By Angela Rowen

FOR 27 YEARS , Helen Fellows commuted from her San Francisco home to the Oakland junior high school where she taught. Fellows says she never moved closer to her workplace "because I thought I would get the benefit of rent control forever."

Now Fellows, who retired three years ago, might need to leave her $620-a-month studio and seek cheaper housing across the bay. Her landlord, Herb Jaffe, is petitioning the San Francisco Rent Stabilization and Arbitration Board to be able to charge tenants for the cost of renovating the 109-unit, three-building apartment complex on Lombard Street.

The two-year renovation will cost $8.4 million, and Jaffe expects 57 tenants, 20 of whom are covered by rent control, to pick up the tab. This capital improvement pass-through, as it is called, would mean a rent hike of 10 percent each year for 10 years. If the rent board approves it, the tenants will bear the brunt of the costliest pass-through in the city's history.

The city's rent ordinance allows landlords to pass on all capital improvement costs to tenants. Those costs are to be paid over a 7- to 10-year period and can result in a rent increase of up to 10 percent a year.

Alma Morris, another Lombard Street resident, doubts she could afford the rent hikes. "I'm a San Francisco native," she told us. "I just can't believe it's so hard to stay in my own town." The 73-year-old still works, as a legal secretary, to pay her monthly rent of $862. With the pass-through, she'll be paying close to $1,200 in three years.

The building's rent-controlled tenants could have been spared skyrocketing rents. The Board of Supervisors was considering legislation to split the costs of capital improvements equally between tenants and landlords. But apparently after heavy lobbying from landlord groups, the board tabled the legislation.

The reform was introduced by Sup. Leslie Katz last March and should have been before a committee for a hearing by mid-April. Katz's office scheduled a hearing on the issue earlier this month but subsequently canceled it.

Katz insists she hasn't been scared off by landlords; she told the Bay Guardian she's waiting to secure more support for the proposal from supervisors before she sets a hearing date. She's already gotten a nod from board president Tom Ammiano and Sup. Sue Bierman. Sup. Leland Yee told us he hasn't seen Katz's proposed legislation but supports the idea of a fifty-fifty split.

"I am confident that my colleagues will support it," Katz said. "It will pass."

Sources close to the issue aren't so sure. They suspect the supervisors have been swayed by politically connected landlord groups who've joined forces in the Coalition for Better Housing, led by lobbyist Jack Davis. The sources say Davis threatened to oppose the Laguna Honda Hospital rebuild unless the board dropped its support of the pass-through legislation.

Davis told us that landlords want the same thing as the tenants. "If the tenants continue to push for the fifty-fifty split in capital improvements, then landlords are going to ask for the same fifty-fifty split," he told us. That would mean opposing taxes such as the Laguna Honda bond rates, which would be paid exclusively by property owners.

He suggested a one-year "cease-fire" on all legislation pertaining to renters and landlords while an outside group studies housing issues. "If there is no compromise," he said, "projects like Laguna Honda will become hostage to the landlord-tenant battle."

Tenant advocates worry that the pass-through legislation will languish indefinitely. They have demanded that the issue come before the board for a vote. "We would like to see how the supervisors stand," Robert Haaland of the Tenants Union said. "We don't want them to be able to weasel out of it."

Charging for gentrification?

Each year, 300 to 400 landlords in San Francisco pass along their improvement costs to tenants. Some tenants say the law is being used more and more to push out lower-income people. "[My landlord] just wants us out so he can get people in who can pay the high rents," said Lombard Street tenant Lorraine Calcagni, whose low-rent studio apartment is worth $1,700 on the market. "We're throwaway people; we don't give him profit."

Jaffe flatly denied such claims. He said that even if his tenants each paid between $57,000 and $98,000 over the 10-year period, he wouldn't be fully reimbursed for the renovations. "If I wanted them out, it would be much cheaper just to pay them to move," he said.

Landlords say the law gives them incentive to fix up property and prevent it from deteriorating into slums. Janan New, executive director of the San Francisco Apartment Association, told us the law lets landlords fund improvements that they otherwise wouldn't be able to afford. "Rent control makes it necessary," New said.

New's group opposes an even split, even though landlords often have the option of writing off capital improvements on their income tax. "I think what we have now is a fair system," she said. "If people can't afford the rents, they can file for hardship with the rent board." Applicants for hardship must prove that their rent payment would exceed 30 to 35 percent of their gross income, a level that would require many to give up their savings. If approved, the tenant would not need to pay the increase.

Tenants have another way out: they can prove that a landlord is trying to charge them for renovations that aren't capital improvements. The law defines capital improvements as anything that "prolongs the life of the building," such as roof replacement or exterior painting. Tenants do not need to pay for renovations made because the landlord had not been maintaining the property or because the landlord wanted to increase the value of the property to attract a more upscale market.

Three-quarters of the costs to improve the 72-year-old Lombard Street buildings came from window replacement, lead and asbestos abatement, sheet metal facade replacement, concrete waterproofing, and overhead. Residents at the Lombard apartments will try to convince the rent board that those renovations are the result of lack of maintenance.

They may have a case. Tenant Keltie Morris took photos in 1997 showing mold and mildew on walls, chipped paint, and windows rusted open or shut. And a December 1996 letter from the Department of Building Inspection ordered Jaffe to repair window latches, damaged walls and ceilings, and roof weatherproofing, as well as the mold and mildew caused by the water intrusion.

Jaffe told us the disrepair noted by the tenants, like the water damage from the old rusted windows, was inevitable in buildings as old as his. The building was built in 1927.