HomeMy WebLinkAbout1126 Mobilehome rent stabilizationORDINANCE NO. 1126
ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
UKIAH ADDING A NEW CHAPTER 8, ENTITLED:
"MOBILEHOME RENT STABILIZATION," TO DIVISION 1
OF THE UKIAH CITY CODE.
SECTION ONE.
The City Council of the City of Ukiah hereby ordains that a new Chapter 8,
entitled "Mobilehome Rent Stabilization" is hereby added to Division 1 of the
Ukiah City Code to read as follows.
DIVISION 1 BUILDING
CHAPTER 8 MOBILEHOME RENT STABILIZATION
2700: FINDINGS AND PURPOSE.
(A) The State of California has recognized, by the adoption of special
legislation regulating tenancies of mobilehome owners in mobilehome parks, that
there is a significant distinction between homeowners in mobilehome parks and
other dwelling units, and the State likewise has recognized that homeowners in
mobilehome parks, unlike apartment tenants or residents of other rental stock,
are in the unique position of having made a substantial investment in a
residence, the space for which is rented or leased as distinguished from owned.
The physical removal and relocation of a mobilehome from a rented or leased
space within a mobilehome park can be accomplished only at substantial cost
and inconvenience with a limited concurrent ability to find another location and, in
many instances, the removal requires a separation of the mobilehome unit from
appurtenances which have been made permanent, thus creating severe damage
and depreciation in value to the mobilehome.
Because of the limited availability of vacant spaces in mobilehome parks, the
age and condition of some mobilehomes and the cost of moving mobilehomes, it
is extremely difficult, if not impossible, to move a mobilehome from one park to
another within the City.
(B) There is presently within the City and the surrounding areas a shortage
of sites for the placement of mobilehomes.
(C) According to the Ukiah General Plan Housing Element, mobilehomes
presently constitute an important source of housing for persons of extremely low,
very low, low, and moderate income levels, who as a group are unable to afford
unreasonably large rent increases.
(D) A large number of persons living in mobilehomes are elderly, some of
whom live on small fixed incomes. These persons may expend a substantial
portion of their income on rent and may not be able to afford other housing within
the City.
(E) Rents for sites within mobilehome parks in the City have, prior to the
adoption of this chapter, increased substantially, with recent increases in one
park exceeding by a substantial amount the annual increase in the cost of living.
(F) Space rent increases at the time of sale or other transfer of a mobilehome
within a park have been shown to be substantially over the pre-transfer rent.
Such large rent increases at the time of sale of a mobilehome may unfairly
depress the sales price of the mobilehome and work an economic hardship on
the mobilehome owner. The annual rent increases and vacancy control
provisions of this chapter prevent this economic hardship while protecting the
property rights of owners.
(G) Because of the space shortage and potential for rapidly rising rents,
regulation is necessary to assure that economic hardship to a substantial number
of mobilehome owners in the City, many of whom are senior citizens on low fixed
incomes, does not occur.
(H) It is the purpose of this chapter to establish a speedy and efficient method
of reviewing certain requested mobilehome space rent increases in mobilehome
parks to protect mobilehome owners from arbitrary, capricious or unreasonable
site rent adjustments while insuring owners and/or operators and investors a fair
and reasonable return on their investment in their mobilehome park.
§2701: DEFINITIONS.
For the purpose of this chapter, the following words, terms and phrases shall
be defined as follows:
(A) "Affected mobilehome owners" means those mobilehome owners whose
space is not covered by a valid lease meeting the requirements of section
798.17(b) of the California Civil Code or otherwise legally exempt from local rent
control regulation.
(B) "Arbitrator" means a person who is neither a mobilehome owner nor has
an interest in a mobilehome park of a nature that would require disqualification
under the provisions of the Political Reform Act if the person were a designated
City employee, has experience in analysis of financial records, and meets one of
the following criteria:
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(1) Licensed attorney or CPA who is qualified by experience or training to
conduct the arbitrations authorized by this chapter.
(2) Membership in the American Arbitration Association with expertise in
rental dispute arbitration; or
(3) Service as a judge in a state or federal court.
(C) "Capital improvement" means those improvements which directly and
primarily benefit and serve the existing mobilehome owners by materially adding
to the value of the park or adapting it to new uses, and which are required to be
amortized over the useful life of the improvements pursuant to the provisions of
the Internal Revenue Code. "Capital improvement costs" means all costs
reasonably and necessarily related to the planning, engineering and construction
of capital improvements and shall include debt service costs, if any, incurred as a
direct result of the capital improvement. Capital improvement does not include
ordinary maintenance or repairs or Capital replacements.
(D) "Capital replacement" means a capital expenditure as defined by the
Internal Revenue Code which replaces, upgrades or repairs an existing
improvement, such as, but not limited to, an on-site water or electrical distribution
or sewage collection system, a street, a parking area, or common facility, such as
a laundry, community kitchen or meeting room. If the expenditure qualifies for
treatment as a capital expenditure which must be depreciated under the Internal
Revenue Code, it is a capital replacement. If it can be fully deducted in one year
as a business expense, it does not qualify as a capital replacement.
(E) "City" means the City of Ukiah, California.
(F) "Clerk" means Clerk of the Ukiah Mobilehome Rent Stabilization
Program, who shall be an employee or independent contractor designated by the
City Manager as the Clerk and assigned the Clerk's duties as prescribed by this
chapter or as needed for the proper implementation of this chapter.
(G) "Consumer Price Index" or "CPI" means the Consumer Price Index for all
urban consumers in the San Francisco/Oakland/San Jose area published by the
United States Bureau of Labor Statistics.
(H) "Department" means the Department of Community Development of the
City of Ukiah.
(1) " MRL" means the California Mobilehome Residency Law.
(J) "Mobilehome" means
(1) a structure designed for human habitation and for being moved
on a street or highway under permit pursuant to Section 35790 of the Vehicle
Code, including a manufactured home, as defined in Section 18007 of the Health
and Safety Code, and a mobilehome, as defined in Section 18008 of the Health
and Safety Code, but, except as provided in subdivision (2), does not include a
recreational vehicle, as defined in Section 799.29 of the Civil Code and Section
18010 of the Health and Safety Code or a commercial coach as defined in
Section 18001.8 of the Health and Safety Code.
(2) "Mobilehome," for purposes of this chapter, also includes trailers
and other recreational vehicles of all types defined in Section 18010 of the Health
and Safety Code, other than motor homes, truck campers, and camping trailers,
which are used for human habitation, if the occupancy criteria of either
paragraph (i) or (ii), as follows, are met:
(i) The trailer or other recreational vehicle occupies a
mobilehome site in the park, on November 15, 1992, under a rental agreement
with a term of one month or longer, and the trailer or other recreational vehicle
occupied a mobilehome site in the park prior to January 1, 1991.
(ii) The trailer or other recreational vehicle occupies a
mobilehome site in the park for nine or more continuous months commencing on
or after November 15, 1992.
"Mobilehome" does not include a trailer or other recreational vehicle located in a
recreational vehicle park subject to Chapter 2.6 (commencing with Section
799.20) of the Civil Code.
(K) "Mobilehome park" or "park" means any area of land within the City of
Ukiah where two or more mobilehome spaces are rented, or held out for rent, to
accommodate mobilehomes used for human habitation.
(L) "Mobilehome space" means the site within a mobilehome park intended,
designed or used for the location or accommodation of a mobilehome and any
accessory structures or appurtenances attached thereto or used in conjunction
therewith.
(M) "Mobilehome owner" means a person who is the owner of a mobilehome
and legally occupies the mobilehome within a mobilehome park. Unless
otherwise indicated, mobilehome owner includes tenants.
(N) "Owner" means the owner or operator of a mobilehome park or an agent
or representative authorized to act on said owner's or operator's behalf in
connection with the maintenance or operation of such park.
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(O) "Party" as used in this chapter refers to any affected mobilehome owner
and/or owner involved in proceedings under this chapter.
(P) "Prospective mobilehome owner" means a person who is in the process
of negotiating a tenancy in a mobilehome park.
(Q) "Rent" means the consideration paid for the use or occupancy of a
mobilehome space.
(R) "Rent stabilization administration fee" means the fee established from
time to time by resolution of the City Council in accordance with the provisions of
the chapter.
(S) "Rent increase" means any increase in base rent charged by an owner to
a mobilehome owner or offered to a prospective mobilehome owner.
(T) "Tenant" means the person or persons who have signed a lease of a
mobilehome park space as the lessee of the space.
2702: BASE RENT.
Except as provided in this chapter, an owner shall not demand, accept or
retain rent for a mobilehome space exceeding the base rent which shall be the
rent in effect for that space on the date this section becomes effective (the
"Effective Date"). If a previously rented mobilehome space was not rented on the
Effective Date, the base rent shall not exceed the rent in effect during the last
month the space was rented prior to that date, except as provided in this chapter.
For a mobilehome space first rented after the Effective Date, the owner shall
establish the base rent. For parks annexed into the City after the Effective Date,
the base rent shall be the rent charged on the effective date of a park's
annexation into the City.
§2703: CONSUMER PRICE INDEX, UTILITIES AND OTHER PASS
THROUGHS.
(A) Consumer Price Index. An owner, once in any 12-month period, may
impose a rent increase for a mobilehome space by 100 percent of the
percentage increase, if any, in the Consumer Price Index (CPI) during the most
recent 12-month period ending in October; provided, however, the rental
increase shall not exceed five percent of the previous rent charged for the space.
If an owner has obtained a rent increase under subsection 2704(B), the owner
may calculate the rent increase allowed by this subsection based upon the
approved comparable rent as allowed in subsection 2704(8) instead of upon the
actual rent in effect at the time of the increase.
(B) If the change in the CPI exceeds five percent for two consecutive years,
the Clerk shall review the maximum rent increase and recommend an ordinance
amendment if appropriate.
(C) Government Mandated Expense Pass Through. An owner may pass
through to affected mobilehome owners any new or increase in government
mandated capital expenditures and operating expenses including taxes (other
than the two percent annual increase authorized by California Constitution Article
XIIIA, section 2(b)) and assessments, fees and mandated expenses due to code
changes subject to the following procedure:
(1) Upon a petition signed by one adult mobilehome owner for each of 50
percent of the spaces subject to rent control in a mobilehome park or 50 spaces,
whichever is less, and filed with the Clerk within 30 days of the date the owner
gives notice of a government mandated expense pass through to every affected
mobilehome owner, the Arbitrator, in accordance with the meet and confer and
arbitration procedures provided in this chapter, may disallow or decrease the
proposed pass through based upon substantial evidence in the record that the
pass through is not legally proper, or is excessive, or that during the pass
through period the owner is including an unreasonably high financing cost and/or
return on the expense being passed through.
(D) Utilities. If not billed by the utility directly to the mobilehome owner, an
owner may separately pass through to a mobilehome owner charges for all
utilities, including, but not limited to, sewer, water, garbage, cable TV., gas and
electricity, and any increases in such charges, subject to compliance with
Sections 3960-3963. Notwithstanding any provision to the contrary in this
section, the owner shall not pass through any charge or expense for gas or
electric service to the extent prohibited by section 739.5 of the California Public
Utilities Code.
(E) Capital Improvement Pass Through. An owner may charge to the affected
mobilehome owner as additional rent the pro rata share of new service and
capital improvement costs including reasonable financing costs if, prior to
initiating the service or incurring the capital improvement cost, the owner has:
(1) Consulted with the mobilehome owners prior to initiating construction of
the improvements or initiating the new service regarding the nature and purpose
of the improvements or services and the estimated cost of the improvements or
services;
(2) Obtained the prior written consent of at least one adult mobilehome
owner in each of a majority of the mobilehome spaces which are occupied by the
mobilehome owner to the proposed service or capital improvement. Each space
shall have only one vote.
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(F) Capital Replacement Pass Through. Notwithstanding the provision of
subsection E of this section, an owner may charge to the mobilehome owner as
additional rent the pro rata share of capital replacement costs including
reasonable financing costs, if not otherwise prohibited by law, subject to the
following procedure:
(1) The owner may seek advance approval for the proposed pass through,
before undertaking the capital project, by following the procedures set forth in
Sections 2709 to 2711. If the increase is approved by the Arbitrator, it shall not
be effective until the next regularly scheduled annual rent increase date, provided
that the 90-day notice is issued, the expense is actually incurred and that proper
verification is submitted. This verification shall include, at a minimum, proof of
actual costs and payment to vendors or contractors. In the event that the actual
cost of the capital expense is less than the approved amount, the increase shall
be adjusted to reflect this decreased amount;
(2) The owner shall give notice of the proposed pass through to each
affected mobilehome owner no later than 12 months after completion of the
capital replacement work;
(3) Upon a petition signed by one adult mobilehome owner of each of 50
percent of the spaces subject to rent control in a park or 50 spaces subject to
rent control, whichever is less, and filed with the Clerk within 30 days of the date
the owner gives notice of the pass through to every affected mobilehome owner,
the Arbitrator, in accordance with the arbitration procedure provided in this
chapter, may disallow or decrease the pass through for capital replacements
based upon substantial evidence in the record that the capital replacement was
not necessary, or that the cost of the capital replacement was excessive, or that
during the pass through period, the owner is including an unreasonably high
financing cost and/or return on the expense being passed through. The owner
shall have the burden of proving the necessity for and reasonable cost of the
capital replacements. In determining whether the owner has met its burden of
proving the necessity for and reasonable cost of the capital replacement, the
Arbitrator may consider, among other factors, the reasonableness of the owner's
history of maintenance of the property or improvement to be replaced. The
Arbitrator's review will include, but not necessarily be limited to, the records
reflecting past maintenance work and the cost.
(G) All charges passed through by the owner to the mobilehome owners
pursuant to subsection C and D of this section and additional rent charged
pursuant to subsections E and F of this section must be separate from the base
rent and listed separately. All billings used to calculate a pass through or
additional rent to mobilehome owners must be disclosed within a reasonable time
upon request by a mobilehome owner.
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(H) Notice. A written notice of each rent increase or new or increased capital
improvement or capital replacement pass through charge made under the
provisions of this section shall be filed by the owner with the Clerk, and provided
to each affected mobilehome owner, at least 90 days before the rent increase
goes into effect or as required by the MRL. The notice shall identify the park and
shall specify the dollar amount of the increase, the percentage of the increase,
an itemization of all new or increased pass throughs and additional rent charges,
the specific space affected, the date the increase will go into effect, how each
increase was calculated, and the date the rent on each affected space was last
increased. The notice shall also advise each affected mobilehome owner of any
right to petition for review of a proposed rent increase and that a petition form
may be requested from the Clerk.
(1) Whenever a time period is prescribed for filing an application or petition,
the application or petition shall be deemed filed when it is first filed with the Clerk,
even if the Clerk determines that the application or petition is not complete,
provided that the Clerk determines that application or petition is complete, as a
result of additional submissions by the applicant or petitioner, within thirty days of
the initial filing.
§2704: IN-PLACE TRANSFER RENT INCREASES-ESTABLISHMENT OF
NEW BASE RENT.
(A) Whenever either of the following events occurs, an owner shall be
permitted to charge a new base rent for the mobilehome space as provided in
this section:
(1) The termination of the tenancy of the affected mobilehome owner in
accordance with the MRL (California Civil Code sections 798.55 through 798.60,
as amended, excepting section 798.59); or
(2) The voluntary permanent removal of a mobilehome by a mobilehome
owner. A removal of the mobilehome from the space for the purpose of
performing rehabilitation or capital improvements to the space or for the purpose
of upgrading the mobilehome shall not constitute a voluntary removal of the
mobilehome.
(B) Upon the sale of a mobilehome in-place, an owner may implement an
increase of the base rent for that space in an amount equal to 10% of the rent for
that space then in effect.
(C) Except as provided in subsections (A) and (B), an owner may not
condition an in-place transfer of a mobilehome or condition assignment of an
existing lease to a prospective mobilehome owner, upon agreement to an
increased rent in anticipation of the in-place transfer. This subsection shall not
apply to specific conditions included in a lease exempt from rent control which
allows an owner to condition assignment in a manner prohibited by this section.
For purposes of this subsection, "a lease exempt from rent control" means a
lease meeting, in all respects, the criteria of Civil Code section 798.17(b), as
such criteria are presently enacted or may hereafter be amended.
§2705: FAIR RETURN RENT INCREASES.
If an owner presents evidence to the Arbitrator, including any financial records
requested by the Arbitrator, which proves that the owner is denied a fair return by
the rent control provisions of this chapter, the Arbitrator may authorize an
increase in rents as deemed appropriate by the Arbitrator to provide a fair return
to the owner. The Arbitrator shall use the method set forth in subsection 2711(C)
to determine the fair return.
§2706: RENT FREEZE OR RENT ROLLBACK.
(A) Upon the petition signed by one adult mobilehome owner of 50 percent of
the spaces subject to rent control in a park or 50 spaces subject to rent control,
whichever is less, the Arbitrator may prohibit future rent increases for spaces
governed by this chapter, upon its determination that maintenance by the owner
has been substantially reduced and is insufficient to adequately maintain the park
in a habitable condition. The determination shall be based upon substantial
evidence in the record. The prohibition may be continued until the Arbitrator
determines that maintenance by the owner has been restored to a reasonable
level.
(B) Upon petition by one or more affected mobilehome owners, an Arbitrator
may prohibit future rent increases, or order a rollback of the existing rent as to
those petitioners, upon its determination that after the Effective Date, an owner
instituted a rent increase inconsistent with the criteria established by this chapter.
The determination shall be based upon substantial evidence in the record. The
prohibition may be continued until the Arbitrator determines that the rent has
become consistent with this chapter.
§2707: TIME OF ALLOWED RENT INCREASE/ADJUSTMENT.
(A) Once within a 12-month period, the owner may implement a CPI rent
adjustment (subsection 2703(A)), if any, or a fair return increase (Section 2703),
but not both.
(B) A capital replacement pass through under subsection 2703(F) may only
be implemented on the effective date of the CPI or fair return rent adjustment.
(C) The following increases or adjustments may be implemented at any time
during the year:
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(1) Government mandated expense pass through (subsection 2703(C));
(2) Utility pass throughs (subsection 2703(D));
(3) Capital improvements (subsection 2703(E));
(4) In-place transfer rent increases (Section 2704).
Any increases subject to arbitration shall be implemented after the final ruling
of the Arbitrator.
(D) Rent freeze and rent rollbacks shall be implemented at the time they are
ordered (Section 2706).
§2708: ARBITRATION.
(A) Matters Subject to Arbitration.
(1) An owner shall file with the Clerk:
(a) An application seeking to increase space rents beyond 100 percent of the
CPI to provide a fair return to the owner as allowed by Section 2705.
(2) Affected mobilehome owners may file with the Clerk:
(a) A petition objecting to a government mandated expense pass through as
allowed by subsection 2703(C);
(b) A petition objecting to a capital replacement pass through as allowed by
subsection 2703(F);
(c) A petition for rent freeze as allowed by subsection 2706(A);
(d) A petition for rent rollback as allowed by subsection 2706(B).
(B) These petitions and applications shall be decided by the Arbitrator.
(C) Cost of Arbitration. The cost of arbitration shall be paid by the Clerk out
of revenue from the rent stabilization administration fee. The Arbitrator may
reimburse the City by assessing the cost of the arbitration to either party if the
Arbitrator determines that the position taken by the party is frivolous.
§2709: PROCEDURES FOR FAIR RETURN NOTICE AND APPLICATION AND
PETITION FORMS.
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(A) Notice. At least 10 days prior to submission of a fair return application or
a petition to the Clerk, the applicant or petitioner shall mail or deliver a notice and
a copy of the application or petition to the owner and each affected mobilehome
owner in the park. The notice shall be on a form specified by the Clerk. The
at the park's office and shall be posted on the City's website. One copy of the
supporting documents shall be provided by the applicant or petitioner at no cost
to the other party. All fair return notices shall include the following information:
(1) The amount of the rent increase both in dollars and as a percentage of
the existing rent, how it was calculated, an itemization of all pass throughs and
additional rent charges, information that explains and supports the level of
increase proposed including, at a minimum, a summary of the owner's net
operating income for the base year and the preceding 24 months and other
relevant information that supports the level of rent increase desired, the effective
date of the increase and that copies of the supporting documents shall be
provided by the owner at no cost to the mobilehome owners' representative and
be available to the mobilehome owners at the park's office for inspection and on
the City's website;
(2) The name, address and telephone number of the Clerk or designee, a
statement to inform the mobilehome owners to contact the Clerk or designee for
an explanation of the provisions of this chapter, and that a roster of affected
mobilehome owners can be requested from the Clerk; and
(3) A copy of the official petition form which is to be used for the process
established by this chapter.
(B) Application/Petition Forms. The application or petition shall be filed with
the Clerk on the form prescribed by the Clerk and must be accompanied by all
supporting material necessary to support the request. The application and
petition shall contain the following declaration: "I declare under penalty of perjury
that the foregoing is true and correct." The application shall be dated and
subscribed by the applicant(s) and shall state the place of execution.
(1) Within five working days of receipt, the Clerk shall complete a preliminary
review of the application or petition. Applications or petitions which are
incomplete will not be considered properly filed.
(2) No further action shall take place on applications or petitions which are
not properly filed, and the Clerk may decline to accept such application and/or
return them to the petitioner immediately after the preliminary review with a
notice of the defects.
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(3) When the Clerk determines that the application or petition is complete,
the Clerk shall send a written notice of confirmation of receipt of a completed
application or petition to the parties.
(4) In capital replacement proceedings and in government mandated capital
expenditure and operating expense proceedings, affected mobilehome owners
shall have 30 calendar days after receipt of the confirmation of the completed
application to file with the Clerk a petition objecting to the rent increase signed by
one adult tenant in at least 50 percent of the mobilehome spaces subject to rent
control.
(C) Insufficient Objection-Capital Replacement or Government-Mandated
Pass Through Proceeding-Clerk Action. If less than the required number of
affected mobilehome owners object to a proposed capital replacement or
government-mandated pass through, or if objection is withdrawn, including any
amendments, before or after the meet and confer process, the Clerk shall
approve the requested pass through.
§2710: PROCEDURE FOR MEET AND CONFER.
Within 10 working days of the date of the Clerk's notice of a completed
application or petition and prior to assignment of an Arbitrator, affected
mobilehome owners and owners shall meet and confer with each other's
representatives. The time, place and date of the meeting shall be agreed to by
the parties or, if the parties cannot agree, determined by the Clerk. Written notice
of the scheduled meeting shall be given by the applicant or petitioner. At the
meeting, representatives of the parties shall exchange documentary evidence
that the parties, in good faith then know, will be used to support their respective
positions in an arbitration and discuss the issues in dispute. In the case of an
owner, all financial data upon which any proposed increase is claimed shall be
supplied to affected mobilehome owner representatives at the time of the meet
and confer meeting. The parties may request that the Clerk provide a mediator,
at no cost to the parties, to assist with the meet and confer process. The
Arbitrator may deny an application based on the applicant's failure to participate
in good faith in the meet and confer process.
§2711: PROCEDURES FOR ARBITRATION.
(A) The Clerk shall give written notice to the applicant or petitioners and
mobilehome owner representative that the application/petition has been referred
to arbitration.
(1) An Arbitrator shall be appointed in the following manner:
(a) The Clerk shall maintain a list of qualified arbitrators.
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(b) Assignment of Arbitrator and Hearing Date. The Clerk shall choose three
possible Arbitrators and present them to the residents' representative and the
owner. Within five days each party may challenge one candidate. The one
remaining shall be the selected Arbitrator. If both parties challenge the same
candidate, the Clerk shall choose between the two remaining candidates. The
Clerk shall set a date for the arbitration hearing no sooner than 30 or no later
than 40 days after the Arbitrator is assigned. The owner and affected
mobilehome owners shall be notified immediately in writing by the Clerk of the
date, time and place of the hearing and this notice shall be served either in
person or by ordinary mail. The parties may agree, in writing, to extend these
times. The Arbitrator may extend the date for the arbitration hearing upon a
showing of good cause.
(2) The Arbitrator shall conduct a hearing with the parties and/or their
representatives. During this hearing process, the concerns of each party shall be
discussed and the Arbitrator shall indicate the amount and nature of information
needed from any party in order to reach a determination. In fair return
proceedings in Section 2705, this shall include four years of the income and
expense portion of the general ledgers for the park. All information submitted
shall be in writing and shall be certified in the same manner as set forth in
subsection 2709(B).The applicant or petitioner shall have the burden of proof
unless other sections of this chapter specify otherwise. Each party shall comply
with the Arbitrator's request for information within seven days of the request.
Additional information provided to the Arbitrator shall be immediately available to
the owner or affected mobilehome owner representative which will have seven
days to give written comment to the Arbitrator. The Arbitrator may proceed under
this part regardless of whether any party defaults in providing any of the
requested information.
(B) Arbitration Determination.
(1) Within 21 days of the hearing, but no later than 90 days from the date of
the owner's rent increase notice, the Arbitrator shall deliver his or her decision on
the application or petition and a bill for services to the Clerk.
(2) The rent increase in a fair return proceeding shall not exceed the
increase requested in the application.
(3) The Clerk shall provide the result of the Arbitrator's decision to the
affected parties.
(4) The Arbitrator's decisions are final and not appealable to the City
Council.
(C) Method to Determine a Fair Return.
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(1) The base year for the purpose of this section shall be the last full fiscal
year prior to the park becoming subject to this chapter. The Arbitrator may
establish an alternative base year if the owner is unable to produce records of
the last full fiscal year prior to the park becoming subject to rent control.
(2) It shall be presumed that the net operating income produced by the
property during the base year provided a fair return. An owner shall be entitled to
rents to earn a just and reasonable return and to maintain and increase their
base year net operating income in accordance with subsection (C)(4) of this
section. This method is called maintenance of net operating income (MNOI) and
shall be included in all applications.
(3) The applicant or the affected mobilehome owners may present evidence
to rebut the presumption of fair and reasonable return based upon the base year
net operating income. To make such a determination and in order to adjust to the
base year net operating income, the Arbitrator must make the following finding:
(a) The owner'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 Arbitrator shall
consider the following factors:
(i) Substantial repairs were made due to damage caused by uninsured
disaster or vandalism;
(ii) Maintenance and repairs were below accepted standards so as to cause
significant deterioration of housing services;
(iii) Other expenses were unreasonably high or low notwithstanding prudent
business practice; and
(iv) The rent in the base year was disproportionately low due to the fact that it
was not established in an arms-length transaction or other peculiar
circumstances.
(4) Fair Net Operating Income. The Arbitrator shall submit a determination
based on rental income which will provide the owner a net operating income
which shall be increased by 100 percent of the percentage increase in the CPI
over the base year's CPI index. The base year CPI shall be the CPI for the first
day of June. For purposes of this section, the current CPI shall be the CPI last
reported as of the date of the completed application.
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(5) Net operating income of a mobilehome park means the gross income of
the park less the operating expenses of the park.
(6) Gross income means the sum of the following:
(a) Gross space rents computed as gross space rental income at 100
percent occupancy (but excluding rent attributed to a space occupied by a park
employee who receives the space rent free as part of the employee's
compensation); plus
(b) Other income generated as a result of the operation of the park,
including, but not limited to, fees for services actually rendered; plus
(c) All other pass through revenue received from mobilehome owners except
capital pass throughs and gas and electric; minus
(d) Uncollected space rents due to vacancy and bad debts to the extent that
the same are beyond the owner's control. There is a rebuttable presumption that
uncollected space rents in excess of the average of the current and past three
years uncollected rents (each year's rent shall be adjusted by the change in the
CPI between that year and the final year of the four-year period) are excessive
and shall not be deducted from gross income.
(7) Operating expenses means:
(a) Real property taxes and assessment;
(b) Advertising costs;
(c) Management and administrative expenses including the compensation of
administrative personnel;
(d) Repair and maintenance expenses for the grounds and common facilities
including, but not limited to, landscaping, cleaning and repair of equipment and
facilities;
(e) In addition to the management expenses listed above, where the owner
performs onsite managerial or maintenance services which are uncompensated,
the owner may include the reasonable value of such services. Owner-performed
labor shall be limited to five percent of gross income unless the Arbitrator finds
that such a limitation would be substantially unfair in a given case. No credit for
such services shall be authorized unless an owner documents the hours utilized
in performing such services and the nature of the services provided;
(f) Operating supplies such as janitorial supplies, gardening supplies,
stationery and so forth;
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(g) Insurance premiums related to operation of the park prorated over the life
of the policy;
(h) Payroll taxes, business, utility, license and permit fees;
(i) Dues;
(j) Consultant services for park operation and maintenance;
(k) All operating expenses must be reasonable and necessary. Whenever a
particular expense exceeds the normal industry or other comparable standard,
the owner shall bear the burden of proving the reasonableness of the expense.
To the extent that an Arbitrator finds any expense to be unreasonable, the
Arbitrator shall adjust the expense to reflect the normal industry or other
comparable standard;
(1) There is a rebuttable presumption that expenditures in the current year
are unreasonable to the extent that they substantially exceed the average of the
current and past three years (each year's expenses shall be adjusted by the
change in the CPI between that year and the final year of the four-year period);
(m) Operating expenses shall not include the following:
(i) Mortgage debt service expenses;
(ii) Land-lease expenses;
(iii) Depreciation;
(iv) Income taxes;
(v) Electric and gas expenses included in Section 739.5 of the California
Public Utility Codes;
(vi) The cost of government mandated expenses (subsection 2703(C)),
capital improvements (subsection 2703(D)), or capital replacements (subsection
6-66.040(F)).
(8) Notwithstanding any other provisions of the ordinance codified in this
chapter, the Arbitrator is authorized to approve any rent increase that is
constitutionally required by law to yield a fair return.
(E) Subpoenas. The parties may obtain the issuance and service of a
subpoena for the attendance of witnesses or the production of other evidence at
the arbitration hearing. Subpoenas shall be issued and attested by the Clerk.
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Issuance of the subpoena must be obtained upon the filing with the Clerk of the
City of an affidavit or declaration, under oath, setting forth the name and address
of the proposed witness; specifying the exact things to be produced and the
relevancy to the issues involved; and stating that the witness as the desired
things in his/her possession or under his/her control.
Service of the subpoena on a witness to attend arbitration must be at least
five working days before the hearing. Service of a subpoena duces tecum must
be at least 21 days before the hearing. Any party served with a subpoena duces
tecum must produce copies of the requested items to the subpoenaing party no
later than 10 days before the hearing.
A subpoena need not be issued when the affidavit or declaration is defective
in any particular. No arbitration hearing may be continued due to the failure to file
a timely request, or to timely serve a subpoena. Any person who refuses, without
lawful excuse, to attend the arbitration or to produce relevant evidence as
required by a subpoena served upon that person shall be guilty of a
misdemeanor.
No subpoena shall issue until after the parties have met and conferred as
required in Section 2710.
(F) Increases for Capital Expense. Increases attributed to a capital expense,
as approved by the Arbitrator to provide a park with a fair return, shall not be
included in base rent. These increases must be separately itemized on the
monthly rent invoice and terminate at the end of the approved amortized period.
Advance approval and effective date of the increase shall be as allowed in
subsection 2703(F)(1).
(G) Rent Increase Effective Date. Rent increases approved by the Arbitrator,
as determined necessary to provide an owner with a fair return, shall be allowed
upon the effective date given by the applicant in the notice to the affected
mobilehome owners, required in section 798.30 of the California Civil Code.
§2712: REFUSAL OF MOBILEHOME OWNER TO PAY ILLEGAL RENT.
An affected mobilehome owner may refuse to pay any rent in excess of the
maximum rent permitted by this chapter. The fact that such unpaid rent is in
excess of the maximum rent shall be a defense in any action brought to recover
possession of a mobilehome space for nonpayment of rent or to collect the illegal
rent.
§2713: DISCLOSURES.
An owner shall disclose to each prospective tenant the current and proposed
base rent for the mobilehome space and the rental agreement options required
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by this section and Section 2714, provide each prospective tenant with a copy of
this chapter, and disclose to the prospective tenant that if the prospective tenant
signs a lease with a term of more than one year, that lease will be exempt from
rent control. The owner shall give the required disclosure and provide a copy of
this chapter to the prospective tenant at the time that the owner, or owner's
representative, receives the prospective tenant's application for tenancy. The
required disclosures shall be made in a form approved by the Clerk, and the
owner shall obtain a signature of the prospective tenant on the disclosure form
acknowledging receipt of the disclosures. An owner must retain the signed
disclosure form throughout the entire tenancy of the tenant. This signed form
shall be made available to the Clerk upon reasonable written notice.
§2714: PROSPECTIVE MOBILEHOME OWNER-TENANCY 12 MONTHS OR
LESS.
All prospective tenants shall be offered the option of a tenancy of 12 months
or less upon terms consistent with the provisions of the ordinance codified in this
chapter. This section shall not apply to prevent a mutually agreed upon
assignment between an owner and an existing mobilehome owner of an existing
lease, provided any such assignment does not violate subsection 2704(C).
§2715: RENT STABILIZATION ADMINISTRATION FEES.
All or any portion of the costs to administer this chapter may be collected by
the imposition of an annual rent stabilization administration fee established by
resolution of the City Council. The fee shall be chargeable against the total
number of mobilehome spaces in the City subject to rent control determined on a
date certain each year to be established by the City Council. The owner who
pays these fees may pass through to the mobilehome owners, subject to rent
control on the date established by the City Council, 50 percent of the fees
assessed against a mobilehome space. The fee shall be due on a date
established by the City Council but may be paid in quarterly installments by the
owners. Owners of parks annexed to the City after the Effective Date, shall be
charged the fee established by resolution beginning on the effective date of the
annexation.
§2716: AMENDMENT.
Any amendment to this chapter shall require a prior public hearing before the
City Council with notice thereof published in a newspaper of general circulation in
the City at least 10 days prior to the hearing.
§2717: VIOLATION.
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Every person who violates any provision of this chapter is guilty of a
misdemeanor. This section shall not apply to the Arbitrator or officers or
employees of the City.
SECTION TWO
1. COMPLIANCE WITH CEQA. The City Council finds that this ordinance is not
subject to the California Environmental Quality Act ("CEQA") pursuant to Sections
15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect
physical change in the environment), 15061(b)(3) (there is no possibility the activity in
question may have a significant effect on the environment.)
2. SEVERABILITY. If any provision of this ordinance or the application thereof to any
person or circumstance is held invalid, the remainder of the ordinance and the
application of such provision to other persons or circumstances shall not be affected
thereby. The City Council hereby declares that it would have adopted this Ordinance
and any section, subsection, sentence, clause or phrase thereof irrespective of the fact
that any one or more sections, subsections, sentences, clauses or phrases be declared
unconstitutional or otherwise invalid.
3. EFFECTIVE DATE. This Ordinance shall be published as required by law in a
newspaper of general circulation in the City of Ukiah, and shall become effective thirty
(30) days after its adoption.
4. MANDATORY REVIEW. The City Council shall review this ordinance at the next
regular City Council meeting occurring after the first anniversary of the Effective Date of
this ordinance. The review shall consider whether the ordinance should be amended or
repealed based on the City's experience of the implementation of the ordinance over
that one year period.
Introduced by title only on October 6, 2010, by the following roll call vote:
AYES: Councilmembers Landis, Rodin, Baldwin, and Mayor Thomas
NOES: Councilmember Crane
ABSENT: None
ABSTAIN: None
Adopted on October 20, 2010, by the following roll call vote:
AYES: Councilmembers Landis, Rodin, Baldwin, and Mayor Thomas
NOES: Councilmember Crane
ABSENT: None
ABSTAIN: None
/s/ Benj Thomas, Mayor
ATTEST:
/s/JoAnne M. Currie, City Clerk
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Re-adopted on January 5, 2011, by the following roll call vote:
AYES: Councilmembers Landis, Thomas, Baldwin, and Mayor Rodin
NOES: Councilmember Crane
ABSENT: None
ABSTAIN: one
Mari Rodin, Mayor
ATTEST:
foAnne Currie, City Clerk
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