Article 2 — Rent Stabilization Regulations

The following words and phrases, as used in this article, shall have the same definitions and meanings as defined by Sections 798 through 798.12 of the California Civil Code of the State of California: Mobile Home Park; Park; Tenant; Tenancy; Homeowner; and Resident. In addition, for the purposes of this chapter, the following words are defined as follows:

(a)

"CPI" shall mean Consumer Price Index (CPI) for all urban consumers, as reported by the U.S. Labor Bureau of Labor Statistics for the San Francisco-Oakland Bay Area.

(b)

"Director" shall mean the Director of the Community Development and Services Department of the City of Pacifica or his or her designee.

(c)

"Owner" shall mean the owner of a mobile home park or an agent or representative authorized to act on his or her behalf in connection with matters relating to a tenancy in the park.

(d)

"Rent" shall mean the consideration, including any bonus, benefit or gratuity demanded of or received in connection with the use and occupancy of a mobile home space including all amenities, services and benefits. Rent shall not include utility service charges for utility services provided to an individual resident where such charges are billed to the resident separately from the rent for the space, provided that separate billing of utility service fees shall comply with Civil Code Section 798.41.

(e)

"Space" shall mean an area within a mobile home park upon which a mobile home is placed and for which rent is charged.

(§ 2, Ord. 579-C.S., eff. October 23, 1991)

This article shall apply, as of its effective date, to all mobile home tenancies in the City, except:

(a)

Tenancies which were used primarily for commercial purposes as of August 1, 1991;

(b)

Tenancies in mobile home parks of four (4) spaces or fewer;

(c)

Tenancies the rental of which is subsidized by any government agency;

(d)

Mobile home parks owned exclusively by the tenants;

(e)

Tenancies which are exempt by State or Federal law including but not limited to Civil Code Section 798.17.

(§ 2, Ord. 579-C.S., eff. October 23, 1991)

(a)

Rent increases in 1991 and subsequent years. On or after September 1 of each year, the rent charged by an owner for a mobile home space may be increased to an amount not to exceed the rent in effect on September 1 of the prior year adjusted by seventy-five (75%) percent of the percentage increase in the Consumer Price Index (CPI).

The increase in the CPI shall be equal to the percentage increase between the CPI last reported as of July 1 of the most recent year and the CPI last reported as of July 1 of the prior year.

In the event that the CPI decreases, no increase or decrease shall be authorized pursuant to this section.

(b)

Banking. Automatic rent increases allowed pursuant to this section may be accumulated and implemented by the owner at any future time.

(c)

Compliance with State Law. Rent increases permitted pursuant to this subsection shall not be effective and shall not be demanded, accepted, or retained until the owner has given the notices required by state law.

(§ 2, Ord. 579-C.S., eff. October 23, 1991)

Notwithstanding the limitations on space rent increases otherwise set forth in this article, upon voluntary changes in the ownership of the mobile home that is on a space, the rent for the space may be increased without limit. The new rent established at time of change of ownership pursuant to this section shall thereafter be subject to the rent increase regulations of this chapter.

This section shall not be applicable to a change in ownership due to an involuntary eviction or to the death of a mobile home owner wherein the deceased tenant's spouse, children or parents take over the ownership and occupancy of the mobile home.

This section shall not be applicable if there is merely a replacement of the mobile home without a change in the park tenancy.

(§ 2, Ord. 579-C.S., eff. October 23, 1991)

(a)

Purpose. The purpose of this section is to provide a mechanism for the review and approval of requested rental increases in excess of automatic CPI adjustments, and to allow a mobile home park owner to request rental increases in excess of that allowed in Section 9-1.203, when the owner believes that the CPI rent adjustment does not allow a fair and reasonable return on his or her investment. The standards to be utilized in determining whether a proposed increase allows for a fair return shall be based upon the following:

(b)

Terminology and Concepts. For the purposes of rent adjustment review hearings, the following concepts shall apply:

(1)

Net operating income equals gross income less operating expenses;

(2)

Gross income equals the following:

(i)

Gross rents computed as gross rental income at one hundred (100%) percent paid occupancy; plus

(ii)

Interest from rental deposits, unless directly paid by the owner to residents (interest shall be computed at the rate of six and one-half (6-½%) percent of all deposits, but if such deposits in fact earned greater interest, then actual interest earned shall be used); plus

(iii)

Income from utilities, (to the extent the charges are not deemed rent), laundry facilities, cleaning fees or services, garage, storage and parking fees;

(iv)

All other income or consideration received or receivable for or in connection with use or occupancy of mobile home/mobile home spaces and related services; minus

(v)

Uncollected rents due to vacancy and bad debts to the extent that same are beyond the owner's control. Where uncollected rents must be estimated, the average percentage of the preceding three (3) years' experience shall be used or another comparable and reliable method;

(3)

Operating expenses shall include the following:

(i)

Real property taxes;

(ii)

Utility costs, except to the extent such costs are passed through to the resident or are otherwise excluded by this article;

(iii)

Management expenses related to the operation, management, improvement and maintenance of the park, whether contracted out or owner performed, including advertising, accounting, insurance and other managerial expenses, and allowable legal expenses;

(iv)

Repair and maintenance expenses, including painting, cleaning, fumigation, landscaping, and repair of all standard services, including electrical, plumbing, carpentry, furnished appliances, drapes, carpets, furniture, pool, laundry, and recreational equipment;

(v)

Employee salary and benefits and owner-performed labor upon documentation provided showing the date, time, and nature of the work performed. There shall be a maximum allowable expense for this paragraph of (five) 5% percent of gross income, unless the owner documents additional expenses for the benefit of residents;

(vi)

Assessments, taxes, license fees, and registration fees required by law to the extent same are not otherwise paid by residents and to the extent otherwise permitted by this article;

(vii)

Capital expenses with a total cost of less than One Hundred and no/100ths ($100.00) Dollars per year per benefitted space;

(viii)

 Capital improvements and major repairs relating to improvement of and maintenance of the park, provided that the costs of such expenses, if they exceed One Hundred ($100.00) Dollars per space, shall be amortized over their useful life. When said expenses have a useful life of four (4) years or more, an interest cost of twelve (12%) percent a year on the unamortized balance of the cost of improvement shall be allowed as an expense. Amortization of the cost shall be on a straight line basis over the life of the improvement;

(ix)

Increases in land lease payments after base year and increases in variable mortgage interest rates after base year only as to land leases or mortgages which existed on August 1, 1991;

(4)

Operating expenses shall not include:

(i)

Except as provided in Section paragraph (ix) of subdivision (3) of this subsection, mortgage principal and interest payments and payments by the owner under any underlying ground lease;

(ii)

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

(iii)

Legal fees except as provided below;

(iv)

Depreciation of the property;

(v)

Any expense for which the owner has been reimbursed by any security deposit, insurance settlement, judgment for damages, settlement, or any other method;

(vi)

Reserve accounts;

(vii)

Expenses related to the conversion or sale of the park rather than to the improvement and maintenance of the park;

(viii)

 Expenses unrelated to the improvement and maintenance of the park or expenses clearly excessive in relation to the customary and reasonable costs of such items;

(ix)

Expenses incurred as the result of the installation, ownership, operation, maintenance, or replacement of internal sub-metered gas and electrical systems within the park and for which a rate differential was received pursuant to Public Utilities Code Section 739.5;

(5)

Allowable legal expenses shall include attorney's fees and costs incurred in connection with good faith attempts to recover rents owing, good faith unlawful detainer actions not in derogation of applicable law, to the extent such expenses are not recovered from residents, compliance with the Mobile Home Residence Law, and all other legal costs directly related to the operation, maintenance, and improvement of the park and legal costs related thereto. Attorney's fees and costs incurred related to proceedings under this article are not allowable as operating expenses. No other attorney fees are allowable. Owners shall bear the burden of production and proof of the amount and purpose of such fees including rate per hour and hours spent. Fees which are clearly excessive in relation to customary and reasonable rates shall be disallowed;

(6)

Base year operating expenses and gross income for purposes of these rent adjustment provisions shall mean operating expenses and gross income in the year from July 1, 1990 to June 30, 1991;

(7)

In the event a fair return petition involves only a portion of the spaces in a park, the gross income and operating expenses shall be adjusted to reflect the portion of the mobile home park that is subject to this article. Income from spaces that are exempted from this article shall not be considered. (For example, if forty (40%) percent of the mobile home owners are subject to the article, then forty (40%) percent of the income and expenses shall be considered.) The net operating income for the base year shall be determined only for the spaces affected by the petition.

(c)

Determination of Base Year Net Operating Income.

(1)

To determine the net operating income during the base year, there shall be deducted from the "base year gross income" a sum equal to the actual "base year operating expenses" unless the owner demonstrates to the satisfaction of the Hearing Officer that some other twelve (12) consecutive month period is justified pursuant to this article.

(d)

Special base year operating income adjustment. It may be determined by the Hearing Officer that the base year net operating income yielded other than a fair return, in which case the base year net operating income may be adjusted accordingly. In order to make such determination, the Hearing Officer shall make at least one of the following findings:

(1)

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 the base year of operating expenses reflects average expenses for the property over a reasonable period of time. The following factors shall be considered in making this decision:

(i)

The owner made substantial capital improvements during the base year which were not reflected in the rent levels;

(ii)

Substantial repairs were made due to damage caused by natural disaster, vandalism or other unusual cause.

(iii)

Other expenses were unreasonably high or low due to unusual circumstances, notwithstanding prudent business practices.

(2)

The gross income during the base year was significantly lower than normal because of destruction of the premises and/or temporary eviction for construction or repairs, or other special circumstances.

(e)

Schedule of increases in operating expenses. Where the schedule of rent increases or other calculations require projections of a prior year's income and expenses, it shall be presumed, subject to rebuttal, that operating expenses, exclusive of property taxes and management expenses, increased at the CPI, that property taxes increased at two (2%) percent per year, and that management expenses are five (5%) percent of gross income.

(f)

Authorized adjustments. The Hearing Officer shall grant an increase to an owner in excess of that allowed by Section 9-1.203 if he or she finds and determines that it is necessary to provide the owner with a net operating income, after adjustment for one hundred (100%) percent of the increase in the CPI, equal to the net operating income realized for the park during the base year and to provide the owner with a fair and reasonable return on investment. The percentage rent increase needed to cover increases in operating expenses shall be calculated in the following manner which is structured to permit growth of the net operating income of the park and to provide a fair and reasonable return on investment based upon objective standards:

Minimum percentage increase Base year net operating income -minus- Current year net operating required = (adjusted by CPI) income

---

Current year gross rents

It is presumed subject to rebuttal that this formula will provide a fair and reasonable return on investment. The owner may establish by clear and convincing evidence that this formula will not provide a fair and reasonable return on investment, and that an alternative method should be used by the Hearing Officer in evaluating the petition. In evaluating the petition, the Hearing Officer may consider any relevant factors necessary to permit a fair and reasonable return on investment.

(§ 2, Ord. 579-C.S., eff. October 23, 1991)

(a)

Fair return petitions.

(1)

If an owner wishes to increase rent for any mobile home space more than the automatic CPI increase specified in Section 9-1.203, the owner shall submit a fair return petition to the Director. The rent for a

mobile home space may not be increased more than once in any twelve (12) month period except upon voluntary vacancy pursuant to Section 9-1.204 herein.

(2)

A fair return petition shall be submitted on a form prescribed by the Director and shall contain at least the following information:

(i)

The address of the mobile home park;

(ii)

The space number of each mobile home park space for which a rent increase is requested;

(iii)

The amount of the requested rent increase, stated in dollars and cents;

(iv)

The facts supporting the requested rent increase, including supporting documentation;

(v)

The actual operating expenses by category for the mobile home park for a two (2) year period ending no more than four months before the proposed effective date of the increase;

(vi)

The current and proposed rent schedules for each space in the mobile home park;

(vii)

A schedule of other fees and income from the mobile home park;

(viii)

 The vacancy rates in the mobile home park during the preceding two (2) year period;

(ix)

A list of current leases for spaces unaffected by the proposed increase extending beyond the effective date of the increase, showing the dates that each lease expires and the amount and date of change in rental rates for such lease;

(x)

The applicant may also submit anticipated increases in expenses for the mobile home park for the twelve (12) month period of the proposed increases, provided that the increases are certain and can be precisely

calculated.

(3)

The owner shall include in a fair return petition all rent increases desired for a particular mobile home park for that year. No more than one petition may be filed per mobile home park each year. The owner shall sign the fair return petition under penalty of perjury. At the time the owner submits the fair return petition, the owner shall also submit the fee required by Section 9-1.208 herein.

(4)

Information and records sufficient to document the need for the increase shall be provided. The Director may contract with an independent certified public accountant to audit the application and supporting documents and records so as to determine the accuracy, reliability and completeness of the application and information.

(b)

Notice of complete petition. Within ten (10) days after receipt of a fair return petition, the Director shall determine if the petition is complete and shall notify the applicant of any additional information or documentation required to make the petition complete. The applicant shall submit such information within ten (10) days after notice from the Director. Such time may be extended for good cause shown.

(c)

Notice to residents. Within five (5) days after receipt of a complete rent increase petition, the Director shall give written notice of the petition, by United States mail, to the residents of the mobile home spaces specified in the petition. If all of the tenants affected by the petition notify the Director in writing within ten (10) days after such notice that the requested rent increase is accepted by them, all proceedings on the petition shall cease and the owner may implement such increase as of the date such increase would otherwise have been effective without the intervention of this article.

(d)

Hearing officer. A Hearing Officer appointed by the City shall consider and decide petitions for rental increases. The Hearing Officer shall be appointed by the Director within ten (10) days after the Director has accepted the petition as complete. The Hearing officer shall meet one of the following criteria:

(1)

Completion of a Juris Doctor or equivalent degree from a school of law and completion of a formal course of training in arbitration which, in the sole judgment of the Director, provides that person with the knowledge and skills to conduct a mobile home space rent arbitration in a professional and successful manner; or

(2)

Possession of the knowledge and skills to conduct a mobile home rent increase arbitration and completion of at least three (3) mobile home rent increase arbitration proceedings that involved issues the Director

considers similar to those raised in rent dispute arbitrations.

(e)

Hearings. All hearings shall be open to the public. Hearings shall be held as necessary to hear and decide petitions within the allotted time and such hearings may be continued as necessary to insure that the Hearing Officer has all information he or she deems necessary to make a determination. Except as otherwise set forth in this chapter, the owner shall bear the burden of production and proof of any factors affecting the need for the proposed rent increase. Owner shall provide documentation sufficient to provide the Hearing Officer with such information as the Hearing Officer deems necessary to render an informed decision on the petition.

(f)

Representation. Any party to a hearing may be assisted by attorneys or other persons of the party's choice at the party's sole expense.

(g)

Hearing procedure. The Hearing Officer shall proceed in the manner required by law, including this article, and shall render findings which support his or her decision and which are supported by the evidence. The hearings shall not be conducted according to technical rules of evidence and witnesses. Any relevant evidence shall be considered if it is the sort of evidence upon which reasonable persons are accustomed to rely in the conduct of business affairs, regardless of the existence of any common law or statutory rule which might make improper the admission of such evidence over objection in civil actions. Unduly repetitious or irrelevant evidence shall be excluded upon order of the Hearing Officer.

Although the hearing need not be conducted pursuant to the rules of evidence, the Hearing Officer shall afford the parties a fair hearing including, but not limited to, refraining from taking of any ex parte evidence. The Hearing Officer shall tape record meetings and make an official record of the hearing, which record shall constitute the exclusive record for the decision of the issues at the hearing. The record shall be obtainable for the cost of copying and shall include: all exhibits, papers, and documents filed or accepted into evidence during the proceedings; a list of participants present; a statement of all materials officially noticed; all findings of fact; all recommendations, decisions, orders, or rulings; all final decisions and orders. A stenographic record of the proceedings may be obtained upon payment of the cost of preparing such a record by the party requesting such record.

(h)

Time for decision. The Hearing Officer shall make a final decision within ninety (90) days of the submission of a complete fair return petition, and no later than twenty-one (21) days after the conclusion of the hearing on any petition. The time limits may be extended upon consent of the owner.

(i)

Rent increases. If the Hearing Officer's determination is that all or a portion of the proposed rent increase shall be granted under the circumstances, then the Hearing Officer shall grant all or such portion of the rent increase effective as of the time such increase would have been otherwise effective without the intervention

of this article or Urgency Ordinance No. 577-C.S. Unpaid amounts of such increased rent may be billed to the tenants in equal installments over a six (6) month period as a surcharge to the increased rent.

(j)

Notice of decision. The owner and tenants shall be sent a notice of the Hearing Officer's findings and decision within seven (7) days after the rendering of the decision.

(k)

Judicial review. Review of the final decision of the Hearing Officer shall be by a court of competent jurisdiction and venue. Such review shall be conducted in accordance with the Code of Civil Procedure, Section 1094.5 and 1094.6.

(§ 2, Ord. 579-C.S., eff. October 23, 1991)

On September 1 of each year, each mobile home park within the City, coming under the terms of this article shall file with the Director a registration statement setting forth the number of spaces in its park regulated by this article. The City Council shall, by resolution, establish an administrative fee to the owner to offset the costs to the City of the regulatory activities provided pursuant to this article. No fee shall be imposed for any space exempted from this article pursuant to Civil Code Section 798.17. No more than one-half (½) of the per space charge may be collected by the owner from the tenant of the space for which the fee is paid.

(§ 2, Ord. 579-C.S., eff. October 23, 1991)

(a)

At the time the owner files a fair return petition pursuant to Section 9-1.206, the owner shall also submit a fee in an amount specified by the City Council by resolution. The fee shall be used to pay all costs of the City incurred in conducting proceedings on the fair return petition pursuant to this section, including without limitation City staff time, noticing, audit costs, accountant costs, postage and Hearing Officer cost. If the amount of the fee exceeds such costs, the balance shall be refunded to the owner within thirty (30) days after completion of the proceedings. If the Hearing Officer approves a rent increase that is equal to or greater than the rent increase requested by the owner in the fair return petition, the cost of the fee may be passed through to the tenants affected by the rent increase, less any amount refunded by the City. Unless the owner and the tenants agree otherwise, the reimbursement shall be paid in equal installments with the rent payments for the twelve (12) month period following completion of the proceedings and shall be divided equally among the residents of the mobile home spaces affected by the rent increase. Such period may be extended in the discretion of the Hearing Officer. If the Hearing Officer approves a rent increase that is less than the rent increase requested by the owner in the rent increase application, the owner shall not be entitled to reimbursement of the fee.

(b)

Except as provided in subdivision (a), the owner and the residents shall each bear their own costs incurred in the proceedings on the rent increase petition, including but not limited to attorneys' fees.

(§ 2, Ord. 579-C.S., eff. October 23, 1991)

Nothing in this chapter shall operate to restrict the right of a tenant and management to enter into an agreement in accordance with California Civil Code Section 798.17. Pursuant to Civil Code Section 798.17(c), the tenant and a prospective mobile home purchaser shall have the option to reject the offered rental agreement and accept a rental agreement for a term of twelve (12) months or less, including a month to month agreement. If a new rental agreement is offered to a prospective home owner, the prospective home owner shall have at least ten (10) working days from the date the rental agreement is first offered to review the agreement and to accept or reject it. A copy of the proposed agreement shall be provided to the prospective home owner for this purpose. The prospective homeowner shall also have the right to rescind the rental agreement after signing it by notifying the management in writing within seventy-two (72) hours of the execution of the rental agreement.

(§ 2, Ord. 579-C.S., eff. October 23, 1991)

(a)

If the Hearing Officer finds that service reductions have occurred, the Hearing Officer shall determine the value of the service reductions and may offset the allowable rent increase by the value of the service reductions. Service reductions which affect all spaces subject to the proposed rent increase shall be prorated over all such spaces, regardless of the number of residents claiming such service reductions. The tenants shall have the burden of production and proof that such service reductions have occurred.

(b)

In determining the value of any service reductions, the Hearing Officer shall consider the following factors:

(1)

The area affected by the service reduction;

(2)

The length of time the resident has been subjected to the service reduction;

(3)

The degree of discomfort the service reduction imposes on the resident;

(4)

The extent to which the service reduction causes the mobilehome or the space to be uninhabitable;

(5)

The extent to which the service reduction causes a material reduction in the usability of the mobile home or space;

(6)

Other similar factors deemed relevant by the Hearing Officer.

(§ 2, Ord. 579-C.S., eff. October 23, 1991)

It shall be the duty of every owner to provide a copy of this article to each mobile home owner or tenant who rents or leases a space from the owner.

(§ 2, Ord. 579-C.S., eff. October 23, 1991)

The park owner shall notify a mobile home owner of the amount of any vacancy decontrol increase that would be instituted pursuant to Section 9-1.204 of this article.

Said notice shall be provided within ten (10) days of a written request by a mobile home owner for said information. The amount of said increase shall be binding on the park owner in regard to any vacancy increase for that space for a period of six (6) months.

Failure of a park owner to comply with this section shall result in a loss of the right to any rent increase pursuant to Section 9-1.204 unless said failure is justified by good cause.

The purpose of this section is to insure that sellers and purchasers of a mobile home in a park have full knowledge of the conditions surrounding current and future occupancy of a mobile home space in the park.

(§ 2, Ord. 579-C.S., eff. October 23, 1991)

An owner or tenant may bring an action in the Superior Court compelling the other party to comply with the terms of this chapter. Violation of this chapter shall not be a misdemeanor nor punishable by the imposition of civil penalties.

(§ 2, Ord. 579-C.S., eff. October 23, 1991)

This chapter is not intended to substitute itself for any legal or equitable remedy otherwise available under law to a resident, tenant, or owner of a mobile home park and should be understood to provide remedies which are cumulative thereto and otherwise nonexclusive.

(§ 2, Ord. 579-C.S., eff. October 23, 1991)

If any section, subsection, sentence, clause, phrase, or portion of this chapter is for any reason held void, invalid or unconstitutional by a court of competent jurisdiction, such portion shall be deemed a separate, distinct, and independent provision, and such decision shall not affect the validity of the remaining portions thereof.

(§ 2, Ord. 579-C.S., eff. October 23, 1991)