Vega Adjustment addresses situations where the base year NOI was unusually low, typically because the rent charged for 1 or more units was unreasonably low. Vega refers to a court case which required such adjustments when using the MNOI methodology for fair rate of return. The RHC adopted a Vega Adjustment methodology which allows the landlord, as part of a petition for a fair rate of return, to identify units that were rented for less than the HUD Fair Market Rents (FMR) for Santa Clara County. The Vega Adjustment assumes that the rent charged for such units would be the higher HUD FMR rent, rather than the lower rent actually charged, thereby raising the gross income for the base year, which then affects the MNOI for the base year and allows an additional increase in rent for the year for which the landlord is petitioning. The increase in rent allowed would then be spread across all the units in the apartment complex that were subject to the Vega petition.
Vacancy Decontrol refers to the situation that occurs when a tenant voluntarily vacates a unit; the landlord can then charge whatever the market rent is at that time.
Rollback date is a CSFRA term referring to the date (Oct. 19, 2015) taken to calculate the Base Rent for current tenancies whose establishment predates the rollback date. It is called a “rollback” date because the CSFRA required upon its effective date that rents could not be higher than the Base Rent.
The Rental Housing Committee per CSFRA shall consist of 5 Mountain View residents appointed by the City Council; no more than 2 members can own or manage rental property, or be realtors or developers.
NOI is net operating income. It is calculated by subtracting operating expenses from gross income.
The concept of Maintenance of Net Operating Income (MNOI) is the concept that the landlord was presumably receiving a fair rate of return in 2015, for example, and that the landlord should be able to maintain this NOI in the following years if they are to have a fair rate of return. This is a key part of rent-stabilization law.
Just Cause for eviction means the Landlord has a good reason for terminating a tenancy, generally either failure to pay rent, or breach of the lease by the tenant. Reasons are stated in California Code of Civil Procedure and detailed in Dept. of Fair Employment and Housing definition. Tenants in all rental units (unless exempted as described above) with an initial certificate of occupancy before the Effective Date of CSFRA, 12/23/16, are subject to Just Cause protection. The Tenant Protection Act passed in 2019 has modified California law.
Fair Rate of Return is a key term in rent-stabilization law as landlords may petition for an upward adjustment to the rent, above the Annual General Adjustment (AGA), if they can show that the AGA does not give them a fair rate of return. CSFRA excludes many factors that can be considered in determining a fair rate of return, but the decision of how to calculate a fair rate of return was left to the Rental Housing Committee (RHC). Fair rate of return per the RHC uses the maintenance of net operating income (MNOI) methodology. This method identifies the net operating income (NOI) in the Base Year (i.e., 2015 gross income from the property, less 2015 operating expenses.) The second step adjusts the NOI based upon the CPI-Rent of Primary Residence.