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(a) It is the intent of this chapter to allow landlords in housing emergency areas to implement only those rent increases sufficient to enable them to recover increased costs for items reasonably and actually related to the operation of their properties and to permit them a reasonable profit on their investment. However, it is not the intent of this chapter to inhibit nor discourage the construction and the availability of financing of new housing accommodations.
(b) A rent increase will be approved by the commissioner if it does not exceed increased costs for the property or would not result in a profit on investment which is higher than that required to attract capital to the rental market in the housing emergency area. In determining what profit on investment would attract capital to the rental market in a particular emergency area, a board may consider evidence of normal return on investment, normal return on equity, or normal cash flow needs or any other relevant evidence. The burden of proof to establish, by a preponderance of the evidence, the profit on investment which would attract capital to that rental market is on the party alleging the appropriateness of a particular level of profit.
(c) In this section, "increased costs" means
(1) increases in taxes assessed;
(2) municipal property assessments imposed since the last rent increase;
(3) increase in utility costs;
(4) increases in maintenance and repair costs;
(5) the cost of capital improvements on residential housing accommodations amortized over the useful life of the improvement;
(6) the cost of fixtures and furnishings for residential housing accommodations amortized over the useful life of the item;
(7) increases in premiums for insurance on the property involved;
(8) increases in credit losses occurring since the last rent increase;
(9) increases in personnel or other management costs; and
(10) any other necessary expenses related to the continued operation and possession of rented or leased properties.
(d) In considering the items set out in (b) and (c)(1) through (c)(10) of this section, allowable increases include but are not limited to the tenant's pro rata share of that proposed increase. In this subsection, "pro rata share" means the portion of the increase which bears the same ratio to the total increase as the complaining tenant's rent bears to the total rents set for all units sharing the increase.
(e) The recommended decision of the board either to approve or disapprove a requested increase shall be set out in writing with the board's findings of facts and its conclusions regarding the issues presented.
History: Eff. 5/6/75, Register 54; am 11/15/75, Register 56
Authority: AS 34.06.030
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Last modified 7/05/2006