Committee Transcript 1991-Aug-22 | 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 has scheduled a full day of hearings for Windsor and area. We have a full slate of presenters for this morning and this afternoon.

WINDSOR HOMELESS COALITION,
UNITED TENANTS OF ONTARIO

The Chair: The first presenter is the Windsor Homeless Coalition, Joe Crouchman. Joe, how are you doing? Joe, the committee has allotted you 15 minutes for your presentation, and you can withhold some time for questions and answers if you wish.

Mr Crouchman: Okay, thank you. It is very good to see you again, Remo, after 20 years, and to see so many good friends around the table here.

I, as you probably are aware, was elected recently to the United Tenants of Ontario as a southwestern region representative, but I am also chairman of the Windsor Homeless Coalition. Our bill orientation hearing for our group, the United Tenants of Ontario, is this weekend in Kingston, so I am somewhat embarrassed at presenting something that I really do not even understand, Bill 121, so you have to bear with it that my presentation is a presentation on behalf of the homeless.

I have cards I gave to Deborah, if she could give them to each member. I am also the international chair of the Homeless Coalition of Windsor and Detroit. Most of our people, 90% of our people, are illiterate, and in the meeting last night they came up with two things: One is that they want rent controls, and they want accountability of landlords.

I tried to read Bill 121 to these people, and it is very difficult to explain it. The Bill 121 quick summary from the United Tenants of Ontario is that new buildings will not be covered by any rent regulation for the first five years -- no rent registry ever for one-, two- or three-unit buildings. All illegal increases from 1985 to 1990 can form the basis for legal rents for four-, five- or six-unit buildings.

Rents can be increased above the guidelines if the tenant agrees to renovations being done in the unit, or addition of services. Tenants may be pressured to make these agreements, and low-income people will suffer.

There is no provision in this bill for the homeless we have in this province. One of the very sad parts about me leaving Windsor and going to the Toronto convention of United Tenants, is seeing the large number of homeless people on the streets. The sitting members of Windsor can be very proud that we, in Homeless Coalition, have the most unique concept in North America with dealing with our homeless situation.

Prior to the bus strike, we sent many of them to Detroit to churches through the International Homeless Coalition. It has been somewhat of an embarrassment since we have had a bus strike for two months and we cannot send them, so our homeless have increased threefold.

Bill 121 has to address the question of human rights, dignity and the homeless, and if there cannot be a provision in it somewhere, as a leader of a coalition group I appeal to you personally that it has to be included.

There is a concept within United Tenants of Ontario and within the Homeless Coalition that we are very proud of the bill and many, many parts of it. We are very proud of the Honourable Dave Cooke, and we are very proud of the party and the work that we have done as a tenants organization. Our tenants organization can be very responsible for the election, probably, of the NDP. We want to continue to support Bill 121, but we want to be able to have more input into understanding it and having some education programs addressed to the homeless and to the illiterate people in the community who do not understand it. We want a combination of a landlord-tenant advisory bureau of some concept, so that we can work together and not fight any more. We found in Windsor, by working with landlords and by working with tenant organizations, we were able to achieve more, and not go to the courts.

Mr Tilson: The very last point you raise is one that has surfaced throughout the hearings, and that is that you do not want to fight any more. There is no question that all landlords and tenants are feeling the same way.

The difficulty was, of course, that this Bill 121 encourages the very fact that delegations that come to us, they are either landlord or tenant, and they are at opposite ends of the poles. This legislation encourages that, in fact, it makes it even worse and it gives many of us great concern. Do you have any thoughts on that?

Mr Crouchman: Yes I do, because I found that as leader of the Homeless Coalition, by working with the landlords and by making and ensuring that repairs are done through volunteerism at low cost, we are able to get our homeless off the street and into buildings. It is very necessary for tenant groups to work with landlords, to make sure that landlords are making money, and that there is money available for homeless people to get into these existing facilities. There has to be some kind of communion with these people, and we have to stop the fighting and the bickering.

We have been successful in Windsor. It is the most unique city in Ontario, and if you go around -- I ask any member to find a homeless person on the street, but when you go into your own communities, you know how bad it is. But we have a unique situation here, because we work with landlords, we work with tenants associations, and we hope this will continue.

Mr Tilson: There are statistics all across the United States and Europe stating that, in fact, rent control causes homelessness, just the very economics of it, and there are quite detailed statistics. Several presentations have been made, specifically from Sweden and the United States, during Bill 4 hearings and during the Bill 121 hearings that have presented those facts. Do you have any comments as to what they have said?

Mr Crouchman: Yes. In particular I am referring to the Santa Monica project in California and certain areas where these statistics are true, but in our situation, our homeless people do not have any money, or are not on disability payments to rent, so we end up getting them government subsidies through mental disabilities, physical disabilities, and getting them into nursing homes, so it is a different situation. There have to be affordable rents.

I have 15 people in an office building right now who cannot afford more than $150 a month, and I cannot find $150-a-month apartments. There should be some type of rent control so I can put those people in.

Mr Tilson: I think that is the difficulty with this legislation in that it is not rent control; it is rent review. It allows increases of up to 8% annually, and part of that can be automatic, depending on what the specific application is, which people simply cannot afford. I guess that raises the question I have been asking to delegations in Toronto and the very cities that we have attended to: Is what you are talking about a social problem as opposed to a housing problem? In the same way that people have problems finding food, clothing, just general living, for the type of people you are representing and speaking for, should the government be looking at a form of subsidy as opposed to rent review, which is what this legislation is?

Mr Crouchman: Well, we do have the subsidy which is going in for the homeless -- when, is it next month or is it the following month? The Legislature just passed some homeless -- but that is only going to be a one-time subsidy. What is going to happen after that two-month rent runs out?

Mr Tilson: This legislation will allow the increases to continue, there is no question. Those are my questions.

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Mr Mammoliti: Sir, thank you very much for your comments, more specifically the ones that said you are proud of us and proud of the minister. We appreciate that. I know that the minister has worked hard --

Mr Mahoney: We now know who is responsible for the election. We were looking for you.

Mr Crouchman: But I am also a very good friend of the Liberals and the Conservatives. I just changed a little bit when you guys changed; that is all.

Probably the man I know more than anybody is Remo. Andy Brandt and I go back to the early days.

Mr Mammoliti: I am sorry about that.

Mr Crouchman: Thank you, George.

Mr Mahoney: Do you want to pass now, George?

Mr Mammoliti: The question I have for you, sir, is, I would like to find out about the previous legislation and how that contributed to homelessness in Ontario. Perhaps you can elaborate for us on rent review and what that did not do for the homeless.

Mr Crouchman: George, you have obviously done your homework, because I ran in the last election and I was evicted election day. Mr Dadamo was the man I ran against and I actually was not running against him. I was wearing a red coat at the time and I guess Mr Wrye did not show up and Mr Dadamo got elected.

We were losing in the courts. The Landlord and Tenant Act had no effect whatsoever. The homeless were losing every case that we would take into courts; one building in particular I brought 900 cockroaches from and was ready to unleash them in the courtroom to show the judge how bad the building was.

This new legislation addresses a lot of things that we are very proud of and there are some great advances. It is hard for us to understand them, but we are going to go along with what you are doing because we believe in what you are doing. We spend our weekends, as the United Tenants organization -- I go to a conference every weekend, learning the same way you guys are learning. It is not easy for us to learn government and learn what we are doing, but I think we are a dedicated group of people and we are doing a good job, and in particular our members here.

Mr Brown: Joe, you raised some issues that I think are of concern to us. One of them is that rent review or rent control or whatever you want to call it cannot be seen in isolation from the rest of housing policy. The government tells us it is studying general housing policy, but yet it is proceeding with a rent control bill now, before it can be seen as a component of that. Some of us have some great difficulty with seeing how you could take a piece of the puzzle and decide what it is before you decide what the overall strategy is. But the one thing you said that really concerned me, and maybe you could just elaborate, because I do not quite understand the issue, is that you bus homeless to Detroit. Could you explain a little bit about that, just so it can be helpful to us?

Mr Crouchman: The Detroit community -- unless you are from the area it is difficult to understand. They have a large religious spiritual community in which they open their churches at night time after 5 o'clock. So at 3 o'clock, when our eating places close downtown, we do not have the churches and we do not have the facilities and the housing for these people. So what we do is we arrange for them to go to downtown Detroit. They have 18 buses waiting in the downtown core area, and they take them to the churches and they bring them back and they eat here in the downtown area and they stay in Windsor. We try to house as many as possible, but during the recent bus strike we have not been able to do that because there are no buses to Detroit.

When I got elected international chairman -- and it is really ironic, the group that is doing most and spending most of the money and our phone bills and everything and our offices are the Hare Krishna group, and not one of us are a member or affiliated in any way with them. Walter Reuther's daughter is living at the temple there and I think Henry Ford's grandson is married to her and they feed and clothe and they help. We are using the International Homeless Coalition movement to help with the Windsor situation and to teach us, and we are learning how to cope with the problem.

I have a package that I am going to leave with Deborah which will explain that program, show you pictures. I hope that you will all keep it in confidence, because one of the things with the Homeless Coalition is a lot of homeless people do not want to be known as homeless. You see my card; I have a "Confidential" stamp on it. It is a stigma. It is really -- there is something lost there. I would hope that you would share this package and I would hope that we would be able to get away from this kind of thing and be able to support our own homeless.

The Chair: Joe, thank you for your presentation. Time has expired.

WINDSOR-ESSEX TAXPAYERS COALITION

The Chair: Windsor-Essex Taxpayers Coalition, Mr Marc Baker, 15 minutes for your presentation and you can reserve some time for questions and answers, if you wish.

Mr Baker: Great. I am a member of the local taxpayers coalition. Basically we monitor municipal funding and try to achieve some type of accountability with the taxes we pay.

It seems to me the problem today in Ontario is the economy. We compete with the US. We are in a world economy. People shop in the US, businesses are moving there. One of the reasons is government spending.

Rent control is a big element of that spending. The Liberal rent review program was budgeted at about $40 million in their last year in office. According to the Windsor Star, NDP provincial projected costs of the housing rent subsidy over a two-year period will be approximately $570 million.

What happens when the government becomes a real estate developer is that taxes have to be raised to pay for that. The reason that the NDP was elected in the first place was a protest vote against the spending policies of the previous governments. All the previous governments put in rent control and they all eventually were kicked out of office. The Tories started rent control in this province.

Rent control is one of the most disastrous policies to the economy. As our taxes go up, we have less and less money to spend on whatever we want to spend on. When election day comes and the taxes go up, which they have to in Ontario if the private developer is not going to be building buildings and the provincial government is going to become the developer through non-profits, there are not going to be any tax revenues reaped from this building project, because though the non-profits pay property taxes, the rent subsidies neutralize that. Those buildings are a drain on taxes for ever. So eventually those buildings will end up costing more in tax revenues than they bring in, whether they are federal dollars or wherever those dollars come from. It is the overall tax burden that the citizen sees when he goes to vote.

You can blame the Tories for a while for the tax problem, but it is not going to work for ever. For your own self-interest I would recommend doing away with rent control so you would not have to raise taxes an incredible amount.

Tax freedom day this year was August 2. That means that every person in Ontario worked seven months out of the year to pay his tax burden. That means that every day that I went to work, four hours and 40 minutes was to pay taxes, meaning I was working for something other than to support myself. Three hours and 20 minutes this year of every eight-hour day was the amount that I earned that I kept.

Now you project a $10-billion deficit. That is only projected; it has got to be more than that. There are already indications that it is a conservative element, so that means that next year I will be working more than four hours and -- what did I say? -- 20 or 40 minutes a day for these services.

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Recently I received a letter from Mr Lessard. I own my condo and I am not a tenant, so I do not know why I receive rent control legislation literature. It seems sort of costly. Anyway, he says, "In Windsor-Walkerville we found that tenants have been victimized by rent increases of up to 81% a year," buildings in the 1200 block of Ottawa Street and 1300 block of Pierre Avenue.

I have the rents on this unit. My lawyer represented the owner of this building at rent review. First of all, it is one building, it is not two buildings. Second of all, the rents did go up 81%, and, you know, you used the word "victimized." If the landlord did something criminal which you are accusing him of, I would recommend you bring him up on charges. There is plenty of legislation already existing against tenant intimidation.

I do not know your definition of victimization, but the rents in that building went from $200 to $360. That is way below the market rents for non-profit buildings, which are $550 or $600. I do not see how those tenants were victimized, due to the fact that for an extra $180 or $360 rent, they got renovated units. In addition, by increasing the value of that property, the landlord was working to reduce the deficit. He pays higher property and income taxes. If the government froze taxes, froze spending, then this development encourages increased tax revenues.

In 1989, quoting Bob Rae in the Globe and Mail, he said, "What we want to try to do is eliminate the unproductive speculative element in the economy as much as we possibly can." If a landlord is victimizing his tenants -- what I see is that people voluntarily rent apartments. If someone charges too high a rent, then that tenant has the choice to move out. If too many people move out of the building, then either the landlord will go bankrupt, if he is an idiot, or he will lower rents to fill the building back up. I do not see that a tenant would live in a building where the rent would be raised -- you know, if it was raised from $1,000 to $2,000, the tenant leaves, and what good does a landlord do raising his rent to that degree if no one will pay that rent? I mean, that is absurd. The building will sit there and go bankrupt.

So rent control -- people make stupid decisions sometimes. Sometimes people rent units that are too expensive for them. I do not see where it is the proper role of government to protect people from stupid decisions, either landlords or tenants, and in the meantime to institute this type of legislation, which is totally unnecessary. The previous governments' was unnecessary. It contributed to their losing their election, because getting into real estate is very expensive, and these types of policies will prevent the NDP from staying in power very long.

There is a revolt rising in the country and in Ontario. It is called the Reform Party. And what do they advocate? They advocate cutting services, letting people be responsible for themselves. People make stupid decisions; they pay the consequences. When we make good decisions, when we succeed, we keep the profits from our success. When I make a decision to buy a building or to build a building, it is a result of my thinking process. If you control my property, you are controlling my thoughts and you are controlling me.

So the tenants who advocate tenants' rights, actually they are going to have to pay for these policies through higher taxes. So if the landlord does not have the right to his property, whether it is a building or whatever, then the tenant -- or even when you are out of office you will not have the right to keep the majority of the money you make, because the taxes will be so high to pay for these type of policies that you put into power.

We see when the Tories started rent control -- and I do not know who started baby bonuses, but I do not understand the purpose of subsidizing those who do not need it. You know, there are tenants --

The Chair: Did you want to reserve some time for questions and answers?

Mr Baker: Yes, I just have one more point.

It does not make much sense to subsidize and to control rents of people who spend the winter in Florida. It is like giving the baby bonus to people who do not need it. It is very expensive, and this is the type of policy that Canadians are starting to fight back about. If you follow what is going on in Blenheim and Sparta, there are some serious tax revolts going on, and the key to political leadership is sensing what is in the wind and reflecting what people want. You would be much better off lowering taxes. Then business would stay here. Ontario would attract business and there would be more money for social policies. I have nothing against -- you can help anyone you want, but those of us who want to succeed, we should be left alone to succeed.

Mr Mahoney: Do you know, sir, the vacancy rate in this community? Someone said around 4%?

Mr Baker: I am intimately involved with the real estate market and I have --

Mr Mahoney: The point of my question is that I am trying to find out in that example that Mr Lessard was sending around wherever if the 81% rent increase, which I assume was somehow approved and justified through your lawyer, who represented them --

Mr Baker: Right.

Mr Mahoney: -- so it went through. Did it cause economic eviction in that unit? Do you know any of those figures?

Mr Baker: Not that I know of; $365 a month, that is --

Mr Mahoney: Nobody left?

Mr Baker: Not that I know of, but I did not really look into it.

Mr Mahoney: I noticed you spent your entire time -- and this is not in any way reacting sensitively -- talking to the government members. I would suggest to you that you might as well have gone over and faced the wall and given your speech there, because I am afraid it is going to fall on deaf ears.

Mr Abel: Now he is talking to the cameras.

Mr Mahoney: While I understand your desire to be successful, you can rest assured that these ladies and gentlemen are just living up to their philosophical dogma in putting forth their attitudes on how they know best for the people of this province.

Mr Duignan: Like you did for five years.

Interjections.

Mr Mahoney: I think we are in some trouble. You can see they get a little sensitive and upset when someone starts to tell the truth. They cannot handle it, but in any event --

Mr Baker: But this is a chronic --

The Chair: Mr Tilson.

Mr Baker: Can I answer his -- was it a question?

The Chair: It was a statement. Mr Tilson.

Mr Mahoney: Do you not agree?

The Chair: Mr Tilson.

Mr Tilson: We were in London yesterday, and one of the last speakers was a lawyer who made her living acting for tenants organizations that probably did not understand the system, did not understand the forms, did not understand the bureaucracy, and I am going to ask you the same question I asked her. As she was talking, I listed off the bureaucracy that was involved in these proceedings, and that consisted of the printing companies that printed off the vast number of forms that are involved, the rent police people who are now going to be introduced to seize landlords' records, the lawyers, the housing staff, the inspectors, the consultants, the judges, because there are certainly going to be court proceedings over this, the property managers, the lobbyists, the property standards staff, the work orders staff, the computer operators, the people who are going to be running the rent registry system, and I am sure there are numbers that I am leaving out. My question to her was, as it is to you, how much can the taxpayers stand with respect to bureaucracy such as this?

Mr Baker: This bureaucracy is what our taxes go for and it is very costly and people rebel in different ways. They shop in the US. That is the clearest tax revolt. I mean, it will go down in history, like the American tax revolts, you know, dumping tea. This is the same thing.

You mentioned the rent control police, and Bill 121 seems to encourage some type of private building by saying it will not be covered by rent control for the first few years. Every landlord I have talked to would not touch private development in this province with a 10-foot pole. The consensus is to try and sell and to try to reduce your holdings, because to go up against these rent review police, you know, it is not something that we want to do. It does not encourage economic development.

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Mr Lessard: If I follow your argument, you are not in favour of any regulations of rents, for one thing.

Mr Baker: Correct.

Mr Lessard: You feel that if more properties were in the hands of private developers, the profits they make would contribute taxation revenue to the government.

Mr Baker: Correct.

Mr Lessard: That is your argument in favour of deregulation. Those rents come from the tenants, right? So the people who end up paying the tax bill are the tenants who may in some cases be the persons least likely able to pay those bills.

Mr Baker: They would live in the older stock of housing. Right now what happens is, because there is no new development -- in the last five years there have been about 130 private units built in the Windsor area and about 1,300 non-profit units. What happens when there is new building in a healthy market, it is like new cars. People buy new cars. There are used cars. Lower-income people buy those used cars. That is transportation for the poor. Well, housing for the poor and the working poor is the oldest stock of housing that is vacated with the natural upgrade. As people improve their incomes they move to nicer accommodations. When non-profit housing -- and I do not want to criticize your development program, but people of higher income will never live there. They want to live in luxury units. When they vacate the older units to move into newer units, those rents have to be lowered to fill up those buildings because they have vacancies. That is what low-income housing is. So, it is just unnecessary.

The Chair: Thank you. I am sorry, but time for this presentation has expired. Thank you for coming before the committee this morning.

FEDERATION OF WINDSOR-ESSEX COUNTY TENANTS ASSOCIATIONS

The Chair: The next presenter, Federation of Windsor-Essex County Tenants Associations.

We will be following the same procedure. I think you have been before us before, and if you want to have a question-and-answer session, you will have to withhold some time.

Mr Krall: Yes. My name is Joe Krall, and I am the chairperson of the Federation of Windsor-Essex County Tenants Associations. On behalf of our board of directors, I would like to thank this committee for the opportunity to appear before you today.

Our group is the lobby voice of approximately 20,000 Windsor and Essex county tenant households. We were founded in June of 1990 at a tenants rally protesting the RRRA.

Throughout the past nine months our federation has heard many varied comments concerning Bill 4, the green paper and now Bill 121. This presentation can be considered a cross-sampling of those comments. To begin, we are pleased that Bill 121 contains the following welcome changes:

No more financial loss allowances, which were simply a guarantee of profitability at the direct, hurtful expense of tenants. These allowances led to flipping, inflated property values and rent levels and the erosion of affordable rental stock.

Increased fines and offences, section 124, and in particular clause 124(1)(j) which makes it an offence to interfere, hinder or obstruct a tenant from organizing or securing his or her rights.

Interest is now payable upon rebates of illegal rent. Under the RRRA, if a rebate of illegal rent was ordered, there were no provisions to order interest payable on these moneys which were illegally obtained from unsuspecting tenants. Subsection 30(4) provides that interest will now be paid. This should provide a greater deterrent, particularly when coupled with increased fines.

Applications to reduce rent, as provided in sections 23 through 26, are another welcome addition. However, we will caution that section 24 requires a tenant to provide information which will be difficult or impossible to obtain. We are concerned that the vague nature of sections 25 and 26 imply that rulings will primarily be at the discretion of rent officers. This can lead to inconsistencies and many other problems. We urge the ministry to mandate very high standards for these rent officers, particularly since it has abolished appeal hearings.

We feel that Bill 121 is a modest improvement over the RRRA, even in its present form. However, we feel that it could be markedly superior and we will use the balance of our presentation to share some of our fears and offer potential solutions.

Guideline increases: We believe that the two-guideline system is unfair and confusing. We suggest there is no real evidence to substantiate the cost differences claimed by small landlords. We will submit that this provision has added undue complexity to this bill. If there must be a two-guideline system, there should be a provision to isolate owners who own several buildings of under seven units and otherwise would be rewarded more than other landlords with similar unit numbers but fewer buildings.

Notice of rent increase will no longer require a landlord to disclose the maximum legal rents or the percentage increase that he is taking. This information is vital to tenants and the lack of same will only add confusion and could encourage misrepresentation of legal rent and available increases.

The rent registry is a shambles and is not likely to improve sufficiently under Bill 121. All private-sector rental units should be registered, not just buildings with four or more units. We hope the ministry will reconsider.

Registering every rental unit is not the complete solution. To date, the registry has been a mechanism to legalize illegal rents and this will surely continue under Bill 121.

The six-month period available for challenges to the registered information is completely inadequate and should be replaced by a period of not less than two years.

Further, landlords should be required to provide additional information which would allow for ministry spot-checks to validate supplied information.

Administrative review is virtually as complex as under the RRRA. Reasons for an order will not be released unless specifically requested. We simply cannot understand the reasoning for this and are certain that confusion will increase.

No appeals will be allowed under Bill 121. We feel that this is an unfair prejudice towards tenants as most will not understand the system and will likely do little or nothing until an order has been released. Unfortunately there are no options left under Bill 121 except the courts. This is certainly not a practical measure for the average tenant. We feel a one-tiered system should have an automatic hearing with a provision to allow both sides to consent to administrative review.

Maintenance standards will likely not improve dramatically under Bill 121. There are no provisions to respond to any lack of local enforcement and we expect lengthy delays throughout this process. Devoted and competent rent, property standards and health officers, in adequate abundance, are a strict pre-requisite for this system.

The rent freeze provided for non-compliance will not prove to be much of a deterrent as it only affects future rent increases. This penalty would be considerably more effective if it rolled back the last rent increase to the date of infraction.

Subsection 37(3) allows a landlord to request a review of a work order if he or she is not satisfied with its terms. This should be expanded to include provisions for tenant input. We expect this would be very beneficial to the chief rent officer reviewing this work order.

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Capital expenditure transition provisions in subsection 16(1) are a slap in the face to tenants who had promises made to them through Bill 4. There will be many upset tenants as these orders are released and these people realize Bill 4 was only a temporary salvation. These provisions will create a huge backlog of applications, which is certainly not conducive to a smooth transition, especially considering the backlog of RRRA matters which must still be dealt with.

Section 17 will presumably allow a landlord to make a capital expenditure application for unnecessary work solely due to a tenant's consent. We fear this will lead to coercion and exploitation of tenants, particularly since there are no provisions to protect a tenant who changes his or her mind following consent. Likewise, tenants who consent to assume the costs of a new or additional service under section 18 are similarly disadvantaged if they change their minds.

Two per cent of the annual guideline has been targeted for capital expenditures, yet there are no provisions to stop a landlord from using this money for any other purposes. Neither the 2% of the guideline or potential pass-throughs will ensure rental stock is maintained or necessary work will be done.

This federation has never advocated cost pass-throughs and will not begin now. We firmly believe that if we must work under this type of system, there should be more protections afforded to tenants, including:

The removal of capital costs from existing rent levels once the expense is paid for.

Full accounting of capital expenditures versus moneys allocated and collected for this purpose by landlords making an application. This accounting should be for a period of not less than five years.

A cost pass-through system cannot be fair until all costs that are no longer borne are removed from existing rent levels. As these revenues continually compound, there must also be provisions to remedy this compounding effect.

Subsection (20)(5) contains additional landlord windfall potential and grants interest on the capital expenditure even if borrowing is not required. It further provides that a value be allocated for a landlord's own labour, which simply cries for abuse.

A challenge faces both this committee and our government. That challenge is to make substantive and meaningful changes to Bill 121. Let us not settle for a system that is only moderately superior to its predecessor legislation, as we could reasonably achieve much higher.

One of the most disturbing things we have seen locally is that many of the tenants we have spoken to seem to feel their appearance before this committee would have been a waste of time and we assume that will partially account for the meagre tenant representation here today. We hope these fears are unfounded and there will be substantial changes to Bill 121 prior to proclamation.

We thank you again for the opportunity to appear before you today.

Ms Harrington: Thank you very much, Mr Krall, for coming. You have given a very thoughtful presentation and very thorough and I just do not have the time to comment on all of it, but I would like to try to let you know that many of the things you have brought up we have already heard about and several of them are definitely being considered.

First of all, you brought up the question of the reason for the two guidelines, the need for a rent registry that does operate well. We realize that has to be effective. The appeal procedures: We have had concerns about them voiced to us, and of course the maintenance enforcement. That is one of the main thrusts of this bill, and that is something that we have to ensure is workable, and you are talking about the interaction with municipalities on that. You also deal with the consent without coercion, which is something that we have to look very carefully at to make sure that, if there is consent, there is no coercion. Also, one of my concerns here you had noted: the lack of local enforcement of standards.

The cost-no-longer-borne provision -- I wanted to ask you: There was a proposal put forward by several people, I think, that people's rental charges be separated into a charge for accommodation, the charge for taxes and the charge for temporary charges, that is, the cost-no-longer-borne-type thing. Would you favour that?

Mr Krall: I would if we must be in a system of cost pass-throughs, but I am not certain that we have to. If we are in that kind of a system then I think it is only fair if the rent is actually subdivided into many different areas, but that again is a bureaucratic nightmare, I am sure, and very costly to administer. If we have to be with pass-throughs, then yes, I would advocate that.

Ms Harrington: Would you favour a reserve fund then?

Mr Krall: I have not seen enough research that I think I could really knowledgeably talk about a reserve fund. I really like the concept and I think it is probably something that could be workable.

Ms Harrington: For new buildings it is a lot easier than old.

Mr Brown: The one issue I wanted to raise with you is guideline increases. What has been pointed out to be fair by a number of tenants groups and a number of landlord groups, the differentiation in the guideline as six units or less or larger -- the one thing you seem to note is that not necessarily small landlords own these buildings; it could be large landlords. We had a person present to us yesterday in London who is a partner with four other people in a building that had 16 units. Essentially, this small investor owned a triplex. If you look at it from the tenants' point of view, why should I pay more, in terms of guideline increases, if I happen to live in six units or less than I do in the larger? We do not understand that particular provision. What would you recommend?

Mr Krall: We really feel one guideline would be sufficient. If you have a smaller number of units we feel that, while you do not have certain cost advantages, there are also certain expenses you likely do not have versus a large building. Usually these small buildings do not have elevators or full-time staff. There are many things the small landlord can actually save versus the large one. I really think that if exhaustive studies were done, it all kind of works out in the wash and that one guideline would be practical.

Mr Tilson: I would like you to comment further on the guideline issue, the rent control index, section 20, because there has certainly been considerable criticism of that. Why are we going on large and small buildings when the major problem of the deterioration of buildings in this province is that 70% to 75% of the buildings are 20 years old or older? Those are the buildings that need the tremendous amount of capital improvements, not the issue of small and large buildings.

The second criticism which has surfaced to some degree is that the calculations given in the ministry that talked to us somewhat about this were based on a Royal LePage study, although the ironic part is that the operating costs that were calculated were based on the needs of new buildings and not old buildings, of which there are somewhere between 70% and 80% of this province, as I have indicated. The very statistics the ministry is using are out of whack. I would like you to comment because you did refer somewhat to section 20 in your remarks.

Mr Krall: I am not familiar with the Royal LePage study you are referring to but, on this issue, I do not think small buildings or large buildings, old buildings or new buildings should be under a different guideline system. If money is earmarked for maintenance in the guideline, for repairs were used for that purpose, and landlords were made to account in that regard, I do not think we would have the same problems.

Mr Tilson: The ironic part, sir, is that the ministry used its statistics on new buildings, not old buildings.

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WINDSOR AND DISTRICT LABOUR COUNCIL

The Chair: The next witnesses before the committee are from the Windsor and District Labour Council. Good morning. We will be following the same procedure: 15 minutes for the total presentation, and you can withhold some time for questions and answers if you wish.

Mr Parent: I am Gary Parent. I want to thank you, Mr Chairman. First of all, you do not have to worry about the time for questions because our brief this morning will be very brief. As you can well appreciate, and as we outline in our brief, the labour council per se does not get into the renting, nor does it get into the landlords of buildings or properties that are covered under the legislation that is before us here this morning. I think our brief really is an overview of where we see this legislation. I am going to tell you very bluntly and upfront that any technical questions on the legislation we are not exactly that familiar with, but we do know the concerns of our members who are talking to us daily about the problems they are experiencing.

In saying that, we thank the committee for the opportunity to talk to you here this morning on the proposed new rent control legislation. We do not believe we have to highlight to you the inadequacies of the past rent control legislation that in our opinion failed the tenants and the landlords miserably. We applaud this government in attempting to put in place a piece of fair legislation that in our opinion will benefit both parties.

Take, for example, the landlord. If he or she faces water, hydro, municipal taxes or other major repair costs, that individual may apply to rent control for an increase greater than the guideline up to, as we understand the proposal to be, a 3% over guideline maximum. We feel this should make any landlord happy unless that landlord is strictly out to gouge his tenants.

We feel the proposed new legislation provides the tenants, finally, the right to apply for rent rebates and rent reductions if they are being charged illegal rents and if their landlords owe them money. As well, tenants can apply to have their rent reduced when landlords have withdrawn services or when maintenance is poor.

The proposed new legislation will enable newly constructed buildings to be exempt from rent control for a period of five years, as we understand it which, contrary to the outcry from developers, should not discourage them from wanting to invest in new buildings. In saying this, we also believe there have to be some safeguards put in so that this is not abused. The labour community in Windsor and surrounding areas does feel that this government listened primarily to the renters from this province, who a great majority were ripped off, in our opinion, by landlords who only wanted their bankrolls to increase and did not care about what condition their buildings were left in or what living conditions their tenants had to live in.

We know there are many good landlords in this community and other communities across this province, and we would like to tell these people that this legislation would not hurt them if they would at least give the proposed legislation a chance. As I said earlier, as a labour council,we are not experts in the renting or building of places that this legislation covers, but we do know that the members we represent have in the past been gravely affected by high rent increases, primarily our retirees who are on fixed incomes and, I might add, our unemployed people. As we stated earlier, we would only hope that we allow the legislation to become law and that both tenants and landlords work together to make it work for all concerned. This is respectfully submitted by myself and Nick LaPosta, who is the secretary-treasurer of the Windsor and District Labour Council. Could I just make another comment, Mr Chairman?

The Chair: Certainly.

Mr Parent: I listened to the one presentation before the last. One comment he made was to the effect that, "If people don't like the rent, they can just move out." I just say to that individual and other individuals of the same mind that it would be nice if it could be practical, but we all know some of the renting problems we have experienced in this community. If we were at a zero rent vacancy, where would that person go to? What kind of housing would that person go to? I say to that person that I understand the concern when talking about this new piece of legislation, but also, as we stated in our brief, we have to work out any inadequacies that are there. I think some of the points of the speaker immediately previous to myself have pointed out some concerns this committee should be looking at before it puts the representation and make the final draft of the legislation before the Legislature. Thank you.

The Chair: Thank you. Nick, did you want to add anything?

Mr LaPosta: In listening to the different presenters who came before this committee today, I do not know if this committee is -- nobody has talked to me about a minimum standard. I have not seen any minimum standard guidelines in any of the legislation, and I have to be honest: I am not a research person where I have gone through every piece of legislation ever written on rent control or housing in our province, but I have heard some good arguments on the side of the landlords and I have heard some good counterarguments on the side of the tenants. From where I sit in the argument, it seems to me that if both sides were just to sit down together, forget the government-elect, forget the governments elected from the past and come up with some legislation they could maybe jointly propose to a body such as this, possibly we would have less catcalls and less screaming back and forth and a little more productivity on both sides. That is the only thing that I would like to mention.

Interjection.

Mr LaPosta: We see that on the television all the time. It does not work.

Mr Tilson: On the first speaker's comment with respect to rent availability in the Windsor area, I would just like you to comment on a news story from the Windsor Star from the middle of July which talked about Windsor's official vacancy rate hovering around 4%, nearly 80% higher than last year's, and that renters are moving out of substandard housing when and where they can. It talked about the average rent as being $503 for a two-bedroom unit. This is as of last of October; I do not know what that would be now. You cannot beat that anywhere in Ontario. I would like you to comment on those figures.

Mr Parent: I hope you will appreciate what has been happening in our community. Although $503 may not sound like a lot of money to someone renting in the city of Toronto or in other communities across this province, an unemployed person stuck on a fixed income of unemployment insurance just cannot afford that $503. There is a real concern of affordable housing we are pushing for as a labour movement and as a city, I must add, of trying to get more affordable housing as well into this community, in the sense of co-op and non-profit housing. We will continue along that vein as well.

Mr Tilson: This news clipping continues by talking about the proliferation of non-profit housing units, which are part of the problem in creating vacancies in the private sector. Can you comment on that?

Mr Parent: Yes. I do not totally agree with that. I do not believe we all believe everything that is written in the paper to be gospel. If we did we would all be in a heap of trouble, but at the same time I believe that the realities of what is happening and facing us as a community have to be taken into consideration when such comments are made public.

Mr Tilson: This is the Canada Mortgage and Housing Corp, it is not?

Mr Parent: I understand what you are --

The Chair: Thank you. Mr Dadamo.

Mr Dadamo: Thank you, Mr Parent and Mr LaPosta, for appearing before this committee this morning. I want to make a couple of comments. First of all, I want to highlight the fact that the rent review guideline for the year 1992 is 6%. When this new rent control act is to be passed, the most a landlord will be able to obtain above the guideline is another 3%. As you know, the city has been devastated in the last year and a half, two years, by the economy and by the recession. I would like to know from you and make public to the committee this morning, on behalf of the labour council, how drastically and dramatically the rents have gone up in this area. We would like to say that the 15%, 20%, and 30% days will be over. Maybe you know of some people who have been put in that kind of predicament.

Mr Parent: Probably Nick would be a better person to talk to on that because he has a direct link with over 2,000 of his members who have been laid off through this economic climate. I just want to make a comment before I turn it over to Nick. There are people right now whom we have coming in to the labour council office and other local unions across this city who are out of housing, and I think our housing needs in this community are much greater, but in a different way than is covered under this rent control legislation. I am talking now about going back to the affordable and the co-op housing structures we have to be looking at, primarily because of what we are facing in this community and other communities. But maybe Nick can answer the direct question.

Mr LaPosta: To just answer the question briefly, my particular local has suffered through plant closures at a devastating rate. I know there are some members on this particular board who can relate to that. There are a lot of single parents, male or female, who use rental housing as their main source of housing while they are working. But one day they are working and the next day they are not. Their source of income is interrupted so regularly. Even though you hear of supplementary unemployment benefit plans and unemployment insurance programs and government initiatives to assist one's standard of living, once his own personal source of income is gone, there is always a time lapse; there is always a gap.

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The biggest argument that was going on in our immediate area while all this was happening -- unfortunately, landlords were painted as the cruel person who came down and said: "I'm not interested in what is happening to you personally. All I know is that you're behind in the rent," or "You're falling this far behind and I'm losing money." The unfortunate part there is that those people ended up either throwing their keys at the landlord and leaving or actually being thrown out, because if they were still making their payments and still had some source of income, that particular landlord used the legislation of the day to come down on them, saying, "Your rent is now going up 20% or 25%."

When you look at the retirees, the people who live alone, who are on fixed incomes, who could not absorb that type of cost, when you look at the plant closures that broke up their source of income so that they could not maintain, and when you look at the general population that has left the area because of the devastation, I think that adds a lot of credence to the figures Mr Tilson was throwing out earlier and also adds some credence to what the government attempted to do.

Mr Mahoney: I wish Alvin Curling were here, the minister who brought in Bill 51, because it was under his leadership that exactly the process you talked about occurred. In fact, the initial printing of the bill was signed by people like Mr Dan McIntyre from Ottawa, and many --

Interjection.

Mr Mahoney: Oh yes, it was. He has a copy of it, excuse me, and I have seen it. There was an attempt to sit down with the landlords and the tenants to come up with it.

My question relates more to some of the comments here. You suggest that landlords should accept a 3%-over-guideline maximum in dealing with things like water, hydro, municipal taxes or major repair costs. Let's deal with water, hydro and municipal taxes. These are items where the rates are set by a third party, by a government. No control by the tenants, no control by the landlord. You say they should be happy with the 3% unless they are trying to gouge the tenants. What do they do if in fact it is a double-digit increase in taxes, in hydro? We are looking at 44% as the latest projection for hydro increases. Should the landlord be required to subsidize the tenant through costs that are being passed on by other forms of government, or should the tenant share in those costs?

Mr Parent: I am not averse to the tenant sharing in any abnormally high cost that is passed on to the landlord. What we are objecting to very strenuously is to inflate that same landlord's pocketbook to the double-digit figures as well.

Mr Mahoney: I am talking about the actual costs that come from public policy decisions of the PUC or municipal governments or whatever. I am not talking about him gouging for profiteering. We have seen double-digit tax increases, double-digit hydro increases, double-digit water increases. Is the landlord just supposed to say, "Okay, I'll take 3%, guys, and I'll eat the rest of it"? Is that fair?

Mr Parent: Again, if you take everything in credence, you have to look at exactly what the bottom line of that particular landlord is. No, I do not expect him to absorb the total cost, but the tenants at the same time do not have to take it as being part of their responsibility to inflate his pocketbook at the same time.

Mr Mahoney: I am not talking about inflating his pocketbook. I am talking about increases that are passed on --

Mr Parent: We do not know unless you are talking specifics, my friend.

Mr Mahoney: I am talking about increases that are passed on through public policy decisions that neither the tenant nor the landlord can control. It is simply unfair to suggest they should be happy with 3%.

Finally, I found your presentation an attempt to be moderate and to be conciliatory until we come to the statement at the bottom of page 3 and the top of page 4, where you say that you believe this government listened primarily to the renters "who a great majority were ripped off, in our opinion, by landlords who only wanted their bankrolls to increase and didn't care about...their buildings." Are you suggesting that a great majority of the tenants in this province are being ripped off by their landlords?

Mr Parent: Absolutely.

Mr Mahoney: You really believe that?

Mr Parent: Yes, I do. Very much so.

Mr Mahoney: Do you have any statistics to back that up?

The Chair: I wish I could let this go on for the rest of the morning. I am going to give Mr Parent about 30 seconds to answer the question. I have allowed every presenter this morning to go over between one and three minutes, and now we are getting to the maximum. So I am sorry, I am going to have to cut it off, but I will allow Mr Parent to answer the question.

Mr Parent: I just want to say to Mr Mahoney and to the committee that if it were not for the landlords who are not, in our opinion, reputable, if it were not for the landlords who are treating tenants very unfairly, there would be no need in this province for rent control. But unfortunately, my friend, that is not what is happening and unfortunately there are people in this province who are hurting as a result of not having fair landlords.

The Chair: I would like to thank the Windsor and District Labour Council for coming before us this morning.

SCARSDALE TENANTS' ASSOCIATION

The Chair: The next presenter for this morning is Donald Fraysure. Mr Fraysure, I think you have been before this committee before, so you are familiar with our procedure. We have allotted for the presenters 15 minutes, of which you can withhold some time for questions and answers.

Mr Fraysure: Thank you for hearing my presentation. I am Donald Fraysure, chairperson of the Scarsdale Tenants' Association. We tenants live in an apartment complex of two three-storey apartments with a total of 47 rental units on Tecumseh Road East in Windsor. We gave a presentation to you in January dealing with Bill 4, and we welcome this opportunity to appear for Bill 121.

To give a short update of what has happened to our complex since January, we still have had five different owners in what is now 45 months, with a continuing history of minimum repairs and maintenance and no capital expenditures. We still have absentee landlords and now we even have an absentee management company. Our present landlords do seem to be very unhappy owners. They backed into the situation as owners of a block of six Windsor apartments, of which the Scarsdale is one. The landlords were primarily mortgagors and not real estate investors in this transaction, or so we were told by their financial adviser, Mr Lal Khanna. They had to take over the properties on July 27, 1990, to protect their mortgages to First Western Ontario Properties. Only weeks after the mortgages were issued, FWOP folded. Suresh Malhotra, in trust, seems to be the principal.

In February, our executive met with Mr Khanna and tried to work out something regarding the continuing neglect of repairs and maintenance. He asked for a five- or six-month respite to plan correctly and include capital expenditures. We have tried to work with all our landlords, so we agreed. Now this is it. It is past the six-month period and not a whisper from anyone. We are now in the process of yet another inventory of tenants' complaints leading up to building inspections and, we hope, binding work orders this time.

Bill 121, section 12, needs more explicit, tighter controls spelled out for the 2% capital expenditure fund, and also tight controls specifically dealing with less expensive repairs and maintenance, which not all landlords, but some, are now almost totally neglecting.

Some of our tenants are still using their own labour and/or money to do their own necessary repairs. We feel that Bill 121, again under section 12, should allow them to initiate the necessary work and be reimbursed from the 2% allowance on the grounds of need, but only when this is approved by a rent officer. The costs could then be passed on to the landlords in the form of penalties for not meeting their obligations. I can already hear the complaints of this overloading the system still more, but something has to be done to halt the further deterioration of the rental housing stock in Ontario, so each and any approach we use will help alleviate this.

Under Bill 121, clause 15(3)(a), dealing with neglect, we would suggest, drawing on our own experiences, that any pass-throughs for capital expenditures must be proven. This would have to be done by the landlord submitting complete figures for all repairs, maintenance and capital expenditures on the property for a period of up to the last seven years.

We would also ask for proof of maintenance figures claimed in operating costs. For example, on a weight of 100, a figure of 16.9 or $13,100 was claimed in 1989 by our landlord. A claim such as this should be accompanied by a complete list of proven figures so that tenants would be privy to this information on a continuing basis.

1110

Now we come to a glaring loophole from the Residential Rent Regulation Act, 1986, not taken care of by Bill 121. Under Bill 4 and Bill 121, it is no longer possible for a landlord to claim financial loss, hardship allowance or economic loss for phase-ins for rent increases. But nothing has been done about the financial loss phase-ins that are in the rent and will remain compounded in the existing rents unless this is corrected. This should be taken care of under "Application to Reduce Rent" in Bill 121, sections 23 to 28. This item cannot be classed as retroactive, as it was claimed in Bill 4 for other items.

Here is some of the history of our experiences with phase-ins under financial loss under rent review application number L-0574-WN.

Under RRRA 1986, sections 75, 79 and 92, our rents were raised for a claimed financial loss of $40,350 and a relief from hardship of $5,500 as allowed by two phase-ins: 5% June 1, 1989, and 5% June 1, 1990, under schedule B6, "Phase-in Calculations" and B7, "Relief from Hardship" for the specific years named and with total amounts spelled out in detail. Here are some of the wordings in the orders:

"The closing balance will be used to calculate the phase-in amount for the subsequent year. Calculations similar to the initial year phase-in calculations will be completed for each subsequent year until the financial loss has been eliminated."

"Relief from hardship will be phased in after financial loss has been eliminated."

Under this setup, even with our landlord no longer able to claim financial loss, he will be able to receive his claimed financial loss from 1989 and 1990. Hence, at that time, this amount compounded, still remaining on our rents, becomes an additional windfall profit to the landlord. That should be corrected. We suggest that the correct maximum rents be figured by going back to the rent paid before the first phase-in was applied in 1989 and adding only the legal guidelines for the years involved to that figure to arrive at the maximum present legal rent. Again, as it is no longer legal to claim financial losses for the landlords, why would it be legal to retain the financial loss phase-ins compounded in our rent when they are no longer used or issued for that purpose?

We would suggest that Bill 121, section 96 be expanded so that files in the rent registry be further upgraded annually for each rental unit, so that the complete financial history, changes in value and/or ownership, operating costs, expenditures and any other necessary items would be collected from landlords and tenants as necessary to have a complete, up-to-date picture in one file. This would allow any questions pertaining to the unit to be more easily answered. This would also give the tenant access to information he has not always been privy to before. It has been suggested numerous times, by all parties involved in these various hearings and in the Legislature, that a definite co-ordinated program be put in operation to revise and simplify all the forms and complex procedures now in rent control.

Even so-called experts are now at a loss, and the poor tenant has to seek assistance for even the most simple action. We have not heard or seen that these changes in the process are being done. Will they come in with Bill 121?

I know this is not dealing with Bill 121, but Mr Tilson brought up an item that I brought up before under the low-rise rehabilitation program. I would suggest it be amended and revised so that the present 25-year time eligibility be lowered to 20 years because most of the apartments that are deteriorating now start deteriorating at 20 years, so there is a use for that. This would be a backing for the small landlord and help revitalize the existing housing, and it sure would be less expensive than financing new housing. Thank you for your time and patience.

Mr Brown: It seems to me you brought some pictures of your building the last time.

Mr Fraysure: I have them if you want to see them, they are over here.

Mr Brown: Are you telling us there was not much of an improvement?

Mr Fraysure: No, there has not been any improvement, there has been deterioration.

Mr Brown: Have tenants been forced to move out of the building at all because of the conditions occurring in the last few months?

Mr Fraysure: I have not heard of anybody. It has not definitely gotten to that point but I hate for this winter to come because ceilings and walls are beginning to crack to the point they are going to be falling and we have noticeable seepage in the walls. That is the reason next week I hope to start the process. Even though it winds up in district court, we are going to have to do something.

Mr Brown: The municipal building inspectors have been in, I take it?

Mr Fraysure: No, this is what I am making up now. We do believe in trying to work with the landlords. We do not believe we should be at each other's throats, so we have tried it, as I have told you. They asked for a five- or six-month respite and now everything is absentee. They have even formed their own management company which is in Mississauga. We have no local office or anything.

Mr Turnbull: It sounds like you live in a pretty dreadful building from what you described in February and now.

Mr Fraysure: As I pointed out before, because of the tenants themselves taking care of the glaring mistakes --

Mr Turnbull: Right. Tell me something, what is the average rent level in your building?

Mr Fraysure: I am paying now $570 for a two-bedroom place.

Mr Turnbull: Do you believe a landlord is entitled to a profit?

Mr Fraysure: Reasonable.

Mr Turnbull: What would a reasonable profit be?

Mr Fraysure: I would say he is making a reasonable --

Mr Turnbull: No, I am not asking you whether he is or not, I am saying what would a reasonable profit be, related to other investments?

Mr Fraysure: I would say he should be aware of the amount of profit he is going to make --

Mr Turnbull: No, no, excuse me, I am asking --

Mr Fraysure: Listen me out, please.

The Chair: We do not have time for long explanations, I am sorry. I think we are just going to go over to Ms Harrington.

Ms Harrington: Thank you very much, Mr Fraysure. You have really given us a picture of what it is like here, at least in your building. I know you have done a lot of work with this paper and through the years. You have become an expert. I would like to take back several things you have mentioned; the fact that the financial loss phase-ins are then compounded in the rents and do not get out of the rents, and your concern about the rent registry being able to have a lot of information tenants need. It is, of course, difficult to make sure we have everything. We are talking computers and making sure things are up to date. We need a system that works and that is not too complex. I think you understand that.

The other point you made -- although everything was very valid -- is that landlords and tenants have to understand each other. And you are saying that, "Yes, landlords should make a fair profit." And we are saying, yes, in Ontario. We have to have a rental market that is viable. We know that but we cannot have this kind of situation you are facing and we have to stop that. So I appreciate your trying to work together with your landlord, if only he could be found, I guess that is what you would say.

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LEGAL ASSISTANCE OF WINDSOR

The Chair: The next presenter is Legal Assistance of Windsor. We will be following the same procedure -- 15 minutes and you can withhold some time for questions and answers if you wish.

Ms McDermott: My name is Carol McDermott. I am a staff lawyer at Legal Assistance of Windsor. Legal Assistance is a poverty law clinic. It specializes in immigration, social assistance and landlord and tenant matters. In order to qualify for our services our clients are usually eligible for some form of social assistance or are members of the working poor. Since they are always in some kind of serious financial constraints, they are the people for whom fair rental control is essential. Therefore, we certainly welcome the opportunity to address this committee.

There are a lot of positive aspects to the proposed legislation and certainly some aspects that could be improved. I will try to address my comments to issues that have not, I think, been raised previously and I will go chronologically through the act.

It is certainly helpful that the scope of the act is consistent with that of the Landlord and Tenant Act. Previously there were some differences between what premises were covered under the RRRA and the Landlord and Tenant Act and that certainly added to the confusion that was already present with that kind of technical legislation.

Many laypeople are aware of many of their rights under the Landlord and Tenant Act, but they are not aware of many of their rights under the RRRA and its predecessor. I think part of the reason for that, aside from the obviously technical nature of the RRRA, is that the Landlord and Tenant Act has in its regulations a summary written in language that is accessible to the layperson and it is required that it be posted on the premises. I think a very simple way to assist people in becoming aware of their rights under the proposed legislation would be to have a similar summary provided in the regulations and require that it be posted on the premises, along with the summary from the Landlord and Tenant Act. What rights are granted are only as useful as people are aware of them and providing people with rights that are not understandable or accessible to them is useless.

Our clients need housing they can afford and that they can feel secure in for a period of time. Because they are on such strict financial limitations, not only is paying the rent a major concern for them, but any disruption in that seriously puts them into jeopardy. Some people may choose to move because they are tired of their accommodations or they wish something better. Most of our clients move only when they are in desperate straits. If the rent has increased to the point where they can no longer afford it, not only is finding a new place that is affordable a problem, but just paying for a move is a problem, paying for the hookup of the new utilities and change in telephone service. Everything becomes much more difficult. So they need to know that once they choose a place they can afford, they need to know they are going to be able to afford that for some lengthy period of time. Therefore, we think the cap on the increase over the guideline is really helpful.

Certainly we appreciate the limitation and the kinds of extraordinary increases that will support an application for this increase. Hopefully cutting out increases for financing and losses associated with sales and indeed resales sequentially of property will help curtail some of the profit-seeking speculation that has penalized our clients most severely.

It is understandable that a landlord may be entitled to an increase above the guideline when there has really been an extraordinary increase in operating costs. On the same side, though, of course, a tenant should be entitled to a decrease when that happens. But again, a tenant will only be able to exercise that right if he has access to that kind of information. We suggest the landlord be required to post a summary of operating expenses annually, perhaps at the same time that the guideline is published, which could be posted along with the summaries of the two acts.

The 2% annual guideline amount to be allocated towards capital costs needs somehow to be recorded and justified and proved that that has been allocated in that direction. Unfortunately, I think an unscrupulous landlord might see this as an incentive to pocket an extra 2% profit for a few years, which allows the building to deteriorate to the extent where its need for capital improvements would justify an application for an increase above the guideline. Therefore, we suggest it is imperative that that 2% be applied every year or carried forward in an account that can only be used and would need to be spent towards capital improvements before an extra 3% can be added. Unfortunately, with the carry forward, it could mean an unscrupulous landlord who is used to keeping records could plan the repairs so he could justify an increase every two years. If he applies for 6% and gets 6% every two years it would mean the tenants' rents will be going up the guideline plus 3% every two years.

Landlords, of course, will say they have to undertake these repairs and improvements at some time, so they need to be allowed to pass their expenses through to their tenants. We suggest that the capital gain on his property is one of the landlord's return on investment. Our tenants live in rental accommodations because they cannot afford to own their property. They are paying rent and not building up any kind of equity. Therefore, a landlord who is building equity in the property by the use of our tenants' rents should feel somewhat satisfied in the creation of a capital gain in the long term and not necessarily feel that every expense needs to be passed on to the tenant.

We wholeheartedly applaud the availability of a tenant to apply for a reduction in a rental amount based on the stated criteria. It is interesting to note the wording in section 25, however. It allows the application to be made not on the basis of the existence of inadequate standard of maintenance or repair but on "whether the standard of maintenance or repair...is inadequate." I am not sure what this means. It is arguable that it would put the burden of proof on the landlord to prove that the standard is adequate, or it could leave it up to the rent officer, on a fact-finding basis, to make a decision. There are certainly advantages and disadvantages to either way of proceeding, but I think that section needs to be spelled out more clearly.

Subsection 28(3) allows the rent officer to make an order requiring the landlord to repay the tenant a sum of money. For those tenants who remain in their units, deducting that sum sequentially from their rent can be a very helpful and adequate way of enforcing that order. However, for those tenants who may have made the application after they have moved out, or for whom their success in their application has caused the relationship with their landlord to deteriorate to the extent where they subsequently move out, they need some other practical means of enforcing that order. One way to do it would be to add in the section in the old RRRA -- I think it was section 36 -- that provided that an order of the board could be filed with a court and thereafter would be enforceable as if it were an order of that court. That way the tenant who has not been paid what the board has ordered his landlord owes him could file the order with the small claims court and proceed to garnish the other tenants of that landlord.

Section 33 allows a party to apply to a chief rent officer for an order determining a variety of issues such as the applicability of the act, what units are included and the maximum rent. All those seem to be fairly factual issues which would certainly seem to be within the purview of an administrative review. However, it is surprising that within that list of issues there is one that can allow the rent officer to make a determination about whether an agreement between a landlord and a tenant for improvements has been made on the basis of coercion or freely. I think it is surprising that such a decision would be made by a non-judicial officer and without, it would seem, any requirement for a hearing, because it certainly would require a determination of credibility between the parties.

I suspect that the Statutory Powers Procedure Act would apply and would require a hearing. However, section 59 specifies that a hearing must be requested by one of the parties before it will be held. I think section 33 should be clarified to require that a hearing be held in every case where the credibility of the parties is at stake and that the decision should be subject to judicial review.

Our clients frequently experience difficulty in enforcing the right to adequately maintain the rental premises. This seems to be a perennial problem. We are certainly encouraged by the attempt of this act to address that issue.

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The Chair: Did you want to reserve some time for questions and answers? It is your option, I just wanted you to know.

Ms McDermott: Well, if anybody has a question that they would like to address. If I could just briefly suggest, that whole section needs to be tightened up an awful lot. It is not at all clear what the roles of the parties are. There seems to be an inspector available at some point. The standards committee, previously available, was not at all well known. The conflict between jurisdictions which have their own standards and those that do not, meant that it was much less useful than it could have been. I think the idea behind this section is quite laudable but needs greatly to be tightened up.

In terms of procedure, the ways of giving notice are set out quite clearly. I think it also needs to have some way of proof of giving notice. Many of these notices are given in very informal manners, and it is not until some time after the effect that it becomes clear that it is controversial. It is long after a tenant has first rented a unit that the landlord says, "I gave you a piece of paper telling you that there was an application pending when you first rented it." If, at the time of giving that notice, the tenant's signature is requested, or when other methods of service such as posting or mailing are undertaken, specified forms of affidavits of service would assist in preventing some of those disputes. If I can just address one --

The Chair: It is your option. You can use all the time for your statement or you can reserve time. It is not a question of me insisting on what you do.

Ms McDermott: I will just address one further point. Section 31 prohibits illegal charges. It specifies considerations of fee, premium, commission bonus, penalty or key deposit. I think this is a very useful section. It corresponds to the previous section 100 in the RRRA. I would like to have that tightened up slightly to allow reasonable liquidated damages for NSF cheques returned. Most people would agree that if a cheque is dishonoured, the landlord should not have to pay the bank charges and the tenant should be liable for them. There is case law to provide that is the case.

The problem is that case law then seems to open the door. It says it is okay to charge $25 because liquidated damages is not really a penalty. That, I fear, does open the door for landlords to say, "Well, I am also going to charge you my carrying fees and my secretarial fees for sending you the notice, and I am going to charge you my printing fees for the notice." It opens the door for the landlord to try and fit other things in as liquidated amounts and say that they are that rather than a penalty. If it specified what specifically is allowed, it will close that door and not allow other arguments in.

There are other circumstances in which tenants are being charged legal fees of up to $300 when their rent is late. I would like that section to be tightened up to say that legal fees are covered by the prohibitive reference to fee, unless legal fees are specifically ordered by a court of law.

The Chair: Thank you for your presentation.

M. SCHAFER REAL ESTATE LTD

The Chair: The next presenter, M. Schafer Real Estate Ltd.

Mr Schafer: Mr Chairman, ladies and gentlemen, my name is Matthew Schafer. We are property managers in Sarnia of 600 units of working-class, average buildings. They range in size from 10 units, 14, 18 and up. We are providing very low-cost rentals and face the fact and prospects of losing our properties and everything that we have. The difficulty has arisen as a result of rigid rent increase controls as against a landlord's uncontrolled expenses relating to hydro, gas, garbage removal, maintenance, water, taxes and others.

I only have two points to make. One is about the costs. The second one is that we are in fact subsidizing tenants in these buildings. Are we to subsidize all the renters in Ontario, including the well-off and two-income families that pay the same rent as the old pensioners and the poor? It is the poor and the pensioners who should be subsidized.

What galls me no end on the properties we manage is that we will see a young couple -- a teacher or nurse and her accountant or chemist husband -- making $80,000 to $85,000 a year combined income and paying $550 for a two-bedroom, heat and hydro included, fridge and stove. Across the road is some poor soul, widow, with a total income of $14,500 paying the same rent.

This is what is so unfair about the rent controls. We are subsidizing, in the majority of cases, people whose incomes are very high relative to the rents that they are paying. The poor soul whose total income is $14,500 a year is paying $550 a month. These other people have an income of $7,000 a month. It does not make sense. You are penalizing the poor and the old and the pensioners when they should be getting a subsidy. Nobody wants to see these people out on the streets. No one wants to see that. I do not want to see that. I was born in the Depression from immigrant people in the Prairies. But what is happening here? We are supposed to subsidize the rich and the double incomes and the high incomes. In turn we get condemned and criticized by the poor. "Well, I'm paying $550 and I only have $14,000 income or $14,500." That is the person who should be getting the income. I mean, I could go on and on about this, but this is our complaint.

Another complaint is that all the rules for rent control emanate because of Toronto. I am from southwestern Ontario. Everything that works in Toronto does not work in Chatham, Wallaceburg, Blenheim, etc, or Sarnia. In Toronto, rents were able to be increased the minimum amount from 1975 on. Albeit the minimum amount, but they are going to get those increases. In southwestern Ontario, and under poor economic conditions, we could not increase rents in many years. We had to roll them back or give incentives.

So, what happens? 1985 comes along and you people freeze all the rents at the 1985 level. Well, in many cases our rents really were only the legal rents of 1978-79. You are saying that there are illegal rents charged. Yes, illegal. We are not charging the proper rents. We are way below the legal rent that should be, had we been able to kick in 5% or 4% every year.

You people are making us sound like we are criminals, we are thieves, we are getting rich, when in fact we are slowly losing our equities and properties. This has to stop. This is a democratic, capitalistic society. This has to stop. We are not criminals. We who invested in real estate, instead of investing in the stock market or in bonds, we are not criminals. Do not make us out to be criminals.

Not only that, not only did the rent freeze include the older buildings, it included the new construction, which you call MURBs. ARP means assisted rental program, where the government gave us money which we have to pay back later to make the rents affordable at market rents. Not economic rents, but market rents. Everything was frozen. Does nobody in these committees understand anything about day-to-day values in real estate? Does anybody in this committee own any real estate? Until you do, you do not understand the problems.

Mr Tilson: When you are involved, you have to.

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Mr Schafer: Yes. I have a solution here how we can remedy the low rents that have been frozen, that were below what they should have been in 1985. There are many ways in which this matter could be remedied. My suggestion is that, without access to the rent review process, a cap be established in 1991 of $550 to $575 for a one-bedroom apartment and $650 to $675 for a two-bedroom apartment. The market will determine the rents which can actually be charged, of course, and the normal permitted increase, as set out by the government of Ontario, will apply to the rents determined by the market.

In other words, instead of this confrontation with the tenants calling us crooks and thieves and everything else, just accept the fact that we are not in Toronto. We are southwestern Ontario, in a poorer part that would have been afflicted by economic conditions. Say, all of Ontario, any one-bedroom: no rent control up to $550, $575 for the year 1991 and no rent control on a two-bedroom up to $650, $675 for the year 1991. The confrontation, the aggravation, the stories you have heard from these people here, all that would be eliminated.

Of course, where the poor are really poor, give them a subsidy. Do not go building at $120,000 or $100,000 a unit what you call co-op housing and putting the poor in the brand-new housing. Who is to rent the older stuff? There is no shortage of rental accommodation in southwestern Ontario. There is only a shortage of people who cannot even pay $300.

I will give you the rent rates of the 600 units that I manage: bachelors from $325, including heat and hydro; one-bedroom is an average of $425; two-bedroom is an average of $500. Where do you think we are gouging and we are thieves and we are getting rich? You socialists had better understand that there is an economic factor and there is a market factor and there is a factor not to confiscate our properties. If this is what you have in mind, you are on the right road to confiscate our properties and to kill our equities. Is this the ultimate intention of you people -- to make us lose our properties? We have put our lifelong effort into it and now we are supposed to be called crooks and thieves?

We also manage a property in London. We bought it in 1979 as a MURB. It was supposed to have been free of rent control. What do they do? You froze us in 1985 and London was very economically depressed in 1985. We were just getting on our feet after feeding those properties for four years. Everything is going up. Our hydro this year went up 8%, plus the GST -- it is 15% our hydro has gone up. Our water has tripled in the last few years. Like I say, I could go on and on.

I just want a bit of fairness from you people, to understand that we are not crooks, to set the level of rents on one-bedrooms at $550, $575 without rent review process, and two-bedrooms at $650, $675 and to understand that we are subsidizing mainly the high-income people. That is who we are subsidizing. The landlords of Ontario are subsidizing the high-income people and we are penalizing the poor because we have to get that $550. Whether it is a rich man, a millionaire, or a poor man, we have to get $550, when my taxes are $1,000 or $1,100 a unit or $1,200 in some cases, and my heat, hydro and water is $1,400, $1,300.

Ms Harrington: You certainly had a lot of things to say here. I would like to let you know that we do not believe that you are crooks or thieves and we do believe in fairness. We have an annual guideline which is based on inflation which allows you to raise your rents, due to the costs that go up every year. We have also proposed in this legislation a pass-through system for extraordinary operating costs, which are municipal taxes going up and the other things you have mentioned like hydro.

Mr Schafer: But you are missing the most important point of what I said. Southwestern Ontario, outside of Toronto, when the rents were frozen in 1985, they were frozen at levels that sometimes were at the 1978-79 level. I am talking about this discrepancy by saying: have an average rent of a one-bedroom, $550 or $575, and a two-bedoom at $650 or $675.

Ms Harrington: I have read what you said, yes, and I heard what you said.

Mr Schafer: This is where the inequity comes in and the unfairness comes in. Now you are talking of rent control police. Mother of God, even in Russia communism is going out the door.

Ms Harrington: I wanted to make one point that some of the previous presenters have made and that is that it would be really nice if we had tenants and landlords in the same room, and I do believe --

Mr Schafer: You are living in Utopia. It is like the banker talking to you and --

Ms Harrington: May I finish my sentence please?

Mr Schafer: Just a moment, it is like the banker talking to you and --

The Chair: Order, please. Sir, we want to give you the chance to answer. We want to be fair to you and I have to be fair to the committee members. Mrs Harrington, please place your question.

Ms Harrington: What I was pointing out was that landlords and tenants, if they could be together in one room, as I believe they are here, if they would listen to each other, maybe some of the problems might be solved. The point that was made earlier was that stability is very important in people's lives and this is what we are trying to deal with, that people need to know they will not be evicted from their accommodation.

Mr Schafer: You already have that. You already have that provision. What else do you want? Do you have lifetime tenure?

The Chair: Sir, thank you. I am sorry, Mrs Harrington, we have to move on.

Mr Brown: First of all, I will tell you I am from Sarnia originally and spent about 20 years.

Mr Schafer: Oh, thank you.

Mr Brown: So I understand, I think, a little about southwestern Ontario and the fact that the economy in southwestern Ontario does not necessarily move in lockstep with the economy of the province.

Mr Schafer: Correct.

Mr Brown: Particularly in Sarnia, where it is geared to the petrochemical industry. We sometimes mirror the Alberta economy better than we do the Ontario economy.

I understand the point you are making is that in Sarnia during that period, it was not possible. The market-controlled rent increases, whatever rent review was doing at the time, meant you got locked in at prices that were very low vis-à-vis the real market value somewhere else in Ontario. Then when Sarnia's cycle came on and there were reasonable economic times in the place, you then could not reflect the true market rent at that time. You reflected market rent when it was low, but you could not represent market rent when it was comparable to the rest of the province. That is what is creating a large part of your problem.

Mr Schafer: And eventual loss of our building if this is not corrected.

Mr Mahoney: I have a lot of questions I would like to ask you, but considering the time, I will just come down to the issue you raised. I notice how you started out calm and got a little emotional. It is good to see that fire, because I know how you feel.

Mr Schafer: When you are losing your property, and your home as well, you will feel the same way.

Mr Mahoney: I understand that. The question I have is in relationship to the rent police that are being put forward. The issue supposedly is that landlords will gouge and they will pad their costs and pass it on and the records have to be accessible. If you were doing repair work and applying for an increase in the rent, would you voluntarily be prepared to put your cost figures forward and not require someone to come in in the middle of the night and seize your records?

Mr Schafer: So far, the way it is now about improvements, we have to spend the money first before we get a hearing, so we have our paid bills and cheques. What else do we need? We do not go and say, "We need an increase of X number of dollars for repairs." We actually have to do the repairs first and pay for them, and then go hat in hand to the rent people and beg to cover our expenses. We do not need a Mother Russia police force coming in and seizing our books.

Mr Turnbull: I must say I am hard pressed to see how this government's legislation is going to make landlords co-operate with it or with tenants, because this is doing exactly the opposite. It is confiscating their property without any compensation.

I notice that it says mortgages and appraisals on your letterhead. Are you an appraiser?

Mr Schafer: Yes, I do mortgage appraising and I sit on the board of National Trust.

Mr Turnbull: I am sorry. I want to be very brief so that I can get all of these questions in. Could you describe the three basic approaches to value of an investment property?

Mr Schafer: One is replacement value if you are building brand-new, so when you put out to tender. A second one is the economic value, which we cannot get. That is why there is no construction in Ontario. And the third is the market value of the rents that people are paying relative. Regardless of whether the unit costs $100,000 to build, if the market value states it is only $15,000, that is all you as owners will get for that building, $15,000 a suite.

Mr Turnbull: It has been alleged by tenants' groups and by the government that those landlords who are saying they are going to lose their property now as a result of this legislation and Bill 4, it is because they overpaid for the property. Would you like to comment on that?

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Mr Schafer: No one overpays for anything, starting with a normal house. When you are looking for a house, you see 10 or 12 homes in the area that you intend to buy. You have a fairly good idea of what the market value of that property should be. You are not inclined as a home buyer to overpay, nor as a businessman who, instead of investing in stocks and bonds is investing in real estate -- only a fool, and you do not find fools with money.

Mr Turnbull: My last question is twofold. What would be a reasonable rate of return, an internal rate of return over the 10-year ownership of an investment property of this nature? Also, are you in danger of losing all of your equity in your building?

Mr Schafer: You can buy any blue-chip stock -- Ralston Purina, Heinz -- and you will get an internal gross of up to 20%. I would be happy with 15% or 12%, but in many cases we are subsidizing the buildings. Our better buildings are feeding the ones that need repairs, because when tenants move out sometimes we spend up to $2,500 a suite. We cannot go to rent review on every suite. We can only go to rent review on the overall balance when we need roofs, windows, fridges and stoves. We are being bled to death.

The Chair: Mr Schafer, thank you for your presentation this morning before the committee. Time has expired.

Mr Abel: Just on a point of clarification, the subject of search and seizure has come up several times and it would appear to me that there is some uncertainty about how it actually works. Would it be possible to have clarification from the ministry just to clear that up?

The Chair: Is there a ministry staff person who could come forward and clarify the matter of search and seizure?

Mr Irwin: I am Terry Irwin from the ministry. The search and seizure provision comes up under section 113 related to duties of inspectors. It is clear under subsection 113(2) that inspectors' duties are related to prescribed maintenance standards only. We then get into --

Mr Mammoliti: I am sorry. What act are you referring to?

Mr Irwin: I am sorry, this is Bill 121.

Mr Mahoney: That is what we are doing, George.

The Chair: Order, please.

Mr Mammoliti: Mr Chairman, just for clarification, there are a lot of people here today and I am sure that they are wondering what act we are talking about.

Mr Mahoney: That is for sure.

Mr Mammoliti: I will continue saying that you are as rude as ever, Mr Mahoney.

The Chair: Can we please have the gentleman give us the explanation that has been requested?

Mr Irwin: At subsection 113(7), it sets out the power to enter a dwelling without the consent of the occupier, only under the condition that a search warrant has been obtained under section 114. Just to clarify, the search and seizure provision is only related to issues dealing with the prescribed maintenance standards, and only in conditions where there is no consent of the occupier of the dwelling, a search warrant is required.

Mr Brown: Could you define "occupier of the building"? Who is the occupier? Is it the tenant? Is it the landlord? Who is the occupier of the building?

Mr Irwin: I believe Ms Poole asked that question yesterday or the day before and we are providing an answer to that question.

The Chair: Can we have a short answer now?

Mr Irwin: A short answer?

The Chair: Is it the tenant or the landlord?

Mr Irwin: To put it simply, if it is an issue on suite within the unit, it would be the tenant; if it is an issue with common area, the lobby or what not, it would need the consent of the landlord.

Mr Turnbull: My understanding, if it is correct, is that there is no prior notice of this order; just the officer comes with that and they have to turn over the records immediately. Is that correct?

Mr Tilson: Reasonable prior notice, except no one knows what that means.

Mr Irwin: Reasonable prior notice.

Mr Tilson: It could mean anything.

Mr Irwin: Yes. Reasonable prior notice under subsection 113(2), and it sets out hours for that period.

Mr Turnbull: Are we talking about 24 hours in this or what?

Mr Irwin: I am not a lawyer, but my understanding is that the wording parallels other legislations that set out the search warrant and entry provisions.

Mr Turnbull: That essentially gives you immediate access under that type of legislation, whereas my understanding is that under the Landlord and Tenant Act a tenant requires 24 hours' written notice and it should be at reasonable hours that you get access to their apartment. I am hard pressed to understand that we have a more punitive approach to landlords than we have to tenants for inspection.

The Chair: That is a policy question that has to be discussed with the government and within the committee. That is not a strict question based on the information we wanted. I am sorry, Mr Turnbull. Did someone here have a question?

Mr Mammoliti: I just wanted to clarify that is one of the reasons I asked what act perhaps he was referring to, whether or not there is an overlap there of some sort.

The Chair: Are there any more follow-up questions? Mr Mahoney.

Mr Mahoney: I think that it is helpful that this request for clarification was made, because it is clearly an attempt to paint this section of the legislation as somewhat innocuous and really not draconian at all. I just want to get some clarification. When you say there is some maintenance work -- let's take an example. There is some work done on the roof and the landlord is applying for an increased rent in the 3% category. Then someone can come in with a search warrant and seize the records, search the office and seize the records to bring them in as evidence in the hearing or in the decision-making process. Is that basically what you are saying, that those kinds of police powers are being passed on in that situation?

Mr Irwin: The way I understood the question, Mr Mahoney, it dealt with an application for a determination of a rent and possibly related maintenance issues.

Mr Mahoney: Such as ongoing maintenance or repairs? Would you consider maintenance the repairing of a boiler, or do you consider -- not you personally, Terry. Does the act consider repairing the boiler as maintenance or as capital works?

Mr Irwin: No, the maintenance issue here would flow out of a potential violation of the maintenance standard. It may have nothing to do with the setting or determination of a rent. In other words, where a tenant has a complaint about an outstanding maintenance issue, that might lead to a work order.

Mr Mahoney: Maintenance could be they did not pick up the debris in the parking lot or something of that nature. I am trying to understand if this is like everyday maintenance of household-keeping type of issue, or is this maintenance that requires the expenditure of some dollars that would then be reflected in a rent application?

The Chair: I think we are going to have to set aside --

Mr Mahoney: Mr Chairman, this is extremely important, because, as I mentioned, I think there is some attempt to paint this out as innocuous. If it is innocuous, I think the committee should know that, but if in fact it is vesting in some individual designated by the government the power to search and seize and simply go to a JP and get a search warrant -- and we all know how quick and easy it is to deal with justices of the peace these days. You simply go and get your search warrant and come in and violate someone's privacy. I want to know if it is the extreme of violating civil rights, or is it truly the innocuous position the government members would like us to believe, "It's okay, they're just going to ask them for the records." I think it is one of the absolute, fundamental cornerstones of this legislation and the mentality of the government putting forward giving people the authority to violate people's civil rights.

Interjections.

Mr Mahoney: You cannot get an answer here, with all due respect to the staff, as to what it means, and maybe we should ask for a written report on this section that would outline exactly what kind of circumstances would occur that would require people to be put in this position.

The Chair: As a matter of fact, I was going to make some kind of recommendation in line with that, because it is taking a little longer than I had anticipated, but I saw three hands that went up, so we have Mr Mammoliti, then Mr Abel and I thought I saw a nod from Mr Turnbull.

Mr Turnbull: I was just agreeing with what Mr Mahoney said.

The Chair: Okay, then we have Mr Mammoliti and Mr Abel.

Mr Mammoliti: I cannot agree with what Mr Mahoney said.

Mr Turnbull: You never do, George.

Mr Mammoliti: I would say I think he is exaggerating somewhat, but I am concerned. I am concerned about the two different acts, and that is one of the reasons I asked, because I thought I saw the Landlord and Tenant Act in front of him, and that is one of the reasons I asked you to clarify what act you were reading from. I personally am concerned about what act would supersede what act would supersede what act, on a personal note. I am glad we brought this issue up because I can see that as an issue late on. I think the ministry could perhaps look into it a little deeper.

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The Chair: I know we are putting the ministry official on the spot today, but it is an important issue.

Mr Abel: The way the whole search and seizure thing is set up in Bill 121, does it treat landlords any differently than anybody else when a warrant is issued? Are they treated any differently?

Mr Irwin: I am not a lawyer. My understanding is that it does not treat them any differently. When we have the lawyers here, maybe --

Mr Turnbull: It is equal treatment with drug dealers. Do not worry.

Mr Mahoney: Could we get some clarification on that? What do you mean it does not treat people differently?

Mr Tilson: Tenants are given the right of refusal in subsection (8). Landlords are not given the right of refusal.

Mr Mahoney: Has this government got the right to come in and search my home and seize records out of my home? Is that treating me differently than them? What kind of nonsense are you guys trying to perpetrate here?

Mr Mammoliti: Is he out of order, Mr Chairman?

Mr Abel: You are a disgrace.

Mr Mahoney: You are a disgrace. Tell the truth.

Mr Turnbull: You are all playing up to the cameras. This is the truth, that the government likes to duck out of the fact that it is bringing in such draconian legislation.

Mr Duignan: You like to duck out of the facts. You do not believe in protection.

Mr Turnbull: You do not understand the facts.

Mr Duignan: Of course I understand the facts.

Mr Turnbull: You have not read the legislation. You do not understand it because you have never owned anything in your life.

Mr Duignan: Never did and never will.

The Chair: We had originally called the ministry official to come forward to give us some off-the-cuff remarks as best he could.

Mr Abel: It is too bad the opposition tried to exploit it.

The Chair: It has developed into lengthy questions and answers and I can understand why it has developed into lengthy questions and answers. I would like to say that --

Mr Abel: It is called grandstanding.

The Chair: Order, please. I would like to say that what we need from the ministry officials is a review of the Hansard from this section of today's proceedings. The committee, myself especially, and all the witnesses who have come forward this morning and everyone who is here today, I think we deserve a written and full explanation of the questions that were put today so that it can become part of the official record. All of us, and I mean all of us, can then come to our own conclusions once we have that information made available and distributed.

Now I have two points of order that we are going to deal with, one from Mr Mahoney and then from Mr Mammoliti.

Mr Mahoney: I will accept your ruling if we are going to get a written analysis of the questions and not simply, with due respect to the staff, an opinion preceded by the statement that the staff person is not a lawyer. If we are looking for a legal opinion, we should get one. If we are looking for some interpretation of the legislation from staff's perspective, we should get that. Then, obviously, we would be allowed to decide whether or not we accept that interpretation. Simply getting that interpretation does not make it so. It is obviously subject to differences of opinion.

Regardless of what Mr Abel or others think is going on in this process, the opposition's role is to defend the rights of all the people of this province when they see areas where the government, in the opinion of the opposition, is acting inappropriately. For them to be name-calling and acting in such a childish, silly manner simply because we are putting forward our concerns I think is totally out of order and shows the lack of experience of these members of the government.

Interjections.

Mr Mahoney: As you can see, they are getting a little excited, which always delights me and makes my day.

The Chair: That is really not a point of order. Mr Mammoliti, do you have a point of order?

Mr Mammoliti: As you know, I like these hearings to go as smoothly as possible and it irks me somewhat to --

The Chair: What is your point of order?

Mr Mammoliti: My point of order, Mr Chairman, is that two individuals on the other side of the table here have interjected frequently during our visit here in Windsor. I would like it just stated for the record that they are out of order by interjecting and by the name-calling that --

The Chair: Order, please.

Mr Mammoliti: I am not finished, Mr Chairman.

The Chair: What is your point of order?

Mr Mammoliti: Again, for the record, I want you to rule that Mr Mahoney and Mr Turnbull were both out of order in the earlier discussion by interjecting --

The Chair: Order, please. That is not a point of order. I have told all committee members from the first day we started having hearings that the rules and procedures that govern the Legislature are the rules and procedures, more or less, that govern the work of this committee. Yes, interjections are out of order and interjections have come from all sides throughout these whole hearings. I have tried to be fair and evenhanded and I have tried to tell everyone that their interjections are out of order. Are there any other points of order or any last --

Mr Mammoliti: Just that the grandstanding is coming from the other side.

The Chair: Do the ministry officials understand the request that has been made by the Chair?

Mr Irwin: Yes.

The Chair: Do you have any guess as to the time it would take to receive the request?

Mr Irwin: We will endeavour to get this early next week, Monday or Tuesday.

The Chair: Thank you very much for your co-operation.

TWIN ELMS TENANTS' ASSOCIATION

The Chair: The last presenter for this morning, Twin Elms Mobile Home Park. I think you have been watching some of our proceedings this morning. We will be following similar procedures. Your organization has been allowed 15 minutes and you can withhold some time for questions and answers. We do need you to identify yourselves for the official record.

Mr Mitchell: My name is Alexander Mitchell. I am the president of Twin Elms Tenants' Association. This is Mr Fred Stevens, who has been a tenant in Twin Elms Mobile Home Park for -- approximately 17 years, Fred?

Mr Stevens: Fifteen years.

Mr Mitchell: Fifteen years, I am sorry.

Twin Elms Tenants' Association is a member of the Ontario Owned-Home Leased-Lot Federation. As president of Twin Elms association, it gives us great pleasure to address to you some of our main concerns with regard to owned-home leased-lot communities. It is hoped that our comments will be taken into consideration when you, ladies and gentlemen, compile your final report for presentation to the Legislature.

Twin Elms Estates Mobile Home Park is a retirement community comprised of 162 moderate cost, well maintained, factory-built homes located in the township of Caradoc, just south of the town of Strathroy on Highway 81. Most of the residents of this park are retired senior citizens, with approximately 40 widows or widowers with fixed incomes. These tenants have an investment in the park of approximately $12 million.

While Bill 121 is an improvement over the previous legislation, it does not adequately cover the situation regarding owned-home leased-lot communities and gives no protection to the tenants under the Rental Housing Protection Act. Our landlord attempts, on rent review applications, to confuse the issue by describing the rental units as "bare land rental" or "vacant lot rental," even though this park has fully serviced lots with hydro, water, sewers, telephone, cable services, together with driveways.

Section 1 of the act does not give a clear, concise description of an owned-home leased-lot and should be amended to fully clarify the following types of land rentals:

Bare land, in our estimation, is normally for agriculture or storage use;

A fully serviced lot is normally found in a recreational mobile home park, which has seasonal occupants;

An owned-home leased-lot is where a tenant has purchased his unit from the landlord or a holding company and therefore is entitled to lease a fully serviced lot within the residential complex as defined in the act.

Non-registrability of the modular or mobile homes: Many landlords consider these types of homes as chattels and many owners do not have a clear, positive proof of ownership, even though the unit is owned free and clear.

A registration system should be considered where an owner-owned unit in a leased-lot community is registered with the Ministry of Revenue assessment division within 30 days of change of ownership for a recommended fee of $25. This would entitle the unit owner to receive the assessment and tax notices and pay the taxes directly to the township or the municipality without reference to the landlord.

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For example, in Twin Elm Estates, the total taxes for 1990 were $98,885.17. Of this sum, the tenants paid $91,861.11 in monthly instalments commencing January 1, 1990, to December 1, 1990, inclusive. This resulted in the majority of tenants overpaying their taxes and having to wait on the landlord's pleasure to refund the overpayment.

Security of tenure: Rental Housing Protection Act, 1989. It must be understood there are in excess of 4,000 tenants in an owned-home leased-lot situation in nine communities in central and southwestern Ontario which comprise the Ontario Owned-Home Leased-Lot Federation who must have protection from closure and modification of these types of parks without consultation, investigation and approval of the municipal council or other government agencies. Our landlord uses the threat of part closure as a means of intimidating tenants to get his own way. This threat has been used in our park as recently as one month ago when his agent stated if he does not win his appeal in the Divisional Court in Ontario or, "If you don't like it here, take your unit and move."

As these residential complexes are regulated by references (a) and (b), it cannot be too strongly recommended that protection be provided through the Rental Housing Protection Act, 1989. In order that the act could cover these parks more readily, it is recommended consideration be given to amending the title of the act to read, "Residential Housing Protection Act," with an additional addendum to the act to cover owned-home leased-lot communities. I have shown the references and also the Legislature research which was issued in 1990-91.

We are now coming to a part that is very touchy to the tenants in our park, non-registrability of leases. Prospective buyers of modular homes in some owned-home leased-lot communities are not always advised that a lease is or may be required. In our park, the purchaser is not given a lease until after he or she has taken up occupancy and, when reviewing the lease, finds they are tied into a situation that is hard to get out of.

The leases presented are for various periods of time. For example, one and a half, two, four, six months or as high as two years. The tenant then becomes a monthly tenant under the terms of the lease. Normally leases are for a period of 21 years less a day, or in any event, less than 21 years, so as to avoid the cost and the municipal scrutiny of having the land registry with a plan of subdivision. I think a possible action is to make the leases of an approved standard format that must be for a period of not less than 10 years, with a cancellation clause of 120 days by either party. Amend the Planning Act to require the filing of a reference plan for all owned-home leased-lot communities.

I have attached a copy of a lease for your perusal and this is a lease for one and a half months. It started on the 14th day of July 1989 and ended on the first day of August 1989. We do not know why.

I think most of the questions I have broached here are also contained in the owned-home leased-lot community's research 370/90-91, which I understand is in the legislative research service. Thank you.

The Vice-Chair: Thank you. We have some time. Mr Mahoney.

Mr Mahoney: Thanks very much. Thank you for your presentation. Just to get some clarification, on page two, so I understand this, you are saying that the total taxes for your community were $98,800 but the tenants paid $91,800, therefore they overpaid. What the tenants paid is less than what the tax bill was. I do not understand.

Mr Mitchell: What happens here, the landlord's share of that tax bill of $98,000 was slightly over $7,000. That was the landlord's share.

Mr Mahoney: So that made up the balance. The tenants paid $91,800 and the landlord made up the balance.

Mr Mitchell: That is right.

Mr Mahoney: Are you then saying that the landlord's share was not enough?

Mr Mitchell: No, what I am saying is what we are doing now is paying by monthly instalment. He says, "I want $75 a month for taxes." In my own case, after December 31 this year, he will owe me approximately $102. We have had some figures as high as $125.

Mr Mahoney: You are just saying he acknowledges that overpayment and gives it back to you, but he does not do it quickly enough.

Mr Mitchell: It takes you a little while to get it back. It took me two years to get back my 1988.

Mr Mahoney: Your suggestions here on possible action are of some interest. I guess there are two points. As I understand it, the reason the term of 21 years less a day is used is that 21 years traditionally in law -- it used to be this way -- was considered a lifetime contract. I believe it is still the case. But why would you arbitrarily pick 10 years? If somebody wanted to lease a lot for five years with a renewal clause and the landlord agreed, why would you not allow that to happen?

Mr Mitchell: I think that could be considered, but I do not feel leases should be a month and a half, two months, four months, six months. We cannot find out the reason why he is trying to do this. Even our legal adviser --

Mr Mahoney: Your concern there would just be turnover, that you do not get a sense of community, that type of thing?

Mr Mitchell: That is right. We have a peculiar park. We are having real problems. We are still dealing with our 1987-88 rent review.

Mr Mahoney: Before I leave the tenure, it is important to me because what, in essence, you are saying is that there should not be an allowance for any short-term rentals to be made in the park.

Mr Mitchell: Not in a retirement community such as ours, because who is going to go in and invest perhaps $65,000 or $75,000 in a unit for one and a half months?

Mr Mahoney: You are suggesting to amend the Planning Act. If you were going to amend the Planning Act to require them to file a reference plan and put restrictions on the length of the lease and other restrictions, would it make sense to deal with mobile home parks totally separately from this legislation, for them to have their own piece of legislation?

Mr Mitchell: Definitely. Within the residential rent regulation, I think there should be a different, a completely separate section, and it must be fully identified.

Mr Tilson: Actually, it is ironic that when we talk about the adversarial system between landlords and tenants, you are one group in which the tenants and the landlords actually agree on something, that either this issue should be a separate section in the act or it should be a separate act. Of course the response we are getting from the government is that there is an interministerial committee working on it. They do not know really too much about it.

I do not know how much consultation you have had. I would like to hear your thoughts on that, because there are obviously very serious problems, not only the problems that you have talked about but the problems that occur with a seasonal unit. Roads are designed for seasonal times and then the whole park is changed into a permanent lot so the roads are inadequate. There is the issue of the environment, where you have a sewage system that may have been adequate 15 years ago and obviously may not be adequate now under regulations. Who is going to pay for all of that? Are the tenants going to be stuck with all this? Clearly, separate legislation is required for the very serious problems that have nothing to do with this act.

Your paper is certainly an excellent paper. I would like to hear what consultation, if any, you have had with either Minister Cooke or Minister Gigantes.

Mr Mitchell: I have had very good co-operation with the Ministry of Housing. They are concerned with our problems in our park. As I just finished saying, we are going to Divisional Court on October 13 to defend our 1987-88 rent review.

Mr Tilson: My question was specifically to your input with respect to either a separate section in the act or indeed a separate act.

Mr Mitchell: I have written numerous letters to the Housing minister. They have them all on file there. I think I have been writing them for the last 12 months.

Mr Stevens: Our park, as a member of the Ontario Owned-Home Leased-Lot Federation, has been involved in a great deal of communication with the Ministry of Housing, over a number of years, several years. This presentation of ours today is one which we hope has been supported by representatives of the other eight members of the Ontario Owned-Home Leased-Lot Federation.

I think I can summarize what I have said by saying we have had a great deal of communication with the Ministry of Housing and other ministries over a number of years. Our federation has made many suggestions to the interministerial committee that has been in place, I believe, for two years or more. We feel our position has been very well described and our feeling on the matter have been very well put to the government bodies involved in consideration of these problems.

Ms Harrington: I think you have made it extremely clear that this association you belong to, as well as your particular community, feels you definitely need protection. That is why you are here. I have heard various concerns about exactly where you live. It seems obvious that over the past few years previous governments must have put this issue totally on the back burner, because nothing seems to have been happening.

We have come in as government and I have been very concerned about this kind of community because in fact my mother-in-law lives in a home like yours. I know the kind of situation they were threatened with. It is not even in Ontario, so I cannot comment on that, but even in the municipality I come from, Niagara Falls, and various other places in Ontario, whether it is environmental concerns or planning concerns, they are being pushed out. We want this type of affordable housing as an option in Ontario and we have to give it priority. Hopefully as soon as this report comes out we will come to grips with it and do something as quickly as we can, because you are saying, "We need protection desperately."

I have a couple of quick questions. Is it true that the owner of this property -- I believe you used the word "threats" -- is it true that there is this kind of intimidation and threat going on? Second, are there people who ask for receipts for cash for their payment and cannot get receipts?

Mr Mitchell: This has been a problem in our park. We had a gentleman 80 years of age who went to pay his rent by cash. The landlord refused it. He said, "I'm not giving receipts." Eventually, he assaulted the 80-year-old man by shoving him out through the door.

Mr Duignan: Your landlord appeared in front of the committee yesterday in London and basically wants no regulation. He claims there are no maintenance problems. Are there any maintenance problems in your particular mobile home park? Also, what kind of increases have you been experiencing over the last couple of years?

Mr Mitchell: The maintenance problems? I do not see where he has got them. He has no maintenance on any of the rented lots, the units, because we pay for all our own maintenance. If I want my septic tank pumped, he charges me $75. If I want my water cut off, if I bring an outside plumber in to have my water cut off, so I can have my system blown for the winter before I go south, I have to pay a $30 fee for his handyman to check a tradesman to see he did the job right. These are the kinds of things. He has closed our clubhouse. He has closed the swimming pool. He has taken away our park benches.

Mr Duignan: Is the reason he is appealing the decision in the provincial court that he is applying on the basis he is a tree farmer?

Mr Mitchell: That is definitely incorrect. There is a statement that he made to the administrator. He stated, "I planted the trees to protect the watershed."

Mr Duignan: The owner received a rent increase to finance the purchase of snow plows, grass cutters, etc, but do you not do all that yourself?

Mr Mitchell: I just computed some figures for our general meeting here last month. The landlord has submitted as capital expenditures an estimate of $550,000. The rental income for the whole property for one year is approximately $287,000. Of that, $220,000 is earmarked for tractors, snow plows and tree diggers.

Mr Stevens: There is a mile and a half of road in the park.

Mr Mitchell: There is only a mile and a half.

The Chair: The time for this morning's session has expired. I want to thank the witnesses for coming.

The committee recessed at 1225.

AFTERNOON SITTING

The committee resumed at 1401.

SUN PARLOUR PROPERTY OWNERS ASSOCIATION

The Chair: The first witness is Sun Parlour Inc Property Association. We will be following the same procedure we used this morning: 15 minutes for the presentation with some time reserved for questions and answers. We would just ask you to identify yourself for the Hansard record, and we will turn the floor immediately over to you.

Ms Kamen: Good afternoon. My name is Sylvia Kamen. I am president of the Sun Parlour Property Owners Association, and I am here to speak on behalf of our membership. Our membership consists of landlords here in Windsor, Tecumseh, Leamington, Amherstburg and Ruthven.

I want to start first with presenting to the ladies and gentlemen here some copies of the classifieds in the Windsor Star to show exactly what is going here in Windsor and the problems we are having. We have tremendous vacancies. We have just barely recovered from the 1980-1984 recession when we had landlords losing their apartments, losing their homes, and here we go again. I have copies here I am going to pass around. The ones that are circled tell you what is going on in Windsor.

We now have apartments where you have a half a month's free rent, a month's free rent, one and a half months' free rent, two months' free rent. Now, you have to be pretty desperate when you start giving things away. This is the overabundance of apartments, the overabundance of public housing, which has now become our competitor. Yet we hear we need housing. That is nonsense. These ads tell it all of what is going on in Windsor and in Toronto and over the entire province. I had one landlord send me today a copy of a classified from Leamington, saying that this is now starting to become very serious in Leamington.

I am going to show you another thing. Not only do we have tremendous vacancies, but the Windsor Housing Authority -- this is subsidized housing -- has now put a classified ad in advertising apartments. This is how many vacancies we have. The Windsor Housing Authority now has ads for single homes, semi-detached, town houses, apartments -- two, three and four bedrooms. Apartment rents start at $582 per month. We now have the housing authority advertising for tenants. I can tell you that one of the major complaints that we have had from our landlords is that we are now losing our tenants to government housing, and that government housing has now become a competitor to private industry.

Here you are, sir. This is from the Leamington paper.

So much for a need for additional housing. I am here to represent our membership, who have told me their concerns concerning Bill 121, and I want to bring a few points to your attention as to the unfairness of it, and how destructive this legislation will be to the entire housing industry in Ontario if it is passed.

To begin with, with every building of more than six units the annual guideline increase will be substantially reduced. The guideline formula will be based on 50% of inflation in building costs rather than the 66%, and if that formula were in place this year, you would receive only 4.6% rather than the 5.4%, an across-the-board reduction of your cash flow by 20%. In addition, this reduced guideline will also have to fund common-area capital replacement of items such as fridges and carpets, since they do not meet the new definition of capital qualifying for an increase over the guideline.

Under Bill 121, increases above the guideline will only be allowed to a maximum of 3% each for two years for large buildings and three years for small buildings, and to qualify for the 3% you actually have to spend 5% per year, since the government has deemed 2% to be included in the guideline for capital. In other words, you will have to plan your capital spending such that it will not generate an allowance of more than 10% over two years. A garage repair will have to broken into a series of projects spread over many years, at a much higher overall cost and greater inconvenience to tenants. You will have to miraculously select the perfect time to do the work. Too early and it will be disallowed as unnecessary capital; too late and it will be ruled as a result of neglect. After all this, if you managed to skirt every minefield, the government will magnanimously allow you to recover 60 cents on the dollar.

Remember how Dave Cooke promised that those caught with capital expenditures they could not recover under Bill 4 would be treated fairly under the new law? Chalk it up to another NDP broken promise. These expenditures have also been capped at 3%, and a landlord who spends $3,000 per unit on capital in 1990, which would have resulted in a $32 rent increase under the old system, will now be allowed only $15.76 spread over two years. Almost half of the costs will never be recovered.

The new law proposes to penalize any landlord who does not comply with a work order within 30 days of it being reported to the ministry. Notice, that does not say, "Make a reasonable effort to comply." You must actually show that the work has been done. If the plumbers are on strike or the railings cannot be replaced in January or the job simply takes more than 30 days to complete, too bad. This applies to every work order, no matter how trivial. A rent increase, including even a guideline increase, can now be challenged on the basis of a missing knob on a cabinet. In other jurisdictions this has lead to tenant abuse of the system by filing frivolous claims or actually vandalizing the building and then calling the municipal inspectors.

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This legislation is an invitation to problems. Maximum rent can now be reduced. It is not just your increase that can be challenged; tenants can actually seek to roll back the legal maximum rent on the vague grounds of inadequate maintenance. Even more frightening, one single tenant can complain about maintenance standards by claiming, for instance, that the common areas are not cleaned enough for his standards. He can then challenge the maximum rents for the entire complex.

All the increase will be stayed on the issues decided, which, by the way, will be done by officers of the Ministry of Housing, not by an arm's-length body. It is this type of uncertainty which makes it impossible to take business decisions and renders the rest of the bill meaningless. Even if a cap was introduced which provided sufficient flexibility for funding of capital, how could it be financed when not only this increase but even the guideline and the base rents could not be guaranteed?

For most landlords, mortgage payments are the largest single expense category. An increase in mortgage interest rates, which are completely beyond a landlord's control, could lead to bankruptcy if there is no way to pass the costs through rents. Yet Bill 121 eliminates the landlord's ability to pass through increases resulting from high interest rates.

This week, long-term mortgage rates stopped falling, and have begun a tiny reversal. When they start to climb sky-high again, as they will in the inevitable course of time, the bill will wreak financial havoc on the industry.

By permanently eliminating any consideration of financial loss, Bill 121 will reduce the value of every apartment building in Ontario by from 25% to 40% compared to pre-NDP values. For recent purchasers this would mean the expropriation of all equity and possibly the loss of the building, and long-time holders will see their equity greatly eroded, destroying the retirement saving plans of many small landlords. The real value of the buildings will be fixed at those reduced levels for ever, since there is no way for a future purchaser to recover any higher costs.

For the past five years the rent registry has essentially been inoperative. The bureaucracy was unable to cope with the task of registering and providing notice for the limited number of large buildings in the province. Now the NDP has decreed that tens of thousands of more buildings which contain four to six units will also be required to register. Some landlords can now look forward to the same administrative horrors large landlords have had to face. Who will pay for this army that you are going to have to hire to do all of this?

Statistics for 1990 from the Ministry of Housing report that since 1985 the Ministry of Housing's operating costs have increased 236% and that the cost of maintaining the ministry is $540 million. Former Housing Minister John Sweeney says social housing costs will soon exceed $900 million. I say it is going to be well over $1.5 billion if this boondoggle is allowed to continue on.

Sometimes someone will write an article that is so intelligent and so informed you cannot possibly improve on it. I read this article in the Windsor paper of July 27 written by Dewar Laing. I would like to read it to you. I think it tells you everything.

"I was greatly disturbed when I opened the July 4, 1991 edition of the Windsor Star to find that the guest columnist was Minister of Housing Dave Cooke. The purpose of Cooke's article was to congratulate himself and his government on the new rent control system. There are a few things that Cooke forgot to mention in his article. For example, he forgot to mention that Bill 121 is intentionally prejudicial to landlords in a manner unmatched since the expropriation of the property of the Jews in Nazi Germany. Or that it interferes with personal property rights and civil rights for both landlords and tenants. Or that it denies landlords the simple right to make a profit. Or that it will result in an increased tax burden for property owners in order to continue the current level of subsidized rents. Or that it presumes every landlord to be guilty of the misdeeds of a few and punishes all of them without exception or explanation. Or that it denies landlords the right to due process of law and allows bureaucrats to be prosecutor, investigator, judge and jury. Bill 121 is an agenda for the socialization of all private stock housing in the province of Ontario. At a previous seminar that I conducted, Cooke told a handful of landlords that he did not represent the people in the room. The `people's party' has formed a government `of the people' for only some of the people.

"Landlords are paying to be put out of business. They pay the taxes that help pay for the construction of subsidized housing; they pay the difference between what the government allows them to charge for their own units and what it actually costs to service them; they pay for their vacancy losses when their tenants move into public subsidized housing; and they pay the taxes that make up the difference between what the tenant pays in public subsidized housing and what it actually costs the government to operate these units. Landlords have been forced into an unwilling partnership with the government for the provision of subsidized housing without any recognition or compensation.

"The government has decided that all landlords in Ontario are speculators of the most sinister sort. The government assumes every landlord `flips' buildings at inflated prices to intentionally create losses. The idea, apparently, being to use these losses to justify rent increases. Quite frankly, I know very few landlords that are wealthy enough or stupid enough to invest their money in this manner. Nevertheless, this is the reason that a landlord's right to make a profit is now gone. The result is that a purchaser cannot buy a rental complex for more than the current rents can carry, regardless of the fair market value of the building or how outdated the rents may be. If a landlord is not making a profit from a building now, he can never expect to. The sad reality is that the government has made some slums more valuable investments than well-maintained buildings, simply because the rents are higher. The tail is wagging the dog. Rents now set the value of buildings rather than the value of the buildings setting the value of the rents."

More frightening, however, is that the NDP with its new Bill 121 has created a new police called rent inspectors. "They are granted an unfettered right of search and seizure." All they have to do is state "that they believe there are documents on the premises that could be useful in prosecuting a landlord. They can go into a landlord's home or place of business without warning and remove all records that they choose."

I do not think there is a criminal in this country who does not have more justice than the landlord in this province.

There is not a murderer, a rapist or a serial killer who does not have more rights, where the police would not dare to go into his home without a search warrant and without going before a judge and getting probable cause to invade his home, but Bill 121 is going to allow it. There used to be another government that had the same policies. I think they were called the Nazis and their own people were called the Gestapo.

In addition, there will be no longer an appeal board. Instead, issues will be heard before a rent officer and landlords will have to make applications for hearings before the rent officer. However, this is what decides --

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The Chair: I just inform the witness that we have pretty well expired the 15 minutes.

Ms Kamen: I just have a few more words and you can take it off my questioning time. This is very important.

The Chair: All the time has been used, was the point I was trying to make. If you are willing to end the formal part of your presentation now, we can allow one short question before we --

Ms Kamen: Do you not want me to finish?

The Chair: The time has expired, so I would need permission from the committee --

Ms Kamen: Fine, then I will just make one statement.Bill 121 is not intelligent, useful, worthwhile legislation. It is a blueprint for the destruction of private housing in this province. I would like to ask, not only as a landlord but as a taxpayer, why this government is destroying private enterprise in this province.

Mr Turnbull: Mr Chair, can we allow the governing party to answer the question the lady has just put? I think it is most germane.

Ms Harrington: It is up to the Chair.

Interjection.

The Chair: Mr Mammoliti, let me rule. I do not need you to constantly be on me to make a ruling. I will make a ruling. Mr Turnbull made an interjection and a suggestion. Give me a chance to respond.

I have told the witness and all members of the committee about two minutes ago that the time was up and that we would allow one question per party if there was consensus. There is no consensus for that, so I have to apologize to the witness and let the witness know that I can only allocate to her the time the committee has agreed to at the beginning of the hearings. I wish we could have questions and answers and I wish I could give you more time but I am unable to, unless there is full approval by the majority of the committee members to do so. I do not think I see that approval, so thank you for making your presentation today.

DON BARRATT

The Chair: The next witness is Don Barratt. Sir, we will be following the same procedure of 15 minutes, and you will have to retain some time for questions and answers if you wish.

Mr Barratt: My name is Don Barratt. I am a landlord. I own an apartment building in Cambridge, 29 units, and a complex in the county of Essex, 28 units. I also own some houses in southern Ontario. I manage these properties myself and I work about 80 hours a week, so coming to these meetings is a real pain but I feel I cannot afford not to come.

There are about 20,000 landlords in this area, if you count duplexes and people renting parts of their houses. I found it incredible that there are not at least 2,000 landlords protesting. I would like to thank the few landlords who came today for coming.

I only have 15 minutes to speak, so I could not reply to the whole of Bill 121. I will have to review a few pieces, but first I would like to talk to you about the vacancy rate, in case I forget.

All I hear is about poor old Toronto. I lived in Toronto for 20 years and I never saw anybody sleeping on the streets, but all I hear is dire shortage and people sleeping under wagons and on the railroad tracks. You keep going by the CMHC figures of vacancies. I have the Toronto Star, if anyone cares to count the ads. There are houses and condominiums, 1,376 listed for rent, and the regular apartments, 1,280. In other words, there are 96 houses and condos, more ads than the apartments, and yet those are not counted by CMHC. In other words, the vacancy rate you get from CMHC is phoney, because it does not count anything less than three units.

As I explained to you, I am an experienced landlord and I owned property in Toronto. I do not now, but when I was there and put an ad in the paper I never had a lineup, so where the hell is the dire shortage? It is absolute nonsense. It is the same around in this area. I have an ad running now for a town house and if I get one call a day I am lucky. Sometimes I get two calls, but it averages about one a day, so I really do not know why you need rent controls.

Now I will go to a little bit of Bill 121. There are so many things in there, I cannot possibly cover it all in 15 minutes. If anybody has this in front of them, section 19, I would hope the committee has it there; how many have it? One?

The Chair: We all have it.

Mr Mahoney: We know what is in there. Go ahead.

Mr Barratt: You all have it. All right. Page 19, section 19 -- I will just read it: "If an application is made under section 13 and the landlord has given a notice of intended rent increase as required, until an order setting the maximum rent for the rental unit takes effect, the landlord may charge and collect a rent up to the lesser of the amount that would be charged if the intended rent increase specified in the notice...would be charged if the maximum rent were increased by the guideline." What the hell does this mean? Is there anybody in here who can explain that to me?

Mr Turnbull: Absolutely not.

Mr Barratt: How on earth a person whose English is not perfect can figure this out, let alone English-speaking people, I mean, it is just ridiculous, the whole bloody thing.

Just inside the cover here it says: "A landlord can seek an increase above the guideline on any one or more of the following grounds," which are taxes, hydro, water or heating and certain capital expenses, if the roof is blown off or something like that. It says you can get an increase, but it does not say when you get it, two weeks or two years away.

Further down it says: "An increase awarded cannot exceed the guideline by more than 3 per cent in any year," which means if you really need 10%, the other 7% is spread along the line. But what about an interest-free loan? That is not mentioned. You cannot get it off the tenants, so who the hell is going to pay for this? The landlord, unless he can come up with some loan. You also eliminate legal fees and rent control consultants and bad debts, which is a major item. It has cost more than any repairs, like regular painting and stuff like that, broken taps, vandalism and the GST.

On the following page at the top it says: "A tenant may apply for a rent reduction on any one or more of the following grounds." I will just pick out one: "Inadequate maintenance of the complex as a whole or of a rental unit in it." Now what we are going to have is that some tenants will expect a holiday in maintenance, manicured lawns, etc and they will use this as a tool to get a reduction in the rent. In fact, I have already experienced this in a small claims court.

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At the bottom of that page, part III of the bill provides for a registry system, which we already have in existence. But anyway, why not a tenant registry so we can get an address, so we can get our back rent when they move out?

The next page is not numbered, but it is the next page. We have rent inspectors -- as one person said, rent police; why not a tenant inspector? Landlords can call an inspector to inspect the damage to an apartment, and to inspect a rent ledger to prove that a tenant owes the rent. I really believe -- and I have already mentioned this a couple of times at these meetings -- we should have a damage deposit.

Now in the past, it has been claimed that landlords have been keeping the damage deposit for no reason, and at one of these meetings, I proposed to the Minister of Housing that we could eliminate that by getting a damage deposit and the Minister of Housing keep the money. Let them keep the money until the tenant moves out, and then if a landlord claims some damage, send an inspector to look at the property, and then make the deductions. I do not even want the money. Let them have it, and let them have the interest, at least it is some protection. It also protects the decent tenants who do not do any damage, because then you do not get an increase on phoney repairs.

The Ministry of Housing and the Landlord and Tenant Act create bad debts, and therefore should pay for the bad debts and provide legal aid and free service to process the rent increase applications, because we are not allowed to claim these things.

The Landlord and Tenant Act is worse than rent controls, and it should be run by the Ministry of Housing, not by the Attorney General.

Bill 121 is an evil document from cover to cover, and designed solely to bankrupt landlords just to get votes. Hitler did this to the Jews. He created laws to steal their property legally, then generally made their lives miserable so they would leave Germany. Throughout history there have been many bad laws. At one time it was lawful to own a human being.

You should scrap rent controls. We do not need them. There is no shortage of shelter in Ontario, and I believe our rental properties and owner-occupied properties are a terrific bargain compared to other countries. Tenants are free to move if they do not like their apartment. Thousands are over-housed. I know single people living in a 1,000-square-foot house. Two of the bedrooms are used for storage, and yet the house is rent controlled. Government-financed buildings have thousands of tenants who could well afford to move out and let poor people move in.

Bob Rae has finally said there must be more efficiency to social programs. Well the rent control program will burn up $100 million this year, I figure, but there is not a nickel for landlords. Millions upon millions are burned up to subsidize rents for people, to give them better shelter than thousands of people struggling to pay a mortgage, and you do not have a nickel for the landlords again, either.

The Ontario government has saved 600 jobs by shovelling in $247 million to a paper mill run by a Canadian paperworkers union at a cost of $41,166 per job, to save one job, and not a nickel for the landlords.

The Ontario Federation of Agriculture reports the federal government has set aside $1.3 billion for farmers in distress. There is an Ontario government relief program in place to help farmers pay for interest on their loans. Not a nickel for the landlords.

The vacancy rates -- I have already said this, I will not go into that.

The Canadian Auto Workers Union are the highest-paid workers in the country, yet they build apartments with government money with 100% mortgage. In this area, they have 426 units with a further 994 to be built.

That is the end of my presentation, and I would just like to say again that there is no need for rent controls. You do not need a very, very expensive consultant to do this job, just put an ad in the paper and see how many people you get lined up for this dire shortage. There is no dire shortage.

The Chair: Thank you. We will try one question. Mr Lessard?

Mr Lessard: You have a newspaper with you, sir, and I have today's Windsor Star. It talks about somebody who is living down on the waterfront in some gutted building that is on the CN grounds, because he is really at the end of the line and he has no place to go. I would suggest to you that people are out there who need some affordable accommodations, and even though a lot of accommodations may be on the market, it is for people who really cannot afford it. If you follow your line of submission, you do not like government being involved in subsidization of a lot of things, for farmers or for --

Mr Barratt: No, I did not say I did not like farmers getting help, they deserve help, but why do the landlords not get any help?

Ms Harrington: We do have programs for small landlords.

Mr Barratt: Well, I never got a bloody nickel, never got a nickel.

Mr Mahoney: It is almost at the point where, with some of the concerns that we are hearing, that they are better just left said. Let me just go back to the issue, I think you raised it, with regard to your rights. How are you going to react the first time somebody shows up at your office or your home or your apartment building and hands you an order that says they are coming in to seize your records?

Mr Barratt: To seize them or inspect them?

Mr Mahoney: No, seize them.

Mr Barratt: I would not like it. I would be quite happy to show it to them, but if it is the law that they can take them, I have no choice, do I?

Mr Mahoney: Well, that is what is in this bill, but you would be quite prepared to voluntarily provide records of your maintenance and that kind of thing?

Mr Barratt: Sure, yes. In fact I have asked the rent control office to send somebody out there, instead of the old legislation where we are sending out thousands of photocopies back and forth to Thunder Bay. My rent consultant fellow charged $325 for the photocopies, which he justified.

Mr Turnbull: Your presentation, as do all of the presentations, raised so many questions, and we have got such a small amount of time to speak about it.

When you were speaking, there were looks of incredulity among the government members, and there were some tenant groups nodding their heads violently in the back. By the same token, we have had tenant groups presenting, and we have had landlords nodding like crazy in the background.

We seem to have a problem in communicating this, that literally, landlords who have had 25% or 30% equity in a building, who have maybe bought it within the last five years, have seen all of their equity wiped out as a result of Bill 4. Notwithstanding this, they are also losing money in terms of cash loss, so not only do they not have capital appreciation, on the contrary, they have had their equity wiped out, and as well as that, they are losing money. Can you suggest anything to me that will help us in communicating this message to tenants groups and to the government, that this is the reality?

Mr Barratt: Naturally if I was a tenant, I probably would not be too happy to hear anything negative against tenants. That is common sense. You do not even need tenants to make a presentation, you know they want low rent. It is common sense. It is common sense that landlords want to make a profit, but we have the facts. In fact, you do not even need me to tell you, because it is public knowledge. You can go to any rent review office and look at the records.

At my last presentation, I had the records there for 1981, 1982 and 1983, and some people were there, maybe some people back here. I had the records put in writing by the ministry that in 1981, I think I made $2 on a 29-unit building. The following year I think I made about $3,000

Mr Turnbull: Their reaction will be that you made a bad buy.

Mr Barratt: Vacancies, that is what they have created, and damage.

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MORE CUSTOM HOMES

The Chair: The next presenter, More Custom Homes, Maurice Baker.

Mr Baker: Before my time starts, I called Deborah Deller and she told me I had 20 minutes, and I wrote my brief for 20 minutes, so is it possible to carry through with that?

The Chair: No.

Mr Baker: My time is starting now. I will speak very briefly on my presentation and try to answer questions.

I am an architect. I am a builder-developer and I am now a landlord. I have been a landlord and a builder and developer since 1956, and I manage approximately 1,000 units in the city of Windsor.

The Ontario government has instituted a number of anti-business laws, of which Bill 121 is the most devastating to the private sector and the economy of Ontario. Ontario is experiencing a high rate of bankruptcies, closing and moving of industrial plants, closing of retail shops and a high vacancy rate of commercial space. The unemployment rate in Windsor is 13%. Virtually no private rental units have been built in the last 10 years, but the vacancy rate is 4% and rising. Now, I will not go over the police force because I think that we have had a lot of that.

Bill 121 is an agenda, clearly, for the nationalization of private rental units by control through legislation. Although this bill centres on the control of landlords, not a single control is listed on tenants' behaviour, responsibility, or payment of obligations. Yes, landlords are people, but also tenants are people. This bill is a clear signal that the government does not approve nor trust the private rental housing industry. It is evident from Bill 121 that the government lacks confidence in a free market rent structure and the rental industry's ability to maintain and repair their property. This type of legislation does not encourage private financing, nor does it encourage the vast contribution that the private industry, rental industry, has made to Ontario in the number, the quality and the variety of units that do exist. I always thought the most desirable units in every community I have ever visited were built by the private sector.

The most disastrous and limiting aspect of Bill 121 is the three per cent limitation on capital cost expenditure. As an example, the Ontario government recently granted a 30-year-old, 90-unit St. Joseph housing project $3.3 million for capital cost expenditures. I think that this is wonderful, and I support it. This is $36,600 per unit If a private developer had controlled this 90-unit housing project, Bill 121's limited increase of 3% for capital cost improvements would limit the expenditure to $108,000. If indeed $3.3 million is needed to increase the quality of housing in the St. Joseph housing project, then why does Bill 121 limit the private sector to a 3% increase of gross rentals for capital cost improvements if they are truly needed? Why is the private sector not allowed to limit, to be guided by the market value or rents of more realistic percentage?

Bill 121 is anti-business legislation, any way you look at it. It is determined to deteriorate and eventually lower the quality of the private rental industry.

An example of this disastrous 3% limit of Bill 121 in the private housing sector can be shown by three apartment buildings being offered for sale in this community. Building A is a 60-year-old building, three storeys high, 29 units, in an excellent neighbourhood. Six two-bedrooms now rent for an average of $360 a month; two bedrooms, $360 a month. What is affordable housing? Twenty-three one-bedrooms rent for an average of $300 a month. This building has never been to rent control. The St. Joseph project capital cost expenditure is $36,600. If the same quality of improvements were needed in building A that I just mentioned as in the St. Joseph project, it would take 66 years. Bill 121 makes building A unmarketable and unmanageable for the future. The ultimate end of this 29-unit building will be bankruptcy and complete abandonment.

Building B is a 10-storey building, a 137-unit-rise. It is 20 years old. It is located on Riverside Drive facing Lake St Clair and is in a good residential area. All the balconies face Lake St Clair. There is underground parking, a party room, exercise room and other amenities. Nine three-bedrooms in this building rent for $496 a piece, 59 two-bedrooms rent for $440, 50 one-bedrooms rent at $375 and 19 bachelors rent at $264. Without a doubt, that person living in a burned-out building cannot afford any of these rents because he does not have a job. What he needs is employment. He does not need lower rents. The lower rents are available for those who want them.

A 3% increase in rentals would allow a capital cost expenditure in this 137-unit building of $107,000 a year, or $781 a unit. It would therefore take 34 years for Bill 121 to allow an update of maintenance and replacement program to create a quality of housing equivalent to that which the St Joseph housing project will possibly get. As can be seen, this building also is not marketable. The end result will be to deteriorate the present private rental stock of at least 137 units which will have to be replaced by the public sector at a cost of $20 million or more in the future.

Government housing and non-profit housing in Windsor is being built at $100,000 per unit. That is a one-bedroom unit. In the Windsor area three-bedroom, private, individual homes are selling for an average of $110,000. It seems to me the government could be building private, individual three-bedroom homes for the same price they are getting their non-profit housing. In today's paper, and to his credit, Premier Rae said more efficiency is needed for social programs.

The Windsor Housing Authority in the city of Windsor rented space from me, 10,000 square feet. They manage 3,000 units. They have 60 employees that sit at desks. I manage 1,000 units. I have three employees. They were paying $150,000 a year rent. They moved out because they found newer, better quarters at a higher rate. So when we are talking about marketable rents, I think what we are really talking about is that private industry really has been more efficient than the government and the government, for some reason or other, would like private industry to create the marketable rents. I do not think marketable rents are the problem. I do not think that rent control is the problem. I do not know what it is like in Toronto but in this community the problem is employment. If people had jobs they could pay $200 a month, they could pay $250, they could pay $300.

I just came from my office and I have a woman -- I think I should not mention her name. She has been living in our building since 1979. She has a one-bedroom apartment. She is paying $593 under rent control. There is now a three-bedroom available at $960. She wants to move to the three-bedroom apartment. This is a single, 50-year-old woman. What is affordable? That is really, truly the question. I think I will leave it at that and allow people to ask me questions.

Mr Tilson: Welcome to socialism.

Mr Baker: Well, Hitler promised everybody a Volkswagen and the people in Germany thought everybody really should have a Volkswagen. Why should some people drive a Mercedes when everybody can have a Volkswagen? We know what happened there.

Mr Tilson: We have a fair idea as to what capital improvements are needed to the housing stock in Toronto. We have had concrete restoration people and different builders come and tell us all about that. Can you tell us, in your experience, the age of the buildings on average in Windsor and the surrounding area and the need for capital improvements in this area?

Mr Baker: I manage 1,000 units. They were all built before 1976 and they go back to 1965. I have been to rent control on every one of those buildings for capital improvements and I would say I was against the rent controls in the past, but it certainly was a lot more fair than Bill 121. I would list at least 20 or 30 items that I would consider rent control and the rent control people would throw out 10 of them. So I was in a position where a building was 15 or 20 years old; under the past laws I was able to renovate the building with new refrigerators, ranges, of this order. Specifically -- am I answering your question?

Mr Tilson: Yes.

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Mr Baker: There is no question that 3% does not cover capital costs. If you have a 137-unit building that is 10 storeys high and you have to replace the roof you are only allowed $107,000. The roof is going to be $150,000. You cannot replace one roof If you took 137 refrigerators, they would amount to $75,000. So you might be able to replace the refrigerators under the 3%, but nothing else.

Mr Tilson: I would like you to elaborate somewhat -- and I asked this question this morning; I think you were here -- on the effect of the proliferation of non-profit housing units in the area. You did spend some time in your comments with respect to that, but specifically do you have any information as to the number of non-profit housing units, whether it be co-ops or whether it be --

The Chair: Very briefly.

Mr Tilson: In the same period of time that you gave for the private sector.

Mr Baker: No, I do not. The only thing I could tell you is that this is the Labour Community Service Centre non-profit seniors housing development and this brochure was sent out on January 1. They wanted $535 for a one-bedroom and $635 for a two-bedroom. The average of all my buildings, a one-bedroom rents for $550, $15 more than the Labour non-profit housing. My two-bedrooms rent for $650, which is also $15 more. So all I am saying to you is my housing is probably more marketable than non-profit senior citizen government projects are.

Ms Harrington: Thank you for your presentation. I quite enjoyed it.

Mr Baker: You are welcome. I am glad you appreciate it.

Ms Harrington: First of all, you started off with regard to the job losses in this community and I know that has been really a damaging thing in Windsor, plus all of Ontario. You have to agree that we have a recession, we have the free trade problems, we have the GST. It is all compounding on us this year. We have a whole restructuring of our manufacturing sector. Those jobs are going and they are not coming back. This is going to be the most difficult decision-making time for any government in Ontario -- the next four years. Bob Rae, as you are saying right there in that article, is facing those kinds of problems and we know we have to make those tough decisions; exactly what you quoted him saying, more efficiency in social programs. We know we cannot raise taxes. We have to look for inefficiencies.

Mr Baker: Exactly. I could not agree with you more.

Ms Harrington: I want to also tell you that our new Minister of Housing said to me the quality of our buildings is one of her top priorities and she specifically mentioned the 20- to 30-year-old buildings that are facing a lot of major systems that need to be replaced. I also want to tell you that the whole marketing of rental housing in Ontario is something we want to see operate well and fairly, and you have given us various examples. We know 80% of landlords do not go to rent review. They operate these buildings, possibly this one you are mentioning on Riverside Drive, where the rents are low. Maybe they have not gone to rent review and that building is doing well. I am not sure about the state it is in or anything.

Mr Baker: But it will have to go to rent control from time to time.

Ms Harrington: Right.

Mr Baker: And they will be out of luck.

Ms Harrington: So we are not trying to fight you, we are trying to work with you, give you a fair profit in Ontario.

Mr Baker: Well, the answer is a two-tier system. There should be one for social housing and there should be one for private housing. Twenty per cent of my tenants go to Florida, they go to Arizona, they go to California. When I talk to them they say in their retirement they will stay in the United States. Why? Because taxes are low, number one. Number two --

The Chair: Thank you, sir. I have got to give these guys a chance. Mr Brown.

Mr Baker: I agree with everything you have said.

Mr Brown: You have raised some interesting points. What is your opinion of having public housing governed under exactly the same rules as the private sector? In other words, they would be subject to rent review or rent control or whatever on the same basis totally as the private sector is because, as you know, we see tremendous increases in their operating costs, etc which the taxpayer pays for.

Mr Baker: I think it is a complete necessity. There are only two instances I have come across where there were 80% increases in rent. One of them was the Windsor Housing. About two years ago they increased 80%. The other was one that MPP Lessard mentioned the other day; it was an 80% increase. The 80% increase by the Windsor Housing went from $200 to $360 and some people were evicted. The one that MPP Lessard mentioned went from $200 to $360, too; an 80% increase. An 80% increase is too much for anybody to bear at one level. There should be rent controls on government housing as well as private housing, but it should not stop there.

When we have a crisis, there should be price controls on food, there should be price controls on clothing, there should be price controls on transportation, there should be price controls on taxes, there should be price controls on hydro and there should be price controls on every item that we have as long as we have a crisis and we are going down. When we are going down, I think we should all go down together. I do not think it is fair for only the poor to suffer on this particular basis. So, I am for complete controls on everything.

Mr Mahoney: Just briefly, I think you can identify the problem: The parliamentary assistant referred to the minister's comment when the minister was quoted as saying that she was concerned about the quality of "our" buildings. They think they are "their" buildings even though they are yours, and they may wind up being their buildings. The statement was also made that they are trying to help.

Mr Abel: That is hair-splitting. That is nonsense.

Mr Mahoney: I hear platitudes and roses being tossed at your feet. Can you see anything in this legislation that is really trying to help you?

Mr Baker: No, I think everything is devastating. It is not only devastating for the rental industry, because the rental industry might survive through this. It is devastating to the base of industry in Ontario because if you do not have good housing, nobody is coming in from out of Ontario or out of Canada if there is no housing. If all you have is social housing, the Japanese are not going to settle here; the Germans are not going to settle here; the Dutch are not going to settle here, and the Chinese from Hong Kong are not going to settle here. You need a base of good housing if you want to get industry.

The only one that can supply that is private housing and you do not need a $10-billion housing project, because private industry can finance their own housing. We put it on the tolls and we charge the taxes. Nobody gets a free lunch any longer and tenants do not get free rents; they pay for it. When they go to work, they pay taxes. They pay for every automobile they get. A perfect example is the automobile I drive. It is a Lincoln Continental and I am proud of it. It cost $45,000 in Canada; in the United States it is US$22,000. Now that is why people are leaving Ontario. That is why Detroit is a boom city right now and Windsor is a bust city.

The Chair: Thank you, Mr Baker.

Mr Abel: That is why there is no medicare, no proper social services in the States.

An hon member: Let's not get sick in the States.

Mr Abel: If you want to live in Detroit, go there.

Interjections.

The Chair: Mr Mammoliti, do you think all of this is out of order?

Mr Mammoliti: I think that you should have already said that they are out of order, yes.

The Chair: Thank you for your help.

Mr Mammoliti: I notice that my mike is not on.

The Chair: Mr Mammoliti is absolutely correct. I should have ruled all of these things out of order two and one half minutes ago.

Mr Mammoliti: If it were me, you would have.

WINDSOR AND DISTRICT CHAMBER OF COMMERCE

The Chair: The Windsor and District Chamber of Commerce. I would like the witnesses to please identify themselves for the record. We will be following the same procedures: 15 minutes, questions and answers.

Mr Jacques: I am Mark Jacques, executive director of the Windsor and District Chamber of Commerce and making our presentation, on behalf of the chamber, is Walter Muroff. I will let Mr Muroff proceed.

Mr Muroff: The introduction of rent control was a dramatic action which resulted in a dramatic reduction of rental units built by private enterprise for the residents of Ontario. It also completely stagnated the free market and stopped competition because rents are now raised by the government on an annualized basis. Can you hear me okay?

The Chair: Yes.

Mr Muroff: On November 28, 1990, amendments to the Residential Rent Regulation Act were tabled by the Minister of Housing, David Cooke. The moratorium established by the legislation provides that any order permitting a rental increase, which is to be effective after October 1, 1990, will not be enforceable. Therefore, any landlord who has performed major repairs or renovations, has made applications through the Residential Tenancy Commission and has obtained an order permitting rental increases which were to take effect October 1, 1990, will not be able to enforce such an order.

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The moratorium also denies landlords the right to apply for any increase of rent in the event that such request for increases is as a result of any costs related to capital improvements or major repairs such as installation of a new elevator or repair of a roof Government is not allowing any economic incentive whatsoever for the improvement of living conditions for tenants. In addition, the landlords will not be able to apply for any increase for financial or economic loss. In effect, then, landlords are being forced to subsidize the rents of their tenants.

The landlord will still be able to apply for an increase based on an increase in taxes, interest on mortgages or higher utility costs.

It may be argued that since housing is a basic necessity, the moratorium will benefit tenants in Ontario. It is our opinion that any benefit to the tenants will be short lived in that there will likely be no extraordinary increase in rent. In fact, tenants in the Toronto area are now beginning to realize that rent controls may not be in their best interest.

On a long-term basis, the legislation will achieve the following negative results: discouraging developers from building rental accommodations; discouraging landlords from doing repairs or maintenance; discouraging financial institutions from making loans to finance the construction and renovation of rental accommodation -- I might add, putting some of those loans at present in jeopardy, which in turn could hurt the institutions; discouraging the normal progression from renting to owning -- we should be encouraging home ownership in the province; encouraging landlords with a small number of units, particularly those not subject to the Rental Housing Protection Act, to convert from residential rental to any other available use; discouraging employment for those workers in the construction and renovation field; a basic supply-demand analysis of the rental market will show that legislating prices below market levels almost always makes the economy work less efficiently; relationships between landlords and tenants are deteriorating rapidly.

The amendments will cause personal hardship to many small or independent landlords where savings are tied up in the properties and who are using the income as a basis for their retirement planning, which is a large part of our population.

All of the above will have the effect of reducing the number of rental units available and causing the units which remain available to deteriorate.

It may also be argued that since we are in recessionary period, tenants will benefit from more stable increases in rent. The counter-argument for this is that during a recessionary period, upward pressure on prices would be reduced and therefore this legislation is not necessary. In addition, landlords will and have cancelled a number of repair and improvement programs. Cancellation of such programs will seriously affect contractors and small businesses that rely on this type of work for their livelihood. The reduction in this type of work will have a trickle-down effect of stopping landlords from implementing such programs.

Our primary recommendation is to have the legislation revoked. However, as this is unlikely to occur, in order to alleviate some of the problems which we have highlighted above, we feel that the following recommendations will assist to that end.

The new legislation should not apply to any approved applications for rent increase no matter when the effective date of the order is, and any application which is currently in the system should be permitted to proceed.

The moratorium should apply only to new applications commenced after November 28, 1990, the date of tabling of the legislation, and not October 1, 1990.

The landlord should be able to apply for an increase in rent in the event that the landlord suffers any increased costs as a result of provincial legislation.

The landlord should be able to apply for an increase for increased costs related to renovations or repairs which are necessary to achieve both energy efficiency and upgrade his or her property.

The length of the moratorium should be shortened and the government should undertake to report to the public with the result of the public inquiry no later than November 28, 1991.

Small landlords, those with less than seven units in total, should be exempt from legislation.

Government subsidization should be available to those tenants who require assistance, and we feel strongly that rent supplements are probably one of the most economical solutions to the plight of the rental crisis.

Further, the imposition of severe rent controls on existing properties that were built or acquired by individuals planning for future retirement and financial security amounts to a virtual confiscation of their assets.

Where the authors of this report recognize the necessity of providing affordable housing for all citizens, it is felt that many of the recommendations presented by the government could in the long run be counterproductive and do more harm to the average Ontario citizen than the good for which they were intended. Thank you for your time.

Mr Mahoney: I have a question that -- before I get to it, let me just ask you about recommendation 6 with regard to small landlords being exempt. Would it make more sense, if you are going to grant exemptions, to do it by the age of the building rather than the size? Assuming that any of your suggested amendments were going to be taken seriously by the government, which I must tell you I do not hold out a lot of hope for, if it did, would it not make more sense to do it on the basis of when the building was built, or something less arbitrary perhaps than the size of it?

Mr Muroff: It is a good point. It would make sense.

Mr Mahoney: One of the things that has not really come up here, I noticed in the advertisement that we were given by an earlier presenter that there are a number of bonuses being offered: half a month's free rent, a month, two months, whatever. People are offering upgraded quality carpeting. They are offering fridges, stoves, washers, dryers, various things. Would it not make sense for the landlord community to pull in their horns and all of that kind of thing and say to tenants, "We're going to rent you the basic shell for X amount of dollars, and if you want a fridge, go buy it; if you want a stove, go buy it"? Is there a threat that the landlord community, as a result of the fact that they cannot get increases, for example, to buy new appliances for an apartment building, will simply not provide that level of service?

Mr Muroff: That would be a function of the marketplace. It is an interesting concept, but the reality of it is the fact that the tenant is going to have to have the capital investment available to move into an apartment, which may prove difficult.

Mr Mahoney: Which they would not have. But my concern is the potential for a degrading of the quality of services. While I see landlords saying, "It can't be done," are you then going to -- if it cannot be done, then what you are in essence saying is that you are going to eat this legislation, you are going to continue to provide the level of accommodation that you are providing, and how can you do that without allowing the company to go broke?

Mr Muroff: On the contrary, you may see a situation developing, as has happened in the South Bronx, where the buildings just run down and eventually become abandoned. That is the other danger.

Mr Mahoney: How do you address the concept of the rent police, the ability to go in and seize records if you are a landlord? Contrary to a statement made earlier, they do have to get a search warrant, but that is not terribly difficult to get if there is legislation backing it up. But they do not have to give any substantive notice. They can simply show up and knock on your door and make you salute. Has the chamber discussed that?

Mr Jacques: No, I would suggest we have not investigated that position.

Mr Turnbull: On the question you raise about rent supplements to those most in need, the Conservative Party has consistently advocated this as a more effective and more reasonable approach which is sensitive to the people in need. It is claimed by the government that it could not afford it, yet it determined that landlords should afford to subsidize people.

You mentioned non-profit co-op housing, I believe. Non-profit co-op housing is typically costing, on average across the province, about $1,800 a month, whereas they are typically renting out those units which are not rent geared to income, the ones that they call market rent, at around $900 a month as compared with the $1,800 it is costing.

In fact, there is one of the members here today who is from the NDP who is living in one of these subsidized, so-called market rent situations. They are getting an MPP's salary, plus they are probably getting a parliamentary assistant's salary, and they are living in this subsidized housing.

Would it not be more reasonable for us to apply the cost of the money we are spending on non-profit co-ops to rent supplements for those most in need?

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Mr Muroff: No question about it, Mr Turnbull. Your examples are well taken. Off the top of my head, I would say the vacancy rate in Windsor, the CMHC rate is about 550 units, which is roughly 5%. I would say they miss about 20% that they do not count in smaller units. We have probably got about 800 vacant units. There are buildings that are renting for the $550 and $650 range where people could not afford them. If they gave a rent supplement of even $100 or $200, it would be much less than putting them in non-profit housing that is costing in excess of $900.

Mr Turnbull: In a broader sense, how does the chamber view the message that we send out to investors, say, in industrial plants from overseas, with a government which effectively is confiscating private ownership of apartment buildings by reducing 30% of the value of the buildings?

Mr Muroff: I would say it would not encourage them to invest in plants and create jobs. It has to have a psychological spillover effect.

Mr Turnbull: We are having difficulty in getting the other side to believe that this is reality. When we talk about reduction in the value of buildings in the order of 30% as a result of Bill 4 and now this legislation, the knee-jerk answer is, "Oh, all of the market has gone down by that." However, they ignore the fact that this is a controlled market. When you are talking about office buildings which go down by that amount, it is because you have a vacancy rate and you have an income deficiency as a result of your vacancy rate. When you have got a controlled market, it is a legislated reduction, and it seems from Bob Rae's discussions before the election that he wants to depress the rents.

The Vice-Chair: Question.

Mr Turnbull: Do you think that this is part of an underground approach to Bob Rae's agenda of forcing down the value of buildings and then taking them over at much reduced prices?

Mr Muroff: I would not want to comment on our Premier's agenda because he is our Premier, but I just hope that is not so. It could appear that way. I hope it is wrong.

I might point out that the biggest asset that the average person has, and the average person in this city is a Chrysler or GM worker, is his home. At the end of the day, when they are through working, their home is worth between $100,000 and $150,000, and that is the biggest single asset they have. We should be encouraging home ownership and the increase in property values, which funnels down to the average person, and it is the average person who is a substantial real estate owner in this province, particularly in Windsor.

Mr Mammoliti: I would like to address a couple of concerns, first, your concern on rent control and what that does to supply. I would like to just refer you to British Columbia, where they do not have any rent control. When we talk about the supply, the rents are still very high in British Columbia. I would like you to comment on that. I would also like you to let us know what you think a fair long-term-profit return would be for a landlord. A figure would certainly be appropriate at this time.

Mr Muroff: In response to the BC situation, they were the first to introduce rent control, and the result of that, I think in the late 1970s, was the creation of a tremendous shortage and they gently eased out of it to level out the market. I do not think it is as severe as you are pointing out. I am not that familiar with it at this point.

As far as production is concerned, I have statistics in Ontario. From about 1968 to 1976, we were creating about 40,000 apartment units annually in the province. When rent control came in, in 1976, we dropped to 26,000. By 1982 we were down to 14,000 units. That has to indicate that rent control had to have impacted the market vis-à-vis dropping construction. We started a climb in the mid-1980s, but a lot of that production, which is in the 20s and 30s, was as a result of non-profit housing being produced, not from the private industry.

Mr Mammoliti: Sir, very quickly, in response to my second question, what is a fair return?

Mr Muroff: Fair return would be based on -- if you are investing in a building, you have alternate forms of investment. You have GICs, you have T-bills. Your return is guided by relative returns in the marketplace at a given point in time. Today, I would say a reasonable return would be somewhere between 8% and 12% on your equity. That would be determined by the inflationary pattern, if inflation is falling or rising. You cannot just take a figure today and stick with it; it has to be an adjusted figure depending on the marketplace.

Ms Harrington: Thank you for your brief. It is similar to the one we received in London from the chamber of commerce there, and I am going back to my city of Niagara Falls --

Mr Muroff: Are you inferring we have orchestrated something?

Ms Harrington: I am just looking forward to --

Mr Jacques: We sure are giving a consistent message.

Ms Harrington: Sure. Going back to Niagara Falls and speaking to my own chamber of commerce, of which I sat on the executive for a year or two, I am finding out if they agree with the same things.

You talk about various things here that I wanted to comment on; first of all, the relationship between landlords and tenants. We feel that is very important, and we want that to improve. We do not want it to deteriorate. We need landlords and tenants to co-operate together --

The Vice-Chair: A question?

Ms Harrington: -- to plan what repairs should be done in the long term, because to live within the guideline and/or the 3% cap, one has to plan carefully the repairs that have to be made, and I would think with the tenants.

The Vice-Chair: A question?

Ms Harrington: My question to you is, we feel the whole reason for this bill is stability for tenants --

The Vice-Chair: Question.

Ms Harrington: Do you feel -- I feel --

Interjections.

Ms Harrington: -- that stability is also important for landlords. Do you think landlords want to have stability in their tenants, just as much as tenants want to stay there?

Mr Tilson: Don't ask her to repeat the question.

The Vice-Chair: I think that was a question.

Mr Muroff: I would say absolutely, as a responsible tenant. First of all, I am also on the housing advisory committee in the city and I am quite familiar with the housing market. Personally, my living is made in mortgage financing and apartment financing, and responsible landlords want responsible tenants. There is no question about it. One complements the other.

Ms Harrington: I also want to ask you about subsidies.

The Vice-Chair: At some later time. Thank you, gentlemen. We appreciate your appearing before us today.

The next presentation will be made by Don Ross of the Municipal Retirees Organization of Ontario. Mr Ross?

Mr Mammoliti: You did very well, Mr Chairman.

The Vice-Chair: I was too nice to you guys.

MUNICIPAL RETIREES ORGANIZATION OF ONTARIO

Mr Ross: Mr Will Ferguson told us not long ago that if we could not make our point in 20 minutes, we did not know what we were talking about, so I will try to do it in 15.

The Vice-Chair: That will prove that you know everything about what you are talking about. Thank you, Mr Ross. As you know, you have the 15 minutes. If you would introduce yourself for the purposes of our official recording system, that would be appreciated.

Mr Ross: My name is Don Ross. I am the vice-president of the Municipal Retirees Organization of Ontario. We represent the 45,000 retired municipal workers in this province.

I sat back here feeling that I was in the wrong room because, frankly, we intend to speak in favour of the bill.

In August 1990, we had a letter campaign about some improvements we wanted in our pension plan. We had a great response from our membership, but in addition to the problems with our pension, a number of other things came to light: problems with taxes, problems with rents. We heard horror stories -- people in their retirement having to move to cheaper apartments, having to move from the upper floors to the lower floors so they could remain in the same building, people having to move from places they had lived in for 15 and 20 years into subsidized apartments.

Our 45,000 retirees are the tip of the iceberg. There are 210,000 retired persons aged 65 and over in this province who live in rented accommodation. This is not subsidized. How many persons are retired under the age of 65 and living in rental units, we have no idea.

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Most people, when they retire, plan for it. They want affordable housing. But unfortunately, 93% of the pensions in this country are not indexed. Usually, when they retire, they have some small savings, their company pension if there is one, old age security, sometimes CPP. The Income

Tax Act, of course, has chewed a hole in a lot of the savings of these people, and the rent spiral over the last few years has been devastating to a lot of these people.

We have heard and read the horror stories in the papers of increases up to 40% and over. I was shocked to find out that the rent review officers in 1988 granted increases averaging 10.5%. The Rent Review Hearings Board granted increases averaging 11.5%. This was at a time when the guideline said 4.6%.

There is no doubt that this government and the previous government felt that some form of rent control was necessary. My personal belief is that the former act was probably intended and started out as a good piece of legislation. Unfortunately, over the years, over time, the bureaucrats found loopholes until the former legislation got to look like Swiss cheese.

We have heard people say we should throw out rent control. We feel that Bill 121 deals fairly with the subject. There are three areas of concern that we would like to touch on:

Subsection 14(2) deals with extraordinary increases in expenses. We do not feel this should be allowed to be expanded upon. We do not think there should be a discretionary area grow in here. Extraordinary expenses should be as are outlined in the bill. Under the former act, we saw instances where in the end even custodians' wages and rent were classed as "extraordinary expenses."

Under capital expenses, we feel that allowances made in the bill for money to be used for maintenance of the buildings -- we feel that neglect of a building should not be any excuse for a grant in capital expenses.

On the subject of financing costs, we do not feel this should be allowed. Too often under the former act, people bought buildings knowing full well when they went in that their operating costs and mortgage costs would not be covered by the rents, but with the full knowledge that all they had to do was apply and they would be granted relief. As far as we are concerned, it was just an excuse to up their rents and make the buildings more saleable.

We prepared a brief, which you have been given. I chose not to read it to you. I trust you will read it when you have more time. I just wanted to make a few comments and to bring to your attention that our 45,000 pensioners are concerned about this issue. Thank you very much for your time.

Ms Harrington: I think one thing we have learned in our travels is that seniors in particular feel rather vulnerable and wonder if this act will protect them enough. I have certainly heard of people in the rest and retirement homes who are very concerned about what will happen with the increases in accommodation charges in that sector.

We certainly believe that seniors deserve as much protection as everyone else. You have made a few proposals here. Obviously, I have not read it over yet, but is there anything else directed specifically at the act that you would like to let me know that seniors are most concerned about? I have a list of the concerns and actual changes, amendments to the act that we are looking at.

Mr Ross: Basically, no, just the things that I have mentioned. They are outlined in a little more detail in the brief

Ms Harrington: I notice that one address here was in Scarborough. Are you from the Windsor area or do you live here?

Mr Ross: My home address is in Corunna, just outside Sarnia.

Ms Harrington: Oh, I see.

Mr Ross: The office for our organization -- we share office space with the CUPE Ontario division in Scarborough.

Ms Harrington: Okay.

Mr Ross: And no, we are not a CUPE organization. I myself am a retired police officer.

Ms Harrington: I see. Do seniors have any more concern with the cap of 3% than the rest of the tenants of Ontario?

Mr Ross: They are more concerned because seniors over the age of 65 pay the highest ratio of income to rent. It is a figure here of 21.6%. So any increases in rental accommodation have a disproportionate effect on these people as compared to people who are still in the workforce and can demand or try to demand increases in line with the cost of living.

Ms Harrington: Right. Of course you understand that the balancing we are trying to do is to deal with the reality of housing in Ontario, and that there is aging housing stock and a lot of major upgrades have to be done in these older buildings, even 20 years old. That is why the 3% over the guideline is there. Within the guideline, they should be able to do capital repairs on a planned basis in consultation with the tenants. Ideally speaking, this is the way it should be done.

The problem, of course, is that Ontario municipal taxes are going up and so are heat and hydro and the rest of it. That is why, of course, we have the guideline pegged into inflation. What we are trying to do is get a viable system so people who cannot get an increase of 8% in their income every year still have the stability of being able to live in their homes. The end result is that if you do not get an increase of at least inflation or more, then the percentage of income that you are paying on your accommodation is going to go up every year.

Mr Ross: Well, the act as it is outlined gives the tenant something he can count on, something he can plan on in the years ahead, whereas the way the former act wound up, they could not. They were suddenly dumped with 12% and 15% increases two years in a row. It was disastrous.

Ms Harrington: As I mentioned to the previous person, stability is the key to this legislation.

Mr Brown: I am most familiar with downtown Toronto -- and Sarnia, for that matter, being a Sarnian for about 20 years of my life. But the issue I want to talk about is the pension issue. You noted that only 7% of Ontarians have indexed pensions.

Mr Ross: Only 7% of Canadians.

Mr Brown: Of Canadians. Well, I have extrapolated it. Maybe our percentage is higher; I am not sure. But the point is that we have some grave difficulties in a number of the pension plans, particularly private pension plans in this province, being underfunded. I personally believe in fully funded pensions. I think anything else is just hocus-pocus. And there is no way that somebody who is to receive a pension knows whether or not the money will actually be there when it is their turn to get the pension. This is a real concern to the government of Ontario because the government of Ontario guarantees these pension plans and it could cost us billions.

I know that is not particularly your problem here, but what I am wondering is, your pension plan, obviously you study where they make investments and what they do with their money; it is obviously of interest to a group of retirees where their pension moneys are invested. Do you know if your pension plan invests in residential accommodation, in that sector?

Mr Ross: First of all, our pension is a fully funded plan

Mr Brown: I am aware of that, but I was --

Mr Ross: Some others here might think we are just sponging off the taxpayer, but our plan is a fully funded plan. The pension board made significant investments in real estate in the last few years, in the billions of dollars. Some of them did include apartment complexes. They also included a lot of commercial buildings in the major cities across Canada.

Mr Brown: I guess what I am trying to get at is, is that turning out to be appropriate to your fully funded pension plan? Are these seen as good investments by the pension plan, or are you aware of the facts? The reason I am asking is that we have had a number of presenters come here and say, "Look, these are not good investments in Ontario." I am trying to come at it from the other side of the question and you seem to be on both sides of it here.

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Mr Ross: As I said, our board had made investments of $2 billion or $3 billion in real estate in the last couple of years and I cannot remember what the amount was for 1990 and 1989. They had a return on investment of 15%. It is one of the fastest-growing pension plans in North America. So, yes, I certainly approve of their investment.

Mr Brown: It looks good to you. Thank you.

Mr Tilson: You have indicated at the outset that you and your organization support the bill. I come from a riding just northwest of Toronto, and pensioners in my riding say to me they cannot afford any increases. They are very concerned with the increasing lack of capital improvements because landlords are saying they do not have the funds to complete the repairs or the new roofs, replace boilers or to even put carpeting down on the various floors in the hallways and stairs. But they cannot afford any increases.

This legislation, whether an increase is warranted or not, allows for increases when in fact it may well be that from year to year there may not be any need for any increases or in fact there should be decreases. But this legislation is no different than the last legislation; it allows for automatic increases. So I must say I am surprised at your position when I have spoken to pensioners who simply do not accept this type of legislation. Could you comment on that.

Mr Ross: I can only tell you what our board has discussed. As far as the increases are concerned, to be realistic I would expect if people own apartment buildings they would expect to get increases whenever they could.

Mr Tilson: Let's talk about that. What sort of increase should an owner of a building get? What sort of rate of return each year should an owner get compared to the interest rates in a bank account, a bond or RRSPs?

Mr Ross: I have no idea.

Mr Tilson: Should they receive any increase?

Mr Ross: We can live with this bill as it is drafted and with the increases they have outlined.

Mr Tilson: What increases are those, because the landlords are saying they are losing, they are not getting any increases. In fact, the values of their buildings are depreciating; they cannot afford to make the capital improvements; they cannot sell their buildings, they cannot do anything with it. Their buildings are becoming vacant and falling apart because the legislation does not allow for the capital improvements. That is what they are telling us. Now, someone is not telling the truth. I cannot believe when landlords' associations and landlords come forward and tell us this all across the province from Sudbury to London to Hamilton to Toronto to Windsor, even just before you; you heard the individual before you make some comments.

Mr Ross: I heard several people make comments.

Mr Tilson: What is your response to that?

Mr Ross: I do not know, I am not a landlord and I do not intend to be.

Mr Tilson: let me ask about another area. You referred to subsection 14(2) which deals with operating costs of municipal taxes, hydro and those sorts of expenses, and they are listed. One of the criticisms that has come to us is that if you have a particular municipality that may increase its taxes a certain amount -- and this legislation does allow for that increase -- but if it is over a certain amount it is capped. Therefore the landlord must bear that additional cost, whether in municipal taxes, heating or hydro. Unbelievable increases in hydro have been predicted. Where is the money going to come from?

Mr Ross: I have no idea.

The Chair: Thank you for your presentation, sir.

OBOLUS LTD

The Chair: Mr Ed Meyer. We will be following the same procedure, 15 minutes, and you can identify yourself for our Hansard recording and/or any organization you are representing.

Mr Meyer: My name is Ed Meyer and I am the president of Obolus Ltd and a past president of the Sun Parlour Income Property Association. I want to thank you today for the opportunity to speak before you and indicate some of my opinions.

The priorities and stated direction of the Ministry of Housing concerning Ontario's housing policy are, in the opinion of many, fundamental and sound. A healthy affordable housing stock is without question the cornerstone and basic requirement for any stable and progressive society.

Bill 121, the permanent rent control legislation introduced by the province on June 6 of this year, fundamentally deals with many new proactive protections and safeguards of Ontario tenants' affordable rents charged by Ontario landlords and healthy housing stock maintenance provided by Ontario landlords.

As with any legislation, mandatory controls on Ontario's free marketplace by the government should be instituted with reasonable care and execution and fairness if they are to influence the marketplace in a positive way for social benefit. Any deviation from this basic principle, regardless of the good intentions, can and has historically resulted in destabilizing and negative conditions.

Excessive rent increases will reduce the affordability of rents. Bill 121 addresses the historically excessive increases in the rents Ontario tenants are charged. In fact, the Residential Rental Standards Board of Ontario, in a report dated April 4, 1991, on the Ministry of Housing consultation paper, stated on page 10 that, "The cumulative increase of the Rent Guideline, since 1975, is 48% below the CPI for Ontario." Surely, in no one's definition could this be interpreted as excessive. In fact, the actual financial return of Ontario landlords has significantly eroded over the previous 17 years.

Ontario landlords who charge rents in excess of that required for a fair return on their investment will reduce the affordability of rents. Statistics from Revenue Canada indicate that 355,000 individuals in Ontario filed statements of rental income in 1988 with an average return of only $173 per year for each rental property. This cannot be interpreted as excessive profit or support the gouging myth of landlords.

If Ontario landlords as a whole are therefore not guilty of excessive rent increases or realizing excessive rental profits at the expense of Ontario tenants, then the fundamentally new proactive and intensive rent control guidelines introduced in Bill 121 are, at best, redundant to the existing rent review legislation. At worst, they may destabilize and deteriorate the very healthy affordable housing stock Bill 121 is supposed to preserve.

For buildings of more than six units, the annual guideline increase will now be based on 50% of inflation rather than 66%, resulting in a 20% decrease in cash flow which will now also have to fund common area and replacement costs such as fridges and stoves.

Increases over the guideline will be limited to 3% over two years for large buildings or three years for small buildings. To qualify for the 3%, the landlord actually has to pay 5% per year to recover 60 cents on the dollar spent. The same 3% cap must also cover operating expense increases from such items as taxes and utilities.

Landlords who have completed large capital improvements in good faith subject to the existing rent review guidelines received a 0% cap under Bill 4 and now will be subject to the same 3% allowance, regardless of the size of capital expenditure spent.

Bill 121 proposes to penalize any landlord who does not comply with a work order within 30 days, and comply means to complete the work in 30 days regardless of the size of the work, if there is a labour strike or if there is bad weather. Any trivial work order such as a missing knob on a cabinet can cause an entire building rent guideline increase to be challenged. Major abuse of this enforcement is available to the very few tenants who would vandalize a building to roll back rent increases.

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Legal maximum rents can now also be rolled back on the vague grounds of inadequate maintenance. Entire building maximum rents can now be challenged by a single tenant on very minor and very subjective complaints such as common areas not being regularly cleaned. Any and all increases could be stayed until the ministry decides on the complaint. This type of uncertainty makes it impossible to properly administer the landlord's decisions with respect to maintenance, financing and all general business.

For most landlords, mortgage payments are the largest single expense category. In Bill 121, even though a mortgage interest increase is beyond the landlord's control, no pass-through of higher mortgage interest costs is allowed. This is certain to result in bankruptcies and financial havoc in the industry.

By permanently eliminating any consideration of financial loss, Bill 121 will reduce the value of every apartment building in Ontario by 25% to 40%. For recent purchasers this will mean the expropriation of all equity and the possible loss of the building. Long-time holders will see their equity greatly eroded, destroying the retirement savings plans of many small landlords.

For the past five years the rent registry has essentially been inoperative due to the inability of the bureaucracy to cope with the task of registering and providing notice for the limited number of large buildings in Ontario. Bill 121 will now require that thousands more buildings which contain four to six units will also be required to register.

For the first time in the history of rent review, officials will now have the power to search any landlord's premises and seize records, inspect and photograph evidence. The sweeping powers given to the rent policy in Bill 121 are truly frightening and totally un-Canadian.

If all this is not enough, definitions for terms like "neglect" and "inadequate maintenance" are not established in the bill. Changes to the rent control index, formerly the residential complex cost index, RCCI, have been indicated but will remain unknown until the regulations are actually released.

The majority of landlords in Ontario are ordinary, average Canadians who own single-unit, duplex or fourplex housing tenements. Not surprisingly, and not addressed in past rent control legislation, current or proposed housing policy, is the fact that the greater majority of all housing stock in Ontario is actually supplied by these small fourplex-or-less landlords. And who are these people? Generally they are simple, decent folks, including many who are hardworking, blue-collar union workers, retired people on fixed incomes, and young families augmenting their modest incomes or reducing their own housing costs by purchasing or building a duplex house, renting out a second unit or renovating their unused basements or attics.

Fundamentally, these small landlords simply do not have the resources or even access to the continually expensive expert accountants or consultants required to understand, administer and reasonably comply with Bill 121. How can these small landlords prosper and continue to supply affordable rental housing for Ontario within the increasingly complex rent control guidelines they can never hope to understand? Often large landlords and governments naturally accept their economically sound access to expert lawyers, accountants and consultants as a fundamental resource. In reality, for the small landlord, the average Canadian, this fundamental resource will never be available to them nor will they ever be comfortable understanding the complex advice they would be given.

Mr Lessard: Thank you very much for your presentation, Mr Meyer. It is good to see you here today. You said in your closing submission that something that was not addressed in past rent control legislation was the fact that a great majority of rental housing stock is owned by persons who were what you might refer to as small landlords. What do you mean by this issue not being addressed?

Mr Meyer: Fundamentally, as past president of Sun Parlour Income Properties Association in Windsor, the majority of our membership are vis-à-vis small landlords, the people who immigrated here and bought rental accommodation for retirement plans or the union worker who has a duplex or a fourplex. These people do not have an especially high degree of education or understanding of very complex concepts and, frankly, Bill 121 and the previous rent regulation bills were far too complex and too comprehensive for these people to even remotely understand what it meant to be a landlord and what it meant to properly administer their units. Consequently, because of that inability to cope with the legislation, they were at a loss to maintain their buildings properly.

Mr Lessard: You realize, though, that there is a distinction made in this legislation between smaller-unit and larger-unit buildings.

Mr Meyer: That is absolutely correct for the first time. I guess what I am suggesting is that the majority of small landlords will never know that or be able to make use of it.

Mr Lessard: What sort of addressing of the issue would you like to see? You say to make it less complicated, that is one of your submissions, but how do you see us trying to go about that?

Mr Meyer: I think personally that there is an influence in government thinking that better legislation means more legislation. I do not think that is necessarily true for the rental income stock in Ontario. Personally, other forms of ensuring affordable housing to Ontario tenants, which would be much easier to administer, would be a free market rental situation where the truly needy could be directly targeted and supplemented. In today's marketplace you have public housing that is charging tenants 30% of their income, but in the private housing stock the majority of people are paying less than 15% or 10%. That is an inadequacy which is causing a lot of problems. If that could be addressed, I would suggest it would be much more accessible for the majority of people to build affordable housing and to maintain it for the benefit of all Ontarians, whether it be taxpayers, tenants or so forth.

Mr Brown: You have raised a number of good points. I appreciate your discussion, particularly of the small landlords' difficulties with this legislation. We have been concerned a fair bit with the two different guidelines, depending on the size of the building, and have seen absolutely no rationale anywhere for why a small building is more expensive or less expensive or whatever than a large building. There appears to be no rationale for that particular distinction. If there had to be a distinction, in your opinion should it be more on the age of the building than on the size of the building?

Mr Meyer: Age is a very important consideration in determining the costs of a building. Whether you have large buildings or small buildings, the age directly determines the capital expenditures that are required to maintain a building. I am a consulting engineer by profession. Buildings require maintenance to be maintained. There is no question about that. If you have a two-storey building that has a roof or a 25-storey building that has a roof, there is a certain fixed cost in replacing that roof The fixed costs of management, maintenance and so forth are traditionally spread among fewer units in a smaller building versus a larger building. Again, to reiterate, the smaller buildings are generally owned by less sophisticated and less informed organizations or people who physically cannot maintain their buildings with respect to this legislation. It is just physically impossible for them to do so.

I would suggest, in my opinion, that if there is to be an exception between the two, it may be more equitable to use the number of units versus age, although I think age, like you suggest, is a very important consideration as well which has to be addressed.

Mr Tilson: I congratulate you on the excellent summary you have given of many of the concerns that have certainly been raised throughout, although I would like you to spend some time on the rent police issue that has been raised, which certainly our party finds shocking. Considering the wide powers that inspectors have, they can literally come in and seize anything. They could seize your diary. The word is "anything." They can inquire into any matters. They can do anything. They can take photographs of absolutely anything. It is unbelievable, and I would like you to comment on that.

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Mr Meyer: Basically, it would be expected that the legislation addresses problems within the industry. If I can reiterate my opening paragraphs, since 1975 when rent controls were introduced, the cost-of-living allowance has only realized 49% in the rent increases. There does not appear to be a problem with gouging landlords taking unfair profits from Ontario tenants. It does not appear to exist if you look at the data. So I do not personally think it is justifiable to take such a very drastic and significant step. I think it is unwarranted at best, and at worst, it is really not something that this country has seen before and it probably should be avoided at all cost.

Mr Turnbull: I have no questions. I just congratulate you on your excellent presentation and the summary you have given, which I would hope the government would pay some attention to. Unfortunately, I have no real belief that that will happen.

The Chair: Thank you for your presentation.

That concludes the list of presenters for the day. I understand that Mr Abel has a motion he would like to present.

Mr Abel: Since the topic of rent control in British Columbia has come up several times, and I think it is a concern of all three parties, I thought it would be advantageous to have somebody come who is an expert in the field. Therefore, my motion would read that Mr David Hulchanski, a professor at the University of Toronto, be invited to share with this committee his expertise on British Columbia rent control.

The Chair: Mr Abel moves that Mr David Hulchanski, professor at the University of Toronto, be invited to share with this committee his expertise on British Columbia rent control. Any further discussion by yourself, Mr Abel, at this time?

Mr Abel: We feel that Mr Hulchanski is a very qualified person to come. As I said, I think it would be advantageous to have somebody with his expertise to answer questions that have come up in the past, the concerns and comments that have come up by some of the presenters. He was the director of the University of British Columbia centre for human settlement and taught housing and community planning at UBC's school of community and regional planning. He has a PhD in urban and regional planning at the University of Toronto and he has a BA in political science and history, so I feel he is more than qualified to answer our concerns.

Mr Brown: I think we would have no objection to asking that this person come before the committee. I think he would bring us some very valuable information. But I will say that I do not think we could accede to this request unless other rent experts from other jurisdictions, which this committee has over its lifetime been denied access to hear -- I can think off the top of my head of four people who are experts in jurisdictions other than Ontario, and the argument from the government on those occasions was, "Well, they're from other jurisdictions and we don't need to know."

I would like to hear from him. However, I do not really understand why we would have him come if we would not have the other experts that the opposition had requested appear at various times. Therefore, I am going to have a problem with this. I am going to have a problem with the fact that the government did not see fit to allow us to have the Ontario Housing Corp come and see us, which, as we have heard from both tenant groups and landlords, would have some really valuable information with regard to maintenance on buildings, real costs on buildings, and yet the government denied that. So unless the government is willing to have other experts, then I think we are in a position where we will have a very difficult time supporting this particular motion.

Mr Tilson: I am not going to echo what Mr Brown stated, but obviously we would take the same position as Mr Brown. It is as if the government is saying, "We won't hear your people but we'll hear our people." I think that obviously the whole subject of rent control is worthy to be discussed from all of the provinces. I am fairly confident that the research people prepared information from all of the provinces and it might be useful to hear some elaboration on that, whether there is any update on that material. Why British Columbia? Why not other provinces?

Mr Turnbull put forward very sound reasoning for people from the Ministry of Financial Institutions. I had listed a specific name for rent review, an individual who my staff had indicated was prepared to come at his own expense from northern Ontario, an active member. That was rejected. Ms Poole put forward an alternative of not necessarily someone who is currently sitting but is a member who has sat on the board in the past. That was rejected. Here is the government coming at the final hour with a name, after having the nerve to reject very sound and very worthwhile requests that our party and the Liberal Party have put forward.

So I am afraid I am going to be taking the same position as Mr Brown, unless -- if we are going to look at some of the things, let's look at all of the things.

Mr Abel: I am very disappointed that the two opposition parties are taking this stand. I am not surprised. In fact, I expected it. They both came up with a very ambitious list of people and they brought forth motion after motion, so I suggested that it be referred to the subcommittee to be discussed so there could be some paring down. That is exactly what happened. There was an arrangement made; yes, we listened to each other's arguments and we chose three people, experts who we thought would be beneficial to this committee. It was agreed and now they are going on and saying they are disappointed --

Mr Tilson: You are breaching the agreement.

Mr Abel: -- and more or less --

Interjection.

Mr Abel: -- excuse me. I believe I was recognized.

Mr Mammoliti: Is he not out of order?

The Chair: Yes, Mr Tilson is out of order.

Mr Mammoliti: Okay, just wondering.

Mr Abel: If I may, Mr Chair, continue.

The Chair: I am going to name you associate Chairman, George. Mr Abel, you have the floor.

Mr Abel: Thank you. There was a paring down and it was agreed by the subcommittee, recommended and agreed by the whole committee that these people it was recommended be invited to attend. They were the ones who talked about BC. Time and time again they had brought it up. We feel that to answer our questions and to address the comments that were made by some presenters it would be advantageous to have this person here.

The Chair: Okay, I think we are going to run a list. Did I see you nod, Mr Brown? We are going to run a list. Mr Turnbull, then Mr Mammoliti, then Mr Duignan.

Mr Turnbull: Mr Chairman, we know from bitter experience that it was not an ambitious list of names that we gave; it was a relatively conservative list. We asked for -somebody from the Ministry of Financial Institutions, which is certainly within the control of this government, and yet they did not want somebody to come from one of their own ministries to talk about the financial implications in this province. We are not talking about something out-of-province, and I agree it would be useful to examine the experience out-of-province and also in the United States. But I emphasize that the financial implications of this legislation as heard from one of our own ministries was voted down by you.

You asked to speak about it in the subcommittee, which for the sake of the media we will explain is done in camera. So in this way they were able to gag us, instead of doing it in the full committee as we are doing now. We will not make that silly mistake again. If you do not want to hear the truth about what your legislation is doing in this province according to your own ministries, why do you bother having hearings?

1600

The Chair: Thank you. Mr Mammoliti, Mr Duignan, then Mr Mahoney.

Mr Mammoliti: Mr Chairman, I think we have to look at what we have here. We have a motion on the floor, a separate motion, something that is totally different from what both opposition parties are talking about. They are talking about previous motions. They are talking about motions that were dealt with. They were referred to the subcommittee. The subcommittee negotiated and it dealt with it. In lieu of that I think that we should understand that there is a motion here, a separate motion, that we should be dealing with.

Mr Abel: That they said they agreed to, by the way.

Mr Mammoliti: Which they said they agreed to. I also understand we have a plane to catch at 5 o'clock, so I would say first of all that I am totally in favour of the motion and that I think I should call the question at this point because --

Mr Mahoney: On a point of order, Mr Chair.

The Chair: There is no debate allowed when the member --

Mr Mahoney: On a point of order, Mr Chair. I believe if you read the rules you would find that it is not in order to call the question after a member has spoken and given a speech. If you call the question, you simply call the question.

The Chair: Let me consult with the clerk and I will give a ruling in a few seconds. Mr Mammoliti's request is in order.

Mr Mahoney: I would like to move for a 20-minute recess to discuss the matter.

The Chair: Mr Mahoney has moved for a 20-minute recess.

Mr Abel: Is that necessary, since all the members who are in the city are present?

The Chair: It does not matter.

Mr Abel: Okay.

The Chair: Order, please. You must understand where we are at this point. A 20-minute recess has been called for, which means that we will not return to this room until 4:24, which means that you will not make your 5 pm flight, so we need to instruct the clerk on what to do for arrangements. We will have to cancel those reservations and put you on the -- 7:30 is it? -- if we can get on.

Mr Mahoney: Mr Chairman, I was going to make a suggestion before Mr Mammoliti put that motion. If you wish to hear it, it may solve the problem.

The Chair: I have no authority to allow you to put that position forward unless there is full consensus, unless there is unanimous consensus by the committee to allow you to do so or unless Mr Mammoliti withdraws his motion. Short of that, I am unable to allow you to do so, Mr Mahoney.

Mr Mahoney: Fine.

The Chair: We shall return at 4:24.

The committee recessed at 1604.

1621

The Chair: The chair sees a quorum. It was moved by Mr Abel that Mr David Hulchanski, professor at the University of Toronto, be invited to share with this committee his expertise on British Columbia rent control.

Motion agreed to.

Mr Abel: Let the record show that the vote was unanimous.

The Chair: The record will show that there were five votes in favour and no votes opposed.

The committee adjourned at 1622.