5.44.090 Application for rent adjustment—valuation—Relevant factors.
In evaluating the application the council may consider, along with all other factors it considers relevant, changes in costs to the owner attributable to increases or decreases in master land and/or facilities lease rent, utility rates, property taxes, insurance, advertising, variable mortgage interest rates, employee costs, normal repair and maintenance, and other considerations, including but not limited to, rehabilitation work, capital improvements, upgrading and addition of amenities or services, net operating income, and the level of rent necessary to permit a just and reasonable return on the owner’s property.
A. In applying the foregoing factors, the hearing officer shall utilize the maintenance of net operating income (MNOI) formula. Under the MNOI allowable gross rents are calculated as follows: all operating expenses for the twelve-month period ending December 31, 1981 are subtracted from all operating expenses for the twelve-month period immediately preceding the date of the application for which expense data is available. In the event operating expenses are not available for the period ending December 31, 1981, then expenses for a twelve-month period reasonably close to December 31, 1981 may be substituted. The difference shall be added to gross annual rent based on rental rates in effect on March 15, 1982. The sum shall be the allowable gross annual space rent. The allowable gross space rent shall be fairly apportioned between all spaces in the park. The space rent determined under the MNOI formula shall be adjusted as follows:
1. There shall be an adjustment to allow for inflation calculated as follows: the net operating income (NOI) for the base period shall be calculated by subtracting the park’s operating expenses for the twelve-month period ending December 31, 1982, from the park’s annual gross space rent based on the space rent in effect on March 15, 1982. The CPI index for the month most recently available prior to filing the application shall be divided by the CPI index for March, 1982. The resulting quotient shall be multiplied by the base period NOI. This shall be the adjusted NOI. The operating expenses for the twelve-month period immediately preceding the date of the application for which information is available shall be added to the adjusted NOI. The sum shall be the inflation-adjusted gross space rent. The allowable space rent shall be the greater of the space rent calculated using the MNOI formula and the space rent adjusted for inflation.
2. In calculating MNOI there shall be an adjustment to the gross space rent in effect on March 15, 1982, if the hearing officer determines that the gross space rent in effect on that date did not allow the owner to receive a just and reasonable return on his or her property.
3. If the hearing officer concludes that the MNOI formula, and the adjustments thereto, does not provide a just and reasonable return to the owner, then the hearing officer may apply any reasonable formula, including a return on investment, a return on fair market value, or return on equity, to determine a space rent which will allow the owner to receive a fair and reasonable return on his or her property.
B. The hearing officer shall not consider income arising from spaces leased in the park pursuant to Section 5.44.030(E) of this chapter. Likewise, the hearing officer shall not consider a pro rata portion of the expenses of park operation attributable to the leased spaces. (Ord. 1117 (part), 1988)