5.13.070 Landlord fair return petition for rent increase.
(1) Landlord’s Fair Return Application for Rent Increase. A landlord may file a fair return petition (“application for rent increase”) with the department to request an increase in rent for a covered rental unit, beyond that which is otherwise permitted under CMC 5.13.050, if the landlord contends, in good faith, that they are not receiving a fair and reasonable return on the landlord’s investment from the allowable rent increases under CMC 5.13.050, in accordance with the provisions of this section.
(a) Presumption. It shall be a rebuttable presumption that the annual net operating income earned by a landlord, and rent increases allowed under CMC 5.13.050, provide the landlord with a fair and reasonable return on the investment. A landlord shall have the burden to prove the necessity of any additional rent increase necessary to earn a fair and reasonable return.
(b) Nothing in this section shall be interpreted to authorize a rent increase for a covered rental unit in excess of the amount authorized pursuant to California Civil Code Section 1947.12.
(2) Approval of the landlord’s application for rent increase may become effective only after all of the following:
(a) A landlord has provided written notice to the affected tenant of the approved rent increase for the covered rental unit in accordance with California Civil Code Section 827; and
(b) A landlord has registered each affected rental unit in the rental property, and is current on payment of registration fees, pursuant to CMC 5.13.100.
(3) Review and Approval of Application for Rent Increase.
(a) The department shall consider the following factors, as well as any other relevant factors, in reviewing the application for rent increase and making its determination, and no one factor shall be determinative:
(i) Changes in the CPI.
(ii) The rental history of the affected covered rental unit(s) and the rental property, including the base rent and pattern of past rent increases or decreases.
(iii) Increases or decreases in property taxes.
(iv) The history of any prior hearings or determinations on an application for rent increase by landlord.
(v) The addition of capital improvements on the rental property.
(vi) The physical condition of the affected covered rental unit(s) and building, including the quantity and quality of maintenance and repairs performed during the preceding 12 months, as well as the long-term patterns of operating, maintenance, and capital improvement expenditures.
(vii) The need for repairs caused by circumstances other than ordinary wear and tear.
(viii) Any increase or decrease of housing services since the last rent increase.
(ix) Any existing rental agreement lawfully entered into between the landlord and the tenant.
(x) A decrease in net operating income.
(xi) A fair and reasonable return on the building prorated among the rental units in the building.
(xii) If landlord received rent in violation of this chapter or has otherwise failed to comply with this chapter.
(b) The director may approve or deny an application for rent increase and make the following determinations, with written findings in support thereof, in compliance with the provisions of this chapter:
(i) The department determines the rent increase in the amount requested by landlord is necessary and appropriate to ensure the landlord receives a fair and reasonable return on the landlord’s investment, and will not cause an undue financial burden on the affected tenant.
(ii) The department determines a lesser rent increase than the amount requested by landlord more appropriately ensures a fair and reasonable return on the landlord’s investment and will not cause an undue financial burden on the affected tenant.
(iii) The department determines no additional rent increase is necessary and appropriate to ensure the landlord receives a fair and reasonable return on the landlord’s investment.
(c) Nothing in this section shall be interpreted to authorize a rent increase for a covered rental unit in excess of the amount authorized pursuant to California Civil Code Section 1947.12.
(d) The department’s decision may be appealed to a hearing officer, in accordance with the procedures set forth in CMC 5.13.130.
(4) Notices Upon Filing Application for Rent Increase. Within five calendar days after submission of an application for rent increase with the department, the landlord, at their own expense, shall provide written notice of said application to each affected tenant via personal service or certified mail return receipt requested.
(5) Submittal to Department of Application for Rent Increase. Upon receipt of an application for rent increase, the department shall review and evaluate whether there should be a rent increase in accordance with this section and the department’s procedures and guidelines.
(a) The application shall be on a form approved by the department, signed under penalty of perjury, and must be accompanied by an application fee, if any, and must include the following:
(i) The specific rent increase or adjustment requested;
(ii) Copies of any books, records, papers, or other financial information relevant to the review of the application; and
(iii) Other documentation reasonably required by the department relevant to the application.
(b) Application Fees. The department may set a reasonable application fee to be paid by the applicant at the time of the filing based on the administrative expenses incurred in reviewing and processing the application.
(c) The department shall have the authority to deem an application complete.
(6) Right of Assistance. All parties to an application for rent increase may seek assistance from attorneys or any other person designated by said parties.
(7) Consolidation. Applications for rent increase pertaining to tenants in the same building or rental property may be consolidated for determination at the election of the department. (Ord. 736 § 2 (Exh. A), 2023).