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Supervisors urge Rent Board to tighten 'reasonable reliance' standard as tenants protest Veritas pass‑throughs
Summary
The Board passed a resolution urging the Rent Board to adopt clearer, objective guidelines for the 'reasonable reliance' test used in operating and maintenance pass-through petitions. The vote followed extensive public comment from tenants who said Veritas Investors has pursued disproportionate pass-through rent increases on long-term residents.
The Board unanimously adopted a resolution urging the San Francisco Rent Board to adopt fair and objective guidelines for the use of “reasonable reliance” when evaluating operating and maintenance (O&M) pass-through petitions.
Supervisor Brown introduced the resolution and said the goal is to protect renters by clarifying whether a property owner “did in fact reasonably rely on their ability to pass through costs when they decide to purchase the building.” She urged the Rent Board and colleagues to develop objective criteria for determining that reliance.
Supervisor Feuer recalled that she authored February legislation banning pass-throughs of debt service and property tax increases tied to purchases of rent‑controlled buildings after April 3, 2018, except in cases where the owner can show they reasonably relied on the pass-through at purchase. She said the Rent Board’s interpretation of “reasonable reliance” has been too lenient and the resolution seeks to align Rent Board practice with the ordinance’s intent.
The item drew extensive public comment from tenants and tenant advocates describing multiple buildings where they said a landlord group, Veritas Investors, sought O&M and capital improvement pass-through increases. Speakers said tenants faced large rent hikes, confusing ledgers, and reduced services, and urged the Board to press Veritas to drop the increases. Tenants described long-term residency, language-access problems communicating with management, and requests that the company disclose its financial justification rather than requiring tenants to submit sensitive hardship information.
Supervisor Peskin and others noted the Board’s passage of the measure and expressed support for tenants seeking relief. The resolution passed without objection.
The Board did not impose a moratorium in this action; the measure is a request to the Rent Board to adopt rulemaking clarifying the reasonable reliance test. Several tenants said they would continue advocacy if landlords do not withdraw challenged pass-through petitions.
