San Francisco Sun

Legislation recently passed amending the Rent Ordinance to stipulate that General Obligation Bond Passthroughs from landlords to tenants must be calculated based on the property tax rate increase due to general obligation bond repayments since the tenant’s move-in date (or Tax Year 2005-06, whichever is later). The legislation also permits tenants to seek relief from the entire Bond Measure Passthrough based on financial hardship. These amendments will take effect on June 10, 2024, and apply to Bond Measure Passthroughs effective on or after July 1, 2024.

The Rent Ordinance traditionally limits rent increases for residential tenants but allows landlords to pass through a portion of property tax changes resulting from certain general obligation bonds ("Eligible Bonds"). Specifically, landlords can pass through 100% of the change in property tax from bonds issued by the City between 1996-98; 50% of the change from bonds issued by the City post-2002; and 50% of the change from bonds issued by the San Francisco Unified School District or San Francisco Community College District post-2006. The Controller calculates an annual citywide passthrough rate based on property tax attributable to Eligible Bonds. Landlords are not required to petition the Rent Board for approval but must use its Bond Measure Passthrough Worksheet and provide it along with a written notice of rent increase.

The new legislation alters how tenant passthrough rates are calculated. Instead of using a standard passthrough rate for all tenants based on total Eligible Bonds under repayment, landlords must now identify a specific passthrough rate for each tenant based on their move-in date. Each tenant’s passthrough rate is determined by comparing how much the portion of the property tax rate paying for general obligation bonds (the “Bond Factor”) has increased between the current year and either their move-in year or Tax Year 2005-06, whichever is later. If there has been no increase in this period, no Bond Measure Passthrough applies. If there has been an increase attributable to Eligible Bonds, that portion may be passed through to tenants.

The Rent Board has updated its worksheets according to these changes to assist both landlords and tenants in calculating individual tenant passthrough rates. These adjustments only affect Bond Measure Passthroughs effective from July 1, 2024 onwards and do not impact those already in effect before this date.

Additionally, tenants may file a Tenant Financial Hardship Application seeking relief from payment of General Obligation Bond Passthroughs.