Definitions

1  In this regulation:

"home owner" means a tenant of a manufactured home pad;

"pad" means a manufactured home pad;

"park" means a location at which a landlord rents or offers to rent one or more manufactured home pads;

"park owner" means the landlord of a manufactured home park;

"subcommittee" means a subcommittee appointed under section 69 of the Act by the chair of the dispute resolution committee.

 Application

2  (1)  This regulation applies to disputes respecting notices of rent increase for manufactured home pads.

(2)  This regulation does not apply if the tenant rents a manufactured home and the manufactured home pad under a single tenancy agreement.

(3)  A subcommittee or an arbitrator must apply this regulation when determining the justifiable rent increase to be recommended or ordered to resolve a dispute.

 Calculation of justifiable rent increase

3  The justifiable rent increase is determined by calculating

(a) a basic rent increase which takes into account the park's income, operating costs and capital expenditures, and

(b) any adjustments to the basic rent increase on the basis of other relevant factors, if appropriate.

 Minimum and maximum rent increase

4  (1)  The justifiable rent increase for each year for which it is calculated may not be less than zero and may not result in a rent exceeding the new rent indicated on the notice of rent increase.

(2)  The justifiable rent is the lesser of

(a) the base rent plus the justifiable rent increase determined according to the method in this regulation, and

(b) the new rent indicated on the notice of rent increase.

 Park owner to provide information before mediation meeting

5  The park owner must complete the statement of rent increase information form and give a copy to the home owner applicant and to the dispute resolution committee at least 7 days before the mediation meeting.

 Park owner to deliver information form to arbitrator if proceeding to arbitration

6  (1)  If the matter proceeds to arbitration, the park owner must submit a copy of the statement of rent increase information form to the arbitrator at least 7 days before the hearing.

(2)  If there have been any changes to the form delivered under section 5, the park owner must give the amended form to the home owner applicant at least 7 days before the arbitration hearing.

 No award of increase if expenses unproven

7  The subcommittee may recommend or an arbitrator may award a zero percentage adjustment for any part of the basic rent increase for which the park owner has not substantiated the relevant costs or expenditures at the mediation or arbitration.

 Base rent to take into account amounts reduced to offset overpayment or other factor

8  For this Part and for the purposes of issuing a notice of rent increase, the base rent is to include any amount by which the rent payable has been reduced to offset an overpayment or for a rent reduction under section 12 of the Residential Tenancy Act, as well as any remaining portion of a previous rent increase not yet fully phased in, as determined through a previous mediation or arbitration.

 Calculation for other business, activity or asset

9  (1)  Throughout the calculation under this Part, if another business, activity or asset is located in the park, the park owner must make a reasonable estimate of the proportion of operating expenses and capital expenditures attributable to that business, activity or asset, and provide the rationale on which the estimate is based.

(2)  The subcommittee may recommend or an arbitrator must determine whether the park owner's estimate of the proportion applicable to the park is reasonable, and may adjust that amount if necessary.

(3)  The proportion of each expenditure that may be included in the calculation is the proportion that is determined to be applicable to the park.

(4)  If a reasonable estimate cannot be made or the amount involved is relatively minor, and it is reasonable to do so, related revenues may be included in the estimated gross annual income for the purpose of each calculation as appropriate.

 Calculation of basic rent increase

10  (1)  For notices of rent increase given on or after October 1, 1992 and effective on or before December 31, 1998, the basic rent increase and, if applicable, the expense to income ratio adjustment, are calculated according to the method set out in Appendix B.

(2)  For notices of rent increase effective on or after January 1, 1999, the basic rent increase is calculated according to section 11.

 Calculation of basic rent increase on or after January 1, 1999

11  (1)  For this section:

"base rent" means the rent lawfully in effect on the date on which the disputed notice of rent increase was given;

"relevant year" means the most recent fiscal year for the park ending at least six months prior to January 1 of the calendar year in which the notice of rent increase is effective;

"preceding year" means the fiscal year for the park immediately preceding the relevant year.

(2)  If a change in the relevant year used for the park results in capital expenditures or a change in local government levies being counted twice or omitted, the subcommittee or an arbitrator may:

(a) exclude any capital expenditures occurring in the relevant year or changes in local government levies occurring between the relevant and preceding year which were included in the calculation of the basic rent increase for the same pad or pads for a previous year in a mediation or arbitration; or

(b) include any capital expenditures or changes in local government levies which occurred during an intervening period and which were not included in the calculation of the basic rent increase for the same pad or pads for a previous year in a mediation or arbitration.

(3)  The basic rent increase for notices of rent increase effective on or after January 1, 1999 is calculated using the following Steps:

Step 1: Calculate estimated gross annual income

Estimated gross annual income from the park is calculated using the following formula and definition:

In the formula:

"monthly rent" is the sum of

(a) the full rent payable for the last month of the relevant year for each manufactured home pad in the park that is occupied by a home owner who does not receive a discount on the rent, and

(b) the full rent payable for the last month of the relevant year for a similar manufactured home pad, with comparable services, facilities and surroundings in the manufactured home park, for each manufactured home pad in the park that is

(i)  vacant,

(ii)  used in the operation of the manufactured home park, or

(iii)  occupied by a person who receives a discount on the rent, such as the park owner, a relative of the park owner, or an employee or agent of the park owner.

Step 2: Calculate percentage rent adjustment from local government levies

The percentage rent adjustment from local government levies (LGL) is calculated using the following formula and definitions:

In the formula:

"local government levies" or "LGL" means any property, school or other tax, levy or fee applicable to the park and payable to the local government (including municipalities and regional districts), including transit, recycling (blue box), garbage, sewer and water fees.

Step 3: Calculate percentage rent adjustment from capital expenditures

The percentage rent adjustment from capital expenditures is the amount obtained using the following formula and definitions:

In the formula:

"capital expenditure" means a major expenditure made by the park owner in respect of the park during the relevant year that is non-recurring within a reasonable number of years and is

(a) necessary to

(i)  protect or restore the physical integrity of the park,

(ii)  comply with municipal or provincial health, safety or housing standards,

(iii)  maintain water, sewage, electrical, lighting, roadway or other facilities,

(iv)  provide access for persons with disabilities, or

(v)  promote the efficient use of energy or water, or

(b) for renovations or new services or facilities with the written approval of

(i)  the home owner, if the expenditure benefits only the manufactured home pad of that home owner, or

(ii)  at least 2/3 of the home owners in the manufactured home park who will benefit from the expenditure,

and is not an expenditure required because the residential property has not been properly maintained in the past or an expenditure for which the park owner has been or will be compensated by another person;

"capital expenditure adjustment rate" means the relevant percentage in Appendix A for the year corresponding to the effective date of the disputed notice of rent increase.

If a capital expenditure clearly benefits only one pad or some of the pads in the park, and is unrelated to the shared facilities or infrastructure of the park, a separate calculation must be done to separate that expenditure from those benefiting all pads. In those cases, the estimated gross annual income must be replaced with the estimated gross annual income from the benefiting pad or pads in the formula in this Step, and the resulting rent adjustment must be applied to the rent of the benefiting pad or pads only.

Step 4: Determine percentage rent adjustment from rent inflation factor

The percentage rent increase from the rent inflation factor is the percentage provided in Appendix A that corresponds to the effective date of the notice of rent increase.

Step 5: Calculate basic rent increase

The basic rent increase expressed as a percentage is the sum of the percentage rent adjustment from local government levies, the percentage rent adjustment from capital expenditures, and the percentage rent adjustment from the rent inflation factor.

The basic rent increase expressed in dollars is calculated by multiplying the percentage basic rent increase by the base rent.

 Application of Part 4

12  Part 4 applies only to notices of rent increase effective on or after January 1, 1999.

 Home owner may request adjustment for exceptionally high base rent

13  (1)  A home owner may request an adjustment to the basic rent increase to take into account an exceptionally high base rent.

(2)  A home owner requesting an adjustment under subsection (1) must notify the park owner and the dispute resolution committee or arbitrator at least 10 days before the mediation meeting or arbitration hearing, in the form and manner determined by the dispute resolution committee.

 Park owner may request adjustment for exceptionally low base rent

14  (1)  The park owner may request an adjustment to the basic rent increase to take into account an exceptionally low base rent.

(2)  A park owner requesting an adjustment under subsection (1) must notify the home owner and the dispute resolution committee or arbitrator at least 10 days before the mediation meeting or arbitration hearing in the form and manner determined by the dispute resolution committee.

 Adjustment for exceptionally high base rent

15  (1)  If the home owner has requested an adjustment under section 13, and the subcommittee or arbitrator finds that the base rent is exceptionally high based on criteria in subsection (2), the basic rent increase may be reduced by up to $10.

(2)  A base rent is exceptionally high if the subcommittee or arbitrator finds the rent to be exceptionally high considering the location, condition, and amenities of the park, and any other relevant information.

(3)  In order to determine whether the rent is exceptionally high according to the criteria in subsection (2), the subcommittee or arbitrator must consider:

(a) any relevant information presented by the home owner,

(b) any relevant information presented by the park owner, which may include information about the expense to income ratio for the park as set out in section 17.

 Adjustment for exceptionally low base rent

16  (1)  If the park owner has requested an adjustment under section 14, and the subcommittee or arbitrator finds that the base rent is exceptionally low, the basic rent increase may be increased by up to $10.

(2)  A base rent is exceptionally low if the subcommittee or arbitrator finds the rent to be exceptionally low considering the location, condition, amenities, and expense to income ratio for the park and any other relevant information.

(3)  In order to determine whether the rent is exceptionally low, the subcommittee or arbitrator must consider

(a) whether the expense to income ratio reflects a low base rent as set out in section 17 (2), and any other relevant information provided by the park owner, and

(b) any relevant information presented by the home owner.

(4)  An adjustment for an exceptionally low base rent will not be made if the park owner has not provided the expense to income ratio information for the park in the form and manner determined by the dispute resolution committee.

 Expense to income ratio

17  (1)  The expense to income ratio reflects a high base rent if it is significantly lower than 35% or other appropriate number as set out by the dispute resolution committee, depending on other factors, such as the size of the park.

(2)  The expense to income ratio for the park reflects a low base rent if it is significantly higher than 35% or other appropriate number as set out by the dispute resolution committee, depending on other factors, such as the size of the park.

(3)  The expense to income ratio is calculated as follows, using the definition of "total operating expenses" provided in this Part, and the estimated gross annual income calculated according to Step 1 of the calculation of the basic rent increase:

"total operating expenses" means the sum of the payments made by the park owner for all of the following expenses applicable to the operation of the park for the relevant year:

(a) local government levies, as defined in this regulation;

(b) utilities, including heating oil, gas and electricity;

(c) repair and maintenance expenses, including sewer and water expenses if not included in local government levies, and payments to, or on behalf of, a caretaker or superintendent for repair and maintenance work but excluding amounts spent on capital improvements;

(d) property management expenses, including payments to, or on behalf of, a caretaker or superintendent for property management, and the total amount of payments recognized for property management expenses is either

(i)  a deemed payment of 5% of estimated gross annual income if property management work is done by the park owner, or

(ii)  actual property management expenses supported by receipts, up to a maximum of 10% of estimated gross annual income;

(e) legal, accounting, advertising, collection, license and permit fees, insurance premiums other than premiums for mortgage insurance, and other similar business expenses that are necessary for the operation of the park.

 Justifiable rent increase if no further relevant factors

18  If there are no further relevant factors to be considered, the subcommittee must recommend or the arbitrator must order a justifiable rent increase that is equal to the basic rent increase obtained using the formula in Part 3 and any adjustment made under Part 4 or Appendix B.

 Exceptional cases and further adjustment

19  (1)  For exceptional cases, if the subcommittee or arbitrator finds that there are additional relevant factors, the subcommittee or arbitrator may make a further adjustment to the basic rent increase in order to determine a justifiable rent increase that is fair to both parties.

(2)  Additional relevant factors may be raised by the park owner or home owner before or during the mediation meeting or arbitration hearing.

 Excluded factors not considered

20  The subcommittee or arbitrator may not make an adjustment to the basic rent increase on the basis of factors that are excluded by this regulation.

 Additional relevant factors

21  The factors that the subcommittee or an arbitrator may take into account in determining the justifiable rent increase include but are not limited to the factors listed in sections 22 to 27.

 Relevant terms of the tenancy agreement

22  If the tenancy agreement between a park owner and a home owner contains provisions that are relevant to the rent increase in dispute, the subcommittee or arbitrator may make appropriate adjustments to the basic rent increase.

 History of rent increases in the park

23  (1)  If a period of time occurred in which the park owner could have given but did not give a rent increase, the subcommittee or arbitrator may make an adjustment to the basic rent increase under subsection (2) or (3), if fair and appropriate under the circumstances.

(2)  For notices of rent increase effective on or after January 1, 1999, the subcommittee or arbitrator may adjust the basic rent increase to take into account capital expenditures and changes in local government levies occurring in the year preceding the relevant year, if those factors have not been included in a previous rent increase calculation.

(3)  For notices of rent increase given on or after October 1, 1992 and effective on or before December 31, 1998, the method set out in Appendix C must be used if an adjustment is made on the basis of the history of rent increases in the park.

 Relevant arbitrator's orders and previous agreements

24  (1)  The subcommittee or arbitrator may make adjustments to the basic rent increase as appropriate on the basis of an arbitrator's order or a previous agreement between the park owner and home owner relating to a rent increase or rent freeze specified for the year in dispute.

(2)  The subcommittee or arbitrator may make adjustments to the basic rent increase on the basis of relevant terms contained in a previous arbitrator's order or an agreement between the park owner and home owner, including but not limited to the following:

(a) expenditures agreed to be undertaken by the park owner in exchange for a specified rent increase given in advance of the expenditures, if the actual expenditures would otherwise be eligible for inclusion in the calculation of the basic rent increase for the year in dispute;

(b) estimates of expenditures that the park owner had agreed to make in exchange for a negotiated rent increase amount, but which subsequently proved to be significantly higher or lower than estimated.

(3)  If the park owner agreed to make improvements to the park in exchange for a higher rent increase in a previous agreement, but subsequently failed to make some or all of the estimated expenditure, this may result in a reduction to any subsequent rent increase recommended or ordered by the subcommittee or arbitrator.

 Non-monetary contribution

25  (1)  The subcommittee or arbitrator may adjust the basic rent increase to reflect non-monetary contributions made by the park owner or home owner to the operation or improvement of the park, if appropriate.

(2)  If the work done would fall under the definition of capital expenditure as provided in this regulation had the park owner paid another person to complete the work, the subcommittee or arbitrator may attribute a reasonable sum for the park owner's labour or equipment, or both, and include that sum as a capital expenditure in the calculation of the basic rent increase.

 Other similar expenses

26  If the park owner incurs an expense that is similar to but does not fit clearly into one of the categories of expense provided under this regulation, the subcommittee or arbitrator may consider the expense to be in the category most similar to it.

 Subcommittee recommendation

27  If a dispute proceeds to arbitration, the arbitrator may make adjustments to the basic rent increase on the basis of the subcommittee's recommendation.

 Excluded factors

28  (1)  Adjustments to the basic rent increase may not be made on the basis of changes in the park owner's debt servicing costs.

(2)  Adjustments may not be made on the basis of market rent comparisons or the profitability of the park, except as provided for under Part Four and Step Six in Appendix B.

 Written recommendation or decision

29  (1)  The subcommittee's recommendation or arbitrator's written decision must indicate the following:

(a) the basic rent increase;

(b) any further adjustments made to the basic rent increase or basic rent increase formula and the reasons for those adjustments;

(c) the resulting justifiable rent increase;

(d) the effective date of the justifiable rent increase;

(e) the resulting justifiable rent, which is to serve as the base rent for the purpose of the next lawful rent increase;

(f) the rent payable by the home owner, if that amount is different from the justifiable rent.

(2)  The subcommittee's written recommendation must indicate all matters mediated and any recommendation made with respect to each matter.

 Phased-in rent increase

30  (1)  If the justifiable rent increase is large and it is appropriate to do so, the subcommittee may recommend and an arbitrator may order that the justifiable rent increase be phased in over time.

(2)  If a rent increase determined through a previous mediation or arbitration has not been fully phased in on the date on which the disputed notice of rent increase was given, the base rent for that year for the purpose of calculating the basic rent increase must include the remaining portion of the rent increase yet to be phased in.

 Options for repayment of rent overpayments

31  (1)  In order to correct for an overpayment of rent by the home owner, the subcommittee or arbitrator may make a recommendation or order

(a) that the amount of overpayment is to be set off against all or part of the future rent payable by the home owner, or

(b) that the park owner reimburse the home owner for the amount of the overpayment.

(2)  If the parties negotiate their own agreement ending the dispute, they may agree to repayment options different from those provided for under subsection (1).