Agda Pkt 2026.05.11 Joint SA PFA

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Page 3 of 9 City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.org 1. Receiving required notices for no-fault terminations 2. Processing tenant relocation assistance applications 3. Reporting and analytics will track data on no-fault terminations, relocation assistance applications processed, and relocation assistance approval and denials This software will simplify and standardize processes for tenants and landlords and will provide additional benefits such as application status tracking and multiple methods of notification. Software implementation has started and it is expected to go live by summer 2026. Fair Rate of Return Appeal Guidelines The TPO requires that landlords terminating a tenancy for a substantial remodel must offer the displaced tenant the right to return to the rental unit upon completion of the substantial remodel. The offer to re- rent the rental unit must be at: 1. The rent that was in effect when the tenancy was terminated plus any increase(s) allowed by State law had the tenant continuously occupied the rental unit (“Right to Return Rent”); and 2. With a lease that contains the same terms as the lease that was in effect at the time the tenancy was terminated, except for any changes required by law. Landlords required to offer tenants a right to return upon completing a substantial remodel may file an appeal with the City requesting a higher rent increase if the Right to Return Rent would cause the landlord to be unable to obtain a fair rate of return. The TPO includes information about landlord’s right to appeal and associated timelines, but lacks specifics on how to apply, required documentation, and the methodology used for determining a fair rate of return. To assist in processing Fair Rate of Return (FRR) appeals in an objective and transparent manner, staff has developed the Fair Rate of Return Appeal Guidelines (Attachment E). Fair Rate of Return Appeal Process Under the proposed FRR appeal process, the rent a landlord could charge under the City’s right to return requirements (i.e., the Right to Return Rent) is compared with the rent needed to justify the cost of the substantial remodel (i.e. the Fair Rate of Return Rent). If the Fair Rate of Return Rent is higher than the Right to Return Rent, the landlord making the appeal can increase the rent. The proposed FRR methodology first calculates a projected future rent, referred to as the Baseline Stabilized Rent. It then uses a market capitalization rate1 to determine how much remodel cost the Right to Return Rent can support. Lastly, it tests whether the Right to Return Rent is sufficient to support the actual costs of the substantial remodel. If the Right to Return Rent is insufficient, the process then calculates what would be a “Fair Rate of Return Rent” using the actual substantial remodel costs. This approach recognizes and addresses those outlier cases where the rent increases allowed by State law may not be sufficient to recoup investment, such as older or historic properties that had below-market rents and unusually high rehabilitation need. 1 Capitalization rate (cap rate) - a standard metric used to measure estimated rates of return for income-producing properties. 8.A. - Page 3 of 85 261