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E. Effect of Condemnation. The Park Owners may make leases <br />subject to termination upon condemnation or sale in lieu of <br />condemnation. <br /> <br /> F. Statement Itemizing Rent Increase. In the notification <br />of rent increase required by Civil Code Section 798.30, the Owner <br />shall also include a statement itemizing the increased costs <br />permitted by Paragraphs VII and VIII, if applicable. Changes in <br />Operating Costs may be cumulated to the categories shown in <br />Paragraphs VIII (A) (1) through (9). <br /> <br />VI. ALTERNATIVE FORMULAS FOR RENT INCREASES <br /> <br />Formula A. Cost of Living Formula - If Formula A is selected, <br />the annual rental adjustment shall be equal or less than: <br /> <br /> 1. 100% of the increase in Cost of Living multiplied <br /> times the previous year's rent level; plus <br /> 2. Capital improvement costs as provided in Paragraph <br /> VII. <br /> <br />Formula B. Cost of Living Adjusted for Operating Cost. <br /> <br /> If Formula B is selected, the annual rental adjustment shall <br />be equal or less then: <br /> 1. 100% of the increase in Cost of Living (COL) <br /> multiplied times the previous year's rent level; plus <br /> 2. Capital improvement costs as provided in Paragraph <br /> VII; plus or minus <br /> 3. An operating cost adjustment as follows: <br /> i. If average monthly operating expenses for the <br /> prior 12 month period increased at a rate greater than <br /> the percentage increase in the Cost of Living, then that <br /> dollar difference .may be added to the annual rental <br /> adjustment. <br /> ii. If average monthly operating expenses for the <br /> prior 12 month period changed at a percentage rate less <br /> than the percentage increase in the Cost of Living, the <br /> difference shall be subtracted from the annual rental <br /> adjustment. <br /> <br /> (Examples in Exhibit "D") <br /> <br />VII. CALCULATION OF CAPITAL IMPROVEMENT COSTS <br /> <br /> A. Information Statement to Home Owners. If the notice <br />informing Home Owners of the increase in space rents includes any <br />allocation for Capital Improvement Costs, then that notice shall <br />also include an itemization of what capital improvements were <br />made and at what cost. <br /> <br />B. Amortization of Capital Costs. A Park Owner may, at his <br />option, amortize capital improvement costs over a multi-year <br />period, up to five years in length. In that event, the Park <br />Owner may include reasonable financing costs not to exceed the <br />Prime Rate plus two percent (2%) for that calendar year for the <br /> <br /> - 6 - <br /> <br /> <br />