14 Staff Report - Revised Rental Dispute Resolution Regulations
" DATE: TO: FROM: COUNCIL AGENDA REPORT February 13,2004 MAYOR AND TOWN COUNCIL DEBRA J. FIGONE, TOWN MANAGER MEETING DATE: 3/1/04 ITEM NO. /'-f SUBJECT: INTRODUCE AN ORDINANCE AMENDING
THE LOS GATOS TOWN CODE CHAPTER 14, ARTICLE VIII, RENTAL AND OTHER LANDLORD/TENANT DISPUTES; AND ADOPT A RESOLUTION ADOPTING REVISED RENTAL DISPUTE RESOLUTION REGULATIONS RECOMMENDATION:
1. Introduce an Ordinance amending the Los Gatos Town Code Chapter 14, Article VIII, Rental and Other Landlord/Tenant Disputes: a. Direct the Town Clerk to read the title; b. Waive the
reading; c. Introduce the Ordinance amending the Los Gatos Town Code Chapter 14, Article VIII, Rental and Other Landlord/Tenant Disputes; and, instruct the Town Clerk to publish a summary
no more than five (5) days prior to adoption. 2. Adopt a Resolution rescinding Resolution 1999-l4, Resolution of the Town of Los Gatos Adopting Revised Rental Dispute Resolution Regulations,
and adopting revised rental dispute resolution regulations. BACKGROUND: Town Code Section 14.80, "Rental and other Tenant/Landlord Disputes," governs the monthly rent that may be charged
by the oWner of rental units located in complexes of three units or more; and provides a resolution process for rent-or service-related disputes between landlords and tenants. This section
of the Town Code is referred to as the Town's "Rental Dispute Mediation and Arbitration Ordinance," hereinafter "Mediation Ordinance." As allowed for by the Mediation Ordinance, the
Council has adopted corresponding regulations, "Rental Dispute Resolution PREPARED BY: REGINA A. Communitypirector N:\CSD\TCRPTS\Apartment OrdRes 2004.wpd . Reviewed by: '.
Assistant.Town Manager Town Attorney __Clerk /,'\. Finance __CommunIty Development Revised: 2/13/04 10:36 am Refonnatted: 5/30/02
PAGE 2 MAYOR AND TOWN COUNCIL SUBJECT: INTRODUCE AN ORDINANCE AMENDING THE LOS GATOS TOWN CODE CHAPTER 14, ARTICLE VIII, RENTAL AND OTHER LANDLORD/TENANT DISPUTES; AND ADOPT A RESOLUTION
ADOPTING REVISED RENTAL DISPUTE RESOLUTION REGULATIONS February 13, 2004 Regulations,"(hereinafter "Rental Regulations") which provide a detailed explanation of how rent increases may
be calculated, how they must be communicated to residents, and how disputes between landlords and tenants may be resolved. The Town contracts with Project Sentinel, a local nonprofit
organization, to administer the Ordinance and RentalRegulations. The Town's Rent Advisory Committee is charged with making recommeI1:dations to Council regarding modifications
to either document, and to related processes. The Committee membership includes property owners, renters, and other residents of Los Gatos. The Rent Advisory Committee has recently completed
an extensive, two-year review of both the Mediation Ordinance and the Rental Regulations. At its July 7, 2003 meeting, the Committee adopted a recommendation that Council introduce and
adopt the proposed ordinance (Attachment 1), which contains revisions to the Mediation Ordinance; and adopt a resolution (Attachment 2) adopting revised Rental Regulations. The goals
of these revisions are to: • codify the procedures for noticing a rent increase, for disputing a rent increase, for petitioning a reduction in service, and for holding a mediation or
arbitration hearing • improve communication between parties to a rental dispute • resolve rental disputes first through informal discussion, then through formal mediation, and finally
through arbitration • make the Mediation Ordinance and Rental Regulations consistent with field-tested best practices The proposed changes primarily address the administration of the
program and the functioning of the dispute resolution process. They represent efforts to eliminate potential contradictions between current language in the Mediation Ordinance and Rental
Regulations, and to clarify and formally incorporate practices and definitions already in place based on sources such as opinions from the Town Attorney and current standards ill mediation
and arbitration. Other changes are intended to address experiences arising from complex cases handled under the current language. DISCUSSION: Revisions to Mediation Ordinance. The goal
ofall the proposed changes is to clarify the process ofrental dispute resolution, so that any tenant or landlord may understand the process up front. A brief discussion ofthe proposed
changes follows: 1. Definitions. The proposed Ordinance would include updated definitions for terms such as "mediator," "arbitrator," "landlord," "tenant," and "voluntary vacancy," following
current industry standards.
PAGE 3 MAYOR AND TOWN COUNCIL SUBJECT: INTRODUCE AN ORDINANCE AMENDING THE LOS GATOS TOWN CODE CHAPTER 14, ARTICLE VIII, RENTAL AND OTHER LANDLORDI TENANT DISPUTES; AND ADOPT A RESOLUTION
ADOPTING REVISED RENTAL DISPUTE RESOLUTION REGULATIONS February 13, 2004 2. Notice of Dispute Resolution Rights. The process for advising tenants of their rights under the Mediation
Ordinance would be made more specific, including the content of the landlord's written notice to tenants, and the timeline in which such notice must be given. 3. Disputes Involving Multiple
Units. The process for resolving a dispute involving multiple units in the same rental complex would also be made more specific, including the timeline in which the required number of
tenants must agree to join the dispute. 4. Subpoenas. The standard for issuing subpoenas in the course ofmediation and/or arbitration would be strengthened, to require that any party
requesting a subpoena requiring the production ofdocuments (subpoena duces tecum) must showthe Mediator or Arbitrator good cause for such a request. 5. Mediation Hearings. The integrity
of the mediation process would be strengthened, stating the basic principles ofconfidentiality, neutrality, and the freedom ofparties to settle a dispute as they choose. Third parties,
such as media representatives, would not be allowed to attend mediation hearings. 6. Costs ofDebt Service. The proposed Ordinance would require that, when"a landlord requests a rent
increase based on increased costs ofdebt service, an appraisal ofthe property must be perfonned by an uninterested party, within twelve months of the request. Revisions to Rental Regulations.
As noted above, the goal of all the proposed changes is to clarify the process of rental dispute resolution, so that any tenant or landlord may understand the process up front. A brief
discussion of the proposed changes follows: 1. Initiating the Dispute Resolution Process. The proposed Resolution would more specifically outline the procedure for any tenant or landlord
to begin the dispute resolution process, including timelines to submit required documents, the topic of disputes, and disputes involving multiple units. 2. The Role of the Town's Agent.
The role of the organization chosen by the Town to administer the Rental Regulations, currently Project Sentinel, would be more clearly stated. The role of Project Sentinel is to remain
a neutral party during a dispute resolution process, to explain the process to all parties involved, and to facilitate the administration of the process but not the substance of any
dispute. 3. Evidence. The process for sharing ofevidence or other written materials between parties in
PAGE4 '. MAYOR AND TOWN COUNCIL SUBJECT: INTRODUCE AN ORDINANCE AMENDING THE LOS GATOS TOWN CODE CHAPTER 14, ARTICLE VIII, RENTAL AND OTHER LANDLORD/TENANT DISPUTES; AND ADOPT A RESOLUTION
ADOPTING REVISED RENTAL DISPUTE RESOLUTION REGULAnONS February 13, 2004 a dispute would be made more clear, including timelines for sharing of materials. 4. Attendance at Hearings. The
parties allowed to attend a mediation and/or arbitration hearing would be clearly stated. At mediation hearings, only parties to the dispute would attend. At arbitration hearings, final
decision power regarding a third party's attendance would be given to the arbitrator. 5.· Conduct of Hearings. The procedures for mediation and arbitration hearings
would be clarified, including the role of the mediator or arbitrator, how evidence may be presented, and when and how a resolution may be made. 6. Eligibility ofMediators/Arbitrators.
The eligibility requirements for a mediator or arbitrator to hear a dispute under the Town's Town's process would be strengthened. All must have been trained in the Town's process, in
addition to formal training in mediation or arbitration. 7. Definitions. The proposed Resolution would include updated definitions for terms such as "mediator," "arbitrator," "tenant,"
and "landlord/tenant dispute," following current industry standards. Opportunities for Public Comment. As noted above, the Rent Advisory Committee's review process took place over a
two-year period. During that time, an ad hoc subcommittee ofthe Committee held a series ofworking meetings, open to the public, which representatives of the Tri-County Apartment Association,
and a local tenant advocate, attended regularly. The Tri-County Apartment Association provided written comment, as well as verbal comments, both of which were discussed and incorporated
into the review. The full Rent Advisory Committee discussed these issues at several oftheir regular public meetings, which are advertised to the public in accordance with Brown Act regulations.
The Committee itself is composed oftwo tenant representatives, two property owner representatives, and one other Town resident. CONCLUSION: The proposed revisions to the Mediation Ordinance
and Rental Regulations have been drafted through extensive work by Rent Advisory Committee members, Project Sentinel staff, and Town staff. The Rent Advisory Committee believes that
they represent the best means to improve the process for resolving rental disputes. The Committee recommends that Council introduce the proposed Ordinance (Attachment 1), and adopt the
proposed Resolution (Attachment 2).
PAGES MAYOR AND TOWN COUNCIL SUBJECT: INTRODUCE AN ORDINANCE AMENDING THE LOS GATOS TOWN CODE CHAPTER 14, ARTICLE VIII, RENTAL AND OTHER LANDLORD/TENANT DISPUTES; AND ADOPT A RESOLUTION
ADOPTING REVISED RENTAL DISPUTE RESOLUTION REGULATIONS February J3, 2004 If the Council introduces the proposed Ordinance at its March 1 meeting, the Ordinance will be brought back to
Council for adoption at its March 15 meeting. It would go into effect 30 days after adoption, April 14. The Resolution, if adopted, would also go into effect on April 14. ENVIRONMENTAL
ASSESSMENT: The recommended actions are not projects defined under CEQA, and no further action is required. FISCAL IMPACT: Revision of the Mediation Ordinance and Rental Regulations
would not result in any additional fiscal impact to the Town. Administration ofthe Rental Dispute Resolution Program is included in the Town's Operating Budget, in Program 8030, "Housing."
Attachments: 1. Draft Ordinance Amending the Los Gatos Town Code Chapter 14, Article VIII, Rental and Other Landlord/Tenant Disputes (Section 14.80) 2. Draft Resolution of the Town Council
of the Town of Los Gatos Rescinding Resolution 1999-14, "Resolution of the Town of Los Gatos Adopting Revised Rental Dispute Resolution Regulations," and Adopting Revised Rental Dispute
Resolution Regulations (with Exhibit A) Distribution: Rent Advisory Committee members Martin Eichner, Project Sentinel, 1055 Sunnyvale/Saratoga Road, #3, Sunnyvale, CA 94087 Jeffrey
Dennison, Tri-County Apartment Association, 792 Meridian Way, Suite A, San'Jose, CA, 95126
ORDINANCE NO. ORDINANCE AMENDING THE LOS GATOS TOWN CODE CHAPTER 14, ARTICLE VIII, RENTAL AND OTHER LANDLORDrrENANT DISPUTES (SECTION 14.80) THE TOWN COUNCIL OF THE TOWN OF LOS GATOS
DOES HEREBY ORDAIN: Chapter 14, Article VIII Rental and Other Landlord/Tenant Disputes, of the Town Code is hereby amended to read as follows: SECTION I Sec. 14.80.010. Title. This article
shall be cited as the Town's Rental Dispute Mediation and Arbitration Ordinance. Sec. 14.80.015. Declaration of policy and purposes. (a) The Comcil finds and decla:res that there is
a shortage Ofa:rld increasing demand for honsing in the To This circnmstance, conpled increasing inflation, the rising costs of developing honsing,
a:rld other factors, has pttt snbstantial pressme on residential rents. The Councilfinds that there is a serious and continuous shortage ofand increasing demandfor housing
in the Town. This circumstance, coupled with periodic inflationary pressure, uncertain and changing strength in the surrounding economy, and the rising costs ofdeveloping new housing,
results in volatile rental rates for residential housing which are often subject to substantial upward pressure. (b) This article is necessary in order to protect the health, safety
and welfare of the citizens of the Town by meeting the needs created by the housing shortage, including, but not limited to, prevention of excessive and unreasonable rRent iIncreases,
and the assurance to lLandlords ofa fair and reasonable return on the value of their property. Sec. 14.80.020. Definitions.' The following words, terms and phrases, when used in this
article, shall have the meanings ascribed to them in this section, except where the context clearly indicates a different meaning: (a) Agent. An individual or organization, or governrnent,
designated by the Town Council to administer the ordinance this article. (1) ATTACHMENT 1
(b) Affected Tenant. A Tenant whose terms and conditions ofrental relationship with his or her Landlord are changed by a proposed Rent Increase or other change in terms and conditions
governed by this article. (c) Arbitrator. A person designated by the manager or the manager's designated repr esentati vt \"9ho is tr ained to hear disptttesttnder this article arId
the reg1:11ations adopted pms1:1ant thereto and render a decision. A person designated to act as the hearing officerfor the arbitration phase ofthe dispute resolution process under this
article. (d) Duplex. A building or group of buildings on the same premises, containing not more nor less than two (2) dwellings. (e) Housing'SServices. Those services provided and associated
with the use of occupancy of a rRental n'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. (f) Land. Real property in the technical sense. The
meaning ofthe word includes, but is not limited to, buildings and parking spaces. . (g) Landlord. The person or entity with the legal right to exercise ownership control over rental
housing property governed by this article. An owner, lessor, or sublessor, who receives or is entitled to receive Rentfor the use and occupancy ofany Rental Unit or portion thereof,
and the agent, representative, or successor ofany ofthe foregoing. (h) Landlord/Tenant Dispute. Any dispute between a Landlord or any agent or employee thereof, and a Tenant, regarding
Rent or any other aspect ofHousing Services, provided that the Tenant is occupying the premisesfrom which the dispute arises. (i) Lease/rRental aAgreement. An agreement, written, oral,
implied in fact, or implied in law, in which a landowner, for compensation, conveys the right to possess tLand to someone else for a period oftime or from period to period. OJ Mediator.
A person designated by the manager or the manager's designated representati vC is trained to conciliate rental disp1:1tes 1:1nder this article. A person designated to conduct
the mediation phase ofthe dispute resolution process under this article. (k) Rent. 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 rRental nUnit, or the assignment of a lease for such a unit, including hHousing sServices or subletting. (2)
(I) Rental ttUnit. Any building or part of a building which is used for residence, or any mobile home owned by a mobile home park owner, and which is rented to a tTenant as a dwelling
place, except: (1) A rRental uUnit located in a building or group of buildings on the same premises containing only one (1) dwelling unit; (2) A room in an owner-occupied dwelling where
under the lease provisions the tTenant does not have the substantially exclusive use of the kitchen; (3) A single house, condominium unit, or planned development (Business & Professions
Code § 11003) unit; (4) A hotel room or similar accommodation ordinarily let for occupancy by the same tTenant for periods of less than thirty (30) days; (5) A hospital room, skilled
nursing facility, or similaraccommodation where the main factor in the rental relationship is the personal care given to the tTenant; (6) A dwelling owned, operated, or managed by a
government agency or which is exempted by Sstate or Ffederallaw from rRent regulation; (7) Mobile homes located in mobile home parks and not owned by the mobile home park owner. (m)
Rent-ilncrease. Any additional rRent due or paid by a tTenant for a rRental uUnit, including any reduction in hHousing sServices without a corresponding reduction in the moneys demanded
or paid by rRent. (n) Tenant. A lessee 'i'9ho occnpies land under a lease or sublease. A person who is legally entitled to occupy all or part ofa rental property subject to this article
at the time any issue or right under this article arises. (0) Voluntary "Vacancy. A voluntary vacancy occurs 'i'9hen a rental unit is vacated b, a tenant for reaSOIlS other thenl evictioIl.
For the purpose o/this article, a vacancy is voluntary under any ofthefollowing circumstances: (1) A voluntary choice by a Tenant to vacate the Rental Unit. (2) The Tenant is evicted
by a courtfor non-payment, chronically late payment, or other material violation ofa written rental agreement. (3) A Tenant moves out pursuant to a three (3) day noticefrom the Landlord
or Landlord's agent to pay Rent or vacate the Rental Unit. (3)
(4) A Tenant moves out pursuant to a three (3) day noticefrom the Landlord or Landlord's agent to comply with a covenant ofthe rental agreement or move out. Ifa Tenant moves after receiving
a thirty (30) or sixty (60) day noticefrom the Landlord, it is not a Voluntary Vacancy. (5) A Voluntary Vacancy occurs when one (1) ofthe roommates gives a notice to vacate and there
is a written agreement to the effect between the Tenant and Landlord that a notice to vacate submitted by one (1) Tenant is binding on all of the Tenants, and is a Voluntary Vacancy
within the meaning ofthis article. (6) A Voluntary Vacancy occurs when anyone (1) Tenant vacates the Rental Unit without notice and the written agreement between the Tenant and Landlord
provides to the effect that afailure to give notice to vacate is a breach ofthe agreement, is binding on all ofthe Tenants, and is a Voluntary Vacancy within the meaning ofthis article.
Sec. 14.80.025. Regulations. The Town Council may adopt regulations to assist in implementing this article. Sec. 14.80.030. ReasonablerRent ilncreases. No !Landlord shall increase the
rRent of any tTenant in an amount which is unreasonable. The factors to be considered in detennining whether arRent tIncrease is reasonable are set forth in division 4 of this article,
and may be described in greater detail in regulations adopted pursuant to this article. See. 14.80.035. Retaliatory evictions. (a) Possession of a rRental nUnit shall not be recovered
by a !Landlord from a tTenant who is not otherwise in default as to the tenns of occupancy of such unit if either: (1) The !Landlord's predominant reason for seeking to recover possession
of such rRental nUnit retaliation against the tTenant for exercising the tTenant's rights pursuant to this article; or (2) The predominant motive of the !Landlord in seeking to
recover possession of such rRental nUnit is to evade the purposes of this article. (b) When an eviction occurs within one hundred eighty (180) de:tys of the tTenant,s exercise or reasonable
attempt to exercise rights provided by this article, and if the tTenant shows that the !Landlord knew at the time of eviction of the tTenant's conduct in relation to this article, the
eviction is presumed to be reta.liatory. This presumption applies in judicial proceedings and is one which affects the burden of producing evidence. (4)
Sec. 14.80.040. Notice of conciliation dispute resolution rights. (a) No notice of rent increase shall be valid unless the landlord does the order for a notice
ofRent Increase to be valid, the Landlord must: (1) Serves, with the notice of proposed increase, written notice advising advice to the aAffected tTenants of their right to petition
for conciliation dispute resolution under section 14.80.205. , and giving the ctlIrent telephone ntunber of the agency administering the ordinance for the Town; Said written advice must
include the name and current telephone number ofthe designated Agent administering this article for the Town; and (2) Provides in miting, to any tenant reqnesting in
the apartment rtnmbers of all tenants receiving increase notices for the same month as the tenant making the reqnest. Respond in writing within thirty (30) days to a written request
made by any Affected Tenantfor the names and apartment numbers ofall Tenants receiving increase notices for the same month as the Tenant making the reque.st by disclosing said information,
provided that such request is made by an Affected Tenant within thirty (30) days after the Rent Increase takes effect. (b) Failure to provide the notice in theform specified above or
in aform which provides substantially the same information, orfailure to provide a timely response to a request for Affected Tenants, shall render the notice ofproposed increase invalid.
A notice which fails to meet any remaining requirements which may be established by corresponding regulations that may be adopted waives the thirty (30) day limit herein and permits
a petition to befiled within six (6) months ofthe applicable Rent Increase or other event giving rise to the dispute. tb1 (c) A reissued notice to correct the notification requirement
shall not exceed the amount of the previous rRent tIncrease notice. Sec. 14.80.045. Applicability to dDuplexes. (a) The provisions of this article shall apply to dDuplexes only as follows:
(1) Tenants and !Landlords of dDuplexes are entitled to the resolution services provided in division 3 (sections 14.80.205 and 14.80.210) below; and (2) A regulatory fee shall be imposed
on each rRental ttUnit pursuant to that division. (b) Duplexes shall not be eligible for mediation or arbitration services. . (c) Section 14.80.310 shall not apply to dDuplexes. (5)
SECTION II Sec. 14.80.105. Retroactive application. (a) This article shall apply to all rRent ilncreases effective on or after July 1, 1980, and to all !LandlordltTeriant dDisputes arising
after July 1, 1980. (b) No tLandlord sha.ll be required to refund any rRent under this article; however, the mediation agreement or arbitration award may establish a reasonable rRent
at a decreased level, which may be effective for up to twelve (12) months from the date of the agreement or award. Sec. 14.80.110. Stay. Invoczrtion by a tenantor landlordofconcilizrtion
nnder this article shall stay the rent inerease complained of, pending resolntion of the dispnte, provided, that if staff and a medizrtor detennine, based on Mitten findings, thzrt a
petition is not cOvered by the intent and pnrpose of this arliele, the stay shall tenninzrte as of the dzrte of the findings. In the case of stay, the tenant shall pa, hzrte ver rent
inerease is deter mined to be rcasonable her ennder, retr oacti veto the dzrte the original inerease proposed by the landlord onid have been effective. Filing a petition for dispute
resolution ofa Rent Increase stays the Tenant's obligation topay any amount ofthe increase greater than the limits setforth for annual increases below in section 14.80.310 (c), pending
thefinal outcome ofthe resulting case under this dispute resolution process. Iftheflnal outcome results in approval ofan increase greater than tke limit seiforth in 14.80.310 (c), the
Tenant shall pay the resulting retroactive increase due, calculatedfrom the effective date ofthe proper increase notice to the date ofthe final outcome. Said payment must be made by
the Tenant within thirty (30) days ofreceiving notice ofthe final outcome ofthis dispute resolution process, unless otherwise ordered as part ofany arbitration award or voluntary settlement
in the case. Sec. 14.80.115. Defense; unlawful detainer action. A finding by an mediator Arbitrator of a violation of this article by a tLandlord shall be a complete defense to unlawful
detained proceedings by a !Landlord against a tTenant not otherwise in default under the lease, and to any action to recover rRents in excess of those found reasonable. Sec. 14.80.120.
Nonwaiver. Any waiver or purported waiver by a tTenant of rights granted under this article prior to the time when such rights may be exercised shall be void as contrary to public policy.
(6)
I1 Sec. 14.80.125. Standing to enforce. The Town may enforce this article by bringing a civil action. Sees. 14.86.136--14.86.266. Reser SECTION III Sec. 14.80.205. Town service.
When either party to a lLandlord/tTenant transaction has a dispute with the other, the party may seek the services of the Town by filing a written petition for conciliation with the
Town or its aAgent; provided, that in the case ofrRent disputes, twenty-five fZ57 percent (25%) of the units affected must join in the petition, orfile timely concurrent petitions. In
all other cases an individual may submit a petition: Petitions challenging a Rent Increase in a single unit must be filed within thirty (30) 'sixty (60) days after the rental increase
takes effect the Landlord sends a valid notice ofRent Increase. In the case ofRent Increases for multiple units, an initial petition by at least one Affected Tenant must befiled no later
than sixty (60) days after the Landlord sends a valid notice ofRent Increase. Ifan initial petition is received within the applicable sixty (60) days for a property in which multiple
numbers ofincreases were noticed, additional petitions containing the requisite number ofsignatures necessary to reach the twentyfive percent (25%) level must be received within thirty
(30) days after any Affected Tenant has received a list ofthe names and unit numbers ofthe Affected Tenants as required by section 14.80.040 or has otherwise been notified by the Agent
that additional petition signatures are necessary. A petition raising an issue other than a Rent Increase must befiled within thirty (30) days ofthe event giving rise to the dispute.
Sec. 14.80.210. Conciliation. The Town or its aAgent will provide conciliation service to parties engaged in dDisputes arisingfrom the occupancy ofRental
Units as defined herein. Conciliation in,this sense is limited iritervention in the dispute, using letters and telephone and personal eonversation to attempt to explain to each part,
the position of the other and to mge rational agreement. Sec. 14.80.215. Mediation. When a dispute LandlordlTenant Dispute arisingfrom the occupancy ofa Rental Unit on a property containing
three (3) or more Rental Units has not been resolved through conciliation, either party may request mediation by applying therefor on a form provided by the aAgent. (7)
Sec. 14.80.216. Time limit. A request for mediation is effective only if it is received by the Town or its aAgent as prescribed by the regulations adopted pursuant to section 14.80.025.
Sec. 14.80.220. Subpoenas. The mediatorrmry, on the mediator's 01;'911 initiative or at the reqnest ofa part, An Arbitrator or Mediator may on his/her own initiative or at the request
ofa party issue including for snbpoenas dnees teennt a subpoena requiring the production of documents, provided however, that a Mediator or Arbitrator shall require
aparty t:equesting a subpoena requesting documents to make a showing ofgood cause supporting such a request. For the purposes of this article, the Town Council's authority to issue subpoenas
is delegated to the mMediator or Arbitrator, reserving to the Council full authority to issue subpoenas for the same or other purposes. Sec. 14.80.225. Conduct of mediation. The parties
shall eooperate l;'9ith the mediator, stating their position 011 all issnes,
cOrlfening l;'9iththe mediator and each other, and pro\7iding at the mediator's reqnest information and eonoborationof their assertions of faet. If the parties agree, the mediator shall
rednee theit agreement to· I;'9ritingand the patties shall sign it. When a party properly requests mediation, the dispute shall be heard under a process consistent with the basic principles
ofconfidentiality, neutrality, andpreservation ofthefreedom of the parties to decide whether to settle and ifso, on terms oftheir own choosing. No third patties, 'such as representativesfrom
the media, shall be allowed to attend mediation. Sec. 14.80.230. Request for arbitration. When conciliation or mediation does not result in an agreement either, any party to the case
may request arbitration by applying therefor on a fonn provided by the JOl;'9n's Agent. The mediator rna, also initiatearbitratiottif the mediator eonelttdes that nrediation is not feasible.
If the arbitration request follows a mediation that did not result in an agreement, the arbitration request will be granted. If the arbitration request follows conciliation that did
not result in an agreement, the Town, or its aAgent, may assign either arbitration or mediation. The Town, or its aAgent, will base this decision upon which procedure appears most likely
to result in a timely decision that is both fair and acceptable to the parties. (8)
Sec. 14.80.235. Time limits. A request for arbitration is effective only if it is received by the Town or its a4gent as prescribed by the regulations which may be adopted pursuant to
section 14.80.025. Sec. 14.80.240. Arbitration. When a party properly requests arbitration, the dispute shall be heatd or received under the regulations adopted pttIsuant to section
14.80.025. administered and conducted according to generally accepted rules for arbitrating disputes in Santa 'Clara County, California, unless otherwise specified in regulations adopted
pursuant to this article. Sec. 14.80.245. Regulatory fees. (a) For the sole purpose of reimbursing the Town for the costs of administering this article, there is hereby imposed on each
rRental nUnit, subject to the provisions of this article, a regulatory fee in such amount as the Council may establish by resolution from time to time. The regulatory fee for a rRental
uUnit in a dDuplex shall not exceed fiftyt5B1 percent (50%) of the fee charged to other rRental nUnits subject to this article. No later than June 1 of each year, the manager will report
to the Council on the amount of regulatory fees necessary to recover the costs of the Town in administering the article. (b) The regulatory fee shall be due at the same time that the
!Landlord's business license fee is due. Except, in the case ofdDuplexes, the regulatory fee is due July 1. A !Landlord who fails to pay the fee within thirty (30) days after the Town
mails its bill to the !Landlord shall pay a twenty-five f251 percent (25%) penalty, plus an additional twentyfive f251 percent (25%) penalty for each thirty (30) days thereafter that
the bill remains unpaid. Until such time as the bill including penalties is paid, the !Landlord of a rRental nUnit shall not be entitled to any rRent ilncrease. Sees. 14.89.259--14.89.399.
ReseI fed. SECTION IV Sec. 14.80.305. General standards. The purpose of this article is to permit !Landlords a fair and reasonable return on the value of their property, while at the
same time protecting tTenants from arbitrary, capricious or unreasonable rRent ilncreases. The determination of reasonableness shall be made with reference to the following standards,
unless a4rbitrator determines that the overall standard of reasonableness requires other standards to be applied in a given case; (9)
Sec. 14.80.310. Specific standards. (a) Exemptions. The first rRent ilncrease after the following events shall be exempt from this article: (1) Construction of a new unit. (2) A vVoluntary
vVacancy. (3) Eviction of a tTenant by a court for nonpayment or other violation of a written rental agreement. (4) If the last increase was initiated no less than two (2) years before
the current increase and the current increase is ten tte7 percent (l0%) or less. (b) Frequency ofrRentilncreases. Rent shall not be increased more frequently than annually, except that
it may be increased: (1) When the fee imposed under section 14.80.245 is paid increased, it may be passed through at the rate of no more than one-twelfth (1/12) of the fee per month.
(2) At any time, with the written consent of all aAffected tTenants, which shall be sought through conciliation or mediation. (c) Amount ofannual increase. Annual rRent ilncreases shall
not exceed the seventy fTBJ percent (70%) CPI ceiling or five t51 percent (5%), whichever is greater, unless the hearing officeI Arbitrator determines that other factors render a larger
increase reasonable. CPI is the' Consumer Price Index, All Urban Consumers for the San Francisco-Oakland Area. The most recent CPI is the bimonthly figure most recently available from
the Bureau of Labor Statistics. The seventy fTBJ percent (70%) CPI ceiling is an amount arrived at by adjusting the current rRent to reflect seventy eB7 percent (70%) of the most recent
annual average change in the CPr. Sec. 14.80.315. Other factors of reasonableness. (a) Increases deemed reasonable. Subject to the terms ofsection 14.80.305, a it rRent ilncrease is
reasonable if the heaIingeJfficeI Arbitrator determines the following: (1) The rRent ilncrease consists of no more than five percent (5%) of existing monthly rRent plus the pass-through
of all or some of the amounts of one (1) or more of the following: a. The fee imposed under section 14.80.245; (10)
b. Documented costs of capital improvements, averaged on a per-unit basis and amortized over a period ofnot less than sixty (60) months; c. Increased costs of maintenance and operation;
or d. Documented costs of rehabilitation; averaged on a per-unit basis and amortized over a period of not less than thirty-six (36) months; (2) The cost figures are established to the
reasonable satisfaction of the hem ing officer Arbitrator. (3) Each of the costs proposed for passthrough to tTenants bears a reasonable relationship to the purpose for which such cost
was· incurred and the value of the real property to which it is applied. (b) "When costs ofdebt service deemed to be reasonable. Subject to the terms ofsection 14.80.305, the The heming
officer shall Arbitrator shall deem as reasonable and allowable to be passed through to tTenants the· costs of debt service where the heming officer Arbitrator finds the debt is a secured,
arms-length transaction in the following instances: (1) In the case of increased costs of debt service by new or existing owners, the increase shall be limited to eighty E8BJ percent
(80%) ofthe increased costs of debt service arising from that proportion of the aggregate amount of debt not exceeding seventy flBJ percent (70%) of the value of the property as established
by a lender's appraisal or appraisal by some other person or entity in an arm'slength relationship to the Landlord at the time the appraisal is performed. No notice ofan increase based
on this subsection shall be effective until such an appraisal has been obtained. Appraisals utilizedfor debt service pass-through calculations shall have been performed within twelve
(12) months ofthe Rent Increase request. Where no lender's appraisal is available,the hearing officer ma, secme stich appraisal to be paid for b, the landlord as a cost of maintenarrce
alld opermion. (2) Reserved.. (c) Standards applicable to rRent iIncreases which exceed the foregoing. When the amount of any rRent ilncrease or portion thereof exceeds any of the foregoing
foregoing standards under subsection (a) or (b) of this section, the hearing officer Arbitrator shall determine what is reasonable under the circumstances takinginto account any of the
following factors on which the hearing ·officer Arbitrator has received information: (1) In the case of increased costs of debt service due to a sale or refinancing of the(11)
rRental ttUnits or the building or property of which the units are a part within twelve (12) months of the increase; a. The arms-length nature of the transaction, b. The iLandlord'srate
of return on the investment, c. The frequency of past resale or refinances, and d. The extent to which prior rental Rent tlncreases have made provisions for appreciation of asset value.
(2) The rental history of the unit or the complex of which it is a part, including: a. The presence or absence of past increases, b. The frequency of past rRent tlncreases, c. The iLandlord's
response to Proposition 13 savings, and d. The occupancy rate of the complex in comparison to comparable units in the same general area. (3) The physical condition of the rRental ttUnit
or complex of which it is a part, including the quantity and quality of maintenance and repairs performed during the twelve (12) months. (4) Any increases or reductions ofhHotlsing
since the last rental: Rent tlncrease before the effective date date of this article. (5) Other financial information which the iLandlord is willing to provide. (6)
Existing market value ofrRents for units similarly situated. SECTION V If any of the provisions ofthis ordinance or the application thereof to any person or property is held invalid,
such invalidity shall not affect the other provisions of this ordinance which can be given effect without the invalid provision or applicatio.n, and to this end the provisions of this
ordinance are declared to be severable. (12)
Ji SECTION VI Any judicial review of this ordinance shall be by writ of mandate, under Code of Civil Procedure 1085. Any action or proceeding seeking to attack, review, set aside, void
or annul this ordinance shall be commenced within 90 days after adoption of this ordinance. This ordinance introduced at a regular meeting of the Town Council ofthe Town of Los
Gatos on March 1,2004, 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 March 15,2004.
This ordinance takes effect thirty (30) days after it is adopted. COUNCIL MEMBERS: AYES; NAYS: ABSENT: ABSTAIN: SIGNED: MAYOR OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA ATTEST: CLERK
OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA N:\CSD\TCRPTS\ResolutionslApt Rental Ord.wpd (13)
RESOLUTION NO. RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS RESCINDING RESOLUTION 1999-14, "RESOLUTION OF THE TOWN OF LOS GATOS ADOPTING REVISED RENTAL DISPUTE RESOLUTION
REGULATIONS," AND ADOPTING REVISED RENTAL DISPUTE RESOLUTION REGULATIONS WHEREAS, Chapter 14.80 ofthe Municipal Code ofthe Town ofLos Gatos, also cited as the Town's Rental Dispute Mediation
and Arbitration Ordinance, has as its stated purpose the prevention ofexcessive and unreasonable rent increases, and the assurance to landlords ofa fair and reasonable return on the
value oftheir property; and WHEREAS, Section 14.80.025 of the above-mentioned Rental Dispute Mediation and Arbitration Ordinance provides that the Town Council may adopt regulations
to assist in implementing its stated purpose; and WHEREAS, Resolution 1999-143, "Resolution of the Town of Los Gatos Adopting Revised Rental Dispute Resolution Regulations," adopted
Rental Dispute Resolution Regulations pursuant to Section 14.80.025 ofthe Rental Dispute Mediation and Arbitration Ordinance; and WHEREAS, the Town's Rent Advisory Committee has performeda
lengthy review of the Rental Dispute Resolution Regulations, and has developed revised regulations which would improve those sections ofthe regulations which were unclear, conflicting,
or did not apply to real-life dispute resolution situations; and WHEREAS, at its July 7, 2003 meeting the Rent Advis9ry Committee unanimously voted to recommend that the Town Council
adopt such revised regulations. 1 ATTACHMENT 2
NOW,THEREFORE,THETOWNCOUNCIL OFTHETOWNOF LOS GATOS DOES HEREBY RESOLVE AS FOLLOWS: A. This Resolution shall be in effect as of April 14, 2004. B. Resolution 1999-143, "Resolution of
the Town of Los Gatos Adopting Revised Rental Dispute Resolution Regulations," is hereby rescinded. C. The Town Council hereby adopts the revised Rental Dispute Resolution Regulations,
attached as Exhibit A. PASSED AND ADOPTED at a meeting of the Town Council of the Town of Los Gatos, California, held on the 1st day of March, 2004 by the following vote: COUNCIL MEMBERS:
AYES: NAYS: ABSENT: ABSTAIN: SIGNED:MAYOR OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA ATTEST: CLERK OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA N:\CSD\TCRPTS\Resolutions\Apt Rental
Regs.wpd 2
Town of Los Gatos Rental Dispute Resolution Regulations Adopted by Resolution #1999-143 effedite Odobe. 29, 1999 N:\CSD\RAC\Apartment Regs Redline.wpd, rev. 12/30/03 Page 1 EXHIBIT A
TABLE OF CONTENTS INTRODUCTION RENT INCREASE LIMITS A. Frequency of Rent Increases B. Amount of Annual Increase I. 1. 2. 3. 4. Increased Costs of Debt Service Increased Costs of Operations
and Maintenance Service Reductions Economic, Financial and other Factors 5. Guidelines Pertaining to All Rent Increases other than Base Rent Increases C. Notice of Rent Increase and
Petitions 1. Rent Increase Notices 2. Filing a Petition 3. Electing a Representative 4. Consolidation of Petitions II. THE CONCILIATION PHASE III. FILING DEADLINES AND HEARING REQUESTS
A. Mediation B. Arbitration IV. HEARING PROCESS AND DECISION MAKING A. Confidentiality B. Hearing Procedures C. Burden of Proof D. Conduct of Mediations and Arbitrations E. Decisions
and Agreements F. Failure to Appear and Rescheduling V. THE MEDIAnON PHASE A. Introduction N:\CSD\RAC\Apartment Regs Redline.wpd, rev. 12/30/03 88899MMMMMMMM+t +t +Z +Z HH Page 2
A. B. B. Presentation by the Parties C. Private Sessions D. Voluntary Agreement E. Closing Session F. Additional Documentation G. Hearing Summary H. Timing and Impasse Reports VI. THE
ARBITRATION PHASE Purpose of an Arbitration Hearing Conduct of Arbitration Hearing on Referral from Mediation or Conciliation C. Conduct of Arbitration Hearings on Claims of Violation
of a VIII. MISDEMEANORS AND ENFORCEMENT C. Additional Civil Rights IX. APPEAL OF ADMINISTRATIVE ACTION X. DEFINITIONS. Voluntary Agreement D. Timing and Contents of Award VII. HEARING
OFFICERS The Ordinance Provides that it is a Misdemeanor Investigation Selection Criteria The Program Administrator Assignment to Cases Disqualification from Cases Review of Hearing
Officer's Performance A. B. A. B. C. D. E. N:\CSD\RAC\Apartrnent Regs Redline.wpd, rev. 12/30/03 Page 3
LOS GATOS RENTAL DISPUTE RESOLUTION REGULATIONS INTRODUCTION Rental Uttnits in complexes of three ill or more units on the same parcel of land shall be covered by the Ordinance Chapter
14.88 of the Los Gatos Code after July 1980. If one ill or more of the units is owner-occupied, the remaining units shall be subject to the Ordinance Chapter 14.80. When Rrental
Uttnit s are annexed into the Town of Los Gatos, Rrent !increases prior to the annexation are not subject to review, but do establish a twelve [l2) -month or two ill year period for
future increases. For example, if Rrent is increased in July and the property is annexed in August, the Rrent may not be increased until the following July. I. RENT INCREASE LIMITS A.
FREQUENCY OF RENT INCREASES I. Rent may not ordinarily be increased more frequently than annually except: a. To pass through the annual regulatory fee at no more than one-twelfth (l/12th,Lper
month; b. With the written consent of all affected Itenants; c. At the time of a voluntary voluntary Vvacancy of an apartment unit; or, d. At the time of a court-ordered eviction for
violation of a rental agreement. 2. Consequences: Ileal iug Officels Arbitrators shall consider evidence establishing that there has been morethan one increase within' a twelve (12)
month period. When it is found that there has been more than one increase, the second and subsequent increases must be disallowed in their entirety, regardless ofthe amount or percentage.
Rent is presumed to have been increased when a Itenant moves in unless the 1tandlord can document that it was not increased. Other increases within twelve (12) months after the Itenant
moved in may be disallowed. B. AMOUNT OF ANNUAL INCREASE The annual Rrent !increases shall not exceed the seventy percent (70%) 78 percCllt of the Consumer Price Index (CPI) ceiling
or five percent (5%), whichever is greater, unless the Itenants agree in writing or the Arbitrator determines that other factors render a larger increase to be reasonable. The Town or
its Aagent shall compute the average annual percent of change as set forth in Section 14.80.310 (c) of the Rental Mediation Ordinance. Increases in excess of 7f} seventy percent (70%)
CPI ceiling or five percent (5%), whichever is greater, are subject to review if the affected Itenant/s file a fpetition with the Agent. N:\CSD\RAC\Apartment Regs Redline.wpd,
rev. 12/30103 Page 4
110,000 80,000 30,000 750,000 1,000,000 .75 (EXEMPTION: Ifthe last Rrent lincrease was initiated no less than two (2) years before the current increase and the current increase is ten
percent {1 O%} or less.) An increase may be subject to review because the dollar amount has been raised, or services reduced, or both. The following cost categories may be considered
in the review process. 1. INCREASED COSTS OF DEBT SERVICE for new or existing owners shall be deemed reasonable and allowed by the Arbitrator when: a. lfthe loan to value ratio does
not exceed 7f) seventy percent (70%) of the appraised value of the property, -Bepercent (80%) of the increase in debt services is allowable and may be passed through to Itenants. b.
If the loan to value ratio exceeds 7f) seventy percent (70%), the annual amount of the increased costs of debt service which shall be found allowable and may be passed through to Itenants
is -Be percent (80%) of the sum calculated by multiplying the new debt service by 7f) seventy percent (70%) divided by the loan to value ratio less the prior debt service. A computation
example follows: INCREASED COST OF DEBT SERVICE EXAMPLE Facts New Cost of Debt Service per Af!nnum Prior Cost of Debt Service per Af!nnum Increased Costs of Debt Service Aggregate Bgebt
from which Cost of Debt Service arises Appraised Vyalue of the PIlroperty Loan to Vyalue Rratio (LTVR) Calculation Pass T!hrough =.8 [((New Cost of Debt Service x [; 7+LTVR]) -Prior
Cost of Debt Service)] Pass T!hrough = .8 [(110, 000 x [. 7+.75]) -80,000)] Pass T!hrough =.8 [(110,000 x. 9333) -80, 000)] Pass T!hrough = .8 (102,663 -80,000) Pass T!hrough = .8(22,663)
Pass T!hrough = 18,130.34 (PIler Af!nnum) Individual PIlass T!hrough = (18,130.40 + 12) + # of units or square feet N:\CSD\RAC\Apartment Regs Redline.wpd, rev. 12/30103 Page 5
2. INCREASED COSTS OF OPERATIONS AND MAINTENANCE. This cost method compares documented costs for the most recent twelve Llll months and the prior twelve Llll months. The 1tandlord has
the option to present increased com of ol'etations and maintenance Cost of Operation and Maintenance (O&M), Iimprovements, and tchabilitation costs Costs of Rehabilitation;
plus seventy percent (70%.Lof CPI or five percent (5%) whichever is greater of the monthly B,tent. a. Capital Improvements -The cost of Iimprovements must be averaged
on a per unit or square foot basis and amortized over a period of at least months. b. Costs of Rehabilitation -The of B,tehabilitation must be averaged on a per
unit or square foot basis and amortized over a period of at least thirty-six (36} months. [New O&M Costs (last 12 months) -Old O&M Costs (prior 12 months)] -:-12 months = eQperating
and Mmaintenance fincrease (O&M) Capital Improvements -:-.60 months = Capital Improvement fincrease fincrease (CI) Costs of Rehabilitation -:-.36 months =B,tehabilitation fincrease (RI)
o & M + CI + RI = Mmonthly fincrease . Mmonthly fincrease -:-(# Bgnits or proportion of 5.§.quare Ft:-feet) =Mmonthly Bgnit fincrease (MUI) MUI + 5% or 70% CPI of units prior B,tent
=T!otal Rent fincrease ********************************************* 3. SERVICE REDUCTIONS -A service reduction occurs when the 1tandlord has breached her/his
obligation to furnish to the Itenant the Bhasic 5§.ervice clevel and the Itenant's usability of the premises is thereby measurably reduced. a. Basic 5.§.ervice clevel-The 1tandlord
is required to furnish to the Itenant a basic level of Hhousing herein called the "Bhasic 5.§.ervice cleveI" and established by: I. California Civil Code Section
1941.1 and 1941.2 and other applicable codes and statutes; ii. The 1tandlord's implied Warranty of Habitability; N:\CSD\RAC\Apartment Regs Redline.wpd, rev. 12/30/03 Page 6
iii. Express or implied agreement between 1tandlord and Itenant; IV. The nature and quality of original construction of improvements, fixtures, and equipment; v. The age of the improvement,
fixture, and equipment; VI. The condition of the improvements, fixture, and equipment at the beginning of the term of tenancy; vii. The 1tandlord's policies of operation and maintenance,
repair and replacement communicated to the Itenant at the beginning of the applicable term of tenancy. b. Allegations of Service Reductions -Each allegation of a service reduction ·shall
be made in a separate writing, signed the Itenant claiming it, and filed with the Town, its Aagent or the Hearing Officer during or prior to the fit st healing the conciliation
phase of the dispute resolution process. The burden of proof of each service reduction is on the person alleging the reduction. Each allegation of a service reduction shall state: I.
The prior housing service level provided by the 1tandlord; II. The specific changes from the prior service level comprising the alleged reduction in service; lli. The date the service
reduction was first noticed by the Itenant; iv. The date the Itenant gave notice to the 1tandlord requesting correction of the alleged service reduction, and whether the request was
oral or in writing; . v. When and how the 1tandlord responded to the Itenant's notice; VI. Whether the condition was improved or corrected and if so, when and how; vii. The status ofthe
condition as ofthe date the allegation is signed by the Itenant; and Vlll. The extent to which the 1tandlord and/or the Itenant was responsible for the condition generating the service
reduction. c. Determining Value ofUnreasonable Service Reductions -When it is found that a service reduction has occurred which is unreasonable under the circumstances, the monetary
value to be assigned to the service reduction N:\CSD\RAC\Apartment Regs Redline.wpd, rev. 12/30/03 Page 7
is to be determined by the Arbitrator. The percentage reduction in usabi Iity of the Rrental Uttnit and common areas caused by the service reduction, commencing with the accrual date
shall consider the following factors: I. The amount oftime the occupant is exposed to the condition; 11. The degree of discomfort the condition imposes; iii. The extent to which such
a condition causes Itenants to find the premises uninhabitable and leave. The Ilea! iug Office! Arbitrator shall apply the percentage reduction to the monthly Rrent, divide by !hir!Y.i30),
and multiply the resulting sum by the number of Ddays commencing from the date to the date of restoration of the service level. d. Housing Code Violations -Violations of the Los Gatos
Housing Code or of Section 1941.1 and 1941.2 of the State Civil Code shall be considered and may reasonably condition, disallow, or reduce aRrent !increase based on severity. An inspection
report ofthe Los Gatos Building Official shall be deemed presumptive, but not conclusive, proof of the matters recited therein. e. Findings -In making any Ddetermination 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 Aaward, the Ilea! ing Office! Arbitrator shall make and include a specific finding of the facts upon which the Ddetermination is
based. f. Consequences of a Service Reduction Unreasonable Under the Circumstances I. If the value of the service reduction is determined to effect affect the reasonableness of a pending
Rrent !increase, the value of the service reduction shall be applied as a credit against the Rrent !increase unless it is a permanent reduction in service in which case it will result
in a Rrent reduction. ii. When the proceeding does not involve determination of reasonableness of a pending Rrent !increase, the value of the N:\CSD\RAC\Apartment Regs Redline.wpd, rev.
12/30/03 Page 8
service reduction shall be applied as a credit against the Itenant's obligation to pay current Rrent unless .it is a pennanent reduction in service in which it will result in
a Rrent reduction. 4. ECONOMIC, FINANCIAL AND OTHER FACTORS -The I leal iug Office. Arbitrator will consider additional relevant factors presented by either fparty. These factors may
include the following: a. Market Value: The current market value of Rrental Uttnit s similarly situated, which are not owned or controlled by the 1tandlord. b. Rental History: The amount
and frequency of past increases, and the occupancy rate in comparison to comparable properties in the same general area. c. Physical Condition: The physical condition of the unit, including
maintenance and repair during the last twelve (12) months. d. Services: Any increase or reduction in services since the last Rrent !increase. e. Vacancy and Bad Debt Losses: The degree
to which and bad debt losses are not offset by retention of deposits, court judgments or increases to new Itenants. f. Other Financial Information: Other financial information
that the 1hindlord is willing to provide. 5. GUIDELINES PERTAININGTO ALL RENT INCREASES OTHERTHAN BASE RENT INCREASES. a. Each of the costs must bear a reasonable relationship to the
purpose for which they were incurred and the value of the real property. b. . Costs are "out of pocket" which have been incurred or obligated. All costs ciaimed must be supported by
reasonable documentation. c. If aRrent !increase is cost justified and neither service reduction nor Housing Code violations are present, that Rrent !increase may be deemed reasonable.
d. The cost categories presented at Arbitration must be the same as at Mediation. The Arbitrator has the discretion to require cost infonnation from categories not initially presented
by the 1tandlord, ifthat information N:\CSD\RAC\Apartment Regs Redline.wpd, rev. 12/30/03 Page 9
is necessary to resolve issues such as service reductions. e. Operations and maintenance costs are for the most recently available consecutive two ill twelve Lill month periods ending
no more than sixty (60l..Qdays prior to the Rrent !increase date. f. Undocumented projections or estimates offuture costs may not be accepted for use in cost analyses. g. Debt service,
Q,capital Hmprovements, and lehabilitatioli costs Costs of Rehabilitation must be incurred in the past twelve Lill months as evidenced by payment or contract establishing a legal obligation
and evidence that the terms ofthe contract are or have been met. The twelve Lill-month period for each of these 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.,'ebntl aet 011 7/80, pel MImed 7/80=6/8 t, iliel ease 8/80, nttlst have begull by the time the
B;rent !inerease is due. h. If, however, increases in debt service or repayment of Q,capital capital !improverri€mts or lehabilitation costs Costs of Rehabilitation are, or have been
deferred so as to become effective at a future date in excess of a twelve (12) month period, then those costs may be appIied as they become effective. i. Ifcosts are equal to or greater
than the petitioning Itenants' Rrent !increase, that increase is cost justified. C. NOTICE OF RENT INCREASE AND PETITIONS 1. RENT INCREASE NOTICES -When a1tandlord issues a notice ofRrent
!increase he/she must provide the Itenant s notice of their full right to use the Rtental Bgispute Rtesolution PQrocess authorized by the Ordinance. The notice must include the name,
address and telephone number of the Agent Relital Dispute Resolution Program.' This must be included conspicuously
in the Rrent !increase notice or done separately at the same time and manner as the Rrent !increase notice. The recommended wording is: You have the right to use the Rental Dispute Resolution
Process. To be eligible a petition must be received by the Town or its d.agent within 38 60 Driays aftel the ;IICI ease goes ;lIto effict. For further information contact: N:\CSD\RAC\Apartment
Regs Redline.wpd, rev. 12/30/03 Page 10
· (Agency) (Address) (City, State, Zip) (Phone and Fax) 2. FILING A PETITION -To initiate the dispute resolution process, Tenants or Landlords must complete and file a written Petition
with the Agent. Petition forms may be obtained from the Agent and must be filled in completely. A Petition may be filed to
resolve any Landlord/Tenant Dispute. As defined in the Ordinance a dispute may concern Rent or any other aspect of'rental Housing Services 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. A Petition can only be filed and can only be processed ifthe affected Tenant continues to occupy the premises involved in the dispute. a. Rent Increase Petitions
-Twenty-five percent (25%) of the units affected by the Rrent !increase must join in the fpetition. b. No initial fpetition may be filed later than sixty (60) after the
Rrent !increase takes effect. a petition may be filed six (6) months of a lent increase if the notice is not in compliance ith these Regttlations.
If an initial Petition is received within the applicable sixty (60) Days for a property in which multiple numbers of increases were noticed, additional Petitions containing the requisite
number of-signatures necessary to reach the twenty-five percent (25%) level must be received within thirty (30) Days after any affected Tenant has received a list of the names and unit
numbers of the affected Tenants as required by Section 14.80.040 of the Ordinance or has otherwise been notified by the Agent that additional Petition signatures are necessary. A Petition
raising an issue other than a Rent Increase must be filed within thirty (30) Days ofthe event giving rise to the dispute. A notice which fails to meet the basic requirements of Section
14.80.040 of the Ordinance, which requires the name and current telephone number N:\CSD\RAClApartment Regs Redline.wpd, rev. 2/l3/04 Page 11
of the Agent, is invalid. A notice which fails to meet the remaining requirements of these regulations waives the thirty (30) Day limit herein and permits a Petition to be filed within
six (6) months of the applicable Rent Increase or other event giving rise to the dispute. c. Deferral of Amount of Increase, pver 76 Seventy Percent (70%) cpr When a Itenant files an
eligible £petition, the amount of the increase over 76 seventy percent (70%) CPI or five percent (5%), whichever is greater, is stayed, pending a resolution of the dispute. The Itenant
is obligated to pay only the old plus 76 seventy percent <70%) of the Consumer Price Index or five percent (5%), whichever is greater, until the £petition is resolved and
the Rrent level established. If the Award determining the final outcome establishes a Rent level higher than this interim level of increase, the affected Tenant orTenants are obligated
to pay any retroactive difference included in the Award within thirty (30) Days ofreceiving notice of the Award, unless date the paymentis due is otherwise determined by the Arbitrator
as part of the Award. 3. ELECTING A REPRESENTATIVE a. If three (3) or more Itenants seek review, the Itenants shall designate in writing to the Town, or its Aagent, an individual to
serve as the Itenant representative for the purposes of receipt of all notices, correspondence, decisions and findings of fact required in this article. The Tenant representatives in
consultation with the Agent shall take reasonable steps to, permit the petitioning Tenants to take part in making substantive decisions. such as whether to accept a settlement proposal
made during conciliation or mediation. b. The representative shall be selected by majority vote or by signatures on a designation form from a majority of the affected Tenants. c. The
iting designating the teptesentati ve shall be in the €olin of one doctlllIent containing the signattlt es of all petitioning teliC1nts. d. The Itenants shall designate their representative
within ten (10) fifteen (15) Ddays of stlbntitting the petition notice from the Agent of their duty to make a proper designation. When appropriate the Tenants may designate N:\CSD\RAC\Apartmenl
Regs Redline.wpd, rev. 12/30/03 Page 12
more than one representative to serve as co-representatives and/or backup representatives. Failure to designate a Itenant representative within ten .(l 0) da, s the above time period
will render the fpetition incomplete and the fpetitionwill not be accepted fat filing processed further. e. Service ofnotice upon the designated Itenant representative will constitute
adequate and sufficient notice to all petitioning Itenants. 4. CONSOLIDATION OF PETITIONS -Whenever possible, fpetitions from B!ental Uttnits owned, operated, and managed as a single
housing complex, shall be consolidated into one case by the ploglalll staff Agent. II. THE CONCILIATION PHASE The filing of a fpetition authorizes the Agent to contact any
of the fparties to the dispute to conciliate the issues. The purpose of conciliation is to resolve tenanb'laudlotd disptItes Landlord/Tenant Disputes through limited intervention. Conciliation
does not involve a face to face meeting but is a limited negotiation through telephone or mail mail contacts by a IIotIsing CotInse!ot member of the Agent's staff to explain to each
fparty the position of the other and to attempt resolution of the dispute. Information and clarification ofItenant 1tandlord law and the Los Gatos Ordinance may be involved. The
Agent is designated as the Hearing Counselor. If conciliation does not resolve the dispute, either fparty may request mediation or arbitration. The Agent and its staff are neutral parties
during this process. It is their duty to explain this process within the meaning ofthe Ordinance and this document to the Parties, but it is not their . duty to advise the Parties on
substantive issues in the dispute or to advise the Parties about the substantive content of settlement proposals or decisions to accept settlement proposals. III. FILING DEADLINES AND
HEARING REQUESTS A. MEDIATION. A request for mediation may be filed in writing with the Town or its Aagent twenty-one (21illdays after the fpetition for conciliation was received by
the Town or its Aagent and the dispute has not been resolved. Mediation must be requested in writing of Town's/Agent's receipt of the fpetition for
conciliation. B. ARBITRAnON. A request for arbitration must be filed in writing by a Party with the Town or its Aagent within .illill:...(60L.Qdays of the filing of the fpetition for
conciliation, or, within thirty (30L.Qdays of El) the conclusion of the mediation Hhearing; or, E2) the discovery that the mediation agreement has been broken. IV. . HEARING PROCESS
AND DECISION MAKING GUIDELINES A. CONFIDENTIALITY. The identity of the fparties and the factual data of the case are N:\CSD\RAC\Apartment Regs Redline.wpd, rev. 12/30/03 Page 13
confidential. Anyone of the Eparties to an arbitration Hhearing has the right to request to see and to copy information supplied by the other EPlirties. This information may also be
reviewed and used by the Town for program operations, administration, audit and evaluation. While the Eparties andthe Town have access to this information, it is not public information.
B. HEARING PROCEDURES 1. Time. Within thirty (30) Ddays from the date a request for mediation or arbitration is received, the town or its Aagent shall schedule a Hhearing unless the
Parties agree in writing to waive this reguirement. 2. Notice. The Aagent shall mail written notice to all Eparties (unless there are three or more Itenants, in which case,
to the Ite.nants' representative) at least twenty (20) calendar Ddays before the Hhearing unless the Parties agree in writing to waive this reguirement. 3. Submittal of evidence. Matelials
to be consideled at the heating l1itlst be logged the of its agent at least (12) days in advance of the heating shalll1iake them a vailable
to all parties to the heal ing (tmless thel e al e tIll ee 01 mOl e tenants, in case, to the tenants' leplesentative) at least seveli (7) days iii ad vance of the heal ing.
a. During the conciliation and mediation phases orthis process, evidence or materials supplied by the Parties will be shared with. the other Party or Parties only with the consent of
the Party supplying said documents. All materials submitted for arbitration, in61udirtgevidence and briefs, must be served by mail on all other Parties to the arbitration, and on
the designated Arbitrator, no later than seven (7) Days prior to the noticed . arbitration Hearing date. Failure to do so will subject the material to an objection which the offended
Party may raise and which will be decided by the Arbitrator in his/her discretion who may impose a suitable remedy including grantinga continuance and/or excluding all or part ofthe
material from consideration. 4. Extension. Extensions of time for the Hhearing process may be mutually agreed upon by both Eparties (or, if three ill or more Itenants, by one Eparty
and the Itenants' representative) with the concurrence ofthe Aarbitrator. Extensions may N:\CSD\RAC\Apartment Regs Redline.wpd, rev. 12/30/03 Page 14
also be granted by the Arbitrator upon an application by any Party who makes a showing of good cause for granting the application. C. BURDEN OF PROOF 1. The 1tandlord shall have the
burden of proof for establishing the reasonableness of a Brent !increase. 2. The Itenants shall have the burden of proof for the existence of service reductions and Housing Code violations.
The burden of proof in any other type of Housing Services dispute shall rest with the petitioning Party. 3. The burden of proof shall be satisfied by demonstrating that the fact to be
proven is more probable than some other fact. 4. The burden of proof shall be met by using only evidence which has a tendency in reason to prove or disprove a disputed fact of consequence
in determining the B.!2asic bleve!. 5. Proof shall onlybe received for service reductions alleged in a elaim filed ith the its agelit, 01 the Healillg
Offieel dtlling 01 pliol to the filst heating. if the Party raising the issue has complied with the requirements of I-B 3, "Service Reductions," above. 6. Proof of a service reduction
shall be received only for that period of time the premises have been owned by the 1tandlord against whom the claim is filed. D. CONDUCT OF MEDIAnONS AND ARBITRAnONS 1. The I leal ing
Officel 11L1!Y change the 01 del, delete 01 add items to the folio illg list in oldel to cOllduct the Heat illg ill a timel, and olded, maImer. The Beal illg Officel Ina, adopt Inles
to ellCOl1lage a timel, and bl1siness-like heal iug. 2. All £parties to the £petition and his/her Qeounsel may attend the Hhearing and offer idelice and testimony participate as
deemed appropriate by the Mediator or Arbitrator conducting the Hearing. a. Examples of those ho 1l11!Y attend Beatings include. 0 nel s, ploperty managel s, agellts, attollle,s,
tenants, itnesses, pat alegals, and designated Ieplesentati ves. The Ileal ing Officel liIay Iimit the palticipatioli of attendees othel than parties to the displite. At mediation
sessions, no person other than the Mediator, the Parties and their designated representatives may attend the session. N:\CSD\RAC\Apartment Regs Redline.wpd, rev. 12/30/03 Page 15
b. ExaIiiples ohllose who generally lila, not atteud IIeariIigs include tenants not by tllc pctition, of other properties, membels of the public. These persons
lila,. attend if all par ties agree. At arbitration Hearings, the Parties and their designated representatives may attend the Hearing, as well as other persons such as agents and witnesses,
subject to the Arbitrator's final discretion to limit the presence or participation of anyone other than a Party or designated .representative. Third parties inc1udingobservers such
as Tenants not affected by the pending Petition or members .of the media shall not be permitted to attend absent written agreement between all Parties or their designated representatives
executed at least seven (7) Days prior to the date set for the Hearing. 3. Review and Response to Evidence and. Testimony -Each p£arty must have the opportunity to review all evidence
and testimony introduced at the Hearing or provided to the Hearing Officer, and to make a response. The Hearing Officer has the discretion to allow written responses to be submitted.
Hearing Officers have the discretion and must consider allowing reasonable recesses to review any new information or documentation. 4. Record of Hearings -Hearing Officers will cause
to have a written record of all p£arties attending either Mediation or Arbitration Hearings and a listing ofevidence presented. Mediation sessions shall not be taped. The Arbitrator
wiII tape record all sessions and tum the tape and all evidence into over to the Town's Agent with the Arbitration Award. *nr The record ofproceedings shall be is available to both the
Pparties for their review. All tape recorders will be placed as designated by the Arbitrator. Tapes will be available for review for a period of twelve U1.l months " at the appropriate
Town office. Any and all duplication costs will be borne by the requesting £party. 5. Participation ofthe Hearing Officer -The Hearing Officer shall, at all times in the conduct ofthe
hHearings and in otherwise' performing his/her duties, act neutrally and impartially. The Hearing Officer shall not solicit, invite, or encourage new . . complaints from thet,Landlord
or tIenants. This does not preclude clar ificatioli of each par ty's rights under the or dinance. I1ear ing Officer s ar e elicour aged to suggest cOl1lpromisesto disputes raised at
the heating. N:\CSD\RAC\Apartment Regs Redline.wpd, rev. 12/30/03 Page 16
6. Relieffrom Default -The Hearing Officer may relieve any p£arty from their failure to adequately state their claim prior to or during the first meeting upon a reasonable showing of
fraud, error, or inadvertence. The Hearing Officer may grant to the opposing p£arty additional time to respond to any claim, addition to, or revision of, a claim filed pursuant to the
relief granted. E. DECISIONS AND AGREEMENTS 1. Eligible Petitions -The Vvoluntary Aagreement or arbitration Aaward shall apply to a Itenant/s who have filed an eligible £petition or
have been included in a 1tandlord £petition. 2. Effective Date -Unless otherwise set by the Hcating Officc!, dctcllliinations, and vo!tlllta!y ag!ccmcnt terms of a Voluntary
Agreement or by an arbitration Award, all agreements or Awards regarding Rent Increases shall be effective as of the effective date of the increase originally proposed by the 1tandlord
and shall extend for twelve (12) calendar months. F. FAlLURE TO APPEAR AND RESCHEDULING 1. No appearance by the Landlord or his/her Representative -When the 1tandlord or his/her representative
does not appear at the an arbitration Hearing regarding a Rent Increase or service reduction, the Brent Increase or rate will be determined to be unreasonable. Failure to appear at any
other Hearing will not preclude the Arbitrator from issuing a binding Award based on the evidence presented by those Parties who do attend. If a Landlord chooses to appear at a mediation
or arbitration through a designated representative, said representative shall have written authorization from the Landlord to effectively resolve the dispute. 2. No Appearance by Tenants
-When the Itenant/s or their representative does not appear at the an arbitration Hearing concerning a Rent Increase or service reduction, the Brent !increase or rate will be determined
to be reasonable. Failure to appear at any other Hearing will not preclude the Arbitrator from issuing a binding Award based on the evidence presented by those Parties who do attend.
3. Voluntary Agreements -When a Denant fails to appear or be represented at a Mediation Hearing where a Vvoluntary Aagreement is concluded with the remaining Itenarits, the fpetition
of the Itenant who failed to appear will be considered to have been withdrawn. N:\CSD\RAC\Apartment Regs Redline.wpd, rev. 12/30/03 Page 17
4. Arbitrator's Determination -When a Itenantfails to appear or be represented at a Hearing that results in a written Ddetermination, that £petition of the Itenant who failed to appear
will be considered to have been withdrawn. 5. Rescheduling -Rescheduling of Hearings causes a delay in the resolution of the dispute and inconveniences the £parties. However, a rescheduling
is sometimes appropriate. a. Request by Landlord or Tenant -A Hearing may be rescheduled by the Town or its Agent, one time at the request of a 1tandlord or a Itenant for leasouable
good cause, when the request is made at least five (5) Ddays before the scheduled Hearing date. b. Request by one ofthe Parties -A Hearing may be rescheduled by the Town or its Agent,
when one ofthe Bparties was unable to attend due to reasons beyond her/his control and the request is made within twenty-four (24} hours after the scheduled Hearing date. V. THE MEDIATION
PHASE -The purpose ofthe Mediation Hearing is to give the £parties an opportunity to resolve the dispute voluntarily. A. INTRODUCTION -The Mediator will introduce him/herself, identify
all attendees, circulate a sign-in sheet, an.d briefly explain the Hhearing process. The Mediator will explain. that the Mediator's role is to neutrally facilitate discussion ofresolution
options and that it is not to decide which Party is right or wrong or to otherwise determine disputed issues or to advise Parties of their rights. B. PRESENTATION BY THE PARTIES -The
£parties will be given full opportunity to pI eStnt evidence and testimony. COllllileltts IlItlSt becleal, coucise, and Idevant. When one part)' has made its plesentation the othel party
be au opporttlnitj' to make its plesentation. effective presentations oftheir positions and claims. Ifthe case involves a pass-through formula, the Landlord
shall produce, no later than the mediation Hearing, the basic formula and calculations used to justify the increase. The Landlord is encouraged to present further evidence such as the
the supporting documentation for the calculations. A Party's voluntary disClosure of documentation will not preclude that Party from supplementing or correcting that documentation at
arbitration. C. PRIVATE SESSIONS -Following the initial presentations, the Mediator may at his/her discretion meet privately (caucus) with each side to attempt to work out a V"v'oluntary
N:\CSD\RAC\Apartment Regs Redline.wpd, rev. 12/30/03 Page 18
Aagreement. The agreement is confidential and shall only be shared with the specific consent ofthe all participants. The Mediator will notify all Parties that statements made in the
caucus are confidential and will not be disclosed to the other Parties unless the Mediator is given permission to do so by the PartY making the statement. D. VOLUNTARY AGREEMENT -If
the fparties arrive at an agreement, the Mediator will summarize the resolution on an agreement form and witness all signatures. Voluntary Aagreements must specify the agreed upon Rrent
and may include any other items the fparties agreed upon. E. CLOSING SESSION -The Mediator will meet with both fparties to sign a Aagreement or to provide an opportunity
to plesellt additional ev idellce 01 testilllon, make further presentations. F. ADDITIONAL DOCUMENTATION-Ifadditional docomentation timeto obtain additional information or other input
is requested, the Mediator may recess the Hearing at his/her discretion, for no longer than ten QQl Ddays, for the purpose of Iecei ving this docomentation doing so. G. HEARING SUMMARY
-If a Aagreement is not possible the Mediator wiIl prepare an impasse leport a written statement of impasse. H. TIMING AND CONTENTS OF IMPASSE REPORTS STATEMENT
1. The Mediator shall submit an impasse report statement to the To Aagent within five QLQ.days of the Hhearing. If the Mediator has requested additional documentation, the report
statement is due five illj2days after the continued Hhearing. Once the Mediator serves the impasse statement, the mediation phase of this process shall be deemed concluded. 2. Contents
-The report statement will include only the following: a. . Identification of all attendees. b. Statement of all evidence pI esented sociI as the costs, sel vice I edoctions aud/ol IIoosing
Code violations pI esented, and an, Ide vant economic, financial, 01 legal factol s. A statement that the Parties reached impasse. £" Any agreement reached by the Parties defining the
issues issues to be presented at arbitration. d. If a case that is not resolved in mediation is subsequently submitted to arbitration, no statement made by any PartY during the mediation
shall be N:\CSO\RAClApartment Regs Redline.wpd, rev. 12/30/03 Page 19
admissible at the arbitration and no notes or other documents, such as mediation briefs prepared solely for the mediation or solely during the mediation shall be admissible at arbitration.
Documents or evidence existing prior to the mediation Hearing, such as lease agreements or photographs are not subject to this rule. The Mediator is not subject to be called as a witness
at any subsequent arbitration. VI. THE ARBITRATION PHASE A. PURPOSE OF AN ARBITRATION HEARING -An arbitration Hhearing is held to make a final Ddeterminationconcerning rental bOl1sing
Landlord/Tenant bdisputes as defined in the Ordinance when a conciliated or mediated agreement'has not been achieved or has been broken. B. CONDUCT OF ARBITRATION HEARING ON REFERRAL
FROM MEDIATION OR CONCILlAnON -When a Vvoluntary Aagreement is not reached during conciliation and the Aagent grants arbitration, or when a Vvoluntary Aagreement is not reached at a
mediation Hhearing and one of the fl'arties or the Mmediator requests arbitration the following procedures will be followed: 1. Introduction -The Arbitrator will introduce him/herself,
identify the fl'arties, circulate a sign-in sheet, request that any representatives identify themselves, and will briefly explain the Hhearing process. 2. The fl'arties will be responsible
for bringing all pertinent written documents and evidence to the initial Hhearing. The fl'arties will be given full opportunity to present evidence and testimony which has been produced
in compliance with the disclosure rules herein. When one fl'arty has made its presentation, the remaining fparty w'iil be given an opportunity to make its presentation. Parties seeking
to obtain evidence in the possession of opposing Parties which has not been voluntarily produced prior to the Hearing or at the Hearing, may apply to the Arbitrator in writing for a
subpoena to be issued upon a showing of good cause with notice to all participating Parties. The determination of good cause by the Arbitrator shall be based on a general standard that
the evidence being sought is likely to be admissable at the arbitration Hearing. The written request for such a subpoena shall include the showing of good cause and must be served on
both the Arbitrator and all participating Parties at the same time. Any Party opposing the N:\CSD\RAC\Apartment Regs Redline.wpd, rev. 12/30/03 Page 20
request shall have five (5) Days to serve a written opposition to the Arbitrator and all other Parties at the same time. The Arbitrator will rule on the request after the five (5) Days
have passed. Parties seeking to present a at a Hearing may apply for a subpoena with reasonable advance notice to all Parties prior to the Hearing date. 3. Response to
Evidence and Testimony -The £parties will be given reasonable opportunities to respond to the new documentation and issues. The Arbitrator has the discretion to recess the Hhearing or
to allow the submission of written statements. 4. Request for Additional Information -The Arbitrator may request the submission of additional documentation or other Information within
ten .Q.Ql.Qdays. When this request is made, the Hhearing 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 Attward. 5. Evidence -Evidence submitted will be retained by the Arbitrator for
use in making the Attward and will be provided to the To II'S Agent along with the tape/s and the arbitration Attward. 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. 6. Testimony -The Arbitrator will judge whether
or not testimony is material and relevant. A list of the names and addresses of any witness will be kept and made a part of the record. 7. Relieffrom Default -The Ileal ilig Officer
Arbitrator may relieve any £party from their failure to adequately state their claim prior to or during the first meeting upon a reasonable showing of fraud, error, or inadvertence.
The I leal iug Officer Arbitrator may grant to the opposing £party additional time to respond to any claim, addition to, or revision of, a claim filed pursuant to 8. Voluntary Agreement
-An Aarbitrator Aarbitrator may recess the Hhearing for the purpose of allowing the fparties to negotiate a V\fOIuntary Attgreement to resolve the dispute. At the request ofthe £parties,
an Arbitrator may also assist them in coming to and preparing a written Voluntary Attgreement. t N:\CSD\RAC\Apartment Regs Redline.wpd, rev. 12/30/03 Page 21
9. In apph:,ing these rules and in otherwise making procedural decisions, the Arbitrator shall make interpretations which emphasize basic principles offairness rather than technical
or narrow interpretations.. C. CONDUCT OF ARBITRATION HEARINGS ON CLAIMS OF VIOLATION OF A VOLUNTARY AGREEMENT: Voluntary Aagreement 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 similarto
those described in the previous section (V.A. 1-7). The State Code sets additional procedures. Those involved in these Hhearing should read this section of the State Code. (Other differences
are caused by the nature of these Hhearing.) This section covers these differences. I. 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". 2. Appeals may be made to the Town's Agent by either £party. Appeals
must be in writing and must include a copy of the letter described above. 3. Clarification 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". 4. Verification -The Arbitrator will
determine if the agreement has been violated. 5. Remedies -If the agreement has been violated, the Arbitrator will issue an Aaward which compensates for the violation. The Arbitrator
may require that the agreement be kept ("John Doe has to fix stove/move the car"), that the Rrent be increased or decreased, or other just and equitable remedies. 6. Processing
-A copy ofthe appeal will be sent to both £parties with a notice of the arbitration Hhearing. 7. Authority ofArbitrator -The decision ofthe Arbitrator is final and legally binding. An
Arbitrator has the authority to allow or disallow B;'ent !increase or portion thereof and may reasonably condition his/her Aaward in any
manner necessary to meet the purpQses of the Ordinance. N:\CSD\RAC\Apartment Regs Redline.wpd, rev. 12/30103 Page 22
D. TIMING AND CONTENTS OF AWARD 1. The arbitration Aaward shall be issued withinW fifteen (15) business Ddays ofthe close ofthe Hhearing. The allowance of time to submit additional information
or written statements is a recess of the Hhearing and the Aaward is due ten (lOj Ddays after this deadline. The time limit herein will be extended by any intervening legal holidays.
2. The arbitration Aaward must identify the £parties and make a clear statement of: a. The basis for the decision, and all standards that were applied. b. In a case involving a Rent
Increase or service reduction, the Award shall state Ww hether or not the proposed increase is reasonable; c. If a portion is reasonable, the dollar amount; d. Any conditions which are
placed on the Aaward; e. An attached summary of cost calculation; f. A Brent schedule for any Brents to be paid by or refunded to each Itenant based on the Aaward and Brents paid by
the Itenants since the time ofthe Brent Iincrease. VII. HEARING OFFICERS A. Mediators and Arbitrators shall, at all times in the conduct ofthe Hhearings and in otherwise performing his/her
duties, act neutrally and impartially. They shall not solicit, invite, or encourage new complaints from the 1tandlords or Itenants. This does not preclude clarification of each ,Eparty's
rights under the Oordinance. B. SELECTION CRITERIA -Hearing Officers are those individuals who, having met the following established criteria, have executed a contract with the Town
or its Agent and are . Officels ale also those ploglamstaffdesignated as Healing Officels either Mediators or Arbitrators for specific purposes. Heal ing Officels They must meet all
of the following criteria. 1. Have leeeived fot1lteen (14) !tonls fOllllal ttaining m mediation completed recognized training courses in mediation or arbitration as applicable to them
and seven (7) hours formal training on 1tandlord/Itenant law and economics of the rental industry. 2. lIave obselved lllediations 01 heatings similal to those of this ploglam.
Been oriented in this particular dispute resolution process. N:\CSO\RAC\Apartment Regs Redline.wpd, rev. 12/30/03 Page 23
3. Shall not own or rent property covered by the Oordinance. 4. May not be an employee or an officer of groups or organizations which have or are viewed by significant numbers ofItenant
s or Ltandlords as having taken advocacy positions in Ltandlord Itenant matters. C. THE PROGRAM ADMINISTRATOR is desigliated as a HeaIing Officel for tlte ptllpose ofAGENT is the decision-making
authority for all procedural issues concerning this dispute resolution process prior to the time a specific Arbitrator is designated to hear in the case. Such authority includes decisions
: 1. Conciliatioll ofcases Whether a Petition or subsequent filings meet the procedural requirements of the Ordinance and any corresponding regulations; 2. Consolidation
of cases; 3. Scheduling of Hhearings, although mediation Hearing dates and times shall be set to meet the convenience of the Parties to the greatest extent possible; 4. Acceptanee of
doct1lnentation and \"VI itten statements, 5. Acceptance Of requests for mediation or arbitration. D. ASSIGNMENTS TO CASES 1. Mediation Cases -Mediators shall be assigned by £.program
-S.staff equitably and fairly, with due regard for the Mediator's availability and experience. 2. Arbitration Cases -A selection list shall be sent to both £parties that will contain
at least three ill names ofArbitrators who meet one-ofthe following qualifications: a. Appointlnent to the ArneIican AI bitt ation Association's Panel of Albitt atOI s, b. A sufficient
training and prior relevant experience as an arbitrator, and of a Juris Doctor or equivalent degree from a School of Law
. \"Vitlt ploofofa COtHSe in atbittation, 01 d. Completion of six mediations, obset vatioll of one al bitt atioll, and docl1ll1entation of rol1nal at bitt ation tl aining. The Itenants,
if three ill'or fewer, or their representative, and the owners may eliminate oneill name each. The Agent will designate the Arbitrator to be assigned to the case from the remaining name
or names on the selection list. E. DISQUALIFICATION FROM CASES -A IIeating Officel Mediator or Arbitrator shall disqualify themselves from hearing a case and can be disqualified by £program
-S.staff at the N:\CSD\RAC\Apartment Regs Redline.wpd, rev. 12/30/03 Page 24
request of one ill ofthe£parties if: 1. The Hearing Officer knows or has reason to know he/she has a financial interest affected by the Ddetermination or Aaward. 2. The Hearing Officer
is related to one ill of the £parties or their representatives to the third Q.:} degree. 3. The Hearing Officer has been retained or employed by one ill of the E.parties within the past
two ill years, has given advice to one ill of the E.parties relative to the issues involved in the Hhearing. 4. It appears probable that the Hearing Officer by reason of bias or prejudice
cannot provide a fair and impartial Hhearing. 5. The Hearing Officer is a £party to the Hhearing. A Heal iug Officel Mediator or Arbitrator is not disqualified from hearing a case where
one ill or more of the £parties have appeared before him/her in an earlier Hhearing. The £parties may waive their right to the disqualification of a Heal iug Offieel Mediator or Arbitrator
by a written statement accepting his/her service. F. REVIEW OF HEARING OFFICER'S PERFORMANCE OF MEDIATORS AND ARBITRATORS -The £program periodically review the performance
onleal iug Officels Mediators and Arbitrators and will inform the Town of the execution and termination of Hearing Officer's contracts. VIII. MISDEMEANORS AND ENFORCEMENT A. THE ORDINANCE
PROVIDES THAT IT IS A MISDEMEANOR: 1. For a1tandlord to evict Itenants in retaliation for Itenants organizing or exercis ing rights granted by the Ordinance. 2. For a1tandlord to evict
a Itenant when the 1tandlord's dominant motive is to evade the purp.oses of the Ordinances. 3. For a 1tandlord to demand, accept, receive, or retain any Rrent in excess of the maximum
Rrent allowed by a mediation agreement or an arbitration Aaward. B. INVESTIGATION -Program 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 ofthis program to prevent It, when possible, by informational
contacts with the 1tandlord. In the event that the investigation shows that a violation has or is in the process of occurring and that it is not N:\CSD\RAC\Apartment Regs Redline.wpd,
rev. 12/30/03 Page 25
possible to prevent, a request will be made to the Town Attorney for review and prosecution. Either Bparty can pursue civil action afterthe conclusion ofTown Rtental Mediation dispute
resolution procedures. C. ADDITIONAL CIVIL RIGHTS -Tenants have additional civil rights not covered by this chapter this document. Either Bparty can pursue civil action after the conclusion
of Town Rtental f)gispute Rtesolution D. APPEAL OF ADMINISTRATIVE ACTION -Administrative,actions by Bprogram may be appealed in writing to the
Director of Community Services. [ndi vidoals also Itave the right to pr esent i.nfulmation and recolllmendations on tlte implementation of tltese regolations to the Rent Advisory Committee.
IX. DEFINITIONS A. Agent: An.individual or organization, or government. designated by the Town Council to administer the Ordinance. B. Anniversary Date: Twelve (12) months from the last
Rrent !increase. C. Arbitrator: A person designated to act as the Hearing Officer for the the arbitration phase ofthe dispute. resolution process under the Ordinance. D. Award: The written
decision of an Arbitrator. E. Base Rent Increase: Five percent C5%} or seventy percent (70%} of the CPI, whichever is greater. F. Capital Improvements: Improvements which materially
add to the value of the property, appreciably prolong its useful life, or adapt it to new uses. Capital Improvements are improvements for which the useful life is likely to be five ill
years or more. G. Committee: The Los Gatos Rent Advisory Committee appointed by the Town Council. H. CPI -ConSumer Price Index: CPI is the Consumer Price Index -All Urban Consumers for
the San Francisco Oakland area. The figure is released monthly from the Bureau of Labor Statistics. I. Cost of Debt Service: The periodic payment or payments due under any security or
financing device which is applicable to the Rrental Uttnit, or the building, or complex, or other real property of which it is a part, including any fees, commission.s, 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. N:\CSD\RAC\Apartment Redline.wpd, rev. 12/30/03 Page 26
J. Cost of Operation and Maintenance: Expenses, exclusive of original costs of dcbt SCt 9 icc ! Cost of Debt Service, of ,Rrehabilitation, and costs of
Iimprovements, incurred in the operation and management ofthe Rrental Uttnit 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 1fandlords under tim Chaptct this document), 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. K. Costs of Rehabilitation: Any rehabilitation or repair work costs done
on or in a ,Rrental Uttnit or common area ofthe housing complex containing the Rrental Uttnit and which work was done in order to comply with an order issued by the Los Gatos Building
Department, or the Santa Clara .County Fire Department, or to repair damage resulting from fire, earthquake, or other natural disaster. L. Counsel: An attorney or other advisor. M. Day:
A calendar day unless otherwise specified herein. N. Determination: A summar, rcport b, a mcdiator voluntary settlement agreement reached in mediation or conciliation or a written decision
by an Aarbitrator. . O. Fact Finding: The action of an Arbitrator in establishing that certain facts, such as costs or service reductions, exist. P. Hearing: A meeting of the £parties
in a dispute with either a Mediator or an Arbitrato'r to resolve the issues. Q. Hearing Officer: A person designated by the Town Manager or the Agent who . mediates or
arbitrates rental disputes pursuant to the provisions of this Chaptct document. R. Hearing Counselor: A person designated by the Town Manager or its Aagent who counsels £parties with
regard to housing disputes and conciliates, as necessary. S. Housing Services: Those services provided and associated with the use or occupancy of a ,Rrental Uttnit, 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. T. Landlord: An owner, lessor, or sublessor, who receives or is entitled to receive ,Rrent for N:\CSD\RAC\Apartment Regs Redline.wpd,
rev. 12/30103 Page 27
the use and occupancy ofany Rtental Uttnit or portion thereof, and the agent, representative. or successor of any of the foregoing. . U. Landlord/Tenant Dispute: Any dispute between
a Landlord or any agent or employee thereof, and a Tenant. regarding Rent or any other aspect of Housing Services, provided that the Tenant is occupying the premises from which the dispute
arises. V. Mediator: A person designated to conduct the mediation phase of the dispute resolution process under the Ordinance, and who is trained and experienced, in the principles of
community mediation practice. W. Ordinance: Chapter 14.80 of the Los Gatos Town Code, also cited as the Town's Rental Dispute Mediation and Arbitration Ordinance. X. Pa.rty: A 1tartdlbrd
or Itenant(s) who is involved in the Hhearing process. Y. Petition: A petition for conciliation. Z. Program Staff: The staff of the Agent Los Gatos Rent Mediation Progralil assigned
to implement the Rental Dispute Mediation and Al bittatioll Ordinance. AA. Rent: The consideration, including anybonlls,benefit or gratuity, demanded or received by a 1tandlord for or
in connection with the use or occupancy of a Rtental Uttnit, or the assignment of a lease for such a unit, including Hhousing ,S,services or subletting. BB. Rent Increase: Any additional
Rtertt due or pa.id by a Itenant for a Rtental Uttnit, including any reduction in Hhollsing ,S,services without a corresponding reduction in the monies demanded or paid for Rtent. CC.
Rental Unit: Any building or part of a building which is used for residence and which is rented to a Itenant as a dwelling place, except: 1. Rental units, located in a building or group
of buildings on the same premises, containing only one ill dwelling units. 2. A room. in an owner-occupied dwelling where under the lease provisions the Itenant does not have substantially
exclusive use of a kitchen. 3. A single house, condominium or planned development (Business and Professions Code Section 11003.0) unit. 4. A hotel room or similar accommodation ordinarily
let let for occupancy by the same Itenant for periods of less than fifteen (15LQdaYs. 5. A hospital room, skilled nursing fa.cility or similar accommodation where the main factor in
the rental relationship is the personal care given to the Itenant. N:\CSD\RAC\Apartment Regs Redline.wpd, rev. 12/30/03 Page 28
6. A dwelling owned, operated and managed by a government agency or which is exempted by S§.tate or Ffederallaw from Brent regulation. DD. Tenant: A pelson 01 pel SOliS elititled by
01 mal agleement or by soffelance to occopy a rental onit to the exclosioll of others. A person who is legally entitled to occupy all or part of a rental property subject
to the Ordinance at the time any issue or right under the Ordinance arises. EE. Tenancy at Sufferance: When a Itenant 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. FF. Vacancy: Untenanted. A Brental Uttnit is vacant when there are no Itenants living there. To be
vacant, the unit must be untenanted; if a roommate moves, there is no unless the 1tandlord and the Itenants have a prior written agreement that this does create a
Said prior agreement must infonn the Tenants of their rights under this document. If a Itenant moves after receiving a Notice from the 1tandlord,
it is not voluntary. If the increase is after the eviction of a Itenant by a court for nonpayment, chronically late payment, or other material violation ofa written rental agreementit
is considered a voluntary GG. Voluntary Agreement: An agreement entered into by mediating fparties defining elements of resolution dispute. HH. Warranty of Habitability:
A 1tandlord's minimum obligations under California Code include that: 1. There are no leaks when it rains, and no broken doors or windows; 2. The plumbing and/or gas facilities must
be functional, including provisions of hot and cold water, and a working sewer or septic tank connection; 3. The heater must be functional and be safe; 4. The lights and wiring must
be functional and be safe; 5. Floors, stairways and railings have to be in good repair; 6. When it is rented, the unit must be clean, with no piles of trash or garbage and no rats, mice,
roaches, or other pests; 7. The 1tandlord must provide enough cans or bins 'with covers for the garbage; 8. There must be one ill working phone jack; and, 9. A working smoke alann at
the time of rental. N:\CSD\RAC\Apartment Regs Redline.wpd, rev. 2/13/04 Page 29
[Regs adopted by Resolution #1998-148 effective June 4, 1998. Revised and adopted by Resolution # I999143 effective October 20,1999.] N:\CSD\RAC\Apartment Regs Redline.wpd, rev. 2/13/04
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