1. Basis for Application. A landlord may file a rent adjustment application for all rental units in the landlord's rental complex with the city in order to establish the amount of the maximum allowable rent, to establish a reduction in the maximum allowable rent based upon a discontinuance or substantial reduction in housing services, or to achieve a just and reasonable return based on net operating income principles as set forth in Section
17.44.030, or on any other ground authorized by this title or by regulations promulgated pursuant thereto. A tenant or group of tenants may file a rent adjustment application based on failure to perform required maintenance, reduction in housing services without a corresponding decrease in rent, to establish the maximum allowable rent, for a refund of illegal rent, or any other ground authorized by this title or by regulations promulgated pursuant thereto.
(a) Common-Area Rent Decrease Applications. When an application filed
by one or more tenants seeks a rent decrease due to an alleged failure
to perform common-area maintenance or a substantial reduction of a
common-area housing service, the Department shall mail an opt-out
form to every tenant in the building. The form shall identify the
common-area issues raised in the application and shall state that
every tenant in the building is deemed a party to the application
unless he or she opts otherwise. The form shall include a statement
that the tenant may sign indicating that he or she opts not to participate
in the application. Any tenant who signs the form and returns it to
the Department shall not be deemed an applicant. All other tenants
shall be deemed applicants and shall be entitled to any rent adjustment
awarded in the hearing decision.
(b) Designated Cultural Resources. When an application filed by one or more tenants seeks a rent decrease due to an alleged failure to perform the interior common area or building exterior painting as required by Section
17.56.010(c) at a building that is a designated cultural resource pursuant to Chapter
19.58 (Cultural Heritage Preservation), a copy of the application shall be transmitted to the Community Development Department upon acceptance. Upon receipt of the application, the Community Development Department shall forward to the hearing examiner any order(s) to paint the interior common area or building exterior or a written statement that no such order is pending. The Community Development Director or their designee may request an extension from the hearing examiner of up to 45 days from receipt of the application .in order to conduct an inquiry into the condition of the property.
2. Application. An application for a rent adjustment pursuant to this chapter shall be filed upon a form prescribed by the City and shall be accompanied by the payment of a fee as determined by resolution of the City Council. The applicant shall produce at the request of the hearing examiner any records, receipts, reports or other documents under the applicant's possession, custody or control that the Commission or hearing examiner or Commission on appeal may deem necessary to determine whether a rent adjustment should be approved. The application shall be made under penalty of perjury and supporting documents shall be certified or verified as requested. No application from a landlord shall be accepted unless the building in which the unit is located is registered and any registration fees have been paid. If a landlord is seeking an adjustment pursuant to subdivision (g)(2) of subsection
(1) of Section
17.44.030, the application shall not be filed with or accepted by the city unless the landlord provides any and all documents and information on which the landlord relies to establish that the base date rent was disproportionately low.
3. Incomplete Applications. The Department shall determine
whether said application is complete within such time as is provided
by regulation of the Commission. If it is determined that an application
is not complete, the applicant shall be notified in writing as to
what additional information is required. In the event the applicant
notifies the hearing examiner that the requested information is unavailable,
the hearing examiner shall proceed with scheduling a hearing as though
the application is complete. Notice that an application has been filed
shall be sent to the landlord and all affected tenants by the hearing
examiner; said notice shall invite submittal of evidence from all
concerned parties. Requests for the issuance of subpoenas to obtain
necessary and relevant documents or witnesses to evaluate an application
may be made to the City Council by the Director of Rent Stabilization,
the Commission or hearing examiner.
4. Hearing Date. The hearing examiner shall hold a hearing
on said application within such time after the application is determined
to be complete as provided by regulation of the Commission. Notice
of the time, date, and place of the hearing shall be mailed to the
applicant and the affected parties at such time prior to the hearing
as is provided by regulation of the Commission. The notice to the
affected parties shall include a brief summary of the stated justification
therefor and state that all submitted documents and materials as well
as any report prepared by the hearing examiner or staff will be available
for public review prior to the hearing.
5. Hearing Rules. At the hearing, the parties may offer any
documents, testimony, written declarations, or other evidence that
is relevant to the requested rent adjustment. Formal rules of evidence
shall not be applicable to such proceedings.
6. Hearing Decision. Within such time as is provided by regulation
of the Commission after the hearing is closed, the hearing examiner
shall issue a decision, with written findings in support thereof,
approving, partially approving or disapproving a rent adjustment.
7. Notice of Decision. A notice of decision on a rent adjustment
application shall be mailed to the applicant and all affected tenants
within one day of the decision. Such notice shall be accompanied by
a copy of the hearing decision.
8. Appeal. The decision by a hearing examiner may be appealed
in writing by the landlord or affected tenants in accordance with
the procedures for appeal set forth below and in regulations of the
Commission. If the decision of a hearing examiner is appealed, the
decision and all further proceedings (including compliance determinations)
relating to that decision are stayed pending appeal. If no appeal
is filed, the decision of the hearing examiner shall constitute the
final decision of the Commission.
9. Violation. Any violation of a hearing examiner's decision
which has not been modified, reversed or vacated by the Commission
constitutes a violation of this title.
(Prior code § 6411(a); Ord. 85-59 § 1, 1985; Ord. 85-59U § 1, 1985; Ord. 85-79 §§ 1, 10, 11, 1985; Ord. 85-79U §§ 1, 10, 11,
1985; Ord. 87-135 § 10,
1987; Ord. 87-135U § 10,
1987; Ord. 87-168 § 1,
1987; Ord. 89-227 § 1,
1989; Ord. 89-236 § 2,
1989; Ord. 89-236U § 2,
1989; Ord. 89-247 §§ 1,
2, 1989; Ord. 91-300 § 1,
1991; Ord. 91-300U § 1,
1991; Ord. 91-305 § 1,
1991; Ord. 92-325, 1992; Ord. 92-350 § 1, 1992; Ord. 93-364, 1993; Ord. 93-378 §§ 1, 2, 1993; Ord. 93-391 § 1, 1994; Ord. 94-428 §§ 1 – 3, 1994; Ord. 95-451 § 10, 1995; Ord. 99-548 §§ 18, 19,
26, 76, 1999; Ord. 04-680 § 1,
2004; Ord. 09-827 § 1,
2009; Ord. 17-1000 § 2,
2017; Ord. 20-1100 § 2,
2020; Ord. 24-16, 6/24/2024)
1. Appeal. An appeal of a hearing examiner's decision must
be filed with the Department within such number of days of the decision
by the hearing examiner as is established by regulation of the Commission.
The appeal must set forth the grounds upon which it is claimed that
the decision is in error, is not supported by the findings made or
the evidence in the record, constitutes an abuse of discretion or
is contrary to specific provisions of the Rent Stabilization Ordinance
or state law. An appeal must be accompanied by an appeal fee as determined
by resolution of the City Council.
2. Evidence. Upon receipt of an appeal the complete record
of the proceeding before the hearing examiner shall be transmitted
to the Commission, including the original application, all documentary
evidence submitted to the hearing examiner, all minutes and/or transcripts
of proceedings, if any, pertaining to the matter and the findings
and decision of the hearing examiner.
3. Hearing. The Commission may consider the appeal solely on
the basis of the written record established before the hearing examiner.
No new matter or evidence shall be received or considered unless the
applicant can show why such new matter or evidence could not with
due diligence have been produced at the prior hearing. Oral arguments
may be heard in the discretion of the Commission. In the alternative,
the Commission may conduct a de novo hearing in accordance
with procedures adopted by regulation. The appeal shall be heard and
determined within the number of days from receipt of the appeal provided
by regulation of the Commission. Reasonable notice of the date, time
and location of the hearing shall be provided to all parties.
4. Decision. The action of the Commission shall be by majority
vote. The written findings and determination on appeal shall be transmitted
to the parties. The action of the Commission shall be final ten business
days after the filing of the written findings and determination with
the secretary of the Commission.
5. Effect of Decision on Appeal. In the event that an adjustment
to the maximum allowable rent is granted by the decision of the Hearing
Examiner, and is then reduced or nullified by the Commission on appeal,
the rent shall immediately be adjusted in accordance with the Commission's
decision. In addition, the party to have benefited from the hearing
examiner's decision shall refund to the other party any rent collected
or withheld following the hearing examiner's decision which is in
excess of those amounts permitted by the decision of the Commission.
6. Time. The overall time between the initial finding of an
application to be complete by the hearing examiner and determination
by the Commission on appeal shall not exceed one hundred fifteen days,
unless the delay is caused or is requested by the applicant. The hearing
examiner and/or the Commission may extend this one hundred fifteen-day
deadline in rent increase proceedings for forty-five days for good
cause. Factors which may constitute good cause include but are not
limited to the unusual complexity of a case, reasonable requests for
continuance(s), allowing parties time to obtain representation, scheduling
difficulties, and a remand of the case by the Commission to the hearing
examiner. Notification of a time limit extension for good cause shall
be made in writing to all parties.
(Prior code § 6411(b); Ord. 85-59 § 1, 1985; Ord. 85-59U § 1, 1985; Ord. 85-79 §§ 1, 10, 11, 1985; Ord. 85-79U §§ 1, 10, 11,
1985; Ord. 87-135 § 10,
1987; Ord. 87-135U § 10,
1987; Ord. 87-168 § 1,
1987; Ord. 89-227 § 1,
1989; Ord. 89-236 § 2,
1989; Ord. 89-236U § 2,
1989; Ord. 89-247 §§ 1,
2, 1989; Ord. 91-300 § 1,
1991; Ord. 91-300U § 1,
1991; Ord. 91-305 § 1,
1991; Ord. 92-325, 1992; Ord. 92-350 § 1, 1992; Ord. 93-364, 1993; Ord. 93-378 §§ 1, 2, 1993; Ord. 93-391 § 1, 1994; Ord. 94-428 §§ 1 – 3, 1994; Ord. 95-451 § 10, 1995; Ord. 99-548 §§ 27, 56,
77, 78, 1999; Ord. 09-827 § 2,
2009; Ord. 17-1000 § 3,
2017)
A rent adjustment shall be approved in order to provide a just
and reasonable return and maintain net operating income in accordance
with the following criteria:
1. Fair Net Operating Income. Fair return applications shall
be considered according to the following guidelines:
(a) Net operating income equals gross income minus operating expenses.
(b) Gross income equals the following:
(1) Gross rents, computed on the basis of one hundred percent occupancy,
using rent levels which include all previously approved and banked
rent increases other than the current year annual general adjustment.
To the extent that such increases were not fully implemented or received
during the entire current year, they shall be annualized to reflect
the total annual gross rents to which the property owner is already
entitled, plus
(2) Interest from security and cleaning deposits (except to the extent
that said interest is payable to the tenants), plus
(3) Income from services, garage and parking fees, plus
(4) All other income or consideration received or receivable for or in
connection with the use or occupancy of rental units and housing services,
minus
(5) Uncollected rents due to vacancy and bad debts, to the extent that
the same are beyond the landlord's control. Uncollected rents in excess
of three percent of gross rents shall be presumed to be unreasonable
and shall not be deducted from gross rents unless it is established
that they result from circumstances that are likely to continue to
exist in future years.
(c) Operating Expenses – Inclusions. Operating expenses shall include
the following:
(1) Rent increase application filing fees and vacancy increase application
fees (if the application is found to be meritorious);
(2) Annual registration fees which pursuant to resolution of the City
Council cannot be passed through to tenants;
(3) License fees, real property taxes, utility costs, insurance;
(4) Normal repair and maintenance expenses, which shall include, but
not be limited to, painting, normal cleaning, fumigation, landscaping,
repair and replacement of all standard services, including electrical,
plumbing, carpentry, furnished appliances, drapes, carpets and furniture.
Owner-performed labor shall be counted at reasonable rates as established
by Commission regulation;
(5) Allowable legal expenses, and management expenses (contracted or
owner performed), including necessary and reasonable advertising,
accounting, other managerial expense. Management expenses are presumed
to be six percent of gross income, unless established otherwise. Management
expenses in excess of eight percent of gross income are presumed to
be unreasonable and shall not be allowed unless it is established
that such expenses do not exceed those ordinarily charged by commercial
management firms for similar residential properties;
(6) Attorney's fees and costs incurred in connection with successful
good faith attempts to recover rents owing and successful good faith
unlawful detainer actions not in violation of applicable law, to the
extent the same are not recovered from tenants;
(7) Building improvements, major repairs, replacement and maintenance,
except to the extent such costs are compensated by insurance proceeds,
subject to the condition that said expenses shall be amortized in
accordance with Commission regulations.
(d) Excluded from Operating Expenses. Operating expenses shall not include:
(1) Maintenance and repair work which resulted from the intentional deferral
of other repairs or work, which deferral caused significant deterioration
of housing services, the building or individual units (if the time
since the work was performed significantly exceeds the amortization
periods established by the Rent Stabilization Regulations, it shall
be presumed that it was intentionally deferred);
(2) Avoidable and unnecessary expense increases since the base year;
(3) Mortgage interest and principal payments; fees, other than fees expressly
authorized by subsection (c) of this section;
(4) Penalties and interest awarded for violation of this or any other
law; or legal fees, except as provided in this section, and depreciation
of the property.
(e) Base year for the purpose of this chapter shall be 1983 for tenancies
commencing on or after January 1, 1999. In the event that an owner
for good cause cannot produce base year income and expense information,
or in the event net operating income as measured by April 30, 1984
rents (annualized) minus 1984 operating expenses substantially differs
from base year net operating income, the Commission may use a different
base period or estimate base year income and expenses.
(f) Presumption of Fair Base Year Net Operating Income. Except as provided
in subdivision (g), immediately below, it shall be presumed that the
net operating income produced by the property during the base year
provided a fair return (fair net operating income). Landlords shall
be entitled to earn a just and reasonable return and to maintain and
increase their base year net operating income in accordance with subdivision
(h) of this subsection, below.
(g) Rebutting the Presumption. It may be determined that the base year
net operating income yielded other than a fair return, in which case,
the base year net operating income may be adjusted accordingly. In
order to make such a determination, the Commission must make at least
one of the following findings:
(1) The landlord's operating and maintenance expenses in the base year
were unusually high or low in comparison to other years. In such instances,
adjustments may be made in calculating such expenses so that the base
year operating expenses reflect average expenses for the property
over a reasonable period of time. In considering whether the base
year net operating income yielded more or less than a fair net operating
income the Commission shall consider the following factors:
(i)
The landlord made substantial capital improvements during the
base year, which were not reflected in the base year rent levels;
(ii)
Substantial repairs were made due to damage caused by uninsured
disaster or vandalism;
(iii)
Maintenance and repair were below accepted standards or resulted
from the intentional deferral of other repairs or work, which deferral
caused significant deterioration of housing services, the building
or individual units. If the time since the deferred work was performed
significantly exceeds the amortization periods established by the
Rent Stabilization Regulations, it shall be presumed that it was intentionally
deferred;
(iv)
Other expenses were unreasonably high or low, notwithstanding
prudent business practice.
(2) The rent on the base date was disproportionately low due to the fact
that it was not established in an arms-length transaction or other
peculiar circumstances. To establish peculiar circumstances, the landlord
must prove one or more of the following: there existed between the
tenant and the owner a family or close friend relationship; the rent
had not been increased for five years prior to the base date; the
tenant performed services for the owner; there was low maintenance
of the property by the owner in exchange for low rent increases or
not rent increases; or any other special circumstances which affected
the rent level outside of market factors.
(h) Fair Net Operating Income. The Commission shall permit rent increases
in the MAR such that the landlord's net operating income shall be
increased by sixty percent of the percentage increase in the Consumer
Price Index, over the base year. (For example, if the Consumer Price
Index has increased by ten percent since the base year, the landlord
shall be entitled to a net operating income which is six percent above
the base year level). Unless the Commission selects a base period
other than the year 1983, the base year CPI shall be 292.7. For the
purposes of this chapter, the current CPI shall be the CPI last reported
as of the date of the application. A rent increase granted pursuant
to this chapter shall not exceed the increase requested in the application.
However, the MAR for a unit shall be increased by a maximum
of twelve percent during the first twelve months after the date of
the final decision of the Commission. If the final decision of the
Commission determines that the landlord is entitled to an increase
in the MAR which is greater than twelve percent, then the MAR for
the unit during the second twelve months following the final decision
shall be increased by the amount of the increase over twelve percent
which was not charged during the first twelve months plus ten percent
interest on that amount, plus any other adjustments to which the landlord
is entitled under this title. Thereafter, the MAR shall be the amount
determined by the Commission plus any other adjustments to which the
landlord is entitled under this title.
(i) Allowable Professional Services. The commission shall adopt reasonable
rules and regulations, for including in the net operating income calculation,
reasonable expenses, fees, and other costs for professional services
reasonably incurred in the course of successfully pursuing or defending
rights under or in relationship to this title.
(j) A rent increase shall not be permitted for any unit rented on or
after January 1, 1999 which was rented after completion of the work
as outlined in the rent increase application.
2. Building Improvement Increases. The Commission shall adopt reasonable rules and regulations pursuant to Section
2.64.090 establishing standards to govern applications for building improvement increases.
(Prior code § 6411(c); Ord. 85-59 § 1, 1985; Ord. 85-59U § 1, 1985; Ord. 85-79 §§ 1, 10, 11, 1985; Ord. 85-79U §§ 1, 10, 11,
1985; Ord. 87-135 § 10,
1987; Ord. 87-135U § 10,
1987; Ord. 87-168 § 1,
1987; Ord. 89-227 § 1,
1989; Ord. 89-236 § 2,
1989; Ord. 89-236U § 2,
1989; Ord. 89-247 §§ 1,
2, 1989; Ord. 91-300 § 1,
1991; Ord. 91-300U § 1,
1991; Ord. 91-305 § 1,
1991; Ord. 92-325, 1992; Ord. 92-350 § 1, 1992; Ord. 93-364, 1993; Ord. 93-378 §§ 1, 2, 1993; Ord. 93-391 § 1, 1994; Ord. 94-428 §§ 1 – 3 , 1994; Ord. 95-451 § 10, 1995; Ord. 99-548 §§ 11, 12,
28, 29, 57, 1999)
1. Grounds for Application. A tenant or group of tenants may
file a rent adjustment application for one or more rental units in
the same rental complex:
(a) On the grounds that there has been a discontinuance or substantial reduction of housing services to tenants without a corresponding reduction in rent, or that maintenance required by Section
17.56.010, including the requirements for resident manager, posting of business hours and posting of emergency telephone numbers, has not been performed; provided, however, that the basis for the application arose on or after April 30, 1984; or
(b) To determine the base rent or the maximum allowable rent charged
for units; or
(c) On the ground that the landlord has accepted and retained rent and/or
fees in excess of that permitted by this title or by its predecessor
moratorium adopted November 29, 1984. The remedies here are cumulative
and do not preclude any other remedy that may be available under any
provision of law.
(d) Limitations Period.
(i) A tenant may apply to recover illegal rent overcharges resulting
from a landlord's failure to file a re-registration form, except that
no tenant may recover overcharges collected more than three years
before the filing date of a re-registration form or a rent adjustment
application by the tenant to recover the overcharges, whichever is
earlier.
(ii)
A tenant may apply to recover excess fees for a period not to
exceed three years before the filing date of the rent adjustment application.
2. Procedures. The application, notice, hearing and appeal procedures applicable to such an adjustment application shall be the same as set forth in subsection
(4) of Section
17.44.010 and as set forth in regulations promulgated by the Commission. All required notices shall be sent to the parties as set forth in those sections.
3. Decision.
(a) The hearing examiner or Commission on appeal may approve a rent adjustment under subsection (1)(a) of this section if it determines that required maintenance has not been performed and/or there has been a discontinuance or a substantial reduction of housing services without a corresponding reduction in rent and provided that such reduction or discontinuance was not caused by an intentional act of the tenant. For purposes of this subsection, an intentional act of the tenant shall not include performance of maintenance pursuant to subsection
(g) of Section
17.56.010.
(b) If an application for a refund of illegally collected rents and/or
fees is granted by determination of a hearing examiner or by the Commission
on appeal, such determination shall specify the manner in which the
excess rent and/or fees shall be refunded or credited as to each affected
tenant. In no event shall a refund be required to be paid or a rent
credit allowed to be taken until after the time for appeal of the
hearing examiner's determination has elapsed.
If the Commission orders a rent refund or rent credit on appeal,
such refund or credit shall not be made effective until after the
expiration of the time period within which the party against whom
the order is made may seek a stay of the order from a court of competent
jurisdiction.
|
(Prior code § 6411(d); Ord. 85-59 § 1, 1985; Ord. 85-59U § 1, 1985; Ord. 85-79 §§ 1, 10, 11, 1985; Ord. 85-79U §§ 1, 10, 11,
1985; Ord. 87-135 § 10,
1987; Ord. 87-135U § 10,
1987; Ord. 87-168 § 1,
1987; Ord. 89-227 § 1,
1989; Ord. 89-236 § 2,
1989; Ord. 89-236U § 2,
1989; Ord. 89-247 §§ 1,
2, 1989; Ord. 91-300 § 1,
1991; Ord. 91-300U § 1,
1991; Ord. 91-305 § 1,
1991; Ord. 92-325, 1992; Ord. 92-350 § 1, 1992; Ord. 93-364, 1993; Ord. 93-378 §§ 1, 2, 1993; Ord. 93-391 § 1, 1994; Ord. 94-428 §§ 1 – 3, 1994; Ord. 95-451 § 10, 1995; Ord. 00-566 § 2, 2000; Ord. 09-826 § 1, 2009; Ord. 12-886 § 2, 2012)