Chapter 22.01 MOBILEHOME RENT/SALE STABILIZATION

(a) Mobilehome owners, unlike apartment tenants or residents of other rental stock, are in the unique position of having made a substantial investment in a residence for which space is rented or leased. Relocation of a mobilehome from a mobilehome park space is not always a practical alternative to accepting an excessive rent increase in that it can only be accomplished at substantial cost. In many instances relocation may cause extensive damage to the mobilehome and loss of appurtenances such as integrated landscaping and supporting structures inconsistent with the new location. Because mobilehomes are often owned by senior citizens, persons on fixed incomes, and persons of low and moderate income, exorbitant rent increases fall upon these individuals with particular harshness.

(b) Mobilehomes are an important component of affordable housing stock within the city of Santa Cruz. The 1987 housing element of the city’s general plan lists six goals for increasing the availability and affordability of housing in the city. These include increasing the supply of housing for low and moderate income households, preserving the city’s stock of low and moderate income housing units, encouraging long-term affordable housing and providing opportunities for mobilehomes. Accordingly it is in the best interest of the city to take steps necessary to assure that mobilehomes remain affordable.

(c) Mobilehomes, unlike other forms of housing, have two items which must be taken into account in order to assure continued affordability: (1) the mobilehome’s purchase price which will be determinative of the owner’s monthly mortgage payments; and (2) the mobilehome’s monthly space rental. Those who have challenged mobilehome rent control ordinances enacted by other California cities claim that “vacancy control” ordinances which allow mobilehome owners to pass all or a portion of their rent control protection on to a prospective purchaser wrongfully increase the value of the mobilehome thereby inflating its purchase price and conferring an unwarranted monetary benefit on mobilehome owners who sell their mobilehomes. The city council finds that both the allowance of unregulated rent increases upon the sale of a mobilehome, or the sale of mobilehomes for prices inflated as a result of the mobilehome owners’ ability to transfer the benefit of their rent control to mobilehome purchasers, would frustrate its goal of preserving affordable housing stock within the city of Santa Cruz. This goal is advanced only if rents remain affordable and resale prices are not inflated. The council is therefore willing to regulate mobilehome rents only where there is a commitment from mobilehome owners to sell their mobilehomes for affordable prices.

(d) Within the city there are two nontenant owned mobilehome parks which offer a total of approximately two hundred fifty spaces for rent. In light of the relatively low number of available mobilehome spaces and the high demand for affordable housing within the city there is the potential for rapidly rising mobilehome space rents. Regulation is therefore necessary to assure that economic hardship to a substantial number of mobilehome owners in the city does not occur.

(e) Therefore, the city council finds and declares that it is necessary and in the public interest to provide statutory protection to mobilehome owners from unreasonable rent increases, where this can be done in a manner which advances the city’s objective of maintaining an adequate supply of affordable housing stock within the city while at the same time recognizing the need of park owners and mobilehome owners to receive a just and fair rate of return on their mobilehome park investments and mobilehome investments respectively.

(f) The city council also hereby finds and determines that it is necessary and in the public interest to establish a mechanism to assist in the resolution of disputes that may arise from time to time between mobilehome owners and park owners regarding the rates charged for the rental or lease of space, regarding proposed space rent increases and/or housing service charge increases, and regarding allegations of service reduction.

(g) The city council finds that the adoption of the regulations codified in this chapter will not have a significant, substantial or adverse effect on the physical environment of the community because enactment of this chapter involves no deviation from the general plan and no change in the present use of any property within the city.

(Ord. 91-37 § 1 (part), 1991).

22.01.020 DEFINITIONS.

For the purposes of this chapter, unless otherwise apparent from the context, certain words and phrases used in this chapter are defined as follows:

(a) “Capital improvements” shall mean those improvements which: materially add to the value of a mobilehome or of mobilehome park property; appreciably prolong their useful life; adapt them to new uses; and, with regard to mobilehome park improvements, which are required to be amortized over the useful life of the improvement pursuant to the straight line depreciation provisions of the Internal Revenue Code and the regulations issued pursuant thereto.

(b) “City clerk” means the city clerk of the city of Santa Cruz or the city clerk’s designee.

(c) “Consumer Price Index” or “CPI” shall mean the price index for all urban consumers for the San Francisco/Oakland Bay Area (all items), provided by the U.S. Bureau of Labor Statistics.

(d) “Fair rate of return” shall have the meanings assigned to that term by courts which would have competent jurisdiction in the event that any civil action was brought to challenge the validity of any decisions made by a hearing officer concerning the subject of fair rate of return. If such a distinction is relevant, fair rate of return shall be determined with reference to the park owner’s investment rather than property value.

(e) “Gross income” shall mean that income to the park owner calculated in the manner described in Section 22.01.130.

(f) “Housing services” shall mean and include those services provided and associated with the use or occupancy of a mobilehome space including but not limited to repairs, insurance, maintenance, replacement, painting, light, heat, water, refuse removal, parking, recreation facilities, security service and any other benefits, privileges or facilities.

(g) “Mobilehome” shall have the same meaning as a structure so defined in the Mobilehome Residency Law of the State of California.

(h) “Mobilehome owner” shall mean any person owning a mobilehome which is located within a mobilehome park in the city.

(i) “Mobilehome park” shall mean an area of land in the city where five or more mobilehome spaces are rented, or held out for rent, or made available for use, to accommodate mobilehomes used for human habitation.

(j) “Mobilehome space” or “space” shall mean a site within a mobilehome park designed and available for the location and use of a mobilehome for human habitation.

(k) “Net operating income” shall mean that return to a park owner as described in Section 22.01.130 of this chapter.

(l) “Operating expenses” shall mean those costs to a park owner as described in Section 22.01.130 of this chapter.

(m) “Park owner” shall mean the owner, lessor, operator or manager of a mobilehome park in the city.

(n) “Planning director” means the planning director of the city of Santa Cruz or the planning director’s designee.

(o) “Space rent” means the consideration, including any bonus, benefits or gratuity demanded or received in connection with the residential use and occupancy of a mobilehome space in a mobilehome park, any housing services provided by the park owner, and security deposits, but exclusive of any amount paid for the use of the mobilehome as a dwelling unit. Space rent shall not include recreation vehicle (RV) storage charges, laundromat charges, or charges levied for submetered utilities assessed in accordance with regulations of the Public Utilities Commission.

(p) “Space rent increases” shall mean any additional consideration demanded of or paid by a mobilehome owner for a mobilehome space including any reduction in housing services without a corresponding reduction in the moneys demanded or paid for space rent.

(Ord. 2003-27 § 1, 2003: Ord. 91-37 § 1 (part), 1991).

22.01.030 EXCLUDED PARKS/TENANCIES PROHIBITION.

This chapter shall apply, as of its effective date, to all mobilehome tenancies in mobilehome parks located in the city of Santa Cruz except:

(a) Tenancies which are used primarily for commercial purposes;

(b) Tenancies in mobilehome parks which have less than five spaces;

(c) Tenancies in mobilehome parks, the construction of which began after the effective date of this chapter; provided however, that this exception shall continue in effect for only five years from the date a certificate of occupancy is issued;

(d) Tenancies the rental of which is subsidized by any government agency pursuant to federal or state laws or regulations which specifically exempt such spaces from rent regulation;

(e) Mobilehome parks owned exclusively by the owners and residents of the mobilehomes in the mobilehome parks;

(f) Tenancies exempted from rent regulation by state or federal laws including but not limited to tenancies governed by Civil Code Section 798.17 rental agreements;

(g) Nonowner occupied mobilehomes which are rented by an absentee landlord on a short-term basis. For purposes of this subsection, a period of less than sixty days constitutes a short term.

(h) Mobilehome parks that have provided the notice specified in subsection (h)(1) below, and otherwise comply with the requirements of this subsection.

(1) The owner shall provide notice to all mobilehome owners (except those who are parties to a long term lease), or to such list of mobilehome owners as the city approves, of the availability of a long-term lease approved as to form by the city (the “approved lease”) and meeting all of the following requirements:

a. The notice shall be approved by the city and shall contain an initial deadline approved by the city and which shall be specified in the notice, within which the lease may be signed and returned, in which case the initial base rent shall be the mobilehome owner’s rent in effect as of the date of the notice. If the lease is signed and returned after the initial deadline, but before a second deadline specified in the notice, then the initial base rent will be the applicable market rent as determined by the park owner in its sole discretion. The notice shall be provided on or before September 30, 2003. The initial deadline described in this paragraph shall be the date specified in the notice, and shall be on or before November 30, 2003. The second deadline shall likewise be as specified in the notice and shall be on or before December 31, 2003.

b. Term of thirty-four years, unless sooner terminated in accordance with the terms of the approved lease, except as described below for sites that become vacant after December 31, 2023.

d. Upon any change in tenancy, as set forth in the approved lease, the park owner may increase rent to the then current market rent as determined by the park owner in its sole discretion (“full vacancy decontrol”). Thereafter, annual rent increases shall be limited to one hundred percent of the increase in the CPI.

e. Assignment upon any change in tenancy, as set forth in the approved lease. Upon any such event, the park owner may exercise its right to full vacancy decontrol.

(2) As to any mobilehome space that, as of June 10, 2003, is vacant or contains a mobilehome owned by the park owner, such mobilehome space shall be exempt from application of this chapter and park owner is not obligated to offer a lease for that mobilehome space.

(3) As to any mobilehome space that becomes vacant between June 11, 2003 and December 31, 2023, the mobilehome space shall be exempt from application of this chapter and the park owner may exercise its right to full vacancy decontrol provided that, it notifies a prospective mobilehome owner about the availability of a long-term lease that is in substantially the same form as the approved lease and contains the following essential terms and conditions:

a. The initial base rent shall be the then current market rent as determined by the park owner in its sole discretion.

b. Term of thirty-four years, measured from the effective date of the lease, unless sooner terminated in accordance with the terms of the approved lease.

c. Annual rent increases limited to one hundred percent of the increase in the CPI, except as set forth in the approved lease.

d. Full vacancy decontrol.

e. Assignment upon any change in tenancy, as set forth in the approved lease. Upon any such event, the park owner may exercise its right to full vacancy decontrol.

(4) As to any mobilehome space that becomes vacant after December 31, 2023, the mobilehome space shall be exempt from application of this chapter and the park owner may exercise its right to full vacancy decontrol provided that it notifies a prospective mobilehome owner about the availability of a long-term lease that is in substantially the same form as the approved lease and contains the following essential terms and conditions:

a. The initial base rent shall be the then current market rent as determined by the park owner in its sole discretion.

b. Term expiring on August 30, 2037, unless sooner terminated in accordance with the terms of the approved lease.

c. Annual rent increases limited to one hundred percent of the increase in the CPI, except as set forth in the approved lease.

d. Full vacancy decontrol.

e. Assignment upon any change in tenancy, as set forth in the approved lease. Upon any such event, the park owner may exercise its right to full vacancy decontrol.

(5) As to tenancies that are exempt from the ordinance codified in this section, pursuant to subsection (f) of this section, the park owner shall have no obligation to offer a lease until the circumstance that gives rise to the exemption ceases to exist, unless the tenancy is subject to a lease agreement, in which case the park owner shall have no obligation to offer a lease until the expiration of the lease that is subject to the exemption. Thereafter, the park owner shall offer a lease that is in substantially the same form as the approved lease and containing the following essential terms and conditions:

a. The initial base rent shall be the then current market rent as determined by the park owner in its sole discretion.

b. Term of thirty-four years, measured from the effective date of the lease, unless sooner terminated in accordance with the terms of the approved lease.

c. Annual rent increases limited to one hundred percent of the increase in the CPI, except as set forth in the approved lease.

d. Full vacancy decontrol.

e. Assignment upon any change in tenancy, as set forth in the approved lease. Upon any such event, the park owner may exercise its right to full vacancy decontrol.

(6) With respect to tenancies that are subject to a lease as of the effective date of the ordinance enacting this subsection that does not include rent regulated by this chapter, the park owner shall be exempt from application of this chapter during the term of such lease and, upon expiration thereof the park owner may exercise its right to full vacancy decontrol provided that it thereafter offers the existing mobilehome owner or any prospective mobilehome owner a lease that is in substantially the same form as the approved lease and contains the following essential terms and conditions:

a. The initial base rent shall be the then current market rent as determined by the park owner in its sole discretion.

b. Term of thirty-four years, measured from the effective date of the lease, unless sooner terminated in accordance with the terms of the approved lease.

c. Annual rent increases limited to one hundred percent of the increase in the CPI, except as set forth in the approved lease.

d. Full vacancy decontrol.

e. Assignment upon any change in tenancy, as set forth in the approved lease. Upon any such event, the park owner may exercise its right to full vacancy decontrol.

(7) With respect to the offers of Lease described in subparagraphs (3) through (6), above, the mobilehome owners shall have the periods of time specified in Section 798.17 of the Mobilehome Residency Law within which to accept or reject the lease, and to void the lease after signing it.

(8) Any notice required under this section shall either be delivered personally to the mobilehome owner or deposited in the United States Mail, postage prepaid, addressed to the mobilehome owner at his or her site within the mobilehome park, with a copy to the city.

(9) Nothing contained herein shall be deemed to relieve the park owners of their obligation under existing law, including the Mobilehome Residency Law of the State of California.

(10) The mobilehome space of any mobilehome owner not accepting the leases offered pursuant to this subsection (h) shall be exempt from application of this chapter.

(i) Mobilehome parks that have provided the notice specified in subsection (i)(1) below, after April 1, 2004 and on or before August 31, 2004, and that otherwise comply with the requirements of this subsection.

(1) The owner shall provide notice to all mobilehome owners (except those who are parties to a long term lease), of the availability of a long-term lease approved by the city in accordance with the criteria set forth in this subsection (i), (the “conforming lease”) and meeting all of the following requirements:

a. The notice shall be approved by the city and shall comply with (i), (ii) or (iii) below, as applicable.

(i) For mobilehome owners that, as of the date of the notice, are participants in the rent-control program, the notice shall contain an initial deadline approved by the city and which shall be specified in the notice, within which the lease may be signed and returned, in which case the initial base rent shall be the rent immediately prior to the commencement of the lease term. If the lease is signed and returned after the initial deadline, but before a second deadline specified in the notice, then the park owner may set the initial base rent at or below the then applicable fair market rent, as defined in subparagraph (i)(12), below.

(ii) Except as set forth in subparagraphs (iii) through (v), below, for mobilehome owners that, as of the date of the notice, are not participants in the rent-control program, the lease shall provide for the initial base rent to be phased into “fair market rent” as defined in paragraph (12), below, from the rate in effect as of November 27, 2003 (“phased-in rent”) unless, pursuant to an agreement between the park owner and the mobilehome owner, the initial base rent is set at the applicable space rent as of November 27, 2003. Phased-in rent shall be determined as follows: First, the fair market rent applicable to the lease will be determined in accordance with paragraph (12), below. The lease shall then provide for the rent to be phased into fair market rent from the rent in effect as of November 27, 2003 by annual adjustments in an amount not to exceed 15% per year, plus applicable CPI adjustments as provided in subsection (1)(c), below. The starting phased-in rent shall not be in excess of 15% above the rent in effect as of November 27, 2003. Thereafter, the lease shall provide for adjustments of up to 15%, plus any applicable CPI adjustment, to occur annually on or after the anniversary of the effective date of the lease. Mobilehome owners that are not participants in the rent-control program as of the date of the notice shall have until the second deadline specified below within which to sign and return the lease.

(iii) For mobilehome owners that, as of the date of the notice, are administratively appealing or challenging in court the planning director’s decisions concerning applications for relief from the deadline for executing a participation agreement as specified in Section 22.01.040, and for whom an appeal was pending as of the effective date of Ordinance 2004-14, the lease shall provide for the initial base rent to be the mobilehome owner’s rent in effect on November 27, 2003, subject to CPI adjustments as provided for in the lease, unless the planning director’s decision is, upon final disposition, overturned. If, upon final disposition, the planning director’s determination is upheld, then unless the park owner and the mobilehome owner agree that the initial base rent shall be established as the applicable space rent as of November 27, 2003, then commencing with the first rent payment due that is at least fifteen days after the final disposition of the appeal, the base rent shall be: (1) the Phased-in rent that would have been in effect had the mobilehome owner been considered not a participant in rent control under sub-paragraph (i)(1)(a)(ii); plus (2) twenty five percent of the difference between the actual rent paid and the phased-in rent, until the park owner has been paid the difference. Notwithstanding the foregoing, mobilehome owners who have appeals pending as of the date of the notice shall have until the second deadline specified below within which to sign and return the lease.

(iv) “Very Low Income” Senior Resident Protection. Mobilehome owners who are 60 years of age or older as of November 27, 2003 and who, as of the date of the notice, (1) are not participants in the rent-control program, and (2) qualify for HUD’s “very low income” status shall be offered, in addition to (ii), above, the option of a lease providing for the initial base rent to be set at the rent in effect as of November 27, 2003, with annual rent increases limited to 100% of the increase in the CPI.

(v) Supplemental Social Security Income Protection. Mobilehome owners who receive Supplemental Social Security Income as of November 27, 2003, regardless of age and who, as of the date of the notice, are not participants in the rent-control program, shall be offered, in addition to (ii) above, the option of a lease providing for the initial base rent to be set at the rent in effect as of November 27, 2003, with annual rent increases limited to 100% of the increase in the CPI.

The notice shall be provided on or after April 1, 2004, but before August 31, 2004. The initial deadline shall be the date specified in the notice, and shall be on or before September 30, 2004. The second deadline shall likewise be as specified in the notice and shall be on or before October 31, 2004.

b. Term of thirty-four years, unless sooner terminated in accordance with the terms of the conforming lease, except as described below for sites that become vacant after December 31, 2023.

c. Annual rent increases limited to seventy-five percent of the increase in the CPI during occupancy by the mobilehome owner who received the notice specified in subparagraph (a), above, except as set forth in the conforming lease or otherwise provided herein, and, for any subsequent tenancy, annual rent increases limited to one hundred percent of the increase in CPI, unless the interior living space is increased or a larger mobilehome is installed on the site so as to place the mobilehome in a higher rent classification, in which case the rent may be adjusted accordingly.

d. Upon any change in tenancy, as set forth in the conforming lease, the park owner may adjust the rent to at or below fair market rent (“vacancy decontrol”) unless: (i) for original mobilehome owners that received the notice specified above and, as of the date of the notice, are participants in the rent control program, the parties may agree to set the rent at its existing level upon the first change in tenancy (subject thereafter to annual rent increases that are no greater than one hundred percent of the increase in CPI for the previous year), in which case upon a subsequent change in tenancy the park owner may terminate the lease and thereafter the affected mobilehome space shall be exempt from the provisions of Title 22; and (ii) for original mobilehome owners that receive the notice specified above and, as of the date of the notice, are not participants in the rent control program, and for whom the original base rent was set at the rent level in effect at the affected space as of November 27, 2003 pursuant to subsection (i)(1)(a), above, the park owner may terminate the lease and the affected space shall thereafter be exempt from the provisions of Title 22. Notwithstanding any provision of this paragraph to the contrary, a mobilehome sale financed by the mobilehome owner that results in a default and foreclosure within one year of the sale shall not be considered a change in tenancy upon a transfer of title back to the original owner, and the rent in effect for the purchaser shall remain in effect (subject to subsequent CPI adjustments at one hundred percent of CPI).

e. Assignment upon any change in tenancy, as set forth in the conforming lease. Upon any such event, the park owner may exercise its right to vacancy decontrol.

f. Upon sale of a mobilehome, as set forth in the conforming lease: (i) for original mobilehome owners that received the notice specified above and, as of the date of the notice, are participants in the rent control program, the mobilehome owner shall assign to the park owner seventy percent of the amount that the actual sale price exceeds the resale cap price as determined under the existing participation agreement; and (ii) for original mobilehome owners that receive the notice specified above and, as of the date of the notice, are not participants in the rent control program, and for whom the original base rent was not set by agreement at the rent level in effect at the affected space as of November 27, 2003, and for subsequent generations of mobilehome owners, the mobilehome owner shall assign to the park owner seventy percent of the amount that the actual sale price exceeds the original purchase price, adjusted by the same percentage of CPI as rent during the lease term, plus any costs or expenses associated with the sale.

g. Nothing contained herein shall be deemed to prevent a park owner and mobilehome owner from negotiating an agreement whereby, in exchange for setting rents that are below the maximum rents permitted by this chapter, the mobilehome owner can assign to the park owner a larger percentage of: (i) for original mobilehome owners that are participants in the rent control program, the difference between the actual sale price and the resale cap price as determined under the existing participation agreement; and (ii) for other mobilehome owners, the difference between the actual sale price and the original purchase price, adjusted by the same percentage of CPI as rent during the lease term, plus any costs or expenses associated with the sale.

(2) As to any mobilehome space that, as of the effective date of the ordinance enacting this subsection (i), is vacant or contains a mobilehome owned by the park owner, such mobilehome space shall be exempt from application of this chapter and park owner is not obligated to offer a lease for that mobilehome space.

(3) Except for spaces exempted under subsection (i)(1)(d), above, as to any mobilehome space that becomes vacant between the effective date of the ordinance enacting this subsection (i) and December 31, 2023, the mobilehome space shall be exempt from application of this chapter and the park owner may exercise its right to vacancy decontrol, provided that it notifies any prospective mobilehome owner about the availability of a long-term lease that is approved by the city or conforms to the terms of the conforming lease, and contains the following essential terms and conditions:

a. The park owner shall set the initial base rent at or below fair market rent.

b. Term of thirty-four years, measured from the effective date of the lease, unless sooner terminated in accordance with the terms of the conforming lease.

c. Annual rent increases limited to one hundred percent of the increase in the CPI, except as set forth in the conforming lease unless the interior living space is increased so as to place the mobilehome in a higher rent classification, in which case the rent may be adjusted accordingly.

d. Vacancy decontrol.

e. Assignment upon any change in tenancy, as set forth in the conforming lease. Upon any such event, the park owner may exercise its right to vacancy decontrol.

f. Upon sale of a mobilehome, as set forth in the conforming lease, mobilehome owner shall assign to the park owner seventy percent of the amount that the actual sale price exceeds the original purchase price, adjusted by the same percentage of CPI as rent during the lease term, plus any associated costs or expenses.

(4) Except for spaces exempted under subsection (i)(1)(d), above, as to any mobilehome space that becomes vacant after December 31, 2023, the mobilehome space shall be exempt from application of this chapter and the park owner may exercise its right to vacancy decontrol provided that it notifies any prospective mobilehome owner about the availability of a long-term lease that is approved by the city or conforms to the terms of the conforming lease, and contains the following essential terms and conditions:

a. The park owner shall set the initial base rent at or below fair market rent.

b. Term expiring on September 30, 2038, unless sooner terminated in accordance with the terms of the conforming lease.

d. Vacancy decontrol.

e. Assignment upon any change in tenancy, as set forth in the conforming lease. Upon any such event, the park owner may exercise its right to vacancy decontrol.

(5) As to tenancies that are exempt from the ordinance codified in this section, pursuant to subsection (f) of this section, the park owner shall have no obligation to offer a lease until the circumstance that gives rise to the exemption ceases to exist, unless the tenancy is subject to a lease agreement, in which case the park owner shall have no obligation to offer a lease until the expiration of the lease that is subject to the exemption. Thereafter, the park owner shall offer a lease that is approved by the city or conforms to the terms of the conforming lease, and containing the following essential terms and conditions:

a. The park owner shall set the initial base rent at or below fair market rent.

b. Term of thirty-four years, measured from the effective date of the lease, unless sooner terminated in accordance with the terms of the conforming lease.

d. Vacancy decontrol.

e. Assignment upon any change in tenancy, as set forth in the conforming lease. Upon any such event, the park owner may exercise its right to vacancy decontrol.

(6) With respect to tenancies that are subject to a lease as of the effective date of the ordinance enacting this subsection that does not include rent regulated by this chapter, the park owner shall be exempt from application of this chapter during the term of such lease and, upon expiration thereof the park owner may exercise its right to vacancy decontrol provided that it thereafter offers the existing mobilehome owner or any prospective mobilehome owner a lease that is approved by the city or conforms to the terms of the conforming lease and contains the following essential terms and conditions:

a. The park owner shall set the initial base rent at or below fair market rent

b. Term of thirty-four years, measured from the effective date of the lease, unless sooner terminated in accordance with the terms of the conforming lease.

d. Vacancy decontrol.

e. Assignment upon any change in tenancy, as set forth in the conforming lease. Upon any such event, the park owner may exercise its right to vacancy decontrol.

(7) With respect to the offers of lease described in subparagraphs (3) through (6), above, the mobilehome owners shall have the periods of time specified in Section 798.17 of the Mobilehome Residency Law within which to accept or reject the lease, and to void the lease after signing it.

(9) Nothing contained herein shall be deemed to relieve the park owners of their obligation under existing law, including the Mobilehome Residency Law of the State of California.

(10) The mobilehome space of any mobilehome owner not accepting the leases offered pursuant to this subsection (i) shall be exempt from application of this chapter provided, however, that upon any change in tenancy, the park owner shall offer a lease that is approved by the city or conforms to the terms of the conforming lease, and containing the following essential terms and conditions:

a. The park owner shall set the initial base rent at or below fair market rent.

b. Term of thirty-four years, measured from the effective date of the lease, unless sooner terminated in accordance with the terms of the conforming lease.

d. Vacancy decontrol.

e. Assignment upon any change in tenancy, as set forth in the conforming lease. Upon any such event, the park owner may exercise its right to vacancy decontrol.

(11) No lease agreement offered by a park owner as the conforming lease shall be valid as qualifying a park for the exemption set forth in this subparagraph (i) unless it has, prior to the offer, been considered and approved by the city council in accordance with this subparagraph (i)(11). In order to qualify for the exemption set forth in this subsection (i), a lease offer and notice must be submitted to the city for consideration on or before June 30, 2004. No lease offer or notice submitted prior to the effective date of the ordinance enacting this subsection (i) shall be eligible for consideration. Any lease offer and notice submitted to the city for review on or after the effective date of the ordinance adopting this subparagraph (i)(11) shall either be accepted or rejected by the city council by resolution which shall be adopted within the sooner to occur of sixty days from the date of submittal by the park owner to the city or five days before the expiration of the deadline to make the initial lease offer. If the city council does not take action to either accept or reject a proposed lease and lease within the time specified herein, then it shall be conclusively presumed that the proposed lease and notice are accepted and that the lease is approved as the conforming lease. Any resolution rejecting a proposed lease shall specify the grounds for rejection, as well as the modifications required in order to qualify as the conforming lease. In addition to the specific criteria set forth herein, the city council, in determining whether to accept or reject a proposed lease as the conforming lease, may take into consideration all of the following factors:

a. The extent to which offering the proposed lease, as an exemption to the standard rent control provisions set forth in this title, nevertheless fulfills the city council’s overall goals and objectives, as set forth in the findings and declarations of Section 22.01.010;

b. The average age, income and demographics of the park tenants;

c. The location of the park;

d. The extent to which the actual sale prices of mobilehomes in the park have historically been limited by the allowable sale price as determined by the formula contained in Section 22.01.040 and the applicable participation agreement;

e. The level of amenities offered to park tenants, in comparison to other mobilehome parks in the community;

f. The reasonableness of the lease terms, taking into account the respective bargaining positions of the parties;

g. Whether the person to whom the initial lease is offered previously participated in the rent control program established by Title 22;

h. Whether the lease terms provide the park owner with a fair return on its investment; and

i. Such other and further factors as the city council may take into consideration after receiving the input of the interested parties, which factors shall be set forth in the resolution accepting or rejecting the proposed lease.

(12) “Fair market rent”, as used in this subparagraph (i), shall be based on the most current FMR statistics for Santa Cruz County published by the U.S. Department of Housing and Urban Development (HUD) for mobilehome park spaces, and adjusted for unit size based upon the following formula, where “A” equals HUD Mobilehome Space FMR (less a 10% utility cost credit); “B” equals HUD efficiency apartment FMR; “C” equals HUD one bedroom apartment FMR; “D” equals HUD two bedroom apartment FMR; and “E” equals HUD three bedroom apartment FMR:

a. A/B x B = Fair Market Rent for a “Very Small” unit with interior living space of less than 320 square feet.

b. A/B x C = Fair Market Rent for a “Small” unit with interior living space of from 320 to 579 square feet.

c. A/B x D = Fair Market Rent for a “Medium” unit with interior living space of more than 580 and up to 1000 square feet.

d. A/B x E = Fair Market Rent for a “Large” unit with interior living space of more than 1000 square feet.

The square footage of each unit subject to this subsection shall be approved by the city council concurrently with its approval of the initial lease offer. Upon any changes in the square footage of the interior living space of the unit or installation of a larger mobilehome on the site, rent shall be adjusted according to the foregoing formula.

In all other mobilehome parks the park owner and/or the park owner’s agents are prohibited from collecting, or attempting to collect, rents in excess of the amount prescribed by this chapter from mobilehome owners who elect, pursuant to Section 22.01.040, to accept the rent control protections afforded by this chapter.

(Ord. 2004-25 § 1, 2004: Ord. 2004-18 § 1, 2004: Ord. 2004-14 § 1, 2004: Ord. 2004-06 § 1, 2004: Ord. 2003-34 § 1, 2003: Ord. 2003-27 § 2, 2003: Ord. 92-05 § 1, 1992: Ord. 91-37 § 1 (part), 1991).

22.01.040 TENANCIES PROTECTED.

(a) The rights and protections afforded to mobilehome owners pursuant to this chapter shall only extend to mobilehome owners who apply and qualify for an irrevocable participation agreement, in a form to be approved pursuant to city council resolution, by which the mobilehome owners voluntarily agree to limit the price at which they will sell their mobilehomes should they at any point in time decide to sell.

(b) The participation agreement shall contain a formula for computing the allowable sale price of the mobilehome which is the subject of the participation agreement. Initially, the sale price will be computed, pursuant to the formula, from a base price determined by appraising the mobilehome’s value as of July 1, 1990 or the date upon which the mobilehome was first placed in the mobilehome park, whichever is later. In determining value, the appraisal shall take into account the location of the mobilehome. The mobilehome owner shall provide a copy of the appraisal to the mobilehome park owner at the same time that it is filed with the city. The appraisal filed with the city shall be accompanied by proof of personal service upon the mobilehome park owner. Any written response to the appraisal by any interested party shall be filed with the planning director within fourteen days after the filing of the appraisal. Subsequently, with respect to mobilehome owners who have purchased their mobilehome at a price that does not exceed the adjusted base price as determined in accordance with the criteria set forth herein from a person who has executed a participation agreement, the base price shall be the actual purchase price, adjusted as thereafter provided for herein.

(c) The formula referenced in subsection (b) by which the sale price of the rent-controlled mobilehome is determined, shall authorize the mobilehome owner to upwardly adjust the mobilehome’s base price on an annual basis. As adjusted, the base price will be the allowable sale price. The sale price may be upwardly adjusted annually by a factor of seventy-five percent of the CPI increase over the previous twelve-month period. In addition, the mobilehome owner may add to the adjusted base price the value of all capital improvements made to the mobilehome since the later to occur of: (1) the date utilized in computing the base price under subsection (b), above; or (2) with respect to mobilehome owners who take possession of rent-controlled mobilehomes by virtue of the fact that they have purchased their mobilehomes from persons who have executed a participation agreement, the date of taking possession. The value of capital improvements shall be the depreciated value as indicated in a report furnished by the mobilehome owner and prepared by a certified public accountant in accordance with generally accepted accounting standards. For purposes of this subsection, the actual cost of capital improvements shall include the value of the mobilehome owner’s labor incurred in connection with the construction and installation of the capital improvements computed in the manner prescribed at Section 22.01.130(c)(5), and depreciated as provided for herein.

In addition, at the time of sale the mobilehome owner may add to the adjusted base price the mobilehome owner’s costs of sale, including real estate commissions and costs of complying with the reporting requirements contained in this section, as documented in escrow documents pertaining to the sale. The adjusted base price on the date of sale added to the mobilehome owner’s costs of sale shall constitute the maximum allowable sale price.

Nothing set forth in this subsection shall be construed to limit the right of a mobilehome owner and a prospective purchaser to negotiate the allocation of costs to be incurred in bringing the mobilehome into compliance with applicable building and housing codes where code compliance is a condition of sale.

(d) Mobilehome owners who own their mobilehomes and have them in place in mobilehome parks on the effective date of this chapter must execute a participation agreement within one hundred eighty days of the effective date of this chapter in order to receive the rights and protections afforded to mobilehome owners pursuant to this chapter. Mobilehome owners who take possession of mobilehomes eligible for rent control under this chapter after the effective date of this chapter shall have one hundred twenty days from the date of possession to execute a participation agreement. Mobilehome owners who take possession of rent-controlled mobilehomes by virtue of the fact that they have purchased their mobilehomes from persons who have executed a participation agreement shall have one hundred twenty days from the date upon which they take possession to apply in writing for a participation agreement in order to retain the rights and protections afforded by this chapter. The date of taking possession shall be determined by the mobilehome owner’s rental agreement with the mobilehome park owner. The application shall contain proof of notice to the mobilehome park owner. Any responses to the application shall be in writing and shall be filed with the planning director within fourteen days after the filing of the written application. The mobilehome owners shall also provide to the city the appraisal, proof of service and proof of the date of taking possession. Execution of an irrevocable participation agreement shall occur on or before expiration of one hundred eighty days from the date upon which the mobilehome owner takes possession.

(e) Notwithstanding the one-hundred-eighty-day limitation period for execution of participation agreements set forth in subsection (d), mobilehome owners who take possession of mobilehomes eligible for rent control, whether or not the mobilehome was subject to the rent control provisions of this chapter prior to their possession, may be allowed to apply for a participation agreement beyond the one-hundred-twenty day limitation period and to receive a participation agreement beyond the one hundred eighty day period upon demonstrating to the planning director that they had no actual knowledge of the mobilehome rent control available under this chapter at the time they took possession of their mobilehome and thereafter failed to obtain actual knowledge during the one hundred twenty day period following their possession. Relief from the limitation periods provided for in this subsection shall only be available to those mobilehome owners who submit a written letter of application for relief to the planning director within forty five days of actual knowledge of the mobilehome rent control available under this chapter. The forty-five day deadline set forth herein may be extended if the applicant demonstrates to the satisfaction of the planning director that the failure to submit a timely application is due to the applicant’s incapacity or other factors beyond the applicant’s control. The letter application for relief under this subsection shall include an explanation of the circumstances giving rise to the applicant’s actual knowledge of the mobilehome rent control available under this chapter, setting forth the date the applicant first obtained actual knowledge and, in the case of an application for relief from the forty-five day deadline set forth herein, shall document, with supporting evidence, the incapacity or other circumstance upon which the claim for relief is based. The application shall contain proof of personal service of a copy of the application upon the mobilehome park owner or the mobilehome park property manager. Any response to the letter application by any interested party shall be in writing and shall be filed with the planning director within fourteen days after the filing of the written application. The planning director’s written decision granting or denying relief from the one-hundred-eighty-day limitation period shall be issued between fifteen and twenty-eight days after the filing of the letter application. The planning director’s decision may be appealed to a hearing officer pursuant to the provisions of Section 22.01.100. Any such appeal must be brought within thirty days of the planning director’s decision. The appeal shall be brought by filing an appeal petition with the city’s planning department. The petition shall set forth the petitioner’s name, address and telephone number. The petition, at a minimum, shall contain a statement of facts and contentions and clearly identify the factual or legal basis of all contentions. The petition shall be accompanied by all pertinent documentation relevant to the issues to be decided. The petition shall be accompanied by a proof of service documenting that the petition and all supporting documentation have been served on any interested party who had filed written documents in the underlying proceedings before the planning director. In hearing the appeal, the hearing officer shall apply the rules of evidence and procedure referenced in Section 22.01.100(e) as adopted by the city council, or as reasonably adapted by the hearing officer to address the particular circumstances of the appeal before the hearing officer.

(f) Any person aggrieved by any determination made pursuant to this section shall exhaust administrative remedies to the extent required by law by complying with the hearing requirements of Section 22.01.100 as a prerequisite to bringing any legal action to challenge the determination.

(Ord. 2003-27 § 3, 2003: Ord. 94-02 § 1, 1994: Ord. 92-08 § 1, 1992: Ord. 92-05 § 2, 1992: Ord. 91-37 § 1 (part), 1991).

22.01.050 SPACE RENT INCREASES – VACANCY CONTROL.

(a) Except as elsewhere provided in this chapter, any space rent increase after the effective date of the ordinance codified in this chapter which exceeds an aggregate of seventy-five percent of the increase of the CPI for the twelve-month period ending sixty days before written notice of such rent increase is given, or eight percent, whichever is less, shall be subject to review under the hearing process referenced in Section 22.01.100.

(b) When a rent-controlled mobilehome is sold, the park owner may not adjust the rent on that new occupancy over the current rent then existing prior to the time of sale. Nothing set forth in this subsection shall be construed as prohibiting rent adjustments otherwise authorized by this chapter which the park owner might have assessed had the mobilehome not been sold. Similarly, nothing set forth in this subsection shall be construed as prohibiting the park owner from adjusting the new mobilehome owner’s rent should the new mobilehome owner fail to execute a participation agreement within the time limits for doing so set forth in Section 22.01.040(d).

(c) Where the new owner has purchased a mobilehome in a park which has not been exempted from this section pursuant to Section 22.01.030(h) and for which the previous owner did not have rent control, the new owner, in accordance with Section 22.01.040, may elect to apply and qualify for a participation agreement in order to obtain the rights and protections conferred by this chapter. Under these circumstances, unless preempted by state law, the new owner’s space rental will be computed as if the mobilehome had been rent-controlled on the effective date of this chapter and as if all rent increases allowed under this chapter had been assessed between the effective date of this chapter and the date the new owner took possession. Notice of the application of a new owner must be given in accordance with the provisions for notice in Section 22.01.040(d), unless extended pursuant to Section 22.01.040(e), and any written response shall likewise comply with the provisions of Section 22.01.040(d).

(d) The seller of a rent-controlled mobilehome, at the time of sale, shall fully disclose to the purchaser: the amount of the seller’s space rental at the time of sale; the date of the last previous space rental adjustment; the date upon which the seller first acquired the mobilehome; and the amount of the seller’s original rent. The seller shall also provide the purchaser with a copy of the seller’s participation agreement and a written statement explaining how the sale price of the mobilehome was determined pursuant to the formula set forth in this chapter and the participation agreement.

(e) The mobilehome owner of a rent controlled mobilehome shall provide notice to the city and the mobilehome park owner of the impending sale of the owner’s mobilehome and the price thereof fifteen days prior to the completion of any sale. The mobilehome park owner shall also provide notice to the city of any impending sale of which it has notice.

(f) A park owner may not require, directly or indirectly, any mobilehome owner or prospective mobilehome owner, as a condition of tenancy in a mobilehome park, to sign a lease or rental agreement with a term in excess of twelve months or which requires the mobilehome owner or prospective mobilehome owner to waive his or her right to elect the rights and protections conferred by this chapter. In addition no owner may deny a tenancy to a prospective purchaser of a mobilehome in a mobilehome park on the ground that the prospective purchaser will not sign such a lease or rental agreement. However nothing in this chapter shall be construed to prevent mobilehome owners and park owners from voluntarily entering into private space rental agreements which provide for a fixed term and/or a fixed space rent for mobilehome tenancies.

(g) A mobilehome owner or mobilehome owners association may request a hearing to protest any space rent or housing service charge increase including those which a park owner is entitled to assess without prior approval from a hearing officer.

(Ord. 2003-27 § 4, 2003: Ord. 93-29 § 3, 1993: Ord. 91-37 § 1 (part), 1991).

22.01.060 SPACE RENT INCREASES – LIMIT ON ANNUAL INCREASES.

(a) The space rent for any mobilehome space may not be increased more than once in any twelve-month period except as allowed under subsection (b).

(b) Subsection (a) shall not apply where the mobilehome previously occupying the space has been removed pursuant to a voluntary termination of tenancy.

(Ord. 91-37 § 1 (part), 1991).

22.01.070 SPACE RENT INCREASES – EXEMPTIONS.

Subject to the provisions of Section 22.01.080, if a park owner has not increased space rent for more than twenty-four months prior to the latest increase, rental increases in excess of those allowed pursuant to Section 22.01.050 shall be permitted without a hearing, provided that the new space rental is not in excess of the space rental which would have been in place if, since the date of the last space rental increase, the park owner had actually assessed all space rental increases permissible without a hearing under this chapter.

(Ord. 91-37 § 1 (part), 1991).

22.01.080 LIMITATIONS ON INCREASES.

Notwithstanding any other provision of this chapter, no space rent increase may be authorized in any given year for an amount in excess of twice the CPI increase for the twelve-month period ending sixty days before notice of the increase or fifteen percent, whichever is less. If the amount of any individual adjustment otherwise justified under this chapter is greater than such limit, the full justified amount shall be granted over a period of years such that the rent does not increase by greater than this limit in any given year.

(Ord. 91-37 § 1 (part), 1991).

22.01.090 SPECIFICATION OF CHARGES.

(a) For any space rent or housing service charge increase assessed by the park owner, the park owner shall provide sixty days’ written notice of the increase. The notice shall specify with particularity the amount of the increase, cite the authority for the increase, and explain how the amount of the increase was calculated. The notice shall set forth clearly the total amount of monthly space rent and housing service charges the mobilehome owner will be liable for upon the effective date of the increase.

(b) Any notice of termination of tenancy served by the park owner upon a mobilehome owner on the basis of a failure to pay space rent or housing service charges shall similarly set forth the amount owed by the mobilehome owner and the manner in which the amount owed was calculated.

(Ord. 91-37 § 1 (part), 1991).

22.01.100 HEARINGS.

(a) Any person aggrieved by a decision of the planning director pursuant to this chapter shall exhaust available administrative remedies by filing a petition for hearing and obtaining a final decision thereon pursuant to this section. A petition for a hearing shall be filed within thirty (30) days of the date of the decision and shall thereafter be time-barred. Compliance with this section shall be a prerequisite to bringing any legal action to challenge the decision. A hearing shall be provided to resolve disputes regarding the issuance of irrevocable participation agreements, appraisals, allowable sales price, adjustments to base price, space rent increases, to consider space rent increase petitions for increases which exceed those allowed under Section 22.01.050, to review housing service charge increases, to review the reduction and/or elimination of housing services, and to hear appeals pursuant to Section 22.01.040(e). In addition, a mobilehome owner may request a hearing when he or she asserts that the maximum allowable sale price permitted pursuant to Section 22.01.040 is insufficient to allow him or her to realize a reasonable rate of return on his or her mobilehome investment. The planning department shall appoint hearing officers to conduct the hearing provided for in this chapter. The hearing officers shall not be city employees and shall independently contract with the parties upon appointment by the city. To ensure the impartiality of the process, no hearing officer shall preside over more than two matters in any calendar year.

(b) The hearing officer shall allow space rent and housing service charge increases to the extent that such increases are reasonable and necessary to allow the park owner to realize a reasonable rate of return on his or her investment in the mobilehome park.

(c) A park owner who seeks to increase a mobilehome owner’s space rent by a sum in excess of that allowed under Section 22.01.050 shall be required to file a petition invoking the hearing process provided for in this chapter. That portion of the requested space rent increase which exceeds the maximum space rent increase allowed under Section 22.01.050 shall not take effect unless and until such time as the hearing officer allows such excess space rent increase or portion thereof.

(d) The hearing officer shall authorize a mobilehome sale price higher than that otherwise authorized by the participation agreement only to the extent necessary to allow the mobilehome owner to realize a reasonable rate of return on his or her mobilehome investment. For purposes of this subsection, it will be presumed that the formula set forth in the participation agreement will allow the mobilehome owner to sell his or her mobilehome at a price which will allow him or her to realize a reasonable rate of return on his or her mobilehome investment. The mobilehome owner, if he or she requests a hearing to increase the maximum allowable sale price, will be burdened to prove that unusual circumstances or undue hardship requires allowance of a higher sales price. The fact that real estate prices within the community have escalated at a rate greater than the increase rate permitted by the participation agreement shall not constitute an unusual circumstance or undue hardship.

(e) Rules of evidence and procedure to be applied by the hearing officer shall be promulgated pursuant to city council resolution. These rules shall define how the costs of the hearing, including the hearing officer’s fees and clerical support costs, are to be allocated between the parties. The decision of the hearing officer shall be final.

(Ord. 2003-27 § 5 (part), 2003: Ord. 94-02 § 2, 1994: Ord. 92-08 § 2, 1992: Ord. 91-37 § 1 (part), 1991).

22.01.110 ALLOWABLE EXCESS SPACE RENT INCREASES.

(a) Where the park owner believes that the annual space rent increase permitted without a hearing pursuant to Section 22.01.050 is insufficient to allow for a reasonable return on the park owner’s mobilehome park investment the park owner may file a petition with the city clerk seeking leave to increase space rent by a sum in excess of that amount. Upon the park owner’s filing of the petition with the city clerk, and after a hearing pursuant to this chapter, the hearing officer may permit such an excess space rent increase only to the extent that the increase allows the park owner to realize a reasonable return on the park owner’s mobilehome park investment. The determination of what constitutes a reasonable return on the park owner’s mobilehome park investment shall be made by the hearing officer with reference to the standards set forth in this chapter.

(b) A change in ownership of a mobilehome park after the effective date of this chapter shall not in and of itself entitle the succeeding park owner to higher space rents than would have been paid had the original owner remained the park owner.

(Ord. 91-37 § 1 (part), 1991).

22.01.120 DETERMINATION OF REASONABLENESS.

Hearing officers shall determine whether space rent or housing service charge increases they are called upon to review are reasonable under the circumstances taking into consideration that the purpose of this chapter is to permit park owners a fair rate of return on their investment in the mobilehome park while protecting mobilehome owners from arbitrary, capricious or unreasonable increases.

(Ord. 91-37 § 1 (part), 1991).

22.01.130 RENT ADJUSTMENT PROCEEDINGS – TERMINOLOGY.

For purposes of determining whether space rent or housing service charge increases are reasonable under the circumstances, the following definitions shall be used by the hearing officer:

(a) “Net operating income” equals gross income less operating expenses.

(b) “Gross income” equals:

(1) Gross space rents received from rent-controlled mobilehome tenancies; plus

(2) Interest from rental deposits on rent-controlled mobilehome tenancies, unless directly paid by the landlord to the mobilehome owners on an annual basis (interest shall be computed at the rate of five percent unless such deposits actually earn greater interest); plus

(3) All other income or consideration received or receivable by the park owner for, or in connection with, rent-controlled tenancies; minus

(4)Uncollected space rents due to bad debts to the extent that the same are beyond the park owner’s control and are attributable to rent-controlled tenancies. Uncollected rents in excess of three percent of gross space rents attributable for rent-controlled tenancies shall be presumed to be unreasonable unless otherwise established. Where uncollected space rents must be estimated, the average of the preceding three years’ experience shall be used, or some other comparable method.

(c) “Operating expenses” shall include the following to the extent that they are attributable to rent-controlled tenancies or spaces:

(1) Real property taxes;

(2) Utility costs which are not passed through to mobilehome owners by way of submeters or otherwise;

(3) Management expenses, contracted for or owner-performed, including necessary and reasonable advertising, accounting, insurance and other managerial expenses, and allowable legal expenses. Management expenses are presumed to be five percent of gross income unless established otherwise;

(4) Normal repair and maintenance expenses including painting, normal cleaning, fumigation, landscaping, and repair of all standard services, including electrical, plumbing, carpentry, furnished appliances, drapes, carpets, furniture, pool, laundry, and recreational equipment;

(5) Owner-performed labor which shall be compensated at the prevailing wage for the type of labor performed per the Bureau of Labor Standards. Notwithstanding the foregoing, a park owner may receive greater or lesser compensation for self-labor if it can be shown that the amounts set forth are substantially unfair in a given case. There shall be a maximum allowable expense for owner-performed labor of five percent of gross income unless the park owner shows greater services for the benefit of residents;

(6) License and registration fees required by law to the extent that they are not passed through to residents;

(7) Capital improvements and major repairs shall be amortized over their useful life. When the capital improvements have a useful life of four years or more, an interest cost of twelve percent a year on the unamortized balance of the cost of improvement shall be allowed as an expense. Amortization of the cost shall be on a straight-line basis over the life of the improvement;

(8) Uncollected rents due to vacancy and bad debts to the extent that these costs are beyond the owner’s control. Uncollected rents in excess of three percent of gross rents shall be presumed to be unreasonable unless established otherwise. Where uncollected rents must be estimated, the average percentage of the preceding three years’ experience shall be used, or some other comparable method;

(9) Attorney’s fees and costs incurred in connection with successful good-faith attempts to recover rents owing and successful good faith unlawful detainer actions not in derogation of applicable law, to the extent such expenses are not recovered from mobilehome owners.

(d) Operating expenses shall not include the following expenses which may be attributable to rent-controlled tenancies or spaces:

(1) Avoidable and unnecessary expenses;

(2) Mortgage principal and interest payments;

(3) Any penalties, fees or interest assessed or awarded for violation of this or any other law;

(4) All legal fees except those referenced in subsection (c)(9). Legal fees and costs incurred in connection with hearings or proceedings taken pursuant to this chapter are not allowable as operating expenses;

(5) Depreciation;

(6) Any expense for which the owner has been reimbursed by any security deposit, insurance settlement, judgment for damages, settlement or any other method;

(7) Rent stabilization fees assessed under Section 22.01.190 of this chapter.

(e) Base year for purposes of this chapter shall mean calendar year 1990. Base date for purposes of this chapter shall be July 1, 1991.

(Ord. 2003-27 § 5 (part), 2003: Ord. 92-08 § 3, 1992: Ord. 91-37 § 1 (part), 1991).

22.01.140 DETERMINATION OF BASE YEAR NET OPERATING INCOME.

(a) To determine the net operating income during the base year, there shall be deducted from the annualized gross income being realized on January 1, 1991 a sum equal to the actual operating expenses for calendar year 1990 unless the park owner demonstrates to the satisfaction of the hearing officer that some other twelve-consecutive-month period is justified by reasons independent of the purpose of this chapter. In all cases, January 1, 1991 shall fall within the twelve-month period utilized in this chapter.

(Ord. 91-37 § 1 (part), 1991).

22.01.150 PRESUMPTION OF BASE YEAR NET OPERATING INCOME.

It shall be presumed that the net operating income produced by a mobilehome park during the base year provided a fair rate of return on the park owner’s investment in the mobilehome park and that the base year net operating income adjusted annually by a factor of seventy-five percent of the CPI increase during the prior twelve-month period or eight percent, whichever is less, will continue to provide the park owner with a fair rate of return. The presumption referenced in this section is a rebuttable presumption which may be challenged by either a park owner, mobilehome owner, or mobilehome owners association at a hearing provided for in this chapter.

(Ord. 91-37 § 1 (part), 1991).

22.01.160 ADJUSTMENT TO INCOME COMPUTATION – CONDITIONS.

The hearing officer may determine that the base-year net operating income yielded other than a fair rate of return on the park owner’s investment, in which case the base year net operating income may be adjusted upward or downward accordingly. In order to make this determination the hearing officer must make at least one of the following findings:

(a) The park owner’s operating and maintenance expenses in the base year were unusually high or low in comparison to other years. In such instances, adjustments may be made in calculating such expenses so the base-year operating expenses reflect average expenses for the mobilehome park over a reasonable period of time. The hearing officer shall consider the following factors:

(1) The park owner made substantial capital improvements during 1990, which were not reflected in the space rent levels in place in 1990;

(2) Substantial repairs were made due to damage caused by natural disaster or vandalism;

(3) Maintenance and repair was below accepted standards so as to cause significant deterioration in the quality of housing services;

(4) Other expenses were unreasonably high or low notwithstanding the fact that the park owner followed prudent business practices. In making this determination, the fact that property taxes prior to 1990 may have been higher or lower than in 1990 shall not be considered.

(b) The space rent in the base year was disproportionately high or low due to one of the factors enumerated below. In such instances, adjustments may be made in calculating gross rents consistent with the purpose of this chapter:

(1) The space rent in the base year was established by a lease agreement or other formula rental agreement which provided for substantially higher rent at other periods during the term of the lease;

(2) The space rent on the base date was substantially higher or lower than at other times of the year by reason of seasonal demand or seasonal variations in space rent;

(3) The space rent on the base date was substantially higher or lower than preceding months by reason of premiums being charged or rebates being given for reasons unique to particular spaces or limited to the period determining the base space rent.

(c) It shall be presumed that where net operating income is less than fifty percent of gross income in the base year, after making adjustments as permitted by subsections (a) and (b), the park owner was receiving less than a fair rate of return on his or her investment in the mobilehome park. In such a case, for purposes of determining base-year net operating income, gross income shall be adjusted upward.

(Ord. 91-37 § 1 (part), 1991).

22.01.170 INCREASES IN OPERATING EXPENSES – AMOUNTS PERMITTED.

Where scheduling of space rent increases, or other calculations require projections of income and expenses, it shall be assumed that operating expenses, exclusive of property taxes and management expenses, increase at ten percent per year, that property taxes increase at two percent per year and that management expenses are five percent of gross income.

(Ord. 91-37 § 1 (part), 1991).

22.01.180 INCREASE DETERMINED NOT REASONABLE – REMEDIES.

Any space rent increase or housing service charge increase which has been collected by park owners pursuant to an increase which is the subject of a hearing and which is later determined by the hearing officer to be unreasonably excessive shall within ninety calendar days be either returned to the mobilehome owners or credited to future rental charges at the option of the park owner. In no event shall the time period exceed ninety calendar days for carrying out the decision of the hearing officer in this regard.

(Ord. 91-37 § 1 (part), 1991).

22.01.190 RENT STABILIZATION FEES.

Any costs to the city attributable to the implementation of the provisions of this chapter may be paid from fees assessed annually by the city upon park owners. Such fees shall be set by resolution which shall be reviewed annually. Up to fifty percent of the fees may be assessed by the park owner pro rata on each rent-controlled mobilehome space. Any such fees shall be assessed on October 1st of each year. No more than fifty percent of the rent stabilization fees may be collected by the park owner from the mobilehome owners. Rent stabilization fees shall not include attorney’s fees or litigation costs incurred by the city in connection with defense of this chapter.

(Ord. 91-37 § 1 (part), 1991).

22.01.200 EXTENSION OF TIME.

(a) Whenever any notice or determination called for by this chapter or rules of procedure adopted pursuant to this chapter is served by mail, the time for compliance set out in this chapter or in the rules shall be extended five working days. Further, when the last day for compliance falls upon a legal holiday, the time for compliance is extended to the next working day.

(b) By written agreement of the parties or upon application to the hearing officer and for good cause shown, the time limits provided for in this chapter and in the rules of procedure adopted pursuant to this chapter may be extended.

(Ord. 91-37 § 1 (part), 1991).

22.01.210 DUTY OF OWNER TO PROVIDE COPY OF CHAPTER.

It shall be the duty of every park owner to provide a copy of this chapter to each mobilehome owner who rents or leases a space from the park owner.

(Ord. 91-37 § 1 (part), 1991).

22.01.220 VIOLATION – PENALTIES.

No person shall demand, accept, receive or retain any space rent or housing service charge in excess of the amounts allowed under this chapter. Any person may file a complaint regarding an alleged violation of this chapter with the city clerk. The city attorney, in his or her discretion is authorized to investigate and prosecute those complaints that in his or her determination merit prosecution and to seek all remedies authorized by this code or general law be they civil, criminal or equitable in nature. Any person found to have demanded, accepted, received or retained any space rent, or housing service charge in excess of the amounts allowed under this chapter is guilty of an infraction.

(Ord. 91-37 § 1 (part), 1991).

22.01.230 SEVERABILITY.

If any section, subsection, sentence, clause, phrase, or portion of this chapter, or the application thereof to any person, firm, corporation, or circumstance, is for any reason held to be invalid or unconstitutional by the decision of a court of competent jurisdiction, such decision shall not affect the validity of the remaining portion thereof. The city council for the city of Santa Cruz hereby declares that it would have adopted this chapter and each section, subsection, sentence, clause, phrase, or portion thereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses, phrases, or portion thereof may in the future be declared invalid or unconstitutional.

(Ord. 92-05 § 3, 1992).