Committee Transcript 1991-Feb-14 | Legislative Assembly of Ontario

The Chair: I see a quorum. Good morning. This is the standing committee on general government. We are having public hearings. We were in Sudbury yesterday, and today and tomorrow morning we will be in Ottawa to hear presenters. The committee is hearing consideration of the Residential Rent Regulation Amendment Act, better known as Bill 4. We have a full day and evening planned for these particular hearings, and also tomorrow morning.

THOMAS KELLER

The Chair: The first presenter is Thomas Keller. Mr Keller, for the record, we need all presenters to identify themselves and whom they are representing. As the clerk has previously told you, you have been allotted 20 minutes, 10 minutes of which can be used for an oral presentation. We will reserve 10 minutes for questions from committee members and that will be shared by the three political parties. The floor is yours, sir.

Mr Keller: Good morning, ladies and gentlemen. I am Thomas Keller and with me is my wife, Veronica. We represent a landlords' group.

My wife and I came to Canada from Czechoslovakia 20 years ago, practically without a cent. I was fortunate that my university degree was accepted in this country and I was able to find work. Not knowing English well enough, my wife, a former teacher, had to start as a waitress. She learned new skills in photography and then worked as a photographer on her own. We worked hard and saved.

We decided to invest our savings in rental housing, mainly because I am an architect and so I understand buildings, construction and the building trades. We started 10 years ago with a small five-unit property which we still own. In 1989 we bought a 30-unit apartment building. I am a full-time employee in the federal civil service, but when needed I work evenings on repairs and improvements in our building. My wife manages the 35 units we own.

Interestingly, some tenants have larger incomes than we have. Yet we have to subsidize their rent, because the rents we collect do not cover our expenses. Before we bought the building, we calculated that this deficit would disappear over a number of years through the rent review process and we would then have a modest return on our investment. We took advice about the rent increases available and planned our investment accordingly.

If rent increases are restricted again, as Bill 4 will do, then we will run out of the money we set aside for the projected losses and may lose the building to the bank, along with all our life savings. We strongly suggest that you leave financial loss allowances as they were, at least for people like us who have already bought a property. It is unfair to change the rules after the commitments have been made.

We will also be badly affected by the proposal to eliminate equalization. Because of the pre-1987 rent review rules our legal rents are very unequal. The Residential Rent Regulation Act allows the ministry to equalize rents for similar units, and the order we have provides for this. Relatively low rents are raised up to 5% extra, while relatively high rents are raised less than the average amount. Equalization does not allow us any extra legal rent in total.

At the end of this brief, there are the following attachments. There is attachment 1; that is, a schedule with unit description and equalization from the rent review order dated 22 June for our building. There is an equalization adjustments calculation sheet, then a sheet showing rents by unit type. The last two attachments are irrelevant, the Residential Rent Regulation Act section and the section from Bill 4.

Attachment 1 shows the adjustments that were made in the rent review order we received in order to equalize the rents. Now this is not quite clear, so attachment 2 shows the increases and the decreases in separate columns, and each column is added up. The total of extra-dollar increases is $269.97. The total dollar amount of equalization decreases is $270. I do not mind paying the three cents.

Attachment 3 shows the rents in our building grouped by unit type and the average rent for each type of unit and the equalization adjustments that are included in those rents. The last column, which is titled "Applying section 100f of Bill 4 -- Rent if no equalization allowed," shows what our order would have been if equalization had not been allowed. You can see that the rents that are low, even with the equalization, would have been even lower, and rents that are high with equalization would have been higher.

We want equalization because it lets us straighten out rents that are uneven. Some tenants are upset to find their neighbour is paying less for the same apartment. They will blame us, when it is the fault of the rent review system not allowing equalization. I understand that equalization was eliminated in 1982. However, the tenant representatives wanted it restored. This was their position both before the Commission of Inquiry into Residential Tenancies, the Thom inquiry, and in the Rent Review Advisory Committee. Equalization was restored in the Residential Rent Regulation Act.

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Knowledgeable tenants understand that equalization is not equalizing up to the highest rent. It is in fact equalizing around the average new rents. Knowledgeable tenants generally support equalization because it is fairer. The tenants with lower rents pay a higher increase, but still pay a lower rent until equalization is finished. The higher increase is because they have been paying less in the past.

If there must be a moratorium, equalization should be allowed to continue, both in new orders during the moratorium and in notices of phase-in.

I would like bring your attention to attachment 3. If you look on lines 28 to 32, those are five two-bedroom apartments which are identical, and the 1990 rent, as per the order, ranges from $555 to $900, which are 16% below and 36% above the average respectively. If the equalization was not applied in that order, the lowest rent, on line 28, would be $530 -- that is, another $25 less -- while the top one would be $50 more than the $900, at $950. If I extend this, in three years, applying just for the example, the 5% every year, the lowest rent would be raised from $530 to $616, which is still below the average of 1990 for a two-bedroom apartment -- and it is well below today's average Ontario rent for a two-bedroom apartment -- while the top apartment, on line 32, the most expensive, would in three years be around $1,100. The increase would be $150 compared to the $85 increase in the cheaper apartment.

If the equalization is not applied and only the fixed or predetermined percentages are applied, then the higher-rent apartments are gaining much faster than the lower rents and the gap between the low and high is actually increasing rapidly.

That is all I have to say.

Mr Tilson: Sir, I am sure you may or may not have read or heard of the Premier's notorious interview in 1989 where he indicated his position, and presumably his party's position, which has not yet been denied, that the government of Ontario essentially plans to take over all the housing stock. In other words, the emphasis would be on non-profit housing as opposed to encouraging private enterprise to build new apartments or to encourage private enterprise to continue to maintain its housing stock.

Specifically, he was asked a question on the Swedish model which I have read to other witnesses and would like to read to you or other applicants making submissions to this committee: "Over the long term, you would like to see Ontario and perhaps Canada generally moving to something more like the Swedish model where there is a very small percentage of private ownership." Mr Rae's response: "Yes, that makes a lot of sense to me. What we would want to try to do is to eliminate the unproductive speculative element in the economy as much as we possibly can. My model would be one where you have a very substantial non-profit rental sector which would be dominant."

Having heard those words, and obviously being a representative of the private enterprise system, what do you think of the government's position on that?

Mr Keller: I think the government would be better off leaving it in the hands of the private persons if it is going to go ahead with Bill 4, because the private industry has to come up with money to sink into that rental housing because it is a losing proposition now. If the government wants to take over, it would be facing losses.

Also, I do not quite see how there could be a healthy competition between government and private enterprise in the same area, the government having practically limitless resources.

Mr Tilson: You indicated you represent a landlords' group. Which landlords' group?

Mr Keller: I am on my own.

Mr Tilson: Oh I see, just an expression.

You indicated that as a result of the Bill 4 legislation you are anticipating bankruptcy. How far off is that? How far can you hold out? Assuming that the position of the government is to go for its breathing space, or its moratorium as it calls it, with this restrictive legislation, how long would you go?

Mr Keller: I could go about two or three years --

Mr Tilson: Okay.

Mr Keller: -- because when we bought the building we knew there would be losses and we set aside an amount of money. We also have a partner so we are not alone in owning this building.

Ms M. Ward: Mr Keller, thank you for your presentation. I would like to ask you a few questions. Would you consider yourself a speculator?

Mr Keller: No, I would not. I chose this line of business because, as I said, I am an architect and I understand this --

Ms M. Ward: You bought the building intending to keep it and maintain it.

Mr Keller: I see the advantage in having an investment like that because the income is not fixed.

Ms M. Ward: The reason I asked that question was because what Mr Tilson was referring to in those comments was speculation. The word "speculative" is in there. That is the reason I asked you the question. I did not think from your presentation that you were a speculator, that that was the reason you had bought it.

Mr Keller: Well, the first building we bought 10 years ago, we still own and live in.

Ms M. Ward: You still hold it and keep that as a business.

Mr Keller: We bought to hold it.

Ms M. Ward: So your main concern here seemed to me to be simply with the equalization payments from reading your brief. Is that true?

Mr Keller: There are two. One of them is that the expenses are not allowed, so I am losing on any repairs that I have to do.

Ms M. Ward: The financial loss.

Mr Keller: There is financial loss, and equalization as well. Because the lack of equalization represents losses for me. I show that rent, that $900, which I cannot charge today, would climb to $1,100 in three years while the market value is today about $750. That would go right out of my pocket.

Ms M. Ward: So legally you can charge $900 --

Mr Keller: But I am not able to rent it out.

Ms M. Ward: -- but the market will not let you rent it for that.

Ms Harrington: Thank you very much for coming forward this morning to talk to us about the situation here in Ottawa. We appreciate it.

I just wanted to clear up once and for all the record with regard to the comments Mr Tilson made, the contention of what Bob Rae is saying. To say that we want to take over all housing in Ontario is totally absurd. I am sure you understand.

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Mr J. Wilson: You cannot promise.

Mr Tilson: He did not deny it.

Ms Harrington: Mr Chair, may I have the floor?

What Rae has said that he is opposing is the speculative aspect of housing. That is very clear from what Mr Tilson read, and I am sure that even the Progressive Conservative Party would oppose the speculative nature of housing, because housing is a right. They have agreed that housing is homes for people. They are not just investments. So I think if we think long and hard about that, we could put that quote aside, because we want to put all the pieces of the housing market in Ontario together in a way that works. We do want landlords like yourself who are dedicated to providing good housing and making a fair profit, no argument at all.

I want to ask you, do you feel that the system that we have now, which is called the RRRA, is a system that works fairly for you and for tenants?

Mr Keller: The present one?

Ms Harrington: The present rent review system that we have had.

Mr Keller: I was not really joyous about it, but it was something that I knew existed and I could count on it.

Ms Harrington: I agree that every business person does need to know the rules, but we need a better system.

Mr Keller: I may not be around as a landlord until your better system comes along.

Mr Brown: Welcome to the committee this morning. Ms Harrington has just alluded to how bad the RRRA is. You realize that it gave tenants a 5.8% increase on average last year, that very few, a minuscule number of tenants faced grave rent increases under the RRRA. There has been, as we know, very little luxury renovations. At least, the government has not proven to this committee or to anyone else or provided any evidence that luxury renovations have accounted for any problems. I wonder, have you done luxury renovations that have caused rents to increase in your buildings?

Mr Keller: No, we have just done the necessary improvement. In fact, I am doing most of the work myself. I counted up that if I had to hire people to do the work I did personally in the building, it would represent $16,000 for the last year. So this is one way how I keep above the water, that I do most of the work myself.

Mr Brown: You have alluded to the fact that you have rent review orders in your hand today that say that you can pass through financial loss and that you made your financial planning on the basis that these orders were in place.

Mr Keller: If the order is upheld, I am okay. I set aside for the loss that was expected.

Mr Brown: What you are really saying to us here today, on that issue anyway, is that the retroactivity part of this bill, which reaches back as much, we know, as four or five years, is what is really horrendous. You played by the rules, you did what the rules required, you did not do anything wrong, and yet you are being penalized, perhaps forced to bankruptcy, because of the whim of a government that made some political promises.

As Mr Tilson has alluded to, we do not know what this government is about. It is all: "That was then and this is now. That was then. Mr Rae said something. This is now, but we're going to do something different tomorrow and we don't know what's going to be different tomorrow, we only know what's now." And we know that this does not benefit either tenants or landlords and can force huge conglomerates like you into bankruptcy.

Mr Keller: That is correct.

The Chair: Thank you, Mr Brown. Time has expired. Mr Keller, Mrs Keller, thank you very much for appearing before the committee.

Mr Keller: Thank you for the opportunity of speaking to you.

MINTO DEVELOPMENTS INC

The Chair: The next presenter is Minto Developments Inc. We will be following the same procedure. We need you to identify yourselves and who you are representing for the record, and you have 10 minutes for your presentation and 10 minutes for questions.

Mr Greenberg: Good morning, ladies and gentlemen. My name is Roger Greenberg. I am the newly appointed president of Minto Developments Inc. I have with me this morning our vice-president responsible for residential property management, Guy Godin.

I am grateful for this opportunity to present our views on Bill 4. I do not intend to read from the written documentation which we have presented to you, I would rather give a more simple message.

It is our position that we believe that Bill 4 is going to have very severe negative consequences for the citizens of the province of Ontario.

We are active members of the dominant, the large industry organizations: the Fair Rental Policy Organization of Ontario, the main organization which represents landlords in this province; the Urban Development Institute, and other organizations. We fully support the positions that they have taken against this legislation, and I do not want to repeat them.

I would like to also introduce our executive vice-president, John Russell, caught in the snow from Kanata, no doubt.

Mr Godin: The other thing I want to mention is that we are also a member of the Eastern Ontario Landlord Organization and also a member of the Ottawa Region Landlords' Association, which will present briefs this afternoon.

Mr Greenberg: The approach I would like to take with the committee this morning is to present a little bit of the behind-the-scenes look at Minto, because I think that what is taking place at Minto today is a microcosm of events that are taking place around the province.

Minto is a family-owned business that has been active in the Ottawa region for more than 35 years. During that period of time we have built more than 30,000 homes, of which more than 10,000 have been rental units. We are currently the largest private landlord in the Ottawa-Carleton region. We have built all types of housing units, from limited dividend and assisted housing units right up to luxury rental accommodation. Our commitment to service and excellence has given us a widely recognized reputation for professionalism in this area.

Minto, though, like many other companies, is currently in a state of transition. Many of the so-called old guard developers of the 1950s, 1960s and 1970s, who were responsible for building the bulk of the rental housing stock currently in existence, are getting advanced in years and are beginning to turn over control of their companies to their children. The situation at Minto is that less than one month ago, the sole surviving active founder of the company, my uncle, Irving Greenberg, passed away and he has now handed the reins of responsibility for guiding the company to me.

My question is: What message does Bill 4 give to people like me and my peers in this industry? I say without equivocation that this government has no respect for private rights and clearly wants private industry out of the provision of rental housing.

Many of our buildings are now getting on in years. Many are 25 years of age and older. We pride ourselves on the amount of upkeep which we expend yearly on these apartments, but a point in time comes when you simply can no longer patch and repair and maintain.

We have been undertaking an ongoing program of capital repair over the last number of years. I headed a committee last spring to look at and finalize a program of capital replacement over last summer. We approved a program and spent the sum of $7 million last year alone, 85% of which was for roof replacement, garage and balcony repairs. Not one penny was spent on so-called luxury items. Our criteria were what was strictly in the best interests of tenants and a long-term preservation of the housing stock.

Most of the work was completed before the election last year. Some of the repairs, some types of the repairs, I might add, were completed at a cost substantially below that which the Ottawa-Carleton Regional Housing Authority incurred for similar kinds of repairs.

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You are all well aware that we cannot apply for rent increases until after the work has been completed. I am not going to deny to you that when the election took place last year, there was some nervousness at Minto because of the stated policy of the NDP on rent controls, but we were greatly assured by the statements which the Premier made about opening a dialogue with private industry. I think at one point he said something like: "Let's get rid of the lobbyists. I have an open line; you can call me at any time." These statements were followed up by similar statements from the Minister of Housing, David Cooke.

I was part of a Fair Rental Policy Organization of Ontario delegation that met with the minister for one hour on 8 November 1990. One day earlier, the organization had issued a press release stating that the government had secretly decided to impose moratorium legislation. To that point in time, there had been no formal contact between the government and FRPO.

The first 10 minutes of the meeting that we held with the minister was a lecture from him not to call the press but to call him personally, that he was there to discuss matters with us and that he was open to dialogue. This was 8 November. He refused to discuss anything about a moratorium and we simply talked in very, very general terms.

Three weeks later, without any further consultation, out comes Bill 4. Since that point in time, there were no further meetings until approximately two weeks ago when there was another meeting between FRPO and the minister. Bill 4 would now be law if the opposition parties had not pressed for these public hearings. That is some consultation process.

In the meantime, we are being told by this legislation --

The Chair: Excuse me, who said that Bill 4 would now be law if there were no public hearings?

Mr Greenberg: It is my impression that in the absence of any public hearing, the government's timetable was to press forward with Bill 4 and I would expect that it would have been passed by now if the --

The Chair: I just wanted a clarification. I thought you were ascribing that to someone other than yourself.

Mr Greenberg: No.

The Chair: Thank you.

Mr Greenberg: In the meantime, we have now been told that we cannot recover the expenditures we made last year in good faith, notwithstanding that we did so in accordance with the laws of the land at the time. This retroactive denial of rights is patently unfair and brings into question fundamental justice in government process.

What are we going to do this summer? Am I going to spend another $7 million on capital repairs for which recovery will be denied? All major repairs have now been put on hold, except for safety-related structural repairs, until the permanent legislation is clarified.

The deeper problem, though, is that this government is sending a clear message to people like myself: Get out of the rental housing business.

I will not sit here today and tell you that the withdrawal of Bill 4 and even, hopefully, the eventual elimination of rent control will immediately mean an instantaneous explosion of rental construction. As the government itself is now recognizing, the issue is indeed very complex. What I can guarantee is that if this legislation moves forward, there will be no additional private rental construction under the current legislative climate and I believe that this is fundamentally wrong.

Private industry must be part of the solution to the housing crisis. It has been proven time and again that we can build buildings more cheaply and efficiently than the government because of the competitive spirit within us. We can provide a greater choice of housing accommodation to people. The alternative would be a requirement for a massive amount of taxpayer funds to meet the needs of society.

Landlords recognize that there are serious problems out there. We recognize that there are many people for whom social assistance is necessary, but it should be social assistance provided by taxpayers as a whole. I believe that the current approach is wrong and this committee can take the first positive step towards resolving the problem by requesting the government to withdraw Bill 4. The government should be doing all it can to encourage people like myself to build new rental housing, not drive me away from the industry.

Mr G. Wilson: Thank you for your presentation. I think you have gone to the heart of the issue in a number of ways.

At least the figures that I have here show that you are the largest landlord in this area, so you have some experience in what it means to meet the needs of tenants. Actually, something that relates to what you said, of course one of the major problems you have is the capital expenditures you have made recently, or at least applied to make, come after a period of some 25 years for some of these buildings. I had an architect in my office last week who was there to see about preserving a 100-year-old building saying that there are a lot of years left in that building, and when I suggested, you know, we are having problems with 25-year-old buildings, she scoffed and said that is because of the way they are built. So that is one thing. The other is the --

Mr Godin: Just a second. What do you mean by "the way it is built"? Do you mean that your architect is going to tell you that a roof that has a life expectancy of 20 years should last 100 years? Is that what you are inferring?

Mr G. Wilson: Not at all. In fact, the roof is a significant development. I mean, a new roof, you expect it is going to last 20 or 25 years. So that is one of my questions. Do you not put aside funds to replace that roof in roughly 20 or 25 years?

Mr Greenberg: The legislation that was first introduced for rent control in 1976 was a companion legislation to the wage and price controls. No provision was made for capital repairs at that time. The situation is such that when we build rental accommodation, we lose money in the first years of the operations.

I have provided in our brief an example of two buildings in the west end of Ottawa called Aventura I and Aventura II, very modest accommodation that was built in 1982-83, first occupied in the latter stages of 1983. Even with a second interest-free mortgage under the Canada-Ontario rental supply program, eight years later that project is continuing to lose money, and that is just simply an example of a situation across the board. We have to put a very sizeable equity investment in up front, we have to support it every year with cash infusions, so over a period of time we hope to make a modest profit on that.

With buildings, you do not set aside funds to repair things. That is why you seek mortgage funds later on. You hope to make a profit over a long-term perspective, and these buildings we have held for 25, 30 years. Things called salt damage are going on now that would never have been dreamed of in the 1960s. It is amazing. Because of the amount of salt that the government puts on our streets, it goes up in the air, it attacks balconies. Balconies are no longer structurally safe. We have to close them and then repair them. Garages are the same thing.

Mr G. Wilson: I agree. So, as you are suggesting, it is a very complex issue. You mentioned something from 1976, which of course was not our government, showing that other governments were having problems with meeting the demand or the need for housing, which we all agree on. I would say that with 12,000 units in 160 different complexes, your modest profits seem to be adding up to quite a good business.

You made a point too about saying the private sector is able to meet these needs cheaply and efficiently, yet you mention these problems from a number of years ago and in fact the problems that arise from unintended sources, like the salt. Do you see some way of perhaps solving these in a different type of arrangement? For instance, obviously the cheaper and more efficient approach of the private sector does not seem to be solving these problems.

Mr Greenberg: I think we are going to have the problems. That is not the issue. What I am suggesting to you is that the private sector can eliminate the problems, or can attack the problems more efficiently than the public sector. For example, in our project in Bayshore over the past summer, we replaced the roofs with a new style of pitched roof which we deemed to be more efficient and better off in the long run. The Ottawa-Carleton Regional Housing Authority took the same approach on some of their units. Our price came in for completing these repairs at 50% of the cost which was incurred by the Ottawa-Carleton housing authority.

Ms Poole: Welcome to our committee today. I have over the past years long been known as a tenant advocate, but at the same time I have always felt that landlords should be treated fairly if their actions warranted the fact they should be treated fairly.

I have three major problems with this bill. The first is that, as you have pointed out, there is no provision for necessary capital repairs, and there seems to be this view by the government members, who sometimes I think are in la-la land, that this money is going to come from somewhere but they do not know where. They seem to feel that if you have to pay $500,000 to restore an underground parking garage, this is something that could be taken out of rents. It is just a totally unrealistic attitude about capital repairs. Even if the structure of the building is in jeopardy, even if the repairs are necessary for the safety and health of the tenants, they still have no provision for necessary capital repairs.

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The second thing is the draconian attitude towards the retroactivity, which, again, you have addressed.

The third is that they have treated landlords who have taken excessive advantage of the system exactly the same as those who are good landlords and who have had reasonable rent increases.

I would like to ask you about this third thing. The Minister of Housing and the Premier have cited statistics of 100% rent increases, 150%, 192%, and they have deliberately fostered the impression that this is common and widespread. Have you ever had any rent increases with Minto Developments that have been in this range or, for that matter, have been in the range of 50%, 40%, 30%? Would you tell us what type of rent increases you are charging when you do necessary capital repair work?

Mr Godin: The type of rent increases is covered partly in our brief. I must add that at Minto we do necessary repairs, contrary to what the government is trying to say that landlords in Ontario take a vinyl tile floor and place marble everywhere, including probably in the bathroom. That is not the case with most landlords.

In our case, in the case of most landlords in Ontario, in the case of most landlords in Ottawa, and I know quite a number of them, we do not do that. In our particular case, rent increases, by and large, have been below 10% when we talk about strictly capital expenditure. And the types of capital expenditure that we do are absolutely necessary, as Roger said, roofs, balconies, etc.

The largest rent increase that we have had in the last 15 years since rent review has been instituted, strictly for capital expenditure and forgetting the statutory guideline and forgetting equalization -- and you never know what rent review services is going to do with equalization -- is at the most 15%.

Ms Poole: I might tell you that statistics do bear you out --

The Chair: Thank you, Ms Poole.

Ms Poole: -- and that only twelve thousandths of one per cent of applications to rent review are over 100%.

The Chair: Thank you. Mr Tilson.

Mr Tilson: You indicated that Minister Cooke saw you on 8 November and that he did not see you again until several weeks ago. I am concerned about that, because the minister has always boasted that he is the minister of consultation. Are you telling me that the Minister of Housing has been avoiding you?

Mr Greenberg: He has not met with us. The facts speak for themselves.

Mr Tilson: Have you asked him to meet with you during that time?

Mr Greenberg: I cannot say. I do not know whether we have or we have not asked. You would think if there is a policy of consultation, and the government is bringing in a piece of legislation, it should be seeking to consult with the members of the industry.

Mr Tilson: Yes.

Mr Greenberg: I cannot sit here today and say that we have asked for meetings which have been denied. I am not aware of that.

Mr Tilson: I think I am concerned with the fact that he was telling you not to go to the press, not to do this. I find that very difficult.

Mr Greenberg: I think he was upset that the organization had leaked to the press potential, pending government legislation and had asked us to come and speak to him about our concerns first. All I am suggesting is that then he would not talk about what the plans of the government were, and three weeks later the very thing which the meeting addressed, the issue of retroactivity -- the chairman of our organization, Julius Melnitzer, had spoken for at least 20 minutes on the grave concerns with retroactivity. The taking away of private rights was something which, in our opinion, was completely ignored. He never responded to Mr Melnitzer's concerns and three weeks later out comes Bill 4.

Mr Tilson: I would like you to comment on the capital expenditure issue in Bill 4, or the lack of existence of the capital expenditure issue in Bill 4. The minister has simply taken the position that you people have been making all kinds of money over the years, that you have been ripping the system off, that you have got lots of money to make capital expenditures and that there is enough money in your system, with the 4.6% and the 5.4% increases, to make capital expenditures. What is your response to the minister's comment?

Mr Greenberg: I disagree with it completely. As I have indicated, we have continued to build rental accommodation on a regular basis for 35 years. We need the so-called profits from some of the older buildings, in a sense, to cover the losses which we suffer in the newer buildings until they are able to become profitable. We do not set aside funds. We are not able to set aside funds for a rainy day, so to speak. I think it shows a lack of understanding of the housing business.

Mr Tilson: I will bet you the green paper will make you, unfortunately.

Mr Godin: How are you going to get the reserve from a building that is 50 years old or 25 years old? Is the government going to issue Minto and all of the landlords a cheque for all the reserves that you could not build in the last 25 or 50 years? Are they going to issue Minto a reserve for the first rental building we built in 1956, for instance? What the government is saying is, "We want to spend the taxpayers' money and build rental housing and forget the private industry and everybody is going to be treated the same." You will not have a choice as to whether you want to live in a $400 two-bedroom or a $1,200 two-bedroom. Everybody is going to be treated equally and the home owners of Ontario, who do not get any benefit out of this, are going to pay to subsidize all the tenants, while in fact we all know the problem is that 28% or so of the people need a shelter allowance.

The Chair: Mr Greenberg, I want to thank you and your delegation for coming and making your brief to us this morning. Very good.

VALERIE WISEMAN, GEORGE ZADORI

The Chair: The next presenter is Valerie Wiseman, rent review consultant. Valerie, we are following the same procedure. I noted that you were watching the last few minutes. You have 10 minutes for your presentation and 10 minutes for questioning, and we need you to identify yourself for the record. The floor is yours.

Ms Wiseman: Okay. My name is Valerie Wiseman. I am here with George Zadori, who is a small landlord here in Ottawa, and I am going to refer to him in my presentation. So at the end, if you would like to ask him any questions, he may want to say a few words, because I will be brief.

I am a rent review consultant whose client base is primarily small landlords and I would like to share with you this morning my concerns about Bill 4. Before becoming a consultant I was employed by rent review services as an administrative assistant and later as an appeal analyst at the Rent Review Hearings Board.

I originally became involved with this work because of my concerns for tenants and tenants' rights. At the time I was guilty of making broad generalizations about landlords and their interests. A few years ago, as an uninformed tenant myself, and without realizing its retroactive nature, I would have wholeheartedly supported Bill 4. My experience at rent review, however, was quite different from what I originally expected. I did see that stereotypical landlord, the gouging landlord, the landlord who neglects to do proper maintenance and still expects to justify large increases year after year. I did see that landlord; however, that landlord is very much in the minority. Most landlords have real complaints, often about tenants who are in arrears of rents time after time or tenants whose units require major renovations after they move out before they are fit for rerental.

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It was very interesting for me to realize that many Ottawa landlords experience financial loss and are far from making any profits whatsoever. This fall when the NDP formed the Ontario government, many of my clients were very concerned about possible changes to rent review and there was suspicion that those changes would be retroactive. I assured them, as I truly believed, that the government would not be so rash. After all, the NDP believes in open and honest government and is dedicated to the very principle of fairness. I was convinced that new or amended legislation would be preceded by careful study and that any changes would not prejudice either landlords or tenants. However, I was wrong. Instead, Bill 4, in my opinion, is the product of a hasty, uninformed decision to appease tenants at the expense of landlords. In fact, not even the legitimate complaints of tenants will be addressed by Bill 4, as we are already receiving reports of landlords who have stopped renovations on their complexes. Bill 4 is a mistake which will be very costly to both landlords and tenants of this province.

The greatest injustice perpetrated through Bill 4 is retroactivity, because it potentially affects contracts that were negotiated as far back as mid-1989. When business agreements were negotiated in good faith long before this government was elected and when costs were incurred by landlords who relied on rent review legislation then in place and, furthermore, when rent increases have been applied for through the proper channels pursuant to that legislation, and in some cases ordered, it is extremely unfair of this government at this time not to allow those costs.

A number of my clients within the last two years have done extensive capital renovations to their properties. None of these repairs was unnecessary or frivolous. Some were even requested by tenants. I understand that this government is trying to prevent landlords from claiming flagrant capital expenditures, the cost of which would be borne by tenants. However, I feel that, in this instance, the baby is being thrown out with the bathwater. My clients, small landlords, cannot afford these unnecessary frills and I think some guidelines would be more appropriate, rather than to cut off the capital expense across the board. These abuses can be addressed through regulation, by restricting the type of work that can be claimed.

George Zadori decided in 1987 to make some major improvements to his 17-unit income property. He is a retired contractor and purchased the property as a long-term investment and as security for the future. Most of the work was performed by himself and his wife. It included updating the wiring and plumbing, installing new storm windows, replacing or refinishing floors, major repairs to the roof, carpentry and wall repairs, painting throughout and some replacement of appliances and landscaping.

Because he did not apply to rent review when the work began, he was not able to claim some of the costs. However, he could claim, according to the RRRA, approximately $75,000 of his capital cost. This would result in a potential increase just over 30%. Out of context, this increase may seem high; however, his rents are well below market at $464 for a two-bedroom. The average rents in older units in Ottawa are about $600 for a two-bedroom apartment and $742 for a three-bedroom. So his proposed increase to $600 would simply bring his rents up to market for the Ottawa area. Unfortunately, however, the date of his first increase on his rent review application was after 1 October 1990, so he will not be able to raise the rents to cover costs. His tenants, on the other hand, have the benefit of living in substantially improved and, in some cases, totally renovated units at no extra cost.

To finance the improvements, he did not reach into his profits, as he has been operating at a small loss for some time, but mortgaged his own home. If Bill 4 is passed and remains retroactive in nature, he may lose the building altogether. I fail to see even the slightest hint of fairness in this scenario and for this reason, if for no other, this government should not proceed with Bill 4.

If this trend continues, the banks of this province will become the landlords. Please understand that rent review is inherently restrictive and is not a windfall for landlords. Granted, there are abuses of the system and those abuses should be addressed. However, the many should not pay for the abuses of the few. Rent review tends to polarize landlords and tenants, and for this reason the government attempted to strike a compromise with the RRRA. The Rent Review Advisory Committee, or RRAC, was composed of an equal number of landlord and tenant representatives who, after numerous meetings, reached agreement on the majority of issues, and the resulting report formed the basis of the current legislation.

Now we find that there may be problems with that legislation. However, those problems can be addressed. I would request of this government that it promote the spirit of compromise that was embodied in RRAC rather than further polarize landlords and tenants with Bill 4. The small landlords of this province are counting on this government to live up to its principles of fairness. Thank you.

The Chair: You have two or three minutes if you would like to use it.

Mr Zadori: This Bill 4 really put me in a bad position. I really do not know how to go about this. I may go bankrupt because I mortgaged my house and at my age it is very difficult for me to start something all over again, due to my heart condition also. If I lose my building, am I going to end up on welfare? I just have no answers for myself.

Mr Brown: I am interested, first, to discuss what you described to us as abuses of the system and whether in your experience as a rent review consultant here in your practice in Ottawa you would have seen luxury renovations, the famous marble foyers and those Jacuzzis and those sorts of things in many of your applications that you represented landlords for.

Ms Wiseman: No, I have never seen such things. Generally, the same sorts of renovations that were in Mr Zadori's application -- some updating to wiring, plumbing, wall repair, usually general improvements.

Mr Brown: Improvements that are necessary for the structure?

Ms Wiseman: Necessary improvements.

Mr Brown: The second question is about flips. We hear a lot about flips, although no one from the government has been able to describe to us exactly what those are. I think we all have a vague notion of what they might be. In Ottawa, in this area and in your practice, are you aware of flips, flipping?

Ms Wiseman: In my practice, no, I am not at all. I think if the government is worried about flipping, that again can be addressed through regulations, by putting a time limit on when you can go and claim a financial loss based on how often the building has been sold.

Mr Brown: Mr Zadori, I am interested in your particular situation. I may have missed it, but how long have you owned this building?

Mr Zadori: Four years in April.

Mr Brown: It has 17 units?

Mr Zadori: Yes.

Mr Brown: And you have spent a considerable sum of money and have yet to realize any real return? You are still in a loss position on rentals even before you did the renovations? Is that a fair statement?

Mr Zadori: Yes.

Mr Brown: You were hoping to get to a point where you would recover and make a long-term profit, I assume.

Mr Zadori: That is correct.

Mr Brown: You know, I suspect we were talking about 10 years down the road when we were turning the corner and that you were in the black and that sort of thing. Is that fair? Now you are facing bankruptcy, as I understand.

Mr Zadori: Close to it.

Mr Brown: And that is essentially because of the retroactivity of this bill?

Mr Zadori: Yes.

Mr Brown: You played by the rules, you did what the previous legislation said, you made necessary repairs, not frivolous ones?

Mr Zadori: Yes.

Mr Brown: From our point of view, we agree with you. We cannot believe that any government would make retroactive these sorts of -- this legislation. First, they have made no case for it, and second, it is just contrary to actual justice. So thank you for coming. We need to see the faces behind the issue.

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Mr J. Wilson: Thank you for your presentation today. You started by reiterating what is in the NDP brochures, which is that they are committed to the principles of fairness and open government, but I suggest to you that the jury is still out on that, and while that is what is written in the brochure, it seems the process that we are going through here is that the government clearly made a decision -- and the previous presenters made that clear -- and now we are on a travelling roadshow to try and change their minds, really, in some of the areas.

Ms Wiseman, you have had a number of years of experience as a rent review consultant under the RRRA. What changes, succinctly, would you like seen to Bill 4, or do you want to see it scrapped and perhaps we should continue with our consultations and come up with a fairer response to this? What is fair, to you?

Ms Wiseman: Ultimately I would like to see Bill 4 scrapped altogether; but if this government feels it is necessary, the retroactivity of Bill 4 is completely unfair. I do not think anyone can live with that, either landlords or tenants. On top of that, when the new legislation does eventually emerge I would like to see possibly those specific problems addressed in that particular legislation and that, again, both landlords and tenants are taken into consideration at that time.

Mr J. Wilson: Mr Zadori, what will happen to your building and your tenants if you go bankrupt as the landlord?

Mr Zadori: I guess the mortgage company is going to take it over.

Mr J. Wilson: What do you think they will do with it, given that it is being devalued under this piece of legislation?

Mr Zadori: I do not have a clue.

Mr J. Wilson: So, really, your tenants' homes and whether or not they will be remaining in these homes under this bill is questionable.

Mr Zadori: Yes.

Mr Drainville: Before I pose my question, I would like to make clear to Ms Wiseman that in terms of the comments made by Mr Brown about the non-existent flips, as he calls it, and the luxury renovations that have not been proven, we have had case after case before this committee. If you were in Hamilton, as I believe you were, sir, you would have heard three specific cases of people who told about the flips on their apartments at that time.

Mr Brown: I chaired the committee.

Mr Drainville: Perhaps you were on Mars at the time, sir, I do not know.

Mr Brown: I was not in jail.

Mr Drainville: No, lucky thing. As to you, sir, in terms of the comments that you have been making to the witnesses about the policy of the government being to put the whole of the housing stock into public ownership, it has never been the policy of the NDP, as you well know, and also you have taken the context of the Premier's comments totally out of context. So it might be better if you begin to --

Mr Tilson: He will not deny it.

Mr Drainville: Perhaps if you would read the whole text you might understand what he was saying.

Mr Tilson: Everybody is reading the whole text.

Mr Drainville: In terms of that I might ask you, Ms Wiseman, in terms of what you are up to, in terms of your role as a consultant, as you know, Bill 4 significantly hems you in in terms of the kinds of consultations that you can do, I would think, under this new bill. As a consultant, it is your job, I would imagine, to work with landlords trying to find ways through the maze of the old legislation in terms of the rent review. Under Bill 4, in a sense, a lot of that is cut off and will not be accessible to landlords.

My comment to that is, one, obviously this is affecting your livelihood and I can appreciate your coming before us and indicating that. I would also like to say and ask the question that, in terms of the system that you have been working under as a consultant, I mean, surely there are better ways to prepare the people of Ontario and provide tenants with the kind of housing that they need. Would you support a full free market system? Is that what you would advocate? Would you advocate the old system that we presently have, or do you not think that there is a need for radical change in that system?

Ms Wiseman: I did not have that many problems with the system as we had it. I think that there are areas that could be improved upon. As I said before, we did have rent controls. We did not have a free market system. Landlords are not able to charge what they would maybe want to charge or even need to charge. I have had many clients who have come to me who were experiencing financial losses before this Bill 4 came into effect, or will come into effect, if that is the case, who were very surprised to see that they could actually make their expenses back through the rent, because they just had thrown up their hands knowing that rent review was in existence at all and just felt that they were not able to even claim their expenses. So they had basically given up. I am surprised that you would look at that as free market.

Mr Drainville: I did not say it was free market. I am saying, was that an alternative, not to go with the old system, but rather to go to no system at all; that is, have the free market system dictate the level of rental for rental accommodation as one of the options?

Ms Wiseman: Well, as one of the options, I cannot see if you went to the free market system that rents would raise much more than they are now. Maybe they would meet market is basically where they would stay.

The Chair: Thank you, Valerie, and, sir, thank you for coming. We appreciated your presentation.

Mr Brown: On a point of order, Mr Chair: We seem to have some dispute about the facts surrounding this whole issue. We in the opposition have asked repeatedly for numbers on flipping. We have asked the ministry for a definition of flipping. We have not had them. I think it would be appropriate if the ministry could come before this committee with that information. I do not think it is very useful for us to discuss an issue when we do not have the facts that we can agree on before us. The ministry can do that. I think the ministry should come before us and provide that information.

I would also ask, Mr Chairman, that they provide information on luxury renovations. We have asked for that in the past. We want that defined. We want to know what percentage of rent review applications have been affected by the Jacuzzis and the marble foyers, and there is no point in us quibbling over the facts when the facts can be provided to us by the ministry. It would be useful to all members of this committee.

Mr Drainville: Just in response to that, I want to be clear about this. I have no problem in the member asking for that information. By all means, go ahead. What I do want to be clear about is that witness after witness has come before this committee and they have spoken about how they have lived in apartments where their premises have changed hands repeatedly over a period of five and six years with huge increases in terms of profit for that landlord, and that is flipping. Under any other guise, that is flipping. That is the way it is.

The second thing is, in terms of the luxury renovations, again, we have had witness after witness talk about luxury renovations, not just upkeep, but in terms of many, many new things and many stylish things that were not needed in that apartment.

My only point is that there have been many witnesses. To say that there is no indication of this and that the government is totally out to lunch is wrong on that. We have had witness after witness indicate it.

Mr Tilson: I support Mr Brown's request for that information and I think that sort of comment that was just made by the government member is self-explanatory. Those facts just are not there. It is a simple matter. Either the government has those facts or it does not have those facts.

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The Chair: Could I interrupt you for just a second, Mr Tilson? Could we have one of our staff people come forward, because I think we are going to be making a request for information and we may want to dialogue a little bit. I am sorry, Mr Tilson, please proceed.

Mr Tilson: I think that is the sort of reason why Mr Brown has made his request, because the innuendoes that are being put forward by the government as to the sole reason why it is putting forward Bill 4 is because of flips and luxury renovations and I have yet to see hard, cold facts from the ministry that those are accurate. I think Mr Brown's request is perfectly in order because it goes to the whole root of what the minister has said as to why he has put forward Bill 4.

Mr Brown: I am sorry if I gave the impression that I did not think they existed. What I was trying to determine was how widespread this practice is. I am not saying it does not happen, because we know it does happen, and we know we have to do things to correct that, but what we want to know over on this side is, how prevalent is the practice? Does it affect 1% of tenants or does it affect 0.5% of tenants or is it a problem to 10% of tenants? We want to know that. We want to know what the government is doing and we want that information.

Mrs Y. O'Neill: This is my ninth day of hearings on this bill. I really do find it confusing to hear what Mr Drainville has just stated. He did say witness after witness after witness, and I will buy three, but witness after witness after witness implies much more and it is perceptions that count. But the research team could maybe help us here, because I have sat on many committees and I think we need a summary of the presentations, and I hope we will get that, because I have not yet had that impression myself.

I have had more the impression that we have several small landlords in particular who are caught in a bind, because they had orders in their hands that have not yet been fulfilled. In most cases, the tenants who came before us complaining about increases were those who were having pass-through costs or phase-in costs from financial loss.

As far as Jacuzzis and marble are concerned, and we have asked those questions specifically about unnecessary repairs, we have had, in my memory, about two or three. The tenants themselves are honest enough to say these were not the kinds of things that were done. So I really do think it is unfair that we have this impression created that that is what we are dealing with. We are not dealing with that. We are dealing with a lot of other things and they are much more complex than Jacuzzis.

Interjection: Right on, Yvonne.

Ms Harrington: Just briefly, we have no problem asking staff for any information that they have, because that is why they are here.

I just wanted to make it very clear to Mr Brown and everyone else in the audience that there is no question of people having undergone flips. We want to make that very clear, because we do not want to discredit the witnesses who have been before us who have certainly undergone really dreadful situations and have made it very clear to us. So by asking for this information, we do not want to discredit our witnesses.

The Chair: Very good. Anyone else on the point of order? The point of order has turned into a request and I am going to try for the committee to summarize the request to Colleen Parrish, who has been helping us all along. We need from the ministry, Colleen, a definition of "flipping." We would like also the number -- I believe Mr Brown used the term "number" and later on "extent," so if we have any hard data. I believe it also would be worth while if we could break that down into regions: central region, southwest region, eastern, northern. The second part of the request for information was a definition for "luxury renovations," and I believe from my notations that is the extent of the request, unless there are some addenda to this.

Mr Abel: I think maybe we should add "unnecessary renovations" as well.

The Chair: All right. My understanding was the committee wanted a definition for "luxury renovations." We want to add a second portion, "unnecessary."

Mr J. Wilson: You had better put in a definition of "unnecessary" too --

Mr Tilson: Yes, what does "unnecessary" mean?

The Chair: Okay.

Mr J. Wilson: -- if you are going to define "luxury."

The Chair: And a definition of "unnecessary renovations." Colleen, I know you have responded to us very quickly in the past, and hopefully some time next week we can have at least an interim answer, if not a complete answer.

Ms Parrish: We will do our very best, Mr Chairman.

The Chair: Thank you very much.

CLINIQUE JURIDIQUE STORMONT DUNDAS GLENGARRY LEGAL CLINIC

The Chair: Moving right along, the next presenter is Clinique juridique Stormont Dundas Glengarry Legal Clinic. This organization has been allotted 40 minutes. We need, for the record, the presenters to identify themselves, whom they are representing. You have 20 minutes to make your oral presentation to the committee, followed by 20 minutes of questions.

Mr Saint-Aubin: My name is Etienne Saint-Aubin. I am director of the legal clinic. My colleagues are Lisa Larocque-Bertrand and René Guitard. We wish to thank you for the opportunity to make this presentation before the committee on this important matter.

Very briefly, our legal clinic exists as part, of course, of a province-wide system and our particular clinic has been in existence since 1985 in Cornwall, a community which has never been favoured with the easy life. A very significant proportion of our population receives an income below the poverty level and generally it is a community where income levels are lower than the provincial average. We exist to promote the general legal welfare of the community, but most particularly to help meet the legal needs of persons with lower incomes. A significant proportion of our activity revolves around landlord and tenant issues and rent review issues, where we represent exclusively lower-income tenants. That is the perspective that we bring to these proceedings.

The importance of this legislation is clear. In fact, based on our experience, or more particularly the experience of our clients, I think it is appropriate to say that you are dealing with the most fundamental of human needs. We base that assertion on the silent courage of recipients of social assistance, and recipients who all too frequently are single-parent mothers with children. Theirs is a daily struggle waged in a world of make-believe where the social assistance system pretends to give them adequate support and they pretend to make ends meet. In that real world, what must come first is the roof over their heads. The stark truth is that the rent must be paid or the sheriff will be at the door to evict. The amount of that rent, the cost of that roof, will determine what this family will have to eat, and inasmuch as the food budget can be more readily squeezed, nutrition becomes a secondary priority.

And so, as we underline the importance of this issue, let us at the outset stress that we support the need for this legislation and that we are in agreement with its general direction. There are, however, a few factors that we would respectfully ask be taken into account in arriving at a bill in a final form.

There are perhaps four basic premises that we would like to stress. A philosophical debate at this stage about the wisdom of having adopted a rent review system at all in the first place would be fruitless and any return to a totally free market system without other safeguards at this juncture would cause intolerable hardships, so some form of legislation is here to stay.

Second, the present system does not work very well. When you have a system where you have got to have lawyers to appear on your behalf, something is wrong, and that is coming from a lawyer. It is a system that operates in a fairly bizarre way. It actually seems to be predicated on the notion that if obtaining a rent increase or challenging one is made complicated enough, then most people will settle for the annual guideline, which seems fairly straightforward. Those who are determined enough or who are astute enough or who can pay someone to be astute for them can work their way to a more significant outcome. It is something like the system of ordeal by fire of ages ago.

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We also respect the process of putting in place a consultation period, trying to evolve to a more appropriate system that will require more extensive review and consultation.

Our last basic premise, which I think is a fundamental one, is that government does not have the resources to provide an adequate supply of rental housing. It can intervene to alleviate shortages, but it must look to private enterprise to provide the bulk of this accommodation. That is an important premise because from it must flow certain consequences.

Are the interests of landlords and tenants necessarily competing? We are quite aware of the fact that, having outlined our perspective as defenders of the interests of low-income tenants, the rest of our submission may be seen as rather predictable. Regrettably, our society seems to be quick to always approach issues in an adversarial way, as if we have to mount the barricades on all of these issues with the perspective of, for example, "Tenants good, landlords bad." We happen to think that it is more complex than that and that the issue deserves better than that.

In fact, there is no intrinsic link between the status of landlord and tenant and wealth, at least the way we see it from Cornwall. The average landlord in our community is a small property owner who may rent out part of the house or whose life savings have been invested in a second house, a rental property, and the property burdened with a heavy mortgage.

In addition, we see no inherent kinship between tenants as a social group. We decline to adopt the view that what is good for the Bloor Street West tenants whose foodstuffs come from Holt Renfrew is necessarily good for the tenants we represent, whose Kraft Dinner comes from a food bank. In fact, the interests of low-income tenants may be more interwoven with those of the small landlord than may be apparent at first glance.

A comparison with the other fundamental market, which is food, is important. In that market there is relatively little price control or review. There is, however, very significant involvement of government in control of quality. If one compares that to the housing market, there are significant governmental resources applied to the question of cost, but very few resources -- and in the context of a rather half-hearted and disjointed effort -- ensuring adherence to standards of quality.

While we respect that the legislation is not designed as a complete overhaul of the whole system but as a temporary measure, it would undoubtedly better serve the interests of the low-income tenants whom we feel should be the priority of an endeavour to effect a redress, would better protect those tenants if greater incentives were created for adherence to standards of quality.

Here, in terms of alluding to one of our basic premises, where private enterprise is expected to provide the bulk of the supply of rental housing, we acknowledge that it is basic economics that the landlords must find involvement in this field of activity to be attractive; very few are going to be involved if it is not. This is where the interests of landlords and tenants coincide.

In our jurisdiction the supply of housing at an affordable price for low-income persons is very graphically related to the issue of quality of that housing. Municipal control of quality is minimal: one person in a population of approximately 60,000 to carry out inspections in response to a tenant complaint. The municipality issues notices to landlords to carry out repairs where deficiencies have been noted, but no other legal steps are taken to enforce this notice. We have reason to believe that this is a pattern throughout Ontario.

The result, at least in our community, is that much of the housing is substandard, and most of the affordable housing fails to meet property standards. So the concentration of substandard housing is precisely, of course, in the low end of the market. Where we think it is wrong is we think that low-income tenants should not have to accept as a way of life that a roof over their heads must necessarily be one that leaks. Therefore, part of the focus of the bill should shift somewhat to creating greater incentives for adherence to property standards. As always, there are two types of incentives, and the story about the carrot and the stick makes that fairly clear. The present system for ensuring adherence to property standards is all stick and no carrot, and not a very big stick at that.

The Residential Rental Standards Board and the provisions of the Residential Rent Regulation Act which pertain to it purport to impose rent review penalties upon a landlord who does not meet these standards. This system does not work very well. For one thing, very few tenants know of the existence of the board and, second, if the landlord is prepared to live with a guideline increase, the rent review process will likely not be involved. Third, too many low-income tenants do not have a sufficient degree of sophistication to know that they can challenge an increase on the basis of non-compliance with standards.

I think the time has come for legislation to recognize a regrettable reality in our province, that among persons who are most in need a hugely significant proportion are illiterate. We are going to have to finally recognize that as a fact. How interventionist one becomes in that context is a matter for discussion, but the reality is that the system must begin with focusing on the needs of this group first.

We recommend that the opportunity be taken with the bill to enhance the quality of rental accommodation by providing for a simpler system of enforcement, which we call the stick, as well as recognizing a financial incentive, which we refer to as the carrot. With the stick, all rent increases, including guideline increases, as well as applications for rent increases, would have to be filed with the Rent Review Hearings Board. A certificate of standards compliance would have to be filed together with this increase, and no increase would be effective without this certificate. It would be the responsibility of the landlord to obtain the certificate from the appropriate authority.

The carrot is that the bill should recognize as a ground for requesting a rent increase legitimate costs associated with repairs required to ensure adherence to property standards. If this ground is not available, we consider that those persons whom we represent, and on whose behalf we have advocated in this brief, will be most vulnerable.

We know that we would not perhaps have been expected to make that kind of presentation to you, but we deeply feel that the present legislation and the amendment do not provide sufficient incentive to a landlord, in both forms, to create a physical environment for the lower end of the market where persons again do not have to accept substandard accommodation.

An additional recommendation is not necessarily related to the bill itself but in the context of making the system somewhat more accessible. We respect that the moment you begin to try and effect some control, a process to limit costs, you are going to be faced with an almost impossible task of trying to make it simple. These two needs of fairness but simplicity are probably irreconcilable, but I think a somewhat better job could be done by the ministry to explain the legislation, again, being conscious of the fact that such a significant proportion of the population has difficulty with complex material. In that regard we would urge that review be made of the material distributed by the Quebec Régie du logement, and in both official languages, be considered.

We are certainly in support of the provision that would remove from the eligible expenses costs associated with the sale of property. The two sources of interest for a landlord, at least from the perspective of our community, of being involved at all in this field, are making a living from the accommodation as a going concern and then making a profit as one sells the building. We see too many people who get involved in the field who have very little capital, and who gets squeezed is the tenant with a landlord who has almost no money to make repairs.

This notion of making money by selling and reselling is indeed a fact of life in our community. We have no figures on it, but we know it is a very common thing, and the people who get hurt by it are our clients. At least as an interim measure, we think it is desirable that that feature be removed, at least in general terms, as a motive for increases.

Those are our submissions.

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The Vice-Chair: Thank you very much. The first caucus with questions is the Conservative caucus. I have Mr Wilson.

Mr J. Wilson: Thank you for your brief. I have a little problem reconciling your support of this bill with your underlying premise that the private sector must be involved in the rental housing market. We have had testimony before this committee by a number of landlords particularly small landlords, who say that they may go bankrupt, that the banks or financial institutions may end up taking possession of their buildings, and that specifically because of the contents of Bill 4, with retroactivity and with the inability to pass through necessary capital expenditures, they are going to be out of the rental market. Many, many have indicated to us that if this bill proceeds they will never go back in to the rental market.

So I am wondering, once again, how you would justify or reconcile your support of the bill with the fact that it may do irreparable harm to the private sector.

Mr Saint-Aubin: We recognize that proactive steps must be taken to encourage investment in the field of providing housing from the basis of private landlords. We think, in looking fairly at the whole process, that that portion of the concern of landlords which we find in our hearts to be legitimate is where there are issues involving capital expenditures pertaining to ensuring that the premises are in conformity with standards. We have great difficulty with the position of landlords in other areas because we know from experience that the losers in the system as it stands now are the low-income tenants. We think that the legislation can be made fairer in trying to deal with this problem by at least acknowledging the need for the landlord to be able to pass through, as you use the phrase, costs associated with maintaining the premises according to standards.

Mr J. Wilson: With a number of your clients is not the primary problem, as I understand from your presentation, really poverty rather than the rental accommodation they are in or are not able to find? Is that the underlying problem?

Mr Saint-Aubin: There certainly is a related, and very deeply related, issue, first of all of course your question of poverty, yes, and, second, the adequacy of the social assistance system. I think that, in tandem with a preoccupation with those weakest in the community, changes will have to be made to those levels of assistance that are related to housing so that something fairer occurs, but you are quite correct that, yes, certainly in our community poverty is the underlying problem.

The Chair: Mr Tilson, any questions?

Mr Tilson: No, I have no other questions.

The Chair: Very good. We have Mr Abel, Ms Harrington and Ms Ward.

Mr Abel: Thank you all for your presentation. I enjoyed it very much.

I do agree wholeheartedly with the one comment that you made, that the current system works in a very bizarre way. That is exactly why we are here today tackling this issue.

I do have a question from one comment that you had made, sir. On page 3 of your presentation you said, "Putting forward an interim measure such as this bill, and to provide for this process to take place, is wise." Could you elaborate on that?

Mr Saint-Aubin: We have evolved to a society which endeavours to arrive at some consensus, attempts to try to achieve a solution that is not necessarily based on adversarial notions, that a process of true consultation is wise. Of course, as I said, as soon as you try to effect some control of prices, you are going to be fighting, I think, an impossible battle by trying to make it simple. I do not think that is achievable completely, but in trying to arrive at an ideal system the proposed two-year period of ongoing discussion and review is wise.

Ms Harrington: Thank you very much, Mr SaintAubin, for coming. You gave a very thoughtful presentation. I really appreciate it.

We are a new government and we do have our ideals and commitments, the background that we come from. I would like to reassure you and everyone else that we are very much committed and aware of the real world situation out there and that that has to be a situation of bringing people together and trying to get a system that works for everyone.

You mentioned your four basic premises and I appreciated that very much. The fourth one that you mentioned was the fact that landlords are part of the system, and always will be, and that we must work with them. You also noted, and it was very thoughtful, that the low-income tenants and small landlords are not altogether different. They are all people who are here in this province and who, hopefully, have to work together and need each other.

What we have done, as you pointed out, is an interim bill. We realize, because the public and the opposition have very quickly told us, that we cannot live under an interim bill, that we have to move as quickly as possible, with full, meaningful consultation, to develop something good and something soon. That is the process that we are embarking on today, and next week as well, and all through this year.

There were a couple of questions I wanted to check with you. From your experience in Cornwall, what are the kinds of increases that the people who have come to you have been dealing with and how has that affected them?

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Mr Saint-Aubin: I am just going to ask my colleague to answer that.

Mr Guitard: Certainly we see people, if I can refer to usual increases, with the minimal increases according to the guidelines. We see that very often. Unfortunately, we see a lot of non-compliance with the notice requirement as well. I think the major problem is a lack of information, both from the landlord's point of view and the tenant's point of view, and that is why we do encourage that the system be more simple for everybody involved.

Ms Harrington: I certainly agree with you.

Mr Guitard: We have seen some illegal increases, but what we see is that nobody knows what the law is exactly, and even the simple requirement of giving notice is not respected in our city or in our area.

Ms Harrington: Can you tell me the types of per cent increases that you have seen? What per cent increases have your tenants had?

Mr Guitard: Most of what we have seen are, like I said, the usual increases, so there was not more than the guidelines. We saw some cases, but that was not the majority, of very large increases which were illegal. What we have seen most often is that there was no compliance with the necessary application to the rent review, the notice requirement, so there was a very major lack of knowledge of the law in general. But I cannot tell you the average one. I do not think that it is more than usual.

Ms Harrington: I will pass to Ms Ward.

The Chair: I am sorry, your time has expired; my apologies.

Ms Poole: I would like to thank the presenters today for one of the most sensitive, balanced and helpful briefs that we have had to our committee. I think there are many things within this brief with which we should all agree.

I agree with you that the premise of interim legislation is wise. I guess where I have a problem is in some of the provisions that are in this legislation. You have brought a couple of them to the fore. For instance, you have said, even though it is interim legislation, you think, "It would undoubtedly better serve the interests of low-income tenants if it created greater incentives for an adherence to standards of quality." I wholeheartedly agree, and that is lacking in this legislation right now.

The second thing you have stated is that "they" -- meaning landlords -- "must be able to make a decent profit from this field of endeavour. If it is an attractive business, the supply will increase." Again, one of the problems I have about the way Bill 4 is presented is that there is no incentive for any landlord to want to continue in this business, particularly because the retroactivity has been so draconian.

I just wondered if you would like to comment on the retroactive provisions where landlords would have spent money on capital repairs, for instance, in the spring of 1990, or even in the fall of 1989, and yet those capital expenditures would not be allowed due to the retroactivity of this legislation. Do you see that as problematic in your area, or do you see it problematic at all?

Mr Saint-Aubin: If I may, the perspective that one has certainly colours what priority one gives to particular concerns. That is why I stated that the perspective we had was from a small community. The housing picture where we come from is more significantly comprised of very small landlords. There are not very many high-rises. We certainly can respect the fact that in some other jurisdictions there may be issues that pertain to problems, however, that have been encountered with landlords possibly playing the game of this bizarre system and obtaining increases based on capital expenditures that were not necessarily in the interests of tenants. Our experience is not that this is the case in our jurisdiction.

The focus that we would have as the most problematic area is what you have been referring to as flipping, number one. Number two, as my colleague has alluded to, there is in effect a very significant, let's use the phrase "black market" operating in the sense that because you have such a huge proportion of the population where in effect we are living in Third World circumstances as far as sophistication is concerned with the rules and so on, you have in reality the law operating down here where increases take place that are totally illegal. The system is not being respected or enforced.

But as to questions of retroactivity, we can acknowledge that there may be a problem elsewhere. We just do not know and we will not state what we do not know.

Ms Poole: Thank you for your frank comments.

Mrs Y. O'Neill: Mr Saint-Aubin, thank you very much for coming from Cornwall this morning. I do feel, as has been mentioned, that this is a very balanced brief. You do seem to fully understand the limitations of Bill 4, you understand the limitations of Bill 51, and I can tell you that some of the people who do the same job as you do in other communities have not brought forth such a balanced report or brief to us.

I just wanted to ask you a couple of things. When you have the standards board, and you seem to understand that fully, do you help tenants work their way through that? Is that one of your main objectives, to see whether that particular kind of condition has been fulfilled? Because I do agree with you. I think some tenants, first of all, find that kind of route oppressive and some of them have no knowledge, which you have brought to our attention again. What is your role there?

Mr Saint-Aubin: Yes, indeed we try, because the clinic system, if I can make a plug for it, is a darned good one and a darned important one. We try to convey information. With the very greatest of respect, we think that the Ministry of Housing should be doing some of this too, but we try to convey information about what the law is and what rights are.

Mrs Y. O'Neill: How do you think the Ministry of Housing could best do that?

Mr Saint-Aubin: Maybe it could take a course in simple writing. It seems to have had some difficulty in conveying simple information -- well, at least in conveying in a simple way information that could be readily grasped. I look at the documentation from the ministry and I compare it again to what comes from the province of Quebec and I think the latter is done much better.

Mrs Y. O'Neill: By the way, that document you mentioned, we do not seem to have it. Would you --

Mr Saint-Aubin: I brought a copy of it. I will perhaps leave it with your staff.

Mrs Y. O'Neill: I think we have your message on how you do that. I just want to say one thing to you about your brief which is very personal. You chose Bloor Street West as uncomparable to other spots. I happen to have been a tenant, in my younger days, on Bloor Street West. I lived in an apartment that had no hot running water -- I presume it does now -- and we did also have quite a few friendly cockroaches. So maybe you want to get an address on Bloor or another street in Toronto to use, because there are still some pretty modest apartments on Bloor Street West. I think I know the ones you are talking about, which are way way west, but certainly Bloor Street West has its difficult dwellings as well.

The Chair: Sorry, time has expired. I want to thank the Stormont Dundas Glengarry Legal Clinic representatives for appearing before us today with such an informative brief. Thank you very much.

Ms Poole: Mr Chair, might I make a request to the clerk that she distribute to committee members the Quebec Régie du logement material that is provided by the presenters?

The Chair: Okay, we will do that.

Ms Poole: It will be particularly helpful, I think, in the long-term consultation process.

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Ms Harrington: On behalf of the Ministry of Housing, I would just like to say that we initiated a couple of years ago a project called, in most communities or regions across the province, housing help centres, where information with regard to housing specifically targeted for poorer people or hard-to-house people is available in a street-type setting. I do not know if there is one in Cornwall, but there are in most regions.

The Chair: Thank you for the information.

LEVINSON-VINER LTD

The Chair: The next presenter, Levinson-Viner Ltd. Is it Tony?

Mr T. Mancini: Yes.

The Chair: We will be following the same procedure and you have been allotted 20 minutes.

Mr T. Mancini: Thank you. My name is Tony Mancini and I want to thank you for allowing me the opportunity to speak to you today. I am employed as a property manager for Levinson-Viner Ltd and have been for the last 14 years. I will be speaking both on behalf of myself as a small landlord and on behalf of the company, a company which manages over 3,000 units in Ottawa.

First I want to make it clear that I am completely against Bill 4. I believe it was enacted in a rush and without any consideration to the effect its measures would have on landlords, tenants, tradespeople or the economy. If a moratorium bill is in fact required, I believe that strong consideration should be given to amending the terms of the bill before its implementation.

I am 35 years old. I am married and have two young children. I own my own home with a mortgage. My wife does not work. I was born poor. I chose to invest in real estate because I believed it to be a good long-term investment. It has not made me rich and many times I have found it hard to make ends meet, with unexpected vacancies, high mortgage rates and unexpected major repairs. But I struggled and so far have survived. I always felt that the investment would prove beneficial in the long term, my retirement. Now I am not so sure.

In 1989 six friends and I bought a 17-unit building, as none of us could afford it on our own. The property loses $25,000 a year. Effective 1 October 1990, we received an order of 8.3% to cover part of this financial loss. This order also provided for a phase-in allowance of 5% for the next three years, so that in four years the entire loss would eventually be eliminated.

Bill 4 will now render the order void and forces us to pay this $25,000 loss continuously. We cannot afford this long-term loss. We bought the building knowing that with this application the loss would be eliminated in four years. I honestly do not think we would have bought it otherwise, because we could just not afford it. But the law was in place and we made an investment on that basis. It is very unfair now for the government to change the law retroactively. It is unfair to penalize us because we put our savings into real estate and not in the bank.

Levinson-Viner manages 3,000 units for some 150 investors. That is not including their spouses. This averages 20 units per investor. This hardly classifies any of them as large landlords. Most of these investors work full-time. Real estate was simply an investment for them. Most of our portfolio has been in the same ownership for 10 years and some for up to 20. These are people who are building a retirement investment. Most will eventually pass it on to their children.

In 1989 and 1990 we spent $6 million to improve 1,700 of these units. Not one dollar went into luxury renovations, nor was any of the work done for the purpose of flipping the investment. If someone buys a car, he will incur regular expenses every year to keep it going, and no matter how well he looks after it, eventually he has to replace that car. The same is true for apartment buildings. We did not look at the building and say, "What can we do now?" We did not expect the garage to fall down, but it did. We did not expect the bricks to spoil, but they did. We did not want the roof to leak, but it did. These are very costly repairs, and they are not luxury. They do not improve the building, they just keep it up. If all we wanted was a rent increase, it would be far better to do something obvious for the tenants than repair a roof, garage or the bricks. We did not modernize the kitchens, the bathrooms or the lobbies.

Landlords are expected to initiate fire safety measures, improve elevator safety, improve the parking-lot lighting, upgrade the wiring system, all for safety reasons and not out of the goodness of their hearts. But this is not possible. Rents have been so controlled over the years that there has not been any excess left for improvements. We need higher rents. We need a provision in place to obtain the higher rents.

We simply did work to keep the building at the level of standards our tenants are accustomed to. In one particular building of 176 units, we took advantage of the low-rise grant so that we could do needed work within a 5% increase limit. This building is predominantly occupied by a low-income group of tenants. We kept the rents low yet made the building a little safer and more comfortable.

The few landlords who abuse the system will not be hurt by this bill; they have come and gone. The bill only hurts the good landlords. This bill will only give the message to all those good landlords that they too should have abused the system while they had a chance because there is no reward for being good.

All our expenditures were made under the rules in place at the time. Lenders advance funds based on projected incomes. The retroactivity aspect of Bill 4 will cause undue and unexpected hardships to many of our investors. Retroactivity is unfair. The bill has already damaged the confidence people had in real estate. The Ontario government will lose the confidence of the people to invest in its province. If the natives of Ontario do not have confidence in this government, how is the government to expect to receive foreign investment?

Imposing such strict measures on rental housing impacts the economy in the worst possible way. Real estate has many side effects. Unemployment will result for salespeople, roofers, bricklayers, concrete masons, pavers, appliance manufacturers, etc. In turn, these will then impact the non-real-estate sector.

To help pay for these commitments already made, many landlords will now have no choice but to cut back. Our survey of local suppliers indicates an expected loss in 1991 of $12.4 million, or 64% of their volume, resulting in staff layoffs of between 25 to 33 people. This is a direct consequence of Bill 4. On the other hand, tenants will now spend their savings on roofs, appliances, paving, garage work, etc.

In order to restore a good part of this damage, Bill 4 must be amended. Retroactivity must be removed. The bill should only become effective the date of announcement and should not affect any contract that was already in force. This will protect the landlords whose decisions were based on the rules in place at the time.

The bill assumes that all landlords are speculators when only a very few are. Because of this, and a few highly publicized cases of large rent increases, the NDP assumes that all landlords are filthy rich and playing dirty pool. Premier Rae says we need tough rent controls to protect tenants from high increases, but who is to protect the good landlord from going broke? Tenants want all the rewards of home ownership without any of the associated risks. They continuously demand safe and well-maintained accommodation at low rents. This is just not possible.

Ministry of Housing statistics show that in 1990 only 2.1% of units received increases over 30%, and even this means nothing if the base rent was already too low to begin with. The Premier wants to protect 2% of the tenants at the expense of 98% of the landlords. This is grossly unfair, especially from a government that believes in fairness.

Of all tenants, 26% pay more than 30% of income to rent while 52% pay less than 20%. We all agree that some tenants need help, but they are few. We do not agree that the landlord should help those tenants who do not need it.

Arguments have been raised that this bill is necessary to prevent rent increases of 20%, 30%, 100% or even up to 200%, but you do not realize that these high percentage increases are only quoted when it is beneficial to the damaged party. Newspapers will make major headlines out of a 200% increase even if it only affected three tenants. This in turn gives all landlords a bad public image. The article will not emphasize that the rents were only $200 per month. The article will put an emphasis on one low-income tenant and fail to mention the two high-income tenants. The article will play on the hardship case, but not emphasize all the needed repairs the landlord just carried out to maintain this housing stock.

The landlord should not be made to subsidize the tenant who pays 40% of his income to rent when the majority pay less than 20%. It is my belief that the true intent of this bill is to help those tenants who pay a high proportion of income to rent, and no one will argue with the fact that these people need help. However, what this bill does to the detriment of the landlords is also help the tenants who pay a low portion of their income to rent, and these are the majority of the tenants.

A $500-a-month apartment occupied by tenants earning $50,000 a year does not need subsidizing. A luxury $2,000 a-month apartment will not be occupied by people in need. When the landlord receives a large percentage increase, it usually means that the rents were much too low. When rents are at market levels, the increases will be much less. If the government really wants to make units affordable to low-income tenants, maybe it should introduce a bill forcing the higher-income earners to move out of them.

This moratorium bill should be amended so as to protect the many good landlords who worked within the guidelines. The government should not put the affordability problem on a small group of landlords who have not the clout to fight back. The government does not have the money to supply all the needed rental housing and should do its utmost to encourage further private development, rather than discourage it. Rent controls have not worked in 15 years and the proposed policy just makes it worse.

Tenants wanted fairer legislation, but even they admit that this bill goes too far. They also agree that retroactivity is unfair. They know that landlords will not improve the building if the income is not there. Tenants do not want government-run housing. Tenants do not want slums. All they want is a system that is fair to them and fair to the landlord.

I urge you to reconsider this bill and allow some breathing room. Do not make the bill retroactive. Allow existing rules to apply to commitments on or before 28 November 1990, regardless of the commencement date. Allow for financial loss on purchases. Put an annual limit on increases for capital improvements. In this way, landlords can survive, the trades can get back to work and tenants will be protected from exorbitant increases.

I would like to read some newspaper excerpts, if I have time.

The Chair: You are a little over time.

Mr T. Mancini: Okay.

The Chair: I would have to ask the committee. They would have to give up some of their time, Tony.

Mrs Y. O'Neill: Maybe we could have the newspapers submitted for our consideration, Mr Chairman.

The Chair: We could photocopy them and provide them to all the committee members. We would be happy to do that.

Mr T. Mancini: Okay, thank you.

Ms Harrington: I would like to ask you, sir, what costs you feel should be covered within the rents.

Mr T. Mancini: What do you mean, which costs should be covered?

Ms Harrington: The maintenance and repairs of buildings.

Mr T. Mancini: The current guidelines only seem to cover just the regular, ongoing operating costs of keeping the building up to date on a standard, annual basis. There is just no room in it for capital improvements.

Ms Harrington: The guideline for this year is 5.4%.

Mr T. Mancini: That is right.

Ms Harrington: Do you not feel that within that amount there is what could be used for repairs?

Mr T. Mancini: Capital work?

Ms Harrington: Yes.

Mr T. Mancini: No, there is not. There just is not any money in that 5.4% for the extra work that needs to be done. It is a reality. There is not.

Ms Harrington: You feel that it covers maintenance.

Mr T. Mancini: I know that it does not cover the extras. I have been in the business long enough.

Ms Harrington: It does cover maintenance.

Mr T. Mancini: It will cover the regular going to keep a building operating on an annual basis, but that is it.

Ms Harrington: I would presume that in some of the buildings you own or that you manage the increases would be over 10% per year in subsequent years. Have you had that occur?

Mr T. Mancini: You mean, when we go to rent review?

Ms Harrington: Yes.

Mr T. Mancini: Yes, I would say our average increase had been 10% to 11%.

Ms Harrington: And that is every year, over 10%.

Mr T. Mancini: We do not take every building to rent review every year, no.

Ms Harrington: No. Okay, there have been buildings where you have had over 10% in subsequent years. My question is, how can tenants pay that amount without having to leave the building if they are on fixed income or they have cost-of-living increases in their pay of, say, 5%?

Mr T. Mancini: But what you are trying to say --

Ms Harrington: I am asking.

Mr T. Mancini: -- is that the landlord should pay for the tenant's little income. That is not a landlord's problem. If a tenant does not have enough income, that is a problem the Ontario government should address. They should subsidize those tenants. With this bill what you are telling us to do is to help those people and help everybody else at the same time. The majority of the tenants do not have the affordability problem.

Ms Harrington: So you are saying that you feel it is no problem for them?

Mr T. Mancini: Oh, I know there are some tenants who do have a problem. The majority do not though, is what we are telling you.

Ms Harrington: I am glad to hear you say that the rent control system was not working.

Mr T. Mancini: It is complicated. It seems to be working. I mean, it does not seem to be abused by anybody to a great extent. There have been very few people who have abused it with their flips and luxury renovations, and that is what seems to get everybody hot and bothered here. The only thing wrong with the current legislation is it is very complicated. It is difficult to understand.

Ms Harrington: It is very convoluted and bureaucratic and it takes lawyers to do it.

Mr T. Mancini: That is correct.

Ms Harrington: It should be changed.

The Chair: Time has expired. Mrs O'Neill.

Mrs Y. O'Neill: Just to pick up on the last statement that was made, it may not be quite as simple as some people in this room think to change rent legislation. It certainly has been something we have dealt with over a long period of time.

I would like to congratulate you, Mr Mancini. First of all, you presented a written brief to us previously and now a different brief. I would like to say that I think Ms Harrington would find a lot of the answers to her previous, first question on page 3 of your written brief, which you distributed earlier. I found that a very useful page, certainly for knowing the market in Ottawa. You talked a lot about tenants and how tenants are not one unanimous body of people with unanimous resources or needs, and I think we have to keep underlining that. You said a lot about retroactivity and I am really glad you did.

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I would like you to say a little bit more about something in your written brief and in your presentation that you did not attend to much, but which I am sure you have a knowledge of, because you do go on to explain how Bill 4 is going to affect the economy. You talk about how the small amount that tenants save is not going to be distributed in the same way as the ability to put that money back into an investment. You are the first person who had presented that to us.

Could you tell us a little bit about how you know this has affected the Ottawa economy? Maybe you have some examples of how it is affected, for instance, the allocation of contracts within your own experience.

Mr T. Mancini: I have attached some of the reports I had from suppliers to the brief and I have others with me. I will just go through them. We have people like the carpeting business. If there is not any money for a landlord to replace carpeting, he is just going to leave it. They just cannot go and replace something with money they do not have. That will affect the carpet installers and the carpet manufacturers, because a lot of business is done in apartment buildings; and tenants, because they are mobile and they are transient, are not about to spend money recarpeting their apartments, in most cases. The same will hold true for the appliances, the same will hold true for the roofers, the concrete masons and the garage work and the balcony work that many have spoken about.

Mrs Y. O'Neill: Have you got one example? I would like you, if you could, to be specific on something that may be a necessary repair. You mentioned balconies structurally and where you could tell us that some contract has ceased because of this.

Mr T. Mancini: That some have ceased?

Mrs Y. O'Neill: Yes.

Mr T. Mancini: We have cancelled a carpet contract because of this bill. It was a $500,000 contract. It would have meant an increase of 3% above the guideline amount. We have completely cancelled that. We have brickwork that was planned for 1991, and I do not think we may be going ahead with that because I do not know where the money is going to come from for it.

Mr Tilson: I guess that gets down to the question as to the major concern our party, the Conservative Party, is concerned with with respect to this bill, and that is the detriment to the quality of the life of the tenant and the effect of this bill on that. You have just started to get into it. I think you have seen from the line of questioning of Ms Harrington -- which is a typical question from the government -- in other words, that the landlords have got lots of money, that you have accumulated lots of money over the years and that you are getting lots of money with your 4.6% increase and your 5.4% increase.

Unfortunately, that is not the root of the problem, as you have said. The root of the problem is called a war on poverty. It has to do with the 360,000 tenant households that are spending more than 30% of their income on rent. It does nothing to deal with the 40,000 families on the waiting list for subsidized housing, and I think you have talked about it. There is no incentive to deal with these people, for the private sector to get into it. I think they just think you are going to solve the problem, as opposed to the government.

Mr T. Mancini: That is right.

Mr Tilson: I would like to continue with Mrs O'Neill's line of questioning. Give us any other examples as to how you feel that the quality of life of the tenant will deteriorate as a result of Bill 4 over the next year.

Mr T. Mancini: Tenants will have to make do with the accommodation they have without expecting the landlord to go in and do any kind of work in the building to maintain the building at least to the level they are accustomed to. Most landlords will just do that. If they have a low-income-occupied building, they will tend to keep it maintained to that level of accommodation. If it is a high-luxury rental building, they will tend to spend money to maintain it a high-luxury building. So you will hear the government saying, "Those are luxury renovations," where what is luxury in one building may be just standard for that building and that is the accommodation the tenants expect and that is what they are going to get.

Mr Tilson: What are landlords telling the tenants when they come and say, "We need a new roof," or "We need new carpeting," or "We need new plumbing"?

Mr T. Mancini: Since the NDP came into power, we have been telling them there has been a freeze on rent and we do not have the money to do it.

Mr Tilson: What do they say?

Mr T. Mancini: They do not say much.

Mr Tilson: There is nothing to say, is there?

Mr T. Mancini: No. Really they are not saying anything.

Mr Tilson: On your comment too about the bill subsidizing the rich, I would like your thoughts. I would like you to elaborate more on that as well.

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Mr T. Mancini: I have a friend who lives in a one-bedroom apartment. He is married and he makes $55,000, his wife makes $30,000 and they pay rent of $485 a month. He is in no rush to move out --

Mr Tilson: I guess.

Mr T. Mancini: -- because he has got it good. The building is well maintained. He maintains the apartment a lot on his own, but he has got no incentive to move. I mean, he would be crazy to. You are asking us to help those people when they do not need the help at all. A lot of these people make more than some of our small landlords make.

Mr Tilson: Thank you for your thoughts.

The Chair: Mr Mancini, thank you for your brief. We appreciated your comments.

RANDY KEMP

The Chair: Next presenter, Randy Kemp. Randy, I think you are familiar with the procedure we have been following, 10 minutes for your oral presentation, 10 minutes for questions. The floor is yours. You can sit down and relax. Take your time. We need you to identify yourself for the record.

Mr Kemp: My name is Randy Kemp. I am a resident of Ottawa. I have lived here all my life. I want to first thank you for the opportunity to speak to you today concerning the proposed moratorium on rent increases known as Bill 4.

It is my understanding that the proposed bill, Bill 4, will retroactively abolish rent increases for any and all capital expenditures regardless of whether they were absolutely necessary or not. It is my understanding that Bill 4 will retroactively abolish rent increases for unusual maintenance costs. It is my understanding that the proposed bill, Bill 4, will retroactively abolish any and all increases due to approved orders for phase-ins for financial loss, phase-ins for chronically depressed rents and phase-ins for hardship relief.

But does this committee understand that Bill 4 will victimize small landlords who updated their buildings up to at least one year prior to the election of this NDP government? Does this committee understand that Bill 4 will create a far greater shortage of rental housing than ever previously experienced in Ontario? Does this committee understand that Bill 4 will put contractors, trades people and suppliers out of business? And does this committee understand that Bill 4 will ultimately cost the Ontario taxpayer?

I wish to speak to you about this bill from three different perspectives. First, as a small landlord I have part ownership in 13 rental apartments in five different buildings. I personally manage all of the buildings. Second, as a builder-contractor I have created 11 new rental units, either as new construction or converted dwellings, eight units in just the last 12 months. Finally, I wish to speak to you as an Ontario taxpayer.

Bill 4 is bad for landlords, bad for tenants and bad for Ontario. When you mention rent control to the small landlord, generally he shakes his head, grunts, maybe even cusses, but that is about the extent of the reaction. Why? Because rent control is complex, confusing, and small landlords, like the majority of ordinary people in Ontario, just want to get on with their lives. What the small landlord does not realize is that Bill 4 will effectively wipe out 15% to 20% of his investment. One indication of this is that banks have significantly reduced the loan-to-value ratio on low-rise rental buildings. They will not lend money beyond what the rents will carry; for example, 50% to 60% of the value of the building.

A small landlord who has made major renovations or repairs to his buildings, applied for an increase prior to the existence of this government and received approval of a nominal increase prior to the introduction of this bill has unsuspectingly been blatantly discriminated against by a government that feels it is has every right to retroactively abolish rent increases that were perfectly justified to the letter of the law. You call this fairness? You call this justice?

What does the abolition of an approved rent increase mean to the average small landlord? Perhaps an example. First, some assumptions. This example is based on a per-unit basis, one apartment. The apartment has a net operating income of $500 per month, $6,000 annually. Net income is used primarily for debt service. Landlord completes his upgrades to the building some time late 1989, early 1990. He applies to rent review some time in July 1990. Rent review approves a 5% increase for capital expenditures in October. The NDP government abolishes the increase on 28 November 1990, close to one full year after the work was done. The small landlord says to himself, "It was only 5%, $25 per unit."

What the small landlord did not realize is that that 5% increase was worth $3,000 of value to his building -- gone. He lost that value for ever. Start compounding over five years on, say, a six-unit building and the loss becomes grotesque. The moral to the story is, why spend money on your building? It is a complete waste of your investment, and for those who have spent the money and lost the increase, you have been blatantly robbed of something that was rightfully yours, whether you realize it or not.

Then when you consider there are absolutely no means of increasing rents except for extraordinary operational expenses, one comes to realize that this government is not the least bit interested in the welfare of small landlords. This government feels that landlords have no right to manage their property as they see fit.

I am also a builder and a contractor. As previously mentioned, I created eight new residential units in 1990. I spent $200,000 on renovations and I spent $170,000 on new construction. Not one cent of it was taxpayers' money. I will build no more.

This government will not recognize the fact that if there is no return on investment then the investment ceases to exist. It becomes a liability. Bill 4 has completely destroyed any remaining investor confidence in residential rental housing. The typical cost for a 1,000-square-foot, two-bedroom apartment in a three-unit building is about $60,000. You include the lot, the common areas in the building, the parking lot, the appliances, etc, and the unit cost is between $80,000 and $90,000. That is cost, no profit. His gross income is $750 per unit. The net operating income is $600 per unit.

First of all, the investor would not be able to sell the building in today's market and recover all of his expenses. Second, if he wanted a nominal 15% return on his money, he would have to hold on to that building for a minimum of 10 years, based on restricted -- 5% -- annual increases.

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The obvious question is, what does this have to do with Bill 4? Directly, very little. Indirectly, Bill 4 has demonstrated to the investor in residential rentals that the NDP government and the Liberal Party is not the least bit interested in a fair deal for small landlords. Therefore, as a builder of rental units, I say to you, you can build your own rental units. It is not worth my while. I have a family to feed.

Bill 4 is a bad deal for taxpayers too, because if the private sector is not able to respond to the need for rental accommodation, then the government is forced to. The NDP government says it is going to build 20,000 subsidized rental units per year at a capital cost of over $1.6 billion. That translates into over $200 million in carrying costs alone. Who is going to pay for this, corporations? Sorry, they are already leaving in record numbers. They say the cost of social programs and taxes in Ontario are already too high.

When a builder-developer builds rental units, he creates jobs, he increases the municipal tax base, and most important, his rental units do not increase taxes. As a taxpayer, I deplore the government's attitude towards landlords and the rental investment community.

Committee members, a new approach is needed to help those people who cannot find decent rental units, and we also have to make sure buildings are better maintained. The small landlord should not be expected to pay for the government's failure. Rent controls should be phased out gradually over a five-year period. For more units to be built, rent must be allowed to rise to market values. There has to be a return on investment for the small landlord. Private industry will build more rental units if a fair market exists. Those tenants who cannot afford to pay market rents should have targeted specific financial assistance to ensure that no more than 30% of their income goes towards paying rent. It is just not fair to expect the small landlord to subsidize the standard of living of those people perfectly capable of paying market rents. That is exactly what rent control does.

In conclusion, I ask you these questions and offer these comments. Why are you making it more and more difficult to make an honest day's wage for an honest day's work? The small landlord is an entrepreneur. If he does not make a profit, he ceases to exist. How can you justify the retroactive nature of Bill 4? It is completely unfair. Bill 4 demonstrates to me how arbitrary, and how insignificant the small landlord is to this NDP government.

Bill 4 is a disaster. It discriminates against the small landlord, it forces builders out of the residential market and it ultimately increases everyone's taxes. Thank you.

Mrs Y. O'Neill: Mr Kemp, will you be providing your remarks in writing to us?

Mr Kemp: Yes, I have, to Deborah.

Mrs Y. O'Neill: Thank you very much. You certainly have brought forward to us the financial realities of owning property, investing in property, and I want to thank you for what you have done for our community with your livelihood and with your investment.

Mr Kemp: Thank you.

Mrs Y. O'Neill: You have a true understanding of costs, and I think it is one of the clearest explanations we have had about what owning property costs. It is not just an income.

You did mention our party, and we did support this bill in principle when it came forward on the floor, in the protection of tenants, and that was the principle upon which we supported it. We are certainly going to be presenting many amendments. I trust that some of them will attend to some of the needs you have presented, and certainly if you have been watching and listening to the hearings at all you will know that we are as disturbed as you are about the retroactivity of this bill. The principle of retroactivity in legislation, in my mind, is intolerable. I do feel that you truly understand what we are dealing with here and I thank you for the clarity with which you presented your points.

Mr Tilson: I will predict that in the budget the new government is going to bring out, it will say that it is going to build all kinds of non-profit housing. They made a promise during the election, even though the minister has already said, "Well, I don't think we're going to have the money to honour that promise."

My question to you is, assuming that the government does spend tremendous amounts of money on non-profit housing, I think you have raised a point that has not been raised at these hearings. Will they be able to maintain them without rents going up in those various non-profit housing units?

Mr Kemp: My answer to any sort of government intervention where the market should prevail is that it costs the government $1.50 to get a dollar's worth of value. The government does not belong in the rental market and any expenditure in the rental market, as far as I am concerned, is a waste of money because it can be handled by private industry if given the opportunity. But you cannot stack the deck.

Mr J. Wilson: Thank you, Mr Kemp, for your presentation. Tonight, after the dinner break, we will be meeting with two large tenant associations in this area and we are spending two hours with them. If you had the opportunity, if you were speaking right now to a group of tenants, how would you best explain the position you are in as a small landlord?

It is a tough question, only because we have, unfortunately, two sides in this that the committee is grappling with. We have the tenants on one hand, and I am a tenant myself. Many people have bought into the government's line that landlords are filthy rich and somehow you guys have money for capital improvements and that rent increases, anything over the guidelines is unjust. It is very, very difficult to argue when people are facing large rent increases in some cases, and it is very difficult to get them to understand that the only source of revenue for a landlord is the tenant. Do you have any thoughts on that?

Mr Kemp: First, if I were addressing a tenant group, I would definitely distinguish between the large landlord and the small landlord. The large landlord has purchased his investment based on a positive cash flow. The small landlord has purchased his investment, at today's market, at a negative cash flow with the intention of capitalizing on the appreciation of the building. It is impossible in the city of Ottawa to buy a small rental building with a positive cash flow.

The difference between the big landlord and the small landlord is a question of economies of scale. The small landlord improves his building with his own bare hands. He paints it, he adds to it, he makes the quality of life better for the tenants. Eventually that pays off when he disposes of the building.

Rent control restricts the amount that the rents will rise, regardless of what the small landlord does to that building, so if he is capable of attracting a higher rent for his building, he should be compensated for it.

Mr G. Wilson: Thanks very much for your presentation, Mr Kemp. I think you very clearly laid out a lot of the issues from the small landlord's point of view, although I must say, some of your interpretations I found less relevant, say, to the larger group. For instance, you mentioned our corporations leaving because of the high taxes, I think you said in Canada, maybe specifically Ontario, whereas another interpretation is that they are leaving because of free trade. So the slant you put on that can argue for the case you are trying to present.

Also, as far as the government having no role, say, in provision of rental units, I should point out that rent controls were brought in by the Conservative government about 20 years ago, so it is an understanding that government has to have a role in it to make sure that the rental units are there or that the shelter is there for the citizens of the province. I think that is the point of view we are coming from, and that is why this process is in effect to make sure that all views are heard. That is why I am really happy you are here to present your side of it, but I would like to know specifically what you think of standards in rental units and how they should be maintained.

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Mr Kemp: First of all, I think they should be maintained by the market. If the standards are not up to what the market dictates the standard should be for that rental price, then the tenant should have the right to move out and the landlord is faced with putting that rental unit back on the market.

What is happening is there is no market so it does not matter, the condition of the rental unit. If you are locked in at $500 and the market says, "If you fix that up you could get $700," but the government says, "If you fix that up you can't have $700, you can only charge $500," then definitely the rental market is going to deteriorate. There is no point. There is no need, from an investor's point of view, to spend money that is not going to generate any return. It is a basic market philosophy.

Mr Cooper: Briefly, it seems that there is a perception out there that the New Democrats are putting the boots to the small landlord.

Mr Tilson: That is an understanding.

Mr J. Wilson: That is called reality.

Mr Brown: You got it.

Mr Cooper: No. We are talking about all the small landlords, and it seems all the presenters for the small landlords are all new investors. And I think what has been going on, when we talk about fairness here, is that what people have been doing is making poor investments. What they have been doing is buying poorly maintained buildings and trying to work through the system and working on the backs of their tenants to make that investment come through. So that is the reason we are putting the freeze on for a couple of years, just so we can get a handle on this and make it fairer for the tenants and for the landlords.

Mr Kemp: Mr Drainville, I think that is a red herring.

The Chair: It is Mr Cooper, not Mr Drainville.

Mr Kemp: First, I have never gone to rent review. It just did not serve my needs, because I was creating units, I was building new residential housing, my units came on the market at market value. What I am saying here is that rent control is depreciating my investment. If you, through the force of law, restrict the increased value of my rental property, you are costing me money, and I say that is wrong. I made that investment with the intention of living off it as a pension or making other investments at a later date. I did not make that investment with the intention of subsidizing housing, and that is exactly what you are proposing here, that I, as a small landlord, subsidize housing, and that is wrong.

The Chair: Your time has expired. Mr Kemp, we appreciate your coming before the committee.

Mr Kemp: Thank you for the opportunity.

The Chair: You are welcome.

JOHN DICKIE

The Chair: Next presenter, John Dickie. Sir, we will be following the same procedures.

Mr Dickie: Good morning, everyone. I have been a lawyer for eight years and I have represented people in rent review and landlord and tenant matters for 10 years. For the first five years I represented mostly tenants. Since then, I have acted mostly for landlords. This work makes up 90% of my practice.

In my opinion, there are two things wrong with rent review: Rent review is unfair and rent review wastes resources. Bill 4 makes both of these problems worse. I will comment on each of these problems and then comment on one specific section of Bill 4.

First, rent review is unfair because it singles out landlords and makes them subsidize tenants. Not all landlords are wealthy. Not all tenants are poor. In some cases, poor landlords are subsidizing tenants who are better off than they are, and I know this for a fact because some of them are my clients. Some tenants need help to afford suitable accommodation. But their problem is not created by landlords, and it should not be solved on the backs of landlords. Rent review is not the answer.

Bill 4 adds to the unfairness because it singles out some landlords among all landlords and treats them worse still. Bill 4 hurts three groups of landlords: those who have recently done major repairs or renovations; those who have recently bought a building; and those who own a building with relatively low rents. Mr Keller, who spoke earlier today, and Mr Mancini, in his personal capacity, both fell in some of those categories.

Bill 4 adds to the unfairness by being retroactive and taking away allowances that landlords have relied on receiving.

Second, rent review is bad policy in an economic sense because it wastes resources. You have heard this from economists; let me try to give you a sense of why it is true.

A famous moral philosopher had this to say about government control:

"The man of system...seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chessboard. He does not consider that the pieces upon the chessboard have no other principle of motion besides that which the hand impresses upon them; but that, in the great chessboard of human society, every single piece has a principle of motion of its own, altogether different from that which the Legislature might choose to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably."

In enacting and maintaining rent review, you assume that you can tell landlords and tenants what to do. The problem is that they often want to do something else.

For example, as the "men of system," you want a landlord to charge less rent than tenants are willing to pay but still maintain his building as he would if he could charge more. However, one of the landlord's principles of motion is to try to make money. Since he cannot charge tenants what they would be willing to pay for well-maintained premises anyway, his natural reaction is to reduce the maintenance. That costs no rental income, because that is fixed regardless, but reduces his costs and therefore increases his profit. Mr Kemp said this, and I am just putting it in a somewhat more general and philosophical way. To deal with that problem, you then enact more rules about how much maintenance must be performed.

The problem with that answer is that those rules are terribly difficult and expensive to enforce. You are trying to do with rules what can be done much better by the market. By using rules, you are not getting results and you are wasting millions of tax dollars.

A second example of this principle is the fact that tenants, because rents are held down, tend to buy more housing than they otherwise would, or they buy more affordable rental housing than they would. Mr Mancini gave you the example of someone with a huge, or at least a large income living in a $480 apartment. If he were not able to get it at that price, he would move into something else. The $480 apartment might cost $550, but at least someone who needs it would be in it, and that is happening on a very broad basis across the whole economy.

Your cost in administering the system, millions -- the last figure I heard was $40 million -- is what it costs of taxpayers' money to administer the system. It also costs millions of dollars in money and time for tenants and landlords working in the system. And despite the cost, you do not get quality affordable housing to the people who need it.

The fact that people want to do something different than you would like should really not be considered a problem. It reflects the fact that we live in what is mostly a free society. We do not tell people where to live or how much housing to rent. Therefore, we should not try to tell people how much they are allowed to pay, and to charge, for housing.

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Bill 4 makes this problem worse by preventing landlords from recovering the costs of any major repairs and renovations for the moratorium period. This will cause landlords to postpone work which both they and tenants want to see done now. Mr Mancini gave you an example of that as well.

Bill 4 tries to deal with a direct effect of the market that you in the government do not like; namely, large rent increases. In doing so, you ignore the indirect effects Bill 4 will create. I want to give you one more specific example of this because clearly it may be that the bill is not much changed. If the government does not think that it should be changed, it may not be much changed. But surely we can clean up some injustices.

The one that I would like to focus on is the proposed subsection 100f(5). This provides that the ministry may not allow a higher rent increase than the landlord has proposed in a rent review application. You in the government like the direct effect: Tenants will not have to pay more than is proposed. But the indirect effect is that all knowledgeable landlords will ask for more than they were asking for before. You want to give tenants greater security, but in fact you will give many of them less security because perfectly sensible landlords will propose higher rents than they propose now, and that will unnecessarily scare tenants into moving.

In conclusion, in my opinion, the effect of rent review and Bill 4 and this subsection is to hurt people you should not want to hurt, to help people who do not need help and to waste resources. Let us stop subsection 100f(5) and Bill 4 and let us work towards the elimination of rent review and its replacement by a program that is fair and cost-effective and helps tenants who need help and does not hurt landlords who in no way deserve to be hurt.

Mr Tilson: The question I have, I guess, is a response to your comment about essentially the rich are going to get richer and perhaps the middle class will be benefited more than, perhaps, the poor as a result of the passing of Bill 4. You have commented, reiterating one of the earlier speakers, about how the rich are benefiting from this legislation. In your experience as a counsel for landlords, how widespread is that in this area?

Mr Dickie: In my experience it is very widespread. I would say 30% to 40% of tenants really do not have an affordability problem at all. They are paying a lot of money for rent now and naturally, as human beings, they want to pay as little as they can. They organize and they oppose landlords' rent review applications.

There are another 30% to 40% of tenants who are of more modest incomes and it is true that paying less rent helps them. They are in the middle group and so it would be nice if they did not have to pay more rent, but the costs are there of maintaining and building buildings, and basically they have got to pay them because otherwise taxpayers are going to pay them, and they are taxpayers too.

If you leave aside rent review, the market will work. It will minimize costs and it will direct housing to people who need it. Perhaps 30% of tenants, and this is what the affordability statistics show, 20% to 30% of tenants pay more than 30% of their income as rent. But what I am saying is that the way to solve them is by raising their incomes or introducing shelter allowances, but deal with the source of the problem, not go by the back door, in which case you waste all your effort and you hurt people who should not be hurt.

Mr Tilson: Sir, a second question I have is perhaps to you as a counsel for landlords, and that is that these hearings have been designed to provide a report to the Legislature on the temporary legislation and yet on Monday we will be hearing from the minister with his green paper as to the permanent legislation. As a result of the hints that have been given from the government that there will be a request or a demand that landlords set up a reserve fund, and that presumably that will be funded solely by the landlords, anticipating that type of presentation from the government, do you have any thoughts as to whether landlords will be able to sustain that requirement?

Mr Dickie: I would say they will not be able to, and the reason is that when housing is built it simply does not pay for the costs. The rents do not cover the costs. You have heard Minto Developments management this morning say that they have a building built nine years ago that is still not covering its costs. Every year money is sunk into that building by them to pay the shortfalls, besides their original equity, and there is simply no way to take money out of the rent and put it into a reserve fund. The money is not there.

Even in respect of an older building, either someone has bought it within the last five or 10 years or 15 years, in which case there is no money in the rent, or it was built a long, long time ago and the owners of it have suffered depressed rents for the last 15 years and they are entitled to what small return they are able to get now. They should not have to sacrifice that to pay for these renovations and to subsidize tenants who do not need the help.

Ms M. Ward: Thank you for your presentation. I was interested in the Economics 101 there. I thought, "Adam Smith keeps rising again from his mouldy grave from 200 years ago."

I would like to ask you about some of the increases that you have seen. I understand that you have worked on behalf of the same landlord the presenter two ago was representing, Levinson-Viner?

Mr Dickie: It is correct that I act for them. If I might just say, I think Adam Smith knew more about the way the world works than Bill 4 displays that the government of Ontario knows, frankly.

Ms M. Ward: Well, it is a philosophy --

Mr Dickie: It may be 200 years old but it is still intelligent and right.

Ms M. Ward: Okay. We are using up my time. I do not have 200 years for my question, so I would like to ask you about what level of increases you have managed to obtain for the landlords. We hear talk about there may not be many 100% increases. I think a 20% increase is large also. If someone is paying $500, a 20% increase is $100. Could you give me an idea of what the range is there?

Mr Dickie: The range of increases, and I am talking the total increase now, not just the additional amount --

Ms M. Ward: I am speaking of those that go to rent review.

Mr Dickie: Yes, they range from about 6% up to --

Ms M. Ward: Above the guideline?

Mr Dickie: No, including the guideline -- so that is only 1.5% over the guideline -- up to 15% over the guideline, which would be 20% in total. Those are relatively rare. The average rent increase through application is 10% to 11%, and that applies only to 20% of the buildings in the province. So it is not an average of all buildings but an average only of those that apply.

Ms M. Ward: We know about averages. You could drown in an average depth of two feet of water, and I believe there are a number of people drowning through rent increases. I want to leave some time for Mr Wilson.

Mr G. Wilson: I do want to say that I think the quote from Adam Smith is significant in that you choose one thing that he did say. That was 200 years ago and I think, for one thing, he would drop dead at the thought that there would be women involved in running legislatures, for instance. In that period that was out of the question. So things have changed and I want to say too that the party that is associated with Adam Smith is the one that brought in rent controls. They recognize that things have to be altered, that the market cannot look after everything, and I think that even Smith would agree with that. In fact, he knew there were problems, that people getting together would end up in conspiracies against the relatively vulnerable.

That is what we are looking at here and that is why this bill has come forward, because adjustments have to be made and we have to look at what has to be done. I want to ask you whether you think the tenants should not have some say in what this has done. You seem to imply that tenants are just out to get the best possible accommodation at the lowest price without any realization that costs have to be met.

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Mr Dickie: Tenants can vote with their feet. If they do not like an apartment, they can move. The market would supply housing if we just had not gotten into this abortion that is rent review 15 years ago. I realize we have a problem getting out of it. There would be transitional problems, but I still say to you that there are real costs for housing and if tenants are not going to pay them, then it is the government and all taxpayers who need to pay them, not landlords. Landlords are in there already doing their best, they are making costs as low as they can in order to try to make a buck, and, frankly, making a buck is what we need more of in this industry, not less.

Ms Poole: Thank you for your presentation today. Rather than continue the philosophical debate of rent control or rent review and whether we can or cannot get out of it, which I do not think is at issue in this bill -- I am quite sure that the government would not bend on that principle, particularly in this bill -- I would rather look at the pragmatic side of Bill 4 and some of the ramifications; for instance, the retroactivity. You have made some brief comments about it in the bill. How is the retroactivity affecting your clients and how would you like this bill changed to reflect the fact that the retroactivity should not be so encompassing?

Mr Dickie: It is having a very serious effect. I know many people who are going to be driven into situations of real hardship because of this. The way to cure the problem is to make the cutoff date 28 November 1990, which was when the bill was announced, and to make it apply to work committed or done after that date. In other words, work committed or done by that date should continue under the existing rules that people have relied on. When properties have been bought before that date, they should continue under the existing rules that people relied on when they bought or built.

The only other thing I would say -- and given the government's general attitude, I think this would be difficult to achieve -- is the bill also seriously impacts people who have buildings with very low rents. They are low rents because they have taken only legal increases and they have been hammered over 15 years. To cut off financial loss does not hurt the so-called speculator, because he has not bought the building yet. It hurts the people who own the building now, for whom it is their retirement savings and who need the money.

Mrs Y. O'Neill: Thank you very much, Mr Dickie, for bringing your points forward. I think you are the first person who has brought before us subsection 100f(5), the abuse that is possible there, and I think that is a point that is well made. We just mentioned retroactivity. Could you say what you feel is the worst aspect of Bill 4, in 25 words or less?

Mr Dickie: The retroactivity. It only takes two.

Mrs Y. O'Neill: Okay.

Mr Dickie: With respect to the subsection, the subsection is particularly prejudicial to smaller landlords who cannot get or do not get proper rent review advice. For the big landlord the change that the government proposes in the bill will not hurt them. I will just turn around and propose 10% more than I was proposing before. At the moment, I try to target very closely to what we will get, so as not to interfere with the tenants' lives unnecessarily, but if I know that if we cannot get any more than I asked for, I am going to have to ask for 5% or 10% more or the landlord will lose the money permanently and, frankly, I may be sued. I am not looking forward to either prospect.

Mrs Y. O'Neill: Thank you very much for bringing this forward.

The Vice-Chair: Thank you very much for a very provocative presentation.

THÉRÈSE MAHONEY COUSINEAU

The Vice-Chair: Our next presentation will be from Thérèse Mahoney Cousineau. Good morning. You have no doubt seen the other presenters, so you will have 10 minutes to make your oral presentation, followed by 10 minutes of discussion with the committee. Would you identify yourself for the purposes of Hansard and then begin.

Ms Mahoney Cousineau: Good morning, members of the committee. I am pleased to be here and to be able to make a presentation on behalf of myself. I am, I guess, what you would call a small landlady, not literally but I have a triplex and I act as repair person, janitor, accountant, cleaner, electrician and painter. Maybe Smith would drop dead if he heard that. Over and above that, I hold down a full-time job and a part-time job. My reason for purchasing the triplex was for my senior years, if I might call it that, so that I would not retire from work completely and that it would possibly be a good investment, because over the years, raising a family, I have not been able to keep full-time employment and therefore have a reasonable pension to support myself.

I also own a property in Quebec and I will just be brief on that. I find the laws there so much more flexible. I have had no problems with rent review. There are no problems of going to the rent review board and presenting these numerous forms in 10 different copies with all figures justifiable, receipts and whatever. It is much more flexible and there are hardly any problems. I do not have problems with tenants and I do not have problems with the rent review board.

There is another comment I would like to make, and this is just passing by. I find the words "landlord" and "landlady" very oppressive. It is very archaic. I do not know where it goes back to. It seems to give, right away, an arbitrary position to the landlord and to the tenant. It maybe could be cleaned up, I am not sure how.

My triplex was purchased in June 1989. I had a private evaluator to look into the structure of the building -- the roof, the plumbing, the heating -- so that my investment would be sound, the result being that it was a sound building, an older building, and would need repairs from time to time. For example, it was an old furnace. The roof may need repairs in 10 or 12 years. I also checked with the rent review as to the possibility, if needed, for renovations and repairs and I was explained how the rent review operated in Ontario and that there probably would be no problem.

The building is financed at 100% and presently I am experiencing, with the refinancing, about $200 per month loss. I called the rent review and asked if it was possible to present an increase and I was told that I would be given a seminar with a group of other small land owners or property owners and that I would be able to fill in these forms by myself, that it would not be a costly affair, but after the seminar I found out that there are about 10 copies, both-sided, with all these figures and all these works. So I finally had to go to an accountant to get this done.

Then I was told that because it was June 1989 I should wait for a full year to look into getting a rent review into the matter. So after a year I presented my claim to ask for a rent increase for the amount that I thought was reasonable and then I was told: "If you wait until January 1991 you will then be able to claim more. You'll be able to claim 5.4% or 5.6% increase, so it would be more feasible for you to do that."

Now I am caught between Bill 4 and being able to make a presentation. Although I have already paid the accountant and the person to prepare all these forms, I am left with these other costs over and above the already $200 per month that I am losing.

Again, there are no problems with the tenants I have presently, other than slow rents. How do you collect rents? That is one thing that I do not think the new bill addresses. How do you collect rents from people who are slow paying? My mortgage comes due to my bank on the first of the month and I have to pay it, otherwise I have penalties. So how do you deal with your renters?

I am now left with expenses that I have incurred by believing that I could eventually recuperate the moneys. I almost had a 100% promise that, "This is law, you can go forward with this and there is no problem." But now in November, with a new government, I am told, "No, you can't; you can't do any repairs that you will be able to recuperate," although the furnace is aging and maybe next year it will not be functioning. So what do I do? Do I put out moneys of my own when I am already at a loss, or do I leave the tenants without heat? It is very difficult for me as a working person to understand the rent review process and why this has become the whipping men's toy joy in our province. Property owners have this continual black cloud over their heads.

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Successive governments have spent enormous sums of money to regulate and sterilize rents, vast sums of taxpayers' money to bring rents under control, to whose profit? Neither the landlady or the property owner are profiting, nor are the tenants.

I am sure that there are poor property owners. I do not disagree with that, but I am sure the percentage is very low, because we buy properties in order to eventually be able to sell them; therefore we have to upkeep them.

There are also lousy tenants, and I am sure there are some of them out there, but governments have not changed that or improved it. These people still exist and will continue to exist no matter how much regulation. Greedy property owners are allowed to continue to find a way to outsmart the system, just as bad tenants continue to plague society: late rents, broken or damaged walls, etc.

There is no cure for all ills in our society. What governments should be looking at is the safety and the rentability of the units, and how to prosecute the culprits, not to try to regulate where there is no real problem.

If regulations are needed to keep property owners honest, fair and reasonable, then governments should be seriously delving into the need for regulation into, for example, food, clothing, oil and other necessary items of consumption. One would assume that if regulation is the cure for all ills of our business, then it is necessary to protect consumers against possible gouging of oil companies, clothing companies and food companies.

Oil companies recently raised their prices when they heard of the Gulf war, although nothing really happened to change their revenue or their expenses. I did not hear any government, or this present government's outcries of, "How can we control this?" Why are they making unreasonable profits? There are poor consumers out there. The recent Gulf war brought the price of oil up the following day, with no controls. Why are we not having controls? Are these companies too big, too powerful, too multinational?

An article in the Globe and Mail on 8 February reads that Hydro's finances are shaky. This is Ontario Hydro. Electricity rate increases are to outpace inflation, and if you have a moment, I would like to read just the first paragraph from it. It says:

"Electricity prices in Ontario will rise faster than the rate of inflation during the next three years because Ontario Hydro needs to increase its profit to meet its financial targets."

Then it goes on to say that "Hydro is different from a private company, the government's return should not be as high as a market-based rate of return."

I am wondering if that is contradictory or if I am understanding it properly.

You must find moneys elsewhere if your tenants cannot afford housing, more than 5.6%. If my tenants cannot afford more than 5.6%, where am I going to find the money for paying the increases of the 10% for hydro? Last year, school taxes in the municipality of Vanier increased 26%, municipal taxes increased 16%, and as a result of that, this year I am now paying $30 a month more than I paid last year. I do not get an increase from one of my tenants of $30 a month. That is just taxes. We are not talking about anything else. We now have to pay 7% GST. That is 7%, and it goes on and on.

The Vice-Chair: Ms Mahoney Cousineau, if you would like to conclude your remarks, please.

Ms Mahoney Cousineau: No legislation is going to cure all society's ills. If that were so, crime would be wiped out, theft and fraud would be gone.

In closing, I would like to say, do you not think it is time to protect the poor landlords and property owners and not only the renters and tenants? There are small property owners out there, a lot of them, and we as a society are moving towards privatization and deregulation in most of the governments, they say that this is good financial and business management, while our Ontario government is putting on more restrictions and more regulations to the rental industry. We are told that we should be masters in our own houses and I am wondering who is going to be masters in our houses from now on.

Ms M. Ward: I enjoyed your presentation. You pointed out an important problem with the current system in that it is too complex and landlords and tenants cannot understand it. You had to go pay someone to help you understand what you could and could not do under the system. Is that correct? You went to an accountant.

Ms Mahoney Cousineau: That is correct.

Ms M. Ward: You did not go to a rent review consultant then, which a lot of landlords have to do.

Ms Mahoney Cousineau: And landladies.

Ms M. Ward: And landladies, yes. As you say, that word is not --

Ms Mahoney Cousineau: It is very confusing.

Ms M. Ward: I find it, for women -- maybe I am prejudiced in favour of women.

Did you take the statutory increases? I understood you bought the property in 1989.

Ms Mahoney Cousineau: I have not been able to get any increases since that time other than statutory.

Ms M. Ward: You did take the statutory increase, which was 4.6% and would be 5.4% for this year.

Ms Mahoney Cousineau: Yes, I did.

Ms M. Ward: But at the time you purchased the property, you did not realize that you would have the financial loss?

Ms Mahoney Cousineau: Yes, I did realize, because there are no properties that I am aware of in the city of Ottawa that have cash flow. They are at a loss, most of them, because of the increase in the prices.

Ms M. Ward: You financed the whole property.

Ms Mahoney Cousineau: The 100%, that is right.

Ms M. Ward: I am not making any judgement there. I believe you should have a fair return on your investment, but essentially then you have no investment -- aside from your labour, which is a substantial thing, you did not make any financial investment in that?

Ms Mahoney Cousineau: It is financial investment that I have to meet my payments every month, which is over and above my rents that I am able to claim. I am paying the hydro out of my own pocket.

Ms M. Ward: That is one other thing I did want to mention that you might not be aware of. Bill 4 allows for small increases above the guideline where you have extraordinary increases in some of your fixed costs, in which you have no control, such as taxes. If the taxes in your municipality have increased a great deal more than the average on which the statutory -- there is a tax component in the statutory increase.

Ms Mahoney Cousineau: Ms Ward, if you will permit me to answer, I realize that. But you also have to realize that disbursements have to be made one year before you can claim them, so therefore you are at a loss for that particular year, which you have to recuperate or be able to recuperate somewhere. If you have to borrow the money from the bank you have to pay interest on it, whereas if you go to the rent review board you have three months then before you even are looking at a recuperation of that amount of money.

Ms M. Ward: I understand your point. It is the money in the meantime.

I just wanted to say this is interim legislation. The quicker we get this passed and get to work reforming the old RRRA, the better, I think.

The Vice-Chair: Mrs O'Neill, the member for Ottawa-Rideau.

Mrs Y. O'Neill: Thank you very much for coming this morning, Ms Mahoney Cousineau. I do feel you have learned a lot in a short time. You said you came into this field knowing very little and you seem to have learned a lot of it the hard way.

I have a lot of difficulty thinking this is interim legislation. I think it is unfortunately a lever to something that may be following in its footsteps. That is a personal opinion.

I think you have reiterated to us that small landlords have a very difficult time with cash flow, and we have heard that from several presenters even this morning. You said several times that you were advised that this was not a good time to do things. Could you tell us a little bit about who was advising you that you should not proceed regarding the increases that you thought were justifiable?

Ms Mahoney Cousineau: Yes, it was the rent review that is located here in Ottawa.

Mrs Y. O'Neill: And that was in the fall of this year?

Ms Mahoney Cousineau: Yes. The seminar was given in August. I do not know if I have lost -- it seems something has changed. The seminar was given in August, and in September I started preparing my documents. When I called in November I was told: "You should wait until January, because in January you're going to get a better increase. You're going to get 5.6% plus whatever you ask that is reasonable for major renovations or replacement of existing equipment."

Mrs Y. O'Neill: I am very sorry that somehow or other there has been I think rather misguided information given to you, because I really do feel, and I hope that in the future it will be useful, that you will proceed with a rent review application as soon as it is in order. I really do hope that the regional housing or rent review group in Ottawa here is continuing to receive applications if landlords and property owners want to present them. I feel very strongly. This legislation has not yet passed and it has come to our attention in other centres that it is being acted upon as passed.

Ms Mahoney Cousineau: As passed. That is correct.

Mrs Y. O'Neill: It has not been and we do not know whether any amendments will be received. So I am glad you brought it to our attention, because hopefully the ministry will be making sure that its branches that deal with rent review are acting on the legislation that is now in existence, which is Bill 51.

Ms Mahoney Cousineau: Thank you, Mrs O'Neill.

Mr J. Wilson: Thank you, madam, for your presentation. I too want to pick up on what Mrs O'Neill's last point was, and that is, in a previous statement by the NDP the language being used sounds like the RRRA is not the current legislation. It is the current legislation until such time as this bill goes through or otherwise. Second, you are losing about $200 a month, is that correct?

Ms Mahoney Cousineau: Yes.

Mr J. Wilson: I think what the government has said in many other places that we have been is that if you incur capital costs -- if you need a new roof, a new furnace -- you are to take that out of money that you have from God knows where, given that you are operating at a loss, and the logic again continues that, because you bought this building and it will appreciate over time, you are building up equity in the building, you are going to make money in the long run on this thing. What do you have to say about that, given Bill 4?

Ms Mahoney Cousineau: First of all, I would say that the same should hold true for all businesses in Ottawa or in the province, that they can wait to make a profit at some distant future and supply money out of their own pockets, and I think the economy would consequently suffer. I am not an economist, but I would assume this.

The Vice-Chair: Thank you for a very enlightening presentation. This concludes the morning session. I would remind members that the afternoon session will begin at 2 o'clock. We will be in recess until then.

The committee recessed at 1212.

AFTERNOON SITTING

The committee resumed at 1402.

The Vice-Chair: Good afternoon. Welcome to the afternoon session of the standing committee on general government.

The work of this committee is to review Bill 4. We have been conducting public hearings throughout the province and in Toronto. Our first presenter this afternoon will be the Eastern Ontario Landlord Association. If the people representing that association would come forward and be seated at the table --

Mr Tilson: Mr Chairman, before we hear these people speak, I would like to speak to you on a question of privilege, and that has to do with the request that was made on a point of information this morning with respect to having the ministry provide us with specific information on the number of flips which have been alleged to have been made throughout the province and the amount of unnecessary capital expenditures that were to be made throughout the province, asking the ministry to provide that information as soon as possible.

It has been drawn to my attention, Mr Chairman, that the minister, when he made his presentation to this committee on 15 January last, outlined five examples of rate increases that exceeded 100%: 156%, 176%, 224%, etc. Mr Turnbull of the Progressive Conservative Party made a specific request at that time that the ministry provide details of those increases so that this committee could analyse that information the minister was submitting, specifically the addresses of these places and details that the ministry had, all the details. That information has not come forward.

My concern is that the request that was made this morning, if it takes three weeks, and we still have not had that information, how long is the rest of the information going to take? I would hope that that information would come as soon as possible and that you, as the Chair, would direct the ministry to provide that information.

The Vice-Chair: Fortunately, we have a representative of the ministry here with us and perhaps she could help us with the information the member has requested.

Ms Parrish: Sir, I am not sure if there has been a transmittal problem or not, but in a letter of 6 February to Mr Mancini, Anne Beaumont did provide that material. We have the information that was requested. I do not know if there has been some sort of transmittal problem or not, but I do have a copy of the material here. It has got a few little scribbles on the bottom, but I am sure we could get it copied again and resubmit it. If there has been some error, I apologize, but it appears to have been transmitted to the committee.

The Vice-Chair: I think, though, Mr Tilson was also concerned about the time frame we would need for the ministry to provide the other information that was requested this morning.

Ms Parrish: I have already phoned back to the ministry and asked for that material to be prepared as soon as possible, and we will be working over the weekend to get it. Some of the material is quite readily available and some of it will actually involve having to go through a manual search of some of the rent review files in the 20 offices across Ontario. We will certainly use our very best efforts, sir, as we have in the past.

Mr Tilson: I must confess, Mr Chairman, I have asked for this information in the House repeatedly, particularly with the minister making allegations of flipping and those types of expenditures, as to why he is issuing the bill, and I cannot understand why it would take so long. However, I appreciate you have no control over that.

I have not received that letter, and if a copy of that could be made available to Mr Wilson and myself as soon as possible, we would appreciate that.

The Vice-Chair: I suspect all committee members would wish to have copies of that information.

Mrs Y. O'Neill: That is correct, Mr Brown. I know there are copying machines in this hotel, so I think we should have it this afternoon.

The Vice-Chair: That is a good idea, Mrs O'Neill.

Mr Drainville: Mr Chair, I just wanted to say also to the member of the ministry, obviously since they did do their work and they had that information available, to thank them for that and to acknowledge that there has been an error in terms of that particular portion. I too, as the member indicated, would like to see as soon as possible some definitions that we asked for this morning as well.

EASTERN ONTARIO LANDLORD ORGANIZATION

The Vice-Chair: I think we have some of our business done, gentlemen. If you would introduce yourselves, and the positions you hold within your organization, then you will have 20 minutes to make your oral presentation. It will be followed by 20 minutes of discussion with the committee. Each of the caucuses here represented -- the New Democratic caucus, the Liberal caucus and the PC caucus -- will divide the 20 minutes among them. Would you like to begin, sir.

Mr Caparelli: My name is Luigi Caparelli and sitting beside me is Jeff Gould. We appear before you today as members of the Eastern Ontario Landlord Organization.

I would also like to take a minute to acknowledge and thank everybody sitting behind us. Most of the people here are small landlords or are employed in the building and maintenance/renovation industry. They obviously feel they have a lot at stake in this legislation that is being proposed and they are here to show their interest in and their support of the Eastern Ontario Landlord Organization.

We are a joint committee consisting of representatives of small landlords and landlord organizations as well as large landlords. We have the support of some 500 landlords in eastern Ontario who own and manage over 40,000 rental units.

Our main concern is the retroactivity of Bill 4 and therefore its inherent unfairness. Bill 4 will delay a great deal of needed repair work. It denies legitimate recovery of costs already spent and it will destroy many jobs that are badly needed in a time of recession. Bill 4 assumes that landlords are not entitled to any return on their property and their investment in rental housing. It blatantly discriminates against landlords. It hurts poor landlords and it helps affluent tenants. Bill 4 also prejudices most of the lenders in the province. Bill 4 seeks to solve problems that do not exist. It is based on myths and misconceptions.

At this point, I would like to go into some of the things that the committee was discussing prior to our presentation. Some of the information that we have is quite startling. We continuously hear about these 100% or 150% rent increases across the province due to luxury renovations, and one would think that they are common and everyday, according to the reports we hear. Our research has shown that out of approximately 1.4 million rental units in the province, there has been a grand total of 154 units where a rent increase in excess of 100% has been approved in the last two-year period -- 154 out of 1.4 million rental units.

One of the areas that Bill 4 will put a stop to is major repairs and allowances. Again, the retroactive nature of this provision is highly offensive. It is unfair and it is discriminatory. It literally confiscates repair costs which have already been incurred by landlords. Again, this will take away badly needed jobs. It is important to note that approximately 67% of the buildings in Ottawa are more than 20 years old. Things can only be fixed so often. At a certain point, systems have to be replaced. Bill 4 will not allow the replacement of these items.

The present rent review legislation allows for cost recovery over the expected life of the work that is being done. There is no profit built into the existing system for landlords. For example, if a landlord puts a new roof on a building and if we, say, assume that that roof costs $5,000, at today's interest rates of approximately 12% a landlord would be granted an annual allowance of $745.50. This is allowed once and over the next 15 years the landlord would recover his $5,000 expenditure, although he has had to spend the money up front when he initially put the roof on. At the end of the 15 years, one would assume that that roof will once again have to be replaced. At this point, because of inflation, that same roof can reasonably be expected to cost $10,000. However, the landlord is not allowed the full $10,000. The present rent review system simply allows for an extra allowance for that $5,000 differential. And this goes on and on. As you can see, there is no profit in there for the landlord.

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Bill 4 denies the legitimate recovery of these repairs, even though they were made or contracted before the bill was announced, and definitely before the 5 September election. Bill 4 denies cost recovery for major repairs even though landlords already have an order from the ministry allowing them to collect this amount. It is theoretically possible for Bill 4 to be retroactive on major repairs for as many as 1,123 days, and we feel that is innately unfair.

I would like to give you another small example about a real-life landlord here in Ottawa. Mr and Mrs Joseph Franchina own a 14-unit building in downtown Ottawa. Between September 1989 and August 1990 they spent roughly $19,145 doing necessary repairs. The bricks were deteriorating so they were cleaned of excess dirt; some floors were sanded; the exterior of the building badly needed painting so it was done; and there was a plumbing upgrade -- for a total, as I said, of $19,000.

The ministry allowed an allowance of $4,213 for this work. Of that, $794 was deducted from their statutory increase. So the total amount that was actually granted for the renovations was $3,419. This works out to 4.3% of the current rents, rents which at the time averaged $472 per month, and these are for large two- and three-bedroom units very close to downtown Ottawa. With the statutory increase, as well as the allowance for repairs, the rent would have been approximately $514 per month, which works out to approximately $20 per month for $19,000 worth of work. We do not think that is excessive. For Mr and Mrs Franchina, Bill 4 is retroactive to September 1989, which is when they started the work, for a period of 454 days.

The minister has offered some solutions. He has stated that when the moratorium is over in 1993 the work done before 28 November 1990 may be considered under the new permanent rules. The minister's solution is simply not adequate. Landlords have to pay contractors now because the work has been done. Landlords have to pay for their loans right now. Landlords have to carry the costs of these rental improvements until the rent increases are allowed.

Bill 4 also has considerable side effects, especially the retroactive nature of it. The long-term effect on the confidence of potential builders and lenders in the rental housing industry will be severe. Potential builders and lenders will demand higher returns to risk their money on any investment in rental housing. This will mean a higher building cost and higher borrowing costs. Since it is obvious that rental housing cannot generate these higher returns, there will be less private investment in the building industry.

What we propose, if Bill 4 must be kept in some form, is that the retroactivity be eliminated and the cutoff date should be for 28 November 1990, the date that the changes were announced. This date must be tied into commitments or work already completed. It cannot be tied into a date of rent increase.

We acknowledge that there were some problems, some difficulties between landlords and tenants as regards capital expenditure allowances. Some tenants think that the lifespans for some items of work are too short. Conversely, some landlords think that some of the periods are too long. These agreements do not justify abolishing the system entirely. There should have been room for negotiations between the two parties.

Tenants also think that landlords can pay for major repairs without any extra rent increases. This is simply not possible. Rent review has depressed rents in the province for 15 years. In 1987 the Thom commission report, which was commissioned by the province at a cost of over $3 million, came out. In that report, Mr Thom concluded that had it not been for rent controls, rents would be at a minimum 30% higher than they were as of that date. Therefore, there simply is not any excess money in the present rents to pay for major repairs. The market rents that you can get when a new building is put on the market will simply not allow for a landlord to recover his costs immediately. For all these reasons, there is simply nothing extra in the rents to pay for major repairs.

The minister has also said that there is a problem with luxury renovations, but there have been very few cases of luxury renovations. There are some luxury buildings in the province. Some tenants want and expect quality replacement of older finishes. For tenants to have a choice of apartments at different quality levels, landlords must be allowed to repair and renovate and to recover the costs of doing so.

The minister has also claimed that Bill 4 is justified in order to stop rent increases of 100% and over. Again, I would like to repeat those startling statistics that I set out at the beginning. There have only been 154 units out of 1.4 million rental units where a rent increase in excess of 100% has taken place over a two-year period.

If there must be a moratorium, landlords must be allowed reasonable rent increases to pay for necessary major repairs. If need be, these allowances could be capped and phased in at a rate of 10% per year in most cases. The cap has to be higher than 10% where a landlord is starting out with a very low base rent.

I would like to now get into the area of financial loss allowances. The Eastern Ontario Landlord Organization opposes Bill 4's treatment of financial loss allowances because it is unfair and discriminatory. It hurts landlords who have average or below-average incomes. It will cause extreme hardship to landlords who have recently bought or built buildings. It also causes extreme hardship to landlords who own buildings with affordable rents. It also benefits many tenants who do not need any help.

The tenants who need help to afford housing need that help because their incomes are low. Any policy intended to help them should address their income problem and be funded by society as a whole, not by taking money away from landlords to give it to tenants. We acknowledge that according to Statistics Canada roughly 28% of tenants are paying more than 30% of their income in housing, and something should be done to address that problem, but this is not the way to do it.

Prior to Bill 4, under the Residential Rent Regulation Act, landlords were allowed extra rent increases called financial loss allowances. The allowance is limited to 5% of the rent each year, and so the loss is eliminated over a number of years. The past losses are never recovered and the allowance does not allow for any profit. Bill 4 cancels many orders which have already been made allowing this allowance. Bill 4 seriously harms many recent purchasers. I would like to give you another specific example.

Gordon Brownlee bought a 10-unit building in Ottawa on 31 May 1990. He paid $582,500 for it. He assumed a mortgage of $358,000 against the building and he gave a vendor-take-back mortgage of $140,000, for a total mortgage financing of $498,000. He paid $84,500 as a down payment. Mr Brownlee had been saving this down payment for 10 years. He expected to lose $120,000 over the next six years until the building breaks even. If financial loss allowances are taken away, he will now lose $275,000 over the next 15 years. Because of Bill 4, the property is now worth at most $524,000, a drop in value of 10%. The financing is still $498,000, so that Gordon Brownlee's equity is now only $26,000, a loss in the value of his savings of 70%.

Mr Brownlee can sell his property now. If he does that, he has just lost $58,500 before he has paid any real estate commission fees or legal fees. If he holds the property, he will have to pay the losses from his salary for many years to come. He expected there to be losses, but relied on the allowances provided by the Residential Rent Regulation Act to reduce those losses gradually over time. In effect, his other income is being stolen from him and given to his tenants. Because of this, we oppose retroactivity.

Orders cannot be cancelled after already being made. Landlords have relied on rent increases allowed by the Residential Rent Regulation Act to reduce these losses gradually over time. Landlords will have to try and pay these losses from their salaries. The losses are money which is stolen from landlords and given to tenants regardless of tenant need. Lenders relied on orders and phase-ins under the rules then in force. Bill 4 will seriously harm long-term owners and it adversely affects lenders. Bill 4 has driven down the value of every property with affordable rents, it has stolen many people's retirement savings and it puts lenders at risk of defaults because of losses landlords cannot pay.

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If Bill 4 is kept at all, the solution to retroactivity is to make the cutoff date 28 November 1990. That date must be tied into the date that an agreement of purchase and sale was made, not the rent increase date. To correct the problem for the long-time owner with affordable rents, the solution is to exempt sales of buildings with low rents which were last sold more than five years ago. This measure will avoid penalizing the long-term owner and leave intact crucial retirement savings.

The minister says that phase-in periods of 10 years are ridiculous and show the system is not working. We have come across very few phase-ins that last 10 years. Any that do, tenants have been paying a fraction of the cost of their accommodation for years. Because of the restrictive 5% financial loss cap already in place, they will keep paying a fraction of the cost for 10 years to come. It is landlords who have the right to be offended by 10-year phase-ins, not tenants.

The minister says that repeated flips of rental buildings are creating artificial costs and that Bill 4 is a necessary temporary measure. There are actually very few flips, regardless of how you define the term. According to a study by the city of Toronto housing action committee, which can be made available, the number of flips was extremely low compared to the overall number of sales in buildings in the Metropolitan Toronto area.

Again, the moratorium is unfair, unjust and undemocratic. It forces landlords to pay unexpected and undeserved financial losses. It will have a long-term effect on the confidence of potential builders, purchasers and lenders in the rental housing industry. They will then demand higher returns to risk their money. Borrowing money will cost more. Building and repair costs will cost more.

It also sets a precedent for doing away with financial loss allowances permanently, and that will end all private building of rental housing. If the private sector will not build, the government will have to. Past experience shows that the cost will go up when the government builds or pays. The costs of building rental housing have to be paid. The only logical way to pay the costs is for the users of housing to pay rents that cover the costs.

As a comparison of costs between the public sector and the private, I would like to refer the committee -- either now or later they can look at it -- to appendices to the brief that we have submitted which show some cost increases incurred by the Ottawa-Carleton Regional Housing Authority, which is the ministry's crown agency in this area. It shows that their day-to-day maintenance costs for the past few years have been rising well in excess of 10% per year. This is in addition to roughly $7.5 million each year spent on capital renovations. If you want to break that down a little more, the $7 million on capital renovations is spread over 8,600 units. That works out to $73.21 per unit per month. On an average rent of $550, that would imply a 13.3% rent increase every year for the capital expenditures alone.

Bill 4 also has other side effects. It will severely curtail all private investment in housing. It will mean all new rental housing will be built by the government with taxpayers' money. This will result in tax increases. Money will be taken away from other government programs. It will also reduce the value of apartment buildings, thus wiping out many retirement savings. It will reduce the supply of housing. It will destroy tenants' rights to choose the type and quality of housing they will occupy. Bill 4 does absolutely nothing to solve any tenant's affordability problem.

If Bill 4 must be kept, the solution is to disallow applications for the financial loss allowance on any purchase occurring within five years of the previous sale but leave the allowance intact in other cases.

I would also like to briefly go over some of the other aspects that are affected by Bill 4. The Residential Rent Regulation Act allows landlords to recover increases in maintenance costs which are abnormally high. Sometimes these costs are not within the landlord's control. In other cases, the cost increases are within the landlord's control but they rise because of an intentional increase in the quality of maintenance and services. Such an increase should be rewarded, not penalized or ignored. The allowance for extra maintenance cost increases should not be changed. If reform is needed, only the following should be disallowed: one-time increases or deliberately induced cost increases which do not improve maintenance or facilities, and these are very rare.

The Residential Rent Regulation Act also allows financing costs of up to 85% of the acquisition costs of a property. Bill 4 will limit this to 75%. The allowable financing limit should remain at 85% because it is the traditional level of financing on real estate investments. Smaller and first-time investors need the borrowing to obtain a foot in the door in the industry. Reducing the limit to 75% will prevent new investors from entering the housing industry, which will reduce competition and be bad for tenants in the long run.

I would also like to touch on another aspect, which is justifying more than requested in an application for whole-building review. The Residential Rent Regulation Act provides that the ministry may allow a higher rent than the landlord has requested if his or her costs justify that higher rent. This policy should be maintained, because smaller landlords who cannot afford to get proper rent review advice need this protection. They already cannot claim the justified rent until 12 months after the date they should have received it. They should not be further and permanently penalized.

Bill 4 also changes the time required for tenants to pay back rent arrears. The practice under the Residential Rent Regulation Act has been for either party to pay the other within 30 days. This practice should be continued. Pending an application, the tenant need only pay the statutory increase. Due to delays, landlords bear substantial costs to carry money that they should already have received. Tenants are usually advised by their agents or community legal services to put sufficient money aside to pay the order when issued.

Finally, I would like to get into some suggested recommendations that we would like to make.

Our first and obviously our preferred route is to abolish Bill 4 entirely. Bill 4 is too flawed to be corrected by amendments. The Legislature should refuse to enact it and leave the current rules in place until permanent reforms are enacted.

If Bill 4 is enacted in some form, the following changes must be made:

Retroactivity must be eliminated. Bill 4 must not apply to major repairs made or contracted before 29 November 1990. It must also not apply to agreements of purchase and sale made before 29 November 1990. It must reject the use of the rent increase date as the cutoff date.

It should allow financial loss allowances on sales of buildings which were last sold more than five years ago. It should allow all existing orders and notices of phase-ins to continue. It should allow cost recovery of necessary major repairs during the moratorium. These allowances could be capped at 10% per year except when rents are extremely low.

It should also allow rent increases for financial losses. Increases from flips can be eliminated by refusing allowances on purchases when the last previous sale was less than five years ago. It should continue to allow extraordinary maintenance cost increases in all normal cases. The new 75% financing limits should only apply to purchases made after 28 November 1990. Equalization should continue, both in new orders and during the moratorium and in notices of phase-ins. It should continue to allow a higher maximum rent than landlords have requested, subject to the existing 12-month delay.

The Chair: Do you have more?

Mr Caparelli: No, that is it.

The Chair: Okay. I want to extend a warm welcome to all of our visitors who are here to watch the proceedings of the standing committee on general government. I will just remind everyone that these proceedings are an extension of the proceedings in the Legislature and we do not allow any demonstrations, and that is so that we can maintain order and to make sure that the presenters and the committee members can be heard at all times. Again, a warm welcome to each and every one of you who have come to watch the committee and I thank you in advance for your co-operation. The first questioner is Ms Poole.

Ms Poole: Thank you for your very excellent presentation today. On the first day of the committee I said publicly on Hansard to the minister that while we in the Liberal Party supported the principle that there should not be outrageous rent increases of 200%, while we supported that there should not be flippings encouraged and luxury renovations, we felt he was misstating the case when he said that this was rampant and widespread. Your statistics today certainly bear this out and that is what we have heard.

I also told the minister that we would not be willing to support this bill on third reading in the Liberal Party unless there were substantial amendments. The first amendment we would like to see is to address the very draconian effects of the retroactivity. The second amendment we would like to see is that there is a provision for necessary repairs so that our buildings are kept in good shape, and the third problem we had with this bill is that there is nothing in the bill to discourage neglect of our buildings and we would like to see that addressed in the bill. Would you comment on whether you think these three items are something you could support and would support?

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Mr Caparelli: We definitely would support all three of those recommendations. I think that is a minimum position. Without making allowances for capital renovations, the buildings simply will not be properly maintained. That does not help anybody -- tenants or landlords or future tenants -- because the housing stock will simply deteriorate. An allowance for capital renovations must be allowed to continue.

Ms Poole: It sounds like you read my speech in the House, or maybe you wrote it for me. I think Mrs O'Neill is quite interested in asking a few questions.

Mrs Y. O'Neill: Mr Caparelli, you have brought with you very real people today, and I think you explained at the beginning of your brief why they are real people, people who are affected by the housing industry at one end or the other. I think what you have shown is that losses in investment, property, however modest that investment may be, are real losses. What we are asking by Bill 4 in the way it is now written is that private sector people, people who own two or three units, provide subsidy in the housing market. I think you have explained that very, very well.

The other thing that I think we have always talked about since these hearings began some three weeks ago was that retroactivity is being misunderstood. Some members of the press are even suggesting that it is only back until 1 October, when this government actually took office. However, you have explained it very clearly, that it can be up to two years and in some cases up to three years, depending on financial loss phase-ins. So it has a very bad claw-back effect, which I think we have to keep emphasizing and which I do not think is and should ever become a principle of government in this province.

This is what is so frightening about Bill 4, and the members of the government have said over and over again: "We've got to get this out of the way. This is a temporary piece of legislation and we're going to bring in permanent legislation." Well, if this is their temporary legislation, whoa boys, I am worried about their permanent legislation.

We have had a great deal of difficulty on this committee getting expert witnesses. You did mention one, Mr Thom. We have got permission and the government members have agreed to have Mr Thom come before us next Tuesday, and I think you would be happy to know that.

You have two extraordinary charts before you, the one that talks about the public housing costs, and I think that is very helpful. Appendix D is very interesting to us as MPPs, and Appendix C is also very helpful.

My question to you is, you talked about equalization. That has not been mentioned much in our discussions. Would you tell us a little bit about that and why you think it should stay?

Mr Caparelli: There have been a great many misconceptions and misrepresentations regarding how equalization is presently treated. We have heard the Minister of Housing state on public record that rents are presently equalized to the higher rent. Nothing could be further from the truth. The present legislation equalizes around an average rent. There are also restrictions in that no tenant can be faced with an increase of more than 5% due to equalization.

To take a simple example of two units that are identical, renting at $400 and $500, they would not even equalize at $450. The process would take several years. The lower unit would go up to $420 and the higher unit would decline by a $20 amount. We have that specific example in the brief. There is no net benefit to landlords of equalization. We simply think that it is fairer for landlords and tenants.

Mrs Y. O'Neill: Exactly, and that is what we have been promised by this government, fairness, and I find that very difficult, that that is being overlooked in this legislation.

Could you tell us about the percentage of luxury renovations? You have mentioned it. Have you got any idea? We have been trying to get figures on that.

Mr Caparelli: One of the difficulties is in defining what a luxury renovation is. The point that the Eastern Ontario Landlord Organization would like to make is that there are different buildings, with different standards. There is no doubt that there are buildings that were initially built as luxury buildings, because some tenants can afford and want to pay $2,000 a month in rent. Those buildings should be allowed to be maintained at that level. At the same time, lower, more affordable accommodation should be maintained at the same level. We have not been able to get any figures that show that there has been a problem with luxury renovations.

The Chair: Thank you.

Mrs Y. O'Neill: Thank you, Mr Caparelli, for an excellent brief.

Mr Tilson: Sir, both the NDP and the Liberal Party voted in favour of the support of Bill 4 on a second reading. Our party, the Progressive Conservatives, voted against it and we will be voting against it on the third reading for all of the reasons that you have outlined.

One of the arguments that the government members have been taking on this committee and in and outside of the House is that they have been saying that you landlords have all kinds of money, that you have been hoarding money over the years and you are ripping the system off and that you should be able to absorb these capital expenditures with the money that you have been hoarding over the years.

I guess I am interested specifically on your elaborating on the economic position of the small landlord. I say that referring to a newspaper article from the Ottawa Citizen on 22 January, which was not to do with your association but would have to do with an association that is meeting later this afternoon, the Ottawa Region Landlords' Association. They put forward some very interesting figures which I would like you to comment on. The comments in the newspaper were that:

"Small landlords in Ottawa are losing an average of nearly $1,600 a year from their rental properties, Revenue Canada figures show.... The figures, compiled by the association, show that" -- my eyes are bad -- "14,870 individual landlords in the city lost money in 1988. The landlords combined for a total loss of $23.7 million. The figures don't include corporate landlords, such as Minto, which account for more than half of the" -- I hope I am reading this right -- "78,000 rental housing units in Ottawa. The numbers are slightly better for small landlords across Ontario. Revenue Canada figures show the 355,000 small landlords earned an average of $173 a year in 1988."

These are rather astounding figures and I would like to have you comment on that on behalf of your association.

Mr Caparelli: We certainly do not have -- I mean, those figures come right from Revenue Canada statistics; you cannot argue with them. There are roughly 39,000 landlords in Ottawa-Carleton who own one or two units. That is where those figures come from. The facts speak for themselves. I do not know how I could add to it.

Mr Tilson: I guess the question is that one of the areas that you and other landlord groups have zeroed in on is the issue of capital expenditures. Landlords have come to us and simply said: "We don't have the money. We can't do it." You are saying the same thing. What is going to happen over this two-year moratorium period if these capital expenditures are not met?

Mr Caparelli: What is going to happen in most cases is that they will simply be delayed and it will then cost more to be done, because eventually they will have to be done. Landlords are responsible people. They will not allow things to deteriorate to the point where there is a concern for safety. Those things have to be done. The point is that delaying things for two years simply means that there will be more costs to be incurred at the end of the moratorium.

Mr Gould: If I may add to that, you must also realize that in a structure of a building you can have deterioration at a very gradual level until a certain point and then it accelerates and it goes very quickly. Many, many buildings in Ottawa are in excess of 25 years old, and over this two-year period there is much concern that this acceleration period is now going to be in effect.

Mr Tilson: The Minister of Housing will be presenting to this committee on Monday his proposed permanent legislation. We anticipate that one of the areas will be making it mandatory that you, the landlords, will be obliged to create a reserve fund to make your capital expenditures. Do you have any thought on that?

Mr Caparelli: My only comment on that would be that he had better have a very large and efficient police force to police it, because the money simply is not there and landlords will -- not because they do not want to, they simply will not be allowed, be capable of coming up with any extra funds.

Mr Gould: I would hope that the minister, if that be his decision in the legislation, does allow additional means to put that money aside and to collect it so that we can have reserve funds such as we do have in commercial buildings.

Mr J. Wilson: I too want to thank you for a very excellent brief. I am just wondering, if by chance Bill 4 goes through without significant amendment, as we are clearly outvoted on this committee, as we are in the House, are you anticipating a large number of bankruptcies? Any idea of how many of your members would be drastically affected by it?

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Mr Caparelli: We do not have any specific figures as to how many would actually go broke. They will all suffer severe financial hardship. They will have to continue to subsidize their buildings for longer than they intended to. Most of our members have full-time jobs elsewhere. They will have to continue at those full-time jobs and their salary will have to go towards subsidizing these buildings.

[Interruption]

The Chair: Order. Anything else?

Mr Tilson: Those are our questions.

Mr J. Wilson: Those are our questions, thanks.

Ms Harrington: I would like to thank you very much, Mr Caparelli and Mr Gould, for coming, and everyone for that matter. I thank you for your very well-prepared suggestions. You have laid it out very clearly. I would like to let you know that our job is to carry your concerns forward. As Mr Tilson said, we will be meeting with Mr Cooke next Monday to look further into this.

We have heard also that the rent regulation system under Bill 51 has certainly been flawed. It has hurt small landlords and certainly has hurt tenants in this province.

We have a clear mandate to examine the problem that is before us. We have heard mention of the two-year space of this interim bill. I would like to let you know that we look forward to a much shorter period, because we know that there will be difficulty and harm on both sides the longer that it takes to bring forward some legislation for the long term.

We want this consultation period to begin as soon as possible, and today is the first day of that with the people here in Ottawa. I want to ask you if you and the whole group would be willing to participate in further consultations for the long-term legislation.

Mr Caparelli: We certainly would be. That is what we are here for. We all recognize that the present rent review legislation is not perfect and it can be improved on. However, this is not the way to do it. You are basically taking a sledgehammer to crush a peanut.

Ms Harrington: I must disagree. This is not a peanut; this is a very widespread and deep problem in Ontario, and we have to examine it.

Mr Caparelli: Figures do not show that it is a widespread problem. I would also like to say that the people you are trying to help will not be helped by this legislation. Not one single unit will come on to the market. Any tenant who cannot afford an apartment today will not be able to afford it when Bill 4 becomes law.

[Interruption]

The Chair: I have to have help from everybody who is here and we have to have orderly proceedings. If I let one part of the proceedings become disorderly, then the entire proceedings may become disorderly. So please help the Chairperson and let's not have any more demonstrations. I know how you feel and I know you want to show your emotions and I appreciate that, but you have to help me ensure that these hearings from beginning to end are orderly.

Mr Gould: In due respect to Ms Harrington, a comment was made that -- maybe I will throw the question back. We are under a two-year moratorium period right now. You said in all likelihood, or potentially that period would be reduced. How do you expect landlords, both large and small, to sit here and listen to something like that and accept a statement like that when since 1975, from all levels of government, provincial government, we have continually been told things and then it has been turned around upon us, from the time that this was temporary legislation 15 years ago.

So please do not take landlords as accepting everything, because we have been slapped too many times. This is a two-year moratorium. I do not know how you can sit there and say it may be less, okay? And I do not think it is fair to start putting that carrot in front of landlords. It is either two years or it is not two years.

Ms Harrington: The furthest date that this legislation can go until is January 1992. What I am telling you, and I thought it would be beneficial for you to know, is that the full intent of the ministry and the minister is to try to get good long-term legislation in place as quickly as possible, which is this year, because Bill 4 is not a long-term legislation; it is very much a temporary one. I just thought you should know.

Mr Drainville: I would like to speak about the issue of affordability, because obviously this is a very important issue. It is important to landlords and important to tenants as well. We know that the regional municipality of Ottawa-Carleton said, in 1986, that 37% of tenant households had affordability problems. We know that officials in both the social services and other non-governmental agencies have indicated that is significantly higher now.

What we have is really, in a sense, two very different approaches to this issue. We have heard from landlords, we have heard certainly from members on the opposite side, that the issue is not high rents, the issue is low income. It has been suggested by some landlords, and also by the members of the Progressive Conservative Party in fact, that the way to deal with this is to deal with it through subsidies.

One of the difficulties that I have with this issue is first of all in terms of the issue coming forth from the Progressive Conservative Party. We presently have a Prime Minister who is dismantling social programs in Canada and a party that has not always been supportive of increased social spending.

Second, what we have is a situation as well in which landlords indicate that high rents are not an issue. It is an issue. Not in every apartment building and not because of every landlord, but there are many tenants across the province of Ontario, and many in this region especially, as we have heard from other deputations -- and will receive more as the time goes past -- who have significant problems of affordability.

To say that is not the responsibility of landlords at this point is, I think, not acceptable. It is not only your responsibility; it is also the government's responsibility. That is one of the reasons why we are trying to put forth legislation and trying to begin a consultation on new legislation.

The question that I would like to ask you is a very nuts-and-bolts kind of question. It has to do with the fact that if we get down to capital expenditures, which are always a major problem in terms of replacing roofs or what have you, we have a situation right now where once a capital expenditure is made, let's say, for a roof and that increase is added to a tenant's rent, once that is paid for, that rent never goes down appropriately or commensurately. So one of the questions that I have is, from your point of view -- as you say, you have mentioned fairness very often in your brief today -- would it not be fair under those circumstances to ensure that once you have paid for that particular capital cost the rent is decreased appropriately?

Mr Caparelli: It distresses me to hear comments like this coming from a member of this committee. The present legislation clearly does exactly what you have just said should be done. Once the capital expenditure has been paid for and a landlord then has to go back to rent review to replace that item, that correction is made exactly as you suggest. You do not need Bill 4 to make this change. That exists clearly in the present legislation.

Mr Drainville: My understanding is that that is not what is happening in the province at this time.

Mr Caparelli: What is the problem, of course, is that this present system has only been in place for four years, so if a roof is supposed to last 15 years you have to wait 15 years before it can be taken away. Otherwise, the legislation does make that provision.

You talk about affordability, and I agree with you that that is a responsibility of everybody in society, not just landlords. There is an affordability problem. Something should be done to raise people's income. What Bill 4 does is take away jobs from people. Bill 4, during the moratorium, will cause people to lose their jobs and therefore even more people will have an affordability problem.

The Chair: Thank you very much. Our time is expired. I want to thank the Eastern Ontario Landlord Organization for appearing before the committee today.

OWEN KELLY

The Chair: The next presenter is Owen Kelly.

I want to note to all the members we ran over time on that presentation quite a bit. I am going to intervene more to keep us on schedule or we will not be able to complete our work today.

Mr Kelly, sir, you have been allocated 20 minutes, 10 minutes of which are for an oral presentation and 10 minutes for questions. I will turn the floor over to you. We just need you to identify yourself and whom you are representing, for the record, please.

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Mr Kelly: Thank you very much, Chairman. A special thanks to Mrs Deller, who organized my little time slot here. I appreciate it. And thanks to the honourable members of all sides of the House for the opportunity to come forward and express my views.

My name is Owen Kelly. I represent myself. I am a small landlord, together with a friend of mine, Wanda Noel, who unfortunately could not be here today. We own some 20 rental units in the city of Ottawa.

I also understand that Mrs Deller has been kind enough to distribute a page of comments that I had, and I will be talking to them in a moment.

I am a small landlord. I am a landlord; I am not a monster. I agree that there is legitimate social need to provide proper accommodation for the people of Ontario. I agree with that. As a taxpayer and as a person and as a landlord, I support that 100%.

At the same time, I will 100% disagree with any legislation which suggests that the cost of that social umbrella, safety net, should be borne by one segment, i.e., the small landlords or landlords of our society; with that I disagree 100%. I think that is unfair, I think that is unjust, because we are solving a problem which is a problem to all the residents of Ontario and should not be solved on the backs of small landlords.

I will now move to the presentation in itself and I will restrict my comments to two areas: I will try to talk about the interim control legislation and make some comments to that, and after that I will move forward to make what I believe are some suggestions, legitimate proposals, that should be incorporated into any ongoing legislation.

The Chair: Just so you can plan your time, sir, you have not quite seven minutes.

Mr Kelly: That is fine. I do not think it will be a problem, Mr Chairman.

The interim control legislation that has been passed is a law that is retroactive. Landlords have followed the law, we have followed the law, I have followed the law. We heard discussions this morning about flips; I am not involved in flips. We heard discussions this morning about people gouging tenants with excessive rents, of increases of over 100%; I am not party to that. The highest increase that we have ever put forward under the law, that was approved and has now been rolled back, was 9%, which we had to have professionally prepared for us.

The timing of this law, this freeze, this roll-back, is extremely untimely. No one, I do not think, this morning has mentioned GST, and while that has been laid on by a different level of government than is yours, it is nevertheless a value added tax which rolls to the consumer, except in rental accommodation. Small landlords have nowhere to go to lay off this cost, but absorb it by themselves, and that has added 7% on all goods and services to landlords.

The law punishes every landlord. I have said that we have not gouged tenants, we do not have increases of plus 100%, and yet this law has retroactively been imposed on all landlords and has not punished the few landlords, perhaps the exceptional few, where action should have been taken to solve that problem. It is retroactive. And it is not retroactive, as the previous gentlemen mentioned, to 1 October. It goes back much further than that, ladies and gentlemen. It is draconian, it is unfair, it is unjust.

I would like to move forward to the more positive side of my presentation and talk about a permanent rent control system. You will get no quarrel with me that if there are unjust social problems, they have to be solved and they have to be solved by all taxpayers in Ontario, not the government, not landlords, but all people. I support that. But the rent control system that we have now is an unmitigated nightmare because it attempts to control all rents, it attempts to control all rents, and rents that do not even need to be controlled, because the tenant in that position is in a point in life and a position in life where he wants a certain level of accommodation and is fully prepared and wishes to pay for it, to accommodate himself or herself that way. The rent control system, when it is a blanket over all rents, is cumbersome, costly, inefficient, etc.

I believe the rent control system in the future should attempt to provide a safety net for those less-privileged people who are caught in the squeeze and are being gouged by excessive rents by landlords, and that is where the new legislation should focus its attention.

I make an assumption here that the government of Ontario remains committed, that it needs small landlords, of which I am but one; and I do not know what percentage of accommodation in the city of Ottawa or the province is provided by small landlords, but I would suspect it is substantive. And I make the assumption that we still want to proceed on that basis, that they provide it. Now, if I am wrong, it is time to 'fess up and it is time to get moving at building public housing -- I for one would feel that that is not the right way to go -- because clearly the present legislation is driving small landlords out of business and it is driving them away from providing adequate and attractive housing. Underline "attractive."

My suggestion hinges on, to some, perhaps, a dirty word but I believe a rent control system in the future should be linked to a rent-to-income theory. Based on income, the province would pay a rent subsidy to a less-privileged tenant who could not afford it. The province could set that subsidy at any level. It need not simply give from the level that the person could afford up to the market rent. That would be wrong, because there would be no incentive there on landlords to reduce and keep their rents down. The advantages of this theory are multiple, and I have enumerated just some of them. To me it would be less bureaucratic, to me it would be more effective and efficient and it would be less costly to all taxpayers. The system would provide, on an exception basis, a safety net to people less fortunate who need to be provided with adequate, good housing, and it would provide adequate, good housing and attractive good housing to all the residents of Ontario.

With this positive climate, investment would begin to flow into the industry. We would not have the situation of repairs being deferred, improvements being deferred, with the fallout effect that that has on the construction industry, etc.

My suggestion for new legislation hinges very clearly on a subsidy system which is rent-to-income, which addresses the social needs of the less privileged. I thank you for your attention and I would be pleased to answer any questions that I may.

Mr J. Wilson: Again, a very good brief. I think we would certainly agree with your comments on the interim control legislation. I would like to point out that it is certainly my belief that the word "interim" or "temporary" is dubious at best. It seems to me in the world of politics, once you set something in motion and once you put it into legislation, it is very difficult to go back in two years to change that legislation to any great extent. Once we are further entrenching rent controls, it is going to be that much harder to have the flexibility to ever think of moving in any other direction, and Bill 4, to me, just further entrenches a system which -- we have heard from witness after witness on both sides of the issue -- has difficulties.

I am interested in your permanent rent control system. I guess what I did not quite understand was, does this involve -- I guess it is the private sector continues to build accommodation and it is rent-geared-to-income. How is this capped so that rents do not go up excessively? How are you capping this?

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Mr Kelly: I am suggesting here that, based on rent-to-income, if a person, a tenant, is capable of only paying $400 a month rent but to find adequate accommodation that person, depending on the size of family, has to pay $600 in the marketplace, the government could subsidize that person, not the $200, but $100, $150. I would not suggest simply the government going in and subsidizing from what the person could afford to pay all the way up to market, because there would be no incentive there for landlords to keep their rents down.

It would also have the benefit that people would select the type of accommodation within their reason. You would not have someone with a disposable income from rent of $400 a month going out and renting a luxury accommodation. Have I answered your question?

Mr J. Wilson: Yes. We would agree, certainly in our party -- and when I became an MPP, for instance, I bought into the idea and vowed to uphold it -- that the government is responsible for the weakest members of society, and we would agree with a number of the landlords who say they are not responsible for the social programs. I am just wondering, as a bit of an aside, do you see any disincentive for people to earn a living, though, if you went to an across-the-board rent-geared-to-income system?

The Chair: You have time for a yes or no.

Mr Kelly: I am sorry?

Mr J. Wilson: Is there a disincentive to work? You always worry in bringing in a social program that it may in fact encourage people not to seek employment as readily as they might. Does your rent-geared-to-income system?

The Chair: Yes or no.

Mr Kelly: No more than under the present system. You will always have that in society, some who will not work.

Mr Cooper: To carry on with this line that we are on right now, I think what we have going here is a big play on words. First of all, when you say you are subsidizing people, are you not actually subsidizing the landlord? The money is not going to the people who cannot afford the rent, it is going to the landlord who is charging the rent. So we are talking a play on words. You are not subsidizing the people. You are subsidizing the landlord.

Mr Kelly: No, I would suggest that the subsidy should be going to the tenant.

Mr Cooper: And the tenant is going to pay it to the landlord, so you are not subsidizing the people at the lower end of the economic scale. That was just one thing I wanted to --

Mr J. Wilson: It is for their rent.

Mr Kelly: It is subsidizing the --

Mr Cooper: Right, but it is going to the landlord, not to the person.

Mr J. Wilson: Who do you think rents it out?

Mr Cooper: But the part I wanted to get on to was about the rent controls. You say you wanted to control it at the top end of the scale. I would suggest to you that if you did that you would have a lot of people at the top unhappy, and we are talking about fairness and that is why we are out here consulting, but I would also suggest that what would happen would be that they would stop building and they would stop investing and then eventually what would happen would be that all the small landlords would catch up to them and then where would we be? There would not be one unit created through this plan. That is why the rent controls have to go right across the board.

Mr Kelly: I am sorry, I did not follow you when you talked about the people at the top would be unhappy. I am sorry. What did you mean by that?

Mr Cooper: You want to control the upper end of the rent.

Mr Kelly: Yes, for the less privileged who have difficulty in paying rent. Okay?

Mr Cooper: No, on the part you are talking about, you want rent controls. You do want rent controls.

Mr Kelly: I certainly want rent controls to provide a safety net for people.

Mr Cooper: At the upper scale.

Mr Kelly: For people in the lower levels, the less privileged, who have difficulty meeting payments to provide themselves with adequate accommodation. I support that and every landlord does, I believe.

Ms Harrington: I just wanted to make a quick comment. We need small landlords in this province. That is part of the way we provide housing and we always will. Second, we need fair profit for those landlords in this province.

With regard to the interim nature, I want to assure Mr Wilson that the reason these hearings are so compacted is that we want to get on to the long-term legislation right away next week. We would not have the green paper next week if we did not know that this was an interim legislation only.

Mr Brown: I am very pleased that the parliamentary assistant to the Minister of Housing has given us this assurance about the interim legislation. I know we all feel much better about that, and I think we all suspect that we will see a government amendment next week that will suggest that it will be at the end of this year that the interim legislation will be on. You are making that assurance to all the presenters who come in, and the government of course has control of the agenda, as we all know. That is why these hearings are so short.

Anyway, you have been here. I have noticed you in the audience and I did not see any horns. I think you are real people, not a devil or anything, and you are not wearing a black hat. After having talked with our esteemed panel of economists over here, who obviously believe that it is very, very lucrative to be a landlord, who obviously think there is lots of money out there -- who, by the way, have control of a huge amount of dollars. For example, there are $20 billion, approximately, in public service pensions in this province, $20 billion that they administer as the government of Ontario in public service pensions that I think they would be suggesting to their friends at the Ontario Public Service Employees Union and the Ontario Secondary School Teachers' Federation, among others, be invested in this very, very lucrative investment of being a landlord. I am sure that would create a lot of rental housing and would help the small landlord along the way. Would you think that would be a good idea?

Mr Kelly: I do not want to comment on that because that is an area in which I am not very well versed, but I can talk at length about the loss to small landlords. Somebody earlier read figures of $800, $1,000 loss per -- okay. In the past year, our loss per unit approximated $2,500-plus per unit. I must admit that some of that is related to interest. That is a federal government policy and is not to be laid at the legislators of Ontario, but I cannot comment therefore on that fund. I do not know about that, but I do know what small landlords are losing in Ontario.

The Chair: Mr Kelly, thank you for appearing before the committee today. We appreciate your comments.

Mr Kelly: Thank you very much, Mr Chairman. I appreciate it.

SHIRLEY HALPERN

The Chair: Our next presenter, Shirley Halpern. Shirley, if you have had a chance to watch the proceedings, we are going to just continue on as we have.

Ms Halpern: I came this morning as an interested listener, and after listening I decided that I wanted to give my point of view as well.

The Chair: Certainly.

Ms Halpern: I am very concerned about the retroactive nature of Bill 4 and I am very concerned about the long-term effect of what is happening in the rental market.

I am a small landlord. I own two houses and I am part of a syndicate and my part of the syndicate in apartments is 42 units. With this syndicate, we bought it seven years ago and we have experienced a problem in that the elevators were unsafe and they had to be fixed. I had no idea when I went into the investment that it costs $100,000 to service an elevator properly. We had a vote on this and it was decided that we should look after the elevator. Since you are from Toronto, I do not know if you are aware that one person was killed in an elevator in the Lord Elgin Hotel this summer and one person was killed in an apartment building because of a faulty elevator.

From a moral standpoint, I am very glad that we went ahead and we took a bank loan and we fixed the elevator. As an investor, it has been disastrous, because it is not only the $100,000, but we had to take a loan for this, so we also have the interest costs to carry.

At the time that we took the vote, we were told not to worry because this is a legitimate expense and we can recoup it in our rental income. Now, of course, because of Bill 4, we cannot do this.

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I do not know what the solution is, but I think you should be aware of this. I think you should also be aware of the fact that when you put $100,000 in a building, if you cannot increase the rents to show that increase in your investment, the investment is not worth $100,000 more.

You may have some viewpoints that you want to give me on this, but I would also like to say that I do volunteer work. I happen to deliver meals on wheels. One of the people I deliver meals to is a Mrs Cooper, and she lives on Stewart Street and she lives in an older apartment. She happens to be on the fifth floor. There is a little sign on her elevator and it says, "Use at your own risk." Well, I did it once, and I was so scared, you have no idea, so when I deliver her meal, I want you to know that I walk up five flights of stairs with a large tray, holding her meal, her soup, her salad and her fruit.

I do not want that to happen to my investment. I do not want to end up a slum landlord and I am really scared about it, and those were the two things I wanted to say. It is not only elevators, it is all types of things. Some people think that if you replaced carpets, that is a luxury. If you read last night's Citizen, the University of Carleton, what do they call it --

Mrs Y. O'Neill: Student housing.

Ms Halpern: They were complaining about the air quality of their housing and they had someone come in and check the air in the complex and they were told the reason the air was so bad was because of carpeting. So how long can you keep carpeting in an apartment without replacing it? Most large high-rise apartments do not have wooden floors, so you really do have to replace a carpet.

The Chair: Very good, thank you, Shirley. Is there anything else you wanted to add or do you want to go right into questions?

Ms Halpern: I will be happy to go into questions.

Mr G. Wilson: I am glad that you got a chance to give your presentation, Shirley, because I think it highlights one of the problems. I think you had some money, as you pointed out to me in our earlier conversation, and thought this would be a good investment. I am wondering, though, and it occurred to me after I was thinking about your predicament, whether you would have gone into that investment if you had known about the elevator.

Ms Halpern: First of all, when I went into the investment, I was looking at it as a long-term investment, and when I made my business decision -- and it was a business decision. I am a third generation who lives in Ottawa and I am proud of my city and I hope that my children will remain in it and it was a long-term investment for me, okay? I do not say that I approve of rent control, but one of the things that made me feel that it was something I did not have to be afraid of was that there was a provision that if you wanted to repair your apartment, you could do so and then you could see it reflected in the rents. If that provision had not been there, I definitely would not have thought of putting my money in rental income, because I want to be proud of what I own and I want to be able to maintain it at a certain level, and if I cannot do that, I do not really want to be a part of it. I do not want to be a slum landlord and I do not want to see slums in my city.

Mr G. Wilson: You suggested from the safety viewpoint that that elevator should be working, and I think all the tenants would feel better about it. In that case I think they would agree, as we have been hearing here in a lot of the presentations, that there is a lot of reasonableness in this, even though it sometimes does not appear that way, that tenants realize costs have to be met. But the fact is, if it is going to break you as a landlord, then that does not add up to the kind of arrangement anybody would like. So I think the question then becomes, again, whether you should have gone into that in the first place, since you could not afford a payment like that.

Ms Halpern: Okay, well, look at it this way: When you decide to invest money in something, it is up to you to investigate and find out what that investment is, all right? If I invest in the stock market, I look at the stock market, I look at the track record of what the stock is and I project what I think I am going to make on that issue. If they say they are going to give me a 9% return, presumably I am going to get a 9% return unless something really drastic happens and I can get rid of it.

When I went into the rental market, I looked at the apartment, I looked at what the rentals were, I knew there were rent controls and they said that I could get X number of dollars return. But they also said that if there were needed renovations, I could do the renovations and I could see that reflected in my rent. Unfortunately, the way this has happened, I cannot do that any longer, and what really concerns me is, right now it is disastrous because we have gone to the expense of doing an elevator. But what if there is something else that crops up that has to be replaced? Am I going to see my total investment go down the drain because I cannot do anything about it? I mean, I cannot take another $100,000 bank loan the next time something else goes wrong.

Mrs Y. O'Neill: Ms Halpern, thank you very much for bringing to us a very personal story. I feel that what you are describing to us is that the rules changed midway through the game in your case.

Ms Halpern: That is right.

Mrs Y. O'Neill: Are you one of the people who was caught through Bill 4's retroactivity?

Ms Halpern: Yes, because of the major expense we incurred with the elevator.

Mrs Y. O'Neill: So you did not meet the deadline, which would have actually been June?

Ms Halpern: That is right.

Mrs Y. O'Neill: I feel that it is very accurate what you bring forward. Mr Mancini was speaking on LevinsonViner Ltd this morning about carpet, and I did not think he was clear enough, as you have been, about the health and safety risks of carpeting. Certainly in apartments where seniors live it is not only the buildup of fumes and odours it is also a hazard for people to walk on carpets after a certain point, and I think you brought that forward.

I think what you have brought forward to us today is that there is absolutely no distinction being made regarding capital improvements that have to do with health and safety, and that, I think, is something that cannot be overlooked. Certainly I think we would get support from many areas of the community, and even from the fire chiefs of the province, on some of the things that we feel will have to be changed about this bill if it is going to pass with our approval.

Ms Halpern: Thank you very much.

Mr Tilson: I guess my only comment to your question as to, what are they going to do about your problem, I think, from what we have seen so far, is that they are probably not going to help you at all and they are going to pass Bill 4. We will try and defeat it. We will continue to try and persuade them to make amendments, but I do not think you are going to find that this government is going to help you or people like you at all, and you may have to rely on groups such as the Fair Rental Policy Organization. You may know that they put forward a press release today indicating that they had a legal opinion which came from the firm of Gardiner, Roberts saying that the provisions of this bill, Bill 4, specifically violate sections 7 and 15 of the Charter of Rights, and that probably is your only hope.

Ms Halpern: May I say one more thing, please?

The Chair: Certainly.

Ms Halpern: I wrote a letter to Bob Rae and I wrote a letter to the Housing minister and I wrote a letter to the rent review board and I did not get one reply. I really feel very badly about it, and that was another reason I wanted to talk today. I wrote it 21 January. Thank you.

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

OTTAWA REGION LANDLORDS' ASSOCIATION

The Chair: The next presenter, Ottawa Region Landlords' Association. It appears that you have 40 minutes for your presentation. Were you given 40 minutes?

Interjections.

The Chair: A dress rehearsal? Okay? Is that what it says, 40 minutes? Now that we are fully dressed, we need you to identify yourselves individually and whom you are representing. You have 20 minutes for your oral presentation and 20 minutes for questions.

Ms Pchajek: I am Nicole Pchajek, the past president of the Ottawa Region Landlords' Association.

Ms Lerner: Elat Lerner, president of the Ottawa Region Landlords' Association.

Ms Pchajek: I am dressed in black hat and cape because this is how landlords are being portrayed. Why? Because in order to pass legislation as vile as Bill 4, landlords must be vilified. What has been said about landlords? It is said that they are gouging tenants. Whenever renovations are mentioned, there is always an insinuation that landlords are making luxury renovations. Apparently landlords are flipping their buildings and causing economic eviction.

I suggest to you that the problem that this legislation is attempting to rectify is not a problem caused by landlords. The problem is that a pre-election promise was made and the New Democratic Party wants to come through on that promise without acknowledging the long-term damage to the rental housing industry in Ontario. If a robber-baron landlord does exist, then we suggest that the government should target real excesses instead of using landlords as scapegoats.

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It is inexcusable to vilify landlords. We of course know why it is happening. One does not have to look far back in world history to find governments who vilify a minority group in order to justify the government's ruthlessness.

The New Democratic Party adopted a motto, Agenda for People. Landlords and those who are supportive of landlords are today wearing this button to remind our government that landlords are people too. Yes, we are people who have made great investments in our time, great investments of our emotional and financial resources to manage and maintain rental housing. We now not only have to do the work involved in being a landlord but we have to direct our energy to defending ourselves.

Does it matter that this legislation will gravely discourage investment in rental housing in Ontario? Does it matter that the retroactive nature of this legislation will cause hardship and is simply unjust to those conscientious landlords who, in good faith, improve their buildings with capital expenditures? Does it matter that phase-ins have been voided so that those who are suffering financial loss will not eventually break even? Does it matter that renovations and repairs are not encouraged under this legislation? Does it matter that no one is served in the long run by this legislation?

It matters to the Ottawa Region Landlords' Association, and it should matter to every citizen of Ontario. Rent increases, on average, have been very modest in the Ottawa region. Statistics -- which have been mentioned, and I will repeat them again -- from Revenue Canada show that individual landlords in the city of Ottawa function, on average, with a negative cash flow. In Ontario, individual landlords make a profit, a grand total of $173 per year. I would like to suggest that perhaps you already have non-profit housing. We are providing it. We do not deserve this legislation.

The construction of condominium apartments and town houses that are sold to investors is an important part of the rental housing stock in Ottawa. This morning there were people from the legal aid clinic in Cornwall. Their situation is a little different. In Ottawa, we have been counting on our condominium stock. What effect will the voiding of phase-ins have on this stock? Will investors sell their units and remove them from rental housing stock? Will builders construct condominiums destined to be rented when investors do not see rental housing as a wise investment choice?

We are going to have a crisis on our hands in Ottawa. The previous legislation discouraged the construction of permanent rental accommodation, and now this amendment, Bill 4, will discourage the existence of rental condominium units which up until now have filled the gap.

We add our voices to the others who expressed outrage at the retroactive nature of this legislation. How is it possible for a government to void phase-ins and rent review orders granted by a previous administration? Capital expenditures made under the Residential Rent Regulation Act should be honoured.

We do not see anything creative in the proposed legislation. It does not encourage growth nor improvement of our aging stock. It indicates that there is no future in private rental housing. Yet the public purse cannot pay for the housing requirements of future tenants. Taxpayers, which directly includes tenants, who are taxed at a higher mill rate, should reconsider whether they want to pay the price of this proposed legislation.

Ms Lerner: I would like to tell you a bit about the history of the Ottawa Region Landlords' Association, just so you know where we are coming from.

We were founded in January 1988 by a handful of volunteers. Our first newsletter was produced in the late spring of 1988 with a budget of less than $200. Our current membership right now is 282 members. Most of those members are very small landlords.

We charge our members $25 per year and that hardly covers our costs. We have no paid staff, we have no office and we do not have an official phone. We answer the phones in our own homes when people want to talk to us. We are totally operated by volunteers.

We are here today to find out about the problems described by the government that brought about the introduction of Bill 4. We heard of landlords who are gouging their tenants. We heard of landlords who economically evict their tenants. Landlords are flipping properties. They are inflating the values and they are raising the rents by over 100%. We heard all those things, and we do not know, we are just individuals.

So we decided to ask some government agencies that collect information about the facts. What are the facts out there? Is that really the picture? Is that what is happening out there?

We went to Revenue Canada. We called them up, and those are figures that are available to anybody in this province who will pick up the phone and ask them that question. We did not make those numbers up. We just called Revenue Canada. They told us that in 1988, 355,340 individuals in Ontario filed statements of rental income. The total rental income for those 355,000 individuals was $61,103,000. In the city of Ottawa, 14,870 individuals filed statements of rental income, and their income was not an income, it was a loss of a total of $23,691,000.

So we just sat down and we did some basic arithmetic. We came to the conclusion that the average individual landlord in Ontario, this filthy-rich person, makes $173 per year off his rental property. This is an average, so some landlords make more, but on the other hand, some landlords make less. The corresponding figure for Ottawa is a loss of $1,593 per year. The average landlord in Ottawa loses $1,593.

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On the other side of the coin, we know that the average family income in Ottawa-Carleton is over $50,000. That means that the average family can afford to rent accommodations which cost in excess of $1,250 per month. That is when you are using the 30% guideline. The average cost of rental accommodations, however, in Ottawa-Carleton is less than half of that at $579.

We also went to CMHC and we asked them what kind of rent increases have taken place in Ottawa-Carleton in the last couple of years. We found out that the average increase between 1988 and 1989 was 3.7% and the average increase between 1989 and 1990 was 4.1%. This is less than the guideline.

Last, we collected figures from the regional municipality of Ottawa-Carleton and we combined them with CMHC numbers that we had and we did some simple arithmetic. We found out that there are over 41,000 landlords in Ottawa-Carleton. Of those 41,000, 981 own six or more units; 856 own between three and five units; and almost 40,000 landlords own between one and two units in Ottawa-Carleton.

Now I am sitting here today and I watch this proceeding and I really do not know what it is that we are doing here. We show you those statistics, but I hear that statistics do not really mean anything and that you can drown in two feet of water, so I guess there is really no point.

I am a small landlord myself, and I am not sure what it is this committee wants to hear that is going to convince it that, if there is a problem out there, it is not a problem for the tenants, it is a problem for the landlords. But if statistics are not going to do it, then I wonder what will.

I guess at this point I would really rather stop this presentation and have you ask me questions. I find this process rather humiliating, because I am being told that it is my own fault, I made a bad investment, I was not clever enough, so really, why am I here, why am I complaining? I guess at this risk I will open myself up to questions and see what I can say.

Mrs Y. O'Neill: Both of you have presented, I think, in the most graphic way the kind of stereotyping that Bill 4 has placed upon people who own property. I am very happy that you brought the Ottawa-Carleton statistics, and I know these are accurate and are up-to-date figures, that one to two units, almost 40,000 of these are small, small property owners who for one reason or another need a bit of financial stability, whether it be for the over 50% who have no pension and will never have a pension income or for one reason or another can only hold a part-time job or have a disability. They need a way to make a living and property is one way, and it is certainly an honest and upright way to make a living.

I think that because you are both women -- and there have been other women today -- that we should take note that we are now in an age of employment equity and I think it is very important that women be given the same rights and the same supports, and certainly in the beginning, women will be small property owners. So I hope you do not think what you have done is hopeless or that it will have no meaning. You no doubt are pioneers, and I am very, very happy that you have brought forward such accurate statistics. You have taken risks and you have done work, and for that you should be commended.

I want to tell you that we have had the same presentation from women in Toronto, in Sudbury and in London, Ontario. They all tell the very same story, and if we as legislators are not hearing it, then there is something very wrong. I really do hope that your presentation will make a big change, not only in Bill 4, which we are being told over and over is interim -- frightening legislation, but interim -- and the new legislation will take some of the things that the present government has stated are its themes, such as employment equity, into mind when it is drafting what it is going to present as permanent legislation.

So please continue to be involved, and I hope you will respond to the paper we are going to have unveiled on Monday. I know that you will make a dent.

Mr Brown: I want to thank you for coming before us. I was impressed by the sincerity of your presentation and how well prepared you were with statistics that were very relevant to this particular area. I will say I was a little bit less than pleased that you forgot to bring the white hats of the people on the other side. None the less, we have had countless deputations such as yours in cities all across this province saying exactly the same thing, wondering why statistics and facts do not mean anything to this government, why political promises made in the heat of an election campaign mean more than reality.

I said yesterday in Sudbury, and I am going to repeat it because I think it is worth while, the difficulty that our friends across here have is they made a lot of promises in a wonderful document called the Agenda for People. Obviously they were trying to win an election, and obviously it worked. The problem is, nobody can keep those promises. They know that. But their biggest problem is that they do not know which ones they should keep and which ones are the silly ones.

So we are here today, watching them pursue one of the silliest promises that they made, and I, like all members of our caucus, am very disturbed that this is the election promise made in Agenda for People. This is not interim legislation, as they like to say, unless they are going to deny their election platform in Agenda for People, so you have every right to come before us and be most nervous about their long-term plans, because those long-term plans could very well be the Agenda for People. And I believe you are real people. I believe the other people in this room are real people. I wish you well and we will do our best on your behalf.

Mr Tilson: I understand very much your cynicism of it. We have had people come with statistics. We have had people come with emotions. We have had people come and cry and break down. Maybe Groucho here should do a soft-shoe routine. Maybe that would work, because nothing else seems to be.

I will say that the NDP have admitted that the moratorium it is not the right legislation for permanent legislation, as has been said. The minister, Mr Cooke, has said, "I believe you can't ignore capital improvements." He has gone on record as saying that.

However, they had all last summer. After the election they sat around all fall and thought up things. They called the House back for a month, introduced Bill 4, and are still thinking about it and probably will be thinking about it until this summer.

I guess my question to you, on behalf of the organization that you represent, is: While the NDP is proceeding to continue to think about what it is going to do, with Bill 4 in place -- and I believe it will be in place, unfortunately -- will you be able to survive or will people in your organization be able to survive with the economic disaster that it is probably going to bring?

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Ms Lerner: I guess I will answer for myself. Am I going to go bankrupt? I think the answer is no. I have been a landlord since 1980 and I have been losing money every year since 1980, in the thousands of dollars, and I have not gone bankrupt. What I do is, I have a job and the money that I make from that job goes into the money that it costs me to carry those properties and I have not gone bankrupt back then and I am not going bankrupt right now. All I have to do is keep on working at my job and using whatever money I make to put into my properties. I do not own a car, I do not own a home, I live very modestly and I guess I have no reason to go bankrupt. I just use my own money to support my tenants.

Mr Tilson: Generally speaking, I was listening to your statistics with respect to the Ottawa area. I have asked this question in the cities that we have travelled to around the province, and generally speaking the answer has been the same, that this is basically a Toronto problem, that there are serious problems in Toronto. Yes, some of the problems exist throughout the province, but the seriousness of it exists in Toronto. Is this a Toronto problem? Are the problems in Toronto different than that of Ottawa?

Ms Lerner: It is hard for me to answer this question. It seems, from where I sit, that there is a lot of rhetoric being thrown around. I have not really seen any concrete evidence of hardship out there, tenant hardship. We hear of it, we hear of gouging, but I just do not see it and I am not sure where it is. If we look at our statistics, obviously tenants in Ottawa are paying a very small proportion of their income on rent. So if there is a problem out there, I would like to know about it. I have not seen it.

I see hardship for the landlords. I see people who are hardworking people who can hardly make ends meet. Being a landlord is not one of those things where you just go in and buy a property and sit back and collect the money. It is a lot of hard work. I am on call seven days a week, 365 days a year. My tenants can call me any time of the day or the night and I have to come and fix the problem. I do not have enough money to pay somebody else to fix the problem, so when there is a problem I go there and I fix the plumbing, I paint the units. That is what I do in my spare time.

Mr Tilson: We have lost our Chairman. Well then, great, I can go on. Let's go carrying right on here. One of the areas that our party is concerned with, of course, is the allegation that there has been a lack of communication between tenants and landlords as far as capital expenditures are concerned, that capital expenditures are made without consulting the tenants. One of the solutions that we will be putting forward is a democracy clause; in other words, that capital expenditures cannot be made without consultations with the tenants. Would you support such an amendment?

Ms Lerner: The system is quite complicated as it is. There are other speakers here before who commented on it, and any introduction of more red tape is just going to make it totally impossible.

Ms M. Ward: I have a couple of things I would like to ask you to comment on. First I would like to say, though, referring to Mr Brown's comments, that either he has changed his mind or my recollection is very bad because I thought the Liberal Party supported Bill 4 on second reading.

Mr Brown: We can clarify that, no problem.

Ms Poole: Mr Chair, on a point of order: Yes, the member has raised a question about the Liberal stand on Bill 4, although I have mentioned it a number of times on this committee. Perhaps I need to reiterate it for Ms Ward's benefit and for the benefit of those in the room. We as a party supported the principle of Bill 4, that there be a moratorium to take a second look at the rent review legislation and decide what was workable. We supported the concept of tenant protection, but we also made it extremely clear that we do not support a number of provisions in this bill. When one is voting on second reading, one is voting as to the principle of the bill and whether you as a party and as a member can support that principle. We support the principle. We do not agree with the provisions such as retroactivity, such as the fact there are no capital repairs and such as that it is treating all landlords the same whether they are abusing the system or not.

Mr Abel: Mr Brown said it was a silly bill.

Mr Brown: And I am right.

Interjection: You are not kidding.

Ms M. Ward: I accept Ms Poole's comments. They clarify their position. Can I get back to --

Interjections.

Ms M. Ward: Do I have the floor, Mr Chairman? May I ask the witness a question?

The Chair: That really was not a point of order; it was a point of information. But we will proceed.

Ms M. Ward: I wanted to ask you to comment on an aspect of the income figures here. You represent small landlords; I believe you said 282. According to some statistics we have from the Minister of Housing, 76% of units in Ontario are controlled by corporations. I think there is a difference between these groups. The statistics you have provided here on income, would that include all rental units, not the rental units controlled by small landlords? Is that true?

Ms Lerner: The figures we have are from Revenue Canada and they are figures that were taken out of individual income tax returns filed. In other words, corporations would not show up. This would be individuals.

Ms M. Ward: That answers my question. These do not apply to corporations. They apply to individuals who would be the small-unit owners.

Ms Lerner: That is correct.

Mr G. Wilson: I wanted to mention something Mr Brown said as well, which was that, according to him, statistics and facts do not mean anything to this side of the committee, but that was just after he said that there were countless submissions made to this committee. I think that it would be easy to count them up to see exactly how many there were. I think the implication was that they were all in support of the views that you are bringing forth. I can tell you that is not the case, that there have been a number of varied views brought forward.

The other thing is I noted that you said that our promises made in An Agenda for People were silly promises. I do not know that you were referring to Bill 4 specifically, but in any case, I think one of the problems that Bill 4 speaks to is our concern about affordable housing, and that is the issue I wanted to raise with you. It follows from something Mrs O'Neill said. She pointed out the equal-opportunity atmosphere in the province now and was pleased to see that there were two women presenting on this issue. I want to say that women are one of our main concerns as well, since they often are the ones who most need affordable housing. When we think of widows, when we think of disabled or women who generally work at some 60% to 65% of what men earn, and then women often have a single family, I just wonder how you think then we should make sure that the stock of affordable housing, which is the purpose of Bill 4, is maintained.

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Ms Lerner: I guess affordable housing sounds very good if somebody else can take care of it. I have to be totally selfish here. I did not become a landlord to be a charity. That was not my intention. I came to Canada in 1980 and I immediately set out to provide financial security for my future. I got a job and every penny I made I invested in property, thinking that this was a good way to provide for my future. I did not go into it because I felt sorry for tenants who needed their rent supported.

If there are tenants out there who need help, it is up to the taxpayers to take care of them, but I do not want to be forced into this charity, and especially not when the charity is provided to a tenant who probably makes a lot more money than I do.

Mr G. Wilson: No, but I think what I was trying to point out is that there are a lot who do not, and certainly as admirable as your actions have been in looking after your future, I think it is understood, though, and you would probably agree, that there are many people who cannot follow that example, because of the reasons that I listed. So as a government, and I think everybody in the committee, takes that responsibility very seriously, we have to provide for everyone in the province, and not just those who can do it on their own. Further, I think we have to say those who can do it on their own cannot expect to do it at the expense of those who are unable to look after themselves for whatever reason.

Ms Lerner: Yes. I have no problem paying my taxes and my taxes can be used for that purpose. However, I do not really want, out of my disposable income that is left after taxes, to also support tenants. I do not really see why I have to do it more than anybody else who lives in this province.

The Chair: Very good. I want to thank the presenters for coming here this afternoon, making your presentation to the committee.

MINTO TENANTS' ASSOCIATION (PARKWOOD HILLS AND NAVAHO PLACE)

The Chair: The next presenters, Minto Tenants' Association, Mr McCormick. Sir, you have been allocated 20 minutes by the committee, 10 minutes of which you can use to make an oral presentation and 10 minutes can be reserved for questions by the committee members.

Mr McCormick: Okay.

The Chair: If you would identify yourself and whom you are representing for the record, the floor is yours.

Mr McCormick: My name is Bob McCormick, representing the Minto Tenants' Association (Parkwood Hills and Navaho Place).

Good afternoon, distinguished members of the committee, ladies and gentlemen. I wish to speak on behalf of the tenants of the roughly 2,600 rental units in Parkwood Hills and Navaho Place, who support Bill 4. This area is at the east end of the city of Nepean in the riding of Ottawa-Rideau. Our landlord, Minto Developments Inc, owns town houses, garden homes and low- and high-rise apartment buildings, the first of which were completed in the late 1950s.

Recently Minto made capital expenditures for repairs to the balconies and for the repaving of parking lots, and consequently applied for rent increases above the permitted limit at that time. The buildings in this area have paid for themselves many times over and have earned a healthy profit for Minto with little further investment. Occasionally, capital expenditures are necessary to ensure that the premises remain safe and in good condition, but these must only require a small percentage of the profit that has accumulated over the years. It was not necessary for Minto to borrow money to finance the current work. The repairs were made for the sake of normal upkeep, upkeep which is similar to, but on a much larger scale than, normal maintenance items and minor repairs. Tenants ought not to finance such expenditures through increased rents when the landlord can afford to do so with negligible effect on overall profit.

We support Bill 4 because it protects us from unreasonable rent increases when they are brought about by capital expenditures. Landlords, especially those as wealthy as Minto, should be able to accept the reasoning behind this bill and accept that their net profits will be slightly lower than they would be under different circumstances. Past laws appear to have been beneficial to landlords and sometimes unfair to tenants. Bill 4 does allow for rent to be increased above the limit under several circumstances which appear to be beyond the landlord's control or foresight. Such events could adversely affect the landlord's profits, and the bill does protect him in these instances. Tenants ought to be willing to accept the possibility, however remote, of rents increasing for these reasons. Our tenants' association encourages the passing of Bill 4 in its present form, so that Ontario tenants will be protected from unreasonable increases.

From a personal point of view, I feel I am getting fair value from Minto, find my apartment satisfactory and am pleased with the service. It appears that tenants in this area agree, although some are dissatisfied with the condition of their units and with some aspects of maintenance.

Had the proposed increase been permitted, my rent would have increased by about 18%; some rents would have increased even more than that. Presently, about 38% of my net income is used to pay rent; with the increase, I would have had to budget for about 43%. Some tenants would have been more seriously affected than myself. Although I have suggestions for improvements that ought to be made to buildings in this area, accommodations are satisfactory.

All tenants in Ontario ought to be able to live in affordably priced units that at least meet these standards and to be confident that they will always be able to afford to do so. We at the Minto Tenants' Association (Parkwood Hills and Navaho Place) support Bill 4 and give our full endorsement to the presentation to be made at 8 this evening by Dan McIntyre, executive director of the Federation of Ottawa-Carleton Tenants Associations.

I would like to thank the members of this committee for giving me the opportunity to speak for my association, and the tenants for coming here to show their support for Bill 4.

Mr J. Wilson: Thank you, Mr McCormick, for your presentation. We have had a significant number of landlords appear before this committee and give testimony that they do not have the money for capital projects -- such as those described in your case, balconies and pavement of the parking lots -- that over the years, because rent controls have been in place since 1975, they have never really been able to set aside capital funds in a reserve and that they truly do not have the money. It is an area that concerns our party, this bill which would no longer allow necessary capital projects, would no longer allow the landlords to recoup those costs. Are there any conditions in which you would agree that capital costs should be able to be passed on to tenants? After all, tenants are the only source of revenue for the landlords.

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Mr McCormick: It would appear that landlords could set aside money from the revenues collected from rent. Not all landlords have the same type of retained earnings that Minto does, but I am pretty sure that Minto must have lots of money accumulated in retained earnings. For a landlord, perhaps on a smaller scale, who has been in business for less amount of time perhaps, has two or three units and has to make capital expenditures for just regular maintenance, why should the tenant have to bear out the whole cost of that? Could there not be perhaps a grant or a tax credit to the landlord if he did not have enough retained earnings to cover the capital expenditure?

Mr J. Wilson: We had evidence earlier today, or testimony anyway, that Minto is losing money on some projects, for instance -- I do not know about your particular buildings -- and I would suggest to you that you may be fortunate to have Minto as a landlord in that it probably makes money on some projects and probably does not make money on other projects. I think they told us today that overall in their portfolio they have not been making profits I guess they think they should be making, anyway.

We are still waiting to see from the Ministry of Housing some of the hard evidence on some of the things you suggested. I do not doubt in your situation at all what you are saying, but the problem with any law brought in by government is it covers everyone across the board.

Mr McCormick: Of course, but there could be some provisions made for -- I can imagine perhaps myself in a few years being a landlord personally, and still, if I had to spend a lot of money just to keep the particular maintenance standards of the building that I had, I could not foresee asking the tenants to pay for that over a period of five or 10 years. I would try some other way to finance that. My annual salary has only increased by a certain percentage each year and there is no way that as a landlord I would expect to cut into the disposable income of my tenants. I would find some other way through the government, some sort of grant or tax credit.

Ms Harrington: I have two questions. First of all, at the beginning of your brief you talked about your landlord, which is Minto Corp, and that you believe that it does make a healthy profit and that it was not necessary for Minto to borrow money to finance current work.

Mr McCormick: That is right.

Ms Harrington: I gather you must have some reason for stating this. Why would you say that?

Mr McCormick: Well, considering that the age of the housing stock in that area -- and there are statistics to back this up, I believe with the Federation of Ottawa-Carleton Tenants Associations. I believe they have some figures that would substantiate that, and perhaps there are some other provincial records that would indicate that these building have long been paid for and the mortgages must have been paid off.

Ms Harrington: So you are feeling that with a building of that age where the mortgage has been paid off there would be money there in order to make capital expenditures and repairs.

Mr McCormick: Of course. For the most part, there seems to be very little evidence outside of those capital expenditures of anything major being done to the community. Seeing all the different units in that area, it appears that they are just --

Ms Harrington: What we heard this morning was that they were not making any money at all and other landlords in general are not making any money. In fact, the previous presenter said that there is just no profit at all; it is a loss situation.

In your presentation you also mentioned that your increase this year is going to be 18%, which then would have you paying from your income 43% on housing. Are you actually going to be able to stay? Are you managing to afford this?

Mr McCormick: Yes, I am, but that is that much less money that I can spend on other things. I looked forward to taking a small trip. I have not taken any vacation for the last three years. I would like to just get away for a few days. Of course, I will still be able to stay there. I do not spend too, too much money on groceries.

Ms Harrington: Yes. I think what I --

Mr McCormick: Yes, I could afford to stay there paying 43% of my salary.

Ms Harrington: I would like to conclude that I think what this shows is that apartments are homes and that they really have a feeling. People do not want to just have this attitude, "If you don't like it, move." Homes are very special places.

Mr McCormick: I would like to stay where I am, yes.

Mrs Y. O'Neill: Thank you, Mr McCormick. I think I am safe in saying you are one of my constituents, if you live in the Parkwood Hills area.

Mr McCormick: Yes.

Mr Tilson: Did he vote for you?

Mrs Y. O'Neill: That is the question.

If I may ask about page 2, you said, "had the proposed increase been permitted," and I am having trouble finding where that hangs. Did you have a whole-building review? Was there a proposed increase that Bill 4 has put on hold?

Mr McCormick: Yes, that is correct. The effective date was October 1990.

Mrs Y. O'Neill: October 1, 1990 --

Mr McCormick: The very first increase for the building that I am living in was for 1 January 1991, so all tenants in this particular building are protected. Their rent will only go up 5.4% for the next period of 12 months, I think, on the lease.

Mrs Y. O'Neill: I think you will realize the age of those buildings -- and the Minto group did present to us this morning. They did not use the example of that neighbourhood; they used their Bayshore example. It is slightly older. I think their example was very explicit, that they had 109 leaks in that particular building at Bayshore, that they had to replace the roof. So I really do feel that my next question has to do with safety. Do you feel there should be a difference made between what I consider leaking roofs as safety -- and you had mentioned balconies, and certainly underground parking garages -- should there be a difference made between those improvements which are health-and-safety-related and other improvements?

Mr McCormick: Yes. I would consider a leaking roof, supposing that my building did have one, a safety hazard.

Mrs Y. O'Neill: Okay. You said you would like other improvements in your building. Could you tell us a bit more about what those would be?

Mr McCormick: One thing is the installation of new windows. The present windows are the original ones and some of the wood is kind of chewed up. They are woodframed and they are very drafty in the wintertime. Minto could save a lot of money heating that place. The heat is good, but you have to throw a lot of heat to counteract the draft, so I would suggest that they put new windows on all the buildings in this area and over the years they would save on heating.

Mrs Y. O'Neill: I think that would be an excellent suggestion.

Mr McCormick: Oh, yes.

Mrs Y. O'Neill: Energy conservation is certainly something we should all be concerned about. I thank you very much for bringing these things to us and for taking the leadership role you are taking within your community, Mr McCormick.

Mr McCormick: Thank you.

The Chair: Thank you for your presentation, Mr McCormick. We appreciated you coming before the committee today.

URBANDALE REALTY CORP LTD

The Chair: The next presenter, Urbandale Realty Corp Ltd. Bear with the process. Just please identify yourself and who you are representing, for the record. You have 10 minutes for your oral presentation and 10 minutes for questions.

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Mr Burns: I am Peter Burns, vice-president of Urbandale Realty Corp Ltd. I come to you more from my background in property standards, at one point directing that with the city of Ottawa. I was vice-chairman at one point with the Ottawa housing authority, and I am presently a member of the province's Residential Rental Standards Board, so I am hoping I am here more with some suggestions and some in-depth on maintenance rather than the politics of Bill 4. I will speak briefly to the retroactivity because of our own problems there.

My main interest is, again, emphasizing that Ontario's housing stock is old, 20- to 40-year range plus. It is not being renewed as commercial buildings are, where they are demolished where they have served their time, because of the other freezes that exist, so it is going to have to be looked after with some care if you want it as a vital part of your housing program in Ontario.

I feel it is a growing maintenance and refurbishing problem. I do not like to see problems created for the future, and I feel that with the moratorium, on top of some tightnesses that have existed since 1975 because of rent review, there is a lot of work that money will have to be spent on to keep it for as many years as you have seen it up until today.

I have put a number of statistics and facts in my brief. I am not going to attempt to use figures here. They do not come across in verbal presentation. I am sure you do not need one more speaker with a lot of facts being thrown at you after the number of days that you have been at it, and I gather that within four days you will then be looking at the green paper, with a very tight schedule to try and react to that. I understand that not too many individual briefs will be dealt with during the green paper process. My hope is that some of these briefs will exist through that process and be useful.

I think it is down to two basic issues: tenants of low income who have an affordability problem and 20- to 40-year-old buildings which require major work because of their age. In my brief I have touched on concerns touched on by the Residential Rental Standards Board, the Ontario Association of Property Standards Officers, who are municipal employees, the city of Ottawa and the city of North York. They all know that it costs a lot of money to maintain older properties. They are all concerned as to how this can be done when capital costs can not flow through from the rents, both reaching back about a year and a half and also during the moratorium until the new legislation comes into effect.

North York officials are particularly worried as a result of a fairly extensive survey they have done of all high-rise buildings, rental and commercial, in North York, and parking garages. They are seeing damage coming to the surface because of salt, to balconies, garages, the structural supports and the brick and concrete cladding, and they find the closer the building is to a major arterial road, and downwind, in other words, prevailing winds from the north, the damage is worse, especially on the brick cladding, the concrete cladding and the balconies. They think they are just seeing the tip of the iceberg of a lot of work.

Their concern is, apart from rent control or rent review, is there enough money sort of in the market rents to generate what is going to be needed for many of these structures, commercial, industrial and rental? They have a rather scary slide series that they will show on that.

In my brief I have listed some of the costs that Urbandale has experienced over the last few years doing work on our projects which were built between 1962 and 1975. We try and keep them in good condition. We have properties which have never been to rent review for capital work. We do what we can out of the rents. But in the last few years we have seen costs of $4,000 per dwelling unit for garage repairs, $2,800 per unit for roof work on a high-rise and $2,700 for new roofs on each of 245 row housing units. You cannot expect these kind of expenses to be paid for out of rents which are in the $400 range.

Our experience is not unique. In our brief I have given you some of the costs which the Ottawa-Carleton Regional Housing Authority is experiencing. They are the agency looking after Ontario Housing Corp's rent-to-income projects in the Ottawa area, and they are frightening figures: $6,400 a unit for covering falling brick work with metal siding, which in a normal rent would be a $76 a month increase. They are just in a program replacing roofs on row housing, $10,000 per dwelling unit, that is $118 a month if it was the private landlord; $5,900 a unit for repairs to a salt-damaged parking slab, and they have another garage that the budget has not allowed them to get at and they have shoring inside for the safety.

It is not that Ottawa Housing does not run a good show. They do day-to-day maintenance, but their costs for the recurring maintenance, the day-to-day, are up 22% in 1989 and another 20% in 1990. At the same time, the amount they were spending on the major capital work between 1985 and 1990 went up 73%.

So it is a large flow of money, and in this case the public purse, and any apartment building at some stage, no matter how well maintained, it is going to need a new roof, it is going to need balcony repair, the replacement of the galvanized plumbing, bringing the fire equipment up to today's standard, or close to it. Tallying it up, if these kinds of cycles hit at one time, it would be very easy to spend about $16,000 per dwelling unit for an apartment building, which is $160 a month.

Much of Ottawa's stock is in the $400- to $500-a-month rental range, so it still keeps it affordable for most of the tenants, especially compared to Toronto's standards of what is affordable, but there is an income problem at the lower end, and I am not trying to deny that. But the work has to be done, and that is really the message that I want to leave with you. The buildings are getting older and more tired.

In our own case, we started in the middle of 1989 doing major work on three projects for the first time, roofs and balconies and some window work and bathtubs and wiring and so on, and we spent $3.6 million. All right. In our rents that was an increase of $50 a month. Unfortunately, our first increase came after 1 October, so we are carrying the $3.6 million waiting to see what comes out of Bill 4.

I just want to leave with you that you cannot ignore the maintenance work. How it is addressed will be part of, presumably, the green paper. But look at your own Ontario Housing stock, condominiums and co-ops; there is no secret between them and the private.

Ms Harrington: I am very pleased that you would come before us today, because you have such a diverse and appropriate background to housing. Did you say you were also on the Rent Review Hearings Board?

Mr Burns: The Residential Rental Standards Board, which accepts work orders that are not being done in a municipality, and if we feel they are substantial, refers them to the minister for a rent penalty or a rent abatement. So we are getting a feel of the kinds of orders that are happening around the province, and more and more I see the orders on -- not the worst neighbourhoods. As the buildings become older in Toronto, I am seeing up around Eglinton and Mount Pleasant and places that you would not expect it but age is catching up.

Ms Harrington: Well, the standards board then, as well as the Rent Review Hearings Board, is something that is very appropriate. The question I wanted to ask you is exactly that. How do you think the standards board can do its work better? We depend on you to make sure that our housing is in good condition. We have heard in previous days that there are problems with standards, both at the municipal level and at the provincial level, so could you quickly maybe give us an idea how you think we could be better at it?

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Mr Burns: Our recommendation is that it be mandatory -- and not maybe -- that every municipality have a property standards bylaw under the Planning Act. That is number one.

Ms Harrington: I know in my area in St Catharines there is a large apartment building, two of them actually, a complex. They have -- I think it is about 28 -- outstanding orders against them and it has been a couple of years. Now the local legal clinic is telling them the only way to get the building improved is to go through the legal route.

Mr Burns: I think it should be mandatory.

Ms Harrington: I have spoken to the mayor about it.

Mr Burns: I think the municipalities need some help in the court system on the fines. The municipalities, in many cases, have the right to do the work and add it to the tax roll, but they are worried about their security and they are worried in these older buildings that, by doing the work and putting it on the tax roll, if the building comes back to them in the next years, the amount that they have put into the building may be more than the property is worth.

I think the province should be looking at extending the low-rise program and getting the high-rise grants, provided that they are reflected in the rent or an abatement of the rent, hopefully related some way, maybe, to incomes, because in a lot of buildings the tenants do not need any help. We have units in Ottawa at $2,000 per month, people by choice.

Ms Harrington: So you agree we need more teeth in our enforcement?

Mr Burns: Yes.

The Acting Chair (Mr Abel): Ms Poole or Mr Brown?

Ms Poole: I think Mrs O'Neill had a question.

The Acting Chair: Sorry, I did not see you. You are sitting so close to Mr Tilson.

Mrs Y. O'Neill: I knew I was getting smaller but I did not realize I had disappeared.

Ms Harrington: She has moved over to the right.

Mrs Y. O'Neill: Thank you very much, Mr Burns, and thank you for your previous correspondence with me. You suggest that you only have your personal experience to call upon. I would suggest that is great and it is a great contribution.

I would like to draw attention to a couple of pages in your brief. You did have to condense it quite a bit and I am sorry for that. I thought that what you brought forward on page 4 is so very relevant, the costs because buildings have got to a certain age, and anybody who knows as much as you do about rental stock in this province knows that much of the building did go on in the 1960s and now these are the kinds of costs, and they are certainly likely more than the actual building costs in the beginning.

Mr Burns: And you should look at Ontario Housing's experience as well.

Mrs Y. O'Neill: Right, and you have given those figures as well to balance.

I also wanted to bring to page 7. Two of your paragraphs, I think, are extremely meaningful. Under "General Observations," you talk about partnership with government, and certainly since we have had legislation that has controlled rents in this province landlords and tenants and government have developed partnerships. That is what so difficult about this legislation, the instability it creates in a partnership. You have suggested that the retroactivity is certainly one of the most difficult parts of this whole piece of legislation. I think you have tried, as many people have done in these hearings, to tell us what luxury renovations are about and why they are irresponsible. I really do like the paragraph you have devoted to that, and you say, other than in Toronto, owners must be careful not to do so much work or the approved rent will be above the market and that is not collectable. I think that is what we really talk about when we talk about luxury renovations.

Mr Burns: At some point, a market does prevail in most of Ontario.

Mrs Y. O'Neill: Correct, and we are hearing that. Very few people have brought that to our attention and I am very glad you did. Would you like to respond by suggesting how you feel the rent review legislation that is in existence could have been improved? Have you got one or two capsules?

Mr Burns: One is all parties have talked about how terribly complicated it is. It is not fair to a small landlord. There is no way you can go to rent review without a consultant, and if you have only a few units you cannot afford it. Even with our size, we use a consultant. It has to be simpler. I like the old hearings. In a way both sides get it off their chest, and I think there are some elements of the hearing where you can go in and justify. If you are doing a new roof, you are foolish not to add insulation. Is that luxury upgrade or does that just make sense, and that could be dealt with at a very simple kind of hearing process. If you are going to replace old windows, it is silly that they will just put back single glazing; do double glazing. Is that a luxury upgrade or is it that sensible? You need some way to work through this, but on a one-to-one, where someone can go in with their shoe box, the bills, and say, "What do I do now?"

Mrs Y. O'Neill: Thank you very much for coming forward. I hope you will have input also into the new housing legislation that we are going to be presented with on Monday.

Mr Burns: If there is time.

Mr Tilson: Dealing specifically with Bill 4, I would like you to comment on what effect Bill 4 has had on loss of jobs, loss of contracts, that whole area where you presumably have been hurting. Hearing evidence around the province, I would like to hear some thoughts specifically in the Ottawa area.

Mr Burns: I cannot speak personally there, because we were too efficient. As I say, we started in the middle of 1989 and we got all our work done about August, just in time to be hit with Bill 4. In most cases the work was done; we did not have too many people to send home. We returned a number of items, and we have got some emergency generators on hold that we were going to add to take over the old battery packs, but it is $50,000. We are seeing if we can return them.

I do know that one company that does a lot of concrete garage work has had about three large contracts cancelled: "Don't go ahead." It is easy to spend $1 million in garage work, and it is extremely labour-intensive. It is jackhammers going day after day. There is a lot of that, yes. Some of the roof people, well, they will not see it until spring. We should try and not do new roofs during the winter in Ottawa.

Mr Tilson: You speak of parking garages and you mentioned cement work earlier. That leads to the area of my next question, and that is one of safety. We have had a number of -- particularly, I think it was in Toronto earlier this week that a cement group came and spoke on the whole issue of safety.

Mr Burns: I am glad you had that. It is serious. Not just rental buildings, all buildings.

Mr Tilson: I would like to hear some of your thoughts on that, specifically when we hear testimony from different people around the province that 75% of the buildings in the province of Ontario are 20 years or older. There are many things, according to testimony that has been given to us, that you simply cannot anticipate or that you cannot keep up through daily maintenance.

Mr Burns: Flushing will help, but in many cases the problem was built in, because back in the 1960s and 1970s, and 1950s, they would add calcium chloride to the mix, so it would set up faster. Now, we know you started off with a salt problem. Then with the water that the cars drag in from the slush, it starts working, and there is no way to reverse it. Building a garage today should last far longer; I am not sure it is for ever. They put membranes on now, which they did not use to. We have been through two large garages, two buildings we bought from Cadillac Fairview. It was $1 million each, and after we started working we wondered what had held the cars up in some places. It was rather scary.

The Chair: Thank you very much, Mr Burns, for making your presentation today.

Mr Burns: I hope it is of some use in your deliberations.

The Chair: Yes, very useful.

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COMMUNITY LEGAL CLINICS UTOO INC

The Chair: I understand that we are a few minutes ahead of schedule and I hope we did not interrupt any meetings you were having. If you have had a chance to see our proceedings so far, you know that we have been allocating 20 minutes and you will have 10 minutes for an oral presentation and 10 minutes for questions. I would just like to ask you to identify yourselves and whom you represent for the record.

Mr Chartrand: My name is Jacques Chartrand, executive director of West End Legal Services of Ottawa. My colleague here is Sue Skinner, community legal worker with the South Ottawa Community Legal Services. The brief is presented jointly with Community Legal Services of Ottawa-Carleton and a non-profit organization called UTOO Inc., which is an umbrella group for many tenants' associations.

Our brief basically states that we support the implementation of Bill 4 because the current legislation leads to circumstances where tenants are less able to afford the rents being charged and are placed in a vulnerable position when the landlord charges less than the maximum rent and can, at any time, let the economic levers go and evict tenants.

The thrust of our brief, though, is that although we are in agreement with Bill 4, we are asking that consideration be given to other aspects of the Residential Rent Regulation Act as well. Basically we are submitting that it be extended to have a rent registry for all residential units, and that includes buildings with less than six units, rooming houses and single dwellings.

Ms Skinner: It is our information, which was obtained from the Ottawa Region Landlords' Association, that 45% of the rental units in Ottawa-Carleton are in buildings with less than six units.

Mr Chartrand: By extending the rent registry to all residential units you achieve uniformity throughout the province. You achieve consistent rental history of the properties, and this can assist tenants to know where they stand when they are renting properties. We at the clinics often make applications for orders for repairs and abatement of rents, and this occurs particularly when landlords who have been requested to do repairs do not do them and then turn around and serve the tenant with notices of rent increases. This is where the battle starts. I have noticed section 100g, where the tenant can now dispute based on non-repair and the state of the premises, which is basically what should happen when a landlord is seeking to increase the rents; in other words, "I want more rent," and the tenant is responding, saying, "Okay, you want more rent, but the property is not up to standards, so you should not be allowed to get more money."

Section 100g limits the criteria set out in that section and we believe that it should not be just restricted to that. It should also include a record of violations of other sections of the rent regulation act, not only in taking into account the performance of the landlord and repairs but also in the conduct towards the tenants. The record of violation that we want to be added or falls into the recommendation that we make that it is about time that landlords be licensed. A necessity such as shelter has gotten to the point where landlords have to operate properly and treat tenants properly. It is like anything else these days, if you have violations against your records, we should not be tolerating these violations on a consistent basis; and if you do too many violations, then you are either fined or somehow you get a slap on the wrist. That is what I have to say.

Ms Skinner: Just to continue with the licensing, it is our experience in Ottawa-Carleton that when tenants come to clinics with a repairs issue, property standards is involved. Property standards issues orders against the landlords. There is such a long wait list for anything to be done that the tenant eventually gives up and moves on. The landlord has failed to comply. He brings in new tenants, quite often raising the rents. There is no control at all. I think that with licensing certainly there would be control of how properties were managed and I suspect that the many landlords in the region, and in Ontario, would not mind being licensed. It would protect themselves as well as tenants.

Mr Chartrand: Any questions?

The Chair: Thank you very much. We are going to start our rotation. Mr Brown is first.

Mr Brown: As we have travelled around the province, we have heard a great deal about maintenance of buildings and maintaining them in a suitable manner for the tenants. After all, the unit is the tenant's home and it needs to be maintained. I am interested in your solution of licensing and how you would really see that working. Each landlord presumably would have to have a licence to own or to operate, I guess, a rental unit. If he did not fulfil the requirements of the licence, what would you see happening?

Mr Chartrand: It would be similar to what is happening now with some landlords who do not obey property standards orders. They are put on a proactive list. This means that the city can step in and either do the work or assist the landlord in trying to solve the problems. So the licensing, if you have too many violations, then it would be going over to, perhaps, a proactive list where supervision is much more strict in the performance of maintenance or bookkeeping, making sure there are no illegal rents or illegal deposits taken, etc.

Mr Brown: So I understand, for example, that if I happened to be a landlord and owned six or seven different rental properties, I would have one licence and all violations would accrue there so someone somewhere could look at those and say this landlord "is not behaving properly." We see that he has a number of violations, a history of violating various acts, and therefore we would somehow know that this is "a bad actor." Is that the idea, rather than have the licence go with a specific building?

Mr Chartrand: Yes, you could probably look at licensing a specific building, because you can have good performance in one building and not good performance in the other building.

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Mr Brown: So the licence is for the building and not for the landlord?

Ms Skinner: It could be either for the property management company or the landlords. Quite often the landlords are numbered companies and have no idea what is going on, but we think that that is probably a service that rent review services could have in its mandate would be a licensing agency.

Mr Brown: Just so I understand then, if the landlord, for whatever reason, does not comply, the municipality cannot enforce whatever, or they do the work and put it on his taxes but he cannot pay his taxes -- I mean, there is also an economic component to this. You may want to do the work, you may want to do all the things right, but you do not have the money to do it. What happens then?

Mr Chartrand: I heard of an announcement made by the provincial government that it was willing to assist landlords in difficulty financially. I am not a financial expert, but if it comes to a situation like that, government assistance perhaps could be asked for to assist the landlord to re-establish itself properly.

Mr J. Wilson: Thank you for your presentation. Along the same line of questioning, because you mentioned strengthening section 100g, what is the extent of the problem of violations of the standard of maintenance and repair in this area?

Mr Chartrand: Basically what we see is landlords turning around requesting rent increases, and most of the tenants assume that the statutory rent increase is automatic, so they pay it. It is when they go beyond the statutory rent increase where they start fighting and saying, "You haven't done the repairs, so I don't want to pay you the additional moneys."

Mr J. Wilson: What is the landlords' argument to that? Do they just sort of naturally go for the statutory increase?

Mr Chartrand: Statutory increase, yes.

Mr J. Wilson: And I guess we have had arguments and they are saying that that is never enough when you hit major capital expenditures. So I guess you get that side of it from --

Mr Chartrand: No, we basically deal with the legal end of it. Most tenants do not want to pay more than what they are paying right now because the property has not been repaired, and the landlord is looking at this automatic increase all the time and the tenant is saying, "Well, I was asked to pay $500 a month. I got in, the unit is in disrepair and I'd like to have it repaired," and the landlord turns around and says, "I want my automatic rent increase" or "I want more than that."

Mr J. Wilson: How widespread is that? What is your guess, perhaps? You would only see the ones who come into your office, I guess, or they give you a call.

Mr Chartrand: No, we basically deal with the cases where the tenants object and the landlords sue the tenants and we go to court to seek an order for repair and abatement. It is done more recently than before because the problems of repairs do exist quite a lot in the Ottawa region.

Mr J. Wilson: But you do not know what the number is on that exactly, because we are having a problem getting stats out of the ministry on these types of things too.

Mr Gagnon: If I could just add something, at the clinic where I work, it is a downtown clinic, most of our case load is landlord-tenant. Close to 70% of our case load is just that, and what we see is a reluctance on the part of the tenants to actually take action against the landlords because it is such a lengthy process.

They also feel as if they are victims in their apartments. They are scared, and we see landlords simply abusing the tenants, simply not doing any repairs after, let's say, a year, two years, the tenants simply getting fed up, representatives not taking any action, and then after that they simply leave. The tenants simply leave, either because they are threatened by the landlord or they cannot afford the place any more.

Mr J. Wilson: We were told in Sudbury, for instance, that perhaps this committee should be distinguishing between big landlords and small landlords. In your case load that you do see, who are the violators, the big companies or the small?

Mr Gagnon: Well, that is difficult. That is like saying, "Who is the biggest racist in town?"

Mr J. Wilson: I am also trying to figure out the extent of the problem; that is a little difficult.

Mr Gagnon: Sure. Well, we see everything. We see families who rent to tenants in their basement and they are simply not respecting the Landlord and Tenant Act, either because they are ignorant of the law or basically because they feel as if they need some money quickly and they just do not know what to do with this person they feel was harassing them and they are just not respecting their rights.

The Chair: I am afraid I am going to have to interrupt. Mr Wilson, it is your turn, sir.

Mr G. Wilson: I do not mind your continuing that line, though. I think that is of interest as well.

Mr Gagnon: Okay. That goes in respect to rooming houses again, where you have several tenants who are living in small little units. When it comes to the year period, especially in the downtown core where students are coming in, then all the older people the landlords do not like they just boot out for new, young tenants who seem to have money. We see a lot of problems there.

And then we have the huge landlords. The huge landlords have several properties and they simply are maybe more sophisticated in abusing the system and they offer penalty fees and so forth.

Mr G. Wilson: Thank you for that report. It gives us another very good slant on what is happening.

You specifically mentioned the problems with tenants who do not see repairs being made and therefore are reluctant to pay the increases, but what about tenants who simply cannot afford increases? Do you have many of those cases in your clinics?

Ms Skinner: Most of our clients cannot afford the increases, and their solution to the problem is to move and --

Mr G. Wilson: Where are they moving to, by the way? Is that an easy thing to find out?

Ms Skinner: To substandard units.

Mr G. Wilson: Substandard. Right.

Ms Skinner: That is it.

Mr Gagnon: Especially where there is a landlord who does not ask for a deposit for the last month's rent. And their names are on a waiting list for subsidized housing, but that takes years and years and years before they actually get something.

Mr Chartrand: What you also see are situations where the landlord has a certain maximum rent but rents at a lower amount to get the people in, and then one year later he bumps it up a bit and his maximum goes up, and then he can at any time turn around and say, "Well, now I want the maximum," and the tenant cannot afford it and has to leave.

Mr G. Wilson: Sounds like a stressful situation for the tenant, and that brings me to UTOO, which is a neat name. None of you is from UTOO, though, I do not think.

Mr Chartrand: Yes.

Mr G. Wilson: Oh, are you from UTOO?

Mr Chartrand: No, I am not from UTOO, but --

Mr G. Wilson: But its mandate sounds interesting in that it seems to promote the awareness among tenants of something they can do. What has been the success of UTOO here in this area?

Ms Skinner: It has only been ongoing for two years and right now they are still at the fledgling stage, but they are widespread across the province and we are hoping to get more representatives and more involvement.

Mr G. Wilson: How hopeful a thing do you think that is, to encourage --

Ms Skinner: Very, very good.

Mr Chartrand: Yes. They held a conference in Hamilton last year and they intend to hold a conference in Ottawa this year, try and bring all the tenants' associations and have workshops, etc.

The Chair: I apologize. Our time has expired. I want to thank the community legal clinics for coming in today and making their fine presentation.

Mr Chartrand: Thank you.

Ms Skinner: Thank you.

The Chair: You are welcome. Is the Real Estate Board of Ottawa-Carleton here yet? Is Christopher Barker here yet?

HOUSING HELP/AIDE LOGEMENT OF OTTAWA CARLETON

The Chair: If not, we will proceed with Housing Help/Aide logement of Ottawa Carleton. I think you are quite familiar with the procedures we have been using today. I will just turn the floor over to you.

Mr M. Wilson: Thank you for allowing us to speak to you this day. A brief has been provided, and for the sake of brevity and to allow you to have time for questions, I just wish to highlight some of the points of that brief.

The Chair: First introduce yourselves and whom you are representing, for the record.

Mr M. Wilson: My name is Michael Wilson and I am the executive director of Housing Help/Aide logement of Ottawa-Carleton.

Ms Jamieson: I am Lisa Jamieson. I am the housing educator at Housing Help/Aide logement.

Mr M. Wilson: First of all, I would like to state that we recognize there is a major issue about housing, and the two major points we want to stress are the need for affordable housing and the need for adequacy in housing. In the region of Ottawa-Carleton, 48% of the occupied dwellings are rental units, so I think tenants need to have a voice about what their plight might be.

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I want to say just a bit about who we are. We are a small non-governmental, government-funded organization that works in a community that has been developed through a community development profile. Housing Help started in 1986 and had about 4,000 people come through its doors. This last year, we saw almost a double increase in the amount of people who came to us, almost reaching 20,000 people, and out of those we had almost 1,000 cases where people were really suffering clear hardship in their housing, who certainly were without any kind of security of tenure and most of whom needed to be assisted to find or maintain a sense of affordability or had to have assistance provided to them to ensure that they would have adequate standards in their housing.

The most common denominators of our client group who are facing the most difficult times are that they are low to low-moderate incomes -- 80% received an income less then $15,000 per annum -- and that 50% of those people in crisis were representing families.

As was mentioned earlier here, there seems to be some concern about whether subsidized housing provided by the government is the true solution to some of the issues. In Ottawa-Carleton we have a waiting list that is shared jointly by the city of Ottawa's corporation, City Living, and the regional housing authority, and there are 4,235 people on that list who are waiting to be provided housing, as of December of last year. So what we see in our clients is that 50% of them continue to struggle to try and survive on the private market.

Against this sense of recognizing the need for affordability and adequacy, we also recognize that there is an extreme dilemma that, as we try to strive for housing that is affordable, we run into the question of whether it can be adequate. Do people provide the standards that are necessary; are there safety measures available; are the roofs well done; things like that. We also recognize that even though there is an emphasis on social housing, that people would be provided units at rent-geared-to-income prices, the private market continues to carry the majority of tenants in the region.

We know that this is a delicate balancing act, but we come to you today to say that we are in agreement with Bill 4 and we would like to see some of that legislation be passed on to the final legislation. I would like to say why we agree.

The city and the region have provided a lot of numbers to state that there is a question of affordability in the region, and those are before you. We ourselves have done an in-house study of some of the private market rents and what people were allocating out of their incomes towards a rental cost. Though of course we will see the people who are suffering most, we found in our study that 88% were having an affordability issue, and we define that as paying more than 25% of your income towards housing. In fact, 39% paid more than 50% of their income for their housing.

We think there are a number of related issues, and we recognize that any kind of freeze or guaranteed limitation of increase for rent is not the sole answer to provide affordable or adequate housing, but we see that there is a continual loss of affordable housing in this region.

Other numbers are before you, provided by the region. Maybe just to mention the first one, between 1981 and 1986 the region estimated that 48,650 low- to moderatepriced units were lost. That does not mean they were just physically removed from the market because of demolition or conversion, though a lot of them were. It also means that because of the price hikes for rent they became unaffordable and therefore people just did not rent them.

We also live in a region where there is a very low vacancy rate. The CMHC says that in order to have a healthy sort of private market housing, you have to be between a 2% and 3% level, and for the last 10 years this region has been below that. In fact, at the moment it is at 0.5%. So we see each day at our offices that people are in need of finding housing and it is very difficult for them to attain that.

Last, we see that property standards are often not provided by landlords in the sense that they are not kept up to par. We have done a number of things to illustrate that.

I have one story that I would like to share with you about an apartment building at 272 Bronson Avenue that had requested an 18% increase in rent in 1987. This was a way in which the tenants were motivated to organize. From that, they met with the rent review committee at that time and they were granted certain repairs to the building far beyond what the landlord had intended in his initial request. The committee had told the landlord that he was only going to be able to raise the rent 8%. Well, those repairs were done, the rent was increased 8%, and then the building was sold.

What happened after that is that rent review at that time, in 1989, provided a 15% increase that was to be phased in at 5% per year. We are happy to say that with the freeze that is now in effect with the moratorium, the last 5% has not been imposed on those tenants.

But to reiterate some of the things that you have been hearing from other groups, one of the results of that is that there was about a 90% migration movement from that building. They could no longer afford to live there, so that population has become unstable, whereas before it was a lot of people who were on various fixed incomes, either because they were low-income earners or because they were elderly.

The last part of this is that when we look at some of the numbers provided by the region as well, we recognize that rental increases in this region have risen from 10% to 17% beyond the consumer price index. We think that it is difficult for tenants to constantly be paying more of a percentage of their income towards rent when they themselves are not given that money via their work or whatever mode of income they may have.

We have some concerns about how Bill 4 could be strengthened as it becomes new legislation, and we would like to just point out a couple of things. We see a lot of people who are not living in large apartment buildings, though we do see people from that perspective as well. The Ottawa Region Landlords' Association has put out a statistic that 45% of the rental units in Ottawa-Carleton are buildings with only one or two rental units. One of our grievances with the past system is that units of six or less are not registered, and so we have no idea whether the rents are legal or whether landlords are providing the services that are expected -- you know, whether heat was included for one tenant and not included for the next -- and it compounds the issues for us.

We ourselves have a small registry of one ward in the city, and I have also provided an annual report where there are some case scenarios -- portfolios, if you will -- some instances where people were able to get money back because of illegal rents that could be shown from that registry. So we would like to see whatever happens include that.

We are concerned about tenant repayment. We would like to see more flexibility on that.

We think that there might be more interesting ways in which to ensure the adequacy of the buildings, and there is a paragraph on the landlord incentive package, which we think should be a compendium package. We do not necessarily see that the government and public dollars should always carry those costs as well. I think being a landlord is a business and you take risks and you take responsibilities as well with that. These are not fleshed-out ideas, but they are just to show that there are other possible ideas.

We also believe that a strong component, once this legislation is decided and passed, should be a system of landlord-tenant education so that people are able to work within the system.

The Chair: Thank you. I appreciate your presentation. I am sure the committee members also do. Mr Wilson, I believe you are first in this rotation.

Mr J. Wilson: It is really a complete brief, much of which I think we have heard from some of the legal aid community with very similar concerns.

You mentioned the landlord incentive package is not fleshed out, and I can understand that, but I would be interested if you had any further comments on it because you kind of went over it quickly. I guess the government had said it might set aside $15 million to help landlords with repairs, and we have heard from some landlords that that is simply a drop in the bucket. They gave us a number of examples of costs of repairs required, that it would not nearly cover the extent of the repairs that are required across the province, and unanticipated repairs like parking garages were the big ones.

Given that the government may never have enough money to put into that envelope, where are landlords going to get the money for capital repairs, or do you think the government should put every effort into trying to come up with the money? Cancel other programs is what they would have to do, I guess.

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Mr M. Wilson: If the government were to come up with any package, I think that is generous on their part because, as I have said, landlords are in a business situation.

Mr J. Wilson: But they are in an unusual business in the sense that their ability to make money is limited. That is one thing we seem to miss from a lot of groups, that it is a highly regulated, limited business and has been for 15 years. Unless they are all lying to us, a lot of them are not making any money and a lot of them expect to go belly up in the near future.

Mr M. Wilson: I would suggest that landlords make more money than tenants do, in general.

Mr J. Wilson: We have had evidence that some small landlords -- actually, it is implied, quite a few, because of the losses on their buildings -- make less than some of the tenants they are subsidizing. But I am just playing devil's advocate with you.

Mr M. Wilson: No, I recognize that. Go ahead.

Ms Jamieson: I think they would get fairly substantial tax deductions for that.

The Chair: Now, to move on to Gary Wilson.

Mr G. Wilson: This is a very solid report and it has a lot of facts and figures. One thing, actually, that my colleague mentioned is on page 3 of your report, where you talked about fire escapes as being an unnecessary renovation at Bell Street? Could you clear that up?

Mr M. Wilson: This is a large apartment building that is in the area of our central office. We provided a tour last spring for two conferences on housing in the region. We provided a housing tour, and this site was an example of renovations that tenants did not wish to have done to the building. They certainly were renovations that improved the dollar value of the building for the landlord. On going into the building we recognized that the fire escapes had been done in marble. I was wondering why and what benefit the tenants would enjoy from that. The interior of the building was certainly out of context for the exterior as well. Some of the major things that could have benefited the tenants who were living there were not considered.

Mr G. Wilson: Okay. I would like to return, then, to the more general thing here. I think that is something that goes to the heart of the issue, and that is where, under "Who Are We and What Do We Do?" you say, "We believe that every person has the right to secure, adequate and affordable housing." How popular a notion do you think that is in our community -- this community, say -- from your experience?

Mr M. Wilson: At this table?

Mr G. Wilson: Not necessarily at this table, but your experience in the housing field. I mean, do you find everybody is working to realize that?

Mr M. Wilson: I think that there is certainly a very clear and defined movement in that direction, and it is not solely a national view even, that it is more large than that, that it is global and there are people from every walk of life and from very many different countries who are working towards achieving that for people.

Mr G. Wilson: What about governments? Do you find that they are supportive of this?

Mr M. Wilson: No, in general I would say that what we have seen is governments have not taken steps. I would be glad to say in the future that perhaps the new government of Ontario has done something to do this, to change this situation. But at the moment we look and we see that the people who come to our door on a day-to-day basis are the ones who suffer. We see other opportunities that are out there about the availability of land. We talk about the cost of land. Government holds a lot of land and when it does sell, in general, it sells it at very high and lucrative prices, rather than financing non-profit or co-operative housing. We see the federal government constantly backing away from commitments in housing, and the social housing program is in fact in jeopardy at the moment.

So I cannot say from my immediate context that I see a lot of movement in that direction. I am happy to say that, in our local region, I think the city of Ottawa and the regional government have supported our group, and by doing that they are making very clear statements. The work that I see coming out of their offices, and studies and assessments and analyses of the situation, is clear and moving towards recognizing the needs of those who are really suffering because of this, and not those who have the money.

Mrs Y. O'Neill: I certainly think that your annual report is very helpful for me as a member from Ottawa and I know that the statistics will be correct.

You are the people who had the housing maze, are you not?

Mr M. Wilson: I beg your pardon?

Mrs Y. O'Neill: Did you have the housing maze?

Mr M. Wilson: Yes, the homelessness maze.

Mrs Y. O'Neill: Sorry. Yes, I do remember that. Are you still travelling?

Mr M. Wilson: Yes, we still do.

Mrs Y. O'Neill: I hope you will bring it back to Queen's Park now that we have a lot of new members.

Mr M. Wilson: Invite us.

Mrs Y. O'Neill: It was a very effective tool to show the very difficult decisions some people have to make in choosing housing.

I want to go to page 2, if I may, of your brief. I find some difficulty with the figures, and the only reason I find difficulty is that you have stated this is an in-house survey.

Mr M. Wilson: Yes.

Mrs Y. O'Neill: So these are people who are in difficulty?

Mr M. Wilson: Yes.

Mrs Y. O'Neill: I think that we have to emphasize that those statistics, then, are not really Ottawa-Carleton statistics. They are statistics of people who --

Mr M. Wilson: They are in-house statistics. That is why they are phrased that way.

Mrs Y. O'Neill: I am pleased that you made that clear and I want to reiterate it because they are certainly contradictory to things we have gotten from the government agencies today. You have made one comment at the top of page 2 regarding your statements on Bill 4. You say, "No phase-ins until new legislation is adopted." Could you expand a little bit on that, please?

Mr M. Wilson: Probably not. Not in an adequate way. The question of phase-ins for us is that I think the government is going to be faced with some very difficult and hard decisions, and we do not believe that phase-ins are appropriate, though we do not know what alternative there may be if there are substantial increases for some given situation. So we are willing to be open on that at the moment, but I really cannot elaborate further than that.

Mrs Y. O'Neill: You say "difficult decisions." I am sorry, this is important to us, to know exactly what your thoughts are. Would you say a little bit about what the difficult decisions are? Give us an example.

Mr M. Wilson: I think that the government has clearly been, and will clearly be, advised by tenant groups and tenant representatives that there is a real question of affordability and adequacy in Ontario and that the government has an obligation to guarantee housing on those levels to tenants, and to represent them as a legislative body. I think also, as we have seen in the media and in the last days that we have gone through, that the landlords are very capable of forming lobby groups, of making their voices known, and that they have concerns as well. So I think the difficult decisions will be trying to balance what I have outlined as a dilemma between providing affordable housing and guaranteeing adequacy. That is why I think that it is not just a question of rent controls but that other compendium packages are going to have to go along with that. At points they will be difficult to decide, what is an appropriate cost that tenants should share and what is not, what is benefiting the landlord solely.

Mrs Y. O'Neill: I really appreciate that you have brought forward that so many of the housing needs are served by the private investor.

The Chair: Sorry. Time has expired. Thank you for your brief.

REAL ESTATE BOARD OF OTTAWA-CARLETON

The Chair: The next presenter for this afternoon is the Real Estate Board of Ottawa-Carleton. We would ask the presenters to please identify themselves for the record, and whom they are representing. You have been allocated 20 minutes, 10 minutes for your oral presentation followed by 10 minutes of questioning. The floor is yours.

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Mr Lenardon: My name is Bill Lenardon. I am the president of the Real Estate Board of Ottawa-Carleton, and accompanying me this afternoon are Irving Altman and Irene Wong, both members of the Real Estate Board of Ottawa-Carleton. I think you will find that our presentation perhaps will be of a somewhat more general nature. Our comments are provided on behalf of the Real Estate Board of Ottawa-Carleton in response to Bill 4, the Residential Rent Regulation Amendment Act, 1990. We do appreciate the opportunity to appear before the standing committee on general government to present our views.

The Real Estate Board of Ottawa-Carleton is a trade association of 2,200 registered real estate brokers and salespeople in the greater Ottawa area. The board was incorporated by letters patent in 1921 and among our objectives are the following: to do all things necessary to promote interest in the marketing of real estate in all of its aspects and to advance and improve the relations of the members of the Corporation with the public; and to promote, encourage and protect the ownership of real property and its value.

Our board represents many diverse interests. Our members are owners of single-family homes and multi-unit rental properties. Some of our members are property managers and many of our members are tenants. Our members' clients and customers include both tenants and landlords. Bill 4, in its present form, will be of benefit to some of our members and will be a detriment to others. We are concerned with the impact of Bill 4 on landlords, on tenants and on taxpayers.

We stress this point as we want it to be clear that our appearance before this committee is unmotivated by any vested interest in the outcome of your deliberations. If we have any interest at all, it lies in our insistence that the parties most affected by the proposed legislation be treated with equity and fairness. In our view, what is being advanced in Bill 4 is neither fair nor equitable to any of the aforesaid parties.

Among other things, the legislation fails to dispel -- in fact, it helps to perpetuate -- a popularly held misconception that all or most landlords are "major property holders," "rolling in wealth, having realized the value of their initial investments many times over," flippers of rental properties, insisting on unnecessary luxury renovations solely to justify the gouging of their tenants.

As we have said time and time again, and as we fully believe, the best means to ensure the rights of both landlords and tenants is to permit the operation of a free and open market system -- we are, after all, a market economy -- so that natural economic forces could operate without hindrance. The best controls, in our view, are no controls at all.

As members of organized real estate, real estate boards across the country have for many years fought for the preservation of real estate property rights. Although we have a new Constitution in this country, with a Charter of Rights intended to protect the fundamental rights and freedoms to which we are entitled, the right to private property is not one of them. The proposed Bill 4 represents a further violation of the property rights of landlords.

Landlords, not the government, own the property. Although possibly not intended, the proposed legislation makes it appear that the government is attempting to control the entire stock of rental accommodation in Ontario by driving landlords out of business. Certainly the proposed legislation will make it less and less attractive for landlords to continue owning and maintaining their buildings, and for new investors to enter the rental property market.

We urge the province to respect what should be the basic right of Ontarians -- to own their own property without undue interference -- and hope one day to see this right entrenched in the federal Charter of Rights and Freedoms.

We are distressed at the inequity that will be created by the proposed legislation. Tenants do have rights that need to be protected, but these rights should not be protected at the expense of another group, the landlords. Much of the rental accommodation stock is provided by individuals who own only one, two or three units and who sometimes occupy one of these units themselves. Most landlords are not big business people but ordinary Canadians who are saving for their old age and providing an essential service at a reasonable cost. Is it fair for the government to expect these landlords to subsidize rents out of their own pocket or from retirement savings?

Our recommendation 1 is to reject the Residential Rent Regulation Amendment Act, 1990. Keep the existing legislation in place until a public consultative process can be established to develop a new long-term rental policy. Our hope is that such a process will have as its ultimate goal the phasing out of rent controls in our province.

Many statements have been made, or undoubtedly will be made, about the negative impact of this legislation on landlords. The proposed caps on rent increases for 1990 and 1991 will sooner or later have an equally negative impact on tenants. If landlords cannot recover the costs of work that was previously approved, it simply becomes even more difficult and less desirable to continue to own or build rental units. Tenants will suffer as a consequence of the reduction of choice and selection in the rental market. In addition, the impact of renovations planned but which will not now be carried out will result in a deterioration of rental units because of the disincentive to repair or upgrade units, thus depriving the tenants of their rights to adequate maintenance of their units.

According to CMHC, the vacancy rates in metropolitan Ottawa for apartment structures of six or more units was 1.9% as of April 1990, and has been forecast by CMHC to fall below 1%. Does this not tell you something? The depletion of rental stock harms tenants directly.

The retroactive element of Bill 4 troubles us greatly. Many landlords applied for rent increases in good faith and planned repairs and maintenance accordingly. Many landlords have already carried out necessary renovations and will consequently be unable to recover their investment. Some of them may be forced into personal bankruptcy as a result; others will lose all or part of their retirement nest egg.

By not permitting any allowance for renovations already approved, the economic impacts are going to be far greater than anyone can possibly predict at this time. The cancellation of renovation contracts and resulting loss of construction jobs, as well as the reluctance of property owners to replace aging, and in some cases only marginally habitable, rental housing must cost the Ontario economy hundreds of millions of dollars.

People do not want to build new rental units if they cannot recover their costs in rent, and many people will be discouraged from investing in existing rental property.

Our recommendation 2: Permit landlords to proceed with already approved capital improvements and allow the agreed-upon increases. Permit the recovery of the cost of planned capital improvements.

Bill 4 classes all renovations together without differentiating between those which are necessary to maintain the integrity of the property and those which have been categorized as so-called luxury renovations. The majority of renovations carried out are not luxury renovations but are essential to maintain the property and protect the owner's investment. Our concern is that without some direction or definition of what is intended to be construed as luxury renovations, many types of repairs will be lumped into this catch-all category and will consequently not be carried out, thereby depriving landlords of the opportunity to maintain their properties and tenants of the opportunity to maintain the quality of their lifestyle.

Our recommendation 3: Establish guidelines to define what is necessary to adequately maintain a property and to identify what constitutes a luxury renovation.

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The Chair: You have about one minute left.

Mr Lenardon: Thank you. Right now, as we see it, the rental control system is unfairly and improperly forcing the landlord to be a subsidizer of government policy, to the detriment of all. The shortage of rental units will continue to be a problem that publicly supplied housing should not be expected to solve. In fact, the cost of public housing is often higher than housing in the private sector. It would seem much more sensible to see the rent control system replaced by rental assistance allowances for those truly in need and permit the laws of supply and demand to re-establish themselves.

Recommendation 4: Consider rental assistance allowances for those truly in need. We do applaud the government for its general approach to help the people of Ontario, but Bill 4 is not the answer. As we understand it, Bill 4 is meant to fill the gap to provide the government time to have new rent control legislation enacted to be effective 1 January 1992. Why the rush? Landlords and tenants have been operating under the Residential Rental Regulation Act; the rules have been clear. Why change them now as a stopgap measure?

The board's recommendations, in summary, are: (1) reject Bill 4 and begin a public consultative process; (2) remove the retroactivity element; (3) establish guidelines for luxury renovations, and (4) consider rental assistance allowances as an alternative to rent controls.

The Chair: Thank you very much. We are going to proceed with questioning. Let me find my list. Mrs Harrington.

Ms Harrington: I note you asked in the last page here, "Why the rush?" We were accused earlier today of having very silly policy to embark on this and we were told to defeat Bill 4 and go back to the existing system. I want to assure you that we want healthy rental opportunities for everyone in this province, the landlords and tenants, and that is why we are approaching this.

I would like to ask you for your comments on the following, which I just happened to find. I did not have it earlier this afternoon. This is from the annual report of Dr Ratna Ray, who is the chair of the Rent Review Hearings Board, to the government. She is not directly connected with the new government but was appointed some time ago. In her report she says:

"Neither landlords nor tenants are enamoured of the legislation. This observation is not a figment of the imagination of this chair. It is a publicly acknowledged reality.

Infinite complexity, inadequacy and inconsistencies of the act are a daily staple for this board. It has resulted in a horrendously convoluted, time-consuming and confusing program that makes both parties and practitioners unhappy. This high level of dissatisfaction cannot be allowed to continue."

That is why we are doing this.

"When a piece of legislation intended to be an instrument of common good" -- which of course all laws are supposed to be -- "results in an uncommon level of anxiety, anger and accusations, there is no option but to resolve the issues without delay."

Obviously, with the new mandate for our government for a four- or five-year term, we have to attack this and go at it as seriously as we possibly can.

Just two of the comments that the chair of this board makes:

"Out-of-town, offshore, nameless, faceless landlords are not exceptions. Neither all investors nor all property managers are concerned for the buildings' or tenant's wellbeing."

Finally, "There is a concern that tenants are paying off a building for a landlord and subsidizing flip transactions while not being considered at all when the profits from sales are taken."

This was the report to a previous government. I am wondering if you would like to comment?

Mr Lenardon: I think that, generally speaking, our position is one of attempting to persuade all who may be concerned to try and apply more common sense and less policy that is all-encompassing in its nature. There are assumptions that there are landlords who are out there who are profiting at an unnecessarily high level or not doing, for lack of a better way of saying it, their jobs as landlords, being, we believe, a distinct minority, not a majority, and should be dealt with in a more specific fashion. Therefore, all landlords, no differently than all tenants, are not to blame for the difficulties.

Mrs Y. O'Neill: Well, I want to thank all of you for coming this afternoon. As you know, I know a little bit about you and visit you from time to time, and what I see in your document, as I have seen before, is that you treat the whole situation and in some cases the whole family when you are trying to seek housing for them. I really do feel that you have done a lot for our community. I know you know, more than anyone, likely, the economy of eastern Ontario is not at its very healthiest moment, and we often hear that Toronto does not even know we exist. You have on page 4 attended to that very, very briefly, and I wonder if you would say a little bit more.

The context I would like you to say that in is, you began your document -- your recommendations are very helpful -- by saying you want to get involved in public consultation. One of the greatest difficulties I have with Bill 4 is the message it sends out to investors in this province, and certainly to landlords in this province, the insecurity that it creates, and certainly the fears that it engenders.

I do not think we needed Bill 4. I think we could have gone immediately into consultation once we had received the annual report that we had from the director of the annual rent review process, but we had to have Bill 4, which sent out a very negative message to many people. So I would like you to say a little bit more about your third paragraph on page 4 -- you must know more than is in that one sentence -- about the cancellation of renovation contracts and resulting losses of construction jobs. Could you just elaborate a bit about what you think and have observed has happened to the economy of eastern Ontario as a result of Bill 4?

Mr Lenardon: Before I answer that, I am going to ask if any of my colleagues here have -- I think you are looking for specific responses?

Mrs Y. O'Neill: Certainly something that would help this community get --

Ms Wilkinson: I can give you something very specific which is something I have been working on in the last two months. A lot of the people had building units, there are hundreds -- I am not sure of the exact number, I was involved with 75, but there are more -- of units which were condominiumized some years ago and have been rented for many years which are being sold right now in Ottawa-Carleton. Many of those are being bought by first-time buyers, which is nice that affordable housing is being made available. In fact, we are reducing the rental stock considerably.

There are a multitude of reasons for this, it is not just one, but one aspect is that some people do not feel it is worth while any more holding on to rental units, and there is a fear that this bill is going to make it so difficult to -- not make money, but to lose too much, because that is what happens with a lot of small landlords -- that they are being sold off. The rental vacancy rate here is already low. I am very concerned that over the next year we are going to find a very, very tight rental system here.

So that is one aspect of the economy, because they are not building -- l do not know of any major builder building rental units now -- and they are selling off some of the existing stock. I do not think it takes very much to work out that it is going to be creating quite a problem.

Renovations are the other part of it, and no major renovations are going on unless there is a very serious situation with a municipal order.

Mr Tilson: The government has indicated that it is going to encourage more and more non-profit housing. I would like to know where your organization's philosophy is on non-profit housing, as opposed to encouragement of the private sector type of housing. Does that help the situation? I am talking about perhaps the social issue of it. Does that create a widening of a gap between the people of this province, the economic gap between the people of this province, or is that a genuine good move?

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Mr Lenardon: To answer that kind of a question right now would be necessarily more a personal response than on behalf of the members. I think most of us, though, would find agreement in stating that the need for public housing as a specific thing is probably very necessary in a very tight and specific area of need and not, again, as a general sweeping answer to people in general who are having some financial difficulty.

We have already suggested some sort of allowance factor based on a more personal nature as a subsidy versus all-sweeping rent controls is probably a better answer generally, and the specific need for public housing per se should be for a very specific, very defined area of the population.

Mr Tilson: Sir, I would like also to ask you a question on the economic aspect of Bill 4. Not necessarily you, but your organization would probably deal with investors province-wide, nationwide and perhaps international-wide. Investors listening to the debate with respect to Bill 4 and reading the legislation of Bill 4; what has that done as far as the confidence that these investors have in the province of Ontario with this particular sector?

Mr Lenardon: I think you will find that investors -- and when we speak of investors, I assume we are talking about those who invest in income properties, small or large -- are no different in general than anyone else in the province considering buying anything, from a car to an income property. Therefore, the bottom line to that kind of a question is that if you were told when you bought it that your car was going to increase in value and two years later you were told that the rules were going to be changed and it was going to decrease in value and that anything you wanted to do to maintain its value would not be of any benefit to you because it would cost you more and more, you would tend to pull in your horns and not invest in that car. I think, in very simple terms, anything that appears to a prospective investor as a detriment to his ability to show some kind of return profit over a reasonable future is going to slowly curtail more and more the desire to purchase or build income property.

Ms Wilkinson: One of the major investors in, say, a large apartment complex is pension funds, and these are pensions of a lot of Canadians, and by the types of controls that are coming in we are actually reducing the value of people's future pensions and I think it is something to consider with investment. We are not just talking about nebulous -- there are individual people involved in those investments, and most of them are Canadians. There are some offshore, but the majority are Canadians and for the majority of them it is for long-term pensions, which saves government moneys because it means people provide for themselves instead of looking for handouts in their old age. I think it is something to keep in mind.

The Chair: Very good, thank you. Our time has expired. I would like to thank the Real Estate Board of Ottawa-Carleton for coming in. The hearings for this afternoon have been concluded. The committee stands adjourned until 8 pm this evening.

The committee recessed at 1735.

EVENING SITTING

The committee resumed at 2000.

The Chair: Ladies and gentlemen, I would ask everyone to please take their seats. Thank you for your co-operation. This is the evening sitting of the standing committee on general government. This committee is having public hearings on Bill 4 and Ottawa is one of the centres across the province that we have visited.

Mrs Y. O'Neill: Ottawa is not over yet.

The Chair: No, Ottawa is not over yet.

Mrs Y. O'Neill: You were using the past tense.

The Chair: We still have tomorrow -- tonight and tomorrow. I did not quite want it to sound like that.

We have two presenters this evening. The first presenter will be given one hour and the second presenter, I understand, will be given 45 minutes -- pardon me, 40. That is a little bit different than what we have been doing in other centres, or for other presenters. We have been allowing 20 and 40 minutes, but because of the size of the delegation we thought it would be only fair to allow an hour since a number of organizations are being represented.

FEDERATION OF OTTAWA-CARLETON TENANTS ASSOCIATIONS

The Chair: The presenters for this evening are from the Federation of Ottawa-Carleton Tenants Associations. You have 30 minutes to make your presentation and then the members of the committee will reserve 30 minutes for questions and answers. I would like you to identify yourself and all at the table and what positions you hold in this organization and any other organizations you may be representing. I will turn the floor over to you, Mr McIntyre.

Mr McIntyre: Actually, Ms Keasey will start.

M^me Keasey: Bonsoir, je m'appelle Marie Keasey. I am the chairperson of the Federation of Ottawa-Carleton Tenants Associations. Sitting next to me is Dan McIntyre, who is the executive director of the federation. Next to him is John Burant, the vice-chair of the federation.

J'aimerais souhaiter la bienvenue aux membres du comité à Ottawa. M. McIntyre va maintenant vous présenter l'exposé de la fédération.

Mr McIntyre: Thank you, Marie. My presentation will be entirely in English, but we certainly want to recognize the large percentage of tenants in our area who are francophone and deserve and need protection and good legislation as much as or more than anyone else. We are not going to read all of the brief to you.

The first page of our brief is a backgrounder. A number of you are not from the Ottawa area. We welcome you to Ottawa and we hope to see you back from time to time. Of course, Ms O'Neill is an old friend. It gives you some of our history and our history particularly with the rent review/rent control issue.

The position of the Federation of Ottawa-Carleton Tenants Associations is that we support this interim legislation. Bill 4 does not address all of the major concerns of tenants, but it does deal directly and boldly with the issues of capital expenditures and so-called financial loss. We will be asking or proposing a couple of amendments but essentially we are here for Bill 4.

Bill 4 is An Act to amend the Residential Rent Regulation Act, 1986. I think that is extremely important to underline, because this is the Residential Rent Regulation Act and this is Bill 4, so if you weighed them, you would see the difference. And you have to understand the RRRA to understand Bill 4.

That act, which we will refer to as RRRA, is so severely flawed that a complete overhaul has been in order for some time now. We are hopeful that permanent legislation will be forthcoming in a reasonable time. Tenants have learned at first hand that the current system is stacked against our interests. Compounding, a word I have not heard much here, and frequently excessive rent increases have meant that housing is becoming less affordable as it ages. Many tenants have experienced economic eviction or other hardships, such as having to go to food banks just to survive, and all tenants have had a reduced quality of life.

The results of the rent review system enacted in 1986 are not a big surprise to us. We predicted it. In fact, the legislation proved worse than our predictions, due to unforeseen regulations and the breakdown of the rent registry. Just for the record, I happened to be the tenant member of the Rent Review Advisory Committee in 1986 who did not sign the report. That was my first prediction.

In that historical context, we would like to deal with the issues of rent increases and their relationship to Bill 4. We are going to start with guideline increases, a topic not talked a lot about here either so far.

Landlords make more money in the years they do not go to rent review. In those years they get an extra 2% revenue bonus built into the 5.4% or 4.6%, whatever it is. This is in schedule A of this Act. It is not attributable to any cost. That 2% has been compounding since 1987. The effect today is that all rents, by the end of this year, will have been built up by ll%. So a rent of $600 per month contains a $66.00 bonus not attributable to any cost. By the end of 1990, it is 8.9%. To illustrate the buildup of rents compared to costs, we have put some charts at the back of our brief. I will be highlighting those later.

This giveaway leaves landlords with lots of money in current rents to pay for capital expenditures. It also leaves tenants with an outstanding grievance to be dealt with in permanent legislation. Bill 4 allows landlords to continue receiving this bonus during 1991, and perhaps 1992.

Turning now to capital expenditures, a source of substantial rent increases and concern for tenants, under the RRRA tenants would have to bear more than the costs for any capital expenditure. No consideration was given to necessity, desirability, affordability, quality, history or whether lower prices were sought. Placed on top of capital expenditures were management allowances, high-interest allowances and extra consideration if the landlord personally did some of the work. There was a tenant here from Minto this afternoon. According to their own submissions for rent review, they completely financed their so-called capital works out of their retained earnings. Rent review allows them interest as if they had borrowed the money. It is a good way to get a great return on your money.

Once placed into the rents, these allowances compounded over and over again. Tenants would keep paying long after the landlord had fully recovered costs and tenants would not share in the increased value of the building. Landlords have not been required to keep or use reserves for capitals. They do not even want to talk about the compounding bonus in the annual guideline. Nor has consideration been given to depreciation allowances. Costs no longer borne are allowed to remain and compound in revenue and the RRRA specifically states that any capital costs before August 1985 can never be taken out of the rent -- never. It stays in there for ever and, somewhat contrary to what Mr Caparelli said today, even under the new act it is only if that specific, same item ever comes back that the original allowance is taken out, not the compounded allowance.

The expectation of landlords is that future tenants should pay for everything. They want current rents and other landlord benefits to be ignored.

Bill 4 provides much-needed relief -- that is what it is -- for tenants facing the one-sided considerations given to capital expenditures.

Again, our charts will show some of the true ramifications of capital allowance increases.

Financial loss: Everybody knows the golden rule of investing: Buy low, sell high. The RRRA induced investors to buy high with the prospect of selling higher and with tenants subsidizing the transactions through increased rents. Tenants get nothing positive for these transactions. All we get is the rent increase along with sometimes unstable management, because it is going to change, and sometimes reduced cash flow for maintenance. Sale prices were further propped up by the use of vendor-take-back mortgages and the recalculation of interest rates on those mortgages.

The elimination of financial loss will mean that properties will be more fairly valued in sales transactions. More important, it ends the tenants' subsidies to investors, including the insidious phase-in provisions of the RRRA.

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Extraordinary cost changes: Bill 4 eliminates all but six of the categories eligible for this treatment. These are matters said to be beyond the landlord's control.

The only category that concerns us is municipal taxes. We propose that this matter only be considered where the cost increase is due to a general mill rate increase. We think that changes due to reassessment ought not to be considered for a rent increase. Reassessments can be a product of capital works done to the building. As these would already be recognized in previous cost awards, it is unfair to ask tenants to also add on the reassessment cost to the taxes. If the change has to do with market value assessment -- and if you had an hour, I could talk about this -- it is not right to treat an increase by way of a landlord application when there is no mechanism for a rent decrease when buildings have been assessed downward.

Maximum legal rent: A little time bomb in the RRRA. Under the RRRA, every rental unit has two rents, actual rent and maximum legal rent. Often they are identical. However, when maximum legal is higher than actual, landlords can take large catch-up rent increases without any application whatsoever. These increases often catch tenants off guard. They are contrary to the intent of Bill 4. The gaps occur because of extremely generous rate-of-return provisions in the RRRA and/or landlords, for whatever reason, not taking or needing annual increases.

In keeping with the intent, it is necessary to return to a system that deals with actual rents. Landlords who have not taken increases usually do not need the increase. With the rent registry not working, tenants do not know that they are exposed to these increases. Sometimes no increases are commensurate with no maintenance. Large rent increases are large rent increases. They ought not to be tolerated. An amendment would be required.

Timing of this act: Discussions at this committee, in the Legislature obviously, in the media and elsewhere have often centred around the effective date of this legislation. We keep hearing the word "retroactive."

Landlords seem to believe that they could do anything they wanted and they would be guaranteed results. As critical as I am of the RRRA, nowhere in that act are rent increases guaranteed. In fact, the implementation of the RRRA brought about a significant change to the way rent increases are treated in this province. Under the RRRA, the Minister of Housing became personally responsible for rent increases in the province. Previous law, the Conservative law, had delegated responsibility to a commission, at arm's length. The RRRA made rent increases a political decision mandated by legislation. As long as the same minister, or the same government, was in power, landlords and tenants could expect rent increase decisions to go a certain way. But neither landlords nor tenants should be able to expect the status quo when the government changes. Elections are a democratic method of bringing about change.

As of 1 October 1990 we have a new government and a new minister. There is an ability to change the law. I understand that was checked with the Attorney General. There is an obligation to act in a manner consistent with what you promised the electorate, wherever possible. This minister and his party had voted against the RRRA. While they were in opposition, Dave Cooke moved a resolution, in May of last year, to throw out the RRRA and bring in real rent control.

During the election, the NDP made a specific written promise to end the current system and replace it with a simple system of rent control. It would have been unconscionable and unthinkable for this government and this minister to fail to act as soon as possible to end a situation they had so steadfastly opposed. From 1 October onward the minister would have been put in a position of authorizing increases that he did not agree with. He was on record. Governments that act on election promises are to be commended. The blood would have been on their hands had they dithered.

We have identified over 10,000 units in our area that could have been belted with high increases in 1991. That could have been 10,000 broken promises without Bill 4. We expected the government to keep its promise, and Bill 4 is a significant step in that direction.

All the capital expenditures we have seen recently claimed were financed from retained earnings. All of the financial transactions were voluntary. Tenants do not have the same voluntarism to what happens to them. It would not be necessary or right for tenants to have to carry the freight again. If anything, Bill 4 is too late. A lot of damage has been done to the affordability of our housing.

Affordability: According to the regional municipality of Ottawa-Carleton, about 37% of tenant households had an affordability problem in 1986. That is before the RRRA comes in. We believe that figure to be closer to 50% today. With the minimum increase above the level of inflation and a number of other increases well above it, it just follows, because incomes are not going up that fast. Rents are eating up more and more of tenants' income. We often see less and less maintenance at the same time.

The only way to make rental housing more affordable is to hold rent increases to below inflation. Units are naturally aging and it seems senseless to make us pay more for our units in relative dollars. They are getting older, that is a fact of life. Bill 4 puts the brakes on an escalating problem. Other legislation and initiatives are still necessary to tackle the problem, and we -- and I say "we," the 100,000 tenant households in this area -- cannot afford to make it any worse.

Summary: Tenants in Ottawa-Carleton currently pay over $700 million in annual rent. I estimate it would be $7 billion in the province. It costs about half of that to operate rental units. We recognize that operating costs are subject to inflation and we expect tenants to pick up that increase on reasonably maintained properties. The rest of the money goes for equity and profit. There should be sufficient revenues to cover major necessary capital works. It is built into the rents with these 2% bonuses and whatever and the cost no longer borne.

It is not necessary to place a larger tariff on future rents, because landlords do not recognize the magnitude of current rents. We are attaching to this brief a list of rental buildings that RRRA or Bill 4 have been impacting upon. They may look like names and numbers but remember they are real people who live in these units, people who are struggling to get by or get ahead, who are struggling with taxes, who only hope for fair treatment and who do not have a lot of money or ability to lobby governments. It is on behalf of these very real people who are impacted by rent increases that we present this brief this evening. Rent is not in control in this province. Rent control is needed and Bill 4 is a start.

That is the formal part of our brief. I want to walk you through some of the appendages. The next page shows the amendments that would be required to meet the two problems that we see as outstanding. We think these amendments are consistent with the intent of the legislation.

Some background on the charts and scenarios is on the next page. The main thing I want to emphasize is these are not extreme examples. These are rather conservative examples of what happens with what has been termed as almost "affordable" increases because they are not the 20% and the 100% increases and all that stuff. Mr Caparelli told you that there was only a couple of hundred units that got over 100%. That is right. Does that make a 20% increase right? Anyway, I do not want to get too far on that one.

In the first scenario that we show you we take a typical rent of $500 per month in 1986, fully serviced -- that is, heat, hydro and parking. What we do is apply the guideline increase each year and we apply the factor developed by the building operating cost index, which simply measures the cost for landlords. What we have done here too is taken 60% as operating cost, and let me tell you I am observing more and more cases where landlords are only spending about 40% to 45% of their rent revenue on operating cost. The RRRA recognizes 67%. That is where the two thirds of BOCI comes in, because that is applied to revenue. So that is generous too, but we are not too upset about that. What you do then is apply the increases, and what you see on the other side is the increased gross profit that happens without the landlord putting another penny into the building.

What the landlord does who is in a profit position is take the money out. He can put it into another building, invest it somewhere else, whatever he wants, so it is like having a $100 savings bond where you take the interest out each year. You are not entitled to accumulation unless you put the interest back in. So what you have over a mere seven-year period is, the gross profit grows from $2,400 to $3,541 and it keeps growing, and that is the effect of the 2% bonus built in to rents today. So there is more money than ever before, even for landlords who do not even go to rent review.

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Our second scenario proposes that in 1988 the landlord does some capital expenditures, and we have worked this out as a mix of five- and 10-year items and we have imputed what works out to an 11.1% increase in 1989. We have even allowed for revenue lag, but again, if you look at the gross profit figures, by 1993, whereas with the guideline the gross profit was $3,541, the gross profit now is $4,009. The capital is completely paid for, and the rents are still escalating. Okay? The provision for costs no longer borne does not kick in.

The third scenario is a building that gets sold late in 1987, which is just convenient for giving you most understandable charts. What we have presumed here is that the landlord was given the 5% financing in the first year and two phase-ins. Look what happens to this landlord. By 1993 his rents are $9,665. He has not put a penny into the building, other than buying it. His costs are the same, because operating is going to cost the same to operate the same piece of merchandise. His gross profit is now $4,804. The money just grows and grows, compounding. Every banker knows what it means. That is what is happening to our rents. That is why putting controls on and slowing down this escalation is absolutely necessary, and the government has gone some distance on this, but frankly, I think there can be more distance to go.

The last two sheets include some of the buildings we have identified that have had some history with the act. I am sure we have missed a number of them. There are a couple of spelling errors in there, that sort of thing. The other thing, modestly, is an article that I wrote on rent control prior to the introduction of this bill, for your amusement.

That concludes my remarks tonight. I would be happy to take any questions that anyone might have.

The Chair: Very good. I mentioned earlier on today when we had a very large delegation that the sitting of this committee is basically an extension of the Legislature and therefore no demonstrations are allowed and I am going to ask all of you people in the audience tonight to help me run an orderly meeting. I know that we all want to express our emotions, and I know we feel strongly about these issues, but we have to have orderly meetings and I need your co-operation and your help to make sure that happens. Thank you.

We are reserving 35 minutes for questions, starting with Mr Tilson.

Mr Tilson: You were quoted this afternoon, Mr Burns, by --

Mr McIntyre: It is McIntyre, by the way.

Mr Tilson: Mr McIntyre, I am sorry. Mr Burns was the one who quoted you, from the Urbandale Realty Corp.

Mr McIntyre: I usually do not quote him.

Mr Tilson: Well, he has quoted you, and I would like to read to you what he has in his statement, a quotation that he attributed to you on an issue that you dealt with a few minutes ago, and I would like you to respond to that. Unfortunately, the way the system is we hear a landlord, we hear a tenant, we hear someone else. It would be nice to hear both at the same table, because we hear quite conflicting views on issues. However, Mr Burns has commented, and I would like to read what he has said. This has to do with the subject of allowance for work and rent.

"Dan McIntyre of the Ottawa federation of tenants keeps saying that there is a 2% allowance for the annual statutory increase to allow the landlord to save for periodic major capital works. An examination of this will show that 2% of a $400 per month rent provides a fund of $96 per rental unit at the end of each year: hardly a dent in the above-noted costs which we have experienced; hardly a dent towards the cost of items such as the $6,395 per rental unit spent by the Ottawa-Carleton Regional Housing Authority for installing metal cladding on a high-rise senior citizen building to solve a serious and dangerous brick problem or $10,000 per unit to replace flat roofs on row housing or $5,942 per unit for repairing a garage parking deck."

That seems to coincide with what you have said tonight.

Mr McIntyre: No, it does not.

Mr Tilson: Could you respond to that?

Mr McIntyre: He has forgotten compounding as well. He has taken 2% as a literal number. It is 2% every year: End of 1990 that is 9%; end of 1991 that is 11%. On that $400 rent, which is well below CMHC average, by the way, that would be $44 per month times 12. That gives you about $600. So it is a heck of a lot more than he has alleged.

That is a starting point. There could be costs no longer borne in that rent. There could have been other cutbacks and savings. There could be other factors. The tenant from Minto this afternoon indicated he would like to see windows put in so the landlord could save money on heating costs. There is another way you pay for capital expenditures. There are all sorts of things in there, and we have to look at those things.

I guess the underlying point is there is a lot more there than what this committee has been told, in the current rents.

Mr Tilson: I think that gets to the real problem, as I see it. There is obviously a perception -- because you are not the first person that has come to these hearings and has said that -- the landlords have lots of money; they are ripping the system off.

Mr McIntyre: I did not say that.

Mr Tilson: I am not saying that you are, but that is the implication that many tenants' groups are saying.

Mr McIntyre: We do not imply that.

Mr Tilson: That landlords are taking advantage of the system.

Mr McIntyre: Of course they are. I would too.

Mr Tilson: And yet we are having landlord after landlord after landlord coming to this committee and saying that the money simply is not there.

Mr McIntyre: Well, Mr Tilson --

Mr Tilson: If I could just finish. I know you are all excited about this and that is understandable, because of the crisis -- because there is no question there is a crisis. I see a number of seniors in this hall tonight who cannot afford any rent increase, and I appreciate your speaking on their behalf. But we have landlord after landlord after landlord coming to us saying, "There's no more money." They have enough money to maintain their buildings, to do minimal maintenance, but they do not have enough money to perhaps put new roofs on, to build parking garages, to even carpet halls.

I can say in my riding, which is the great riding of Dufferin-Peel, we do not have a great deal of apartments in our riding. It is a rural-urban area, but there are a number. I spoke to one apartment group last week, which was a twin building basically made up of senior citizens. Last year, 11 simply left the building because they could not afford the increases. They could not afford any increases, let alone the 4.6% or the 5.4%. We had a meeting and the landlord was present, and the landlord opened up her books and she showed that they simply did not have enough money to construct a new roof. They had put on a boiler system, which had gone through the system. They did not have the money required to replace the hall carpets in the two buildings.

So it is a bit of a dilemma and I would like you to comment on that, when we have landlords coming to us simply saying there is no more water at the trough.

Mr McIntyre: Several things to comment on, because you have raised several things. First of all, there are some landlords who, if they open the books in my presence, I would trust them. There are some I would want a third-party auditor.

Mr Tilson: Of course you would.

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Mr McIntyre: I am going to take that with a grain of salt.

You cannot simply pull out a case from your area and say, "This applies across Ontario."

Second, I have been following this committee very closely, thanks to its being televised, and the opposition has been asking for information, and rightly so. That is part of your role and I appreciate that. Why has nobody done what I have presented in a brief here? Why has that not been done in a study to show what has happened to rents? The information I start with was given to me by the Ministry of Housing when I was on the Rent Review Advisory Committee. It might be ironic, being a non-signatory, that I now use it, but that established for me a basis that you could look at the truth in operating.

I worked with the private sector for many years before I worked for this organization, and was very happy to do so. I used to work with farmers. I did their books. They all cried about how little money they made, and I always sympathized with them, but I knew what they had.

So what we need too is the government to do these things. You can impute all sorts of different rents and different operating cost ratios and different factors in here and you will see that really the money is there, it is just whether or not they make good --

Mr Tilson: But are all these landlords lying to us?

Mr McIntyre: I do not know.

Mr Tilson: Are they all lying to us?

Mr McIntyre: I do not know.

[Interruption]

The Chair: Order, please.

Mr Tilson: Ask a foolish question, get a foolish answer, I guess, I do not know.

Mr McIntyre: I think what they are doing is quite legitimate. We came before a similar committee in 1986 as the tenants, and we did not want the government of the day to pass Bill 51. We fought, we did our best, we put forth every argument we could and we lost. I am sitting watching landlords and I appreciate what they are doing. They are trying to defend what they have got. You have got to look at what they have got. They do not want to lose it. I do not blame them for that, but what you have got to look at as a Legislature is what is right for tenants and what is right for the affordability of housing today. Bill 4 is a start; that is what it is.

Mr Tilson: What are your recommendations to this committee? Obviously we are dealing with Bill 4, but somehow it has got into more permanent legislation, which is really unfair because we have not even seen the permanent legislation, but we are talking about Bill 4.

Keeping that in mind, I see statistics -- and I spoke to you this morning about this and I would like to hear your comments about it -- where there are 360,000 tenant households that spend 30% or more of their income on rent. In other words, they cannot afford the 4.6%, they cannot afford the 5.4%. Bill 4 does not address that problem. It does not do anything for the 40,000 families on the waiting list for subsidized housing. It does not do anything with respect to that. In other words, it is called a war on poverty. The question that I ask you is, is the answer simply that the government takes over the whole housing industry, or what role does private enterprise have in this whole system?

Mr McIntyre: Private enterprise has a major role to play no matter what the supply mechanism is. There is not a non-profit housing unit in this province that was not built by the private sector. So what we are talking about is ownership. There is a definite role there. They have got all the bulldozers, they have got all the cranes; and that is great, they do a good job.

Mr Tilson: They have you, sir; you are downplaying yourself.

Mr McIntyre: Okay. In terms of the ownership, in 1986 again, when the Liberals and the Conservatives voted for the RRRA, the rationale for that act was this was going to make the sky full of cranes. They were going to go out and build apartment buildings. I think we have got to the point where we realize that is just not going to happen because you cannot put the product in the ground and get a rate of return in a competitive market that you would require, like over $1,000 a month for new units. So we have to be realistic about that. We have got a lot of condominiums in this city that are dressed up as rentals right now that are being rented out. They are really condominiums. The rug can be pulled out under anybody.

Mr Tilson: My question was, what do we do for the next two years, this moratorium period where we are having these rents all of these people cannot afford? I imagine there are people in this very room who cannot afford the rents that you are recommending.

Mr McIntyre: Let's get back to Bill 4. It is a temporary piece of legislation. We have got 10,000 people who are looking for its passage because they went through Christmas thinking they were going to not have to pay the 20% proposed increase. You, and hopefully I, will get our hands on that green paper Monday morning and let's get to it. I am willing to sit down with you, with members of the official opposition, with the government, with the staff of the ministry, and we have got a lot of ideas, but what we are asking for right now is, give us some certainty, give us some relief and pass Bill 4 and we will have the most thorough, honest discussion that we can possibly have about the future of rent control in this province.

Mr Tilson: But during that time, sir, the tenants of this province cannot afford the rents that you are recommending.

Mr McIntyre: If you do not pass Bill 4, I have got 10,000 people looking at 20% increases. So there is no value to not passing Bill 4. Let's get on with that issue; I agree with you.

Mr Duignan: Thank you, Mr McIntyre, and your panel, for coming here this evening, and on behalf of the government committee members here I thank all the tenants for coming out here and showing support for Bill 4. You are quite correct when you say that Bill 4 is a temporary bill to give some relief to the tenants of this province, who have not had relief for the last number of years and are paying an average of 11% increase in rent. It is a breathing space where we get together to put in a permanent piece of legislation that is fair to both tenants and landlords.

I have some questions that I would like to ask today, some specific questions around some increases that your tenants will be facing, for example, in the Minto properties. Could you give us some specific examples?

Mr McIntyre: Minto management have applied in their Bayshore portfolio, which is one of their older ones, which I can assure you they are making good money on. In fact, I do not mean to say it out loud, but I sometimes refer to it as their cash cow. Parkwood Hills is another place they have applied, Herongate. They went to rent review in great numbers October 1.

I do not know whether there is any relationship between the fact that that was when the NDP came into power with your written promise, and I am not doubting that much of the work that they would claim as capital expenditures was done, but I have no reservation in saying Minto will do quite fine without those rent increases and the tenants are the ones that -- I mean, if you are going to err, err on the side of the tenant. I do not think it is an error, but basically, let's start putting the tenant first for a while. The landlords have been having this escalation that we are showing here. Put the brakes on. Let's get on with the discussion Monday morning and see what happens.

Mr Duignan: Given the fact that some of the Ottawa landlords have been collecting consistently high rent increases through the old system, do you believe that landlords have the money to make repairs out of rental revenues?

Mr McIntyre: Certainly. First of all, the building operating cost index has a component in it for maintenance. The day-to-day maintenance has a component in it for a superintendent, has a component in it for heat, hydro, water, etc. It is all built into that increase. And the two thirds of BOCI we are not disputing tonight. So it is all there. It is built in. And this is from figures landlords put in to rent review and that were used to give to the Rent Review Advisory Committee in 1986 and that started that index, which is a good index. It does not go on the price of oranges or potatoes or anything, just what it costs to rent.

Also, we were told that while 1% of the extra 2% is for capital, you cannot say, "Well, they spend 1% every year so you can't count that." That compounds every year, so now, even if you took half of that, that is 5.5%.

The other 5.5%, one of the landlord deponents in 1986 who was a member of the RRAC committee came before the committee and said that is for a rainy day. Well, it is raining on tenants, so let's make some changes.

Mr Duignan: Have you any idea of the numbers of tenants who have been economically evicted?

Mr McIntyre: What we know is that night follows day, and if you increase the housing component of one's expenditures, you put a pressure on. We do not have people calling up and saying: "Hi, I just moved into the senior citizens home. I did not want to, but I can't afford to live in the Saville Terrace Apartments any more." But we know that that is happening. We also expect that people are doubling up. We also expect that, as somebody said this afternoon, they are going to substandard accommodation. They are moving around. And we know that we have a homeless problem in this province.

We also know that even those tenants who can afford the rent increase, supposedly, do not get a 20% pay increase when they get a 20% rent increase. So even they might cut back on going to the movies or going to the restaurant, all of which has a negative effect on small businesses in our community. So it has effect.

There is no way of quantifying an economic eviction. I can tell you one of the first cases I got involved with was a building at 1071 Ambleside where the landlord got a 37% increase. We formed an association, tried to fight it, got the 37%, the landlord appealed, got 52% on appeal. We do not have an association there any more. You know why? Because all the members have left. I do not know where they are.

Mr Duignan: I firmly believe that housing is a right, and someone's apartment or town house or whatever it may be is their home. They put X amount of effort into it to keep it their home. Do you believe that landlords view it that way, or it is just viewed from an economic point of view, a profit base? Or do they believe that tenants are just transients?

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Mr McIntyre: They are all in the business to make a profit, and under Canadian law and practice that is fine. There are some who, I think, have a pride that they are providing a vital service to Canadians. I think there are others who are simply in it for the money, who are buying up some of our older stuff and pulling some of the stuff that -- frankly, I think maybe this committee should be looking at the conduct of some of the landlords who are coming in and doing various things, being in violation, taking this money and not spending it and then going for low-rise rehab grants, all sorts of things that are going on. I do not -- and this is one thing that has bothered me through the committee -- paint all landlords with the same brush, but there are certainly some characters. I personally support what was said this afternoon: You have to license landlords.

Mr Abel: Thank you, Mr McIntyre, for sharing this very comprehensive report with us. I found it very informative, and believe me, it certainly does concur with concerns that I have heard from tenants in my riding, back home in Wentworth North.

I think it is very fitting that you and this group are here tonight because today, for those of you who were here today, we all had to sit and listen to a lot of Grit and Tory pap on Bill 4.

Mrs Y. O'Neill: You do not know what party those people were from. That is an insult to the people who were here today.

Mr Abel: And we were called socialist paps. I mean, take it and --

Mrs Y. O'Neill: I do not like the people of Ottawa being accused of that kind of thing.

Mr Abel: Anyway, if I can have the floor back, I would think with the line of questioning it is quite obvious that the Tories have put dollars before the people and the Liberals have seemed to ride the rail and jump off whenever it suited them best. In fact, one of the Liberals who voted for this bill on principle in the House today called this bill "silly." I do not think it is silly at all. I think it is a necessary piece of legislation, something, as Mr Duignan said, to give us some breathing space so we can get this disaster straightened out.

Mr Tilson: Nice question.

Mr Abel: The question, I guess, I do have to put to you is, obviously there are deficiencies in the current legislation, would you not say?

Mr McIntyre: I do not have enough time to answer all the -- I just want to make a point for the record. The federation is a non-partisan organization. Many of us personally choose to support whatever party of our choice, so I do not want to get involved in the political back and forth here.

Mr Abel: No, no, this is not political.

Mr McIntyre: But what I am going to do though, Mr Abel, as a former Hamiltonian, is challenge the government to start developing along the lines we have showed you in our brief as to what is happening with rents, because a whole lot can be done. We did it with a simple Supercalc program to show the growth in rents. You have a responsibility. We would like all parties in the Legislature to support tenant rights and rent control, and I think it is important that we work together and we discuss it and we talk about differences, and we are prepared to do that.

Mr Abel: Exactly, and we do want to work together.

The Chair: Mrs Harrington has time for one question.

Mr Abel: Okay. Did we use our 11 minutes?

The Chair: Yes, Mrs Harrington has time for one question.

Ms Harrington: Thank you very much, Mr Chair, I appreciate that.

I want to thank you, Mr McIntyre, for bringing your expertise here. Certainly with your going back to the RRAC, you do bring a very comprehensive way of looking at all of these figures and data.

Part of our job, obviously, as a government is to bring people together in this province. I am sure all of your tenants realize -- and you just said it a few minutes ago -- that we need to have very good landlords and very hardworking landlords. I know there are some in this room whom we have heard this afternoon; in fact, two women who I know are sincere and hardworking. I wondered how would you answer them when they told us -- and I believe them -- that they are hurting, that they have to get a job in order to make the building stop, I guess, from going into bankruptcy.

Mr McIntyre: The dilemma there, Ms Harrington, is that that gets into the financial loss provisions of the RRRA, and investors tell us they are risk-takers. They did not have to buy the building. They knew what the revenue of the building was when they bought it. Why would somebody buy a building that would deliberately lose money for a few years? Tax breaks and the rewards from rent review are two obvious answers. Those rewards are being paid out of our pocket. Tenants were not at the table when those deals were signed. Certainly, without the RRRA those landlords would not have paid the same price for the building. Second, they had every right to walk away and say, "Either the price comes down or I'm not buying it from you." But they chose to buy it and they chose to ask us to subsidize their investment.

Mrs Y. O'Neill: Mr McIntyre, you and I have spoken quite a few times, though we may be of different political stripes, and I am not even sure of that. We do not talk about that because we do know we have a mutual interest to help people who need to be helped, and you and I did work together on the hotline -- and now I think it has been restored -- and I certainly do feel that all of the parties who were part of that made a good effort. I am very happy that you decided to put down the people you represent. All of the first few are from my riding of Ottawa-Rideau. I do not know whether that was on purpose or not, but it is nice to see that Ottawa-Rideau is being profiled.

If we look at your page of the people you represent, it does look like they are more or less the larger landlords of Ottawa-Carleton. I do think that for the most part, and you may want to question me on that, you do seem to represent those units and buildings that have 50 or more units, and they, in my humble opinion, are somewhat different than some of the people we have heard from this afternoon even, the 40,000 people in this area who have three units or less. So I feel that that consideration has to be taken, certainly not in Bill 4 it is not, but in the permanent legislation. You may want to comment on that.

I do think that you have brought forward some of the weaknesses in Bill 4. We have been told, even by the government members, including the parliamentary assistant, that there are hardships on both sides still, even with Bill 4, and we have to get permanent legislation. That is what we have been basing our whole hearings on, it seems. The provision for costs no longer borne is a very crucial point that no doubt could be eliminated very quickly and with some creative legislation -- and I do have to say that I think some of your thinking is very creative -- and that the municipal taxes issue, I think, is something that could be looked after immediately in an amendment to Bill 4. I do not think we should wait. It is so simple. The maximum rent issue is another issue that, I think, is one that could be wiped out very quickly.

I am hoping that next Tuesday, when we begin clauseby-clause, some of the things that you are hoping for, and that I am hoping for, will be received by this government. We have very little indication at this moment that there will be any changes to Bill 4.1 do not think it is necessary to wait until January 1992 to do some of the things that you have brought forward.

I have a couple of questions for you. You say that a 50% affordability problem is existent in the community.

Mr McIntyre: That is an opinion.

Mrs Y. O'Neill: I have not got that same statistic. I do not know where you got it. Simply because, certainly in Ottawa-Rideau, and throughout Ottawa-Carleton for that matter, there is a lot of social housing, there is a lot of co-op housing, both of which I support very strongly. Could you tell me where you get the figure?

Mr McIntyre: First of all, let me assure you that is taking out the non-profit housing sector. That is of the private rental sector, and if that is not clear enough, I am sorry. The 37% comes from a study done by the regional municipality, recently published 1986 figures. The close to 50% is an opinion -- expert, if you will.

Mrs Y. O'Neill: Okay, I will accept that for the moment. I also have problems with "all tenants have had a reduced quality of life."

Mr McIntyre: That is right.

Mrs Y. O'Neill: You said earlier that you do not do sweeping statements about landlords, and I respect that you do not usually do that, and that is why I found that statement rather difficult. Maybe you would like to say more about it.

Mr McIntyre: A reduced quality of life, first of all, would be a variable. For some it would be a little bit, for some it would be a lot. But the reason for that is, if rent goes up higher than income, then, and particularly in terms of relative dollars and particularly in terms of the aging of the apartment, there is a negative connotation to some other aspect of that person's life. It is not necessarily a deliberate, but it is always there because the RRRA builds in a situation where, as long as inflation is where it is, the guideline will be higher than the level of inflation even though our numbers show us that in order to maintain the status quo a landlord needs approximately 50% of the rate of inflation.

2050

So it is very generous that way. What it means is the building ages, so you have lived in a building 10 years, it is 10 years older, and even with a good, quality management company some of that will show. It will be a little greyer, perhaps, as we all are.

If I could just pick up on a couple of things you said earlier, first of all, as you know, I live in your riding. That is why I started off with those --

Mrs Y. O'Neill: You have an identity and so do I.

Mr McIntyre: Second, you are right in saying that we probably do more work per capita with large buildings than small. We would remind you that some of the other deponents who have talked about some of the particular problems of small buildings, not having the rents registered -- there is a mix of players in that field as well.

Mrs Y. O'Neill: Yes, I realize that.

Mr McIntyre: And there are some that I, as an open-minded individual -- as, I am sure, are many people here -- would want to look at honestly and openly. But I think that you will find there are a lot of players you will not want to be too helpful towards in that --

Mrs Y. O'Neill: I still have trouble and I will not accept the "all tenants," because some tenants in OttawaCarleton -- and as you know, we have a lower unemployment rate than any other part of this province at the present time. I do feel still that "all tenants have a reduced quality of life" is a little bit -- I may go for "some," maybe even edge towards "most," but "all" is a bit much. Because we do have some people in this community with a very stable income that is growing.

Mr McIntyre: But if their income is growing, should not their quality of life?

Mrs Y. O'Neill: Yes, and it is.

Mr McIntyre: It is not meant to be sweeping in the sense of saying that it is a drastic reduction for some. It is a variable.

Mrs Y. O'Neill: Okay, let's leave that.

I have a little trouble, too, when you talk about how you are paying for people who have made a bad investment. No matter what you buy, whether it be your telephone, whether it be a product in the store, every investment is a corporation or some conglomerate, and we pay for those investments. Some of them are registered on the stock market, some of them are in buildings. So I think that no matter what we do -- I mean, rent is a commodity. It is also a right. Housing is a right.

We have to have investments, because that is what makes the world go round. Many people in this province do not have pensions, and many people who came before us this afternoon, some of whom have been criticized -- and I feel their sincerity is definitely genuine -- and they do have a right to have an investment that they chose. It may not be the investment you or I would choose, but it is their choice. It is true that the tenants will pay for some of that the same as they will pay for their toothpaste if that stock goes up.

Mr McIntyre: The problem is that what the RRRA seeks to do is guarantee that investment, and no other investment I can think of is guaranteed. I played around a little bit with a few stocks. They were worth $16 a share about four years ago and they dropped to $8 and I got rid of them at $10. I know what it is like to lose money. It happens.

Mrs Y. O'Neill: We all do make those --

Mr McIntyre: There are all sorts of businesses that are going bankrupt in other fields. We do not make the consumer bail out those businesses. Some people win and some people lose in a capitalist system, and I honestly hope that most people win, but if they do not, then that is --

[Interruption]

The Chair: Order, please. I need everybody's help to run an orderly committee meeting. I repeat, this is an extension of the Legislature. I cautioned our visitors this afternoon twice, and if we start conducting these meetings in a disorderly fashion, then we will not be able to do the job for you that you want us to do. So you have to help me help the committee. Thank you.

Mrs Y. O'Neill: Mr McIntyre, thank you very much for an exchange. It is the usual kind of exchange we have and I am very pleased that you are going to be very keen on examining the paper on Monday morning, as will I, and I hope we can continue to work together.

Mr Brown would like to ask you a few questions.

The Chair: Mr Brown has one minute.

Mr Brown: Thank you, Mr Chairman, I think. Mr McIntyre, you seem extremely knowledgeable in the Ottawa-Carleton rental market. I wonder if you could tell me how many additional units have come on stream during the RRRA in the Ottawa-Carleton area. I am not necessarily talking about new buildings but new units.

Mr McIntyre: I could not answer that question professionally. There will be some people here from the city tomorrow who might be able to assist you with that specific question. In a sense, what you are asking me is, "Did the RRRA work?" and the answer is no. But there are a lot of buildings built, as condominiums have gone up, multiple-unit residential buildings and all sorts of things. But I am not sure how much of that has been in the last five years.

Mr Brown: Do you think that Bill 4 will assist the level of maintenance within buildings during its interim time?

Mr McIntyre: In my opinion, as legislation Bill 4 is neutral on that question.

Mr Brown: Do you think that landlords will do just as much as they did before?

Mr McIntyre: I think what you are asking me now is how a group of people will behave. I would hope they will behave responsibly.

Mr Brown: Just so I can be clear, and because I have so much, I am going to jump a little. Picking up on Mr Tilson's point, you do not believe that the private sector will build any more buildings in Ottawa because it costs about $100,000 a unit. Is that what you told Mr Tilson? Therefore, the public sector will have to take on that role in Ottawa-Carleton?

Mr McIntyre: No, what I am saying, in general terms, is the cost of producing a unit, then putting it on the market and getting a rate of return, it does not matter whether it is the right rate or not, you simply do not have a market. At that rate, people can be buying condos, they can be or renting some of the stuff or they can be looking at the home ownership field. So there is not a great market with a rate of return. At least when you get into co-operatives and non-profits with government assistance, obviously you are directly addressing some of the questions of affordability. I hope we do not get too deep into that because I --

Mr Brown: No, what I am saying --

The Chair: Thank you, Mr Brown. Mr McIntyre, I want to thank you and the Federation of Ottawa-Carleton Tenants Associations for making your presentation this evening and helping the committee in its work.

Mr McIntyre: Thank you, Mr Chair, and we look forward to discussing the discussion paper with you.

The Chair: Certainly.

ACTION-LOGEMENT

The Chair: The next, and last, presenter of the day is Action-Logement and we have allocated 40 minutes for the next presentation, 20 minutes for the presenter and 20 minutes for questions. We would ask the presenters to please identify themselves for the record and whom they represent and take the floor.

M. Morin : Bonsoir. Je me présente : Guy Morin, président d'Action-Logement. À mes côtés il y a Marielle Drouin-Jones, représentante de l'Association des locataires des appartements Evergreen à Vanier, et Anne-Thérèse Bourdon, qui est coordonnatrice, section logement. J'aimerais vous souhaiter la bienvenue à Ottawa.

Le premier point que j'aimerais faire est que ActionLogement appuie la démarche du gouvernement avec la Loi 4, avec sa proposition sur le contrôle des loyers.

Nous sommes une jeune organisation ; nous sommes en opération depuis un peu plus d'un an. Nous sommes encore au stage de recueillir des données et des témoignages sur la question complexe du logement qui nous touche tous dans le quotidien, que nous soyons propriétaire ou locataire. Certains peuvent rêver de pouvoir avoir un logement, de devenir propriétaire, mais pour plusieurs de nos clients c'est souvent un cauchemar. Là, je pense aux pensionnés, aux petits salariés, à tous qui ont des revenus fixes ou qui reçoivent des augmentations plus basses que l'augmentation qui est généralement admise par le contrôle des loyers. Ça devient un cauchemar lorsque tu es obligé de payer 40 % à 60 % de ton revenu pour ton logement, qui est quand même un bien essentiel, surtout quand tu sais que ce n'est pas un investissement ; ce n'est qu'une dépense, une nécessité de la vie.

Je suis fier de voir que la législature ontarienne prend le temps de s'arrêter à cette question primordiale. Je ne peux pas prétendre avoir toutes les solutions tout de suite d'avance --

The Chair: Excuse me, sir. Could we close the doors in the back? We have to able to hear the presentation because we are going to want to ask questions. Sorry for the interruption.

M. Morin : La question du logement est une question de société ; on doit s'assurer de maintenir un logement abordable et convenable pour toutes les couches de la société. Et certainement on doit développer des mécanismes législatifs pour assurer que les bien moins nantis de notre société ne doivent pas laisser pour compte dans un marché libre ce qui est essentiel pour eux parce qu'eux n'ont pas la liberté, ils n'ont pas la liberté de leurs revenus. Ils ont souvent des revenus qui sont très limités et ils sont pris dans le cycle de la pauvreté. Le tunnel est long, et si leur logement continue à leur coûter la majorité de leurs revenus, ils vont certainement être longtemps dans le cycle de la pauvreté. Ils ne verront jamais le bout du tunnel.

Ce sont quelques considérations, peut-être, qu'on peut dire plus philosophiques, mais je vais laisser Anne-Thérèse, notre directrice, témoigner un peu plus des témoignages et des différentes données qu'on a pu recueillir au cours de la dernière année.

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M^me Bourdon : Merci, Guy. Bonsoir mesdames, messieurs. Vous excuserez mon état de fatigue, surtout après une journée de travail. Alors, il semblerait qu'il y avait un problème technique. Il est maintenant réparé. Je veux demander votre écoute.

Bien que n'ayant qu'un an d'existence, Action-Logement est déjà en mesure de dégager certaines grandes tendances en matière de logement. Ainsi, avec le profil des clients que nous avons rencontrés, nous constatons qu'un lien existe entre «situation financière» et «problèmes de logement». Mon témoignage est basé sur les observations d'une année d'opération et je déposerai à la fin de mon intervention le premier rapport annuel d'Action-Logement.

Les clients que nous avons rencontrés, pauvres, voire même très pauvres, arrivent mal à payer des coûts de loyer qui grugent une part importante de leur revenu. C'est au nom de ces clients que je m'adresse à vous aujourd'hui.

Vous vivez à Ottawa, Vanier, Gloucester et vos revenus annuels sont inférieurs à 25,000 $ par année. Pouvez-vous imaginer un instant ce que chercher un logement peut représenter ? Partout où vous vous adresserez, le propriétaire exigera dès le départ le paiement de deux mois de loyer, à savoir le premier et le dernier mois de loyer. La plupart des propriétaires vous poseront plusieurs questions sur votre niveau de solvabilité, et si vous vivez de prestations d'aide social, souvent on vous refusera le logement. Bien sûr, on ne vous dira pas que c'est parce que vous êtes un assisté social, mais le refus sera le même.

Admettons que vous ayez réussi à vous trouver un logement ; admettons que, de plus, vous aimez votre logement même si payer votre loyer vous occasionne un mal de tête mensuel. Arrive inexorablement le temps où votre propriétaire vous envoie un avis d'augmentation dépassant parfois, et même souvent, la norme annuelle. Souvent, trop souvent il vous a promis d'améliorer quelques détails, «bientôt» il fera installer une boîte aux lettres qui ferme à clé, «bientôt» il peindra la cage d'escalier, «bientôt» il remplacera les quelques ampoules électriques brûlées, mais hélas, pour beaucoup de locataires ce bientôt n'arrive jamais.

Vous avez l'audace, voire le courage de lui téléphoner tout en ayant une crainte, celle de passer pour un locataire indésirable ou de vous faire jeter dehors. Mais vous passez outre ces craintes et vous l'appelez pour comprendre l'avis de l'augmentation de loyer. Il vous répondra alors que les taxes ont augmenté et qu'il a le droit d'augmenter les loyers. Bien souvent vous ne comprendrez même pas sa logique. Pire, bien souvent, si vous êtes francophone et que votre propriétaire est anglophone, il vous donnera ses arguments en anglais et vous ne les comprendrez pas ; il y a des francophones à Ottawa. Alors, vous plierez à l'avis de l'augmentation de loyer ou et vous chercherez un logement moins cher. Vous aurez alors peut-être le réflexe de faire placer votre nom sur une liste d'attente pour obtenir un logement subventionné, mais on vous informera très rapidement que votre nom figure à la 2352^e place. Que faire ? La question est posée. Je vous pose la question. Nous comptons sur vous pour nous fournir des réponses.

... Action-Logement, organisme sans but lucratif, aimerait que le gouvernement ontarien vienne à la défense des locataires et surtout de ceux et celles qui vivent à la limite du seuil de la pauvreté. En instaurant un meilleur système de révision des loyers, en freinant les augmentations de loyers qui souvent se situent au-dessus de la norme annuelle, en adoptant le projet de loi 4, votre gouvernement, notre gouvernement prouverait qu'il existe une justice sociale en Ontario.

Parce que Action-Logement estime que le logement est un droit et non un luxe ; parce que Action-Logement dessert des communautés où le taux de locataires est nettement supérieur au taux de propriétaires -- je vais parler pour Vanier, c'est là que nous avons notre local ; à Vanier, il y a 30 % de propriétaires et 70 % de locataires -- Action-Logement, au nom de tous ses clients, veut vous remercier pour votre consultation publique et espère que cette consultation influencera équitablement vos décisions futures.

J'aimerais maintenant passer la parole à Marielle Drouin-Jones ; elle travaille pour une association de locataires assez active à Vanier et Marielle va vous faire part de son témoignage.

M^me Drouin-Jones : Je représente une association que nous avons créée il y a deux ans pour les locataires des appartements Evergreen de la rue Blake. Mon plus fort de moi-même a voulu pousser cette chose-là parce que ce que j'ai vu était déplorable.

Quand j'ai eu mon appartement il y a cinq ans, je savais en quoi je rentrais, mais j'ai voulu me l'arranger. Alors, j'ai déposé de l'argent pour réparer le plâtre, la plomberie etc. Mon frère m'a aidée et j'ai payé quelqu'un parce qu'il fallait que je vive quelque part. Donc, s'il faut que je vive quelque part, il faut que tous vivent quelque part et non pas dans la rue.

J'ai plaidé cette cause, je l'ai apportée -- excusez-moi, je ne parle pas suffisamment français -- au Rent Review Hearings Board. Le propriétaire a fait une demande pour monter les loyers de 22 % à 31 % et il a gagné sa cause. Dan McIntyre nous a représentés. Il y a en a qui ont été très fâchés parce que, après six mois, il avait le droit de monter le loyer, maintenant à 17,4 %, et en plus, avec le loyer maximal qui monte 8 % de plus, de 5,2 % de cette année.

En déposant ma cause à cette association, au ministre du Logement et au low-rise rehabilitation program, j'ai envoyé ces choses-là aux quatre dès le début parce que je voyais que l'action était urgente. J'essayais de pousser autant que possible pour aider ces gens.

En même temps, je suis très sympathique envers mon propriétaire parce que souvent il m'a demandé quoi faire, qu'est-ce qu'on peut faire avec ceci et qu'est-ce qu'on peut faire avec cela ? Nous nous sommes parlé et je lui avais suggéré : «Arrange la toiture, pose des nouvelles fenêtres. Tu vas sauver un peu de chauffage». Dieu merci, il l'a fait un peu. Il va un peu se sauver de l'argent.

Mais en plus de ça, en déposant cette cause j'ai demandé de la protection parce que premièrement, là où nous sommes il y a des trous dans les murs. Les personnes vivent là quand même. Tu peux voir les tuyaux de plomberie dans certains appartements. J'ai pris des photos. L'électricité est fautive, certaines places dans certains appartements que j'ai touchées, on y touche le poêle, on prend un choc chaque fois.

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Toutes ces petites choses, j'en ai fait une sorte d'étude. Premièrement, j'ai fait une page, je les ai déposés aux 77 unités et leur ai demandé : «S'il-vous-plaît, donnez-moi la permission de vous représenter. Vous n'avez pas besoin de me payer, c'est parce que je veux que ça aille mieux, parce que c'est un beau building qu'il était autrefois. Il peut revenir à quelque chose de beau, très beau.» C'est le Colonel By qui avait bâti tous ses appartements et c'est un beau petit chez-soi, c'est tout proche et moi j'aime la petite communauté de Vanier.

J'ai fait une analyse de planchers, de murs, de poêles et de réfrigérateurs, de l'électricité, du chauffage et de la plomberie. Dans tout ça, dans les 24 qui m'ont répondu sur 77, il y a 85 % des planchers qui ont besoin d'être réparés. Le chauffage, il y avait 33 %. Je me souviens, je suis allée dans deux appartements au mois de décembre et en janvier, que les personnes n'avaient aucun chauffage à la maison et puis je leur ai montré comment avoir du chauffage. Je ne nomme pas de personnes.

Le propriétaire m'a envoyé une lettre disant de me mêler de mes affaires, alors Dieu merci, du moins il y avait ce chauffage-là. Je leur ai écris une lettre et je leur ai dit d'aller à Vanier à l'inspectorat, de manquer une journée d'ouvrage. Je sais que c'est très important parce que cette personne-là donnait 80 % de son salaire pour le loyer. Je dis, «S'il-vous-plaît, ça vaut la peine, manque ta journée d'ouvrage ou demande à quelqu'un pour te remplacer pour faire entrer l'inspecteur.» Il y en a qui l'ont fait, il y en a qui n'ont pas pu le faire. Moi, je suis restée trois jours chez moi sans ouvrage pour attendre que l'inspecteur de Vanier vienne. Il s'est aperçu qu'il avait beaucoup de choses qui étaient mal, et le lendemain le propriétaire avec ses réparateurs était là. Alors, je l'ai fait comme ça ; c'est parce que je suis assez forte pour pousser ces choses-là.

Continuant, pour les poêles et réfrigérateurs, il y a beaucoup de personnes, des mères avec leurs enfants qui furent obligées d'acheter des réfrigérateurs. Aujourd'hui, un réfrigérateur est vraiment exceptionnellement coûteux. Les réfrigérateurs ne fonctionnaient pas, toute la nourriture était gâtée. Dans ma tête j'ai pensée, mon Dieu Seigneur, quand je travaillais à CAC à Montréal il y avait une assurance qui, si les réfrigérateurs ne fonctionnaient pas, couvrait toute la nourriture.

Alors j'ai dit, quoi faire ? Ensuite j'ai dit, tiens, je vais faire ça. Dans la plomberie, c'est défectueux complètement. Je me souviens que dans mon appartement -- moi c'était le sous-sol -- entre le mur entre la cuisine et la chambre de bains, c'était les Niagara Falls qui descendaient. Maintenant, à cause de ça, dans ma chambre à coucher toute la peinture se détache du mur ; je touche le mur et je peux pousser comme ça.

Moi, ça m'est égal, les autres ça me concerne. Il y a un monsieur dont, franchement, la situation est déplorable parce que c'est un homme qui est handicapé, il est sourd et muet, il a eu une opération à coeur ouvert et puis maintenant il vit là. Ce qui est arrivé, les gens qui vivaient là, il y avait beaucoup de locataires qui n'étaient pas très bons. Ils sont partis mais ils sont revenus. Ils ont brisé les fenêtres. Le propriétaire a fait poser des planches au lieu des fenêtres. Les poignées de portes, il n'y en avait pas et n'ont jamais été posées.

Ce pauvre homme a un bâton de deux pouces carrés qui tient la porte et le mur pour que personne n'entre le soir. Imaginez-vous cette personne qui est déjà handicapée, qui ne sait pas comment communiquer avec le monde qui arrive avec une affaire comme ça. J'ai pu communiquer de cette façon : sur sa porte est écrit «Sonne la clochette», et j'ai tapé du pied à terre. Il pouvait ressentir le vrombissement et par la porte il pouvait entendre certains sons. Je comprends ça, c'est à cause des ossements du crâne qu'ils peuvent comprendre ça. Ils ont une sensibilité extraordinaire, ces personnes-là.

En plus de ça c'est le dépotoir : en été le dépotoir est supposé d'être approuvé par la ville de Vanier -- les mouches noires et les rats. Un soir j'ai ouvert la porte et il y a eu une bibite qui m'est sautée dans le visage et j'en ai eu une frayeur.

En plus de ça, notre surintendant, c'est un très bon surintendant. Le propriétaire l'a supposément congédié. Il m'a demandé d'être sa gérante. Je lui ai dit : «Qu'est-ce que tu as fait avec une affaire comme ça ? Cet homme a du coeur et il prend soin de nous, il prend soin de tes affaires. Va le chercher.» Oh, il est comme ci, il est comme ça, c'est un Canadien français, il ne sait pas parler l'anglais. J'ai dit, «Monsieur, ça c'est de la discrimination.» Il s'est excusé. Donc, j'ai dit, «Reprend cet homme-là, donne-lui ce qu'il demande et je te garantis qu'en un an tu vas avoir des résultats et tu seras un peu plus satisfait que tu l'es maintenant.» Mais il dit, «Il demande trop cher.» J'ai dit, «Combien tu payes ?» Il m'a dit, «Tant.» Alors j'ai dit, tiens, tiens, je vais m'arranger d'une autre façon. Je lui ai dit, «Veux-tu que je sois ta gérante ?» Il dit, «Certainement.» «Alors je te fais une proposition. Comment tu paies ? Qu'est-ce que c'est les choses ?»

Il me donnait tant d'argent, comme 2000 $ par mois, mais il fallait que je paie tout. Finalement, quand j'ai tout calculé il n'y avait rien qui restait. J'ai dit, oh, une minute là, ça sert à rien d'enrichir un riche par nos propres moyens quand rien ne nous revient en retour. Parce qu'aujourd'hui le monde est assez intelligent pour savoir que si tu veux quelque chose, du moins il faut que tu aies le courage d'en demander ce qui t'appartient.

Mais pour ce monsieur qui est malade, je lui ai promis de l'aider. Ce soir il ne pouvait pas venir parce que quelqu'un avait stationné dans son stationnement et puis il a poussé l'auto. Cet homme travaille de six heures le matin à six heures le soir. Je lui ai expliqué qu'il pouvait avoir une pension d'invalidité par le ministère des Affaires communautaires, c'est à part du logement. J'ai dit, «Je vais t'aider, n'aie pas peur ou quoi que se soit.» Finalement, mon propriétaire m'a écrit une lettre disant qu'il a fait ci, il a fait ça. Je suis très contente qu'il m'a répondu. Je lui ai répondu. Pardon ?

The Chair: You have one minute left, madam.

Ms Drouin-Jones: One minute left?

The Chair: Yes.

Ms Drouin-Jones: Very well. I have a representation here, but I have made some recommendations, and if you do not mind, please, I recommend that the old customs of my younger days be reinstated:

1 Firemen check in the springtime for fire hazards in every home; I remember that.

2. Policemen on the beat at nightfall check every block in the community that children be off the street. I was beaten up by young punks around my place. My fingers were broken in that.

3. That fine bureaucratic line between municipalities and provinces be thoroughly and satisfactorily investigated.

4. That building inspectors stop the blind eye and do their jobs responsibly, ensuring that any irregularities and complaints be put in the order and forced.

5. That where tenants have paid the increased rents and repairs have not been done, which is a fact in this case, reimbursement be given to them somehow.

6. That only 1.5% be given for yearly increases in guidelines. The rest is gravy.

7. Where in the past tenants have been paying 80% of their total income to rent, that be rebated to a standard average of 25%, funded by provincial and federal governments.

I recommend that we have a system built by the city to acquire rent geared to income and availability to rent and buy and be responsible for that unit. This system has functioned in England with the council houses and it is functioning in the province of New Brunswick.

Are we are all so complacent as to let time slip out of our hands, and shall we wait till the future of our children is jeopardized?

I recommend that, due to the high cost of housing, a rebate would be given by the city taxes to new owners having less than 25% in income level as regarding the council house.

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The world is becoming so small and our resources so carefully scrutinized, let it be that investors would adopt the farmers' attitude of not wanting more than what a crop can yield. I recommend that the rent review system carefully screen applicants for rent increases and be aware of dispositions, ambitions and culture shocks. In a city such as Ottawa, many come to work and the excuse that tenants are transient is a myth. If people are comfortable in their lodgings and close to their work, there will be no loss for landlords.

M. Drainville : Merci pour votre présentation, et je vais essayer de parler français. Mon français n'est pas bien mais je vais essayer quand même. D'abord, avez-vous une copie de votre présentation, madame ?

M^me Drouin-Jones : Ce soir ? Oui, j'en ai une.

M. Drainville : Si vous êtes capable de la donner au comité, j'aimerais bien ça.

M^me Drouin-Jones: Si vous voulez, en plus de ça donnez-moi l'adresse où je peux tout vous envoyer le paquet des plaintes et tout ce que j'ai présenté jusqu'à présent.

M. Drainville : Oui, vous pouvez faire comme ça. Merci. On a parlé avec beaucoup de propriétaires aujourd'hui et les propriétaires ont dit au comité que le problème ce n'est pas parce que le logement coûte beaucoup d'argent, mais parce qu'il y a trop de pauvreté dans notre société.

Le problème est un problème pour le gouvernement, ce n'est pas un problème pour le propriétaire. Des propriétaires disent aussi que le gouvernement peut payer des «subsidies». Ce n'est pas ça le mot en français.

M^me Drouin-Jones : Ce sont des subventions.

M. Drainville : Oui, des subventions pour donner de l'aide. Je veux vous demander si c'est une bonne idée ou si ce n'est pas bon à accepter.

M^me Drouin-Jones : Dans mon discours je n'ai pas pu expliquer parce que j'ai peu de temps, et je vous remercie quand même. J'explique la culture de pauvreté, j'explique la bienséance des pauvres qui tiennent ensemble. Vous allez chez un pauvre et il va vous donner un verre d'eau en entrant. Mais dès qu'une personne peut économiser un peu d'argent et monter un peu, ce sont les strata de la culture, de la société.

Ils vont se tenir de côté parce qu'ils ont peur de retomber dans ce même trou. C'est très dificile de monter de la pauvreté au niveau de ce qu'on appelle «low-middle income to higher» jusqu'à ce qu'on peut être assez confortable. Dans cette affaire-là, c'est une destitution et les personnes ont peur et c'est une paranoïa.

M. Drainville : Je veux poser une question. Est-ce un problème juste pour le gouvernement, donner une subvention pour les pauvres, ou est-ce un problème aussi pour les propriétaires ?

M^me Drouin-Jones: À mon avis la pauvreté, nous l'avons créée nous-mêmes, parce que les pauvres n'ont pas besoin des riches, mais les riches ont besoin des pauvres. À mon avis, ce que j'avais fait ici dans ce discours c'est ce que la madame fait avec Action-Logement, ce que M. Mclntyre fait qui instruit le public peu à peu, au moins que ça lui rende un peu ; et finalement, plus de communication, plus d'aide, alors il va y avoir le ministère des Services sociaux et communautaires, il va y avoir le ministère de l'Éducation, et je ne veux pas dire seulement dans l'école, je veux dire de l'éducation publique continuelle jusqu'au temps où ce soit comme une pluie et que finalement nous soyons vraiment rassasiés, la communication de ça.

Inconsciemment, les riches veulent garder les pauvres dans un état d'ignorance et le morale est très bas. On n'a pas besoin de ça ici au Canada. C'est un beau pays qu'on a ici et on a bien de place pour tout le monde. Seigneur, on en rentre, des nouveaux Canadiens. Alors c'est une fausse excuse et il faut que l'attitude soit changée.

Un propriétaire, peut-être là, admettons que quelqu'un -- je ne veux pas prendre celui-là qui est pauvre parce que sa culture est ci, est ça. Mais si les pauvres vivent ensemble avec les moins pauvres et un peu plus riches, ça fait une communauté où on voit comment sont les choses, comme les personnes qui sont handicapées.

M^me Bourdon : J'aurais voulu aussi répondre à monsieur. Je pense qu'il y a sûrement des changements qui devraient s'opérer au niveau législatif. Si je regarde, les propriétaires ont effectivement le droit de demander le premier et le dernier mois de loyer ; c'est sûr que ça leur garantit le paiement du dernier mois. Par contre, dans la loi il n'y a rien qui les oblige à accepter une lettre de garantie de l'aide sociale. C'est là que nous rencontrons vraiment des problèmes.

M^me Drouin-Jones : Est-ce que je peux vous dire quelque chose en plus de ça ?

M. Drainville : Je pense que M. Wilson veut poser une autre question.

Mr G. Wilson: I was wondering whether you get the co-operation of the authorities in the problems you have with landlords and whether you can say something about that.

Ms Drouin-Jones: Which authorities are you speaking of, sir?

Mr G. Wilson: The municipal and provincial authorities where it comes --

Ms Drouin-Jones: I think I have had some misleading phone calls but I finally got face to face with the minister. I know how to reach Queens' Park. The problems that I am getting at the moment are mostly with the city of Vanier. I am sorry to say this, but it is mostly with the inspection department of the city of Vanier and the low-rise rehabilitation program.

In the letter that the minister has sent me, there is a promise there that things have been done. Somebody is saying it is not there, and somebody is, so that is file 13 to me in the bureaucratic system. "Don't say too much or else you will lose your job." You know, there is a largesse of conscience there, but otherwise, up to now I am very grateful that I have finally succeeded with 24 out of 77 to put their confidence in me. And believe you me, they are not treating me well all the time.

Mrs Y. O'Neill: Thank you, Ms Drouin-Jones. I have some difficulty with some of the things you have said because, as you know, as members of the Legislature, we are protected with immunity and you are not. Particularly now you have just made some pretty strong accusations and pointed very directly to one department in the city of Vanier. I think that your member, Mr Grandmaître, has made us very aware at Queen's Park of a lot of problems in housing in the city. I do think there are some difficulties, and they are not just confined to Vanier, in municipal and provincial co-operation.

I am very pleased that you brought that forward -- not many witnesses have -- because we do have a Residential Rental Standards Board and it should be protection against the intolerable conditions that you have brought forward tonight. There is nobody in this province who should be living in the conditions you described and I am very glad that you are going to present your remarks to us. I hope also you will present your recommendations, because I think some of them are very good and creative and to the point.

I do feel that housing is a very complex issue. The pressures in Vanier are very different than in the city of Ottawa, and you know that.

Ms Drouin-Jones: That is right.

Mrs Y. O'Neill: I do feel that the Ministry of Housing has tried to educate people throughout the years. It is a very difficult job, though, because every landlord-tenant relationship is unique, and I do commend you for the things you have done and the leadership you have taken. I would suggest you continue to pursue those and to get all of those, and us, who can help you to do that, because I do think that we will never solve the housing problems in this province without partnerships: partnerships with tenants and landlords and partnerships between provincial and municipal governments, one that you have highlighted very strongly.

So I do feel that you have brought forward human rights issues. It is a very complex situation that you have brought forward -- employment equity, a lot of things. You are tackling them and I hope you will continue to get support and bring your problems forward to those people who can truly help you. And do not forget your MPPs when you are doing that.

Ms Drouin-Jones: Thank you, madam. I forgot there is one recommendation that I have asked for. The corporate standards board in Toronto is excellent. I recommend that their standards -- no minimum, no middle -- be the one across Ontario. This is what I want for all. And if the municipalities cannot accept that, well they better get somebody else who can do the job. This is how I feel about it. I am sorry, but I have seen too much of poverty --

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Mrs Y. O'Neill: You write those recommendations down and I am sure they will be given very due consideration by the members of this committee. Hopefully you will bring them forward very quickly.

Ms Drouin-Jones: Thank you very much. I appreciate this.

M. Tilson : Bonsoir.

M^me Drouin-Jones : Bonsoir, monsieur.

Mr Tilson: Where I come from, very few people speak French, and those who do don't.

Ms Drouin-Jones: Don't feel bad.

Mr Tilson: I have attempted at Queen's Park to take French lessons and last week my French teacher laughed at me.

Ms Drouin-Jones: Oh, that is too bad.

Mr Tilson: I am trying, but I am not ready yet to speak to you in French and so you will have to put up with my English.

I sympathize with the comments that you have made, and obviously it is called war on poverty.

Ms Drouin-Jones: It is.

Mr Tilson: It is as simple as that, and it goes far beyond the housing issue. It is food, clothing, unemployment, and it is a vast problem. It involves municipal, provincial and federal governments that are going to have to deal with this overall problem, and I think it is admirable of you to appear before this committee, because it certainly affects housing.

I do not think that Bill 4 is going to solve your problem, because the people you represent cannot afford any increases. They cannot afford the 4.5%, they cannot afford the 5.4% increases, and of course on top of that there will be an allowance for additional items, such as increases in taxes and increases in hydro. I think that is something that this government is going to have to deal with. The provincial government is going to have to deal with the very issue that you are here about, a war on poverty.

I am concerned about the conditions that you have described as to what the people you represent are living under, and I think you have come to the crunch of it. Obviously, we do have a Residential Rental Standards Board that will deal with some of the issues, but hopefully your municipal government will deal with the problem as well. If they do not have property standards bylaws, they should, and if they are not enforcing them, they should. There is something coming up this fall called the municipal election, and you may have to be taking your war on poverty to the municipal field as well. I do not think that we have any immediate answers to the problems that you have raised, other than the fact that I am sure the government will be introducing legislation to assist you.

Ms Drouin-Jones: Sir, believe me, the amount of rent that people are paying at the moment I believe is fair. I am for the landlord as much as I am for the tenant. Right now, these people want their homes and this is a psychological trick. They want their homes and they are fighting. If they have enough guts, like, you know, something to work on, they are working to keep their homes and they say, "Oh, darn it, I'm so fed up working like that, I'm going to get an education." It is an incentive for them, and keep it that way. Do not bring the rent down to a very low minimum. The poor will never get out of it. They have to come out on their own and they are doing it because they want to live there.

M. Morin : Monsieur Tilson, c'est certain que lorsqu'on parle du logement, on va aborder la question de pauvreté. Les pauvres ne peuvent pas se payer de logement ; ils paient le logement de ceux qui peuvent être propriétaires du logement. Lorsqu'on paie un loyer, on paie les taxes, on paie souvent aussi le chauffage et puis c'est souvent une grosse partie de notre revenu. Si on fait 25 000 $ et on paie 12 000 $ de loyer, il nous en reste 12 000 $ pour vivre.

Pour revenir à la question de M. Drainville tout à l'heure, lorsqu'il demandait si le gouvernement est le seul corps qui peut résoudre la question du logement : je ne crois pas qu'il soit le seul. Je crois qu'il y a toute la question de coopération, comme le mentionnait M^me O'Neill, qui devrait exister entre les différents intervenants.

Mais la question de logement est toujours une pierre angulaire dans la guerre contre la pauvreté. Si notre témoignage ce soir semblait être plutôt un témoignage vers la pauvreté, c'est que pour les pauvres, lorsqu'ils arrivent sur la question de logement, c'est souvent la question primordiale : est-ce que je vais être capable de payer mon loyer à la fin du mois ?

The Chair: That about takes up the time of the committee for the day. I want to thank our presenters for their information that they have left the committee. I appreciate you taking the time to join us this evening. The standing committee on general government is adjourned until tomorrow morning at 9 am.

The committee adjourned at 2136.