Committee Transcript 1991-Aug-29 | Legislative Assembly of Ontario

The Vice-Chair: Good morning. The standing committee on general government will come to order. The purpose of the committee is to hear public presentations on Bill 121. I would assure members that the bells that were going early this morning were not division bells and that the Chair was not responsible.

UNITED TENANTS OF ONTARIO

The Vice-Chair: Our first presentation is from the United Tenants of Ontario, Mary Garrett and Ted Starr. If you would introduce yourselves for the purposes of Hansard; you have 15 minutes to make your presentation.

Mr Starr: My name is Ted Starr. On my immediate left is Mary Garrett. She is from Ottawa and is co-chair of the United Tenants of Ontario. On her left is Dan McIntyre, a council member from Ottawa. On my immediate right is Rick Desormeaux, who is also a co-chair of the United Tenants, and he is from Sudbury.

I should explain that our full name is United Tenants of Ontario. We are commonly called and referred to as UTOO. I should maybe give a little background. I am on the provincial council. I am also the recording secretary and therefore on the executive of UTOO. I reside in Mariposa township near Lindsay, which is Victoria-Haliburton riding. In our presentation today I will be giving a brief overview of UTOO, then Mary will be addressing the issues raised as we see it in Bill 121 as it is presently drafted, then I will be making some concluding remarks and then we will be ready to answer any questions. I trust that will be acceptable to the committee. We have tried to time it so we have time for all of those things and we will see what we can do.

By way of background, for many years the tenants and tenant advocates across Ontario have felt a need to work together on common issues and share information on common problems. In 1989 around 200 tenants and advocates met in Hamilton and agreed to form a province-wide organization and they called it the United Tenants of Ontario, or more familiarly UTOO. In 1990 we had another annual meeting and a training conference at Waterloo, at which time we met with the then Minister of Housing, John Sweeney, and the then opposition leader, Bob Rae, who had addressed us at our dinner meeting.

In 1991 our annual meeting and training conference was in Ottawa, and I should point out that the annual meeting takes about three hours of three days. The rest is training and it is really quite informative when you meet tenants from across the province and you find out that no matter how different your areas are, there is a commonality there. In 1992 we are planning to have our annual meeting and training conference in Sudbury.

From 1989 to date, UTOO has participated in a number of forums and discussions and events across the province. Prior to the change in government we had started a tenant inquiry to investigate the problems of tenants. Because of the rapid change in legislation, we have now refocused that to be concerned right now about rent controls.

I should point out that at the 1991 conference the then Minister of Housing, Dave Cooke, informed us that we were being granted $210,000 for the year for our operating budget, and as a result we are now in a position where we can really get heavily involved in defining our role and starting to figure out what our mandate is. We have provided you with copies of our preamble and statement of purpose from our constitution and that is a pretty good outline. I think the best way of saying it is that across Ontario certain areas have tenants' federations and they are very well organized, very active. There are a lot of other areas with less active tenant federations and some areas where tenants feel they are in the wilderness and by themselves. Our role as we see it with UTOO is to help organize the unorganized tenants in the province and to provide sort of a co-ordinating body for tenants across the province.

As I mentioned earlier, we have always been very conscious of the physical and often emotional separation that tenants feel across this province, but we also recognize that there is a great similarity in the problems. I believe it has been said that what we are trying to do is help tenants talk with their many voices in a united way. I do not want to see UTOO taken as being the only voice of tenants. We have purposely organized ourselves in such a way that we do not provide necessarily a single voice, because there are too many variations. In this respect we have organized ourselves into five regions and from the five regions 21 council members are chosen at the annual meeting. They are not necessarily just chosen from their region; there is a vote by all the members there.

I should also point out that our policies are for the most part based on consensus. Although they may be passed by a majority vote, I think I can say that we spend a lot of time getting something everyone can agree to. We do not usually have much disagreement once the policy is in place. In particular, our presentation on Bill 121 is based on a consensus that was reached at the provincial council meeting we held in Kingston last weekend. At that time we also held a special meeting on Bill 121 and it was attended by a number of tenants from the Kingston area. Some of them are here today.

I should point out that while I was asked to help with this presentation today, I am not the only spokesperson for UTOO on this issue. In fact, I am only here for the background material. We do not believe that one person can solely represent the tenants of Ontario. I should point out that Rick and Mary, who are with me today, are both co-chairs. We in fact have three co-chairs. We do not have one head of the organization; we have three. One is in Sudbury, one is in Ottawa and one is in Toronto. We very purposely structured ourselves that way because we think that tenants need more than one voice. So at that point I think I will pass it over to Mary. She is going to discuss our views on Bill 121 more directly.

Ms Garrett: My presentation is in the packet that I believe you have received from us. I just wanted to make one comment to what Ted was saying about the government so generously giving us $210,000 to operate. We acknowledge and thank the government; that is six cents per tenant, in the true perspective of reality.

Tenant representation has been made in Toronto, Sudbury, Hamilton, London, Windsor, Ottawa and now in Kingston. These presentations have been made by tenant federations, tenant associations, legal clinics, tenant advocacy groups, including Housing Help in Guelph and Ottawa, homeless groups in Windsor and individual tenants. We express our deep pride in the efforts that all of these tenant groups have put forward. We now take the formal opportunity to support the tenants' representations that have been put before you in these hearings. We would have you note that in all of these presentations the tenants have called for a better, true rent control system.

What is a true rent control system? A system that we the tenants could support. We the tenants of Ontario would support a system that ends cost pass-throughs, a system in favour of a capital reserve system. If, after our concerns are heard, there is still a cost pass-through system, there should be no phase-ins or carry-forwards. We would support the lowering of the guideline percentage to get rid of the 2% bonus given away and compounded each year. We would support a system that takes costs no longer borne out of the rents. We would support a system that contains a working rent registry for all tenants.

We would support a system that uses the actual rents, if they are legal rents, for the determining of any rent increases. We would support a system that is simpler than the existing system, one that would allow both tenants and landlords a better chance of understanding the rules and the process. We would support a system that provides a fair hearing process. We can support a system that has universal rules for all tenants and landlords.

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We believe that for this system or any system involving the business of landlording to work properly, landlords must be licensed so that the system can better ensure co-operation of all landlords.

We would draw your attention to the fact that Bill 121 deals with more than the matter of rent increases. It deals with property standards and maintenance. It includes how many rent increases shall be allowed in a year. While these concerns affect all tenants, this legislation excludes tenants who can and should be included in these protections.

We are concerned that tenants of the Ontario government living in public housing are not protected in this legislation, although they can suffer rent increases as high as 107% simply because of an OHC policy change and not the result of change of income.

I would like to point out that in my job that I get paid for as a legal worker in a clinic, I had a gentleman who had immigrated to this country 11 years ago come into my office. He was sponsored by his son originally. He got permission from immigration to stop that sponsorship in 1982. He moved into public housing in Ottawa in 1988, paying a rent based on his family benefits income that he receives from the provincial government. He had just received a notice of rent increase for 121% because the local office decided that he should still be sponsored and they were going to base his rent increase on the income as if he were sponsored. There is no protection in this legislation for that kind of situation.

We are concerned that tenants in non-profits and co-operatives are not protected by this legislation. It provides discrepancies as to its effect on tenants in small buildings who would be expected to pay higher rents even though they would not expect to receive the same amenities as if they were living in a larger complex that would contain recreational services, elevators and such. It discriminates against tenants in smaller communities who would have either no or less effective property standard bylaws.

We the tenants in Ontario can support a true rent control system. That is a system that controls the rents and is not just a more limited rent review system. We support a system that treats all tenants equally, no matter who the landlord is, whether the landlord has two units or 1,000 units, or if the landlord is a private entrepreneur, the government or a community group.

The Vice-Chair: There are three minutes.

Mr Starr: Okay. Then what I will do is I will hit the headlines, shall we say.

First of all, we want to make sure that the committee understands that tenant problems are province-wide. There are only variations in detail, not variations in major components.

Second, we feel that the tenant problems are made worse by things such as complex legislation, especially when we have a suspicion that complexity is really a disguise for unfairness, especially for tenants. We are also concerned that there is a lack of services for tenants.

In the riding of Victoria-Haliburton there is no legal aid clinic. There is no one who can effectively represent tenants. The private bar, through the legal aid system, does not handle it very often, if at all.

Many communities are very isolated. One of our council members is from Thunder Bay. He feels out of it. He feels a lack of information. He cannot go down to the government bookstore. If he is feeling that way, what happens with somebody from Sioux Lookout?

Third, tenants have to face real income issues. Our incomes are going down and for many ways. I do not need to elaborate. There are the taxes, the recession and so on.

Fourth, tenants have concerns about this committee's consultative process. Many individual tenants are very uncomfortable with it or scared of reprisals. They are afraid their landlord is going to get rid of them if they speak up. In areas such as the one I come from, there is not much help for them unless they can afford to have a lawyer, and that is pretty rare.

We are also concerned that this process is being rushed more than it needs to be. Because in our case we have got 21 members from across the province, it is very hard and very expensive to get everybody together. It is a very detailed piece of legislation. We just have not had time to properly respond.

Also, we are really concerned that all tenants have not had access to the committee. We understand that the hearings are during the daytime only. Most tenants are working during the day and cannot attend. We are really concerned that the committee does not go north of Sudbury, and there is a lot of Ontario north of Sudbury. I believe it is 12 hours by bus to Thunder Bay.

Fifth, there is a real, growing affordability problem for tenants because of the results of the past legislation and the current legislation and the rents that are a result of it. There have been cost increases that have been accumulating at compound interest. You hear everybody saying how great compound interest is. It is great if it is on your savings; it is terrible if it is on your rent.

Sixth, we are concerned with the affordability of the housing stock for future tenants, because as tenants' incomes have been ignored in the whole process and it only focuses on the landlords' expenses, tenants get left behind. We are way behind the cost of living.

To summarize, what we want is a system of real rent control, not a complex legislative escalation of rents, because remember, we are talking about our homes, not just somebody's investments. Really, I think it is time we now followed on housing the example we have used in this country on education and health care. They are rights. They are not something for somebody to make a fast buck on.

The Vice-Chair: Thank you, Mr Starr, for appearing today before us. We appreciate that.

PETER G. DAVY

The Vice-Chair: The next presentation will be from Mr Peter Davy. While Mr Davy is coming up, I will take the opportunity to point out to committee members that on your schedule Midge Rouse is at 11:45. It says that presentation is cancelled. That is incorrect; she will be here. Mr Davy has approached the Chair and pointed out that it would be helpful to him if, when it is time for questions, the members would give the question to him in writing.

Mr Davy: I have to begin my comments by saying I am fundamentally opposed to rent controls. They are restrictive, counterproductive and of course totally discriminatory and unfair. While shelter is a fundamental need, so of course are food and clothing. Yet neither of these commodities is cost-controlled. The butcher, the shoemaker, the clothing merchant are not forced to sell their products at "affordable prices," although it would be very nice indeed if we could buy these items at bargain prices.

The landlord is forced to provide accommodation at prices mostly below market to people who, in many cases, could well afford to pay the market price. We are very sensitively aware that there are many people who are having real problems financially. There is no question about this. To answer this particular problem, we think a subsidy system would definitely be appropriate for those people who need help paying the rent.

It is important that we understand what really caused rent controls. They were introduced some 15 years ago by a Conservative government acting on political expediency, knowing full well, as does anybody else who has done any investigating into the matter at all, that rent controls have caused far more problems than they have solved. Each ensuing government has perceived an equal political expediency and has propagated this debilitating legislation to the present time. Nobody has had the courage of the little boy in Andersen's fairy tale about the emperor's new clothes to say, "Hey, the king has no clothes on." This is ridiculous legislation. In other words, let's get rid of it.

However, reality dictates that I must face it. Accordingly, I can only make suggestions that hopefully will make bad legislation less bad. The New Democratic Party has presented itself as wanting to be fair in its approach to governing and when this government was elected it said it would meet with all interested parties to a matter and hear all sides in order to come up with legislation which would be fair to all. It is hoped that this forum today is in fact for this purpose and that justice will indeed be done and not just be seen to be done.

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While I find much in the proposed legislation to be objectionable, it is difficult in this kind of a gathering to do a clause-by-clause study or discussion of it, so I will simply to try to refer to some specific problem areas.

One of the major complaints of both tenants and landlords about the existing legislation is that it has been too complicated. This government said it would bring in a new bill that would be much simpler for all. Bill 121 in no way meets that criterion. It is not simple; it is very complicated. If we are to have rent control legislation, then it must indeed be simple and workable for all involved.

As a prerequisite to this, I suggest that there be absolutely no retroactive implications. This bill should start no earlier than the date this present government came into power. Whatever was done or arranged to be done and rent increases granted before the election and under the previous legislation should be left to stand. To do otherwise is most unfair and unreasonable. It would be like arresting a person now for drinking 17 years ago at age 18 while the legal drinking age now is 19. It was legal then, but it is not now. You have to be 19. How can we do that?

This should also apply to legalizing all present rents. Rent controls have been in place since 1976 and there have been many and complex changes to the legislation over the years. Why not consider starting with a clean sheet of paper that says that the rents currently stated as the maximum rent or the rents being charged as of October 1, 1990, are legal and go from there? Call this an amnesty, if you wish, but I would call it real initiative and progress and indicative of this government's desire to in fact bring in enlightened legislation. There may well be some rents out there that are illegal, but there would be few of them, very few, so few that it would seem a fresh start would be worth much more in the benefits it would create in goodwill and forward thinking.

Several points in the proposed legislation are of particular concern. Among them are the several sections dealing with limiting or capping of the allowable increase in rent irrespective of costs or capital improvements. Many landlords are faced with extraordinary costs from various causes -- taxes, PUC, sudden repairs, etc -- that can often run into thousands of dollars. To simply cap the amount of rent increase beyond the guideline is just not fair.

Incidentally, we keep referring to rent increases in terms of percentage, which I consider most unreasonable and unrealistic. I have been in contact with tenants who are living in beautiful one-bedroom apartments and are paying $200 a month because their rents were never raised prior to rent control. Now they are stuck with a low rent. If you raise that rent to $400, that is a 100% increase, but it is still a cheap rent for that accommodation. I think we have to get a handle on this percentage of increase. It is not really relevant always.

Many landlords just cannot absorb these extra costs. Also, in the case of capital improvements, many buildings are old and wearing out and have to be upgraded. It is true, you can keep patching and piecing, but that does not make economic sense. It is also true that the old, beat-up kitchen cupboards can be repainted time and time again, and they will still hold cereal boxes, but any prudent landlord would know that is not good building management, nor is it good customer relations.

I think it is important, again, to realize that landlords are business people and tenants are our customers. We resent very much this confrontational thing. We do not want vacancies. We want to be on good terms with our tenants. They pay us good money, they pay good rent and they are entitled to services. They are our customers. We want to keep the buildings up for their sake, not just to get more rent. We want to keep them happy. New cupboards and countertops have to be installed to keep the building viable and to give the tenants what they want. Tenants want these things, would you believe? But also, no landlord can afford to pay these upgrading costs out of existing rents.

Such things are not built into the rent structure for the simple reason no one knows what costs of cupboards or carpet or anything else will be 10 to 20 years from now. Also, to charge present tenants more rent at the beginning of their tenure for improvements to be made 20 years hence would put the rent beyond the market range in many cases. Also, most buildings involved in major refit requirements are in the 20-year-old-or-more range, before rent controls came in, and rents started off low and were not raised in the pre-rent-control period high enough to anticipate either the refitting costs or the advent of rent controls.

Therefore, there must be a mechanism to allow the sharing of these costs, without a cap, between landlord and tenant over time. It is reasonable, it is fair and it ensures the good maintenance and management of rental buildings. The landlord should not have to obtain tenants' approval of any renovation. If it is feared that some might be frivolous, perhaps a category could be set up under which certain contentious items could be listed as needing approval by the majority of tenants. For example, you might want to put installation of a so-called luxury item like a marble vanity on a list that would have to be approved by a tenant or group of tenants, whereas replacing concrete floors in a parking garage would not be on such a list.

Re sections 23, 24, 25 and 26 in the particular bill we are faced with here, dealing with a tenant's right to apply for rent reduction, these sections are quite unacceptable. They are extreme measures which will put the landlord in a very precarious position subject to the whims of tenants at any time, when in their view the building is not being well maintained. It could result in chaos. The rent officer would be required to take time to inspect the premises and act as sort of a referee in determining what maintenance would please the tenant. Also, the lowering of rent due to an inordinate decrease in his operating costs is just not practical. If such a situation were to occur, and I cannot envisage any scenario where it might, the decrease would only be temporary. Yes, it might give the landlord a temporary cost reprieve without in any way, however, affecting the tenant. Any reduction after the rent has been set would be financially difficult for the landlord. You plan your year ahead on getting so much rent. Therefore, I have this income to work with and I want to do certain things and now, all of a sudden, I find it is going to be reduced. It is too shocking.

There are strong municipal maintenance standards bylaws -- believe that -- which already address building maintenance. Any further policing in this area is redundant. Also, it is very important to note that many cases of deterioration are caused by the tenants themselves, through lack of proper and adequate housekeeping. The proposed penalties provided in this section for any breach are really too severe.

Another part of the legislation which is objectionable and unnecessary is the requirement to register small buildings; that is, buildings of four to six units. There are thousands of small landlords around and thousands of these buildings. The cost to the taxpayer to do this would be huge. It is totally unnecessary. Further, many owners of the buildings, being small landlords, would find the complicated process of registering these to be quite a difficulty. Big buildings are registered -- let it go at that.

Last, and one of the most important parts of the legislation which is really frightening, is the right of the ministry to obtain search warrants to search a landlord's home or other premises. This kind of power should avail for criminal matters only; it has no place whatever in civil legislation in this country. It is obvious that in the true interests of fairness this bill must be scrapped and a new one drawn up after consultation of a committee made up of personnel, representative landlords and tenants. That is the only way to arrive at palatable legislation in this very contentious area of rental accommodation. Thank you.

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The Vice-Chair: Thank you. Mr Grandmaître, you have a question. Could you just read the question, Mr Davy?

Mr Davy: Okay, thank you. The question is: "If we were to abolish the percentage system or percent increase, what formula or mechanism will you replace it with?"

That is very viable. I think the percentage system is okay. I do not think there is anything really wrong with using that system to increase rents. It is just that I do not think it should be looked upon as being such a horrendous increase when you see a 30% increase. Do you understand my point? You have to have some method of increasing rent, and if a percentage system is not in place you have to use a dollar system which one can translate right back into a percentage system. My concern is simply that we talk about people getting a 50% increase. If they are only paying $200 a month to start with, 50% brings them up to $300 and that is still cheap rent. That is my main concern.

Mr Winninger: We started with Bill 4 and there were a lot of complaints from landlords that it was retroactive. It was designed to deal with some wildly escalating increases under the RRRA, so we introduced a transitional provision under Bill 121 to allow landlords to pass through capital costs up to a limit retroactive to January 1, 1990, the theory being that before that date they would already have applied for and received their increases under the old legislation. The landlords complained that they were not able to pass through their capital costs so we allowed them to pass through capital costs up to a cap of 3% above guideline, all very fair, I would submit to you, in coming to terms with the landlords' concerns about deteriorating housing stock and being able to make a modest profit.

The area where I would disagree with you, however, is that landlords should get a general amnesty on the rents. We know that when they registered the rents in 1986 there were a lot of complaints about that. The justification process never really took place, and I think it would be grossly unfair to say to the tenants now, "We're going to allow the landlords an amnesty." I am sure you are a good landlord and you do good repairs, but that rewards the kind of ruthless landlord who increases rents unlawfully. I do not think we should reward landlords for that kind of misconduct.

Mr Davy: To answer your second point, my point was not in any way intended to try really to give amnesty. That was not the main thrust of my intent. The main thrust of my intent was simply to start with a fresh base; it was not the intent to simply grant amnesty. That was a byproduct, if you like. The main intent was to say: "Start with a fresh base. Let's call all the blinking rents legal and let's start from here and stop about all this `rents set in 1984, the 1980s.'" That is all. It was not intended to grant an amnesty.

To comment on the first comment you made about the cost of building and maintenance, capital costs, my concern and I think the landlords' concern -- although I am not involved in this like some landlords so perhaps I am not quite as qualified to speak -- was that if they had had an application in for rent review, it had been approved and the tenants sometimes even had been paying the new rent, you understand, then to have that ruled back after they had borrowed money to do these things was my concern. This was a fait accompli. That is what I say; that should have not been retroactive. That was done, it was approved and they were paying it. Leave it alone.

The Vice-Chair: Mr Tilson has a written question.

Mr Davy: "With all the bureaucracy being created, are the rent control wars of New York inevitable?"

Well, yes, I think it is pretty hard to say it is inevitable but it is certainly leading to that kind of thing. Any situation where you get alienation and confrontation between two groups and where you have each group struggling to survive financially -- a lot of tenants have a rough time paying the rent and a lot of landlords are having a rough time -- when you get those two ingredients, then you have the recipe for problems. If landlords cannot keep their buildings up, then they deteriorate and the rents cannot go up. People cannot pay the rents, the building deteriorates further and the whole neighbourhood goes down. I am not sure the bureaucracy is particularly related to that, but I think the system of having a restrictive rent control is.

The Vice-Chair: Thank you very much, Mr Davy.

KINGSTON RENTAL PROPERTY OWNERS' ASSOCIATION

The Vice-Chair: The next presentation will be from Bob McKean. The unions cancelled just now. Good morning, Mr McKean. The committee has allocated 15 minutes for you to make your presentation. We would enjoy it if you allow us a few minutes for questions and answers within that 15 minutes. You can begin by introducing yourself.

Mr McKean: Thank you, Mr Chairman. My name is Bob McKean. I am president of the Kingston Rental Property Owners' Association. I have been a landlord since 1972 and a licensed real estate agent since 1978, so I look at the situation from three different points of view. What concerns me as I present this, my fourth brief at yet another hearing to yet another Minister of Housing, is whether those attending are really prepared to listen.

The Kingston Rental Property Owners' Association is made up of approximately 58 members. These landlords represent about 7,000 units in the greater Kingston area, and 90% of our membership is made up of landlords of 30 units or less. The membership is made up of teachers, shopkeepers and tradespeople, everyday people like you and me.

Our association has been operating since 1970 and up until recently has had a good rapport with our tenants. We find with the present regulations and the stipulations this relationship is deteriorating at a rapid rate. Five of our small landlord members made applications for rent increases based on capital expenditures. They used the services of an experienced rental consultant to arrive at an approximate cost of the rental increase due to their expenditures and went ahead with the expenditures. One landlord in particular spent over $200,000. I personally spent $90,000 for a rent increase due December 1. It got rolled back to October 1, I did the renovations and got no credit for it. The renovations were almost finished when it became retroactive.

As one frustrated small landlord from our association writes: "My building was owned by a family who had the building paid for. They had not raised the rents for many years, leaving the rents well below market level. I had to get a mortgage. I had to apply for more than the guideline rent. Rent review gave me an agreement to raise the rent by 5% over guideline for three years. The tenants did not complain and they were pleased with the work that was being done. I had hoped to break even. Now my deficit is $14,000 per year because the new government rolled back my increase. Is our government deliberately trying to put landlords into bankruptcy? The rollback of phased-in agreements is tantamount to legitimized stealing. Where is the rent adjuster who can help the small landlord adjust rents for apartments where the owners did not keep up with the present increases, instead of continually trying to drive the rents down for a legitimate increase? The new rent police in rent review are similar to the KGB in the Soviet Union. Are we going beyond socialism to communism?"

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I had a number of other things I wanted to talk about, but something has come about recently that I thought was even more important. In August 1991, Gary Wilson, our MPP for Kingston and The Islands, sent a letter to tenants in the Kingston area. I would like to read you this letter:

"Dear Friend:

"It's a new day for tenants like you. On June 6, Housing minister Dave Cooke proposed a new rent control law that will provide you with rent rules that are fair and certain.

"An important feature of this new tenants' bill is that once this bill is passed, new rules will strengthen your right to have needed repairs and maintenance done to your apartment.

"When the New Democrat government took office in October, the rent review system was a mess. Tenants never knew if their rent increases were going to be 5% or 45%. Landlords were tied up in wasteful and time-consuming bureaucracy. Some landlords weren't doing needed repairs; some were doing unnecessary renovations and charging tenants who didn't want them and couldn't afford them.

"In my riding of Kingston and The Islands we found that tenants had been victimized by rent increases of up to 25% a year. Sometimes big landlords flipped apartment buildings and passed inflated financing charges on to tenants. Other landlords exploited special giveaway provisions in the old law to hike rents. For example, one landlord owned two companies. The first company owned the building while the second owned the land the buildings sat on. The land company raised the rent it charged the building company. The building company passed this increase on to its tenants. In the end the giveaway contained in the old Liberal law gave landlords many opportunities to manipulate the law and make tenants pay more.

"That's why Housing minister Dave Cooke put an end to the giveaways allowed under the old Liberal law. And to plan for a new, permanent law, the New Democratic" --

Mr Tilson: That is a nice, non-partisan letter.

Mr McKean: It goes on and we ought to skip because it comes into a number of -- the old rent review system was unfair, landlords used giveaway provisions to charge higher rents, tenants were left afraid and the New Democrat government rent control system will give a rent control you can count on.

I find this letter infuriating. In his enthusiasm to protect the tenant, did he not once stop to consider the numerous landlords in his riding who are not aware of their rights probably because today landlords have so few? This is another instance of the poor tenant being protected against whom? A fellow citizen who invested time and money in rental property. Our problem certainly is not going to get better unless tenants and landlords start to work together to reduce these costs.

When is Mr Wilson going to send me a letter, call me "friend," tell me what a good service I am providing to the community by providing affordable housing available at no cost to the government, thank me for taking phone calls in the middle of the night which forced me out of bed on Christmas Eve to repair frozen water pipes that occurred as a result of a negligent tenant leaving the door open, or putting up with destructive tenants? This letter does nothing but pit the tenant against the landlord more than ever before. It is no wonder tenants now tell landlords they can do anything they want, "I pay my rent." Is this the NDP mandate?

In one breath the government says: "Trust us. We're looking out for your best interests." Is this an example of it? Where is help from the system when an annoyed tenant calls property standards over a minor issue? And who can please everybody? As a result of one complaint I was told to replace 15-year-old aluminum windows to meet 1991 standards.

A number of ways Bill 121 affects our business:

1. A reduced annual guideline: It was previously agreed by a committee of landlords and tenants that the guideline formula is based on 66% of inflation. The government now reduced it to 50%.

2. Limit on capital increases: 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. To qualify for the 3% you actually have to spend 5% each year, since the government has deemed 2% to be included in the guideline for capital work. In other words, you 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 be broken into a series of projects over many years at much higher costs and inconvenience to the tenant in the long run. 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 manage to skirt every minefield, the government will generously allow you to recover 60 cents on the dollar.

3. Extraordinary operating cost increase: The same 3% cap must cover extraordinary operating costs, so you had better hope that in a year where you have to spend money on capital, your municipality does not increase your taxes, utilities, put on a sewer surcharge -- as they did this year -- heating cost, and of course now the added GST. As for other costs beyond our control, insurance rate increases or higher maintenance costs and vandalism are no longer grounds for increases.

4. Blatant disregard for loss: Remember how David Cooke, our previous Minister of Housing, promised that those caught with capital expenditures not recoverable under Bill 4 would be treated fairly under the law? Chalk it up to another broken promise. The expenditures have been capped at 3%. It does not cover the money I have spent.

While trying to recover a fraction of what was spent in 1990, you will not be able to do any new work until 1994, since your 3% allowance has already been used up for the next two years. This is no defence if you get a work order. Your rents could be rolled back if you do not comply immediately. Future capital allowances could also be at risk if it is ruled the work was neglected, even if the landlord can prove there was no money to pay for it with just a 3% increase.

Do you realize mortgage companies are reluctant to lend money to owners for repairs, and even it they do, the cost to refinance an existing mortgage is extremely high, with the legal appraisal and mortgage fees? Mortgage companies do not like owners to take equity out of their building. I know. I have tried.

5. Unreasonable maintenance: The new law proposes to penalize a landlord who does not comply with the work order within 30 days of being reported to the ministry. Notice it does not say, "make a reasonable effort to comply." You must actually show the work has been done. What if the plumber is on strike? What if it is in the wintertime and I get a work order for paint? You cannot do it in 30 days. It simply cannot be done. Too bad, you are out of luck.

The government, via this bill, is treating landlords as criminals before we are proven guilty or even convicted of any crime. Why is there even a provincial board at all? Here in Kingston, as in most communities, channels already exist. They work. This is one more case of government intervention in municipal affairs.

6. Permanent reduction in the value of the building: Mortgage companies are hesitant to loan more than 65% of the appraised value for new purchasers. Would you invest 35% of your money into a building with no return? It is no wonder so much money is being reinvested out of Ontario. I know of a number of situations where they have invested in Edmonton and Dallas, Texas, within the last couple of months.

A couple built an 11-unit apartment building on Wellington Street in Kingston. Some 32 years later, the elderly widow offered the building for sale at $600,000, or $54,000 per suite. Prior to Bill 4, an offer was accepted for $540,000, accepted by the vendor, but withdrawn by the purchaser upon hearing of major changes coming. The building was later sold for $352,000, based on its income, well below the $70,000-per-suite replacement cost. This elderly woman was penalized $188,000 because she failed to increase her rent each year. She liked the tenants. They had a good rapport, so she had not raised the rents. Why should she be penalized? This is one more circumstance where a rent increase in excess of the guideline is necessary just to bring the building up to a reasonable value and to bring the rents to a market level.

The government was concerned that our capital expenditures were of a luxury nature. In many cases, our buildings are 20 to 35 years of age and require fire alarm systems, upgrading electrical services and elevators. Our balconies are cracking, mechanical systems are worn out, tenants are continually asking for upgrades. They deserve some upgrades, and you tell me I cannot do it unless it is in the 3%. Where does the landlord get the money to do the repairs?

7. Increase in interest rates: For most landlords, mortgage payments are the largest single expense category. An increase in interest rates, which is completely beyond my control, could lead to bankruptcy if there is no way to pass the cost through, yet Bill 121 eliminates a landlord's ability to pass through increases resulting from a higher interest rate. Interest rates right now are at a four-year all-time low. Inevitably, they will go up.

As if fluctuating interest rates are not enough, mortgage companies are reducing the principal amount of existing mortgages upon renewal. They say, "Because of your rent increases not going up, we're not going to renew your mortgage for the same amount." Where does the landlord get the shortfall?

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8. More bureaucratic hassle for the small landlord: The rent registry has essentially been inoperative and unable to cope with the task of registering and providing notices for large buildings. Now you have decreed that buildings which contain four to six units must register. The bureaucratic hassle is so confusing and intimidating that the average Ontario citizen considering some form of investment will avoid rental property and invest in something else.

The government told us that if we go through the right channels and use the rent review process, we can get a rent increase in excess of the guideline. Then sweeping retroactive changes are made. The existing landlords are so frustrated they want out. My own buildings are for sale. I have been a landlord since 1972 and I am fed up to here. I have enjoyed it up until now.

9. Search and seizure: 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. These sweeping powers given to the rent police are truly frightening. I give 24 hours' notice to my tenants to enter their apartment for repairs, yet the rent police have the right to enter my home unannounced, push aside my family and seize records from my basement office.

10. The unknown: Definitions for terms such as "neglect" and "inadequate maintenance" are not established. Changes to the rent control index have been talked about but will remain unknown until regulations are released in the fall or winter. There is also some talk that the capital amortization table will be altered. Clearly, very little capital work will be possible for 1991-92. There is no guarantee that the calculation of the allowance will be based on a 10- or 20-year amortization or whether a particular expenditure meets an undefined test of "necessary to physical integrity" of a building or to protect the environment.

I had some discussions on behalf of one of our association members with representatives from Revenue Canada. This particular owner has a small, four-unit building. She has owned it for a number of years. She is losing money. Revenue Canada is now saying there is a possibility she will not be able to write off her loss if there is no chance of her making a profit on the building. With this added threat, one more person is considering leaving the business.

In conclusion, the NDP government seems to think all landlords are rich and greedy. Many of us are just ordinary people. Faith in our economy and the free enterprise system has made Canada prosper and succeed. As we make laws that infringe on these basic policies and rights, we jeopardize the democratic system. Get out of rent control and subsidize the people who need the help. If there is such a shortage of accommodation, if there is a profit to be made, more buildings will be built and there will be lots of accommodation available.

The Vice-Chair: Thank you. You have perfectly timed your presentation to use the entire 15 minutes. We appreciate your coming today.

KINGSTON COMMUNITY LEGAL CLINIC

The Vice-Chair: The next presentation is by Andrew Roberts of the Kingston Community Legal Clinic. As you know, you have 15 minutes allocated. Please identify yourself and your organization for the purposes of our Hansard recording.

Mr Roberts: My name is Andrew Roberts and I am a staff lawyer with the Kingston Community Legal Clinic in Kingston.

I am going to begin my presentation with a short story. I am unable to quote the source, but I understand that a very wise judge once said to counsel who was going to appear before him that he should be concise, be clear and be gone. In my presentation this morning, I am going to try to be that way.

It is our intention to bring to the committee's attention this morning the different and particular characteristics of the housing market in Kingston, particularly the tenant population and the housing stock which is rental housing stock in Kingston, and to offer two strong recommendations as a result.

Our first recommendation is that the rent registry apply to all residential units in Ontario.

Rental units comprise a high proportion of the residential premises in Kingston, much higher than is the proportion of rental units in many other communities in the province. The city of Kingston's report issued in 1990 as the Municipal Housing Statement Update indicated that, as of 1986, some 58% of the housing units in the city of Kingston were rental accommodation.

The second peculiarity to the housing market and the rental market in Kingston is that a large proportion of the housing stock in Kingston is composed of smaller units, as many of these units were constructed before the era of large multiple unit buildings. Over a quarter of the city's housing stock was built before 1946 and almost another half was built between 1946 and 1970. Almost three quarters of the housing stock then was built before 1970, based on 1986 as the base year. Although the data are not available in support of the point, I would assert that much of this older rental housing stock is comprised of rental units in buildings with just one or a few rental units.

A further quality which I would suggest is particular and peculiar to the residential rental market in Kingston is a high degree of transiency among tenants. Kingston is the home of Queen's University and its enrolment of about 15,000 students, many of whom are tenants. There are eight federal correctional facilities in Kingston, many of which release inmates to the Kingston area, and many inmates have families who move to Kingston to be closer to them while they are in one of the institutions. There is a regional psychiatric facility with some 700 beds, many of whose patients are released into the community. Many of these people suffer an illness again and are reinstitutionalized and released yet again. Finally, Kingston is the centre for a large hinterland for a variety of residential care facilities whose tenants, clients and patients are often released into the Kingston community after a period of residency in one of the facilities.

These are characteristics that are peculiar to the tenant population in Kingston and I think speak to a higher degree of transiency than one might normally find elsewhere in the province. The result of this is that incoming tenants often lack knowledge about the outgoing tenants and about the rent that had been paid by those previous tenants.

Given the particular qualities of high transiency, older and smaller rental housing stock and a high proportion of rental housing, we feel the rent registry should require the registration of all residential rental units in the province.

Our second recommendation is one which earlier speakers have canvassed and, I am sure, subsequent speakers will address as well, that a much-expanded low-rise renovation program be delivered by the province.

As I indicated earlier, over a quarter of the city's housing stock had been constructed by 1946 and almost a further half was built in the 1946-to-1970 period. Given the age of the housing stock in Kingston, major maintenance and capital expenditures are extraordinarily costly. Many stock items cannot be used; special materials must be obtained and the costs of repairs are enormous.

These questions, as earlier speakers have suggested, created a tremendous tension between tenants and landlords. But instead of dickering over percentages and amounts that ought to be and should be and can be allocated to these areas, it is our contention and suggestion that much of this tenant tension would be alleviated if a much-expanded low-rise renovation program were offered and delivered at the time this legislation comes into force.

I made inquiries about the program in its present form and found that in Kingston only 75 units had been allocated for the low-rise renovation program in 1991. This allocation was gone in less than two weeks. I was given to understand that the program works extremely well, that it is managed easily by the officials who must manage it and that, as an estimate, a further 500 units could have been found to be eligible under the program in place at this time.

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Accordingly, given the particular nature of the especially aged housing stock in this community, very unlike the housing stock in many other parts of the province, particularly the larger urban areas, given the extraordinary costs of major maintenance and capital expenditures to this aged housing stock and given the tensions which are placed by this between tenants and landlords, we propose that a much-expanded low-rise renovation program be introduced concurrently with the new Rent Control Act.

Those are the two submissions that the Kingston Community Legal Clinic wishes to make to this committee. We thank you for the opportunity.

Mr Tilson: The general theme that seems to be developing here today, and which has developed in other communities we have visited, is -- from both landlord and tenant groups -- the lack of simplicity; in other words, that the whole system is becoming more and more complicated. It is a great boon for people like you, of course, because you are going to be the only people who are going to be able to understand it.

Mr Roberts: We are also run off our feet.

Mr Tilson: I am sure you are, and you are going to have to become a specialist to understand it, because I do not think the average lawyer is going to be able to understand it after a while. We hear that tenant associations which are forming have to go to conferences. We have landlord associations hiring lawyers and consultants. It is getting bigger and bigger. How much can the taxpayer bear? Because all of this complicated bureaucracy and regulation is going to require an unbelievable amount of not only people in the private sector, such as you -- I do not know whether you are in the private section.

Mr Roberts: The non-profit, voluntary sector.

Mr Tilson: Okay, and certainly in the public sector as well. You are a taxpayer. How much can you bear?

Mr Roberts: I would like to answer your question, if I could, within the ambit of the recommendations we have put forward. In connection with the recommendation that the rent registry apply to all residential units, I did observe the requirements of the rent registry in another setting in which I worked previously and it was not my observation that those requirements were particularly onerous. I feel there are other draws upon the bureaucracies that occur when tenants find the rents they are paying are perhaps not the legal rents and they then have to seek to invoke measures they do to bring redress to that. Furthermore, many tenants who may be paying illegal rents will face a variety of complications in relation to their income and will have to draw the bureaucracies into play on their behalf in that regard. I think a rent registry that is simple should --

The Vice-Chair: Thank you. Mr Wilson.

Mr G. Wilson: Thank you very much, Andrew, for your submission here. It certainly presents two well-documented and well-argued suggestions which we will take into account. I do, though, want to ask you, from your experience in the legal clinic, about the kinds of problems you run into. For instance, a previous speaker to our committee suggested that the legislation is causing antagonism between landlords and tenants. The thrust of our legislation is in fact to try to relieve these tensions. They pre-dated our legislation in particular and legislation in general probably since, as you heard, the Tories themselves brought in rent control legislation some 15 years ago. I am just wondering what your observation is of this. From the cases you have heard, what are some of the grounds of these tensions that you hear? Are tenants out to gouge landlords?

Mr Roberts: My observations are that the tenants look forward to the legislation that is presently in draft. Tenants find solace in feeling there will be fewer loopholes and fewer ways around the issue of rent control than there have been. Also, I have observed tenants to feel solace in the areas of maintenance and renovations, but I fear some of that solace will turn into tension, as I have suggested in my brief it may. I am not sure that solace is well founded and I fear some of those tensions will be brought upon the relationship between tenants and landlords in the present manner. I make that recommendation in the strongest possible terms.

Mr Grandmaître: Mr Roberts, in your presentation you alluded to a low-rise renovation program twice, I think, or maybe three times. Did you know there is a low-rise renovation program in place?

Mr Roberts: Yes, and I referred to that particular program when I suggested that 75 units were allocated to Kingston in 1991. But I was given a best guess that 500 units could have easily been handled if the funds had been allocated under that program, under the presently existing program. There is a program, but its scope in this community is far too modest.

Mr Grandmaître: Did you discuss this with municipal council, because as you know, to apply for this low-rise renovation program you must go through your municipal council.

Mr Roberts: Yes.

Mr Grandmaître: What was their request?

Mr Roberts: I have not discussed this with members of council. I have discussed this with a city official with whose work I am familiar and who gave me some guidance on this.

Mr Grandmaître: But you do not know what the --

Mr Roberts: I do not know that the city of Kingston has applied for a greatly increased allocation of units.

The Vice-Chair: Thank you, Mr Roberts. We appreciate your presence here with us today.

HASTINGS AND PRINCE EDWARD LEGAL SERVICES

The Vice-Chair: Our next presentation is from Lynn Wheatley, Hastings and Prince Edward Legal Services. You have 15 minutes allocated to you. I will, if you wish, warn you if you are approaching the end; otherwise you have 15 minutes to discuss your brief with the committee as you wish.

Ms Wheatley: Thank you very much for the opportunity of being here.

I do work in a community legal clinic. Our main office is in Belleville and we have satellite offices in Bancroft, Picton and Madoc, which are all rural communities. We represent many clients who live in rural areas and we therefore are familiar with rent review issues that particularly affect those types of tenancies. What we have decided to do in our presentation is highlight four issues we feel are of particular importance to rural tenants.

I have given you a written brief. You will notice that it is long. Certainly if I went through the whole thing, it would take more than 15 minutes, so I am going to highlight the four issues and try to spend just a couple of minutes on each issue, leaving time for questions.

The first issue we would like to raise is the enforcement of repairs and maintenance, which is of course very important to tenants because it is very important that their homes be repaired and maintained. It is obviously the landlord's obligation to do this under the law. The question is how is this obligation enforced, because sometimes it is difficult to enforce the obligation.

In rural areas, a typical rental home would be a single-family house or a single-family mobile home which is occupied by the tenant with no common areas. It is often on a large tract of land. The landlords are often absentee landlords who live in cities, who own the land either because they want it for their retirement or for investment purposes. There is often not much time devoted to maintaining the premises by the landlord, and sometimes tenants are expected to maintain them themselves, so we are glad to see that Bill 121 does have some enforcement mechanisms for repair and maintenance.

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One of the enforcement mechanisms is the rent penalty. We think that is an appropriate remedy if a landlord has not maintained or repaired a premises. However, we do have some concerns that this may not be effective in a rural area. There are 32 municipalities in the two counties of Hastings and Prince Edward. Only 15 of them have property standards bylaws. Even in the municipalities with property standards bylaws, it is sometimes difficult to get work orders in those townships and villages. Property standards bylaws officers are often reluctant to make work orders. In small towns everybody knows everybody and things are often done to avoid conflict. There may be more reluctance by the property standards bylaws officers in small towns to issue work orders if they know the consequence is going to be a rent penalty.

We support a provincial standard, and we support a provincial standard that should apply to all municipalities without property standards bylaws and to all municipalities where the property standards bylaws are inadequate. For example, in Bancroft the property standards bylaws only apply to the outside of the building, not the inside. We also think the standards should apply where there is not proper enforcement of the bylaws. There must be consistent enforcement of the maintenance bylaws across the province or the rent penalty enforcement mechanism will be meaningless to people who live in rural areas where they cannot get work orders.

The second issue I would like to address is the rent control guideline. As everyone knows, in the bill each year the minister will set a rent control guideline and this will be based on a rent control index which takes into account operating cost categories set out in the regulations. We anticipate the operating costs will likely include superintendent's salary and rent, heating, hydro, water and cablevision, among other things, because that is the current operating cost.

This method of determining a rent control guideline imposes operating costs on tenants in rural areas that are not reflected in actual operating costs borne by landlords. In our experience, in the single-family home that tenants typically live in, they pay their own hydro, they pay their own heat, they cut their own wood and there is a well so there are no water costs. There is no superintendent because there are no common areas. Often you are not even going to get cable TV, so that is not even an issue.

We think it is inappropriate that a landlord would be allowed a rent increase based on the increase of costs such as heating and hydro when the landlord does not bear the costs, the tenant bears the costs. Recognition should be given to tenants who pay their own utilities. Perhaps the regulations could be adjusted in those situations -- there could be a regional guideline -- but it is inappropriate that a tenant should pay, through a rent increase, for operating costs the landlord does not have to pay for.

The third issue I would like to talk about is maximum rent. The Ministry of Housing has repeatedly stated that this bill will mean that no tenant in Ontario will ever be faced with a rent increase which is greater than the rent guideline plus 3%. By maintaining the concept of maximum rent, this simply is not true. It is false. Section 11 of the act would allow the landlord to charge rent above a guideline increase if the rent is not higher than the maximum rent. A tenant could easily be faced with an increase of 15% to 20% in one year or more. I will give you a couple of examples.

In rural areas, what typically happens is there is not a rent increase for many years. For three or four years perhaps there could be no rent increase. This might be because the market rent has not gone up. This might be because the landlord can operate the premises and make a profit without increasing the rent, so there is no need to increase the rent. If three or four years pass and there is no rent increase and then the landlord decides, "I want the maximum rent now," a tenant in a rural area could be faced with an increase of easily 15% to 20% in one year. Economic eviction would be the result. Rural tenants are often tenants with low incomes, and if they were faced with an increase that high, it could mean they have to leave.

A second example of this would occur when there is a discounting. Now this is not a rural problem necessarily, but the case I have cited in here is from Belleville. Where there is a discounted rent but the landlord can set the maximum rent at the undiscounted amount, it could lead to problems. In the example I have given you, there was a lease in 1985, undiscounted rent of $820, discounted rent of $570. In 1990, the Rent Review Hearings Board set the maximum rent at $1,027. The rent the tenant was paying in 1989 was $727. If the landlord raised the rent to the maximum rent, that would be a $300 rent increase in one year, almost 50%, which is unbearable.

The concept of maximum rent must be refined to protect tenants against large increases and live up to the promise of the government. There should be no large rent increases, ever. If the concept of maximum rent is not abolished or refined, there must be a cap on the amount of rent increase a landlord can take each year, despite the maximum legal rent.

Our fourth point has to do with procedure, and procedure is important because of access to a fair hearing. Two points about procedure: The first is that we support an independent review process. Under the current scheme, rent review officials would make all the decisions in the administrative process or the hearings and the only appeal would be to a Divisional Court on a point of law. We submit that there should be an independent hearing board so that tenants can have a fair hearing.

The second point that we would like to raise with respect to procedure has to do with the right to a hearing. It is very possible that if a tenant does not ask for a hearing, there will be an administrative process only. This is a problem for tenants who do not have the resources, are not literate; perhaps they do not know they have to ask for a hearing. You could easily have a tenant where the decision is made by administrative review by default. A tenant who is illiterate or who does not have access to legal services or has transportation problems may not make written submissions in an administrative review, and we are concerned that if there is not an automatic right to a hearing, tenants will be deprived of a fair process.

That is all I have to say. Is there time for questions?

The Vice-Chair: There is about five minutes. Ms Harrington.

Ms Harrington: I wanted to reply to some of your concerns. In the small municipalities, the province does have property standards inspectors. There are 36 of them and their responsibility is to try to deal with the problems in the rural areas where there are no municipals.

The problem of maximum rents which you brought forward and the fact that there is no stability for tenants in that particular system is something we have heard before, we have noted and we are concerned about.

Now you are saying the costs in rural areas are not fairly reflected in the guideline. That is something I am glad you came all the way from Belleville to tell us, because our view was that every part of Ontario deserves protection and that is why, of course, we thought the guideline should be throughout Ontario. So we certainly would like to look at that problem of applying the real costs in the guideline.

Ms Wheatley: If I could just make a response about the property standards officers, I work in the Bancroft area. I am there every week, so I have experience with the inspectors who have been appointed by the Residential Rental Standards Board. I think that is good; I think it is good that we have a provincial standard. My concern is that there be enough trained and experienced inspectors to do the work; 36 in a province the size of Ontario is not a lot of inspectors. So if we are going to rely upon a provincial standard and provincial inspectors to protect these municipalities, they have to be there and they have to be able to get there fast and get their orders out fast.

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Mr Grandmaître: Possibly on the same subject, do you think we should have two minimum housing standards in this province, an urban one and a rural minimum housing standard?

Ms Wheatley: I think that might be a good idea because they certainly are different properties altogether. We are dealing in the rural areas with septic systems, wells. It is sometimes hard to compare an urban apartment building to a farmhouse with a septic system. So keeping in mind quality, I think two different standards reflecting the two different characteristics of the areas may be a good idea.

Mr Grandmaître: When the minister went around the province consulting people on Bill 121 for eight months, did you have a chance to tell the minister exactly what you thought of the bill?

Ms Wheatley: Unfortunately, with such short notice, at that time our clinic did not make a presentation on those initial consultation processes.

Mr Grandmaître: Do you know if the Kingston clinic did?

Ms Wheatley: I do not know. We were given very short notice on that one.

Mr Tilson: I come from a similar area as this, not as large as Kingston but a similar area. In the specific municipality where I live, we have one bylaw enforcement officer who looks after everything -- canine control, you name it. There are other municipalities in our area that do not have any bylaw enforcement officer. They are rural-type areas.

We have had bankers, we have had landlords, we have had concrete restoration people, everybody under the sun, who have come to these hearings and said that with Bill 121 owners of buildings will not be able to undertake the capital expenditures necessary to make repairs to their buildings. They simply will not be able to do it.

The legislation of course talks about negligence. We do not know what it means, but it talks about negligence, and may result in a proliferation of charges by bylaw enforcement people.

My question to you is as someone who perhaps speaks for rural- and semirural-type communities that have bylaw enforcement officers, and I am not talking about the 36 people who go around the province, which I do not think will be enough. Will they be able to handle the job when landlords are telling us that they will not be making the necessary capital repairs to their buildings?

Ms Wheatley: There is an appeal process that landlords can enter under any municipal property standards bylaw. If there are a lot of buildings in disrepair and it may be possible that the small-town bylaw standards enforcement officer is not be able to handle it, that is when the province could step in.

Mr Tilson: That is the area I am looking at. I am not looking at the people who do not have bylaw enforcement officers.

Ms Wheatley: If there is a property standards bylaw officer, and because it is a part-time job and because he cannot enforce the bylaws, the provincial standards should apply not only in areas where there is no bylaw but in an area where a bylaw could not be adequately enforced either because of reluctance by the property standards bylaw or the inability of the property standards bylaw to do it.

The Vice-Chair: Thank you, Ms Wheatley. We appreciated your coming before us this morning.

DORETA APPAREL SHOPS

The Vice-Chair: The next presentation will be made by Richard Kizell of Doreta Apparel Shops. You have 15 minutes allocated to you. If you would like to reserve some of that time for questions and answer with the committee, we would appreciate that. Please introduce yourself for the purpose of Hansard.

Mr Kizell: My name is Richard Kizell. I am part-owner of a company called Doreta Apparel Shops that is a landlord in Kingston.

Thank you very much for giving me the opportunity to make a presentation to the legislative committee studying the rent controls in Ontario. My father and I are small businessmen who own and manage a few residential buildings in Kingston. Our family has owned at least one apartment building in Kingston since 1954, so we consider ourselves long-term investors.

I have been extremely upset with the government's position on rent controls. The last year has been a nightmare for us as landlords. First the NDP government cancelled any phase-ins we had which had been approved by the Residential Tenancy Commission. We made investment decisions in good faith, and the NDP government arbitrarily cancelled decisions that had been agreed upon by the government's own commission. In my opinion, by cancelling past agreements the government violated my rights.

We were then faced with a rent increase frozen at 5.4% for 1991. In an ordinary year, we could probably have lived with an increase of 5.4%, but 1991 is not an ordinary year. The following are some of the increases in expenses we faced this year: We had to absorb a 7% increase for GST on all our supplies, utilities and maintenance and we were not able to apply to get any rebates or refunds on it; our property taxes are up 8% this year; our PUC costs are up 18% this year; our oil bills are up 10% this year; our balconies all need replacing; our roof is 30 years old; we are replacing our furnace and hot water tanks this year, even though the NDP government will not allow us to recover the costs.

If you are going to limit rent increases to 5.4%, why do you not limit Ontario Hydro increases to 5.4%? Why do you not put controls on oil costs? Why do you not tell the landlords that they do not have to pay the GST?

Are we not entitled to a return on our investment? The announced 6% increase for 1992 has tempered my anger to some extent, particularly if you allow an extra 3% for extraordinary operating costs. This is acknowledgement that it costs more to operate buildings. If rents do not go up to cover the increased costs, landlords will have no choice except to cut services.

I have a 14-unit building that I spent $105,000 on last year to bring it up to code. I was given a grant of $70,000 towards the cost under the low-rise rehabilitation program. Unfortunately, that program has no money in it this year. Our building is 40 years old and the plumbing, wiring, kitchens, bathrooms and roof all needed to be replaced. We had done the repairs over the last 40 years but, unfortunately, the standards had changed, technology had changed and everything needed to be replaced.

It was only because of the grant that we could afford to do the work. Is the government prepared to give every landlord a grant to do major capital repairs, or is it going to allow higher rent increases for major capital repairs? Eventually, the government will finally realize that rent controls are not working.

Rent controls penalize both the landlord and the tenants. Rent controls distort the marketplace and do not help those who really need the help.

I have one building where the rents are $550 per month for a two-bedroom apartment. Most of the tenants can easily pay more. I have another building where the rents are $375 per month for a two-bedroom apartment, where I would say that 30% of those tenants cannot pay the rent at that low level. How many people in Toronto would line up for an apartment at $375 a month for a two-bedroom apartment? Yet those tenants still cannot afford to pay the rent. They are still bouncing their cheques and it all has to do with the location of the building.

In both buildings the rents went up 5.4% this year. In the one building the tenants could easily afford the increase. In the other building the tenants could not afford the increase. How is rent control helping the tenant who needs help? The answer is to phase out rent controls and let the market decide on the rents. With a proper phase-in period, there will be more building. With more building, there will be more supply and therefore more competition. In some cases, rents will actually come down.

The key to phasing out rent controls is to provide rent vouchers to those who actually need help with paying their rents. In my opinion, rent controls have not helped the poor but have subsidized the rich tenants and penalized the landlords. The rental stock in Ontario is deteriorating and operating costs are rising faster than the rate of inflation. Where is the money to come from for capital costs?

I do not deny that there are many renters who need help. If rent controls were phased out, many landlords would probably make a larger profit, which would in turn, hopefully, be taxed fairly. Those higher tax revenues could then be used to target rental assistance to those who actually need the help.

With rent controls phased out, builders would build, competition would force landlords to maintain their buildings, the market would decide the rents, and everyone would be better off.

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The present system is not working. Some landlords get grants to build or to pay for repairs while other landlords get nothing. Many tenants are subsidized by rent controls while other tenants are still being forced out of buildings in spite of rent controls. The government is losing tax revenue while paying out grants, and those who need help do not get it.

Every study in the world has shown that rent controls do not work. I urge you to recognize that our operating costs are up, capital repairs are needed, tenants need a place to live and the money has to come from somewhere. Does the government want to be the landlord to all the renters in Ontario? Are the taxpayers prepared to go on subsidizing those tenants who do not need help?

Thank you very much. Hopefully we have some time for some questions.

The Vice-Chair: We do. Mr Mahoney.

Mr Mahoney: Mr Kizell, you have asked a lot of questions that hopefully the government members will attempt to answer.

Ms Harrington: You can give me your time, Mr Mahoney.

Mr Mahoney: I think the answer that we hear them saying is that they want the private sector to stay in the rental business and to be part of producing rental housing, and yet everything in this bill would certainly point to the opposite viewpoint being true. There have been statements -- it is not a matter of being unfairly critical -- made by the Premier that he wishes to make it less possible for people to stay in the private rental business, and I think that message has come through loud and clear.

The previous presenter made an interesting point, however, that I think is very valid. It is that tenants should not be given a rent increase based on PUC costs or public policy costs of some description passed on to the landlord if indeed they pay direct. We have asked for a report on whether or not municipal taxes could be paid direct and assessed directly on a per unit basis, whether or not all hydro costs -- individually metered, I suppose -- all of those kinds of things could be passed on directly. Perhaps, as in a condominium association, there may be some common area responsibility of some type. Would you think that kind of system would work? How does your operation work now?

Mr Kizell: We have buildings where some of the tenants do have separate meters, and it works very, very well. It is amazing how they turn off the lights and are more efficient with the energy when they are paying. But unfortunately, to redo the buildings and give them all separate meters is very, very expensive. Somebody has to pay that capital cost.

Second is that there still is common area, which adds up. In one building we have an elevator, and the elevator costs are just going through the roof. Halls, the lights, the common-area rooms, the laundry rooms -- we use a lot of energy. There is still that part of it that has to be paid.

The older buildings all have central heating. I would love to put electric baseboards in every single unit, with a separate meter and a separate hot water tank, but unfortunately many of the buildings that were built 30 and 40 years ago were not built that way. To redo the buildings, the money has to come from somewhere. I think every landlord would love that: go to electric heat, go to a separate hot water tank for everyone in the unit, and let them pay their costs. But what do we do with the old buildings? In most of the buildings 30 or 40 years ago, that was not the method. In a place like Kingston, in Kingston proper, most of the buildings are older, whereas in the township they are newer. It is difficult to do.

Mr Tilson: You asked one question as to whether or not the government would be prepared to give you any grants for any of your capital expenditures. You did not say it, but I would assume you would also include interest-free loans or reduced loans. That type of question has been asked of the government before. I will tell you what the answer is, and I would like to hear your response. The government's answer is that people like you have been ripping the system off, over the years, long enough; and second, that this is an investment for you. You have an obligation to maintain your investment, to make capital improvements at your expense, because in due course you are going to make an unbelievable capital gain when you sell your property. That is their answer; that is the answer to the type of question you have asked.

Mr Perruzza: On a point of order, Mr Chairman: Are you going to allow members to make wild assumptions about what the government's position is and is not, and are you going to allow members to put words in the mouths of me or --

Mr Tilson: You said it; you have never been here.

Mr Perruzza: I have never said it.

Mr Tilson: Your fellow members have been saying it week after week after week.

The Vice-Chair: That is not a point of order.

Mr Perruzza: If you want to play politics, play politics. If you want to ask legitimate questions, ask legitimate questions.

The Vice-Chair: Order. Mr Perruzza.

Mr Kizell: Can I answer the question on the low-rise economy housing?

The Vice-Chair: Mr Tilson, are you prepared to have an answer?

Mr Tilson: My question to you is, having heard that type of response -- and I can assure you the government members have been making that type of response -- what is your response to them?

Mr Kizell: I will tell you about the low-rise program. It was a sharing program where the landlords did put in money -- yes, it is a long-term investment -- but the technology has changed so much. We have had rent controls now, I think, for 14 years in Ontario. In that period of time, we had the old knob-and-tube wiring in every apartment. We have switched now to automatic breakers. The fire controls have changed. Our buildings are now up to code on existing buildings, but the new code is that you have to have the automatic door closures, you have to have a more sophisticated smoke detector system. Though our buildings meet the present code for old buildings, the new code for new buildings is so drastically changed that unless the money comes from somewhere, how do we bring it up to code?

Yes, under the low-rise program we were given a grant by the government, a two-thirds grant, but there were conditions on it. The conditions of the grant were that the first requirement of the money spent was all on safety things for the tenants. It was not frivolous money thrown away for some landlord fat cat to make a big capital gain. When you have owned a building for 40 years, yes, if you sell the building there might be a capital gain, but the federal government is certainly looking after taxing that significantly. But the main point is that the tenants benefited so greatly from the low-rise program. They are living in safer buildings.

Which landlords are going to spend that kind of money when their building is already up to code -- it is just that the new codes have changed -- unless they are allowed to raise the rents or somebody gives them the money? That really was the basis of the program. The bulk of the funds went for that type of work. Of course, we also got a new roof out of it, for which we paid one third of the cost. But the money has to come from somewhere to bring up the standards of these old buildings.

Ms Harrington: I would like to try to explain some of the government's position, although the time is certainly limited.

You brought up in your brief a list of the costs that you are facing or have faced this year. The first four of these you enumerate, such as the GST, property taxes, the PUC, are part of the inflation calculation that makes up the guideline. So all of these things make the guideline fluctuate, costs go up, and therefore the guideline has gone up for this coming year, as you know.

I would like to get into a couple of the other areas that we have been discussing here. First of all, the market system has not increased supply. A system without rent controls does not increase the supply of housing. This is what we have found.

Mr Kizell: Where did you find that?

Ms Harrington: I can refer you to the studies if you would like. I have the papers. I can give it to you.

Mr Kizell: Yes, I would really like to see that.

Mr Tilson: It is probably confidential.

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Ms Harrington: The whole idea of this legislation is stability for tenants -- that is where we start from; I will certainly grant you that -- maintenance and upkeep of the building and a belief that this very basic part of life should be regulated.

From there I would like to assure you that we are realistic in knowing the problems that we face. It would be simple to put regulation on a system that is working, but the system that we have inherited is not working. The problems of Ontario are quite large. You have told me what some of them are: 20-to-30-year-old buildings which need massive repairs; speculation of land during the 1980s, where the cost of buildings has gone up. People who have bought buildings in 1985-90 are in problem situations because now the market is less than it was during those heydays of speculation.

The Vice-Chair: Are you anticipating a response?

Ms Harrington: No. What I would like to answer is that yes, we would like a simple system. We have to have a workable system and we understand and believe that we have to work with landlords and tenants for the betterment of this province. Earlier we heard a very interesting comment, which was, why do we not send out a letter to landlords? I think that would be a grand idea, to explain our position of working with the landlords in the future, as we did with tenants.

The other question you asked was where the money comes from for capital and where the government's position is on that. We believe that landlords, tenants and the government have a part to play in it.

The Vice-Chair: Thank you, Ms Harrington, and thank you, Mr Kizell.

Mr Kizell: Can I just respond to that first?

The Vice-Chair: If the committee tells me you can. Yes.

Mr Kizell: I will give you my business card. I would like to get those studies that show that the free market does not build rental housing. I would certainly like to see that because every study I have seen has been different. Yes, it has been factored in, the rent increases, but it is going to take me years to get. In the meantime, my expenses in the first six months of this year were up greater than my revenue. I therefore had to go to the bank to get a loan to finance that shortage. The GST kicked in January 1. When am I going to get my 6%? A year this October; that is the next rent increase. I have to finance that difference. I suffered, without any capital costs, without spending any money. I am borrowing money now for the furnace and the hot water tank, but just for my operating costs, I had to borrow money in the first six months because the costs went up greater than the revenue.

You are not helping the tenants. Many of the tenants cannot afford a 5.4% increase this year and a 6% increase next year, but many of them can afford it. You are not helping those who need the help. You talk about a stable housing supply. You are still not helping those who need the help. All you are doing is distorting the marketplace. You have not come up with the answers of how to help the poor.

The Vice-Chair: Thank you.

MIDGE ROUSE

The Vice-Chair: The final presentation this morning is Midge Rouse. Good morning. You have been allocated 15 minutes by the committee. We would appreciate it if you would introduce yourself for the purposes of Hansard. You may begin.

Ms Rouse: Good morning. My name is Midge Rouse and I am probably one of the smallest landlords in Kingston -- not by stature. I have distributed my comments and I will just read from those.

Rent control has been a controversial policy since its introduction in 1975. Preceding provincial governments have attempted to establish policies which balance the needs of tenants for safe, affordable and attainable housing against those of landlords for a profitable return on their investments. The debate on rent control continues, as is evident by this committee's presence in Kingston and certainly in the presentations before me this morning. I have come to speak to you today as a very small landlord in support of the Rent Control Act, 1991. I believe the act balances the needs of tenants for protection and those of landlords for a reasonable return on investment.

Landlords are as diverse a group as tenants. Landlords include large corporations, small companies, individuals with a few rental properties and people like myself who rent part of our homes. Few of us are slum lords with no regard for the tenants' health and safety, and few of us are landlord buccaneers driven to speculate on rental property. Many of us see rental property as a secure investment in economically precarious times.

Some landlords -- this is particularly interesting since the gentleman before me -- have no doubt come before you and expressed their concerns that the Rent Control Act of 1991 will result in the reduction of the construction of new buildings by forcing landlords out of the market. They might have said that the act will actually result in a reduction of health and safety standards of buildings because the formula will not meet capital expenses. Some might even have argued that the government of Ontario should not intervene in housing and that market forces should determine the distribution of rental housing.

It will not surprise you to hear that these arguments have been raised by landlords upon each occasion that a government introduced a rent control act or made revisions to rent control policy, and they have liked to say this regardless of whether it was the NDP, the Liberals or the Conservatives. There is little evidence in the years of rent control that supports these concerns, and I would like to refer the gentleman to the Kingston Public Library, where there is quite a bit of information and studies available on rent control. There is no evidence that controls destroyed the supply of rental housing in Ontario. Construction of new buildings continued. Most of the rental buildings have been kept in reasonable repair, as the studies indicated, and it was difficult to find in any of the studies that I read a reference that landlords have been economically disadvantaged by rent controls.

The people of Ontario expect their government to protect their rights as consumers. Rent control has had its greatest success in protecting the consumer, the tenant. Controls have ensured their security of tenure and protection from economic eviction. Controls have been successful in preventing rent gouging and the cases cited are only on an individual basis. Controls have helped to stabilize rental costs and therefore helped to keep inflation rates down in Ontario. The government of Ontario must continue its role in consumer protection.

There have been problems for landlords and tenants with previous rent control acts. Landlords have found that rent review administration has been burdensome, and tenants still remained the victims of loopholes in the acts.

I would like to give you an example of one that I experienced in Kingston. It was a few years ago when I was looking for an apartment and I came across a landlord who was renovating an apartment. What they were doing was building a wall between a kitchen area and a dining room area and they were installing a sink in a bedroom. It was a two-bedroom apartment with a bathroom in between, but they were putting this sink in one of the bedrooms. It was just blatant that the landlord was doing these major capital renovations in order to increase the rent above the rent review guidelines. This loophole has been closed under the act, and I think correctly so.

The Rent Control Act of 1991 advances the rights of tenants to safe and secure housing. It promotes the health and safety of tenants by ensuring that rental properties are maintained. The policy encourages landlords to be proactive in planning for capital expenditures and should thus reduce capital expenditures over the long term. It does not address the concerns raised by the gentleman who spoke before me about his present situation.

The act also makes provisions to prevent tenants from bearing the burden of the financial speculations of landlords. I think that this policy reflects a philosophy that rental housing is more than a box in which people live, that these are people's homes. This measure has no doubt caused the greatest concern for some landlords, and particularly the more speculative among us. However, the provision of the act which excludes new buildings from rent controls for five years should alleviate some of their concerns. The landlords will still be able to secure a reasonable return on their investments under this act.

The Rent Control Act of 1991 addresses the issues of affordable housing by establishing a guideline which is reasonable for both tenants and landlords. This guideline will have its greatest effect on middle- and lower-middle-income tenants, as have previous rent controls. Again, the gentleman's point that was raised before, that rent control, in the history of its 16 years, has really had very little effect on low-income people -- that is just a fact.

Affordable and attainable housing is the major issue for low-income tenants and this act does not address this issue and neither have any of the acts before it. These tenants still await the government's actions on their concerns. Thank you very much.

The Vice-Chair: Thank you. Mr Tilson.

Mr Tilson: You say you are a very small landlord. Does that mean you own a house?

Ms Rouse: I own a house and I rent part of my house.

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Mr Tilson: Okay, that is what I assumed. We have heard testimony from financial people, financial institutions, real estate people who have connections with financial institutions, and one of the concerns that has been expressed to us is that the financial people, as a result of this legislation, will be putting perhaps more onerous standards or requirements on people who are seeking loans to purchase single-family houses, or houses, whether they are legal accommodation or not. They will be putting more rigorous standards on those loans, either for purchase or for capital improvements or otherwise. Does that give you some concern, as someone who represents that type of landlord?

Ms Rouse: No, it does not. I think that for people like myself who rent out part of their homes, the tax benefits -- it is actually the only way people of my income could even afford to buy a home. You have to rent part of it. It is based on the proportion of the house you rent, so you can deduct from your overall income that portion that you rent. I found that it has really made owning a home affordable.

Mr Tilson: The type of suggestion that has been made is that there might be a clause inserted into mortgages that says that if you rent out your facility or your house or part of your house to anyone else, your mortgage will forthwith become due. That is what has been suggested. It is because of the fear of the standards being reduced that are necessary for repairs and those types of things which are the concerns of the mortgage institutions.

Ms Rouse: I have not had that experience.

Mr Tilson: I am sure you have not.

Ms Rouse: I do not think that would be affected by this policy.

Mr Tilson: That is what we have been told.

The Vice-Chair: Mr Mammoliti.

Mr Mammoliti: Mr Chairman, I am going to pass my time up to Mr Wilson, if you do not mind.

The Vice-Chair: Sure.

Mr G. Wilson: Thanks a lot, George.

For a small landlord, you certainly have a large vision. In particular, I want to highlight the sentence, "This policy reflects a philosophy that rental housing is more than a box in which people live, that these are people's homes." In your case, you have, I guess, quite close contact with your tenants. I was just wondering what your feeling is about promoting better understanding between landlords and tenants. We were addressed first this morning by a group called UTOO, United Tenants of Ontario, and I was wondering whether you see that as a hopeful development, to have more tenants' associations that can organize and then become more articulate and address landlords directly from that basis.

Ms Rouse: I think so. I think if landlords and tenants meet and discuss and learn to respect each other more, then for landlords it means that your property is better maintained, because your tenants are not damaging; this place is actually their home, and people usually treat their homes better than they treat rental units. I think that policies or programs that encourage that kind of communication where people meet as equals and with respect for each other can only reduce your cost as a landlord.

Mr Mammoliti: Mr Wilson asked my question; that was fantastic. But I also wanted to apologize to you. If it kind of looks like we are asleep here, it is because the fire bells were going off all night. Actually, we all ran out in the hallway with our pyjamas on looking for the Speaker. We thought we were being called for a vote.

How do you get along with your tenants?

Ms Rouse: I think that there are the same kinds of conflicts that incur in any tenant-landlord relationship, which is a lot around maintenance and speed of maintenance and those kinds of things, but very well. I think when you share your home with somebody or when you are in that position, both the tenant and the landlord have to choose well.

Mr Mammoliti: The communication is there?

Ms Rouse: You have to communicate and you have to develop a relationship based on respect and be consistent. Both the landlord and the tenant have to be consistent.

Mr Mammoliti: Have you ever thought about having your own seminars for landlords, holding your own seminars on how to improve communication?

Ms Rouse: I do not think I am a big enough landlord yet.

Ms Poole: Thank you for your presentation today. I would like to discuss with you this sentence in your presentation: This act "promotes the health and safety of tenants by ensuring that rental properties are maintained."

If this legislation truly did that, I would have a lot of my concerns alleviated, but landlord after landlord has come to our committee and said that this legislation is driving them to the point where they are going to do the absolute minimum. I have had landlords in my own riding, whom I consider to be very good ones, who have good relationships with their tenants -- tenants even write to me and say how good they are -- who have said they are fed up; they do not trust this government.

They do not trust the fact that this legislation provides significant rent penalties for neglect without even giving us a definition of neglect in the legislation itself and we are asked to pass this without knowing what it is.

They have been very upset about the provisions surrounding the work orders and the fact that they are given no right whatsoever to talk about extenuating circumstances, such as if the repair is seasonal, whether there is a construction strike, whether there is an underground parking garage that is twice as bad as they thought it was going to be initially when the work order was put on. These things are not even allowed to be discussed. There is an automatic rent penalty as soon as that director sends out the non-compliance notice and issues that rent penalty and it cannot be complied with.

I am afraid that the opposite is going to happen. Instead of going along the route, as you said in your brief, where most landlords do maintain their properties, that will have them drawing in their horns and saying: "I'm not doing anything under this government for the next four years. I'm going to wait until we have a new government." Does that type of talk concern you?

Ms Rouse: I do not think it is unusual, from the reading I did when I prepared for this. That type of talk has occurred at every single hearing that I read, or in the reports. Despite that type of talk, I think good landlords still want to maintain their buildings. You want to attract tenants and you want to keep them happy. I think the problems are if in fact in this legislation those issues are not dealt with in a flexible way, and I think this legislation does provide for some flexibility.

The issues you raised would concern me, but I still think that extenuating circumstances, like an increased expense -- because when you go into a building and you are repairing something, it is true you do not necessarily know how much damage has been done. But if you can document that and support your argument, then I think your argument should be heard and I hope that there would be some forum for that.

The Vice-Chair: Thank you. We appreciate your appearing before the committee this morning.

That completes this morning's scheduled presentations. I would remind members that we will start those presentations sharply at 2 o'clock this afternoon.

Ms Poole: Mr Chair, on a point of order before we adjourn the hearings for this morning's session: When this committee was given its mandate to look at Bill 121, the week of September 16 was made available, if the committee wished it to be, for clause-by-clause.

Our party and the Conservative Party have been going on the understanding that we would be having clause-by-clause for that week. We now understand that three of the government members have personal plans and will not be available that week and that they will not be able to give us a definite answer whether they are even willing to proceed until we are in the middle of next week.

I think we should discuss this as a committee and as a full committee. The last time we had a subcommittee meeting, we had an agreement about witnesses who were to appear. We compromised. Both the Liberals and the Conservatives supported the compromise proposal put forward by the NDP, and the very next day they reneged. They stabbed us in the back and put forward an additional witness who was not on the list.

I am afraid I would insist that we deal with this in full committee.

Mr Abel: There was an agreement, there is no question about that. The opposition wanted a building inspector; they got it. They wanted somebody from the Ministry of Financial Institutions; they got it. A motion was brought up by Mr Tilson to bring somebody in from Quebec. We agreed. We have been more than obliging as far as scheduling goes. We asked for one, and then they play their little games. They get up and they leave. Let's get things into perspective here.

Mr Tilson: That is two of six people.

Interjection: Remember when you all headed home?

Mr Abel: Anyway, getting back to --

The Vice-Chair: Mr Abel has the floor.

Mr Abel: Thank you, Mr Chair. May I continue?

Interjections.

Ms Poole: The issue at hand, I think, is whether we are going to sit --

The Vice-Chair: Mr Abel has the floor.

Ms Poole: He turned it back to you.

Mr Abel: I did not turn it back to --

Mr Perruzza: You interrupted her.

Mr Abel: As far as getting into clause-by-clause is concerned, we have no problems discussing the issue, but we are not able to pin down a time this afternoon. I was talking to the chief government whip yesterday trying to pin down a time. She did not have an answer and will not have an answer until the beginning of the week. If you want to discuss things, fine, but we cannot pin down a time today.

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Mr Tilson: Who is calling the shots here, your whip or you?

Mr Abel: From what I understand, there is some discussion between the House leaders.

Mr Winninger: You need government members.

Ms Harrington: We are a committee of the Legislature.

The Vice-Chair: Mr Mammoliti.

Mr Mammoliti: Mr Chairman, as you know, I have ultimate respect for your decisions as Chair. That is why I would like to ask you for the record as to whether this was a point of order or not. Please rule on that for the record.

The Vice-Chair: I am not sure whether it was a point of order or not, but it is in order that we discuss the business of the committee, so whether or not it was a point of order is rather irrelevant to rule on.

Mr Mammoliti: She raised it as a point of order.

Ms Poole: I did not bring it up on a point of order.

Mr Mammoliti: Yes, you did.

Mr Winninger: You did. You said that.

Mr Abel: It will be in Hansard.

The Vice-Chair: I do not see that it is useful to debate whether it was or it was not. She was in order to discuss the business of the committee.

Mr Winninger: Point of order, Mr Chair.

The Vice-Chair: Yes. We have a point of order from Mr Winninger.

Mr Winninger: Members have been ruled out of order because their alleged point of order was not a point of order. I think it is perfectly fair, for the record, that you rule on whether that was a point of order, because I feel it was a point of information.

Ms Poole: He just did.

Mr Winninger: He did not.

Mr Mammoliti: No, he said he was not sure.

Ms Poole: He said it was in order to discuss the committee's business.

Mr Winninger: He said he was not sure. Let's have a ruling.

Mr Abel: Did you not say "a point of order"?

The Vice-Chair: Ms Poole was perfectly in order to raise the issue. There are no witnesses waiting; the business of the committee has to be ordered. I do not think Ms Poole particularly is worried about whether that was actually a point of order or not and the Chair certainly is not worried about whether it was exactly a point of order. If we are going to be hung up, I am going to rule it was a point of order just to go on to the next stage. Do we have some more debate?

Mr Tilson: I think the issue raised by Ms Poole is certainly valid, because somewhere before this day ends the Chair will have to be given guidance as to where we are going next. We know we are going to be hearing from the ministry staff on certain questions that have been raised, and that will take place prior to clause-by-clause to assist us in making our proposed amendments. We know that we are going to be hearing from some authority with respect to rent control from the province of Quebec, again, to assist us in consideration of potential amendments to assist the government in this legislation, and finally, you will need to know as Chair when you are going to adjourn these proceedings to. Do we adjourn the proceedings to this week of the 16th? Do we adjourn these proceedings to when the House resumes? So I think that it is most timely that Ms Poole raises this issue at this time.

The Vice-Chair: Mr Tilson, just for clarification, it is not up to the Chair to make some of those determinations; it is up to the committee to do that. It is possible under the rules for the committee to adjourn to the call of the Chair. So that would also be in order, rather than a specific time.

Mr Tilson: I am quite aware of that. We all have agendas to prepare for, not only in our ridings but at the House. Certainly we need to have some advance determination as to --

Mr Perruzza: On a point of order, Mr Chairman: You gave Mr Tilson the floor. Mr Tilson spoke his mind. He referred it back to you. You as Chair were about to make a ruling. I had my hand up; Ms Poole had her hand up as well. You finished speaking, Mr Tilson rudely interjected again and took the floor without you giving him the floor. Is there going to be a process we are going to follow here or are you just going to rambunctiously go around the tables here and people can just jump in whenever they feel like jumping in? I know that Mr Mahoney has been quite good about this. He has just been sitting back and taking it all in --

Mr Mahoney: I am just totally bored with all this nonsense.

Mr Perruzza: -- but once he gets into it, Mr Chairman, you are going to have a real problem on your hands.

The Vice-Chair: Thank you for the advice. The Chair can recognize whom he chooses. Ms Poole.

Mr Perruzza: Mr Chairman, Mr Tilson was out of order and I think you should rule him out of order for interjecting.

The Vice-Chair: I appreciate your advice.

Ms Poole: Mr Chair, I am hoping we can actually talk about the substance of whether we go into clause-by-clause. The problem I see is that both the previous minister and this minister want to have this legislation passed by the end of this year. Once the House is back in session on September 23, this committee is authorized to sit what would amount to four hours a week. We took two full weeks on clause-by-clause for Bill 4, two full weeks where we had from 10 in the morning until 6 at night to sit, and in that eventuality we had to rush to get through.

If we have this bill, which has 130 clauses to go through, only one less than the RRRA, which you said was so complicated and so complex and so convoluted, how are we going to be able to do that and have the bill back to the House for third reading debate unless we sit that week of September 16?

We have had four weeks for the government to consider whether it was or was not going to go into clause-by-clause that week. Notice was duly given by the committee four weeks ago and I fail to see why they cannot let this committee know how we can arrange our business. If we wait until next week, there is no opportunity for the committee to discuss it and for us to have any opportunity to influence the government decision. I do not think that is very democratic.

Mr Abel: You can do that right now. There is nothing stopping you from doing that right now. You do not have to know an exact date. What is precluding you from sitting down with your colleagues? Not a thing. Let's get real.

Ms Poole: Because there are more of you on this committee than there are us and you will determine what happens.

The Vice-Chair: One at a time, Ms Poole.

Mr Abel: Then it is easier for you to get together.

Ms Poole: If we do not have the decision it does not matter.

Mr Abel: All you want is --

The Vice-Chair: Ms Poole --

Mr Abel: Sorry, Mr Chairman.

Ms Poole: You are not sorry.

Mr Perruzza: Mr Chairman, I do not understand why both the opposition and the Conservative Party are forcing this issue. This has always been resolved amicably in the past. With every committee I have sat on, the subcommittees meet and work out a timetable.

A suggestion was taken the other day and we undertook it in good faith when Mr Tilson stepped forward and said, "We would like somebody in from the province of Quebec to explain to us the rent control system." We as a party sat back and said: "You know what? He makes good sense on that, because we'd like to know about that as well, although he may have a card up his sleeve." I do not doubt for one minute that that card will be flushed out when the day comes. I guess we will have to call him on that when that happens, but we took that on good faith because in a genuine effort we would like to hear from somebody from the province of Quebec about its rent control system.

We did not establish a date for that. Mr Tilson should have put a date on that and then we probably could have borne down and talked about the nuts and bolts of his motion. We did not do that. We simply accepted it. Everybody in this committee understands the process on how we go about establishing dates for committee meetings. We all sit on a number of committees. We all have a number of other responsibilities. Granted, on the government side we probably have some responsibilities over and above those of the opposition members and the third party. Usually these matters are referred to the three House leaders of the three parties, the Liberal, the Conservative --

Mr Tilson: So what is your point?

Mr Perruzza: -- and the NDP House leaders, they work out a timetable and yes, it is worked out through the offices of the whip. We have the Liberal whip here with us and he could probably speak to this far better than I in terms of process, of course.

Mr Mahoney: No doubt.

Mr Perruzza: I do not doubt that for one minute either, Mr Mahoney, but you are here and you may want to shed some light on this. We cannot give a date now, not that we do not want to undergo the process. I think our whip has spoken to that issue. If it is referred to the three House leaders and through the whips' offices, dates will be provided on when you can have the government members sitting again at this committee. Your whips and your House leaders will determine when they will be able to have members sitting on your side of the table so that we can get on with the business of the committee. I do not see anything wrong with that. To grandstand and to try to make a point when a point does not need to be made --

Ms Poole: Give me a break.

Mr Perruzza: Look, it was not this committee that took off, where was it, from Windsor, who got on the bus or on the plane or wherever they got and just simply left the show. It was not this group of people, it was that group of people on that side. So if you want to be frank with the people who have come here today, let's put all the cards out on the table. I think they should be apprised of that as well.

Interjection: Who is next?

Mr Abel: Mr Chairman, I --

Ms Poole: Mr Chair --

The Vice-Chair: No, I have a list. Mr Abel.

Mr Abel: Thank you, Mr Chair, I will pass on to the next speaker.

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Ms Harrington: Ms Poole raised the problem and the difficulty and I understand why she has done that. We too are aware of the timing difficulties. I would like to go back and say that you have spoken of the ministry's rush to try to get that through, the ministry's position. That of course is the ministry's position. It is not this committee's position; it is not the Legislature's position. We will have to hear from the minister herself to know exactly what the minister wants for the months ahead.

I would also just like to say that we are a committee of the Legislature and it is my understanding that we work with the House leaders to see the procedure of the legislation as it goes through the process, to direct where it goes and how it goes. So I think there are two things that we do not have yet: the minister's direction and also the Legislature's direction. We are at the will of both because we are a committee of the Legislature, and we certainly do want to accommodate everyone. So we cannot tell you a date today.

Mr Mammoliti: You know, short of crying, I think that the opposition, both opposition, has done everything to try to discredit us and to absolutely --

Ms Poole: Golly gee, have we done that?

Interjection: Waste our time.

Mr Mammoliti: -- waste not only this committee's time but the government's time, yes. I am a rookie at this, there is no question about it, and you have proved to me that, yes, you are a bunch of sucks. You do -- you are --

Ms Poole: Mr Chair, point of order.

Mr Mammoliti: You are children.

Ms Poole: That is totally unparliamentary.

Mr Mammoliti: You are just like children.

Ms Poole: We do not have to discredit you. You are doing it yourself.

Mr Mammoliti: Why do I always get interrupted, Mr Chairman?

The Vice-Chair: Maybe you would like to reconsider your remarks.

Mr Mammoliti: What is wrong with the remark I made, Mr Chairman? Is it not parliamentary?

Mr Grandmaître: It is stupid.

The Vice-Chair: I think the words are insulting and abusive of a member.

Mr Abel: What about "stupid?"

Mr Grandmaître: The remark is stupid.

Mr Mammoliti: Are you asking me to?

The Vice-Chair: I was just suggesting you did.

Mr Mammoliti: No, I will not take it back unless you ask me to. I still think they are sucks, but if you ask me to, it is different.

The Vice-Chair: That is great for decorum.

Mr Mammoliti: They have proved to me over these hearings that they are doing --

Ms Poole: When my children were six years old they used that term. I am glad to see you are in good company.

Mr Mammoliti: Yes. This proves to me a little more -- and I am glad I got into politics to try to stop this sort of behaviour. It is absolutely incredible. What you did in Windsor is absolutely incredible, leaving us and heading out to the airport, stranded. We met as a committee and all six of us were there; you were not. We had a vote, a very important vote, at that point.

Ms Poole: You went on the same plane we did.

Mr Mahoney: You sat beside me, George.

Mr Mammoliti: You left and you proved to me --

Mr Mahoney: George, you bought the beer.

Mr Mammoliti: Mr Chairman, for the record, I would like them -- they are out of order.

Mr Perruzza: Mr Chairman, we had better break for lunch before Mr Mahoney gets into this.

Mr Mammoliti: I have something to say --

The Vice-Chair: Continue.

Mr Mammoliti: -- and I keep getting interrupted here and I am frankly getting very annoyed. I have never raised my voice at this point, and I am not going to. I am not going to stoop as low as Mr Mahoney and his antics.

I would like to just close by saying that we are not opposed to meeting on the 16th. What we are saying is that we need a little bit of time. We have to communicate. I know that you do not know how to communicate. You have proved that over the past six years, seven years, how long you were the government, I do not know. It was absolutely an incredible time for everybody in Ontario, anyway. But communication is important to us -- communication both with the opposition and with our own people back home, our government, our whip. We know that we have to go back there and we have to talk and find out what they think. If you cannot handle that --

Ms Poole: I cannot handle you.

Mr Mahoney: I will handle George.

Mr Mammoliti: -- then step down off the committee, because you obviously have some sort of a problem, and I do not know. Perhaps I can refer you to a counsellor of some sort, Ms Poole. I do not know.

Mr Chairman, again, I will close by saying that I am really disappointed in the way the opposition have handled themselves. I think it is short of my own three children and how I deal with them sometimes, but thank you for listening to me. I appreciate it.

The Vice-Chair: Mr Mahoney.

Mr Mahoney: I would like to thank all the government members for their sage wisdom, obviously built up with the great length of experience they have accumulated sitting on committees and in the Legislature.

Mr Chairman, could I point out, as the chief whip for the official opposition, that my office has not been contacted about a change in the schedule, that I fought at some length with Mrs Cunningham -- I was there this week --

Mr Perruzza: So you know how it works.

Mr Mahoney: -- with Mrs Cunningham, the Conservative whip, and with the chief government whip, I fought at some length to provide four weeks of hearings because of the number of people who requested to come before this committee. Therefore, our option was to create an optional week at the choice of the committee. Now my understanding is that the majority of the committee have some difficulty sitting that week and are not either prepared to do it or want to put forth some alternative.

By the way, this committee does not await direction from the minister. If this committee starts awaiting direction from the minister, then I will step down from the committee, and so I am sure will all members of the opposition. We are equals. You represent the government side, we represent the opposition. We have a job to do and you have a job to do. This kind of silly name-calling is degrading to the profession that you folks fell into on September 6. I would suggest we clean it up.

Your whip should be in touch with me and with Mrs Cunningham of the Conservative Party to discuss a request by the majority members of the committee to change the sitting schedule. We have a week set aside. If you are unable to sit that week, say so. If you are unable to get subs to sit for you out of the 75 members of your caucus, say so. If you do not wish to meet that week because you do not want to work, say so.

Mr Perruzza: This is exactly what you were thinking in Windsor. You said that in Windsor when you got on the plane.

Mr Mahoney: Mr Chairman, the issue we would just simply like to know -- and Ms Poole has raised the issue, that this should not go to a subcommittee.

Mr Perruzza: Like little kids.

Mr Mahoney: This should not go to a subcommittee. Give him something to hold on to, would you, your hand or something, so he does not get so excited.

Ms Harrington: We will have the whip contact you this afternoon.

Mr Mahoney: That would be just fine, but you should tell us. We have to order our affairs and we, in our caucus, have set aside that week and if any of us cannot be there for all or part of that week, we will arrange for a substitute. That is the normal process. That is also the process you should follow.

Mr Mammoliti: That is what we are looking for too.

Mr Mahoney: We need to know obviously before the committee breaks. We do not want to get a memo as committee members telling us that the clause-by-clause is being delayed for several months or that we are not going to get an opportunity to put forward our amendments or that we do not have an opportunity to hear the invitee from the province of Quebec who was graciously agreed to, after you tried to ram something through in Windsor. But in any event, the issue very clearly is scheduling. You are the majority. Ms Harrington, you do not await the minister's direction. You may, within your role as a member of the NDP caucus, take your orders from the minister, but this committee sure as hell does not. This committee is empowered to order its own business. In fact, it is our responsibility to order our own business and not take direction from a minister.

So I would be quite delighted if this afternoon the government members wished to give us an indication they are not prepared to meet that week which has been set aside. Then I will sit down with the government whip and the Conservative whip and see what alternative arrangements can be made, but no one has contacted me about this, and they cannot make that decision, quite bluntly, without doing that.

The Vice-Chair: Thank you. Mr Abel.

Mr Abel: Thanks, Mr Chair. I would like to thank Mr Mahoney for his little sermon, but from the very --

The Vice-Chair: Again, I think we are getting the seeds of an agreement here.

Mr Mahoney: Let him go.

The Vice-Chair: Okay.

Mr Abel: From the very beginning I tried to indicate to this committee that we are trying to pin down a time. I did say we were not able to pin down a time at this very moment. There is a wonderful invention called the telephone --

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Mr Mahoney: Can you tell us this afternoon?

Mr Abel: -- and if we are able to pin down a time this afternoon, fine, we will let you know. If we are not, then unfortunately it will have to wait until the beginning of next week. That is all we are saying. We realize we have to find a time, but how can we commit ourselves to something when we just do not know when that time frame is going to be?

Mr Mammoliti: They are liable to walk out anyway.

Interjections.

Mr Abel: That is it, Mr Chair.

Interjection: You never know what they are going to do.

The Vice-Chair: Fine. Ms Poole.

Mr Perruzza: I think we should adjourn for lunch and come back on a full stomach and maybe we will accomplish something.

The Vice-Chair: The Chair has some interest in trying to get this issue somewhat resolved. As we all know, we have a very taxing afternoon. If we are going to have the discussion, I would rather have it now than have it at 5:30 this afternoon. I think that is in everyone's interest.

Mr Mahoney: Maybe if we went to lunch we could get some brain food.

The Vice-Chair: But I see that there seems to be an agreement between the official opposition whip and the government that there is going to be a discussion this afternoon and that if possible we are going to know before the end of sittings today what the arrangements are.

Mr Abel: If it can be arranged, yes.

The Vice-Chair: Okay. Ms Poole, if you can be helpful.

Ms Poole: Mr Chair, I will be extremely brief. I just want to make two points. One, I believe Ms Harrington was not in when Mr Mahoney suggested that this afternoon all three parties will contact their whips and resolve this matter, so by the end of the day we can have some idea whether the September 16 date is viable or not. The second thing I wish to state for the record is that when the Liberals and the Conservatives walked off committee in Windsor every presenter had been heard. As far as our two caucuses were concerned, the business of the committee was completed because the sham and the mockery --

Mr Mammoliti: There was a vote.

Ms Poole: There was a vote, which you knew --

The Vice-Chair: I was going to suggest we do lunch.

Interjections.

The Vice-Chair: Mr Abel.

Mr Abel: Thank you, Mr Chair. I think we had better get things into perspective here. A vote was called. It was Mr Mahoney I believe who asked for the 20-minute recess, regardless of the fact that all members were present. They were trying to kill 20 minutes to give them time to leave, jump on the plane and go home. They knew we were going to stay and vote, yet they were probably hoping we would miss the plane. Well, it did not quite work. That is the fact. You called the 20 minutes unnecessarily and we went through the motions and you took off and left. So make sure that is clear.

Interjection: There we go. Time. Let's go.

Interjection.

Mr Abel: I am glad that you feel guilty, because you sure as hell were.

Mr Mahoney: The only disappointment I had was that you guys made the plane.

Mr Abel: Thank you and I am glad you enjoyed Mr Mammoliti's company on the plane.

The Vice-Chair: The committee will recess until 2 o'clock.

The committee recessed at 1225.

AFTERNOON SITTING

The committee resumed at 1358.

RALPH WIRSIG

The Vice-Chair: Our first presenter is Ralph Wirsig. The committee has allocated you 15 minutes for your presentation. If you would begin by introducing yourself and any organization you may be representing, then you may begin your presentation.

Mr Wirsig: My name is Ralph Wirsig. I represent myself and my wife. We are both part-time small landlords. My specific aim this afternoon is first to briefly outline my personal predicament resulting from Bill 4 and Bill 121 and, second, to make a few observations as to the direction these NDP policies are taking this province.

As to what my efforts will achieve this afternoon, on the basis of responses to my letters and previous presentations to the NDP government, I have no reason to expect that the government's course will be affected one iota by what I have to say directly. After all, the NDP obviously has an agenda and it is staying the course. It is, however, very important, I believe, that the general public become more informed about what the NDP's agenda is. This being a public meeting, I am hoping my presence here will at least help a little bit in this regard.

My specific situation is best summed up in my recent letter to Bob Rae. I will read that now.

"Dear Sir:

"My wife and I have been part-time small landlords for several years with a view in the future to supplement our income after retirement with profits" -- or you might better say earnings, because we are going to continue working at it -- "from our rental operation. In summary, our situation is as follows:

"We currently operate two 16-unit buildings after purchasing the second building on February 1, 1990.

"We purchased the second building for a price far less than the cost of constructing a new building and we knew we would have to invest additional money to bring it up to acceptable standards.

"We purchased that second building under the rent control rules of the day which allowed phasing in of rent increases to cover financial loss. Our plan was to use the financial loss provisions to get the rents up to cover both the financial loss and to make the needed improvements."

We chose to do it that way. We were not going to go through the rent review procedure to cover maintenance costs, such as carpets, which we could have done.

"We proceeded with the plan and in July 1990 we obtained a rent review order for approximately a 20% increase above the guideline increase to be phased in over five years.

"The 1990 increase was phased in but then of course the remaining four years of the phase-in were cancelled by your NDP government.

"We are in a serious loss position and will continue to be so for many years beyond the previously forecast break even in year five.

"We are continuing with much personal labour to upgrade the building, with intensive maintenance which probably cannot be classified as capital expenditures and thus we have no recourse to recover some of the lost rental increases. We are avoiding major expenditures wherever possible.

"Our plans to do capital improvements on our first building are cancelled; eg, the fridges and stoves are over 25 years old.

"With all that has happened and what the future holds for rental property under your government we are very discouraged. We understand why other people we know, who are in a similar position, are considering walking away from their buildings. In our case we would lose $150,000 to $200,000 of hard-earned cash." We are working people.

"Our plans to retire within five years are at minimum on hold and probably dashed."

Just to make sure there is no misunderstanding, I have been in the workforce for over 3 1 years as an engineer and I had a substantial working life before that.

"In conclusion I must state that our purchase of the second building was at that time a sound but not lucrative investment that would have benefited everyone, especially the tenants, as we have substantially upgraded the quality of the building maintenance, supervision and management. But with the election of your government it has become a major source of hardship to us. A key problem for us is the (I believe) illegal cancellation of the phase-in. If this is not reversed your government should be required to compensate us for the losses you have forced upon us. For example it may be your government should be required to purchase the building at a fair price, which would still be less than the replacement cost.

"I would like to receive your response on how we should deal with the difficult situation your government has put us in."

I will not go into the reply, because it is not worth it.

In short, the situation for building owners in Ontario is as follows: We have a major investment of buildings and land whose product is rental accommodation. The NDP government has told us what we may charge for that operation, for that product, which in most cases is below the cost of operation. While they are decreasing our revenues on the one hand, they are increasing our costs yet further on the other hand by bringing in more complicated controls and added controls, such as the elaborate maintenance and maintenance enforcement rules.

Rent controls were bad enough before. Now they are so bad that investors will no longer respond to the demand and need for more rental accommodations. The concept of market economy for rental housing in Ontario is no more. It is clearly dead. The inevitable result is that the taxpayer will be required to foot the bill for both investment and operating cost losses for what will need to be a massive government-run housing enterprise, and we all know how effectively governments run enterprises.

The situation reminds me very much of some of the life experiences of an aunt and uncle of mine, who live in what was once East Germany. When their new government came into power, in the late 1940s, their situation was as follows: Just like myself, they too had investments of land and buildings. Their product was farm goods. Their new government said: "Fine. If you wish, you may continue to operate your enterprise, but here are the prices you will deliver your products for." Those prices, of course, were below the cost of production.

"Additionally," the government said, "you will be required to keep your land and buildings in good repair, and to be sure you do, the inspector will be around periodically to check. When he is not around, there are plenty of neighbours around who will keep us informed. Alternatively, you have the option of signing the property over to the local co-op which, in return, will give you a salaried job for life." So maybe there is hope for me in my retirement.

Needless to say, everyone eventually lost their enterprises to the government co-ops. I visited there two years ago, just at the time when the young East German families were leaving that area and starting to cross the border into Hungary. You might say it was the first hole in the Berlin Wall. There was still at that time, though, a prominent sign at the local co-op farm near my aunt and uncle's place. It said something like this: "Socialism is almighty, because it is the truth." After 40 years, that sign is now finally gone and the country is in turmoil as it finds its way back to a market economy. This is now 40 years behind their brothers, sisters and cousins in West Germany.

While the old signs are down, new signs are up, among them one in East Berlin on a statue of Lenin -- perhaps it was Marx -- which pathetically proclaims, "Sorry, it was all a mistake." For Ontario and for all of us who live here, I sincerely hope we do not have to wait 40 years to hang up our sign, "Sorry, it was all a mistake." Thank you for your attention.

The Vice-Chair: Thank you. We have about five minutes for questions in total.

Ms Harrington: Thank you, Mr Wirsig, for coming forward. A couple of things: You first of all read the letter explaining your situation. We have heard from many small landlords on our trip around the province, and that is what our visits are for, to find out the reality across Ontario. We are aware of the situation of some of you and we certainly are not going to deny that reality. I have spoken with the minister about this and we will consult further.

The picture that you have just drawn of eastern Europe is certainly a dramatic one. I think we all understand what you are saying, but let's be real. This is Ontario; we have had a democratically elected government; the people of Ontario have very strongly said they want change; they wanted change for the better, and that is why this government is here. It is up to us to prove in the next four years what we can do for the people of Ontario, and then it is their judgement on us that we all know is the outcome.

We are facing very tough times. This has been a tough year of recession, and we are going forward now in the fall to come to grips with some of the many realities in this province: The restructuring of the manufacturing sector; the constitutional problems of this country; trying to rein in what we inherited, a massive bureaucracy -- education, welfare; we have to come to grips with it.

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Mr Mahoney: The man has gone broke and you are worried about all that?

The Vice-Chair: Order.

Ms Harrington: He talked about eastern Europe.

Mr Grandmaître: And you are trying to find excuses.

Mr Duignan: You are the excuse.

Mr Grandmaître: Your submission sounded as if you and your wife are a very desperate couple. You will be losing all of your life savings if the government does not respond to your needs; not only your needs, but to other small landlords' needs.

In your opening remarks you talked about the NDP agenda. Can you give me your thoughts on the NDP agenda, because we do not --

Mr Wirsig: To me it looks as if they are aiming to do the same things that happened to my aunt and uncle. They are on the same path at this point. As far as rental housing is concerned, they are dead on course. More specifically, they want to get investors out of the rental accommodation business, and I think the taxpayer needs to understand that it is the taxpayer then who has to put forth that investment; that the landlords or the investors are not going to. The funds have to come from the taxpayer for not just the investment, but also for the operating losses that they are going to result in.

Mr Tilson: The government of course will say, with respect to the second building, that you made a bad investment, and they will secondly refer to section 16. I do not know if you have had a chance to look at that; that is the transition section to allow for some compensation to those who received difficulties under Bill 4.

Mr Wirsig: It does not apply to me.

Mr Tilson: That is my question. Have you had an opportunity to look at section 16, and could you tell the committee how section 16 affects you, if at all?

Mr Wirsig: I am not familiar with the sections. I used to handle my own rent review years ago, but it is so complicated now that I hire a consultant. My consultant tells me I cannot do anything with regard to that 16- or 18-month transition period.

Mr Tilson: Yes, thank you.

The Vice-Chair: Thank you, Mr Tilson. Thank you for appearing today. We appreciate your presentation.

SUSAN HISCOTT-SCHOP

The Vice-Chair: The next presentation is Susan Hiscott-Schop. Good afternoon. Welcome to the committee. You have 15 minutes allocated. You may use all of that time for your presentation, or the committee always enjoys having some conversation with you during that period. So if you would introduce yourself, you may begin your presentation.

Ms Hiscott-Schop: My name is Susan Hiscott-Schop, and I hope you will bear with me, because I have never done this before. But I felt it was really important that a variety of tenants appear before the committee, to give you a cross-section of what was happening.

I was on the founding council and served one year with United Tenants of Ontario; that is a total of two years. I have been a tenant for probably two and a half, three years. I have sat on the other side of the table, so I know what some of the landlords are discussing. I am a single parent. I am a full-time Queen's student, and I find that some of the things that are going on here in Kingston are difficult to accept.

I have heard some of the landlords talk about property standards and some of the things they have had to go through, but I can tell you as a tenant, the backlog there is phenomenal and if a landlord pushes the tenants to the point where they do have to complain to property standards, they have to go through a long rigmarole. I know when I called property standards about a leak in my bathroom, my ceiling eventually came through before the property standards could get there. As far as I know, that ceiling is still in the shape it was when I left.

I find that the act in a lot of ways is very complicated so it is not accessible to all. You talk to tenants about some of these issues, and they feel that it is something a lawyer has to do. I am in a position where I think it is about time that landlord and tenant -- it is not something that lawyers want to deal with. They want to pass the buck and pass it on to someone else because it is not something they can make any money at, and most of the tenants do not have money to pay them in the first place; so I honestly feel it is something the lay people should be starting to deal with, which would be a cost saving for everyone concerned.

I have heard some of the landlords talk about the GST, and I can understand their hardships and some of the things they must be going through, but I as a tenant cannot pick up that slack. Granted, there are some tenants out there who, with the price ceiling, could probably afford the rents as high as they would go if you started adding additional costs to them, but there are people like myself who could possibly end up out in the streets, and it is all we can do to struggle to keep out of things like subsidized housing.

I tried student housing, and it is put under the label of subsidized housing. Actually, Queen's sort of gives its students a price break. They have come up with this market value and then rent the property to the students at 98% of that cost. I do not know where this market value comes from, but I do know that the private sector rents properties less expensively. I had to move out of student housing because they increased my rent by 15% and instead of paying out 60% of my cheque each month for housing I was going to end up having to pay almost 90%. I really do not understand where they are getting the idea that it is subsidized.

There have been some changes in the law under student housing and, unfortunately, anything under previous legislation that was of any assistance to students, if you could get it enforced in the first place, has now been wiped out. As a student, I find that we have no protection under property standards or under rent controls. These are some of the concerns that are going on in the community that I live in. 1420

Ms Poole: Thank you for your presentation today. You can relax now because you did very well and we appreciated hearing your comments.

One of the concerns that is shared, not only by the government but by the opposition caucuses as well, is the whole issue of maintenance. I guess what we have to analyse on this committee is if this bill takes the right step towards making sure that maintenance is performed in the buildings and, in fact, that we are actually going after the abusers, not the landlords who are doing a fairly good job in their buildings.

One of the concerns I have in this regard concerning Bill 121 is that they have abolished the Residential Rental Standards Board. I do not know if you had anything to do with this in the Kingston area -- not to do with the abolition, obviously, but if you had ever in your building had a problem with standards and had the rental standards board involved. The standards board under the previous government was, I think, a very good idea but it did not have teeth in it. For instance, in order for them to put out an order, they had to go through rent review, which ended up being caught in the backlog.

The problem area in Bill 121 is, they have abolished the standards board and put the whole thing through rent review, which I think is moving backwards. I would say, if the problem was the backlog in rent review, then you give the standards board the jurisdiction to deal with maintenance matters. But with it being put back in rent review, if there is a backlog there, you can be assured that it is the rents that will take the first priority and maintenance again will take --

The Vice-Chair: Is there a question there?

Ms Poole: I am just getting into it, Mr Chair. Your timing was impeccable.

Are you familiar with the standards board and how it worked? Would you like to see a separate body dealing with maintenance and rent penalties as opposed to putting the whole thing under the rent review system?

Ms Hiscott-Schop: I am here on a position that I think the rent review system needs to be totally revamped. As I say, right now the system is so complicated that you need to get legal advice on how to proceed through the system and lawyers do not want to touch it. They do not want to be involved, and if you talk like you have any knowledge whatsoever, in other words, if you have got any grey matter, lawyers do not want to deal with it. They say, "Well, you can deal with it yourself"

I myself have had to take many cases to rent review and to Divisional Court, and I find Divisional Court actually works better than the two systems. One was a property standards issue and it was too large. I think you will find that a lot of tenants who are willing to stand up for their own rights are having to go beyond the rent review system because it is inadequate.

The Vice-Chair: Thank you. Mr Tilson.

Ms Poole: Thank you.

Mr Tilson: One of the areas that you touched on was market standards, and it has been my contention that because, particularly in smaller municipalities, urban municipalities, and to some extent the large municipalities, there are insufficient property standards, bylaw enforcement officials, or whatever you want to call it to deal with these problems. In the areas of the province that do not have any, of course, there are insufficient provincial people to go in and enforce the provincial property standards. My fear is, because of this legislation and what the sections are bringing forward, there will be even more demands on these individuals to enforce very serious problems of tenants in maintaining the quality of life.

I would like you to spend a little bit more time on your personal experience with the property standards officials in this area.

Ms Hiscott-Schop: In this particular area?

Mr Tilson: Yes.

Ms Hiscott-Schop: I think I should take a step backwards. I have just moved to this area about three years ago. Before that I was in the Newcastle area and I dealt with property standards and the public health board there. I spent six to eight months trying to get officials out. By the time I got officials out to my place -- now I am talking about what they talk grey water being pumped into an environmentally protected area; I am talking about a septic backup into my well system, and that was the only water coming from the well -- it was completely empty.

I finally took it to court. It was a long, involved procedure and it took me almost another six months to get it straightened around. The most concrete thing that I got out of the whole thing was -- I had to pay my own expenses, which cost an awful lot of money, and I also got told that I could be released from the conditions of my lease. In other words, I could move.

I started that procedure here and I was advised by the courts and by the property standards to move. This is what tenants are being told when they run into problems. The problem that I personally had was a leaking bathtub and it was leaking down into my main floor. It got so bad that the ceiling eventually fell in. What I was told by property standards was to move, because it would take them too long to deal with it.

Mr Winninger: In my own riding in the London area there have been a lot of problems in enforcing work orders over the last few years. In fact, the tenants I have spoken to there and their advocates indicate that one of the most attractive and appealing features of the new legislation is the tying together of compliance with work orders with the very right to ask for a rent increase. This they see as a way of enforcing compliance with work orders that they were never able to achieve before. That is their experience anyway.

I just wanted to add one point. You mentioned landlords may complain about the extra cost of the GST. It is my understanding that where a landlord purchases goods or services for the purpose of earning income, ie, rent, that they get a rebate back on that extra GST they spent.

Ms Hiscott-Schop: But I hear a lot of landlords complaining about that. It is like tenants do not have to pay the GST.

Mr G. Wilson: Thanks a lot for your presentation, Susan. I noticed you said at the beginning that you were on both sides, or at least you have seen the situation from the other side, which suggests that you could offer a perspective that could point the way towards future relations between landlords and tenants, some of the ways of relieving the tensions.

For instance, you just mentioned the GST, that landlords say they are having to pay the GST. I think the point you were raising is that tenants also have to pay the GST. How can we sort of bring these two views together so there is more understanding about each other's predicament?

Ms Hiscott-Schop: I would like to see more communication between landlords and tenants, more of a civil type of action where landlords and tenants are actually getting around the table and discussing issues, rather than a confrontational way.

I think our legal system here in Ontario always paints a good guy and a bad guy and we are doing a disservice to both sides by doing that. It is about time we recognized there are good tenants, there are bad tenants; there are good landlords, there are bad landlords. If we can all get together and work together by talking about these things, more of a tribunal where you have equal representation from both sides deciding issues rather than some paid government official who maybe has never been a landlord and maybe has never been a tenant, or has one side and not the other. Is that answering your question?

Mr G. Wilson: That is coming to it. Do you think the landlords' and tenants' approach, say, are equally balanced in the resources they have to present their positions?

Ms Hiscott-Schop: No. Financially anyway, a landlord has far more economic resources than a tenant. Landlords have control to a certain extent over their expenditures and their investments and assets, whereas tenants have to pay whatever is being asked. I find -- my family will shoot me for this -- that if you have a background of money, whatever, behind you, you can get far more done, and I really think the landlords have more of that in their favour. They can pull more strings, they know more people.

Mr G. Wilson: I was wondering if those thoughts occurred to you when you were trying to get that problem rectified in Newcastle when you were trying to get the officials out. Do you think maybe if you had more influence that would have occurred more quickly?

Ms Hiscott-Schop: I really think so. If I had been in my home territory where my family is, and I believe to some extent they still carry a fair amount of weight, I do not think I would have experienced nearly the problems, but because I have decided to become an independent person and try to work things through on my own, I am beginning to find out that does not work.

The Vice-Chair: Thank you. The next presentation?

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STEVEN MANDERS

The Vice-Chair: Good afternoon, Mr Manders. You have been given 15 minutes by the committee to make your presentation. You have been here for a few minutes anyway and have seen how it is done. If you would like to introduce yourself for the purposes of Hansard, then we may begin.

Mr Manders: I am Steven Manders, small landlord. I used to renovate apartment buildings. I am dose to bankruptcy because of Bill 4. I spent $250,000 of borrowed money last year renovating apartment buildings. I sat down and visited with all my tenants to see what they wanted for improvements. They filled out the government forms for all the work inside the units, the work outside. There was good communication. These documents are all on file at the rent review office.

The money was spent, the tenants have the benefit. I have now got to pay back the banks. There is absolutely, positively no revenue to cover that, despite everything that has been said that it will be taken care of I have had to refinance my house at 18% to pay some of my property taxes. The rest go unpaid and I am still fighting off lawsuits. So much for your help. I tried to do it by the law. I am one of the ones who did communicate, played by the rules, stayed within legal rents and so on.

Anyway, my presentation is called "Why the Titanic Had to Sink." I heard a fascinating presentation a number of years ago by a Queen's University professor, whose name I cannot remember, about why the Titanic had to sink. He went into the socioeconomic, technical and other aspects of the ship in a most interesting way. Most books deal with the technical and human errors that were made, but not why they were made.

Back in the days when the ship was built, they had no jets to whisk you across the Atlantic in a few hours, and a ride on a turn-of-the-century ship in a North Atlantic winter was no tropical cruise. That created a market for a very fast, luxurious ship while the passengers endured a lengthy ride.

Any ship that could set new standards for comfort and speed could command a premium price. Safety was important because ships are expensive and they do not want them to sink, aside from the human aspects. As a result, watertight bulkheads were built up to the sixth floor, but not to the seventh, because that would divide the grand ballroom in half, a compromise.

It was imperative that the ship set a world speed record on its maiden voyage, because all the world was watching it and it was built to do it. The captain simply could not slow down for icebergs, but he was unsinkable, or so he thought, so full steam ahead.

What does that have to do with rent review or in particular Bill 121? The Titanic had to sink because it compromised all else to cater to the whims of a very demanding group of people. Rent review is also catering to the whims of a group of people -- tenants, rich and poor alike. We have heard from a lot of poor tenants, but the rich ones do not come out and speak at these places for fear of jeopardizing their overall good benefit.

All else was forsaken to cater to these groups. Similarly, rent review is catering to the whims of this group, rich and poor tenants alike. They all get the same benefit regardless of whether their landlord can afford suppressed rents or not. All else is forsaken: adequate supply; quality; maintenance; bankruptcy among landlords, tradesmen and so on. It does not matter. As a result, the entire infrastructure that supports rental property is now sinking or has sunk. But that is the price of rent review.

Landlords have asked the government over the years to subsidize only the tenants in need -- there are many of them in need -- and let the rest pay market rates. Margaret Harrington stated a few months ago here in Kingston that the government with its billions of dollars could not afford to subsidize the poor tenants, yet a handful of landlords are expected to subsidize all tenants, rich and pool alike, and rent review is the only answer. Think about it, the government cannot afford to help just the needy with their rent, but landlords are expected to help all tenants regardless of their financial ability. If bankruptcy occurs, tough. That is the law. Watch them sink. Watch apartment investment sink.

This government has caused all rental property in Ontario to decrease by 25% in value in one short year. Why should you care? I have that problem. I cannot pay my bills because I cannot even sell my buildings. If a landlord was thinking of expanding, though few are any more, the equity in his existing building is gone so he cannot raise the down payment for a new one. New buildings usually rent at a loss their first few years and it takes the profit of an older building to carry it. If there is no profit in an older one, a new one simply cannot be built. Landlords do not have magic sources of capital, just existing investments and they are needed for their new ones. It is simple. Mortgage companies realize these problems and all require 40% down payments now, about double what was required a few years ago. A landlord with a fixed amount of capital can now build only half as many new units, but he is not trying any more. Watch the supply sink.

Will someone else step in and fill the gap? A rich Arab, a brewer, General Foods, Hong Kong money? No, the supply will have to come from existing landlords, the ones who are already in the business and they know it is a sinking ship. Who will house all these new tenants? That is your problem now.

Remember the names Alvin Curling, Chaviva Hosek, John Sweeney, David Cooke? They were all totally dedicated, enthusiastic and keen about the good ship Rent Review, and they all went down in about a year. They tried very hard to make the unworkable work, and they each in turn learned what they were up against. Have you got them all together to draw upon their experiences? They all had the same goals. They all sank, as you will too.

There has been more effort at writing rent review laws and changing them than any other legislation. Government after government has failed because they ignored the people they were regulating, and it was not the tenants.

The ship met its iceberg with Bill 4, that retroactive legislation that destroyed a handful of law-abiding landlords and their contractors. That piece of legislation did damage beyond anything that ever happened before. Its biggest damage was not just what it did to those caught in its web, but the message it gave all other businessmen. They and their investments will be treated with contempt by this government and they had better hang on to whatever cash they have left, no more investments.

Most buildings do not need to go to rent review, but a few do have to go for major rehabilitation. A 3% increase will not do it. Banks will not lend the money because there is no revenue to cover the cost of borrowing. Men will not work for free. Landlords are not stupid and they know they will be treated with contempt. We are not looking charity. We are just looking to be treated fairly. That means recovering costs spent on behalf of the tenants' benefit.

Bill 121 does nothing to correct this. The whole system is doomed to failure, especially if Bill 121 passes in its present form. It is utterly unworkable for the people who have to work with it. It may work fine for the tenants, but they do not work with it.

The five-year exemption from rent review for new buildings is irrelevant if a landlord has lost his equity in his present building or if mortgage companies will not lend him money, or if there is no feeling that they will be treated fairly after the buildings are built. Will the exemption be removed in only two years? The necessary trust in the future is gone.

The loss of rental accommodation is already recognized by the government in the Housing Framework for Ontario 1991 on page 109. It clearly shows they anticipate the private sector supply to decline by 75% this year. In another year, the entire private and public supply will meet only half the demand. This is after massive infusions of public money into housing. David Cooke's only solution to this crisis of his own making was to force municipalities to legalize basement apartments. That is the last place most tenants want to live. How low can you go? No wonder he sank.

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On page 131 of the Housing Framework for Ontario, it shows that existing buildings have a market value of only 70% of new stock, yet we are made out to be the bad guy for this perceived equity gain.

Page 134 shows landlords are not gouging on rents. They are losing an average of $526 a month per unit in Ottawa and losing $236 per month in Toronto. For this, they need more regulation and oppression?

Perhaps there are too many rich and poor tenants looking for a free ride. Everyone likes a free ride. Even politicians like a free ride by trying to buy tenants' votes with landlords' money -- and it does not even show on their budget.

David Cooke took great pride in biting the hand that houses the tenants. Suppose a businessman, such as myself, enacted retroactive pay decreases on his employees back to last year, only through necessity of course. Would it be legal? Would it be moral, fair? Would you continue to work for him? You might get away with a Bill 4 in law, but you will lose far more for the tenants in the end. Bill 121 must undo this damage, but it only aggravates it.

You think government housing is the answer? Most tenants want out of it and into the private sector if they could.

Got a spare billion dollars for Ataratiri Place in Toronto, a piece of land in Toronto on a flood plain the size of a hobby farm -- 20 acres for 12,000 people? It has cost $250 million so far but not one unit has been built. They could house two tenants elsewhere for the same cost as one there, or 15 needy families -- subsidize their rent for $1,000 a year for ever for the cost of a single unit there. But that is not what is planned. That is even bad socialism.

Evelyn Gigantes can do no better. Bob Rae has her on the same course: full speed ahead, to hell with icebergs; we have this load of tenants, rich and poor, to cater to and promises to keep. Little compromises will not work any more. Talk will not do it. This presentation will not do it. The ship has to sink with its passengers before serious dialogue will occur. And that is the end of this story for now.

Mr Tilson: The NDP of course have made it quite clear that there will be no new private enterprise construction. They have agreed with you. They agree with everyone else. There will be no more new apartment buildings or accommodation built by private enterprise in the foreseeable future. Their solution to the problem, which you have outlined, is non-profit housing and co-ops. I do not know what knowledge you have of those two areas.

Mr Manders: Is it the most expensive housing there is on the market.

Mr Tilson: That is what my question is. I would like you to comment as to that solution they are proposing.

Mr Manders: It is the most expensive housing on the market. I have tenants in lovely two-bedroom buildings renting for $350 a month. I spent $10,000 a month renovating them last year. My 3% increase will come to $12. In the next 100 years, that will not cover the interest I have had to pay on the money I borrowed. Co-ops -- they are generally running $1,500 a month. They may rent for $200 or $300 a month, but the cost is still $1,500 a month. It is the most expensive housing you can devise, because you have all the bureaucracy in there running it. It is even in the Housing Framework for Ontario. It shows that after 30 years, you are still losing money on the things.

Mr Perruzza: How many units do you own?

Mr Manders: About 50. I cannot sell them to pay my bills. There is no market.

Mr Perruzza: When did you buy them?

Mr Manders: I have been in the business full-time now for six years and part-time for about 15 years prior to that.

Mr Perruzza: We had rent controls at that time. Why did you buy them?

Mr Manders: Overall, real estate is a good long-term investment. I was enjoying renovating. I have an old limestone in my house. I knew the rent review rules, and I saw that tenants could benefit by me renovating. I got cost pass-through and over the years buildings would slowly appreciate. My buildings have not depreciated 25%. It is no longer a viable business.

Mr Perruzza: From the time that you bought them? Or from last year?

Mr Manders: Yes, sir, even though they are fixed up. Because there is no increase in revenue. The building is worth no more fixed up than before it was fixed up. Now the market is running scared so the building is worth less fixed up than it was unfixed.

Mr Perruzza: How much did you buy it for?

Mr Manders: I have different buildings. One was at $200,000, another $514,000.

Mr Perruzza: The one that you bought for $200,00 -- how much is it worth today?

Mr Manders: I put $60,000 into it, but I doubt I could get $200,000 out of it. I have got a lot of my buildings on the market but the offers coming in, they are just low-balling, hoping somebody will be desperate and just simply walk away for the value of the mortgage. That is the only market that is out there.

Mr Perruzza: And the one that you bought for $500,000?

The Vice-Chair: Mr Mahoney.

Mr Mahoney: Thank you for your presentation. I guess the other answer to that question about why you bought it, is you probably would not have anticipated a socialist government --

Mr Manders: Absolutely not.

Mr Mahoney: -- in this wonderful province of Ontario. But here we have reality.

Mr Manders: That is right.

Mr Mahoney: Have you sat down and thought about specifically what you can do to survive for four more years, and whether or not you will still be in the business in four more years until this legislation can truly be changed?

Mr Manders: Well, I had to refinance my house -- which did not go over well with my wife -- to pay the taxes on some of my properties. Others still remain unpaid. I can only carry that on for so long. To borrow the money I am paying premium rates. I was hoping that Bill 4 would not go through and I could get my money back. I am not getting profit out of it -- it was just cost pass-through. Everybody talks as though that is making a fat profit. It was not. You pass the cost through -- the tenants got the benefit. I got my money back over a period of years. Now the money is not coming back, and I am not too sure how to work it all out. I cannot sell, I cannot borrow.

Mr Mahoney: Were you under the impression, after the Bill 4 fiasco, that there was some commitment on the part of the government to address problems like yours?

Mr Manders: Absolutely.

Mr Mahoney: Do you see any item that you can cling to or look to or have any hope of in this legislation that will address them?

Mr Manders: Three per cent will not even cover my interest charges, let alone the principal, if I even get that. Because my notice of rent increase has to go for January 1, I need it. Then I will have to wait until 1992 before I get that 3%. Meanwhile, interest charges will have more than eaten that up. So basically I will never see the principal again. That is shot.

Mr Mahoney: How much is it?

Mr Manders: A quarter of a million dollars.

The Vice-Chair: Thank you, Mr Manders. We appreciate your coming this afternoon.

ARI WEISBERG

The Vice-Chair: Mr Weisberg. Good afternoon, sir. You have 15 minutes allocated by the committee. You may use all of it for your brief, or you may use some of it and leave some time for questions and answers with the members. Will you introduce yourself for the purposes of our Hansard recording service.

Mr Weisberg: Thank you very much. My name is Ari Weisberg. I have a short statement to make and I will be more than glad to answer any questions. I am a landlord.

Dear panel: Your government proclaims that it listens to the people -- landlords, in lack of another word. We do not really like to be called landlords. I am no lord, I am just in the business of renting to people so they can live in places. Landlords are people too, as you can see on my button here. I welcome this opportunity to speak to you today and I hope that you will listen to my submission.

I will give you some background about myself. I am a single parent, deriving about half of my small income from a small rental unit which I bought approximately five years ago. This building is 36 years old and in need of constant repairs. In 1989, with the full knowledge and agreement of all tenants, I embarked on a major renovation project. In order to keep costs down, I did much of the work myself. After the work was finished, I applied to the rent review board for an increase to cover the increase over the guideline, only to be turned down when the rules later changed.

The new proposed legislation is unfair and unworkable. The new rent controls will punish the good landlord and compensate the bad. It does not allow for the recovery of costs beyond the control of the landlord, and it can place us in financial hardship.

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In this room today you may hear only the complaints of tenants of the landlords who do not take care of their properties. As far as I know, none of my tenants are here, because my property is well taken care of and is in good repair with money out of my own pocket -- funds I could never recover under the new legislation. However, the landlords who spend little or no money will receive the same rent increase as the landlords who have improved their buildings. Needless to say, this discourages landlords from investing money. Why bother? The ones to suffer are, of course, the tenants.

The additional 3% above the guideline allowed under certain conditions is ridiculous. In the city of Kingston, taxes alone jumped by 21% this year. All other expenses went up by at least 7% due to the GST. There is no cap on these expenses. All the people in this province have to pay it, but the tenants do not. I have to pay not only my own share of increased taxes, but the ones of the tenants as well. This is not only unfair, it is a gross injustice.

In the new proposal there is no way to recover past and present capital expenditures due to the fact that this unfair and unrealistic 3% cap is all-inclusive. The increase in operating costs more than used it up. Where am I supposed to get any compensation for the capital costs and expenditure I spent two years ago?

Some tenants claim that we need not have a profit because at the final count, when we sell our property, we will materialize a large capital gain. This is not the truth, because the cost of income property is linked directly to its income. Now that the income is restricted to under the rate of inflation, that is the rate of its capital appreciation. It is a negative one.

If profit has become a bad word, then why should we own a rental property? Is it for the fun of being awakened at odd times to hear that the tap in somebody's bathroom has been leaking for the last two weeks? The government then can manage the rental market, and we will see how much that will cost them.

I did not elaborate here about my own personal situation and I will be glad to answer questions in that regard. That is basically my presentation. There was one more thing that I wanted to add that I remembered on the way down here, but it has escaped my mind.

The Vice-Chair: It will maybe come up during the questioning. Mr Perruzza.

Mr Perruzza: I am just going over some figures. I intended to ask an earlier witness a series of questions on the history of the finances related to his particular units, because it sounded to me that he is one of those who is really caught in the crunch. I think that I and my colleagues on this side of the House are sensitive to those kinds of issues. It is something we definitely have to take back with us when we are considering amendments to our legislation.

It is my hope that we do consider those case-by-case situations of unnecessary hardships, where it is clearly demonstrated that both the retroactive aspects of our legislation and the bill before this committee now does impact severely on some of the unit owners across the province of Ontario. It is something that I wanted to get to with the former witness but I did not get an opportunity to. By looking at a sketchy analysis of this particular witness's situation, it seems to me that there may be some grounds for closer scrutiny as well.

The Vice-Chair: I suspect there is a question there.

Mr Mahoney: There are thousands of them.

Mr Tilson: I hope the minister listens to you, Tony.

The Vice-Chair: Is there a question?

Mr Perruzza: No, Mr Chairman. I just wanted to get that comment out. Obviously, there is not going to be enough time to follow through on the series of questions that I would have for the witness.

The Vice-Chair: Well, we have about a minute.

Mr Perruzza: It is pointless. I did not get a chance to do it with the other one. I will not get a chance to finish it with this one either.

Mr Mammoliti: I would just like to know, sir, you have a six-unit complex?

Mr Weisberg: Yes.

Mr Mammoliti: If you do not mind my asking -- you do not have to answer it -- do you have a mortgage on the complex, sir?

Mr Weisberg: Two of them.

Mr Mammoliti: How much are they?

Mr Weisberg: One is for $150,000 and the second one is $24,000.

Mr Mammoliti: What are your monthly payments?

Mr Weisberg: About the $2,000 mark; I cannot remember. On top of that I have a loan of $50,000 which I took to finance my renovations in 1989, which got caught between the rules and regulations, and now I am paying that.

Mr Mammoliti: You went for a loan, you got a loan, you applied for rent review. You got caught under Bill 4. After all your expenses were paid, what would have been your profit at the end of the month?

Mr Weisberg: Do you mean before I spent the $50,000?

The Vice-Chair: Sorry. If you can answer quickly, that is fine.

Mr Weisberg: Mr Chairman, one of your commissioners made a statement on my time which had no question in it.

The Vice-Chair: Well, I am the Chairman. I have no control over what the members do with the time that is allocated to them.

Ms Poole: Mr Chair, if the witness would like a minute of our time to answer the question, we would be happy to.

The Vice-Chair: Fine. If you want to answer, that is good.

Mr Weisberg: Well, what was the question? What kind of profit?

Mr Mammoliti: Yes.

Mr Weisberg: Anything, other than a loss. I made $24,000 last year, okay? The $50,000 loan costs me $650 a month, which I take out of my income, bread off the table of my family, of my child, to subsidize those tenants. In my particular case, many of them are Queen's University staffers. They make much more money than I do a month. The bottom line is I do not think it is right that I should subsidize them because I got caught in between them. I support the other answer. The other answer is that you should subsidize the people who need it.

Ms Poole: One of the problems our committee has encountered is -- and by the way, we are composed of both government members and opposition members, so hopefully all will listen -- we have two opposite viewpoints on capital expenditures.

A number of the tenants and tenant reps have said: "Well, the landlord received enough profit over the years and enough from guideline increases that he should have been putting this into capital. There is enough money there. The landlord gets the capital appreciation and capital gain when he or she sells it. Therefore why should tenants have to subsidize it?" On the other hand, we have landlords who, like yourself, come and paint a very vivid picture of how hard your economic circumstances are and what dilemma you are in.

It is my understanding that when a building is sold, the primary thing that they base the value on is not necessarily what type of shape the building is in, not what renovations have been put in, but on the rent -- what is the income on that building? So the capital gains argument loses a lot of weight when you are in a situation like yours where your building has depreciated by 25%, your rents have been frozen. Where is breaking even, let alone profit? Could you comment on that?

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Mr Weisberg: Yes. I mention that in my submission, that the value of my building is only going to go up 6% next year, if there is somebody stupid enough to get into it, because that does not take into consideration that it has to be fixed up every now and then -- it is an older building -- so you are actually losing money, and that is less the inflation rate.

What I object to is the fact that people see profit as a bad word. Why should we be in this industry if there was not some profit? Anybody who works wants to make something out of it. We do not do it for the good of our heart. Tenants' groups before said: "Why should we guarantee a profit? No other business, when you go into it, is guaranteed profit." There is, and that is not true. In any of the regulated businesses, there is a guaranteed profit. Bell Canada, which is regulated, has a guaranteed profit; so have the cable companies. If we are regulated, we should have some profit guaranteed. If we are not regulated, then open it up. If you open a shoe store tomorrow, nobody tells you how much to sell that pair of shoes for; therefore, there is no guarantee. We are told we can only charge so much, but profit is not guaranteed. If we are regulated, then deal with us like a regulated industry. If we are non-regulated, then let the market take its course.

Mr Tilson: At the risk of affecting the relationship between you and your tenants, you must be able to have some picture as to where your building is going. I am looking at the quality of life of your tenants. Have you had any discussions with your tenants as to things that you perhaps have been able to do now and which you may not be able to do in the future? I am speaking of everything from a new roof to planting flowers.

Mr Weisberg: Yes, I was frank with my tenants. Actually, when the new rules came down -- Bill 4, when the talks started -- I had one more thing to do to fix the building and that was to get new fridges and stoves. I want to say again, the tenants supported everything. They say they wanted it according to the previous legislation. I went and I told them, "No new fridges and stoves." Yesterday, I had a tenant call me. Even though his apartment was painted in 1989, he said: "Well, it's time. I want it painted again." I said: "No. If you want to do it out of your expense, fine; I think that a paint job every two years is just fine."

Where do I see it? I wish my tenants would buy the building from me. They can run it, they can manage it and they can have the profits. I do not want anything to do with this industry any more. Why should I? It costs me $650 a month.

Mr Tilson: That is my question.

The Vice-Chair: Thank you for coming today.

Mr Weisberg: Thank you for listening.

Mr Mahoney: A point of clarification, or at the risk of calling it a point of order and having that challenged, I would just like some information. I am not sure that it is appropriate, to all members of this committee, that we should be asking personal financial questions of witnesses.

The implication is that if you happen to own the building outright you can afford to subsidize because you make money, you do not have debt service. If you do not own it outright, you know, then they want to sort of get into the personal stuff, and I say this not in a partisan way. I am not sure, recognizing that people come before a legislative committee, that at times it can be somewhat intimidating. They are not totally clear of what the process is. If they volunteer information like that, it is one thing, but I enjoyed the lady's response in Ottawa yesterday when she said it was no one's business.

Mr Chair, I think it is an issue the committee should consider, and it is not necessarily something I am asking you to rule on. I just put it out to caution members that I am not sure it is appropriate for us to be putting people in a position on a public record, in a public forum, where they are divulging personal financial information. Frankly, it is none of our business and it has nothing to do with this bill.

Mr Perruzza: I would like to speak to that. This is something that I guess I have given some --

Interjection: Speak up. We cannot hear you.

Mr Perruzza: I think you got the wrong microphone.

The Vice-Chair: It is okay.

Mr Perruzza: Yesterday I switched the names around and I got the microphone on every time. Today I sit in the proper place and I never get it on.

Mr Mahoney: You're just a mess, Tony.

Mr Grandmaître: What's the difference, Tony?

Mr Perruzza: I have been giving this question some long and hard thought, primarily because of what happened yesterday with one of the witnesses who appeared before the committee. It seems to me that if we do not involve ourselves in these kinds of questions, we will really never get to the crux of the issue. I think we are going to be, at some point, in a position where we are going to have to make some hard and fast decisions about how our legislation is going to impact on people's lives, on people financially and emotionally and on their family life.

I think that if we do not get things like that personal element on the record for us to be able to review in detail, I am afraid we are not going to be able to come to understand some of the complexities that are associated with the legislation, and quite frankly yesterday I sat back and I thought that it was good of us to simply take the no for the answer. But if people are going to come here and tell us that they are going to be faced with hardships and they cannot make do and that our laws are impacting on their economic livelihood negatively, then it is only fair that they are also able to provide those numbers to show us clearly that it is in fact the case and not permit us to simply walk away from this and make all kinds of assumptions about people's state of being without having the actual evidence to be able to support the conclusions one way or another.

Interjection.

Mr Perruzza: Yes, we do, sir. So I disagree with Mr Mahoney's assertion that we should not delve into these kinds of issues, because I think we should. When someone appears before the committee and he talks about a particular aspect of his livelihood, then I think it is only fair that we get all the information out on the table. I do not think it would be fair for us to go into other aspects of their personal lives, that would be totally inappropriate, but as long as it relates to their investment, as long as it relates to our legislation, I think it is quite appropriate. Those are some of the conclusions that I have drawn out of my own mind, and I just toss that out for members opposite and my colleagues to wrestle with.

The Vice-Chair: I have two members on the list whom I will get to in just a second. I would tell members that the Chair certainly has no ability to instruct them about what they may or may not ask, but I would suggest that of course a witness does not have to answer any question that he or she does not wish to answer, and I guess I would suggest we leave it to members' good judgement. That is about all the committee Chairman can do, as far as instructions are concerned.

Mr Mammoliti: I am going to be consistent. Throughout these hearings I have wanted you to rule on a number of things. This morning I wanted you to rule on a point of order, and now I would like you to rule on the point of clarification. Was it a point of clarification or was it not?

Mr Mahoney: He just did.

Mr Mammoliti: I think it was out of order.

Mr Grandmaître: Mr Chair, the point of order is out of order.

Mr Mammoliti: Mr Mahoney's point of clarification was out of order.

Mr Mahoney: What a ridiculous statement. Any member has the right to ask for a point of clarification at any time. You do not know what the hell you are talking about.

Mr Mammoliti: With all due respect, I will dig in Hansard if I have to, but every time I raise a point of clarification or a point of order or a point of information or a point of whatever, I am cut off and I am told that I am out of order. Now, I think you should rule in the same regard to the opposition. Is it out of order or is it not?

The Vice-Chair: Are you suggesting that I rule differently for the opposition than I do for the government? I resent that, Mr Mammoliti, and I do not think I should have to take it.

Mr Mammoliti: I am suggesting that you make a ruling.

Interjection: Children.

The Vice-Chair: Exactly.

Mr Mammoliti: I am suggesting you make a ruling; that is what I am suggesting.

The Vice-Chair: Well, I cannot rule on a point of clarification, because they do not even exist.

Mr Mammoliti: Well, there you go, so it is out of order.

The Vice-Chair: No, it is not out of order. Mr Mahoney asked in between presenters, which is quite different from asking for a point of order when a presenter is sitting in front of us, if something could be clarified. I thought that that was in order. I let Mr Mahoney speak, I let Mr Perruzza speak, I would have been quite prepared to let any other member speak, and I think that is fair.

Ms Poole: Mr Chair, just to give you a vote of confidence, I think you have probably ruled me out of order more than any other member, and I can certainly say that you have been very fair and even-handed. I suggest we get on with the presenters instead of wasting their time hearing this nonsense.

[Interruption]

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The Vice-Chair: I remind people this is a proceeding of the Legislative Assembly of Ontario. Participation is only by invitation and otherwise only by members of the committee.

DACON CORP

The Vice-Chair: Our next presenter is Mr Bob Wilson of Dacon Corp. You have 15 minutes to make your presentation to the committee. You may introduce yourself and your position within your corporation and then you have 15 minutes to discuss that with the committee.

Mr B. Wilson: Thank you. I am vice-president of finance for Dacon Corp, which is a locally owned company that for 32 years has been building houses, apartments and commercial properties in the greater Kingston area. I would just like to present some of my own personal experiences and observations here. For some 20 years, Dacon owned and managed apartments in Kingston. By the end of 1989 we sold the majority of our apartments. I would like to give you some of the reasons.

The first one is the increased paper jungle of rent regulations, so complicated that the landlords even have to hire consultants to understand it. It is constantly changing, along with income tax, labour laws, now GST and numerous other government red tape. With these constant changes comes uncertainty. What is going to happen in the future? A decision we made today based on the rules may not be appropriate next year, five years or 10 years from now.

Another one is actually being able to deal on a one-time basis with our tenants, who are in fact our customers. The whole process is becoming very adversarial. In one particular experience I had, I went to a rent control hearing and we were accused of falsifying invoices. Our suppliers were accused of falsifying documents, even to the point that we were putting fuel oil in our cars and charging it off to the project. Thankfully, the chairman on that ruled they were out of order. But the ultimate reason why I came away suggesting to our owners of the company that we get out of rent controls was a conference I went to from September 1 to 4, 1987, here in Kingston at Queen's University which was called Rent Control: The International Experience. I would like to read a few excerpts of that. I have left a copy with the committee.

One of the topics of the four days was Description of Different Jurisdictions' Experience -- Los Angeles, Ontario, New York City, the United Kingdom, Sweden, Israel and Bangalore, India. "The various jurisdictions' experts were unanimous in their opinion that rent controls have been harmful: In Los Angeles, where they have been mild, they have been an irritant; in Ontario, where they have been in effect for 13 years" -- at the time of this writing -- "and have been moderate, they have had a significant negative impact on the functioning of the market; in NYC, the United Kingdom, Sweden and Israel, which have had strict controls over a long period, they have severely impeded the functioning of not only the housing market but also the labour market...."

"To offset the problems induced by rent controls, government intervention in the housing market becomes increasingly extensive...until, in some jurisdictions, the rental housing market is essentially replaced by government allocation. A related theme is that the longer controls have been in place, the harder they are to dismantle. Controls confer substantial windfall gains to sitting tenants, which they fight hard to retain.... The message from the review of the different experiences was clarion: In the jurisdictions surveyed, rent controls have been harmful and have seriously impeded the function of the housing economy...."

"While admitting the complexity of the goals of housing policy, participants were also unanimous in the view that almost anything rent control can do, some other policy can do better: If cheaper housing for the poor is deemed desirable, then subsidize their housing; this lowers the consumer price, while allowing the market to determine the producer price, which will provide landlords and builders with the appropriate incentives to construct and maintain housing. If security of tenure is valued, then it should be written into the landlord and tenant legislation."

To continue: "The experience in Britain, Sweden and Israel provide alternative scenarios for long-term controls. Each of these housing economies have adapted controls in a particular way, but in each controls appear to have seriously impeded the functioning of the market, to have generated significant efficiency losses, and to have induced an overbearing government presence in the rental housing sector. It is heartening, however, that the downward spiral caused by controls appears reversible; Coleman outlines the British program for the gradual dismantling of controls, and Turner the current trend in Sweden towards a more market-adapted system." That is my end of my quotes.

The major theme I heard from all participants from Europe, Sweden and North America was that rent controls get votes in the short run but distort the market in the long run. As the representative from Britain, Dr David Coleman from Oxford University and a former special adviser to the Ministry of Housing, said: "Things had gotten so bad from some 73 years of rent controls that they had nowhere to go but up. By 1985, only 9% of the housing market was being supplied by the private sector."

I only hope that we, the people and politicians, can learn from other people's longer experience with rent controls and not believe somehow that things will be radically different in Ontario, because people's basic motives, beliefs and desires are not all that different around the world. I think the recent political upheavals in Europe especially bear me out. As suggested from the conference, give subsidies directly to those who need them. I do not believe there is not still some need for some government housing in the market, but I still believe that private enterprise will supply a better product in the long run.

Especially, I do not believe there is enough money for government in the long run to supply all of the needed housing, health care and other demands that you as politicians must see. I also foresee, as I think you probably heard from the former speaker, that the small-time landlord is going to disappear, that you are probably going to end up with the majority owned by large, absentee landlords. People are just fed up. They want to get out. I believe this will further destroy the social fabric of Ontario's communities.

Something else I hear a lot of, and politicians I have talked to have told me the same thing, is that we outside of Toronto are sick and tired of hearing about Toronto's problems. That is all you read in the papers and that is all everybody seems to be reacting to in some cases. I personally do not believe we have that great an affordability problem in Kingston. The greater Kingston area currently meets the Ontario Ministry of Housing guidelines for a 10-year supply of developable and affordable subdivision land. I think the removal of rent controls in the long run, with some pre-determined phase-out process, will allow Dacon and numerous other builders to return to the market to provide affordable and competitively priced apartment accommodation.

I do not personally read much in the paper about experiences in other countries that have had dealings with it a lot longer than we have. That was my main point I wanted to bring out. I have left a copy with the committee. There were at this conference numerous people from Ontario, Ministry of Housing, various universities and of course consultants from, as I said, around the world.

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Ms Poole: Thank you for your presentation. With reference to your comment about reacting to Toronto's problems, I can assure you we have heard that comment before. I specifically remember hearing it in Sudbury, London, Hamilton, Windsor -- in fact, virtually every place we have gone.

Mr B. Wilson: I came from Toronto 10 years ago, so I am not a native Kingstonian as such, but just having been here 10 years, I am tired of hearing about Toronto.

Mr Mahoney: It is not the province of Toronto.

Ms Poole: But probably one of the problems of rent regulation under three successive governments is that everybody is lumped in one kettle of fish. I am sure there are many landlords out there who are making a very comfortable profit all the same, thank you very much, because they bought their building many years ago, have paid it off and now are surviving nicely. But there are also landlords in completely opposite situations. Vacancy rates vary across the province. They are quite pronounced in some areas and very tight in others. Would you favour going to some sort of regional look at the legislation so that the needs of various areas are considered in a different light, taking into account vacancy rates, average rents, all those types of factors that do vary from the Toronto scenario?

Mr B. Wilson: I would certainly like to see that considered. I still think, though, that in the long run rent control should disappear. I think that problem should be looked at, even if it is a 10- to 15-year time frame to get there. In the short term, yes, that is a solution. I have seen that, although even in here there were papers presented about how do you start defining vacancy. There are problems with dealing with that, but I think it can be brought out.

With regard to one of your other points, about wealthy landlords out there, if I can make a comment, there are certainly other ways of taxation then. If that is one of your worries or objectives, there is capital gains taxation. There is the Fair Tax Commission now being set up to establish, perhaps, some successive duties and what not. There are ways of taxing if people are worried about wealth being created out of it.

Ms Poole: We on this side of the table call it a tax commission, not the Fair Tax Commission, because we are not sure that has been established yet, how fair it will be.

Mr B. Wilson: I am not saying I agree with it. I am just saying there are other methods of handling it.

Mr Perruzza: They are cutting into my time with their 40 tax increases in three years.

If I understood the bulk of your presentation, one of the premises you anchored your entire discussion on was that if you remove rent controls, then the marketplace is just going to simply move in and create more rental housing. I think you quoted from a text which suggests that. If you build a new building in this area now, what would you have to charge for a builder to gain some return?

Mr B. Wilson: To gain some return? Again, it depends on what kind of --

Mr Perruzza: A one-bedroom unit.

Mr B. Wilson: In a high-rise? A low-rise? That is all over the map. If I am building a high-rise with pools and everything else, it is a different number than --

Mr Perruzza: Roughly. Take a large shot at it.

Mr B. Wilson: An upset number would be $750. But why is that number that high? What other government regulations are we into to cover that?

Mr Perruzza: So $750 an apartment unit.

Mr B. Wilson: Yes.

Mr Perruzza: What are the average rents now with rent control. Where would you ballpark that?

Mr B. Wilson: I would have to get a survey.

Mr Perruzza: Are you involved in any buildings at all? Do you own any?

Mr B. Wilson: We have two current buildings left.

Mr Perruzza: What is the average rent in your buildings?

Mr B. Wilson: Again, one is brand new, as of 10 years ago, and the other ones are 30 years old, so there is a complete difference.

Mr Perruzza: So what is the average rent in the one 10 years old?

Mr B. Wilson: About $630.

Mr Perruzza: What is the average rent in the other one?

Mr B. Wilson: You would lucky if you are in the $560-$570 range.

Mr Perruzza: So you are close to the average.

Mr B. Wilson: If you want to know, we are losing money. We are close to the average.

Mr Perruzza: You are losing money now and you are saying --

Mr B. Wilson: I am saying we need $750 to make money, even to break even.

Mr Perruzza: To break even, but you are saying that the private sector would, at a $750 benchmark, provide enough housing and make a profit.

Mr B. Wilson: But what is our vacancy rate right now in Kingston?

Mr Perruzza: What would your vacancy rate be if you increased it?

Mr B. Wilson: It is less than 1%. I say there is a need for it.

The Vice-Chair: Thank you, Mr Wilson. We appreciated your presentation today.

HOMESTEAD LAND HOLDINGS LTD

The Vice-Chair: The next presentation will be from Homestead Land Holdings Ltd, Brian Bunting. The committee has allocated 15 minutes. You may introduce yourself and commence the presentation.

Mr Bunting: My name is Brian Bunting, and I am here to make a presentation on behalf of my employer, Homestead Land Holdings Ltd. Mr Chair, may I suggest that rather than go through the full presentation, which has got a lot of repetition in it, if I give you a copy afterwards, can it be included in the record of the proceedings, to try and shorten it up a bit?

I feel a sense of déjà vu, as most of our comments will be similar to those made, with no effect, on September 17, 1986, to another committee, chaired by Mr Floyd Laughren, that was then conducting public hearings into the proposed Residential Rent Regulation Act. Since then, we have had Bill 4, the Residential Rent Regulation Amendment Act, that was effective from October 1, 1990, and now we have yet another proposal hanging over our heads. I also feel a sense of futility in view of the reported comments by Mr Allan Pilkey in respect of Bill 115, the Retail Business Holidays Act, that "the principle of a common pause day is not up for negotiation" regardless of public hearings. If this is the attitude of the government, that a stated principle cannot be reconsidered, then why are any hearings held at all to receive public input?

This proposed act is the latest game in the rent control football series played by Ontario governments from all political parties. The series started in 1975, and represents the last vestige of wage and price controls. No other endeavours in the province of Ontario have been so consistently kicked around in the interests of votes at the polling booth; this must be the reason for this plethora of legislation that has proved to be of no benefit to the tenants with affordability problems, nor to landlords of all sizes.

Do we see food costs or motor vehicle purchase and operating costs subjected to the same restrictive legislations? What happened to the proposed constraints on prescription drug costs? Yet the residential rental landlords in Ontario are expected to subsidize all their tenants, regardless of their individual needs. Is it politically impossible to enact proper legislation and direct funds to those members of our society who have a true accommodation affordability problem?

I understand that the cost of administering the existing legislation is in excess of $40 million a year. Now this proposed legislation will bring many smaller rental properties under scrutiny through the rent registry system, which itself is far out of date. The increase in operating costs paid by the taxpayers of Ontario will escalate beyond belief. These costs, I believe, do not include the costs of the various federal and provincial schemes, ranging from national housing act loans through various assisted rental programs to the convert-to-rent program. Millions of taxpayers' dollars have been pumped into these, and to what end? There is still an affordability problem. These costs do not include loans for non-profit and co-operative schemes, nor the subsidies being paid through the municipal housing authorities and their attendant administrative costs.

We despair that the true problem of real, and not just perceived, housing affordability will ever be looked at with a new, critical eye to develop an effective economic policy to help those truly in need and that can be administered effectively and inexpensively. Instead, we foresee a continuing mess of legislative patches worsening the basic problem at increased costs, compounding the inward, downward spiral unto the distant future. It is sad that sledgehammer legislation to protect some tenants from a few landlords is detrimental to all tenants and to all landlords in Ontario.

It is easy for Bob Rae to make comments about buying out speculative landlords and creating a pool of non-profit housing, which will be at the expense of the Ontario taxpayers, but I beseech you to consider the true effect of this and all the other legislation on the hundreds of landlords of small rental properties, many of whom do not know about the Landlord and Tenant Act or the various rent control acts.

Would it not be possible to prepare a list of all the relevant legislation affecting property owners and to send it out with the annual assessment notices or the municipal tax bills? These small landlords may then come to realize, too late, that their property will not provide a retirement nest-egg because of the rent control provisions designed to curb speculators. They may well be faced with the total loss of their property, or even bankruptcy, when they are unable to refinance their mortgage or to raise funds for needed major repairs, because there will not be adequate rental income to support the extra payments required by an uneasy lender.

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Just because it is the larger landlords and their associations who are, from necessity, heard from most often does not negate the fact that we can speak on behalf of all landlords. It is perhaps ironic that the party now in power in Ontario has claimed that it is representative of ordinary Canadians, yet this proposed legislation can harm such people.

Making constructive comments on this new legislation is difficult because the real nuts and bolts required for day-to-day operations and planning will not be available until the regulations and the attendant paperwork are known. Furthermore, these regulations do not come before the House. They can be changed by the minister at the drop of a hat.

Our experience is that Bill 4, now known as the Residential Rent Regulation Amendment Act, suggests that there will be another long waiting period in suspense until information of importance to landlords and to tenants becomes available. With Bill 4, the effective date was October 1, 1990; first reading, November 28, 1990; second reading, December 18, 1990; third reading and royal assent, April 22, 1991; and the regulations were finally made available in this area by the ministry on June 11, 1991. That is a delay of over eight months.

Our comments on Bill 121: Firstly, we would like to commend the government for telling it like it is and titling this a Rent Control Act and not hiding behind prior euphemisms. Secondly, it is difficult to make specific comments on the precise effects because the practical application will not be known until later, when the Lieutenant Governor in Council has made more prescriptions than your average pharmacist. However:

Section 2 is the five-year exemption. I do not see this encouraging private investment because there is no market guarantee that losses and return on equity recoveries will have been obtained in that time. Furthermore, governments have shown an inclination for changing the rules, for retroactive legislation at any time regardless of prior commitments.

What categories of operating costs will be included when the lawful rent increases are calculated? Unless these include the items presently shown in the BOCI and RCCI formulas, the landlords will be penalized again.

I have never been able to understand the reasoning behind the 50% rule for extraordinary costs. For example, if your calculation shows that your extraordinary cost is $499, you may not get a rent increase, but if it is $501, you can get a rent increase. This differentiation is beyond me.

Another anomaly is the fact that costs are dealt with on an annual basis, but the revenue is annualized. By that, they take the highest month's rent and multiply it by 12. This means that, again, in the calculation of a justified rent increase, that the landlord is being penalized.

There are a lot of phrases and expressions in the draft bill that are going to require some precise definitions. Our concern -- and it always has been ever since rent control first came into being -- is that there is no control, no follow-up to ensure that the same definitions are being applied from one office to another or even from one application to another. We have seen that happen many, many times.

Section 17 refers to work inside a rental unit and requires the tenant's agreement. However, it is possible to have to do work in a rental unit, such as installing energy-conserving windows or repairing a leaking radiator heating system, that some of the tenants agree and some of them do not, then what is the landlord to do?

In section 21 is the provision that if an order is not issued in good time, the tenants can spread the extra payment over 12 months. This can be out of the landlord's control, but he is going to be penalized for it. In view of the 3% cap that is going to be on all increases, is that section really necessary?

Section 24, which deals with the tenants' applications, has no time frame at all, as opposed to the rigid time frames that the landlord is faced with.

Section 29, the application for an advance determination on capital expenses. This suggests that if a landlord makes an advance application, he will be obliged to carry out the work. Surely this should be to help the landlord decide whether he can in fact afford to do the work and to assist him to negotiate with the lender.

Section 38, which has been mentioned before, is the question of work orders and rent rollbacks. We have had many work orders to repair damage caused by tenants. Is this going to be the way that tenants can get their rents rolled back or to ensure that landlords do repair damage caused by tenants?

Section 44 mentions equalization of separate charges, but why are rents not going to be equalized? The media have always reported that this is a windfall for the landlords, but if the ministry's own computer system was not working properly as it should have done -- the whole theory behind that was that the landlord's total revenue stayed the same. This was an adjustment of rents between different tenants, because over the years the rents for similar apartments have grown hundreds of dollars apart.

We have mentioned section 66, which is the rent officer's powers to go on a fishing expedition, and sections 113 and 114, with the search warrants and the police coming to your door at 7 in the morning.

Section 88 gives a rent officer authority to change an order, but it does not give either of the parties to an application the power to ask a rent officer to reconsider an application. I feel that is a rather important point, because you have taken the whole of the appeal provisions out of there. One would consider that a basic right, to appeal a decision or an order. It is all very well saying, "Let's go to the courts," but the courts have their own problems at the moment.

I think I will leave it at that, but I would like to thank you all for listening to this presentation, and in your own way, for ensuring my continued employment.

Mr Tilson: Under the advance determination section, section 29, you raised the issue of consent. The government members of this committee have continually taken the position that whether landlords can afford it or not, to protect their capital investment in the building, they really have an obligation for their own benefit, let alone the tenants' benefit, to keep the building properly maintained, to make the proper capital expenditures. Yet this section -- and I would like your thoughts on this -- appears to say that a tenant's consent is mandatory for all repairs. At least, that is an interpretation that I am giving to it. I will be interested in hearing the housing staff's interpretation. Do you have any thoughts on that, that conflict of almost philosophy with respect to capital expenditures?

Mr Bunting: Again, it falls under this question of interpretation, what is an essential repair.

Mr Tilson: As you say, the act could be completely rewritten by regulation.

Mr Bunting: Right.

Ms Harrington: I am glad you like the new rent control. I do too.

Mr Bunting: I do not necessarily like it, I just commend the honesty behind it.

Ms Harrington: Previously, the name "landlord" was mentioned, and I think maybe that should be changed too to something a little more appropriate -- "partners in housing," something like that.

Mr Bunting: We have always felt that the word "charity" was more appropriate.

Ms Harrington: I would like to briefly comment on some of the questions that you raised, the concerns that you raised. Our job as a ministry is to look at the whole picture of housing in Ontario, not the piecemeal picture that has developed during the past. Also, it is not a political advantage for the short run. That has been tried before. There is no sense in that at all. What we have to look at is the whole big picture, the land prices in Ontario for home owners and for apartment units, of course. The Ontario Housing Corp has to control spending and make it a decent place to live; non-profit and co-ops as well. The reality is that we cannot endlessly extend these programs. We have to be a partnership with the private rental market.

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Ms Poole: Thank you for your presentation. We always particularly appreciate it when presenters give us specific sections they have concern with so we can take a look at them.

Looking at sections 38 and 39 concerning the work orders that you made comment on, I applaud the intent of the government, because quite frankly, there have been problems with work orders. There have been problems with certain landlords -- not all landlords, and in fact I would say not even most landlords, but there have been concerns that some of them have abused the system and have a history of outstanding work orders.

Would you like to see some safeguards built into this section, for instance, the same ones that are in Bill 51, where the director would have to look at extenuating circumstances, look at whether they are making reasonable attempts to comply, look at the history of the building and whether the landlord has constantly been in trouble in this regard, whether there are financial implications? Do you think that would help this section, or how do you see it being changed to make it more effective?

Mr Bunting: I would say in general, if we are talking rent control, that rent control has to be here to stay, and that basic argument we do not agree with, obviously.

I agree that there are bad landlords. There are bad tenants as well. It is bound to happen and it is part of the human condition.

But I think the point you are leading to, that there should be a sort of graduation, more room to consider the exact circumstances leading to the issuing of a work order or of the follow-up of it -- because once something is written down in black and white, you are going to have to interpret it this way or that way. If it gets interpreted the wrong way, then you are going to penalize a person who might basically be a good landlord but who has got this work order, which could be a major one. We have heard about the older buildings here in Kingston. We have 100- and 200-year-old buildings. A work order for a small landlord in that situation could be a major problem. He is faced with a financing problem, and it might take months to go through, as I have seen going through lenders now. They are getting so cautious it is unbelievable.

Ms Poole: It becomes a catch-22 situation.

Mr Bunting: Very much so.

The Vice-Chair: Thank you, Mr Bunting. We have appreciated your coming here today.

KINGSTON FRONTENAC HOME BUILDERS ASSOCIATION

The Vice-Chair: The next presentation is John Armitage of the Kingston Frontenac Home Builders Association. You have been allocated by the committee 15 minutes for your presentation. If you wish to reserve some of that for conversation with the committee, we always appreciate that. If you would begin by introducing yourself, your organization and your position within the organization, it would be appreciated.

Mr Armitage: My name is John Armitage. I am the president of the Kingston Frontenac Home Builders Association. We have 170 member firms in Kingston, representing in a typical year about four million person-hours of employment; 90% of the rental housing built in the greater Kingston area is built by members of our association.

I would like to thank you for taking the time to listen to those of us in the industry regarding this legislation. When I look out the window, I think we are inflicting some cruel and unusual punishment on you, making you stay in here when it looks so nice outside.

When I was working on my remarks -- normally when I do this kind of thing, I have prepared written remarks that I leave with you -- it occurred to me that there is really nothing I can say to you that you have not heard before. You have probably heard from overzealous landlords who are ranting and raving about the intrusion in the free-enterprise system. You have probably heard from overzealous tenants on the other end who are probably telling you that every landlord is some mean person with a Rolex watch who drives a Cadillac and wants to take their money. I think really what we have to do in our society is try to seek out some more meaningful consensus.

Let's talk about Kingston for a minute. In the last 24 months, we have had landlords who have built new buildings who have offered one month's free rent. In one case we had a fridge and stove being offered for people who would rent from this landlord. That tells you this is one of those unique market situations where there is an oversupply. You have heard it before, but the most effective rent control system, the most effective price control system in our society for any commodity, is when there is an adequate or even an oversupply.

There is a 120-unit building in our community that has a maximum legal rent that is $100 per month more than the landlord is charging for that building. Why is very simple. If the landlord charged the maximum legal rent, the building would probably have a large vacancy rate.

Simple economics work. We are a market that does not need rent controls to the degree that perhaps some of the larger markets do.

I am concerned that this piece of legislation is sending a message to the investment community that transcends just the rental market situation. We need money from outside Ontario for our province to flourish. We all know that there is a serious concern about the deindustrialization of Ontario right now. The only way we are going to maintain the investments here and indeed attract any further investment to Ontario from outside our borders is to get the message out that it is not a bad thing to make a profit.

Unfortunately, Bill 121 as it is currently written has an implied message that a fair profit is something a landlord should not be entitled to. I do not think there is a thinking tenant, a thinking member of any of your parties, who would disagree that a landlord should not be denied the opportunity to make a fair profit. The message we are giving in Ontario right now is one that is scaring investors away, and this rent control situation is just a microcosm of a larger problem that we have to deal with.

This proposed legislation has injected a high degree of uncertainty into the rental investment market. Lenders are nervous, landlords are nervous, and I think tenants should be nervous, because there is the potential for the drying up of private-sector-initiated construction.

I think there is a unique opportunity here, just through this one piece of legislation, to simply write into the legislation the fact that a landlord is entitled to a fair profit. I cannot imagine anybody opposing that concept.

Maybe I am oversimplifying, and perhaps you will correct me when I am done with my remarks if I am oversimplifying, but it seems to me that if any company or any investor in any market in Ontario is making a profit, they are going to pay taxes, they are going to employ people who pay taxes, and the government of the day, indeed, the three levels of government of the day -- four in some jurisdictions -- will use these taxes to deliver the programs that they think are in the best interests of the greater public and serve the greater public good. Profit is important for us to be able to serve those in our society who are in need.

This recession has been hard on us in Kingston. Our unemployment in the construction sector has peaked out at 50%-odd, and right now a recent statistic tells us that our unemployment rate is in the 40% range. I keep reading that the recession is over. I can tell you that in the housing sector in Kingston, and I am including the rental housing sector, obviously, it is not over. It started in April of last year, and 16 months later, it just has not abated. We are told that our sector is going to pull the province out of a recession. Once again, we have an opportunity with a piece of legislation to either encourage recovery from the recession or perhaps to hold us in.

The previous legislation had many flaws. It was not a perfect piece of legislation. I think everybody would recognize that. But I am told that there were something like 50,000 private-sector-initiated housing starts in Ontario since 1985. That is not bad. That tells you that at least on the supply side of the equation there was some degree of confidence perhaps coming back into the market. This new legislation, unfortunately, undoes this confidence that has been emerging in the rental supply market.

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I have five specific recommendations. I have to be honest with you that, when I was coming here, I said to myself, "What's the use?" There is a high degree of frustration in the business sector that governments do not listen -- not just the government of the day in Ontario, but all governments. The small businessman's degree of frustration is so high it is going to explode somehow, somewhere. Part of that frustration is an honest, sincere feeling that governments do not listen. I will not accuse you of that, because you people would not be sitting here on such a beautiful day if you did not care a little bit about the job at hand.

I am convinced you are going to move ahead with this legislation, so I am going to ask that you give consideration to five specific recommendations. I am not an expert in the clause-by-clause analysis of this piece of legislation, I am more of a generalist, as a builder and as a representative of our association.

The first recommendation: When you deal with the rent control index, I think you should talk about old versus new buildings, not small versus large. You have heard it before, I am sure, but an old building has a higher operating cost as a per cent of income than a new building, and I think it is easy to see. Newer buildings just simply have not had the time to weather, to deteriorate, and they have a higher income base as a per cent for their maintenance fees, for their fixed fees.

For example, in our market, old buildings typically would have a rent in the $400 to $500 range for two-bedrooms and new buildings would be in the $600 to $700 range. So for the higher rent for the same costs, obviously, as a per cent, it is less for a new building than an old building.

The second recommendation: Inflation should be allowed for when you are calculating the formula. It is a very simple concept. If the rate of inflation is 5%, what is worth a dollar today is 95 cents tomorrow. So for my dollar to be worth a dollar tomorrow, then I should be allowed equal to the rate of inflation. If the rate of inflation is 5%, a dollar today should be calculated as $1.05 tomorrow.

The third recommendation: I do see a good aspect to this legislation. It is the recognition that a new building needs time to settle into the market. A period of five years has been recommended.

I can tell you that one of our member firms has just finished a pro forma on a 180-building project, and the time to break even on that project is closer to seven years. What we have got to recognize is that, yes, that landlord should be given the opportunity to reach the break-even point, but once the landlord reaches the break-even point, to be encouraged to go ahead with the project and for the lenders to have the faith to lend on the project, they then should allow for a fair rate of return on the investment within the formulas, a fair profit; 10 years would be a more acceptable term than five.

My fourth recommendation: I am concerned about the discretionary powers that are written into this legislation for what has been called the rent police. I see that they have the right to determine maintenance standards with no right of appeal. Surely fairness in our society tells you that any of us should have a right of appeal. If an honest mistake is made or if somebody is being unfairly arbitrary, I think we would all want to see the individual have the right of appeal. It is only fair in our society.

My last recommendation is that the maximum legal rent for a building should be the economic rent. I do not think I need to explain economic rent to you. An impartial accounting firm could look at the costs involved in putting a new project together. We could, I am sure, agree on a fair rate of return on the investment for whoever the investor may be, large or small, local or foreign, and then we should be able to determine what that economic rent is. That economic rent should be the maximum legal rent.

I think it is important that we encourage supply. I think it is important that we encourage private-sector-initiated supply. We will always have the public sector. It is necessary to help those at the bottom end of the economic ladder and we have an obligation as a society to help those who are disadvantaged. I do not think anybody argues with that, but fundamentally, I do not think anybody, the mainstream taxpayer, wants to see his tax dollars going to provide a subsidy, whether it is direct or indirect, to those who are not in need.

That concludes my recommendations. Just a final appeal: I think it is time that we take the three parties involved -- governments, and I say governments in plural because we are dealing with more than just the provincial government; landlords and tenants -- and I think we have got to sit down and try again at a meaningful dialogue to resolve this issue. It is more than whether or not you can win a certain riding; our future is at stake here. I am concerned about my children, and my children's children and the legacy that we -- and I say "we" because we are all in this together -- are going to leave our next generation and the generation that follows if we do not find a rational, middle-of-the-road solution to the situation.

Let's come clean on the political realities, and let's come clean to the voters of the province and say, "We, politically, have a problem here; all three parties have a problem." We have a million votes that we are dealing with, but somehow our legacy has to be that we have a system that works, so that those who come behind us are not going to be facing the blight that we see, and you have heard all about the horror stories all over the world. Somehow we have to find a made-in-Ontario solution. I do not know what it is, but I just appeal to you to -- let's put Bill 121 on hold until we can have a meaningful dialogue with the parties. Thank you for your time.

The Vice-Chair: Thank you. Mr Perruzza, Mrs Harrington and Mr Wilson have expressed an interest to spend your 40 seconds. Mr Perruzza?

Mr Perruzza: Mr Chair, I am going to pass over to Mr Wilson, since he is the member for this area, and it is good of him to come out and sit in on this committee.

The Vice-Chair: Now he has got 10.

Mr G. Wilson: Thanks John, for an unusually sincere and straightforward account of where your position is. This question has come up before and I have put it to tenants about how they speak to landlords, and I just wondered, from your point of view, who speaks for the tenants, and how do you meet with tenants to find out what their views on this are, or should we be encouraging organizations of tenants so that they will be able to articulate their position in a way that they would, then, have a position at the table?

Mr Armitage: Well, I think you know my answer fundamentally will be as an employer opposed to formal organizations of any type; but yes, we need to somehow have a meaningful dialogue with tenants. The problem we have to watch out for, and you have to be vigilant for it, is those who aggressively seek to speak for any group. I would be suspicious of their motives, if they have a hidden agenda. We are seeing people in our society now adopting causes, not so much because they believe in the cause, but because that is going to help them get to whatever their personal agenda is.

I think you have to use focus groups rather than people who claim to represent tenants, and use the focus groups that are scientifically selected from landlords and tenants. Sit down and talk to them so that you are talking to the average landlord -- not the overzealous type like myself who will come and talk to you, but the average guy out there -- and start talking to the average tenant, not the people who seek to represent tenants. I think focus groups are the answer.

Ms Poole: Thank you for a very thoughtful presentation, and particularly your middle-of-the-road stance. I can tell you, as being a party very much in the middle, it is sometimes uncomfortable, and other times dangerous, but there is some hope for some of your recommendations.

I do not think there is anybody who has come before our committee who has not come of the viewpoint that the double guideline is confusing and unnecessary, particularly the way they have done it with small and large buildings, so I am quite optimistic that the government may reconsider that and have one guideline, or, as you suggest, old versus new buildings.

The second one, the right of appeal: Again, tenants and landlords have been very much of the viewpoint that is something that cannot be denied in a democratic society. We find your --

The Vice-Chair: The question is?

Ms Poole: The question is, I really appreciate your comments and I think they will be very helpful to our caucus, and hopefully other caucuses, in formulating our amendments.

Mr Perruzza: Good question.

Ms Poole: Do you agree?

Mr Armitage: Yes.

Mr Tilson: There is obviously a group of tenants -- wealthy tenants or middle-class tenants, however you want to refer to them -- who perhaps may or may not have an interest in getting into other things, such as the purchasing of homes, which is your line of work. Are you able to determine through facts or otherwise whether this type of legislation will have an effect on those types of individuals purchasing new homes? In other words, would it pay them to stay in their buildings, obviously?

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Mr Armitage: Our business is building rental as well as new homes. Our members are in both businesses and we represent that equally in our area.

Anything that says to anybody in our society, "I've got a good deal," is going to mean that they are going to hang on to what they have. Whether it is a car or a boat or a bicycle, if it is a good deal, they are not going to trade it in. If I can afford a modest starter home or a new home, but I am in a unit in the Kingston market that is two bedrooms, that is under rent controls, that is $385 a month, why would I if I can afford that?

I think that is the point. Artificially, we have created a good deal for people. Having said that, philosophically, we are not going to argue with the fact that we have to help those out who cannot help themselves. Our philosophical position is that we are opposed to helping those who can help themselves.

In answer to your question, yes, this legislation will hinder the upward movement of tenants into the housing market, which will have a ripple effect of decreasing the availability of rental housing for those who really need it, particularly the lower-level rent-controlled units.

We have affordable housing in Ontario. The problem is it is occupied by all the wrong people, who do not need it.

The Vice-Chair: We very much appreciated your appearance before us today.

KINGSTON AND AREA REAL ESTATE ASSOCIATION

The Vice-Chair: Mr Neil Hubbard of the Kingston and Area Real Estate Association is the next presenter. You, like the other presenters, have 15 minutes to state your case to the committee. We would appreciate a few minutes to have questions and answers. Just introduce yourself.

Mr Hubbard: My name is Neil Hubbard. I am the president of the Kingston and Area Real Estate Association. I would like to read a short introduction to the Kingston and Area Real Estate Association first.

The Kingston and Area Real Estate Association is a non-profit organization which represents the interests of real estate and realtors in Kingston, Napanee, Gananoque and the surrounding areas of our trading boundaries. Our association is composed of approximately 540 members who are active in all phases of real estate, including residential, investment, commercial, industrial, rural and recreation.

As realtors, we have firsthand knowledge of our community, as we deal with the public on a daily basis and we are able to gauge the effects of government policies on the real estate market.

The association's mandate is to assist members in operating their businesses in a successful and ethical manner, to increase consumer protection through improved standards of business practice, to enhance the opportunity for all area residents to own and enjoy real estate, and last, to preserve and protect private property rights for all our citizens.

We in our provincial governing body, the Ontario Real Estate Association, comprising over 45,000 realtors in 48 local boards, have worked closely in the past with all branches of government to develop, review and to comment on government policies affecting realtors, real estate and Ontarians.

The new government policy respecting rent controls affects realtors, real estate and Ontarians.

That is my introduction. It is the position of the Kingston Area Real Estate Association that the new rent control legislation is not acceptable. It is not acceptable to the tenant whom it is meant to protect, and it is not acceptable to the landlord who has traditionally provided the type of housing the act is supposed to control.

We do not wish to see a return to the situation of the past. The history of excesses by landlord and tenant alike is best forgotten. The tenant needs some form of protection from these excesses. However, if the protection is to be provided, it should not be at the total expense of the landlord. If short-term protection is given to tenants, the government must beware it may lead to long-term disaster in the rental housing field.

Each day, we as realtors are seeing more and more potential investors who are avoiding the Ontario rental housing market completely and, in many instances, are investing out of province and even out of country.

Potential investors are now of the opinion that government policies make it a waste of their time and money to become involved in the rental housing market. They are more concerned with investing in areas where a profit is a possibility rather than investing in the rental market where a profit appears to be an impossible dream.

The new legislation is one more obstacle in the path of even a reasonable profit. By giving short-term protection, the rent control may result in a shortfall of new rental stock and a deterioration of the existing stock as landlords simply walk away from their properties in total frustration.

Where rent control is supposed to assist the poor, it is often the middle class who reap the benefits of the system by utilizing rent control units, banking their savings and using these savings to make a down payment on their own residence. At the same time, the poor are locked into substandard accommodation but are reluctant to move as they are reaping the benefit of controlled rent and do not wish to lose this so-called benefit.

This new submission is not a timely warning in light of the uncertainty and concern being felt by many people in Ontario. Ontarians are fearful of their jobs, of rising provincial and federal taxes, of lot levies, and perhaps the most major concern of all, whether the country of Canada will stay together as a nation.

The path taken by the new rent control act is one which, in our opinion, may eventually require the provincial government to take full control of all rental housing units in the province. We feel this would be a drastic mistake and urge the government to let the market dictate fair rent.

If, as provincial statistics point out, a third of all Ontarians cannot afford their present rent, it seems only logical that the government should take the estimated $40 million it now spends on administrating rent control and perhaps put this money towards rent subsidies for those who truly need this type of assistance.

Tenants would find it more acceptable and landlords would continue to invest in the market, leading to at least some return on their investment.

Ms Poole: I do not know what it is about the Kingston area that is bringing these moderates out who agree that our goal is to protect tenants and also stimulate the industry, but it is good to hear that kind of talk.

What I would like to explore with you is how we do manage to stimulate investment, confidence and trust in the housing market. Quite frankly, I think after Bill 4 that is going to be a tough call. Certainly the landlords who have come before our committee are extremely angry. They feel threatened and therefore they are threatening, themselves, to get out of the market.

What do you see as the solution? Do you think Bill 121 can be amended to provide that middle ground where we can have tenant protection and, at the same time, provide that stimulation and boost to our economy?

Mr Hubbard: I would certainly hope so, because from my own experience, week by week I talk to people who are investing in the Alberta market, who are investing in the British Columbia market, and when you say to them, "How about the loyalty of staying with the Ontario market?" they say: "It's not worth our money. Why should we waste money on this market when we can do much better in the other markets?"

I certainly hope there is going to be a change in the bill to provide both protection and also protection of the word "profit." The word "profit" is not a dirty word. I think more and more the investment community is becoming a bit leery of investing in our own province, which is a terrible travesty as far as I am concerned.

Ms Poole: Are you suggesting that perhaps one way we might accommodate this is to take a look at the guideline again and maybe reinstate a 1% profit? Is that what you are leading to?

Mr Hubbard: Anything that will give some indication that profit is possible. That is the thing that most people are very afraid of. They are seeing zero profit and perhaps financial hardship, bankruptcies and the whole thing, and I do not think that is fostering any sound investment policies in Ontario. We are finding it day by day.

Mr Tilson: Continuing on with that line of questioning, you are not obviously the first, as I am sure you are aware, to come forward with that type of statement, that investors have lost confidence in this province. Businesses are becoming more wary of this government with not only its rent control policies but other policies. As you have stated, they are moving to other provinces and out of the country in fact. Do you have any thoughts, in speaking with these individuals, as to the long-term effects? We know what the short-term effects can be. Have you had any discussions with any of the people you deal with on this?

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Mr Hubbard: I think the one issue that continues to come up is that these people who are in this market certainly want a profit. The average person who cannot afford some sort of housing also wants housing to be provided. Long-range they are just saying: "We have the money to invest, why are we being forced not to invest in our own country or in our own province, in our own area? Why are we having to go out of province, out of country even, to let some other country enjoy the investment we are willing to put forth? We are being discouraged by this." That is the general trend of what I get from people talking on a day-to-day basis.

Mr Tilson: The reverse of that, of course, is new industry coming from outside the country into the country or the province, or outside the province coming into the province. As I am sure you are aware, many of them send out individuals to determine what the schools, housing and everything else is like. Have you had any thoughts or any discussions with out-of-province industry or businesses as to our housing industry or our pending housing industry?

Mr Hubbard: Up until this year they have been very pleased with the housing industry. The cost of housing and so on in this area is still reasonable when compared to other major centres like Toronto or Ottawa, so I have no problem with that whatsoever. They are still considering Kingston an area they would like to come to.

Mr Tilson: But that is mainly the purchasing of business as opposed to the rental of business.

Mr Hubbard: Yes, but investors from outside -- I find it is slowing down. It is definitely slowing down.

Mr Perruzza: You talk a lot about investment and confidence. Are you familiar at all with the land use planning processes of countries other than Canada?

Mr Hubbard: Honestly, sir, not to the point I could answer a certain type of question on it, no.

Mr Perruzza: You would not know how long it would take to get a rezoning application through in France, for example.

Mr Hubbard: No, I do not.

Mr Perruzza: Okay. You are not familiar at all with Japanese land use planning principles.

Mr Hubbard: No, I must admit I am a Canadian and I can tell you about Ontario but I cannot tell you about outside.

Mr Perruzza: So I think it would make for interesting reading if you picked up on some of that information and find their land use planning is substantially different from ours, and then you could come back here and make a presentation on investment and confidence in investment in those kinds of economies and in real estate particularly, because you would find it is quite different. It is just something I throw out to you.

Would you support our changing land use guidelines to allow the rental market or the private sector to be able to make profits and provide rental housing at a reasonable market rate?

Mr Hubbard: To allow the private sector to do this?

Mr Perruzza: Yes.

Mr Hubbard: I would have to look at it in the long-range plan. I would think the private sector right now is providing a lot of the housing we are requiring in the first place.

Mr Perruzza: Okay. Maybe I am not making my questions clear -- just to clear it up a little bit, okay? The other gentleman said earlier it would require about $750 in market rent, I guess, for a unit that is about 700 square feet, a one-bedroom unit, at market value, to be able to permit builders in this part of the province to make a profit and provide market value housing units. The average in this area seems to be in the $400 range. That is what people can afford. Would you support the density increases that it would require on a site-by-site basis that would enable builders to provide rental housing at $500 a square foot and would you have any idea on the kinds of density increases you would be looking at and how it would change the landscape in this part of the province by doing that?

Mr Hubbard: Your question is kind of a long one, but I would support anything that -- are you suggesting now that by doing this the Ontario government is going to become involved in it and so without control or --

Mr Perruzza: I guess my question is --

The Vice-Chair: I think your time for questioning has expired. Thank you very much, Mr Hubbard, for appearing before the committee today.

Mr Hubbard: Thank you very much for your time.

ANNA IRCHA

The Vice-Chair: The next presentation is from Anna Ircha. Good afternoon, I see you have been here for a while so you have seen the procedures. You have 15 minutes to make your presentation to the committee. We certainly appreciate some time for questions and answers. Introduce yourself and you may begin.

Ms Ircha: My name is Anna Ircha and I thank the committee for allowing me to speak. I too have never done this before. I am a single mom and I work full-time.

I am a tenant and I will always be one unless I win a lottery or receive an inheritance. I feel tenants are punished for not being able to own their own homes. Anything we ask, we get, "If you don't like it, you can move." Buildings are seen only as an investment, not as places where human beings make their homes. I have a series of rents from a unit I wanted to live in, but it was filled at the time of my move. As of September 1, 1985, it was $555 and as of September 1, 1992, it will be $777. The rent asked for by the company at that time in 1992 would be $789. They are putting rent control on to what they would like rather than what they are paid and allowed. This is a $222 increase and I am glad I did not move into that building. This is a new building and it does not really have any major repairs.

I have a letter from someone who lives on Ontario Street. She says: "This is an example of a tactic which is perfectly legal but not, in all fairness, moral. Rent notices show two figures, actual assessment and allowable assessment. This year, with absolutely no improvements in the building, the landlord went to the higher figure and then put the increase on top of that, making a nearly 9% increase. On top of that, due to the increase in tipping fees, garbage chutes were locked and we had to put out our own garbage at considerable saving for the landlord and a benefit for which the tenant pays has been withdrawn."

I live in a 35-unit building which opened in May 1985 and I am the only original tenant left. I pay approximately $575, plus electric heat, for a two-bedroom apartment in the north end of the city. The hot-water tank is within my apartment unit so the landlord pays to heat and light the halls, basically.

This building is an eyesore in a meticulous community. A hayfield is growing out front and back, even though the owner owns a rider mower. Snow removal is treated the same as the hay. A few tenant complaints put under my door: The laundry provides three washers and dryers for 35 units. For years, the laundry room was open until 11 pm and without notice management changed this to 9 pm, with the exception of Wednesday evening. Dryers need to be used two or three times, taking time and money to get your clothes dry. Closure at 9 instead of 11 is an added stress on the tenant. If you work and come home and make supper and try to fight for the laundry room, it is hopeless.

A tenant has waited 13 months to get a lock fixed on a door; another waited six months to get a toilet repaired. Management will not paint or fix any problems re humidity from a nearly airtight building. We are allowed to paint or paper if we pay for the products, plus labour. I was shocked to hear someone would be willing to paint an apartment every two years because I have been there since 1985 and there is no way they would paint.

Management also wants tenants to pay to have their rugs cleaned on leaving. I have never heard of this. I have not left yet, but this is what I have heard. If any repairs are attempted, they are done as a Band-Aid solution, with poor-quality materials and non-professional workmen. They do not care. Absentee landlordism and property management make it difficult to get anything done. Landlords take little notice of law and can tie up things in courts in legal shenanigans for ever until the tenant gives up or moves, as they said they would do in the first place.

I pay for a parking space although I do not own a car and probably never will. We are not allowed to put bicycles on our balconies because of the fire marshal's regulation. Why do apartment buildings with balconies not have bicycle racks? I guess that is about it. Thank God for rent control.

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Mr Tilson: We have received testimony from landlords obviously opposing rent control that, because of the financially restrictive nature, they will not be able to make the type of capital expenditures they made in the past, whether to roofs, plumbing or all sorts of things. Nor will they be able to, perhaps, make sufficient maintenance improvements as they have in the past. The fear of not just a few -- it has been most of them -- is that the quality of life of the tenant will deteriorate even further, because you are not the only tenant who has come and told us very unfortunate stories of how you are being treated by certain landlords.

Having heard that and having listened to summaries of the rent control legislation and what it is doing financially -- and it is very difficult to understand it; most people do not understand it, including a lot of people on this committee -- do you feel, having heard that, that the quality of your living in whatever apartment building you are going to will deteriorate?

Ms Ircha: I like the punishment for the work order, I think that is the only hope I have.

Mr Tilson: The reduction of the rent?

Ms Ircha: Yes, because they do nothing. But at least if we have some law that says if I ask you -- I have water leaks on my ceiling, but they do not care, yet they expect the tenants to clean the rugs when they leave. An old tenant left and they made him pay to have someone wash the walls and clean the rugs. Is that not the landlord's job? These people paid the money. I thought morally the landlord should do it.

Mr Tilson: I understand that, but we have also had landlords, even earlier today, who simply say -- I think one is still in the audience -- they have not got the money.

Ms Ircha: These guys have never done anything, so where --

Mr Tilson: I appreciate that. We are talking about two different types of people. But he said even the ones who care are saying that because of the restrictive nature of this legislation they will not be able to do even minimal things that perhaps they have done in the past and that is the fear they are putting forward to this committee.

Ms Ircha: They should have built in electric heat and had the water tanks in the apartment. This is a very smart landlord. He pays for just about nothing and does nothing. It is a travesty on the community. Everybody has immaculate lawns all around us and we live in a slum. The building is lovely because it is still fairly new, but beyond that, I am ashamed to live there.

Mr Tilson: Thank you for coming and telling us your story.

Ms Harrington: Thank you, Ms Ircha, for coming here and for your comments. I just wanted to let you know that your first sentence about how you feel as a tenant, not being in control of your future and your stability in your life, is something this government believes we must change, and that is to enable our citizens to feel some equality. That is not to degrade other people's rights, but to bring equality. So, thank you for coming.

Mr Mammoliti: I cannot believe the landlord has not done anything.

Ms Ircha: That is why I am the only original tenant.

Mr Mammoliti: How long have you been there?

Ms Ircha: June 1985. It opened in May 1985. There is not one person -- they love you to move; they would love me to move.

Mr Mammoliti: What is ironic is that landlords are coming in front of us and saying it is because of our bill, this bill -- we have only been the government for 11 months, almost a year -- that this is going on in buildings. Is this the case or has this been happening from day one?

Ms Ircha: I can only give you this story. I moved into a brand-new building thinking, "Well, I have to pay my own heat, but it is a new building."

Mr Mammoliti: So it has been happening for a long time.

Ms Ircha: Yes.

Mr Mammoliti: What about their argument that they do not have any rights, that we are trying to take rights away from them? What about the rights of the tenants. What about your rights?

Ms Ircha: I do not feel I have any. They found out that I was speaking here. They phoned me at 8 in the morning to know why and what complaints do I have and I really said it is none of their business, but I am either going to get very good treatment or I am going to be harassed.

Mr Mammoliti: Thank you very much for coming. Keep it up and good luck. I am going to pass over, if you do not mind, Mr Chairman.

Mr G. Wilson: Thanks a lot for coming in. I think you gave a moving and concrete view of what the tenant has to go through, and highlighted the issue of "It's your home versus somebody else's way of making money." I think this is the thing that has to change. Again we come back to just what kind of voice the tenant does have. In your building it appears the only voice your former co-tenants felt they had was to leave and no chance of improving conditions, which I think are not out of reason.

As my colleagues mentioned, we have been in government only a year. We cannot be responsible for the first years of your tenancy, but the view of some people would suggest that landlords are doing even less than nothing under our legislation, so keep up the fight.

Ms Poole: Thank you for coming today. I know it is very intimidating to come before this committee. If you had been here at lunch-hour you would not have been too intimidated. You would have thought we were all acting like children and it probably would have relaxed you somewhat. At least certain members were; sorry, I had to get that in.

I thank you for relaying your experience. I think it shows why certain provisions are in this act, particularly the ones about maintenance and rent penalties. I guess our job, though, is not to question whether they should be in there, which your story certainly says they should, but to make sure they are really going to do the trick.

I just wondered, had you any experience in your building where the city has come in and put a work order on it?

Ms Ircha: I put a notice under everybody's door asking if they wanted to say anything. I know there is one apartment that is under legal aid or something; they have not paid their rent in six months and the owner will not accept any registered mail, so there is obviously a court case pending.

I phoned rent control about them and they knew the building immediately and said the name and that they have tons of problems with that building. There are an awful lot of problems. I just stay in my little unit and I have it wallpapered. I do one room a year and I keep all the bills, but it is my choice to do that.

Ms Poole: Just to wind up, the job of our committee is making sure that the landlords who -- I should not use the word "abuse" -- take excessive advantage of the system, who abuse the system and their tenants, we want to make sure this legislation is going to solve that problem without making it difficult for other landlords who really have sincere problems and have actually kept up their maintenance. I personally know of specific examples where this has happened, and now they are saying they are just fed up and they are not going to do anything. I appreciate your coming to tell your story so that it can reinforce in our minds why we have to make sure this legislation works.

The Vice-Chair: Thank you very much for coming. I trust it was not too painful.

Ms Ircha: No.

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KINGSTON EMPLOYMENT AND YOUTH SERVICES INC

The Vice-Chair: The next presentation comes from Kingston Employment and Youth Services, Susan Harrison. Good afternoon.

Ms Somerville: Good afternoon. Sorry for our lateness.

The Vice-Chair: The only thing is that it gave the committee a minute to kibitz and that is always a problem. You are ready to proceed then?

Ms Somerville: Yes. I believe a handout is being passed around.

The Vice-Chair: Ms Deller will look after that for you. You have 15 minutes allocated by the committee. If you will introduce yourself and your colleague and the group you represent for the purposes of our Hansard, then you may begin.

Ms Somerville: My name is Jane Somerville and my colleague is Susan Harrison. We are two staff at the Kingston Employment and Youth Services. The report that is being passed around is representative of 15 young people who use our service who were involved in a discussion and handed in comments, as well as myself and two other staff who put together some impressions. It is not representative of the whole agency, but that is the input.

Kingston Employment and Youth Services works with people between the ages of 15 and 24. We have been in existence for the last eight years and over those eight years housing has been an issue that has been very important to the people we serve. Traditionally, the people who use our service are from disadvantaged backgrounds or marginalized youth; 82% have not completed their grade 12 and are looking for employment or training programs. Over half are living on their own and also about 40% are recipients of social assistance. You can imagine that they are on a fixed limited income and when they are employed it is usually starting at minimum wage.

I will just tell you how they shared their comments. There was a workshop that was facilitated to explore housing issues. Many of the comments probably did not relate directly to your mandate in terms of the new proposed legislation, but we felt it was important to include the spirit of the comments in the document you have received because it is not often an issue that can be separated into little components.

After the comments were made, just general comments, they then wanted to respond directly to the proposed legislation and so we tried to make comments in that area as well. Generally what you will find is that anything that can make housing more accessible and more financially possible for these young people the better. This is what they are looking at:

1. Keeping a cap on the increases that are allowed per year;

2. That the houses or the accommodation they are living in is kept to a legislated standard and there is some sort of check on landlords, because the people who are living in this accommodation do not often know their rights. They do not know that landlords have to keep the homes up to a particular standard and so they are often victims of that not-knowing and abuse; I guess they feel if there is any way to keep a cap on, as I say, and also to ensure that the standards are kept up on the houses they are living in.

That is the spirit of it. We have included quotes because often, as service providers, we speak for people we serve and so we have tried to include quotes they have made about these different areas in terms of rent increases, capital expenditures and maintenance of the buildings. We decided to make it brief because we did not want to drag it on. We thought, "Let's not bore these people; let's just get to the meat of it."

The Vice-Chair: That is fine. The members often enjoy the brief presentations because then they get to ask questions for longer.

Ms Harrington: Do you have a housing help centre here in Kingston?

Ms Somerville: Just recently a housing registry has been developed and we are just starting to have that group of people make presentations to the clients we serve, so I cannot really assess the impact it has had at this point.

Ms Harrington: It is just fairly new then. In other communities we have encountered it has really become an integral part of people needing housing and a good bridge between landlords who have something available and the tenants who need it. I am hoping your organization might be able to work with them.

Ms Somerville: Yes. In the past there have been advocacy, individuals and different community agencies but not an actual registry, a system.

Ms Harrison: One of the staff members of the housing registry was involved in the facilitation of this workshop to get comments and feedback from our clients. It was sort of the first time we had used the education co-ordinator and we certainly plan on continuing it because the feedback from the clients was that this was an area they really wanted to learn more about.

Ms Harrington: We found also that the issue of educating people to know what their rights are, but also how to get along, is very important as tenants and landlords; any way you could be of help, that is the objective of this government, to try to empower people.

In your day-to-day job, what would be the scenario of what you do in a day?

Ms Somerville: When a young person enters our centre, usually he or she is unemployed or looking to continue his or her education, employment or training somehow. For intake workers,what is involved is finding out where the person is at. You will notice in the report that 10.5% are in a crisis situation in terms of housing, food or shelter, so it has implications that expand beyond housing. It expands to someone's ability to find employment in this case.

Ms Harrington: I think we have heard of some similar type of thing in Sault Ste Marie.

Ms Somerville: Yes.

Mr G. Wilson: I would like to follow up Margaret's comments by commending you for coming in to make this presentation, and also for your organizing to help young people who need help in the community in getting established. I was wondering whether you intercede with the landlords to any extent. Do you hear from them or do you contact them on behalf of your clients?

Ms Somerville: No. There are other agencies within the city that do that. In the past we have used youth services at family counselling to mediate in terms of finding housing and also if there is conflict, but --

Ms Harrison: I think the only time we would ever have any contact with landlords would be when they want to confirm that one of the young people is placed in one of our programs so they know that they have an income. Often that is really the only time we hear from them.

Mr G. Wilson: Do you think it might be a good idea to improve the housing your clients need in Kingston?

Ms Harrison: To have more dialogue with --

Mr G. Wilson: Yes, exactly, since you have, I would say, a very good understanding of what is needed.

Ms Harrison: It could be.

The Vice-Chair: We will let them think about that, Mr Wilson, and ask Ms Poole to pursue the questioning.

Ms Somerville: As a worker I often hesitate to make comments about the agency in terms of what it is willing to do because we also have issues of confidentiality. I cannot really comment at this point, but definitely the workers at our centre are very committed to helping people find stability to be able to find employment, and so are organized on different issues and comments; so, yes, as individuals I am sure.

Ms Poole: Thank you very much for coming. We really appreciate hearing your perspective because the youth perspective is one we have not heard before in the hearings, so it is particularly valuable. I have been looking through your brief at some of the comments the youths have made and a number of them have just hit right on the mark. Youth does not mean they have not figured out exactly how things are happening.

Your section on maintenance in particular was quite helpful. One of the youths said, "Have one authority make sure that repairs are done and to impose a rent penalty when there is an unnecessary delay." I think all the components that are important are there. It is not the landlord who is going ahead and doing the work -- and being a good landlord you worry about it; it is the ones who constantly stall and keep on putting it off and there is unnecessary delay, and that certainly is one of the things we are looking at here in the act. Thank you very much for coming and continue your fine work.

Ms Somerville: Thanks very much. 1640

Mr Tilson: I am pleased that you came to speak to us this afternoon. We have certainly heard from seniors' groups and we have certainly heard from people who simply have not that good an income to afford housing accommodation. To my recollection you are the first interest group that I can recall that has come to us, so I do thank you for giving us your perspective.

The question I have asked the other groups is that students and young people, I suppose, who are starting off in the work force, cannot afford any increase and yet this legislation provides automatic increases whether or not it is needed, because there are many apartments, for example, and we are seeing it all across the province, where there is an increase in availability of accommodation and rents are being reduced in some cases, yet this legislation allows for automatic increases. I would like you to comment on that.

Ms Somerville: I just want to comment from the perspective of what I feel youth, whom we work with, would say. They do not necessarily know about all the legislation or abilities to increase rent, all they know is --

Mr Tilson: Neither does anyone else. They are not alone.

Ms Somerville: They cannot afford it; they cannot afford last month's rent, they cannot put up with poor living accommodations, so --

Mr Tilson: Let me move on to my final question, Mr Chair. The final question is, and this seems to be a problem that has developed in a lot of university towns where there are all kinds of youth there for various reasons: Have you spoken to your municipality about experimenting with different types of zoning, because clearly the common complaint that has occurred throughout, particularly in university towns, is the student who is getting ripped off by landlords for accommodation, for high rents, etc? One of the issues that has been raised is maybe the municipality should be changing or maybe the province should be, and the province and the municipality should be perhaps revising the zoning rules to allow for increased accommodation in certain areas. It is a very controversial subject; I do not know whether you have --

Ms Somerville: Often youth are seen as students, and the youth we represent are non-students; they are often low-income-family youth. I think addressing the need for accommodation that is reasonable and affordable to these young people who are making minimum wage is the goal, so I would be a little concerned if the focus was only on university towns and student experiences.

Mr Tilson: Students, young people who are starting off in the workforce, I think many of them are in the same economic category and I would recommend, if you have not already that you would communicate further -- because obviously you have no fear in coming here, and that is great -- with the municipal officials and that you communicate with the provincial officials as to that whole subject, because I think they would be pleased to receive your input.

The Vice-Chair: Thank you, Mr Tilson, and thank you for coming today. I might say that this concludes the public hearings on Bill 121 and that we have enjoyed our visit to Kingston. The standard of presentations here was at least as good as, if not better than, anywhere else in the province.

Mr Mammoliti: On a point of privilege, Mr Chair: We have enjoyed the day in Kingston and I think at this point I would like to, on behalf of the committee, I hope, thank Gary Wilson, who is the MPP for the area, for joining us here today. I have known Gary for a while and I know he is concerned about the housing issue in Kingston and very dedicated to trying to resolve the problems between landlords and tenants. I would like to thank Gary for coming down and taking time out of his busy schedule on behalf of the committee. Thank you, Mr Chairman.

Ms Poole: Mr Chair, on a similar point of privilege. While it is an MPP's job to represent his or her constituents and come to these hearings, and I would hope he or she would be here, that is not true of our witnesses and I do commend them for coming out and giving of their time today and their expertise and their experiences. We very much appreciated it. So thank you to the audience.

Mr Duignan: Since we are on the subject --

Mr Abel: Who is left to thank?

Ms Poole: This is like the Academy Awards.

Mr Duignan: I think we have overlooked some very important people here today. That is the staff of the committee who have served us very well over the last number of weeks, especially moving around, and indeed the ministry staff who have also followed us around and given us some valuable information. I think the committee owes them a debt of gratitude as well.

The Vice-Chair: I think we all would agree with those sentiments, Mr Duignan. One of the few things this committee can agree on all the time is that the quality of our assistance is good. I would personally like to thank Mr Wilson for arranging a perfect day in Kingston. The weather is spectacular. I would tell you not every MPP can do that when we come.

Ms Poole: Mr Chair, on a point of order: I think it was a higher authority than a whip.

Interjection: No, it was Gary.

The Vice-Chair: With that, the committee is in recess to the call of the Chair.

The committee adjourned at 1647.