Ord 2103 - Amending Los Gatos Town Code Article VII, Section 14, Mobile Home Rental and other Tenant/Landlord DisputesORDINANCE 2103
ORDINANCE AMENDING LOS GATOS TOWN CODE ARTICLE VII,
SECTION 14, MOBILE HOME RENTAL AND
OTHER TENANT/LANDLORD DISPUTES
THE TOWN COUNCIL OF THE TOWN OF LOS GATOS DOES HEREBY ORDAIN:
SECTION I
Article VIII, Section 14, Mobile Home Rental and Other Tenant /Landlord Disputes is hereby
amended to read as follows:
Sec. 14.85.010. Title.
This article shall be cited as the Mobile Home Ordinance.
Sec. 14.85.015. Purpose and findings.
(a) Mobile home tenants, unlike apartment tenants or residents of other rental stock, are in the
unique position of having made a substantial investment in a residence for which space is rented
or leased. Removal and /or relocation of a mobile home from a park space is not a practical
alternative to accepting an excessive rent increase in that it can only be accomplished at
substantial cost, and in many instances may cause extensive damage to the mobile home and loss
of appurtenances such as integrated landscaping and supporting structures inconsistent with the
new location. Because mobile homes are often owned by senior citizens, persons on fixed
incomes, and persons of low and moderate income, exorbitant rent increases fall upon these
individuals with particular harshness.
(b) The Town Council declares that it is now necessary in the public interest to establish a means
by which to resolve the occasionally divisive and harmful impasse between park owners and
mobile home tenants. After consideration of numerous factors, including the mandates of state
law, regulations which best fit the needs of the Town have been selected.
(c) Rent control regulations are consistent with the Town's policy to encourage a variety of housing
types, prices and densities within the community, respond to the need to preserve existing
housing stock and assist in providing housing for moderate, low., and very low income
households.
(d) Rent control regulations can assist in protecting affordable housing in combination with Town
programs and actions designed to reduce costs to the consumer which help to provide a variety
of housing types within a range of costs to meet the needs of all income groups.
(e) The regulations which are set forth in this article are designed to produce stability in rent
increases for mobile home park tenants while recognizing the rights ofmobile home park owners
to receive a just and reasonable return.
Page 1 of 21
(f) The Council finds that the adoption of the ordinance codified in this article will not have a
significant, substantial or adverse effect on the physical environment of the community because
enactment of this article involves no deviation from the general plan and no change in the present
use of any property within the Town.
Sec. 14.85.020. Definitions.
For the purposes of this article, unless otherwise apparent from the context, certain words and phrases
used in this article are defined as follows:
(a) Arbitrator. An individual designated by the Town's agent to conduct the arbitration hearing and
arbitration pre- hearing procedures of this article.
(b) Affected tenants. All mobile home tenants in a mobile home park who have been notified by the
park owner that a rent increase is to become effective during the following calendar year, or
who experience a service reduction.
(c) Capital improvements. The installation of new improvements and facilities or the replacement
or reconstruction of existing improvements and facilities which consist of more than ordinary
maintenance or repairs.
(d) Consumer price index (CPI). The consumer price index for all urban consumers for the San
Francisco /Oakland /San Jose Area (all items) index (1967 equals 100) as reported by the U.S.
Bureau of Labor Statistics.
(e) CPI rent increase. An annual rent increase equal to the amount of increase in the CPI in the
previous twelve (12) months up to five (5) percent, and not less than three (3) percent.
(f) Housing services. Those services provided and associated with the use or occupancy of amobile
home space, including but not limited to repairs, insurance, maintenance, replacement, painting,
light, heat, water, laundry facilities and privileges, refuse removal, parking, recreation facilities,
security service and any other benefits, privileges or facilities.
(g) Mediator. An individual designated by the Town's agent to conduct the mediation procedures
set forth in this article.
(h) Mobile home. A structure designed for human habitation which is transportable in one or more
sections along a street or highway, commonly referred to as a mobile home. This definition
includes manufactured homes when located on a mobile home space.
(i) Mobile home owner or tenant. Any person owning a mobile home who has a tenancy or right
of use or occupancy of a mobile home space in a mobile home park.
(j) Mobile home park. An area of land where two (2) or more mobile home spaces are rented, or
held out for rent, or made available for use, to accommodate mobile homes used for human
habitation.
(k) Mobile home space or space. The site within a mobile home park intended, designed, or used
for the location or accommodation of a mobile home and any accessory structures or
Page 2 of 21
appurtenances attached thereto or used in conjunction therewith where public utilities are
provided.
(1) Owner or mobile home park owner. The owner, lessor, operator or manager of a mobile home
park in the Town.
(m) Owner's petition. A petition filed by an owner seeking a supplemental rent increase.
(n) Rental agreement or lease. An agreement entered into between the park management or owner
and a mobile home tenant establishing the terms and conditions of a mobile home park tenancy.
(o) Service reduction. Any reduction in housing services which results in a cost savings to owner
without a corresponding reduction in the monies demanded or paid for space rent.
(p) Space rent. The total consideration, including any bonus, fees, surcharges, benefits or gratuity
demanded or received in connection with the use or occupancy of a mobile home space in a
mobile home park, or for housing services provided, and security deposits, but exclusive of any
amount paid for the use of the mobile home as a dwelling unit.
(q) Sace rent increases. Any additional rent above the base space rent which is demanded of or paid
by a tenant for a mobile home space including service reductions.
(r) Supplemental rent increase. An increase in space rent in excess of the annual CPI Rent Increase,
determined by the arbitrator to result in a fair and reasonable return to the owner.
(s) Tenant's petition. A petition filed by one or a group of affected tenants.
(t) Town's agent. The individual or agency designated by the Town Council to perform the services
defined herein.
(u) Validated tenant's petition. A tenant's petition filed by one or a group of affected tenants that
meets the statutory requirements of this article.
Sec. 14.85.025. Exceptions to article provisions; partial vacancy decontrol.
The provisions of this article shall not apply to the following:
(a) Space rent or space rent increases during a thirty -day period commencing upon the completion
of a new mobile home space or mobile home space first rented after December 1, 1992.
(b) Nothing in this article shall operate to restrict the rights of tenants and owners who have entered
into agreements providing for a fixed term and /or a fixed rent for mobile home tenancies, beyond
a twelve -month duration.
(c) Nothing in this article shall operate to restrict the rents charged by mobile home park owner in
the case of voluntary termination, abandonment of a mobile home in place, removal as a result
of dealer or real estate broker /agent pull out, eviction, or sale of a mobile home owned by the
mobile home park owner.
Page 3 of 21
(d) In the case of an in -place sale of a mobile home, except those that qualify as a family transfer
under the California State Mobile Home Residency Code, the initial space rent to be charged the
new mobile home tenant may be increased as follows:
RENTS RAISED TO THE GREATER
2000 $488.00 or seller's rent + $25.00
2001 $488.00 + CPI rent increase for 2001 or seller's rent
+$25.00
2002 $488.00 + 2001 CPI rent increase + 2002 CPI rent
increase or seller's rent + $25.00
CPI rent increase is calculated by applying the annual CPI rent increase to the $488.00. The CPI
rate is per the data most recently available when calculated. The CPI increase applied in this
table will be for each year from 2001 to the current year.
Increases for subsequent years are calculated in the same manner. Increases are calculated in
October of each year.
(e) A mobile home replaced due to a casualty loss and subsequently held for two (2) years will not
be subject to supplementary rent increases such as in subsection 14.85.025 (f) of this article. A
casualty loss includes loss by fire, earthquake, falling trees, and similar events.
(f) In all cases when a mobile home is replaced, except as stated in (c), above, the rent upon the first
resale following replacement will increase one hundred dollars ($100.00) over the rent calculated
in (d) in the year the sale occurs.
See. 14.85.030. Regulatory fee.
For the sole purpose of reimbursing the Town for the costs of administering this article, there is
hereby imposed on each mobile home space, subject to the provisions of this article, a regulatory fee in such
amount as established by the Council by resolution from time to time which shall be paid annually when
the mobile home park owner's business license fee is due. A mobile home park owner who fails to pay the
fee within thirty (3 0) days after the Town mails its bill shall pay a twenty -five (25) percent penalty, plus an
additional twenty -five (25) percent for every additional thirty (30) days the fee and penalties are not paid,
and shall not be entitled to any rent increase until the full fee and penalties are paid. The Town Manager
shall report to the Council in time for budget hearings each year the recommendation as to the amount of
the regulatory fee necessary to recover such costs.
See. 14.85.035. Violation; penalty.
(a) Criminal penalty. No person shall demand, accept, receive or retain any rent in excess of the
amounts allowed under this article. Any person may file a complaint regarding an alleged
violation of this article with the Town's agent. The Town Attorney is authorized, in his /her
discretion, to investigate and prosecute any such complaints. Any person found to have
demanded, accepted, received or retained any rent in excess of the amounts allowed under this
Page 4 of 21
article is guilty of a misdemeanor. It shall also be a violation of this article for any person to
evict or otherwise take retaliatory action against any tenant for exercising any rights afforded
under this article. Any person violating this anti - retaliatory provision shall be guilty of a
misdemeanor.
(b) Civil action. Any person who demands, accepts, or retains any payment of rent, in violation of
the provisions of this article shall be liable in a civil action to the person from whom payment
is demanded, accepted or retained, for damages in the sum of three times the amount by which
payment exceeds the maximum rent which could lawfully be demanded, accepted or retained.
Any person who evicts or otherwise takes retaliatory action against any tenant for exercising any
rights afforded under this article shall be liable to that tenant for the resulting civil damages.
See. 14.85.040. Waiver of rights.
(a) Any tenant's waiver or purported waiver of rights under this article, prior to the time when said
rights may be exercised, shall be void as contrary to public policy, except as provided in this
section.
(b) It shall be unlawful for an owner to require or attempt to require, as a condition of tenancy in a
mobile home park, a tenant, or prospective tenant to waive in a lease or rental agreement, the
rights granted to a mobile home tenant by this article.
(c) It shall be unlawful for an owner to deny or threaten to deny a 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 tenant by this
article.
(d) Nothing in this section shall preclude an owner or tenant, or prospective tenant, from entering
into a lease or rental agreement described in section 14.85.025 provided that such lease or rental
agreement is not procured by a requirement that it be entered into as a condition of tenancy in
the mobile home park, and is not procured under a threat of denial of tenancy in the mobile home
park.
Page 5 of 21
Sec. 14.85.045. Permissible reasons for eviction.
A tenant may refuse to pay any rent in excess of the maximum rent established pursuant to this article.
The fact that the unpaid rent is in excess of the maximum rent shall be a defense in any action brought to
recover possession of a mobile home space for nonpayment of rent or to collect the illegal rent.
Sec. 14.85.050. Extension of time; mutual agreement.
By written agreement of the parties or upon application to the arbitrator and for good cause shown,
the time frames provided for under this article may be extended.
Sec. 14.85.055. Duty of owner to provide copy of article and rental data.
(a) It shall be the duty of every owner to provide a copy of this article to each tenant who rents or
leases a space from the owner. A single copy will be provided each owner by the Town for
reproduction by the owner.
(b) All mobile home park owners shall cause documentation of the rent charged for each space in
December 1985 and December 1992 to be filed with the Town's agent by February 1, 1993. By
October 1 of each year thereafter, the mobile home park owner will document and file with the
Town's agent the rent charged for the current year and the proposed rent for the upcoming
calendar year, for each space occupied by a tenant -owned mobile home.
(c) Any owner that fails to provide the information required by this section shall not be entitled to
any rent increase until the information is provided. The failure of one or more owners to provide
the information shall not adversely affect the rights of any other owner or tenant of the other
owner to the procedures and processes provided by this article. Any information so missing.shall
either be ignored or estimated by the Town or arbitrator, as applicable, so as to achieve the
purposes of this article.
Sec. 14.85.060. Severability.
If any section, subsection, sentence, clause, phrase, or portion of this ordinance is for any reason held
invalid or unconstitutional by any court of competent jurisdiction, such portion shall be deemed a separate,
distinct and independent provision and such decision shall not effect the validity of the remaining portion
thereof.
Sec. 14.85.100. Hearing process -- Established.
There is established the mobile home rental dispute hearing process.
Sec. 14.85.105. Space rent increase -- Notice.
(a) The mobile home park owner shall notify all affected tenants of any rent increase scheduled to
take place during the following calendar year. All notices shall be given at least ninety (90) days
prior to the effective date of the rent raise on or about the same calendar day each year. The
purpose of this requirement is to avoid the possibility of multiple disputes over rent increases for
the same park within a given year. (This requirement does not apply to increases pursuant to
leases identified in section 14.85.175.)
Page 6 of 21
(b) Any notice of space rent increase shall include notice of the tenant's right to participate in the
rent review process and shall provide the business address and telephone number of the Town's
agent.
(c) The park owner shall, upon written request, provide each affected tenant with a list of all tenants
with their respective space numbers who received a notice of rent increase.
Sec. 14.85.110. Same- -Limit on annual increases,
The space rent of any mobile home space may not be increased more than once in any twelve (12)
month period, except as provided in Section 14.85.025.
Sec. 14.85.115. Same -- Hearing required for supplemental rent increase.
Except as provided in this article, any space rent increase after December 6, 1992 that exceeds the CPI
rent increase as defined in section 14.85.020 (e) of this article shall be deemed a supplemental rent increase
and shall be subject to review under the hearing process.
Sec. 14.85.120. Hearing process -- Submission of owner's petition.
Any owner who seeks a supplemental rent increase shall notify all affected tenants in writing of the
amount of the supplemental increase over the allowable rent increase, reasons for the requested supplemental
increase, results of the Net Operating Income calculations, and /or explanation of capital improvement costs
related to the supplemental rent increase request. It shall also set forth the time requirements for filing the
tenant petition, the number of required signatures, and the mailing address and contact telephone number
for the Town's agent. This notice shall be submitted to the Town's agent and serve as the owner's petition.
Blank petitions for tenants opposing the supplemental rent increase shall also be provided with this petition
and included in the notice sent to all tenants.
Sec. 14.85.125. Same -- Submission of tenant's petition.
(a) Submission of tenant's petition disputing supplemental rent increase. Any tenant who wishes
to limit any rent increase may file a tenant's petition with the Town's agent within thirty (30)
days of receiving a notice of supplemental rent increase, To be a validated petition it must be
supported by at least twenty (20) percent of the affected tenants as determined by the petitions
delivered to the Town's agent. The sole basis for such a petition shall be to request a reduction
in a supplemental rent increase petition filed by owner.
(b) Submission of tenant's petition for a reduction in service. A tenant who wishes to reduce any
current rents on the basis of a reduction in service may file a petition with the Town's agent.
Upon receipt, the Town's agent shall send a ballot to each affected tenant to determine his /her
support for the petition. To be a validated petition it must be supported by at least twenty (20)
percent of the affected tenants as determined by the ballots returned to the Town's agent within
twenty (20) days of receipt of the ballot by tenant. The sole basis for such a petition shall be
to compensate for a reduction in service as provided in division 4 of this article. Before filing
a tenant's petition, written notice of the alleged service reduction and a reasonable opportunity
to restore service must be given to the mobile home park owner.
Page 7 of 21
(c) If a group of tenants seeks review, the affected tenants shall designate in writing to the Town's
agent an individual to serve as the tenant representative for the purposes of receipt of all notice,
correspondence, decisions and findings of fact required in this article, within ten (10) days of
notice to affected tenants by the Town's agent of a validated tenant petition. The tenants, if they
desire, may also designate more than one representative to serve as co- representatives or backup
representatives. Service of notice upon the designated tenant representative will constitute
adequate and sufficient notice to tenants who submitted petitions or ballots supporting a petition.
Failure to designate a tenant representative within ten (10) days of notice by Town's agent that
sufficient petitions have been received to proceed with this process will render the petition
incomplete and the petitions will be dismissed . The tenant representative or representatives
shall be responsible for making reasonable efforts to communicate with the affected tenants to
inform them regarding the status of the case and substantive proposals from the park ownership.
Any ratification of a settlement proposal or any other decision determining the outcome of this
process shall remain the prerogative of the affected tenants. The designated tenant representative
or representatives shall, in consultation with Town's agent, conduct ratification votes or other
similar processes to permit the affected tenants to make these decisions.
(d) A tenant's petition may include a request for audit and Net Operating Income (NOI) analysis for
the preceding three (3) years; however, no such tenant - requested audit and analysis may be
required more frequently than once in every three (3) year period. The auditor shall be selected
by Town or its agent. The cost of such audit and analysis shall be paid by the Town from the
regulatory fees collected. The full audit shall be confidential and presented to the arbitrator only.
A summary, including at least income and expenses by account and NOI analyses, shall be
prepared by the auditor or designate and presented to the mobile home park owner and tenant
representative. Disclosure of any information not included in the summary shall be disclosed
only as deemed necessary in the exclusive discretion of the arbitrator.
Sec. 14.85.130. Petitions - -Form.
(a) The form of the owner's and tenant's petition shall be prescribed by the Town's agent and must
be accompanied by supporting material as prescribed by the Town's agent. An owner's petition
shall contain the printed name and address (i.e. space number) of each tenant whose rent is being
increased. Appended to the petition shall be a copy of the notice given by the park owner which
indicated the date it was served. Appended to a tenant's petition alleging service reduction shall
be a copy of the tenant's notice to the mobile home park owner of that service reduction. The
petition shall be made under penalty of perjury and supporting documents shall be certified or
verified as requested by the Town's agent.
(b) All petitions received by Town's agent concerning similar issues at the same mobile home park
will be merged at the Town agent's discretion.
Sec. 14.85.135. Same - -Time for filing.
An owner's petition must be filed at least ninety (90) days before the first effective date of the
increase stated in the notice /petition to tenant. A tenant's petition disputing a proposed supplemental rent
increase must be filed within thirty (30) days after receiving a notice of supplemental rent increase. A
tenant's petition alleging a service reduction must be filed within ninety (90) calendar days after expiration
Page 8 of 21
of the reasonable time given to the mobile home park owner to restore services.
Sec. 14.85.140. Space rent increase; effective when.
If an owner's petition is filed, the supplemental increase shall not take effect until the date specified
on the petition or until a negotiated /arbitrated supplemental increase is agreed to during the hearing process,
whichever is later.
Sec. 14.85.145. Hearing -- Procedures.
(a) Parties. Parties to an owner's petition and a tenant's petition disputing a supplemental increase
include the owner and all tenants affected by the proposed rental increase. Parties to a tenant's
petition for service reduction include the owner and signatories of the petition or ballots.
(b) Timing of meetings.
(1) Tenant's petition disputing supplemental increase. Upon receipt of sufficient valid
petitions by tenants disputing a supplemental rent increase, the time of the hearing process
shall be as follows:
(a) Within ten days of selection of a tenant representative(s) as provided for in section
14.85.125 (c) of this article, the owner and tenant representative(s) shall hold a joint
meeting to determine whether the parties can resolve the rent increase issue prior to
mediation or arbitration. The parties may request supportive conciliation input from
the Town's agent. The mobile home park owner shall set a time and place for a
meeting to be held on the mobile home park premises, giving the tenant
spokesperson(s) at least seven (7) days' written notice of the time and place.
(b) If the parties have not resolved the dispute within ten (10) days after the joint
meeting specified above in subparagraph a., the Town's agent shall set the case for
a mediation session. The mediation session shall be held within twenty (20) days of
the notice from the Town's agent, unless all parties agree in writing to extend the
deadline. The specific procedures for the mediation process shall be those set forth
in section 14.85.415 of this article.
(c) If the mediation session fails to resolve this dispute, the mediator shall issue a
declaration of impasse. Any party seeking arbitration of the dispute, must file a
written request for arbitration with the Town's agent within ten (10) days of the
notice of impasse. The actual arbitration hearing, will be held within thirty (30) days
of the written request for arbitration, or as soon thereafter as is administratively
possible to do so.
(2) Tenant's petition alleging service reduction. Within thirty (30) days from the date a
validated tenant's petition is received by the Town's agent per Section 14.85.125(b), the
same procedures set forth above in subparagraph (1) shall apply.
(a) Notice for arbitration hearing. The Town's agent shall mail written notice to all
parties at least fourteen (14) calendar days before the hearing.
Page 9 of 21
(b) Extensions. Extensions of time for the hearing process maybe mutually agreed upon
by both parties with the concurrence of the arbitrator.
(c) All evidence, briefs, or other submittals prepared by the parties for presentation at the
arbitration hearing shall be served on the arbitrator and the opposing party or parties
at least five (5) days prior to the date set for the arbitration hearing. The arbitrator
shall decide any pre- hearing motions to exclude evidence or to continue a scheduled
hearing, to issue a subpoena, or to address any other pre - hearing issues. Any such
motions or other requests shall be served on the opposing party or parties at the same
time they are submitted to the arbitrator. Upon a request from a party or parties, the
arbitrator shall have the power to issue a subpoena for testimony at the hearing.
Upon a request from a party or parties with a showing of good cause, the arbitrator
shall have the power to issue a subpoena for the production of documents either at
the hearing or prior to the hearing.
(d) The Arbitrator shall have the power to continue a hearing date upon a showing of
good cause.
(e) At the arbitration hearing, the tenant representative or representatives will present the
case on behalf of the affected tenants either directly or through a designated
representative or legal counsel. The owner will present the case on behalf of the
owner either directly or through a designated representative or legal counsel. The
arbitrator shall have the authority to determine who else may attend the hearing,
based on the principles that the affected tenants should be permitted to attend, and
that members of the public should have the opportunity to attend, but that the
arbitrator retains the authority to maintain sufficient order and decorum to hear the
case in a conducive environment.
Sec. 14.85.150. Same -- Arbitrator's fee.
The Town shall pay the arbitrator's fee from the regulatory fees.
Sec. 14.85.155. Same -- Conduct.
The hearing shall be conducted by an arbitrator, appointed as a result of the following procedure. The
parties will be provided with a list of potential arbitrators with a minimum of three (3) choices. Each party
will be given an opportunity to strike at least one name from the list within seven (7) days after receiving
the list. The Town's agent shall appoint the arbitrator from the remaining name or naives. Subject to the
requirements of section 14.85.145, the arbitrator shall determine the admissibility of all evidence based on
whether the evidence is relevant to any issue necessary to determine the petition or petitions at issue.
Sec. 14.85.160. Same -- Determination.
(a) Owner's petition. Based upon the evidence presented at the hearing, the arbitrator shall determine
the extent to which the proposed supplemental rent increase is reasonable, in accordance with
the factors set forth in section 14.85.200. The burden of proof regarding such reasonableness
shall be on the owner unless otherwise indicated.
Page 10 of 21
(b) Tenant's petition. Based upon the evidence presented at the hearing, the arbitrator shall determine
if a service reduction has occurred and the monetary value thereof. The burden of proof to
establish a service reduction and its monetary value shall be on the person or persons alleging
reduction.
Sec. 14.85.165. Hearing; determination; notification.
Within twenty (20) days following the conclusion of the hearing, the arbitrator shall deliver to the
Town's agent a written statement of determination and findings of fact upon which such determination is
based. Such written determination shall include validation, refutation, or correction of any NOI or other
calculations which represent a fundamental element of the supplemental rent increase request or service
reduction allegation. The Town's agent shall cause copies of the determination and the findings to be mailed
by regular first class mail to all parties.
Sec. 14.85.170. Increase determined not reasonable; remedies.
Any rent increases collected by a mobile home park owner pursuant to a CPI or supplemental
increase, or which are subject to a service reduction, which are determined to be unjustified by a final
settlement agreement or arbitrator's award, shall, within ninety (90) days of said settlement or determination
be refunded to the affected tenants or if not refunded during said period, credited against all rent otherwise
immediately due thereafter until fully offset, unless specified otherwise in the settlement or arbitration
award. Any rental increase which has not been collected during the pendency of a rental increase or service
reduction case and which is determined by a final settlement or arbitrator's award to be justified shall be due
and payable from all affected tenants within ninety (90) days after said settlement or award, unless specified
otherwise in the settlement or arbitration award.
Sec. 14.85.175. Determination; applicability.
. The determination made under the provisions of this article shall be effective with respect to all
affected mobile home park spaces, unless the tenant of such space has a written lease which meets the
criteria of Civil Code Section 798.17, with the owner which otherwise sets forth the rights and obligations
of the parties with respect to rent.
Sec. 14.85.180. Determination and appeal.
The determination of the arbitrator shall be final. Any party disputing the determination and findings
may seek review pursuant to Sections 1094.5 and 1094.6 of the California Code of Civil Procedure. Section
1094.6 expressly applies to proceedings under this article.
Sec. 14.85.200. Determination of reasonableness.
In determining the reasonableness of a supplemental rent increase, the arbitrator shall consider this
article's purpose to permit mobile home park owners a just and reasonable return while protecting tenants
from arbitrary, capricious or unreasonable rent increases. The arbitrator shall consider the following factors:
(a) Fair rent return (Net Operating Income Approach set out below).
(b) Changes in the consumer price index.
Page 11 of 21
(c) The rent lawfully charged for comparable mobile home spaces in the Town of Los Gatos.
(d) The history of rent increases in the previous five (5) years.
(e) The completion of any capital improvements, maintenance, or rehabilitation, the cost thereof,
including cost of materials, labor, construction interest, permit fees, and other items as the
arbitrator deems appropriate. These costs will be limited to an amount equal to the annual
depreciation expense as allowed in section 14.85.240. Once the capital improvement has been
fully depreciated, such expenses shall be excluded from the calculation of net operating income.
(f) Changes in property taxes or other taxes related to the mobile home park.
(g) Changes in the utility charges for the mobile home park paid by the mobile home park owner
and the extent, if any, of reimbursement from the tenants.
(h) Changes in reasonable operating and maintenance expense.
(i) The need for repairs caused by circumstances other than ordinary wear and tear.
(j) The amount and quality of services provided by the mobile home park owner to the affected
tenant including the value of service reductions as determined by division 4 of this article.
Sec. 14.85.205. Fair return rent increases.
It is expected that the CPI rent increase will provide the owner with a fair and reasonable return.
However, in the event that the CPI rent increase does not provide the owner with a fair and reasonable
return, the owner may request a supplemental rent increase.
Sec. 14.85.210. Presumption of fair base year net operating income.
For the purposes of determining the rent increase necessary to provide the owner with a fair and
reasonable return, it shall be presumed that the Net Operating Income, as described below, provided the
owner with a fair and reasonable return in the base year.
Sec. 14.85.215. Base year.
(a) Except as provided in subsection (b) of this section, base year means the calendar year 1985.
(b) For spaces which were exempt from the provisions of this article pursuant to a rental agreement
as described in section 14.85.025& and which are subject to the provisions of this article
because of the expiration or other termination of such rental agreement, base year means the last
twelve (12) months of the term of the rental agreement.
Sec. 14.85.220. Determination of base year Net Operating Income.
The base year Net Operating Income shall be determined by calculating the NOI per space in the base
year for each Los Gatos mobile home park and averaging them.
Sec. 14.85.225. Rebuttal of fair Net Operating Income presumption.
Evidence to rebut the presumption of fair and reasonable return based upon the Base Year NOI may
be presented during hearing on a petition and the arbitrator may adjust the Base Year NOI upon making at
least one of the following findings:
(a) The owner's operating expenses in the base year were unusually high or low in comparison to
Page 12 of 21
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 arbitrator shall consider the following factors in making this finding:
(1) Extraordinary amounts were expended for necessary maintenance and repairs.
(2) Maintenance and repair were below accepted standards and caused significant deterioration
in the quality of services provided.
(3) Other expenses were unreasonably high or low notwithstanding the application of prudent
business practices.
(b) The owner's operating expenses in the base year inadvertently omitted expenses actually paid,
or included improper expenses.
(c) The gross income during the base year was disproportionate. In such instances, adjustments may
be made in calculating gross income consistent with the purposes of this article. The arbitrator
shall consider the following factors in making this finding:
(1) The gross income during the base year was lower than it might have been because some
tenants were charged reduced rent.
(2) 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.
Page 13 of 21
Sec. 14.85.230. Determination of Net Operating Income.
(a) The Net Operating Income for the base year shall be determined by:
(1) Determining the annualized gross income by totaling the rents collected during the base
year per section 14.85.235.
(2) Determining the operating expenses during the base year per section 14.85.240.
(3) Subtracting the operating expenses from the annualized gross income.
(b) The NOI for years other than the base year shall be determined by:
(1) Determining the annualized gross income by totaling the rents for the twelve -month period
ending within ninety (90) days prior to the notice of a rent increase or service reduction
( "the relevant year ").
(2) Determining the operating expenses during the relevant year.
(3) Determine annualized park NOI by subtracting operating expenses from annualized gross
income.
Sec. 14.85.235. Calculation of gross income.
(a) For the purposes of determining the Net Operating Income, Gross Income shall be the sum of
the following:
(1) Gross rents calculated as gross rental income at one hundred (100) percent occupancy of
all spaces, adjusted for uncollected rents as provided in subsection (b) of this section;
(2) Income from any laundry facilities and parking fees;
(3) Costs of utilities paid directly to the owner by the mobile home tenants; .
(4) All other income or consideration received or receivable in connection with the use or
occupancy of the mobile home space including the regulatory fee required by section
14.85.030; and,
(5) Proceeds from a sale of a mobile home park asset which exceed the book value of the asset.
If an asset is conveyed from the mobile home park to another entity via a non -sales
transaction, then, for this subparagraph, the transaction would be considered a sale and the
sales price would be set at the fair market value of the asset.
(b) Gross rents shall be adjusted for uncollected rents due to vacancy of mobile home spaces and bad
debts to the extent such are beyond the control of the owner. No such adjustment shall be greater
than three (3) percent of gross rents unless justification for a higher rate is demonstrated by the
owner.
(c) Gross income shall not include rent from mobile homes owned by the park owner which exceeds
the average space rent. It shall be deemed that the rent for spaces occupied by mobile homes
owned by the park owner or vacant spaces is equal to the average space rent of all other occupied
spaces in the park. This rent shall be included in the gross rents as calculated in subpart (a)(1)
above.
Sec. 14.85.240. Calculation of operating expenses.
Page 14 of 21
(a) For the purposes of determining Net Operating Income, operating expenses shall include the
following:
(1) Costs of operation and maintenance.
(2) Utility costs to the extent they are not included in costs of operation and maintenance.
(3) Owner perfonmed labor compensated at reasonable hourly rates.
(a) No owner performed labor shall be included as an operating expense unless the
owner submits documentation showing the date, time, and nature of the work
performed.
(b) There shall be a maximum allowed under this provision of five (5) percent of gross
income unless the owner shows greater services were performed for the benefit of the
tenants.
(4) License, registration fees, and the regulatory fee required by section 14.85.030 as required
by law to the extent not otherwise paid by the residents.
(5) Expenses of capital improvements (either improvements to existing capital items or
acquisition of additional fixed assets) where all of the following conditions are met:
(a) The capital improvement is made at a direct cost of not less than five thousand
dollars ($5,000.00).
(b) The costs, less any insurance proceeds or other applicable recovery, are averaged on
a per space basis for each space actually benefitted by the improvement.
Infrastructure improvements shall be deemed a benefit to all park tenants unless a
mobile home or group of mobile homes receive a higher level of service as a result
of the improvement, in which case, costs will be apportioned on a pro rata basis.
(c) The annual expense is limited to one -fifth of the cost of the capital improvement or
the annual depreciation as calculated by generally accepted accounting principles of
the capital improvement whichever is less.
(d) The costs do not include any additional costs incurred for property damage or
deterioration resulting from unreasonable delay in the undertaking or completion of
any repair or improvement.
(e) If a capital improvement is removed from service, then the related depreciation shall
discontinue accrual to operating expenses. Depreciation for a capital improvement
shall also discontinue accrual to operating expenses when the book value of the
capital improvement is reduced to the salvage value or zero, whichever is greater.
(6) Operating expenses as calculated by this section are to include repair and maintenance
work on all spaces up to and including the utility pedestal. In the event gross rents are
reduced by greater than the three (3) percent reduction cap allowed in subsection 14.85.23 5
(b), then a pro rata portion of the expenses will be reduced unless park owner can
demonstrate that park has continually made a good faith effort to rent spaces at no more
than market rental rates. All repair and maintenance on any spaces beyond the utility
pedestal are not to be included in operating expenses.
(b) Operating expenses shall not include the following:
Page 15 of 21
(1) Mortgage principal or interest payments or other debt service costs and park lease costs.
(2) Any penalties, fees or interest payments or other debt service costs and park lease costs.
(3) Any penalties, fees or interest assessed or awarded for violation of any provision of this
article or of any other provision of law.
(4) Legal fees except as specified in subsection (c) of this section.
(5) Political contributions.
(6) Any expenses for which the owner has been reimbursed by any utility rebate or discount,
security deposit, insurance settlement, judgment for damages, settlement or any other
method or device.
(7) Costs arising from operation and maintenance, improvement, and acquisition of mobile
homes owned by the park owner.
(8) Expenses of a capital improvement after the improvement is fully depreciated.
(9) Rehabilitation costs resulting from a work order issued by a public agency unless to correct
conditions caused by a natural disaster.
(c) Legal expenses allowed in the calculation of operating expenses shall include: 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 the normal operation of the park to the extent such expenses are
not recovered from adverse or other parties. Attorneys' fees incurred in relation to the
administrative or judicial proceedings in connection with this article are not allowable as
operating expenses.
Sec. 14.85.245. Fair and reasonable return.
An owner has a fair and reasonable return when the owner's relevant year NOI is equal to the amount
required for the owner to maintain the base year NOI adjusted annually by the consumer price index, plus
increases allowed by vacancy as set forth in section 14.85.025(d).
Sec. 14.85.250. Determination of allowable supplemental rent increase.
(a) The arbitrator shall set the amount of any supplemental rent increase in an amount not to exceed
that required to provide the owner with a fair and reasonable return.
(b) In determining the supplemental rent increase required to provide the owner with a fair and
reasonable return, the arbitrator shall determine:
(1) The fair and reasonable return in accordance with section 14.85.245.
(2) The gross income required to produce the fair and reasonable return.
(3) The rent increase needed to produce the required gross income.
(c) Rent increases based upon costs of capital improvements shall apply only to those spaces
benefitted by the capital improvements in accordance with section 14.85.240(a)(5)b.
(d) Rent increases based upon increased operating expenses shall apply only to those spaces for
which such increased operating expenses were incurred.
Page 16 of 21
Sec. 14.85.300. Basic service level.
The mobile home park owner is required to furnish to the tenant a basic level of housing services,
herein called the "basic service level ". The basic service level is established by:
(a) Civil Code Section 1941.1 and 1941.2 and other applicable codes and statutes;
(b) The mobile home park owner's implied warranty of habitability;
(c) Express or implied agreement between mobile home park owner and tenant;
(d) The condition of improvements, fixtures and equipment considering;
(1) The nature and quality of original construction, fixtures, and equipment;
(2) The age;
(3) The condition at the beginning of the tenancy;
(e) The mobile home park owner's policies of operation and maintenance, repair and replacement
communicated to the tenant at the beginning of the applicable term of tenancy.
Sec. 14.85.305. Service reductions.
A service reduction occurs when the mobile home park owner has breached the obligation to furnish
the Basic Service Level impairing the tenant's use of the premises.
Sec. 14.85.310. Allegations of service reductions.
Each allegation of a service reduction in a tenant's petition shall be separately stated and include:
(a) The prior level of service;
(b) The specific changes in the prior level of service;
(c) The date the service reduction was first noticed by the tenant;
(d) The cause of reduction of service level, if known;
(e) The mobile home park owner's response to the tenant's notice;
(f) The mobile home park owner's effort to improve or correct the service reduction;
(g) The status as of the date the petition is filed.
Sec. 14.85.315. Determining value of unreasonable service reductions.
The arbitrator shall determine the monetary value to be assigned to a service reduction by applying
the following standards:
(a) The arbitrator shall determine the percentage reduction in usability of the mobile home space
and common areas caused by the service reduction considering:
(1) The area affected;
(2) The amount of time the tenant is exposed to the condition;
(3) The degree of discomfort the condition imposes;
Page 17 of 21
(4) The extent to which such a condition causes tenants to find the premises uninhabitable.
(b) The date reduction in service began.
(c) The arbitrator shall apply the percentage reduction to the monthly rent, divide by thirty (30), and
multiply by the number of days commencing from the date service reduction began to the date
of restoration of the service to the Basic Service Level.
Sec. 14.85.320. Conclusive evidence of service reduction.
The results of an audit, prepared pursuant to section 14.85.125, which demonstrate that a mobile home
park owner's three year average NOI exceeds a fair and reasonable return, as defined by section 14.85.245,
by more than eight (8) percent, shall be conclusive evidence of a service reduction. In such an event, rents
shall be reduced to result in a NOI not to exceed eight (8) percent more than a fair and reasonable return.
Sec. 14.85.400. Resolution of non - rental disputes.
This division is provided to enable tenants and park owners to resolve disputes when there is no
concurrent issue concerning increase in or the amount of rent. If at any time while the non - rental dispute
remains unresolved there is a rent dispute, then the non - rental dispute issues shall be resolved separately in
accordance with this section and shall not be consolidated with the rent dispute proceeding.
Sec. 14.85.405. Unsupervised efforts of the parties.
(a) Notice of objection. One or more tenants, or the mobile home park owner, may at any time file
a written objection with the other, as to maintenance, capital improvement, housing services, or
any other concern related to the physical condition or habitability of the mobile home park.
(b) Informal meeting. Within ten (10) days after service of the written objection from a tenant, the
mobile home park owner shall set a time and place for a meeting to be held on the mobile home
park premises, giving the tenant at least seven (7) days' notice of the time and place. In the case
of a written objection filed by the park owner, a time and place for discussion shall be set forth
in the notice. The purpose of this meeting shall be to allow the parties the opportunity to resolve
any differences they may have concerning non - rental disputes. The meeting may be continued
to another time and place agreeable to the parties. The parties may agree to consolidate more
than one notice of objection in the same discussion.
Sec. 14.85.410. Conciliation.
If the informal meeting does not resolve the dispute to the satisfaction of both parties, the dissatisfied
party or parties may, within ten (10) days of the date of the meeting, file with the Town's agent a petition
for conciliation. Conciliation in this sense is limited intervention in the dispute, using letters and telephone
and personal conversation to attempt to explain to each party the position of the other and to urge rational
agreement. If the Town's agent determines after a reasonable time that conciliation is not likely to resolve
the dispute, it shall notify the parties in writing.
Sec. 14.85.415. Mandatory Dispute Resolution.
Page 18 of 21
(a) Petition forformal mandatory mediation. Within ten (10) days ofnotice of failure of conciliation
from the Town's agent, either party may file with the Town's agent a written request for
mediation of non -rent dispute.
(b) Assignment of mediator and hearing date. Upon receipt of a petition for mediation, the Town's
agent shall assign a mediator. The Town's agent shall set a date for mediation hearing no sooner
than ten (10) nor later than thirty (3 0) days after the mediator is assigned. The parties shall be
notified in writing by the Town's agent of the date, time, and place of the mediation hearing
which shall be set to maximize the convenience of the parties.
(c) Mediation.
(1) Introduction and opening statement. The mediator will introduce him/herself, identify all
attendees, circulate a sign -in sheet, and briefly explain the mediation process. The
explanation will include any ground rules to be observed. The rules of confidentiality will
also be explained, as well as the exceptions to confidentiality noted below for any
agreement reached or in the event of impasse. The parties will be asked to sign a
confidentiality agreement.
(2) Presentation by the parties. The parties will be given full opportunity to present any
documents or verbal statements which they chose to submit on those issues which the
parties desire to discuss. The parties will be encouraged to make comments which are
clear, concise, and relevant. All parties in attendance will be given their turn to make
presentations.
(3) Private sessions. At any point in the process that the mediator believes it would advance
the process, the mediator may meet separately in a caucus with the parties. The mediator
will notify all participants that statements made in the caucus are confidential and will not
be disclosed to the other parties, unless given permission to do so by the relevant party
during the caucus meeting.
(4) Voluntary agreement. If the parties arrive at a voluntary agreement, the mediator will
summarize the resolution on a written agreement form, to be signed by all relevant parties
and the mediator. The resulting agreement will not be confidential, unless all parties agree
in writing that the agreement will remain confidential.
(5) The parties and the mediator are encouraged to conclude the mediation in one session, but
if the mediator in his /her discretion concludes that an additional session will be helpful to
resolution, and the parties agree to attend an additional session, an additional session will
be scheduled.
(6) In the event of any impasse between the parties on the terms of a voluntary agreement, the
mediator will seek to reach an agreement between the parties on the list of issues remaining
to be decided by binding arbitration.
(7) In the event of impasse, the mediator will notify the Town's agent within five days of the
hearing. The notification will be held by the Town or its agent as a confidential document
and will contain only the following information, said information being deemed an
Page 19 of 21
exception to the rule of confidentiality:
(a) Identification of all attendees;
(b) A statement that impasse was reached;
(c) If applicable, any agreement by the parties which defines the issues to be subject to
binding arbitration.
(8) If a subsequent binding arbitration is held, that hearing shall be conducted on a de nova
basis without any reference to, or utilization of any content of the mediation hearing by any
party to the arbitration, except as limited elsewhere in the applicable ordinance or
regulations. If the parties have reached agreement on the issues to be determined by the
arbitration hearing, the arbitrator shall be bound by that agreement. In the absence of an
agreement between the parties listing the issues, the arbitrator shall determine the issues
to be decided.
(d) Arbitration:
(1) If the mediation process fails to resolve the dispute, any party to the case may request
arbitration by filing a written request for arbitration with the Town's agent. Said request
must be filed within thirty (30) days of the declaration of impasse by the mediator, or if
mediation is waived by the parties, within sixty (60) days after the initial filing of the
petition.
(2) Once a timely written request for arbitration has been received, the arbitration process shall
be governed by the arbitration provisions of sections 14.85.145 through 14.85.165 of this
article.
Page 20 of 21
SECTION II
This ordinance was introduced at a regular meeting of the Town Council of the Town of Los Gatos
on September 15, 2002, and adopted by the following vote as an ordinance of the Town of Los Gatos at a
regular meeting of the Town Council of the Town of Los Gatos on September 3, 2002. This ordinance
takes effect thirty (30) days after it is adopted.
COUNCIL MEMBERS:
AYES: Steven Blanton, Sandy Decker, Steve Glickman, Joe Pirzynski,
Mayor Randy Attaway
NAYS: None
ABSENT: None
ABSTAIN: None
SIGNED: 4�4
MAYOR OF TOWN OF L ATOS
LOS GATO , CALIFORNIA
ATTEST:
A
CLERK OF THE TOWN OF LOS & l ji/1—
O S
LOS GATOS, CALIFORNIA
Page 21 of 21