San Jose Mun. Code Chapter 17.23 § 17.23.810
Fair return standard (San Jose Apartment Rent Ordinance and Tenant Protection Ordinance)
Operative Text
A. Fair Return Standard. A fair return is the Base Year Net Operating Income adjusted by the percentage increase in the Consumer Price Index since the Base Year. "Net Operating Income" is the Gross Income from a Covered Property net of Operating Expenses, as such amounts are calculated and adjusted pursuant to this Part. Debt service costs are not included in calculating Net Operating Income.
B. Base Year. The "Base Year" is the 2014 calendar year, provided that where the Rent for Rent Stabilized Units has been set in a prior fair return decision regarding a Petition pursuant to this Part, in which case the calendar year that was the Current Year in the prior determination may be used as the Base Year for the purposes of reviewing a subsequent fair return Petition.
C. Current Year. The Current Year is the most recent calendar year preceding the submission of a Petition pursuant to this Part.
D. Calculation of Consumer Price Index. The Consumer Price Index ("CPI-U") for the Base Year shall be 251.985, which equals the annual average for 2014 reported by the Bureau of Labor Statistics for the CPI-U index for all urban consumers for all items for the San Francisco-Oakland-San José area. The CPI-U for the Current Year shall be the annual average for the Current Year reported by the Bureau of Labor Statistics for the CPI-U index for all urban consumers for all items for the San Francisco-Oakland-San José area. In the event a successor index to the CPI-U index for all urban consumers for all items for the San Francisco-Oakland-San José area is established by the Bureau of Labor Statistics, this calculation method may be updated accordingly in the Regulations.San Jose Municipal Code § 17.23.810 establishes how a 'fair return' is measured for owners of rent-stabilized properties. Under this standard, a fair return equals the property's 2014 net operating income (gross income minus operating expenses, excluding debt service) adjusted upward by the percentage change in the San Francisco-Oakland-San José area Consumer Price Index since 2014. When a prior rent board decision has already set rents using a different base year, that more recent year may serve as the new starting point for a subsequent petition.
Plain English — not legal advice.
Property owners filing a fair return petition under § 17.23.810 generally document their 2014 gross income and operating expenses carefully, since that Base Year Net Operating Income is the anchor for the entire calculation. Compliant operators track annual BLS CPI-U figures for the San Francisco-Oakland-San José area, as those figures directly determine how much the Base Year income figure is adjusted when a petition is reviewed. Owners who have previously obtained a fair return determination should note that the year designated as the 'Current Year' in that prior decision may be used as the Base Year in any follow-on petition under this section.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
Section § 17.23.810 defines the ceiling of what a landlord can claim as a 'fair return,' which means tenants have an interest in how the Base Year income and CPI adjustment are calculated during any rent increase petition proceeding. If a landlord files a petition, tenants generally have the right to participate in the hearing process before San Jose's rent board and to challenge whether the income and expense figures submitted accurately reflect the property's actual financials. Tenants who have questions about a pending petition or how this standard applies to their building may find it useful to contact a local tenant-rights organization or review the Rent Stabilization Program's published regulations for guidance on the process.
General guidance for tenants — not legal advice for your specific situation. Consult a tenant-rights organization or attorney for advice on your case.
Generated September 3, 2026 — auto-generated, not yet human-reviewed. See /transparency for methodology.
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