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(A) A landlord may petition for a rent increase in excess of that provided in § 11-1.04 in order to obtain a fair and reasonable return on the landlord's property ("fair return petition").
(1) Such fair return petition shall be on an application form prescribed by the City Attorney or designee and shall be decided by a Hearing Officer subject to § 1-6.01 designated by the City Attorney.
(2) The landlord shall provide a copy of any fair return petition submitted to the city to the applicable tenant(s) and shall provide the city with proof of completing such service to the applicable tenant(s). The tenant(s) shall have 30 days from the date of receiving the fair return petition to reply or provide additional materials to the city in response to the fair return petition.
(3) The landlord shall bear the burden of establishing that a rate increase in excess of that provided in § 11-1.04 is necessary to provide the landlord with a fair and reasonable return on the property, including by providing an independent financial report and verified financial data demonstrating that without such an increase, the landlord will not realize a fair and reasonable return on the property.
(4) The landlord shall be responsible for all costs associated with the city's review of the fair return petition. Upon receipt of a fair return petition, the Hearing Officer shall determine the anticipated costs of review and if the employment of expert(s) will be necessary or appropriate for a proper analysis of the landlord's request. If the Hearing Officer so determines, the Hearing Officer shall also determine the anticipated costs of employing such expert(s). The resulting figure shall be communicated to the landlord, and the fair return petition shall not be processed until the landlord has paid to the city the estimated cost of the complete analysis. The city will provide the landlord with an invoice of all costs incurred after the review of the fair return petition. Any unused portion of the advance payment for analysis shall be refunded to the landlord. If additional funds are required, payment will be required before the landlord receives the determination on the fair return petition from the city.
(B) The factors the Hearing Officer may consider in deciding a fair return petition include, but are not limited to, the following:
(1) Changes in the Consumer Price Index for All Urban Consumers in the San Francisco-Oakland-Hayward Area published by the Bureau of Labor Statistics arising after commencement of the tenancy.
(2) The length of time since the last determination by a Hearing Officer on a rent increase application, or the last rent increase if no previous rent increase application has been made, after commencement of the tenancy.
(3) The completion of any capital improvements to the residential real property specified in the fair return petition, and the cost thereof, including materials, labor, construction interest, permit fees, and other items the Hearing Officer deems appropriate, arising after commencement of the tenancy and averaged on a per-unit basis and amortized over a period of not less than 60 months.
(4) Documented rehabilitation work averaged on a per-unit basis and amortized over a period of not less than 36 months.
(5) Changes in property taxes or other taxes related to the subject residential real property arising after commencement of the tenancy.
(6) Changes in the utility charges for the subject residential real property by the landlord, and the extent, if any, of reimbursement from the tenants arising after commencement of the tenancy.
(7) Changes in reasonable operating and maintenance expenses arising after commencement of the tenancy.
(8) The need for repairs caused by circumstances other than ordinary wear and tear arising after commencement of the tenancy.
(9) The amount and quality of services provided by the landlord to the affected tenant(s) arising after commencement of the tenancy.
(C) A fair return petition shall be decided by the Hearing Officer within 90 calendar days of the date that the application has been deemed complete, including submission of proof of service of the fair return petition on the applicable tenant(s), unless the landlord has failed to pay all applicable costs associated with the city's review of the fair return petition or an extension of this time has been agreed upon by the parties. The decision shall be sent by mail and shall be emailed with proof of mailing to the subject landlord, the landlord's designated representative(s) for the fair return petition, the applicable tenant(s), and the designated representative of the tenant(s), if any. The decision of the Hearing Officer shall be the final decision.
(Ord. 2219-C-S, passed 10-11-22)