Modesto Municipal Code Ch. 19 Mobile Home Rent Stabilization Program

(a) Approximately a year and a half prior to the adoption of the ordinance codified in this chapter, many citizen-residents of mobile home parks began submitting concerns and complaints about rapidly increasing mobile home park space rents which threatened to cause the displacement of residents, to the attention of the Modesto City Council, as well as the Stanislaus County Board of Supervisors and the City Councils of Ceres, Riverbank, and Oakdale.

(b) In response to these complaints and developing crisis, requests for a rent control ordinance, in the spring of 2006 the Modesto City Council, along with the Board of Supervisors, and the City Councils of Ceres, Riverbank and Oakdale, formed an Ad Hoc Committee (the "Ad Hoc Committee") to look at options available to address this growing concern. The Ad Hoc Committee was made of up elected officials from each jurisdiction.

(c) The Ad Hoc Committee met approximately nine (9) to ten (10) times between May 2006 and February 2007. Over the course of their meetings the Ad Hoc Committee took in documentary evidence and testimony from residents and owners, as well as receiving information from subject matter experts in the area of mobile home rent control.

(d) During the time the Ad Hoc Committee was studying this issue, mobile home space rents continued to increase, some very drastically. The citizen-residents submitted testimonial and documentary evidence demonstrating that some mobile home parks specifically cited the threat of potential rent control as a reason for the rent increases during this time.

(e) Collectively, the decision of the Ad Hoc Committee was for the representatives of the various agencies to recommend rent stabilization ordinances in all the involved jurisdictions. On April 30, 2007, this recommendation was brought to the Modesto City Council, who then acted to move forward with the adoption of a rent stabilization ordinance.

(f) The City of Modesto currently has nine (9) mobile home parks with a total of approximately one thousand four hundred (1,400) mobile home spaces. These mobile home spaces also represent a significant portion of the low cost affordable housing supply within the City.

(g) The State of California has recognized, by the adoption of special legislation regulating the terms and conditions of tenancies of mobile home owners in mobile home parks, that there is a significant distinction between the situation of residents (mobile home owners) of mobile home parks and tenants of rental apartments or other rental property. This legislative recognition is codified in the State Mobile Home Residency Law, which is found at California Civil Code Section 798.55a, and includes the following findings:

The Legislature finds and declares that, because of the high cost of moving mobile homes, the potential for damage resulting therefrom, the requirements relating to the installation of mobile homes, and the cost of landscaping or lot preparation, it is necessary that the owners of mobile homes occupied within mobile home parks be provided with the unique protection from actual or constructive eviction afforded by the provisions of this chapter.

(h) In 2001, the United States Supreme Court also explained the "unique" nature of mobile home space rentals in its pivotal holding in Yee v. The City of Escondido 503 U.S. 519, 523, 112 S.Ct. 1522, 118 L.Ed.2nd 153 (1992) while holding as follows:

This case concerns the application of a mobile home rent control ordinance, and some background on the unique situation of the mobile home owner in his or her relationship to the mobile home park owner may be useful. The term "mobile home" is somewhat misleading. Mobile homes are largely immobile as a practical matter, because the cost of moving one (1) is often a significant fraction of the value of the mobile home itself. They are generally placed permanently in parks; once in place, only about one (1) in every one hundred (100) mobile homes is ever moved. (Citation.) A mobile home owner typically rents a plot of land, called a "pad," from the owner of a mobile home park. The park owner provides private roads within the park, common facilities such as washing machines or a swimming pool, and often utilities. The mobile home owner often invests in site-specific improvements such as a driveway, steps, walkways, porches, or landscaping. When the mobile home owner wishes to move, the mobile home is usually sold in place, and the purchaser continues to rent the pad on which the mobile home is located. (Yee v. Escondido, 503 U.S. 519, 523, 112 S.Ct. 1522, 118 L.Ed.2d 153 (1992).) Thus, unlike the usual tenant, the mobile home owner generally makes a substantial investment in the home and its appurtenances—typically a greater investment in his or her space than the mobile home park owner. (cite omitted) The immobility of the mobile home, the investment of the mobile home owner, and restriction on mobile home spaces, has sometimes led to what has been perceived as an economic imbalance of power in favor of mobile home park owners. Galland v. Clovis, 24 Cal.4th 1003, 1009-10 (2001).

(i) As a practical matter, mobile homes in mobile home parks are "immobile." The cost of moving a mobile home from one (1) park to another is substantial. Generally, mobile home parks will not accept mobile homes that are more than a few years old. As a result, owners of mobile homes in mobile home parks are virtually captive tenants. The result is that often the only space where they can place their mobile home is the space where it is currently located.

(j) The City of Modesto commissioned a Mobile Home Market Study in July of 2007 (hereinafter the "Market Study"). The results of the Market Study provided that between the years 2000 through 2007, most mobile home residents have experienced average rent increases of twenty-five (25) to forty (40) percent. However, within the last two (2) years, some mobile home residents have experienced a dramatic increase in rent, in some cases more than ninety (90) percent. This has led to tremendous financial hardship, particularly for residents on fixed incomes, including senior citizens. Under the Mobile Home Residency Law, residents are not entitled to receive more than a ninety (90) day notice of an increase in rents, which may not provide sufficient time to plan and budget for these significant rent increases. The Market Study also indicated that some residents received more than one (1) such significant increase within a year's time.

(k) One (1) effect of the rapidly increasing mobile home rent spaces has been that mobile home owners who could no longer afford to pay the rent spaces, have been forced to sell their mobile homes. In some cases, as revealed by the Market Study, mobile home owners who were neither able to sell their home nor afford the increased rent, simply walked away from their mobile homes.

(l) Mobile home parks are a valuable resource of affordable housing for low and moderate income individuals and families. In the City of Modesto, approximately forty (40) percent of mobile home park residents qualify as low income, with annual incomes of less than twenty thousand dollars ($20,000.00).

(m) Most of the mobile home park residents in the City own their own mobile homes. A significant portion of those mobile home owners have made a substantial financial investment in their mobile homes.

(n) The Market Study further revealed that a significant proportion of mobile home park residents are senior citizens, many of whom live on limited or fixed incomes.

(o) The Market Study also confirmed that due to the unaffordability of significantly increasing rents, some mobile home owners have had to sell their homes for drastically reduced prices, and in some cases, the owners have had to abandon their homes entirely when they found themselves unable to sell and unable to afford the increased rent.

(p) The average income level of mobile home owners is substantially below the area median income level and the level necessary to afford a median priced rental unit.

(q) Due to their limited or fixed incomes, their large investment in their mobile homes, and the immobility of mobile homes which creates a captive market, mobile home park residents generally have very limited economic bargaining power concerning the rents charged for mobile home park spaces.

(r) If there are no limits on rent increases for mobile home spaces, park owners could impose excessive rent increases that would further result in mobile home owners suffering severe financial hardship, including, but not limited to, a drastic reduction or loss of equity in their mobile homes.

(s) Provide a minimal rollback of the effective date of the ordinance codified in this chapter, to April 30, 2007 because that is the last day of the month in which the City Council determined a rent stabilization ordinance was needed to address the crisis of potential displacement of residents unable to afford to remain in their homes.

(t) The City Council finds that the adoption of the ordinance codified in this chapter will not have a significant, substantial or adverse effect on the physical environment of the community because enactment of this chapter involves no deviation from the General Plan and no change in the present use of any property within the unincorporated areas.

(Added by Ord. 3451-C.S., § 1, effective 10-4-07)

The purpose of this chapter is to:

(a) Encourage the fair and reasonable practices utilized by most mobile home park owners and managers in the City;

(b) Encourage good and productive relationships between mobile home park owners and residents, and mobile home park owners and managers;

(c) Prevent excessive and unreasonable increases in mobile home park space rents;

(d) Prevent potential exploitation of the captive market made up of residents/owners of mobile homes who cannot afford excessive rent increases, yet cannot or are unable to move to another mobile home park;

(e) Enable mobile home owners to preserve some of the equity in their mobile homes;

(f) Permit mobile home park owners to fairly run their businesses and receive a fair return on their investments; and

(g) Help preserve a valuable form of affordable housing within the City of Modesto.

(Added by Ord. 3451-C.S., § 1, effective 10-4-07)

(a) Approved Long-Term Lease Agreement/ Supplement. The Approved Long-Term Lease Agreement/Supplement is the agreement approved by City Council resolution, in accordance with the terms of the Memorandum of Understanding between the City and participating park owners. The Approved Long-Term Lease Agreement/Supplement sets forth the applicable terms to be included in any long-term lease agreement or as a supplement to any existing written lease agreement.

(b) Consumer Price Index. The Consumer Price Index all items for the western region for all-urban consumers as reported by the Bureau of Labor Statistics of the United States Department of Labor.

(c) Days. Days shall mean calendar days.

(d) In-Place Transfer. The transfer of the ownership of a mobile home with the mobile home remaining on the mobile home park space following the transfer.

(e) Landlord. A mobile home park owner, mobile home owner, lessor or sublessor who receives or is entitled to receive rent for the use and occupancy of any rental unit or portion thereof, and the agent, representative or successor of any of the foregoing.

(f) Mobile Home. A structure transportable in one (1) or more sections, designed and equipped to contain not more than one (1) dwelling unit, to be used with or without a foundation system.

(g) Mobile Home Owner. A person who has the right to the use of a mobile home lot within a mobile home park on which to locate, maintain, and occupy a mobile home, lot improvements and accessory structures for human habitation, including the use of the services and facilities of the park.

(h) Mobile Home Park. Any area or tract of land where two (2) or more mobile home lots are rented or leased, or held out for rent or lease, to accommodate mobile homes used for human habitation for permanent, as opposed to transient, occupancy.

(i) Mobile Home Rent Hearing Board. A Hearing Board, identified as a subcommittee of the Citizens Housing and Community Development Commission, consisting of three (3) members, exclusive of elected officials.

(j) Mobile Home Rent Stabilization Administrator. The individual designated by the City Manager to administer the City's Mobile Home Rent Stabilization Program.

(k) Mobile Home Resident. A person, including a mobile home owner or mobile home tenant, who occupies a mobile home.

(l) Mobile Home Tenant. A person who rents or leases a mobile home from a mobile home owner.

(m) Rent. Any consideration, including any bonus, benefit or gratuity, demanded or received by a landlord for or in connection with the use or occupancy, including housing services, of a rental unit or in connection with the assignment of a lease or in connection with subleasing of the rental unit. Rent shall include charges for privileges and facilities supplied in connection with the use or occupancy of a mobile home park space and passthroughs as authorized under this chapter.

Rent shall not include:

(1) Utility charges for charges for submetered gas and electricity;

(2) Charges for water, refuse disposal, sewer service, and, or other services which are provided and charged to mobile home residents solely on a cost passthrough basis;

(3) Any amount paid for the use and occupancy of a mobile home unit (as opposed to amounts paid for the use and occupancy of a mobile home space).

(n) Rent Increase. Any rent demanded of or paid by a mobile home owner for a mobile home park space in excess of rent paid for the rental unit immediately prior to such demand or payment. Rent increase includes any reduction in services provided to a mobile home resident or transfer of the cost without a corresponding reduction in the moneys demanded for or paid as rent.

(o) Rental Agreement. "Rental agreement" means a written agreement between a landlord and a mobile home owner or mobile home tenant for the use and occupancy of a rental unit to the exclusion of others.

(p) Rental Unit. A mobile home park space, located in a mobile home park in the City of Modesto, which is offered or available for rent. Rental unit includes the land, with or without a mobile home, and appurtenant buildings thereto and all housing services, privileges and facilities supplied in connection with the use or occupancy of the mobile home or mobile home park space.

(q) Service Reduction. A decrease or diminution in the basic service level required to be provided by the landlord pursuant to any of the following:

(1) California Civil Code Sections 1941.1 and 1941.2;

(2) The Mobile Home Residency Law, California Civil Code Section 798 et seq.;

(3) The Mobile Home Parks Act, California Health and Safety Code Sections 18200 et seq.;

(4) The landlord's implied warranty of habitability;

(5) An express or implied agreement between the landlord and the resident;

(6) The level of service as implied by the condition of improvements, fixtures, and equipment and their availability for use by the resident, at the time of the last rent increase.

(Added by Ord. 3451-C.S., § 1, effective 10-4-07)

This chapter shall be applicable to all mobile home park spaces within the City, except as provided in Section 4-19.05 of this chapter.

(Added by Ord. 3451-C.S., § 1, effective 10-4-07)

(a) Exemptions Provided by State Law. The following serves as notification of exemptions from local rent regulations provided by State law:

(1) Spaces that are subject to a rental agreement which exempts that space from rent regulation pursuant to the California Mobile Home Residency Law, California Civil Code Section 798 et seq.

(2) Newly constructed spaces, which are exempted pursuant to Civil Code Section 798.45.

(3) Spaces which are exempt pursuant to Civil Code Section 798.21 (which exempts spaces which are not the principle residence of the mobile home owner).

(4) Any space otherwise exempted by State law.

(b) Units Owned or Operated by Government Agencies.

(1) The provisions of this chapter shall not apply to mobile homes or mobile home parks owned or operated by any governmental agency.

(2) The provisions of this chapter shall not apply to any rental unit whose rent is subsidized pursuant to a public program that limits the rent that can be charged for the mobile home park space.

(c) A mobile home park shall be exempt from this chapter if it has entered into a Memorandum of Understanding with the City. By signing the Memorandum of Understanding, the mobile home park owner must provide all mobile home owners and residents who, as of August 31, 2007, are not parties to an existing long-term rental agreement having an initial term in excess of twelve (12) months, the opportunity to enter into the Approved Long-Term Lease/Supplement, and provide proof of offer of said Approved Long-Term Lease/Supplement to the City of Modesto, on the following conditions:

(1) The Approved Long-Term Lease/Supplement is identical to the terms as approved by City Council resolution. Any long-term lease which offers the same or better protections to the mobile home owners and residents may be used with approval of the City Manager or designee. As long as the Approved Long-Term Lease/Supplement is offered to the mobile home owners and residents, the park owner may offer other rental agreements to the mobile home owners and residents for their consideration and acceptance/rejection.

(2) The mobile home owner or resident is provided with an Information Sheet, which among other things, must set forward the rights of residents and owners under this chapter as well as additional information as determined by the Mobile Home Rent Stabilization Program Administrator.

(3) The mobile home park owner must submit verification of compliance with this section to the City for each current and incoming resident, in accordance with procedures as set forth by the Mobile Home Rent Stabilization Program Administrator. The mobile home park owner must also submit verification of compliance upon request of the City.

(4) Such other criteria as may be set forth by City Council resolution.

(Added by Ord. 3451-C.S., § 1, effective 10-4-07)

No rent in excess of rent in effect on April 30, 2007 may be charged unless authorized by Section 4-19.07 (Automatic Annual Increases), Section 4-19.09 (Passthroughs of Property Tax Increases), Section 4-19.10 (Increases in Order to Provide a Fair Return) of this chapter, or other applicable sections of this chapter. With regard to those mobile home parks that may be annexed into the City, the applicable base year and rent shall be that rent in effect at the time of the annexation.

(Added by Ord. 3451-C.S., § 1, effective 10-4-07)

(a) Rent Increases in 2007. On or after August 31, 2008, the rent may be increased to an amount equal to the rent in effect as of April 30, 2007 adjusted by one hundred (100) percent of the increase in the percentage increase in the Consumer Price Index (CPI), since April 30, 2007. For the purposes of this subsection, the increase in the CPI shall be equal to the percentage increase between the CPI last reported as of January 1, 2008 and the CPI last reported as of July 30, 2008.

(b) Rent Increases in 2008 and Subsequent Years. On or after August 31st of each year, the rent may be increased to an amount equal to the rent in effect on February 1st of the prior year adjusted by one hundred (100) percent of the increase in the percentage increase in the CPI last reported as of August 31st in the year before the prior year and the CPI last reported as of August 31st of the prior year.

(c) Calculation of the Percentage Increase in the CPI. The amount of the increase shall be rounded to nearest one-quarter (¼) of one (1) percent.

(d) Ceiling on Annual Automatic Rent Increases. The allowable increase pursuant to this section shall not exceed six (6) percent.

(e) Notice of Allowable Annual Rent Increase.

(1) Notice by Mobile Home Rent Stabilization Administrator. The annual rent increase shall be annually calculated by the Mobile Home Rent Stabilization Administrator, and posted by April 30th of each year both in the City's Tenth Street Place building at 1010 Tenth Street, Modesto, California, and on the City's website. The information shall also be mailed to each non-exempt park owner and to the mobile home owner representative in each park in the City.

(2) Notice in Mobile Home Parks. A copy of the notice shall be posted by the park owner or manager in a prominent place in each non-exempt mobile home park within three (3) days after it is received by the park owner.

(f) No Decrease if CPI Decreases. In the event that the CPI decreases, no rent decrease shall be required pursuant to this section.

(g) Compliance with State Law. Rent increases permitted pursuant to this section shall not be effective and shall not be demanded, accepted, or retained until the landlord has given the notice required by State law.

(Added by Ord. 3451-C.S., § 1, effective 10-4-07)

(a) Increase Permitted. Upon an in-place sale or transfer of the ownership of a mobile home, a park owner may increase the space rent by ten (10) percent.

(b) Allowable Frequency of Increases. Only one (1) increase of ten (10) percent shall be allowed pursuant to this section within a sixty (60) month period.

(c) Types of Transfers Excluded from this Section. In-place sales and transfer of ownership of the purposes of this chapter shall not include transfer to the conservator, guardian or trustee of a homeowner, transfers to a homeowner's trust (provided that the beneficiaries entitled to ownership of the mobile home are members of the homeowner's immediate family), for transfers to a surviving spouse, parent, or children of the homeowner.

(d) Replacement of Mobile Home not a Transfer. No increase may be imposed pursuant to this section pursuant to the removal of a mobile home from a park by a homeowner already residing in the park for the purpose of replacing a mobile home with a new or different mobile home.

(e) Advance Notice of Allowable Rent Increases Pursuant to this Section. A mobile home owner who intends to offer the mobile home for sale may request a written statement from the park owner specifying the rent which will be charged to a new mobile home owner. The park owner shall provide this written statement within ten (10) days of the request, which shall be deemed received on the day that the notice is personally delivered or within three (3) days of the time that the notice is mailed.

(Added by Ord. 3451-C.S., § 1, effective 10-4-07)

A park owner may pass through property tax increases resulting from a reassessment of the park as a consequence of the sale of the park, provided that the purchaser of the park is not a member of the seller's immediate family or a surviving spouse. This section shall not authorize any passthrough that is not permitted under State law.

The amount of the property tax increase resulting from the sale of a park for the year in which the sale took place shall be computed by comparing the annual property tax for the property tax year (July 1st-June 30th) prior to the sale of the property with the property tax for the property tax year in which the transfer occurred. The amount of the property tax increase for subsequent years shall be computed by comparing the annual property tax for the property tax year (July 1st-June 30th) prior to the sale of the property with the property tax for the property tax year following the year in which the transfer occurred. The property tax comparisons pursuant to this section shall not take into account the portion of the property tax increase attributable to City-wide increase in assessed values, such as the two (2) percent annual increase that is ordinarily applied to all properties.

A park owner may pass through cost increases resulting from new types of property assessments.

The amount of the any property tax increase or cost increase resulting from a new type of property assessment shall be prorated on a monthly basis among all of the spaces in a park.

(Added by Ord. 3451-C.S., § 1, effective 10-4-07)

In addition to the rent increases authorized by Sections 4-19.08 and 4-19.09 of this chapter, a park owner may petition for a rent increase in order to obtain a fair return.

(a) Presumption of Fair Base Year Net Operating Income. It shall be presumed that the net operating income received by the landlord in the base year, provided the landlord with a fair and reasonable return.

(b) Fair Return. A park owner has the right to obtain a net operating income equal to the base year net operating income adjusted by one hundred (100) percent of the percentage increase in the CPI since the base year.

(c) Determination of Base Year.

(1) Except as otherwise provided in this section, for the purposes of calculating expenses, base year means the 2007 calendar year. For the purposes of calculating income, base year income means the annualized rental income of the park based on the rent in effect as of April 30, 2007.

(2) In the event that a rent increase determination is made pursuant to this section, if a subsequent petition is filed, the base year shall be the year that was considered as the "current year" in the prior petition.

(3) In the event that base year income or expenses are adjusted pursuant to subsection (e) of this section, the adjusted amounts shall be used for the purposes of calculating base year income and/or expenses.

(4) In the event that the park is exempted from this chapter pursuant to Sections 4-19.05 and 4-19.06 of this chapter, for the purposes of calculating expenses, base year means the calendar year immediately preceding the termination of the exemption and base year income means the annualized rental income of the park as of December 31st in the year immediately preceding the termination of the exemption.

(d) Current Year. The current year shall be the calendar year that precedes the year in which the application is filed.

(e) Adjustment of Base Year Net Operating Income. Within two (2) years following the adoption of the ordinance codified in this chapter, the park owner or any mobile home resident who is a party to the administrative hearing may present evidence to rebut the presumption of fair return based upon the base year net operating income as set forth in subsection (c) of this section based on at least one (1) of the following findings:

(1) Exceptional Expenses in the Base Year. The park owner's operating expenses in the base year were unusually high or low in comparison to other years. In such instances, adjustments may be made in calculating operating expenses so the base year operating expenses reflect average expenses for the property over a reasonable period of time. The following factors shall be considered in making such a finding:

(i) Extraordinary amounts were expended for necessary maintenance and repairs.

(ii) Maintenance and repair was below accepted standards so as to cause significant deterioration in the quality of services provided.

(iii) Other expenses were unreasonably high or low notwithstanding the application of prudent business practices.

(2) Exceptionally Low Rent in the Base Year. The gross income during the base year was disproportionately low due to exceptional circumstances. In such instances, adjustments may be made in calculating base year gross rental income consistent with the purposes of this chapter. The following factors shall be considered in making such a finding:

(i) If the gross income during the base year was lower than it might have been because some residents were charged reduced rent;

(ii) If the gross income during the base year was significantly lower than normal because of the destruction of the premises and/or temporary eviction for construction or repairs;

(iii) The pattern of rent increases in the years prior to the base year and whether those increases reflected increases in the CPI;

(iv) Other exceptional circumstances.

(f) Calculation of Net Operating Income.

(1) Net Operating Income. Net operating income shall be calculated by subtracting operating expenses from gross rental income.

(2) Gross Rental Income.

(i) Gross rental income shall include:

(A) Gross rents calculated as gross rental income at one hundred (100) percent occupancy, adjusted for uncollected rents due to vacancy and bad debts to the extent such are beyond the control of the landlord. No such adjustment shall be greater than three (3) percent of gross rents unless justification for a higher rate is demonstrated by the park owner.

(B) All other income or consideration received or receivable in connection with the use or occupancy of the rental unit.

(ii) Gross rental income shall not include:

(A) Income which constitutes reimbursement for utilities provided by the park owner.

(B) Income associated with provision of utility services when consideration of the income is preempted by State law.

(3) Operating Expenses.

(i) Included in Operating Expenses. Operating expenses shall include the following:

(A) Reasonable Costs of Operation and Maintenance.

(B) Management Expenses. It shall be presumed that management expenses have increased by the percentage increase in the CPI between the base year and the current year unless the level of management services has either increased or decreased between the base year and the current year.

(C) Utility Costs. Utility costs except utility costs which are excluded pursuant to subsection (f)(3)(F) of this section.

(D) Real Property Taxes. Rent increases obtained pursuant to this chapter in order to cover increases in property taxes shall be considered in conjunction with consideration of property tax increases.

(E) License and registration fees required by law to the extent same are not otherwise paid by mobile home residents.

(F) Landlord-Performed Labor. Landlord-performed labor compensated at reasonable hourly rates.

1. No landlord-performed labor shall be included as an operating expense unless the landlord submits documentation showing the date, time, and nature of the work performed.

2. There shall be a maximum allowed under this provision of five (5) percent of gross income unless the landlord shows greater services were performed for the benefit of the residents.

(G) Costs of Capital Replacements. Costs of capital replacements plus an interest allowance to cover the amortization of those costs. In order to constitute operating expenses, all of the following conditions shall be met:

1. The capital improvement is made at a direct cost of not less than one hundred dollars ($100.00) per affected rental unit or at a total direct cost of not less than five thousand dollars ($5,000.00), whichever is lower.

2. The costs, less any insurance proceeds or other applicable recovery, are averaged on a per unit basis for each rental unit actually benefited by the improvement.

3. The costs are amortized over a period of not less than thirty-six (36) months.

4. The costs do not include any additional costs incurred for property damage or deterioration resulting from any unreasonable delay in the undertaking or completion of any repair or improvement.

5. The costs do not include costs incurred to bring the rental unit into compliance with a provision of the Modesto Municipal Code or State law where the rental unit has not been in compliance from the time of its original construction or installation and such provision was in effect at the time of such construction or installation.

6. At the end of the amortization period, the allowable monthly rent is decreased by any amount it was increased because of the application of this provision.

(H) Legal Expenses. Attorneys' fees and costs incurred in connection with successful good faith attempts to recover rents owing, successful good faith unlawful detainer actions not in derogation of applicable law, and legal expenses necessarily incurred in dealings with respect to the normal operation of the park to the extent such expenses are not recovered from adverse or other parties, subject to the following requirements:

1. Reasonable fees, expenses, and other costs incurred in the course of successfully pursuing rights under or in relationship to this chapter and regulations adopted pursuant to the ordinance codified in this chapter including costs incurred in the course of pursuing successful fair return petitions shall be amortized over a five (5) year period, unless the Hearing Board concludes that a different period is more reasonable. The allowance for such amortized costs shall include an interest allowance set in accordance with subsection (f)(3)(G)(3) of this section.

2. Allowable legal expenses which are not of a nature that recurs annually shall be amortized over a reasonable period of time and at the end of the amortization period, the allowable monthly rent shall be decreased by any amount it was increased because of the application of this provision.

i. Interest Allowance for Expenses that are Amortized. An interest allowance shall be allowed on the cost of amortized expenses; the allowance shall be the interest rate on the cost of the amortized expense equal to the prime interest rate, plus one (1) percent. The "average rate" shall be the rate Freddie Mac last published in its weekly Primary Mortgage Market Survey (PMMS) as of the date of the initial submission of the petition.

ii. Exclusions from Operating Expenses. Operating expenses shall not include the following:

a. Mortgage principal or interest payments or other debt service costs;

b. Any penalties, fees or interest assessed or awarded for violation of any provision of this chapter or of any other provision of law;

c. Land lease expenses;

d. Political contributions;

e. Depreciation;

f. Any expenses for which the landlord has been reimbursed by any utility rebate or discount, security deposit, insurance settlement, judgment for damages, settlement or any other method or device;

g. Unreasonable expense increases since the base year;

h. Uninsured losses.

iii. Adjustments of Operating Expenses. Operating expenses shall be averaged with other expense levels for other years or amortized or adjusted by the CPI or may otherwise be adjusted, in order to establish an expense amount for that item which most reasonably serves the objectives of obtaining a reasonable comparison of base year and current year expenses when:

a. An expense item for a particular year is not representative; or

b. The base year expense is not a reasonable projection of average past expenditures for that item in the years immediately preceding or following the base year; or

c. The current year expense is not a reasonable projection of future expenditures of that item; or

d. A particular expense exceeds the normal industry or other comparable standard for the area. In such a case, the park owner shall bear the burden of proving the reasonableness of the expense. To the extent that it is found that the expense is unreasonable it may be adjusted to reflect the normal industry standard.

(g) Assurance of a Fair Return. Notwithstanding any other provision of this chapter, nothing shall preclude the Hearing Board and the City Council, either in the exercise of their sound discretion during review of a petition for fair return adjustments or in response to a court order, from granting an increase that is necessary in order to meet constitutional fair return requirements and to take into account factors that must be considered in making a fair return determination.

(Added by Ord. 3451-C.S., § 1, effective 10-4-07)

(a) Right to Petition. A mobile home park owner who seeks to increase the rent of any mobile home park space which is not exempted from this chapter, by an amount in excess of the amounts authorized by this chapter may file a petition pursuant to this section. No petition may be filed pursuant to this section until sixty (60) days after this chapter goes into effect.

(b) Limit on Frequency of Petitions. Only one (1) petition pursuant to this section may be filed for a mobile home park within a twelve (12) month period. An exception to this limitation shall be authorized in the event of extraordinary circumstances that could not reasonably have been foreseen at the time the prior petition was filed.

(c) Petition Form Required. Such petition shall be on a form prescribed by the Mobile Home Rent Stabilization Administrator.

(d) Contents of Petition Form. The form may require any information deemed relevant by the Mobile Home Rent Stabilization Administrator, and approved by the City Manager or designee. The form shall include, but not be limited to:

(1) A list of the names and addresses of all mobile home owners and mobile home tenants subject to the rent increase;

(2) A statement of the date the rent increase is proposed to be effective;

(3) The rent for each space in the park in the base year, the current year, the three (3) prior years;

(4) An income and expense statement for the base year, the current year, and the three (3) prior years;

(5) Evidence documenting the income and expenses claimed by the park owner;

(6) All other documentation upon which the park owner is relying on to justify the rent increase.

(e) Determination that the Petition is Complete. Within thirty (30) days after the petition is submitted, the Mobile Home Rent Stabilization Administrator shall determine if the petition is complete and inform the petitioner in writing that the application is complete or if deemed not complete, list the additional information that is required. If the petitioner submits additional information, within twenty (20) days following the petitioner's submission of additional information the Mobile Home Rent Stabilization Administrator shall determine if the petition is complete and inform the petitioner in writing. If the Mobile Home Rent Stabilization Administrator fails to notify the petitioner of missing information within the thirty (30) day or twenty (20) day periods, the Hearing Board may nonetheless request that the petitioner complete the petition prior to the hearing, or deny the petition on the ground that it is incomplete.

(f) Access to the Petition. The City shall make the documentation required by this section available for inspection and copying by any person during the City's normal business hours. The petitioner shall maintain a copy of such documentation at the mobile home park office and shall make such documentation available for inspection during the normal business hours of such office.

(g) Mobile Home Rent Stabilization Hearing Board. When the Mobile Home Rent Stabilization Administrator deems an application complete under subsection (e) of this section, the Administrator shall convene a hearing of the Mobile Home Rent Stabilization Board, which is comprised of a three (3) member subcommittee of the Citizens Housing and Community Development Commission. In no event shall one (1) of the members of the Hearing Board be an elected official.

(h) Time of Hearing.

(1) The Hearing Board shall commence an administrative hearing on the petition within not less than thirty (30) nor more than sixty (60) days after the date the park owner's petition is deemed complete. The hearing shall be completed within fifteen (15) days after it is commenced. These time deadlines may be extended if the Hearing Board finds that there is good cause to commence and/or complete the hearing at a later date.

(2) The Hearing Board may schedule the hearing during the normal business hours of the City unless the park owner or a majority of the residents that are subject to the petition request that the hearing be scheduled during the evening.

(i) Notice of Hearing. The City shall give written notice of the time, date, and place of the administrative hearing to the park owner or a majority of the residents that are subject to the petition at least thirty (30) days prior to the hearing.

(j) Requests for Additional Information by Opposing Party.

(1) Either party may request that additional specific supporting documentation be provided to substantiate the claims made by the other party. The request shall be presented in writing to the Hearing Board.

(2) The Hearing Board may order production of such requested documentation, if the Hearing Board determines the information is relevant to the proceedings.

(k) Rebuttal Reports. The residents of the mobile home park affected by the petition may submit rebuttal reports to the Hearing Board fourteen (14) days prior to a hearing. The petitioner may submit a response to the resident's rebuttal not less than seven (7) days prior to the hearing.

(l) Conduct of Hearing.

(1) The hearing shall be conducted by the Hearing Board in accordance with such rules and regulations as may be promulgated by resolution of the City Council and any rules adopted by the Hearing Board.

(2) The Hearing Board shall have the power and authority to require and administer oaths or affirmations where appropriate, and to take and hear evidence concerning any matter pending before the Hearing Board.

(3) The rules of evidence generally applicable in the courts shall not be binding on the Hearing Board. Hearsay evidence and any and all other evidence which the Hearing Board deems relevant and proper may be admitted and considered.

(4) Any party or such party's representative, designated in writing by the party, may appear at the hearing to offer such documents, oral testimony, written declaration or other evidence as may be relevant to the proceedings.

(5) The Hearing Board may grant or order not more than two (2) continuances of the hearing for not more than ten (10) working days each. Additional continuances may be granted only if all parties stipulate in writing or if the Hearing Board finds that there is a good cause for the continuance. Such continuances may be granted or ordered at the hearing without further written notice to the parties.

(6) A tape recording of the proceedings shall be made by the Mobile Home Rent Stabilization Administrator.

(7) The hearing shall be conducted in a manner that insures that parties have an opportunity to obtain documents and to obtain information about the theories and facts to be presented by the opposing parties an adequate time in advance of the hearing to enable preparation of a rebuttal.

(m) Representation of Parties.

(1) The parties in any administrative hearing may be represented at the hearings by a person of the party's choosing. The representative need not be an attorney.

(2) The parties shall file a written designation of representatives with the Mobile Home Rent Stabilization Administrator at least five (5) days before the hearing date.

(3) The written designation of the representative shall include a statement that the representative is authorized to bind the party to any stipulation, decision or other action taken at the administrative hearing.

(n) Hearing—Findings and Determination.

(1) Within thirty (30) days following the close of the hearing, the Hearing Board shall submit to the Mobile Home Rent Stabilization Administrator a written statement of decision, together with written findings of fact upon which such decision is based

(2) The Hearing Board's decision shall include a determination in accordance with the provisions of this chapter of the amount of the rent increase, if any, which is required to provide the landlord with a fair return and findings as to the income and expenses of the park in the base year and the current year with a breakdown of allowable expenses in accordance with the categories set forth in the application form.

(3) The Hearing Board's allowance or disallowance of any proposed rent increase or portion thereof may be reasonably conditioned in any manner:

(i) Necessary to effectuate the purposes and provisions of this chapter; and

(ii) Consistent with California law.

(o) Notice of Decision. The Mobile Home Rent Stabilization Administrator shall mail copies of the decision to the landlord or mobile home park owner and all affected mobile home owners and mobile home tenants as soon as the decision, but in no case longer than ten (10) days.

(p) Modification of Decision in the Event of Mathematical or Clerical Inaccuracies. Any party alleging that the Hearing Board's statement of decision contains mathematic or clerical inaccuracies may so notify the Mobile Home Rent Stabilization Administrator within fifteen calendar days of the mailing of the decision. The Mobile Home Rent Stabilization Administrator shall refer such allegations to the Hearing Board, who shall review the decision, make any corrections warranted, and refile the statement of decision within ten (10) working days following the referral by the Mobile Home Rent Stabilization Administrator. Upon refiling of the statement, the decision shall be final and binding on the parties.

(q) Completion of Hearing and Issuance of Hearing Board's Decision. After a petition is deemed complete, the overall time for conducting a hearing and issuing a decision shall not exceed one hundred twenty (120) days.

(r) Appeal of Decision of Hearing Board.

(1) The Hearing Board's determination shall be subject to review pursuant to California Code of Civil Procedure Section 1094.5 as a final administrative determination.

(s) Attendance of Mobile Home Owner. The administrative Hearing Board's decision shall apply to all mobile home owners subject to the proposed rent increase regardless of whether such owner was present or represented at the hearing.

(Added by Ord. 3451-C.S., § 1, effective 10-4-07)

(a) New capital improvements shall be defined as services or improvements that do not exist in the park at the time the park owner incurs any of the costs for the services or improvements. New capital improvements shall not include replacement capital improvements or services, maintenance, or improvements the park owner was required by law to provide.

(b) A park owner may pass through to mobile home owners one hundred (100) percent of the cost of new capital improvements. A park owner may charge each affected mobile home owner as additional rent the pro-rata share of new capital improvement costs including financing costs. Any assessment for a new capital improvement shall be identified separately and listed on rent statements along with the date on which the assessment will expire.

(c) No costs of capital improvements other than new capital improvements as defined in subsection (a) of this section may be passed through to mobile home owners. Passthrough of the costs of new capital improvements shall be subject to the following preconditions:

(1) Prior to initiating the service or incurring the capital improvement cost, the park owner must advise the mobile home owners regarding the nature and purpose of the improvements and the estimated cost of the improvements.

(2) The park owner must obtain the prior written consent to the proposed new capital improvement of at least one (1) adult mobile home owner in each of a majority of the mobile home spaces in the park. Each space shall have only one (1) vote.

(3) If a majority of the mobile home owners fail to consent to the new capital improvement and the park owner can establish that the new capital improvement is reasonably necessary to protect the health or safety of the mobile home owners or their property or to protect the infrastructure of the mobile home park from physical damage or deterioration, the park owner may petition for a new capital improvement pass through under the procedures in Section 4-19.11 of this chapter.

(Added by Ord. 3451-C.S., § 1, effective 10-4-07)

(a) Any waiver or purported waiver by a mobile home resident of rights granted under this chapter shall be void as contrary to public policy.

(b) It shall be unlawful for a landlord to require or attempt to require, as a condition of tenancy in a mobile home park, a mobile home owner, mobile home tenant, prospective mobile home owner, or prospective mobile home tenant to waive in a lease or rental agreement or in any other agreement the rights granted to a mobile home resident by this chapter.

(c) It shall be unlawful for a landlord to deny or threaten to deny tenancy in a mobile home park to any person on account of such person's refusal to enter into a lease or rental agreement or any other agreement under which such person would waive the rights granted to a mobile home resident by this chapter.

(Added by Ord. 3451-C.S., § 1, effective 10-4-07)

(a) Posting of Ordinance. A copy of the ordinance codified in this chapter shall be posted in the office of every mobile home park and in the recreation building or clubhouse of every mobile home park located in the City.

(b) Notice to Prospective Residents. A copy of this chapter shall be provided to every resident and to prospective residents of a mobile home park in the City before the resident or prospective resident agrees to any rental agreement or lease.

(Added by Ord. 3451-C.S., § 1, effective 10-4-07)

A copy of this chapter shall be shown to every prospective purchaser of a mobile home park in the City before the prospective purchaser enters into an agreement to purchase the park.

(Added by Ord. 3451-C.S., § 1, effective 10-4-07)

(a) Within thirty (30) days following the date of the ordinance codified in this chapter becoming effective, the City shall provide each mobile home resident in the City with a copy of this chapter. A copy of the ordinance codified in this chapter, and other issues related to mobile home park space rentals within the City, shall also be posted and maintained on the City's web page.

(Added by Ord. 3451-C.S., § 1, effective 10-4-07)

The residents of each mobile home park in the City shall annually select by majority vote, a resident representative to receive all notices required by this chapter. Each elected representative shall also serve on the Citywide Mobile Home Owner/Mobile Home Park Owner Committee, in accordance with the terms of the Approved Long-Term Lease Agreement/Supplement and Memorandum of Understanding as applicable. The residents shall advise the Mobile Home Rent Stabilization Administrator of the name, address, and phone number of the elected resident representative in writing no later than January 31st of each year and shall promptly notify the Mobile Home Rent Stabilization Administrator of any change of representative. This provision is not intended to preclude the residents of any mobile home park in the City from forming other organizations concerned with landlord-tenant matters or from associating for any purpose.

(Added by Ord. 3451-C.S., § 1, effective 10-4-07)

Any prospective resident must be offered the opportunity to enter into the Approved Long-Term Lease Agreement. Prospective residents must also be provided the option of renting a mobile home space in a manner which will permit the "resident-to-be" to receive the benefits of the Mobile Home Space Rent Stabilization Program which includes, but is not limited to, rental of a mobile home space on a month-to-month basis. Such a person cannot be denied the option of a tenancy of twelve (12) months or less in duration. The park owner shall provide each prospective resident with a photocopy of the written notification which is attached as Appendix B of the ordinance codified in this chapter.

Any effort to circumvent the requirements of this section shall be unlawful.

(Added by Ord. 3451-C.S., § 1, effective 10-4-07)

(a) Due Date. Every mobile home park owner shall file an annual registration statement on a form provided by the Mobile Home Rent Stabilization Administrator no later than February 1st of each year.

(b) Contents of Registration Form. The initial registration shall include the name(s), business address(es), and business telephone number(s) of each person or legal entity possessing an ownership interest in the park and the nature of such interest; the number of mobile home spaces within the park; a rent schedule reflecting space rents within the park; a listing of all other charges, including utilities not included in space rent, paid by mobile home owners within the park and the approximate amount of each such charge; the name and address to which all required notices and correspondence may be sent, and other information required by the Mobile Home Rent Stabilization Administrator.

(c) Certification of Registration Forms. All registration forms and any documentation accompanying any registration forms shall contain an affidavit or declaration, signed by the park owner or a designated agent, with his/her signature notarized, certifying that the information contained therein is true, correct, and complete.

(c) Notice of Sale of a Park. Upon the sale or transfer of a mobile home park, the seller or transferor shall notify the Mobile Home Rent Stabilization Administrator of the sale or transfer and of the name and address of the buyer or transferee. Within ten (10) days following the sale or transfer of a mobile home park, the buyer or transferee shall register with the Mobile Home Rent Stabilization Administrator by providing the information required by this subsection.

(Added by Ord. 3451-C.S., § 1, effective 10-4-07)

(a) It shall be unlawful for any mobile home park owner or landlord to evict a mobile home resident where the mobile home park owner or landlord's dominant motive in seeking to recover possession of the rental unit is:

(1) Retaliation for the mobile home resident's organizing, petitioning government for rent relief, or exercising any right granted under this chapter; or

(2) Evasion of the purposes of this chapter.

(b) It shall be unlawful for a mobile home park owner or landlord to retaliate against a mobile home resident for the resident's assertion or exercise of rights under this chapter in any manner, including but not limited to:

(1) Threatening to bring or bringing an action to recover possession of a rental unit;

(2) Engaging in any form of harassment that causes the resident to quit the premises;

(3) Decreasing housing services;

(4) Increasing rent;

(5) Imposing or increasing a security deposit or other charge payable by the resident.

(Added by Ord. 3451-C.S., § 1, effective 10-4-07)

(a) It shall be unlawful for a mobile home park owner or landlord to demand any rent in excess of the amounts specified in this chapter during the period from the filing of a timely petition to the date an administrative Hearing Board's decision approving such excess is rendered.

(b) It shall be unlawful for a mobile home park owner or landlord to demand, accept, receive or retain any rent in excess of the maximum rent allowed by the decision of an administrative Hearing Board under this chapter.

(c) It shall be unlawful for a mobile home park owner or landlord to demand, accept, receive, or retain any rent in excess of the maximum rent allowed in this chapter.

(Added by Ord. 3451-C.S., § 1, effective 10-4-07)

(a) If any person is found to have demanded, accepted, received, or retained any payment of rent:

(1) In excess of the maximum rent allowed by decision of an administrative Hearing Board under this chapter; or

(2) In violation of the notice provisions of this chapter;

(3) In the form of a service reduction without a corresponding reduction in rent; or

(4) In violation of any other section in this chapter.

Such person shall be liable to the mobile home resident from whom such payment was demanded, accepted, received, or retained, for damages as determined by a court of competent jurisdiction.

(b) In the event a mobile home resident is the prevailing party in a civil action against a person found to have demanded, accepted, received, or retained any payment of rent described in subsection (a) of this section, such mobile home resident, in addition to damages as determined by the court pursuant to subsection (a) of this section, may, in the discretion of the court, be awarded an amount not to exceed five hundred dollars ($500.00) or three (3) times the damages determined by the court pursuant to subsection (a) of this section, whichever is greater. For the purposes of this subsection, a mobile home resident shall be deemed to be a prevailing party if the judgment is rendered in such mobile home resident's favor or if the litigation is dismissed in such mobile home resident's favor prior to final judgment, unless the parties otherwise agree in the settlement or compromise.

(c) Remedies provided by this section are in addition to any other legal or equitable remedies available to the City, as well as to the residents and are not intended to be exclusive.

(Added by Ord. 3451-C.S., § 1, effective 10-4-07)

The Mobile Home Rent Stabilization Administrator may adopt rules and procedures to implement the applications, notices, registration, verification, hearing procedures and certification required by this chapter, and for the review of rent increase applications and the conduct of hearings.

(Added by Ord. 3451-C.S., § 1, effective 10-4-07)

(a) Administrative fees imposed for the purpose of reimbursement to the City's general fund the costs of providing and administering the administrative hearing process and other services established by this chapter may be adopted pursuant to Council resolution.

(b) The Mobile Home Rent Stabilization Administrator shall provide the City of Modesto with a recommendation regarding the amount of the fee that is necessary to recover the costs of administering this chapter as part of the City's annual budget process. The amount of the fee shall be set forth in the schedule of fees adopted by resolution of the City of Modesto. The fee shall not exceed the amount found by the City Council to be necessary to recover the costs of administering this chapter, and the City Council finding in this regard shall be final.

(c) The mobile home park owner shall pay any applicable fee to the City for all of the owner's rental spaces which are subject to this chapter on or before January 31st of each year.

(d) The mobile home park owner may pass the amount of the rental dispute fee to the resident of each space which is subject to the fee, provided that the amount of the passthrough is set forth as a line item which is separate from the base rent.

(e) Any mobile home park owner who fails or refuses to pay any fee required under this chapter for a period of thirty (30) days from and after the date such fee is due shall, in addition to the fee, pay a penalty of twenty (20) percent of the amount of the unpaid fee. The penalty shall be increased to fifty (50) percent if the fee is not paid within ninety (90) days after the due date. A park owner must be provided with a thirty (30) day notice prior to becoming subject the penalties set forth in this subsection. The notice shall be delivered by certified U.S. mail, postage prepaid and return receipt requested; U.S. mail delivery confirmation; U.S. mail signature confirmation; or such other delivery method that is reasonably calculated to provide actual notice to the park owner.

(Added by Ord. 3451-C.S., § 1, effective 10-4-07)

In addition to any other remedy available by law, the City Council may institute a civil action to compel compliance with this chapter.

(Added by Ord. 3451-C.S., § 1, effective 10-4-07)

If any section, subsection, sentence, clause, or phrase of this chapter is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this chapter. The City Council declares that it would have passed the Mobile Home Rent Stabilization Program codified in this chapter and each section, subsection, clause, or phrase hereof, irrespective of the fact that any one (1) or more of the sections, subsections, sentences, clauses, or phrases hereof be declared invalid or unconstitutional.

(Added by Ord. 3451-C.S., § 1, effective 10-4-07)