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b.Maintenance and repairs were below accepted standards to cause <br />significant deterioration in the quality of services provided; <br />c.Other expenses were unreasonably high or low in comparison to prudent <br />business practices; <br />d. Costs of debt service paid during the base year, where the proceeds of the <br />debt were used for capital improvements or rehabilitation in the property. <br />2. The gross income during the base year was disproportionate. In such instances, <br />adjustments may be made in calculating gross income consistent with the <br />purposes of this section. The Hearing Officer shall consider the following factors <br />in making this finding: <br />a.The gross income during the base year was lower than it might have been <br />because some Tenants were charged reduced Rent; <br />b. The gross income during the base year was significantly lower than <br />normal because of the destruction of the premises and/or temporary <br />eviction or vacancies for a substantial remodel, construction, or repairs. <br />c. The Rent charged by the Landlord in the base year was significantly below <br />the HUD FMR Rent for the most similar unit type. <br />D.Determination of current net operating income. The net operating income as of the date <br />of filing a Fair Return Petition shall be determined by: <br />1. Calculating gross income; <br />2. Determining the operating expenses during the immediately preceding calendar <br />year; <br />3. Subtracting the operating expenses determined from the annualized gross income. <br />E.Calculation of gross income. <br />1. For the purposes of determining the net operating income, gross income shall be <br />the sum of the following: <br />a.Gross Rent calculated as annualizing the Rent in effect as of the date of filing <br />at 100 percent occupancy, adjusted for uncollected Rent; <br />b. Income from any laundry facilities and parking fees; <br />c.All other income or consideration received or receivable in connection with <br />the use or occupancy of the covered Rental Unit. <br />2.Gross Rent shall be adjusted for uncollected Rent due to vacancy (unless the <br />Landlord has failed to use reasonable efforts to fill the vacancy) and bad debts to <br />the extent such are beyond the control of the Landlord. No such adjustment shall <br />be greater than three percent of gross Rent unless justification for a higher rate is <br />demonstrated by the Landlord. <br />F.Calculation of operating expenses. <br />1. For the purposes of determining net operating income, operating expenses shall <br />include the following: <br />a.Reasonable costs of operation and maintenance. <br />b. Utility costs to the extent they are not paid by the Tenants. <br />c.Landlord-performed labor compensated at reasonable hourly rates. No <br />Landlord-performed labor shall be included as an operating expense unless the <br />Exhibit A <br />Ordinance No. 2026-001 Page 9