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paid a base rent of $825-but no property tax pass through as a line item--regardless of what the prior resident was paying.) The amount of the base rent is important because under the agreement, the base rent is adjusted each year by a Cost of Living. The Cost of Living is the change in the consumer price index for the San Francisco-Oakland-San Jose Metropolitan Area for the twelve month period ending in August of each year. The consumer price index (often referred to as the CPI) represents all goods and services purchased for consumption, arranged into eight major groups: food and beverages, housing, apparel, transportation, medical care, recreation, education and communication and other goods and services. The Cost of Living has varied between just over one percent to slightly less than five percent; most recently (August 2007) it was 2.6%. Also under the agreements, if a park owner constructs new capital improvements or rehabilitates or replaces any existing capital improvements that no longer have a useful life, the owner can recover (pass through) the costs to the residents, if such improvements exceed certain threshold amounts ($10,000 for the larger parks, $2000 for Fairview). For new capital improvements, however, a majority of the residents (who cast votes) must approve the construction of such improvements in order for the owner to recover the costs. The two larger parks have a number of amenities: a clubhouse, swimming pool, laundry room, greenbelts, landscaping, etc. Maintenance of these amenities were addressed in the agreement by incorporating certain maintenance standards. Issues in the Negotiations Over the last 18 months or so, staff has met with residents of the parks and with the park owners in an effort to discuss terms and conditions of a new agreement. At Vineyard Villa, the focus of the discussion centered on eliminating the property tax pass through (for those residents who had this as a line item for their monthly rents) and on increasing the threshold amount that a park owner would need to spend before the cost could be passed on to the residents. As to this latter item, the residents were concerned that because the park is nearly 30 years old, infrastructure and facilities- streets, utility lines, the clubhouse-were aging and would soon need to be repaired or rehabilitated, the costs of which would then fall on the residents. The residents also wanted the park to remain a senior park. The Hacienda residents had similar concerns but their overarching issue was that the Park had not been maintained properly and that sidewalks were in a state of disrepair that made their use hazardous, landscaping was dead or dying and street lights were not operating. Those residents voiced their concern to City Council on at least two occasions. If no new agreement were reached, the City's Rent Stabilization Ordinance would apply to the parks. Although the Ordinance would keep in place many of the protections of the agreement, under court decisions, park owners could seek to increase rents for all Page 3 of 7