Item 29 - Second Amendment to Agreement with RSG, Inc.

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workshops can be tailored to specific groups such as non-profits and tenants’ organizations that may assist renters with the Ordinance, and property owners and property managers. RSG will work with the City to provide translation for these workshop/webinars in Spanish and Vietnamese. • Written Notices to Tenants and Landlords/Owners - RSG can work with the City Attorney to prepare and update required notices as identified in the Ordinance. Ongoing Administration RSG is available to administer the City’s Ordinance on an ongoing basis, and continue to respond to public inquiries as needed, including: • CPI Rent Increase Calculations – RSG will prepare and distribute allowable rent increase amounts to affected property owners pursuant to the procedures detailed in the RSO. CPI calculations determine the allowable percentage a property owner/landlord is allowed to increase a tenant’s rent by. The RSO states that this shall be the lesser of 3% per annum or 80% of the change in CPI. • Fair Return Petition Review – If a property owner/landlord believes the annual RSO rent increase does not allow for a sufficient fair return on investment, they may file a petition for a fair return increase that may allow for an adjustment above the 3% or CPI calculation. This process requires reviewing income and expense information and performing a maintenance of net operating income analysis. • Petition Review– RSG will review the Petition to ensure that it is complete and adheres with the RSO requirements, that all claimed expenses are eligible operating expenses, and that property revenues are verified. Petition Review also includes preparing correspondence to the applicant informing them if their Petition has been deemed complete or insufficient. If the Petition is incomplete, RSG will inform the applicant of any deficiencies with sufficient detail and provide them an opportunity to submit additional information. RSG anticipates that the City will be responsible for all mailings. • Net Operating Income (“NOI”) Analysis-RSG will use a Maintenance of Net Operating Income ("MNOI") methodology for determining fair and reasonable rent. The MNOI method is a recognized and accepted practice used in other jurisdictions for evaluating fair return increases under rent stabilization. RSG will calculate a base year NOI for a property prior to adoption of the RSO, using actual historical revenue and expenses for that property, collected through the Petition process. RSG will provide the analysis to the City for review so the City Manager or designee can decide on the allowable rent increase amount. RSG will also evaluate all the other factors that may be considered by the City Manager as part of the rent increase as detailed in the RSO Section 8 -1998.3(c). • Written Evaluation – RSG will prepare a written evaluation of the materials submitted by the applicant and residents. The written evaluation will include a description of the various rent increase factors and the proposed allowable rents under each method. • Capital Improvement Petition – RSG will ensure that all capital improvements meet the definitions detailed in the Ordinance. Determination of allowable capital improvement increases are based on amortization schedules and any relevant factors affecting amortization, such as the quality of the improvement and external factors that affect its longevity. The calculation of the allowable rent increase is based on the total improvement costs plus interest divided by amortization period (number of years) and then divided by 12 to reflect the monthly payment. • Petition Review – RSG will review the Application to ensure that it is complete and adheres EXHIBIT 1