(A) Establishment of base rent. Beginning on the effective date of this chapter, no landlord shall charge rent for any stabilized rental unit in an amount greater than the rent in effect for that unit on March 2, 2022 except for increases expressly allowed under this chapter. The rent in effect on that date is the base rent. If there was no rent in effect on March 2, 2022 the base rent shall be the rent that was charged on the first date that rent was charged following March 2, 2022. For tenancies commencing after the adoption of this chapter, the base rent is the initial rental rate in effect on the date the tenancy commences. As used in this division, the term "initial rental rate" means only the amount of rent actually paid by the tenant for the initial term of the tenancy. The base rent is the reference point from which the maximum allowable rent shall be adjusted upward or downward in accordance with § 5.55.080(C).
(B) Posting. As soon as the landlord is aware of the annual general adjustment the landlord shall post it in a prominent place in or about the affected stabilized rental units.
(C) Annual general adjustment. No later than June 30 each year, the Town Manager shall announce the percentage by which rent for eligible rental units will be adjusted, effective September 1 of that year.
(1) The annual general adjustment shall be equal to 75% of the percentage increase in the consumer price index (all urban consumers, San Francisco-Oakland-Hayward region, or any successor designation of that index that may later be adopted by the U.S. Bureau of Labor Statistics) as reported and published by the U.S. Department of Labor, Bureau of Labor Statistics, for the 12-month period ending as of March of the current year.
(2) Division (C)(1) notwithstanding, in no event shall the annual general adjustment be less than 0% not greater than 5%.
(3) For the period between the effective date of this chapter and the first annual general adjustment announced September 1, 2023, the landlord may submit a request to the Town Manager for an increase to the maximum allowable rent. Guidelines for approving or denying such request shall be promulgated by the Town Council.
(D) Petitions. Upon receipt of a petition by a landlord and/or a tenant, the maximum allowable rent of individual stabilized rental units may be adjusted upward or downward in accordance with the procedures set forth elsewhere in this section. The petition shall be on the form provided by the Town Manager and shall include a declaration by the landlord that the rental unit meets all requirements of this chapter. Notwithstanding any other provision of this section, the hearing examiner may refuse to hold a hearing and/or grant a rent adjustment if an individual hearing has been held and decision made with regard to the maximum allowable rent within the previous 12 months.
(E) Hearing procedure. The Town Council shall enact rules and regulations governing hearings and appeals of individual adjustment of maximum allowable rents which shall include the following:
(1) Hearing examiner. A hearing examiner appointed by the Town Manager shall conduct a hearing to act upon the petition for individual adjustment of lawful rent and shall have the power to administer oaths and affirmations.
(2) Notice. The Town Manager shall notify the landlord, if the petition was filed by the tenant, or the tenant, if the petition was filed by the landlord, of the receipt of such a petition and provide a copy thereof.
(3) Time of hearing. The hearing officer shall notify all parties as to the time, date and place of the hearing.
(4) Records. The hearing examiner may require either party to a rent adjustment hearing to provide it with any books, records and papers deemed pertinent in addition to that information contained in registration statements. The hearing examiner may conduct a current building inspection and/or request the city to conduct a current building inspection if the hearing examiner finds good cause to believe the Board's current information does not reflect the current condition of the stabilized rental unit. The tenant may request the hearing examiner to order such an inspection on or prior to the date of the hearing. All documents required under this section shall be made available to the parties involved prior to the hearing at town offices. In cases where information filed in a petition for maximum allowable rent adjustment or in additional submissions filed at the request of the hearing examiner is inadequate or false, no action shall be taken on said petition until the deficiency is remedied.
(5) Open hearings. All maximum allowable rent adjustment hearings shall be open to the public.
(6) Right of assistance. All parties to a hearing may have assistance in presenting evidence and developing their position from attorneys, legal workers, tenant organization representatives or any other persons designated by said parties.
(7) Hearing record. The Town Manager shall make available for inspection and copying by any person, an official record which shall constitute the exclusive record for decision on the issues at the hearing. The record of the hearing, or any part of one, shall be obtainable for the cost of copying. The record of the hearing shall include: all exhibits, papers and documents required to be filed or accepted into evidence during the proceedings; a list of participants present; a summary of all testimony accepted in the proceedings; a statement of all materials officially noticed; all recommended decisions; orders and/or rulings; all final decisions, orders and/or rulings, and the reasons for each final decision, order and/or ruling. All hearings shall be recorded. Any party may receive a copy of the audio that was made. Reasonable costs may be charged.
(8) Proof required and notice of decision. No individual adjustment shall be granted unless supported by the preponderance of the evidence submitted at the hearing. All parties to a hearing shall be sent a notice of the decision and a copy of the findings of fact and law upon which said decision is based. At the same time, parties to the proceeding shall be notified of their right to an appeal to the Town Council and/or to judicial review of the decision on appeal pursuant to this section and § 5.55.100.
(9) Consolidation. All landlord petitions pertaining to tenants of the same property shall be consolidated for hearing, and all petitions filed by tenants occupying the same property shall be consolidated for hearing unless there is a showing of good cause not to consolidate such petitions.
(10) Time for decision. Decisions decreasing rents shall remain in effect until the Town Manager finds that The landlord has corrected the defect warranting the decrease. Upon a determination of compliance, the landlord shall be entitled to reinstatement of the prior rent level, retroactive to the date that the landlord corrected the defect which warranted the decrease. This shall be in compliance with Cal. Civil Procedure § 1942.4. If the landlord is found to be in violation of Cal. Civil Procedure § 1942.4 then no rent shall be charged for the period during which the landlord was in violation.
(11) Appeal. Any person aggrieved by the decision of the hearing examiner may appeal to the Town Council acting as the Appeals Board. On appeal, the Town Council may affirm, reverse or modify the decision of the hearing examiner.
(12) Finality of decision. The decision of the hearing examiner shall be the final decision in the event of no appeal to the Town Council. The decision of the hearing examiner shall not be stayed pending appeal; however, in the event that the Town Council on appeal, reverses or modifies the decision of the hearing examiner, the landlord, in the case of an upward adjustment in rent, or the tenant, in the case of a downward adjustment of rent, shall be ordered to make retroactive payments to restore the parties to the position they would have occupied had the hearing examiner's decision been the same as that of the Town Council.
(F) Individual adjustment rent increase. In making individual adjustments of the annual adjustable rent increase, the hearing examiner shall consider the purposes of this chapter and the requirements of law, including state law. In making an individual downward adjustment, the hearing examiner may consider decreases in housing services; substantial deterioration of the stabilized rental unit other than as a result of ordinary wear and tear; or failure on the part of the landlord to provide adequate housing services or to comply substantially with applicable housing, health and safety codes.
(G) No direct charge for utilities. A landlord may not charge a tenant for utility charges indirectly. In order to be paid by a tenant, the utility service must be separately or individually metered and the utility account must be registered to the tenant and not the landlord.
(H) Landlords' right of reasonable return. In making individual adjustments of the maximum allowable rent, the hearing examiner shall consider the purposes of this chapter and shall specifically consider all relevant factors, including (but not limited to):
(1) Increases or decreases in property taxes;
(2) Unavoidable increases or any decreases in maintenance and operating expenses;
(3) The cost of planned or completed capital improvements to the rental unit (as distinguished from ordinary repair, replacement and maintenance) where such capital improvements are necessary to bring the property into compliance or maintain compliance with applicable local code requirements affecting health and safety, and where such capital improvement costs are properly amortized over the life of the improvement;
(4) Increases or decreases in the number of tenants occupying the rental unit, living space, furniture, furnishings, equipment, or other housing services provided, or occupancy rules;
(5) Substantial deterioration of the rental unit other than as a result of normal wear and tear;
(6) Failure on the part of the landlord to provide adequate housing services, or to comply substantially with applicable state rental housing laws, local housing, health and safety codes, or the rental agreement; and
(7) The pattern of recent rent increases or decreases.
(I) No upward adjustment of an individual maximum allowable rent shall be authorized under this section if the landlord:
(1) Has continued to fail to comply with any provisions of this chapter and/or orders or regulations properly issued thereunder; or
(2) Has failed to bring the rental unit into compliance with the implied warranty of habitability.
(J) Allowable rent increases pursuant to an individual upward adjustment of the rent ceiling shall become effective only after the landlord gives the tenant at least a 30-day written notice of such rent increase and the notice period expires. If the hearing examiner makes a downward individual adjustment of the rent ceiling, such rent decrease shall take effect no sooner than 30 days after the effective date set for the downward adjustment.
(K) No provision of this chapter shall be applied so as to prohibit the hearing examiner from granting an individual rent adjustment that is demonstrated by the landlord to be necessary to provide the landlord with a fair return on investment. Limits on the total increase per month and length of monthly increase may be promulgated by the Town Council through regulations.
(Ord. 871, passed 11-2-2022; Ord. 882, passed 9-6-2023)