Committee Transcript 1991-Aug-20 | Legislative Assembly of Ontario

The Chair: The standing committee on general government is called to order. The committee is reviewing Bill 121, An Act to revise the Law related to Residential Rent Regulation, better known as the Rent Control Act. The committee is travelling throughout Ontario. We are pleased to be in the Hamilton region today. We have a full list of presenters for the morning and the afternoon.

SUBCOMMITTEE REPORT

The Chair: Before we hear from our first presenter, we have a short report from the subcommittee on a number of items that had been raised yesterday afternoon. I ask the clerk to read into the record the consensus that has been agreed to and the plan that has been agreed to by the subcommittee.

Clerk of the Committee: "At its meeting of today, August 20, 1991, the subcommittee agreed to recommend that the committee invite a representative of the Ministry of Energy with a request to have someone available from Ontario Hydro and a city building inspector to appear before the committee for a total of one half-hour each, with up to 15 minutes for a presentation and 15 minutes for questions from the committee, on the morning of August 27.

"It was further agreed that the committee would invite the Ministry of Housing to continue its briefing to the committee on 27 August at 11:30 and continue through the lunch-hour."

Mr Tilson: There was also an agreement, I recall, that the financial people would have a half-hour as well.

The Chair: Yes, that is correct. The committee has previously agreed to that. That will all be done on the same day.

Mr Turnbull: I would just like to go on record as saying I am extremely disappointed to see that we cannot have a representative of the Ministry of Financial Institutions. The implications of this legislation for the financial institutions are very significant, and Ontario may well rue the day that we did not consider the impact on financial institutions and the impact on apartment owners of not listening to this advice.

Mr Abel: I would just like Mr Turnbull to know that the subcommittee worked very hard on coming up with an amiable solution to the requests that were put before us. It was a compromise, give and take on both sides, and we felt it was important, we do agree it is important that these people who we agreed should appear would appear for the reason that we thought they had something to offer. We tried to avoid repetition and we felt these are the key people whom we could all benefit from. We felt the other request could be dealt with by the Ministry of Housing staff. I feel the subcommittee came up with a good, workable compromise.

Mr Turnbull: You may think this is some workable compromise. Essentially, what you have done has been horse-trading, and the interests of the people of Ontario have not been served well by horse-trading. As a result of this legislation, there is a serious implication for the financial structure of apartment building owners and also for the trust companies that lend. Unless it is examined, you might as well stop the hearings right here.

Mr Duignan: Playing for the cameras again, eh, Dave?

Mr Turnbull: This has nothing to do with cameras. We are talking about serious financial implications for this province.

Mr Abel: I am sorry that Mr Turnbull is not happy with the arrangement the subcommittee, including his colleague, has come up with, but I would like to suggest we get on with the public hearings. That is what we are here for.

The Chair: Your colleagues have their hands up. Do you want me to acknowledge them?

Mr Abel: Of course.

The Chair: Or should I pretend that Mr Mammoliti is -- no, I will not. Mr Mammoliti.

Mr Mammoliti: It is in your best interest not to, Mr Chair. I want to reiterate what my colleague has said and just say there are a number of people, again, who want to present to us here today. Mr Turnbull, if you are going to start these rampages, I have something to say about that.

Mr Tilson: Listen to him. It is absolute bunk, what he is talking about.

Mr Turnbull: You have interrupted these proceedings and the Bill 4 proceedings more than anybody else, and you know that quite well.

Mr Mammoliti: Mr Chair, I do believe he is out of order.

The Chair: Interjections are out of order. The Speaker and many Chairs have said so many times.

Mr Mammoliti: If I may, Mr Chair, again, I could advise Mr Turnbull that everything will be okay and just to control himself somewhat, because there are people here who want to present to us.

Mr Turnbull: It is going to be okay. People will go bankrupt. That is okay.

Mr Mammoliti: What you are doing is stalling and wasting time.

Mr Turnbull: This is not stalling.

Ms Poole: In an attempt to bring peace to the family, may I just say that Mr Turnbull does have a very valid point about the importance of this bill to the financial institutions. However, we are having a member from the Canadian Bankers Association attend before our committee for half an hour for us to question very closely about the impact of Bill 121. I assume many of the questions Mr Turnbull wants to ask would be answered at that particular time. I suggest we move on to our presenters, who are patiently waiting.

Mr Morrow: If I can just go on Ms Poole's words, we have a lot of people from the Hamilton area here whom we do want to hear from. I would like us to move on and let all the grandstanding stop, if we can.

The Chair: Shall the motion of the subcommittee be adopted?

Agreed to.

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HAMILTON AND DISTRICT APARTMENT ASSOCIATION

The Chair: The first presenter for this morning is the Hamilton and District Apartment Association, Derek Lobo. Derek, you have appeared before our committee before. I think you know the procedure. I have to advise you that the committee has allotted 15 minutes for your presentation. You can reserve some of that time, if you wish, for questions and answers.

Mr Lobo: My name is Derek Lobo. I am a director of the Hamilton and District Apartment Association.

The day after the election, Bob Rae sat with his union masters and analysed the election results. "Who voted for me?" asked the Premier. "The tenants voted for you, sir." Bob Rae replied, "Go forth and make more tenants because I will need them in the next election." So the Minister of Housing, Dave Cooke, went forward and planned 40,000 communal units.

"Who else voted for me?" asked the Premier. "The union men voted for you," said Bob White. "Then go forth and create more union members. I will need them in the next election also." So the Minister of Labour, Bob Mackenzie, introduced laughable legislation to increase union membership and union power.

"Who else voted for me?" asked a jubilant Premier. "The poor voted for you, sir." "Then go out there and create more poor," said Bob. That is what Bob Rae has done best in Ontario. He has created more poor. Shamefully, he has created more poor. Then he has increased the welfare rates to keep them in perpetual bondage. These people are Bob Rae's vote slaves.

It besmirches me to appear before another one of Bob Rae's pitiful government committees. This committee and others like it are a sham, staged events that are more commonly used by illegitimate communist dictators to perpetrate unconscionable acts. Witness the recent events in Mother Russia. Mikhail Gorbachev has stepped down due to ill health, likely a distortion of the truth. In Ontario, true facts have also been distorted. Witness Bob Rae's gross distortions of 150% rent increases. This is a bold-faced distortion of reality.

Let me first very clearly state that our problem is not with the people behind us. They are our residents. They are our customers. This is not a landlord versus tenant issue. Without our residents, we would not have jobs, we would not have businesses and we would not have our livelihood. It is Bob Rae who has created the class strife where there was none before. It is our Premier and his sympathizers who have exploited the tenants to make them believe they are victims. They are not victims. We are not oppressors.

Our problem is not even with the NDP backbenchers here today. They are merely part of Bob Rae's façade of consultation. From the Bill 4 committee hearings it became painfully clear that these were not the decision-makers. Their strings are pulled from the Premier's office. They dare not speak out against this legislation. Our problem is with Bob Rae, a very nasty man, if you are a property owner. Premier Bob is unleashing his ideological rage upon the bloated capitalists, the landlord class that he seems to hate.

Ontario's property owners were the first victims of the socialist experiment in Ontario. First, punitive retroactive rent control legislation destroyed property values and now Bill 121, really a bureaucratic nightmare, is designed to place the landlord at the mercy of Bob Rae's ideological jackboot.

Let me tell you about our association. We have 400 members. The majority of us are small landlords. We have a few larger landlords also. We represent about 45,000 units in the city. The association's bank balance is less than $4,000. Many of our members are first-generation Canadians. They are cautious people. Some of them come from socialist countries. These people are particularly obsessed with security. That is why they invested in real estate. It was part of their Canadian dream. It was their retirement.

Unlike you people, we do not believe that Bob Rae can take care of us or that the state will take care of us, so we worked a little harder, saved a little more and invested in Ontario. But now the socialist hordes that our members fled in Europe seem to have followed to Ontario and, for the second time in some of their lives, their properties are being confiscated.

Let me repeat, our problem is not with our residents; our problem is with an ideological Bob Rae. In Ontario's time of need, this province needs leadership, not high school socialist ideology. A leader's job is to inspire and instil confidence in those he leads. A leader must accept responsibility. The buck stops on the leader's desk.

The boy Premier of this province does not seem to want to accept responsibility. Ontario's problems are never his fault. He blames the recession, the federal government and the Bank of Canada. He will even blame the builders for the housing shortage. They are not building. The boy Premier seems to blame everyone but himself. In Ontario's time of need we require leadership, not finger-pointing. After almost one year it has become quite clear that Bob Rae is not a leader. He is merely a servant to ideology.

Let's talk about rent controls, the budget and housing. The Ontario deficit is $10 billion. That is excessively high. Funding to the Ministry of Housing has increased by more than 39% in the last year. At least $50 million will go towards maintaining the slothful rent review bureaucracy that you promised you would eliminate. That was the whole idea of this new legislation, to make it simple. Bill 121 is not simple; it is a bureaucratic nightmare. In fact, I think you people told a bold-faced lie when you said you wanted to create a simple rent review system. This is not a simple rent review system. You should all be taken behind the woodshed and given the caning of your life.

The budget contains unprecedented funding for communal housing which will compete against the private sector, so as vacancy rates in this province go up, your plan is to build more communes. These communes are subsidized to the rate of $1,800 per month per unit. It just does not make any sense. You are building communes to compete against private industry.

The $10 billion that I talked about is a huge amount, but that is not the true deficit. The true deficit is in our spirit. More than bankrupting the provincial coffers, this government is bankrupting our spirit. Tens of thousands of men and women have faxed you, written to you, marched against you and lost their jobs for you, but you do not seem to be listening. Oh, you go through the charade of public hearings like this, but in the end it is the rampant ideology that prevails. How many Ontarians, how many businessmen, how many workers have to go to the wall for Bob Rae?

All of you, even the people behind me, ask yourselves the following questions: Will Ontario be a better place to live in four years from now after the socialist experiment? How many factories have to leave the province? How many owners have to lose their buildings and how many tenants will have to see their buildings deteriorate?

You could say I am biased and I am not one of your special-interest groups. I am not a member of a union. I am not a tenant and, unlike you, I believe this province is already eminently fair. Ontario has been governed by Conservatives and Liberals in the past and the truly needy of this province are probably taken care of better than anyone else in this hemisphere. This government does not have a monopoly on fairness, benevolence, social conscience or the environment. To think that you alone represent the needy in society is sophomoric and, quite frankly, self-serving.

But it is not your compassion to the needy that I question; it is your competence. Let's look at what others are saying. Let me give you three examples. I am not making this up. First, European investors who invested in Ontario real estate were outraged by this government's attack on their businesses. They are now channelling their funds to other provinces and some American states. They now consider Ontario in the same investment category as the Third World. Congratulations, Premier Rae. Is this your vision of Ontario?

Second, "Quebec Replaces Ontario as US Investor's Choice" is the headline from the Financial Post. A growing number of US investors are betting that Quebec separatism is less of a worry than Ontario socialism. Merrill Lynch of New York said, "Investors who would normally have looked to Ontario are now looking to Quebec." Congratulations, Mr Boy Premier. It seems American investors would rather trust their money with a government that is trying to harpoon Confederation than with the socialist Bob Rae government. You should hang your head in shame.

Third, your own socialist comrades are avoiding you like the plague. Poor NDP hopeful Mike Harcourt in British Columbia is plagued by the NDP disaster in Ontario. Harcourt has stated, "Bob Rae was not ready to govern." That is a nice way of saying not fit to govern. Harcourt said he does not believe in rent controls. The real solution is to build more housing. Listen to your socialist brethren. The real solution is to build more housing. Why can the socialists in British Columbia see the folly of rent controls when the socialists in Ontario are enamoured and blinded by it? Romanow and Blakeney in Saskatchewan do not subscribe to deficit spending. Audrey McLaughlin has taken Bob Rae off her Christmas card list and is distancing herself from the socialist buffoons in Ontario.

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This regime has a simplistic vision in many matters. The NDP sees all landlords as villains and all tenants as oppressed. Such a simplistic vision of Ontario's housing industry is a recipe for disaster. In 1989, Bob Rae was asked, "How would you get the current private rental stock out of the hands of large owners and into the hands of non-profit?" That is a loaded question. Here is what the Premier said: "You make it less profitable for people to own it. I'd bring in a very rigid, tough system of rent review, simple. There'll be a huge squawk from the speculative community and you say to them, `If you're unhappy we'll buy you out.'"

I just want to spend a minute looking at this statement. His first statement was, "You make it less profitable for people to own it" -- mission accomplished. Conservatively, rental property values have decreased by 25%. Is this what Bob Rae means: "I want to work with you; I'll help you be less profitable"?

"I'd bring in a very rigid, tough system of rent review" -- that is almost done. After sham committee hearings, Bill 121 was introduced and I have said this before. Shame on you, Mrs Harrington; shame on you, Mr Abel, and shame on you, Mr Duignan. You sat here as dozens of landlords presented real-life financial dilemmas to you but you lacked the political courage to stand up to Bob Rae's ideological jackboot. After hearing real-life financial dilemmas, you cowered to Bob Rae's ideology. You are just sheep following an ideological leader; you are not leaders.

Bob Rae said, "There's going to be a huge squawk from the speculative community and you say to them, `If you're unhappy we'll buy you out.'" Well, Bob Rae, many of your so-called speculators were foreign investors and you were wrong. They are not squawking; they are just leaving Ontario and investing elsewhere. They have left very quietly.

In a recent article in the Financial Post, Bob Rae said, "Wealth creation is crucial. We can't take it for granted," and, "We have to encourage markets to work and to create profits." Are retroactive rent controls encouraging markets to work? Is this the idea you have of creating profits? Well, the boy Premier seems confused. First he wanted to make it less profitable and now in the Financial Post he is saying he is trying to create a profit. Does this leader inspire confidence? No.

There are many problems with Bill 121, but I do not believe you are willing to listen to me. Even if you did, you do not have the political will to stand up to Bob Rae's ideology. Your job is to execute the Premier's façade and just go through the motions. You are not allowed to think.

Mr Chairman, the opposition has something to do before this bill becomes law. Show Ontarians that your political --

Ms Harrington: On a point of order, Mr Chairman: I think everyone in this committee agrees that no matter what side of this table we are on, we are here for a purpose and that is to try to improve this legislation. People in the audience know that too. From some of the statements this presenter is making, I am wondering whether he is not questioning the integrity of this committee. I think you should listen very carefully and make a judgement.

Mr Lobo: May I finish, sir?

The Chair: I have to rule on the point of order first. Is there more discussion on the point of order?

Ms Harrington: We have tried to accommodate everyone who has come before this committee, but there are certain limits where the integrity of all parties who sit on this committee and the integrity of the Legislature --

The Chair: Okay, Mrs Harrington. On this same point of order, Mrs Poole and then Mr Tilson.

Ms Poole: Mr Chair, I would find it very difficult if you were to rule on whether this witness has challenged the integrity of this committee. We will only find out if this committee truly has a purpose when we see whether the government is willing to accept the needed amendments to this legislation.

Ms Harrington: I would certainly ask this witness if he has any amendments or anything to suggest or deal with this legislation. This is why we are here.

Mr Duignan: Are we dealing with the point of order?

Ms Harrington: Very much so.

The Chair: Order, please.

Mr Tilson: Most of us in this committee have sat through all the Bill 4 meetings and most of the Bill 121 hearings and this is the first time I have ever heard a member of a committee interrupt a member of the public of Ontario who has come to address us. There has been no reference by this individual, Mr Lobo, to criticize this committee or what this committee is doing. He has every right to attack and put forward his philosophy as to where this government is going with the housing policy of this province. I think Mrs Harrington is out of order herself in interrupting the train of thought of this individual who has come to speak to us, and I would rule her out of order.

[Applause]

The Chair: I am going to have to remind all our guests today that the committee is an extension of the Legislature and there are no demonstrations allowed in the Legislature and therefore there are no demonstrations allowed in the committees. We have this rule in place so that we can have orderly, properly run meetings so that everyone can participate as best they can. I ask all our guests today to help me in ensuring that this committee is well run.

I am running a list of speakers on Mrs Harrington's point of order. I have not ruled on the point of order. I want to know from the committee whether we are going to have lengthy discussion. So far I have Mr Turnbull, Mr Brown, Mr Sola and I think I had Mr Mammoliti.

Mr Mammoliti: Yes.

The Chair: So that is four more. If the committee wishes to continue to discuss this point of order, that is fine, but we are eating into our time. Mr Turnbull.

Mr Turnbull: I will forgo it. My colleague Mr Tilson said very eloquently my feelings on the matter.

Mr Brown: Mr Chairman, in ruling I think you should consider the precedents of this place, the Legislature of Ontario. It is not our job to screen or decide before a presenter has actually said what he has to say whether it is appropriate or not. We are here as members of the Legislature to listen to the views of the people of Ontario, whether we may like them or not. That is not our job and it is certainly not our job to censor the people who come before this committee. I ask the Chairman, in the democratic tradition of this place, to rule against Mrs Harrington's point of order.

Mr Sola: Having sat on the Sunday shopping committee and the committee hearings on automobile insurance, I would like to inform you, Mr Chairman and Mrs Harrington, that the words the delegation is saying before this committee are mild compared to some of the words members of your party, specifically Ed Philip, Peter Kormos and some of the others, said in committee about the intentions of the government at the time and about the intentions of the committee, about the sham. Therefore, just going by precedent, Mr Chairman, I think you would have to rule against Mrs Harrington.

Mr Mammoliti: The only thing I want to say is that perhaps on some of the things Mr Lobo is borderline on breaking the law, so I think maybe you should --

Interjections.

Mr Mammoliti: -- mention the rules, when we talk about immunity and all that, perhaps just so that the witness knows. I think it is important. That is the only comment I wish to make.

Mr Duignan: Mr Chairman, further to my colleague's point, the witness did refer to this committee as a sham, which is not the case. This is an extension of the Legislature. This committee is holding public hearings across this province to improve this legislation. While the intent of the legislation will not change, we are willing to listen to what the people of this province have to say to improve this legislation. But I certainly object to somebody who refers to a committee of the Legislature as a sham.

Ms Harrington: I do not have a copy of the presenter's remarks in front of me. As all of you know, we have been through this for several weeks now and then months before, last January, February and March, and we are certainly here to listen to what the presenters have to say. You know I will listen to people, but some of the statements this presenter has made, not just against the government, have cast aspersions on the role of this committee and, I feel, against you as Chairman as well. We are here to listen to people and we have to have a certain amount of decorum and/or dignity in this setting.

1030

Mr Tilson: There is just one important point, Mr Chair: Surely it would be preposterous to invite someone to come to these hearings and all of a sudden tell him: "You cannot speak any more. Sit down, we have heard enough." How preposterous.

Ms Harrington: I asked Mr Chair to instruct the witness as to the proper way this committee functions.

Mr Tilson: You are telling him to shut up.

Mr Brown: Socialist censorship.

The Chair: Order, please.

Mr Abel: Just one quick comment: I think we should let Mr Lobo continue, because I think it shows his true character and the government-bashing that has gone on since the day we were elected and the damage it is going to do to this province.

Mr Turnbull: You are doing the damage to the province.

Mr Abel: If they would just back off and give the government a little bit of room, I am sure --

Mr Turnbull: Nonsense. Confiscation of people's property without any compensation --

Mr Duignan: Talk about nonsense --

The Chair: Members of the committee keep sticking their hands up. Okay, we are cutting it off. In my own experience, I have in fact sat in committees where witnesses have been very difficult on the government of the day and on the committees in general. I have sat in committees where, if not the integrity of the committee was questioned, at least the intent of the committee's work was questioned.

I believe the witnesses who come before us have the individual right to make up their own minds on how they see the committee work and function. Based on that, and also doublechecking with the clerk for historical precedence, I am ruling that your point of order is not in fact a point of order but it is a point of concern. It is also a point of concern for the Chairman.

As Chairperson of this committee, my job is to help this committee hear as many individuals and/or organizations as possible within the time frame allotted to us by the Legislature, and I have always tried to conduct the hearings of this committee with efficiency and as much dignity as possible. We are in a situation where there are three different political views put forward most of the time, and some of those views are deeply held and forcefully defended.

Witnesses come before us and they also have deeply held views, and it is true that sometimes witnesses make statements which could be considered borderline. What does a Chairperson do in those instances? The Chairperson could advise the person making the statements to be more careful. I thought of doing that. However, Mr Lobo has been before our committee before; he has followed the proceedings of this committee before; he has watched the proceedings of this committee on television; he knows how the committee operates. The first time Mr Lobo appeared before our committee, there was an outbreak of spontaneous demonstration and I called it to order, and I did so again today.

I would just remind all the committee members that everything you say in committee is recorded by Hansard and read by many more people than we actually imagine. The same goes for the comments made by the witnesses, and the people who read and/or see what is said will make up their own minds. But based on the strict interpretation of whether or not his comments are out of order, I would have to say that his comments are in fact in order. Very critical, maybe too critical of the committee and its work, but that will be up to the people and everyone else watching to decide.

This is an all-party committee of the Legislature, made up from the three parties of the Legislature. I am a member of the opposition, and my job is to be fair to everyone who sits before me, whether they are members or whether they are witnesses. Having said all of that, I note that Mr Lobo had three minutes left in his presentation. You could use that, sir, to finish your remarks, or you can take questions and answers.

Mr Lobo: I would like to use it to finish my presentation. I meant no disrespect to the Chair.

Mrs Harrington, I have tried and I have tried to talk to members of your government. I have met with Mr Abel, I have met with Mr Morrow, I have met with Richard Allen twice. I have been to every meeting, I have written letters. I have tried.

You are not listening. Okay. There is no point in me telling you what is wrong. You already know what is wrong, but you are ideologically bent on this idea. So I have tried, our association has tried, and really, we are at the 11th hour here.

What we worked for all our lives is being destroyed by a government that just does not happen to think what we do is right. We have tried -- believe me, we have tried -- and I have tried as hard as anyone in this province to convince you of why it is important that you maintain financial loss, why interest rate increases have to be passed on, why having maintenance police is not the way you get quality buildings for the tenants of this province. It is competition that creates quality.

Mrs Harrington, nothing I am saying is new to you; you are just not listening. What is the point of me sitting here and going through Bill 121 and saying, "This is wrong, this is wrong, this is wrong"? We have said that, and it has been said over and over again.

To say that this committee is a sham, I do not think I can retract that statement, because we went through Bill 4, and we tried very, very hard to convince you of what was wrong. None of it seemed to make a difference, so why would it make a difference now? In fact, part way during the Bill 4 committee hearings, the consultation paper came out -- before the hearings were finished. This is a sham.

That completes my presentation, sir.

The Chair: We have time for one short question from each party.

Mr Tilson: Obviously Mr Lobo has raised a number of questions of the government, and we would refer that question to the government.

Ms Poole: We of the Liberal caucus will also give up our time so that the NDP can give some answers to Mr Lobo's very telling questions.

Ms Harrington: The question Mr Lobo had asked me was with regard to the system and whether it would be simpler. Because we have eliminated very many reasons for going to rent review, such as the financial loss clause, that system is definitely going to be simpler.

Mr Lobo: You said you would make the system simple and fair. If the system is going to be simple, then it is not going to be fair, and if the system is going to be fair, it is not going to be simple. You cannot make brain surgery simple; it is a complicated procedure. So is owning an apartment building.

Mr Abel: First, I would like to address the question that Mr Lobo directed to this committee: Do we think Ontario will be a better place to live in four years? My response to that is, you are damned right it will be, but it is going to take co-operation from the government and the business community, not the government-bashing that has been going on by the business community. I hope they realize they could create a polarization that this province has never experienced before.

Is the business community prepared to co-operate with the government and show the flexibility that the government has shown to the business community in Bill 4? Bill 4 is a good example. You say we did not listen. Believe me, sir, we listened, and there is proof of flexibility.

Mr Lobo: You make it less profitable for people to own a building. That is what Bob Rae said. How do we work with someone like that?

Mr Mammoliti: I know you are frustrated, sir, and I just want to say that I have taken in everything you have said. The only thing I did not like is the name-calling, in particular being called a sheep.

Ms Poole: Would you like to be a seal?

Mr Mammoliti: I never put up with that prior to the election, and I do not think I should after the election. The point I am trying to make, sir, is that we are here to listen. You said that we were not listening and that we were sheep. We are here to listen, sir. I assure you that all the hearings we had on Bill 4 and the ones up until now, we have soaked in. We are listening and we are communicating with the Premier as well as the minister. I think you are mistaken, and I thought I would just put that on the record.

The Chair: Ten seconds to respond.

Mr Lobo: I think Mr Mammoliti was just absolutely eloquent. There is nothing I can say.

The Chair: Mr Lobo, thank you for your presentation this morning.

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GEOFF GLASS

The Chair: The next presenter is Geoff Glass. Mr Glass, we will be following the same procedure, 15 minutes.

Mr Glass: My name is Geoff Glass, and I am a landlord. I feel very sad this morning. I feel sad for the government because of the recent Supreme Court decision regarding the Canada assistance plan. It means the government of Ontario will have fewer resources to fund much-needed social services. This landmark decision will affect the ability of the government to meet the needs of its citizens the way it would like to, one of these basic needs being housing. How can the government provide housing with money it does not have and without taxing an already overtaxed electorate? So I feel sad this morning for the government.

I feel sad for the tenants of Ontario, because if Bill 121 becomes law, they will be in a worse plight than they have ever been in before. Over the long term, the present rental housing stock will deteriorate and no new housing will be provided by the private sector, and because the cupboard is bare, the government will not be able to provide public housing. So I feel sad for the tenants of Ontario this morning.

And I feel sad for the landlords of Ontario, myself included, because this proposed Bill 121 is unfair and is making it difficult for us to operate and maintain our apartments.

I know this morning you are going to hear from many landlords who are distraught and frustrated about this proposed legislation, and we know all the different things because of the reduced annual guideline. The percentage of the building operating cost index inflation rate that will be allowed has been reduced from 66% under Bill 51 to 50% under the proposed Bill 121.

The capital expenditure increase limit: If a landlord must spend $100 in capital expenditures, he will only be able to recoup $60 of it in a rental increase. There are no allowances for interest rate changes. There is limited recovery for extraordinary operating cost increases.

The retroactive aspects of the current government's Bill 4 has not been corrected with regard to lost phase-ins, disallowed capital expenditures, disallowed economic and financial losses, and the list goes on and on. We all know them.

The list of individuals who now see the errors of Bill 11 is increasing every day. As recently as last Sunday's Toronto Star, a well-known pro-tenant columnist, Jeffrey Freedman, wrote this article and I think it should be read in part into the record. The heading of his column was, "Rent controls will hurt, not help, tenants."

"As the NDP attempts to ratify its controversial rent control act, they are discovering there are few people outside Housing minister Dave Cooke's office who approve of it.

"Two weeks ago, the head of the Ontario Chamber of Commerce, Linda Matthews, told the Star, `Under the bill (121), the more you do (as a landlord), the more you get penalized.'

"She was alluding to the fact that landlords will be allowed to increase rents only 3% above the 5.4 guideline to cover repairs and operating costs. (This guideline would vary each year according to the rate of inflation.) It will be hard to recoup any investment you make over these strict limits.

"Matthews's concern is that the 3% will not cover the cost of the major repairs and renovations that landlords will have to make to our aging rental housing stock. In fact, this legislation acts to discourage investment in repairs and maintenance.

"Jim McKinlay, a member of the Association for Furthering Ontario's Rental Development (AFFORD), says, `The scary thing is, the banks are not going to be able to lend money to landlords for repairs and renovations.'

"The reason, he says, is that under the proposed legislation, landlords can't guarantee the banks they will be able to pass expenses on to tenants.

"`That's going to hurt landlords, but the ultimate person who suffers from that is going to be the decent tenant.'

"There are minimum standards landlords have to maintain, but it will be almost impossible to enforce these once the legislation is passed. I have already heard of numerous complaints from tenants who say their landlords have begun repair and maintenance slowdowns, and municipal and provincial authorities have done little, if anything, to enforce existing standards.

"McKinlay says he has seen the future and it doesn't look good: `Landlords won't be able to do the work so the city will step in and add it to his tax bill; he won't be able to pay, so the government will take over the building for taxes.'

"As McKinlay notes, once government takes over these buildings the tax revenue from them is lost.

"The proposed rent control act is also going to have a devastating effect on landlord-tenant relations.

"`Regardless of how much griping tenants or landlords may do in a free market, the fact remains that nobody is able to force anyone into a transaction they don't want to make. But rent control is purely and simply an attempt by tenants to use the power of the government to set prices.'

"But wherever rent control has been tried it has been a failure and injurious to tenants and the rental housing stock."

I am part owner of four apartment buildings totalling 121 units. I have never illegally increased rents. I have never made luxury capital expenditures, by anyone's definition. I purchased these buildings in the late 1970s and early 1980s with the intention of keeping them for a long-term investment. I operate my apartments not only within the law but within the spirit of the law. Consequently, I have lists of people waiting for vacancies. I have discharged my responsibilities as a landlord in good faith and I am truly offended by the adversarial tone that Bill 121 creates between landlord, tenant and government. The whole philosophy of this legislation seems to be that tenants are good, landlords are bad and the system has to be protected against the landlord.

I feel that safe, affordable housing is as much a human right as health, education and minimum wage. These other basic human rights are guaranteed by government on behalf of all citizens and the responsibility for providing them is shared appropriately by all citizens through taxation. However, in the case of supplying affordable housing, the government has seen fit to seek its objective while placing the financial burden upon owners of private rental housing. I believe it can be easily demonstrated that not only are the proposals of Bill 121 harmful to owners of rental property but also that these policies will result in those with lowest incomes living in increasingly substandard housing. The government will find itself abandoned by the private sector and forced to invest in a housing system requiring massive infusions of already scarce tax dollars. No one will benefit, everyone will lose and it is all unnecessary. There is a better way.

Your committee, I feel, wants a long-term solution to solve a long-term problem. Why not work together to devise a rental housing system which will protect those who need protection and subsidize the rent of those who need subsidy? At a time when the government is faced with far more financial demands than it can possibly meet, why not maximize the resources of the private sector to address as much of the housing demand as possible, rather than unnecessarily driving the private sector out of housing? The solution, I believe, has to be a partnership between the landlord, the tenant and the government.

In my buildings, none of my tenants is spending more than 30% of his income on rent, and as I mentioned before, I have no problem renting these well-maintained units. I can show you numerous examples in my buildings where tenants are spending between 7% and 15% of their income on rent. These are not the people, I feel, who need protection.

Like all private owners of rental property, I must weigh the return on investment I can obtain from owning rental housing against the return available on guaranteed investment certificates and a multitude of other options. The market must afford me the opportunity to earn a fair return on investment for me to retain the incentive to manage real property, yet still offer reasonable and competitive rents. This is the best guarantee a tenant has that housing will be well maintained and affordable.

The proposed Bill 121 will distort this environment by discouraging the development of new units and making expenditures for maintenance a bad investment decision. I know you would agree that access to adequate food is at least as basic a right as access to housing. Does the government propose to implement a food price review board or intend to force grocers to justify every price increase? Of course not, because we all know that what keeps food quality up and prices down is the competition of the open market. For those who cannot afford food, the government has recognized the need to provide income support. Price controls on groceries would lead to poor quality, rigid pricing, supply problems and an expensive state bureaucracy that produces nothing. This is precisely what Bill 121 will do for housing. Artificial controls on accommodation are just as costly, inefficient and counterproductive as they would be for food.

If the NDP government follows through on not allowing rent increase due to financial loss, economic loss, and increase in mortgage interest rates, etc, I am afraid I and many others may have no other option but to withdraw from the rental investment market. Offering a carrot rather than a stick would be a far more effective and cost-efficient means of achieving the laudable goal of assuring an adequate supply of affordable housing.

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Possible solutions: Why not remove controls from the multiple-unit buildings where the owner makes available 20% of the units for rent supplement agreements with the local housing authority and set the rent cost of the units at 80% of the average rent cost of the remaining units? This approach would make immediately available a huge infusion of rent-geared-to-income units for allocation to those persons in greatest need. The units would be scattered throughout the community, thereby integrating lower-income people into different buildings and avoiding the ghettoization which has proven to be such a problem in the past when low-rental housing is highly concentrated. At the same time, such an approach would ensure the buildings are well maintained at the owner's expense and investors could return to the business of creating and upgrading rental units in an environment free of controls.

Such an approach holds major benefits for Ontario. It is estimated that high-rise apartment buildings in Ontario will need $10 billion in repairs over the next decade. I believe it is self-evident that the proposed rent control legislation of your government will force rental property owners to reduce or cancel altogether much of this necessary repair work, or even abandon the rental housing market. The possible result can be seen in places such as New York City.

In the New Democratic Party's document An Agenda for People it is proposed that 20,000 non-profit units will be built each year. With a maximum unit price of $110,000 per unit, that represents an investment of $2.2 billion each year. How does it make sense to spend billions of tax dollars to construct new units which will need annual rent subsidies, while simultaneously implementing a rent control strategy which will lead to a loss of privately constructed units and the deterioration of thousands of remaining units? How does it make sense and how can it be just and fair to expect private rental property owners to operate under legislation that does not even apply to non-profit housing corporations?

At the same time, both municipal and provincial governments could enter into joint ventures with private developers on government land similar to the recently announced 600-unit venture between the city of Toronto and a private developer. It is a win-win situation for everyone.

I am seeking a partnership between the government, the tenant and the landlord, a simpler system where scarce tax resources would be directed to helping those who need help, rather than continuing a watchdog system that forces private property owners to subsidize everyone in order to protect the minority who need help.

In a paper produced by the government entitled Earning the Trust of Ontario Citizens, I read the following statement: "This government wants to work with all sections of the community openly and honestly to build confidence in government. It encourages dialogue on all aspects of an issue so that a fair decision can be made. Whatever the issue, Ontarians must know that it is being dealt with fairly and truthfully."

As a citizen of Ontario, I am asking for nothing more than dialogue and a commitment to fairness. I hope you can treat rental property investors such as myself as deserving of the same respect and fairness you or a tenant would want to be accorded. If we are to successfully address fair rental housing issues, we will have to overcome the unflattering caricatures that landlords, politicians and tenants have created of each other. I believe it is in our collective interest to work together as partners, not adversaries, and I believe I have placed before you today some ideas for a common ground. I urge you to have the courage to turn away from the disastrous rent control legislation proposed and make a fresh start, to seek more effective, innovative and cost-effective means to ensure that all Ontario's citizens can enjoy their basic right to safe, affordable rental housing.

Ms Poole: Thank you very much for your excellent presentation. I would like to ask you a question about your suggestion that controls be removed from multiple-unit buildings where the owner makes available 20% of the units for rent supplement agreements with the local housing authority. This obviously could fit in well with the larger buildings. What would you do with the smaller buildings? Would they be automatically exempt from rent control or would they be under rent control?

Mr Glass: When you say small buildings, say, six or something like that?

Ms Poole: Six units.

Mr Glass: Again, it is just a conceptual idea and you have to sit down and think of all the different things. Maybe there will be an exemption for six or under or something like that, I really do not know, but it would make sense that when you are looking at the smaller numbers you would have a disproportionate number in the 20%. I think the six or under is not a large number anyway. If you do it six or over, I do not see a problem with it. I have 23 units. Tomorrow, if it was done, I do not think there would be a problem. Again, It would be helping those people who need help and are not being helped.

Mr Tilson: Mr Glass, you obviously appear to be very informed as far as the housing industry is concerned in this area. My perception of what this government will do is that this bill will pass, probably with very little amendment. I would like to ask you a question with respect to the existing bureaucracy and the anticipated bureaucracy and whether you perceive that the bureaucracy created by Bill 51 has been improved or lessened rather by Bill 121.

Mr Glass: It has not. It is more complex. I have my other partner here; he is the one who does all the submissions before rent review and is more informed. He is frustrated in terms of making all the applications. I feel there is a simpler way. Controls do not work. We know privately they do not work; if we would all come out publicly and say, "Hey, they don't" -- there has to be a better way.

Ms Harrington: You certainly have put forward your position quite clearly that you do not believe there should be any rent control, but you have also stated some other things on which I think we can agree. We believe rent control can work and that it is a consumer protection, like any other type of regulation or legislation we have in many other fields in our basic lives.

You talked also about having a long-term solution that will work, having a partnership between business, government and tenants. I would like to assure you that what we are looking at beyond rent control in the Ministry of Housing is the bigger picture, and some of these suggestions you are putting forward are part of that or may fit into that bigger picture.

I would also like to tell you that 80% of the landlords in this province have not in the past gone to rent review in any one year. Many people can operate their buildings with a reasonable profit and that is the system we want. We do not necessarily think you have to come to rent review. What percentage do you feel is a fair profit?

Mr Glass: I do not know. We were talking on the way down. The way it looks now to the government is that it does not want the owners to make any profit. I guess I just look at it and say it is a lose-lose situation; it really is.

The Chair: Thank you for your presentation. The time has expired.

851 QUEENSTON ROAD TENANTS ASSOCIATION

The Chair: The next presenter is 851 Queenston Road Tenants Association. We ask you to identify yourselves for the record. We will be following the same procedure, 15 minutes, and you can reserve some time for questions and answers.

Mrs Somody: I am Patricia Somody. I reside at 851 Queenston Road in Stoney Creek. This has been my address for 18 years. With me is Betty Stein, a fellow tenant who also has 18 years at this address. It is now owned and managed by Megna Property Management. I am speaking in favour of rent controls on behalf of the tenants.

Bill 121 is certainly a step in the right direction. Three areas we would like to see addressed before the bill is sent back to the Legislature are maintenance, possessions or services and resale -- flipping.

1. How can the dilemma be resolved in regard to continuous repetition of repairs and maintenance?

The maintenance agency is run by the owner, Mr Bruno Megna, who hires repair people with questionable skills and qualifications. This creates many additional visits to correct mistakes before the repair is completed or fixed, plus excessive costs; for example, pipes redone three times before being correctly done. Costs are no longer borne for expenses for work done; therefore things being repeated over the years should be reduced, or tenants should not be required to bear the costs.

There needs to be a greater enforcement of work repair orders, landlord penalties or rent rebates for tenants who have waited an unreasonable length of time to have their repairs completed properly. For example, plaster repairs: many just patched, redone numerous times to date, the whole building needs plaster work done; front door: hung three times before being properly done, pins and hinges installed upside down, etc.

This legislation does not put any requirement on municipal officials to enforce work orders or to issue them in the first place. In fact, it may have the opposite effect and lead to a decreased number of work orders being issued in an attempt by municipalities to counter what is perceived as tough legislation.

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2. Nothing stops a landlord from taking away services, and yet rents continue to go up. Until this point, there has not been enough protection for tenants. For example, our party room/tenants' lounge was closed. A tenant meeting was held May 22, 1989, with Mr Bruno Megna and Mr Fiori Manga, requesting the return of the party room. The owners promised that, yes, we would have it back. Today that is not so. The room is used for training superintendents of other buildings owned by Mr Megna, storing supplies, as a workshop, etc. Other take-aways which we pay for in our rent are: sauna room, freezer room, bicycle room, hobby room, one locker room -- all these, yet the rents continue to climb, with reduced services.

The new legislation purports to consider the loss of services; however, how will they be translated into dollars and cents? The actual effect on the tenants' lifestyle cannot be given adequate compensation in money. As well, when bulk services such as cable are provided by the landlord, the landlord's rate is far below what the individual purchaser would pay. When these services are discontinued, the decrease in rent is based on the amount the landlord paid, not the higher amount the tenant will be forced to pay to continue receiving the same service. The tenant ends up with an increase in rent in real terms.

This legislation is supposed to offer tenants real rent control, yet, just like the previous legislation, it deals almost entirely with landlords, and tenants are inconsequential. This is most apparent in the areas in which smaller buildings are given special considerations. Owners of these buildings are given higher guideline increases and other benefits, but what about the tenants? Why should tenants be paying higher annual percentage increases simply because they live in small buildings? Has there been a study that indicates that tenants in small buildings are more able to afford higher increases? Is there any actual analysis of the number of smaller buildings that are owned by struggling retirees and those that are part of the portfolio of large corporations? This is an unjustifiable differentiation and is the result of direct pressure from landlord lobbies.

3. Another important fact that needs mentioning and should receive attention is the purchase and resale of buildings. We feel that when a purchase is made the owner should do his or her utmost to maintain the property to standard: repairs, cleanliness, etc. Also, a time limit of five years should be set before a resale occurs. In our case, the building was 18 years old in March 1991. The original owner held the building for six or seven years before selling in 1980. Since that time, we have had another eight owners and, now, our 22nd superintendent. This itself tells something. The point is that a real estate deal should not be allowed to close if outstanding work orders exist. They should be cleared up prior to closing the deal.

The original repairs that should have been done have received little or no attention, with some being duplicated, chiefly cosmetic, before resale. These same problems keep surfacing and are repeated with each owner. The building has truly deteriorated and the repairs to date and violations to be corrected are still not completed.

Work orders are being circumvented, because after the inspector has issued work orders, the landlord is correcting just enough to pass inspection or not fully completing the work, leaving units half done, for example, drywall that is left bare and unpainted and plaster work that is patched just to make it look good.

Equipment has been replaced many times over: vacuum cleaners, 3; snowblower; riding lawnmower; mini barn for equipment and tools; picnic table; air-conditioner; floor scrubber, industrial size, and tools replaced three and four times. These are things that bring rents up terribly and the tenant pays the price. Even tiles for each floor in front of the elevators have been removed at time of sale. Allowances had been made for them. A $1,500 allowance was made twice for painting walls in the underground parking area. Painting of pillars was started, and that was the extent of the work.

We have been through rent review three or four times and are now in the process once again, fighting for a decent place to live after living in disrepair for years and yet having high increases. Any of the apartment units that are attractive and in good repair are because the tenant has repaired and completed them at his own expense.

We recommend a stricter law to stop flipping and to monitor buildings so that tenants have sound, clean, attractive apartments to live in at affordable prices.

Mr Morrow: That was a well-thought-out and well-presented brief. Thank you very much.

What a great part of the region you live in, by the way. I had to say it -- it is my riding.

I have actually been in your building and have seen what you are saying. The situation you are in is appalling at the best of times. Can you basically tell us how often you have gone to your landlord and the response that you have received?

Mrs Stein: People have put in letters stating what is wrong with their apartment. We assume once we have put it in the superintendent's door that it gets to the landlord. They claim they have not received them or they are not filled out properly. There is generally some excuse why it has been put off.

Mr Morrow: A real communications problem at that point, then.

Mrs Stein: Right.

Ms Poole: You have made a number of very good points, including costs no longer borne and also your provision about not being allowed to close a real estate deal unless outstanding work orders are taken care of. I am not quite sure how that latter part could be worked out, but perhaps some minds in the ministry can take a look at that.

The question I wanted to ask you related to work orders and maintenance, which obviously have been a big problem in your building. You have pointed out quite correctly that if the law is too punitive you will actually have the reverse effect happen, where landlords will not begin work orders because the municipality will sympathize and say, "Well, it is not fair." Do you have any suggestions for dealing with work orders, other than the fact that the municipalities should be enforcing them more rigorously?

Mrs Somody: I feel that when work orders are issued, landlords should be given a limited time to get them completed and that officials in the municipality should come for a reinspection to make sure all work is completed and is as requested on the order.

Ms Poole: I think what you are really saying is that you would like a province-wide standard, so municipalities could not opt in and opt out of what they apply.

Mrs Somody: It is true. If there was one set of rulings and it applied to all, and if they were done properly and they passed inspection by the people -- be it fire department, electrical work, health department -- if they met the standard in all capacities, I think that would be very wise and a good policy.

Mr Tilson: I appreciate your informing us of perhaps rather intolerable situations that you are experiencing with maintenance and capital improvements. We are hearing that throughout the hearings.

At the same time, we are also hearing landlords coming to us saying time after time that because of Bill 4, because of Bill 121, it is financially impossible to make any further capital improvements, and it will be very difficult for them to even maintain the simplest of maintenance because of the financial restrictions that are put on them.

Can you offer any thoughts to this government that would encourage landlords to make capital improvements or encourage them to proceed with maintenance to their buildings?

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Mrs Somody: I think that when an order was issued, if all work was completed when it needed to be done, then the building would not become in such disrepair and the costs would be minimal. If you kept on top of the situation, then 10 years down the road it would not be in the condition that it is at the present time.

Mrs Stein and I moved in when the building was brand-new. It was lovely; it was like a palace. It was artistically decorated. Everything was fine. We had a superintendent who was out of this world. Every week, if he received a worksheet, he did it weekly. There was nothing -- nothing -- that deteriorated. It was clean, it was attractive, the landscaping was lovely, all of that.

With every person who has come in, it is, "Oh, well, that's all right." Buying a building in disrepair, they get an allowance off the price. So now they are buying a building in disrepair. They get X number of dollars. It is a tax shelter. They keep it three years; now it is time to get rid of it. They have had their tax allowance; now it is time to dump it. Then it is up for sale again. This is what has really happened in this instance.

The Chair: Very good. Thank you for your presentation today.

MCQUESTEN LEGAL AND COMMUNITY SERVICES

The Chair: The next presenter is McQuesten Legal and Community Services. We would ask the presenters to identify themselves for Hansard. You have 15 minutes, and you can reserve some time for questions.

Ms Giroux: Good morning to all the members here this morning. My name is Denise Giroux. I have appeared before the committee before. I am lawyer with McQuesten Legal and Community Services. With me is Andrea Horwath, our community development worker at McQuesten.

You have heard this morning, and I am sure throughout the time of your travels, and you will hear some more today, from landlords who are crying that their profits are being undercut right out from under them. You asked one particular one, "What kinds of profits are enough?" They cannot answer, because what they want are unlimited profits, a free market, a 19th-century liberalism in place that would allow them to set whatever rents might be tolerated in the market. Their proposal is to have you subsidize through the public Treasury the tenants who need it. This is them acting as the great defenders of taxpayers, when in fact their proposals are merely to funnel the Treasury into their pockets more directly.

You have heard from Mr Lobo, and you will hear from Mr Towler this afternoon, about how since the government was elected we are going, hand in hand, to hell in a handbasket. The obsessive and fanatical rhetoric of Mr Lobo is typical of some of the stuff you have heard. I am sure it is not only in Hamilton that you have faced this, but you have heard very little in the way of specific submissions from these people to help make this legislation workable.

You will hear from tenants -- you have already heard from a few -- about the injustices. They better than anybody know what it is like to be poor and paying more and more of their revenue towards their shelter costs. They can tell you, and they have told you, of all the legal activities that are going on out there that are not being addressed by this government any more than the previous government at this point. They can tell you of the sense of frustration and helplessness that they have experienced with the existing system, with the managers of the existing system and with the administration and its biased issuance of orders, its biased determinations. They have told you about the poor management and the flipping not only of the buildings and the owners but also of the managers and the superintendents, which does not lead to consistent care of their buildings.

I am here as a member of the community who works with tenants' groups primarily but who is very familiar with the system in a broader way, I think, than some of the particular tenants' groups, and I have some specific recommendations for you that I would like you to look at in the long run, if not today. I have presented you with a 17-page brief full of details which I hope the minister will look at. As I said, there are some specific suggestions for amendments to the bill which I think will help strengthen it, because despite the government's good faith and intentions to make a workable rent control system, there are too many sections in this bill that are identical to previous legislation I think that is not so much a fault with the principles or the government's intention, but with the drafting of the legislation. It is important that you look specifically at the wording and consider how these things will play themselves out in practice.

I would like to take you through just a couple of the specific sections. I am not, obviously, going to deal with all the material in the brief. On page 2, I have mentioned how the wording of many of the provisions is identical to previous legislation, and will not actually be met with any different administration unless the wording is changed to reflect the principles and goals you have said you intend to include in this legislation.

I would like to turn to page 3 and refer to some specific sections that relate to the prohibition on landlords from collecting illegal increases pending an order's issuance. When you apply as a landlord for an increase, let us say for the 8% or 8.4% maximum, in the past it could have been 30% or 40%. They would issue notices to tenants. They would make application and rent review services would tell landlords they were entitled to collect what they were asking for despite the clear terms of the act which said they should not collect that, but only the guideline portion of that amount, and anything else would only come once the order was issued. But rent review services actually told landlords to do otherwise, and there is a section, section 19 in this legislation, which repeats the wording of a section in the previous legislation. The same damned thing is going to happen and landlords will be collecting the 8.4% before we even know whether they are entitled to the 5.4%, let alone 8.4%.

That needs to be eliminated from the act unless you want to see that same kind of abuse by the administration and by the landlords. We also saw as an effect of that problem that tenants were paying too much, and then if the order actually only gave the landlord 20% as opposed to 30%, the landlord had collected this money and often did not return it voluntarily. It was left to the tenants to try to recoup their overpayments. Oftentimes they never did because they did not know they had done so and did not know how to go about it. Many of them simply are not used to acting upon and enforcing their rights under this legislation or any other legislation, so I urge you to remove section 19 from the act. It works at cross-purposes with sections 5, 6 and 11 and it is totally unnecessary. Without it, landlords will simply get what they are owed further to an order in due course.

On page 8 of my brief I refer to the application procedure for tenants to reduce their rents. These sections again are quite similar to the previous legislation's provisions and the equivalent provisions were rarely used by tenants and still more rarely used successfully. This section is a farce and does not do anything for tenants. It appears to be a remedy, one of those few things in the act to help tenants get what is fair. It will not work unless you expand it from an individual application process to a class action process to allow tenants' associations to take group action. They, better than anyone, can marshal the evidence for a hearing and present their case. It is a divide and conquer situation and individuals are not able to do it.

Besides that, the Landlord and Tenant Act already allows individuals to take abatement claims to court, and this procedure is much more efficient and much more timely than the rent review procedure. Why would I, as a lawyer, advise a tenant to pursue this method when an abatement claim in court could be dealt with within a month? Only if this can produce a class action right will it be useful and I urge you to consider that kind of change.

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Connected with the applications to reduce the rent is the new remedy provided by the bill, which states that tenants may apply for a reduction in their rent if the extraordinary operating costs are actually going down, but how the hell are they supposed to know that when they have no access to that information? It is a silly section, without providing access, as of right, to tenants and their associations to get that information. My suggestion to you is that the rent registry system be expanded to be more comprehensive. It should not only be the base rents and the maximum rents that are included in that registry system. It should also be any outstanding work orders on record in the registry system, and any other matter that affects that building should be on record with the registry system so that tenants can access that information.

Landlords should be made to file their annual operating costs for those four items which qualify as extraordinary operating costs: municipal taxes, water, hydro -- I forget the other one offhand. It is not an onerous burden to have them file that, and only if they are required to file that will tenants be able to rely on this section. Otherwise, you might as well eliminate it. It appears as a balanced perspective to allow tenants a right or a remedy, when in practice it will not do anything of the kind unless you address that problem. I do not want to go into any more specific examples, but I do commend the paper to you and ask that you review it in your own time.

I have read Bill 121 within the context of the green paper the government has recently issued, supposedly for a comprehensive housing policy. I put the Rent Control Act, as proposed, within that context. What we have seen with the comprehensive housing framework paper is that it focuses on non-profit housing primarily, but it is clear to all of us in this room that non-profit housing will not be able to meet the need in the years to come. Even if we were to find a way of building thousands of houses in the next 10 years, we would still not be able to meet the need and this existing rental stock in the private market has to be addressed adequately.

The role for addressing that is the rent control system as far as I am concerned, and I think that is what the government is saying. So this legislation cannot be given short shrift and it is why I urge you to look specifically at the way these sections will play themselves out. That is the key point in time and place, where the effectiveness of this legislation will be recorded or registered.

I feel that to date what we have seen is that the government has not directed staff adequately as to how to implement its goals and objectives. The principles I have no quibbles with, but the actual practical elements that you are trying to include there definitely need review. I think the rent control legislation as it is will play a part in maintaining affordability, but it does not contribute significantly to the preservation of existing stock, as it is presently written, and there needs to be more done in order to preserve that existing stock.

For instance, you have exempted new buildings for five years from the rent control legislation. This was unnecessary because with new buildings, if they were being built, the landlords of those buildings already had the right to establish the first rents on those units and only afterwards did rent control specifically apply. This is a gift, in a way, given, and yet landlords always have an excuse for not building. They say that Bill 4 and rent control -- I heard Mr Tilson say -- stopped people from investing in their buildings, but what was their excuse 10 years ago and 12 years ago and eight years ago? I would like to know.

If these people would urge you to create a system without any rent controls or actually advocate for a reserve fund for new buildings, then they would be consistent, but they are not being consistent in their own ideology. You have an opportunity with new rental housing stock to create a system that will work better than the old system we keep trying to fix up in various ways. You should be looking at a capital reserve fund for new rental housing if you are not prepared to do it for existing rental housing. Otherwise, 20 years and 30 years, from now, you will have the same problems with your new rental housing as you have now with your existing rental housing.

That is all I wanted to say and I am prepared to take some questions, unless Andrea would like to make a comment.

Ms Horwath: No, you have already made them.

Ms Giroux: I would again commend the paper to you for some specific revisions of the legislation. I have put a lot of time and effort into it and I really do think we have some specific and helpful suggestions to make this legislation work.

The Chair: We have time for three very short questions.

Mr Tilson: I am sure the members of the committee appreciate your legal expertise and we will review your paper. I would like you to comment, if your paper does not already comment on it, on some remarks made by Roberta Jamieson, the Ombudsman, in written form to this committee where she dealt specifically with section 89, and that is the power to reconsider. Her concern is that the current legislation has independent board members. This bill places the responsibility of rent review with a segment of the public service and she expressed a concern with that. Do you share that concern?

Ms Giroux: I am not sure I understand your question exactly.

Mr Tilson: With the existing Ministry of Housing legislation for rent review, you go before independent individuals, independent people. In this legislation, the rent review officer is part of a segment of the public service. In other words, there is a connection to the political arm of the government.

Ms Giroux: Do I have any concerns with that?

Mr Tilson: I think her concern was whether this was right, whether or not these decisions should be made by independent people.

Ms Giroux: I do not think the decisions could get much worse than those independent people made, so I really am not that concerned about it, no.

Ms Harrington: Thank you very much for your brief. I certainly will make sure that staff have a look at it. In fact, they are here today and I am sure they are already looking at it. You made some very good points, certainly on the importance of the private rental market. We really do know that and we have to work with landlords and make sure they do have a fair profit.

Also -- I think you were getting to that point -- there is the importance of empowering and enabling tenants to deal with their lives and their situations. The question I wanted to ask you is on the costs-no-longer-borne aspect. I think you were getting into that at one point. We had a suggestion before this committee that the rental charges be separated into, first, accommodation, second, taxes, and third, temporary charges, so that tenants and landlords and everyone knew what the costs no longer borne were. Do you feel this is too complex or would you suggest going in that direction?

Ms Giroux: I think it is a good suggestion. I do not think it would be too complex, providing the system clearly kept records of those figures at the rent registry system. If they tried to explain repeatedly in their orders how those things break down, I think it could lead to a lot of confusion. As long as it was clear what the basic legal obligation was and the opportunity for revisiting that basic obligation because of costs no longer borne is provided in the legislation, I think that would be a good suggestion.

The Chair: Time has expired for this presentation.

Ms Poole: Mr Chair, is our caucus not getting an opportunity?

The Chair: I am sorry. I did not mean to overlook the Liberal caucus. I was looking at the clock.

Ms Poole: You had better not, Mr Chair, or we will expel you.

Thank you very much for your presentation. We always find it particularly helpful when witnesses point out specific sections of the act and make recommendations, so we will look forward to going through your brief in detail.

My question is about the right of appeal. I have looked through your brief and I am not sure I see something specifically on that. There is a very limited right of appeal under this legislation, basically only on a matter of law. Matters of fact cannot be appealed and it is very limited. In your opinion, is this going to be to the benefit of the parties concerned, tenants or landlords, if there is an error made during the administrative review or the hearing and it cannot be remedied at a later date?

Mrs Giroux: For the purposes of hearings where there are actually board members present and hopefully a record being kept -- I think that is an important element which should be made clear -- I do not have any major concerns about appeals being limited to questions of law, but I have some very serious concerns about the administrative review which continues under this legislation. The Statutory Powers Procedure Act continues not to apply, which means that the administrators can do what they have always done: not give reasons for their findings, not refer to legal provisions they rely on. They can just arbitrarily choose what they want to do. How do you appeal a decision like that based on a question of law when you have no damned idea what law they are relying on?

I think it is important that they include reasons in their written orders, even at the administrative review level if that is going to remain with the system, so that the appeal can be properly brought.

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METROPOLITAN HAMILTON REAL ESTATE BOARD

The Chair: The next presenter is the Metropolitan Hamilton Real Estate Board.

Ms Dowling: Rent review was originally imposed by the federal government as a temporary measure in 1975 to help fight inflation. Ottawa lifted federal control in 1977. It was mismanaged from the start and has a cost of $40 million for bureaucracy to handle the case load. Rent review has definitely outlived its usefulness.

Through Bill 121, rent review has become rent control and we have gone from bad to worse. Free enterprise is being legislated to death and Bill 121 is another nail in the coffin for free enterprise.

The legislation of Bill 121 kills investors' interest -- you have heard that before, today -- in the private rental market. The term "Don't buy in Ontario" is the message being sent, which leaves even more of a financial burden for public housing on the province's empty coffers.

The construction of rental units has and will cease as builders do not and will not invest in rental housing because they cannot get a large enough return on their investment. We heard today: What return do you want? A reasonable return on investment. What is reasonable? Let's sit down and talk.

A looming shortage of rental accommodations has been masked by the deep provincial recession. It will choke the supply of affordable housing and the government cannot provide a viable solution because of the provincial debt.

Over the last few years average rent has fallen way behind the average mortgage cost, excluding property taxes and other expenses. If this continues, landlords will and are and do go bankrupt and default on their mortgages as they cannot totally recoup their losses.

The government has basically killed the apartment building industry. The five-year exemption on new buildings is not practical as new buildings usually do not require major repairs. It is estimated that Ontario's high-rise apartment buildings, many 25 to 30 years old, will need at least $10 billion worth of repair work over the next decade.

Bankers are very cautious right now and they will continue to be cautious about lending landlords money when the landlords' ability to generate a reasonable profit is in question. If banks refuse the financing needed, we are all in trouble. Landlords will not have the money they need to keep their buildings running or making the necessary repairs. Tenants will or have already begun to notice the decreased maintenance, as we have heard today, and the gradual deterioration of their buildings.

Preventive repairs will no longer take place, if done at all, and will only be done when absolutely necessary. Recent purchasers will be forced to divest themselves of their holdings -- and they have and they are -- but to whom? Who is going to buy them? The province? Will there be more sellers than buyers? The conditions of buildings will have a significant impact on the purchase price as landlords will not invest in improvements. Good conditions -- fair price; needs work -- less desirable.

The market value of rental buildings could drop by a minimum of 20% to 25%, which will be especially harmful to the common small people, the investors. Is it the government's goal to put all private landlords out of business? Do you want to regulate rent so strictly that the buildings will fall into disrepair? This, of course, will reduce property value and then you, the government, can bail the landlords out and buy all their properties at a greatly reduced rate. Is the government looking for a totally provincially run housing system?

If you are, let me say that when this happens it will be a sad day for Ontario. We are already facing a deficit in our budget. Bill 121 is supposed to provide Ontario tenants with the best protection in Canada, but if the government lifts its head and looks outside the Toronto area, you may realize we do not need as much protection and government control as you think we do. The Hamilton area has numerous landlords who own one or two small investment properties -- we have heard them here today -- as retirement, security or secondary income. They are not the big players, but they are going to be put out of business by the big players' rules.

Rent controls stagnate the entire housing process because people will not move from their current apartments and only higher-priced units will be available. This will lead to more illegal apartments and tenants doubling up in rental units. Anyone who would be interested in going into a business that is totally ruled by government, a government that makes all the rules and then changes them overnight -- why cannot the government admit when it has made a mistake, cut its losses and move on to a practical solution?

Myself and others who are presenting today are not saying anything radical or new. We are just stating that we do not agree with Bill 121, and the last time I checked, Canada was a democratic society. It has been proven time and again that rent controls do not work. You succeed in creating city slums which lead to other social programs. We can look to New York, the war zone, for that. We are here today to ask the government to get out of the housing business and let the market cycles take their normal course. It will all balance out.

I leave you with the following recommendations from the Metropolitan Hamilton Real Estate Board: that the government let the market set the price and gradually remove government regulations and replace them with rent subsidies for needy tenants, and that governments spend less time disrupting the system and take more time to close loopholes in the system that allow those who are well able to pay a fair market price for rental accommodations to be subsidized to the exclusion of those who really need it, the low-income tenants.

The Chair: Thank you for your presentation. There are about two minutes per party for questions.

Mr Brown: Your being here is fortunate just for some questions of fact. In the Hamilton area, how has the increase in the price of a house, for example, compared to the increase of the price of investment residential units over the last 10 years. Have the residential units kept pace with the housing market in general in terms of price?

Ms Dowling: Right now Hamilton is in a very difficult economic crisis due to the Red Hill Creek Expressway dying and industry moving out. When we are looking at housing units, we are also looking at apartment buildings that are not selling as well. Housing has decreased 20% to 30% in Hamilton. Recovery: We are waiting the same as you guys. Has it increased? You are looking at the number of units. I would say you are probably looking at a decrease as well. It fluctuates the same as the housing market. They are two separate entities and they have to be dealt with as two separate entities.

Mr Brown: I know this is an economically difficult time in this area as it is throughout the province, but perhaps in this area it is somewhat worse than some other areas. You do not have any statistics of what the average house would have sold for 10 years ago versus now, or apartment building 10 years ago versus now?

Ms Dowling: I am sorry. I do not have it off the top of my head, but I will certainly get that information to you.

Mr Brown: I would appreciate that.

Ms Dowling: The Ontario Real Estate Association has sent in a brief dealing with rent controls and Bill 121 to this committee.

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Mr Turnbull: Ms Dowling, you have stated that there is a 20% to 25% reduction in the value of apartment buildings, but you have also said that it was a 20% to 30% reduction in the value of housing. Do you attribute the two reductions, which are about in the same magnitude, to the same economic circumstances, or is it a different situation with respect to rental apartment buildings?

Ms Dowling: It is a different situation with rental apartment buildings. We are dealing with new housing, and a lot of our statistics have new housing and older housing combined. I can be put to task on this but, off the top of my head, I do not know of any new apartment building that has not been a condominium-owned apartment building. There has not been a new rental apartment building in our area. When you are looking at that, we are dealing with something that has already been on the market, that has decreased substantially, and therefore there is no uplifting. The decrease of 20% to 30%, if we are just looking at the existing housing market, the older houses, would probably be substantially less if there was not new housing to bring up that price.

Mr Turnbull: It seems to me that in view of the fact that the capital value of these buildings has dropped, which eliminates any of that aspect of profit, it would seem reasonable that you should be able to make a profit out of your building if you own one.

Ms Dowling: You have a lot of factors involved here. You have the cost of your superintendents. You have increases of taxes. Hamilton alone has water meters that now have to be installed on all rental accommodation. It does not take it into consideration under a signed lease. So we have a lot of factors affecting the rental market that are totally out of the control of the 5.4% that we are looking at, and the additional 3% for any increases. It is wonderful to look at this bill and think this is wonderful, but this is not Hollywood. The reality is that there are a lot of buildings in a lot of decrepit states of repair. They are looking at not even getting a reasonable return on their dollar. I asked Richard Allen, "If you had $100,000 today, Richard, would you go and buy an apartment building or would you buy GICs?" He did not answer me, and that has to tell you something.

Mr Abel: Ms Dowling, I would like to thank you for taking the time to come out today and express your concerns to the committee. In your presentation you indicated to this committee that you are under the impression that rent controls may create slums. Is that correct?

Ms Dowling: That is correct, sir.

Mr Abel: You made reference to the slums in New York.

Ms Dowling: That is correct, sir.

Mr Abel: How would you explain the slums in Detroit, where they have no rent controls at all?

Ms Dowling: Have you noticed the tenants taking over these apartment buildings and fixing them up? Have you noticed how they have taken control and done something?

Mr Abel: I am sorry, Ms Dowling, that was not my question.

Ms Dowling: Okay, I am sorry.

Mr Abel: How do you explain Detroit's slums where there is no rent control at all?

Ms Dowling: Detroit slums -- I cannot explain it because you are taking a hypothesis. I am dealing with control upon control, and you are saying that there are no controls.

Mr Abel: I am saying, Mrs Dowling, that New York state does have rent controls, and you have made reference to the slums because of the rent controls.

Ms Dowling: That is right, because I travelled through them last summer.

Mr Abel: But Detroit has no rent controls at all, yet the slums are there. How can you explain that?

Ms Dowling: Sir, the slums are all over. How do I explain that? That is a social issue. Do you want me to explain that?

Mr Abel: What you are saying is that it is not necessarily rent controls that create slums.

Ms Dowling: I am saying that you are looking at deteriorating buildings, and there is no money in the coffers to fix these buildings. There is no reasonable profit. There is no money to fix them up because there is a control on the amount of money it is going to require to fix these buildings up under rent controls. How do you explain that?

Mr Abel: That still did not answer my question, but thank you anyway, Ms Dowling.

Mr Mammoliti: Yes, she did. She said she does not know.

Ms Dowling: That is correct. I am not a socialistic person here.

Mr Mammoliti: Yet you used the argument anyway.

The Chair: Mr Mammoliti, do you have a question?

Ms Dowling: That is the fourth question, by the way.

The Chair: Please, we have a minute.

Mr Mammoliti: You brought up the argument of New York and the slums, and you brought up the argument about rent controls causing those slums, but yet when the question is brought and asked of you about Detroit, you cannot answer it.

Ms Dowling: George, do you have an answer for that?

Mr Mammoliti: The answer I have for that is that the landlords have not been taking care of them. That is the answer I have. I think it is their responsibility.

Ms Dowling: They do too, because it is an investment. If they do not take care of it, they are not going to recoup any of the so-called profit.

Mr Mammoliti: How would you explain all the work orders and all the maintenance that has been neglected in Toronto over the past few years? If what you say is true, then they would care about fixing up their apartments, and they have not been.

Ms Dowling: George, work orders come through. It is done by the city. The city goes into these places and has work orders put on them. A property cannot change hands --

Mr Mammoliti: What about 851 Queenston?

Ms Dowling: Excuse me, George.

Mr Mammoliti: What about 851 Queenston?

Ms Dowling: A property cannot change hands unless --

Mr Mammoliti: What about 851 Queenston? That is something you can relate to.

Ms Dowling: Excuse me, George, I am talking. Please have the courtesy to be quiet. A property cannot change hands unless those work orders are totally lifted. Now, whatever has happened, I do not know. We have to look into that.

Mr Mammoliti: You do not know.

Ms Dowling: I cannot tell you what happens to every single apartment building. I can only tell you that outstanding work orders must be --

Mr Mammoliti: Still exist.

The Chair: We have used up all our time. Mrs Dowling, thank you for coming before the committee.

HAMILTON MOUNTAIN VILLAGE RESIDENTS SOCIETY

The Chair: The next presenter is St Elizabeth Village. Sir, we will be following the same procedure of 15 minutes. You can reserve some time for questions. We would like you to identify yourself for the record, please.

Dr Smith: My name is Robert Smith and I am representing the Hamilton Mountain Village Residents Society Inc. This is a society of residents in St Elizabeth Village on the mountain.

We are somewhat disgusted with the situation in the village because we have absolutely no representation of our group with the management. This has been the situation for quite a number of years and we feel this is an opportunity so that this situation may be changed and that the passage of this new bill would include a directive that our society, our group, our association, would be able to communicate with the management of St Elizabeth Village. This has not been possible for years, since the inception of the group.

Actually the group came into existence on the advice of legal aid, which said, "Have you an association?" We proceeded to do that and we are now an incorporated group. Nevertheless, we are not permitted to communicate as a group with management in the village. They absolutely refuse to do that. This handicaps us because we would like to have good dialogue with management. We believe it would obviate, eliminate probably, a lot of difficulties. We are hoping this new act will incorporate some directive to groups. I do not know if there are others. We believe the situation in St Elizabeth Village is unique in Ontario. We have not been able to find any other situations similar to our own.

We have objections to some of the clauses in the present Residential Rent Regulation Act. This act, except sections 3 and 6, does not apply to a rental unit situated in a residential complex owned, operated or administered by a religious institution for a charitable use on a non-profit basis. The Hamilton Mountain Village Residents Society objects to this provision from two standpoints. As we understand it, the purpose of rent control is to ensure that the needs of the landlord and the tenant have been met to the degree that this is possible. In this regard, we see no difference between the circumstances regarding the needs of a businessman landlord or religious institution landlord. Both invest money and require a reasonable rate of return for whatever purpose they require. There would be some logic if there was subsidization of the rent. However, the act makes no reference to such circumstances.

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In the case of St Elizabeth Village there is no subsidization in that the tenant prepays 21 years' basic rent at the onset of his tenancy, and then that is supplemented by a monthly common area maintenance, known as CAM, a fee to cover all operational expenses thereafter. Under the terms of such a rental contract, it is difficult to understand why the landlord should be allowed to raise the maintenance fee portion of the rent beyond the guidelines of any other landlord.

It is submitted that the St Elizabeth Home Society is totally unique and different from a religious institution as contemplated by the rent regulation act. St Elizabeth Home Society was, over a period of many years, in transition from a small hands-on organization to a major real estate development corporation.

A registered charity return submitted by the St Elizabeth Home Society in 1986 declared almost $40 million in assets. The society has built some 450 homes with serviced land from up to approximately 620. A site plan for a further 600 homes exists. Additional land holdings are also undergoing zoning changes for a major town house development and seniors' apartments. From the foregoing, we submit that a development of such magnitude should be subject to the provisions of the rent regulation act.

The main objection of the residents society is the lack of representation. We have been trying for approximately five years, through various media, to become recognized by the home society which is the governing body of St Elizabeth Village. This lack of representation is an irritant. Most of our members are elderly, some quite elderly, and have no protection from the dictates of management. We are hoping the new act will indicate to management that it must recognize and co-operate with the members of the village association. I think, as I have already said, we are unique in that we are not allowed any say-so.

With regard to the religious institution under which the management, the home society, seeks refuge -- that might be a strong term, but I think it is very descriptive -- it says that the definition and condition set for an institution to be classified as religious is a rental unit located in a residential complex owned, operated or administered by a religious institution for a charitable use on a non-profit basis. As I already said, 10 years ago, when they started out, it was apparently a very, I would not say religious but charitable organization, but as times have gone on there has been no charity shown, nor very much religion.

We have made application to the various government groups, and the big drawback is that there is nowhere any dictionary, case law or judicial interpretation of the words "religious institution." We in our group hope the new amendments to the present act will clarify this so that there will be no ambiguity, both for the landlord and the tenants.

We have absolutely no say-so in the administration of our complex there, no check on the community projects or costs. This is most important to all tenants.

Perhaps we will say a bit about so-called religious institutions in this. We find, and it has become very marked in the last few years, that there is no religious institution that it can be classified as, judicially or otherwise. As I have already said, we have done our best through various agencies to try and change the situation, but without any hope or any good results. Now this new committee, your committee, probably, if you will, can amend the act so that we will have some sort of say in our own neighbourhood, so that we will be able to sort of govern our own lives.

As we are all seniors, very much so in many cases, we have no objection to being sheltered to a degree, but to be told exactly what we do and when we do it and how we do it rather disturbs us. We hope this committee can change that. You are probably our last hope, because we have exhausted quite a number of avenues. We hope you will do what can be done, particularly to define what a religious institution is, so that we will know what part of the rent regulation act we come under.

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The Chair: Mr Smith, you have about 60 seconds left for your presentation. You can use it up finishing your own remarks or you can take a couple of short questions.

Dr Smith: Good. Any questions?

Ms Harrington: I would certainly like to commend you for coming forward and making quite a substantial case for the regulation of your institution and raising some questions. I would also like to thank you for forming a tenant association and having a dialogue with management. That is very important.

The government has not taken a position yet with regard to regulation of these rest and retirement type homes. The Lightman report will be coming forward in October and at that point we will be beginning the discussion on it. Very soon we will be dealing with it.

Dr Smith: Very glad to hear that.

Mr Sola: You are asking for representation in governing your village, I guess, St Elizabeth Village. You say that without representation you have no protection from the dictates of management. What kind of protection are you looking for? Protection from unreasonable rent increases or maybe imposition of religious dogma that is not to your liking? I would like a little bit more specific detail on that, please.

Dr Smith: Nothing about religious dogma. We have all religions there. It is run by a famous or an infamous Sister Elizabeth. It still is, even though a ruling was made that she was to vacate the position of head of the group. We do not object to that, as it is fairly ecumenical. But the rental -- the common area maintenance -- increases steadily, usually just barely within the allowed lines. We cannot do too much about that, but we would like to know what is happening to all the moneys.

The Chair: That is about as long an answer as we can allow to that question.

Mr Tilson: The only comment I have on your remarks, Mr Smith, is that even if your wish is granted, this legislation still creates an adversarial system. It pits landlord against tenant.

Dr Smith: Exactly.

Mr Tilson: Even if your wish is granted, agreements between tenants and landlords are never going to exist with this legislation, and our party will be pursuing an effort to encourage that type of co-operation.

Dr Smith: We will be very grateful for that.

JOHN TOWLER

The Chair: John Towler is our next presenter. We will be following the same procedure, 15 minutes, and you can withhold some time if you wish.

Mr Towler: My name is John Towler. I am a landlord of a sixplex in Burlington. What I will say to you today I am repeating from my last six letters to the Honourable David Cooke, to which I never even had the courtesy of one reply. I assume those letters went into a landlord garbage basket.

There must be a mechanism whereby landlords recover financing costs and where rents reflect the value of the building. Financing is the largest cost in running an apartment building. To suggest it is not valid for recovery is irresponsible, naïve and a recipe for bankruptcy. Because it is the largest cost, it must be addressed in a much more sincere and responsible manner. Your green paper does not give one valid reason for not allowing recovery of this cost. You do say it will add to existing rents. Yes, it will if rents do not reflect the value of the building. It is like saying that if we do not eat, we can reduce our food bill. Obviously there is more to the equation than not eating. Likewise, the landlord must be part of the equation. I do not think he is.

One reason is so outrageous: It says the system of rent control will be simplified if recovery is not allowed. That is what it says. Is the landlord part of the equation? Obviously not. This casual, one-sided attitude is of major concern. I would like to point out that every business recovers financing costs or it goes broke. How you expect the landlord to operate is beyond my wildest dreams.

Your legislation clearly says -- I want to say this very slowly; this is exactly what it is saying -- that you will make an easy target from a selected group of innocent landlords, those who have been trapped with low rents. Rather than help them, you are saying: "We have trapped you. We are going to give you the gears. You are not going to get out of that situation. You are trapped." Their financial ruin is not a consideration. You will force us to provide below-cost rents. Shame on you. Bill 4 has pushed me to the limit. You have tripped us. We are down, and now you start kicking.

The effect of not allowing financial loss is to say that rents will never reflect an increase in the value of the building. Therefore the value of the building cannot go up. May I explain -- it is very basic economics -- that the value of any business is relative to its potential to earn a profit. If rents cannot increase to reflect the value of the building, then it is clear that the value of the building cannot increase. They go hand in hand. In fact, it will not even increase at the rate of inflation. This means its real value decreases as time goes on. Your legislation clearly says this is its intention, to devalue our real estate. It very clearly says this. It is very simplistic to provide low-cost rents when you exclude the landlord from the equation and decrease the real estate value, and that is what you are doing.

Is it workable? Is it fair? Is the landlord part of the equation? Triple no. I suggest you are forgetting something very basic here. If the building does not represent the costs of land, labour, bricks and mortar, then it defies all business sense to invest in that environment, whether for renovations, building new or buying existing stock. It is anti-business, anti-landlord and a recipe for disaster for both tenants and landlords.

I urge this delegation to study pages 20 and 21 of Issues and Options and have the courage to make the proper adjustments. Should this delegation choose to ignore these facts and this reality and this unfairness, I question who it serves. I think we have heard some answers today, and the one that sticks in my mind most is that it does not serve the person it is intended to serve.

I accuse this government of trying to drive a wedge between tenant and landlord by making outrageous statements whereby every landlord is guilty of putting in gold-plated lobbies and buildings are being financed at tenants' expense. It is not true. Let's talk about the 90%, the others, who do not have this problem. I urge you to stop this rhetoric and damage to the industry and instead be realistic, supportive and encourage good landlord-tenant relations. I personally have found tenants reasonable, and when informed most do not expect below-cost rents at the expense of the landlord.

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I would like to talk briefly about my own situation. I felt I had a good, ethical business plan. I am not a crook. In 1988, after extensive research, I concluded mortgaging my house was a sound business plan. My investment and its desirable location certainly could not be replaced for its purchase price. The previous owner of more than 25 years avoided rent control; hence, the rents were extremely low in relation to the value of the building. Today that same landlord has had his planned retirement severely devalued. Years of work for nothing. He is lucky if he can sell his building. Shame on you.

By using a phase-in, I had planned to be able to break even in five to seven years and still provide rental units at below-market, fair rents. I would provide my services as bookkeeper, gardener, maintenance, superintendent, etc, free of charge. In fact, I spend all my spare time in this regard. This plan would assist with my children's education needs and give me some security at retirement -- not outrageous expectations, and very fair with tenants. I used TVOntario's series entitled "Successful Landlord" as a guideline, which by the way is running again, and I warn that it does not reflect today's environment.

Bill 4 shattered my plans. Your rent control legislation will financially ruin me. Your legislation will force my building to lose money for ever. And why? In the name of providing low-cost rents that do not reflect the value of the building. And for whom? For tenants who have had the courage and the moral conviction to say that you are wrong and this is not fair. That is exactly what my tenants said and you can refer to a Hamilton Spectator story on the last page of your handout. That is exactly what they say: "This is not fair. You are wrong."

I believe I can speak for many landlords and tenants in a similar situation. Who would invest in a building that is forced to lose money? You devalued my building so I will never recover my investment, again in the name of providing below-cost rents that do not reflect the value of the building and for tenants who have had the courage and the moral conviction to say that you are wrong, that this is not fair.

You have put me between a rock and something hard. I suppose the most hurt is what you have done to my children's future that I have worked so hard to secure. I almost feel as if I am a traitor to my country for trying to get ahead.

In conclusion, I plead that you consider what I have said and have the courage to provide legislation that is fair, legislation that includes the landlord in the equation, legislation that supports the industry versus attacking it, and legislation that uses the very basics of economics. I warn that mistakes now will be entrenched forever in a spiral of ruin that is going to be felt by everyone.

Mr Turnbull: We heard, when there was a cabinet shuffle a few weeks ago, that Premier Rae wanted to have more co-operation between government and the private sector. For the life of me, I cannot understand how this legislation has any connection with that stated goal. Can you give me an idea as to how much equity, what percentage equity you put into your investment?

Mr Towler: Approximately one third.

Mr Turnbull: Would you say that is wiped out now?

Mr Towler: Very close to it, yes.

Mr Turnbull: And you are still losing money on the building?

Mr Towler: The rents do not cover expenses; that is true.

Mr Turnbull: So on the one hand, you have lost virtually your entire investment and on the other, you are actually losing money out of pocket each month.

Mr Towler: That is right.

Mr Turnbull: What would you suggest to persuade my colleagues over there that this is not a sham? I am concerned. We talk after hours about the legislation and I have come to the conclusion that they do not believe these stories. These are not bad people. They think that in some way it is an exaggeration by a privileged class that is trying to get some extra benefit. What can you say to them that will convince them?

Mr Towler: Try to understand the situation. Be realistic and fair. I am prepared to bare my soul. I never paid too much for my building. As I say, that building cannot be replaced for its purchase price. My rents do not cover the costs. The rents are extremely low. I am trapped in that low rent. Where is the fairness when I am trapped in that low rent and I cannot increase it to something that is realistic to cover a cost that is realistic?

Mr Mammoliti: Sir, I caught something you said and it struck me. The one third that you invested, your equity basically in the place has gone down; there is nothing left. How much of that one third is lost because of the market itself? As you know, the market is not very good all over Ontario.

Mr Towler: I have had the building for three years and certainly real estate in general has, if anything, gone up in the past three years and come back down and settled. It is still above where it was three years ago, minus considerably the low where it was three years ago, if that helps.

Mr Mammoliti: Do you have any figures for us or anything? You said one third.

Mr Towler: I just went through renewing a mortgage, and mortgage experts tell me the value of that building has decreased 30%.

Mr Mammoliti: But how much of that is because of the market itself? You are relating this to Bill 121.

Mr Towler: Would you buy a building that is forced into losing money? Maybe that is an answer.

Mr Mammoliti: No, I am asking you the question.

Mr Sola: Sir, I would like you to clarify something you state at the bottom of page 2 and the top of page 3. You say the previous owner of more than 25 years avoided rent control; hence, rents were extremely low. Then you state you have lost your down payment or your equity in the building, and you are saying at the same time that this same landlord has had his planned retirement severely devalued; years of work for nothing. If you bought the building from him, how is his work devalued?

Mr Towler: I am sorry. I did not present that properly. I mean a landlord who is in that situation trying to sell his building today has had his investment severely devalued. I am not talking about the previous landlord of my building.

The Chair: Mr Towler, thank you for your presentation.

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90 DUKE STREET TENANTS' ASSOCIATION

The Chair: The last presenters for this morning are the 90 Duke Street Tenants' Association.

Mr House: My name is George House and I am a member of the tenants' association of 90 Duke Street. The association has prepared this presentation to cover three distinct areas of rent control: (1) the recovery by the landlord of approved capital expenditures; (2) problems experienced with the management of the 90 Duke Street apartment complex; (3) the intent to increase rents to cover general maintenance, repairs and other costs.

Ninety Duke Street is a high-rise apartment building of 144 units and part of a three-apartment complex, with the Monterey and Bayview apartments located on Bold Street. These are just behind the Duke Street area. There is an outdoor swimming pool located on the complex which is shared by the tenants of each apartment building. There is a total of 344 apartments all together in the three units. The whole complex is owned by the Mutual Life Assurance Co of Canada, Waterloo, and managed by RDC Property Services, a part of the investment division of Mutual Life. The local RDC office is at 224 James Street South, Hamilton. The landlord has owned the property since 1970.

The first concern relates to capital expenditures, how they are claimed and the recovery of the expenses. For example, if an individual property owner, carrying a mortgage on his property, suddenly finds he has a major repair expense that he is not immediately capable of paying for, he can obtain a loan from a financial institution, which will be repaid over a number of years so that the needed repairs can be made. The loan can be repaid, say, over five years, during which time his monthly payments would include the cost of the loan and the mortgage. At the end of the five years he has repaid the loan, so that the carrying expense on the property is now reduced by the amount of the loan payment. At this time the owner has two options: Either he can put the amount of the loan that he had been repaying into a separate interest-bearing account for future repairs or he can decide to use that money for other purposes.

In the case of the landlord being granted an increase in rent to cover the approved capital expense, his increased income from the tenants immediately becomes a new base rent of (a) the guideline of the yearly increase and (b) the approved capital expense increase. If (a) is 5% and (b) is 10%, that gives the total base increase rate of 15%. Future income from rentals will be further compounded yearly at the guideline rate. If this continues at 5% a year, say, for six years, it will rise to a 54% increase in income. This means that the original capital expense is recovered at the increased rate.

When the capital expense is fully recovered, the landlord's position is similar to that of the single-property owner, except that in the landlord's case, after recovery of the expense, he is increasing the profit factor of the original investment. Unfortunately the home owner does not have the advantage of having the carrying costs of his loan decreased by a yearly inflation rate, so his recovery time is fixed.

The tenants' association suggests that the additional profit should be placed in a building fund account for future capital expense. While it is not used, it will still earn a compounded rate of interest based on the yearly guideline increase. This is not a difficult procedure to establish. In the case of our landlord, its combination of actuarial and computer expertise can write this program into its annual budget appropriations for the apartment.

The second part of the presentation is the actual experience of problems encountered at 90 Duke Street from February 1984 to November 1989.

In early 1984, many tenants complained about the deterioration of the ceiling in the first basement level of the indoor parking garage. Moisture was causing the ceiling finish to break up, with a heavy white dust covering the car bodies. The complaints were duly attended to, after about two months, by taping plastic material to the ceiling in the worst areas of the garage. Within a year these had to be replaced because water had gathered inside the plastic sheets. This problem carried on and was replaced several times.

These problems continued until 1988, when the landlord finally decided to do something about the complaints. A consulting company was engaged by the landlord and indicated that substantial work had to be done to repair the garage floors and ceiling of the first and second basement levels and estimated that the necessary repairs would take 16 to 20 weeks. The work started in September 1988 and was not completed until November 1989, which was 14 months later. During this time the tenants lost the use of laundry facilities, lockers and parking and were subjected to extreme noise levels, extensive dust and vibrations from heavy machinery and many other problems associated with daily living in the apartment, such as restricted access to get into the apartment.

Three days after the work was completed, water from the first rainfall began leaking from the ceiling to the garage floor from exterior drains, and within three months after that the condition on the first basement level of the ceiling breakdown was as bad as it was in 1984.

The rent review board approved two increases in rent based on the capital expense claim because the work was not completed in the year from the time of application. There were and are many other issues associated with this problem that cannot be given in the time allowed for the presentation.

The tenants claim that original knowledge of a serious condition in 1984 was ignored. A Band-Aid form of protection to the cars was obviously useless. It is not unreasonable for the tenants to claim that the landlord should be held responsible for the necessary repairs that were not attended to for more than four years.

One member of the tenants' association, when questioning the review board about how it decided on the rent increase, was told, "The landlord had accounted for all the money that was claimed and therefore he was entitled to his claim." There was no consideration whatsoever given to any of the problems associated with the reconstruction over that 14 months. It is obvious that there had to be serious construction problems with the building for the work to take more than a year to rectify.

A major concern raised at tenants' association meetings was, how could a highly recognized company with substantial real estate investments -- $560 million at last statement -- and in-house facilities for property control and management allow such a situation as this to occur? If proper attention had been given to the problem known in 1984, it is highly probable that the repairs needed would have cost less in time and money at that time.

The third part of this presentation relates to the proposal in Bill 121 to give the landlord an uncontested right to a 3% increase over the regular guideline rate to cover extra expenses.

These are not documented and they do not define such extras that could be covered under extra costs. This leaves an area open to landlord abuse. These increases, if allowed, will be compounded yearly, as is the same with all the other rents. The proposal should be more clearly defined so that there is a definite allocation to operating costs, maintenance costs and other costs.

Conclusion: This is a problem related to the landlord-tenant relationship. In the past, all notices to tenants in 90 Duke Street regarding rental conditions, rent increases and notices affecting the daily operation of the building have been issued by RDC Property Services, as stated earlier, which is an operating division of Mutual Life Assurance and responsible for the management of the three buildings. However, the last notice to tenants indicating an application for another increase in rent in 1991 was not sent out by RDC, which manages the property, but by Cohen Melnitzer, a law firm in London, acting as counsel for the Mutual Life Assurance Co. This same notice, which is a simple one-sheet document, was also sent to the tenants in the other two apartments, Monterey and Bayview.

Telephone calls and discussions between tenants in the three apartments were questioning why would Mutual Life Assurance Co, the landlord, have to engage an outside counsel whose reputation has received considerable media attention, when it had its own legal department that could easily have sent out the same information? Why not RDC, which was doing the same thing for the last 15 years? If the name Cohen Melnitzer, which has engaged the media to present extremely adamant opposition to the proposed NDP Bill 121, was intended to intimidate the tenants, I have to report that it has not only backfired but the high-profile reputation of Mutual Life Assurance Co of Canada is now questionable. Whatever happened to Mutual Group's vision "to be the best in the financial markets we serve"?

This presentation was prepared for the committee by the 90 Duke Street Tenants' Association.

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Ms Poole: Thank you for your presentation to our committee today. At the top of page 6 you said, "The third part of this presentation relates to the proposal in Bill 121 to give the landlord an uncontested right to a 3% increase over the guideline rate to cover extra costs." Then you said that the costs "are not documented and do not define such extras." In Bill 121, first, the right of a landlord to charge 3% over and above the guideline is definitely able to be contested, because there is a procedure in place at rent review to do so, but second, the act is quite specific about, for instance, the kinds of necessary repairs. I am having a little difficulty understand what you meant by that and perhaps it is just my understanding and you could explain a little more fully for me.

Mr House: When we received this other increase which was for 2.2% this year, two of the members of the committee questioned the NDP representative in Hamilton and said, "Why is this happening and how can the landlord do this without any protest?" You said: "I am sorry. I cannot answer that question because as far as we are concerned at the moment the landlord will be able to charge an additional rent if he can show that he has spent the money."

I agree when you say, how can we contest this? We now have to go through the procedure of the landlord putting out his associated costs and extra costs which are not in operating costs, and are not in maintenance costs. They do not define what the other costs are. It could be mowing the lawn. It could be planting trees. It could be doing anything which is not defined.

The landlord already knows what his operating costs are because they are included in his original rent construction. He knows what his maintenance costs are because he has the control and the knowledge of this over the past 20 years. If the other costs are not defined and he suddenly comes up with something, we now have a contest between the landlord and the tenants as to what this should be. That is not defined so far.

Mr Turnbull: Are you concerned that this legislation might diminish the standard of maintenance in your building?

Mr House: I look at a person investing money. If I am asked to invest money in an apartment complex, I have the opportunity of using that money and before I use it, I am in the position to have a look at the operation of the company, of the building, what the income is, what the operating costs are and what the maintenance expense has been over the past few years. Most are in a position before they I invest that money to call a consultant company and say, "Please give me a statement of what you think this building needs as a maintenance program." It may be that the building has had a good maintenance program. But if things happen as in our building, a delay of four years to do work which was a construction problem, we are going to come up again in two years to replace what was bad maintenance at that time.

The maintenance factor: It does not matter what you buy, an apartment, a motor car, there is always a maintenance factor associated with your purchase or with what you have. In building maintenance, there is sufficient knowledge in the business to know what maintenance costs are the most costly.

Ms Harrington: On page 6, you stated that the increases will be compounded yearly and Bill 121 should substantially be amended. This has been brought forward to us by several different groups that once something has been put in it should not keep compounding year after year. We call that costs no longer borne. We are looking at an amendment which would deal with this type of situation. Would this be something you would recommend? Is this what you are asking us to do?

I also wanted to ask you what kind of increases you have had in your building. Your actual rent, what would it be?

Mr House: Our rent has gone up in the last three years by nearly 30%. That is two increases, and I say that is because of the guideline increase and the two increases that were approved by the rent review board on the capital expense to put the basement factor right. Can I get your question right again? You are talking about the separation of costs. It does not matter what the costs are, if the landlord gets an approval to have these costs included in the rent, that rent now, further down the road, is continually compounded every year.

If you want an instance of compounding rates and the rent in our apartment building from 1990 up until this year, if they get an increase of four points next year, the rental income for the building on a yearly basis is higher than the original mortgage. You cannot call that a bad investment.

Ms Poole: Perhaps I could have a request for the Ministry of Housing. This morning during the brief from the tenants at 851 Queenston Road, Stoney Creek, the idea was mentioned of having a real estate deal not allowed to close if outstanding work orders exist, that they should be cleared up prior to closing the deal. I do not know whether this would involve having work orders filed on title or what it would involve, but if we could perhaps have an opinion at some stage in the next few weeks from the ministry as to what legislation would have to be amended, what procedures would have to be enacted to put such a thing into effect, I would very much appreciate it.

Ms Parrish: We will look into that. If I could just clarify, what you want us to do is to tell you how you could do this if you wanted to do it.

Ms Poole: Yes, what legislation and what procedures we would have to have.

Ms Parrish: I do know that in many municipalities the current practice is that when there is a transaction involving a building which has a work order, the work order is lifted in order to sell the building and then the work order is reissued. It is quite common that the new landlord will be given some additional period of time to comply with the work order, but practices are not uniform across the province.

The Vice-Chair: For the committee members, I would remind you that we will start again at 2 o'clock. The instructions to the Chair are that we start at 2 o'clock precisely, regardless of attendance by members. It would be most helpful to the Chair if all members would make a point of being here on time.

The committee recessed at 1236.

AFTERNOON SITTING

The committee resumed at 1400.

Ms Harrington: Mr Chair, I have a very brief point of order. During the lunch hour, I had notice here of a press release that was given out by one of the members of this committee. It was Ms Poole. Unfortunately she is not here at the moment. I just want to clarify the matter. In this press release it implies that this committee and the government are not listening or are not open to amendments.

I think at the very first day of the hearings -- this was two weeks ago -- I made it clear on behalf of the ministry that we are open to amendments, that this is not interim legislation, this is long-term legislation and we very much want to have this a workable situation. That is why we are out here. That is why we are listening. I think anyone who was here this morning would see that we are here to bring amendments back to the Legislature. I certainly hope no member of this committee would try to undermine the work of this committee.

The Chair: It is not really a point of order. It is a point of information, a point of disagreement. I do not think it is necessary to have a lengthy discussion on the matter. The matter has been put forward by the member and it has been dealt with.

SMAR HOLDINGS LTD

The Chair: I would like to call the first presenter for the afternoon, Arun Pathak, Smar Holdings Ltd. Arun, we have been allowing 15 minutes for presentations. Presenters can withhold some time, if they wish, for questions and answers.

Mr Pathak: Actually when I came I was told that I should try and keep my presentation to about half that.

The Chair: Then you will get more questions.

Mr Pathak: My name is Arun Pathak and I am the property manager for Smar Holdings Ltd. I grew up in London, England. The main reason I moved to Canada was that it was advertised as a land of opportunity and a multicultural society. Here I expected that my children would not have to face the discrimination I faced. To be called a Paki to your face is not a pleasant experience, but you ignore it and put it down to the ignorance and stupidity of the speaker.

To read that a Minister of Housing says he is allergic to landlords is many times more annoying. Should I ignore that and put it down to the ignorance and stupidity of the speaker? I fully understand what prejudice is and I have seen my fair share of it. But until today I have never, ever complained about any form of prejudice.

Today I have come to tell you that Bill 121 is discriminatory and based on the prejudice this government has against me -- not because of my skin colour but because of my profession. Many people thought that Dave Cooke was joking about being allergic to landlords. No, that was not the joke, that was his prejudiced feelings showing through. The joke was when he said that Bill 121 would be fair to landlords. For a person to say that this bill is fair to landlords requires him to be ignorant of the facts or too prejudiced to believe the facts, or just plain and simply dishonest.

According to the figures in the green paper, guideline rent increases have been 100.5% over the last 17 years, while inflation has gone up 120%. Can you honestly say that the guidelines have been too high? Now it is proposed that a guideline should allow only half of inflation experienced in apartment buildings. It looks to me that the government's reasoning is, landlords are bad, tenants are good; if we rob the bad to support the good, then we are good.

Working with the figures in the green paper, I calculate that over 200,000 units will require capital expenditures averaging about $35,000 per unit. These are older units with lower rents. Many may be renting for $300 to $400 per month. To go out and borrow the $35,000 to do the work will cost the landlord nearly $400 per month, which we have to recover from a rent increase of $9 to $12. Is that possible? Do not tell me that they can subsidize the unit and make a profit when they sell the building, because after spending $35,000 on improvements, many of those units are still not worth $35,000.

I can understand this government's opposition to 100% rent increases, but the solution is to phase in rent increases due to capital expenditures at 8% or 10% a year until it is all recovered. The 3% for two years is totally inadequate.

Some people think that doing capital expenditure is an easy way for landlords to make money, but that is not true. A look at the buildings in Ontario will tell a person of reasonable intelligence that it cannot be true. If doing capital expenditure was an easy way of making a profit, then the majority of buildings in the province would be in a much better condition. In my experience, doing capital expenditure usually results in a negative cash flow because of different amortization periods. The landlord actually loses money on a month-to-month basis.

Yes, there may have been abuses of the system. The welfare system may also have been abused sometimes, as have many other systems, but we must ensure that landlords can finance and afford to do capital expenditure.

When non-profit needs a subsidy of over $11,000 per unit per year, how can you say that a landlord who is charging $300 or $400 per month should get only half of inflation for his rent increase. That $11,000 subsidy will add up to billions of tax dollars if this government builds the number of units it has talked about.

What is the reason for spending $11,000 per unit per year to subsidize non-profit housing? The reason is that the private sector is not building residential rental units. The private sector builds office buildings when there is a 10% vacancy rate. They build shopping malls. The private sector will build almost anything except rental apartments. Do these people love half-empty office buildings? Perhaps they do not know how to build apartment buildings. No, the truth is that they would rather have vacant office buildings than apartments.

1410

Rent controls in the last 17 years have kept apartment rents so far below market value that nobody wants to touch them. The value of apartment buildings has been held back by rent controls. Many of the buildings which were sold in recent years at what this government believes were high prices were actually sold for less than the land value. The apartment building is not an asset; it actually reduces the value of the land.

This government has conducted what it calls a consultation process prior to formulating Bill 121 and part of that was a paper called Rent Control Options -- this thing -- which was circulated mainly to tenants. This paper was the most disgustingly biased questionnaire I could imagine. No, let me correct that -- it was more biased than I could imagine.

Let me give you an example. One of the questions asked was: "On what basis should rents be allowed to increase above the annual guideline?" Of the three options, option C should have been a separate question because it dealt with equalization. Option A was the one intended to be selected. Option B was the only option in the whole paper with a rhetorical question mark at the end. But look at what the option says: "Allow landlords to apply for costs related to purchasing or operating the building?"

If a person is to buy a building, where is he going to cover his cost related to purchasing or operating the building? Is the suggestion that a person should buy a building and pay the mortgage out of his wages? Is he or she a charity? Where should the money for operating the building come from?

All economic theory and justice dictates that rents have to cover costs related to purchasing and operating the building. But this government is so prejudiced against landlords it seems determined to ignore economics and justice when it comes to rent control. These costs are real costs and justice and fairness demand that they be covered by rents. If an individual cannot afford to buy his food, shelter and other necessities of life, that has nothing to do with rent levels -- it is a sign that the government is unable to provide enough assistance.

I do not agree with rent control and I think it should be phased out. But if we are to have rent control, I will tell you what should be in the new rent control system so as to give the best protection to the tenants of today and tomorrow while being fair to landlords.

The guideline should be maintained at a minimum of two thirds of inflation plus the 2% for all sizes of buildings. Extraordinary operating costs allowed should include all costs, including maintenance. Interest rate changes, financial loss, economic loss and relief of hardship should be allowed to be phased in at 5% over the guideline, but to prevent flipping of buildings, they should be disallowed for one year when a building changes hands. Unnecessary capital expenditure should be disallowed, but legitimate capital expenditure should be allowed in full, phased in at 8% or 10% over the guideline rate. Equalization of rents in a building should be allowed. This does not affect the landlord's revenue but is fairer to tenants. Where a landlord makes an attempt to keep up the maintenance to a reasonable standard, the tenants should not be allowed to get a reduction in rent because of tenant vandalism. The present proposals will encourage vandalism by tenants to get the rent reduction.

In closing, I would like to say that lessons must be learned from history. For about 70 years, Russia has attempted a government-controlled economy for everything and it has been a failure. The country is bankrupt. The controlled economy has produced a shortage of everything. In Ontario for 17 years we have had government control on rents and we have a shortage of rental housing. It is not a coincidence. It is cause and effect in both cases. History will show that rent controls have never worked and will never work because you cannot continuously get $1,000 worth of housing or anything else for $400. Please, let's forget the ideology and the failed systems and work together for better housing in Ontario.

Mr Tilson: Obviously Bill 121 is part of a big plan. We have heard from a famous interview -- or notorious interview I suppose -- what Mr Rae plans to do with the housing industry. I would like you to comment as to what you anticipate would be the effects of Bill 121 on the taxpayer. We have seen how health costs in this province have gone out of sight. We have seen how the government has given almost $4 million to lobbyist groups to lobby in certain directions and tremendous subsidies for non-profit housing and co-op housing. What effect will that, plus the bureaucracy, and Bill 121 have on the taxpayer? Need they be concerned?

Mr Pathak: They should be very concerned. Even in recent times when there has not been a construction of apartment buildings there have still been rental units coming on to the market in the way of condominiums. I anticipate even that will dry up and there will be no more units available for rent. The government will have to build them all and they will do them at the taxpayers' expense. This is going to cost billions of dollars if the government is going to do all the new rental construction. This government cannot afford it. It needs the private sector money, but you cannot get money out of a corpse. If you are going to kill the industry, then you are not going to get investment from the private sector.

Mr Abel: Do you still have an apartment building in Dundas?

Mr Pathak: I have never had one in Dundas. I live in Dundas.

Mr Abel: Was it west Hamilton? Where was your apartment building? I remember you had come to talk to me some time ago.

Mr Pathak: Yes, I must have spoken to you about one on the mountain on Fennell Avenue.

Mr Abel: What increases have your tenants received in the last four years?

Mr Pathak: I have not been managing that building for four years. We have had it for about 18 months now. That building loses money every month and will continue to lose money every month.

Mr Abel: It is my understanding that you have managed a building for at least four years. That is the building I am making reference to.

Mr Pathak: Five per cent over the guideline is what we have had on other buildings.

Mr Abel: Five per cent over and above the basic guideline.

Mr Pathak: Yes.

Mr Abel: Are any of your tenants on fixed income?

Mr Pathak: Yes, I am sure there are. I also have some tenants who are subsidized by Halton Housing. They are obviously on a fixed income. I recently asked Halton Housing if it wanted to have some more units in that building but the request just got lost in the bureaucracy.

Mr Abel: What effect have these increases had on the tenants financially, as well as on their quality of life, the ones on fixed income?

Mr Pathak: Obviously it has had an effect, but are you expecting a landlord to --

Mr Abel: I am not suggesting anything. I am just asking, the way you see it, what effects have these increases had on these tenants?

Mr Pathak: I still see them going away for their holidays. I still see them driving around in their cars.

Mr Abel: So you are saying that it has not affected their financial situation or their quality of life in any way.

Mr Pathak: No. Perhaps they cannot spend so much on their holidays this year but they are still doing okay, many of them. Some people will always be in a problem situation and I should not be subsidizing them. The people who have a problem should be subsidized by the government.

The Chair: Order. That is about four or five questions. We are getting close to the expiry of time.

Ms Poole: We have had a number of presenters to our committee, both landlords and tenants, who have expressed a concern about the maintenance work order provision: the landlords from the point of view that they are too punitive and if the government is not going to allow an adequate allowance to put in the proper capital repairs, then it is unreasonable to expect the landlords to go ahead and do them; and the tenants from the point of view that if they are too punitive, they are worried that the municipalities will not enforce them. Could you make some suggestions or comments about the provisions in Bill 121 for work orders and for the maintenance and do you have some suggestions for how you would like to see it dealt with?

Mr Pathak: One thing I have had trouble with in the past on work orders and so forth is where tenants have gone directly to the building department, the health department and so forth without even putting in a complaint. A few years ago I had a situation where the health department phoned me up and said that apartment so-and-so had insufficient heat. The inspector was up there with a thermometer. He told me to go up and do something about it. I went up to that apartment, pulled aside the blinds and closed the window. That solved the problem. But that tenant did not approach me.

I have had other instances where tenants have gone to building departments or whoever they can complain to and have not actually come to me before doing that. You cannot run the system with a stick. I am telling you it just will not work, no matter how hard you try. Even in Russia they are not going to be able to run the system with a stick. They are going to try it now.

Ms Poole: One of the suggestions by the Urban Development Institute yesterday was that the landlord be entitled to have 30 days to clear up the problem prior to a work order being put on the property. Do you see this as being helpful, and where would you take it from there?

Mr Pathak: Yes, the landlord should first get informed of what work needs doing, preferably. The tenant should do it before the city gets involved or brings it in to the standards board. The 30 days may be fine for some items, but other items may take longer to do, so there should be some flexibility. Before a work order is issued, I would think it is common courtesy to call the landlord and say, "Do you realize this is a problem, and can you tell us what you're doing about it?" Most landlords will respond. They do the work that is necessary.

1420

HOUSING HELP CENTRE

The Chair: The next presenter is the Housing Help Centre, Guelph.

Ms von Dehn: Good afternoon. My name is Stephanie von Dehn. I work in the Housing Help Centre in Guelph. This presentation shall be brief so that I may take some questions. The points I wish to make come out of my day-to-day experiences as a case worker at the Housing Help Centre in Guelph. In my work I am faced daily by tenants trying to retain their housing or desperately trying to find some affordable housing because they are completely without housing, and others are seeking help with serious and long-standing maintenance problems. Therefore my comments reflect what is really out there in tenants' real-life situations.

Economic eviction is very much a reality. A large percentage of tenants out there are already paying the maximum they can afford for rent, if not more. This is the result of past increases under the present rent review system which have outpaced increases in the tenants' incomes. Any single-income family, anyone on a fixed income and anyone working in lower-paid, non-union work is extremely vulnerable. I see people on a daily basis who have one thing go wrong in their lives, perhaps a reduction in work hours, an unexpected emergency expense or a temporary layoff. Because they are already paying high rents, they therefore have been unable to save money, so they are very quickly in arrears and face eviction. Even a small increase can throw a household's budget out of line and they face economic eviction.

A case in point is a woman I had earlier this year who faced probably not more than a 12% increase. That was before the freeze and she had to make the decision to move out of her three-bedroom apartment, where she had a son and a daughter. They are now living in a two-bedroom apartment and the mother shares a bedroom with the 12-year-old daughter, which is not an acceptable situation when you think what that would do to family life with a child that age.

Another example is an immigrant family that was in a two-bedroom, ground-floor apartment. They faced a rent increase and were forced to move into a basement apartment that is damp. It may be affordable, but it certainly is not suitable. I would say that even though the group that is paying more than it can afford for rent is not the majority right now, the key point is that it is increasing. The percentage is going up all the time. If we are looking at 8% increases where people's incomes are not going up at that rate, fairly soon it will be a very large portion of the renting population that will not have the right to housing they can afford.

At the same time, in our community there are some landlords, both large and small, who have managed to provide decent housing at very affordable prices without letting their units slide into disrepair. They have had no need to apply to rent review for above-guideline increases. In many cases they have been in business for a number of years. We have a large corporate landlord in Guelph who owns several town houses and manages them in a very businesslike fashion. I would say their three- and four-bedroom town houses are between $600 and $700 rent a month, which is a reasonable rent in our city for that size unit. They have not had to go for above-guideline increases and seem to be managing just fine. When you go and look at the project, it is kept up well.

We also have a small landlord in town who owns a handful of buildings. They are furnished apartments. That landlord has not had to have to an above-guideline increase for 20 years and those buildings are in fairly good shape too. We do not get complaints. We can recommend that landlord.

Unfortunately a larger group of landlords has mined the equity of their buildings, not using rents collected to keep the buildings up, but rather using the rents collected to finance other ventures. These properties have been flipped and refinanced again to finance other ventures. The costs are being passed on to tenants, in some cases, through past rent review orders and the repairs still have not been done on these buildings.

We have a small landlord who has maybe two dozen buildings now and he never repairs the buildings he has; he just buys another one if he has any money left over. It was so bad this winter that Hydro pulled a woman's rented hot water heater out of the basement because there was a huge hole in the side of the basement wall so that the temperature in there was constantly below freezing, causing the pipes to burst and this rented hot water heater to be under water. Finally Hydro took it out, saying, "We refuse to give it to you until you fix your basement so that it will stay above freezing." That tenant was able to end her tenancy through the courts, but that unit is lost. That is an example of why I do not think it has to do with small or large; it has to do with good business practice.

We also have a huge corporate landlord this winter who took off and left town and the building has been through two owners since then. The buildings are incredibly run-down and the tenants are facing -- it is not even clear. The rents are so messed up that we do not know whether they are legal or illegal, but definitely the rents are fairly high. They have not been kept up, so the money has gone somewhere else. That company has left town with those funds. This is the group of landlords who in my mind are the ones to focus on in these hearings.

It is these landlords who, with the help of their consultants, will find the loopholes in this new legislation to get the maximum 8% increase every year into posterity. The other landlords, who have been keeping up their buildings for years within the guidelines due to good management, will not be applying for above-guideline increases. The wrong landlords will be rewarded even by the limited pass-through opportunities of this new legislation. It is the landlords who have mined their properties to invest in other ventures whose buildings need enough work done on them now to request 8% increases into posterity. My comment would be that these landlords are overextended. If they have financial problems they can consolidate their assets. They can sell off something so they can put back the money they originally sucked out of other buildings to do the repairs that are needed.

I think tenants deserve an explanation of why a reserve fund system was not chosen to prevent the type of equity mining I am talking about in the future. As an absolute minimum, I think it is essential that the legislation be improved to demand that landlords be able to document how the 2% has been spent on capital expenditures in every year, not just the year of an application. This documentation should also include how they have spent the 1% they have had since 1986, and what kind of capital expenditures they have to show for that. I think which costs are no longer borne could be calculated in, because there is a time frame for most expenses that eventually should be removed again from these documents. This information must be available to tenants upon request in a usable form, both when an application is made and also when the tenant may want to make an application for a rent reduction where maintenance has been inadequate. This is an absolute must in order for unjustified increases to be contested by those they affect the most, namely, the tenants.

Several other things occurred to me that were potential loopholes. I am concerned that in the applications being made for expenditures during the time of Bill 4 it is not written the same way as in the list of eligible reasons for the new legislation. I would like the word "eligible" to be added because I am concerned that if those applications are considered, they will be considered for expenses that would no longer be acceptable. I believe the applications that are approved of this group should be only the extreme hardship situations. The few cases where landlords truly have been up against the wall by the rent freeze might be able to be corrected, but I believe they are a very small number. Most of those were expenditures those companies could afford.

I have serious concerns about tenants being put under duress to sign for repairs that requires tenants' consent. There is no clarity at the moment in the legislation about how this will happen. I think many tenants, when they are approaching moving out, can be pressured into signing agreements that renovations should happen to their apartments, when they know what they really want is a favour from the landlord, like perhaps a release from a lease or a transfer to a larger apartment in the building. That could be abused by landlords, to wait until someone is moving, get them to sign these documents, let them off the hook on some much smaller point and then renovate, with permission, and then up those rents. They will be lost from the affordable housing stock.

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Finally, I would like clarification on how maximum rents will be determined because I have already, in the last few months, come across landlords setting artificially high maximum rents on paper, where they intend to rent a unit that has been maybe an owner-occupied house for a while, because they are worried about what this legislation will say. They are writing a higher rent in the lease and then accepting several hundred less as the actual rent in cash. But the tenants are not in a position to demand receipts for it. In some cases there are going to be no accurate records of what rent is really paid. Down the road, those landlords will have leases that have a different amount on them than what actually got paid. It should be very clear what "maximum rent" actually means or else maximum rent should be actual rent.

Those are just a few comments I have and I would like to answer some questions. Thank you.

Ms Poole: Thank you very much for your presentation today. With reference to your comment that the affordable housing stock in our communities has already been very seriously eroded, I have a couple of questions about non-profit subsidized housing, not only in the area but generally. As a tenant advocate, I know you probably deal with both sectors but that primarily much of your job is dealing with the tenant sector. Do you feel it is appropriate to have subsidized housing covered under rent control? As you realize, it is not covered under rent control right now, which is of concern to both tenants and landlords.

Ms von Dehn: There are particular areas where people in subsidized housing are lacking protection right now, but that is an area I have not done enough research on to give you a comment. Even those households experience financial fluctuations where they perhaps cannot handle an increase and it should be regulated how much it can go up at one time so their budgets can adjust and so on.

Ms Poole: From your experiences, you would tend to concur that there should be some provision in the legislation for the subsidized housing?

Ms von Dehn: Yes.

Ms Poole: The second question I have also relates to the same area. My understanding is that with the cancellation of the Red Hill Creek Expressway in December some 3,500 affordable non-profit housing units have been put on hold. Has your group taken an advocacy position in regard to this housing? It sounds like you have a fairly serious affordable housing stock problem in the area?

Ms von Dehn: I believe that is in Hamilton. Our centre is in Guelph and we tend to take action on issues in Guelph. I am aware of that situation but we have not been involved in that.

Ms Poole: Is the Hamilton Housing Help Centre involved?

Ms von Dehn: I do not know the answer to that question.

Mr Tilson: You made some comments with respect to the quality of life, the property standards issue. You are not the first individual, as I am sure you know, who has made these comments, not only during these hearings but during the Bill 4 hearings. It would appear to me that the municipalities, at least from listening to people like yourself who have come forward to us, either do not have the resources or do not have the ability to enforce their property standards bylaw, or they are inconsistent with other municipalities. I do not know how much you have looked at that.

You referred somewhat to quality of life in your comments. Do you feel that whole subject should perhaps be taken away from municipalities and made more uniform? The property taxpayer cannot afford it. Perhaps the province could be in a better position financially to be more uniform throughout the province. Have you or anyone in your organization had any thoughts on that subject?

Ms von Dehn: I think there are pros and cons in that issue. I know in smaller communities there is often the problem that the property standards officer plays golf and happens to know the local landlord or a number of them and will go lightly on them and perhaps not enforce standards he should be enforcing. It is because the communities are small and people know each other. I would hate to see it taken away from the municipalities and then --

The Chair: I just want to remind the witness that she has accused a public official of not doing his or her job because of a personal friendship. It is not for me to decide what you say is right or wrong, but you should know what you have just said.

Ms von Dehn: I accept that responsibility. But there is also the problem that if a tenant cannot take action locally because a complaint has to go to another city, that could be a problem as well. It could take a long time, and I would not want that to happen. If something can be worked out where a tenant has access to an outside inspector as a second level or a place he can go if he is not getting results from his local authority, I think that might work.

Mr Mammoliti: Very quickly, because my colleague has a question as well, Bill 121 will prevent landlords from applying for an increase if there is an outstanding work order on a particular unit. You know that. There have been some landlords in front of us who have said that tenants are going to do damage and know to do the damage so they will not get an increase. What they are saying is that they are going to do damage on purpose. They are going to break things so the landlord cannot ask them for an increase in the rent. For instance, Mr Pathak is one of the landlords who has mentioned it. I have consistently asked these landlords whether they have statistics and can prove it. None of them has come up with any statistics; none of them can prove it. What do you have to say as a tenant advocate to the landlords who have been saying, "They're going to break this stuff on purpose?"

Ms von Dehn: I can speak from my experience because we serve small landlords as well. Very few of them have come to say the tenant has maliciously destroyed their property. In the few cases that have come up, it has almost always been clearly obvious that the tenant did it and they end up having to pay for that expense. They get taken to court. But it is an extreme minority and I do not think that cost would be transferred to the landlord where it happens.

Mr Tilson: On a point of order, Mr Chair: Mr Mammoliti has referred to the fact that no statistics have been put forth by landlord groups. There have been many statistics put before this committee which I draw to his attention: the examples of the city of New York, all the American jurisdictions that are into rent control, Sweden, every rent control jurisdiction in Europe where these games are being played. So I say he is out of order in saying there have been no facts put forward.

The Chair: That is not really a point of order, it is a point of information and a dispute about information.

Mr Abel: The previous presenter indicated to this committee that he had, over a few years, been awarded 5% increases above the guideline, so that would bring it up to about a 10% increase. With average wage increases hovering around 5%, 6%, what effect did that have? I asked this question to the previous presenter but he did not feel it had any effect. What effect did it have on your clients in terms of financial security or quality of life?

Ms von Dehn: Those small increases can make a very large difference because many tenant budgets are already stretched to the limit. They may be making use of a food bank, they may not. In the increase I was talking about earlier, the woman experienced an 11% or 12% increase. It was only about $80, but that was $80 she absolutely could not come up with. She had to find alternative accommodation because she was behind in her rent, and in her case there was an unexpected cost around the same time where one of her children required dental work. Something as simple as that can put a tenant out who is already right at that turning point where statistically they might look like they can still afford their place, but any small thing makes them so vulnerable that they fall behind in their rent.

Mr Abel: So you are saying it could have very serious impacts.

Ms von Dehn: Yes.

The Chair: Time has expired for this presentation.

Mr Morrow: On a point of clarification, please: I would like to clarify something Ms Poole said about the Red Hill Creek Expressway causing affordable housing in Hamilton --

The Chair: Order, please. I do not think there is any need because there is nothing out of order. No one is out of order. Ms Poole, like any other member, can give her opinion on things and everybody will agree or disagree based on how they see the issue. If it was a point of order on a procedural matter, believe me, I would let you go on and we would have debate.

Mr Mammoliti: Why do you not hear him out first and then rule?

The Chair: Because the gentleman did not ask for a point of order, the gentleman asked for a point of clarification and now he wants to clarify something someone else said.

Mr Morrow: Point of order, then.

The Chair: We are going to run this committee under the rules established by the Legislature.

Mr Morrow: You are not going to recognize my point of order, then?

The Chair: It was not a point of order. I am sorry, Mr Morrow. If it was a point of order, I would have recognized it. I have been doing that all day long.

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ITALO GALLACE

The Chair: Italo Gallace, you have 15 minutes, like the other presenters, and you can save some time for questions and answers if you wish.

Mr Gallace: My name is Italo Gallace and I am again here today on behalf of myself and as a member of a group of people who pooled our resources, borrowed or otherwise, and purchased an apartment building in our neighbourhood.

I made a submission to the Bill 4 committee on February 1, 1991, at which time I was optimistic and hopeful that the NDP government would indeed listen to all the parties concerned and enact fair and just legislation. I stand here today, six months later, bitter and disappointed, knowing full well that the NDP conveniently ignored all submissions from landlords and passed Bill 4 as though landlords did not even exist.

You were warned of its disastrous consequences, but you paid no attention. I stand here today to repeat to you what many others have also told you, that the value of all apartment buildings in Ontario has dropped 20% to 40% strictly as the result of Bill 4 and this proposed legislation known as Bill 121. You must also know by now what such a dramatic devaluation does to banks and other financial institutions which finance these buildings. Since all equity which was the down payment has basically evaporated overnight with the passage of your draconian and ill-conceived legislation, it is now impossible to refinance most of the buildings purchased in the last three or four years.

The other matter of which I am sure you must be aware as learned members of this committee is that the same buildings purchased in the last three or four years are operating at substantial cash-flow shortages and that the owners have used up all their resources to make up these shortfalls month after month, year after year. Since your legislation has retroactively cancelled all allocations for financial loss, it means these buildings will continue to lose money year after year until the present owners basically go bankrupt.

Faced with this dilemma, people of other businesses could pick up their machinery and move it to another province or another country, or they could lose the business and sell off all assets and attempt to pay off the banks and the creditors and hopefully avoid personal bankruptcy. But I am certain all the learned members of this committee know very well that the people who have chosen apartments as their business cannot pick them up and take them to another province, they cannot shut them down, they cannot convert them into something else and they cannot sell them and pay off their debts. It seems that these apartment owners are now trapped and the only thing they can do is personal bankruptcy.

It is very convenient for the NDP to be generous to all tenants, regardless of need, and cancel approved rents, but totally ignore the corresponding expenses, since it is only the landlord who has to pay them. It is very generous of the NDP to force building owners to continually subsidize the rents of all tenants until these owners go bankrupt, since landlords do not really count.

Your ill-conceived legislation has succeeded in changing a mutually beneficial relationship where tenants are provided with comfortable accommodation and the owner is able to generate enough funds to at least operate the building on a break-even basis into a relationship where tenants have become little better than parasites, where they take and take until there is nothing left to take, since the landlord is now bankrupt.

You and your legislation should be quite proud of these accomplishments. Every member of this committee knows that buildings purchased under the old Liberal legislation simply cannot make it under this proposed legislation. You all know very well that this proposed legislation cancels the needed rents to eventually break even and that without these rents the landlord will soon face total financial ruin, and still I have yet to see among all your mountain of proposals, booklets, pamphlets, letters, etc, a single page or a single paragraph or even a single solitary line trying to address the fact of building owners who are being driven into bankruptcy through no fault of their own. It is as though the NDP has put its collective head in the sand and conveniently pretend that it and its legislation have no part in destroying the lives of some of Ontario's hardest-working citizens.

Contrary to what the NDP believes, landlords are business people who are skilled and ambitious and who are not afraid to take chances. They are the same people who build plazas or houses or businesses. They take on these tasks with caution and calculations in the hope of making few errors in judgement or in mathematics so that at the end of the project, if everything goes well, there may be some kind of return for their work and for their risk. These are the people we need if Ontario is to thrive and prosper, and these are some of the very same people the NDP is bankrupting.

If the NDP believes that there is no room for private ownership of apartments in Ontario, then have the decency to say so and you shall find these individuals seeking opportunities in other areas in this province, if possible, or outside the province, where they are made more welcome. But to simply enact legislation that destroys them is nothing less than criminal.

At first I was hopeful that the NDP government would forge a union of all the principals of Ontario's economy where co-operation and goodwill would enable us to become strong competitors in the global market. Instead, I am finding a government out to destroy in a few months what it took individuals a lifetime to build.

As a last resort and final attempt to communicate with this government, I urge you to put forth the following proposals to this legislation:

1. Assistance must be made available to landlords who shall go bankrupt because of renewal of refinancing. They simply no longer qualify, not even for the existing financing;

2. Assistance must be made available to landlords whose rents simply are not sufficient to meet the corresponding expenses. You cannot continuously feed this building; you are going bankrupt.

Are these unreasonable requests? You are the judges.

Do I have any hope of these proposals becoming a reality? Absolutely none. This government, with all its preconceived ideas, will not listen and actually sees the financial ruin of landlords as a welcome bonus of this legislation.

This government is also conveniently wasting people's time and money with these consultation hearings and submissions, for they are nothing more than charades to justify what you intended to implement from the very first moment, without changing a comma. After all, this is your concept of consultation and working together. I know that I, along with everybody, accomplished little by being here today. Nevertheless, my message to you and Mr Rae and Mr Cooke and Mrs Gigantes is that Bill 4 and this present proposed legislation is a disaster to apartment building owners and those of us who somehow manage to survive and those of us you forced into personal bankruptcy. We shall not forget and we shall not forgive.

The Chair: Thank you for your presentation. We have approximately seven and a half minutes for questions. We will divide up the time.

Mr Mammoliti: Sir, do you believe that a relationship should exist between landlords and tenants?

Mr Gallace: It is better for everybody.

Mr Mammoliti: Do you practise good communication between you and your tenants, and do you do the repairs, as necessary, when they ask you to?

Mr Gallace: The only thing that I request from tenants is to put it in writing.

Mr Mammoliti: But have you practised this?

Mr Gallace: Once they are received in writing, they are done.

Mr Mammoliti: So you claim that you have come through with the requests?

Mr Gallace: I can give every single building that I am involved with, which is three buildings.

Mr Mammoliti: Just so you know, we had some individuals who belonged to the 11 Catalina Drive Tenants Association here this morning, and they claimed that you do not communicate and you do not necessarily follow through with all of the communication in the form of asking you to do work in their particular units. What do you have to say about that? Here we have you saying that you do it and your tenants are telling us that you do not.

Mr Gallace: What I was saying to the tenants of this building or any other building is: "Put it in writing. It will be inspected." Okay? "If it is justified, it will be done."

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Mr Mammoliti: They claim that they already have put it in writing a number of times.

Mr Gallace: Anything that I am involved in, it was. On Catalina, again, I do not manage the building, so I cannot help you.

Mr Mammoliti: What I would suggest to you today, sir, is to perhaps have a talk with the tenants' association. Communication is very important, and perhaps they are here still. You can take them aside out in the hallway and talk about their concerns. Here again you are saying one thing and your tenants are telling us another.

Mr Gallace: You do not seem to hear. I do not manage Catalina, I am not involved.

Mr Mammoliti: Is it Queenston Road? Yes, 851 Queenston Road.

The Chair: Thank you, Mr Mammoliti. Ms Poole.

Ms Poole: Thank you for your presentation. Early on --

Mr Mammoliti: Is that three minutes?

The Chair: Excuse me. Mr Mammoliti, you are continually questioning all of my judgements on time and everything else. Do you want me to put the clock in front of you? I told all committee members before we started that there were seven and a half minutes for --

Mr Mammoliti: Relax.

The Chair: You relax, because you are giving the witnesses the wrong impression.

Mr Mammoliti: I am just simply asking a question, sir.

The Chair: Mr Mammoliti, I am not here to steal time from you.

Mr Mammoliti: There is no need to raise your voice. I am just asking you a question.

The Chair: What is the question?

Mr Mammoliti: The question is, you said that there were seven and a half --

The Chair: Yes. Your time has expired. Mrs Poole.

Ms Poole: Early on in your presentation, you talked about the fact that for financial institutions it is now becoming impossible to refinance most of the buildings purchased in the last three to four years. Is this a situation in which you find yourself, or have you had personal experience of this happening?

Mr Gallace: Yes. Basically there have been two mortgages that have come up for renewal, first and second. The situation there is that you try to combine two mortgages into one. The buildings simply do not qualify. The owners, which is a group of us, were forced to put mortgages on our own houses to be able to come up with the extra money.

Ms Poole: So basically the financial institutions are refusing to give you a mortgage unless you give them additional collateral, your own homes.

Mr Gallace: Yes. The buildings have dropped in value substantially and no longer qualify, whereas they were qualified last year.

Ms Poole: When you were applying for the mortgage, did you have an evaluation which showed that there was a significant decrease in the value of the buildings?

Mr Gallace: Correct. Any appraiser will tell you, and we have qualified appraisers which cost us $2,000 or $3,000 because the banks will not finance anything without an appraisal, that there has been a major drop in the value of buildings.

Ms Poole: Did they give you a rationale for the decrease in value? Did they say a certain amount of it or all of it was due to the recession and the decrease overall of values in real estate, or did they say that a certain amount of it was due to rent control legislation and the fact that the revenues would not support the new mortgages?

Mr Gallace: The recession has very little to do with the value of a building. It is strictly 100% the legislation.

Mr Turnbull: When you went out for the financing, what kind of financing organization did you go to, a bank or the trust company?

Mr Gallace: Every single organization we can go to, including trust companies, banks, life companies.

Mr Turnbull: Were there some of the companies that said they would not take any more apartment building loans at all?

Mr Gallace: There is presently one trust company, which I will not mention, that will not consider apartment buildings. At the same time, we cannot find anybody who even wants to buy them for any price at this time. We do not even have an established price. No sales have taken place in the last year that I am aware of.

Mr Turnbull: Would you say that the price at which you bought this last building was a fair price?

Mr Gallace: At that time it was a fair price. I believe it was just under $40,000 a unit. For a quality building, it costs $100,000 to replace. I thought it was a fair price.

Mr Turnbull: In terms of the refinancing, what sort of debt coverage did they allow?

Mr Gallace: The debt service is now 1.2 -- I believe I understand your question -- as opposed to 1.05 at that time, because the risk has gone up substantially.

Mr Turnbull: Was it a trust company that turned you down completely?

Mr Gallace: Yes.

Mr Turnbull: Had they in the past actually offered loans on the property?

Mr Gallace: It was their own mortgage that they wanted to be paid out.

Mr Turnbull: Could you tell me --

The Chair: I am sorry, Mr Turnbull, your time has expired. Italo, thank you very much for your presentation.

QUEENSBURY COURT TENANTS ASSOCIATION

The Chair: Next is Queensbury Court Tenants Association.

Mr Maycock: My name is Earl Maycock. I represent the Queensbury Court Tenants Association, located at 3020 Glencrest in Burlington.

I would like to commence by saying how much we appreciate the forethought and hours spent by your committee in formulating the compendium on Bill 121 and the opportunity afforded tenants and landlords to study it and be allowed to present some input, whether pro or con, into the final composition of a permanent Rent Control Act. Although we do live in a democratic society, we rarely have the opportunity to participate in the formulating of laws in our fair country and we do thank you sincerely for this.

There are some items with which we do disagree and we would like to commence with paragraph 3 under the heading, "The Scope of Coverage." New complexes, building permits issued on or after June 6, 1991, will be exempted for a period of five years from the rental of the first unit in the complex.

While a landlord must advise a prospective tenant of this ruling, are tenants made to accept and understand that a $500-per-month rental fee upon admission could be increased to $1,000 or $1,500 by the end of the five-year moratorium? We fail to understand why a landlord could not be made to be up front with original rental fees. If he requires $1,000 per month to show his margin of profit, he should not rent for a lesser amount. This would preclude instances whereby tenants of complexes would not have to vacate a run-down complex to be enticed into a new one at the same monthly rent, only to be forced to move after the first year when they could not afford the increase.

Under "Applications to Increase Maximum Rent Above Guidelines," as shown at the top of page 2, there is allowance of an increase of 3% above guideline in any one year. If extraordinary operating costs are incurred due to increases in municipal taxes, hydro, water or heating, this statement is justifiable. However, if a 3% increase is allowed for capital expenditures when preventive maintenance would have precluded such an expense, we fail to understand why tenants should be required to finance such costs. We also feel that landlords should be required to pay for all repairs and updating of their own complexes.

It would be nice if all home owners could reduce their taxes by the amounts spent on repairs or upkeep on their homes, or at least let someone else pay for their repairs. In the complex where we reside in Burlington, our landlord has applied for a 48% increase in rents from tenants to pay a bill of $2 million for work which should have been done over the 20-year period of this building's existence. He was finally forced by inspection to make some renovations. Should we be made to pay for this?

Furthermore, along the same 3% guideline as contained under capital expenditures, which we object to, a statement reads, "Landlords may apply in limited circumstances to increase maximum rents because of capital expenditures which are substantially completed." We would like to suggest that while an application could be allowed before completion, it certainly should not be effective until such time as the work has been completed and approved by a qualified inspector as retained by the director of rent control or other government agency. We have in the past heard many stories where increases have been permitted by inspectors when landlords have shown good intent by having purchased the required materials for the work but the repairs have not taken place until some months later.

Physical integrity of the complex or unit: If a complex has not been attended to or preventive maintenance has been non-existent for enough years to be required by a building inspector to be updated, why should tenants be required to assume the costs? The same provisions should apply to health, safety and environmental standards and the maintenance of plumbing, heating, electrical, etc.

We agree consent of tenant should not necessarily be required; however, we do believe it warrants a qualified inspection be made before allowance of any increase.

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In order to control all aspects of not only capital expenditures, repairs, public utility costs, rental fees, dates of inspections, etc, a properly set up computer file should be established in the office of the director of rent control. This would show life-years of buildings, dates of repairs and extent of same, increases in public utility costs from year to year, dates of inspections and inspectors' names, dates appliances replaced and percentages of increases allowed each year, plus any other pertinent information missed here. This information should be made available for viewing by tenants, if requested, and should also be available to prospective buyers of rental complexes up for sale.

Paragraph 7 under "Capital Expenditures" states that amounts allowed for capital expenditures in an order which exceed the overall cap of 3% above guidelines may be carried forward for one year for large buildings, seven or more units.

Paragraph 8 allows a landlord to make a new application in the subsequent year rather than accept the carry-forward provision, which would amount to less when compounding percentages. If excessive capital expenditures occur in the initial costs, they should be carried forward if tenants are to be required to pay owners' costs.

Applications to reduce the rent: If a tenant is allowed to apply for a rent reduction based on decreases in operating costs of municipal taxes, hydro, water or heating, how are they to police this? Will it be made available by the director of rent control? Will it be filed with rent review?

Maintenance: The proposed legislation continues to provide for provincial capacity to set minimum maintenance standards for residential accommodation and to determine if the provincial or municipal standards are not met or enforced. How is this to be policed? In the complex in which we reside, which was erected on marsh lands some 20 years ago, there has always been water seepage in the two underground parking areas. It has taken 20 years for an inspection to require that maintenance work be done in the interest of safety to tenants. Will regular inspections be made? If so, with what regularity? Will tenants be made aware of pending work orders in order to keep abreast of unwarranted rent increases for lack of landlord compliance to rules? These should be available to tenants or tenants' associations.

Finally, rent registry: The rent registry system is good for what it is worth. However, we suggest, as before, that it be incorporated with all aspects of costs incurred, dates of repairs, increases, etc, in a computer file. Thank you very much for your time.

Mr Tilson: I listened to your comments, and I guess my immediate reaction is the general criticism that Ontario has become the most heavily taxed jurisdiction in North America. The deficit issued by this government has come under tremendous criticism from all members of the public in how it is affecting our own individual pocketbook.

There is no question that there are major problems in the housing industry, and some of the solutions that you have put forward -- you have listed inspectors, and obviously there will have to be an increase of inspectors to accommodate some of the things that you are saying. You have talked about the computer file, and of course the people to man all that and to feed all that and to control all that. You have talked about the registry system, of course, which is what the government is proposing, and I can assure you that is going to be an unbelievable new group of bureaucrats.

Can the taxpayer of Ontario afford what this government is recommending and what you appear to be recommending?

Mr Maycock: Really, I do not have any specifics as far as the costs that are involved, but if we have a rent registry system, I think this has to come about, whereas a building in the past has not had to register any repairs that were done, the life expectancy of appliances, this sort of thing. I think it all has to be incorporated. Somewhere along the line it has to be tied in. I know it will instil extra costs on the government, but it has to be done.

Mr Tilson: I am sure that when this monster is finished, the monster that this government has created, and the number of bureaucrats who are going to have to be hired, even you will be shocked, just shocked.

Mr Abel: Where's your crystal ball?

Mr Mammoliti: I appreciate your coming down here today, sir. It is nice to know that some people appreciate this particular forum, especially after I read Ms Poole's press release earlier today. It is reassuring to know that some people appreciate our being here.

I would just like to ask you, sir, as a resident in Ontario, and understanding that perhaps this bill is not perfect and we have to look at some items, do you believe this government is going in the right direction when we talk about fairness?

Mr Maycock: Absolutely.

Mr Mammoliti: You do.

Mr Maycock: No question whatsoever about it.

Ms Poole: George, notwithstanding your constant attacks, I am going to be nice to you anyway.

Mr Mammoliti: You are always nice, Dianne.

Ms Poole: On to our witness, whose time I guess I am wasting. In a number of places you have referred to inspections having to take place. Is it your suggestion that the province completely take over the enforcement of the bylaws and the work orders and the minimum standards and that it provide inspectors?

Mr Maycock: Not necessarily, but the province could work with municipalities to make sure that inspection reports were submitted. It only takes one clerk to tie all this in with various municipal agencies, if they could do this.

Ms Poole: Your tenants' association is in the city of Hamilton, is it?

Mr Maycock: It is in Burlington.

Ms Poole: Do you have a problem with the enforcement of work orders and bylaws?

Mr Maycock: Not really, except there was no streamlined enforcement. In other words, we have had water seepage in our building, a building of 188 units. There has been water seepage because it was built on marshy ground 20 years ago. Now, where have the inspectors been during the 20 years? It was not until last year that they were directed that they had to repair this, because the whole building might have come down. So it was not until last year that anything was done. Perhaps inspectors were in there 15 years ago or 10 years ago and said, "You'd better get that done," But they never did. Nothing was ever done.

So someone has to go in, some inspection has to be made even by a municipal office, passed on to a provincial office, and the provincial office must be able to send them a notice and say, "You have X number of days or months to get this work done," and if they do not do it, then they will have to pay a fine.

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DUNDURN COMMUNITY LEGAL SERVICES

The Chair: The next presenter is Dundurn Community Legal Services. We would ask the presenters to identify themselves for the Hansard record. We have 15 minutes that has been set aside for your presentation and you can withhold some time for questions and answers.

Ms Karenn: It is a pleasure to have the opportunity to speak to you today on behalf of Dundurn Community Legal Services. With me are Ms Denise Giroux, who is from the McQuesten Legal and Community Services, and Mr Jim Meston, who is a tenant who has kindly agreed to speak with me. The 15 minutes will be divided between Mr Meston and myself.

My name is Morghynn Karenn. I am a staff lawyer at Dundurn, and unfortunately I am the fill-in person today because the real expert who knows exactly what she wanted to say is not here. I am delivering her submissions. I am not able to answer the questions, so I have a backup person, Ms Giroux, who has kindly consented to answer your questions. I will make some submissions and Mr Meston will make some submissions. Ms Giroux will answer the questions for me, but Mr Meston has not succeeded in conning her into answering his questions, so he will answer his own, I think.

Ms Poole: Now the time is up, right?

Mr Abel: Are we all clear?

Ms Karenn: Dundurn Community Legal Services is a legal clinic in central Hamilton. We service clients from the downtown core of the city and the west end of Hamilton. The majority of our clients are tenants in six-unit buildings or less, though we do have clients from low- and high-rise buildings. The clinic has direct involvement in the housing concerns of the community and the clients, and has been an active player thus far in housing matters in the city.

Many of our clients are people upon whom the system has impacted negatively to date. While we are looking forward to the discontinuance of some of the problems arising from the Residential Rent Regulation Act, we are concerned that tenants' needs and concerns may not be fully addressed in Bill 121.

The first of the concerns that I have been asked to mention relates to the rent registry system, which I have reviewed and find in part III, sections 94 to 106. At this time we are seeing an increasing number of tenants from under-four-unit buildings. The housing policy, we believe, in this region envisions increasing the density of the present housing stock, and in many instances we feel that this will involve conversions of single-family homes into two or three residential units.

We had originally hoped that the proposed bill would provide for registration of rents for the three-unit and the under-three-unit complexes so that all tenants would be guaranteed protection from abuse. In our experience, these complexes are quite susceptible to abuse, with landlords charging illegal rents.

Failing to provide for the registration of all types of complexes, we feel, withholds the benefits of rent review from those tenants. While the bill makes allowance for such registration in certain circumstances, the onus is on the tenant to initiate the process. In subsection 96(3), in my humble reading of it, not being the expert -- I have to find the section -- I notice that the tenant "may" request the registrar to so register. I think, in my submission, that is putting an unfair onus on the tenant. In addition, it would seem that in subsection 96(3), the registrar "may require a landlord," etc. The discretionary section in there is what is worrisome. There do not seem to be any guidelines as to how that discretion is supposed to be exercised.

With respect to this situation, particularly in the accommodations near McMaster University, I think I can safely say we have a continuing problem. Rental accommodations are at a premium there and many of the landlords in the area may be taking advantage of the gap in registration. Large houses are being divided into three-unit complexes and tremendous amounts of rent are being demanded of young students sharing accommodation, so that one large house is producing four times the rent that it would produce anywhere else in the city. The students, because they are from out of town sometimes, or their parents are not available to assist them with things, are ending up paying incredible rents, and a lot of them are having problems surrounding this. This may be something that could be looked at and allowed for in this bill.

The registry system can be extremely viable and workable. We are suggesting that more proactive procedures be written in, such as contacting the tenants rather than the tenants having to contact the system, and tenants receiving notice from the system as to what is involved with it, as opposed to leaving it on the tenants to do that.

The second area of concern that I have been asked to mention lies in sections 69 to 75 and that is the area of providing for the pre-hearing conference. Those sections provide for something of an expansion of the scope of the pre-hearing conference prior to the hearing. We feel those provisions may only lengthen the overall structure of the application process and further convolute the process.

The sections that deal with the pre-hearing conference seem to be numerous and somewhat ambiguous. Section 73 allows the rent officer to make a preliminary order, again at his or her discretion, but does not indicate what those preliminary orders should address or how the discussion should be exercised. The section further precludes the officer from making an order clarifying the issues. While this procedure may safeguard the parties, we feel it may simply complicate the whole process.

We suggest the preliminary hearing might continue as an option to the parties but that its format be limited to the type of format that presently exists, to simply narrow the issues, deal with the preliminary procedures, as in the pre-hearing conference, to an appeal right now under the Residential Rent Regulation Act. Overall, simply, the process should be shortened and simplified as much as possible. One of the primary concerns that tenants expressed to us with the Residential Rent Regulations Act was the length of time expended in application processes.

At Dundurn, we are very pleased to have the opportunity to have some input with respect to this new legislation. We hope Bill 121 will not be the final product and that this government will weigh the concerns of the tenants against what we perceive to be the growing pressure being exerted by the landlords. We urge the committee to consider these suggestions in its deliberations.

If there are questions, my friend will be pleased to answer them.

Interjection.

Ms Karenn: Perhaps Mr Meston then would speak first and then Ms Giroux can help us both.

Mr Meston: I am a long-term tenant of a low-rise building in central Hamilton. There are 63 units in our building and most of the tenants are members of a tenants' association which has been in existence for over five years. While I am not the official representative of that tenants' association, my experiences and views are shared by many other tenants in our building.

I am appreciative of this opportunity to make known my views on the proposed legislation regarding rent control, since the amount of rent we tenants pay and the difficulties we have experienced in the past with regard to keeping increases to a minimum are naturally of paramount concern to all of us. Our experiences to date have been frustrating and discouraging. We look forward to more positive results from this proposed legislation.

Unfortunately, however, I am discouraged to see that the bill allows landlords to apply for a rent increase for capital expenditures for work completed between January 1, 1990, and June 6, 1991. The hiatus of Bill 4 was a welcome relief to us tenants, a sort of small payback for the continual increases we have endured. This section allowing landlords to retrieve part of any costs made during what was originally presented as a two-year moratorium is disappointing, to say the least.

I have lived in my apartment unit for five years. In the past five years we have had continual rent increases of over 41%. My rent in October 1986 was $368.16 and is now $519.10. To allow my landlord the opportunity of using a period that was promised as free from above-the-guideline increases is regressive. I request this committee to restore to this bill what was originally secured by Bill 4.

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I am also concerned with the procedures suggested for repayment to the tenant of illegal rents. Uninformed tenants are susceptible to unscrupulous behaviour by landlords. Basically, overcharging illegal rents is stealing from the tenants. The landlord should not be provided with the benefit of making periodic payments to tenants he has knowingly overcharged. A lump sum payment is the tenant's right of first recourse. Subsection 30(9) providing for a second application by the tenant for the lump sum payment is only delaying what should be the tenant's immediate relief. I would prefer to see subsection (8) completely omitted and subsection (9) continued, with a replacement clause that the tenant can automatically withhold rent until the amount provided for in the order is satisfied.

In comparing experiences with other tenants in my building, I have discovered that a number of them have received orders for payments of large sums. In one case, a tenant received an order for over $1,500. The tenant was an older person who was unaware of any recourse he might have and as a result has not received any payment or deduction in rent for three years, since the order was made. The landlord has been happy, naturally, to let this situation continue. This would have been a perfect situation where interest should have accrued for the benefit of the tenant. The section in Bill 121 stipulating that interest must be paid on the amount owing to be paid to the tenant is a welcome provision.

We hope this committee will take into consideration the points raised by the tenants in this area. We the tenants look forward to more input into decision-making in general and housing issues in particular.

Ms Poole: Thank you for your presentation. You have raised a couple of points which I would like to discuss with you. The first was subsection 96(3), which relates to the rent registry. You made the very valid point that this is quite discretionary and it does not really tell you under what circumstances a unit would be registered if there were one, two or three units involved. I asked this question of the ministry and the answer given to me was that in a circumstance such as a landlord who had a history of charging illegal rents, if the tenant applied, that would be a consideration. But I think you have raised a very valuable point, which is that it should be spelling it out much more carefully, either here, preferably, or in the regulations if necessary. Thank you for bringing that to our attention.

Mr Tilson: On the subject of the rent registry -- and I have raised this question in the hearings before, without an adequate answer -- municipalities all across this province seem to overlook the illegal basement apartment or the illegal unit. There is obviously a housing problem in many of these municipalities and that is one of the reasons why they overlook it. The difficulty as I see it -- and I would like your comments on this -- with the registration of these types of units is that inadvertently a tenant may insist that the unit be registered and thereby force the municipality to take action, again inadvertently, to kick him out. Do you see any problem in that type of philosophy with respect to registering all units?

Ms Giroux: The crackdown on illegal units is happening at a rapid rate in Hamilton-Wentworth region and it is a concern. Tenants should not have to face the consequences of eviction because the unit is being shut down when they are trying to enforce their rights. That is a possible consequence of that kind of registration. I think the province could do more, and certainly the municipalities have to take the responsibility to ensure that a range of affordable housing is available in their communities. I think the province could tighten up its policies and requirements of municipalities in that regard, particularly loosening the standards to some extent by allowing illegal units which meet health and safety standards but which may not meet the zoning requirements. I think there could be changes made at that level, which both levels of government, provincial and municipal, should be looking at.

Mr Morrow: Thank you for such a fine presentation. I have sent some people to Dundurn legal clinic and had some very good comments about it.

Ms Poole made a comment earlier in the day that we have lost affordable housing in Hamilton-Wentworth due to the cancellation of the Red Hill Creek Expressway. Is that a fact?

Ms Giroux: The province probably has the statistics to back that better than we. However, I do have some understanding regarding the fallout around the Red Hill Creek Expressway's cancellation and I believe that some of the reasons housing developers may have pulled out may have related more directly to the cost of purchasing land or the purchase price of a contract, for instance, rather than the actual cancellation of the Red Hill Creek Expressway itself. So I do not believe that is a fact, not put that simply, in any event.

The Chair: Thank you for your presentation this afternoon. Our 15 minutes have expired.

WILLIAM EISAN

The Chair: I think we have a substitute for the next presenter, Laurie Ann Marriott, from the same tenants' association.

Mr Eisan: Yes, that is right.

The Chair: Please have a seat, sir. If you would just identify yourself for the record, you can go ahead and make your presentation.

Mr Eisan: Yes. I apologize for her absence. She moved away, and possibly something came up at the last moment. I had been speaking to her a few days ago.

I am Bill Eisan. I am a tenant of 468 Ottawa Street North. That is the new Centre Square apartments. I would like to speak on behalf of maintenance.

It is important that over a period of years landlords' associations have shown blatant disregard for the safety and wellbeing of tenants and tenants' associations who occupy and represent the various apartment complexes throughout Ontario. The probable advice in legal matters that has been afforded by one of their lawyers, who is also chairman of the landlords' association, shows little, if any, respect for the office he held, the law he represented or the court he officiated in. Under these circumstances, what form of justice can the tenants expect to receive from the hearings and appeals that they are forced to proceed with in an attempt to receive justice, protection or compensation?

A number of these tenants are senior citizens who rely on old age security, Canada pension or some meagre savings that they sparingly accumulated over their working years. Some do not even receive CPP or any form of pension at all, so I ask you to take into consideration the financial handicap that is experienced by some tenants throughout the province and the complex I represent and how much they rely on the justice and decisions that are determined through hearings and appeals. I submit that the proceedings that are deemed necessary for the tenants to exist with some form of security and peace in their lives do not adequately meet these objectives.

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As a provincially licensed tradesman in the construction and maintenance industry, I feel that the building inspections are not being carried out thoroughly or diligently enough in many cases and not by the proper authority. Municipal standards should be administered by that authority and provincial standards by the proper local provincial authority. In many cases the inspections should be conducted with the aid of building blueprints pertaining to the inspection, such as building or structural prints, electrical or plumbing prints or piping. For instance, in some cases distribution panels are located in locker rooms and the conditions of these locations are deplorable -- no ready access and so forth. In some cases electrical room locations are being used as storage rooms.

I realize that our various inspection departments profess to have a heavy workload, but that is not the answer. In order to achieve more thorough inspections or follow-up inspections that are needed in most cases, perhaps the Ministry of Housing would consider procuring some of the various retired tradespersons, as they are familiar with the various trades and building regulations.

It is very easy to determine during these inspections the type of maintenance that is being performed in the buildings, in most cases by non-certified tradesmen who try to make repairs that they are not certified for or have the knowledge to perform. This leads to dangerous and in some cases disastrous results for the safety and wellbeing of the buildings and occupants. Perhaps one of the most necessary ongoing inspections is from the health department, as these inspections pertain to rats, mice, cockroaches and in many cases filth and improper garbage disposal conditions, all of which are very detrimental to the health and safety of all concerned.

The obvious response in trying to correct and alleviate these conditions is enforcement. One way to accomplish this is by inspections with immediate forfeiture of pay or penalizing, as is done in the armed forces, in the cases of unsatisfactory results. The disregard of these conditions leaves a lot to be desired and shows little regard for the occupants and their safety. I have concern that Bill 121 does not seem to address these areas adequately.

Mr Duignan: Do you have detailed recommendations you would like us to see re Bill 121 to clear up some of those areas where you have concerns?

Mr Eisan: I have some actual experience. I would just relate to you one thing as to inspections. The old saying is, "It's hard to get an engineer out of the office to go down to actually see the work that he's designing." That is the problem, I believe, with a lot of inspections, because an inspector goes down to do a job on the building but he knows nothing about the building. He has nothing to go by. He reports to the manager and then is taken on a grand tour and he is called up by, we will say, a tenants' association. He is just shown what they want him to see and this is one of the problems.

Other problems would be in the electrical department for a lot of these buildings. A lot of the wiring and panelling was adequate at one time, but as you probably know yourselves, the wiring, the insulation, has long deteriorated into a very, very precarious condition and the panels are outdated. This is what happens to people in these apartments and this is where you have very dangerous conditions. This is existing in probably about as high as 60% to 70% in the city.

I know you say, "Well, we have our retired men in our various unions and locals and things like that," and these men are up on these kind of things and a lot of them do not like sitting back on their haunches for the rest of their years. I would imagine they would not mind going to do inspection jobs like this. However, I just ask the ministry that because I know a lot of our inspection departments claim their workload is tremendous.

Ms Harrington: I just wanted to briefly comment on the situation. The Ministry of Housing has to work with or light some fires under or encourage the municipalities with regard to the inspection process. That is something we have to make sure works properly. The whole emphasis in this bill on enforcement of maintenance is something that is going to be tough to do and we have to work out the details of that very carefully to make sure that it does work correctly.

I did not gather at the beginning where your building is.

Mr Eisan: It is on 468 Ottawa Street.

Ms Harrington: Downtown?

Mr Eisan: In the east end of Hamilton.

Ms Harrington: And what kind of rent increases have you had in the last few years?

Mr Eisan: They have been asking for 33% and we are in the appeals right now to bring it down by 10%.

Ms Harrington: Did Bill 4 stop that increase?

Mr Eisan: No. We have put an appeal for that.

Mr Sola: You stated you wanted inspections and then you also stated that a lot of the inferior standards or a deterioration of the building was due more to an upgrading of standards rather than neglect of the landlord, if I understood you correctly. I wonder if you could elaborate on that. You were saying the standards today are different from when the buildings were built. I wonder if you would elaborate on how your inspections would be able to facilitate upgrading.

Mr Eisan: The distribution panels or, as you know them, the power panels, are in various apartments and in various locations throughout the building; breakers that would be deteriorated and would not stand the overload. The wiring used in those days met the standards, but is deteriorated by now because the insulation covering it has deteriorated and the only thing that is holding it, shall I say, in safe condition is that it is behind walls. That is one of the main things.

Another main item is that the laws have changed in recent years. One time, you could wire a complex and you could put plugs and lights on the same circuit, which you do not any more. This brings it under another load because you would have a lighting load on your wiring circuit.

For instance, the kitchen: One time, you could have your lighting and your plug circuits on the same one. You could have two or three appliances plugged in as well as lights. And on that one circuit, there may be lights to the rest of the house. Therefore, you have an overload for the deterioration of the wire that is in that building. That is a hazardous condition.

NIAGARA REGION LANDLORD ASSOCIATION

The Vice-Chair: The next presentation will be from George S. Cottage, chairman of the Niagara Region Landlord Association. You have been here for a little bit, so you have seen the way that the committee operates. You have 15 minutes to make your presentation. If you wish to reserve some time for questions and answers with the committee, that comes out of the 15 minutes. You can introduce yourself and go right ahead.

Mr Cottage: I simply ask for one moment because it is a simple paragraph that I am reading on behalf of the Niagara Region Landlord Association.

We cannot make a submission to this panel because we do not wish to negotiate the loss of our buildings. We await the phasing out of rent controls and a move towards a shelter allowance as the only logical answer to housing problems.

That is the end of my statement.

The Vice-Chair: All right. The members may have some questions, if you are willing to entertain those.

Mr Cottage: I am really not here to answer questions. We have taken a position on this.

The Vice-Chair: Thank you. I think the next presentation is not here and she is not scheduled until 4 o'clock, so we will take a short recess. The committee will reconvene at 4 o'clock.

The committee recessed at 1540.

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The Vice-Chair: Order. Apparently the last presenter has cancelled; therefore the committee is adjourned until tomorrow morning in London at 9 o'clock.

The committee adjourned at 1552.