§ 540-2.1210. Review of capital improvement rent increases.

(a)

Park Owner's Initial Burden of Proof. The burden shall initially be on the park owner to establish that the required information regarding the capital improvement in the park owner's rent increase notice is accurate, including:

(1)

The cost of the capital improvement project;

(2)

The interest rate used by the park owner;

(3)

The amortization period used by the park owner;

(4)

The formula used to calculate the pro rata share of each mobilehome owner;

(5)

The cumulative capital improvement rent increases will not exceed five percent of the then- existing base rent.

(b)

Mobilehome Owner's Burden of Proof to Rebut. Once the park owner establishes that the required information regarding the park owner's capital improvement proposed rent increase is accurate, the burden shall shift to the mobilehome owners' representative to show that the rent increase is unwarranted or excessive based upon any and only on the following four alternative grounds:

(1)

The cost of the capital improvement project was clearly excessive given industry standards.

(2)

The capital improvement was necessitated due to the elimination, reduction or deferment of maintenance below the level existing on or after September 20, 1994, thereby requiring replacement of the pre-existing improvement prior to the expiration of its normal expected life, as adjusted pursuant to this article.

(3)

The interest rate charged is greater than financing reasonably available to the park owner in an arm's length transaction with a private lending institution.

(4)

The improvement was not reasonably related to the operation of the mobilehome park business.

(c)

Remedy If Burden of Proof Met By Mobile-home Owners. The purpose of the provisions in this chapter providing for contesting capital improvement rent increases is to ensure the good faith of park owners, including but not limited to ensuring that park owners do not engage in nepotism, kick backs and/or deferred maintenance, or make improvements which are unnecessary to the operation of the mobilehome park business. If the hearing officer determines that the mobilehome owners have satisfied their burden of proof with respect to all or any part of the cost of a capital improvement expenditure, the hearing officer may reduce the amount of the rent increase by a corresponding amount, but not more, subject to the limitations set forth in this article and chapter. In the event the hearing officer determines that the park owner has engaged in perjury, fraud, nepotism or kickbacks with respect to a capital improvement rent increase, the hearing officer may reduce the amount of the rent increase to the level the hearing officer deems appropriate under the circumstances consistent with providing a fair and reasonable return on investment.

(d)

Limitations On Ground For Contesting Rent Increases. In determining the normal expected life of a capital improvement the hearing officer shall look first to the amortization table in this section or, if not applicable, the ADR system and/or the regulations, guidelines and amortization tables established by the Internal Revenue Service for capital improvements. It is recognized that the normal expected life of a capital improvement is based on averages and that the actual life may fall short of the normal expected life, for reasons other than deferred maintenance. In the event the normal expected life of a capital improvement is less than five years, the "adjusted expected life" of the capital improvement shall be ninety percent of its normal expected life. In the event the normal expected life of a capital improvement is five years or more, the "adjusted expected life" of the capital improvement shall be eighty percent of its normal expected life. Where a petition is filed challenging a capital improvement rent increase, the hearing officer may not reduce the amount of the rent increase by an amount in excess of the difference between the actual life of the capital improvement and its "adjusted expected life." For example, if the mobilehome owners establish that as a result of deferred maintenance a preexisting capital improvement with an expected life of ten years and an "adjusted expected life" of eighty years, in fact only lasted seven years, the hearing officer may reduce the amount of the requested rent increase by ten percent, but no more. In no event may the hearing officer reduce the amount of a capital improvement rent increase based on alleged deferred maintenance where the capital improvement rent increase is necessitated by a catastrophe, act of God, or other uncontrollable circumstance, including earthquakes, landslides, earth movement, fire or flood.

(e)

Schedule of Amortization of Capital Expenditures for Mobilehome Parks.

The following amortization schedule shall be used for the amortization of capital improvements unless the parties present clear and convincing evidence to the contrary.

Item	Asset Life in Years
Air conditioning units	17
Air ducts
Galvanized steel	20
Aluminum	25
Plastic	30
Air duct insulation	15
Appliances	5
Dishwasher	2
Garbage disposal	5
Refrigerator	5
Stove	5
Water heater	5
Boilers	15
Fans and ancillary items
Fans and motors	12
Electric controls	10
Pneumatic controls	12
Heating and cooling coils	12
Humidifiers and air washers	10
Land improvements, such as sidewalks, roads, canals, waterways, drainage facilities, sewers, bridges, fences, landscaping, shrubbery	20
Laundry equipment	10
Lights	10
Painting
Exterior	5
Interior	5
Paving
Reslurry	4
Resurfacing	8
Pipe
Galvanized	12
Copper	25
Pipe valves and special items	12
Plastering	10
Plumbing
Fixtures	10
Pipes	10
Pumps
Pool	5
Sump	10
Recreation equipment	10
Refrigeration machines
Reciprocating	15
Rotary	20
Roofing	15
Sauna	25
Security entry telephone intercom	10
Stokers and burners	12
Stucco	15
Swimming pools	25
Tennis courts	25
Therapy pools	25
Water cooling towers	15
Water evaporative condensers	20
Windows
Awnings	5
Drapes	5
Screens	5
Shades	5

 

(Ord. 95-31, § 2).

Article 540-2.14 Rights and Obligations