Laserfiche WebLink
Page 7 of 12 <br />5/5/2026 <br />ATTY/DOCS-ORDINANCE-REGULATIONS/05-05-26 FAIR RATE OF RETURN APPEAL GUIDELINES AND APPEAL FORM <br />REV: 05-05-26 LF <br />Chapter 4: Standard for Approving a Fair Rate of Return Rent <br />4.1 Definitions <br />A. “Base Rent” - The monthly rent in effect at the time the tenancy was terminated. <br /> <br />B. “Baseline Stabilized Rent” - The projected annual rent after the Stabilization Period <br />assuming the minimum allowable TPA rent increase (5% per year). <br /> <br />C. “Capitalization (Cap) Rate” - A standard metric used to measure estimated rates of return <br />for income-producing properties. The Capitalization Rate for Fair Rate of Return Appeals will <br />be the average prevailing market cap rate from Coldwell Banker Richard Ellis (CBRE) for the <br />San Francisco Metropolitan Area over the two years prior to the filing of the Fair Rate of Return <br />Appeal. If the CBRE Cap Rate is unavailable or the City determines that the CBRE Cap Rate <br />is not reflective of market conditions, the City may use an alternative Cap Rate. <br /> <br />D. “Fair Rate of Return Rent” – The higher of the Right to Return Rent or the rent needed to <br />provide a fair return on the Verified Substantial Remodel Cost, based on the calculations <br />provided in these guidelines. <br /> <br />E. “Proposed Rent” - The rent requested by the landlord. <br /> <br />F. “Right to Return Rent”- The Base Rent plus any increase(s) allowed by the Tenant Protection <br />Act of 2019 (Civil Code Section 1947.12), had the tenant continuously occupied the rental <br />unit. <br /> <br />G. “Stabilization Period” – Two years following the completion of the substantial remodel. <br /> <br />H. “Supported Cost” – The substantial remodel costs that could be supported by the Baseline <br />Stabilized Rent using the Cap Rate. <br /> <br />I. “TPA” – Refers to the California Tenant Protection Act of 2019 (Civil Code Section 1947.12), <br />also known as AB 1482 <br /> <br />J. “Verified Substantial Remodel Cost (VSRC)” - Substantial remodel costs plus any <br />relocation assistance costs provided to the tenant under the City’s Tenant Protection <br />Ordinance. <br /> <br />1. Substantial remodel costs must be verified through receipts and proof of payment as <br />well as evidence the substantial remodel was completed through a final building <br />permit. If the work did not require a building permit (e.g., hazardous material <br />8.A. - Page 56 of 85 <br />314