15.04.120 Standards of review.

(A) The arbitrator shall determine whether space rent increases proposed or imposed by the park owner are reasonable based upon the circumstances and all the provisions of this chapter. The arbitrator shall take into consideration that the purpose of this chapter is to permit park owners a just and reasonable return, while protecting residents from unnecessary or unreasonable rent increases.

(B) The arbitrator shall not allow more than one rent increase per mobilehome space per twelve-month period, unless a park owner can clearly establish that the rent increase is necessary to cover costs of operation, maintenance, capital improvements or substantial rehabilitation not reasonably foreseeable at the time notice of the preceding rent increase was given.

(1) It shall be presumed that the base year NOI adjusted by seventy-five percent of the increase or decrease in the CPI since the base year yields a fair return. Park owners shall be entitled to maintain and increase their NOI in accordance with this section. The arbitrator shall make a determination of whether the park owner's NOI yields a fair return under this standard.

(2) The formula for calculating the fair NOI return shall be as follows:

Fair NOI =

base year NOI × (1 +.75 % change CPI)

(3) Except as provided in this section, it shall be presumed that the NOI produced by the park during the base year provided a fair return.

(4) Calendar year 2010 shall be established as the base year for purposes of determining whether a park owner's NOI provides a fair return. If a satisfactory base year is, in the arbitrator's opinion, not otherwise available, such as where a park owner did not own the subject property in the base year and/or the 2010 operating expenses are not available, the arbitrator may take evidence of historical factors to construct a base year.

(5) The base year CPI shall be the CPI level in June 2010.

(6) The percentage change in the CPI shall be calculated by using the CPI as of the month prior to the noticed increase.

(7) The comparison NOI year shall be the most recent calendar or fiscal year, unless another period is found by the arbitrator to be more appropriate.

(D) New Capital Improvements. A park owner may seek a rent increase based on the cost of a completed new capital improvement (as defined in Section 15.04.020), together with a reasonable return upon the capital improvement investment, only if the park owner has:

(1) Obtained the written consent of fifty-one percent of the spaces in the park (one vote per space); and

(2) Established by written verification or other competent evidence to the satisfaction of the arbitrator that the costs of the new capital improvement are factually correct as claimed; and

(3) Cost factored and amortized the costs of the capital improvement over the good faith estimate of the remaining life of the improvement, but in no event for a period of less than sixty months; and

(4) Allocated the increase among affected residents on a per space basis and separately itemized such increase on the rent bill. Such increases shall not be considered included in the base rent for purposes of the annual permissible rent increases pursuant to Section 15.04.070(A).

(E) Mitigating Factors. In evaluating a space rent increase, the arbitrator should also consider the following factors in addition to any other factors the arbitrator deems relevant in order to determine whether there are any circumstances that may justify a reduction in a proposed rent increase:

(1) In the event the park owner reduces or eliminates any housing services, a proportionate share of the cost savings due to such reduction or elimination shall be passed on in the form of a decrease in existing rent or a decrease in the amount of a rent increase otherwise proposed or permitted by this chapter.

(2) The physical condition of the mobilehome space or park of which it is a part, including the quantity and quality of maintenance and repairs performed during the preceding twelve months or since the last rent increase. In order to justify the denial or reduction of a rent increase, the arbitrator must find that there are substantial maintenance problems or code violations in the mobilehome space and/or park, and that the owner has had adequate previous notice of these problems and a reasonable opportunity to correct them. If a reduction in the proposed rent increase is justified pursuant to this section, the arbitrator shall make a reasonable effort to quantify the approximate cost of the repairs or maintenance work needed or the amount of the rent increase that would be appropriate after the completion of the repairs or maintenance work, in order to ensure that there is some proportionality between the reduction in the proposed rent increase and the condition of the premises.

(F) Notwithstanding any other provision to the contrary, no provision of this chapter shall be applied to prohibit the granting of a rent increase that is demonstrated to be necessary to provide a park owner with a fair and reasonable return.