RMC Passthrough Petitions

Understanding Rent Board Passthrough Petitions: 

How to get paid back for necessary property expenses
Have you made an improvement to your property in the past 5 years?

You can recoup 50-100% of your investment up to 5 years back Why is this great for you? You get to legally increase rents for necessary improvements

What types of Pass Throughs do we offer?

Capital Improvement Passthrough
100% allowed for 5 units or less
50% allowed for 6 units or more

Operating And Maintenance Expense Increase
One-time, permanent 7% base rent increase

The Do it yourself (D.I.Y.) Pass Through Petition Process (In Brief)
D.I.Y. Pass Through Petition Process
Send the completed package to the Rent Board
Attend hearing with Administrative Law Judge
Receive final ruling from the Rent Board:
minute order
final ruling

D.I.Y. Process: An Example Story

Property owner Smith owns a 10 unit building that needs a new roof. She goes to two reputable roofing contractors to get two competitive bids. The first bid is $55,000 and the second is $50,000. She goes with the lower bid but makes sure that they both reflect the same scope of work before proceeding with the project. 

She signs the contract and gives the roofer a check for the deposit. She goes online and downloads a copy of the cancelled check, including the front and back images, immediately and keeps it in her file. After the project is complete she inspects the work and pays the balance of the contract price. She gets the cancelled check and puts it in her file.

Let’s talk numbers:

She downloads the proper form from the Rent Board’s website and inputs her tenants’ information as well as the necessary information about the work completed, the cost of the project and the interest rate. Since her building has 10 units she only gets to pass through half of the cost of the project, or $25,000, to her tenants. (100% pass through is allowed for buildings up to 5 units). 

Property owner Smith used cash to complete the project so she gets the imputed interest rate (allowable interest designed to compensate Property owner Smith for the fact that the tenants pay her back over 10 years instead of all at once) added to this 50% project cost of $25,000. For 2015-2016 this rate is 2.6%, or an annual factor of .00947 (these numbers are provided by the Rent Board in their forms). The project cost of $25,000 x .00947 x 120 months (10 years) comes out to $28,410. 

How to calculate the allowable monthly rent increase per tenant
Mrs. Smith now divides this allowable project cost by the number of tenants who were residing in the property for at least 6 months as of the date the project began. Since all of her tenants meet this criteria she can pass through $2,841.00 per tenant ($28,410 divided by 10 tenants) over 10 years or $284.10 per tenant, per year. This equates to a monthly rent increase of $2,841 divided by 12 months per year or $23.68 per tenant per month.

Tenant Exceptions provided by the Rent Ordinance
The Rent Board’s rules and regulations provide for a variety of exceptions to the imposition of these increases. The maximum amount of rent increase is 10% of a tenant’s rent in any given year. If your rent increase amounts to more than 10% of the tenant’s current monthly rent you can impose the first 10% in year 1 and the remainder, up to another 10%, in year 2, and so on. 

Before proceeding D.I.Y. route, keep in mind:
This process takes a total of 6-12 months
High organization needed
No guarantee of your petition’s acceptance
This process can be confusing and stressful

Or Let RMC do the dirty work for you.

If you hire RMC to represent you at the Rent Board you’ll receive a 100% Money Back Guarantee. You get a full refund if your petition is rejected by the Rent Board after two unsuccessful submissions.

RMC’s Turn-key Rent Board Pass through Service Turn-Key Pass Through Pricing
$500 Petition Evaluation and Income Projection
$1,500-$3,000 Preparation of Petition (fee based upon size and type of petition)
30% of the first 12 months of revenue from your petition due upon approval by the Rent Board.

RMC’s Turn-key Rent Board Pass through Service
100% Money-Back Guarantee if we can’t deliver an approved pass through for you after two attempts.

Calculation of ROI with RMC’s Turn-Key Service: 

Example
10 Unit Building—$50,000 roof job, paid in cash:

$28,410 Gained (50% PT > 5 Units)
$25,000 + $3,410 imputed int. for cash payment

Unit Rent increase is $2,841/yr or  $23.68/mo

For more information visit us online at www.RMCsf.com or Call (415) 821-3167

RMC’s Turn-key Rent Board Pass through Service 

Completion Level Descriptions

90-100%

• You have provided all or nearly all of the necessary paperwork including:
• The original proposal from the contractor
• A qualified competing bid from a different contractor covering an equivalent scope of work OR the original proposal is billed on a time-and-materials
• All invoices for progress payments
• Copies of all canceled checks including the front AND back showing cancelation
• For mandatory seismic retrofit projects ONLYSF DBI Permit Application and signed job cards
• Final Certificate of Completion (mandatory for seismic retrofit projects)

80-90%

You are missing minor portions of the paperwork above but it is clear that you will be able to obtain the missing documents.

You are missing a competing bid or your proposal is not on a time-and-materials basis.

You will likely need to hire the Rent Board’s estimator and pay the fee to verify that cost of the work was acceptable. This will delay your petition but should not affect the success of your petition.

70-80%

You are missing significant portions of the paperwork required for your petition to be approved.

You will likely need to hire the Rent Board’s estimator and pay the fee to verify that cost of the work was acceptable. This will delay your petition but should not affect the success of your petition.

Under 70%

Your paperwork is incomplete and cannot be considered for submission until the items listed have been provided and evaluated for acceptability by the Rent Board.