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Ordinance Number 545ORDINANCE NO. 545 f Q-4 Mi " 143 AN ORDINANCE OF THE CITY OF SAN JUAN CAPISTRANO, CALIFORNIA, ADDING TO AND AMENDING CERTAIN PROVISIONS OF SECTION 2-2.905 OF THE MUNICIPAL CODE RELATING TO MOBILE HOME PARK RENT REGULATIONS THE CITY COUNCIL OF THE CITY OF SAN JUAN CAPISTRANO, CALIFORNIA, DOES HEREBY ORDAIN AS FOLLOWS: SECTION 1. Ordinance Amendments. 1. Municipal Code Section 2-2.905(a) is hereby amended to read as follows: "(a) Petition and Hearing Procedure. Upon the filing with the Secretary of a written petition concerning a proposed or actual increase in rent filed by an owner or by residents who reside in and represent more than 50% of the inhabited spaces within a park, excluding management, a hearing thereon shall be conducted by a Hearing Officer within 60 calendar days, or as soon thereafter as is reasonably practicable, after the filing of the petition. "The hearing shall be conducted only in the event that the petition is filed with the Secretary within 30 calendar days following the effective date of the rent increase that is the subject of the petition. "The Hearing Officer shall be chosen and a hearing conducted in accordance with the Hearing Officer procedure established by City Council." 2. Municipal Code Section 2-2.905(b) is hereby amended to read as follows: "(b) Purpose of the Hearing. At the hearing on such petition, the Hearing Officer shall conduct an investigation to determine if the rent increase in question exceeds the maximum allowable increase as defined in Section 2-2.902(d) of this Article. If the Hearing mc RM Officer concludes that the rent increase exceeds the maximum allowable increase, the Hearing Officer shall then continue the hearing by receiving all relevant evidence for the purpose of rendering findings and conclusions as to the propriety of the rent increase in accordance with the criteria set forth in Subsection (g) of this Section. "The Hearing Officer may require either party to a hearing on the petition to provide it with any books, records and papers deemed pertinent in addition to that information previously set forth by the parties." 3. Municipal Code Section 2-2.905(g) is hereby amended to read as follows: "(g) Criteria to be Utilized in Rent Increase Reviews. "1. Purpose of Review. The Hearing Officer, The Review Committee, and the City Council shall review the rent increase to determine whether the increase is, ox is not, fair and reasonable. This review shall be conducted by applying the nonexclusive criteria in Subparagraph 2 below to the facts submitted to the Hearing Officer. "2. Nonexclusive Criteria. The Hearing Officer, the Committee, and the City Council shall consider all relevant factors, including, but not limited to, increased or decreased costs to the mobile home park owner attributable to utility rates, property taxes, insurance, advertising, governmental assessments, cost -of -living increases attributable to incidental services, normal repair and maintenance, capital improvements except those defined in Paragraph (h), and the upgrading and addition of amenities for services except as defined in Paragraph (h), and fair rate of return on property. "3. Fair Rate of Return on Propert Criteria. The City Council finds and declares that the following principles shall be applied in utilizing the fair rate of return on property standard as a criterion in the review process: -2- 1 'yam) All provisions ofMunicipalCode Sections 2-2.901 through 2-2.905 shall be applied with the overall purpose of eliminating the imposition of excessive rents while at the same time providing park owners with a just and reasonable return on property. The reasonableness of rent increases is not to be determined solely by the application of a fixed or mechanical accounting formula such as 'return on investment' or 'return on market value' of the property; in particular, recent court decisions have discouraged the use of a 'return on market value' test. Fair rate of return on property is but one of a number of nonexclusive factors to be taken into account in reviewing the fairness of rent increases; it is to be given weight, but not to dominate other relevant criteria in arriving at a final determination. "(iv) The Hearing Officer, the Review Committee, and the City Council shall impartially consider all relevant evidence in relation to the application of the nonexclusive criteria. The extent to which the criteria are considered in the review process, that is, the amount of weight given to any one of the several criteria, ultimately falls within the wisdom and best judgment of these three bodies. "(v) In conducting the entire process, guidance should be taken from leading California case law decisions dealing with rent control issues and in particular, rent control in mobile home parks. These cases include: Birkenfeld v. City of Berkeley, (1976), 17 C.3rd 165; Gregory v. City of San Juan Capistrano (1983), 142 C.A.3rd 8; -3- 146 Cotati Alliance For Better Housing v. Cotati, (1983), 143 C.A.3rd 296; Palisades Shores v. City of Los Angeles (1983) 143 C.A.3rd 369; Oceanside Mobile Home Park Owners Association v. City of Oceanside (1984), 157 C.A.3rd 887; Carson Mobile Home Park Owners Association V. City of Carson (1983), 35 C.3rd 184." 4. Municipal Code Section 2-2.905(h) is hereby added to read as follows: "(h) Rent Increases and Capital Improvement Upgrade Costs. "1. Capital IF Upgrades. Only those capital improvement costs incurred to upgrade, through additions, alterations or replacements, park facilities, assets, or amenities shall not be recouped from residents through rent increases, or any other special assessment, unless the following procedure is first followed: "(i) The park owner shall first inform by first class mail all park residents of the exact nature, approximate cost, billing method and billing duration of the proposed capital improvement upgrade by written notice; "(ii) After allowing the residents a reasonable period of time (of not less than 30 days) to consider whether the capital improvement cost is one that residents believe is necessary and desirable, the park owner shall then obtain formal written consent on a form approved by the City from a simple majority of the total number of residents in the park. Simple majority shall be calculated on the basis of one vote per coach space; "(iii) The costs of the capital improvement upgrade shall be prorated and billed in a method mutually acceptable to the park owner and the residents. -4- 14'7 "'To upgrade' shall mean to raise -to a substantially higher quality, or to substantially improve the existing level of service. Examples of capital improvement upgrades include, but are not limited to, swimming pools, spas, tennis courts, club houses, club house additions, fencing, children's play equipment, and other similar improvements. "2. Exception for Governmentally Mandated Costs. Capital improvement upgrade costs incurred because of the application of current day building codes such as, but not limited to, City building codes, health and safety codes, State, Federal and fire codes shall be exempted from the resident consent provision set forth in Subsection h(1). The park owner shall obtain a written statement from the Building Official verifying that the subject capital improvement upgrade arose from the more stringent current day building code requirements before this exception may be utilized by the park owner." 5. Municipal Code Section 2-2.905(i) is hereby added to read as follows: "(i) Leasehold Agreement Exemptions. Notwithstanding any provision in Article 9 to the contrary, leasehold agreements (that is, leases other than tenancies at will, or month-to-month) entered into between mobile home park owners and their residents shall be exempted from the operation of the petition and hearing review process." 6. Municipal Code Section 2-2.905(j) is hereby added to read as follows: "(j) Forms. The City Manager is authorized and directed to develop and require the completion of forms by interested parties at the time a petition is received by the Secretary. Until said forms are completed to the satisfaction of the City Manager, or his designated representative, the petition and hearing process shall proceed no further." SECTION 2. Effective Date. This Ordinance shall take effect and be in force thirty (30) days after its passage. -5- 149 SECTION 3. City Clerk's Certification The City Clerk shall certify to the adoption of this Ordinance and cause the same to be posted at the duly designated posting places within the City and published once within fifteen (15) days after passage and adoption as required by law; or, in the alternative, the City Clerk may cause to be published a summary of this Ordinance and a certified copy of the text of this Ordinance shall be posted in the Office of the City Clerk five (5) days prior to the date of adoption of this Ordinance; and, within fifteen (15) days after adoption, the City Clerk shall cause to be published, the aforementioned summary and shall post a certified copy of this Ordinance, together with the vote for and against the same, in the Office of the City Clerk. PASSED, APPROVED AND ADOPTED this 18th day of June 1985 , PHILLI R. SCHW RTZE, MAYOR ATTEST: iTY CLERK// �. ..��' STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss. CITY OF SAN JUAN CAPISTRANO ) I, MARY ANN HANOVER, City Clerk of the City of San Juan Capistrano, California, DO HEREBY CERTIFY that the foregoing is a true and correct copy of Ordinance No. 545 , which was introduced at a meeting of the City Council of the City of San Juan Capistrano, California, held on May 21 , 1985 , and adopted at a meeting held on June , 1985 , by the following vote: AYES: Councilmen Friess, Bland, Buchheim, Hausdor£er and Mayor Schwartze NOES: None ABSENT: None (SEAL) MARY AN VER, CITY CLERK