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Ordinance No. NS - ____ Page 5 of 12 Section 8-1998.2 – Reasonable Rate of Return. This ordinance allows for an annual adjustment of residential real property or mobilehome space rent of up to three percent (3%), or eighty (80%) of the change in the Consumer Price Index, whichever is less. A Consumer Price Index-based increase is found and determined to provide a just and reasonable return on a n owner’s property, and has been adopted to encourage good management, reward efficiency, and discourage the flight of capital, as well as to be commensurate with returns on comparable investments, but not so high as to defeat the purpose of curtailing excessive rents and rental increases. Notwithstanding the foregoing, however, any owner of residential real property or a mobilehome park who contends that the limit on rental increases set forth in Section 8-1998.1 above will prevent the owner from receiving a fair and reasonable return on their property may petition for relief from the cap set forth in section 8-1998.1 pursuant to the procedures set forth in section 8- 1998.3. Section 8-1998.3 – Fair Return Petition for Rent Increase. (a) An owner of residential real property or a mobilehome park owner may petition for a rent increase in excess of that provided in section 8-1998.1 in order to obtain a fair and reasonable return on their property (“Fair Return Petition”). Such Fair Return Petition shall be on an application form prescribed by the City Manager and shall be decided by the City Manager, or their designee (“City Manager”). Owner shall provide a copy of any Fair Return Petition submitted to the City to the applicable tenant(s), and provide City with proof of completing such service to the applicable tenant(s). The tenant(s) will then have thirty (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. The applicant shall bear the burden of e stablishing that a rate increase in excess of that provided in section 8-1998.1 is necessary to provide the applicant with a fair and reasonable return on their property, including by providing an independent financial report and verified financial data de monstrating that without such an increase, they will not realize a fair and reasonable return on their property. (b) Applicant 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 City Manager 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 applicant’s request. If the City Manager so determines, the City Manager shall also determine the anticipated costs of employing such expert(s). The resulting figure shall be communicated to the applicant, and the Fair Return Petition shall not be processed until the applicant has paid to the City the estimated cost of the complete analysis. City will provide applicant 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 applicant. If additional funds are required, payment will be required before applicant receives the determination on the Fair Return Petition from the City. City Council 7 –5 10/19/2021