RENT CONTROL ACT, 1991 / LOI DE 1991 SUR LE CONTRÔLE DES LOYERS
MALLETTE GORING AND ASSOCIATES
CRISIS HOUSING LIAISON (SUDBURY)
SUDBURY DISTRICT PROPERTY OWNERS ASSOCIATION
CONTENTS
Thursday 8 August 1991
Rent Control Act, 1991, Bill 121 / Loi de 1991 sur le contrôle des loyers, projet de loi 121
United Tenants of Ontario
Muskoka Legal Clinic
Mallette Goring and Associates
Crisis Housing Liaison (Sudbury)
Sudbury District Property Owners Association
Maurizio Visentin
H and H Property Management
Ken Kaltiainen
Kingsway Villa Ltd
Barbara Carpenter
Al Davis
Adjournment
STANDING COMMITTEE ON GENERAL GOVERNMENT
Chair: Mancini, Remo (Essex South L)
Vice-Chair: Brown, Michael A. (Algoma-Manitoulin L)
Abel, Donald (Wentworth North NDP)
Bisson, Gilles (Cochrane South NDP)
Drainville, Dennis (Victoria-Haliburton NDP)
Duignan, Noel (Halton North NDP)
Harrington, Margaret H. (Niagara Falls NDP)
Mammoliti, George (Yorkview NDP)
Murdoch, Bill (Grey PC)
O'Neill, Yvonne (Ottawa Rideau L)
Scott, Ian G. (St George-St David L)
Turnbull, David (York Mills PC)
Substitutions:
Hansen, Ron (Lincoln NDP) for Mr Bisson
Murdock, Sharon (Sudbury NDP) for Mr Duignan
Poole, Dianne (Eglinton) for Mr Scott
Tilson, David (Dufferin-Peel) for Mr Turnbull
Clerk: Deller, Deborah
Staff: Richmond, Jerry, Research Officer, Legislative Research Service
The committee met at 1000 at the Senator Hotel, Sudbury.
RENT CONTROL ACT, 1991 / LOI DE 1991 SUR LE CONTRÔLE DES LOYERS
Resuming consideration of Bill 121, An Act to revise the Law related to Residential Rent Regulation.
Reprise du projet de loi 121, Loi révisant les lois relatives à la réglementation des loyers d'habitation.
The Chair: The standing committee is here to consider Bill 121, An Act to revise the Law related to Residential Rent Regulation, better known as the Rent Control Act.
The committee has planned to spend the entire day in the city of Sudbury to hear submissions from the general public and to that end we have a list of presenters for today.
UNITED TENANTS OF ONTARIO
The Chair: The first witness will be Rick Desormeaux, representing the United Tenants of Ontario. Rick, the committee has allotted you 15 minutes for your presentation. You can withhold some time for questions and answers, if you wish. I think you have been before us before and you understand the procedures we have used.
Mr Desormeaux: My name is Rick Desormeaux and I am one of the co-chairs of United Tenants of Ontario, UTOO. I am also here as one of the representatives for the north-central region on UTOO's provincial council and as the chair of the organization's administration and communication committee.
Making presentations has always been a learning experience for me, and this time has been no exception. The first thing that struck me as I was preparing this presentation was that as an individual who is rooming with his parents and sharing kitchen and bathroom facilities with them, I do not seem to be covered either by the Landlord and Tenant Act or by rent review legislation. If this is so, I want in. Personally, I do not have problems because my parents are very honest and tolerant landlords who will go out of their way to make sure my board is reasonable, but others who share facilities can get increases more than once a year. Why are they not in?
United Tenants of Ontario believes that virtually all of Ontario's tenants should be covered by rent review legislation. We believe buildings should be covered during the first five years of their lives.
There are three areas of rent review exemption which have particular resonance for me, and they are: (1) non-profit housing, except for non-profit co-op housing; (2) housing which is also covered by legislation like the Nursing Homes Act or the Homes for Special Care Act as well as the Landlord and Tenant Act; and (3) student housing provided by educational institutions. I am saying that consultation is not a substitute for real coverage. They can just tell you they are going to do something and that could be a consultation. I underline these three examples because I believe that both myself as an individual and UTOO as an organization need to champion those most vulnerable to exploitation and those who are least able to fight back when their rights are threatened.
Landlord presentations tend to take these hearings and make them into antipoverty affairs. It is true that a lot of people in economic poverty situations and, for that matter, a lot of people who are not in economic poverty situations, could use some subsidies to help them to be able to afford even the most reasonable rental levels. They are right, as far as that goes, but sound, affordable housing strategies are necessary no matter what kind of social assistance net is implemented.
In addition, although many landlords advocate government money as the answer to the housing problem, it is well known that many people in our society, including some landlords, discriminate against those whose income comes from the taxpayers already. Adding extra subsidies to people who already suffer social stigmas cannot be an entire answer.
Their presentations also tend to make the real issue the poverty of small- to medium-sized landlords. UTOO concedes the point that some landlords may be in economic difficulty and need extra protections beyond those afforded by rent review legislation, but we maintain that being a landlord is a business, and cushioning businesses from economic realities is not the purpose of such legislation. We also maintain that most landlords who have kept their buildings in good order throughout the years and have done regular maintenance should not be suffering under current rent review.
In conclusion, I want to make two points. The first point is that we are opposed to the two-track system, one for buildings under seven units and another for buildings of seven units or more. Since tenants who live in buildings of seven units or more do not make less than those who live in buildings of less than seven units, they should not be required to pay less.
The second point is that as a basic principle all rents should be registered with the provincial rent registry. Instead of making exemptions, if registration is a problem, ways can be found to facilitate the registration.
UTOO believes in including as many tenants as possible into the process of solution-finding and helping to do what needs to be done rather than finding ways to avoid sticky solutions unnecessarily. We believe in political courage. I am happy to answer any questions you may have as best I can. Thank you.
I have something here that I wrote as a poem a few months ago because I was sort of thinking about all the different times we are going to be meeting together in the future. Probably next year it will be the purple paper, and we will talk about that. The way things are going there seems to be no end to the amount we are going to be talking about housing problems, but I am not sure how much we are actually going to do. I entitle it, "Yeah, Me Too (a Poem)."
We've got studies and commissions
Delegations and decisions
Things keep changing rapidly
But the landscape looks the same to me
Different colours for the papers
Wars declared and victories claimed
Darkness reigns but our side wins
At least we settle who's to blame
Keep going off in new directions
Images of sweet perfection
Final words and more revisions
Must make sure we have a vision
Can't begin to feed our hungry
Proper clothes or decent roofs
Boundary wars and good intentions
Hardly pass the needy proof
Speeches and investigations
Letters to the congregation
Divide the madmen from the sane
About the need to break the chain
We've got protests and petitions
Old beliefs and new precisions
Things keep changing drastically
The faces change but not this sea.
Mr Tilson: I detect a small amount of sarcasm in your poem.
Mr Desormeaux: Yes.
Mr Tilson: My question to you with respect to that is, do you have any recommendations as to how this government can cut down on bureaucracy in housing in the province?
Mr Desormeaux: I would look at it from a different way. We are getting these consultation papers and they are saying: "We can do this or we could that or maybe we could do this other thing. Tell us what you think about which one we should do." From my perspective, at this point I think we know all the different options that are on the floor and I would sort of like to hear the government make some statements about what it would like to do. Obviously, it must have some preferences among the choices it is throwing out and some things that it is leaning towards.
Mr Tilson: Its preference appears to be Bill 121. My second question is the whole subject of rent review or rent control. Do you believe that government should completely take over the housing industry and that no private enterprise should be in the housing industry?
Mr Desormeaux: I think we need more private enterprise in the housing industry, but I really do not think private industry is being endangered at this point. I think there are still a lot of private landlords and there is money to be made in that business.
Mr Tilson: Sir, I have not heard of any new apartment buildings being built in the province by private enterprise in the last two or three years. That tells me they are not interested any more and that they are getting out of it. We have landlord after landlord telling us they are trying to sell their buildings and that there is such a loss that they are going to lose it through bankruptcy.
I guess that leads to my second question. You get into the housing industry. If you believe in private enterprise, how should this government encourage private enterprise to stay in it and build more? You are going to take rent controls off all new buildings. How are we going to encourage private enterprise to start building again in this province? They are not going to build any more. They have told us that.
1010
Mr Desormeaux: I do not have an answer for that at the present time. Let's put it this way. I have only been involved in this organization for a couple of years, so I am still in the learning process. It is something you have to work on.
The Chair: That is a fair answer.
Mr Mahoney: By the way, neither does the government have an answer to that, so do not feel bad. They are learning too.
Mr Abel: Just like you did in 1985.
The Chair: Order.
Mr Mahoney: It is nice to get everybody excited. You say in your presentation, "United Tenants believes that virtually all of Ontario's tenants should be covered by rent review legislation," and then you say, "We believe that buildings should be covered during their first five years." Are you saying they should be released after five years?
Mr Desormeaux: Bill 121 is saying they should not be covered by rent controls during the first five years.
Mr Mahoney: Oh, I see, so that is what you are responding to.
Mr Desormeaux: UTOO's position is that they should be covered by rent control for the first five years.
Mr Mahoney: In learning and trying to develop your position on the question Mr Tilson put to you, on the one hand you say everything should be covered, and on the other hand that we need more private enterprise in the housing field. Not to duplicate the question, but that is at cross purposes. How do you say to anybody in the private sector, "Come into this highly regulated industry where we are going to limit your increases completely"? Why would they do that?
Mr Desormeaux: First of all, I talked about four kinds of exemptions and three of them have nothing to do with -- the one is the non-profit housing --
Mr Mahoney: When you say "private sector," do you mean private non-profit or are you talking about for-profit private sector?
Mr Desormeaux: First, I am saying they want the government and non-profit sector to be covered by rent review and that students should be covered by rent review, and they are talking about things like nursing homes and homes for the aged which would be covered by rent review.
Mr Mahoney: I am getting mixed messages from you. You are saying we maintain that being a landlord is a business, and cushioning business from economic realities is not the purpose of such legislation. It is the tenants who are being cushioned.
Mr Desormeaux: On the other hand, the last time I came to these meetings there were a lot of stories about how people got into the landlord business because they wanted to get a retirement for grandpa, or something like that. It was like an alternative to a pension plan, to get a building so that they would be covered. The landlords were kind of surprised to find out that they were in a tough business where there was a chance of making money and a chance of losing money.
Mr Mahoney: Welcome to the real world.
Mr Desormeaux: Welcome to the real world.
Ms Harrington: Thank you for coming. You have brought forward some interesting ideas here and I hope our staff are getting them all down. I wanted to briefly respond to your statement at the end. You said, "We believe in political courage." I would like to clarify the government's position on that type of commitment. I think you will recognize that most people across this province view the commitment and the courage of the minister, Dave Cooke, to bring this legislation forward so directly and dramatically, last November with Bill 4, and following through with that commitment as soon as we could, with this permanent legislation in June and trying to do the hearings and make sure what we have is a real, workable system in Ontario.
You touched on a couple of other things here; that is, the people whose rights should be protected, those people who cannot speak out for themselves for various reasons. That is why this government is so committed to rent control. We also want to empower people, the ordinary people, so they can deal with landlords. There has been a power imbalance and the tenants have had to take whatever was offered -- I am not saying in all cases but in very many cases. That is what we are trying to do, to change the way the system works and to do it in a fair way, because we believe the owners of the buildings should make a fair profit in Ontario and we need that sector to be there. It is very important, so we have to deal with people honestly and correctly.
I believe Mr Mammoliti has a concern or question for you.
Mr Mammoliti: I just want to explain something to you, if you do not mind. Your concern earlier was that the five-year exemption of new buildings from rent control should not exist, that they should be covered under rent control. What we looked at as a government through our hearings in the past was exactly what Mr Tilson was saying. There was no incentive out there. The tenants are saying they should not be exempted. We tried to find a median, that median being a five-year exemption for the new buildings. Do you not think that medians sometimes are needed in this particular case to make both parties happy?
Mr Desormeaux: Compromise is always a difficult thing. It is really to make two sides happy. I do not know if there is a way to make everybody happy, because somebody is bound to feel he is not going to be as happy as the other people involved in the equation. I do recognize it is a very difficult situation.
1020
MUSKOKA LEGAL CLINIC
The Chair: The next presenter is Muskoka Legal Clinic. We will be following the same procedure, 15 minutes for your presentation and you can leave time for questions and answers.
Ms Campbell: Good morning. My name is Susan Campbell. With me is Jo-Anne Boulding. We are from the Muskoka Legal Clinic. The Muskoka Legal Clinic is a legal aid clinic that represents low-income people in the district of Muskoka. The district of Muskoka includes the towns of Gravenhurst, Bracebridge, Huntsville, Muskoka Lakes and Lake of Bays. It is bounded by Simcoe, Haliburton, Parry Sound and Nipissing.
As may be apparent to you, most of the tenants whom we represent live in one-, two- and three-unit buildings. In our first year of operation -- we have only been open a little over a year -- the majority of the work we have been involved in has been the Landlord and Tenant Act and rent review legislation. We felt it was important to come here today to talk to you to ensure that some of the views and problems faced by rural tenants be represented in this process.
We applaud the introduction of this badly needed new legislation. However, we are once again concerned that the legislation seems to be almost exclusively from the perspective of the problems of tenants in large urban centres. To give you a better idea of some of the people we represent in our area, we would like you to know that the income for most full-time residents in the district of Muskoka comes from part-time, seasonal and minimum-wage work. Though the rents may seem to be lower compared to large urban centres, in fact this is not so.
Most people, almost all tenants in the district, pay utilities on top of their rent -- all utilities. They often pay deposits, large deposits, as in $200, for telephone hookups and as much as three months in advance on things like hydro bills and gas bills. They often get to pay extras like having the septic system pumped.
The demand for subsidized units is far, far greater than the supply in the area, so we have a large number of senior citizens, sole-support mothers and differently abled people relying on private market housing. Too often we deal with the debt problems that arise in tenancy situations and come from the large utility bills and other things people must pay on top of their rent. We intend to present to you today a few points of special interest to us on some of the issues that have come forward to us from the tenants we have served in the past year. We would like to reserve a few more comments that we will present to you later in a written brief.
The first item we would like to talk to you about today is the capital expenditure pass-throughs. Most of the tenants we have come in contact with believe capital expenditures should be passed through in order that they have some ability to push landlords into maintaining and repairing our homes. With such high heating costs, they are particularly interested in improvements that increase energy efficiency in their homes. However, they are concerned with the fact that pass-throughs be necessary and that they stop paying for improvements once they have been paid for. Therefore, we make the following recommendations with regard to capital expenditures.
First, in terms of the costs no longer borne by the landlord, I cannot remember what section in the proposed bill this is in, but our recommendation is that the costs no longer borne by the landlord should be automatically removed after the expiry of the predicted expected lifetime of the work. It is not sufficient to remove these when a landlord makes a subsequent application for the same expenditure. There are too many instances where the improvements are not done a second time, or where the building has changed hands and the new landlord does not make the same kind of repairs, may not make any repairs, but still manages to reap the benefit of the costs of that improvement if no subsequent application is made.
Second, with respect to Bill 4, tenants were led to believe that, at least until the passage of the new legislation, capital expenditures were not going to be passed through in their rents. This would be a great blow to tenants in that Bill 121 allows for any capital expenditures to be passed through until June 1991. Unless you are planning an inordinate delay in the passage of this legislation, we believe it would be unfair to go back on the promises made to tenants with the passage of Bill 4.
The second issue I would like to speak with you about is with regard to maintenance standards.With regard to work orders, the same basic provisions of the Residential Rent Regulation Act have been brought into this new bill. Rents are to be frozen upon non-compliance by a landlord with a municipal work order or, in some cases, an order issued by a provincial inspector. The legislation does not address the inability of many tenants to have local housing standard bylaws enforced and to get work orders issued.
In the area we serve there are major difficulties in getting bylaw enforcement officers to understand their role with respect to housing standards in residential tenancy situations. In the town of Huntsville, for example, we have had an ongoing battle with the bylaw enforcement officer, who does not understand at all that he has a role to play in residential tenancies. In fact, they have said, "If we have to do this, who is going to pay for it?" Presumably, he means the tenant or the legal clinic must pay every time an inspection is made. Although they have a bylaw, they do not quite know what to do with it.
In other areas, like Gravenhurst, there is no housing standards bylaw at all. Unfortunately, this is the area of our district where most rental housing is found. There are a lot of senior citizens living in the town of Gravenhurst in rental housing. The ability of tenants to obtain work orders is an empty right in this case. We therefore strongly object to the proposal to disband the Residential Rental Standards Board. It is the only mechanism in many areas to assist tenants in pushing their local governments towards establishing property standards and in other areas, such as Huntsville, in helping the municipality to understand what its role is in enforcement.
The third issue I would like to discuss with you has to do with the rent registry. Bill 121 eliminates the commitment which was made under the Residential Rent Regulation Act to register rents in buildings with one, two, or three units in the rent registry. As most rental units in rural areas come under this category, this bill effectively denies rent review coverage and protection to rural tenants. We understand the reason this measure may have been considered is the difficulty in discerning where these units are located in order to have them registered under the current system. To resolve this problem, and to ensure that rural tenants receive the same rights as other tenants under this new act, it is our submission that the onus be placed on landlords to register rents.
This may be accomplished simply by requiring the landlord to provide the tenant with proof of rent registration within 21 days of the commencement of a tenancy. Failure to provide proof of rent registration would result in tenants' obligations ceasing. As you are no doubt aware, this is identical to a measure currently contained in the Landlord and Tenant Act, sections 81 and 82, with regard to written tenancy agreements. This mechanism is perfectly appropriate for any number of rental units in a building.
Tenants living in buildings with four, five and six rental units may look forward to the opportunity of their rents being registered. However, the date for the first registered rent has been moved up -- from August 1, 1985 to October 1, 1990 -- in Bill 121. This has effectively given a second amnesty to landlords in these buildings. We do not understand why landlords cannot be required to bring forward records of rent through the past seven years. This information should be kept by landlords in the case of an income tax audit and should be made available.
The fourth issue we would like to speak to you about today is with regard to operating costs. The bill proposes that there be a higher annual rent increase and more generous provisions for increases above the guideline for tenants in buildings with six units or less. As we have already pointed out, rural tenants do not generally live in buildings where there are seven units and more. Their costs for housing are not less than urban centres, no matter how it may look from an urban perspective. Therefore, there is no justification that can be made in keeping the distinction that has been made to setting two categories of annual rent increases.
Finally, as has been already mentioned to you by the previous presenter, we do not agree with the exemptions for non-profit housing and for housing where additional services are provided. There is no reason we see, particularly in the last area, that the rental portion of the amount to stay in those particular housing situations cannot still be covered by rent review and that the service part be outside of that. This is also a particular interest in our area as a number of institutions are closing down and more group home types of accommodation will be made available.
That is the end of our presentation for this morning. If you have any questions, we would be pleased to try and answer them.
1030
The Chair: Very good. Mrs Harrington, about a minute.
Ms Harrington: Thank you very much, Ms Campbell, for coming. You have done an excellent job in looking through the legislation. I wanted to mention a couple of things.
First of all, with regard to the last point you raised, about other types of accommodation where other services are involved, one of the main ones is the nursing homes and that type of accomodation. The report that is coming down, the Lightman report, will probably be in October, and then we will be considering that. We do feel an obligation, especially to seniors and students and others, to have some kind of coverage on rent control.
Maintenance and the problem of bylaw enforcement is certainly something I think we have to look at.
The rent registry covering down to one unit is something I think we will also be looking at.
You mentioned the problem of automatically removing the capital pass-throughs that are of a temporary measure. We had a suggestion yesterday of having the rent broken into three parts: first, the rental for the premises; second, the tax portion; and, third, the temporary charges which would come off. What do you think of that kind of suggestion?
Ms Campbell: I am not sure of the purpose of splitting them in three.
Ms Harrington: So that tenants know how much is for temporary charges, so that it does not get hidden in the rent. It would be difficult. We have not investigated it.
The Chair: Do you like that kind of scheme basically? Yes or no.
Ms S. Murdock: Nobody ever answers that way, are you kidding?
Mr Tilson: Ms Campbell, the people you help are obviously people who are poor, who cannot afford any increase and whose income is basically the same in a continuous manner. As you know, this legislation is not rent control; this is rent review. In other words, it enables landlords to continually charge more and more and more, so it is not going to help those people. I guess that is the question our party continues to throw out to people you represent, that this legislation is not going to help those people one iota. In fact, it is going to make their situation even worse because their rents are going to be more.
You are saying they cannot afford the rents they are being charged now, so I guess my question to you is, what are we going to tell those people whose rents keep going up and up?
Ms Campbell: Their rents are already going up every year now anyway. Many of the tenants we have talked to, as I mentioned in the beginning on the capital pass-through items, want improvements made to where they live. One tenants' group I work with, in a mobile home park, actually, knows it wants renovations. They are actually sitting down considering with the landlord how they can make the improvements, as long as they do not have to pay for them for ever and a day. If they get an improved road going through their mobile home park, they are willing to pay for that. As the system works now, you pay for the improvement over, say, a five- or a ten-year period, but once that period is up, it is up and the rent can go back down because that capital item has been paid for.
Mr Brown: I represent the riding of Algoma-Manitoulin, and much of what you talk about is very similar to the experience in my riding: the issue of property maintenance; who does it. I represent an awful lot of small municipalities that do not have bylaw officers at all, period, and a number without property standards bylaws or any of that good stuff. I wonder, given the rural northern area, although I am reluctant to call Muskoka northern --
Ms Campbell: We are too.
Mr Brown: But it is a reality out here through a lot of the province. I am wondering how you see this kind of enforcement being done. Should the province do it? My experience tells me most of the very small communities do not have the ability to do it. Even if they want to, they do not have the people who can enforce it. I am just wondering whether you can give me a suggestion on how this possibly could be done in the real world.
Ms Campbell: We have had some good experience with the standards board helping us deal with our problems in Gravenhurst. Rather than disbanding that board, I see a more expanded role. We have not started to deal with the standards board in terms of the problem in Huntsville yet, but with some sort of governmental organization coming in and talking with them about what their role is, I think we will be able to resolve that problem because they do have the bylaw and the officer.
Part of our problem, and a problem in a lot of other rural areas, I think, is that the clinics are new. Before they came there was not a whole lot to assist tenants in terms of getting those kinds of things done, so for us it is going to be an educational process. I think the standards board can play that kind of educational role with the municipalities as well, and I know in terms of Gravenhurst, where there is none at all, the standards board is playing a role in pushing them towards getting the bylaw. I really think it is an organization that has to keep going, and perhaps the role needs to expand.
MALLETTE GORING AND ASSOCIATES
The Chair: The next presenter is Mallette Goring and Associations, Steve Malcho. Steve, we will be following the same procedure of 15 minutes, and you can withhold some time for questions and answers if you wish.
Mr Malcho: Welcome, committee members. My name is Steven Malcho. I am a rent review consultant and real estate agent with Mallette Goring and Associates, a commercial and investment real estate company here in Sudbury. Of late it has been more of a real estate agent than a rent review consultant, because I can assure you the landlords in this city as well as around the province are running away from rent review and are avoiding, at all cost, any renovations and anything else they can do to stay away from the rent review offices.
I am rather fortunate in that the entire rent review issue of the last eight or nine months has really just affected me in the line of a job, as opposed to my life savings being tied up or devastated by the policies of the government. That, for me, is something of a relief. For some of my clients, though, I can assure you it is an ongoing nightmare they are not soon going to forget.
I guess I should begin with a critique of Bill 121. It is somewhat lengthy, so I am going to try to limit it to aspects where I see problems existing. Part I of Bill 121 deals with basic rules of rent review. In particular, one issue has to do with having two guideline amounts. As I have read, the reasoning behind the two guidelines is that there are economies of scale that come into play, where buildings of seven or greater units are benefiting from the fact that they have larger units, or more units, and they are able to spread their costs around.
Economies of scale work very well in the manufacturing sector, but I can assure you that they are almost non-existent in the rental market. There are no economies of scale in municipal tax; there are no economies of scale in heating or hydro or repairs and maintenance. Your plumber is not going to charge you less to come out if you have eight units as opposed to six units. Economies of scale are a non-issue, and two guideline amounts based on economies of scale are totally irrelevant in this case.
While I do not necessarily have a problem with two guidelines, I would like to see some significant evaluation done to try to understand why they chose seven or greater units. The obvious seems that they had previously required buildings with seven or greater units to be registered, so they chose seven or greater units when it came to choosing two guideline amounts. I think it was a pretty ridiculous way of determining legislation if that was in fact the case.
As far as economies of scale and having two guidelines go, I can also tell you that larger buildings have a larger proportion of common area space. They have parking lots for visitors and what not, as opposed to smaller buildings, which are usually scraping together just enough parking space for the tenants themselves. When the landlords of larger buildings are dealing with their costs, they are giving the tenants additional parking for visitors, which they have to pay for in snow removal and what not.
Laundry facilities: You will not see a lot of six or smaller units with laundry facilities. This is a cost that is borne by the landlord in almost all cases. Perhaps he charges a per-use charge on the washers and dryers, but that does not take away from the fact that he is heating and paying municipal taxes on that area. I think you are seriously overlooking the fact that landlords of larger buildings are paying out of their own pocket for areas the tenants are not paying for. They are eating that cost themselves.
On a planning point for my clients, as a rent review consultant I see no other choice for them but to ask for a change in services. I would recommend to almost any of my clients who are paying the hydro for their tenants' units to switch it over right now and have a change so that the tenants pay the hydro, to take the reduction in rental rate right now, because Ontario Hydro is talking about a 44% increase over the next three years.
Why would landlords who are already being beaten up by Bill 4 and many other aspects of this bill want to continue to pay the hydro? If it amounts to a $70-per-month charge right now, it seems to me that a prudent landlord would ask for a change in service, have the tenants reduce the rent by $70 and let them eat the cost over the next few months. I am sure this government was not anticipating something like that, but from a landlord's perspective I see no other reason to continue paying the tenants' hydro into the future.
Another area that part I of the bill deals with is the extra 3% that is going to be allowed, and that is going to come to the landlords in two different ways: the extraordinary operating costs and the capital expenditures. In Sudbury alone, where a market value assessment took place using 1988 as the assessment year, many landlords of what are termed three-storey walk-ups were faced with 40% and 50% increases in their municipal taxes over the next year, between 1989 and 1990, actually. With Bill 121 as it exists, 3% is not even going to come close to having them recoup their costs. They are going to actually eat such large sums of money that if there is any profit built into a landlord's portfolio, there is no way he is going to be able to cover these outrageous municipal tax increases that have taken place.
1040
Here in Sudbury I can say that they are somewhat lucky because the reassessment took place last year and most of the landlords have had their kick at the cat, and the ones who have applied have gotten their rent increased for it. But that is not to say other municipalities in this province are not going to move along with a similar market value assessment, perhaps based on 1988 or 1989. Things are going to change. Those landlords are going to end up eating the cost. So the 3% extra is not going to help out anyone in terms of extraordinary operating costs.
As far as capital expenditures go, we are led to believe they are going to break them into two areas: eligible capital expenditures that basically deal with the structural integrity and energy efficiency of the units, and ensuite capital expenditures.
Having to eat the costs of extraordinary operating costs themselves because of this meagre 3% cap, I can almost assure you that if they have the extra money, it will probably be channelled towards the structural integrity end of their investment because it is their investment and they want to secure it. I cannot see them doing any ensuite work. So the tenants are only going to benefit to the extent that they are going to be limited to the 3% increase. They are not going to have the benefit of perhaps new energy-efficient windows or new carpeting when the carpeting seems to be getting a little shabby, or new kitchen cupboards or stoves, or new fridges when they start frosting over a little bit more than they probably should. The 3% cap for extraordinary and capital expenditures is totally unimaginable for the landlord. Bill 4 and the talks around that had led us to believe that capital expenditures that were caught by Bill 4 were going to be dealt with somewhat fairly. Bill 121 proposes any capital expenditures that were completed between January 1, 1990 and June 6, 1991 would be subject to this 3% cap as well.
People made sound business decisions based on the laws at the time, and now we are coming back with: "We're going to give you 3%. Ignore the fact that the Residential Rent Regulation Act allowed you to do renovations and make applications to the Rent Review Hearings Board or rent review office." Now they are saying: "Okay, we kicked you in the teeth with Bill 4 and now we're going to kick you in the teeth with Bill 121. We said we were going to help you out if you were caught." Now they are talking about the same 3%. It is totally unfair to the landlords and I seriously hope that you are considering some changes with respect to the capital expenditures that were caught with Bill 4.
As far as laws and rules go, it almost seems that this government has decided there are two standards, basically: one where the government can change the rules and laws retroactively to suit its cause of the day, and one for the rest of the people who are going to have to make do with what they have. The capital caught by Bill 4 has to be dealt with in a more fair manner. It is totally ludicrous.
Tenant applications and rent penalty orders: Tenants have every right to ensure they are dealt with fairly. Nobody is going to argue with that. But we are dealing with rent reductions for something as vague as inadequate maintenance, which this government has not even begun to try to define, let alone determine who is going to police it and decide what in fact is inadequate maintenance. I really would be interested in hearing from the members of the NDP how they propose to do this. Perhaps increasing the rent review staff by 2,000 or 3,000 individuals might do it. Being that we are dealing with a $9.7-billion deficit, I am sure they are quite willing to spend the extra money on that.
Municipal work orders: This is somewhat unbelievable as well. They are proposing that if landlords do not comply with municipal work orders within 30 days they could be facing rent penalties. There are a couple of things that really bother me with this. Aside from the obvious problems in trying to get contractors in to do work when it is seasonal-type work, whether it be roofing or parking lot repairs or what not, or simply getting the contractor in to do it, there is the issue of how the Ministry of Housing seems to be able to interfere with municipal bylaws and the enforcement of municipal bylaws. They are essentially taking away the right to appeal municipal bylaws.
There are appeal processes for everything. If this item stays in here, the appeal process is gone. They comply within 30 days or they get a rent reduction. You do not have a right to appeal a municipal work order now if this stays in here. It is unimaginable.
There also used to be provisions for increased financing costs, and I know that this, along with the financial loss phase-ins, was always a sticky item with the NDP. I am not even going to begin to try and defend the financial loss phase-ins, but I would not mind trying to talk to you about the increased financing costs.
There are a number of ways of dealing with financing costs increases. Financing costs are the largest single cost to a landlord to operate his facility. Perhaps you may say, "Maybe he made not so wise an investment in a property, he overpaid, and we are not going to allow these principal and interest payments to be passed on to the tenants." First of all, the phase-ins are gone, so landlords are going to be eating losses that they may have got themselves into with the help of this government when they purchased.
To deal with the financing costs increases, at the very least the interest component should be dealt with. We have no control over what the Bank of Canada does and what the federal government, in conjunction with provincial governments, does to control the interest rates in this country. Right now we have the benefit of low interest rates. I can assure you these are not going to be around in two years' time. Why are the landlords expected to eat the costs of the interest rate changes?
Fine, if you want to build such a system that costs no longer borne come out, that is fine, but do it and do it right. If you are going to go pulling out capital expenditures after two years, then make sure you allow the financing costs increases, the interest portion at least. If you are going to pull out one, you can pull out the other one. Interest rates change and go back down again, but to totally ignore them in Bill 121, there is absolutely no cause for it and no reason why it should take place.
Another part of Bill 121 deals with rent registry. You are talking about registering four to six units now. In the rent review process, form 9Rs have to be issued which basically outline what the rental charges were. The tenants have a time period in the past two years to be able to supply information that would contradict the registry information the landlord makes.
These 9Rs are the result of the registration of buildings some four years ago. There are thousands of 9Rs that are yet to be issued by the Ministry of Housing. Now you are proposing to put four-to six-unit buildings into the rent registry process too. Again, unless you are going to create another 2,000 or 3,000 jobs with rent review staff, your people that you have cannot do this work. There is no chance they are ever going to catch up.
In closing, I would like to just say this: I realize this rent review-renovation process is in order and is not going to stop. You guys are going to just continue on with this. But I have to tell you that if the government had been honest and fair in its whole dealings with landlords on this matter, it would not have gone with this huge broad-brush approach. You target the people who are being hurt. Nobody denies for a minute that there are too many people paying too high a percentage of their income on housing, but also -- the statistics prove themselves out -- there are too many people living in low-rental units that could be available to people who really need them. Unless you are going to target the people who are actually being hurt, you are just creating another fiasco that is going to continue on and continue on.
1050
The Chair: We have time for one question per party.
Mr Brown: I was interested that at the first of your presentation you were talking about removing the electrical rates, for example, from the rent. As we know, we have a government for which its policy is high energy costs; that is the policy of this government. It would seem to me that many landlords would follow your advice, but when we were in Toronto we also heard from a number of presenters that they thought this could be taken further, that property tax, for example, could be taken out of the rent, and that a number of other what we might consider costs that are completely beyond the scope of a landlord to control might be reduced. What are your thoughts on that sort of approach?
Mr Malcho: The norm has been the more direct services and facilities: the hydros, the heats. As far as municipal taxes being taken out are concerned, if rent review would even consider it then yes, absolutely. If a landlord can have rent review bite on that, then he should, because as long as rent review is taking away the avenues of the landlord to recuperate costs that he is legitimately incurring that are beyond his control, why does he not pass those on to the tenants?
Ms S. Murdock: Just to continue on Mr Brown's comment on the separation or delineation of costs such as hydro, for instance -- I have read the papers too in terms of Ontario Hydro is supposedly going to be increasing 44% in the next few years -- that cost, in my understanding of the legislation, would be included in the base increase allowed if that ever were to occur, that it is such an extraordinary cost it would not be calculated in that 3%. How does that jibe with your arguments?
Mr Brown: No.
Ms Poole: That is wrong.
The Chair: Please answer the question.
Mr Malcho: If I understand you right, you are saying that the hydro is being embedded in the annual guideline amount and he is getting recovery for it anyway, so why would he take it out or how could he take it out and pass the charge on to the tenants in two ways? Am I understanding you right?
Ms S. Murdock: Yes, okay --
The Chair: We only have time for one question per party. The gentleman has to answer the question and we have to move on to Mr Tilson. Have you answered the question?
Mr Malcho: I am trying to interpret the question more than I am doing anything.
Ms S. Murdock: I will talk to him after.
Mr Tilson: The NDP during the last election promised that it would reduce the bureaucracy in housing. Would you comment on that.
Mr Malcho: There is no way in the world that Bill 121 is going to reduce the bureaucracy; it is only going to increase it. Now you are throwing components in where there are going to be standards committees that are going to be going around checking on the maintenance standards. You are going to have rent review now with the right to go in and search and seize records from landlords' properties. You are going to have landlords basically now doing dual duty enforcing municipal bylaws. You are going to register four- to six-unit buildings when the seven and over have not been dealt with properly yet.
There is no way you are going to get this done, have it on stream and have it working on a day-to-day basis. The whole thing is either going to be years behind, which it already is, or you are going to have to increase the staff, increase the bureaucracy and increase the inefficiency of the rent review office.
Right now I have rent review orders in there that are waiting to be dealt with and they are sitting idle. They are being shuffled around to different parts of the province, trying to find a rent review office that has a little bit of spare time. Unless you actually are dealing with the whole system right now on a day-to-day basis, and I can assure you that almost no one in this room is like I am, you do not even begin to see the mess that things are in.
The Chair: Mr Malcho, thank you for your presentation this morning.
Ms Poole: On a point of order, Mr Chair: The question Ms Murdock asked might mislead people in the audience to believe that if there is an extraordinary operating increase, such as a 44% increase in hydro, it could not be put through as part of the 3% cap. We just wanted people to understand that is not the case.
Ms S. Murdock: On the same point of order, Mr Chair: If that is the way the question came out, I apologize, because that is not what I intended to mean. It was that the base rate before the 3% would take into account any -- I used the term "extraordinary" and probably that is where the confusion arose. When the rent control agency would set the base rate or the inflationary rate, that is where such a cost as 44% hydro, if that were to occur, would be taken into account, and then the 3%. Do you know what I mean? That is what I meant.
The Chair: No further comments on that point of order? We have to move along.
CRISIS HOUSING LIAISON (SUDBURY)
The Chair: The next presenter is Crisis Housing Liaison, Barry Schmidl.
Mr Mammoliti: Does the budget allow for crystal balls?
The Chair: Barry, we have 15 minutes for your presentation. You can reserve some time for questions if you wish.
George, you are out of order.
Mr Schmidl: Thank you for this opportunity to present the views of Crisis Housing Liaison (Sudbury) to your committee. I was informed that there was a maximum of seven and a half minutes for my presentation, to be followed by questions. I am going to shoot for that, so I will attempt to be brief and to the point.
Allow me to begin by introducing the organization I represent. Crisis Housing Liaison (Sudbury) is a non-profit organization which provides assistance to people in need of housing. The primary service currently offered by the organization is a housing registry program. This program consists of a computerized listing of all available rental units in the regional municipality of Sudbury. These listings are given to families and singles who register with the program. In 1990, a total of 1,353 families and singles looking for housing used this service.
Using the registration information given by our clients, statistics are compiled by the agency on a quarterly basis in order to secure and maintain funding for the program. The statistics also provide useful indicators on the impact the lack of affordable housing has on people's lives. I will be referring to these statistics through my presentation to demonstrate the rationale for our position. I believe everybody has a copy of the handout with the tables in it.
Sudbury, and indeed large parts of the province, is in the midst of a serious housing crisis. Vacancy rates in the Sudbury region consistently around or below 1% demonstrate that. Crisis Housing Liaison statistics illustrate the situation quite well. Table 1 in the package that has been distributed to you shows that over 42% of the clients coming to our agency in 1990 were living with family or friends or in a temporary shelter of some sort or "on the street." In actual numbers, this means that 574 clients did not have a place to call home when they came to see us last year.
We are not talking here of only the stereotypical and incorrectly portrayed street person who does not hold a job and has many social problems. As you will see in table 2, the largest single source of income for our clients was a job.
As you will see if you look at table 3, over 60% of our clients were families. Please keep in mind that when we refer to a client we are talking about a single person or a family, not the number of individuals served. Each family client represents about three people. Children were a significant part of the 42% of our clients who were homeless in 1990.
My purpose here is not to take up the committee's time by arguing that we are in the midst of a serious housing crisis. Any rational human being can see that this is the case and to disagree is to show that one has one's head in the sand. Rather I have passed on this information to you to show the depth of the crisis we find ourselves in. It is a crisis that the unscrupulous can take advantage of. It is for that reason that we support a strong system of rent control that is fair to both tenants and landlords and prevents unethical or greedy individuals from exploiting the crisis in affordable housing for their own financial gain.
Crisis Housing Liaison supports a system of rent control that provides tenants with protection from unreasonable rent increases, but allows landlords a fair return on their investment with flexibility for some exceptional costs allowed. We support a system that requires that good repair standards be maintained and provides landlords with the cash to meet these obligations. We support a system that helps both landlords and tenants by allowing for a swift appeals mechanism.
To a large degree, the Rent Control Act conforms to our view of what a good system would be. In comparison with the Residential Rent Regulation Act that it replaces, it is a very good system. The rent regulation act allowed for such things as much larger rent increases than the rate of inflation, landlords flipping their properties and passing on the cost to their tenants, the expense of unneeded cosmetic renovations on buildings being charged to tenants through rent increases, and a glacially slow appeals process that frustrated both landlords and tenants.
No system of rent regulation or control is perfect, but we feel that this piece of legislation is an improvement over the previous government's law.
I will now turn to discussion of the Rent Control Act itself. Economic security is something many people in Canadian society lack. Quite simply, paying the bills is a problem for many people. It is not through a lack of financial skill or through wasteful spending; it is because money taken in does not always equal the amount that has to go out. When the major expenditure each month is that which keeps a roof over your family's head, it is a serious concern for someone who may not have the money for this month. If my choice was paying the rent or feeding my 10-month-old son, I know what decision I would make.
The Rent Control Act provides some measure of security against economic eviction of tenants. The guidelines for maximum increases and the limits on the above-the-guideline increases provides a measure of economic security to tenants, although the five-year exemption for new buildings will mean that tenants in those units will be denied any significant security.
1100
One of the major threats to tenants in the present housing crisis is the amount of rent charged. Generally speaking, the more affordable the unit, the less likely it is to become vacant. Why would you want to let an affordable place go, unless it was in poor condition or you are living in overcrowded conditions? If you will refer to table 4, you will see that average rent of vacant units generally exceeds the average rent of all units, vacant or occupied. In the case of two-bedroom units it is by $130, and by hundreds of dollars in the case of three- and four-bedroom units. This would not necessarily be a bad thing if people were normally able to pay these rents. If you refer to table 5, however, you will see that this is not necessarily the case. In order to pay 30% of your income for the average vacant two-bedroom unit, you would have to earn $23,680 a year. This is not a princely sum, by any means, and it is certainly within the range of many. However, if you look at the average personal income for a woman in Sudbury, you will see it is only $11,518. Consider what this means for a single mother with two children who works for minimum wage or is receiving social assistance. This is by no means an extreme example. A full-time minimum-wage job would earn one $11,232 a year, based on 40 hours per week and $5.40 an hour. The implementation of a system like that in the rent control act would help keep affordable housing affordable. It would lower the number of tenants evicted for economic reasons and would ensure that affordable housing is decently maintained housing.
The argument exists that getting rid of rent control entirely would cause more affordable housing to be built, because landlords would make more profit and want to construct more units. As an economic theory, that seems quite sound. However, as with many seemingly sound theories, it is not borne out in practice. British Columbia has no rent regulation and has not had it for some time. That province has a similar housing crisis to Ontario in terms of vacancy and unaffordability of rental housing. If British Columbia's wide-open rental market arrangement has not helped the vacancy situation, there is absolutely no reason to believe that removal of rent control in Ontario would help things here.
I want to talk next about landlords and the act. It is truly a shame that a law is required because a few landlords are unscrupulous. The vast majority of landlords are decent people who care about their properties and are not in business to exploit others. Unfortunately, society has to have laws to protect us from exploitation by others, whether it be false advertising, child labour or substandard living conditions. Any system of regulation will no doubt work hardships on some people; however, the Rent Control Act, we feel, goes a long way to meeting the needs of the average landlord. For example, the requirement that landlords stick to set maintenance standards or be penalized should be offset with the fact that there is a built-in 2% yearly increase specifically set aside for repair. There is provision in the act that the landlord can apply to have certain costs added to the regular rent increase and carried over more than one year, if necessary. In addition, landlords of some older buildings can use part of a $15-million fund announced by the minister to bring their units up to standard. Landlords of smaller buildings, many of whom own one building as an investment or as their primary residence, are eligible for a larger annual rent increase because of the higher cost per unit of operating them. Significant increases in municipal taxes and utility cost increases may be passed on to the tenant. Many landlords and, indeed, home owners have cited these costs as major impediments to their continued ownership of residential property, and this provision partially deals with the problem.
Finally, the act allows for landlords to apply for an increase above the guideline for capital expenses made during the year and a half prior to the act coming into force.
In conclusion, I would like to say that there are some problems with the system proposed in the act, such as the five-year exemption for new buildings, and no system will make everyone happy and be without bugs. However, it is our opinion that the proposed Rent Control Act is a considerable improvement over the previous government's legislation and is generally a just system for both landlords and tenants. I would like to thank you once again for the opportunity to make this presentation to this community, and I look forward to your questions.
Mr Tilson: I am pleased to hear your remarks. I must say you are probably one of the few people that come to these hearings who probably has no real axe to grind other than to provide more housing. Your comments were anti-government, pro-government, anti-opposition, pro-opposition, and I appreciate that.
Mr Schmidl: I hope I got you all mad at me.
Mr Tilson: No, we just appreciate your remarks, sir. I would like you to comment with respect to the rent registry system. Anyone involved in municipal politics, or really anyone, I suppose, in the province of Ontario, knows that there are all kinds of illegal apartments in areas that municipalities have not zoned those apartments to be in and they are generally overlooked, mainly because most municipal councillors are sympathetic towards the need for housing.
The fear that has been put to me is that the rent registry system with all units being registered might indeed force municipalities to take action and do away with those illegal units. You must see tenants, you must see apartments. Do you fear that in Sudbury, in the north?
Mr Schmidl: I think there are two ways of addressing the problems of illegal units in the rent registry.
First, a review of the Planning Act and, indeed, municipalities' official plans and planning processes, should be undertaken with regard to what exactly is an illegal apartment. Should you have to get a special exemption to put an accessory unit in an R-1 zoning area, for example? That has to be looked at.
It certainly could be a problem with the rent registry that it could cause, through the process, the elimination of some of the illegal accessory apartments. There is a problem in that some of the accessory apartments are in very poor condition and --
The Chair: Thank you.
Mr Schmidl: I will try to wrap up real fast. If they are in such poor condition that people should not be living in them, perhaps people should not be living in them.
Mr Brown: I too found your presentation helpful. I particularly find the numbers you present helpful. The first thing I must do is talk a little bit about the British Columbia experience because you do not have, perhaps, the most up-to-date information. The information on British Columbia is that the rent controls were taken off in 1983. At the time rents were higher than they were in Ontario. Now they are comparable and now their vacancy rate is higher than Ontario's.
My real question revolves around -- and I think this is an important issue -- your suggestion that the units on the market today are generally the higher-priced units that the average is quite a bit lower, and that makes it unaffordable. It seems to me that one of the problems we have is a targeting problem: The units people would like to be moving into, that they can afford to move into, are not available.
I wonder how this legislation is going to narrow that gap or make affordable housing available to those that really need the affordable housing. What does this bill do to help that situation, which is a cause of concern to all of us?
Mr Schmidl: Briefly, on what you said about British Columbia, in general the province's vacancy rate may be higher than that in Ontario, but there are municipalities that have the lowest vacancy rates in Canada except for Sudbury, particularly Matsqui, British Columbia, which has the lowest vacancy rate in Canada after Sudbury.
Mr Brown: Those are the latest statistics we have.
Mr Schmidl: In any case, that was not the question. Could I just ask you to rephrase the end of your last question?
1110
Mr Brown: What I am really asking is, we know we have about 25% or 30% of people that cannot afford housing and we have a real problem with affordability. We also know we have a great number of units which are not on the market, and they are not being vacated because there is a financial advantage to stay there. I am just wondering how this legislation is going to help that situation.
Mr Schmidl: Under whatever system you have it is quite normal for people to stay in affordable units. Generally speaking, you are always going to see the higher-priced units vacated more often, because when people find an affordable place to rent they are going to want to stay there as long as they possibly can. The problem with affordability is that there are a lot of poor people who cannot afford the rent they are paying now.
This legislation, except in really exceptional circumstances, is not going to cause rents to go down. They are going to regulate their increase. That does not specifically help the people who are poor and cannot afford where they are living now --
The Chair: Very good, thank you.
Mr Schmidl: Can I finish my sentence anyway? That was a comma, not a period.
The Chair: That was a very long answer. I thought you answered the question two or three separate times.
Mr Schmidl: If I can just -- one sentence here. It is going to stop the rents from becoming worse.
Ms Harrington: I wanted to comment on your organization. Over our travels across the province we have run into various groups which are housing help centres, in a way. I think these are very useful groups to have in the city and especially the statistics and the number of people you help. I really thank you for being involved in this project.
The question you raised with regard to accessory apartments -- and Mr Tilson actually asked about the rent registry. First of all, going back to what the previous presenter had said, the rent registry is catching up, and we are determined it is going to be a system that works across Ontario. The staff have assured me that things are going very well in that direction. We want to cover all units in the province. That is our goal and we are very concerned if there is a problem with accessory apartments being illegal, and we are making sure we move in other directions to protect those people before any problem arises.
We are very concerned about maintenance; that is a very important part of this legislation. We are determined that maintenance has to be protected in these buildings.
The other question you brought up, and the previous speaker as well, is the stability of accommodation. People who are renting want to know their rents are not going to change dramatically. That is why this bill is there.
The Chair: Your question?
Ms Harrington: How many people in the city of Sudbury would get income increases of 8% every year to cover these costs?
Mr Schmidl: I do not know of a lot of people, certainly through speaking to other people or through the media or whatever, who receive annual increases of greater than 8% in their rate of pay. Perhaps if they are promoted or something like that, or go to a different job, they may end up with an increase that way, but I certainly do not get 8% annual increases and I do not know --
Ms Harrington: Neither do we. That is why we are passing this legislation.
The Chair: Thank you for your presentation, Barry.
SUDBURY DISTRICT PROPERTY OWNERS ASSOCIATION
The Chair: The next presenter is the Sudbury District Property Owners Association. Have they arrived? Are you Patricia Chivers?
Ms Beavis: My name is Lynda Beavis.
The Chair: Okay. We will be following the same procedure.
Ms Beavis: Just before I begin, with the indulgence of the committee, I would like to make a comment to Ms Murdock. I presume you read what you wrote. It is very enlightening for us as an audience to sit and actually hear that the government really does not know what this legislation is all about and how it is going to work and what the components are. It is very disheartening and it is very sad.
Ms S. Murdock: Were you listening to me?
Ms Beavis: Yes, I was listening to you.
In the introduction I would like to say that earlier this year we addressed the standing committee regarding Bill 4. At that time, we told this committee that to deal effectively with, and hopefully to resolve, the housing crisis facing the Ontario housing market, the government and tenants groups and property owners must work together co-operatively and in a spirit of compromise if we hope to develop long-term strategies to solve a very difficult problem. Setting an adversarial tone between the landlords, the business sector, government and tenants' groups, polarizing us into warring camps, is not in the interests of this province or of its residents.
Bill 121 in its present form is a recipe for disaster. The proposed legislation gives tenants more rights and landlords more obligations. Running the province of Ontario is the government's business. Providing homes for people is a landlord's business.
In any business, cash flow is the major component for success. However, unlike the government, the private sector has no access to the public purse to finance expenditures. Just a few short months ago the present government made all kinds of wonderful election promises, just what the public wanted to hear. It seems that reality has set in. As an example, the four-laning of Highway 69 to Toronto is postponed indefinitely again. Why? Cash flow.
Reducing the annual guideline for buildings over seven units immediately eliminates cash flow. Reduced cash flow means regular maintenance jobs may have to be postponed. In addition, common-area capital costs, such as hallway carpeting, will have to be funded from reduced cash flow. Meanwhile, tenants have the right to complain, and landlords have the obligation to comply with a work order issued by the ministry or face a rent reduction. The landlord is obligated to supply the standard of maintenance, even though he or she may not be able to recapture the expense of such repairs because of the 3% ceiling built into the legislation.
Ontario Hydro has already advised the public it intends to raise its rates 44% over the next three years to finance the cost of repairing and/or replacing one of its power plants. Under the proposed legislation, a landlord cannot ever recoup the full cost of this normal non-discretionary cost.
In any free market system the cost of doing business is priced out and the value of the goods or services provided is set out as a result. The landlord business has been out of the free market system for many years. However, most landlords will not complain as long as they are at least able to cover the cost of expenses. Under a cost ceiling this goal is impossible.
How do you explain to the landlord the fairness of this legislation? How do you explain to the landlord caught completely by surprise by the retroactive feature of Bill 4 and subsequently led to believe -- through, I might add, the consultation process that took place earlier this year -- he could look forward to some relief under this proposed legislation that when the penny drops he is still left with an empty purse? Is that the way to build confidence in the people you do business with?
It would behoove you to understand that landlords are people too. Among other things, landlords create living space for people. They work, they create employment for others through renovations and repairs, they pay taxes and they exercise their franchise.
You thought voting was very important a few short months ago. Now you have painted landlords into a corner where the last resort will be judicial challenge. The whole scenario is the adversarial system at its best, and the worst possible solution to the problem.
The creation of more government bureaucracy has already invited considerable controversy with many landlords. The current administrative tribunal system in relation to the Ministry of Housing is perceived to be greatly slanted towards tenant concerns and therefore consistently unsympathetic to landlords.
The sheer volume of government involvement and intervention in the private and public sector makes administrative law an acceptable practice in a fast-paced modern society. However, to be effective, any administrative tribunal must be perceived to be fair and just. Where the legislation under which members of any tribunal must work is, or is perceived to be, unfair or to favour one party over another, how can the members of that committee offer to the public any semblance of fairness or justness in their decisions? Such will be the case with Bill 121 in its present form.
1120
As if all this is not enough, the recent passage of Bill 40, the Mortgages Amendment Act, seems to put everything into perspective. We told you in the last round of hearings that, in our opinion, if even one landlord in Ontario is forced into financial hardship or bankruptcy as a result of the proposed legislation, the social contract between the citizens and the government will be broken. Whether true or not, it could easily be construed that Bill 40 was enacted because you already know the outcome for some of the landlords affected by this legislation.
It is with great sadness that we see little hope you will listen to the real problems relating to the housing crisis in this province. In its present form, Bill 121 is completely unworkable. There are no long-range benefits to any party in the proposed legislation.
We invite you to listen once again. We invite you to seriously look at the affordable housing situation and provide subsidies where they are needed most. This is a social responsibility, not one for the private sector. We invite you to seriously look at how a business operates and base your legislation on realistic ways of doing business. Enact legislation that allows landlords to at least break even instead of forcing some into severe financial hardship, even bankruptcy. We invite you to seriously look at how the trades and subtrades will be affected by work directly resulting from unrealistic tax on capital expenditures. We seriously ask you to look at the balance between tenants' rights and landlords' obligations.
In our opinion, it is unfair to penalize landlords for problems they did not create. Rent review has taken its toll over the years, and under this legislation many business people, willing and able to provide housing, will take other investment opportunities, ultimately to the detriment of the very people you are trying so desperately to help, whether they want you to or not. The long-range outlook for the ramifications of this bill are very serious. The value of rental residential property will subsequently decline and will have no chance of recovery. An ounce of prevention is worth a pound of cure.
I will be happy to answer any questions about that.
The Chair: Thank you for your presentation. The first round goes to Mrs Harrington.
Ms Harrington: First of all, I do understand that because the legislation is not in place, whenever there is a period of change like this, there is uncertainty and there is fear and people do not know what the rules of the game are. That is why we are here. We are trying to find out everyone's feelings and their suggestions and take them into account. We understand this legislation is proposed and we are trying to fine-tune it to make sure it will work for all the people of Ontario, and that includes the landlords who want to earn a fair profit as well as the tenants of this province.
I want to tell you there is a need for regulation in the housing market. Some people believe there is not. We regulate licensing of cars. We regulate environmental standards. There are many facets of our lives that are regulated. Housing is a basic human right like health and education. Therefore, the government is involved in regulating this particular market.
I want to tell you also that there are no guarantees in business. Up to this point, when owning a building, all the costs, whether they were the financial costs of buying the building or the financial costs of operating that building, have been guaranteed to be passed through to the tenants. That is no longer so. The landlord must take some responsibility for that particular property. The upgrading that is necessary for maintenance has to be borne not just by the tenants but by the landlords.
Your suggestion of subsidizing people, which is an alternative to rent regulation, would cost a minimum of $1.4 billion to the government of Ontario and would be an increasing financial black hole. We would certainly not want to get into that because all of the people of Ontario, including the opposition, are telling us that the deficit is too large. We are trying to be and we are going to be fiscally responsible.
Ms Beavis: I do not know the question. I think all Mrs Harrington has done is comment, but I would like to reply to her comment, if I may.
The Chair: You have a moment.
Ms Beavis: In the long run there are not going to be private investors in the housing market and then the government is going to be left with the whole ball of wax. If your position is that a landlord should bear some responsibility in the cost overall of a building, we as property owners are not going to argue with that, but what we are saying is we cannot live with an unrealistic capital expense allowance. If you build in a 3% ceiling that encompasses not only extraordinary operation expenses but capital costs also, it is simply not able to be done. It is a virtual impossibility. If you are asking us our position, we are saying that the bill in its present form -- that is only one reason -- is entirely unworkable. It just cannot work.
Mr Tilson: Mr Mammoliti continues to say we are crystal-balling, that we are predicting the future. Well, I can say we are not. We are looking at facts that the government has put forward as late as its green paper, where it stated -- I believe it was on page 3 -- that with private rental production reaching new lows because the cost of building, especially in relation to land costs, exceeds the market rents obtainable, there will be a major shortfall in meeting rental requirements after 1993 without new sources of rental supply. After 1991, virtually all anticipated new housing will be social housing, non-profit or co-operatives, which includes a mix of rent and rent-geared-to-income units. So the government's policy is that there will be no new private enterprise building rental housing after 1991.
My question to you is with respect to the existing housing from the north's perspective, because we have heard some evidence in the south. Landlords in the south are saying: "We don't intend to put any more capital expenditures, any capital funds, into capital improvements, because this legislation won't allow for it. All we're going to do is fight off the work order people just to stay alive." Would you comment as to what you perceive the position of the landlords and the owners of rental accommodation in the north is?
Ms Beavis: Mr Tilson, our position is no different than the one in the south. They are still humans. They still have a cash flow, a budget to meet, and they simply cannot do it. I might add one other thing: There are regional disparities, very real regional disparities, and one of them in the north is a longer heating season, which ultimately results in a greater cost to a landlord simply because you have to provide that facility for a longer period of time. The landlord's costs are increased here and yet he is faced with the same restrictions that someone in the south does not have to encounter.
I agree with your statement that there is going to be the majority of landlords -- there are a few major landlords who can weather the storm. They will admit that. They have come full cycle and they can handle this interim period, but the majority, 98%, cannot. They will only be treading water, just trying to keep their head above water. They are not going to plan capital expenditures and they are now telling the subtrades, which depend on renovations for their income during the winter months because there is no real construction going on: "Forget it. There's no work. I'm simply not going to do the work because I cannot finance it."
Ms Poole: Thank you for your presentation. I will be brief because I know Mr Mahoney also has a quick question.
A number of people who have presented to our committee have made the point that the double guideline suggested by the government in Bill 121 simply does not make any sense. First of all, it is confusing. Second, it is based on the size of the building. So far, any presenters to our committee who have brought it up have said it costs the same to operate a small building as a large building. Could you comment on this?
Second, if you are going to have two guidelines at all -- we doubt that you need to, but if you are -- does it make more sense to base them on the age of a building and give a higher guideline to the older buildings as opposed to the newer ones?
Ms Beavis: In answer to your question, first of all, I do not think a dual guideline is the proper way to go. I am a great believer in each case on its own merits. There are some larger buildings that have horrendously low rates and some some smaller buildings that have closer to average market rates. Basing it on nothing but strict percentages and no logical explanation whatsoever just widens that disparity. There is just no reason for it. I really think it should be on an individual basis, building by building.
Mr Mahoney: I am interested when I hear the government spokesperson on this committee saying they are here to listen, to make the bill workable, and they want to hear your concerns. I would recommend you not be lulled by that kind of rhetoric.
My question would deal with items that are cost pass-throughs as a result of public policy. Hydro rates we have talked about. Municipal taxes we have talked about. These are things that are out of your control entirely and are set either by agencies or directly by other governments and simply passed on.
There was a statement made by the previous presenter that those increases can be passed on to the tenant up to a cap of 3%, I believe. If it is approved, it can be passed. How are you and your members going to deal with the double-digit tax increases and double-digit hydro increases and perhaps gas increases, that type of thing? Are you just going to close the door?
Ms Beavis: I think what is going to happen is that the Mortgages Act is going to find some very interesting occupants, and the financial institutions -- some of the bankers I have talked to are already very apprehensive about the fact that the landlord is going to be able to open his books and show a red balance. Who is going to finance him on that? He has a work order that he has to comply with. He has nowhere to go, no leverage. He is already mortgaged to the hilt. He cannot get any more, and he is just going to walk away. He or she does not have any choice; that is the corner they have been painted into and it is a very real hardship, a severe hardship.
The Chair: Thank you for your presentation.
Ms Beavis: Thank you for your time.
1130
MAURIZIO VISENTIN
The Chair: The next presenter, Maurizio Visentin. We will be following the same procedure. You have approximately 15 minutes, and you can save some time for questions and answers.
Mr Visentin: Mr Chairman, members of the committee, I wish to thank you for permitting me the opportunity to express my views on the issue of Bill 121. My name is Maurizio Visentin and, beyond representing myself, I also represent four other family members who in 1987, as I stated in February of this year, jointly purchased two apartment buildings totalling 24 units. As you can easily determine, the magnitude of our holdings is small and family oriented, with a long-term ownership view.
Over the past four years, we have consistently carried out work to improve the condition of the buildings and the living standard of those who make apartments their home.
For the past four years, in one of the two buildings, which has 11 units, we have operated at a substantial loss, a loss which was further increased by the present government's introduction of Bill 4 and its subsequent passage into legislation. Details are provided in a submission which I made in February to the committee, and you have copies of that.
It is difficult to address Bill 121 as an individual piece of legislation in itself. Let us face the reality that Bill 121 is another attempt by another government to impose its vision of justice through laws on rental property owners. You are only adding one more patch to all the other temporary patches since 1975, but your patch is intended to be permanent, as if glued down with a super glue, perhaps the infamous Krazy Glue, and a crazy piece of legislation it is. Bill 121 is, in some ways, one step forward, in most ways at least two steps backwards, and certainly one step way out in the naïve left.
Thirty years ago this month, at the founding convention of the NDP, Tommy Douglas attempted to describe what he perceived to be the horrors of the free enterprise system through a joke. An elephant dancing among chickens was happily shouting, "Every man for himself." The present government's course in housing policy and its rent control policies are equivalent to this government being the elephant; the chickens are the small landlords of this province.
If I may be allowed to draw from another joke -- two farm animals, a pig and a chicken, were walking down the road and approached a restaurant with a flashing sign, "Bacon and eggs." The chicken turned to the pig and said, "Isn't it wonderful to be making a contribution to society?" "Speak for yourself," said the pig. "Mine is a lifetime contribution."
The majority of landlords in this province have and continue to make a lifetime contribution to solving the housing crisis of Ontario. The small landlords of this province are not the fat hogs this government portrays. This government's legislative agenda will literally slaughter thousands of small landlords throughout this province and hand over more power to you and the large corporate landlords.
On June 6, the then Minister of Housing, through his ministry, mailed out copies of news releases of the minister's introduction of Bill 121. In the same tradition as the 1990 election campaign, the previous Minister of Housing, along with the Premier, continued the perpetuation of lies for self-serving political gains. The minister stated: "This legislation will provide Ontario tenants with the best protection in Canada. Tenants will never again have to fear the 15%, 20% and 50% per cent increases of the past.
The Premier, on November 28, 1990, is quoted as saying, in reference to the introduction of Bill 4, "Tenants were facing increases of up to 150%, 170%."
It would be nice if the two gentlemen could place their political rhetoric aside and ask for accurate figures. Between January 1, 1989 and October 31, 1990, 74% of all units in Ontario, or 887,857 units, did not seek a rent increase above the guideline.
How many units received rent increases of 15% to 25%? A total of 2.74% of Ontario's privately owned apartment units. How many received rent increases of 40% to 90%? It was 0.14%. If we examine Mr Rae's assertion of rent increases of 150% to 170%, the truth is that 154 units out of 1,200,000, or 12/1000 of 1%, received an increase above 100%. The truth reveals fabrication by both the honourable Mr Cooke and the honourable Premier.
I would strongly suggest that the then and present Minister of Housing, the Premier and every member of this government stop deceiving the public, because you are hurting innocent people. It may surprise you to know, although it should not, because there are a good half-dozen members of your caucus who are apparently landlords, that landlords are people too.
It may be fashionable to hate landlords, but the reality again is that the rent is not the largest expenditure for Ontarians. It is taxes. The cost of shelter as an expenditure of total income has consistently decreased. Most tenants do not need protection from rising rents, even if you choose to fabricate numbers. They need protection from rising taxes.
In Sudbury, in the private sector in 1987, the average rent for a two-bedroom apartment was $435. In 1990, the same apartment cost on the average $489, a rise of $54 over those four years, or a 2.7% increase per year.
Ladies and gentlemen, rent controls are a poor way to address the issue that you should be addressing: affordable housing in the province of Ontario. Do not forget that rent controls were a temporary reaction to wage controls, an outcome of manipulation of the media by Stephen Lewis and the playing of electoral politics by then Premier Davis.
Rent controls do not solve the problem of affordable housing, but rather transfer income that should rightly be going to rental property owners to tenants who are not low-income households. The rental property owners most affected are small landlords and there are no government aid programs for them.
The problem of low-income individuals spending a large portion of their income on shelter cannot be solved by rent controls, since what you are asking the rental property owners to do is to personally subsidize rental property. Ladies and gentlemen, small rental property owners were never given the money-printing machine that the Treasurer of this province recently acquired; their debts have to be paid.
The honourable Premier of this province would have us believe that his government can better manage the rental housing sector. Take a look at the Sudbury Housing Authority: increases last year in management costs, 13%; previous increases in management, 25.6%. Why two sets of standards, one for the government and one for the private sector? Will this government also cap funding and increases to the Ontario housing authority?
The average rent in Sudbury for a two-bedroom apartment in 1990 was $489 plus utilities. At one of Sudbury Housing Authority's largest complexes, the market rent for a two-bedroom apartment in 1990 was $612 plus utilities. That same market rent is now $668 plus utilities, an increase of 8.3%. Who is breaking the guidelines?
In one of the two apartment buildings we own, a two-bedroom apartment with appliances and all utilities paid for, averages $539 per month. In the other 11-unit complex we have, some units caught in the Bill 4 scenario, rent at $460 plus heat and hydro. Are these unreasonable rents? Why should our rents be substantially lower than the Sudbury Housing Authority's market rents? Who is subsidizing us? Why should we have to take money out of our personal earnings to subsidize rents stifled by rent controls?
The report of the Rent Review Advisory Committee, submitted to the Honourable Alvin Curling, Minister of Housing, in April 1986, clearly stated: "A number of mostly, but not exclusively, smaller buildings were, in 1975, charging rents well below then prevailing market rents for a variety of reasons. Typically the owners of these smaller buildings bought them with their savings and personal earnings and have maintained them through `sweat equity.' Over the years of rent review these buildings have been caught in an unfair and deteriorating situation."
Finally, a recognition that there is inequity; but that legislation, although printed, was never passed.
Bill 121 is a far cry from such reasonable words. In a socialist fairy tale format, it caps all costs at 3% above the guideline. What will the landlords of this province do if Ontario Hydro actually increases rates by 40% over the next three years? Who will absorb increases in municipal taxes above the guideline? Who will absorb the surtaxes the municipalities are toying with?
How understanding will public utilities and municipalities be to the reminder that our costs cannot increase above 3% of the rent guideline? If by any chance they are going to increase above the guideline, they had better fit into the magical NDP 3% formula of how the world should unfold.
1140
At the same time, we had better pray to NDP socialism that the building itself will not require any capital expenditures above the guideline, and if it does, it had better be within 3%. If by some stroke of luck there should be a decrease in some costs, such as municipal taxes, under Bill 121 that will result in a rent decrease.
How naïve can you be about the real world of rental property and how it works? In 1988 one of our buildings was assessed at a rental income level of $370 per month for a two-bedroom unit, because that was the Ministry of Revenue's standard application for our area. Our actual rent was $341. Who cares? The ministry says and documents say it should be $370. Raise your rents? You cannot raise rents. Rent review, rent controls. Who cares? Absorb the cost.
That means that we, as the owners of one of the apartment buildings, are absorbing an extra $2,000 in municipal taxes a year. The tenants are not paying for it; we are. Good thing we are making a good profit. How am I for time, Mr Chairman?
The Chair: How much do you have left?
Mr Visentin: About three minutes.
The Chair: Can you condense it a little bit?
Mr Visentin: Yes. I will allow the members, especially the NDP side, to read, perhaps, the rest of page 8, which shows great leniency by the Premier towards his own members' mistakes.
What we have is misguided government attempting to solve Ontario's housing crisis via rent controls, using double standards and hypocrisy. Bill 121 exempts buildings with building permits issued on or after June 8, 1991, from rent controls. How will this help to alleviate Ontario's need for affordable housing? How many developers will be renting their units at affordable rents to those presently in need, realizing that within five years they also will be controlled by rent control?
You certainly have a grasp of the problem and how to solve it. But let us not panic. After all, the present government intends to build over 20,000 affordable housing units per year. Or is it 35,000? It presently costs $100,000-plus per unit to develop non-profit housing in this city, not including subsidies. In the private sector it costs on the average about $60,000. You had better keep that money machine well oiled.
As a taxpayer, I am telling you, I am tired of subsidizing. I also have to make a living. I also have a family to support. I cannot afford to support my tenants. I cannot support everyone who is out there. There is a need, but I am tired of paying taxes, ladies and gentlemen.
The private sector is providing the most affordable housing on the market. Neither rent control nor government housing projects will be able to solve Ontario's affordable housing crisis. You desperately need a private sector. You will not get the private sector to help with legislation such as Bill 4 or Bill 121 or the rhetoric in the Agenda for People which was issued prior to the election.
The Chair: We have time for one question per party. The Liberals are first. Mr Mahoney.
Mr Mahoney: Thank you for your very colourful presentation and for some of the material that I think might find its way into a few speeches somewhere along the line.
Ms Poole: He can guarantee it.
Mr Tilson: I will guarantee it.
Ms Poole: The Tory-Liberal accord.
Mr Visentin: You were not here the last time. I have to admit, I was a former member of the NDP.
Mr Mahoney: You were?
Mr Visentin: Yes, and I will admit that.
Mr Mahoney: There are a lot of those, I understand. It is a growing club.
Actually, you have answered so many things in here, but I would just put the same question to you as I put to the last presenter, and that is on costs that are set by public policy: taxes, hydro, that kind of thing. What plans do you have as a landlord to pass those costs on in some way, or are you just going to have to eat them? Have you talked to your accountant? How are you going to handle this?
Mr Visentin: To tell you the truth, accountants are very expensive. As I have tried to say in previous presentations, whatever can be done, we try to do ourselves; but, naturally, whatever can be passed on will have to be passed on. If the city intends to raise its taxes, and other public utilities intend to raise their costs above the guidelines, certainly I am not going to dig any further in my pocket. What have we been doing in the past? We have been taking money out of our own personal savings and putting it into the buildings. We have tried to cut every possible cost, and I think this government fails to understand that.
They have this conception -- perhaps it is because they have lived too often in high-rise apartment buildings -- that every landlord sends his superintendent out to do the work. Sorry. We get up early in the morning and we shovel the snow. We go to bed late after checking buildings. We do everything that possibly can be done ourselves, and when there is no money we scrape deeper in our pockets.
The Chair: Thank you, Maurizio. There is only time for one question.
Mr Mammoliti: Maurizio, I can understand your concern about paying taxes and being very upset at that. I think we all are. I know our government is certainly concerned about the average person paying more taxes. We have this commission under way to help us make our decision on what we should do with the taxes.
Maurizio, there is one thing I do disagree with you on, and that is that you are subsidizing your tenants. The tenants have never really been subsidized by their landlords.
Mr Visentin: I have to stop you.
Mr Mahoney: Keep going, George.
Mr Mammoliti: My opinion is that larger landlords have certainly been subsidized themselves by government. When you talk about some of the landlords in Ontario not paying any taxes at all, that is where you should be concerned. That is where we are concerned. To blame it on the tenants I think is wrong. You may disagree with me, but I wanted to say to you that it is the landlords, more specifically the larger landlords, who have been subsidized, and this bill addresses that.
Mr Visentin: If I may answer the statement, I think that again you are caught in the naïve thinking that I was in years ago as a member of the NDP, that there is someone else to be blamed for all problems. You did not listen to me. I said I am a small landlord. You are penalizing me for what others have done, and I do not feel I should be penalized. Do you want to address the problem properly? Make that visible in Bill 121.
Ms Harrington told me on February 18, when we addressed Bill 4, to have patience. I had patience and what do I get? Bill 121 that further penalizes me and places a cap on expenditures that were legitimately agreed to by tenants, a cap of 3%. I am subsidizing. I did the work. I paid for it. They are enjoying the apartment and the facilities and all the extras, the fridges and stoves that are not supposed to be in the apartment. I cannot remove them, and all that I can increase is maybe 3%. They agreed to pay $500 and more after the work was done. Now they are paying $460 and laughing in my face.
Try owning an apartment building. I told this government: "Go out. Buy an apartment building. Go out. Be a landlord. You make a lot of money. Buy some and rent it to the opposition." I did not see any takers. I do not see any takers. You are living in a dream world. Get real.
The Chair: Mr Tilson.
Mr Tilson: Mr Visentin, you have said it all. I have no other questions.
The Chair: Maurizio, thank you very much for your presentation this morning.
Ms Poole: Mr Chair, I wonder if I might ask for one piece of information from the ministry.
The Chair: Certainly.
Ms Poole: I can do it at the end if you would prefer.
The Chair: Yes, let's do it at the end. We have had two no-shows this morning, and I have also been informed that the first presenter for this afternoon is here and willing to make a presentation as he has a conflict with this afternoon. I thought we could call H and H Property Management.
Mr Mammoliti: Mr Chairman, I am just wondering if there is anybody else here who would perhaps like to address us this morning.
The Chair: I will have the clerk check the audience.
Mr Mammoliti: Because if there is, then we run into a situation of who do we listen to this morning.
The Chair: We are listening to H and H Property Management because they are on the agenda for the afternoon.
Mr Mammoliti: Yes, for this afternoon, but is there anybody else in the audience right now who is scheduled for this afternoon?
The Chair: The clerk will check.
Mrs Carpenter: I have a presentation.
The Chair: Barbara, are you all set for this afternoon? No problem?
Mrs Carpenter: No problem.
1150
H AND H PROPERTY MANAGEMENT
The Chair: We have 15 minutes for H and H Property Management.
Mr R. Hawkins: I should note that I appreciate you moving us up as I have the flu, but I certainly did not want to miss this occasion this morning. I am Roger Hawkins. I am president of H and H Property Management and H and H Investments. This is my brother Nick, who is a vice-president and also our accountant.
I would like to say that in another role I participated in this process dealing with housing issues in this province from the beginning. I have written briefs. I have addressed this committee on Bill 4. I have met personally with the minister and had a deep discussion with him. Throughout it all, in my naïve way, I believed that it might be possible through co-operation and a moderate approach to influence in a positive way housing direction in this province. I hoped the government would have been motivated to listen and to understand all sides of this very complex issue.
The result, Bill 121, indicates that:
1. The current government has selective hearing and has no interest in co-operating with the property owners of this province.
2. The government is more concerned with political constituencies than good policy.
3. Reinventing an already broken wheel does nothing to resolve the housing issues in this province.
The government would have us believe that all landlords are greedy individuals who are mainly concerned with ripping off their tenants by providing poorly maintained housing at exorbitant rents. It may make great press, but it is utterly false.
The government believes that it is the private revenue property owners' responsiblity to provide affordable housing at their personal expense. Whose responsibility is it really? I say subsidize those who need it, in private housing units. Stop creating cash-guzzling ghettos called public housing.
The government believes it can provide housing more efficiently and more cost-effectively than the private sector. I say your units cost twice as much to build and your maintenance costs are 10 times that of the private sector. Compare $2,500 per unit in Sudbury for public housing units versus $250 per unit in the private sector.
You say in your budget you want to build 35,000 units; I also heard the figure 20,000. Can the taxpayers of this province afford it? We are looking at at least $3.5 billion. Can we afford the government taking over the housing industry in this province?
The government wants to encourage developers to build new units. The costs of construction and municipal services are driving the costs of new units and rents for those units way above current market levels in this community. The rising costs of single-family units, due to levies and developmental taxes, have encouraged many upper income earners earning over $50,000 per year to remain in very affordable rental units. An example: a two-bedroom unit for $450. People are living in them who earn $70,000-plus in income, thus limiting the availability of lower-cost units for those who really need them. That is a reality.
The government believes that individuals require no incentives to invest their hard-earned savings into housing, that providing homes for others should be your only reward. That is a fallacy. It is unrealistic and it will not work.
I say there must be a fair rate of return. If you want to cap rents, cap rents. I am all for it. If you think you want to stop the speculation market, then fine. But we have to have a fair rate of return or we cannot operate.
Bill 121 is an apt conclusion to your notorious Bill 4. It is a further Band-Aiding of a complex issue where political concerns take precedence over true problem solving. We are not solving the housing problem in this province. We are talking politics. The government has successfully alienated and further polarized property owners in this province, and it has done it well. Bill 121 is geared to further increasing our obligations with no incentives to us. The government through Bill 121 will financially squeeze the life out of many property owners -- many, your neighbours.
I do not trust the government of this province. It has left us with no alternative personally but to (a) participate in a legal action against it under the Charter of Rights and Freedoms -- we are one of the lead cases -- and (b) sell out our blocks at a loss. We sold one today at a loss because we have no choice. We have been operating at a great loss and we just cannot afford to do it any more. We have pulled out our little equity that is left and we are reinvesting it elsewhere to survive. Our other building we are in the process of remortgaging so that we can survive. That is the reality, my friends, and we are talking about low-rise units.
Ontario is fast becoming the province that lacks opportunity for self-starters and hardworkers who want to invest for their future and invest in their province.
Mr Tilson: Sir, you certainly sound a lot more desperate than you were the last time we heard you and I can understand your frustration.
Mr R. Hawkins: I think part of the desperation is that we thought people would listen. We went and talked to the minister and the minister seemed to understand our concerns, and then we get Bill 121. It does not reflect reality.
Mr Tilson: The observations you make bring to mind a tenant speaking to me the other day about, "Great, our rents are going to be frozen or very minor increases," and in the next breath with a twinkle in his eye he said, "But are our taxes going to stay down?" I guess that gets into the observation that there is certainly a need for assisting the poor, and non-profit housing may be a source, but it is going to be a tremendous cost to the taxpayer of this province if the province continues with its program of encouraging people like you to sell your buildings, like you did today.
Mr R. Hawkins: I am a property manager. I also manage properties for other people. We have done that to try and survive, frankly, in terms of our own. I can tell you right now you are subsidizing the bloody units through your welfare programs and your social assistance programs and so on and so forth. This is an illusion to say that we are not subsidizing housing, because we are. Look at the rise in welfare costs in all the regions of this province and you know that welfare costs are going right out of hand. Do you know what I am saying?
Mr Tilson: I do.
Mr R. Hawkins: So you are subsidizing.
Mr Tilson: My question to you is, what do you perceive, for quality of life, the maintenance and capital improvements to rental units in the north will be as a result of Bill 121?
Mr R. Hawkins: You cannot squeeze money out of a rock that has not got any. I would love to do certain maintenance programs within my buildings to improve the environment for my tenants. In terms of changing windows and so on and so forth, I would love to do it. It was our long-term plan to do that. We cannot. We just do not have the money to do it. If anybody wants to look at our accounts, he can. We had $104,000 loss last year. We just cannot afford it.
1200
Mr Brown: I appreciate you being here, Roger. I think you make the point, as other presenters have made the point, not just here in Sudbury but across the province, of the difference between landlords. The public sector is not required whatsoever to comply with guidelines while the private sector is. I am at a loss to understand why the cost between the two sectors should be that much different, and at a loss to understand why the government would not accept as a reasonable guideline what it is doing in its own housing. Would you think that would be an alternative for guideline, for the private sector to reflect what the public sector does?
Mr R. Hawkins: One of the concerns we have in public housing is that when you start to hire security firms 24 hours a day because you are putting a large group of people together in public housing and there is a lot of damage, lots of problems with public housing -- and these are recorded facts -- your costs are going to go up. When you have to hire untold maintenance crews and so on and so forth on a full-time basis to maintain these units, your costs are going to go up.
I am a humanist, I would say. If I have nine units, I am prepared to give two units over to public. Allow subsidy in the private sector. Get away from the ghetto complex. You want to be humanistic, then do not label people and put them into public housing ghettos. Work co-operatively with the private sector. Let the private sector have some public subsidy within its units and it will do it.
But you are not working co-operatively with Bill 121, and I will tell you right now, the property owners of this province are going to back off. They are angry. I am angry and I started out as a moderate, you all know that. I pushed moderation and I am angry. There is no co-operation here. We may not be enough to throw the NDP out of government but I will tell you, there are a lot of property owners whom I have talked to who are very upset, the vast majority.
Mr Brown: I think there is a growing anger in this sector. The signal this gives us is consistent with what the government is doing in a number of areas towards private enterprise in this province. And I get the sense this anger is far wider than just landlords.
Mr R. Hawkins: It is. I think that is a good point. I am also in the business community, because we are actually getting involved in the business sector to try and stabilize ourselves. And I can tell you that the feeling is the same in the business community. There is a reactiveness there. There was a sincere desire on our part -- and you know that, I talked to you -- to work together with the government to try and resolve the problems of affordable housing. You are not even touching it in 121. All you are doing is Band-aiding a bad situation. We wanted to work with you but you do not want to work with us.
Ms Harrington: First of all, when we came into government the rent review system that was in existence we believe was not working for the people of Ontario. It was a system that was being used and abused and we want to try to fix that. The second thing is that we do not believe this rent control legislation is the answer to the problems of housing in Ontario. There has to be a whole, much larger look at the situation and we have out now a working paper on Housing Strategies for Ontario. You are saying this is a Band-Aid. Certainly in some ways we are trying to improve the system we found. You are saying it has to have a lot of changes to it. I certainly do not agree with all you are saying, but I am saying that there has to be a bigger picture. We have to look farther and wider and we have to work with the business community, and not just in housing but in many other areas which you just touched on.
Mr R. Hawkins: I do not want a speech. I just want to say one thing to you. What really is happening here, and I think Mr Tilson and Mr Brown were alluding to it, is that you have broken faith with people who were going to give you an opportunity. I am also chairman of the property owners' association in this area, I purposely wanted to speak as an individual. I think the danger is you have broken faith with the little guys and the big guys who are dealing with housing in this province and that is the serious danger. Now I really sincerely hope the government can in some way regain that faith. If not, you have got a war.
Ms Harrington: That is up to the people of Ontario --
Mr R. Hawkins: And that is very sad and that is not going to help anybody and that is why we tried to be moderate initially.
Ms Harrington: I understand. I wanted to continue with a couple more points. You are very right in saying that we have to have a good policy. The government does not want to put forward a policy which is good for maybe a year, and then two and a half or three years from now, just before another election, it breaks down and buildings are not being maintained or built or whatever. That would be disaster for us and for everybody. So we are saying that we want a system that works.
We also believe that 80% of the landlords of this province have not gone to rent review for increases above the guideline. We recognize that those are the people who know how to manage their business and treat their tenants and maintain their buildings. That is all we want. We want fair profit rent.
The last thing is reality. You talked about reality of rental housing in this province. I think you do live in a real world, and part of that is seeing people out there in the city of Sudbury who do not get the 8% increase every year. They will have to leave those apartment buildings. You do not want, probably, tenants who are leaving. You want stable tenants who are there. What are we doing if we keep increasing --
Mr R. Hawkins: I have had tenants in my building for 15 years.
Ms Harrington: Okay, that is what we want. That will not exist if we have the cap above 8%. It will cause people to move.
Mr R. Hawkins: Unless you accept the reality that landlords are not making a great deal of money in this province on property. The average is a 3% return, and that is your figure. You have to deal with the issue of fair rate of return. I am saying fair. I am not saying gouging. I told the minister the same thing --
Ms Harrington: I agree.
Mr R. Hawkins: If you want the property owners in this province, that pay a hell of a lot in taxes and provide a lot of jobs, to support the government, you better deal with fair rate of return. If you are not going to deal with it, then we have a problem.
Ms Harrington: I just want, lastly, to quote one sentence from the previous presenter and he says --
The Chair: We are well over time --
Ms Harrington: "Long overdue changes should seek a balance." That is what we are doing, this government, long overdue changes: "A balance between the basic needs of affordable shelter for tenants, with the corresponding need for landlords as providers of shelter." That is what we are working towards.
Mr N. Hawkins: Can I say something? I just want to make one comment. The impression is given that if a landlord goes to rent review he is a bad landlord. You said it yourself, 80% of people did not go to rent review; therefore, they are bad if they go to rent review --
Ms Harrington: No, I did not say that --
Mr N. Hawkins: But that is not true. So if 80% do not go and the other 20% go -- okay, there are always bad apples in every barrel, so 1% went to rent review and are playing games with rent review. What about the 95%, 99% of landlords who have legitimate concerns with the cost structure in their building? If you do not get a rate of return, you are going to lose the building.
Ms Harrington: Okay, fair profit, yes.
The Chair: Thank you for your presentation. Ms Poole has a point she would like to bring up.
Ms Poole: I have a request for the ministry. We have had a number of presenters who have brought up the fact that Ontario Hydro is anticipating a 44% increase over the next three years. We all know that municipal taxes are increasing at a very rapid rate. I would ask the ministry to calculate the guideline amount for 1995 based on a 44% increase over the next three years for hydro, plus based on a 10% municipal tax increase per year, which I think is what many municipalities are running, plus whatever they might project for annual increases in heating and water, so that we can actually see whether these 44% increases are going to be covered in the guideline or whether landlords are going to be out significant amounts of money if it is not covered. So I would ask the ministry to provide that information before our hearings end in August.
The Chair: Very good, thank you, Ms Poole. We will ensure that information is put together and distributed to all members of the committee. The committee stands adjourned until 2:15 this afternoon.
Mr Tilson: Chair, before you declare it, I understood there was some time today when we were going to have a discussion with the ministry staff. That is wrong?
Ms Deller: Sorry, that was changed to the 19th.
Mr Tilson: That is next week?
Ms Deller: Yes.
The Chair: We stand adjourned until 2:15 this afternoon.
The committee recessed at 1210.
AFTERNOON SITTING
The committee resumed at 1420.
The Vice-Chair: Good afternoon. The business of the committee this afternoon is to conduct public hearings on Bill 121.
KEN KALTIAINEN
The Vice-Chair: Our first presenter will be Ken Kaltiainen. Ken, you have 15 minutes to make your presentation. If you wish to reserve some of that time for conversation with the committee, that would be appreciated. If you would identify yourself for the purposes of Hansard and help me with the pronunciation of your name.
Mr Kaltiainen: My name is Ken Kaltianen. I am a middle-class, middle-income constituent of this province. Since last summer after the election I have been monitoring and forced to monitor this government as to what it was doing. If I were to grade this government over the last 14 years I have been able to vote -- congratulations, you have flunked. You have failed me, my family, my kids and myself, our future. I have worked 14 years here in the industry I am in. In my industry, working for draughtsmen and architects, there ain't no pension plan and there ain't no life insurance. There is no dental plan. So instead of buying a house, I saved and scrimped every penny I could find. What did I do? I bought a building.
I knew there were rent controls. I said, "Rent controls ain't so bad," and I put my money in there. As you heard from my presentation on Bill 4, and as I am here to tell you now, if you pass Bill 121 the way it is, myself and a whole pile of other landlords are going to go under. I would like you to go tell my kids why we have to move out of our house and rent from somebody else, and possibly the government, because as one Bill 4 member said, "You made a bad investment." No, I did not make a bad investment. I made an investment under the legislation at that time and you guys keep on changing the legislation. Very rarely have I seen this problem in Alberta, where I practised, where I learned my trade for 12 years, because I could not learn it here.
I was talking to my father the other day, who is a businessman in Sudbury here. He has been a businessman here since he was 16, since his father died. We had an interesting chat. He compared the NDP government to the federal PCs.
Ms Harrington: That is scary.
Mr Kaltiainen: Well, the feds gave us free trade. The NDP has given us a $10-billion deficit. Who is going to pay for that deficit? Me. I am the guy who is going to end up paying for it. You cannot go tax the welfare guy. He has gone fishing. You are not going to tax the rich guy, the guy who has 2,000 or 3,000 units or the guy who has a $2-million or $3-million company. He has the accountants and lawyers to fight these tax credits.
The feds gave us GST. What has the NDP given us? A middle-class dictatorship. This is the investment. You guys are going to buy buildings you can rent and develop and make a profit? Hell, no -- profit is a dirty word. You cannot recoup your losses for rent repairs. I built a ramp beside my apartment building because the tenant that was there could not get out of his apartment because he was bound to a wheelchair, and he could not get into social housing. He told me he has been on the list for three years. I have owned the building for two prior to that. I built the ramp with my own money. I went for assistance. They said: "Yes, there's federal grants. Go get them." But they freeze the rents on that unit and every unit in the building. So instead of seeing this gentleman fall down those stairs again and get all scraped up, taken to the hospital and mucked up again, I built the ramp on the weekend, myself, with my money and my labour and I did not raise his rent one penny. That is a special case. I would not do that with everyone.
I would like this government to talk to the people from Caterpillar who lost their jobs, pass-the-buck government saying, "Oh, it's the federal government that did this." What is the Ontario government doing about it? I will tell you: diddly-squat. Talk to the people here at Neelon Castings in Sudbury who are losing their jobs, and every other manufacturing job in Sudbury. What are you guys doing? Next to nothing, as far as I am concerned.
I call this a pass-the-buck government. I keep hearing: "Well, it was the previous Liberals. It was the previous PCs. The federal government is doing this here." The arrogance of this government makes me sick. I am going to tell you something here. In the Bill 4 hearings I watched damned near every one of them, and this governing party had the nerve to comment on a group's registered name. It had something to do with a multiple-family housing authority or something like that. You questioned his business name. Look in the Bill 4 hearings. You will see it. I think it was out of London. Well, I am going to question your name, the NDP, the New Democratic Party. This is not "new." This is an economic disaster. This is something that most economists will tell you is terrible. Who is going to pay for this debt? I cannot afford to keep paying for all the welfare cases in Sudbury here and seeing my taxes go up. This is not "democratic;" this is communist; this is a dictatorship. The eastern bloc is trying to become a capitalist organization. What do we do here? You do not get diddly-squat. They say: "Oh, you made a bad investment. Sorry, we're the NDP government now. That's the previous government. Don't worry about it." That is sickening.
I would like to know how many people here in this government were in private enterprise before they came into this government. How many people were even landlords? I will tell you something. My grandmother built a building here in Sudbury, in 1939, by herself, with a child that was six or seven years old. Right now that building is under rent control. And do you know what? I told my dad when it gets empty to leave it empty, because it is not worth fixing it up. I work for architects. I could tell him exactly how to fix it up, where to fix it and what to do to make it look nice, but what for? The rents in there do not even cover the bloody taxes. The God-darned land is worth more than the buildings, and you know what? It is a bloody eyesore, that building. It was one of the first buildings on that street in that area. They had to bring power down to there. I am not going to tell him to go down and fix it up. I will say, "Don't. Lock the damned thing up. Burn it if you have to, even though it's against the law." What is law? We see the law changed every year. Maybe it will be legal next year, right?
There is another reason why I did not submit anything in writing this time. I did in Bill 4 and did a lot of research. I am in the construction industry. I know. I did not submit anything here because I did not want to spend the money on the paper. I want to start to save my pennies because I do not want to lose my investment. I do not want to lose 14 years of my life because one government decides landlords are a dirty word. You go talk to any one of my tenants and they will tell you Ken shows up at their place at 2 o'clock in the morning for whatever the scenario will be. There is something broken? He fixes it. Yes, we have bad landlords and bad tenants, but we do not have a $5-million expenditure here like the Sudbury Housing Authority.
I do not understand this. I am a small guy. I am not very powerful here. Yet, I have the Minister of Northern Development and Mines right here in Sudbury. I would like to know what business it is of hers to go down to talk to a tenant group. Has that got anything to do with mines and economic development? No, a Mines minister? That has diddly-squat to do with the mines, yet will she meet with us as landlords? Will she meet with me? I will tell you right now that I am SOL. That is the kind of standard I do not like.
We had a group here in Sudbury, the Sudbury District Property Owners Association, which did a review of Bill 121 and gave some feedback. Did you see the garbage that came out? Why would I submit copy on Bill 121? You guys do not even read the stuff when you ask for feedback. This here is all a joke. This is ridiculous.
Bills 4 and 121 are supposed to help the housing crisis. Do you know that in Sudbury here yesterday the local CMHC office released a piece of news information, a mini-bulletin, that 30% of Sudbury's renters can afford houses in Sudbury? Why the hell would I want to go out and buy a house when my landlord is going to cut the grass, paint the walls, fix the plumbing and shovel the driveway? I can go out and buy a snow machine or a boat and go fishing or camping. I can go out to Florida. I have tenants who were in my building who have since moved up in buildings. They go to Mexico every year. Boy, I ought to sell my buildings, take the loss and go on welfare and I would go to Mexico every year too. Would that not be nice?
I would still like to know how we are going to pay for this $10-billion deficit. Hell, we have a federal government that has some $30 billion, and they cannot even pay for it. I think most of you guys are in la-la land, to tell you the truth.
Then the previous Housing minister puts out a news release saying that people should build apartments in their basement. Why, if I had a house, should I build an apartment in my basement? So I can become a landlord and fall under Bill 121 too? So I could lose my house because some stupid tenant is going to say, "Your garage is not up to snuff here"? Why, as a householder, would I want to help out the housing problem? I just got the hell out of an apartment building. Why should I want to help out the housing crisis? That is the government's job.
One member over in the NDP government asked me, "Don't you think it is a human right to have a place to live?" Damn right it is a human right to have a place to live, but do you not think that it is a Canadian right to own property and not lose your shirt because the government is forcing you to, regardless of what level? I ask you that. How would you like it if I changed the law on you guys and said: "All MPs who own houses, too bad, you now have to go rent. We'll take your house. Oh, profit? You put a down payment? Too bad; you lose it." Is this not the same thing?
And then I hear that the NDP government is doing things the other governments were afraid to do and say, "We're doing what the people want us to do." Horse puckies. If that is what you think, call an election and let's see what the hell people have to say now with truckers' tax, gasoline tax and a changing insurance policy. Insurance: Are people so stupid that when they go to get insurance on their vehicle, they do not read their policies? Not all of them do, I grant you that. But do they not go shopping? If you have to shop for a new pair of shoes, do you go in the first store, buy the shoes and take off?
You guys have to open your ears a little bit, give your heads a shake and see if there is anything in there. This is ridiculous. I did a nice presentation on Bill 121. I was going to give you all kinds of facts and figures. But after 30 typed pages of stuff, forget it. So if you guys think you are doing the right thing and that this is what the people want, call an election. Do like the Peterson government did and see if this is what the people really want. I will answer your questions if you have any.
1430
Mr Tilson: Yes, sir, I seem to recall that you spoke at the Bill 4 hearings, and you are the accountant or one of --
Mr Kaltiainen: No, I am a draughtsman. I work for architects.
Mr Tilson: You went out west and then returned to Sudbury.
Mr Kaltiainen: Yes.
Mr Tilson: And you also indicated this morning that you are in construction or have some connection with the construction business.
Mr Kaltiainen: Yes, I do. You cannot be a draughtsman and work for architects and not be involved in the construction industry.
Mr Tilson: It is in that line I would like to ask you a question. You touched on the issue of employment, and our party has certainly been submitting that there have been unbelievable job losses as a result of what led up to Bill 4 and subsequently, and now there are going to be more job losses because of what is leading up to Bill 121 and after Bill 121. Of course, Mr Cooke's response to those sorts of statements is: "Oh, well, there's a recession going on. It's the feds' problem. It's the goods and services tax," as you said. I would like if you were able to comment and connect any of the job losses, which I am sure there are in the north, to the government's housing policies.
Mr Kaltiainen: For every unit built, there are 58 trades. You would read this in my Bill 4 submission. There are 58 trades directly affected every time you build one unit. The private sector here is still building units for $40,000 a unit. The figures are out there. The government is building for $120,000 to $130,000. The figures are there to back it up. Go check the Ministry of Housing right here in Sudbury; go check CMHC. They will tell you. I know. I certify the progress claims.
The jobs that are being lost right now are not in new construction; they are in renovation: guys replacing windows, doing wiring, plumbing, siding, brick, paving, landscaping, carpets, cupboards. You name it. Anything you can touch is being lost. When you put something like Bill 121 or Bill 4 or any one of them that has to do with limiting the money that can go around, you are dead.
Mr Mahoney: I remember your presentation last time on Bill 4 and how it was fairly calm, if I recall correctly, and well-thought-out and well-presented. As we saw this morning, there is a great increase in the stress level. I guess it is because you feel you were told there would be some solutions in the bill to the problems that had been created in Bill 4, such as if you were caught with any of the capital problems, that type of thing, and none of that has occurred, so it is a pretty clear betrayal by the government. They attempt to sort of lull you to sleep by saying, "We're going to look at it." In fact, we are hearing that from the parliamentary assistant in these hearings, "We're going to look at amendments and things of that nature." It would appear those amendments are going to fall on deaf ears, and we have a number of them that we will be putting. You have to make a business decision. Are you getting out? And if you are, how do you extricate yourself?
Mr Kaltiainen: No, I am not going to get out. At one time I stressed that I was going to pack everything up and go back to Edmonton, where there are no rent controls, and, hey, boom time. We never had a problem. They are in a lull there right now. They just are not up. They still do not have a problem. The reason they do not have a problem is that they are properly legislated. There are no rent controls but there is a rent regulation act, which is not the rent controls we have here.
I am going to stay here and I am going to fight like hell to keep what I have at all costs. I tell you, Ms Murdock, when the next election comes you are going to hear from me and my neighbours. I have neighbours either side of me, they had nice big NDP signs last year. You talk to my neighbours now. They have not got very much to say about you people right now, not much at all. I am going to hang on any way I can. This is one of the reasons I say I had to make a submission here because, with the majority government -- Mulroney said it best: "Who cares? They can't bump us out of power. We've got a majority." You see this every time you watch the legislative channel.
Ms Harrington: When the next election comes we will all take what is due us and every politician knows that.
Mr Kaltiainen: You betcha.
Ms Harrington: I am trying to speak. Second, we are here because we are looking for amendments to this bill and we are here to try to find out what is really happening up here. I want to ask you a question, but before I do I just wanted to point this out to you. I just found this in the lobby of this hotel and it is called Northern Ontario Business, which is August 1991. You asked me the question, "What is this government doing for northern Ontario?" or something similar to that. The answer, part of it, is right here. "The provincial government's $700-million anti-recession program is helping keep Ontario's economy afloat during tough times, according to two economics professors at Laurentian University in Sudbury." What he actually said was "The program puts funds in the hands of consumers and helps fuel the economy." It has a map of northern Ontario and it shows that over 30% of the anti-recession money is coming directly to northern Ontario. That is what the deficit is about. My question to you, sir --
Mr Mahoney: On a point of order, Mr Chairman: It is all well and good to hear the defence by this government's parliamentary assistant, but I think it is irrelevant to Bill 121 and that is what we are here on.
Ms Harrington: Sir, the gentleman --
The Vice-Chair: Continue, Mrs Harrington.
Ms Harrington: Thank you very much.
Mr Mammoliti: On a point of order, Mr Chairman: I sat here and listened to the presenter and he asked specifically what we are doing. She is responding to that. If anybody is out of order, it is the person who spoke previously to me.
The Vice-Chair: Mr Mammoliti, I had indicated that Mrs Harrington could continue. The Chair has given the speakers a great deal of latitude within the time frame, and it is time for Mrs Harrington to place a question.
Mr Mammoliti: Thank you, Mr Chairman, for listening.
Ms Harrington: The very important subject at the base of your concern is the fair profit we want for landlords. What do you feel should be a fair rate of return for your investment?
Mr Kaltiainen: First of all, I am going to clarify my statement to you when I said you are doing nothing for me: I am talking as a landlord. This is what we are talking about here, Bill 121 and I do not mean Bill 4 --
Mr Abel: You said for the province.
Ms Harrington: You were mentioning broader things.
Mr Kaltiainen: All right, now, a fair rate of return. If you were to go to a bank, what would they say a fair rate of return would be? Would you not like a fair rate of return equal to a bank, whatever the interest rate would be?
Ms Harrington: I am asking you as a landlord what you think a fair rate of return should be.
Mr Tilson: Give him a chance, he is trying to answer.
Mr Mahoney: Say anything.
Mr Kaltiainen: No, anything -- they are giving me zero. A fair rate for return for me that I could scrimp by at a minimum would be 5% or 6%. I would like to see the same as a bank. If a bank is getting 12% I would like 12%. Why else would you go and invest in a building? If a building can only give you 2% or 1% return, why would you put your money in a building? Put it in a bank. It makes economic sense, does it not?
Ms Harrington: Just a clarification on that.
The Vice-Chair: I have been quite lenient.
Ms Harrington: We are trying to get at the basis of this. You said 5% a year and that does not include any return at the end when you sell that building? That does not include capital?
Mr Kaltiainen: Give me a break.
Ms Harrington: No? Does it include it or not?
Mr Kaltiainen: No, 5% every year. When I sell that building, that is my retirement fund and that is also a fund I can help my children go to a university or a college. That is what that building is for, okay?
Ms Harrington: I am just trying to get it clear.
Mr Kaltiainen: It is another business. You do not go into this thing because you have financial help in every department, health, medical, life insurance, collegiate funds --
The Vice-Chair: Thanks, Ken, the time has expired.
1440
KINGSWAY VILLA LTD
The Vice-Chair: The next presenter is Guy Carpenter, Kingsway Villa. Good afternoon, Mr Carpenter. We are pleased to have you before the committee. You have 15 minutes to make your presentation. The committee always appreciates a little time being left so that it can discuss the presentation with you.
Mr Carpenter: I have no problem.
The Vice-Chair: If you would introduce yourself and your organization.
Mr Carpenter: My name is Guy Carpenter. I am one of the directors of a company called Kingsway Villa Ltd. This company owns and operates mobile home parks in the region of Sudbury. I am here today to voice my opinion of the new legislation being proposed. I own a park located in Sudbury which contains 63 mobile home lots. These lots are subject to the Landlord and Tenant Act as well, thanks to Bill 4. The passing of Bill 4 has also put mobile home parks under the rent regulations act or clarified it.
Each of these mobile home lots contains a sewer system which comprises a septic tank and a field bed. This park was built over 30 years ago. We bought this park knowing there would be problems. What we did not plan on was the government stepping in and changing the game plan for the whole rent review system. I feel mobile home parks should not be under the Landlord and Tenant Act or rent controls, due to the fact that there are a lot of different expenses involved, such as maintaining sewer systems, hydro, stuff you would not run into with an apartment.
A few of the septic tanks in our park are now in a condition of disrepair. The health unit, by doing its job, has informed us that this system must be fixed. To correct the problem, we have applied for permits to fix them but in the last 20 or so years the rules towards septic systems have changed considerably. One of the most significant changes that affects us are the lot sizes required, as well as the distance now required from different things, such as ditches, buildings, sheds, water courses, etc.
Due to the fact that these lots do not comply with the rules set out today, it forces the health unit to deny permits to fix these lots that are in disrepair. But due to the political and social implications of denying the permits and with a little persuasion from an MPP such as Shelley Martel, the health unit tried to find an alternative to denying the applications, knowing that if the applications are denied the lots would have to be closed and people would be homeless, because in Sudbury there just is not any place for these people to go.
So the health unit is forced to find another solution to the problem. In doing so, they force us to put good money over bad and obtain an engineering study for the park. This study suggests ways to rectify the problem. One of the ways in the report which the health unit liked was the building of a private communal septic system as opposed to individual septic systems. Such an endeavour is not without cost. This solution is estimated to cost about $500,000.
We tell these people that we do not have that kind of money and they say they do not care, but order us to find the money and to do the work or face consequences. With the fact that we own lands and no buildings -- we are just the owner of the lands -- no institution will lend us the kind of money needed to effect the repairs. Even if we could borrow the money, this new legislation makes it impossible to pay it back because the biggest legal increase obtainable is the rate of inflation plus 3% for capital expenditures.
Basically, what happens is that the people in this park pay $147 a month for their lot. People paying $147 a month would receive an increase of a maximum of $13 to cover the rate of inflation as well as the costs of capital expenditures.
The 3% allowed for capital expenditures is roughly $4 per unit; $4 times 63 units comes out to $277, so that is what they propose we can get per month to pay for these capital expenditures. But if you were to borrow $500,000, the payment per month, amortized over 25 years, would be $5,000, and $277 out of $5,000 is quite impossible to pay back.
It leaves us with no choice but to close the park, putting 63 people on the street with nowhere else to go, because like I say, in the region of Sudbury, there are bylaws preventing new parks from opening, and there just is not any place for them to go.
I have had conversations with Shelley Martel on the subject, and the NDP government is standing firm on its policies that the landlords are nothing and they deserve to pay. In a phone conversation with her, she was pleased to see what was going on and even advised me that she would make sure we did effect the repairs rather than close it.
Due to the fact that we cannot afford to fix it, we proposed that the park would have to be closed. Now the health unit, as well as Shelley Martel, not liking this solution, organized meetings with the Ministry of the Environment to apply pressure to have the disrepair fixed. The Ministry of the Environment in turn has now charged us with several counts under the Environmental Protection Act due to the fact that the sceptic systems are not fixed. Now we are supposed to go to court next month, as a matter of fact, facing over 79 charges under the Environmental Protection Act.
The permits applied for were not denied but were not granted, so basically right now we do not even have a permit to fix these if we wanted to, yet they are still laying charges against us. It is a very complicated situation.
Mr Tilson: No, it is pretty clear to us.
Mr Carpenter: They do not like the idea of the park closing because it is a political and social issue, so to apply force they pull in the big people, the Ministry of the Environment, and this is a very touchy issue these days.
They will not allow us to fix it by granting us permits, but because it is not fixed they continue to charge us under the Environmental Protection Act because the systems are broken. Basically our choices are clear: Either we try and find the money and go bankrupt, because like I say, there is no way to recoup that money with this new legislation -- $500,000; there is just no way we will ever get it back. The alternative to going bankrupt is to spend the rest of our lives in court or in prison, whichever comes first.
Mr Tilson: Wait till they pass Bill 70.
The Vice-Chair: Mr Tilson.
Mr Carpenter: I am not an expert at this stuff, but I am directly affected by this legislation, due to the simple fact that if I were to find the money there is no way I could ever recoup it. My choice is to close the park, which again, the social and political aspects of it are just not very good.
Another thing is that this legislation is designed to help the tenants from so-called evictions because they cannot afford it, yet the NDP government does not take into consideration the landlords. The only thing we have to govern ourselves by is the Landlord and Tenant Act. But this act is not even worth the paper it is written on, due to the fact that there is one clause in the act which states the judge can alter any decision or make his own decision on any ruling. Whether the law states that you are allowed to do it, the judge can just turn around and say no.
As it is now, we are in court over problems with this park. One person has built an addition over top of his septic system, making it impossible to fix it. How do you work under a 20 by 16 mobile home? It is impossible.
We have made applications to court under the Landlord and Tenant Act because this guy has breached the act by building without permits, etc. A judge finds that it would be unfair to evict him because he has no place to go, so basically he will not evict him so we can fix it. There is nothing that helps us any more. All this stuff is just helping the tenant more and more.
1450
We even had a case where a tenant re-rented his apartment to somebody else. They never contacted us or anything else. We showed up two weeks later because the rent was not paid, and these people said they were the new tenants. We called the police to have these people removed as trespassers, and the police said they have no right: The Landlord and Tenant Act governs. You have to make an appearance in front of a judge and let a judge decide. But whenever we end up in front of a judge, the judge feels it is unfair to evict people, so we lose all the time. We have no rights left. People can just move into our apartments without even asking.
There are no fair laws any more, and this is not going to make it any better. This is just another way of forcing people into bankruptcy or, like the last speaker said, turning things into a communistic government that wants to control everything and does not want people to have rights any more.
That is basically all I have to say.
Mr Mahoney: It sounds like you have had a rather stormy relationship with Shelley Martel, to say the least.
Mr Carpenter: Yes I have, to say the least.
Mr Mahoney: A couple of things: You made what appeared to me to be an accusation that there was interference or influencing of some sort by Ms Martel with a local health board.
The second part of the question is, can you tell me what the tenants are saying in your park, facing the threat of having the park closed and not having anywhere to live? I would be particularly interested in your expansion on the Martel situation.
The Vice-Chair: Guy, before you respond to Mr Mahoney's question, I should just point out that while all members of the committee have immunity, the witnesses before the committee do not.
Mr Carpenter: Basically, to elaborate on what is going on, I have been speaking to Shelley Martel, and she has informed me that she is following all correspondence to do with this affair with the health unit. Anything they write up or send me, they forward her a copy of as well. She is keeping up to date on what is going on.
There has also been talk that she herself has had a meeting with the health unit as well as the Ministry of the Environment in her office at the Ministry of Northern Development and Mines, as well as with one of the tenants in the park. I am not sure exactly what happened or whether she was participating fully, but she is showing a great interest in what is going on.
As for the tenants and how they feel about leaving, they have been reassured by several organizations that there is no way in hell they will have to leave. One person, who has been given an eviction order due to the fact that we cannot fix his system, has gone to the point of building a new deck, resodding his yard; he has done major renovations to his trailer. After receiving an eviction order he is still doing all this work because he has been assured by different agencies that there is no way we are going to kick him out. And it is true: You get in front of a judge and a judge cannot, with a good conscience, throw these people out, so we are stuck with them.
Ms S. Murdock: Getting back to Bill 121, rather than the Landlord and Tenant Act, you have made your position and the facts of your case really clear, but I am interested in knowing whether all the things you have described have happened in the last 10 months, or has this been an ongoing thing prior to the election of September 1990?
Mr Carpenter: As far as problems in the park go, I guess you could consider it an ongoing matter, but this legislation now makes it impossible to correct the problem, due to the fact that there is no way you can recoup money spent to rectify it.
There is much more maintenance required in a park as compared to an apartment. We have one park where we just spent $20,000 in upgrading the hydro, and we have no way to recoup it. At $147 a month, it barely pays the taxes and the insurance as well as the upkeep. There is no extra money now, so it is impossible to do these types of renovations.
Ms S. Murdock: When did you pay the $20,000 into the park?
Mr Carpenter: This has nothing to do with this park directly, it is another park we owned. When we purchased it, Ontario Hydro assessed all the lines and said it was inadequate for the loads that were in it, and thereby gave us an ultimatum: Either put the repairs into it, or face disconnection.
Ms S. Murdock: Okay, but what I am hearing is --
The Vice-Chair: Thank you, Ms Murdock. Mr Tilson?
Mr Tilson: Of course, we know there is a judicial decision which put mobile homes back into the legislation. We know that Bill 4 then passed a law to get around that saying that it is in there.
You are at least the third delegation that has come to this committee on Bill 121 -- I think there were two tenant groups expressing similar concerns but from a different perspective, but also acknowledging that this type of home project should be outside the legislation. Everyone is agreeing on that.
The parliamentary assistant now says, of course, there is an interministerial committee studying the subject, and it has been going on for some time. You have answered that you are probably going to go under, that you are probably going to close your place. I assume you keep in touch with other mobile homes because I know there are associations around the province.
My question is more of a provincial nature. If something is not done as a result of new legislation, and this problem that you have described, which was described in the Bill 4 hearings, continues, what is going to become of the mobile home owner, the people who own the park and the people who own the individual units in this province?
Mr Carpenter: I cannot speak for the whole province because I do not know what their situations are but as far as this section goes, there are several laws governing mobile home parks, such as city bylaws that state you cannot open new parks. Most of these people would probably gladly pay an extra $30 or $40 a month to have the system fixed, but with this new legislation, it makes it impossible.
For these people, once evicted, their only choice is to go out and buy a piece of land outside the region for $20,000 or $30,000, and put a system in, a well. They are almost better off just to burn their mobile homes and buy houses. They are talking the same kinds of costs. The reason these people are there is because they cannot afford much more. It is a low way of living.
Mr Tilson: They also cannot move.
Mr Carpenter: That is it. There is no place to go.
The Vice-Chair: Thank you, Mr Carpenter. We appreciate your presentation.
BARBARA CARPENTER
The Vice-Chair: The next presenter is Barbara Carpenter.
Mrs Carpenter: I am Mrs Barbara Carpenter. I am a landlord. My husband and I have been in the business for 28 years. This business is our only source of income. Approximately 50% of the landlords across Ontario are husband-and-wife operations. This is a 24-hour-a-day job and seven days a week. It takes a special person to be a landlord.
Sudbury was always a boom-and-bust city, mainly a one-industry place, until about seven years ago when Sudbury began diversifying.
In 1989 I purchased a building built in 1900, consisting of 15 units right in downtown Sudbury. For two years we remodelled the units one by one and spent over $400,000 in repairs placing four newly constructed entrances on the unit and remodelling each unit inside, nothing luxurious.
We applied on October 2 for our capital cost expenses which were legal at that time. Our period ran from March 1989 to February 1990, but the NDP government took over and they retroactively took away all capital expenditures with Bill 4 and the two-year freeze.
We applied to the rent review appeal board and asked to retroactively back up our application and be heard, since there were no tenants in the building. As of today, we still have no hearing and the building is still empty awaiting their decision.
I cannot see why, if the government can act retroactively, a landlord is not able to do the same.
Under Bill 121, they stated they will only allow a 3% capital cost allowance. Well, try getting back $400,000 capital with a 3% cap for one year when your units rent from $140 to $172 per month. How can you pay back a $400,000 loan with an increase of $4.20 per month, or $50.04 times four units equals $201.60 per year, on a one-bedroom 750-square-foot unit; and an increase of $5.19 per month, or $62.28 times 11 units at $685.08 per year, on a two-bedroom 900-square-foot unit.
This $685 plus $201 equals an increase of $886 per year. It means nothing.
1500
This $886 per year increase does not even cover the interest on the $400,000 loan for one month. The $400,000 loan at an interest rate of 12% would be $48,000 interest in one year or $4,000 per month interest. Tell me how this $886 per year increase is going to pay for the interest of $48,000 on this mortgage, let alone the principal.
I can tell that you people have never been in business before and do not know anything about business. You want the landlord to subsidize all tenants, but it is the government's responsibility to aid people who need the extra money to pay for the rent and the people working to pay for their own fair share of their living accommodations.
A couple bringing in over $8,000 a month and paying $172 per month rent on a two-bedroom unit -- this means they are only paying 2% of their income in rent. No wonder they will not move into their own home and leave the units for more needy people. This is why 75% of the people are living in apartments across Ontario, the highest in Canada. No wonder they can go on Caribbean cruises and buy expensive cars and luxury furniture at the expense of the landlords, while we slave away trying to keep our heads above water -- just to float.
They call this a democracy. Well, I certainly do not call it that. The NDP government only looks at one side of the coin. Please take a good look at the other side.
There is another point I would like to bring to the attention of this committee. They have taken legal expenses away. Why is it that a tenant can have a legal-aid lawyer paid by the government to fight against the landlords? Landlords need lawyers to go before the judges or the courts will not listen to us. We have to pay hundreds of dollars for a lawyer to defend our rents not paid, extensive damages on our units and trespassers taking possession without our knowledge and having to go to the courts to remove these trespassers.
If you do not want to allow us our legal costs, then I believe we should also have a lawyer paid by the government to assist our needs. Legal aid lawyers state they do not help landlords, just as the NDP politician, Floyd Laughren, personally stated to me, "We have never helped landlords and we will never help the landlords of Ontario."
We are a very necessary business in Ontario and yet the NDP government will not give us consideration. I do not call this a democratic government. It is pretty bad.
Another point I would like to bring to your attention. Get rid of the ghettos of Sudbury, like Rumball Terrace and Waterview Gardens, with the same people all in the same buildings which require 24-hour policing and protection. The government has 1,900 units here in Sudbury. They spent $5 million in general repairs looking after these units for one year. This does not include capital expenses. It is all right to dig into the taxpayers' pocket and take away this money from them, but it is not right for a landlord to make a living looking after his own buildings.
If you average it out, it runs at $2,500 per year per unit run by the government. As a private landlord, we can keep our repair expenses down to $250 per year, not including capital cost, yet they say we do not know how to look after our buildings, that we are not business people.
Does the NDP government want to become another East Germany and control all property, and put the people of Ontario into poverty? I can certainly tell you that you are heading in the right direction. I think the government has suppressed the landlords long enough. We have been suppressed since 1975 and they are suppressing us deeper into the ground every day. Where is it going to stop?
[Interruption]
The Vice-Chair: This is a committee of the Legislature, and interventions are not permitted. The first question is from the New Democratic caucus. Ms Harrington.
Ms Harrington: I would like to find out a bit more about your particular situation. We have not received anything in writing from you at this time, have we?
Mrs Carpenter: Yes, I presented on Bill 4. You were not on the committee that day, but you talked to me personally after.
Ms Harrington: In Sudbury?
Mrs Carpenter: No, in Toronto.
Ms Harrington: Okay. I just asked if you had something today.
Mrs Carpenter: I have presented in Toronto.
Ms Harrington: Okay. We will try and get hold of that, then, to look at it again. You asked at the end what we wanted and compared us with East Germany or whatever. I would like to go on record, as I have before, and try to very briefly say what this government wants.
When we came into office, we had had the RRRA since 1985, which was a rent review system, a complete pass-through so that any expenses could be passed through to the tenants. This system was being used and abused in very many ways. It was a very complex system and inefficient. It was a problem for small landlords as well as tenants.
We are trying to bring into this province a system that is going to work. I have said this before and we mean it. We want landlords involved to be able to make a fair profit. I have asked the previous presenter what he felt was a fair profit, but I would like to find out a little bit more about your particular situation. You say you have been in the business for 28 years with your husband. With regard to the building you bought in 1989, you have said that the rents range from $140 to $172 in that building.
Mrs Carpenter: Yes.
Ms Harrington: How many units is that?
Mrs Campbell: There are 15 units.
Ms Harrington: And it was a 1900 building?
Mrs Campbell: Yes, it was built in 1900. The city owned it for almost 15 years. They had it up for demolition. They were going to use it as a road allowance and they did not use it. Therefore, they did not put in any repairs for those 15 years. They did not put a cent of repairs into that building. It was ready to collapse. We took it over because you cannot demolish an existing building to put up a new building. Therefore, we took on the responsibility, due to the legislation that we are allowed our capital cost expenses if we remodel a building. Therefore, we did it.
Ms Harrington: I want to tell you we have run into this same type of situation where you have an almost historic building -- I do not know if it is still historic after 15 years of neglect. I have run into this in Kingston, which is a very old city. They have century buildings. Just this week in Toronto, a man from Belleville was presenting. He had put $600,000 into a building that was built in 1867. What I told that man was that because he had a historical building designation, that, in my view, was somewhat of a special case and I would be speaking to the minister about these older buildings. They do not need just maintenance; they need total renovations.
Mrs Carpenter: That is right.
Ms Harrington: I was going to ask you about your other buildings, because obviously you have other buildings, to find out what that situation was.
The Vice-Chair: Thank you, Ms Harrington. Mr Tilson.
Mr Tilson: I think certainly the way the Bill 4 hearings, as you have suggested, and these hearings are going, the socialist government does have a closed mind. I doubt very much if the legislation will be substantially changed, if at all. As a landlady, what do you think will happen to the standard of maintenance and repair in your buildings as a result of both bills?
Mrs Carpenter: My husband has put down his tools and has said he will not work any more. He says he has worked hard seven days a week. We never had a holiday in 25 years and we looked after our buildings. Right now, my husband has put down his tools and has said he will no longer work for the province of Ontario.
Ms Poole: Mrs Carpenter, thank you for coming again. I remember your presentation quite clearly when you came to Toronto. I think it moved quite a few of us. You were very distraught at the time because this was your last desperate plea. I believe at the time you said you were going to lose your life savings because of Bill 4.
Mrs Carpenter: That is right.
Ms Poole: I think you have heard about what measures the government has put into Bill 121 to deal with those caught under Bill 4. Is this going to make any difference to you?
Mrs Carpenter: No difference whatsoever. I have lost that $400,000.
Ms Poole: You have lost your life savings and you just cannot continue on?
Mrs Carpenter: Yes.
Ms Poole: You have our sympathies. There are amendments the government has said it is going to be looking at. We can only hope those amendments will ultimately help you.
Mrs Carpenter: I only wish they could set up a committee and say, "Let's look at each private person and look at his needs." Why can there not be a committee set up to look at each individual person? I know it is going to be a big expense, but you are putting landlords into bankruptcy. Why can you not help us as you help the tenants?
Ms Harrington: Just as a point of clarification, in the bill there is a suggestion put forward to have an advisory committee on rent control. That would be similar to what you are asking for.
Mrs Carpenter: But is it going to help us?
The Vice-Chair: Thank you, Mrs Carpenter. We appreciate your presentation.
1510
AL DAVIS
The Vice-Chair: The final presentation for today is from Mr Al Davis.
Mr Davis: My name is Al Davis. I am a landlord and I just want to let you know at the outset I am a very angry man. I have in Sudbury a 15-unit apartment house with four commercial units in it. This is the correspondence on this year's review alone. I work for nothing. Just under a year ago, I submitted an application for a whole-building review and I still do not have a decision. My next rent increase must be presented to the tenants on or before September 1 and I still have no base to make that increase on. Even if I just use the 5.4%, I have no base to apply that 5.4% to. In the meantime, I have had to borrow $30,000 to keep the building open.
One wonders whether it is the plan of this government to put small landlords into bankruptcy in order to be able to take over the buildings for free and run them as a public facility. For this small complex I have spent many unpaid days working on this submission, plus four trips to Sudbury from Massey, where I live, and finally incurring very heavy accounting costs. I do not think I am a stupid man, but the rent review service has made it so complicated that I had to obtain professional help.
After rent review had my submission for 11 and a half months, I received, on August 2, a letter saying, "I am directing you to file the following information on or before August 6, 1991", and threatening that if I failed to do so, my claim would be disallowed. With the long weekend, that gave me one working day to do a whole page full of --
This is a totalitarian attitude. One would expect this in Russia, but is this not Canada? It is a pity I cannot apply the same attitude to my property taxes, which have increased by 43% since January of last year and no allowances in the rent yet. Governments do not have ceilings put on their increases -- the impudence and hypocrisy of us as Canadians. I have just come back from the eastern European countries as a volunteer consultant telling them how to organize free enterprise. I come back here and I am ashamed of what I did over there, because we do not have free enterprise.
The act also seriously discriminates between different landlords. Those whose rents are net and the tenants pay for their own heat, hydro, and other utilities can live with the guideline percentage as long as the property taxes do not go through the roof. However, those like ourselves who supply all services and utilities and include it in the rent are faced with increases and GST from heat, gas, hydro and other costs, some of which are in excess of 20% since January 1, 1990. Rent review tells us that we can collect the additional back rent to December 1, 1990, if our application is approved. How? Will they collect it for us? Will they track down the tenants who have left during the year? Will they pay our legal costs and collection costs? Will they bail us out of our financial difficulties?
I got into this business to provide for my retirement, but now that I am over 65, I have to work to avoid bankruptcy, by decree of my government. Mr Rae has indicated that he will, during his term of office, increase the minimum wage in Ontario to $7 an hour. Will he also increase those for landlords who work for nothing sometimes?
Now I have got a few horror stories allowed by the act. Surely something can be done to eliminate the discrimination against landlords in this act, which some lawyers have referred to, to me, as the most incredible piece of modern legislation they know of. As you are no doubt aware, if a tenant has a complaint, all he has to do is pick up the telephone to the Residential Tenancy Commission and have it corrected. However, I will relate to you some of the horror stories of what can happen to a landlord if he has a problem with a tenant. These are not isolated cases.
We had a tenant in Sudbury who paid us a deposit, plus a post-dated cheque for the rent on an apartment for herself and her husband, as of 1 July. She moved in. A few days later up to four girls moved in also. It was noticed and complained to us by other tenants that up to 10 men a night were visiting the apartment and noises were disturbing them. This was brought to her attention, but she smiled and made no comment. Her post-dated cheque for the rent was returned NSF and the August 1 rent was not paid. We therefore gave her the Form 4 notice to vacate on 4 August. This she ignored, so I travelled to Sudbury and went to the Residential Tenancy Commission office, which referred me to the district court. I was told they would assist me in filing court action. I went to the court, which sent me back to the commission with a form, where I got very little assistance.
I then contacted a lawyer who gave me some advice over the telephone, but he did not hold out much hope for me. Eventually I filled out the necessary forms myself and went back to the court and had to pay $21 to file. I had to attend court in Sudbury on two more occasions. The tenant moved out at the end of August in accordance with the court order, but paid no rent and left the apartment, which had been newly decorated, in a shambles, including 123 holes in the walls made by nails and other means. She did not attend court and was represented by a lawyer who was unable to give her present address to collect the rent arrears of $834. I requested the costs from the court, but was told by the judge I would have to start another action in small claims court, even though the amount was in excess of the $1,000 I could hope to get from that court.
I also indicated to the court I had to bring our building superintendent back from vacation to attend on two occasions and requested these expenses and my own for four trips to Sudbury. These were denied and my arguments were ignored by the judge, who facetiously congratulated the tenant's lawyer for collecting his fees in advance. We are out about $3,000. Why can we landlords not just pick up the telephone to the rent review board?
In another case, we rented an apartment to a couple and reduced their rent by $50 a month for one year as payment for their agreement to redecorate their apartment. All went well, but they moved out at the end of the year. We rented again to four college girls, naturally at the full rent, and then increased that rent at the appropriate time by the amount allowed by the act. Although we had rent for an occupancy of four, we later learned there were seven living in the apartment. The girls found out that the previous tenant was paying less and appealed to the commission. We were directed to pay back all the additional rent. We appealed and had to travel to Kirkland for the appeal. However, the commissioner would not allow the additional rent, saying the $50 amount we had allowed for redecorating could not be considered rent. All our additional expense was to no avail. We could have appealed again, through the district court, but we could not afford the additional cost and hassle. When they vacated the apartment, we had to redecorate it again and repair their damage. Surely something can be done to correct the situation for landlords and relieve the taxpayer and the landlords of the incredible costs of administering this act.
I have this in writing. I have also contacted the NDPers here, but I got no assistance whatsoever.
1520
Mr Mahoney: The bureaucracy is mind-boggling. Do you see any hope? I assume you have reviewed the bill we are currently having hearings on. Do you see any hope to substantiate the claims by the government that there will be reduced bureaucracy with Bill 121 that might end those kinds of horror stories?
Mr Davis: I can see no solution in the bill. Unless I can get out of this business, I am going to go bankrupt.
Mr Mahoney: Where are your buildings?
Mr Davis: I have one building in Sudbury and another in Elliot Lake. We managed to sell the Kirkland Lake one at a loss.
Mr Mahoney: What is your occupancy?
Mr Davis: Our occupancy in Sudbury is very good. The other is in Elliot Lake, which is incredibly poor of course. It is a tough situation and the tenants think it is rather funny. Even if I get these increases now, how can I possibly go to the tenants and say, "For a year back you owe me another $15 a month rent." I would get laughed out of the building.
Mr Mahoney: In fairness, a lot of your problems are a result of the delays in the bureaucracy under the former legislation. I think you have indicated that. I have no problem admitting that. Fair is fair. What we are attempting to do, or are supposed to be attempting to do, is to try to improve on the situation, and I certainly cannot see anything that will improve it.
When you talk about going bankrupt, in Elliot Lake would you be in the position of just simply closing the doors and walking away?
Mr Davis: In Elliot Lake, I am fortunate enough not to have a mortgage any more. I have owned the building for some 30 years.
Mr Mahoney: That is your retirement, of course.
Mr Davis: That was my retirement. If somebody is going to offer me a job, I could get away from here. It is incredible.
Mr Mahoney: We are all going to end up working for the government, so what is the difference?
Mr Davis: Apart from all this, can you imagine the accounting, the legal costs, the stress?
Mr Mahoney: What were your bills?
Mr Davis: Just to file this was $1,200, and now with this refiling and all this information they want, I cannot see any change out of $2,000. We do not recoup that at all. That has to come out of my own pocket. I now collect the Canada pension plan and it is not going to cover this for sure.
Ms Harrington: First of all, you have pointed out how complicated the system was. I would like to just put it on the record that many of the reasons why landlords could go to rent review, such as the financial loss and a whole host of other things, have now been eliminated. Therefore, that is one reason the system will work more quickly. There will be fewer bureaucrats because many of those reasons have been eliminated.
Your statement that things have to happen more quickly: I really believe it is very important that we have to have a more streamlined system, both for landlords and tenants. You can imagine what it is like for tenants not knowing, after appeals and 18 months or two years have gone by, whether or not their rent is going to go up, whether or not they have to pay thousands of dollars in back rent. There is no security. They do not know what is happening, both landlords and tenants. The system has to work and it has to be much quicker. You have to have an answer soon.
A lot of the problems, the horror stories, which I agree are very terrible horror stories, are a result of the Landlord and Tenant Act, which unfortunately we are not dealing with at this point in time, but hopefully is part of the larger picture of housing in Ontario that we want to deal with. What types of rent are in your buildings in Sudbury and in Elliot Lake?
Mr Davis: We have been bringing the rents in Elliot Lake down. I have bachelor apartments there which I am renting with all services included, and furnished, for $200 a month. A two-bedroom in Sudbury rents at $620 a month, and we supply all utilities, even car plug-ins outside. There is no way we can even break even. I cannot file for December 1 yet. That has to be in by September 1. I have no base to put it on. I phoned the rent review and they said, "Oh, you can sue these tenants." That is ridiculous.
Ms Harrington: Why is that ridiculous?
Mr Davis: It is ridiculous because I cannot possibly go around and sue each --
Ms Harrington: The costs?
Mr Davis: The costs involved, the time involved, the stress involved. In the meantime, I have to run those buildings.
Ms Harrington: You are saying this government -- not my ministry -- should have a look at the Landlord and Tenant Act.
Mr Davis: Yes, and I think perhaps get back to the system of free enterprise.
Mr Mammoliti: I would just like to respond to Mr Mahoney's comments earlier. I find it very compassionate. He is a very compassionate person, as you can see, but he is contradicting himself. I cannot understand why he is being so critical of this bill when they voted in favour of it in the House at second reading. When we talk about this compassionate stuff, I think it is important to put it on the record that they voted for it as well.
Ms Poole: On a point of order, Mr Chair: Just to set the record straight, the Liberal caucus voted in support of the principle of the bill, which was a rent review system, but we also made it very clear that a lot of the bureaucracy and a lot of the flaws in the bill would have to be corrected.
Mr Mammoliti: Is that a point of order, Mr Chair?
The Vice-Chair: It is not a good point of order, but of course I do not know that until she tells it to me.
Mr Mammoliti: You made a couple of comments on rulings. Actually not only you, but a few people today have talked about judges and their rulings and how frustrated they are at the rulings. I just want to say that it is not part of our mandate to determine whether a judge has made a good ruling or a bad ruling. I think it is only fair for yourself and the rest of the presenters who were here today, if they are listening, to understand that we cannot judge the basis of a ruling a judge makes, not in this forum.
Mr Davis: I can agree with you as far as a judge's ruling is concerned, but a commissioner of the rent review board who makes rulings like this has such enormous powers. They have the power to put landlords into bankruptcy, not just by denying their submissions but by delaying their submissions. This is going to be too late for me unless it comes within the next 10 days. This is ridiculous.
Mr Mammoliti: I was referring to a court of law.
The Vice-Chair: Thank you, Mr Mammoliti, and thank you, Mr Davis, for coming. I am happy to see you are the first one of my constituents to appear before this committee.
Mr Davis: Maybe I will have to emigrate from your constituency yet.
The Vice-Chair: This concludes the Sudbury portion of our hearings. Members will know that a week from Monday we resume our hearings in Toronto and then go to Hamilton.
The committee adjourned at 1528.