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5 <br /> <br />Option 1: <br />Landlord <br />Determines <br />Increase <br />Return with a new rental rate that would be <br />determined by the landlord. <br />• Simplest process <br />• Rent increase may make it <br />unaffordable for tenants to <br />return <br /> <br />Option 2: <br />Tenant Protection <br />Act (TPA) Increase <br />Return with rent prior to the substantial <br />remodel plus any increase(s) allowed by the <br />TPA, had the tenant continuously occupied <br />the unit <br />• Simpler process <br />• Provides landlord with <br />reasonable rent increase <br />• Provides tenants with a rent <br />that is consistent with rent <br />if there was no temporary <br />displacement <br /> <br /> <br />In research conducted by staff and the Ad Hoc, there were also several rental rate options that were <br />considered but are not recommended, outlined in table 3 below: <br />Table 3 - Other options considered but not recommended <br />Option Considered Summary Why it’s not recommended <br />Construction Cost <br />Index (CCI) Increase <br />The CCI is a regional index that <br />determines the percentage change in <br />the average cost of construction from <br />month to month. The percentage <br />change in the CCI between the start <br />and completion of the substantial <br />remodel would be used to determine <br />the rent increase amount. <br />• This index is too volatile to <br />consider using <br />Flat Rate Increase <br />option <br /> <br />This option would allow tenants to <br />return with a rental agreement that <br />would have allowed the landlord to <br />increase the rental rate by a set <br />amount. <br />• Potentially conflicts with State law <br />• Potentially restricts a landlord’s <br />right to earn a fair return on their <br />investment <br />Fair Rate of Return <br />Petition option <br /> <br />Under this option, landlords would <br />be able to submit a petition to <br />increase rent to a level where they <br />are maintaining a fair rate of return. <br />• Would require a hearing officer or <br />a rent board (which the City does <br />not have) <br />• Would require an analysis of the <br />property’s operating expenses and <br />revenues <br />• Complex, costly, and time and <br />resource intensive to implement <br />Capital <br />Improvement <br />Petition option <br /> <br />Under this option, landlords would <br />be able to submit a petition to <br />increase rents based on the actual <br />costs of the substantial remodel <br />• Would require a hearing officer or <br />rent board (which the City does <br />not have) <br />• Complex, costly, and time and <br />resource intensive to implement <br />No Rent Increase <br />option <br />Tenants would be able to return with <br />a rental agreement with the rent that <br />• Potentially conflicts with state and <br />case law <br />9.A. - Page 67 of 84 <br />172