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)