1986-143-Amending The Los Gatos Rental Dispute Mediation And Arbitration RegulationsRESOLUTION NO. 1986 -143
RESOLUTION AMENDING THE LOS GATOS
RENTAL DISPUTE MEDIATION AND
ARBITRATION REGULATIONS
WHEREAS, pursuant to Section 24.10.025 of the Town Code, the Town Council
hereby RESOLVES that the Los Gatos Rental Dispute Mediation and Arbitration
Regulations are amended as shown in the attached.
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town
of Los Gatos held on the 2nd day of September , 1986 by the following
vote:
AYES: COUNCILMEMBERS Joanne Benjamin, Eric D. Carlson,
Thomas J. Ferrite, and Mayor Terrence J. Dailv
NOES: COUNCILMEMBERS None
ABSTAIN COUNCILMEMBERS Brent N. Ventura
ABSENT: COUNCILMEMBERS None
SIGNED:
MAYOR OF THE TOWN OF LOSIGATOS
ATTEST:
DEPUTY CLERK OF THE TO OF LOS GATOS
i._,�.1
TOWN OF LOS GATOS, CALIFORNIA
RENTAL DISPUTE MEDIATION AND ARBITRATION
REGULATIONS*
RENT ADVISORY COMMITTEE
*The Town Manager, Director of Community Services, and their designees
shall have the responsibility of implementing these regulations unless
otherwise indicated.
TABLE OF CONTENTS
Chapter Page No
1. LIMITS AND ELIGIBILITY .... ..............................1
Part 1. Eligibility .............................1
Part 2. Limits .... ..............................3
Part 3. Petitions . ..............................4
Part 4. Confidentiality and Proof ...............5
2. HEARING PROCESS AND DECISION MAKING ....................6
Part 1. Conduct of Hearing ......................6
Part 2. The Amount of an Increase ...............8
Computation of 70% CPI
Service Reduction
Cost.Increase Computations
Part 3. The Timing of an Increase ...............25
Part 4. Decision of an Agreement ................26
Part 5. Failure to Appear and Rescheduling ......27
3. THE CONCILIATION PHASE .... .............................28
4. THE MEDIATION PHASE ....... .............................29
5. THE ARBITRATION PHASE ..... .............................32
6. HEARING OFFICERS .......... .............................36
7. MISDEMEANORS AND ENFORCEMENT ...........................39
8. APPEAL OF ADMINISTRATIVE ACTION ........................40
9. DEFINITIONS ............ — — ............................40
LOS GATOS RENTAL MEDIATION
REGULATIONS
Chapter 1
LIMITS AND ELIGIBILITY
This portion of the regulations covers the general limits set by the
Ordinance: eligibility, filing of petitions,'limits on frequency and amount of
increases, and confidentiality.
Part 1
ELIGIBILITY
1.01 Rental Units Subject to Review
Any rental unit in a complex of 3 or more units on the same parcel of
land or mobile home spaces shall be covered by Chapter 24 of the Los
Gatos Town Code. If one or more of the units is owner - occupied, the
remaining units shall be subject to Chapter 24.
1.02 Rental Increases Subject to Review
1.02.01 Exceptions to Frequency Limit
Rent should not ordinarily be increased more frequently than
annually, but it may be increased:
a. to pass through the annual regulatory fee at no more
than 1112 thereof per month.
(1)
1.02.02
with the written consent o- all affected tenants.
C. at the time of a voluntary vacancy exceptmas to_mGb4-le
heme- spaces of an apartment unit.
d. at the time of a court - ordered eviction for violation
of a rental agreement.
e. at the time of a sale of a mobile home. (See Section
1.03)
Increases in Excess of 70% CPI Ceilin
Increases which are in excess of 70% CPI ceiling or 5 %,
whichever is greater, are subject to review with some
exceptions. An increase may be subject to review because
the dollar amount has been raised, or services reduced, or
both. The exceptions are:
a. If the increase is after the rental unit has been
voluntarily vacated by the tenant. To be vacant, the
unit must be untenanted; if a roomate moves, there is
no vacancy, unless the landlord and the tenants have a
prior written agreement that this does create a
vacancy. If a tenant moves after receiving a 30 -Day
Notice from the landlord, it is not voluntary. This
exception shall not apply to the voluntary vacancy of a
mobile home space;
b. If the increase is after the eviction of a tenant by a
court for non - payment, chronically late payment, or
other material violation of a written rental agreement.
(2)
Part 2
LIMITS
1.03 Limits on Frequency of Increases
Rent may not be raised more than once in any twelve -month period. It
can be raised for a new tenant when the previous tenant moved
voluntarily or was evicted (see 1.02.02(b)n except in the event of
sale of a mobile home, a rent increase shall not exceed 10% of the
current rent for that space at the time of sale or $25.00, whichever
is lower. If rent is raised for the new tenant, it cannot be raised
again until the anniversary date of the new tenant.
1.04 Notice of Rent Increase
When a landlord issues a notice of rent increase for more than 70% CPI
ceiling or 5 %, whichever is greater, he must give the tenants notice
of their full right to use the Rental Mediation and Arbitration
Hearing Process. The notice must include the address and telephone
number of the Rental Mediation Program. This can be included
conspicuously in the rent increase notice or done separately at the
same time and manner as the rent increase notice. The recommended
wording is:
You have the right to use the Rental Dispute Mediation and
Arbitration Hearing Process. To be eligible, a petition must
be received by the Town or its agent within 30 days after the
increase goes into effect. For further information contact:
(3)
Los Gatos Rent Mediati
1030 S. Winchester Blvd., Suite 100
San Jose, CA. 95128
(408) 243-8565
1.04.01 If any tenant so requests in writing, the apartment numbers
of all tenants receiving increase notices for the same month
as the tenant making the request, the owner must provide the
apartment numbers.
1.04.02 Failure to give tenants the notice required under this
section shall void any rent increase in excess of 70% CPI or
5 %, whichever is greater.
1.04.03 A reissued notice to correct the notification requirement
shall not exceed the dollar amount of the previous rent
increase notice.
Part 3
PETITIONS
1.05 Petitions
Tenants or Landlords may file by completing a written Petition for
Conciliation with the Town or its agents.
1.06 Deadline
To be eligible, a petition must be received by the Town or its agents
within 30 days after the increase goes into effect.
(4)
1.07 Deferral .P Amount of Increase Over 70% Cn'
When a tenant files an eligible petition, the amount of the increase
over 70% CPT or 5 %, whichever is greater, is stayed, pending a
resolution of the dispute. The tenant should be charged and should
pay only the old rent plus 70% CXPI or 5 %, whichever is greater, until
the petition is resolved and the rent level established.
1.08 Consolidation of Petitions
Whenever possible, petitions from rental units owned, operated, and
managed as a single housing complex shall be consolidated into one
case by the program staff.
Part 4
CONFIDENTIALITY AND PROOF
1.09 Confidentialit
The identity of the parties and the factual data of the case are
confidential. Any one of the parties to a hearing has the right to
request to see and to copy information supplied by the other parties.
This information may also be reviewed and used by the Town for program
operations, administration, audit and evaluation. While the parties
'I and the Town have access to this information, it is not public
information.
1.10 Burden of Proof
The landlord shall have the burden of proof for establishing the
reasonableness of a rent increase. The tenants shall have the burden
of proof for the existence of service reductions and Housing Code
violations.
(5)
a. The rden of proof shall be satisfi by persuading the Hearin
Officer that the fact sought to be proven is more probable than
some other fact.
b. The burden of proof shall be met by using evidence only which has
a tendency in reason to prove or disprove a disputed fact of
consequence in determinin a cost justification
c. Proof shall be received only for cost categories alleged in a
claim filed with the Town its agent, or the Hearin Officer
during or prior to the first hearing.
Chapter 2
HEARING PROCESS AND DECISION MAKING
This chapter covers those areas which both Mediation and Arbitration
Hearings have in common. General rules for the conduct of hearings and
decision making, for instance, are in this chapter.
Part 1
CONDUCT OF HEARINGS
2.01 General Rules for the Conduct of Hearin s
2.01.01 Participation in Hearin
Any party or his /her counsel may attend the hearing and
offer evidence and testimony. However, the Hearing Officer
may adopt rules to encourage a timely and business -like
Hearing.
a. Examples of those who may attend Hearings include:
owners, property managers, agents, attorneys, tenants,
witnesses, paralegals, and designated representatives.
(6)
�. Examples of those who gene lly may not attend Hearings
include: tenants not covered by petitions, owners of
other buildings, members of the public ® unless both
parties agree.
2.01.02 Review and Response to Evidence and Testimon
Each party must have the opportunity to review all evidence
and testimony introduced at the Hearing and to make a
response. The Hearing Officer has the discretion to allow
written responses to be submitted.
a. The Hearings and the right of the parties to review
case files are the primary method for review of
information.
b. Hearing Officers have the discretion and must consider
allowing reasonable recesses to review any new
information or documentation.
2.01.03 Record of Hearings
The open sessions of Mediation Hearings and all of the
Arbitration Hearings shall be tape recorded by the Town if
both parties agree or the Arbitrator so orders. Either
party may tape the hearing at his /her own expense. Any
record is available for review to both parties.
Mediation sessions shall not be taped. Arbitration Hearings
may be tape recorded by the Town and /or either party. All
tape recorders will be placed as designated by the Hearing
Officer. Tapes will be available for review at the
appropriate Town
(i)
nix
ffice. Any and all duplicatio -osts will be borne by the
requesting party.
2.01.04 Participation of the Hearinq Officer
The Hearing Officer shall, at all times in the conduct of
the hearings and in otherwise performing his duties, act
neutrally and impartially as between the landlord and the
tenants. The Hearing Officer shall not solicit, invite, or
encourage new complaints from the landlord or tenants. This
does not preclude clarification of each party's rights under
the ordinance. Hearing Officers are encouraged to suggest
compromises to disputes raised at the hearing.
2.01.05 Relief from Default
The Hearing Officer may relieve any party from his failure
to adequately state his claim prior to or during the first
meeting upon a reasonable showing of error, fraud, or
inadvertence. The Hearing Officer may grant to the opposing
party additional time to respond to any claim, addition to,
or revision of, a claim filed pursuant to the relief so
granted.
Part 2
THE AMOUNT OF AN INCREASE
Amount of Annual Increase
The annual rent increases shall not exceed the 70% CPI ceiling or 5 %,
whichever is greater, unless the tenants agree or the Arbitrator
determines that other factors render a larger increase reasonable.
(8)
Comm ition of 70% CPT (See Appendix
a. CPI is the Consumer Price Index - All Urban Consumers for
the San Francisco - Oakland Area, as reported bimonthly by the
Bureau of Labor Statistics.
b. The Town or its agent shall compute the average annual per
cent of change as set forth in Section 24.70.015 (3) of the
Rental Mediation Ordinance.
2.03.01 Basic Service Level
The landlord is required to furnish to the tenant a basic
level of housing services, herein called the "Basic Service
Level." The Basic Service Level for particular housing
service for a particular rental unit is established by:
a. Civic Code Section 1941.1 and 1941.2 and other
applicable codes and statues;
b. The landlord's implied warranty of habitability;
C. Express or implied agreement between landlord and
tenant;
d. The level of service consistent with subsections a, b
and c next hereinabove and implied by:
(1) The nature and quality of original construction of
improvements, fixtures, and equipment;
(2) The age of the improvement, fixture, and
equipment;
(3) The condition of the improvements, fixture, and
equipment at the beginning of the applicable term
of tenancy;
(9)
2.03.02
2.03.03
(4) The landlord's policir of operation and
maintenance, repair and replacement communicated
to the tenant at the beginning of the applicable
term of tenancy.
Service Reductions
A service reduction occurs when the landlord has breached
his obligation to furnish to the tenant the Basic Service
Level and the tenant's usability of the premises is thereby
measurably reduced.
Allegations of Service Reductions
Each allegation of a service reduction shall be made in a
separate writing, signed by the tenant claiming it, and
filed with the Town, its agent or the Hearing Officer during
or prior to the first hearing
reduction shall state:
a.
In
C.
0
Each allegation of a service
The prior level of service established as part of the
housing services to be provided by the landlord for the
rental unit; and
The specific changes in the prior level of service
comprising the alleged reduction in service; and
The date the service reduction was first noticed by the
tenant; and
The date the tenant gave notice to the landlord of the
alleged service reduction, and whether the notice was
given orally or in writing; and
(10)
The date the tenant gave r ice to the landlord that
the tenant requested the alleged service reduction to
be corrected, and whether the request was oral or in
writing; and
f. When and how the landlord responded to the tenant's
notice; and
g. Whether the condition was improved or corrected and if
so, when and how; and
h. The status of the condition as of the date the
allegation is signed by the tenant.
2.03.04 Proof of Service Reductions
The burden of proof of each service reduction is on the
person alleging the reduction. A service reduction for a
particular service for a particular rental unit shall be
proven as follows:
a. The -pe-^sen- tenant alleging the service reduction shall
prove:
(1) The Basic Service Level for the particular service
for the particular rental unit; and
(2) The actual service level for the particular
service for the particular rental unit; and
(3) That the actual service level is, or was,
materially lower than the Basic Service Level.
(4) That the condition generating the service
reduction was not cured within a reasonable time
after the tenant 2ave, the landlord a written dated
notice of the condition.
(11)
(5) The extent to which V landlord and /or the tenant
was responsible for the condition generating the
service reduction.
b. The burden of proof shall be satisfied by persuading
the Hearing Officer that the fact sought to be proven
is more probable than some other fact.
C. The burden of proof shall be met by using evidence only
which has a tendency in reason to prove or disprove a
disputed fact of consequence in determining the Basic
Service Level.
d. Proof shall be received only for service reductions
alleged in a claim filed with the Town, its agent, or
the Hearing Officer during or prior to the first
hearing.
e. Proof of d service reduction shall be received only for
that period of time the premises have been owned by the
landlord against whom the claim is filed.
2.03.05 Determining Value of Unreasonable Service Reductions
If the Hearing Officer finds that a service reduction has
occurred which was or is unreasonable under the
circumstances, the Hearing Officer shall determine the
monetary value to be assigned to the service reduction by
applying the following standards and procedure:
a. The Hearing Officer shall determine the percentage
reduction in usability of the rental unit and common
areas caused by the service reduction, commencing with
the accrual date.
(12)
In determining the percent i reduction in usability,
the Hearing Officer shall consider the following
factors:
(1) The area affected;
(2) The amount of time the occupant is exposed to the
condition;
(3) The degree of discomfort the condition imposes;
(4) The extent to which such a condition causes
tenants to find the premises uninhabitable and
leave.
C. The Hearing Officer shall apply the percentage
reduction to the monthly rent, divide by 30, and
multiply the resulting sum by the number of days
commencing from the accrual date to the date of
restoration of the service reduction condition to the
Basic Service Level, to determine the value of the
service reduction.
2.03.06 Consequence of a Service Reduction Unreasonable Under the
Circumstances
a. If the value of the service reduction is determined in
a proceeding to determine reasonableness of a pending
rent increase, the value of the service reduction shall
be applied as a credit against the cost ,justified rent
increase atherwise- cost- 3as -t-4#fed- unless it is a
permanent reduction in service in which case it will
result in a rent reduction.
(13)
2.03.07 Housing Code Violations
Violations of the Los Gatos Housing Code or of Sections
1941.1 and 1941.2 of the State Civil Code shall be
considered by the Hearing Officer who may reasonably
condition, disallow, or reduce a rent increase based on
their severity.
a. An inspection report of the Los Gatos Building Official
shall be deemed persumptive, but not conclusive, proof
of the matters recited therein.
2.03.8 Findings
In making any determination that an alleged service
reduction exists or not, is reasonable or unreasonable under
the circumstances, or has a particular monetary value, or
that a Housing Code violation exists or not, or has a
particular monetary value, in any summary report or
arbitration award, the Hearing Officer shall make
(14)
nd include a specific finding the facts upon which the
determination is based.
2.04 Cost Analyses
The Tenant /Landlord Task Force has authorized the use of cost analysis
methods which are described below.
2.04.01 Requirements
a. Cost figures must be established to the reasonable
satisfaction of the Hearing Officer;
b. The cost of capital improvements must be averaged on a
per unit or square foot basis and amortized over a
period of at least 60 months;
C. The costs of rehabilitation must be averaged on a per
unit or square foot basis and amortized over a period
of at least 36 months;
d. Each of the costs must bear a reasonable relationship
to the purpose for which they were incurred and the
value of the real property;
e. Costs are "out of pocket" costs which have been
incurred or obligated.
f. If a rent increase is cost justified and neither
service reduction nor Housing Code violations are
present, that rent increase is reasonable.
g. Increased costs of debt service.
(15)
(1) Costs which satisfy, t' 70 % -80% test for new
owners
Increased costs of debt service shall be deemed
reasonable and allowed by the Nearing Officer
when.
a. The increased costs of debt service
arise from that proportion of the
aggregate amount of debt which does not
exceed seventy percent (70 %) of the
appraised value of the property, and no
more than eighty (80 %) of such increased
costs are passed through to tenants.
(i) If the loan to value ratio
does not exceed 70 %,80% of the
increase in debt service is
allowable and may be passed
through to tenants.
If the loan value ratio
exceeds 70 %, the annual amount
of the increased costs of debt
service which shall be found
allowable and may be passed
through to tenants is 80% of
the sum calculated by
multiplying the new debt
service by 70% divided by the
loan to value ratio less the
prior debt service: fXAMPL -E:A
computation example follows:
(16)
Facts
Prior Debt Service per Annum 80,000
New Debt Service per Annum 110,000
Increased Costs of Debt Service 30,000
Aggregate Debt from which Debt Service arises 750,000
Appraised Value of the Property 1,000,000
Loan to Value Ratio (LTVR) .75
Calculation
Pass Through = .8 (New Debt Service x [.7 LTVR1 - Prior Debt Service)
Pass Through = .8 (110,000 x E.7 .751 - 80,000)
Pass Through = .8 (110,000 x .9333 - 80.000)
Pass Through = .8 (102,663 - 80,000)
Pass Through = .8(22,663)
Pass Through = 18,130.34 (Per Annum)
Individual Pass Through = 18J30.40 ® 12 ® # of units or square feet
(2) Amortization
(i) Loan fees, including points, shall be
amortized over the life of the loan. If
a buyer claims loan fees, balloon
payments of interest, or loan brokerage
fees when calculating his /her new debt
service, he /she must also include these
additional cost categories when
calculating the seller's debt service.
(17)
(ii)
(iii)
(iv)
Balloon pay its of principal shall be
disallowed.
Balloon payments of interest shall be
allowed and will be amortized over the
life of the loan.
�r
(iv) Loan Brokerage fees shall be amortized
over the length of the loan or for over
36 months, whichever is less.
(3) Current owners refinance of debt service shall be
limited to costs of debt service generated by the
amount reinvested in the property, including
liquidation of existing debt. (Appendix C)
(4) All debt service shall be secured, arms - length
transaction.
h. Burden of Proof
The landlord has the burden of proof to establish the
cost justification of a proposed rent increase.
(1) The burden of proof shall be satisfied by
persuading the Hearing Officer that the fact
sought to be proven is more probable than some
other fact.
(18)
(2) The burden of proof s' 11 be met by using evidence
only which has a tendency in reason to prove or
disprove a disputed fact of consequence in
determining a cost justification.
(3) Proof shall be received only for cost categories
alleged in a claim filed with the Town, its agents
or the Hearing Officer during or prior to the
first hearing.
i. Lender's Appraisal
A lender's appraisal shall be the appraisal used by the
lender in making a loan. If the lender is unwillinq to
release said appraisal, the lenders written statement
concerning the ratio between the amount of the lender's
loan and the appraised value shall be accepted in lieu
of the appraisal.
If the lender is a seller and no lender's appraisal is
available, the sale price of the property shall
establish its value as of the date of sale, unless a
different value is proven by the party or parties
challenging the value set by the sale price. If there
is no sufficient evidence to establish the value other
than the sale price the Hearing Officer m2X secure an
appraisal at the owners expense to establish the
value. See 2.04.01 K.
(19)
Appraisal
A lenders An appraisal used for the purpose of
establishing the value of the property pursuant to
Section 24.70.020(2) of the Ordinance shall meet the
following requirements:
a. Format. The appraisal shall be prepared on the
usual short form (1 ®4) format commonly used by
institutional lenders or licensed real estate
brokers to establish the value of property, or as
may be approved by landlord, Hearing Officer and
2/3 of the tenants present at the hearing.
b. Factual Data. The appraisal shall include a
statement of the facts upon which it is based,
including:
(1) Description of Property. A description
of the property, including both legal
description of the land, and of the
improvements thereon.
(2) Neighborhood. A description of the
neighborhood in which the property is
located.
(3) Other Data. Other data considered by
the appraisers, including terms of
financing, if known.
C. Appraisal Methods. The lender's appraisal shall
include the appraiser's independent application of
each of the following three (3) methods:
(20)
(1) Market Comp 'son Approach. This
approach shall consider recent sales and
listings of similar type properties in
the area analyzed to form an opinion of
value by this approach.
(2) Cost Approach. This approach shall
consider the value of the land, assumed
vacant, added to the depreciated
replacement cost of the improvements.
(3) Income Approach. This approach shall
consider the estimated potential net
income capitalized into value
d. Value Conclusion. The appraisal shall include a
recondiliation of the values indicated by the
three appraisal methods, including the logic and
reasoning support thereof, and the dollar figure
concluded as the value of the property.
e. Signature and Certification. The lenders
appraisal shall include the signature of the
appraiser and the certification as to his
qualifications.
f. Appraiser's Qualifications. A lenders appraisal
may be performed by an employee or agent of the
institutional lender or licensed real estate loan
broker negotiating the loan, an MAI, SREA, or SRA
appraiser, or a real estate broker, who has the
following qualifications:
(21)
(1) Prior expel ice in the sale or
appraisal of comparable properties
within the past five (5) years; and
(2) Having no relationship to any of the
parties to the sale, either as an agent,
coworker, relative to the first degree,
partner or associate, within the two (2)
years preceding the appraisal.
(3) Who is not and during the previous
twelve (12) months has not been an
officer or employee of the Town of Los
Gatos.
k. Challenge of an Appraisal. A lenders appraisal may not
be made by the Hearing Officer, but the Hearing Officer
may require the landlord to furnish an additional
appraisal if the Hearing Officer finds that:
1. The lender's appraisal fails to meet the
requirements, or the appraiser does not have the
qualifications set forth in paragraph (2)
2.04.01(jm6), or
2. The lender's appraisal includes a substantial and
material error or omission which substantially and
materially affects the reliability of the
appraisal.
(22)
2.04.02 )st Increase Computation (see )endix B)
This cost method looks at costs between two points in time.
The landlord has the option to present costs for debt
service only or for operating and maintenance, capital
improvements and rehabilitation costs, plus no more than 5%
of the monthly rent.
a. The cost categories presented at Arbitration must be
the same as at Mediation. The Hearing Officer has the
discretion to require cost information from categories
not initially presented by the landlord, if that
information is necesssary to resolve issues such as the
service reductions.
b. Costs are historical costs for the most recently
available two twelve month periods. The later period
terminates no later than the effective date of the
increase. For example, if the increase is effective on
July 1, 1980, the time periods would be no later than
July, 1978 through June, 1979 and July, 1979 through
June 1980.
C. Undocumented projections or estimates of future costs
may not be accepted by the Hearing Officer for use in
this cost analysis.
d. Debt service, capital improvements, and rehabilitation
costs must be incurred in the past twelve months as
evidenced by payment or by contract establishing a
legal obligation and evidence that the terms of the
(23)
contract are or have been The twelvemonth period
for each of these types of costs may be different from
the period used for operation and maintenance, and must
begin earlier than the effective date of the increase,
e.g., contract on 7/80, increase 8/80, time period
7/80 -6/81. Work must have begun by the time the rent
increase is due.
e. If, however, increases in debt service or repayment of
capital improvements or rehabilitation costs are, or
have been deferred so as to become effective at a
future date in excess of a twelve (12) month period,
those costs may be applied as they become effective.
f. If the cost is equal to or greater than the petitioning
tenants' rent increase, that increase is cost
justified.
2.05 Economic, Financial and Other Factors
If the rent increase is not cost justified, under Section 2.04.02, the
Hearing Officer will determine what is reasonable by taking into
consideration any relevant factors presented by either party. These
factors include the following:
2.05.01 Resale or Refinancing
In determining the amount of debt service allowable from a
resale or refinancing within the past twelve months:
a. The arms - length nature of the transaction;
b. The landlord's rate of return;
C. Frequency of past resale or refinancing;
d. The extent to which prior rental increases have made a
provision for appreciation of the property.
(24)
2.05.02 3rket Value
The existing market value of rents for units similarly
situated, which are not owned or controlled by the landlord.
2.05.03 Rental History
The amount and frequency of past increases, response to
Proposition 13, and the occupancy rate in comparison to
comparable properties in the same general area.
2.05.04 Physical Condition
The physical condition of the unit, including maintenance
and repair during the last twelve (12) months.
2.05.05 Services
Any increase or reduction in services since the last rent
increase.
2.05.06 Vacancy and Bad Debt Losses
The degree to which vacanpy and bad debt losses are not
offset by retention of deposits, court judgments or
increases to new tenants.
2.05.07 Other Financial Information
Other financial information which the landlord is willing to
provide.
Part 3
THE TIMING OF AN INCREASE
2.06 Multiple Rent Increases
Section 24.40.010 prohibits, after July 1, 1980, more than one
increase in a twelve -month period.
2.06.01 Evidence
Hearing Officers shall consider evidence establishing that
there has been more than one increase within a twelve (12)
(25)
)nth period. When it is found at there has been more
than one increase, the second and subsequent increases must
be disallowed in their entirety, regardless of the amount or
percentage. Exceptions, see Section 1.02.01.
2.06.02 Voluntary Vacancy or Evictions
The Ordinance permits rent to be increased following a
voluntary vacancy or a court - ordered eviction for a material
violation of a written rental agreement. Rent will be
presumed to have been increased when a tenant moves in and,
unless the landlord establishes that it was not increased,
the Hearing Officer will disallow any other increases within
the twelve (12) months after the tenant moved in.
2.06.03 Annexation
When rental units are annexed into the Town of Los Gatos,
rent increases prior to the annexation are not subject to
review, but do establish a twelve-month period for future
increases. For example, if rent is increased in July and the
property is annexed in August, the rent may not be increased
until the following July.
Part 4
DECISIONS AND AGREEMENTS
2.07 Applicability of Determinations and Voluntary Agreements
2.07.01 Eligible Petitions
The voluntary agreement or arbitration award shall not apply
to a tenant who has not filed an eligible petition or has
not been included in a landlord petition.
(26)
2.07.02 'ffective Date
Unless otherwise set by the Hearing Officer, determinations,
awards, and voluntary agreement shall be effective as of the
effective date of the increase originally proposed by the
landlord and shall extend for twelve (12) calendar months.
Part 5
FAILURE TO APPEAR AND RESCHEDULING
2.08 Failure to Appear and To Be Represented
Depending on the circumstances, failure to appear or to be represented
can result in the increase being determined unreasonable or the case
being closed.
2.08.01 No Appearance by the Landlord or his Representative
When the landlord or his representative does not appear at
the Hearing, the rent increase will be determined to be
unreasonable.
2.08.02 No Appearance by Tenants
a. Voluntary Agreements
When a tenant fails to appear or be represented at a
Mediation Hearing where a voluntary agreement is
concluded with the remaining tenants, the petition of
the tenant who failed to appear will be considered to
have been withdrawn.
b. Arbitrator's Determination
When a tenant fails to appear or be represented at a
Hearing which results in a written determination, that
determination will include all petitioning tenants.
(27)
2.09 Reschedu' I
Rescheduling of Hearings causes a delay in the resolution of the
dispute and inconveniences the parties. However, a rescheduling is
sometimes appropriate.
2.09.01 Request by Landlord or Tenant
A Hearing may be rescheduled at the request of a landlord or
a tenant once for reasonable cause, when the request is made
at least five (5) days before the scheduled Hearing date.
2.09.02 Request by One of the Parties
A Hearing may be rescheduled when one of the parties was
unable to attend due to reasons beyond his control and the
request is made within four (4) days after the scheduled
Hearing date.
Chapter 3
Conciliation
This chapter covers the timing and procedures for conciliation.
3.01 Purpose of Conciliation
The purpose of conciliation is to resolve tenant /landlord disputes
through limited intervention in a dispute. Limited intervention is
telephone or mail contacts to explain to each party the position of
the other.
3.02 Filing of Petitions
When either party to a landlord /tenant transaction has a dispute with
the other concerning rent, housing services or proposed eviction, he
may seek the services of the Town by filing a written petition for
conciliation with the Town or its agent.
(28)
3.02.01 ant Increase Petitions
a. 25% of the units affected must join in the petition.
b. No petition may be filed later than 30 days after the
rental increase takes effect.
3.03 Time Limits
When 15 days have passed without the resolution of the dispute, either
party may request mediation by notifying the Town or its agent.
Chapter 4
THE MEDIATION PHASE
This chapter covers the timing and conduct of mediation hearings and the
authority of Mediation Hearing Officers. Chapter 6 covers those areas that are
common to both mediation and arbitration hearings.
4.01 Purpose of Mediation
The purpose of the Mediation hearing is to give the parties an
opportunity to resolve the dispute voluntarily.
4.02 Conduct of the Mediation Hearing
The Mediation Hearing Officer may change the order, delete, or add
items to the following list in order to conduct the Hearing in a
timely fashion or at the request of the parties.
4.02.01 Introduction
The Mediation Hearing Officer will introduce himself,
identify the parties, circulate a sign -in sheet, request any
proxies to be turned in or representatives to be identified,
and will briefly explain the hearing process.
(29)
4.02.02 aesentation by the Parties
The parties will be given a full opportunity to present
evidence and testimony. The Hearing Officer may require
comments to be to the point and relevant. When one party
has made their presentation the remaining party will be
given an opportunity to make their presentation.
4.02.03 Private Sessions
Following the initial presentations, the Hearing Officer
will meet privately with each side to attempt to work out a
voluntary agreement. Private sessions are not recorded and
confidential information provided during them shall remain
confidential and shall not be shared without the specific
consent of the individual.
4.02.04 Voluntary Agreement
If the parties arrive at a voluntary agreement which
resolves the dispute, the Hearing Officer will write that
agreement on a voluntary agreement form and witness their
signatures. Voluntary agreements must specify the agreed
upon rent and may include any other item the parties agreed
upon.
4.02.05 Closing Session
After meeting in private session, the Hearing Officer will
meet with both parties together to sign any voluntary
agreement or to provide an opportunity to present any
additional evidence or testimony.
(30)
4.03
4.04
4.02.06 dditional Documentation
If additional documentation is requested, the Hearing
Officer may recess the Hearing at his discretion for no
longer than ten days for the purpose of receiving this
documentation.
Hearing Summary
If a voluntary agreement is not possible, or if one of the parties
does not want to seek a voluntary agreement, the Hearing Officer will
make a written summary of the Hearing.
Timing and Contents of Mediation Reports
4.04.01 Timing
The Hearing Officer shall issue a summary report within ten
days of the Hearing. If the Hearing Officer has requested
additional documentation, the Hearing is automatically
recessed until the deadline for this, and the report will be
due ten days after this deadline.
4.04.02 Contents
The report will include the following:
a. Iientification of the parties;
b. Statement of evidence presented. For example, the
costs, service reductions and /or Housing Code
violations presented; and any relevant economic,
financial, or legal factors.
(31)
Chapter 5
THE ARBITRATION PHASE
This chapter covers the timing and conduct of arbitration hearings and the
authority of Arbitration Hearings Officers.
5.01 Purpose of Arbitration
The purpose of arbitration is to make a determination concerning
rental housing disputes and to determine if a voluntary agreement
which has been claimed to be broken, has been broken and, if so, to
determine an equitable remedy.
5.02 Conduct of Arbitration Hearing on Referral from Mediation
This section applies to those arbitration hearings held because a
voluntary agreement was not reached, one of the parties requested
arbitration, or because a Mediator has referred the case to
arbitration.
5.02.01 Introduction
The Arbitrator will introduce himself, identify the parties,
circulate a sign -in sheet, request any proxies to be turned
in or representatives to identify themselves, and will
briefly explain the hearing process. The Arbitrator may
take an oath of office and may administer an oath to parties
and witnesses.
5.02.02 Presentation by the Parties
The parties will be given full opportunity to present
evidence and testimony. When one party has made their
presentation, the remaining party will be given an
opportunity to make their presentation.
(32)
5.02.03 9sponse to Evidence and Testin f
The parties will be given reasonable opportunities to
respond to the new documentation and issues. The Arbitrator
has the discretion to recess the hearing or to allow the
submission of written statements.
5.02.04 Request for Additional Information
The Arbitrator may request the submission of additional
documentation or other information within ten days. When
this request is made, the hearing is recessed until the
submission for the administrative purpose of receiving the
additional information. In the event that the requested
information is not provided or is incomplete, the Arbitrator
may proceed to the making of the award.
5.02.05 Evidence and Testimon
a. Evidence. Evidence submitted may be retained by the
Arbitrator for use in making the award and will be
returned at that time. The Arbitrator will be the
judge of the relevancy of the evidence. Conformity to
legal rules of evidence is not necessary. A list of
this evidence (exhibits) will be prepared and made a
part of the record.
b. Testimony. The Arbitrator will be the judge of the
materiability and relevancy of testimony. A list of
the names and addresses of any witness will be kept and
made a part of the record.
(33)
5.02.06 ' oluntary Agreement
An arbitrator may recess the hearing for the purpose of
allowing the parties to negotiate a voluntary agreement to
resolve the dispute. At the request of the parties, an
Arbitrator may also assist them in coming to and preparing a
written voluntary agreement.
5.03 Conduct of Arbitration Hearings on Claims of Violation of a Voluntar
Agreement
Voluntary agreement forms contain a section making violation of the
agreement subject to arbitration under these regulations and Title 9
(commencing with Section 1280), Part 3 of the California Code of Civil
Procedure. Hearings for this purpose are similar to those described
in Section 5.02. However, the State Code does set some additional
procedures. Those involved in these hearings should read this section
of the State Code. Other differences are caused by the nature of
these hearings. This section covers these differences.
5.03.01 Appeal
a. Before appealing for Arbitration, a letter must be sent
asking that the agreement be followed. This letter
should point out where it is not being followed; for
example, "fix the stove" or "remove the wrecked car ";
b. Appeals may be made by any party in writing and must
include a copy of the letter described above.
5.03.02 Processing
A copy of the appeal will be sent to both parties with a
notice of the arbitration hearing.
(34)
5.04
ME
5.03.03 larification of Issues
After the introduction, the Arbitrator will ask the party
who filed the appeal to state the issue. For example, "John
Doe signed an agreement that he would fix the stove /remove a
wrecked car by June 15. He hasn't done that."
5.03.04 Verification
The Arbitrator will determine if the agreement has been
violated.
5.03.05 Remedies
If the agreement has been violated, the Arbitrator will
issue an award which compensates for the violation. The
Arbitrator may require that the agreement be kept ( "John Doe
has to fix the stove /move the car "), that the rent be
increased or decreased, or other just and equitable
remedies.
Authority of Arbitrator
The decision of the Arbitrator is final and leagally binding. An
Arbitrator has the authority to allow or disallow any rent increase or
portion thereof and may reasonably condition his award in any manner
necessary to meet the purposes of the Ordinance.
Timing and Contents of Award
5.05.01 Timing
The arbitration award shall be issued within 17 days of the
close of the hearing. The allowance of time to submit
additional information or written statements is a recess of
the hearing and the award is due 17 days after this
deadline.
(35)
6.01
MN
5.05.02 intents
The arbitration award must identify the parties and make a
clear statement of:
a. whether or not the proposed increase is reasonable;
b. if a portion is reasonable, the dollar amount;
C. any conditions which are placed on the award;
d. an attached summary of cost calculation.
Chapter 6
HEARING OFFICERS
This chapter deals with the selection and designation of Hearing Officers.
Designation of Hearing Officers
Hearing Officers are those individuals who, having met the criteria
established in Section 6.02, are offered and have executed a contract
with the Town or its agent. Officers are also those program staff
designated as Hearing Officers for specific purposes.
Selection Criteria
Hearing Officers must meet all of the following criteria
6.02.01 Have received fourteen (14) hours formal training in
mediation and seven (7) hours formal training on landlord
tenant law and economics of the rental industry.
6.02.02 Have observed two mediations or hearings similar to those of
this program.
6.02.03 Shall not own or rent property covered by the ordinance.
6.02.04 May not be an employee or an officer of groups or
organizations which have or are viewed by significant
numbers of tenants or landlords as having taken advocacy
positions in landlord tenant matters.
(36)
6.03 Assignme; to Cases
6.03.01 Mediation Cases
Mediators shall be assigned by program staff equitably and
fairly, with due regard for each Hearing Officer's
availability and experience.
6.03.02 Arbitration Cases
A selection list shall be sent to both parties that will
contain at least three names of Hearing Officers who meet
one of the following qualifications:
a. Appointment to the American Arbitration Association's
Panel of Arbitrators;
b. Completion of a Juris Doctor or equivalent degree from
a School of Law with proof of a course in arbitration;
Col
C. Completion of six mediations, observation of one
arbitration, and documentation of formal arbitration
training.
Both parties shall have the right to cross off one out of
three or two out of five name(s) of Hearing Officers to whom
they object.
6.04 Disqualification from Cases
6.04.01 A Hearing Officer shall disqualify himself from hearing a
case and can be disqualified by program staff at the request
of one of the parties if:
a. The Hearing Officer knows or has reason to know he has
a financial interest affected by his determination or
award.
(37)
The Hearing Officer is rei =d to one of the parties or
their representatives to the third degree.
C. The Hearing Officer has been retained or employed by
one of the parties within the past two years, has given
advice to one of the parties relative to the issues
involved in the hearing.
d. It appears probable that the Hearing Officer by reason
of bias or prejudice cannot provide a fair and
impartial hearing.
e. The Hearing Officer is a party to the hearing.
6.04.02 A Hearing Officer is not disqualified from hearing a case
where one or more of the parties have appeared before him in
an earlier hearing.
6.04.03 The parties may waive their right to the disqualification of
a Hearing Officer by a written statement accepting his
service.
6.05 Review of Hearing Officer's Performance
The program staff will periodically review the performance of Hearing
Officers and will inform the Committee of the execution and
termination of Hearing Officers' contracts.
6.06 Administrative Hearing Officers
6.06.01 The Program Coordinator is designated as a Hearing Officer
for the purpose of:
a. Consolidation of cases;
b. Scheduling of hearings;
C. Acceptance of documentation and written statements;
d. Acceptance of appeals to arbitration.
(38)
Chapter 7
MISDEMEANORS AND ENFORCEMENT
This chapter deals with those actions of the Town taken in prosecuting
misdemeanor violations of the Ordinance. Tenants have additional civil rights
not covered by this chapter.
7.01 Misdemeanor Violations
The ordinance provides that it is a misdemeanor
a. For a landlord to evict tenants in retaliation for tenant
organizing, tenants petitioning government for rent relief,
and /or tenants exercising rights granted by the Ordinance.
b. For a landlord to evict a tenant when the landlord's dominant
motive is to evade the purposes of the Ordinance.
c. For a landlord to demand, accept, receive, or retain any rent in
excess of the maximum rent allowed by the decision of a Hearing
Officer.
7.02 Investigation
Program staff will receive and investigate complaints of alleged
misdemeanor violations. When complaints are received of an alleged
violation which has not yet occurred or is in the process of
occurring, it is the policy of this program to prevent it, when
possible, by informational contacts with the landlord. In the event
that the investigation shows that a violation has or is in the process
of occurring and that it is not possible to prevent, a request will be
made to the Town Attorney for review and prosecution. Either party
can pursue civil action after the conclusion of Town Rental Mediation
procedures.
(39)
Chapter 9
APPEAL OF ADMINISTRATIVE ACTION
9.01 Administrative actions by program staff may be appealed to the
Director of Community Programs. Individuals also have the right to
present information and recommendations on the implementation of these
regulations to the Rent Advisory Committee.
Chapter 9
DEFINITIONS
This chapter contains definitions of the more commonly used words and
phrases found in the Ordinance and these regulations.
Anniversary Date
Twelve (12) months from the last rent increase.
Award
The written decision of and Arbitratior.
Capital Improvements
Capital improvements are those improvements which materially add to the
value of the property, appreciably prolong its useful life, or adapt it to new
uses, and which are required to be amortized over the useful life of the
improvement of the building pursuant to the straight -line depreciation
provisions of the Internal Revenue Code, and the regulations issued pursuant
thereto.
Committee
Committee means the Los Gatos Rent Advisory Committee.
CPI - Consumer Price Index
CPI is the Consumer Price Index - All Urban Consumers for the San
Francisco - Oakland area. The figure is released bimonthly from the Bureau
of Labor Statistics.
(40)
Cost of Debt Sery
Cost of debt service shall mean the periodic payment or payments due under
any security or financing device which is applicable to the rental unit, or the
building, or complex, or other real property of which it is a part, including
any fees, commissions, or other charges incurred in obtaining such financing
which are required to be amortized for a period exceeding sixty (60) months
pursuant to the Internal Revenue Code and the regulations issued pursuant
thereto. Nevertheless, when calculating a new owners debt service, costs of
debt service shall not include adjustments in the interest costs of a variable
interest rate mortgage after the indebtedness secured thereby is incurred.
Cost of Operation and Maintenance
Costs of operation and maintenance shall mean all expenses, exclusive of
costs of debt service, costs of rehabilitation, and costs of capital
improvements, incurred in the operation and management of the rental unit and
the building or complex of buildings of which it is a part together with common
areas, including but not limited to: real estate taxes, business taxes and
fees (including fees payable by landlords under this Chapter), insurance, sewer
service charges, utilities, janitorial service, professional property
management fees, increased interest costs of variable interest rate mortgages
over the base interest incurred, pool maintenance, exterior building and
grounds maintenance, supplies, equipment, refuse removal, elevator service, and
security services or systems.
Costs of Rehabilitation
Costs of Rehabilitation shall mean the costs of any rehabilitation or
repair work done on or in a rental unit or common area of the housing complex
containing the rental unit and which work was done in order to comply with an
(41)
order issued by tI Los Gatos Building Department, ae Los Gatos Director of
Community Programs, or the Fire Department, or to repair damage resulting from
fire, earthquake, or other natural disaster.
Counsel
An attorney or other advisor.
Da
A calendar day.
Determination
A summary be a mediator or a written decision by an arbitrator.
Fact Finding
The action of an Arbitrator in establishing that certain facts, such as
costs or service reductions, exist.
Hearing Officer
Hearing Officer shall mean a person designated by the Town Manager and the
rules thereof who mediated or arbitrates rental disputes pursuant to the
provisions of this Chapter.
Housing Services
Housing services are those services provided and associated with the use or
occupancy of a rental unit, including but not limited to repairs, replacement,
maintenance, painting, light, heat, water, elevator service, laundry facilities
and privileges, janitorial service, refuse removal, furnishings, telephone,
parking, and any other benefits, privileges, or facilities.
Landlord
Landlord means an 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.
(42)
A landlord or tenant(s) who is involved in the hearing process.
Petition
A petition for Conciliation.
Program Staff
The staff of the Los Gatos Rent Mediation Program and Department of
Community Programs assigned to implement the Rental Dispute Mediation and
Arbitration Ordinance.
Rent
Rent is the consideration, including any bonus, benefit or gratuity,
demanded or received by a landlord for or in connection with the use or
occupancy of a rental unit, or the assignment of a lease for such a unit,
including housing services or subletting.
Rent increase
A rent increase is any additional rent due or paid by a tenant, for a rental
unit, including any reduction in housing services without a corresponding
reduction in the monies demanded or paid for rent.
Rental Unit
A rental unit is any building or part of a building which is used for
residence, or land which is used for mobilehome space, and which is rented to a
tenant as a dwelling place, except.
a. Rental units, located in a building or group of buildings on the same
premises, containing two or fewer dwelling units.
b. A room in an owner - occupied dwelling where under the lease provisions
the tenant does not have the substantially exclusive use of a kitchen.
c. A single house, condominium or planned development (Business and
Professions Code Section 11003.0) unit.
(43)
d. A hotel m or similar accommodation or( 3rily let for occupancy by
the same tenant for periods of less than 15 days.
e. A hospital room, skilled nursing facility or similar accommodation
where the main factor in the rental relationship is the personal care
given to the tenant.
f. A dwelling owned, operated or managed by a government agency or which
is exempted by State or Federal law from rent regulation.
A tenant is a person entitled by written or oral agreement or by sufferance
to occupy a rental unit to the exclusion of others.
Tenancy at Sufferance
A tenancy which occurs when a tenant comes into possession of a premises
lawfully but holds over either after the expiration of a lease or after the
expiration date of a notice to vacate.
vacant
Untenanted. A rental unit is vacant when there are no tenants living
there. However, a landlord and tenants may, by prior written agreement, agree
that a move out by one roommate creates a vacancy as to all tenants of that
rental unit.
Warranty of Habitability
A landlord's minimum obligations include that:
a. There are no leaks when it rains, and no broken doors or windows;
b. The plumbing has to work, including hot and cold water, and a working
sewer or septic tank connection;
C. The heater has to work and be safe;
(44)
d. The light end wiring have to work and be fe;
e. Floors, stairways and railings have to be in good repair;
f. When it's rented, the place has to be clean, with no piles of trash or
garbage and no rats, mice, roaches, or other pests;
g. The landlord has to provide enough cans or bins with covers for the
garbage.
(45)
Appendix A
Cost Increase
COMPUTATION OF FACTORS OTHER THAN DEBT SERVICE*
New Operating and Maintenance
(12 months total prior to rent increase notice)
-Old Operating and Maintenance
(12 months total prior to above)
subtotal
12 months
New Capital Improvements
60
Subtotal
New Rehabilitation
01
Subtotal
= 0 & M Increase
= Capital Improvement Increase
Rehabilitation Increase
Subtotal
(# units or proportion of
square footage)
Subtotal
+ .05 unit 's prior rent
Allowable Rent.
*See 2004o01(g) for new owner debt service computation.
(46)
Appendix B
REFINANCE BY EXISTING OWNER
Amount used to liquidate prior debt .................... S
Amount incurred for repairs ............................
Amount incurred for capital improvements ...............
Amount incurred for rehabilitation .....................
TOTAL REINVESTED IN PROPERTY:
FORMULAS
TOTAL REINVESTED IN PROPERTY
TOTAL REFINANCE AMOUNT
# OF UNITS
(47)