SF Rent Control Board Rules That Villas Parkmerced's "Bonus Bucks" Rebate Coupon Scheme Violates Rent Control, as Tenants' Class Action Suit Contends
SAN FRANCISCO, CA -- October 17, 2006 -- The San Francisco Residential Rent Stabilization and Arbitration Board ruled on October 17 that The Villas Parkmerced, one of the Bay Area's largest apartment complexes, has violated the city's rent control laws with its use of a "Bonus Bucks" rebate coupon scheme. This ruling comes just weeks after tenants filed a class action suit in San Francisco Superior Court looking to restore their rents to the legal maximums, for restitution of the unlawful rent increases, and damages.
The Rent Board's ruling upholds a Rent Board Administrative Law Judge's September 20th decision that The Villas Parkmerced's scheme was a "contravention" of the city's rent control law.
Plaintiff's firm Brayton Purcell represents the tenants in the class action suit, titled Franklin v. The Villas Parkmerced, et. al.
According to the class action suit and the tenant petitions filed with the Rent Board, The Villas Parkmerced routinely uses a rebate coupon gimmick to obscure the true base rent charged tenants upon initial occupancy. Tenants sign leases that state a significantly higher rent price than what they actually pay. This allows Parkmerced to raise the rent 20%-30% after one year, when the laws of rent control only allow a 1%-2% increase.
This violates San Francisco's Rent Control Ordinance, which allows a landlord to raise the rent on a unit to market rate when it becomes vacant and a new tenant moves in; once this new rent is determined, however, the rent is again controlled during this tenant's occupancy.
"We are gratified but not surprised that the Rent Board confirmed that The Villas Parkmerced is not allowed to 'contract around' rent control," said a Brayton Purcell attorney. "The fact of the matter is that, in April of 2004, a Rent Board decision called 'Ora Linder' ruled against The Villas Parkmerced on this same exact practice. And yet The Villas Parkmerced kept doing it because the Rent Board jurisdiction is very limited and only extends to the particular tenant who brings the petition. That's why we brought this class action: to obtain relief for all tenants and former tenants who have been injured by this practice. We are confident that the Superior Court will agree with this decision and uphold the patent illegality of the 'Bonus Bucks' scheme."
Brayton Purcell cited the two named plaintiffs in the class action, David Franklin and Derek Tanguay, as an example of how the "Bonus Bucks" scheme works. The two tenants agreed to rent a unit for $1325 per month in September of 2005. The Villas Parkmerced arrived at that rent by creating both a lease document that stated a monthly rent of $1675 per month, and a second document, an addendum to the lease, which issued 12 coupons called "Bonus Bucks" that deducted $350 per month from the purported $1675 monthly rent to arrive at the $1325 actual rent. Under the rent control ordinance, this year a landlord charging $1325 a month rent would have been able to legally raise an existing tenant's base rent by only $22.52 (1.7%). Instead, effective October 1, 2006, The Villas Parkmerced raised these plaintiffs' rent from $1325 to $1703 (28.5%).
According to Brayton Purcell, numerous Villas Parkmerced tenants were forced out of their homes in the face of such exorbitant rent increases, resulting in illegal eviction under the Rent Control Ordinance. The damages suffered by this subclass of plaintiffs include moving costs, increased rents they were forced to pay for new apartments, emotional distress, and treble and punitive damages.
Current or former tenants of The Villas Parkmerced who wish to participate in the class action may contact us via email. The Law Offices of Patricia E. Henle are co-counsel with Brayton Purcell in representing the plaintiffs.