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ORDINANCE 2202 <br />ORDINANCE OF THE TOWN OF LOS GATOS <br />AMENDING ARTICLE VIII OF CHAPTER 14 OF THE TOWN OF LOS GATOS <br />TOWN CODE, THE RENTAL DISPUTE MEDIATION AND ARBITRATION <br />ORDINANCE <br />THE TOWN COUNCIL OF THE TOWN OF LOS GATOS DOES HEREBY ORDAIN: <br />SECTION I <br />Section 14.80.315 of the Town of Los Gatos Town Code is amended to read: <br />See. 14.80.315. Other factors of reasonableness. <br />(a) Increases deemed reasonable. Subject to the terms of section 14.80.305, a rent increase is <br />reasonable if the arbitrator determines the following: <br />(1) The rent increase consists of no more than five (5) percent of existing monthly <br />rent plus the pass - through of all or some of the amounts of one (1) or more of the <br />following: <br />a. The fee imposed under section 14.80.245; <br />b. Costs of capital improvements, averaged on a per -unit basis and amortized <br />over a period of not less than sixty (60) months; <br />C. Increased costs of maintenance and operation; or <br />d. Documented costs of rehabilitation; averaged on a per -unit basis and <br />amortized over a period of not less than thirty -six (36) months; <br />(2) The cost figures are established to the reasonable satisfaction of the arbitrator. <br />(3) Each of the costs proposed for pass - through to tenants bears a reasonable <br />relationship to the purpose for which such cost was incurred and the value of the <br />real property to which it is applied. <br />(b) When costs of debt service deemed to be reasonable. Subject to the terms of section <br />14.80.305, the arbitrator shall deem as reasonable and allowable to be passed through to <br />tenants the costs of debt service where the arbitrator finds the debt is a secured, arms - <br />length transaction when both of the following conditions have been met: <br />(1) In the case of increased costs of debt service by new or existing owners, the <br />increase shall be limited to eighty (80) percent of the increased costs of debt <br />service arising from that proportion of the aggregate amount of debt not <br />exceeding seventy (70) percent of the value of the property as established by a <br />lender's appraisal or appraisal by some other person or entity in an arm's- length <br />relationship to the landlord at the time the appraisal is performed. No notice of an <br />increase based on this subsection shall be effective until such an appraisal has <br />