AN ACT Relating to mobile home renters and owners; and adding a new chapter to Title 59 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. This chapter establishes a procedure for reaching a fair compromise between residents and park or court owners on rental increases. The purpose of this act is to increase the security of the homeowner and stability of park ownership. By providing reasonable procedural guidelines and widely used economic reference criteria, the intent is to seek economic justice in such a way that independent objective judgment would appraise the procedure as fair, reasonable, and in the public interest.

NEW SECTION. Sec. 2. (1) The mobile home park owner is entitled to a fair rate of return on the owner's investment equity. This rate shall be calculated on a discounted cash flow basis for a fifteen-year period from the date of ownership using accounting procedures conventionally used to evaluate return on investment for industrial ventures.

(2) A fair and reasonable rate of return for this class of commercial risk shall be not more than two percent above the prime rate average of the previous five years.

(3) (a) If government-mandated capital improvements are installed, such as sewer hookup and street lighting, the owner may pass such costs through on the same annualized basis as is used in tax assessment practice. The owner is obligated, however, to disclose to residents the cost details in writing of such improvements in the derivation of a monthly rate increase. If fifty-one percent of the residents accept this justification statement and do not file for a hearing, the rental increase shall be valid.

(b) A significant increase in taxes on a park exceeding the regional price index inflation rate may also be passed through by the procedure outlined in subsection (3)(a) of this section.

(4) Annual rent increases, calculated as twelve times the monthly rent increase divided by the current annual rent, shall not exceed seventy-five percent of the inflation rate, which is defined by the percentage change in the regional price index for the previous six months. Rent increases that do not exceed this amount shall not be subject to challenge by residents. "Regional price index" as used in this act means the consumer price index as published by the United States department of commerce, for the Seattle region.

(5) A rent increase percentage which exceeds seventy-five percent of the regional price index may be challenged as follows:

(a) Fifty-one percent of the householders in the park must join in a petition requesting a rent increase justification. The petition must be served on the park owner and filed with the office of mobile home affairs within thirty days following notice of the proposed rent increase.

(b) Within twenty days after receiving the petition the park owner must respond with a detailed written statement which includes all increases in costs over which the park owner has no control and any other justification for the rent increase. The response shall be served on the petitioner and filed with the office of mobile home affairs.

(c) If the park owner fails to respond within the time provided, the petitioner shall be entitled to an order from the hearing panel convened under (e) of this subsection that the rent increase is not justified. Unless the order is later vacated by the panel or a court of competent jurisdiction, the proposed rent increase may not be enforced in any court through wrongful detainer action or otherwise.

(d) If, after the hearing panel has entered an order that a rent increase is not justified as a result of the failure of a park owner to respond to a petition within the twenty days provided, relief from the order may be obtained by filing a motion with the panel following notice that such failure to respond was due to:

(i) Mistake, inadvertence or excusable neglect;

(ii) Improper notice;

(iii) Unavoidable casualty or misfortune preventing the party from responding; or

(iv) Any other reason justifying relief from the order as determined by the panel.

The park owner must also file with the motion such justification for the rent increase as required in the first instance.

(e) Within twenty days after receipt of a justification response from a park owner or the granting of relief from a default order as described in (d) of this subsection, the petitioner must file a request for a hearing before a panel of five persons established for this purpose by the office of mobile home affairs. No panel member may own any legal or equitable interest in a mobile home park nor serve any mobile home tenant or park owners' association in a representative capacity. If a hearing is not timely requested, the rent increase shall be valid and effective according to its terms if otherwise valid according to law.

(f) Any hearing requested under this section shall be held within thirty days of the petitioner's request at a place designated by the office of mobile home affairs.

(g) Following the hearing the panel shall conclude that the rental increase is either justified or not justified based on evidence presented and according to criteria in subsections (1) and (2) of this section. The panel shall promptly advise the owner and petitioner of their decision. The proposed rent increase may not be enforced during the pendency of the decision. The panel shall state the vote recorded by each panel member. Formal opinions, including any dissent, may be recorded but are not required.

(h) Aggrieved parties may appeal the decision of the hearing panel to the superior court in the county where the mobile home park is located within thirty days of the date of the panel's decision. Such appeals shall be in the form of a petition for review as set forth in RCW 34.05.510 through 34.05.598. The prevailing party on the appeal shall be entitled to all costs including reasonable attorneys' fees.

NEW SECTION. Sec. 3. Members of the hearing panels convened by the office of mobile home affairs under section 2(5)(e) of this act shall be compensated in accordance with RCW 43.03.240 and shall be reimbursed for their travel expenses incurred in the performance of their duties in accordance with RCW 43.03.050 and 43.03.060.

NEW SECTION. Sec. 4. Sections 1 through 3 of this act constitute a new chapter in Title 59 RCW.