(c) On or before the end of the third complete month occurring after the date the initial registration was filed under subsection (b) of this section, and, at the end of each third month thereafter, each landlord shall file with the Rent Administrator as to housing accommodations not excepted by subsection (a) of this section either

(1) a certification of the accuracy of the information on the registration form filed by him;

(2) upon there occurring any change which would not affect the rent which may be charged under this act, a sworn addendum setting forth the new information; or

(3) upon there occurring any change which would affect the rent which may be charged under this act, and if the landlord wants an increase in such rent, a new registration statement. Such new registration statement per item (3) of this subsection may be filed only at the times indicated in this subsection and at no other time.

(d) Each registration form filed under this section shall be available for public inspection at the Office, and each landlord shall keep a duplicate of each registration form posted in a public place on the premises of the housing accommodation with respect to which such registration form applies, Provided, That, each landlord may, in lieu of posting in a public place in each single family housing accommodation, mail to each tenant of such housing accommodation such duplicate of each registration form.

(e) Each registration form filed under this section which meets the minimum requirements established by the act and by the rules of procedure of the Commission shall be assigned a registration number.

(f) Each certificate of occupancy and each housing business license issued to any landlord in the District of Columbia after the effective date of this act shall contain the registration number of those housing accommodations to which such certificate or license applies.

REGISTRATION FEE

SEC. 203. Each landlord of a housing accommodation covered by this act shall pay to the Mayor at the time that he applies for his housing business license and at the time that he applies for any renewal thereof or, in the case of a housing accommodation for which no such license is required, at the time he files his registration statement. for that housing accommodation under section 202 (b), an annual registration fee of $2 for each rental unit in a housing accommodation registered by him. Such fees shall be paid from time to time into the Treasury of the United States and credited to the General Fund of the District of Columbia.

RENT CEILING

SEC. 204. (a) Except to the extent provided in subsections (b), (c), and (d) of this section, and section 211 of this title, no landlord may charge or collect rent for any rental unit in excess of the rent computed according to the following formula (hereinafter referred to in this act as the "rent ceiling.")

(1) Step 1: add to the base rent an amount equal to 4 percent of the base rent.

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(2) Step 2: add to the figure computed in Step 1 an amount equal to 8 percent of such figure.

(3) Step 3: (A) In the case of a housing accommodation for which the rate of return, as shown on the registration statement and computed according to part (B) of this step, is less than 8 percent, the landlord may add to the figure computed in step 2 a pro rata share of an amount sufficient to increase the maximum possible rental income for that housing accommodation by such an amount as will generate a rate of return of no greater than eight percent, Provided, That no increase shall be more than five percent of (1) the amount computed in step 2 or (2) the rent as established by the Housing Rent Commission or a court of competent jurisdiction.

(B) In determining the rate of return for each housing accommodation, the following formula shall be used (computed over a base period of any consecutive twelve month period within the fifteen months immediately preceding the filing of the registration statement):

(1) The sum of the maximum possible rent income which can be derived from a housing accommodation shall be added.

(2) To the sum of all other income which can be derived from the housing accommodation.

(3) From the total of maximum possible rental income which can be derived from a housing accommodation plus the sum of all other income which can be derived from the housing accommoderation shall be subjected (i) the dollar value of vacancy losses and (ii) uncollected rents the remainder of which shall be defined as the "gross income".

(4) From the gross income shall be subtracted (i) the operating expenses; (ii) property taxes; (iii) management fee of no more than six percent of the maximum rental income of the accommodation unless and only to the extent any additional amount is approved by the Rent Administrator pursuant to subsection (b) of section 205 of this act; (iv) depreciation expenses (computed on a straight line basis) of no more than two percent of the assessed market value of the housing accommodation may be deducted in any one year as a depreciation expense, unless and to only the extent any additional amounts are approved by the Rent Administrator pursuant to subsection (c) of section 205 of this act; and (v) amortized costs of capital improvements if and as permitted pursuant to subsection (a) of section 205 of this act. The remainder after such subtractions shall be defined as the "net income".

(5) The net income shall be divided by the assessed market value of the housing accommodation to determine the rate of

return.

(b) The rent ceiling for a particular rental unit computed according to the procedure specified in this section may be increased or decreased, as the case may be,

(1) according to section 206, to allow for an increase or decrease in related services or facilities;

(2) according to section 210, to allow for the cost of substantial rehabilitation; or

(3) according to section 208 to allow for adjustments for vacant accommodations.

(c) In addition to the adjustments in the rent ceiling which are allowed as specified in subsection (b), any landlord may apply for a hardship adjustment to be computed under section 209.

(d) The rent ceiling for any unit in a housing accommodation exempted by paragraphs (3), or (6) of subsection (a) of section 202 from the provisions of sections 203-212, after the termination of such exemption, shall be the rent charged during the initial leasing period or during the first year of tenancy, whichever is less, increased by an amount not in excess of an amount computed in accordance with step 3 of the formula specified in subsection (a), Provided, That, no increase. shall be more than five percent of the rent so charged. Such increase may be effected only in accordance with the procedures specified in subsections (h) and (i) of this section.

(e) Notwithstanding any provision of this act, the rent for any rental unit shall not be increased above the base rent unless (1) the housing accommodation of which such rental unit is a part is in sub stantial compliance with the housing regulations, Provided, That, such non-compliance is not the result of tenant neglect or misconduct; (2) the housing accommodation is registered in accordance with section 202; (3) the landlord of such housing accommodation is properly licensed pursuant to the housing regulations if such regulations require his licensing; and (4) the manager of such housing accommodation, when other than the landlord, is properly registered pursuant to the housing regulations if such regulations require his registration.

(f) If, on the effective date of this act, the rent being charged exceeds the allowable rent ceiling, the rent shall be reduced to the allowable rent ceiling effective the next date that the rent is due, Provided, That this subsection shall not apply to any rent approved by the Housing Rent Commission under Regulation 74-20 or any rent approved by a court of competent jurisdiction. The landlord shall notify the tenant in writing of the required decreases prior to the effective date of such decreases.

(g) Notwithstanding any other provision of this act, no rent shall be increased under this act for any rental unit with respect to which there is a valid written lease or rental agreement establishing the rent for such rental unit for the term of such written lease or rental agreement.

(h) (1) If a landlord indicates on his registration statement filed under subsection (b) of section 202 of this act, or on any document filed under item (3) of subsection (c) of section 202 of this act, that he is entitled to an increase in rents under part A of step 3 of subsection (a) and that he intends to so increase such rents, such landlord shall immediately notify (in writing) the tenants of the rental units to which such increase applies of the intended rent increase. Such notice shall be mailed to the tenants by certified mail, return receipt requested. Such notice shall include those items listed in subsection (i) of this section, and, in addition, a copy of that portion of the registration statement which shows the computation of the rate of return relating to the housing accommodation containing the rental units for which a rent increase is sought. The Commission shall by regulation prescribe the actual wording (including the size of type to be used)

of a statement to be included with such notice informing the tenants that they may request an audit of such registration statement and a hearing on such audit and giving the address where and time within which such request may be made.

(2) Any intended rent increase to be made under part (A) of step 3 of subsection (a) of this section shall not be effective before the first day that rent is due occurring more than 30 days after the notice specified in paragraph (1) of this subsection is mailed. If during such 30 days, a tenant in a housing accommodation to which such increase applies files a request for an audit of such registration statement, the Rent Administrator shall forthwith notify the landlord of such request and the landlord raising such rents shall pay the amounts collected reflecting such increase from the tenants of the housing accommodation, beginning on the effective date of such increase, into an interest bearing escrow account established by the landlord in a bank or other financial institution in the District of Columbia. Interest on such accounts shall be at least 514 percent. The landlord shall keep detailed records for such accounts showing the exact amounts in such accounts attributable to each tenant in the housing accommodation concerned. Such account, and such records, shall be maintained until the Rent Administrator completes the requested audit and issues an order specifying how the contents of such account is to be distributed. Either the landlord, or the tenant requesting an audit, may demand and receive a hearing on the audit. If the Rent Administrator finds, as a result of his audit, that such increase is justified, then he shall award the amounts in such account to the landlord. If the Rent Administrator finds, as a result of his audit that such increase was not justified, then he shall award the amounts in such account to the tenants concerned. If he finds such increase to be partially justified, he shall order the amounts in such account to be distributed equitably to reflect such finding. The Rent Administrator shall complete each such audit within a reasonable time.

(3) If any tenant files a petition for an audit of a registration statement more than 30 days after the mailing of the copy of such statement, the Rent Administrator shall conduct such an audit in a reasonable time, but the landlord shall not be required to place the amounts reflected by the increase in escrow. In addition, the Rent Administrator or Commission may initiate such an audit.

(4) An appeal may be taken from a decision of the Rent Administrator made as a result of an audit by filing a notice of such appeal with the Commission within fifteen days after the date of the decision being appealed.

(5) In the course of conducting any audit or review of any proposed rent increase under this act, the Rent Administrator may require the landlord concerned to produce copies of relevant portions of income tax forms filed by the landlord with either the Federal or District of Columbia for no more than three years.

(i) Each notice of an impending rent increase shall be in writing and shall contain a statement of the:

(1) current rent;

(2) proposed rent;

(3) percentage increase that the proposed rent represents over the current rent;

(4) effective date of the proposed rent increase;

(5) base rent;

(6) percentage increase that the current rent represents above the base rent;

(7) percentage increase that the proposed rent represents above the base rent;

(8) registration number of the accommodation;

(9) certification and explanation by the landlord that the unit is in substantial compliance with the housing regulations and that the increase is in substantial compliance with the housing regulations and that the increase is in compliance with this act.

(10) exact method of computation of the increase including itemization of cost figures to which the increase is attributable when such increase is pursuant to sections 205, 206, 208, 209, 210 of this title:

(11) statement of the penalties as described in section 215, and

(12) location of the registration statement in a public place on the premises in accordance with subsection (d) of section 202.

CAPITAL IMPROVEMENTS

SEC. 205. (a) In the case of a landlord who has completed capital improvements, the Rent Administrator may permit the costs of such improvements, amortized over the useful life of such improvements and applied on an equal basis to all rental units within the housing accommodations benefiting from such improvement, to be included. as an item in the computation of the rate of return to be subtracted from gross income as defined in part (B) of step (3) of subsection (a) of section 204 of this title PROVIDED That, (1) the landlord has made available to the Rent Administrator and to the tenant concerned the plans, contracts, specifications, and building permits relating to the capital improvements; and (2) the Rent Administrator is satisfied that the interests of the tenant are being protected.

(b) Where, in the computation of a rate of return, a landlord seeks to deduct a management fee in excess of six percent of the maximum possible rental income, he shall first file with the Rent Administrator à petition to allow such excess to be deducted. If the Rent Administrator determines that such excess or part thereof is reasonable, he may permit to be deducted the same or so much thereof as he determines to be reasonable. The petition shall contain such information as the Rent Administrator may require including but not limited to the name of the payee of the fee and what, if any, identity exists between the landlord and the payee.

(c) Where, in the computation of a rate of return, a landlord seeks to deduct depreciation expenses in excess of two percent of the assessed market value of the housing accommodation, he shall first file with the Rent Administrator a petition to allow such excess to be deducted. If the Rent Administrator determines that such excess or part thereof is justified, he may permit to be deducted the same or so much thereof as he determines to be justified. The petition shall contain such information as the Rent Administrator may require including but not