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SAN FRANCISCO-Proposition H, which prevented rent hikes to pay for building improvements, has been blocked by a court order issued by Superior Court Judge A. James Robinson, on the grounds that it prevents property owners from earning a fair share of return.

The judge ruled that Proposition H refers to prices in effect when rent control began in the late 70′s and it is not clear for property owners who invested in apartment complexes since then how to calculate their financial position.

Proposition H allowed property owners to charge tenants for seismic upgrades, but as far as any other reimbursements, they were forced to prove that they were not making money even with their overall investment appreciation.

San Francisco allows property owners to charge new tenants market prices for vacant units, but limits increases for existing tenants.

A spokesman for the SF Apartment Association told GlobeSt.com that the association is happy with the decision, as it will benefit its members, allowing them to increase rates above the usual amount to get back cost of building and capital improvements. He expects that this decision will be challenged by many, including the SF Tenants Union.

City attorneys insist that they will appeal the judge’s decision, as many landlords who have performed tenant improvements since the measure passed last fall and have not delivered bills to tenants may hit tenants with retroactive bills amounting to hundreds or thousands of dollars.

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