RAC 240 - Just & Reasonable Rent Increase

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Rent Adjustment Commission (RAC) Guidelines 240 presumes that the net operating income received up to May 1978 provided landlords with a Just and Reasonable (J&R) return on their rental units, unless there is clear and convincing evidence to the contrary. In most cases the automatic increases allowed by the Ordinance and the property tax savings resulting from Proposition 13 provide sufficient additional operating income to landlords to maintain at least the same net operating income they experienced in 1977 adjusted by an inflation factor. However in some cases landlords may have incurred reasonable operating expenses which exceed the rent increases allowed by the Ordinance and the tax savings resulting from Proposition 13. Therefore, landlords who have had such reasonable increased operating expenses shall be able to  maintain the same level of net operating income as they experienced in 1977, plus a Price Level Adjustment as determined by the RAC from time to time by filing a J&R application requesting a permanent rent increase.