to eliminate debt-service and property tax pass-throughs.
“It’s time for San Francisco to eliminate debt service as a justification for rent increases,” Fewer said. “Large corporate landlords that are purchasing residential buildings don’t need incentives to immediately burden their rent-controlled tenants with exorbitant rent increases. By closing this loophole, we will help keep our rent-controlled housing affordable and prevent greed-fueled displacement.”….
San Francisco is the only major city in the Bay Area that allows landlords to pass through their debt obligations to tenants. The practice is prohibited in Berkeley, Oakland and San Jose, which did away with its debt-service pass-throughs last year…(more)