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Page 9 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 />4.3 Inputs Used to Calculate Fair Rate of Return Rent <br />Inputs Descriptions* <br />A1 Annual Fair Rate of Return Rent: The maximum allowable annual rent to provide a <br />fair rate of return for the Verified Substantial Remodel Cost (C) <br />B1 Annual Right to Return Rent: The annual Base Rent plus any increase(s) allowed by <br />TPA had the tenant continuously occupied the rental unit. <br />B3 Baseline Stabilized Rent: The annual rent two years after the tenant returns <br />assuming only minimum TPA allowable rent increases (5%) from the Annual Right to <br />Return Rent <br />Cap Capitalization Rate (see section 4.1(C) for a complete definition) <br />C Ver ified Substantial Remodel Cost per Unit (see section 4.1(G) for a complete <br />definition) <br />F Fair Rate of Return Rent (monthly amount) (see section 4.1(D) for a complete <br />definition) <br />I Minimum Annual Allowable Increase under TPA = 5% <br />P0 Annual Base Rent: Annual rent in effect at the time the tenancy was terminated. <br />Calculated as 12 months x Base Rent. <br />S Stabilization Period (in years) = 2 (this number is fixed) <br />T Actual Annual Allowable Increase under TPA <br />Y the number of complete years between when the tenancy was terminated and the <br />tenant’s return date. <br />* For detailed definitions please refer to Section 4.2. <br />4.4 Calculation of the Fair Rate of Return Rent <br />Step 1: Determine the Annual Right to Return Rent (B₁) <br />The Annual Right to Return Rent reflects the Base Rent plus any increase(s) allowed by TPA had the <br />tenant continuously occupied the rental unit. <br />B₁ = P₀ × (1 + T) ʸ <br />Where: <br />• 𝑌𝑌= full years since last rent increase (rounded down) <br />• Partial years do not count toward an increase <br />Step 2: Determine Baseline Stabilized Rent B₃ <br />Baseline Stabilized Rent assumes the minimum annual TPA rent increase of 5% for two years after <br />the tenant returns to the rental unit. <br />B₃ = B₁ × (1 + I) ˢ <br />Step 3: Calculate Substantial Remodel Cost supported by Baseline Stabilized Rent <br />This calculates the substantial remodel cost that is supported by the Baseline Stabilized Rent. <br />8.A. - Page 58 of 85 <br />316