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Ordinance 1987-08 ORDINANCE NO, 87-8 AN ORDINANCE OF THE CITY OF GILROY ENACTING THE MOBILE HOME SPACE RENT STABILIZATION ORDINANCE THE CITY COUNCIL OF THE CITY OF GILROY DOES ORDAIN AS FOLLOWS: SECTION I: That attached hereto and incorporated herein by reference as Exhibit "A" is a ~{OBILE HOME SPACE RENT STABILIZATION ORDINANCE, consisting of 8 pages, comprising sections 1,0 to 9.2 inclusive, which is hereby adopted to apply in the City of Gilroy. SECTION II: All other ordinances and parts of ordinances in conflict herewith are hereby repealed. SECTION III: This ordinance shall take effect and be in full force thirty (30) days from and after its adoption and approval. PASSED AND ADOPTED this 4th day of May the following vote: AYES: COUNCILMEMBERS: NOES: ABSENT: COUNCILMEMBERS: COUNCILMEMBERS: 1987, by ALBERT, GAGE, MUSSALLEM, PALMERLEE, VALDEZ and HUGHAN KLOECKER NONE /~APPROVED ATTEST- ORDINANCE NO. 87-8 Exhibit "A" ORDINANCE NO. 87- 8 MOBILE HOME SPACE RENT STABILIZATION ORDINANCE SECTION 1o0 FINDIMSS AND DECLARATION OF INTENT There is presently within the City of Gilroy an extreme shortage of developed spaces for the placement of mobilehomes, and because of this shortage the vacancy rate for such spaces is nearly zero, if not nonexistent among most parks. With the widespread shortage of available spaces, rental increases within the last several years have been rapidly rising within a select number of parks. After studying the City's mobilehome rental situation thoroughly, and then considering whether and what type of mobilehome rent stabilization ordinance is needed in the City of Gilroy, this City Council finds and declares it necessary, in the public interest, to facilitate and encourage fair bargaining between mobilehome tenants and park owners in order to achieve a mutually satisfactory agreement regarding space rental rates in mobilehome parks. The intent of the City Council in enacting this Rent Stabilization Ordinance is to curb excessive and unreasonable rent increases on mobilehome park tenants, to prevent an exploitation of the current widespread shortage of available mobilehome spaces within the City of Gilroy, to permit mobilehome park owners to receive a fair and reasonable return, and to establish a process for rental increase disputes between park owners and tenants. SECTION 2.0 DEFINITIONS AFFECTED TENANTS; means all tenants in a mobilehome park who have been notified that a space rent increase is to become effective within the following twelve (12) months. ARBITRATOR; means a person who is neither a tenant (as defined within this Ordinance) nor who has an interest in a mobilehome park of a nature that would require disqualification under the provisions of the Political Reform Act if the person were an elected state official; and a person whom the Rent Review Officer determines meets one of the following criteria: Completion of a Juris Doctor or equivalent degree from a school of law and completion of a formal course of training in arbitration which, in the sole judgement of the Rent Review Officer, provides that person with the knowledge and skills to conduct a space rent dispute arbitration in a professional and successful manner; or Completion of at least three rent increase arbitration proceedings, or other public related arbitration that involved issues the Rent Review Officer considers Similar to those raised in rent dispute arbitrations. Rent Stabilization Ord. - 2 - 5/05/87 BASE I~NT; means the rent charged for a mobilehome space on the effective date of this Ordinance; or rent charged for a space immediately following the transfer of ownership, vacancy due to eviction, vacancy due to a move- off, or subsequent transfers of ownership; or the initial rent charged for a newly created space within an existing mobilehome park. CAPITAL IMPROVFJ~JqTS; mean those improvements which materially add to the value of the property, appreciably prolong its useful life, or adapt it to new uses and which are required to be amortized over the useful life of the improvements of the building pursuant to the straightline depreciation provisions of the Internal Revenue Code, and the regulations issued pursuant thereto. CONSI~ffiR PRICE IN~EX; means the Consumer Price Index for all urban consumers for the San Francisco-Oakland Area, as published by the U.S. Department of Labor, Bureau of Labor Statistics. LANDLORD; means the mobilehome park owner. LEASE; means a written agreement between a landlord and a mobilehome tenant for the use and occupancy of a rental space to the exclusion of others, and consistent with the provisions under Section 3.3. I~OBILEMOI~E; means a structure transportable in one or more sections, designed and equipped to contain not more than one dwelling unit, and to be used with or without a foundation system. MOBIL~tOME PARK; means any parcel (or two or more contiguous parcels) within the City of Gilroy where ten (10) or more mobilehome spaces are rented or leased for the purpose to accommodate mobilehomes used for human habitation. MOBIL~tO}fl~ SPACE and/or LOT; means a portion of a mobilehome park designed or used for the occupancy of one mobilehome. OPERATII~ EXPENSES; means those operating expenses paid by the owner as described in Section 8.1 "A" of this Ordinance. PARK OWNER and/or Owner; means the mobilehome park owner(s). RENTAL i~REE~NT; means a lease, which is consistent with the provisions as stated under Section 3.3 of this Ordinance. RENT INCREASE; means any additional amount demanded of or paid by a tenant in excess of the rent paid for the mobilehome space immediately prior to such demand or payment. RENT REVIEW OFFICER; means the person or persons designated by the City Administrator to administer and enforce the provisions of this Ordinance. SPACE RENT; means any consideration required for the use and occupancy of a mobilehome space in a park including all amenities, services, and benefits. Rent Stabilization Ord. - 3 - 5/05/87 SUBSTANTIAL R~ABILITATION; means that work done by an owner to a mobilehome space or to the common area of the mobilehome park, exclusive of a capital improvement (as defined within this Ordinance) the value of which exceeds two hundred dollars ($200) and which is performed either to secure compliance with any state or local law or to repair damage resulting from fire, earthquake, or other casualty or natural disaster, to the extent such work is not reimbursed by insurance or security deposit proceeds. TENANT; means a tenant, subtenant, lessee, sublessee, or any other person entitled to the use or occupancy of any mobilehome space under a rental agreement, lease, or other expression of tenancy. SECTION 3.0 EXEMPTIONS 3.1 The provisions of this Ordinance shall not apply to rent or rent increases for new mobilehome parks created after the effective date of this Ordinance or new individual lots created (above the current number of total spaces within an existing park as of the effective date of this Ordinance) for a period of twelve (12) months. 3.2 The provisions of this Ordinance shall not apply to rent or rent increases for new and/or relocated mobilehomes placed on vacated lots for a period of twelve (12) months following the first day the lot is re-occupied. 3.3 The provisions of this Ordinance shall not apply to any mobilehome lot which is under a lease, voluntarily entered into between a landlord and a mobilehome tenant where the lease meets all of the following criteria: Ao The lease was entered into on or after the effective date of this Ordinance; B. The term of the lease is in excess of a thirty-six (36) month duration; C. The mobilehome lot which is under the lease is used for the personal and actual resident of the mobilehome tenant; and D. The first paragraph of the lease contains a provision notifying the mobilehome tenant that the mobilehome lot will be exempt from the provisions of this Ordinance; and E. This exclusion shall apply only for the duration of the term of the lease and any uninterrupted, continuous extensions thereof. If the term of the lease is not extended and no new rental agreement meeting the above stated criteria is entered into, this Ordinance shall immediately become applicable to the mobilehome lot and the last rental rate charged for the lot under the immediately preceding rental agreement shall be the rent for the purposes of determining the base rent under this Ordinance. Rent Stabilization Ord. - 4 - 5/05/87 3.4 The provisions of this Ordinance shall not apply to mobilehome lots, for a period of twelve (12) months, immediately following: The transfer of ownership after the effective date of this Ordinance; For any subsequent transfers occurring after the effective date of this Ordinance; and A vacancy occurring because the prior mobilehome tenant was evicted for nonpayment of rent, issuance by the tenant of checks drawn against insufficient funds or closed accounts, chronically late payment of rent, the tenant's commission of waste upon the mobilehome and/or lot, the tenant's total disregard for maintenance, the tenant's commission or permitting of a nuisance on the premises, the tenant's use of the premises for an unlawful purpose, or other material violation of a reasonable provision of a written rental agreement. SECTION 4.0 MOBILEHOME SPACE RENT INCREASE LIMITATIONS 4.1 Any rent increase (within any twelve (12) month period) which does not exceed five percent (5%) of the base rent or eighty percent (80%) of the change in the Consumer Price Index, ~ichever is less, shall not be subject to arbitration. 4.2 Any rent increase (within any twelve (12) month period) which exceeds the maximum permitted under Section 4.1 may be subject to a formal arbitration hearing under the provisions of this Ordinance. 4.3 No rent increase increment which is in excess of the amounts specified in Section 4.1 and subject to a formal review hearing, may become effective or be collected by the landlord until such time that the increase increment is approved under a formal review hearing by an Arbitrator appointed by the City's Rent Review Officer. SECTION 5.0 RENT INCREASE REQUIREMENTS 5.1 Except as otherwise provided within this Ordinance, the rent of any mobilehome space shall not be increased more than once in any twelve (12) month period. 5.2 Ail rent increase notices shall be given to the tenants on the same day each calendar year and subsequent years, although proposed increases may take effect on different dates. The purpose of this requirement is to avoid the possibility of multiple disputes over rent increases for the same park within a given year. 5.3 A list of all mobilehome tenants, with their respective space number denoted, receiving notice of rent increase shall be available to any tenant upon request. Rent Stabilization Ord. - 5 - 5/05/87 5.4 Whenever a landlord serves notice to a mobilehome tenant of a proposed rent increase which exceeds the amounts specified in Section 4.1, said notice shall include the following information: A. The name of the mobilehome tenant occupying the rental space which is subject to the proposed increase; B. The mobilehome space number and/or letter; C. A statement that the tenant has the right and may file a petition request for a formal rent review hearing with the City's Rent Review Officer. It shall also be stated that the petition must consist of signatures from not less than fifty-one percent (51%) of the total mobilehome park space registry (from those spaces where tenants are not under a rental agreement and/or lease as governed under Section 3.3 of this Ordinance); D. A copy of Section 4.0, entitled "Mobilehome Space Rent Increase Limitations", shall be attached for reference; Eo The Gilroy City Hall street address and telephone number of the City's Rent Review Officer; and Fo A statement of the proposed rent increase expressed both as an actual dollar amount and as a percentage of the then current base rent. 5.5 Whenever a landlord serves notice to a mobilehome tenant of a proposed rent increase which exceeds the amounts specified in Section 4.1, a copy of said notice shall also be sent to the City's Rent Review Officer. SECTION 6°0 PETITION BY TENANTS 6.1 A petition requesting an arbitration hearing shall include the signatures from not less than fifty-one percent (51%) of the total mobilehome park space registry (from those spaces where tenants are not under a rental agreement and/or lease as governed under Section 3.3 of this Ordinance); and shall be submitted to the City within thirty (30) days from the date the notice of rental increase was received by the Rent Review Officer (as required under the provisions of Section 5.5 of this Ordinance). Said petition shall include all the following information: A. The printed names of all affected mobilehome tenants with their respective space number denoted; B. The original petition signatures, with date of signature, from all affected tenants involved; C. The total number of mobilehome rental spaces within the park; and D. The name, address & space number, and telephone number for the tenants' representative and/or contact person. Tenants may designate an outside representative. Rent Stabilization Ord. - 6 - 5/05/87 6.2 Receipt of the petition 6.3 A. Upon receipt of a completed written petition by tenants, as specified under Section 6.1, the Rent Review Officer shall within ten (10) working days assign an arbitrator. The Rent Review Officer shall set a date for the arbitration hearing no sooner than ten (10) days nor later than thirty (30) days after the arbitrator has been assigned. Bo The park owner and all affected tenants shall be notified immediately in writing by the Rent Review Officer of the date, time, and place of the hearing. C. The notice of hearing shall be sent to all parties via first class mail. In the event a petition fails to meet all the submittal requirements listed in Section 6.1, the Rent Review Officer shall respond in writing with a statement of the listed deficiencies. The party filing the petition shall have fifteen (15) days to correct and refile the appeal. If the applicant(s) fail to meet the time limitation the petition shall be deemed to have been abandoned. SECTION 7.0 ARBITRATION HEARING 7.1 The purpose of the hearing shall be to allow the two parties the opportunity to present their differences concerning the proposed rent increase and settle them in a final manner. 7.2 Both the park owner and the affected tenants may appear at the arbitration hearing and offer oral and/or documentary evidence. the park owner and the affected tenants may designate a representative to appear for them at the hearing. Both 7.3 The Arbitrator, as designated by the City's Rent Review Officer, shall use the standards of review outlined under Section 8.0 of this Ordinance for the hearing proceedings. 7.4 The burden of proving the reasonableness of the proposed rent increase shall be on the landlord. The burden of proving service reductions shall be on the mobilehome tenants alleging that service reductions have occurred. 7.5 The Arbitrator shall within fourteen (14) days of the hearing, submit a written statement of decision and reasons for the decision to the City's Rent Review Officer. Copies of the Arbitrator's decision shall be distributed by mail to the owner and all tenants. 7.6 If the Arbitrator's determination is that the proposed space rent increase is not reasonable under the circumstances, then that portion of the proposed space rent increase which exceeds the amount allowed under Section 4.1 shall be suspended. The determination shall be final and that portion of the increase greater than the amount stated under Section 4.1 shall not be collected from the tenants by the park owner or his representative. Rent Stabilization Ord. - 7 - 5/05/87 7.7 If the Arbitrator's determination is that all or a portion of the proposed rent increase is reasonable under the circumstances, then the Arbitrator shall grant all or such portion of the rent increase to be effective as of the time such increase would have been otherwise effective without the intervention of this Ordinance. 7.8 The decision of the Arbitrator is final and binding upon the owner and all affected tenants. 7.9 Any party disputing the final decision and findings of the Arbitrator may seek review of the Arbitrator's actions pursuant to Sections 1094.5 and 1094.6 of the California Code of Civil Procedures. SgCTION 8.0 STANDARDS OF REVIEW 8.1 In evaluating any proposed space rent increase, which exceeds the maximum permitted under Section 4.1 of this Ordinance, the following factors should be considered by the arbitrator: Unavoidable increases in maintenance and/or operating expenses, including but not limited to the reasonable value of: 1. the owner's and/or landlord's labor; 2. any caretaker's labor; 3. increased costs for services provided by a public agency or public utility; and 4. quasi-public agency and/or utility; The physical condition of the mobilehome park and the amenities provided for each individual space, including the quantity and quality of maintenance and repairs performed during the preceding twelve (12) months; C. Substantial rehabilitation work that has been completed; Capital improvements that have been completed, as long as such work is: 1. distinguished from ordinary repair and maintenance; 2. for the primary benefit, use, and enjoyment of the tenants; 3. permanently fixed in place or relatively immobile and appropriate to the use of the property; 4. cost factored and amortized over the good faith estimate of the remaining useful life of the improvement; and 5. not coin-operated nor one for which a "use fee" or other charge is imposed on the tenants for its use; Eo Increases or decreases in property taxes; and F. Other financial information which the park owner is willing to provide. Rent Stabilization Ord. - 8 - 5/05/87 SgCTION 9.0 ARBITRATION FEE 9.1 An initial cash deposit, set by resolution of the City Council, shall be paid by the petition representatives. In addition, upon notice to the mobilehome park owner of an impending hearing, the owner shall deposit like amount. The balance of hearing costs shall be paid equally between the petition tenants and the park owner within thirty (30) days from the final hearing. Any balance remaining will be refunded equally between the petition tenants and the park owner. Fees are due and payable on the date of petition submittal. Any park owner who receives a notice and payment statement from the City's Rent Review Officer (as required under Section 6.2 "B") shall pay the required fee within thirty (30) days or prior to the first arbitration hearing date, whichever comes first. A park owner who fails or refuses to pay the required arbitration fee under these time constraints shall be considered to have withdrawn the rental increase demand (only by the incremental amount which is in excess of the amount specified in Section 4.1 "A"). I, SUSANNE~E. STEINMETZ, City Clerk of the City of Gilroy, do hereby certify that the attached Ordinance No. 87-8 is an original ordinance, duly adopted by the Council of the City of Gilroy at a regular meeting of said Council held on the 4th day of May , 19 87 , at which meeting a quorum was present. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Official Seal of the City of Gilroy this 7th day of May, 19 87. City Clerk of the City of Gilroy (Seal) I, SUSANNE E. STEINMETZ, City Clerk of the City of Gilroy, do hereby certify that the attached Ordinance No. 87-8 is an original ordinance, duly adopted by the Council of the City of Gilroy at a regular meeting of said Council held on the 4th day of May , 19 87 , at which meeting a quorum was present. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Official Seal of the City of Gilroy this 19 87. (Seal) 7th day of May,