Committee Transcript 1991-Jan-24 | Legislative Assembly of Ontario

The Chair: I see a quorum. I would like to call the standing committee on general government to order. As members can see, we have a very full itinerary today. I am going to need everyone's co-operation for us to keep on schedule, bearing in mind that many of the members have to catch a flight early this evening back to Toronto.

I would also like to draw your attention to page 2 of the agenda today, where you will see a slot for 2 pm and 2:20. We have witnesses for those slots and if you have a pen ready, at 2 o'clock Chris O'Neil and at 2:20 Moore Custom Homes Ltd.

SANDILANDS TENANTS ASSOCIATION

The Chair: The first presenter for this morning is Sandilands Tenants Association. The committee has allocated you 20 minutes for your presentation, 10 of which can be used to make an oral presentation to the committee. Ten minutes will be reserved for committee members to ask questions and for you to respond, and that will be done on a rotating basis. For the record, we would like you to identify yourself and also identify any position you may hold within any organization. Thank you. The floor is yours.

Ms McDougall: Good morning. My name is Sandra McDougall. I am representing the Sandilands Tenants Association of 3160 Peter Street, Windsor. My position of secretary-treasurer allows me to speak with many of the tenants and I would like to bring to your attention some of their issues and my own.

July 1984 I moved into my apartment. My carpeting in the living room has a large stain on it, the carpets in my bedrooms are covered with cigarette burns from previous tenants, the windows in my bedroom leak whenever it rains, I have cracks in the ceiling that are beginning to look a little dangerous and my refrigerator does not work properly.

I chose the apartment because of its proximity to my job and the rent was very good. In the last three years the rent has skyrocketed. I am almost in a position where I can no longer afford my rent and there is a proposed rent increase of 10.4% for this year if Bill 4 is not approved. I live alone and am self-supporting. I have no one else to share living expenses with. What am I to do with a rent increase of that amount?

I feel that in our particular case our rent increases have been based solely on financial loss caused by refinancing due to flipping, and that is unfair gouging. Our present increases started in 1989 with a guideline plus phase-in, continued last year, and we will continue to pay until the financial loss is paid. We are not even paying for any visible capital expenditure improvements.

Several of our tenants are on fixed incomes -- pensions and mother's allowance. We have a lot of seniors and students in the building who will be forced to move into substandard housing as a result of the proposed rent increase. Substandard housing rents are enormous. They will be leaving homes that they have lived in for many years, their homes, to apartments where landlords care less for their buildings than our landlord does. Our seniors are paying 45%, 50% and 62% of their incomes on rent alone. How are they going to afford the proposed 10.4% increase?

In my six years of tenancy in a block of six units that always seemed to be sold together, I have seen five owners. Our rents have increased substantially and no repairs are being completed except for board of health issues.

The six units that Wonsch Construction Co got together in the 1970s and 1980s as an investment were and are handled as separate entities. As I said earlier, I am speaking for and representing the Sandilands tenants separate from the other five units. We do have common problems relating to the flipping of 1987 to 1990 where, in 33 months, we have had five different owners. The representative of the Scarsdale Tenants Association, one of the apartments in the group of six, will go into more detail about this later in the day.

I realize that we might not have a totally different problem from the ones you have heard, but I feel that we might be a window into a totally different area of Ontario rental real estate. What has happened over the last four or five years in the Windsor-Essex county area and others outside of Toronto is the so-called flip. Mostly speculative absentee landlords, a portion of whom have not even seen the property, are investing in our market. They have none of the pride usually associated with landlords and their holdings and have no plans in regard to dealing with necessary maintenance and repairs but look only for the bottom line -- profit. There is no mutual feeling between landlords and tenants towards the property and each other as a result of this.

We have a parking lot behind the building that floods in the summer and is a skating rink in the winter. Tenants are paying for the privilege of parking in this lot. If they do not park in the lot, they are forced to park on the street and we do not live in a neighbourhood where this is such a good idea, if there were a place to park. We have a lot of university students parking in the area, so parking is hard to find at times. This parking lot leaks into the underground parking area. One senior has repainted her car because of damage caused by the leaking; one places a plastic cover over her car to avoid damage.

Three or four landlords ago we were to get the parking lot repaired and it has not been repaired yet, other than a slight patch-up job that was completed by the second owner and has not controlled the underground leaking. We are paying more for the privilege of parking underground.

As I stated earlier, we have many seniors in the building. Our last landlord wanted to charge them $15 to change a lightbulb. Many of these people are too afraid to complain for fear of repercussions.

Hence, we formed the Sandilands Tenants Association in June 1990. Many of the tenants are still afraid to speak up, for fear of being evicted. We have been asking the last two owners to repair the parking lot. As of yet, this has not been completed. The ramp leading into the underground parking is supposed to be heated. I say "supposed," since it has not worked since I have been a tenant in the building and we are being told that it is too costly to repair. Why are we paying government-imposed phase-ins if we are getting no repairs completed? We are paying phase-ins for a landlord that does not even own the building any longer.

We have a carpet in the front lobby. One of our seniors tripped on the carpet since the door has caused a corner of it to roll. Luckily she was not hurt seriously. The managing company for the building paid $65 to have tape placed under the edge of the carpet -- $65. Is this how our rent money is wasted? Who is to stop them from paying exorbitant prices for substandard work? The carpet, incidentally, is rolling again. Will our rents be subjected to an allowed increase when the owner is sued for someone being hurt?

The same senior who was hurt has purchased her own refrigerator and stove because the manager could not fix her old ones properly. She states that the manager told her to buy her own. We have three more seniors who have purchased their own fridges and stoves because they could not be fixed.

As a tenants' association, in September 1990 we distributed forms that explained what needed to be repaired in the individual apartments and they were given to the management company. As far as I know, they have not approached any of the tenants about repairs. Some of these are little things, like a bedroom door not closing, door handles falling off, things that you would fix in your own home before it becomes a major repair. They have not attempted to touch any of these problems. It makes me want to question if they are waiting for it be a large enough repair that they will be able to apply for a rent increase.

If I were to buy a house, the government does not allow me any sort of relief because the last owner made a profit and I have a high mortgage. Why is it allowing them to increase the rents on us and seniors, who do not complain? Do we not owe our seniors more respect than that? Our tenants' association is trying to keep an eye on what repairs are being completed. Do landlords have to justify to us paying a $65 fee for a $5 repair the manager should have done? Who keeps an eye on them so that they cannot take advantage of us? Are they even required to tell us how much they paid for repairs so that we can keep an eye on them?

The Sandilands Tenants Association and I thank you for allowing me to speak at these hearings and I appreciate your anticipated co-operation in these matters.

The Chair: Thank you, Sandra. The rotation will be Progressive Conservatives, New Democratic Party, Liberals. Mr Tilson.

Mr Tilson: What is currently the average rent in this building?

Ms McDougall: I pay the highest rent. I can tell you what I am paying. I pay $616.

Mr Tilson: For how many bedrooms?

Ms McDougall: Two bedrooms.

Mr Tilson: What was the last increase?

Ms McDougall: It was 9.4% or 9.8%.

Mr Tilson: So what does that mean in dollars?

Ms McDougall: I think I paid $585 before.

Mr Tilson: When was that?

Ms McDougall: Last year.

Mr Tilson: Do you know what it was prior to that time?

Ms McDougall: No, I do not really.

Mr Tilson: But talking to other tenants, that is probably about the average for the building. So it went through the rent review process and the items that you mentioned existed when the building -- I am just unclear. Some of these matters that you refer to, did they exist when you first moved in?

Ms McDougall: Some of them.

Mr Tilson: Have you approached the municipal inspection authorities?

Ms McDougall: No, we have not yet.

Mr Tilson: I recommend that you do because I think a lot of those issues could be resolved with the municipal authorities. They can literally take the man -- I do not know who it is, the man or woman, whoever it is, the landlord or corporation -- to task to repair those things and if it does not, that is what those bylaws are designed for. There are labour regulations, there are health regulations, there are fire regulations. Some of those things seem to fall into that category and I would recommend that there are services available now that could assist you. Have you read Bill 4?

Ms McDougall: No, I have not.

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Mr Tilson: Some of your concerns obviously are to landlord and tenant problems and it sounds like you do have an unfair landlord, the way you have described it, at least. Bill 4, of course, does not encourage capital expenditures. For example, if it needs a new roof or new major expenses, Bill 4 does not encourage that. Do you think that is right? You do not think the landlord should be encouraged to perform major capital expenditures?

Ms McDougall: I do believe he should be.

Mr Tilson: Oh, you do. You shook your head the other way. In doing that, how can we encourage the landlord to do that? Bill 4 discourages that.

Ms McDougall: I think the landlord, if he is investing in a building, is going to increase his investment as he does repairs anyway, so it is to his advantage.

Mr Tilson: I quite agree, but if the landlord does not have the funds, how is he going to pay for a new roof? Where is he going to get the money?

Ms McDougall: I do not know.

Mr Tilson: You do not know? See, that is the problem. I appreciate where you are coming from, but we are having landlords coming to us and saying: "We don't have the money, and because of Bill 4, we go to a financial institution and the financial institution won't give us the money. It literally does not generate income." The result is, there are buildings across this province that are literally going down in standards and tenants' quality of life is decreasing. I sympathize with your position and I hope the government people take that into consideration.

Mr Mammoliti: Ms McDougall, you did not mention who the landlord was.

Ms McDougall: Oh, dear, I cannot pronounce his name.

Mr Mammoliti: Can you try for us?

Ms McDougall: No, I am sorry, I cannot. I can tell you who the management company is. It is Marwick Management.

Mr Mammoliti: You mentioned that there was flipping and gouging. Did this particular company or this particular person have a chance to look through the building prior to buying it and, in your opinion, look at things like roofs and anything else that may be subject to repair?

Ms McDougall: I have heard that today he came through the building. He bought the building last summer. Today he is going to be coming through the building.

Mr Mammoliti: So there was a chance. Mr Chairman, I do not have much time.

The Chair: That is correct.

Mr Mammoliti: But this is a prime example of what has been happening out in the province, when you talk about gouging and when you talk about the ample opportunity for individuals to take a look at buildings prior to buying them. What is happening is, they are buying them and then having to repair all kinds of things in the building and then charging the tenants for it. In this case we have a number of seniors who cannot afford it. You mentioned 45%, 50% 62%.

The Chair: Is there a question there someplace?

Mr Mammoliti: These seniors who are obviously on fixed incomes, can they afford this?

Ms McDougall: One of them is having a lot of problems.

Mr Duignan: You illustrated a problem that in the last 33 months you have had five owners of the particular apartment buildings, and this is exactly what Bill 4 is designed to achieve: Why should the tenants like yourself have to pay for the financing phase-through of a particular building for someone to make a quick profit? Do you agree with that?

Ms McDougall: Yes.

Mr Duignan: Thank you.

Ms Poole: Thank you for your presentation to our committee today. It has been quite helpful in outlining the problem of flipping in particular. There does not seem to be any definition of flipping. Nobody seems to be able to put a handle on what it is, but I think most people would agree that five owners in 33 months has to be called a flip.

We are trying to work out how we would deal with a problem like this, not only in the long-term legislation but also in the short term. Do you see perhaps provisions saying that if a building is sold within a five-year period, for instance, that the landlord cannot apply for this financial loss the second time? Do you see provisions where if the building is sold during the five-year period after the landlord has received a financial loss order that that should be then declared null and void? For instance, you have highlighted the problem that you are now paying a phase-in order for a landlord who does not even own the building any more. Do you think those types of things would help?

Ms McDougall: I do not know, to be honest with you. I really do not.

Ms Poole: It is maybe unfair to ask you that question, because you really have not had time to consider it, but it might be something you could think about. How are we going to deal with the problem?

The other issue that you raised was what I call value for money, the example that a landlord paid $65 to put carpeting tape on, which I think to most of us would seem quite excessive. It is something I have felt strongly about for quite some time, that there should be a provision in rent review that tenants can use as a defence that they did not get value for money, so that if a landlord puts in very expensive materials and yet the workmanship is shoddy or the result was not satisfactory, the tenants should be able to say, "We don't have to pay for that." Do you agree with that?

Ms McDougall: I agree with that very much.

Ms Poole: Thank you for your presentation today.

The Chair: Very good. I really appreciate your coming before the committee and speaking to us today.

Mr Duignan: My colleagues across the floor have been looking for examples of flipping. Here this morning the very first witness has come up with an example of flipping. Can we get our research people to have a look into this and provide some examples on how this took place?

The Chair: I think that is a very good idea.

Mrs Y. O'Neill: On the same point, if that is the case, then an economist must have an idea of what the word "flipping" means in talking about investment properties. Maybe the research people can find this. We have been going back and forth with this issue. I think we likely have an example of that here, but let's get a firm definition that investors can accept and that is used in the economic circles of this province.

The Chair: Let's get all the data and then when we have a chance to review the data we can maybe have someone else review how it was being done. In response to Mr Duignan's suggestion, I guess maybe they have this information at the registry offices. As ownership changes, new ownership must be registered, I am assuming. By that, we will know how often ownership has changed. I think you went back five years.

Ms McDougall: I went back to 1987.

The Chair: Let's go back to 1985, which will give us a five-year period to look at. We have the address of the building and we will be able to tell all committee members when the building changed hands and who it changed hands to and we will distribute it to all members.

Ms Poole: Just a further addendum to that, if we could ask the ministry for any information it has, whether it be previous briefing notes or survey studies of the situation, anything it has on its records dealing with flipping and how it has looked at the problem. I think that would also be very helpful.

The Chair: I think ministry staff are listening and will try to provide that information.

Mr Mammoliti: I think it is important, if possible, to get the prices, as well, that they were sold for, and mortgages if there were any.

The Chair: We will ask research to add those two items, the prices and mortgages.

Mr Tilson: There have been comments made, of course, throughout these hearings, particularly by the government side of this committee, that there is flipping going on all over the province. I do not know what that means. I do not know how many flips there have been in the last number of years, if indeed we know what a flip is. I think I know what a flip is, but what their definition of a flip is and what my definition is are two different things.

Of course, you are going to ask the staff to pursue that, but as a further piece of information I think it would be useful, once we have established what a flip is, if this committee has established what a flip is, that we be advised as to how many flips there have been over the last number of years, if that information is available. The government, in particular the government members, who obviously have more information available than I do, hopefully will share with us how many flips actually have gone on.

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The Chair: This has been a repeated request. I would implore ministry staff to provide us with any details they have on this subject. It has come up time and again among the committee members. If we have the details, I would implore staff to give them to the full committee as soon as possible. We are going to have to carry on.

Thank you for your presentation.

Mr Tilson: On a point of order, Mr Chairman: I notice the minister has walked in here. I find this unusual. As an observer, he is quite welcome to be here, but I do not know what his presence is here at the table.

The Chair: The minister, being a member of the Legislature, is allowed to join our committee. It is correct; it is not unusual. The minister is not on the agenda to speak to the committee. We will follow the agenda that has been prepared and agreed to by the committee. There is nothing further I can add.

PATRICIA WILLAR

Ms Willar: My name is Patricia Willar. I live in an 11-unit apartment building in the east end. Thank you for allowing me this opportunity to appear before you to express my concerns regarding the rent review system in Ontario. While I have very little knowledge of the mechanism of the legislation, I have felt its effect.

I am here today not only as a concerned tenant but also because I feel I am representative of two other groups, the working poor or low-income and single-parent families, who I believe are mostly women. Possibly these groups compose a large percentage of tenants and surely the ones most affected by rent increases. In 1980, 28% of the population were poor but 57% of them were women. I am sure with the divorce rate at an all-time high, these percentages are even higher.

I returned to Windsor two years ago after living 25 years in an isolated northern community. I had never previously been a tenant and knew nothing about rent review. Affordability and accessibility are my main concerns, because both have such an impact on the quality of my life. Upon my return to Windsor, it took me longer to find accommodation than to find employment. I have had to move twice in 18 months due to rent increases.

Units are not only very expensive but rare. Some that are continually available, awaiting some desperate individuals, are defective, to say the least. The few buildings with more affordable rates do not even take applications. While looking, I faced discrimination for the first time in my life. The first question many landlords ask is, are you divorced? Second, are you working? Surprisingly enough, I was told single working mothers are a bad risk. They often pay late.

Even by doubling up with a relative, the place I found cost 50% of my salary. Rent review was never mentioned by this landlord. When my rent increased the following year, I had to move because $30 more was too much to handle.

The next place was 42% of my salary, but I could find nothing lower. Three months later, my rent increased and was now 45% of my salary. Upon signing the lease, the landlord's representative had me sign a document stating they had given me all the particulars about a pending application for a rent increase, to be effective 1 January 1988, in compliance with the Residential Rent Regulation Act, 1986. I questioned this -- it was August 1989 -- and I was told this was normal procedure. "Rent reviews are always a year behind, not to worry." I was very naïve.

Shortly after I moved, I started receiving documents from rent review: First an order confirming the rate I was charged, then a notice of phase-ins. But please note, it stated, "This is not a notice of rent increase." I understood nothing on this document except that it did allow my landlord to raise the maximum rent charged for my unit, and this without further board approval.

I called rent review to find out more about this board. I wanted to know about its administrative structure and who was on the board and if tenants were represented. I was sure if tenants had any say that rents would not increase this much or so automatically. They could not tell me anything, except the people working there made the decisions concerning applications. As I said, I was very naïve.

I managed to obtain some booklets on rent review, one called A Guide to the Rent Review Process. I was very pleased to read on page 3 that, "Both landlords and tenants are provided with full opportunity to understand and participate in the process." But upon reading further, I became more and more worried. On page 7, " 10 Common Reasons for Applying for Rent Review," eight of them are for landlords. On page 12, a clause allows hardship relief for landlords, yet no provision for tenants who endure hardship, whether personal or caused by landlords.

All in all, the booklets did give me an idea how rent review worked. However, most tenants to whom I spoke told me you need legal counsel to contest applications for rent increases over the guideline. I had also read in the papers about huge increases allowed by rent review because of capital expenditures.

My rent increased in December 1990 to 35% of my salary. I did get a raise in pay. Also in December, I received notice that the rent would be increased $48, effective 1 March 1991, and a request for whole-building review. Now I was really worried, as my landlord had the halls painted, put lightbulbs in the outside lighting, filled in two potholes in the parking and started heating the halls. In 18 months, my rent would have gone up $114.

Even with my raise in pay, I could not afford these rates. I knew from experience how long it would take to find a place within my means and I decided to get help. I called Accessible Housing Service and explained my problem. Three weeks ago, with their help, I moved into an apartment with more affordable rent. Believe me, I lucked out.

However, I am sure history will repeat itself. The building was recently purchased by an American. Already I have been told that if I used the appliances furnished in the apartment, I would be responsible for any repairs. Is this legal? As yet, there is no application for extra increases, but I am sure by next year, unless Bill 4 is passed, I will be receiving a notice of whole-building review. Even now, with just the guideline of 5.4% allowed, the rent will increase more than my salary. I am earning a comparable wage as a bookkeeper but unless pay equity is attained by 1993, I will have to move again. The question is, will there be a place left out there I can afford in two or three years?

I am sure you are thinking, "Here is a candidate for affordable, rent-geared-to-income or non-profit housing." Well, you are wrong. My efforts, and I know others who can tell you the same story, have shown me these projects do not respond to the needs of families needing only a small subsidy. You have to earn less than $16,000 or more than $33,000. Windsor Housing requires you earn less than $16,000 while non-profit has only a small percentage available to low income. The majority are for families on assistance or who can afford market value, earning more than $33,000 a year.

Winhome has a priority list. I have been told it would be years before I could get a unit as I am not living in slum housing nor with rats or other creatures, and have decent plumbing in the buildings I have lived. One person is moved from unfit housing into a Winhome, yet the bad unit is left on the market for another desperate person. So it is not the tenant who is on the list before me but the unit. I wonder why these unfit units are not ordered closed or upgraded.

Last fall, an acquaintance informed me that three nurses moved into one of the Lauzon Parkway Winhome units and also that families with two incomes living in affordable housing was nothing new. I called Winhome very upset and was told there must have been special circumstance, that each case is unique. That is their favourite expression at Winhome. I asked what would happen if I quit my job, gave up my rent and set up in a tent in front of their office. I was told, "Well, then we'd give you a unit."

I might add that going on mother's allowance is a very tempting option. Last year I compared my net revenue with a person on mother's allowance and she was earning only $200 less a month, but she had benefits, dental and medical, and received full tax credits.

Shelter is a very basic and crucial issue. We often see on TV the plight of the homeless and think, not in Windsor. Well, how wrong we could be if something is not done soon to prevent rents from going the way of Toronto. Windsor can still be saved.

The present system seems very complex and makes it next to impossible for someone like me to fight back. I do not have the capabilities to analyse the documents that are required for rent review nor the funds available for legal counsel. The Windsor Star once stated the present system of rent review must be acceptable as we do not hear too many people complaining. Perhaps they are like me, having a hard time finding out about their rights as tenants, or they feel overwhelmed by the system or afraid to be harassed by their landlord.

I hope I have managed to convey to you all that there is a large group of people out there who risk becoming homeless or being forced into unsuitable housing unless something is done to stop accommodation from becoming out of their reach because the system does not recognize nor respond to their needs.

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I hope this committee will offer its support to Bill 4. While temporary, it will prevent further deterioration to the quality of life of many Ontario tenants and will force the rent review system to reassess and re-evaluate its raison d'être.

Mr Lessard: Thank you very much for making your presentation to the committee today. You made several interesting statements mostly with respect to divorced women, whether they were working or not, and shown that the present system seems to discriminate not only against the poor and the working poor but also against women. In any of the situations when you were applying for rental accommodation were you asked about children as well? Did you ever run into that problem?

Ms Willar: Yes, I was. Actually I was told that since I only had one son and there was a shortage of two-bedroom home units, that would be part of the reason why people like me never seem to get -- and also lower income. I will give you an example. Seniors probably have a hard time getting these units. But that is just a small part of the problem.

Mr Lessard: Have you found that dealing with the rent review legislation has been very complex for you and difficult to understand?

Ms Willar: As I said in my presentation, there are parts of the phase-in thing I had no idea of. There are seven or eight columns on 10 pages that I have no idea what they mean, and who can I get? I cannot afford to go out and get a lawyer to help me explain what this is or anything like that. I just cannot afford this. You go to rent review and the staff at rent review are extremely cold. I have gone twice now in a year, and I feel like I am being laughed at when I go in there, so I have a tendency not to go there. I went there just this week to try to find out about this new building I just moved into. I wanted to know if there were any pending rent increases requested and I just was told, "No, there's none from the landlord." That was it.

Mr Lessard: Have you ever been able to obtain any sort of legal advice or assistance?

Ms Willar: I have not gone. I moved out of the building. I could not take the chance. That last increase that we were advised of, the phase-in, had already been approved by rent review. I just could not take it, so I moved out of the building. I did not try any legal -- I did not do anything. I just moved out, because in the meantime I still could not afford to pay $671 a month. That is what my rent would have been.

Ms Harrington: Thank you for coming.

Ms Willar: My pleasure.

Ms Harrington: You certainly have given a clear example of what we have called economic eviction. I would like to assure you that this new government is very serious in looking at and correcting the rent review system that we found. We want to give it a balance so that tenants in fact do have more ability to affect their housing and not, as you say, be at the mercy of the system.

Ms Willar: I am glad to hear that.

Ms Harrington: I want to also note a couple of points that you have brought up that I felt were important. First of all, in the non-profit spectrum of income, there is a gap there, somewhere in the $20,000 earning range.

Ms Willar: That is right.

Ms Harrington: That is a real difficulty. Second, the note that you made about the benefits on family allowance, where you had difficulty in that area as well.

Ms Willar: Yes.

Ms Harrington: You also mentioned the assisted housing office. I hope that is of some help here in Windsor.

Ms Willar: Yes, thank you.

Ms Poole: Thank you for coming before our committee. Just before I ask you a few questions, I want to give you some information. You had asked in your brief if it was legal for them to tell you that if you used the appliances, you would be responsible for the repair bills. To answer that question, it is not legal. The landlord cannot ask you to assume that responsibility unless the landlord actually goes to rent review and obtains an order for extraordinary operating expenses in that regard.

Ms Willar: Thank you. I did find that out this week. I started doing some research because I was presenting here today and I did find out that it is illegal unless it has been approved previously.

Ms Poole: The other matter I want to talk to you about was the document that your previous landlord had you sign, basically a disclosure statement, stating that he had told you about the pending rent increases or the possible rent increases.

Ms Willar: Yes.

Ms Poole: Do you feel that the landlord had given you all the pertinent details?

Ms Willar: No, I do not, because I had the impression that it was something that was, you know, normal procedure, that it was a -- now I find out it really is normal -- but I found out he did not give me enough information to realize the effect it was going to have on me as a tenant. Now I do not know if it is up to them to inform me, as a tenant, of these rights.

Ms Poole: It is certainly incumbent upon the landlord to tell you about the possible rent increase, the fact that he or she has made application and what that would be.

Ms Willar: They did inform me that there would be an increase in December if rent review approved it, which it did, but that was for the year gone by, of which three months affected me. They did not tell me that it was an ongoing thing, that every year -- like I said, this was the first time I ever heard of rent review, when I went there that time. They did not inform me that it was an ongoing process.

Ms Poole: I just want to mention to you as a final point that there is a provision in the rent review legislation that if a landlord does not give the tenant the particulars about a pending rent increase that is to take effect once they move in, the landlord can actually be denied the rent increase. You might want to look into that if they did not -- I guess it is your previous landlord now so it is too late.

Ms Willar: Yes, it is kind of hard.

Ms Poole: But I just want to tell you that there is a recourse for tenants who have not been given the complete story. If it ever happens again, you might want to make sure that you use this. It has been a learning experience.

Ms Willar: I will next time, most certainly. Now that I know more about the system, I will know more of my rights now.

Ms Poole: The witness did make some comments about the fact that she felt that the rent review people in Windsor were less than helpful. Perhaps this might be something that the minister might like to take back to Queen's Park with him and just ensure that when rent review officers are dealing with cases, they are as helpful and give as complete information as possible, because I think people deserve that.

Ms Willar: Even if they were more pleasant, it would help.

Ms Poole: We probably cannot legislate courtesy but we can certainly give very strong directives that it is what we as a government expect of our civil servants.

The Chair: I am sure the minister has taken note. We are out of time. I am sorry.

Mr Brown: Just on a point of information, as we are going to be in Windsor all day I think it would be useful if the ministry could provide to us some information on what the average rents in Windsor are so that we have some idea. I note in some information the ministry provided to us yesterday or the day before that the vacancy rate in Windsor has gone from 1.3% in October 1989 to 2.5% in 1990. Perhaps they could tell us if that is because new units have come on stream. What possible explanations do we have for that? It would be useful for us through the day to have that information.

The Chair: I would ask ministry staff to please take note of that and provide the information to the committee if it is possible.

Mr Mammoliti: Just as a point of information, the ministry has provided us with the average rents in Windsor.

The Chair: Would you read the front page of the document so we can all refer to it? Is that from yesterday?

Mr Mammoliti: It is addressed to you, Mr Chairman, and it is dated 22 January. It has a lot of statistics in it.

The Chair: Mr Brown, could you look at that particular document and see if that meets your needs? If not, in the next few minutes we can ask ministry staff for other things. Let's move right along. Mr Turnbull.

Mr Turnbull: Ms Willar, thank you for the good presentation. You have raised some issues which I think are important to address. You talked about affordability and accessibility and you particularly talked about the problems when you are asked whether you are divorced and whether you are working.

Ms Willar: That is outright discrimination.

Mr Turnbull: It is one of those peculiar things that clearly the landlord in asking those questions is concerned that he is going to get his rent each month. I understand both sides of the issue, that a tenant is outraged at the thought that he is going to be discriminated against and, by the same token, if a landlord is running a business, it is very difficult to take somebody he feels is not going to pay the rent. You stated that you are paying 45% of your salary.

Ms Willar: Yes, I was. If I had stayed in that apartment, I would have been paying that.

Mr Turnbull: Could you tell me how much you are paying now as a percentage?

Ms Willar: I do not think my pay is an issue here. I can tell you the rents. I can tell you what I was paying for rent.

Mr Turnbull: I do not need to know your salary. If I could just have a rough percentage of what you are paying now.

Ms Willar: Right now, I am paying under 30%. I was very, very lucky. This apartment I have was not listed publicly. It was listed through Accessible Housing and I am very satisfied. My only worry is this automatic guideline and the fact that it was just sold to another owner. After all these stories I have heard, it worries me.

Mr Turnbull: You talked about rent-geared-to-income and you felt that people were falling between the cracks in that program. Can you expand on that?

Ms Willar: I have gone to most of the places that offer rent-geared-to-income or affordable housing or whatever you want to call it, co-op, and I never seem to qualify because I am earning too much money. I am earning over $16,000 but under $30,000, and $33,000 seems to be where the double incomes go into -- right now Windsor Housing, I believe, is closing down three- and four-bedroom units, because it does not have enough people, but I cannot have one of those because I only need a two-bedroom. I know two other women who can give you exactly the same story. They get the same line everywhere they call: "I'm sorry, you're earning too much money," or, "You're not earning enough." Definitely there are people falling through the cracks and I am sure there are other women out there or single people who are in the same circumstances as I am.

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Mr Turnbull: Let me ask you about a government program that frankly I have a little trouble with. I would like to get your feedback on it. The Ministry of Housing is funding non-profit, co-operative housing. In a recent example in Toronto, they were giving annual subsidies for units in Scarborough. Admittedly, Metro Toronto is more expensive than other parts of the province, but when you took the amount of money they were funding it was the equivalent of letting everybody buy a house for $245,000, which is more than the average price of a new, single-family house in Toronto today. Would it not be more appropriate to distribute that better and make sure that affordability is more widely distributed, instead of taking a very small target audience and just throwing scads of money at those people. It seems we could address your sort of concerns if we did not do that kind of approach. What do you feel about that?

Ms Willar: I think it is a very good issue. Actually, I thought if you asked me about solutions, one of my suggestions is that perhaps you could think about doing things like that, taking subsidies instead of letting people like me give up and go on welfare or whatever, distribute subsidies directly to people who need them. As you say, co-op is also a very interesting aspect.

Mr Turnbull: As a matter of fact, that is precisely the Conservatives' position, that we believe we should have shelter allowances, where we take the individual person's needs and say, "Okay, we'll top you up to this extent," instead of the shotgun approach, where it does not really help anybody to the right extent. We have people who can well afford their accommodation and there are other people who, no matter what we do with rent control, we will never be able to help them.

The Chair: Thank you very much for appearing before the committee.

MENESET MOBILE PARK

The Chair: Moving right along, we have Meneset Mobile Park, Keith Homan.

Mr Homan: My name is Keith Homan. I am the owner of Meneset Mobile Park, which is a land lease community in Goderich, Ontario. I am sure most of you are unaware of what mobile home parks are about, so I brought some brochures so you would not think it was one of those trailer parks or something to that effect.

I have with me something my tenants gave me at Christmas. As I am a landlord, I will read what it says. This is called a "damn it" doll. This is good for every landlord. It says:

When rent controls have got you down and you want to kick the deck and shout,
Here's a little doll you just cannot do without.
Just grasp it firmly by the legs and find a place to slam it,
And as you whack its stuffing out, yell, `Damn it, damn it, damn it.'

I would like to ask the person who booked this room for our hearings whether he or she has ever read through a whole-building-review application. I would like to quote from the cost-revenue statement: "If appliances, carpeting, furnishings or other similar items were purchased, was there an effort by the landlord or persons directly employed by the landlord to negotiate improved terms of purchase?" I ask you: (1) Did you make an effort to find a more economical meeting room? We would have to. Maybe it is about time the government fell under the same controls as landlords. (2) Did you notice that appliances, carpeting and furnishings do not apply to mobile home parks? In other words, these applications are for apartments only.

My wife and I are the owner-managers of Meneset Mobile Park Inc, a land lease community. Our feeling is that we are not and should not be under rent controls. In 1960s I started the park. I was teaching math in high school. My wife was an RN. Evenings and weekends I worked laying sewer, water and hydro lines. My teaching salary, as well as any park income, was all put back into the park development, as, unlike the government, we were against borrowing and going into debt to develop. We lived on my wife's salary. I had visions of a good business some time in the future, one in which I would be my own boss and be able to pass the business on to my son when I retired.

At this point I am unable to retire after 23 years due to government interference in rent. It is not a business I would like to see my son in because of rent control, and I am unable to sell it due to the chronically low income due to rent controls.

The way I should have worked my business would have been to give myself a good wage for 23 years, therefore putting the rent up, and borrowed money to build the park and then I would be able to show I am in debt and raise the rent. Instead, I have my business paid for and no way to get an increase in income. Nothing in the whole building review applies to a landlord's income.

I would like to explain a park operation and some of its problems. Meneset is a 230-home park. It is completely self-contained, owning and maintaining three miles of paved roads, two and a half miles of water lines, three miles of sewer lines, three miles of primary and secondary hydro lines and poles. There is a recreation hall, three wells, three sewer pumping stations, three large tile beds, workshops and equipment.

As my park is 23 years old, my tile beds need replacing at a cost of $60,000; my three sewer pumping stations need standby pumps so I do not have to endanger my life each month by entering the septic tanks to check the pumps; my roads are in need of repairs; and my building roofs need replacing, as do my hydro poles. I have no money for the above, as rent review does not allow you to have money ahead for projects such as this.

I maintain two pick-ups, one four by four, one dump truck, one bucket truck, two tractors, two large riding mowers and 10 push mowers, as well as much smaller equipment.

We are a small town. Towns collect taxes without government interference. They obtain grants for road and utility work and have money put aside for future projects. They can also raise taxes to cover GST.

I am supposed to pay increases in fuel, which is up 30%, hydro 15%, heat 20%, wages 6%, OHIP 200%, worker's compensation, Canada pension, insurance, taxes, general repairs, building repairs, landscaping, road and ground maintenance, vehicle maintenance, all of which have increased more than 4.6%. The 4.6% increase in my $150 rent per month gives me a $7 increase per tenant per month.

The GST was the final slap in the face. We are unable to recoup any of this because we are rental. In my case, using 1989 financial statements the cost of GST to my business amounts to $14,000. My 5.4% increase this year will not even cover this, let alone all my other increased expenses. I am not allowed to apply for extraordinary operating costs until the end of this year. It then takes another year or two for an order to be given. By that time I am $48,000 or more in debt. I ask if anyone in this room would like to cut his wages by $14,000 per year.

I have no alternative but to cut back on $14,000 worth of services in my park, such as water softeners at the wells, street lights, recreation hall fuel and maintenance, snow plowing, garbage pick-up, ground maintenance, etc.

On the subject of rent review, I have gone through four whole building reviews in the last four years at considerable time and expense. I cannot afford to do this each year for the rest of my life to show that I need larger increases. I would like to add that not once on my four applications has a tenant objected to an increase.

I would like to state some of the problems I have had with rent review orders. On my third application, I was told I could claim $13 per hour working in the park. I worked seven days a week, usually 10- to 12-hour days, and I am on call 24 hours a day. Who gets called out during an ice storm with trees or lines down? Who gets called out on the coldest day of winter for frozen water lines? Who polices the place? Who designed the park? And all for $13 an hour. One of my employees gets $16.50 an hour. How can someone in rent review, who knows nothing about my business, tell me what I am worth? Needless to say, this is the only income I derive from the park,

This next part is not in those sheets.

Last night I looked over the order again to refresh my mind. I would ask you this question: If a town had to hire a new man because it expanded or had repairs to do, would the salary of the foreman be cut back because he would have less to do? Does this sound ridiculous? Let me quote from my order: "Therefore, an hourly rate of $13 has been allowed, which is more reasonable in the marketplace. This figure is further reduced by the salaries of the two new employees, whose work replaces the landlord's, and the amount of labour allowed in the capital expenditure section." I still work the same hours as before.

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On my last review, they put the park income at $30,000 above the figures from my rent book on my application. Where the figures came from, I do not know, but for them it showed I had no financial loss. On the same application, I put in for capital expenditures because for the first time in 23 years I finally built a park office instead of working out of the house or my truck. Thirty per cent was disallowed because I had a picture of an adjacent marina on the wall. I was told that the office was also used for marina business. The marina is two miles away and has its own office.

I was also told that we sell new homes out of the office. We were going to Hensall each time a new home was ordered and spending the day with the client at the factory offices ordering the new homes. Sixteen per cent was taken off other amounts claimed for capital expenditure because I was told there were 37 fully serviced sites available for future income. No one at rent review knew whether these sites were fully serviced or not. These so-called fully serviced sites have no water or hydro and are still empty. There is a cost of $6,000 to service each of them. On the other hand, when I claimed a vacancy loss in the application, it was stated, with no reason given, "These amounts cannot be considered for the purpose of this review."

I was going to appeal my decision but was told by the rent review office that most people who appeal end up with a lower amount on their order.

The operating costs from my financial statements are $29,000 higher than those they used on my order. It appears they use whatever figures necessary to make my economic loss look less than it actually is. For those who do not know what economic loss is, a landlord should be allowed 10% return on his investment. In my case, working with the rent review board, it was agreed that the amount invested by 1975 was $1.2 million. I should therefore be making a return of $120,000, separate from my salary for working in the park. My financial statements show me making a salary of $35,000 to $45,000 for work done and at year-end $1,000 to $2,000 left in the park account. Somehow, my order shows me making $90,000 separate from my salary. If that were the case, I certainly would not be here today.

As far as I am concerned, rent review manipulates figures so that the end result is what they want. The problem is that rent review was started to stop luxury renovations and flipping -- the old word -- of apartment buildings. The rules to stop this are putting the smaller people out of business. There is no flipping of parks or luxury renovations going on here to raise rents. We are mostly honest, hardworking people who are being completely screwed by the government.

Rent review forms were made out for apartment buildings. Nothing on them pertains to mobile home parks. When I asked why they did not make forms for our business, we were told that we are a small minority and not worth making forms for. There are 350 mobile home parks in Ontario.

Anyone with any knowledge should realize 4.6% of $150 per month is $7, while 4.6% of an apartment building getting $700 per month is $32 per month. Why should apartment buildings get $32 and we get $7? Our small increases just tend to put us further behind each year.

New parks are charging from $400 to $600 per month. Why are we held back at $100 to $150 per month? People do have a choice whether they want to come to our parks. That is much more than we have. Our choice is none. In a free market environment, the market only bears the rent people are willing to pay. I had thought this was a country of free enterprise.

All parks are different. Some have no trees to contend with and some are on city water and sewer. At others hydro is supplied by Ontario Hydro. In my case, my park is heavily treed and I supply all services. My park consists of 230 homes, the tenants being mainly middle-class senior citizens with a home here and one down south. This is a very affordable type of housing, which is what the government is looking for but unable to see in front of its nose. One of the reasons General Homes went out of business, putting 140 people out of work, is because parks are not expanding. I myself put a 300-site expansion on the back burner.

We have potential tenants afraid to move in because they are afraid of what government interference will do to our parks. Because of the low rents the question is asked, "How can you keep your head above water?" My park contributes $80,000 in taxes to the township each year. It also gives jobs to plumbers, electricians and carpenters who do jobs for the tenants. My expenses are $300,000 per year to run the park. That is money that goes into the community. We as park owners are not out to rob tenants but we are finding the struggle to survive harder and harder.

I am tired of playing your silly games where you change the rules daily -- retroactive, at that. The choices are few here: I can carry on on my own with no regard for the government or rent controls, just as you have no concern for park owners or know nothing about them; I can go back to teaching and make more money than I am now, with fewer headaches; I can close my park and sell the mile of lakefront property and make twice as much as I do now from interest on the money, with no headaches. I can cut back on services each year as I get further behind in income.

The government is interfering with something it knows nothing about. In conclusion. I would like to restate that in a free market environment, the market only bears the rent people are willing to pay. Let the market set the rents.

Mr Brown: Thank you for coming today. You are the first presentation regarding mobile home parks. You are right. I am not unlike most of the members, and we really do not have much information about this particular segment of the housing industry. We are all very interested in providing reasonable, affordable housing and this does seem to be very affordable. Could you tell me, for example, what would be the average cost of a unit sitting on your land? What would the mobile home be worth in today's dollars?

Mr Homan: Anywhere from $20,000 to $75,000. Used homes are $15,000 up and a new home usually starts about $39,000 to $40,000.

Mr Brown: Is there much turnover among your tenants?

Mr Homan: Not really.

Mr Brown: Would most of them be seniors or retirees?

Mr Homan: We started as everything. There were families, seniors. Gradually, families usually move on to a house, and as they moved, more seniors moved in. At this point, we have maybe four families in the park and the rest are seniors.

Mr Brown: So it is really almost a retirement living sort of situation.

Mr Homan: It is geared for retirement. With the recreation hall, the seniors run it themselves, so it is pretty well geared that way. But it is open to families.

Mrs Y. O'Neill: I thank you very much for coming before us and I commend you on what you have built in your community. I would like to ask you one question. You said you posed a question, and I did not know to whom, about the forms, and that your type of housing was in such a minority position. Where did you pose that question?

Mr Homan: To the London rent review board. When I first went in for an increase, they gave me the forms and I went home and started looking at the forms. How many elevators do you have in your complex? How many bedrooms, what carpeting -- nothing, nothing at all for a park. And the computer will kick things out. The last increase I went for they disallowed, they sent it back because the computer kicked it out because I did not fill in the number of bedrooms. Well, I am not going to go up to everybody's home and say, "How many bedrooms do you have?"

Mrs Y. O'Neill: You have brought something before us which, as Mr Brown says, is unique. I think we should definitely take a very strong look at what you have brought before us, because this and all other very good mobile park homes across this province are a good form of housing. They are a form of housing that gives people another choice.

Mr Homan: Well, at a $30,000 income, it is 7% of their income for rent.

Mr Tilson: Are you aware of the Cartwright decision?

Mr Homan: Not really. I have heard of it.

Mr Tilson: Let me tell you a little about that. That is a reasonably current decision, which I understand has finally been decided at Divisional Court. It decided that where a tenant rents the land but owns the residence situated on the land, rent controls do not apply. Most people in your case and, from what I understand, most tenants under the special situation you are in agreed with that.

Just so you are aware, what the ministry is saying is that it clarifies this vagueness which the court made quite clear. Of course, Bill 4 says that it specifically includes mobile home sites and sites which are on private dwellings owned by the occupant and located there. In other words, they say: "Now you are under rent control." In other words, people in your position have now been kicked twice.

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Mr Homan: That is right.

Mr Tilson: In fact, you have been knocked down and you have been kicked.

Mr Homan: That is what this is.

Mr Tilson: You are right on with your little doll, and I suppose I would like you to talk about that. There is the retroactive issue which mobile home people are complaining about, and now there is the situation where people have been planning, they have been speculating -- not speculating, but dealing with their renovations, their capital expenditures. They are improving the quality of life on the mobile home sites. Now that is taken out. In fact, it has been made retroactive to 1 January 1987. Were you aware of that?

Mr. Homan: Vaguely. I try to blot it out of my mind. As I said in my talk, I am just going to have go on my own and take the consequences.

Mr Tilson: Not only have you been kicked, but you have been stepped on.

Mr Homan: Yes, yes.

Mr Tilson: What is the average rent at your place to occupy a site?

Mr Homan: It is $150 a month.

Mr Tilson: That is $150 a month. Then of course the average rent in Windsor is -- where are you?

Mr Homan: Goderich.

Mr Tilson: What is the average rent over there, roughly, for an apartment?

Mr Homan: Oh, $600 to $700.

Ms Harrington: Thank you for coming. We certainly appreciate that this option, which is the mobile home park, is a good, affordable choice for some people. We do believe that mobile home parks should be available and accessible for people. It sounds from the history of your own personal development of the park, and your pictures as well, that it is a very beautiful spot. I would like to commend you for that development that has taken place over the last 23 years.

Mr Homan: Thank you.

Ms Harrington: The one point you raised about the forms not being able to be processed, if you are filling them out correctly and the computer is not accepting that, is something that I certainly think has to be immediately fixed up.

When did mobile home parks first come under rent review? When did you start being involved with this?

Mr Homan: I believe it was 1985.

Ms Harrington: So you have been through this process then for a couple of years at least.

Mr Homan: Yes. Each year I have to -- as I say, $7 a month. Back then it was less. My increase was probably about $2 a month when I did my first application. I was back at $85 a month, and it was either close it or do something with it. At present, I still cannot make a decent income. I can go back to teaching high school and make more than I am in the park. A 230-site park should be able to give me a decent income.

Ms Harrington: Right. I would like to tell you that when we came into government we very firmly have said that this rent review system is not working and that we want to look at all aspects of it and try to improve it. So we will be looking at this area as well.

Mr Tilson: Putting them in it; some help.

Mr Homan: I could go through my four applications and just tell you --

Ms Harrington: It has been in five years. Pardon me, sir?

Mr Homan: I could go through my four applications and pick all kinds of horror stories out of them. People sitting in London have no idea about the park. They have never been in one or seen one and they are telling me how I should run it.

Mr Lessard: You indicated that your expenses were $300,000 a year?

Mr Homan: That is right.

Mr Lessard: And what is your gross income?

Mr Homan: This is great. I am glad you asked this question, because my rent book that I gave to the rent review for my last application said my income was $354,000. I had everybody's name listed, like the book I keep the rent in, and that is what it worked out to, $354,000.

My rent changes in the middle of the year, in July, so from January to June my rent was $125 a month at that application. From July to the end of the year it was $139, because my rent changed 1 July. They used the number of $139 for the whole year, plus they came up with sundry expenses of $26,000 -- I still do not know where it came from -- and jacked my rent up to $379,000 or $380,000. So they work all these sheets throughout my rent application at $380,000 as an income and my accountant shows me I make $345,000.

Mr Lessard: You do not have a mortgage on the property.

Mr Homan: No, I do not.

The Chair: Our time has expired. Mr Homan, we really appreciate your driving all the way from Goderich to be with us today. We appreciate your representation and your brief.

Mr Homan: Thank you for having me.

BRALDAN INVESTMENTS LTD

The Chair: Braldan Investments Ltd. You have 10 minutes for your oral presentation, followed by questions. We ask you, for the record, just to identify yourself and what position you hold with Braldan Investments.

Mr Demsky: My name is Paul Demsky and I am the owner of Braldan Investments. There should be a sheet passed around that will tell you a little bit about me. I work full time and I am a small landlord. I am not very good at speeches and I am not very good at numbers; I just wanted to talk for a few minutes.

There are three basics that we have to be concerned about: food, shelter, of course, and clothing. The government does not seem to freeze the price of food or clothes and it does not seem to go to the clothing stores and tell them what they can charge a person for a pair of pants or for a shirt, and yet it puts total control on us as landlords. You have to stop maybe for a while using the word "landlord" and the word "tenant" and you might want to switch the words and call them business person and customer.

In this business people want to make a profit, just like the guy who sells shirts or laundry detergent or food. You take away our ability to make a profit and we are going to get out of the business and the housing stock will disappear inch by inch. We make money by positive cash flows and we make money by our buildings going up in value. We are generally long-term thinkers.

Now, if we take $30,000 or 40,000 out of the bank, or if you did it and you wanted to become a landlord, you are getting 10% interest at the bank and you are doing nothing. So if you are going to put it into the building and you are going to have to do work -- it is not just going around and collecting the rents and stuffing your pockets with money. If you are going to take a risk, you want to do a little bit better than 10%; otherwise, why not leave it in the bank and let the government take over everything?

I want to talk about our image as landlords. A lot of people have this perception that we are all Donald Trumps -- we all drive Porsches, we all have these big yachts in the harbour -- and that is really not the case.

Jeffrey Freedman writes a column in the Toronto Star. Let me read what he always says: "This new legislation means that landlords will not be able to pass on the cost of luxury renovations such as marble halls and microwaves." He keeps saying that over and over again. It is like we do not do any thing but put in marble halls and microwaves.

I do not know if you know Bob Rae. He is in the newspaper with a picture of some poor tenant facing her 20% rent hike. The ceiling is collapsing, there are cockroaches, and the papers write it up, and the landlords are horrible. But do not believe everything you read in the newspaper. Maybe it is a bad landlord; there are some, for sure. Maybe the landlord needs the money to do the repairs; maybe he is losing a lot of money; maybe a lot of tenants are not paying their rent; maybe the tenant upstairs is the one running the water all the time destroying the ceiling.

We landlords did not invent cockroaches. We do not bring them into the building. You know, your rent includes four cockroaches to start up a farm. Where do you think they come from? Do not blame us all the time. There are bad landlords, there are bad cops, there are bad doctors, there are bad lawyers, right? A bad lawyer, you could take away his ticket; a bad doctor, you can take away his ticket; a cop, you kick him off the force. Anybody with a few bucks becomes a landlord: we are stuck with him. We rely on you to help keep those bad guys out of the business, but we cannot kick them out, just like the law society does or the medical society does, but you are punishing us for these few bad landlords.

I just want to say that if you want to see some damage from unilaterally freezing rents and just locking it out, I suggest you should not be in Windsor at all. I suggest you all should take a tour of the Bronx and see what your legislation is going to do a few years down the road.

I do not put in marble Jacuzzis and microwaves. Maybe Mr Lessard has seen my project. That gentleman actually came and talked to me. He will tell you the type of work I do, but I borrow money from the bank. I have to pay it back over the lifetime of the renovations, and I pay interest on it. I have to get that back from the tenants or I do not do it; it is just that simple. I cannot afford to fix up my apartments and take the wages out of my job. I have my own house to pay for and I have three kids to look after.

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There is never any mention about legislation to protect landlords. If a tenant does not pay us, it takes us months to take him to court, and we lose, even with the deposit. It is expensive and often futile to go to small claims court. Go try getting a tenant out who is selling dope. Once they get in, they make noise, they move in seven people when they promise you there are only going to be two. Once they are in, they can do all kinds of harm. We end up paying for it.

I had a girl who was on welfare whom I rented to. It turned out to be a hooker, which is all right, everybody has to make a few extra bucks, but customers are coming in at 2 o'clock in the morning and they do not know which door she is at so they are waking up all my other tenants in the building. True story. There is nothing I can do unless I get photographs. I cannot kick her out. I cannot get out a person who is selling dope, if I find out, unless he is convicted in court, which means it is probably three years down the road. You know the court system.

A lot of landlords do not rent to welfare. Do you know why? By the way, that puts a lot bigger demand on public housing. They do not rent because you do not protect us. If welfare gave us direct payments so that they cannot go out and run and spend the money, then maybe we would rent to them. We cannot take them to court and get a garnishee because you cannot garnishee welfare, so what do you do? You take the easy route and you do not rent to them. I do rent to them, but a lot of people do not. If you want to help us out, make sure they pay the rent on time and they are good citizens, and we will rent to them.

I am going to give you a couple of solutions. I know my time is running out. Take all this money that you are spending on rent review and all this mumbo-jumbo and all your salaries and just give it out to business people and say: "Here is money for building apartments, an outright grant. One condition: Keep it as a rental apartment. We will give you $8,000 for a one-bedroom and a $10,000 grant for a two-bedroom and $12,000 for a three-bedroom," and just give away the money to landlords.

Do you know what is going to happen? I will tell you what is going to happen. You are going to have thousands of new units on the market, number one. Number two, the landlords you are going to give the money to are going to charge less, probably, because their costs are less. Then supply and demand takes over for all these units and that is going to hold prices down and then the bad landlords -- I want to tell you about the bad landlords -- are going to have to clean up their act because they are going to be the ones with the bulk of vacancies.

Now, you subsidize co-ops, or mortgage breaks. Some of the units are geared to income. What happens is that well-off people end up living in them and the whole project seems to be subsidized. You all heard about Jack Layton and all these people in Toronto. That goes on all the time. I can show you a lawyer and a social worker earning over $125,000 a year who are living in a co-op, which essentially is funded by the government. Subsidize the working poor so that they can stay working, because sometimes it is better for them to go on welfare because they get more money for rent. Subsidize the needy.

Your other choice is to let us disappear and you become the landlord. You will build more projects for all the needy people, and you know what you are going to do? You are going to build more Regent Parks and you are going to put them all in ghettos instead of letting them integrate. I have a few living in my building. You are just going to build more ghettos. You know what it is going to cost you to build? Have you ever figured out what it is going to cost you to be the landlord? An apartment I can supply for $500 or $600 a month that maybe you will subsidize for a couple of hundred dollars a month is going to end up costing you $1,000 a month by the time you build it, and the land and maintenance, because we are much more efficient at being landlords than the government is, I can tell you that much. So you are going to pay for it one way or the other. You want to boot us out, a lot of us are going to suffer, and in the final analysis, you are going to end up paying.

I have two points that I want to make, real quick ones. Dave Cooke said on Saturday to the landlords -- I do not know if you have heard the name Dave Cooke -- looking them right in the eye, "I don't represent you." We have that on tape. "I don't represent you." He may have gotten elected from, you know, these people, but now he represents everybody. I think he is sadly mistaken.

Now, the Ministry of Labour is run by a union leader who does not care about business people; he only cares about the workers. That is fine if that is the way that you want to be, but think of the message that you are sending out to the world investment community. You are saying, "Stay away." That is going to cost us jobs, investments. Businesses are going to close and welfare will be up and your legacy is going to be that you got better severance deals instead of getting them jobs.

But going back to the landlords, you know, you have legislation about blacks. Why are you bringing out legislation to protect black minorities? I will tell you why. Why do you bring out legislation to protect the handicapped? There are only a few of them around. You do it because it is right and it is moral. Well, you know what? Landlords are a minority too and we should be treated fairly.

If you continue with this law because tenants have more votes than landlords, if you dare do that to try and buy yourself another election, then you are no better than any of the previous governments that have ever been around and you are going to abandon fairness and equity for votes, and God help you if you do. Thank you.

Mr Turnbull: Mr Demsky, you suggested that one should subsidize the working poor. I am particularly interested in that suggestion. The New Democratic Party has suggested, and so have some witnesses who were tenants, that if you subsidize the working poor in their housing that they get to touch the money just as it passes through from government to landlord, and the suggestion is that somehow there is something very immoral about that. Yet at the same time, as I have mentioned on a couple of occasions before, the government is currently funding the construction of co-operative housing in Scarborough, for example, where the annual subsidy to each person is the equivalent of buying them a house for $245,000. It seems to me this is a total waste of money. But I know the way the NDP members think because they have talked about it. How would you respond to this question about subsidizing the working poor and the fact that the money is just being touched by the tenants?

Mr Demsky: If they just touch it, if they smell it, look at it, the bottom line is that if they subsidize the working poor, then that means that less of their money is going to go for rent and they will have more money for other things such as food and clothing and sending their kids to camp. These co-ops where you subsidize the mortgages and CMHC and all these little gimmicks that you have, they are being used, they are being abused. How many of you live in one?

Mr Duignan: I do.

Mr Demsky: Do you? Okay.

Mr Duignan: I do. I take exception to your remarks. That is something I want to talk to you about.

The Chair: Order, please, order. We are following a rotation. Mr Duignan, you will have a chance to respond to this in full.

Mr Demsky: Sorry. The bottom line is that these co-ops cost so much money that if you put it into the right hands to subsidize the people, you can get a lot more bang for the buck than just letting governments become landlords.

Mr Turnbull: Mr Demsky, you mentioned the message that was sent out to the world investment community. There was a statement by Bob Rae last year in an interview with Michael Melling, the tenants' advocate in Toronto, and Rae said in it: "You can't talk about rent review until you talk about the structure of ownership. You make it less profitable for people to own it. I would bring in a very rigid, tough system of rent review. Simple, eliminate the exceptions and loopholes. There would be a huge squawk from the speculative community, and I say to them, `If you are unhappy, I'll buy you out.' We need a government program of purchase."

Mr Demsky: That is great. Make the cheque out to Braldan Investments if you want to buy me out. It would be my pleasure.

Mr Turnbull: That was my question.

Mr Demsky: Or there is another solution. Maybe the NDP government can just single out landlords -- we could make special armbands -- and then just shoot us. What do you want to do? We are honest people, we are hardworking people and we are trying to do a good job and a fair job. I am a good landlord. I am a hell of a landlord. I look after my people. I am over there seven days a week, 24 hours a day. I have a phone call emergency service.

Mr Lessard, who is a nice gentleman -- I am Jewish and I am closer philosophically to the Palestinians than I seem to be to the NDP -- came out and he saw my projects and he will tell you that I do not have microwaves in there and marble halls, and I give them beautiful accommodation. As a matter of fact, I think he would be happy to live in one of my units. But it costs money to make decent accommodation, and we have to get it back. We just do not have deep pockets. Again, we are not Donald Trump.

Mr Mammoliti: Sir, I am going to do this as quickly as possible. I am going to tell you a little story. When I was a kid, I used to play hockey out in the street.

The Chair: This all relates to Bill 4.

Mr Mammoliti: Yes, it does; it relates to Bill 4. I played hockey out in the street, and I could not afford a net. My parents could not afford a net for me. However, there were one or two individuals on that street who did own a net. For some reason those particular persons got more respect than the average kid on the block. A few of them, after their parents called them in for dinner, would take their nets with them because they did not want us to have the opportunity to continue playing hockey. Well, how does it relate to this? It relates because the statements such as, "We want to make profit, and if we cannot make the profit then we are going to leave and we are going to go somewhere else, and Bob Rae and the government are going to be stuck with a big problem on their hands."

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Well, I take exception to that. You are not the only landlord who has been saying that. We have been hearing from tenants for years who have been complaining about high rents, and nothing has been done. The previous government did not do anything, and it did not do anything because it knew there was no threat over its head with tenants. However, now as a landlord you have that threat. We now have to listen to the landlords and take in what you are saying. Sir, and it may not apply in your particular case, but I can say this to you: there have been a lot of landlords in front of us and all of them are giving us this threat. What we are saying is that we want to co-operate with you; we want to co-operate with the landlords. Are you prepared to do that or are you --

Mr Demsky: Sure.

Mr Mammoliti: -- just going to come up in front of us and say, "If I cannot make the profit, then I am leaving"?

Mr Demsky: No, but it has got to be fair. We have got to get the money to do all the renovations, and it cannot come from our pocket because, like I said, we do not have deep pockets. You did not have a hockey net and that guy had a hockey net, and I understand that there are haves and have-nots. I am from the have-nots also. I am also a high school dropout, and never finished grade 10. But you know what? I have worked hard, and I saved my money and I did not go out and blow it on fancy cars or drinking or a vacation. I bought an investment property and then I went on and I got another one. What I did anybody can do. It is really easy; it is really easy in Windsor. Anybody who saves up $5,000 or $6,000 can go and put a down payment on a house here. There is no magic to what I do.

Mr Duignan: Sir, I take exception to your remark about co-ops, etc. I am not going to get into that. I can talk privately with you. However, let's have a look at the free market and what it has done in British Columbia, decontrolled since 1984. For example, private rental starts declined from 47% in 1982 to 5% in 1988. Vacancy rates have dropped to 5%, that is to October of 1989.

Mr Demsky: I am sorry, the vacancy rate is 5%?

Mr Duignan: It dropped to 0.5%, half of one per cent. It has got to the point in Vancouver where the city has imposed a $1,000-a-unit tax to stop the conversion of affordable rental stock to condominiums, and to the point where the British Columbia government is toying with the idea again of reintroducing rent controls. So where does the free enterprise system work? It works for the guy who has the money and screws the tenants.

Mr Demsky: Gee, we are such a bad lot. First of all, I believe your figure of 0.5% is not accurate. Second, how about Alberta? What is the vacancy rate in Alberta? How about Edmonton or Calgary without rent control? I think Edmonton is 6.8% and Calgary is 3.4%. It is all the governments, not NDP, but the Liberals and the Conservatives, because what happened in 1975 when you started this whole cycle with all this maniacal paperwork and everything was that the Conservative government brought in rent control. Again, votes; you know, more tenants than there are landlords.

What happened to the Cadillac Fairviews and the Greenwins and all the little people who were building rental accommodation? They said: "Wait, they are going to tell me what I am going to charge? I'll go build shopping malls. I'll build skyscrapers. I'll build industrial units, but I won't build rental." So they got out of the market --

Mr Duignan: But --

Mr Demsky: Let me finish.

Mr Duignan: In defence of my Conservative colleagues --

The Chair: Time has expired.

Mr Mammoliti: Do not defend them.

Mr Tilson: I do not need your help; stay away from me.

The Chair: Thank you. You have three or four more minutes. Mrs O'Neill would like to speak with you.

Mrs Y. O'Neill: I would certainly like to congratulate you. You said you have not had much experience speaking publicly. You are a man who is making an honest income. You understand the world of business and certainly rental investment. I am very pleased that you brought to us two things that we have not had brought to us: How you would deal with the profession of being a landlord -- very different from what we have in the protection of the other professions that are more highly and formally organized. You brought forward lawyers and doctors. I also think it was very significant that you brought forward the comparison about minorities.

My question to you is about tenant evictions. We have talked very little in this set of hearings about tenants who do present problems to landlords, and there are such people. The same as there are good landlords and those who are not quite so responsible, there are tenants who are not quite so responsible. I have one case in my own constituency where one lady owns a duplex, just two apartments. She needs the bottom apartment for her elderly mother, and she cannot evict what she considers a less than responsible tenant.

Could you tell us a little bit about your experience about your inability to remove somebody who is not helpful to either yourself or the tenants?

Mr Demsky: Generally, unless they are completely off the wall, we try to keep a tenant. I do not like turnover. You cannot kick a tenant out for making noise. You cannot kick out tenants for any illegal activity until it has gone through the courts, which takes a year or two and they are sitting there.

If they do not pay their rent, usually you talk to them, you try and give them a break, but you know, you cannot give them a break because it costs you too much money. So on the seventh day you start by giving them an initial notice. Then you have to wait 20 days, so now you are in the 27th day. Then you have to go give them a notice, then you have to go back to the court and swear an affidavit that you gave them a second notice. Then you have to fill in a third notice and it has to be posted a certain way. You almost have to use a certain type of Scotch tape, I do not know. Then by the time you get a court date and the judge listens to it, if in fact you have crossed every single dot, because they are very sympathetic to tenants and God help you if you make a mistake, you can maybe get the tenant out in two months. That means that you are going to lose a month.

Then of course the tenant has had a couple of months to get angry at you. God forbid, you are a rich landlord; what do you need your rent so badly for? They do not seem to understand that we have mortgages, taxes, heat and hydro and all the rest of that stuff to pay.

So then there is usually damage. Then you cannot show the apartment while you are evicting because they will not let anybody through. So you have to get them out. Then you have to clean it up, possibly repaint it and do some minor repairs, so it has to sit vacant while you are doing it. Then you have to advertise it and generally, I would say that on average, if you are lucky and you get through the court system really fast and make no mistakes, you are going to lose two months' rent to get one person out.

Mrs Y. O'Neill: And you are paying your own costs in the court.

Mr Demsky: Of course. Believe me, I will tell you, one thing we do not get is legal aid.

Mrs Y. O'Neill: Thank you very much. You have brought forward real problems.

Mr Demsky: If it is a welfare person, I can take him to Small Claims Court -- but they have no credit rating anyway -- and go ask the government and say, "They spent their rent on this or they spent their rent on that, but they didn't spend it on their rent, so give it to me." They will say, "Oh, I am sorry, we can't do that."

Ms Poole: I will make this very quick, Mr Demsky. Thank you for your presentation. I think you have made a number of good points. There are three of them that I would like to point out.

The first is that you have said that not all landlords are either good or bad. Like any other profession, you have lots of good ones, you have some bad ones. Although I have spent a lot of my time representing tenants with some of the problems they have, because that is the makeup of my riding, I also appreciate there are a lot of good landlords who are doing a good job and I do not want them to get out of the business, and I think you have made that point very well.

The second is that you have asked us to be fair and balanced with our legislation, not to be pro-landlord or pro-tenant but pro the people of Ontario. That is the third point, that we as MPPs have a duty to represent all the people, not just one interest group. I am quite disappointed to hear your comments that the Minister of Housing had said publicly he did not represent landlords, because I think we each have a duty to represent all the people in our riding.

Mr Demsky: That is on tape, by the way.

The Chair: I want to thank you, sir, for appearing before the committee.

WEBBWOOD TENANTS ASSOCIATION INC

The Chair: Moving along, Webbwood Tenants Association Acting for Town and Country Mobile Home Park. The committee has allotted you 20 minutes, 10 of which can be used for your presentation and 10 minutes for questioning. Please identify yourself and what position you hold with your organization.

Mrs Hasson: I would like to begin by thanking the committee for allowing me to appear today. My name is Ann Hasson. I act as vice-president for the Webbwood Tenants Association Inc. The association was formed in 1976. In July 1985 the trailer park was sold and its name changed to Town and Country Mobile Home Park. We continued to act as the Webbwood Tenants Association Inc Acting for Town and Country Tenants. Our main objective at this hearing is to illustrate the fact that maintenance problems are not new in regard to landlord-tenant issues.

For the first four years under new ownership, the base rents at Town and Country remained at the previous owner's rate of $177 a month, although we did not enjoy the same services as provided by the previous owners. In the past two years our base rent has increased by the allowable maximums and our landlord is now proposing to raise our base rents by the allowable maximum, 5.4%. However, we as tenants have endured rent increases without benefit of continued proper maintenance services or without any expanded preventive or restorative maintenance.

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Now, I would like to share with you some of the misfortunes suffered by Town and Country Tenants, all associated with improper maintenance or neglect.

1. Due to the fact that there are very few driveways, the greatest majority of tenants must park on the streets. On the rare occasions that our landlord performs snow removal service, a lot of the cars are blocked in, because the roads are plowed down the middle only. We are not advised prior to any service so that we have an opportunity to move our vehicles. In fact, we have not even had snow removal this winter season, but in the past, often the snow is simply left at the end of a street where we are forced to either attempt driving through it or around it. Further, the roads are never sanded or salted, even in extremely icy conditions.

2. The roads themselves are full of huge cracks and potholes that are never properly repaired. They are sometimes filled, but the repair never lasts long as the mixture used to fill the holes breaks away.

3. During the last two months the landlord has finally begun to repair the street lights. We are certain this is a single attempt to appease us due to the fact that he intends to increase our base rent. Unfortunately, some of these lights have not worked for many months.

4. During heavy rainfall and spring thaw, we suffer excessive flooding in the south section of the park. We had an incident recently where a woman and her infant were forced to remain in her car, because she could not get out due to flooding.

5. We have no after-hours emergency number. Our manager does not live in the park and seems to be on duty at her discretion. She does not work any specified days or hours. We had an incident where a tenant's pipes burst on a Friday night. He called the township, but they said they could not help in a private park, therefore the water ran from Friday night to Monday, when the manager became available to provide the necessary key for turning off the water.

6. Laundry facilities are available only during the hours that the manager is on duty. Many tenants work daytime hours, therefore the facilities are of no use to the majority of the tenants needing the service. Even at that, the machines are not in good repair. Presently, 2 out of 10 washers are in working order.

7. The community swimming pool is often only open for three or four weeks and must be maintained by the tenants.

8. New tenants moving into the park are charged a $75 fee and after 10 days, charges of $1 a day are applied to late rents.

9. If any tenants complain to the landlord, he simply tells them if they do not like it, to move or he will evict them. We are forced to live under threat of eviction, which would sometimes seem an appropriate solution to our problems if there were sufficient suitable alternatives.

10. If we have a complaint concerning another tenant, whether it be large or small, a letter must be submitted to the office. If at any time our landlord must take the person being complained about to court, our letters are used as evidence. This makes for a very cautious neighbourhood when considering making a valid complaint.

I feel that I have shown the committee some of the outrages and inconveniences suffered by tenants whose landlords ignore their responsibility to properly maintain their holdings as directed by the present Landlord and Tenant Act. The damage from negligence causes increased costs when the repairs are finally done, thus making it seem that the landlord has had expenditures exceeding ordinary operating expenses.

I respectfully request the committee to join me in support of Bill 4.

Ms Harrington: I wanted to ask you, first of all, where your trailer park is located.

Mrs Hasson: It is here in Windsor, between Windsor and Belle River on Highway 2, just outside of Tecumseh.

Ms Harrington: How many units would there be there?

Mrs Hasson: There are 217.

Ms Harrington: Can you give us a little bit of history as to how the rent has been increased over the last little while?

Mrs Hasson: When Mr and Mrs Geisler bought the park in 1985 our base rent was $177. That is our base rent.

Ms Harrington: In 1987?

Mrs Hasson: No, 1985. Then we pay our taxes and our water on top of that to the owners. They left the land rent at $177 for the first four years. Then two years ago we had an increase, the maximum. This year he is proposing another increase. So this will be three. If he gets this one here, this will be three in a row.

Our main contention is, we do not feel that he should not have a rent increase: all we feel is that if he is going to keep continually getting rent increases, he should maintain the park better than what it is.

Ms Harrington: So what you are bringing to us, the government, is that the normal operating increase should cover all maintenance and it should be made sure that people do their maintenance before they get this increase. I just wanted to point out something following up from the last presenter, which is that the relationship between the landlord and tenant is very important. He likened it to a business and customer relationship, and I think that is correct.

Mrs Hasson: That is right.

Ms Harrington: We want good landlords. We want people who are in there to operate these, whether it be a building or a trailer park. We do not want landlords who are there to sell the building. That is not their primary objective. He did bring up a good point about licensing, so we will think about that. Thank you very much for coming.

Mr Lessard: Just following up on encouraging a good relationship between landlords and tenants, if you are living in an apartment building it is a bit easier to pick up your belongings and move somewhere else.

Mrs Hasson: Right. We do not have anyplace to go.

Mr Lessard: You have mentioned eviction of people living in trailer parks. Have you run into any examples of that, or can you explain what persons who live in a trailer are supposed to do if they are evicted?

Mrs Hasson: I really do not know what anybody in Maidstone township would do if they were evicted because there are no available spots to put any mobiles. In Town and Country there is Suncrest at the other end of East Pike Creek, but there are no available empty spots. So if you are evicted out of a park with your mobile -- I do not know where we would go.

Mr Lessard: Has there been any contact with the building authorities in Maidstone township about doing these repairs? I know that for buildings you may be able to contact them; they might make a work order. Does that sort of procedure follow in this trailer park?

Mrs Hasson: No. As far as in a mobile home park, our trailers are owned by us alone. We maintain our own trailers, so we keep them up. Maidstone township does not have any control over him doing anything with the streets because it is a private park. We cannot even have the OPP come in and stop speeders or anything because they do not have the jurisdiction.

Ms Poole: Thank you for your presentation today. You have outlined some of the inconveniences and what you refer to as outrages that have been caused by your landlord, who has given you a great deal of difficulty. How do you see Bill 4 as helping the situation?

Mrs Hasson: To be honest with you, I am not really up on all of that. All I can say is that we would just like our landlord to take care of the necessary things. I cannot answer anything else.

Ms Poole: I guess that is a concern all of us share. For the landlords who are making it extremely difficult for tenants and who are not properly maintaining their properties, how do we not only encourage but in fact force them to do the proper maintenance? One of the problems I have with Bill 4 is that what it does is impose a rent freeze where landlords can just get a statutory guideline and it really does not have any mechanism to solve the problems that you are talking about.

Mrs Hasson: I know.

Ms Poole: That is why we would like to see some amendments to Bill 4 to make sure that we are looking at the abusers of the system, those like your landlord who are causing you difficulties.

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Mrs Hasson: I am not objecting to our landlord getting whatever, if he would maintain and spend some of the money in the park, but in the years he has owned the park he has not done anything with the roads, and lately with the streetlights. Things just keep getting worse and worse.

Mrs Y. O'Neill: Have you operated at all under the other act, the Landlord and Tenant Act? Have you tried to get any redress at any other level than making a presentation to this committee?

Mrs Hasson: Not with these new owners. When it was Webbwood Mobile Home Park, we had to go through rent review and everything, but not with the new owners since 1985.

Mrs Y. O'Neill: So you are still waiting for some redress. You have a tenants' association. Do you meet regularly with your landlord?

Mrs Hasson: No. He will not meet with us.

Mr Tilson: I think we are disappointed in the government's position with respect to Bill 4 and its lack of sensitivity towards the tenants of the mobile homes. There was a case I referred to earlier which simply ruled that the people in your situation would not be subject to rent control. Bill 4 says that is not true. They have changed all that. They have said that the mobile home park is subject to the regulations under Bill 4.

At first blush, that seems good, but I do not think they have gone far enough. I would like to hear your thoughts, because I think there are going to be some tenants like yourselves who are going to be in very serious situations, because you are different than the apartment building. The mobile home park has its own hydro, its own water system, its own septic system, its own sanitary systems. The Ministry of the Environment is very strict about these sorts of things. If they are not up to standards, they can insist they be rectified, that they be fixed. Bill 4 says: "Sorry, we're not going to allow for capital expenditures. We're going to discourage capital expenditures." That will result in unbelievable costs.

The public health authorities, therefore, if those matters are not rectified, can literally come in and close the place down as being unsafe -- not healthy, you can get sick -- which would result in your being a special case, unlike apartment renters, because you have no place to go. If an apartment building is closed down, there are other apartments; there are always vacancies. But really, you have no place to go. You, the landlord, will all lose your life savings and you are literally going to be out on the street. I would like you to comment on that.

Mrs Hasson: I do not honestly know how to answer your question. As a tenant, I have been in the trailer park since 1978. At the moment, I am paying a base rent of $193.84, but with taxes and water it comes to $279.42. If he gets the 5.4% he has applied for, it is going to be over $300 just to sit on that tiny piece of land.

Mr Tilson: There is no question it is a major problem. I only hope your water system, your septic system and your hydro system hold up, because if they do not, under this government's legislation you are going to be out on the street.

The Vice-Chair: Thank you very much for appearing before the committee today. Your information was most helpful.

FEDERATION OF WINDSOR-ESSEX COUNTY TENANTS ASSOCIATIONS

The Vice-Chair: The next presentation will be made by the Federation of Windsor-Essex Country Tenants Associations; Joe Krall, acting chairperson. Your organization, being an umbrella group, is being given 40 minutes to make its presentation to the committee. You have 20 minutes for your presentation and the committee will then discuss your presentation with you for 20 minutes. Please identify yourself for the purposes of Hansard.

Mr Krall: My name is Joe Krall. I am the acting chairperson of the Federation of Windsor-Essex County Tenants Associations. Our thanks to the committee for allowing this federation to make a presentation today.

In the past four days, we have circulated letters of support for Bill 4. I have 811 copies, many with multiple signatures, that I wish to leave with the committee today. We further endeavour to continue this until the end of the Bill 4 debate. We will definitely present many more to the committee. I beg your indulgence, as my presentation may run as long as 21 minutes.

At the onset, we wish to clearly affirm our support for Bill 4 as it is an excellent short-term remedy for a system which is completely inadequate. Within the confines of a 20- or 40-minute presentation, it is impossible to make detailed proposals towards meaningful permanent legislation. As such, we will devote the bulk of this presentation to depicting some of the many flaws of the RRRA and the devastation it inflicts on tenants. We will also explore some of the comments from a well-heeled landlord lobby effort against Bill 4.

It is important to put this situation into the proper perspective. Most of these problems are not new. The previous Conservative and Liberal governments have both enacted legislation to address many of the concerns being brought before you today and throughout these hearings. The RRRA currently in place and its predecessor legislation have failed to address these problems in a manner equally fair to both landlords and tenants. This is not a partisan comment, rather a fact which has been echoed by many landlords and tenants alike.

It is important to note that our intent is not to paint all landlords with the same brush. Many are hardworking, honest people and we will not suggest or imply that all or even the majority are abusers of the RRRA. Were this the case, we would be known as the homeless province. However, most landlords who do abuse the system do so with such regularity and severity that the impact on individual tenants is almost incomprehensible. We will concede that all abusers of the system are not doing so to get rich quick. Some do so to avoid bankruptcy and losing everything. However, financial problems of this nature are almost always indicative of poor management, overspending or speculation, and it is totally unfair to condone the abuse and the financial devastation of tenants under these or any circumstances.

Who are the culprits? Is it the bureaucrats? Perhaps some, who choose to turn a blind eye towards reality, to defend party lines and allied special interests. Is it the landlords? Perhaps some, who abuse the system for quick profits without any social conscience. Is it the tenants? Certainly not. It is not possible to pass blame on to the real victims of this abuse.

Is it the landlords' agents or rent review consultants? Yes, perhaps the biggest culprits in this sad situation. We will not group all of them into the same picture, as we are certain there are some with morals and ethics who are only practising a trade and trying to provide for themselves and their families. However, the profiteers within this group taint all legitimate operators. Some are previous rent review administrators who have mastered a very complex system, proficiently learned all of the ins and outs, then leave their entrusted positions to exploit and abuse the system for personal profit. Unfortunately, the RRRA has left open avenues of abuse. Some agents aggressively entice landlords to use the system and of course their high-priced services to ensure additional profitability and huge cash rewards.

It is hard to blame a landlord who has had many thousands of dollars dangled in front of his face for being enticed to abuse the system. While we do not solely blame this landlord, we do not have sympathy for his plight caused by Bill 4, nor is there any responsibility by our provincial government to bail out or legislate an escape for these particular landlords. Our legal system is far from perfect. However, landlords in this predicament should be encouraged to commence legal actions for costs and damages against these ruthless abusers who aggressively enticed them into these applications and made promises that Bill 4 will not allow them to keep.

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As we are apportioning blame, we cannot overlook certain landlord lobby groups. Admittedly, there are some model landlords within their ranks. However, many who belong to and fund these groups are the most regular and worst abusers of this system. Their real agenda is to protect the loopholes in the RRRA, thus preserving the future abuse potential for their members. They pull out no stops, distort the real picture and portray themselves as the champions of safety, labour, fairness, affordability and yes, even tenants. These groups have lots of cash, as many of their members have been made rich courtesy of the RRRA.

Most advertisements and media releases from them have been humorous to anyone who knows the whole story, as they are quite proficient at distorting the total picture. One group has really shown its true colours. We are all familiar with the "Investors Beware" advertisement which was placed in the Wall Street Journal. On the surface, this could be considered the epitome of childish responses. Much deeper, it borders on treason to blatantly discourage investment and maliciously attempt to destroy our economy in this manner.

What will they do next? We are not certain we want to find out. We do feel that the actions of this group will prompt this committee, the media and the public to discount them as having any semblance of credibility or being in any way representative of all landlords in this province.

Before proceeding with specific problems within the RRRA, we would like to offer a challenge to this committee and to every MPP within this province. We challenge you not to look at this situation through your prospective party lines but instead to analyse the entire range of evidence submitted at these hearings. Then ask yourself, "Who are the legitimate victims?" and, "Will Bill 4 provide fair short-term relief for the majority of problems within the RRRA?" Anyone who fully accepts this challenge will have no choice but to admit that tenants are the legitimate victims and to support Bill 4 as an effective short-term remedy to a very complex problem.

The RRRA offers many opportunities for abuse. Capital expenditures is the first one we will explore. Without regard to the necessity or the desire for these improvements, a landlord has the opportunity to pass on the costs of the capital expenditure to the tenants. These may be for purely cosmetic purposes, to simply improve the value of the landlord's property. This is the first of many forced withdrawals that are available from the "Tenants' Bank and Trust." Once the value of the property has increased through a capital expenditure at no cost to the landlord, he is encouraged to sell the property and realize this value appreciation in cold, hard cash.

Logic would dictate that as tenants are the sole contributors towards this increase in property value, they should at least share in the windfall once it is realized, but alas, this is not the case. The RRRA allows for withdrawals only and not deposits to the "Tenants' Bank and Trust."

This leads to the abuse of financing costs. A prospective buyer is able to pay virtually any price for his acquisition and cover the increased costs courtesy of yet another forced withdrawal. This loophole leads to inflated property values, which increase the vendor's net worth and the amount of the withdrawal from the "Tenants Bank and Trust." Once the property value has been artificially raised to a certain point, new investors are actually scared away, as there are limits to the amount of rent that can be justified or paid. In this manner, the RRRA has been limiting legitimate investment for years. This flaw also encourages phoney, non-arm's-length transactions to gain the initial cash and the substantial increase in gross revenues.

The RRRA legislates other withdrawals. A landlord can spend frivolously, ignore all the rules of good business sense and make a withdrawal to guarantee his profitability. When the landlord decides to make the rent review application, he again has a legislated right to make another withdrawal. Yes, he is even able to subsidize or cover his costs to raise the tenants' rent.

Let's examine the status of the "Tenants' Bank and Trust." It would seem that there is an endless supply of capital. Not true. No deposit insurance available from the RRRA. Many branches have closed their doors. Many others are on the brink, and the balance is praying that our elected officials will do the right thing and limit and legitimize the withdrawals by supporting and legislating Bill 4.

At this point in my presentation, many would think that most landlords in this province have gotten rich quick. Not true. Some have gotten very wealthy, others have gained by varying degrees. Thankfully, many do not exploit the system for a variety of reasons.

First, the system and its loopholes do not offer all landlords an equal opportunity to cash in on this bonanza. The smaller a landlord is, the less likely that he will be able to justify the costs of retaining a high-priced agent to prepare his personal letter to rent review Santa. Mercifully, there is a $25-per-unit limit, which precludes many from taking advantage.

Next, there are many landlords who are honest, legitimate operators. These have found that they are able to be profitable as a result of sound, ethical investing, competent management and, of course, hard work.

Further, there are many landlords who are still ignorant of all the opportunities afforded to them by the RRRA. Sadly, this number is decreasing rapidly due to the debate on Bill 4. Since the announcement on 28 November and the resulting media coverage, many more have learned of these mail-order opportunities for financial security and will exercise them should Bill 4 be altered or trashed.

This puts an even greater responsibility on this committee and all MPPs to ensure that tenants receive at least the protection afforded by Bill 4 before the floodgates open even wider.

Where will the landlord find the money for capital expenditures and maintenance? Most will find it right in the existing rent levels. Landlords openly admit that the vast majority do not make rent review applications and that the guideline increase is more than adequate. Why is this the case? The answer is simple: The guideline has given landlords inflationary increases on their gross revenues. His operating costs, which include routine maintenance but not financing costs, usually average just above 50% of the gross revenues. Necessary major capital expenditures do not occur annually, nor is their life expectancy short. Yet a landlord is able to neglect routine preventive maintenance, then take every last nickel of surplus revenues for his profits. He is then able to force the tenants to bear the full cost of a capital expenditure when it is done in a subsequent year. Even worse, the increase allowed for the capital expenditure remains in the rent levels indefinitely, only compounding these disparities. In this manner, many landlords have been able to take two bites out of the apple by raping their business to maximize personal gain and then passing every extraordinary repair or improvement cost on to the tenants.

Almost all capital expenditures improve property values. Tenants pay the cost, landlords gain the profits. There must be a landlord financial participation towards capital expenditures. Money must be set aside.

A capital reserve fund is one possibility. Another would be to completely remove these from the current maximum legal rents and treat them separately. Total rents would fluctuate as the tenant portion of an allowed, legitimate capital expenditure was approved or paid in full. We are not certain that the fluctuating aspect of this concept is desirable. However, there would have to be landlord participation and the costs would not remain in the rent levels indefinitely.

Much ado is being made regarding retroactivity. We will leave the lengthy legal jargon to the experts, but do have a few comments. To begin, we do not feel there is any measure of retroactivity pertaining to any application, order or appeal which has not completely surpassed all ministry or legal deadlines for challenges. Further, there are no guarantees anywhere that declare an absolute, infinite right to any legislation, nor is anything contained in the RRRA to guarantee against its being pre-empted. Bill 4 will do what all legislation should: protect the residents of this province from the deficiencies of predecessor legislation and undesirable elements of society. Bill 4 does both.

Further, the RRRA disbanded the Residential Tenancy Commission and made the minister directly responsible for rent levels in this province. In so doing, the Liberal government of the day empowered its minister and all subsequent ministers, including the Honourable Dave Cooke, to adjust rent levels to levels that they see fit, when they see fit to do it.

The vast majority of landlords who are adversely affected by retroactivity are abusers of the system. Speculation in all forms carries big risks. Neither our government or tenants have any further responsibility to abusers of this system. If we are to discuss any real retroactivity as it pertains to the RRRA, we must again refer to the thousands of tenants who have been forced to pay huge retroactive rent increases, thanks to the RRRA.

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By design, this presentation has been void of local horror stories. I am certain that some of the tenants here today will share those will you. I will, however, briefly mention one group, Shoreline Towers, which is unable to be here today. Shoreline Towers is a 197-unit, high-rise apartment complex on Windsor's east side. Originally it was a seniors-only building and is still populated by 90%-plus senior tenants.

Following the sale of their building, these tenants found out that their landlord had made an application for a 60% increase in their rents. To a senior who is already paying over 50% of his gross income on rent in many cases, this is an especially devastating situation. Even worse, this application is based on unnecessary capital expenditures and financing costs and appears to be wholly designed to make a Toronto developer rich. This application is still in the hopper, pending what happens to Bill 4. Need I say more about this grave injustice?

Let's broach some of the comments made by opponents of Bill 4.

First, "Bill 4 will have devastating effects on labour and cause large-scale job losses." Very overstated. Most landlords by their own admission deal with maintenance and capital expenditures without special rent review applications and will continue to do so unless coerced into a maintenance strike or other such nonsense by landlord lobby groups that have refused to accept reality. We do expect that system abusers will cancel some capital work which will affect some of the labour force once Bill 4 restricts their ability to pillage the "Tenants' Bank and Trust." We deeply regret any detrimental effects on labour and are sorry that landlord lobby groups have chosen to turn labour into pawns for their political chess games and personal gains.

Next, "Abuse of the RRRA is small." Absolutely false. The average rent increase in this province is close to 11%, more than double the guideline. This statistic alone tells you that if most or 75% of all tenants escape with only the guideline increase, the remaining 25% must be getting socked pretty good to affect the average this dramatically.

Next, "Bill 4 will stop construction starts." Again, absolutely false. For years the private sector has found it unprofitable to build low- to moderate-rent units due to rapidly increasing construction costs. This has been a steadily increasing trend at least since the mid-1970s and has no relation to Bill 4. Particularly with a crisis situation regarding homelessness, all levels of government must fill this void.

In summary, Bill 4 will effectively deal with many deficiencies contained in the RRRA during the moratorium period. Landlords who properly manage their business will not be legitimately disadvantaged by Bill 4. Landlords who are involved in holdings which are currently or were previously abusive of this system will likely suffer extreme financial aftershocks from Bill 4. Frankly, we are unsympathetic towards the plight of these particular individuals.

When public consultation on permanent rent legislation begins, there will have to be a much higher level of accountability required. The present system is far too much of a rubber-stamp operation, which only cries for abuse. No one, including this federation, denies a landlord the right to make a profit on his labours, but this should be conditional on his ability to make sound ethical business decisions, not his ability to hire a high-priced professional who knows all of the angles. Should there be limits on the level of his profitability? No, but he should be required to contribute towards capital expenditures. The landlord who makes the best investments and runs the tightest ship should reap the highest rewards. Presently, the highest rewards are being claimed by opportunistic high rollers whose only concern is turning a fast buck.

I cannot stress enough that it is both morally and ethically wrong to legislate a licence to take money under false pretences, as happens often under the RRRA. It is also both morally and ethically wrong not to correct this situation now that you are aware of it.

Bill 4 will provide an effective remedy, but not a cure for the ills of the RRRA. The cure will require months or perhaps years of intensive input from all interested parties. Clearly, it is better for both landlords and tenants to have an end to the uncertainty.

I assure you these issues are not local. The opportunities exist across this province. Many that I have discussed originate in Metro Toronto, but they have certainly found their way well into Windsor and many other corridors.

In the best interests of 3.5 million tenants and legitimate landlords across this province, we implore you to vigorously support Bill 4.

Mrs Y. O'Neill: Mr Chairman, on a point of order: Mr Krall has made some very sweeping accusations and they are to landlords. But the one that I have difficulty with is on page 2 regarding the bureaucrats. I think we, as committee members, should remind Mr Krall before he begins with the questioning that we as MPPs of the Legislature of Ontario have immunity; he does not.

The Chair: Any further discussion on the point of order?

Ms Poole: I would like to begin by correcting for the record a statement which you made in your brief, I am sure inadvertently. On page 9, you said that the average rent increase in this province is close to 11%, more than double the guideline. Actually that statistic is totally incorrect. The average rent increase of those units going to rent review is 11%. The average rent increase across the province is somewhere in the vicinity of 5.8%. I think that quite seriously changes the comment that you are making in that paragraph. I would like to reiterate that the average rent increase only for the 16% to 17% per year of units going to rent review is 11%. That does not include all those units which are under the statutory guideline, whether it be 4.6% or 5.4%.

Mr Krall: If I can respond just for a second, if I am incorrect I will apologize and I will say that I have heard that statistic quoted many times by the previous government, by many people who did not explain it as eloquently as you, so there certainly was no misintent with the way I have done it.

Mrs Y. O'Neill: And less than 20% of the rentals go to rent review in any given year. That is the other part of that story.

Ms Poole: We can appreciate that. There are so many statistics floating around that we just want to make sure there is no misunderstanding about what we are dealing with.

The second comment I want to make was regarding page 5 of your brief, where you commented about the problem of a landlord who passes through the capital expenditures and then is encouraged to sell the property and in fact flip the building. I am not sure if you are aware of it, but late last spring Mr Sweeney, the former Minister of Housing, did bring in regulations which I think went a long way to curtailing this problem.

The effect of the regulation was to say if a landlord sold a building within five years of getting a rent increase due to capital expenditure, that the landlord would not be able to double-dip and get both those, that there would be a formula where the tenants would get relief from what they had to pay for the capital expenditure. Just to reassure you, I think that regulation has probably cured a lot of the problem. The thing is it has not been in effect long enough for us to really tell.

Mr Krall: I definitely disagree with that statement. The main influx of the legislation last spring was to put some special limitations on bonuses that landlords did receive, management and administrative bonuses. It put some restrictions but it also increased the amounts.

Ms Poole: You are quite correct in that. That was part of the regulations. But there was a specific regulation which dealt with the problem of flipping a building after getting the rent increased. I am quite familiar with the regulations because I sat on the committee that looked at it at the time. I think you would find that problem, which I think historically has been a very severe one, has been mitigated by that.

I think Mrs O'Neill wants to ask you about the retroactivity.

The Chair: I do not think there is time for Mrs O'Neill. I am sorry. We are on seven-minute rotation. Yes, we do have time. My apologies.

Mrs Y. O'Neill: You have been doing very well this morning, Mr Chairman, keeping us on time.

Mr Mammoliti: I agree.

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Ms Poole: You have stated a number of times in your brief that you believe that many landlords are honest, legitimate operators and are not abusing the system, but you really want to deal with those who are creating enormous difficulty for tenants. One of the difficulties I have with the legislation is that it does not differentiate good landlords from bad. It treats them all in the same kettle.

Can you tell us, if you feel that there are those who are seriously abusing the system, why this legislation should not deal specifically to curb those abuses as opposed to spreading out this wide net which says every landlord, legitimate or not, cannot be reimbursed for capital expenditures?

Mr Krall: The first thing I want to say to that is I feel that again in the confines of this presentation, I only barely scratched the surface on issues that we feel are very awful issues in regard to Bill 51.

I do not believe that you can, except for a short-term period of time, address the majority of what are legitimate concerns. The main problem with the situation as it stands right now is there is an absolute legislated guarantee of profitability and that is not fair. That is completely falling on the tenants' backs.

If the government were to provide the capital for this legislated guarantee, it would still affect all the individual taxpayers. The problem is it is falling on the backs of individual tenants and absolutely destroying their lives.

Mrs Y. O'Neill: Have you been watching the hearings on television?

Mr Krall: I saw parts of one day, which was last Thursday.

Mrs Y. O'Neill: I have difficulty, having sat here and seen every single witness to this point -- on page 8 you say "The vast majority of landlords who are adversely affected by retroactivity are abusers of the system." That is certainly not the kind of witnessing we have been hearing. We did not hear that kind of witnessing yesterday in London. We have literally had people break down and they are small landlords. You make no differentiation between small and large landlords. I feel that is really an unfair accusation.

Mr Krall: If I can respond to that briefly, we certainly concede that there are some people who are caught in a bad situation as a result of this. I do make reference to small landlords. I perhaps do not in that particular paragraph but small landlords are without question the most adversely affected by this. I will suggest to you that there are even some of the ones who have appeared before this committee who have paid too much initially for their property, who even before they bought it --

Mrs Y. O'Neill: That is your judgement. They did not think so, and investors have a right to make their decisions.

You go back to retroactivity. You are suggesting that the retroactivity of Bill 4 should be compared to the retroactivity of Bill 51 in regard to applications, orders and appeals. I think those are very unfair comparisons.

As you know, Bill 51 and all of those things you mentioned, whether they be orders, appeals or applications, have notices. There was no notice given regarding retroactivity in any shape or form. This came upon us very suddenly.

How do you feel about the principle of retroactivity -- clawback, I like to call it -- as far as this bill goes? Would you like to talk to us?

The Chair: You have time for a short answer.

Mr Krall: All I am going to say there is that in the case of very legitimate disadvantaged landlords, I feel badly for them. Personally, Bill 51 has in sections 71, 74, and 75 given some very, very powerful rights to the minister -- another flaw of Bill 51 perhaps. But it did give some very sweeping powers to the minister.

Mr Tilson: I have been a landlord, I have been a tenant and I have been an owner of a single-family house. I have seen terrible landlords and I have seen terrible tenants. I must say that, sitting as a legislator, I try to look at the overall effect on our economy, the overall effect to tenants, the overall effect to landlords.

Obviously, you have a vested interest. I understand that. But from my perspective in trying to be critical of the government's legislation and trying to look at it from an overall perspective, it was not just from the landlords' point of view or the tenants' point of view or the investors' point of view the point of view of the people who are losing jobs or the people who are losing contracts, everyone. But I understand where you are coming from.

I also understand, having seen the terrible situations that tenants have been put in as a result of landlords' actions, how cynical you have become over this. I say that with due respect, but you appear to be terribly cynical over them, and I understand that because there have been some terrible situations described to us.

However, this committee is designed to review Bill 4, not the overall legislation, and I would like with my question to direct your thinking to that. What we need to do is to increase the housing stock. How are we going to get better-quality housing stock? I do not see how this legislation is going to encourage certainly private enterprise housing stock. A landlord would be simply crazy to build an apartment building, absolutely crazy.

The other alternative is for the government to build non-profit housing, to encourage that type of housing. Of course, the NDP in the last election promised that it would build 20,000 units this year. Yesterday the minister said, "We won't be able to meet that promise." So this bill, on the one hand, discourages private enterprise, and yesterday it was made quite clear that the government is not going to be able to honour its promise to build the non-profit housing that it was promising.

I would like your comments, dealing specifically with Bill 4, as to how this piece of legislation, in your view, and you are quite strong in your views, is going to encourage the construction of new housing units.

Mr Krall: This bill will not encourage the construction of new housing units in low- to moderate-rent situations. This is not a simple situation of capitalism versus socialism. Realism has to come into the picture.

Mr Tilson: I quite agree.

Mr Krall: Everyone has to realize that costs are too high to build buildings which are at levels of rent that are required by society. Why are they required? The reality is our economy, wages, everything is indicative of all levels of government and its actions. In that respect, government has a responsibility, whether it be through building or subsidizing the building of, to ensure there are units people can afford without getting thrown out into the street.

Mr Tilson: I understand that and that is why I get to the situation with this specific legislation. The benefits of Bill 4 do help the poor tenants. They also help rich tenants, you know, and that is a major, major flaw in the legislation. The rich are going to get richer and the poor are going to get poorer. There are rich tenants around this province who are just laughing at this bill. They are laughing, with their fancy cars and their fancy way of life and their rents frozen. Do you have any comments on that?

Mr Krall: Yes, lots of them. The first thing I would say is I think that all residents of this province, through this or any legislation, should be afforded the same benefits, the same courtesies, the same protection. Personally, I cannot see why you cannot legitimize something simply because the rich will get richer. I think, if tenants are in a position where they spend far less of their gross income on rent, some of those are doing so because they want to save a lot of money. Others do so for a variety of other reasons. Personally I do not think that is a valid point. I do not have a problem with the rich tenant gaining also from this legislation.

Mr Tilson: At the expense of the poor tenant?

Mr Krall: I do not see how you can make that statement.

Mr Tilson: The rich are getting richer.

Mr Krall: But how will Bill 4 make rich tenants richer at the expense of poor tenants? I do not understand.

Mr Tilson: I think you have to acknowledge that what we are trying to do is to solve a social problem. We have people in this province who cannot even afford to pay any rents at any rate. You can pass Bill 4 and we are still going to have tenants who are on the food lines and who literally cannot pay for their housing. Bill 4 does not solve that. On the other hand, you have rich tenants reaping the benefits.

Let me ask another line of questioning, sir, and that has to do with your comments on retroactivity. We have had people come to us, landlords specifically, who have followed the government's rules. They have completed their renovations. They have in some cases paid for them. They have received the tenants' approvals. It is all set to go and Bill 4 comes along, is made retroactive, and says, "Sorry, you're out the door." We have had landlords come to this committee, and it is terribly sad. I acknowledge there have been some sad situations with tenants. Again, I am trying to look at it as a legislator, looking at everybody's point of view, and there have been some very sad situations. A man sits in front of you and cries because his life savings are going down the tubes and he is in his late 50s and there is no way he is going to recover from that. Is that fair?

Mr Krall: No. I am going to say there are cases where it is not fair, but I will also say to you that simply because somebody follows the rules, when those rules are grossly in error and those rules allow them to seriously disadvantage individuals, that is also not fair. That is where we draw the line, and I do not feel sorry for anyone taking advantage.

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Mr Mammoliti: This committee has travelled for two days now and we are going to be travelling a lot more to listen to other people such as yourself. In the past two days we have heard some extensive argument, mostly in London and some in Toronto, about how the cry from tenants and the abuse from landlords only happens in Toronto, and that around areas in the province, perhaps such as Windsor and London, it is not happening as much or it is not happening at all, in some cases. One person here today touched on that. How do you feel about that argument? I am trying to get a grasp myself about whether it is just.

Mr Krall: I can approach that in many ways. It is ludicrous to suggest it is a Metro Toronto issue only. Some things certainly originated in Metro. Even if everything originated in Metro, they have very much spread to all areas of this province. I am an interim council member with the United Tenants of Ontario, and we certainly deal with tenants as far north as this province reaches and in every direction. The stories are the same, the circumstances perhaps a little different, the severity sometimes a little different. But I would suggest that even if that were true and this were solely a Metro issue, it is not morally correct to let it go on. I do not think that has a lot of relevance, but it is incorrect to begin with.

Mr Mammoliti: So what you are telling me here today as well is that you are very experienced and that you know what you are talking about when it comes to Ontario, as opposed to just Windsor. You have some experience in dealing with this issue.

Mr Krall: Yes, I would say indirectly. I do not profess to be an expert on the system. I am still a novice in many respects. Personally, I have about a one-year really heavy immersion into this situation. Where I live, we are very adversely affected by the system, and that immersion has caused me to have contact with many tenants and get involved as long as I have.

Ms Harrington: The last point you made I found very useful. This is what we have heard from a lot of landlords, "We have followed the rules," and you have made the point that those rules in the first place were unfair. I think that is something we have to look at. What you have said is that there has been abuse, abuse, abuse, and that is true. This is what we have been hearing. You also went broader than that and explained that there are good landlords and we want them and we need them in this province, and that is very obvious.

But it is true that there may be a landlord, and more than one, who will have to declare bankruptcy and lose his building. This is unfortunate but this is the way life is. At the same time, we want to realize that there are, for each one of those landlords, hundreds of tenants who are losing their homes, and that is worth something as well.

It is not going to be easy. I think you realize that. I want you and everyone else we have listened to and who is interested to be involved in this ongoing process. This is interim legislation. We have to look very seriously and very honestly to the future of a system that will work. Would you like to comment on that?

Mr Krall: Absolutely. We would certainly concede that there are some, we believe the numbers are few, of legitimate, hard luck cases. I would suggest that perhaps there is an obligation on this government to make some moneys available to very legitimate cases. There would have to be very strict rules. You would have to ascertain that this building had not adversely used the system through that or a previous landlord. If the person overpaid on fair market value in the first place, he deserves no subsidy; it is a foolish, speculative risk. But for the one legitimately hurt, the government is responsible for the system and I think the government should be responsible for any financial recovery to a person legitimately hurt by this legislation.

Ms Harrington: It is hard to cover everyone. We will do the best we can.

You did point out two difficulties with this legislation, including the capital expenditures pass-through. One point we want to look into, which you mentioned, is that the capital expenditures continue indefinitely in the rent for years and years and years and that we cannot justify that, we have to do something about that. You also briefly touched on the retroactivity of the bill. I want to tell you how difficult that is, to set a date for when this bill will come into effect. Even using the date of 1 October 1990, 130,000 tenants in this province are still getting rent increases, so what can we do? To stop that, we would have to go back and back and back. There is just no way one can set a date that satisfies everyone. I think that has to be clear.

One final point you mentioned on page 10, and I think we have to realize this, is that landlords do deserve profit on their investment. You have said it right here, that if you make the best investments and run the tightest ship, you should reap the highest rewards. Presently, the highest awards are being claimed by those who are opportunistic. We are not against people investing and making money, as long as they are operating their business for the benefit of their client, who is a tenant.

The Chair: Our time has expired. Mr Krall, thank you for appearing before the committee today.

Mr Tilson: If I could ask a question of the Chair, I have in the past put the committee on notice that I would like to make a motion to this committee with respect to having Mr Thom appear before us. I would like to do that today, mainly because we will not be sitting for some time after today. I know you literally have the clock running, but I would like your guidance as to when I can bring that application.

The Chair: Would the committee concur to do it after hearing the last presenter this morning? Is that okay? Thank you.

Ms Poole: Mr Chairman, might I further request that you consider a time limit on the debate?

The Chair: We will be into our lunch-hour, so I am sure committee members will judge accordingly.

COMMUNITY LEGAL ASSISTANCE, SARNIA

The Chair: Community Legal Assistance, Sarnia. I note you have been here most of the morning, so I think you understand our procedure very well. You have been allocated 20 minutes.

Mr Peterson: Thank you very much. Just to introduce myself, my name is Peterson. I am a lawyer. I am the director of Community Legal Assistance, Sarnia. I believe most of the committee is already well aware of community legal clinics. That is what we are. We are located in Lambton county and serve the constituency of Lambton county.

You have a rather lengthy brief in front of you. You can put it aside. You can read it, if you like, later on and I certainly invite you to do so. What I would like to do is highlight some of the points, some of our submissions to you, and let you raise the questions flowing from that and anything we have put in writing.

What we see are some very definite good things, from our constituency's viewpoint, in terms of this interim proposed legislation. We believe that for the most part, tenants support Bill 4. The problem this committee has, the Legislature has, and indeed anyone who deals with this subject has, you have already heard. Housing is a business. It is also a question of shelter. The two issues quite often come into conflict.

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You have heard that housing is regulated but many other things such as food and things like that are not. It is not correct. I believe you all know that we are regulated in many, many ways throughout this province, throughout our society. An awful lot of things are regulated. They are regulated because we decide we need a balance; there is something we believe needs to be corrected or legislated by such regulation. We submit to you that housing and shelter is certainly one of those areas, and when the business of housing and the issue of shelter come into conflict we submit to you that you are going to have to look at the issue of shelter first. Shelter is indeed, in our submission, a much greater consideration than the business of housing.

One of the submissions before you a number of days ago in Toronto said that this interim legislation is unconstitutional, unnecessary and uses a neutron bomb to swat a gnat. I am not sure if that was referring to landlords as gnats. From our constituency, we have heard landlords referred to as many things, never a gnat; sometimes something that rhymes with gnat and starts with r, but we have never had the perception that landlords are gnats.

As for the issue of capital expenses flow-through, this is proposed interim legislation. As I understand it, we are looking at 1 January 1993 as the maximum possible date. By the landlords' own submissions, they have many cases before the Ministry of Housing and rent review right now that will not be concluded, because they stem from as far back as 1989. That is two years right there. For the most part, if that is the case, many landlords would not have their capital costs dealt with during the period of this interim legislation in any event.

One of the other criticisms about this freeze, if you like, on capital cost flow-through is that the tenants themselves will suffer as a result. Landlords will just not do any repairs, will pack up and walk away. Bear in mind that there is also the Landlord and Tenant Act. It has been alluded to. Tenants have remedies there, pursuant to section 96 of that act, to seek abatements if their premises are not in a state of proper repair and fit for habitation. Tenants do have remedies if landlords do not wish to make necessary improvements due to matters of expenses or the like.

Constitutionality: It has been submitted that this retroactive legislation is invalid, particularly in view of the Charter of Rights and Freedoms. I would like to make some particular submissions with that point in mind.

It is a well-taken legal point that legislation is presumed not to be retroactive unless a contrary intention is expressed in the statute either by clear words or by necessary implication. This principle applies to what is known as substantive legislation. The principle is exactly the opposite for what is known as procedural legislation. In that event, the presumption is that the procedural matters are retroactive or retrospective unless a contrary intention is expressed. There is numerous case law, and we have presented some of it in our brief to you, standing for those propositions. The courts traditionally respect retroactive substantive changes in legislation. The question you are left with, however, is: What effect does the Charter of Rights and Freedoms have upon this concept? In the United States, the Constitution has some particular impediments to retroactive or retrospective legislation. Does the Charter of Rights present the same kind of impediment?

The cases are not particularly numerous, and we highlight two of what we believe to be most pertinent. One is the case of the Queen and Finta, a case involving sections of the Criminal Code of Canada which were amended, in essence, to speak retrospectively about crimes committed outside Canada. It was challenged by the accused on the basis of section 7 of the Charter of Rights and Freedoms. The decision of the court in essence was that this legislation, the amendment to the Criminal Code, was procedural legislation and therefore the presumption against retrospective legislation did not hold. It was procedural. It was allowed to be retrospective. So Finta does not help us particularly with this legislation.

However, there is another recent case called Haddock. It affects the very legislation you are seeking to amend today, the Residential Rent Regulation Act, 1986. I want to dwell a little on that case, because it was a challenge based on both section 7 of the charter, that is, the right to life, liberty and security of person, and on section 15 of the charter, equality rights provisions.

It was a challenge brought by applicant building owners of apartments that had been constructed prior to 1976. The owners of these buildings claimed that by virtue of their having apartments that were pre- 1976, they had lower rents in their buildings by virtue of the RRRA. They challenged the legislation as infringing on their right to earn a livelihood. Based on section 7 of the charter, the court rejected the application. The court, to paraphrase it, went on to say that the applicants had not been deprived of a means of livelihood necessary to their post-retirement survival; their complaint was merely that their investment is not as lucrative as they would like as a result of impugned legislation, and this is not a matter that engages the guarantees of section 7 of the charter.

The landlords also argued based on section 15 of the charter that their equality rights were infringed. The court again reviewed all of the numerous case law from as recently as the Andrews case and all of the other cases before the Supreme Court of Canada and set forth a test. It said that before deciding whether the charter was infringed, a complainant, under section 15, must show that not only is the complainant not receiving equal treatment before or under the law, but the complainant must also show that the legislative impact of the law was what the court called "discriminatory." Discriminatory, in the court's view, was a distinction based on grounds relating to personal characteristics of the individual or group which has the effect of imposing burdens, obligations or disadvantages on such individual or group.

The court concluded that the applicant landlords of pre- 1976 buildings were not a protected group. In essence, it said these people have no protection under section 15 of the charter because, although they may be treated in a manner that does not give them equal treatment, they are not being discriminated against in view of section 15.

We suggest to you very strongly that the same arguments can be made in the case of retrospective legislation or proposed legislation here. The people who are prior to 1 October are not going to have any different distinction from the landlords who challenged in the Haddock case. They may be receiving unequal treatment, but they are not being discriminated against in the sense that the courts look at it.

Mr Turnbull: You have spoken with a great deal of technical detail about the potential challenge to retroactive legislation. I would like to ask you, philosophically are you in favour of private ownership of residential accommodation?

Mr Peterson: Am I in favour of private ownership of residential accommodation in terms of whether I favour private enterprise running residential accommodation?

Mr Turnbull: That is right.

Mr Peterson: I have no objection to it personally.

Mr Turnbull: You started your presentation by talking about the conflict or your perceived conflict between the business of housing and shelter as a right. It seems to me that where you have privately owned residential housing, there has to be an incentive to the owner. The incentive is called profit. While there are an awful lot of problems with Bill 51 -- I personally could sit down and write a book on the problems with it -- nevertheless it recognizes the fact that there has to be profit to the landlord.

It has been stated here by many landlords that in the first few years of ownership of a residential building you have a loss. I have to tell you I know that some of those losses are structured in that way to maximize the amount of increase they can get under the financial loss clause. You know it and I know it. But to the extent that we have heard people saying that, yes, you do not get a terribly good cash flow out of the building but you hope to make it up with the appreciation on the building, how is that possible unless you have a flow-through of financing?

Before you answer that I would just also like to ask, do you think it is reasonable that we should put a cap on the number of sales so that you do not have this flipping we have heard referred to, which a few people have done? Could you respond to that.

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Mr Peterson: Perhaps I can respond to it in this manner. First of all, this again is interim legislation. We are not looking at a bill that is going to be here for ever. Possibly as a result of continuing studies by this committee, by the Legislature, by the government, it may be in place, but we are looking at two-year legislation right now. For all intents and purposes two years is a very, very short period in the lifetime of most buildings and most owners if they are indeed owners who are in the business of running residential housing. If they are in the business of making a rather rapid turnover on a building, then perhaps to them this may represent their entire period of ownership, but if they are in the business of investing into buildings, two years is almost insignificant.

Mr Turnbull: Mr Peterson, the minister has suggested from the beginning of these hearings that the permanent legislation will have to have some recognition in it, that there has to be the ability to flow through the cost of capital repairs. I personally would feel a lot more comfortable with this if they had not had the retroactive aspect to it, because many landlords who do not have any profits have put their life savings into buying a small building. They have put it all, first of all, into the deposit and the rest into the money which you have to hold in reserve for running it. They have gone out and have started improving these buildings, because our rental housing stock is aging. It is typically between 25 and 30 years. Can I just finish off?

The Chair: You are running over already, Mr Turnbull.

Mr Turnbull: Okay.

Mr Peterson: If I can respond --

The Chair: I am sorry, no.

Hon Mr Cooke: Just a couple of points: I appreciate the comment you have just made about this being interim legislation, because I think that in the way some folks have described it, you would think this was a permanent piece, but this is a transition piece of legislation as we develop the long-term legislation.

I would like to ask you, with the experience you have had operating under the current rent review system, if you have any suggestions for us on how the adjudication process could be improved. You will understand that under the current system there is a review by an administrator and then the possibility of an appeal. The cost of this system is over $40 million a year. It is confusing and complex. Do you have any recommendations for the committee and for the government on how that system could be improved to make it simpler and easier for small landlords and tenants to access?

Mr Peterson: Let me say first of all that I do not envy you your job. If it were my position to decide on the legislation, I think the first thing I would say is, are we prepared to make a strong commitment in dollars and cents to having whatever legislation we have in place operative? I think there is no difference of opinion between tenants and landlords. They all agree. They think there needs to be a change from a day-to-day procedural viewpoint that I see cases of and argue hearings at.

Timeliness: The system takes an awfully long time. If there are ways of speeding up the system without losing the rights and the protections that people have under the procedure, then I think the ministry should certainly head in that direction.

Hon Mr Cooke: What would your view be if there is still an appeal process under the permanent legislation and if there were only the option to appeal to one person as opposed to asking for a three-person board?

Mr Peterson: In essence you might be returning to the former system, where at that time the first level appeal was in essence the hearing, which in essence might be partially analogous now to the paperwork decision. From a practical viewpoint, I think tenants are looking for a decision. I think they want their rights protected. I think they do wish to have a hearing. Whether that hearing is before three people or one person I think is for the most part immaterial. I think they do wish for some form of safeguards. Those are just some of the thoughts I have on the matter.

Hon Mr Cooke: I do not know if I have any time left, but I wondered if you had any words of wisdom for us on how the capital issue could be dealt with in the permanent legislation. As you know, there are a number of options -- reserves, caps and so forth -- that have been thrown out by groups. Do you have any particular point of view on that?

Mr Peterson: Again, you will have hard decisions to make as to where you draw your line. There are clearly Cadillac improvements, as we refer to them. I have numerous tenants who have received Cadillac improvements which they do not want, but the difficult question there is that your Cadillac may be my Volkswagen or vice versa. It is very difficult where you are going to draw a line if you are going to say a landlord can make such improvements and cannot make other, different improvements. They are very hard decisions. I do not in any sense try to come here and say I have answers for the province of Ontario.

Hon Mr Cooke: When the discussion document is out, we will certainly look forward to your response. But in Windsor we do not drive Cadillacs or Volkswagens; we drive Chryslers.

Mrs Y. O'Neill: That is encouraging.

The Chair: Ms Harrington, we have time for a question.

Ms Harrington: We still have time?

The Chair: I am going to give you time.

Ms Harrington: I want to thank you very much for coming. Although I do not claim to understand all of the technical details, that was a very good examination of how, under the law, the retroactivity would be viewed, whether it is unequal treatment or discriminatory. I think that has really helped us a lot.

You were mentioning something else about Bill 4, that it was interim and that the landlords are in there for the long term. I want you to maybe go on a little bit more. For the long-term landlords, how would Bill 4 in your view affect them if they are really interested in their buildings and they want to do a good job?

Mr Peterson: In a sense, as long as we do not know what is coming up after Bill 4, it is a little difficult to answer that question. As I say, based on Bill 4 itself many landlords would not have their capital cost hearings heard in the space of two years anyway. They would be in the midst of rent review and not being able to invoke at the first stage even those expenses. They would be tied up in many instances for at least a year, perhaps for as much as two years. So it may not affect them at all in that time period. Who it will affect, no doubt, are the landlords who were almost about to have the matter heard when they got caught on the 1 October deadline.

Mr Brown: I was grateful for your presentation on the legal issues. The only caution I would have, and what makes me very nervous about the legal issues, is that the government has assured us that there will not be a problem with the legal issues. Having been in government for three years, that makes me particularly nervous. I presume the new government is using the same lawyers. Given that, the assurance may not be worth a lot.

Moving on, I think we all agree here that shelter is a right. Indeed, it is an obligation of this society to provide it. The question is really how we do that. I want to ask you if you have any information about what kind of return on investment landlords in this province might be getting from their investment, because if we are to have a private enterprise system there must be a return on investment or it just will not exist. Do you have any idea on the ROI for landlords.

Mr Peterson: I could not begin to tell you what the numbers are. What I can tell you is that there are private landlords here. Some people will work for a relatively minimal profit. Others will not work for the same profit. But it is clear that as long as we have private landlords here, there is a profit to be made. Do not let the lobby fool you in the sense that they are not making money. It is a question of how much money. Some may want to make more.

Mr Brown: That is exactly my question. How much money is appropriate in this business? We know, from having some people involved in the capital markets before us, that investments are not being made by the large groups of investors that you might think. Pension funds, for example, will not touch residential housing. That is what we have been told. I would suggest to the government that one of the things it might do is to use the Ontario Public Service Employees Union pension fund or the teachers' fund. It is a possibility. If those people are willing to accept the kind of return that a landlord would expect, this might be an opportunity to greatly increase the housing stock in the province of Ontario. I would think that the administrators of that fund, though, would probably not want to do that.

Mr Peterson: I am not going to pre-suppose the fact of economics. I leave that to the economists among us. That is straying outside my profession. What I can say is that there are landlords in business, and as such they are making what they deem to be at least enough profit to keep them in business. It is very obvious to say that if I can get 10% somewhere, which I may not be able to get at a bank -- it all depends on how much money I have to invest at that bank -- I may wish to get 11% if I want to start up my own apartment complex. I may not wish to get 11%. I may wish to get 50%.

It is not so easy as to say that just because I can walk down the street with X amount of dollars and get so many per cent, I am not going to start up an apartment complex.

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Mr Brown: All I am suggesting, though, is that one of the problems with rental housing in Ontario is supply. There is not adequate supply in some areas. We were in London yesterday, for example. The vacancy rate in London, according to CMHC, is 3%, which most people take to be an equilibrium in the market. We had a landlord there who applied to rent review and received an order for a 14% increase. He did not take the 14% increase. He took a statutory increase because that is all the market would bear.

This is a very complicated issue and what I am wondering is how you see this policy encouraging investment, encouraging more apartments to be built in this province, with more choice for tenants, better buildings for tenants, and whether this will do it.

Mr Peterson: Again, you are looking at interim legislation, and as such you are going to be really dealing with a relatively short period of time. Very few landlords, if any, would build on the basis of two-year legislation. I doubt very much any entrepreneur is going to go out there basing his future expectations on a bill that expires two years from now.

Mr Brown: So you would expect that in the short term there will be virtually no new units built during the period of this moratorium.

Mr Peterson: No. What I would expect is that they are going to make the same decision that they would have made regardless of this bill. If they were not going to build --

The Chair: Thank you. Ms Poole has time for one question.

Ms Poole: I want to thank you for your brief. You have given some particularly helpful suggestions towards the back about the notices of rent increases and ways in which we could improve them. I thank you for that, and also for the legal opinion on whether or not the retroactivity is constitutional. A number of witnesses have basically put the committee on notice that they intend to pursue the legal avenue should this become law in its present state, so we shall read the details of your brief with interest.

I only have one question. It is with regard to your comment about capital costs the landlord may have incurred prior to the legislation coming into effect. You made the comment that these capital costs would not even be dealt with under the rent review system until the end of the moratorium anyway, because, I gather, you felt the backlog was so extensive. Our information as of last summer was that the backlog was significantly reduced, to the extent that most decisions were going out within 90 days. I would have anticipated that many of those capital expenditures that took place prior to 1 October would in fact have been dealt with quite expeditiously, so I do not think the moratorium is going to affect that.

The Chair: I am sorry. We are out of time. Thank you for your presentation.

MORGAN'S MOBILE HOMES (CLINTON) LTD

The Chair: Douglas Morgan of Morgan's Mobile Homes (Clinton) Ltd, please come forward and take a seat. The committee has allocated you 20 minutes, 10 of which can be an oral presentation, followed by 10 minutes of questioning. For the record, we would like you to identify yourself and whom you represent.

Mr Morgan: I am Doug Morgan of Morgan's Mobile Homes in Clinton. I have just a short presentation.

We operate a land lease community. We are maybe not categorized the same as some of the other people with apartments who have been here. What we operate is a land lease community, operated as a private business.

Each landlord here is likely acting on his own behalf for his own benefit. We own the land and lease the serviced lots to tenants for their homes. It is hooked up to hydro, water and sewage. It is totally our cost to install these services and to maintain them. The same applies to all roads.

The tenants pay a monthly fee of $95 to us for this land lease, and for that they have a nice lot to put their home on and it includes their water and sewer paid for, garbage picked up and streets maintained.

It is called a mobile or modular home park and is identical to a small village or town. We, as park owners, need some expensive equipment to develop and maintain these parks. If we have a heavy winter, we spend most of the time plowing snow, for which there is no return for our work or cost of maintenance on machinery. Should someone's sewer or water cause a problem in the middle of the night, there is no public utility that will look after it. It is up to the park owner. We find that we, as owners and landlords, are doing a lot of hours of work for very little pay.

We are in the process -- this is talking about our own park -- of having our park appraised and the consensus is that if we were to sell our park to our son, which he would like to buy at this time as that is the only business he knows, the land rent at $95 a month would not allow him to buy it. It is not a viable business and guidelines of 5.2% will not make it a viable business either. We are going to have to get our land rent up to approximately $150 to $175 a month to cover expenses and make it a viable business. This is now prohibited by Bill 4.

Many people in our park are retired, drive new cars etc, and have money invested at 10%-plus. Our park alone does not give us a living. It is subsidized by the sale of mobile and modular housing out of the park.

The government says that it needs more affordable housing. Our manufacturers and ourselves can supply this type of housing, but we are not going to do this if we cannot get a reasonable return on money invested.

The municipalities certainly enjoy the taxes they get from a land lease property because it is gravy money, with no installation or maintenance cost to the municipalities. We manage a small village or town in reality, with no cost at all to our municipality.

Another item which is a thorn in our sides is the fact that, classed as landlords, we must collect all municipal taxes. We are also responsible for them. We own the land and pay taxes on each lot, which is fine, but it is hard to justify why we have to collect taxes from each tenant in our park when that tenant owns his or her own home and is assessed according to its value. The tenants feel also that since they own their home, their taxes should be paid to the municipality and not the landlord. This is an extra burden on us for which there is no compensation.

If this Bill 4 goes through and land lease property is under its jurisdiction as stated, I feel it is against the Charter of Rights and Freedoms for a person to make a reasonable living. You can rest assured we will be doing no expansion of our facilities and/or as little maintenance as possible in order to survive. This possibly means not many sales of homes as of now and/or for the next four years, which also means unemployment for more people.

We, as a country, voted in the NDP because we were tired of all the cost incurred by other governments, but we feel this bill has gone too far the other way. It may have good bearings on large apartment complexes that were being turned over for a large buck and raising rents, but that is not the case in land lease operations such as ours and other park owners. We bought our park in 1968 and we are still working on a new car.

That is my presentation.

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The Chair: I believe the minister has a couple of questions for you.

Hon Mr Cooke: I am just a little unclear on one aspect of your presentation and I would like to understand it; the rent now is?

Mr Morgan: We are $95 a month right now and that pays for the water -- we are on town water and town sewage -- the sewage, garbage pickup and maintenance of all streets and the park in general.

Hon Mr Cooke: And you were suggesting that the rents should go up.

Mr Morgan: In order for it to be a viable business, according to the appraisal, we would have to have about $150 a month.

Hon Mr Cooke: That would then finance the cost of whatever borrowing your son had to do in order to purchase the park from you.

Mr Morgan: And for him to pay back the loan. He would not have any money but at least he would be operating.

Hon Mr Cooke: Just so I understand, the difference between the $90 and the $150 would be primarily financing costs in order to finance a sale.

Mr Morgan: No. Right now, if it was not for our sales out of the park of mobile homes, our business would not be a viable business -- the park itself, our taxes, the cost of machinery. We are different from apartments.

Hon Mr Cooke: I realize that.

Mr Morgan: It is just like a town. The cost of machinery and operating is just getting terribly high.

Hon Mr Cooke: Can I just ask one, the bottom-line question. Are you suggesting that mobile home parks should not be covered by any type of rent regulation?

Mr Morgan: No, I am not suggesting that they should not be covered, but I think we should be in a category by ourselves. I do not think we should be in the same category as apartment buildings. We should be in a strict category. I am not saying we should not have guidelines, by all means, no.

Hon Mr Cooke: If there are specifics, and I am sure there are, when the discussion document comes out in February, that you think we should be more sensitive to in addressing the mobile home park issue, I am sure our committee members would very much like to receive your specific suggestions of how we should deal with them in the permanent legislation, because there are differences and I certainly understand that.

Mr Duignan: You made some excellent suggestions along with other people who came from a couple of mobile park areas this morning. The committee will take a serious look at your suggestions.

Ms Poole: We have actually had several from the mobile home industry. They have pointed out some very telling facts that some of us were not totally aware of, so we do appreciate your presentation.

I want to make sure of a couple of things you mentioned in your brief. You have said that $95 per month is what you rent the land for to the tenants at your park.

Mr Morgan: That is correct.

Ms Poole: That does or does not cover your total costs of renting that?

Mr Morgan: No. If our park was to be separated from the sales lot, the $95 a month does not cover our costs at the present time.

Ms Poole: So it not only does not allow you a profit, it does not even cover your costs.

Mr Morgan: No. It is because of the cost of equipment and maintenance.

Ms Poole: Under Bill 4, that situation will be frozen for at least the time of the moratorium, whether it takes a year or two years.

Mr Morgan: I understand, yes.

Hon Mr Cooke: Have you gone to rent review?

Mr Morgan: No. I have followed the guidelines ever since we bought the park. And because our sales were fairly good and not thinking that much -- well, all tenants are happy and everything is going well. But now as our boy is thinking of buying or we are thinking of selling, we realize all of a sudden that it is not a viable business.

Ms Poole: Just one final question. It is about the taxes. I understand, from what you have said in the brief -- and I want you to correct me if I am wrong -- that you are required to collect the taxes not only for the land you are renting out but also from the tenants' homes themselves, that you are responsible for collecting the entire amount.

Mr Morgan: That is correct. We get an overall bill, X number of dollars, and my wife has to make out the sheets and we distribute them to each tenant. The tenant, in turn, feels that we are picking up a bit of money on the side and there is no way. It is just an extra burden on us. We have to collect those taxes, and if somebody is in arrears, who carries it? We do.

Ms Poole: So if they do not pay, if the tenant abdicates his or her responsibility and does not pay the amount owing, are you on the hook for that?

Mr Morgan: Yes, we are.

Ms Poole: To the municipality.

Mr Morgan: Yes.

Ms Poole: That certainly is something that should be redressed because it is totally unfair.

Mr Morgan: And it is up to us; if at the end of three years they still have not paid we either have to take them to court or do some legal -- to try to get the money.

Hon Mr Cooke: What is your suggestion, Dianne?

Ms Poole: So the municipality could put a lien on your land because your tenant did not pay his or her portion?

Mr Morgan: Yes. If you went and looked, there is a lien on our property from back taxes. That is right.

Mr Brown: Yes, it is really just a question of information. Does your group have an association, a group that, in an umbrella sort of way, would give us an opportunity to present the views as a group so that we could understand the particular issues and your particular problems?

Mr Morgan: No, we do not, and I wish we did have an association, that we could work as a lobby group.

Mr Brown: Could you give me some understanding of how many mobile home parks there are in this province, or do you have any idea?

Mr Morgan: No.

Mr Brown: Perhaps the ministry could supply that information to us.

Mr Homan: There are 350.

The Chair: Order, please. We appreciate the information, sir, but we cannot conduct our meetings that way. Where is the ministry staff? Okay, can you talk to the gentleman, who I think may have some information for the committee on the total number of mobile home parks in the province, and if you have anything else you might want to tell the committee I would ask you to come forward?

Mr Brown: And the number of units, Mr Chairman.

The Chair: Please put the question to the staff and we will try to get answers.

Ms Richardson: I do have some information about the number of mobile home parks. It has been collected by the Ministry of Revenue. My information is that in total in the province there are 389 mobile home parks.

Mr Brown: Do you have any idea of how many units would be represented in those parks?

Ms Richardson: That represents 18,407 units.

Mrs Y. O'Neill: I wondered if there is any provincial association, to your knowledge, of any of these people in any parts of the province?

Ms Richardson: I just do not know that.

Mr Tilson: Does your park have leases?

Mr Morgan: No. I operated a park that did have leases, but when I bought it, our present park never had a lease and they were a lot of retired people and I did not feel like bringing a lease out. It upset them more than what -- and I have still got some of the original people that are in our park and we have a good rapport.

Mr Tilson: Have you discussed some of your concerns with your people who live in the park?

Mr Morgan: Yes, a few, not a lot.

Mr Tilson: What do the few that you have spoken to say?

Mr Morgan: They realize what the cost is and a lot of the comments are that they could not get a cheaper rent any other place.

Mr Tilson: Do they have any other complaints about your operation?

Mr Morgan: No. We have not had many.

The Chair: Thank you, sir, for making your presentation to the committee this morning. We appreciate it.

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ELLA LAMOTTE AND ERNIE HARRIS

The Chair: I am informed that the next two presenters are going to join together in their presentation, Ella Lamotte and Ernie Harris. We had allocated 20 minutes each, so I will be a little freer with the time. We will try to keep the whole thing to about 30 minutes if we can. I would ask both of you to identify yourselves for the record and any organization that you are representing. You can split up your oral presentation if you wish. It is your call.

Mr Harris: Thank you. Ladies and gentlemen, my name is Ernie Harris.

Mrs Lamotte: My name is Ella Lamotte. I live at DaVinci Tower on Donnelly.

Mr Harris: We have some concerns that have been brought. I am not a resident there now. I moved out a few months ago because of the situations, but the last time we came forward to a rent review for problems within our apartment building we both received eviction notices. I do not believe it will be a hardship to the landlords because of this Bill 4. I believe that the building should be kept up maintenance-wise to their apartment buildings. The cost would not be so high.

Let's take a few examples. Back some time ago our landlord was told about leaking faucets, but nothing was really done. So, in the end they had to replace counter tops because they had rotted. At our expense the landlord replaced the taps, counters, plus bathroom fixtures, but to save money they did not put washers in them and the taps leaked again, which you could check very easily.

They also replaced fridges and stoves and stove hoods in the building. Many of them were still in excellent running condition. Mine was, at least, and I know Ella's was. There was nothing wrong with them, but yet, in order to get an increase in rent, anywhere from 4.6% up to 28% increase in rent was put upon each and every individual. I do not object, in passing, to landlords getting increases. I realize that things do cost money, but I think it comes to extremes when you just replace things for the sake of replacing it.

They have slapped paint on walls as a cosmetic look and that was to be done by professionals, but you can see that it really was not. It was a family affair. They replaced kitchen floors. Now, some needed it and some did not really need it. We objected to it, but it still did not matter. All this for a large rent increase. At the time I left my rent was going up from 21% to 22% and Mrs Lamotte's was going up from 24% to 28%.

The landlords gave no respect to privacy and the people would enter at any time without notice, even if you were not there. They felt they could do whatever and they did, yes, even to intimidate you, even if they spoke -- Mrs Lamotte was inconvenienced for many weeks and had to live out of boxes because the landlord did not want to really hurry. When I and Mrs Lamotte spoke up, as I said in the beginning, about rent increases, we were given the eviction notice and we ended up having to go to court, paying my costs, etc, to defend myself. We both stayed, but eventually I did leave. That is why you do not have many from the apartment buildings, especially DaVinci Tower, 3170 Donnelly, because they fear the force that some of the landlords are using on some of them. I am not saying all landlords are alike, but I am saying that there are some that literally put fear into individuals.

I believe there is no reason to allow landlords to be let off the hook and dismissed from Bill 4 because they will not continue to take advantage of tenants across Ontario. It is time to put a stop to it, to greedy landlords, and investigate books -- not everybody -- and work very thoroughly.

So, in short, I am asking this standing committee to allow Bill 4 to be law and force the landlords to keep the buildings up. In closing, as a tenant, I do not believe it matters, the car you drive when it is your legs. You would want something reliable too. Thank you. Ella?

Mrs Lamotte: My main concern right now is the financial difficulty in attempting to pay a 24% increase in my rent this year. In dollars, the increase amounts to $127 per month, or $1,524 for the year. Yet, on the other hand, my income has gradually decreased over the last 10 years while the rent has increased. I cannot see where I can keep up this high rent. I feel that it is too much for me to pay. I do not think I will be able to be there. I have been there for 15 years and I just cannot handle this rent any more. I just cannot find that people can continue to pay these high rents. There is just nothing I can say. I just feel so bad about it. I have been there too long. I am working just to pay my rent. There is nothing I can say about it.

Mrs Y. O'Neill: Mr Harris, you say you had a notice of eviction, that you went to court and that you won that case.

Mr Harris: That is right.

Mrs Y. O'Neill: Could you tell me the grounds upon which you were being evicted?

Mr Harris: It was right after a rental review and we had brought it before the rent review that the landlord was charging extra expenses such as a key, an air conditioner vent when some of them did not have an air conditioner, and a parking spot, $50 per head over two people --

Mrs Y. O'Neill: So what were the grounds upon which you were --

Mr Harris: The grounds that they used were that they wanted to put their daughter, their family, into my apartment. Those were the reasons. When it went before the court, the judge just ruled that in a numbered investment corporation it could not be done.

Mrs Y. O'Neill: Thank you for giving us the details.

Mr Harris: You are welcome.

Mrs Y. O'Neill: That certainly was a very unjust experience. As you know, in the cases you brought, the Landlord and Tenant Act is really what we are talking about --

Mr Harris: That is right.

Mrs Y. O'Neill: -- the relationships between tenants and landlords, and it is another act to what we are dealing with which, as you know, is a rent review legislation. Could you tell me how you feel Bill 4 would help situations like yours, and if you would like to answer, as well, Mrs Lamotte, how you feel Bill 4 will help you.

Mr Harris: I think Bill 4 would certainly, probably -- I am not good on everything like this, but I think it would certainly help the tenants, and especially landlords from taking advantage of tenants who are afraid to speak up for themselves. I just would like to see it implemented. That is about all I can say.

Mrs Y. O'Neill: I am sorry, sir, I really do not believe Bill 4 will do that for you. I am very sorry to tell you that, because Bill 4, as you know, is a moratorium on rent increases and that is basically what it says.

Mr Harris: I would like to see a moratorium. I would certainly like to see something done, compared to getting 24% to 28% increases. I do not mind 4.6% or 5%, but to go 24% to 28% I think is a little bit outrageous.

Mrs Y. O'Neill: I would like to ask Mrs Lamotte. She says her rent has increased consistently. You obviously must have had a whole-building review or something to this effect. Could you tell me why your rents have gone up so much? Have you had phase-in orders? What are the reasons your landlord is giving you for what you consider excessive, and I do not know what they are, so I cannot make a judgement.

Mrs Lamotte: I believe it was because he has put some improvements in there like paintings and floors. I believe that for the rent that he is charging us, he has really gotten enough out of his own building, let's say, for the value of his property in 10 years. I think he has gathered just enough money for that on his time alone.

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Mrs Y. O'Neill: Unless he has sold the property, you know, he cannot appreciate its value. You say this is a long-standing landlord.

Mrs Lamotte: Yes, it is.

Mrs Y. O'Neill: Okay, so there has been no return on this investment at this point unless he sells. You do know that those improvements have been made and that is the reason he has been giving. Did you say you had a 20% increase in rent in one given year?

Mrs Lamotte: Yes, 23.8%.

Mrs Y. O'Neill: What year was that?

Mrs Lamotte: I will have to pay this on 1 July. I was wondering if that is going to be final. I have been paying $547 rather than paying the $660.

Mrs Y. O'Neill: So your effective date is 1 July 1991.

Mrs Lamotte: Yes. I would like to know what can be done at this time on my part. This is a debt that I will be in with them. I will be indebted to them. I think there are a lot of us in that building that just cannot afford this rent increase. I have been there a long time.

Mrs Y. O'Neill: Bill 4 is a proposed piece of legislation which has 1 October 1990 as its date. It has not yet passed the Legislature, so I do not think anyone here can answer your question definitively.

Mrs Lamotte: So that is not final yet.

Mr Brown: It sounds as if this is not a happy landlord-tenant relationship by any means and as if the landlord, as a matter of fact, harasses tenants rather than deals with them in a forthright way.

I guess my question really is pretty similar to Mrs O'Neill's. Many of us find it very difficult to understand how this bill will help in those particular landlord-tenant relationships aside from the fact, and I recognize it is an important fact, that it creates a moratorium on rent increases.

Aside from that, it is difficult to understand during this moratorium period how there will be any improvements to the maintenance of buildings, for example. I guess that is one of the problems we are having with this particular piece of legislation. Do you have any comments on that?

Mr Harris: I have stated that I would like to see a moratorium. I think if the buildings had been kept up to a certain extent they would not have to be going this route, but I think it is their own fault that they have allowed the building to deteriorate, to go down.

Mrs Lamotte: I think if they had looked after it before, it would never have come to this extent.

Mr Brown: Is this a building that is 10 years old?

The Chair: Order. Thank you very much. Mr Turnbull.

Mr Turnbull: Let's talk a little bit about the state of the building. Is it in good condition overall?

Mrs Lamotte: No, I would not say it was in good condition. I would say that they have kept it to a point where it is -- well, we have a lot of students in there as well.

Mr Turnbull: Yes, but what specifically about the building is not good?

Mrs Lamotte: The lighting is very bad in the hallways. When I went there, the building was a beautiful building and my husband and I enjoyed it. He has died within that time. I enjoyed the building, but it has just gone down. The landlord has not done repairs when they should have been done and now he is just bringing all this on top of us right now and it is just costing everybody in the building too much money.

Mr Turnbull: You mentioned the capital improvements that he had gone through. He put new counter tops in and he put in new fridges and stoves and he put in new kitchen floors.

Mrs Lamotte: Which was not necessary. I cannot imagine why, but the man has about four other buildings.

Mr Turnbull: How old is the building?

Mrs Lamotte: I have been there for 15 years. I think it is probably about 16 or 17 years old.

Mr Turnbull: You are saying the building is going down but you do not want him to do capital improvements. I am just a little bit confused about that. Could you clarify that?

Mr Harris: I do not think we are saying that we do not want improvements. I think what we are saying is that the building has been let go and then all of a sudden, bang, he wants to upgrade the building to such an extent and then say to the tenants, "You're going to pay through the nose by a large rent increase." That is why I got out.

Mr Turnbull: You are saying it has been let go and you are telling me that he is doing these things, all these upgrades. You have not described any luxury renovations to me.

Mr Harris: The only thing I can say they have done is they have replaced fridges. There were cracks in the wall that were there a number of years ago that we had told him about and he said, "Yes, we'll get them," but finally the cracks got so big they ended up coming down from the top of the wall all the way to the floor. Finally the cracks were so big they had to go in and do a major project on the walls themselves.

Mr Turnbull: Do you know what they did to the walls, how they solved that?

Mr Harris: They just creviced out the cracks and filled the cracks up and then naturally they had to repaint the apartments. That is what they had to do.

Mr Turnbull: There are some very sad stories we find of tenants coming to us who are having a real affordability problem. We also have landlords coming to us and saying, "Look, capital improvements have never been included in the legislation," which is correct. We have had expert testimony from the Ministry of Housing that major capital items were never included. The present act, which is Bill 51, was changed so that there was a 1% allowance built into the rental increase for capital items, but clearly when you get into large items such as fridges and stoves, you cannot get it back.

I am not suggesting to you that it was necessary for those fridges and stoves to be changed, but I do know the fact is that when you start getting a few fridges and stoves going in an apartment complex, it is usually indicative that they are coming to the end of their economic life, and it is better to buy a whole batch of new fridges and stoves rather than piecemeal going out in just ones and twos, because ultimately the tenants get the benefit of a lower cost in that pass-through. How would you foresee that landlords could cover the cost of capital items if Bill 4 goes through?

Mr Harris: I really do not know how to answer you, except I would like to ask a question back to you. How can they justify, if there are 54 tenants, who is going to pay 4.6% and who is going to pay 28%? We are all tenants.

Mr Turnbull: As a matter of fact, I was confused by your statements about that. Are you telling me they did not go for whole-building review --

Mr Harris: No, they did not.

Mr Turnbull: -- they went apartment by apartment?

Mr Harris: The apartment below me was 4.6% raise. Mine was 21%, between 21% and 22%.

Mr Turnbull: Were there varying levels of maintenance done individually in apartments?

Mr Harris: Not particularly. My wife and I redecorated our own apartment; we did our own work. If there was a small crack in the wall, we got it and we covered it. We did it properly and did it ourselves.

Mr Turnbull: I would suggest that you should follow that up with rent review and check that out.

Hon Mr Cooke: The example that you are giving is an interesting one. I think one of the difficulties under the current rent review legislation is that it encourages landlords to go several years without going to rent review and letting a deterioration of the building exist and then have one big application; in other words, bunching up of all the capital repairs that are being proposed. The challenge we have is to try to devise a system that does not encourage neglect and then a huge application for rent review but tries to encourage ongoing maintenance and therefore there are no huge rent increases, just ongoing maintenance of buildings.

With that in mind, I have just a question of how you would react as tenants to a couple of alternative proposals. All of the options for capital will be detailed more specifically when our discussion document comes out in February. These are all proposals that have been discussed for quite some time. If one of the options was to have a capital reserve fund, where instead of having a guideline of 5.4%, the guideline was 6.4% or 7% and that is what they got every year, and there was an expectation that a couple of percentage points of that increase went into a capital reserve fund for automatic capital improvements, that is one alternative. The other alternative would be to have a guideline plus an ability to apply through the system with an upper cap of, say, 10% or 11% or 9%, whatever the cap would be. What would your reaction be to those types of alternatives?

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Mr Harris: For myself, as I said, I moved out, but in all honesty I probably would be much better with the first one you mentioned, going to maybe the 7% and a couple per cent of that going into a fund where capital would be taken care of. I believe that Ella would go along with me on that. I think something like that would be beneficial to not only the tenants, but also to the landlords. I do not want to see a landlord go under. I do not think any of us do. I think all we want is just a little bit of fairness. We are willing I think to accept something like that.

Hon Mr Cooke: So the bottom line for you as a tenant is the predictability, so that you have an idea of what your rent is going to go up to in a particular year and so that you are not confronted with an increase of 24% or 28% all at once with having no idea and then being economically evicted from your building. That is the most important principle that you are talking about today, the predictability.

Mr Harris: I think that would be good, if we knew from year to year that next year we are going to be paying this much. If come next year I get a notice that it is going to be 24%, that can be a shocker and a very heavy burden to a tenant. I will reiterate on the other situation, I think that the kind of car that you drive should not really interfere with your rent.

Mr Mammoliti: First of all, I want to commend both of you for having enough guts to come to the committee, for caring not only obviously for your own problem but for the problems that exist within the building and the tenants who are in that building as well. I think you should be commended for that, Mrs Lamotte. I am very concerned about what you have said about not being able to afford the $127 and the fact that you do not know what to do. There are thousands of tenants out there who are in the same position as you because of the rent review system, and Bill 4 was structured to perhaps make life a little easier for obvious reasons. What are you going to do? I am concerned. I need to know for myself what tenants such as yourself are going to do.

Mrs Lamotte: I am trying to say that I do not know what I am going to do. I am speaking for students in that building also. They are paying double because they are doubling up. I think this is what is going to happen to me. I will have to double or whatever. It is just too much money. I think we have paid enough. I feel bad for the landlords but I feel worse for us. We cannot afford the increase.

The Chair: I want to thank both of you for coming before the committee today. We appreciated your presentation. Thank you again.

COMMITTEE SCHEDULE

The Chair: Before the committee adjourns, we were put on notice by Mr Tilson that he was going to move a motion and, having regard for that, I will turn the floor over to Mr Tilson.

Mr Tilson: My party has expressed an interest, as have the Liberals, in the wish to see qualified expert people in different aspects, not just the applicants who have come before us, but others. Mr Turnbull made a motion yesterday with respect to having a financial person come and talk about the financial aspect. The government of course has the votes and it turned that down. I cannot believe it is not because they did not want to hear them; they are sticking to their guns and saying, "This is as far as these hearings are going and what is allowed is allowed." I do not agree with that but I understand. They have made their point quite clear. I do not agree with it. I would hope that there will be time allowed.

There is obviously a time for a clause-by-clause in the clause-by-clause section. The minister has indicated that he is coming to discuss the green paper and it gives me great concern. This committee has been set up to specifically deal with Bill 4 and I have no problem listening to people talk about the whole rent control system. The minister this morning, in even his last question, asked a question dealing specifically with the green paper. It had nothing to do with Bill 4; it had to do with assisting him in the green paper. I understand that too, except that I am concerned that he comes in here and takes up the time that we wish for discussing Bill 4. It annoys me somewhat to have the government say there is no time to hear these expert witnesses.

I have prepared a motion. I have given it to the clerk. I do not know whether she is distributing it. It is a very short motion. I will read it and then I will submit my submissions as to why I believe this person is needed to come.

The Chair: Mr Tilson moves that Stuart Thom, author of the Report of the Commission of Inquiry into Residential Tenancies, be invited to appear before the committee to provide an assessment of this legislation on Ontario's rental housing stock.

Mr Tilson: If I might make submissions on that before you hear comments from other members of the committee, hopefully the government representatives will agree with that and hopefully time can be found. I believe that if we can find time to have the minister come and speak on the green paper, which we have not seen yet -- I do not know whether it is going to be extensive or not extensive -- we can find time to hear expert testimony to assist us in our recommendations to the Legislature.

Of course, the way it is worded, Mr Thom may not even want to come. We have asked that he be invited. I imagine he would come because this is a man who, with a staff of 28, started a report that was originally initiated in 1982 by the Conservative government. The first volume of the reports of the Commission of Inquiry into Residential Tenancies, which was called the Thom inquiry, was released by the Minister of Consumer and Commercial Relations in October 1984. The second volume was released by the Minister of Housing in April 1987. Prior to the release of volume 2, the Liberal government of course went ahead with Bill 51 to deal with residential tenancies.

Mr Chair, I will admit that I do not have a copy of this report. I am trying to get one. I think we all should read it if we have not. I know perhaps you and other members of the Legislature who have been in government before have read it, but I have not. I am trying to get a copy. My information is that the cumulative cost as of 31 March 1987 was $3,101,687 for this report. It was a substantial cost to the taxpayer and yet it really has not been adequately reviewed, in my view, by the government. The Minister of Housing at the time rejected the report and of course proceeded with Bill 51.

The Thom commission recommended the implementation of a fair market rent system which would be substantially different in terms of both design and operation of the then existing process. The report, as I understand it -- and I am saying this not having read it, but what I have been informed is that it recommended a two-part system of rent regulation: fair return rent control and market-comparison rent review. I am not too sure what that means. I have had it summarized and told to me, and that is not the purpose of this motion. The purpose of this motion is that an extensive study has been made by a commission or inquiry, the Thom inquiry, to study the whole issue of residential tenancies. Things may have changed even since he submitted his report. He, with the expertise as he is required, may have specific comments to make to this committee with respect to the current Bill 4. I think, with that great expertise, this committee should hear that testimony, assuming he is prepared to come.

So that is the purpose of my motion and I would hope that members of the committee would agree with me that this man should come. I would recommend that time be found -- it may not take a great deal of time -- during the period that is being set aside about when the minister is coming, perhaps, with his green paper.

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Ms Poole: Our caucus would support this motion by the Conservative member. I think we can all acknowledge that Mr Thom is an expert in the field and has a great deal of expertise in this particular area.

I would also suggest that perhaps if Mr Thom is available, 12 February might be an ideal time for us to hear him, either prior to the commencement of our hearings that day or during the lunch period. I would further suggest that he be treated as an umbrella group, that perhaps it be a 40-minute presentation time, 20 for his actual presentation and 20 for questions from members of the committee.

Mrs Y. O'Neill: I believe my colleague was not here yesterday. I think you told us the two hours, 12 to 2, are for ministerial officials on that day, so it would have to be earlier.

I have several outstanding questions of the minister, and he would likely know those from Hansard, but maybe he could help us just on one of those right now to help us make a decision about this. You did respond to my letter very quickly, Minister. I just wonder if you could now tell the committee what your plans are for the week of 18 February and 25 February regarding your green paper. Then maybe we could see if we could use the suggestion of Mr Tilson regarding fitting Mr Thom into that time.

The Chair: I am not sure that is in order.

Mrs Y. O'Neill: Well, we have the minister here, Mr Chairman, and we are trying to make a decision about time, and he is the one who --

The Chair: Yes, I understand, and if there is no objection from the committee, then I will allow it. But under the strict sense of the precedents that I have served and worked under, that is not really in order. But with the consensus of the committee, I will allow it.

Mrs Y. O'Neill: Thank you very much. I think the minister will have an answer.

Hon Mr Cooke: I will try. I have not sat down with the Chairperson of the committee to get a firm determination. I do not know what your schedule is on 18 February, but it certainly is still our intention to release a discussion document. That would be our intention and our desire, to release the document and have the briefings from the ministry that week, whatever day you can schedule us.

The Chair: Can I help here? It was assumed that we would sit on Tuesday 19 February and start clause-by-clause. That would be interrupted as soon as the green paper was presented.

Mrs Y. O'Neill: That is why my question is here. At this moment I think the minister may be able to help us, because at the beginning we thought the actual date of release was 18 February. That has not been verified. Maybe he can verify that.

Hon Mr Cooke: The document will be ready on 18 February.

The Chair: That means we will not go to clause-by-clause then.

Hon Mr Cooke: That is our plan, to have the document ready on 18 February. When you schedule the ministry to brief you on the document is up to the committee. I am just telling you when the document will be ready, and we obviously want to have clause-by-clause of Bill 4 dealt with as well.

The Chair: For the minister's attention and to recall to everyone's attention, the Chair was instructed by the committee that when the green paper was made public we would interrupt clause-by-clause and go to the green paper, which means, unless I am instructed differently, that if the green paper is released either am or pm on Monday 18 February, we will not have clause-by-clause.

Hon Mr Cooke: Mr Chairman, I think you are not correctly following what I am saying. I am saying that the document is going to be ready. When the committee schedules us, fine, but we have indicated all along that we want arrangements for clause-by-clause for Bill 4. So it is really up to the committee to tell us what its schedule is and when you are going to do the clause-by-clause of Bill 4. The release of the document will have some bearing on when Bill 4 is going to be dealt with. That is for obvious reasons; you cannot have two items before the public.

Mrs Y. O'Neill: I am sorry, Minister, I am having difficulty again now. You are saying that 18 February is not a firm date.

Hon Mr Cooke: I am in the hands of the committee and when you give us an indication of when you are going to be doing clause-by-clause and when we can fit in --

Mrs Y. O'Neill: Are you telling me you are going to release this document at the whim of this committee, or at this committee?

Hon Mr Cooke: You have described the committee that way, I did not.

Mrs Y. O'Neill: I am having so much difficulty understanding your timing. Are you going to release the document at this committee, or when we are complete with clause-by-clause, or are we going to tell you when you are going to release the document? I am having so much trouble.

Hon Mr Cooke: What I would suggest the committee should do is that the steering committee or the committee in its entirety should tell us what its schedule is, what the intentions are for clause-by-clause of Bill 4, and we will, to the best of our ability, be as flexible as possible to fit into that schedule.

Mrs Y. O'Neill: And you were going to make a statement that it is not fair to have -- and you did not complete that -- clause-by-clause at the same time as a discussion paper.

Hon Mr Cooke: What we want, and I am sure you would agree, is as much as possible to avoid the confusion that will exist of having two things before the committee at exactly the same time.

Mrs Y. O'Neill: So you are saying you want clause-by-clause complete before the discussion paper is released.

Hon Mr Cooke: That would certainly be the ideal, but again I think your committee should put some proposal forward to the ministry and the committee members should make some determination of how they want to proceed.

The Chair: Can I try this again, please? My understanding is, and we can go back through Hansard -- maybe the clerk can read the motion.

Clerk of the Committee: At its meeting of 20 December when the committee was considering the proposal from the Chair regarding this committee's schedule, Mr Turnbull made a motion that that schedule be amended by substituting the words, "Upon completion of clause-by-clause during the week of February 18, the Ministry of Housing do a briefing on the discussion paper and that if the ministry is prepared to do the briefing before completion of clause-by-clause on Bill 4, that clause-by-clause be interrupted and continue into the week of 25 February to allow that briefing."

The Chair: So basically when the green paper is tabled for public consumption, the committee will interrupt its clause-by-clause hearing and then be briefed by the ministry.

Hon Mr Cooke: That is not how that motion read.

The Chair: That is not how it reads?

Clerk of the Committee: Yes, it is.

The Chair: That is exactly how it reads.

Interjections.

The Chair: Order, please. We will have a full discussion. We have until 2 o'clock to complete discussion. I am running a list. Every member can be on the list if he or she wishes, but we cannot all talk to this subject at once. Now my understanding of the motion, and we will get clarification from the clerk, is that when the discussion paper is tabled, we will interrupt clause-by-clause to do the green paper, to have the ministry briefing. I do not know how long that will take. The committee will decide.

Mr Mammoliti: Mr Chairman --

The Chair: Let me finish, please. I am going to give everybody ample time. The Chair does not take much time in this committee.

Mr Mammoliti: You have given your opinion, Mr Chairman. I would like to give my opinion.

The Chair: Order. You cannot give your opinion while someone else is giving his opinion. Can I give an opinion, please?

Mr Mammoliti: Certainly, but whether it is going to take a half-hour or not is a different story.

Mrs Y. O'Neill: Oh, my goodness. We should be showing respect for our Chair.

Mr Tilson: Absolutely. Have respect for the Chair.

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The Chair: The motion, as I understand it, instructs the committee to do certain things. The Chairman has to follow the motion. I cannot make things up and go along as if my own will is the will of the committee. I can only follow the instructions of the committee. I do my best to interpret the instructions of the committee and seek advice of the clerk when I am unsure, to ensure that what we do is legally correct.

I believe the motion instructs the committee to stop its clause-by-clause discussions of Bill 4 when the discussion paper is tabled. I do not see in that motion anything that instructs the Chair about the time allotted for the ministry briefing. The committee will have to decide that at a future date, as soon as possible, I hope. When the ministry briefing is completed, then the committee will again revert back to clause-by-clause. That is how I read the motion. That is how I read the instructions from the committee. I would like to ask for clarification from the clerk.

Clerk of the Committee: I hesitate to paraphrase, but the way the motion reads is that clause-by-clause will commence the week of 18 February and that upon completion the Ministry of Housing do a briefing of the discussion paper, but that if the ministry is prepared to do that briefing before the completion of clause-by-clause, clause-by-clause will be interrupted in order for that briefing to take place and we will continue clause-by-clause into the week of 25 February.

Hon Mr Cooke: That is not what you said.

The Chair: That is not what I said? If that is not what I said, I would like to know the divergence.

Hon Mr Cooke: The only confusion I have is that you were stating it in a very absolute way, and I do not think that is the case. What the motion says and as the clerk has explained, it is the expectation that there will be clause-by-clause begun in the week of 18 February. The alternative is that if the Ministry of Housing offers to do a briefing before you have completed clause-by-clause, then that would be acceptable to the committee.

Not being a member of this committee, I do not have any direct input, but I would certainly suggest that the appropriate way of going is that before the ministry does its briefing on the discussion document, clause-by-clause on Bill 4 should be completed in committee. That is the way we have always encouraged the committee to proceed.

The Chair: I want to say that I agree with the minister. I have always advised this committee not to do two things at once. Anybody who checks Hansard or the videos of our hearings will see that the Chairman tried to set a schedule that in fact did that. I can only follow the wishes of the majority of the committee.

Were you finished, Mrs Poole?

Ms Poole: No, I was not.

The Chair: We have Mrs Poole, Mrs O'Neill, Mrs Harrington, Mr Mammoliti, Mr Turnbull.

Mr Mammoliti: On a point of order, Mr Chairman: Are the people on the list dealing with the motion or are they dealing with the interpretation you have and the clerk has of clause-by-clause?

The Chair: Do you remember that about 10 minutes ago, when I wanted to rule questioning out of order, I said if I had followed the strict precedent of how committees work I would be ruling that out of order, but if there was unanimous consent, consensus in the committee, I would allow it? I saw everyone shaking their heads yes and now I am being questioned on something you asked me not to rule on. I can only do one thing at a time that the committee instructs me to do. Everybody agreed that we could do this, and we are going to continue. Your point of order is out of order.

Mr Turnbull: On a point of information, Mr Chairman: I do not have my baggage out of my room and we were informed to try to get it out close to 12 o'clock. Does the clerk have any instruction on that? This could go on for a long time.

Clerk of the Committee: I can only tell you what I said earlier, that you should check out as soon as possible.

The Chair: And it is not possible right now.

Ms Poole: As Housing critic for the Liberal Party, I have had quite a few conversations with the minister about the timing of the green paper and also clause-by-clause. If the committee will remember, the weeks of 25 February and 4 March were set aside for the green paper. Major umbrella groups were going to be invited by the committee to come before our committee and make presentation on the green paper.

The minister was indefinite about when the green paper would be available, simply because he did not know if they could keep to the original timetable. He had said they were hoping to have it available on 18 February, and the original idea was that we would have the green paper presented by the ministry staff, there would be an opportunity for question and answer from the members and then we would go into clause-by-clause. There was some flexibility built in simply because the ministry could not absolutely promise it would have the green paper done by 18 February.

I think a couple of points are really important. One is that it is important to get the green paper out as quickly as possible if the presenters coming the week of 25 February and 4 March are to have an opportunity to actually look at it and have meaningful views back to us. That is why we had suggested that as soon as the green paper was available we would interrupt clause-by-clause, no matter what stage we were at; have the green paper and then go back to clause-by-clause.

The minister, I think, believes now that there is a fair amount of certainty that the paper will be available 18 February. I think it makes sense to deal with the green paper first -- we may want to set aside half a day, a whole day, whatever we want, to deal with that -- and then go into clause-by-clause. If we take a day away from the week of 18 February, away from clause-by-clause, I suppose it would be added to the beginning of the next week so we could complete clause-by-clause in a very timely fashion.

That is my understanding and I think the minister will agree with me that that is what we were working on, that as soon as the ministry had the consultation paper available, it wanted to release it to give the major umbrella groups an opportunity to peruse it. So if it is available on 18 February, I would recommend that we deal with it as our first item of business and immediately go into clause-by-clause and deal with it in that order.

Hon Mr Cooke: Could we discuss this during the lunch break? I am sure we can come up with an arrangement of how to handle that week between the members of the committee and myself. I do not think this is a problem.

The Chair: Okay. I am happy to hear that. I would like to get back to Mr Tilson's motion. "Mr Tilson moves that Stuart Thom, author of the Report of the Commission of Inquiry into Residential Tenancies, be invited to appear before the committee to provide an assessment of this legislation on Ontario's rental housing stock."

All debate from this point forward will be referring to Mr Tilson's motion, as everyone has agreed to discuss the timing of the week of the 18th over lunch, or else we are never going to get to Mr Tilson's motion and we are never going to get lunch.

Ms Harrington: To respond to that original motion, this side, I believe, is most pleased to hear Mr Thom. I believe we are here to learn everything we can about every aspect of this proposed legislation.

I think all sides understand our firmness on the hearing dates, in fact the final date of when the green paper is coming. May I ask the person proposing the motion that it is understood that we will not go past the dates we have set, and we would be most pleased to support this motion.

The Chair: What I would recommend to the committee, as it appears there is consensus to hear Mr Thom, is that maybe one evening in the month of February, whether it be the week of the 11th -- the week of the 11th is out; we are travelling quite a bit. Maybe the week of the 18th, the week of the 25th, we could set aside an evening hearing.

I frankly advise the committee not to call Mr Thom in for 40 minutes. I do not think you will find that advantageous. I think the committee will be frustrated. If we could set an evening, say, from 8 to 10, which would give two hours, we could divide the time equally. We could inform Mr Thom how long we would like to hear him speak on the matter before we questioned him. Then it would be worthwhile for Mr Thom and it would be worthwhile for the committee, it would not interfere with the other decisions we have made, and at the end of the process we would feel better instead of frustrated.

That is my advice. I would ask for committee consensus. If there is no consensus on that, we are going to have to come to a consensus on someone else's suggestion. What do the members think?

Ms Harrington: We would be willing to sit in the evening.

The Chair: From 8 to 10. We will pick a date and inform all members in a timely manner.

The motion put forward by Mr Tilson has been read twice. Do we need to hear it again? Dispense?

Motion agreed to.

The committee recessed at 1302.

AFTERNOON SITTING

The committee resumed at 1405 in the Hilton International, Windsor.

The Chair: The Chair sees a quorum. We have a very busy afternoon ahead of us. I ask everyone to please review the afternoon agenda. Also, please take note that a number of the members are flying back to Toronto this afternoon, and we have to get you back to the airport on time. That being the case, I am going to strictly adhere to the committee's decisions made earlier about time limitation. I would ask all members to please co-operate in that. We will strictly adhere to the time guidelines because of the large number of delegations that we have and because of the travel arrangements that cannot be changed.

I also understand that over lunch the committee came to a conclusion as to when the green paper and clause-by-clause would take place during the week of 18 February. It was suggested that we put this on record, and since there is a quorum here, I am going to try to recap for the committee and have it placed on record what I think the clerk has understood. It appears that on Monday the 18th the green paper will be made public and simultaneously the committee will be briefed by ministry staff. Am I correct so far?

Mrs Y. O'Neill: I have just spoken to the minister. I think the minister himself will be present at the committee that day, and he does think we need the whole day of 18 February.

The Chair: Morning and afternoon?

Mrs Y. O'Neill: Yes, because he says that it is a very large document and, if we do not, we will not have time for questions.

The Chair: That is fine. The 18th will be reserved for the green paper briefing by the minister and ministry staff for the committee. Then my understanding is that the committee has agreed to go to clause-by-clause starting the morning of 19 February. I think I have capsulized that. The only thing that the committee has to decide at this moment is the time of sitting on 18 February. As all committee members know, I put everyone on notice some weeks ago that Monday is not a good day for me, so I will not be there, but our Vice-Chair will ably assume those responsibilities.

Ms Poole: Mr Tilson and I were discussing this matter just prior to coming in. One thing that was of concern to both of us was the fact that committee members would not have an opportunity to even look at the consultation document until it is tabled with the committee on 18 February. I wonder if any provision can be made to ensure that committee members have access to the consultation document prior to the time the committee meets that day. Otherwise, there will be no opportunity for us to ask intelligent questions of the ministry staff and there may not even be sufficient time for us to have gone over the consultation document in depth.

Mrs Y. O'Neill: If I may help in this, the minister indicated to me that he wants to go through the document, he and/or the ministry staff, page by page. I presume that if he is releasing the document, which you just told me, at the same time publicly and to us, the request may be impossible. But the only way to check, of course, is to get Mr Cooke to answer.

Mr Tilson: I agree with Ms Poole and Mrs O'Neill on those items. I have no problems with the procedure. My only concern is as to what this committee is expected to do. Actually, I do have a problem as far as the whole procedure is concerned, of its interfering with these proceedings. But since it has been decided that is going to happen, I will work within the system. I have no problem having the minister go through page by page. The difficulty I will have is if he expects this committee to discuss that paper at that specific period of time.

Normally, unless I am the only one but I do not imagine I am, if I see a document that is at all comprehensive, I will probably want to read it more than once. I may want to read it twice. I may even want to discuss it with someone like Mr Turnbull in private somewhere. We will not have sufficient time to do that. If it is understood that we will be able to discuss it at a later date, I have no problems with that either.

Ms Harrington: I want to ask either Mr Cooke or the staff of the ministry if it is at all possible to get it out to the members on the Friday before so we could have the weekend to read it. It is not possible? If it was possible, we would appreciate it. If not, I guess we will have to live with it.

The Chair: Minister, if you can help us, we are happy to have your help.

Hon Mr Cooke: I think the expectation would be that the document would be presented and released to the committee on the 18th and then the ministry staff would brief the committee and there would be an opportunity, in whatever way you want to schedule it for that day, for questions of people from the ministry after the briefing, if that is okay. But if we released it to the committee ahead of time, I think that would be inappropriate. We want to release it to the committee all at one time, and it will not be released to the public before then either.

The Chair: Can I ask the minister how long he believes the ministry briefing would take if the staff are going to go over the matter with the committee on a page-by-page basis?

Hon Mr Cooke: I do not know that you need to go through it page by page, but issue by issue and the various options that are referred to in the document would probably be the best way.

The Chair: Do you have any idea how long that process might take?

Hon Mr Cooke: Mrs O'Neill and I were talking about that a few minutes ago. It is hard for me to guess at how long. It will be a comprehensive document. If you have the whole day, it will take some time to go through it, and then I still think there will be ample opportunity for questioning. We can work the schedule whatever way you want. I guess whatever amount of time you give the ministry people, that is what they will take.

The Chair: I think it has become a little more complicated than just a schedule. I think that I have heard some concerns expressed, and please correct me if I am wrong, that there needs to be a full briefing, then an opportunity after the material is absorbed to go into detailed questions. Is that a good summary of your concerns?

Mr Tilson: Yes, it is.

The Chair: I heard it from several sources.

Mrs Y. O'Neill: I did have the opportunity to discuss this with the minister. I think that we are being given an immediate briefing. We are the people who are going to be responsible for leading the discussions across the province on this paper. The minister himself will also be going, with a couple of other members of the committee. There is some debate about that, but that is immaterial at the moment.

What I hear is that we will finish clause-by-clause and, if we still have need for further discussion on this paper, the minister has assured me, and I think he has even assured other members of the committee, that opportunity will be presented. So I think we have 18 February, then we do clause-by-clause. I do have some of the same concerns as the minister. He and I do not always agree, but on this one we do. We have a responsibility to the public to try to keep this process clean and clear. I really do feel that we will have some time on the 18th, that first day, and then we will have a lot of time to read it as we do clause-by-clause.

I am putting this in Hansard so that the minister will verify again that we can go back to the document. I mean, this document is apparently going to be on the floor for discussion until midsummer. At least that is what we have heard before. So it is not as though we have to have every single question answered that very first day. I like the idea that we are going to be the first ones to get the document. I feel very good about that.

Ms Poole: I would like to reiterate that my major concern is if we are seeing this document for the first time and Ministry of Housing officials flip through from spot to spot and give us a précis, then we might not be asking the questions that we should be asking to clear up confusion that may be arising because of the document.

If the minister can affirm to me that the briefing would be in fact quite comprehensive and that we would spend a considerable part of that day actually going through the document itself, I would feel much more comfortable, particularly if we also allocate that perhaps the first morning we are into session in the following week we could have the Ministry of Housing officials back for a follow-up commentary and questions.

Hon Mr Cooke: No problem.

The Chair: That is no problem either, as far as I am concerned, but it is a little different than the agreement I spoke about at the commencement of this meeting. We have now extended that agreement, so let's all be cognizant of that. For the benefit of the committee, I think we are going to have to be very clear on how we are scheduling this.

Hon Mr Cooke: What you are suggesting, Ms Poole, is that on the 18th there will be an extensive briefing, an opportunity for questions, then you will go back to clause-by-clause. Obviously members of the committee will then have the document, they will read through it, they will go through it with their colleagues and research. If you here are saying that the members want the opportunity to have ministry personnel back in front of the committee after they have digested again, that you would like that opportunity, I see no problem with that at all. That is understandable.

Ms Poole: In fact, if we could specifically arrange for that -- I cannot conceive that it would be possible for me not to want to have further questions of the ministry and I assume that an appropriate time would be the beginning of the consultation period so that many of the presenters could also have some of the questions they may have asked through the committee members.

Mrs Y. O'Neill: Mr Chairman, if I may, I think we would less than true to the committee process of the Legislature of Ontario if we said how long it was going to take us for clause-by-clause. So I do not think at this moment we can determine that second day.

The Chair: I just am very happy you in fact came to this point, Mrs O'Neill. I could be wrong and if I am wrong, then it is great, and we will have ample time to do everything that the clerk and I have been instructed to prepare, but the clause-by-clause may take a great deal of debate, if there are a great number of motions and a lot of recorded votes and all of those things which I have seen happen in the past. So far I do not see there is anything that has shown me that this will not happen with this bill.

Mrs Y. O'Neill: What makes you think that?

The Chair: It is just the nature of the legislation, the nature of the presentations that we have heard and the nature of the concerns that I have heard on all sides. I envision the clause-by-clause to be very tedious and very, very lengthy.

Now if we get our work done quicker, that is fine; we will get to all of these things we have been instructed to do. If not, I am assuming that the committee is going to have to revisit some of these things that you have instructed the clerk and me to do, because my understanding is that the number one priority is to get clause-by-clause completed for the opening of the Legislature. I think I am instructed by the committee to ensure that that happens.

If we bog down in certain areas, I am going to have to allow debate if people want to speak. We may get to the point where we may have completed half of the committee's instructions today, but we may never get to that point of callback of ministry staff or others. I just want everyone to be aware of that potential situation, have that in the back of your minds as we are going through the process.

Do not forget you have also told the Chair this morning that you want to see Stuart Thom, which means that one evening during the week of the 18th or the 25th Mr Thom will come in, and there may be further instructions that you have for me as we go along. Ms Poole?

Ms Poole: Just one further comment and in fact a question, Mr Chair: My understanding was that primarily the week of 25 February and 4 March were to hear presentations from umbrella groups as to the consultation.

The Chair: We no longer have them for the week of 4 March. All three caucuses have scheduled caucus retreats of two and three days. That was brought up quite some time ago, and I foresee nothing happening during the week of 4 March. I think every party has mentioned to me that there are caucus retreats and some of these retreats are quite extensive. The caucuses are getting ready for the opening of the spring session.

Ms Poole: Does this mean that there will be one week for the consultation people, or are we asking for an additional allotment of time, once the House goes back into session, to complete our consultation process?

The Chair: I am only speaking out loud but I foresee our regular Thursday meetings turned into sessions for the consultation paper which then puts us into conflict with the promises that we made to each other about the two 12-hour motions. These are all things that I brought to the committee's attention early on.

Mrs Y. O'Neill: Mr Chairman, I think that we have made a very major decision today. Mr Cooke has verified the release date of the paper, and I would strongly suggest that we get into the hearings for this afternoon. I have one very small request before we do that, but I think we have made as many decisions today as we can. We cannot predict the future, and that is what we are really asking. This committee in particular cannot predict the future.

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The Chair: No. The only reason I made those points was just to alert everyone to the requests that are being made and to the restrictions that we have, so that there are no surprises. One thing we do have to decide is our hours of sitting on Monday 18 February. I am going to suggest 10 to 12 and 2 to 6. Is there consensus?

Mrs Y. O'Neill: That is fine with us.

The Chair: Very good. Let's move right along.

Mrs Y. O'Neill: May I just ask the clerk one question, Mr Chairman?

The Chair: Certainly.

Mrs Y. O'Neill: I did ask the last two or three days about the answer from the Minister of Revenue. Has a contact been made? If it has not, I would request that we have an answer in writing from the Minister of Revenue to be presented to the members of this committee on or before our next meeting, 18 February.

Clerk of the Committee: I have tried on several occasions to reach the minister. She has been in meetings and so on. She does have a message with her executive assistant to contact me here today.

Mrs Y. O'Neill: I will leave that for a later time in the day then, but I do think this committee has to have an answer if she has new knowledge that the rest of us do not have about the concerns of her constituents.

The Chair: I remind everyone that we have a full itinerary this afternoon and I am going to adhere strictly to the time allocations.

CHRIS O'NEIL

The Chair: The first presenter is Chris O'Neil. Mr O'Neil, thank you for joining us today. You have been allotted 20 minutes by the committee, 10 minutes to make an oral presentation followed by 10 minutes of questioning.

Mr C. O'Neil: I would like to thank the committee for allowing me to appear. My name is Chris O'Neil and I am appearing as an individual tenant who has been affected by the rent review legislation. I live in an old, six-unit walk-up apartment on Windsor's west side near the University of Windsor which I have occupied since 1979. There have been two landlords who have owned the premises since I first moved in. The present landlord began collecting the rent on 1 August 1986 though, to my knowledge, he had purchased the building some time before that. Seven months later, the new landlord served me with the first of three termination of tenancy notices I was to receive that year.

He quoted me a rental price for another unit in the building that he thought would be available shortly and told me he would offer me the unit if it did. This offer was made and I accepted, although the rental price quoted was $15 more than when he first made the offer. Later, the landlord gave me a new rental price that was $10 higher than the second quote and further informed me he would be charging me an additional $50 as a deposit.

I informed him I was no longer interested in the new unit and decided to fight his termination notice if he wished to contest it in court. He chose not to, but about two weeks after the expiry of the first notice, he served me with another termination notice claiming he needed the unit for personal use. We ended up in landlord-tenant court in September 1987, and his application for a writ of possession was dismissed when he admitted in his own testimony that he had moved another tenant into a vacant unit while he was attempting to evict me.

Six weeks later, in November 1987, he again served me with a termination notice, this time claiming he needed vacant possession in order to effect major repairs to the unit. In April 1988, we were in landlord-tenant court again and a compromise agreement was reached. In the short term, I was to surrender the exclusive use of my kitchen in exchange for the opportunity to occupy the first available unit in the building. The surrender of the exclusive use of my kitchen was not accompanied by any rent reduction.

Shortly after this agreement was signed, work began on the building as a whole. The landlord had previously given me a letter outlining the work to be done and about how there would be a full consultation with all of the tenants affected by the work. At no time did the landlord consult with me about the repairs and rarely attempted to give me written notice about when workmen would be entering my unit.

In the same letter, the landlord stated that most of the cost of the repairs would be paid for by the low-rise rehabilitation program. I was told that there would be a small impact on my rent of about $20 and that the repair costs that he had to bear would be spread over the life of the repairs. The repairs were necessary to properly maintain the building and bring it up to safe fire standards.

In June 1989, the landlord filed for a whole-building review with a first effective date of 1 October 1989. Contrary to the small impact on my rent I had been promised, I discovered the landlord was seeking a 34.85% increase over my current rent. If I began to pay that on 1 October, I would then be paying about 50% of my income on rent.

The landlord accompanied his application with a form 6R requesting that information in the rent registry be changed. He claimed that when he originally registered the rents he had failed to indicate the full rent. The result, he said, was that the maximum rents in all the units were actually much higher than they appeared, so therefore the actual increase in rent was really only 12.59%.

On 1 October 1989 I opted to pay only a guideline increase with the understanding that if the landlord was awarded a higher rent I would be responsible for all back rent owing.

On 4 January 1990 the rent review services office dismissed the landlord's form 6R application. The office had requested additional information from the landlord or his agent supporting their contention that the rents in the registry did not indicate the full rent. Neither the landlord nor his agent complied with this request.

In May 1990 I was laid off from work. For the previous 10 weeks I had been on a shortened work week and was finding it difficult to put aside money in the event of a rent review services ruling in favour of my landlord. After I was laid off, I found this process impossible and lived in fear of losing my apartment if I was unable to pay the back rent. Fortunately this did not happen as I was recalled to work in August and am currently employed full-time.

I was unhappy enough about the rent review legislation to attend tenant rallies in June and August 1990. In addition, I wrote two letters to Bill Wrye, the former representative of my riding, to inform him that unless he and his party made some commitment to change the rent review legislation to make it fairer to tenants, I would support neither in the upcoming election. I also told Mr Wrye that the fact I had supported him in the three previous provincial elections would have no bearing on my decision.

Mr Wrye, apparently as comfortable with his re-election prospects as the former Premier was with his party's chances, replied that he was satisfied with the legislation as it was. I decided right then to back a party that would protect my interests as a tenant, and accordingly I would like to publicly thank the Minister of Housing and the rest of the Ontario government for proposing this legislation. They have demonstrated to me that my confidence in them to protect my interests was not misplaced.

On 9 August 1990 rent review services handed down its order. This was more than a year after the landlord had first filed his application and 10 months after the first effective date. Rent increases of 16.46% to maximum rent for the whole complex were allowed. This was less than what my landlord had asked for, but still resulted in a hefty monthly boost in my rent, as well as leaving me in debt to him for the back rent. This debt was paid by me in full by 19 September 1990, minus the illegal rent my landlord had been charging me for the year prior to 1 October 1989 and that I knew nothing about until the order was issued.

In early September I had occasion to see a rent receipt issued to another tenant in the building. I checked this receipt against the maximum rent that could be charged for that unit. The landlord was still charging more than $20 above the maximum rent for that unit, plus an illegal and unauthorized charge for the use of an air conditioner of $40.

Permit me now to say a few words about the maintenance of the property as there have been some problems in this regard. The landlord sprayed for pests in October 1988. I should point out that prior to April 1987 there had never been a problem in the building with insect pests. In October 1988 the problem was still relatively minor. The landlord did not spray the apartments again until October 1990, by which time the problem had become far more serious. The problem is still serious and no further spraying has occurred since October.

In my unit a fire door was installed as part of the major repairs done in 1988. Since that time the lock has been broken twice. The door is locked from the outside, but I cannot open it from the inside. The first time it took the landlord six weeks to fix the problem and then he wanted me to pay for half the cost of the replacement parts, even though the problem was caused by poor workmanship on the part of the contractor.

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In December 1990 our furnace quit working. This problem was not fixed until 27 December, about 12 days after it was first reported. It was so cold in my unit for three days near Christmas that ceiling paint cracked and fell out in large chunks.

In closing, let me state my total support for Bill 4. Rent review disrupted my life for over a year and no tenant should ever have to endure such disruption. My mother and sister are also tenants and both have recently experienced this disruption in their lives.

Landlords are claiming that maintenance will suffer under the new legislation. My own experience suggests that maintenance problems are anything but new. For some time now, tenants have had their rights protected in the law to save them from unscrupulous landlords. Now is the time to enshrine in law a bill that will protect tenants from outrageous rent increases. I ask for the help of the committee in passing it and thank you for this opportunity to speak to you.

Mr Turnbull: Mr O'Neil, in going through this submission that you have made, I find several items which rather suggest to me that your landlord has not been dealing with you fairly, and I have to say that these are issues that by and large will not be addressed by Bill 4. It would not appear to be reasonable, the way he was trying to evict you and saying there were other units available. It is rather bizarre. There are avenues you could pursue and I would suggest that you certainly sit down with one of these advocacy groups which would be able to advise you on that. But let me direct my questions to a little bit of understanding about your apartment. How many bedrooms do you have in your unit?

Mr C. O'Neil: One bedroom.

Mr Turnbull: How much is the rent?

Mr C. O'Neil: I do not tell anybody how much my rent is, sir.

Mr Turnbull: Could you tell me what percentage of your income it is?

Mr C. O'Neil: I have a different job now, so it is not as much, but it is still probably around 30% to 40%. I have a low-wage job.

Mr Turnbull: Yes. One of the great problems we are finding in these hearings is that there are some, very frankly, heart-breaking stories coming out. We recognize that some people are paying a disproportionately large amount of their income in rent. However, Bill 4 is not going to stop them paying a disproportionately large amount of rent and they are effectively being pressed into the lowest level of housing. What do you think about the idea of a shelter subsidy to individual people?

Mr C. O'Neil: First of all, I think that is a good idea but I have not really thought about that much. A housing subsidy would be a great idea.

Mr Turnbull: What we are advocating basically is that rather than having all tenants controlled in their rent where they may be driving a fancy car and can economically afford market rents, we target those people who are most severely strained and we make sure they are better off than they are today. This is the problem we have with Bill 4, because frankly Bill 4 does not address your concerns.

Mr C. O'Neil: It does address my concerns. In the last year my landlord came to me, after he had already filed once for rent review, and told me that he wanted to carpet my unit throughout. I told him that I was not interested in that, because I assumed what he was trying to do was that he wanted to install carpets so that he could go again and file for rent review, which I know is something landlords do.

Ms M. Ward: Mr O'Neil, I see you have certainly gone through a lot of uncertainty through this process and no doubt a lot of stress also. I am glad you decided to stay there and fight rather than just move out when you were first asked to. One thing I wanted to comment on and ask you to respond to is something that we have heard about, but it has not really been emphasized. It is the dilemma a tenant is put in when a landlord applies for an increase and there is some possibility that it may not be granted, the dilemma the tenant is faced with if he stays there, taking a chance that it is not going to be granted. They can be stuck with that large back payment of rent which you were. If they move out, they have to find another place.

They really are taking a chance there. If they are not going to be able to come up with that money, they are really playing with the odds. Did you find that this was a difficult decision to decide, whether to stay or not.

Mr C. O'Neil: I did not have an option. I had no option. I had to stay and pay a guideline increase because I really did not have an option. It would have destroyed me economically to pay the rent increase that he was asking for at the time.

Ms M. Ward: But you were forced to pay it later?

Mr C. O'Neil: It was not as much as he had asked for.

Ms M. Ward: But it could have been and would you have been able to pay it? What would you have done then?

Mr C. O'Neil: I do not know. I might have had to take out a loan or see a member of my family. I do not know. That did not happen, so it is not something I can speculate about.

Ms M. Ward: But you did have that hanging over your head throughout that whole period, that you might be faced with paying back that amount.

Mr C. O'Neil: Right.

Ms M. Ward: The other thing I wanted to ask you about was the illegal rent and whether there has been any action taken on that or not.

Mr C. O'Neil: No, when I repaid the back rent, on the advice of a lawyer I deducted that amount from the back rent that I owned him.

Ms M. Ward: So is the landlord still collecting illegal rents? I am just looking for the spot in your submission here.

Mr C. O'Neil: No, that was just a receipt that I had seen from another tenant who showed it to me. I do not know what is happening with the other tenants.

Ms M. Ward: That has not been pursued and you are not familiar with what it is?

Mr C. O'Neil: No.

Ms Harrington: I just want to take a moment to thank you very much for coming and giving us your personal history here. I want to clarify on the last page where you talked about the bill that will be enshrined. I want to point out to you that this Bill 4 is interim legislation that is capping the situation immediately as it is, but we are working on the long-term legislation and we are hoping to get that through within the year. This is going to bring together, hopefully, the good landlords and the tenants of this province to get a system that will work for everyone.

Ms Poole: Mr O'Neil, thank you very much for coming before our committee. As Mr Turnbull stated a few minutes ago, it certainly appears your landlord has not been very honest with you and has created a lot of havoc in your own life. I just have a few questions, if you could answer them. You may not know the first one exactly, but do you have any idea how old the building is? Would it be 30, 40, 50 or 60 years old?

Mr C. O'Neil: It is quite old. I do not really know how old it is. I have been there for 12 years. It is in an old part. It is in an old section of the city, but I do not really know when it was built or anything, but it is quite an old building.

Ms Poole: But it would not be something built within the last 20 years or so.

Mr C. O'Neil: No.

Ms Poole: It would be one of the older ones. In your brief you mentioned that the landlord had asked for a 34.85% increase in the rent. I gathered from your brief that what rent review actually gave him was 16.86%, is that correct?

Mr C. O'Neil: That was for the maximum rent for the building as a whole. Our percentages individually fluctuated somewhat, but they were all pretty much in that area.

Ms Poole: So what were the reasons? I assume that because the landlord said he needed vacant possession, he did fairly major work. What kind of work did he go to rent review about?

Mr C. O'Neil: Under the low-rise program you cannot get money for doing frivolous repairs; they have to be major repairs. He put a new roof on, new siding, upgraded the electrical system and then there were individual problems in the units that he looked after. There were some plumbing problems and things that were also fixed.

Ms Poole: Do you think that some of the work that he did was necessary and that then you could have done without other things or do you think none of it was necessary?

Mr C. O'Neil: I think all of it was necessary. In addressing the termination of tenancy notice, there was no need for me to not be in the unit. Yes, it was necessary, but as far as that goes, since he bought the units just a couple of years before he attempted to do these repairs, that is something he should have considered in his purchase price. Why should the Ontario government be subsidizing him to do major repair work on the units?

Ms Poole: One of the dilemmas we face as a committee is that some of our older buildings need in particular major repair work done. My own fear is that if there is no provision in the legislation for it, some of this work simply will not get done by anybody, so what we are trying to do is to find a solution that is fair to the tenants and certainly that would ensure you do not have to go through what you went through with this particular landlord, but at the same time looks after our older buildings.

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MOORE CUSTOM HOMES LTD

The Chair: Moore Custom Homes is next on our itinerary. We are following the same procedure as we did for Mr O'Neil.

Mr Baker: I would like to make one request, that due to the involved nature of this issue, if I run a little a little overtime, the time be taken from the question and answer period if that is possible.

The Chair: I need consensus of the committee members to do that. Is it agreed? Granted. You can start any time.

Mr Baker: My name is Mark Baker, vice-president of Moore Custom Homes Ltd, a local residential apartment development company. We manage and own buildings in the Windsor area.

It is difficult when discussing this proposed legislation not to dwell on specifics. Bill 4 cries out for specific examples of its counterproductivity which prove that it will hurt the very people it wants to help.

According to the Globe and Mail, Ontario bankruptcies and unemployment are at all-time high, construction starts are at an all-time low and the cost of living is increasing steadily. Since 1985 there have been 165 private units built in Windsor and 1,341 publicly funded units built. As long as the government acts to displace the private developer, taxes must increase as a result to pay for that development, in fact impoverishing the very people the government says it wants to help by constantly raising their taxes.

As a result, residential apartment builders are on strike in the province of Ontario. However, unlike factory workers or civil servants, we do not waste time by picketing. To understand this, I ask you to consider what kind of man builds buildings and what motivates him.

If the government takes away our freedom to build the kind of apartment buildings we want to, we will in turn build condominiums or build shopping centres or eventually build abroad. I submit to you that there are two types of man in any period of history, the risk-taker and the non-risk-taker. Every year our society recognizes the growing number of the unmotivated whose only goal in life is to work long enough to be eligible for unemployment compensation or to stay on welfare as long as possible. As long as we penalize the productive and celebrate the unproductive, bankruptcies will soar and the self-made man will disappear.

Already Bill 4 has threatened the livelihood of individuals I admire. They are not landlords, but contractors, large and small, with whom my company has had a relationship spanning decades. I have submitted to you letters from some of my contractors who, true to Bill 4, have had to lay off employees. Here we must pause in order to use the specific effect of Bill 4 and examine its operative principle.

When I presented the fact to Minister of Housing Dave Cooke last Saturday at this very hotel that I had cancelled $500,000 worth of capital expenditures due to Bill 4, he refused to acknowledge the effect of Bill 4 and its causal relationship on an already worsening provincial economic condition. In 1989, according to rent review services, $122 million of expenditures were granted in Ontario. Already across the province contractors have lost work. My painter was forced to lay off five men, who probably will end up on welfare. Ironically they may one day apply for government housing, having lost their jobs due to government legislation.

If the NDP wishes to be re-elected, it must take responsibility for the impact of its actions on the economy. But to do this, the government must recognize the principle, first formulated by the Greek philosopher Aristotle, of cause and effect.

The Globe and Mail published an article on 16 January of this year on the construction slowdown in Ontario, and a separate article in that same paper on Bill 4. There was no recognition by the reporters of the fact that one feeds off the other. Obviously, many members of our society, and especially those in government, have a problem recognizing cause and effect.

I remind you that originally the Tories introduced rent review in Ontario in 1975. It was inevitable that eventually rents would be frozen. However, the Tories did not recognize that by introducing rent review legislation they were opening the door to an eventual elimination of property owners' rights. Similarly, those who advocate greater rent controls today by not allowing rent increases based on capital expenditures do not see the effect it will have on their own property rights.

Once the government has the right, in the name of the common good or to correct some perceived evil, to eliminate the rights of one group -- in this case property owners; the same is true of what was done to the doctors -- eventually all groups are vulnerable, as are all rights.

According to Dave Cooke, affordable housing is a right. What he is saying is that the recipients of housing have more rights to that housing than the creators of the same housing. This principle is a perversion of justice. There is a lot of ink spilled on the subject of rights. However, no one discusses the origin of rights. Rights must be analysed in relationship to the nature of reality and the nature of human identity.

Human beings have rights because they are rational beings or thinking individuals. We use our brains as our primary tool of survival. We think, and we act based on those thoughts. Property rights are the second most important right because, for example, the buildings we build are concretizations of our thoughts. Our primary right, from which all other rights are derived, is the freedom to think uncoerced by government or other men. The failure to recognize the origin of rights explains the hostility to wealth and capitalism, which is a common denominator in public policy discussions in our province and country at large.

By separating us from our property and by taking away our control and our responsibilities, the government is driving a wedge into our identity, which is made up equally of mind and body. Recently, we have witnessed a frustrated citizenry who could not stop the GST even though 75% of the population was opposed to it. The average citizen or tenant does not understand that being taxed for services they do not use is a violation of their property rights. By advocating an elimination of property owners' rights, tenants are opening the door, just as the Tories did in 1975, to a never-ending cycle of tax increases and property confiscation.

Promises of "tax the rich" never pan out, because it would leave governments a great deal poorer since factory workers account for more tax revenues than the wealthy. At the present, the government does not confiscate outright our buildings. The only confiscation is via exorbitant taxation. However, by eliminating our control, we are left with the responsibility and risk of expenses and taxes without any of the benefits.

I offer the government the opportunity to buy my buildings at considerably less than it costs taxpayers to build non-profit housing. I would rather you buy them now because eventually, as our already aging housing stock ages more and deteriorates, just as in Manhattan, New York, owners will walk away from buildings that are too costly to repair.

If the building department orders me to fix a roof that presents a safety hazard and I cannot raise capital due to depressed rents or receive a competitive rate of return, I will leave that money in the bank, where it is earning a relatively risk-free return and give the building to whoever wants it, probably the government, for non-payment of taxes.

This is the ultimate effect of rent control legislation. Investment money always flows to the highest rate of return. Since rent review was enacted, the private sector has been building less and less units and the government has been building more and more. The government is, in effect, nationalizing the housing industry. I have a higher than average vacancy rate because some of my tenants move into government-subsidized units which are newer and more expensive than my pre-1977 units.

In a non-profit building in Windsor at the corner of Erie and Dougall, a 570-square-foot one-bedroom rents for $545. My 750-square-foot one-bedrooms rent below $545. Non-profit's 700-square-foot two-bedrooms rent for $640 and some of my 950-square-foot two-bedrooms rent below that.

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The Windsor Star reported that Windsor Housing Authority was boarding up units due to neglect, vacancies and the fact that low-income tenants prefer newer units. Basically, the private and public sector are in competition. However, I cannot raise capital or cover a loss or deficit with higher taxation. I also cannot change the rules in midstream to enhance my advantage. The government is also not bound by the Landlord and Tenant Act or rent review legislation. How fair does this committee think it is, that I compete with newer subsidized units when I am prevented from raising rents based on capital expenditures? The government, by tying my hands, is preventing me from competing with non-profit housing and ultimately will put me out of business, as they did to the private doctors in this province.

The previous rent review legislation has inadequacies but your solution is to make a bad situation much worse. I recommend less government regulation, not more. In eastern Europe the populace has no basis for political rights because they have no individual or property rights. By taking away our property rights, you endanger our political rights and civil liberties. In a properly run constitutional democracy our local MPs would know and care about our concerns and represent us in the Legislature. Our needs are different from Toronto or London. For example, we desperately need sales tax relief because our retailers compete with US retailers. However, due to the undemocratic practice of party discipline, if our local MP voted against the GST or rent control legislation he would be disciplined and expelled from the caucus and/or the party.

In a proper democracy, change begins with actual concerns of the populace. In Canada, for example, GST legislation was forced on us from the top down. The political system has a fundamental hostility to individualism and encourages MPs to adopt a herd mentality. MPs represent the party to the constituent instead of representing the constituent to the party. The system penalizes this committee members' individuality and independence due to a paternalistic and centralized party system. You in turn treat the citizenry in the same manner the party hierarchy treats you, by encouraging dependence on government rather than independence. Hence, legislation adopted by all political parties through this anachronistic system consistently violates individual rights by appealing, for example, to the tenant or union vote in order that politicians violate certain people's rights to gain unfair advantage and be re-elected. MPs are accountable to their parties, not their constituents.

As Dave Cooke stated to a group of landlords and contractors last Saturday, I quote: "I do not represent you. I represent most of the tenants." What he represents is a utopian socialist ideology. Hence, he ignores the facts of reality and the actual effects of his policies.

If you must intervene in my private affairs, I recommend you subsidize those who need it with rental vouchers. Build all the units you want, but by what right do you control my prices when other products are exempted, unless, of course, you eventually plan to regulate all industries. I will take you through my buildings and you can count for yourselves the late-model cars, sports cars and Mercedes's. Maybe it warms your heart, but many of my tenants spend the winter in Florida where you and I are subsidizing their vacation condominiums. I remember as a child not being able to understand why we received baby bonuses. It seemed so irrational and expensive for the government to help those who did not need it.

Freedom requires independence and responsibility. If a tenant does not like the building he lives in or the rent he is paying he can move out. After all, he lives there voluntarily. If rent is too high, tenants will vacate as long as regulations do not diminish supply by preventing private building. This is the self-regulating mechanism of the free market. Government housing has no such mechanism to control rents and abuse, as was proven by the still unresolved Patti Starr affair and recent Windsor Star revelations that the Windsor city administrator, Hilary Payne, has recently begun to moonlight as a developer.

In a free market and before 1975, when Ontario still believed in competition, sometimes rent was increased and sometimes it was rolled back, depending on supply and demand, but at least there was private construction and the tenants had choices. Today, after years of rent review legislation, there are shortages of private units. The higher-than-average vacancy rate is due mainly to non-profit and condominium unit competition. Before rent review, Canadians were the best-housed people in the world; today we are the 20th and falling. One wonders what the proper role of government is.

I always thought government should protect our freedoms, but when the government becomes the primary agent violating our individual rights, one wonders what hope there is for freedom in this world. Having lived in and travelled to other countries, I love the freedoms I have in Canada. However, I now understand that individual liberty is seriously threatened in Ontario. Just as the Tories began the domino effect of destroying property rights, Bill 4, with its retroactivity, its similar treatment of all Ontario cities and similar treatment of all landlords as villains, threatens to unravel the thread of individual freedom. I am extremely frightened at present. I have cancelled plans of capital expenditures and additional apartment acquisitions and am considering other alternatives.

How can I trust a political system that does not follow a rational course? For example, post-1975 buildings were retroactively covered by rent review legislation in 1986. Hence, the promise of a two-year moratorium is to me meaningless. Thank you.

Ms Harrington: Mr Baker, you have a lot to say there. You started off by talking about rights and I do want to just touch on that for a moment. Back in 1948 the United Nations was describing what we call basic human rights and listed about five of those and some of them were education and health care and housing. What we have evolved over many years in this country is public education and public health care and what we now are thinking about is that housing is not just an investment, that that is not how it should be primarily seen in this country, that apartment units are primarily people's homes. This is maybe a difference in philosophy that we have. It is also probably a very basic difference between here and across the river.

I wanted to ask you what buildings you own. Do you have one apartment building or more?

Mr Baker: More.

Ms Harrington: What types of rents are you charging? Could you tell me how many units you have?

Mr Baker: I have more than 500.

Ms Harrington: So we have all kinds of rents here. Could you give me an idea, say, in the last year what per cent increases you charged?

Mr Baker: What part of the city?

The Chair: Order. Committee members will remember that we gave up some of our time. So I am sorry, Ms Harrington, we are going to have to move on.

Ms Harrington: I just wanted to mention the problem that you brought up. I think your primary problem was with regard to the cost of capital expenditures and I wanted to assure you that that is something we are looking into.

The Chair: Thank you. Ms Poole.

Ms Poole: I knew you would remember who I was.

The Chair: I was waiting to see who was going to be first.

Ms Poole: Thank you for your presentation today. I just wondered if you would elaborate on one comment that you made. You mentioned that you had cancelled $500,000 in contracts since Bill 4 was announced.

Mr Baker: Correct. That was work on four different buildings.

Ms Poole: What was the effect of that $500,000 cancellation on contractors that you would normally use?

Mr Baker: I submitted a letter. One of my contractors laid off five people, he was counting on that work and he had cancelled other work because we had a signed contract and it was significant; $200,000 worth of plumbing work for a small, local plumbing contractor. There was $200,000 worth of elevator work with Otis Elevator. So it will have a negative impact on the economy, there is no question about that.

Ms Poole: The supplier and tradespeople that you had contracted the work out to, did they indicate what proportion of these layoffs was due to the effect of Bill 4 and what proportion would have been due to the downturn in the economy or perhaps seasonal adjustments, such as the fact that we are now into wintertime?

Mr Baker: The letter I submitted from my painter indicates that he saw the connection directly with the timing of Bill 4. My point is that you have to integrate everything that is going on. You cannot look at anything in a vacuum. As I stated, Mr Cooke refused to acknowledge the impact that Bill 4 will have on a worsening economic condition. You could say, "Well, the economy is bad anyway," but government has power and can do things and cannot do things, and when it does things it has impact, as we all do.

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Ms Poole: I think your point is very well taken. It is important that we reconcile our social policy with our economic policy. Neither of them can work without taking the other into account.

Mr Baker: Of course.

Mr Turnbull: Mr Baker, because of the time pressures I will just have to keep it fairly brief. Are you a developer as well as a landlord?

Mr Baker: Correct.

Mr Turnbull: Can you tell me how much it would cost to build an apartment unit today, an approximation, in the Windsor area? Let's say you were building a 50-unit complex, on a per-unit basis.

Mr Baker: Approximately, I would say, between $50,000 and $60,000.

Mr Turnbull: Is that land included?

Mr Baker: Yes.

Mr Turnbull: So you could do it for those kinds of numbers. You raised to me what is one of the most important issues, the fact that the government, if it were really seriously interested in making sure that people were properly housed and making sure of affordability instead of spending vast amounts of money on a limited number of non-profit houses -- you have told me that it is building non-profit housing which it is actually renting for higher rents than you are renting your for-profit housing for.

Mr Baker: Because they cost close to $100,000 a unit.

Mr Turnbull: In other words, they are spending more money to build non-profit housing than you can build for-profit housing for. It does not make any sense to me whatsoever.

Mr Baker: It does if you consider my points, that basically the political system is hostile to individualism and that we live in a country of incredible statism, where the government is more capable of taking care of the citizen than the citizen is of taking care of himself.

Mr Turnbull: I think one of the problems here is that you have a government that has married itself to making a political statement rather than providing affordable housing to people. Your suggestion of selling your buildings to the government so that they could be available at a lesser cost than the new housing it is building as co-ops makes a lot of sense.

Mr Baker: No offence, but it is not just the government. The Tories did originally bring in rent control and started this fiasco we have. So all political parties are hostile to individualism. That is the problem.

The Chair: Mr Baker, thank you very much for your presentation today. We have to move right along.

SUN PARLOUR INCOME PROPERTY ASSOCIATION

The Chair: Sun Parlour Property Owners Association, Sylvia Kamen.

Mrs Kamen: I am very happy to be here today. I represent the Sun Parlour Property Owners Association. It is an organization that has members from Windsor, Tecumseh, Amherstburg, Ruthven and Leamington. The majority of our members are small independents. We have a few medium-sized and a few larger ones.

The reason for my being here today is that we have a serious problem in housing. All we are asking for is a solution that will be fair both to the tenants and to the landlords.

The majority of our landlords, the ones for whom I am speaking today, are small investors. They are people who have worked in retail stores, small manufacturing, blue-collar jobs, who do not have the benefits of working for the three larger, major motor auto companies, working for the board of education or for the government and who do not have the benefit of indexed pensions.

They are people who have sacrificed much. For the majority of them, we are talking a six-unit or 12-unit. They did it because they realize they cannot possibly live a life of any type of dignity on the government pension. They do not want to be beholden to their children or to their government. They want to live out their lives with dignity. What people seem to forget is that housing is a business, a business that is now in crisis.

It is a problem that has been created over the past 15 years. The reason why it is in crisis is because we have found that the government has taken over housing. It feels it can do a far better job than private enterprise can. I think that is a very serious mistake in judgement. I have figures here before me. None of these figures was picked out of the sky. They are figures that I have from the CMHC, Canadian housing statistics, Ontario region report. The report shows you very simply and very graphically what has happened when there is interference in private enterprise.

In 1973, before rent control, the vacancy rate in Ontario was 4%. Rental housing starts in 1973 were 25,933. Public housing was 11,114. Total accommodations: apartments, 37,047. In 1975, when rent control came in, the vacancy rate is 2.2%. Private housing is 3,691. Public housing is 6,619. For the year, there are now apartments available for tenants in the amount of 10,394.

In 1989 -- this is the government figures -- the vacancy rate now is 0.9%. Private housing has now come down to 6,316. Public housing is 4,684, creating 11,000 new units. It simply goes to show that rent control does not work. What it does is put a burden on the taxpayers. We now have in Ontario young families buying a house, where the husband and wife both have to work to keep the mortgage payments going. There is a high price being paid for that -- a price for the mothers away from the home. It is a situation which is getting increasingly worse. There is a price being paid in children on the streets, of truancy, and we are paying a high, high price for this.

Mr Baker said it very well. It is the taxes that keep going up and up and up without end. We find that the middle class, the hardworking people, simply cannot do it. Why do we now have this terrible phenomenon of a husband and wife, two now, having to work just to pay the bills?

The statistics I have given you have told you that when you bring in rent control, when you do not allow someone to make a reasonable profit, they are not going to build, they are not going to create. They are just going to sit back. What happens then is that the government has to come in, and this is what we are seeing, and take over the housing -- but at what cost.

Statistics from the Ministry of Housing, and this is just since 1985: The Ministry of Housing operating costs have increased 236%; this increase in expenditures despite a waiting list for assisted housing in the province that has doubled.

The cost of maintaining just the Ministry of Housing is $540 million. That is just the beginning. One should consider that according to former Minister of Housing Sweeney, social housing programs will soon exceed $900 million. Obviously, this province can no longer tolerate such expense. This province already is heavily in debt. There must be a solution to this.

The solution is something that is very simple and makes sense. There has always been and will always be people who need to be subsidized. We do not question it. It is the approach to subsidizing. These large apartment houses, as the gentleman just found -- units can be built by the private sector for $60,000, but when it comes to the government we are talking $100,000 per unit. The costs are becoming ridiculous. Why do you not simply give people who need to be subsidized a cheque? Why house people in cement blocks, warehousing elderly people? Why not give them a cheque and let these people live where they want to live? They will be subsidized and the cost of building these large apartments will stop.

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There is another factor besides the human factor in this. What the government does not seem to realize is that every time you put up a large building that is subsidized housing, you have lost taxes. This has gone on for 15 years. We are past the fat, we are past the meat, we are down to the bone, right down to nothing. If this keeps up, there will be no private construction. Up to now rent review has been of some help, but keep in mind that only 30% of the landlords applied for rent review, a very small amount. But if they are not even allowed to pass on their expenditures -- we are not talking frivolities. We are talking a new roof, we are talking a new boiler and we are talking $10,000, $15,000 or $20,000 for one major expenditure. We are talking new stoves and fridges, new windows, because keep in mind that the majority of the apartment stock in Ontario is old. If you do not allow them even to pass down their expenses, how do you expect them to exist?

Somewhere along the line, someone in government has decided that people who work hard and invest their money in housing are second-class citizens, that we are now to become indentured servants. We are not going to accept second-class citizenship. We are Canadians, we are taxpayers, and we have rights, the right to invest in something and the right to get back a reasonable return. After 15 years, after looking at these numbers, it is not my opinion. That is the way it is. If this government really cares about all the people of Ontario, not a selected, élitist group but all of us, it is going to have to look at the figures and come to a new approach. The new approach has to be one of common sense and one of treating everyone fairly.

Our association has never questioned that people should be subsidized. It is the approach which makes no sense at all. To come in with this bill, to try to force people who themselves came here from Europe -- most of them are small builders, who, after work, will build a duplex or a fourplex or a sixplex as a starter and who work and create jobs, who only want to be productive people, who only want to live out their lives with dignity. You are even taking that away from them. What kind of message does that send to young people coming in? Are they going to stay in a province where there are no rights, where laws are changed back and forth retroactively? You have been given a majority government and you have been given a great deal of responsibility. As a taxpayer, as a small landlord, let me tell you, all we ask is an intelligent approach to housing. The approach has to be fair to everyone.

Hon Mr Cooke: I would be very interested in seeing any of the documentation you could provide, or Mr Baker before you, about the private sector being able to put apartment units on the market in Windsor in the private sector for $50,000 or $60,000. I would really be interested in seeing that documentation.

Mrs Kamen: I am not a builder. I am talking for very small, independent landlords. I am sure Mr Baker can help you. If this man has put up over 500 units, I think he knows what he is talking about.

Hon Mr Cooke: But I would like to see the documentation in 1990 or 1991 of whether in the private sector units can be put on the market in Windsor for $50,000 or $60,000. I have certainly talked to a great number of developers in this area who have indicated that is not the case.

I have one very specific question: You expressed some concern about the Ministry of Housing budget achieving $900 million. We are not there yet, but that is certainly going to happen. If we went your direction of having rent subsidies, and I assume that is accompanied with a phase-out or elimination of rent control --

Mrs Kamen: Yes, I think they should be phased out slowly.

Hon Mr Cooke: Have you costed that alternative? I can assure you it is more than $900 million.

Mrs Kamen: If you were to subsidize by cheque people who need help in rentals?

Hon Mr Cooke: And combined it with the phase-out of rent controls. The subsidy rate would exceed $900 million easily.

Mrs Kamen: I am not a big developer, but I find that rather hard to believe. If you build an apartment building at $100,000 a unit and you put it up and you rent it out at a subsidized price, that unit does not pay taxes. The maintenance, as years go on, becomes tremendous, because it is not in private hands. Let's be reasonable; we are all human. If it is not theirs, they really do not care. This goes on year by year, as opposed to a builder who puts up an apartment house. He has to be competitive. He does not have a monopoly; he has to meet the competition. He pays taxes locally, provincially and he pays taxes federally.

The goose has already died. If there is no profit in this, who is going to work? Who is going to invest money, with the legislation we have now, at a profit of 5.2%? Whatever money they have, they will go to a bank and can get 10 1/2%, 10 3/4%, whatever it is. It does not make sense. It is to the benefit of this province, to the people of this province, who are number one, it is your responsibility to look at rules and laws that make sense. I do not think that if you subsidize someone, his rent is even going to be close to having to put up these apartments, not just the cost of the apartments, not the cost of administering it. Where are your taxes?

Mr Brown: I was interested in your association. Do you have members who are adversely affected by the retroactivity, that is, people who have spent money on renovations, have done the work, some even would have conditional orders, and they are not going to be allowed to get those rent increases? Over the past few days, we have heard of real people, not big numbered Ontario companies but real people, who are going to lose their pensions, their life savings, because of the retroactive provisions of this bill. Is that affecting some of your members?

Mrs Kamen: That is correct. Some who started work in spring, with work finished in late fall, are caught in a bind. We are not talking cosmetics but major brick work, because this building is 62 years old, so there is major work to be done. They modernized the bathrooms completely, putting in new plumbing, new fixtures, new fireproof doors; we are talking legitimate, worthwhile improvements.

Mrs Y. O'Neill: Would you like to tell us a little about the kind of people who belong to your association? Are some of them seniors? You gave a very brief overview. And some kind of incomes they have had during their working lives? What I got from your presentation is that we are talking about very ordinary people who you are representing.

Mrs Kamen: That is right. The majority of our members are small landlords who have a 10-family, 12-family, 18-family or 22-family building. As I said before, this is their money and they realize there is no pension for them. If you work in a retail store, there is no pension for you.

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Mrs Y. O'Neill: I think that is a very important point and I am glad you brought that to the committee.

Mrs Kamen: This is it. I have news for you. There are hundreds of thousands of people who are leaving their work, in their senior years, and the only thing they have is their pension and that small piece of real estate that they hoped would sustain them, that they could live out their lives with some dignity. They do not want to come to the government. We are talking about the people of Ontario. They do not want to be beggars. They want to live out their lives. They invested in it, they built it and they are entitled to a return. At the same time, those who need help should get it, but with a different approach, because the 15-year approach we have had up to now simply does not work.

Ms Poole: On a point of information, before we go to Mr Tilson, Mr Chair: The minister asked the presenter if she had statistics on the cost of a subsidy program vis-à-vis our current system. I can understand why the presenter would not have that information. If anybody does, it would be the Ministry of Housing. Is it possible to ask them if they have this type of information and, if so, if they could table it with the committee?

The Chair: Would some ministry staff person who could help us out come forward, please?

Hon Mr Cooke: This is one of the questions I asked not too long after I got into the ministry. It is a very difficult figure to provide because it is difficult to project exactly what would happen to rents in the province. When rent controls are eliminated, then they rise and more people would have to come in to apply for the subsidy. So it would be very much a guesstimate. We can provide you with the best guesstimate we can come up.

Ms Poole: A range perhaps.

Mrs Kamen: Mr Cooke, excuse me. If you were to look in the Windsor papers, you will find many ads: one month's free rent, two months' free rent for signing a lease. We have a high vacancy rate. What is the worry?

Hon Mr Cooke: We did not have a high vacancy rate a year ago.

Mr Tilson: I really would like to proceed with my questioning.

The Chair: I believe Mr Tilson is correct.

Mr Tilson: I do not think your figures are out of line with respect to the difference between non-profit and private enterprise. We have had testimony given to us in Toronto, Toronto people have said it would be $100,000 for private enterprise and $140,000 for non-profit, so the percentages seem to be correct. This is from two different sources. I agree. I think it is up to the ministry to justify why they are destroying private enterprise in this province. It is just as simple as that. I do not think the onus is on you; I think the onus is on the ministry.

I would like to ask you whether you have direct or indirect knowledge that any residential builders have left the business of building apartment buildings and moved into perhaps some other ventures such as commercial buildings as a result of Bill 4?

Mrs Kamen: That happened shortly after 1975. There is hardly any new construction, and those who have left have gone into condominiums.

Mr Tilson: So you are saying as a result of rent control.

Mrs Kamen: They have gone away from it. What you see now is any approach they can get to avoid this. They have gone into condominiums, strip malls, commercial. I am using Housing statistics, l am not making this up.

There is a reason I am here today. We have a new government, we have a new Minister of Housing. The reason we are here today -- I am here on behalf of the association because we have quite a few small landlords -- is to tell you it is hurting and we are looking forward to our new minister looking at his job fairly. It has to be decisions which are good not just for tenants but for landlords and for all the people who live in this province. They are paying the cost of all of this. I think that is as much of the load as they can carry. We are at the end of the line.

Mr Tilson: I have nothing to add to that statement.

The Chair: Mrs Kamen, thank you for coming today.

LUCIER ESTATES MOBILE HOME OWNERS ASSOCIATION

The Chair: The next presenter this afternoon is the Lucier Estates Mobile Home Owners, Mrs Tyssen. Mrs Tyssen, you have been allotted 20 minutes by the committee: 10 minutes for your presentation followed by 10 minutes of questioning. We would ask all presenters to identify themselves and what positions they hold with their organization for the record, please.

Mrs Tyssen: I would first like to thank the committee for allowing us to appear here before you today. My name is Mrs Janet Tyssen, and I am a board member of the Lucier Estates Mobile Home Owners Association in McGregor. I would also like to introduce our president, Ivan Ronald. Our organization is only three months old and we are representing a total of approximately 26 sites. Joe Lucier is the landlord of Lucier Estates.

For as long as I have lived there, which is 13 years, we have had rent increases every year, some of which have been quite high. We rent the land, not the mobile home itself. Not included in our rent are taxes, hydro and gas. The taxes are paid directly by us to the township of Colchester North. We maintain our own sites and our mobile homes. Upon rental of a vacant lot, Mr Lucier supplied the cement slab, the driveway, the porch and the sod for the property. However, if the porch becomes uneven or the cement in the driveway is crumbling or the ground is sinking, Mr Lucier holds us responsible for the cost of the maintenance required.

He asks us to be proud of our park and to keep it beautiful by lawn upkeep and the planting of shrubbery. However, the medians and surrounding areas are covered by dandelions and weeds. In winter the roads are poorly maintained in regard to snow and ice removal. One lady, out of several, has already fallen on the ice. Even though her injury was only minor, it could have been a lot worse due to the fact that she was eight months pregnant.

The streets must be kept clean and well lighted, as stated in Mr Lucier's original rules and regulations. However, tenants have had to complain a number of times to get their street lights repaired. They also state that travel trailers, boats and other vehicular equipment shall not be parked on driveways or on streets and that an area designated by management will be set aside for parking such equipment. We did have such an area for our resident use; however, it was taken away to make room for the building of his new homes, not mobile homes.

Our playground, which the original home owners association supplied the swings and the ball diamond back-stop for, at their own expense, was moved to make way for the new homes, and the playground now consists only of a mound of dirt and two old, large tires.

We have a community centre and laundry facilities, but our access time has been greatly reduced. In the community centre, the pool room and the meeting area downstairs was painted by the original home owners association at no cost to Mr Lucier. We also do not appreciate Mr Lucier's $15 late charge, as we understand that it is illegal under the rent review act. We know our obligation is to pay the rent at the first of the month; however, sometimes due to unforeseen circumstances this is not possible, no matter what efforts we make.

We are in the process of going through rent review right now to fight the proposed rent increase. We have only been able to go through some of his submissions, since all of them have not been turned in. From what we understand, the majority of his submissions pertain to the new housing development, not the mobile homes, and deal mostly with capital expenditures. I was told that we as renters could stay renters and that the leasers would be the proposed co-op. So why do we as renters have to pay for Mr Lucier's expenses incurred in the new housing section?

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Some of his submissions are impossible to comprehend, as they do not clearly state what they are for and who they are from. We also feel that some of these submissions are possibly tax-deductible business expenses, such as the reshingling of the community centre roof, which also houses his offices, maintenance shop and variety store. If this is a tax-deductible business expense, why should this expense be passed on to us as part of the rent increase?

Some of his submissions are hard to understand, such as when he states: "All of the inhabitants of the park utilize the new streets that have been constructed, as they allow a `through access' to the park, connecting the park with additional means of entry and exit from the park, as well as providing access to some of the common areas in the park, including the play area, the pool and the community centre." There have been only two exits and entries to the park for as long as I have lived there and they are located at the beginning and at the end of Parkside Drive, which is one of the original roads which was only resurfaced. The play area, the pool and the community centre are also located on the original roads of the park. New roads and services established in the new area are of no benefit or improvement to the previously existing park area.

He also states that the new units that have been constructed by him and form part of the Long-Term Lease Organization are not benefited in the least by the repair of the existing roads, such as Parkside Drive, since they do not need access to the older units within the complex. If this is the case, I would like to see how they pay their maintenance fee or go to the mailbox or to the store or even, for that matter, get in and out of the park.

We have run into some questionable expenditures, as for example the submissions where the Wildwood Golf Course and RV Park is mentioned. This park has nothing to do with Lucier Estates Mobile Home Park. He has also submitted many expenditures for the new homes section. We were under the impression that he was to recoup his expenses on the new section when he sold the new homes and the lot leases. Also, there was a submission about Ontario Hydro billing Mr Lucier for damage caused to Ontario Hydro property in the new section amounting to $437.56. This is an expense we the renters feel we should not be held responsible for.

Any improvements that have been made to the existing mobile home area have been minimal. He has resurfaced some roads and replaced certain lights. He is claiming a cost of $106,976.58 for our road repairs. However, when it comes to the new section, he is claiming $278,065.96 for new streets and services.

Mobile homes and the like are supposed to be a more economical form of living. The people of Lucier Estates are concerned and worried about the proposed rent increase. Some feel it is too high for their incomes and some are also concerned about the resale value of their mobile homes. Mobile home owners should not have to allow themselves to be held hostage by unfair rates of rent charged by indiscriminate park owners, but unfortunately this is pretty much the way we would describe our present situation.

Apartment renters, when discouraged by high rents, while both emotionally and financially a burden, can move elsewhere to seek lower rent, whereas we cannot do so as easily. We must either sell our mobile home or physically remove it to another mobile home park at great expense. Mobile homes are not permitted anywhere in Essex county except in mobile home parks, so we are bound by the high rents we are charged. We have to keep these rents in perspective to accommodate residents so that they can still live decent lives, for if they cannot live here, where can they live?

Although we understand that the situation we just described to you basically pertains to the Lucier Estates Mobile Home Park, there are many, many others who share the same types of concerns, and we hope this example serves to make you aware of how much tenants in Ontario need this legislation and as quickly as possible. I would like to take this time to thank this committee for your time and effort in helping to establish a better system of rent control. We beseech you to pass Bill 4 as soon as possible to help us out and put our lives at ease. Thank you.

The Chair: Thank you, Mrs Tyssen. Mr Tilson, you are first.

Mr Tilson: I have no real question other than a comment perhaps that you have raised some questions which, I must confess, confuse me, and it may be my lack of knowledge of the mobile home area. I hope the green paper that this minister is preparing addresses this, because the only item in Bill 4 deals with an amendment to change the Cartwright decision. That is the only reference in Bill 4 to mobile homes. Obviously, you have used terminology that I am not familiar with, and I hope maybe other members of the committee can enlighten me, but "new section," "old section" -- in other words, who has what rights, who has other rights, areas for seasonal units, areas for permanent units? Do those people have different rights? Obviously they should, but there needs to be some explanation, at least from my perspective as a member of this committee.

The issue of utility services or services such as hydro, water, septic systems that are normally in some areas paid for by the municipalities, and yet it appears in some of the mobile home areas are paid for by the landlord -- should the tenant pay for that? Those are tremendous expenses. If the Ministry of the Environment comes along and says that your water treatment system has to be replaced and if the landlord has to pay for that, it may be an astronomical cost, and it may be an astronomical cost for the tenant to assist in that. These are, from this committee member's perspective, very difficult for me to understand. I do not know whether, in the short time we have, you have any thoughts on that, but I hope the green paper will address these areas.

Mrs Tyssen: What I can basically state to you is that we were all a mobile home park to begin with. Now Mr Lucier has decided that he wants to, shall we say, get out of it, so he is building these homes and leasing the property because he cannot sell it. He cannot give a deed to it; it is not the required lot size. It is going to be turned over to these people within a certain length of time and become a co-op.

Mr Tilson: All of this may necessitate completely new legislation that has nothing to do with landlord and tenant legislation, or it may mean amending existing legislation. It seems to me that you are clearly in a category all by yourself, as opposed to the apartment building.

Mrs Tyssen: Yes, but we still have the high rent increases that the apartment building --

Mr Tilson: Yes, you do.

Mrs Tyssen: Mine is going up 13.4%. Why should it go up 13.4%, when nothing has been done to maintain the actual existing park itself?

Ms Harrington: I have a couple of brief questions. How many mobile home units are in this park?

Mrs Tyssen: There are approximately 262 sites.

Ms Harrington: It is a big place.

Mrs Tyssen: That is just the mobile homes; that is not including his homes.

Ms Harrington: Is it close to Windsor? How far?

Mrs Tyssen: About 20 minutes outside of Windsor.

Ms Harrington: What I really wanted to ask was about the increases. You stated yours for this past year. Would that be the same for the other units?

Mrs Tyssen: No, apparently the $167s, I believe, are going up a little bit higher. I am at $207 right now. I am at $207 because, unfortunately, when I moved in, I was not under rent control for a great many years. He decided to put it up the way he saw fit, so there is a discrepancy from a $167 to a $207 unit.

Ms Harrington: Going back a couple of years, have you had other increases that were more than the guideline?

Mrs Tyssen: I have personally, yes, because I, like I said, was not under rent review. I have had 10%, 12%, 8%. That is why in a way we do feel that this is necessary to curb these, because you can only stand so much before it takes over and you have to either move somewhere else or do something else.

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Mr Mammoliti: Something you said near the end of your presentation got my attention a little more than the rest of your presentation. That was that you just cannot pick up and go, that you have to physically take the mobile homes out. It reminded me of a speaker who was actually two before you, Mr Baker, who said that if tenants do not like the rent, then they can just pick up and move, which means that they have a choice. Frankly, you do not have a choice, do you? What happens if you cannot afford the amount of money that is needed to pick up your mobile home and move? I would think that you would have to leave it there and just abandon it, would you not?

Mrs Tyssen: Yes, definitely.

Mr Mammoliti: In essence, people just do not have the choice, do they? They have no choice sometimes but to move and literally go out on the streets.

Mrs Tyssen: That is very true.

Ms Poole: Actually, several of the questions I was going to ask have already been answered. I just had one final one. You mentioned you were paying $207, was it?

Mrs Tyssen: Yes, I am paying $207 right now and going up to $234 a month.

Ms Poole: Which would be, I gather, the high end of the range, you were saying, because a number of the other lots are much cheaper rent.

Mrs Tyssen: Yes, they are $167.

Ms Poole: You may not know the answer to this, but again, you may. Mr Lucier has to pay municipal taxes on the site itself. Do you have any idea what would be the amount of municipal taxes payable per month as far as the stationary portion, like your landlord's portion, of the lot?

Mrs Tyssen: To be honest with you, no. But from what I understand when I went down to the tax office on, I think it was last Saturday, they said that before that time the vacant lots were rather cheap to him. Now they are going up. The vacant lots will be going up because they are doing it right across the board and every lot is going to be worth $10,000.

Ms Poole: I suspect that will mean that the assessment on the lots will be going up so even more municipal taxes will have to be paid. It may be a no-win situation all the way around.

The Chair: I would like to thank both of you for appearing today.

SCARSDALE TENANTS' ASSOCIATION

The Chair: Scarsdale Apartments, Don Fraysure. Just identify yourself for the record and the floor is yours.

Mr Fraysure: I am Donald Fraysure, the chairperson of the Scarsdale Tenants' Association, which was founded in 1984. We tenants live in an apartment complex of two three-storey apartment buildings of 47 rental units on Tecumseh Road East, Windsor. At this time, as I said before, I would like to present this photo display showing some of the problems that we have in Scarsdale Apartments, and I will be referring to this in the presentation.

These buildings were built in 1971 and 1972 by Wonsch Construction Co and owned and managed by this firm and Wonsch and Sons Ltd until 1987. My wife and I moved in 16 years ago, 1 October 1974, and I have lived in three apartments in the complex.

I will try to give a brief financial history of the Scarsdale Apartments. We tenants were well served at first by the Wonsches, who were local builders and owners. We could deal with them on a personal basis. Wonsch's local real estate group seemed to be profitable and expanding. They had a block of six local apartments.

Landlords, like other businessmen, sometimes overextend themselves. Landlords, because of loopholes in the rent legislation, have been able to ease some of their woes by pass-throughs to tenants and by not doing the required maintenance on their properties. Wonsch started doing this in 1980, entering into a deal with Wigund (Bill) Kruger to build the high-rise Victoria Park Place in downtown Windsor. Wonsch secured a line of credit for $3 million from National Bank. They also expanded into the Edmonton market.

As you are aware, the early 1980s were a bad time to expand. The times were similar to today, a deep recession. The deal went sour and in October 1985 Kruger bought out Wonsch's remaining indebtedness to the National Bank of $1,600,000. In the windup, Wonsch was forced into receivership but regained control of the Scarsdale Apartments and the five others they owned on 28 November 1985.

It was during the period 1981-87 that the maintenance and repairs necessary to keep the buildings from deteriorating were progressively not being done. We had to fight for repairs or do them ourselves. In 1985, Wonsch applied for a 29% rent increase, but that exorbitant amount was knocked down to a more reasonable amount.

I have rounded off the figures in this section. I hope our convoluted experiences with flipping might help you, because if you listen this is a prime example.

On 2 November 1987, Wonsch sold Scarsdale Apartments to First Windsor Realty Co, Azzis Manji principal, for $1,032,000. At this time, Toronto flipping and the many-loopholed RRRA, 1986, both hit us. Mr Manji kept ownership until 19 January 1989 when Scarsdale was sold to First Windsor Realty Co, Joseph Polano principal, for $1,505,600. This was $500,000 appreciation on a $1-million investment in 13 months with no repairs.

The next sale was on 10 May and 11 May 1990 from Mr Polano to FWOP, 9553-9555 and 9563-9565 Tecumseh Road East Inc, Barry Benson principal, for $1,590,450, another appreciation of $84,850 in 16 months. Here comes the clincher. On 27 July 1990, 11 weeks later, Scarsdale was sold to Suresh Malhotra principal. So in 33 months, five different owners with the attending confusion, raised rents and lack of maintenance and repairs.

In 1989, rent review allowed a 9.74% increase in rents to cover a claimed financial loss of $40,350 because of refinancing in one of the flips. In 1990, a 9.6% increase was allowed. This meant a total of 19.34% for two years. We are hoping that Bill 4 will hold our expected 1 February 1991 notice to the guideline of 5.4% only.

Based on the weight of 100, the rent review figures of the operating costs breakdown in 1989 for Scarsdale was a claimed maintenance cost of $13,100 or 16.9 of the total, and a 1990 weight of 15.28 as per formula. Extending this formula over the years 1971 to 1990 we wish to know what happened to this large amount of maintenance money that was claimed and not used for that purpose. For proof, please refer to that display I have passed around.

Considering that a paint brush has not been put to a majority of the windows and trim for a minimum of eight and a half years or longer, the same for the halls and laundry rooms, and last year one window was replaced at sale price, where did the money go?

The only work on the roadway and four parking lots since installation in 1971 has been cold patching and a botched job on clogged drains in the roadway. Driving on them is downright dangerous. Depending on the time of year and the weather, the parking lots are skating rinks or lakes.

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As pointed out, a majority of the windows leak, seals are broken and the windows are clouded. Only three apartments have even close to proper work done on exterior windows and trim. This is because tenants, Mr Robinet, Mr Frenette and I, did our own patching, caulking and painting, at least two coats, on our first-floor apartments. Considering that we were 73, 74 and 80 years old in 1989 when we did this, we feel the system is somewhat remiss in not holding landlords responsible for their obligations.

A halfway, and I do mean halfway, start on a paint job was done last summer. Instead of using a qualified painter, management tried to use a student with absolutely no experience. He did not even take out the screens, so only one sash of the two per window was sloppily painted with one thin coat only. No repairing, scraping or correct sanding. Not even half were touched, because this was in flip time.

The roofs need checking, the outside walls need caulking and painting, patios, steps and sidewalks need fixing, wiring and plumbing are failing. These buildings fall within the poor construction period of the 1960s and 1970s in Ontario. But I point out that in this case, definitely, the prime factor is poor maintenance and repairs being responsible for the deplorable conditions.

We submitted an apartment-by-apartment inventory of major and minor complaints with a photo display similar to this one accompanying it, last 15 July to Marwick Property Management for the present owner. We, the tenants, agreed to wait six months for management to reply. They have done token minor repairs but no major. I do not know if it is coincidence or not, but the representatives are the owners themselves from Toronto yesterday, who for the first time inspected the building. I do not know if that means we are going to get anything. Are we going to have to pursue other means, such as property standards in courts? This will have to be pursued.

A large portion of us are long-time tenants. Also about one fourth of us are retirees. Quite a few over the years have used their own labour and money to improve their apartments. This includes carpeting. These are also our homes. For example, I have lived in my present two-bedroom, first-floor apartment for almost six years. When we moved in, the carpeting in the living room and the hall was so bad that the installer refused to put the new carpeting I had bought over the old. Naturally, with Wonsch's blessing, we took up the old and put down the new permanently, including padding. The cost to me was $1,500 and the apartment value was enhanced by that amount. I have done all of my own painting and decorating, with the exception of a section of falling wall, which happens quite frequently, I might add. In fact, in an envelope which I have here someplace are receipts for close to $2,000 of my own money expended in my present apartment only. I have also, with grateful permission, bought my own stove and refrigerator. The replaced appliances were moved to another apartment in the complex, thus saving more capital costs.

The purpose of this hearing is Bill 4. We offer the following:

1. Bill 4, even with its so-called flaws, should be passed with a minimum of foot dragging and stalling. Time is of the essence. Further indecision and delays will only multiply the hardship suffered by all of us, tenants, landlords and suppliers because of the inequities of RRRA, 1986.

2. Go back and thoroughly study all rent regulation previously passed. In these, you will find all of the mistakes not to include in decent rent legislation.

Let's remember that the key words are time and fairness.

Mr Mammoliti: I am not sure if you know of the Steve Miller Band, but they sang a song called Take the Money and Run. As you as went through all these flips, the first thing I remembered was that song. If you do not mind, can I just take a look at those pictures?

Mr Fraysure: Certainly.

Mr Mammoliti: Can I ask you a couple of questions? You have been there a long time, right?

Mr Fraysure: Sixteen years.

Mr Mammoliti: How many times have the windows been painted in 16 years?

Mr Fraysure: I know once. It has been eight and a half years. As I said, the only ones that have been painted -- there was an attempted paint job last year, but I would say about half of them. Since the building in 1971, I would say one time thoroughly, maybe twice. I would not narrow it down that much. But I know they had not been touched for eight and a half years, only the grand old trio.

Mr Mammoliti: On this driveway, with all this patchwork and what have you, I can see there has been a lot of patchwork done here. How many times has that been resurfaced in 16 years?

Mr Fraysure: None, just cold patching.

Mr Mammoliti: How many times have they looked at things like this concrete and attempted to fix that sort of thing in 16 years?

Mr Fraysure: None has been touched. That I know of, there are only about two on the first floor.

Mr Mammoliti: You would agree, then, that perhaps all the work that was done in this building was because of the landlord's neglect and because of the flipping.

Mr Fraysure: I would say the majority of it that has been done has been done by tenants, if the work has been done.

Mr Mammoliti: You never stated how much the building was sold for the last time.

Mr Fraysure: I have not gone to land registry yet. They know me; they practically call me by my first name down there. I have not checked that out. I have a notification of who the owner was, but I have not gone down to check through the files yet.

Mr Brown: I think all members of this committee are wrestling with this problem of maintenance especially in apartment buildings. We are also concerned with the flipping issue, but maintenance is something that your photographs show is clearly deplorable and not what you would call a good example of landlords looking after their buildings. But how do you see Bill 4 solving this situation in the near term? What in Bill 4 is going to see that during 1991 your building receives the attention it should get?

Mr Fraysure: I will not refer to Bill 4. I will refer to property standards committee and District Court. If, with logical talk with the landlords and management, with whom I hope to have a meeting next week, we get at some equitable agreement to both of us -- the main reason we are supporting Bill 4 is that we are in the third year of a phase-in and we do not want another phase-in which covers financial loss, as some guy taking the money and running is.

Mr Brown: We understand. So you are going to go through property standards and the normal resource.

Mr Fraysure: First, I am going to try through logical means, by talking to the people to see if we cannot reach some equitable agreement about some of this work being done. We are in the opposite of most of the positions. We are not arguing about money being spent; we are arguing about money not being spent. As I pointed out before, over 20 years, when you use a formula, there is a certain percentage of this money supposed to be used, by any means you want to arrive at, and it has not been done. Where is it?

Mr Turnbull: There is no doubt about it: Your situation is the kind of thing which is typically referred to as a flip. It is not technically, within the real estate business, what they call a flip. With a flip you sell the offer document before it is ever closed. Nevertheless, let's for the moment talk about the flip.

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You have had multiple sales. It seems to me that the principal problem with the existing legislation, which is Bill 51, is that it allowed as many sales as anybody wanted to contemplate to go through and ask for financial hardship relief. When the Cadillac Fairview sale was made many years ago, the Conservative government at the time very quickly brought in legislation to disallow multiple sales, so you could only get the financial relief in the initial sale. I suggest to you that perhaps one sale per four or five years might be a reasonable amount. Would you agree with that?

Mr Fraysure: I would agree with that, because I think you should be able on any investment -- I know on what little bit of investment I have, I expect a reasonable return, but this is not reasonable.

Mr Turnbull: So you would not disagree with the idea of flowing through the added financing, but only once per four or five years?

Mr Fraysure: As the yearly breakdown that I have here someplace shows, naturally after a building gets so old it is going to need repairs.

Mr Turnbull: I want to come to the repairs, but I am talking about the sale at the moment. Once every four or five years would be reasonable and it would be reasonable to pass through the financing costs, in your estimation?

Mr Fraysure: I will not go along with that.

Mr Turnbull: You see, when a landlord invests in something, he wants to get a return on his investment. We have heard it many times referred to by the NDP and by witnesses that they believe that the offset for poor, actual cash flows in apartment buildings is capital appreciation, but unless you have the ability to flow through the cost of refinancing at a higher level it is not possible to get a capital appreciation.

I would suggest to you that the flaw in the present legislation is that it allows 85% of the purchase price to be financing, which violates all of the natural norms of real estate. Normally, 75% is considered a good, reasonably high levering on a commercial property. So if you were to allow to finance 75% instead of the present 85%, and you would allow one sale per four or five years and, in acknowledgement of the fact that you agree that there should be a return to the investor, would it be reasonable to flow through those costs?

Mr Fraysure: You are using the figures of 85% and 75%. My understanding was that the previous minister did bring through the 75% figure.

Mr Turnbull: No, Bill 51 is actually 85%.

The Chair: Thank you for your presentation.

FORREST ESTATES HOME SALES INC

The Chair: Forrest Estates Home Sales Inc, Ken Hughes and Marie Hughes. If you could just identify yourselves for the record. You have been allotted 20 minutes, like other witnesses. You have 10 minutes for your presentation followed by 10 minutes of questions.

Mr K. Hughes: Good afternoon. Thank you for allowing us to speak. After working late last night in our community and rushing down here, we were not able to attend a meeting close to our community. We had heavy snow this morning and we are lucky to be here, but please put up with our tiredness.

I will try and read this guide I have here, and I will try to bring it up quickly. I am shocked by the total disregard that is being displayed toward free enterprise and those who are participating and trying to run business honestly and believe in the legal system of Canada.

Because we are a land lease community, which has as its objective the amelioration of its tenants, we are not allowed equal benefit or protection of the law under which the high court of appeal ruled we are not under any rent control. In your insolence, you subject us to the cruel and unusual punishment of complete disregard of this law of the province of Ontario today. Could this be discrimination because there are only 300 to 400 of our type of business?

Our right to gain a livelihood in the province of Ontario, federation of Canada, is also being manipulated so that we, among many, are being forced into bankruptcy by a negative NDP government legislation, Bill 4, which is now trying to give us loans which have to be borne by the taxpayers of Ontario instead of backing rights and freedoms as may be demonstrated in a free and democratic society, which is my endeavour and may be our only recourse, that of enforcement in a federal court or, the quicker, ceasing to supply much-needed housing.

A land lease community such as ours has 120 acres. We have a river, a trout stream and it is, in short, a town. Others similar to ours are being placed on certain provincial maps. Our community, when completed, will have four miles of roads, six drains, each a half-mile in length, possibly 300 sewer systems, three to four miles of primary hydro, six to eight miles of secondary hydro, and similar with the watermains and manhole valves. As far as equipment, we have three tractors, one snowblower, a road grader, a dump truck, two hoes, a cement plant, two bulldozers and various related tools. Our combined salary per annum is approximately $13,000.

Please explain how we built the first phase of a recreation centre upon completion worth $300,000 to $500,000 and have been allowed approximately $3,000 to date from a September 1987 rent review application which considered 1985-86 submissions. We had to wait until 15 November 1990 to receive this decision. This time period is appalling.

Now the NDP government is justifying a two-year rental freeze of 5% with no capital expenditure allowances. Five per cent of our average rent of $154 amounts to $8, and we consist of 60 or 61 leases. Further, rent review stated that we cannot charge a usage fee to even recoup operating expenses such as heat, hydro, insurance or municipal taxes for our recreation hall, for one thing.

Out of frustration, our best bet would be to simply close it down, as suggested by rent review, or to use a donation box. I am not aware of any viable business that can incur such expenses and not be able to pass them on to the consumer of his business in some way. The users understand the expense and are willing to pay an amount to use the building.

We, as well as a great majority of our resident home owners, take great care and pride in the condition of our homes etc. However, I would like to address a great concern that we have faced in the past and will undoubtedly face in the future. Any home, anywhere, if not properly maintained, will come to the end of its life expectancy. We have a minority of tenants who have dilapidated chattels that depreciate not only the neighbourhood homes but the community as a whole. These homes, sold out of the park, would realize a sale price of around $3,000, but their value within our community could succeed in obtaining approximately $25,000 or higher. At what point in time is a landlord able to remove these eyesores, and at whose expense? I am sure this is a concern faced by other land lease communities. This is much different from apartment buildings that are owned by the landlord and can be renovated at the time the tenant moves. In our case, the tenant moves, leaving the problem behind. It continues to depreciate, and there is always someone looking for something cheap.

In regard to GST, we again find ourselves in a negative business situation. As a landlord we must pay GST without any recourse, either by passing it on to the consumer or by way of a rebate. How can a business absorb this expense year after year and not be forced into financial ruin? Our GST expense this year could amount to around $16,000. A solution to this would be greatly appreciated. By the way, this is also not allowed under our rent control system, due to the NDP policy.

Since 1971, when we started our land lease and construction company, we have humbly existed, even selling one land lease company to those tenants voluntarily. All the while the involved governments infringed on our rights but continued to collect large amounts of hard-earned income.

We have worked the last six years, frequently seven days a week, to make a beautiful community for our tenants to live in. Absolutely no grants or financial assistance has ever been received and we have subsidized the business with our funds. Comparably, a town or a township, if it needs more funds to avoid running a deficit, merely increases PUC rates, taxes, etc, on to the consumer. We do not have this availability.

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Many of our present and future tenants who understand our situation and increased costs are concerned what will happen to them and their homes if we should be forced into bankruptcy if we cannot recoup our expenditures. Please remember, we are a land lease business, not a government-subsidized housing development.

We have contractors on the verge of bankruptcy and our housing manufacturer has already gone into receivership, actually bankruptcy, throwing 200 employees out of work. All our suppliers, workers, some of whom are tenants, and all other recipients of revenue, including Ontario Hydro and the municipal taxes, will also suffer. We believe it is not justifiable to place land lease companies in the same basket with apartment buildings, where the rent could range anywhere from $500 to $1,000 monthly. There is no incentive to work so hard without a fair return on your business investment. Land lease companies, to my knowledge, do not have a history of flipping and jacking the rents up. I so often hear these terms used by politicians when they are referring to rental accommodations. If we were ever forced, for some unforeseen reason, to sell our land lease business, I feel such strict restrictions have truly depreciated the value and saleability of our business. Where could I even find a purchaser who would be willing to invest so much time, hard work and indebtedness for so little, if nothing, to gain? The potential purchaser could gain more by depositing his funds and collecting interest while he relaxes in an easy chair with a beer.

I have a couple of other things that I wrote quickly. I lost my first housing customer last week, a Cornelius Dolinsek from Glasgow Street in Kitchener. I lost him purely on the fact that he believed the government, Bill 4 and rent control will interfere with our lease between our company and himself, and he is willing to stand up and state that fact.

Meet my wife, Marie, who is the free tax collector, also the person who has to stand responsible for the people if they do not pay their hydro bills.

Rent review questions? How about a local rent review in our municipality that understands our problems? Our problems are not the same as this community here. We are up in the Goderich area. Ask about supplying reasonable housing. I attended a meeting with Canada Mortgage and Housing Corp, a gentleman from the federal government who ended up affirming and giving us a written statement that he would back us with full mortgaging on our factory-built housing. I approached Chaviva Ho_ek. Her term was short-lived, unfortunately. We could have supplied housing, seven a day, and we could bring the square foot of that housing to what I have been told, between $32 and $48 a square foot on a two-by-six, heavy drywall house.

Right now I am negotiating with a Pennsylvania company that is thinking of taking over the bankrupt General Housing Co. I hope they do.

I have one other question. In the Cartwright's Point decision, it was ascertained today that land lease companies are not under rental control. If that is the case, why, when I held the case in my hand, did the two rent review officers say they had been instructed to disregard the law three days after it had been won in the Court of Appeal and we have been put under rent review to this date, which has made our tenants quite unhappy and our situation too? In fact, the rent review is completely incredible, unaccountable, unbelievable and ingenuous or stupid. Thank you very much, ladies and gentlemen.

The Chair: On that note, Mr Hughes, we will have questions.

Ms Poole: Thank you for coming to present your case to us today. We have actually had a number of presentations today and, I understand, yesterday as well on the mobile home issue. I understand that your situation is somewhat different. You are a land lease community. You actually build the homes, is that correct?

Mr K. Hughes: We work with the company that builds the homes. We are the developers who build the development and maintain the development.

Ms Poole: Do you actually own the land?

Mr K. Hughes: Yes, our company does.

Ms Poole: So your company owns the land and you help develop the land.

Mr K. Hughes: We develop 100%.

Ms Poole: Are the homes that are put on all permanent or are they more of a temporary nature or a movable nature?

Mr K. Hughes: We put them all permanent onsite. With regard to the units that are depreciating, when this property was bought from these residents originally, there were a few older mobile type of homes that have depreciated. The other residents hate to see their investment go downhill, similar to ourselves.

Ms Poole: You have mentioned that, I believe, the rental fee per month is $154.

Mrs M. Hughes: Yes, that is correct.

Ms Poole: Does that cover your expenses? You mentioned the figure $13,000 that I believe you said was your combined salary. Are you saying that is basically the only profit per year the two of you would get out of this'?

Mrs M. Hughes: That is what, tentatively speaking, we are allowed on paper by our accountant. We take very, very little from the business. We have subsidized the park with our own funds and by selling mobile homes as well in there. We are only 60 sites and it just does not cover the capital expenditures and improvements that we are facing.

I kind of sympathize with the lady who lives in a park outside this area. We have a very lovely park. We are very proud of it. The tenants are very proud of it. I do not want our park to end up looking like theirs and having that kind of situation where people become unhappy, but if we are faced with such restrictions, we are going to end up in the same situation. We just want a fair return from our value and hopefully to be able to recoup our capital expenditures, continue to run a nice living community, and it would be nice to make some profit. I have three kids I would like to put through school at some point in time.

Ms Poole: You look like you are dying to say something there.

Mr K. Hughes: Yes, I would like $15 an hour for some machinery to sand my road. The rent review would not even grant me that.

Ms Poole: A couple of the statements that you reported to us were made by rent review quite frankly shocked me, the first that rent review implied that if this was going to be that devastating to your business, then you could just close it down. Am I interpreting your comments correctly that this is what rent review said to you?

Mrs M. Hughes: This was with regard to a community centre in the park. We made application to rent review in September 1987 for an effective increase for October 1988. We had 20-year leases which were geared to 6%. The minimum at that time, or the allowable rate, was 4.2% or whatever, and we wanted a ruling on the validity of our leases. In order to do that we had to apply to rent review, whole-building review. At that time, we were 36 residents and the difference was $2 a month. It took us from September 1987 to December 1990 to have them say yes, we could have $2 a month for one year for 36 homes. We were in the process of many capital expenditures. We had to replace the hydro. We went underground instead of overhead. We were in the process of building a recreation centre, drains, watermains, to name a few. They allowed us $1,800 for this building, in which we have now got about $200,000 to $300,000, and now we cannot recoup our costs.

Mr Tilson: Originally, because of time I was not going to ask any questions, because my concerns have been answered by previous applicants, but you did make a statement that troubles me. Do I understand from what you said that you made an application after the Cartwright decision and the rent review people told you that because of Bill 4 you were under rent control? Is that what they told you?

Mrs M. Hughes: That is correct. We were made mandatory. We had to go through the rent review legislation even though we are advised that we were not covered under rent review. It has taken me four years and I am still under the understanding that we are not under rent review, but then we are still bound by rent review. Explain it to me. I am very naïve. I cannot understand this. I cannot afford to go to a lawyer to find out a reason.

Mr Tilson: Mr Chair, Mrs O'Neill had to leave, unfortunately, for another engagement, but if she were here she would be very upset, because this gets into the whole area that she was raising, that statements are being made by government officials and Bill 4 has not even been passed. It may not be passed and I do not know whom I am going to express my concern to, other than to the government members, but I find it a terrible thing.

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Mrs M. Hughes: Rent review said to me: "It is, yes, Mrs Hughes, a grey area. You can seek legal counsel on this." I cannot afford to seek legal counsel and wait how many years. It is just frustrating.

Mr Tilson: Mrs O'Neill and I will have further comments to make at a later time on this.

The Chair: The Chair takes note of that.

Ms Poole: Mr Chairman, on a point of information: Could they just tell us which rent review office it was?

Mrs M. Hughes: London.

Mr K. Hughes: I had Robert Doumani's book, $200 worth of book, with the court case, and they said they were instructed to disregard it completely three days after.

Mr Mammoliti: On a point of information, Mr Chairman: Do you have a name from the ministry?

Mrs M. Hughes: From rent review?

Mr Mammoliti: Who were you talking to?

Mrs M. Hughes: Would you like her name? Paula Tilford.

Mr Mammoliti: If we are bringing this up as an issue, then I think that would be important.

Mr Tilson: Paula Tilford may have to come to this committee and explain herself.

Ms Harrington: I want to thank you very much for coming through the snowstorm here, and I want to also assure you that our attitude is not one of insolence. Our attitude, as a new government, is to try to first of all look at this terrible system that we have in place in Ontario and try to make it better, try to get all sides to work together. I do not know whether you believe me, but seriously, this government has been given a mandate and that is our duty, to look at the rent review system and say, "No, it is not working for people, it is being abused, and we have to get something that works better."

I will admit to you that the whole area of mobile home parks is something that has not had, as far as I know, a lot of study on and it is something that we are going to have to look at.

Mrs M. Hughes: Please treat us separately. There are mobile home parks and there are mobile home parks, and I suppose there are apartment buildings and there are apartment buildings. What I mean by that is, we are very proud of our park. We put a lot of money into it and we think it is very good quality. I would love for some people in the Legislature at some point in time to have a look at our park and not call it a trailer park where we are gypsies, in and out, and this type of thing. We are trying to strive to get away from that. We have a lovely group of residents living there and they are also proud of their homes.

They can understand that we are going to be facing a financial crisis. They are concerned. If we go bankrupt, that affects them as well, and they are quite knowledgeable on that fact.

Ms Harrington: Just from the pictures that you have passed around, it looks like a lovely place that -- you did not explain -- you are just developing.

Mrs M. Hughes: Yes.

Ms Harrington: It is just starting off, and this is where you have a lot of financial input, obviously the infrastructure, your sewers and everything.

Mrs M. Hughes: Exactly.

Ms Harrington: I understand that.

Mrs M. Hughes: Your initial investment is very high until you get your return.

Ms Harrington: Of course.

Mrs M. Hughes: We do not want to put a big burden on rentals either, but we think there should be fairness on both parts.

Ms Harrington: Right, and I would like to tell you, from the government's point of view, that you want good tenants in there.

Mr K. Hughes: Yes.

Ms Harrington: You want to take care of your property and get a good, fair profit out of it. We have no argument with that.

Mrs M. Hughes: They need the whole park value to be high as well if they want a return on the sale of their home. If the park goes downhill, then they lose when they resell their home as well.

Ms Harrington: Is there anyone else who wanted to speak?

Mr K. Hughes: I would like to say one thing really quickly. We live in Goderich township. We have a wonderful township to work with. We were in the Oxford area before -- terrible government to work with. That was the difference in the government. This government here is sympathetic. This government can see what we are doing. We are willing to work. We do not want top dollar. We do not want to gouge. We want to build communities. We enjoy that.

If we bring in the expensive engineers to tell us how to do work that we have been doing for our lifetime, then we defeat the purpose because the money gets siphoned off in those avenues. We are there to put in lovely housing with proper services.

Ms Harrington: Are you saying the township is asking you to bring in engineers?

Mrs M. Hughes: No, no. We are just saying we do all the work ourselves to keep the cost down. Certainly we could be very naïve and hire all this work out, which puts the costs and capital expenditures up even more. We do it ourselves. We have some knowledge and we work hands on.

Ms Harrington: You are the kind of people we want in Ontario.

The Chair: I am sorry, our time is expired. Thank you very much for your presentation. Thank you for driving all the way from Goderich.

PARKWAY TENANTS ASSOCIATION

The Chair: Parkway Tenants Association, please make yourselves comfortable. I think you have been here for a while. You have seen the procedure. If you would you just identify yourselves for the record, we can move right along.

Mr Hedrick: My name is Ken Hedrick and I am one of the co-presidents of the Parkway Tenants Association. With me today is Cathy Meyers, who is the treasurer of our group. At this time we would like to thank the committee for allowing us to appear before you today.

The Parkway Tenants Association represents 261 apartment units in 14 two- and three-floor walk-up buildings on Windsor's east side. Our tenants come from all walks of life, but the vast majority are on fixed incomes, with a large concentration of retirees and single parents. These tenants live here because rent levels have been low to moderate and this is all that they can afford. Tenants do not move here for any special services or amenities. Rather, they sacrifice many basic essentials for moderate rents. Even so, many of our tenants spend far in excess of 40% of their gross incomes on rent.

Our group formed to battle a 1989 rent review application, a 1990 rent review order and many illegal rent situations. The particulars of our rent review perils will highlight some of the flaws in the system. Bill 4 will adequately address these flaws.

Our buildings were sold in June 1989 to a Toronto developer. The purchase price of $7.06 million was inflated and did not represent the real market value, especially considering the deterioration of the buildings and the deplorable conditions that exist here.

In viewing the file correspondence and documents relating to the mortgage, a number of interesting things come to light. The real value of the acquisition, or the landlord's personal guarantees, appear to have had no relevance to the mortgage approval. No appraisal was required. The main requirement was a rent review application for at least a 10% increase. The purchasers were also advised that they could receive more once the application was successful.

To add insult to injury, over $250,000 in commissions were paid back to the purchasers on closing. This again added to the non-real financing amount, as these moneys never really changed hands. There were three big winners in this situation. First, the new owners were able to acquire the property with a $5,500 investment and receive $257,000 pocket change as a signing bonus -- not a bad day's work,

Another big winner was the vendor, who pocketed millions in the appreciation of his property value in addition to his previous annual return, which was above average due to the lack of maintenance and repairs.

Yet another big winner was the landlord's agent, who has pocketed thousands of dollars in fees for preparing and defending this particular application. This agent is one of a growing number of former rent review administrators who have used their inside knowledge of the loopholes to make themselves and the landlords rich. If not legally, there is certainly something morally unethical about a civil servant in a position of trust being able to personally profit from the knowledge gained while working for the government. There is an ex-administrator-landlord's agent appearing before the committee today attempting to secure his personal financial future.

As we have presented, there were three big winners as a result of this transaction. Sadly, there were hundreds of losers, our tenants. The system has forced our tenants to provide the capital for all three of these windfalls and we will continue to pay for many years under the existing order. That is, of course, unless Bill 4 or our rent review appeal save us from financial devastation. There is an irony contained in the fact that we will not have an appeal decision until almost two years following the application. Lengthy delays, retroactivity and reality have deeply hurt our tenants. Some have moved. Many others are sacrificing daily essentials to keep a roof over their heads.

In this particular application, our landlord requested a 10% increase. Due to the inflated purchase price and very well padded operating costs, the administrator awarded 11.29%. If this is not bad enough, there is still a substantial loss existing on paper, and the order will provide 5% phase-ins for at least six or seven years until this phoney loss has been eliminated.

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Mrs Meyers: In 1985, our average rent was about $250 per month. The average in 1990 is almost $500. After five years of phase-ins, they will average about $800. Should the landlord be able to stretch these phase-ins to 10 years, which is very possible, our average rent will have risen to $1,300 per month. Courtesy of a system which is very flawed and biased, our landlord will have been able to increase his gross revenues, by 520% in a 15-year period, to $4.1 million annually. Using a 4% inflation rate, his operating costs will rise to $700,000 annually over the same time period. This will leave $3.4 million to deal with financing costs, capital expenditures and his profitability. The latter will receive the lion's share.

In addition to these reported gross revenues, illegal rents generate tens of thousands of dollars' worth of annual unreported bonus revenues, only adding to his profitability. The existing system provides many guarantees to landlords. It guarantees their profitability, regardless of proper management or the reality of costs and values submitted. This guarantee is made at the direct, hurtful expense of tenants. The system also guarantees that a landlord is able to purchase a building at almost any price and have the rents raised to carry the mortgage. Once again the burden falls squarely on the tenants to subsidize the vendor's windfall without any regard to real property values or legitimacy of the transaction. Landlords are encouraged to establish new companies and sell the properties to themselves, realizing a huge profit and large increases in their gross revenues.

Yet another guarantee is that a landlord may gain additional increases to pay for virtually any capital expenditure, whether needed or wanted. Tenants are once again paying to increase the value of the landlord's investment. Unfortunately, the same tenants do not share in the landlord's windfall when the building is sold. Instead, they once again face rent increases to subsidize the new owner's investment.

Are these isolated situations which have faced our group? Absolutely not. Since our inception a year ago, we have heard from hundreds facing similar and worse examples of system abuse. This led us to co-ordinate a rent review protest rally in June. In excess of 600 area tenants joined us in protesting this very biased system. Considering our negligible budget and stiff competition, this was quite an accomplishment. We invited all three major political parties to provide a speaker and explain their patty's point of view. The Liberals and New Democrats accepted and the Tories refused to attend. At this rally, a motion was unanimously carried to form an alliance of all area tenants and tenants' associations to lobby for changes to rent review and other problems facing tenants; hence the creation of the Federation of Windsor-Essex County Tenants Associations. We then co-ordinated a follow-up rent review protest rally in August. With about one week's lead time and a very small budget, we saw about 400 tenants join in protest. Once again, this was no small task.

Are we a bunch of radicals? Hardly. We are simply a group of tenants being forced into the streets due to the loopholes contained in rent review. Many thousands of tenants have been in our shoes. If you are a tenant, there is no escape from the Residential Rent Regulation Act. We have seen many cases where tenants have moved to escape the adverse effects of the rent review order, only to find that their new home is also facing the ill effects of rent review. We have learned the hard way that this is a problem that will not go away easily. As such, we will continue our lobby and protest efforts until there are satisfactory changes.

No one begrudges the landlords the right to make a reasonable return on their investments. However, the current system allows them many opportunities to do so in a manner that can only be described as underhanded. If landlord profitability is to be guaranteed, the level of accountability must also be dramatically increased. If tenants must bankroll a landlord's business, safeguards must be developed to eliminate the opportunity to get rich quick as a reward for mismanagement and speculative purchasing.

A landlord would then have to face the challenge that other business enterprises are up against: Cost-effectively manage your operation, provide the right balance of preventive maintenance and you will see a good return on your investment. At present, landlords have a legislated guarantee of profitability regardless of their ability or desire to run a tight ship. The capital to pay for this guarantee is forcibly extracted from the tenants, who in most cases have little or nothing to show for the increased expenditures. Ironically, as the level of services and facilities declines, many tenants have less to show for paying more.

Bill 4 will not correct all the deficiencies of the RRRA. The RRRA is irreparable. Bill 4 will be an effective remedy during a moratorium period while meaningful legislation can be drafted. Bill 4 will not legitimately disadvantage landlords. The ones who will be hurt are the same ones abusive of the system, trying to make their fortunes overnight. All speculative investments carry risks and it is hard to feel sorry for someone who has been caught in a pinch while trying to exploit a system. I am a single mother of two who spends one third of my gross income on rent. Bill 4 will at least assure me and my family of a place to live, albeit barely within our means. I urge you to support Bill 4.

Mr Turnbull: First of all, I want to make reference to a few of the specific remarks you made in your presentation. You say no one begrudges a landlord the right to make a reasonable return on investment. Could you tell me what you consider, approximately, is a reasonable return on investment?

Mrs Meyers: Everybody wants to make money. What is a reasonable return on any investment?

Mr Turnbull: Something comparable with a bond rate or something like that? Just approximately.

Mr Krall: Can I jump in?

The Chair: Would you please identify yourself again for the record?

Mr Krall: I am Joe Krall.

Mr Turnbull: Very quickly, because I need quick answers to this.

Mr Krall: Yes. The opportunity to make much more if he cost-effectively runs his business operation.

Mr Turnbull: Okay, so essentially a bond rate is what you have in mind. You also said that he should cost-effectively manage his operation. You are saying tenants have little or nothing to show for their expenditure. It may seem unfortunate, but it is the nature of the fact that if you are a landlord, you are buying the property for profit and you have determined what you think in your own mind is a reasonable sort of measure of profit. But when I start thinking about cost-effectively managing the operation, I look at what the Ontario government is funding, by way of subsidies, often to the equivalent, in some cases, of $150,000 per unit to build a co-op house, or in the case of one in Scarborough, $245,000 per unit. I do not see that that is cost-effective, particularly when I do the calculation. You have told me this was an outrageously inflated price on this sale, but $7 million divided by that number of apartments is $26,819. It certainly does not sound like a lot of money for an apartment relative to what the government is paying and you are talking about being cost-effective. Can you respond to that? The lady, please.

Mrs Meyers: Not really.

Mr Turnbull: Do you see what I am saying?

Mrs Meyers: Kind of, yes.

Mr Turnbull: Where is the value for money? The Conservative Party is concerned that people are properly housed and that affordability is addressed, but I do not believe that Bill 4 addresses this question of affordability and more than that, when I look at the sale that you have mentioned, I do not find that an outrageous price, $26,000 a suite, when the Ontario government is funding the equivalent of $150,000 and in some cases over $200,000 per unit. That is money that could be more effectively directed to making sure that the affordability question is more reasonably addressed towards single mothers and people who are struggling.

Mr Krall: I am going to jump in just for a second. The $26,000 is deceptive. The buildings are deplorable. They are all jumbled into very close parcels of land. The only inherent --

Mr Turnbull: Excuse me, are you a specialist on real estate values?

Mr Krall: No, I am not, but I --

Mr Turnbull: Frankly, you told me the rents are $500 per suite at the moment. The average for Windsor at the moment is $598 for a vacant suite. Your building is below the average. That is all of the vacant suites. The average of all units in Windsor at the moment is $510 for suites. I do not believe this is below market --

The Chair: Thank you, Mr Turnbull. I am sorry, we have to move along.

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Ms Harrington: Very quickly, I wanted to make a statement. I do not think anyone, no one, not even Mr Turnbull could defend a system that is plainly not working for people, for anybody. You have clearly shown that the people here in Windsor are being abused, that the system is being abused and that we need a new system, and that is what Bill 4 is to do, to stop things so we can make a system that will work. I believe Mr Lessard has a couple of remarks.

Mr Lessard: It appears clear that you have indicated an example of a situation where tenants can be taken advantage of by the existing system through the sale of a building. You have indicated some facts in here with respect to a commission that went back to the purchasers on closing, and you gave that example as a way in which the purchase price can be inflated. Where was it that this figure of $250,000 came from? How did you find out about that?

Mrs Meyers: When we did our rent review application it was in there.

Mr Krall: It is right in the mortgage documents: five purchasers of the building; two of them were paid back a commission.

Mr Lessard: So that was clearly stated in the documents that they had?

Mr Krall: Not only stated. The rent review administrator clearly overlooked it. The point we have been trying to make when we talk even about accountability and cost-effectively running your business, there is almost a negligible level of accountability that landlords have to do right now. Administrators virtually accept anything that is thrown in front of them, improperly addressed, it does not matter, does not even state the address for that property.

Ms Poole: I like to have a fair and balanced position on matters, and Bill 51 was legislation which I had strong feelings about. I did not feel it was perfect legislation and there were things that I wanted to change about it, but I get very upset when I hear Ms Harrington and other members of the government party say that it was not working for anybody. It was working for many hundreds of thousands of tenants in this province. The average rent increase last year was 5.8%, which is around the point of inflation. So it seems to me to indicate that for many tenants it was working.

I would not for a moment say that there are not tenants, and ones in your position, who had difficulties, and those difficulties should be rectified in any legislation that we are considering. But I would just like to say that I am really tired of having comments made holus-bolus, saying that this was a terrible system that did not work for anybody. The facts do not show that, and the facts also are showing clearly that there are things we have to do as legislators to protect tenants but also to be fair to the housing market in general.

Mr Krall: I just want to say that many things you said I would definitely agree with, but that does not minimize the impact on the tenants that are affected. It is devastating.

Ms Poole: That is right, and what I would like to see is legislative changes to make sure that those who are abusing the system or are taking excessive advantage of it are stopped from doing so. But I do not want to throw the baby out with the bath water either. I want to make sure that older buildings like yours get the day-to-day maintenance plus the major repairs they need. So I hope that when we come to the long-term legislation consultation, perhaps you could share some ideas with us about how you think it could work. That would be very helpful to us, particularly because of your own experiences and your expertise in the area. So, thank you for coming.

The Chair: Thank you. I want to thank the presenters for appearing today. We appreciated your comments.

TENANTS OF UNITY APARTMENTS

The Chair: Tenants of Unity Apartments are next on our agenda. You have 10 minutes for your presentation, followed by 10 minutes of questions. We turn the floor over to you.

Ms Wittke: My name is Lynda Wittke. I represent the tenants of 1191 Lillian. I would like to thank the committee for allowing me to appear today.

Our building is a three-floor walk-up with a total of 26 units. This is my personal story, but reflects that of the other tenants in the building. I have lived in the building for seven years. On 1 October 1989, I received my regular notice of rent increase, effective 1 January 1990. This reflected a 4.7% increase. I then received a notice of increase for 9.62% from the office of G. Dewar Laing, who is the attorney for my landlord, D. Ciacelli. This was dated 9 November 1989, effective 1 March 1990.

I then received a notice from the Ministry of Housing, rent review services, dated 20 November 1989, informing me our building was under review. On 31 December 1989, the building was sold by D. Ciacelli to Walter Golac and Associates. Then I received a verbal notice of rent increase from the manager on 31 January 1990, effective 1 March 1990, reflecting a 12% increase.

Not knowing where I stood, I went to the rent review office on 2 February 1990. After they looked over all my increase notices, they informed me I was to pay the first increase, dated 1 October 1989, effective 1 January 1990. While there, I looked over the file on our building. D. Ciacelli was asking for a 9.62% increase in rents. I noticed the form 4A was incorrect; it showed the wrong amount of rent I was currently paying for my unit. I asked for an extension of time to prove the form was incorrect and to talk to the other tenants.

On 4 February 1990, I went around to talk to the tenants about which increase we legally had to pay according to rent review. Let me say here we have several older people and many non-English-speaking tenants in our building. I had a concern for these people, as they might not understand what was happening with the rent increases.

I also would like to mention here that the rent increase notices from Mr Laing's office look very authentic. They read "Ministry of Housing of Ontario" on the top left-hand corner of each notice. This is very confusing and intimidating to most people, as it looks like the Ministry of Housing has actually sent it, causing some confusion.

While talking to one of the tenants, the manager, Mario Salinitri, saw me and asked what I was doing. I told him I was informing the tenants of which rent increase we legally were to pay. Mario said he was going to call the owner and have him talk to me. The owner, Walter Golac, called on 4 February 1990 at 10:30 pm. He accused me of going door to door stirring up trouble. Twice during our conversation Mr Golac stated, "We have ways of making you pay." I told Mr Golac verbal increases are not legal, and he agreed. Mr Golac kept telling me the former owner of the building, D. Ciacelli, had guaranteed that the rent increase would be approved by rent review, and that is why they bought the building. He told me he was allowed to make his profit. I informed him that the rent review increase had not yet been approved.

On Monday 5 February 1990, Mr Golac came to the building in person to see me. I went down to the main entrance to meet him, as I did not want to be alone in my apartment with someone who had said, "We have ways of making you pay." Again Mr Golac told me he could raise the rents this amount because he was guaranteed them. Mr Golac then wanted to see my copy of my original rent increase form. I felt if I let him have it, he might not return it, this being the proof I had of receiving a rent increase already. I explained there was a copy on file at the rent review office. I also explained he could not raise the rents more than once in a 12-month period. He was rather insistent that he could.

Then on 9 February 1990, I received my fourth notice of increase from D. Laing's office, dated 7 February 1990, effective 10 January 1990, reflecting another 9.8% increase. On receiving this notice I felt I was being harassed and punished for standing up for what is legally right. I do believe he hoped I might give up and move. I just kept paying the required amount of rent.

I received an order from the Ministry of Housing, dated 21 June 1990. The landlord's, D. Ciacelli's, increase was unjustified. I would like to quote from the order under summary of reasons, schedule B6. "The landlord's application claimed financial loss and economic loss. In order to make a determination for financial loss and economic loss, the financial position of the residential complex for the base year must be determined. However, pursuant to O Reg 440/87, ss 37(3), financial position can only be determined where the landlord has submitted at least nine months of operating costs for the base year. The subsection states as follows:

"`The minister shall not make the determination under section 36 (of financial position) unless the landlord provides proof of the actual operating costs for at least nine months of the base year period and findings shall be made for operating costs throughout the base year period.'

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"On 5 June 1990, the landlord's agent, Mr Laing, came into the office and the concerns about the lack of nine months of operating costs was made known to him. At that time, Mr Laing was informed of the importance of providing proof of operating costs in accordance with the act. He said he understood and would get back to us within the next couple of days. Mr Laing did not contact Windsor Rent Review Services for more than two weeks concerning this application.

"On 15 June 1990, Mr Laing telephoned the office and explained to me he still did not have the required information. I told him we had completed our review of the application and that any additional information he had would have to be forthcoming in the very near future, if not immediately. Nevertheless, I stated the manager would be made aware of the situation the next business day, Monday.

"On 18, 19, 20 and 21 June 1990, attempts were made to contact Mr Laing to determine what action he intended to take. No verbal or written request for an extension of time had been received from the agent or landlord for the purposes of providing nine months of operating costs. Since the landlord has not provided nine months of operating costs, no determination or allowance has been made for financial loss and economic loss in this application."

It would be nice if it all stopped here, but this is not where it ended. I then received a notice of appeal, dated 27 June 1990. In the reasons for appeal, schedule A7, at no time did the rent review administrator direct that the information be filed. During the last conversation with the landlord's agent, the rent review administrator indicated that he would speak to his local office manager to determine whether or not the seven months' worth of information provided would be credited pro rata as the only information available to the landlord or whether the additional documentation would have to be directed.

The landlord's agent received messages that the rent review administrator had called on 20 June 1990 at 9:20 am and on 21 June 1990 at 11:05 am. The landlord's agent attempted to respond to the rent review administrator later in the afternoon on 21 June 1990, but the lines into the rent review services office were busy. The landlord's agent had previously advised the rent review administrator that his property had been sold since the application was filed and that the landlord-applicant no longer resides in Canada. The landlord's agent was awaiting a response from the rent review administrator as to whether he would be able to proceed with the application with the information as provided or whether it would be necessary to obtain the information from the owners who insured the building three transactions previously, when the order herein was issued.

I find it hard to believe that the landlord's agent did not know he had to file all the proper documents, as the agent does run a rent review consultancy service. Also, this agent was previously employed by the Windsor rent review office. And busy phone lines?

Next, I received a notice of hearing, dated 9 November 1990. Our hearing was held on 17 December 1990. During our hearing, when going over the submitted documents, it was apparent that again all the base period documents were not here. Mr Laing was given more time to acquire this information. He had six more months to get this information together.

Also revealed at the hearing was the inflated value of the building. In the base year the building was sold four times: from Windsor EEG Labs, to 1191 Lillian Inc, to Domenic Ciacelli, to Walter Golac and Associates. In the selling from 1191 Lillian to Domenic Ciacelli, the building value increased by $300,000. Yes, $300,000. The exact value of the building at each sale is not available to me at present, as Mr Laing was to have this information to me by 18 January 1991 at the request of the rent review hearing board, but has failed to do so.

I have at present contacted the rent review hearing board about not having received the documents. They told me to contact Mr Laing's office, which I have, and they will send them out. This is where we the tenants of 1191 Lillian stand at present.

Bill 4 and us: As I stated above, the building value went up $300,000 in a one-month period. That is outrageous. I believe this to be a very inflated value price. When you have inflated value, you then get inflated costs, and it is with high rents the tenants pay.

The rent review hearing board did ask Mr Laing to have Mr Golac have the building appraised. Having not received the documentation, I do not know if this was done. I believe Bill 4 would put a stop to the flip-flopping and inflated-value prices for financial gain. Also, I ask, how did we as tenants get involved in a guarantee between the previous and present owners? We, the tenants of 1191 Lillian, are truly pawns of financial manipulators, which Bill 4 would put a stop to. We believe Bill 4 is a great place to start getting rents in order. It is really about time the tenants had their say.

As far as Bill 4 goes, I have a hard time believing the landlords when they say maintenance will suffer. This problem is not a new one. In our building repairs have been let go for years. The parking area is full of big potholes, units are unpainted, some as long ago as 1977, old carpets, support beams showing through on the balconies, and the list goes on. If you do need something done, some tenants have waited as long as eight months before it is fixed.

Therefore, in light of what you are hearing from us today and the other tenants across Ontario, I urge you to pass Bill 4. Take a look, maybe make future changes. But for now, this landlords' field day must be stopped.

Mr Lessard: I just want to put your mind at ease and indicate that tenants really are not bound at all by guarantees between previous owners and present owners, as far as rental increases are concerned. However, I am concerned about the increased value of this unit, going up $300,000, you said, in one month. At the present time, the way it stands, is this application still before the rent review board?

Ms Wittke: Yes.

Mr Lessard: How long has it been since the initial notice was given to you?

Ms Wittke: We were first given notice that the building was under rent review on 20 November 1989.

Mr Lessard: So since 1989 you really have not got any idea what your rent is supposed to have been. I would assume that that has probably caused you a great deal of anxiety when you have been living there. I suppose that you would be agreeable to paying a reasonable increase, but you would like to know at some point what that increase might be?

Ms Wittke: Yes. I ended up paying the guideline last year, the 4.6% I believe it was, and I know that 5.4% is out there now. I see nothing wrong with having to pay that, but it is the excess that we are having to pay.

Mr Lessard: Yes, and you would just like some certainty, I suppose, so you could govern your financial affairs accordingly.

Ms Wittke: Yes, and as I stated, there are some older people who are on fixed incomes and not really sure. We have got people saying, "Should I move?" and older people do not like to be moved around a lot.

Mr Mammoliti: My emotions have flip-flopped incredibly in the past few weeks, listening to landlords and how they are losing money. You feel sorry for the ones who are losing money, no question. But for the most part, when I hear of a landlord who is making $300,000 in one month -- perhaps you can help me. I do not know how to feel personally. The flip-flopping has got to stop.

Ms Wittke: I agree.

Mr Mammoliti: This seems to be one of the biggest problems. Are you happy with Bill 4?

Ms Wittke: Yes.

Mr Mammoliti: Do you trust the government?

Ms Wittke: Yes.

Mr Mammoliti: Thank you.

Ms Poole: I am glad Mr Mammoliti did not ask me that question.

Thank you for your presentation today. I think your tenants' association is very fortunate to have you as its president. You are obviously very knowledgeable about rent review and what legal protections tenants have.

I just wanted to mention to you that some of the concerns you have raised about the process were also raised by a tenants' group in Toronto, where they were complaining how the landlord was able to use stall tactics to keep delaying the hearing because they did not have proper documentation. When they did come before rent review, they still never showed up with it and orders were made really without proper invoices being submitted.

This tenants' association has made a number of very excellent, very specific amendments that they feel would remedy this problem. So, at least from that aspect of your presentation, if the committee were to follow that route and accept those amendments, I think it would help alleviate some of that frustration you have felt with dealing with a landlord who is constantly stalling you.

About the other matter, which is the financial loss, that is something we as a committee will have to look at. I guess the battle rages as to whether it should be eliminated altogether or whether there should be a cap on the type of thing where the building flips time and time again and each time the landlord passes this on to the tenants, whether there should be a cap to stop that kind of thing, so that there could be a financial loss, but only once over a certain set period of time.

If you have any specific suggestions, either with the short-term legislation or the long-term legislation, we would be most delighted to hear them, because I think you do have an expertise in this area.

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Mr Tilson: After what you have gone through, you are obviously an expert. It is terrible that you had to go through it and are still going through it.

I have a feeling from the way you describe this landlord that he would probably break any law. He would find a way of breaking any law, and you certainly have to be admired in following it through and standing up for your rights, which you have to do sometimes. It is too bad that you have had to go through that. But I have a feeling that no matter what law any government will pass, he will ignore it, just go on his merry way, and it takes people like you to stand up to some of these individuals.

The word is flip, George, it is not flip-flop, but I will say that is a concern and there have been examples of flips, although this committee is waiting for a specific definition as to what a flip is. Probably the way you have described it, that is a flip, and I think it is.

My reaction to that is, if we are zeroing in on that specific area, perhaps a more appropriate way would be to pass legislation to prevent flips as opposed to turning the whole system upside down, which is what I think the government is doing.

My fear is, and I would like to hear your comments on it, that the whole issue of private enterprise is being challenged and that landlords may be simply forced to get out of the business of apartments because they will be discouraged. Rents could get to such a degree, and hopefully you will agree that landlords are entitled to a fair rent, but rents will get so low that the landlords will not be able to do any maintenance.

Do you have any thoughts on that?

Ms Wittke: It is just like in the presentation. I do believe the ministry or the government sets guidelines as to how much it goes up and, let's face it, everybody -- I mean if you live in a house, your water costs go up and everything goes up, so I believe there is a fair amount, but what we would like stopped is where the building is tossed around, that kind of thing.

Mr Tilson: I understand that and thank you for your comments.

The Chair: Thank you for your presentation. The committee has to move along as members have a flight to catch. I am told Air Canada will not wait.

DEWAR LAING

The Chair: Our last presenter for the day is Dewar Laing. We will finish up at approximately 5:35. There is consensus in the committee to go to that time. You have about 15 minutes for your presentation to the committee and about 15 minutes of questions and answers to share.

Mr Laing: The reason you have a covering letter accompanying my submission requesting the additional period of time is because I am speaking on behalf of probably 270 landlords in the Windsor area.

There have been two seminars that I organized and conducted in the recent weeks since the proposed Bill 4 was announced. Much of the submission that I have drafted and have given to you reflects the concerns and conclusions that were reached as a result of those seminars. I am grateful for the additional time because I think it is important that I address some of the comments that have been made previously before I start on my submission.

First, I would like to advise the committee that I am a practising lawyer. I have been practising law in the city of Windsor for the last six years. During eight months of that time, I sat as a rent review administrator for the counties of Essex and Kent.

There have been a number of references made, I assume, to me, some direct references to me, particularly in the last presentation. I quite frankly resent the idea that my credibility has been affected by remarks that I consider unsubstantiated. I would like to point out to this committee that the proceedings that Ms Wittke referred to in the last presentation are in the carriage of the Rent Review Hearings Board.

As solicitor, I am unable to make remarks as far as what the outstanding process is. I can advise this board that Ms Wittke was grossly incorrect in much of the information she has provided this board. There was no flip for $300,000. There was a transfer of this property that reflected a purchase price of less than $35,000 per unit at a time when the going rate in Windsor was about $50,000 per unit. There has not been any ill intention on the part of any of the owners of this property, particularly my current client. The comment was made that he would most likely abuse any law.

The people you were talking about are people who are involved in the rent review system. They have hired my professional services in order to be involved properly. There has been no misdoing and I strongly resent the fact that comments like this are being made to and from this committee.

In the submission I have given you there are a couple of pages that are a summary of Bill 4. Then there is a section that is called "Impact of the Proposed Amendments on the Residential Rent Regulation Act, 1986." Then you will see that there is a section called "Case Scenarios." Because of the time limits we are dealing with, I would like to go to the case scenarios.

I am able to give this committee innumerable examples of problems with the current legislation, both for tenants and for landlords. I have chosen, because I am here speaking on behalf of my landlord clientele, to give you two scenarios that I think highlight issues that have not been brought out already.

The first scenario that I would like to draw the attention of the committee to is one in which I have a client who owns a fourplex. This client has gone to rent review. She has obtained an order allowing her an increase for capital expenditures and for financial loss. The order allowed her in 1989 to charge $430 per month for one particular unit that I am making reference to. She gave the tenant notice for $377 only. That is all the tenant was paying.

The landlord is not operating at a profit. Even if the landlord could get the $430 per month she would not be operating at a profit. The phase-in allowance requires that there be a prolonged period of time before she actually recoups on the amount that she proved is her loss, and by my calculations she would not be in a profit position for three years.

This landlord is subsidizing the rent of the tenant who is in there. The landlord must continue to pay all of the operating expenses plus her financing costs, taxes, heat, hydro etc. The tenant is only contributing $377 per month. The government, in a position of authority, has informed this landlord that she is not allowed to make a profit. Her ability to do so is being stymied by this legislation.

This landlord is in an even worse position now because the same authority that is restricting her profitability has snatched her tenant. If I can use more businesslike terms, this is a proprietor who has had a customer taken by the competition. This tenant who was paying her $377 a month has moved into a public housing unit where the rent is $671 a month. However, because of the subsidies, the tenant is paying less than the $377 she was paying my client.

There is no one who is suggesting to this committee that it is unfair that the tenant moved. However, what is unfair is that the government has two sources of income. They have the tenants' rent, the portion that they pay, and they have a taxpayer base that makes up the difference, up to the $671 that they deem to be the minimum they can operate that comparable unit for.

My client is not being given that second source of income. That is not fair. My client is left in a situation where she has been forced by the government to go into an involuntary partnership in providing subsidized housing. She is being forced to pay tax to help pay for the construction of that subsidized housing. She is operating the building at a loss. She has had to forgo any hope of profit for probably three years. She has been forced to recognize the inability she has to compete with the government.

She is going to have to continue to pay expenses despite the vacancies that are created by her tenant moving out of her privately owned units into public stock. Then she is going to have to pay taxes to help pay for the subsidy that tenant enjoys when she goes into that unit that is worth $671 per month.

As I have said in my submission, to add insult to injury this landlord is now being told that Bill 4 is going to be introduced, which will do two things. It will make it impossible for her to pay for any capital expenditures that are going to be required. If she needs a new roof next year, she is already operating at a loss. She has no reserve fund that is going to be available and she is being told that the tenants will not have to contribute in any way.

Second, the financial loss phase-in account that she got on the last order is going to be wiped out. It is to be annulled. So not only does she not have a hope of making a profit over the next three years; she is being told that she does not have a hope of making a profit ever. She will never be able to get her rents up to a rate that will compete with the government which is her prime competitor.

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The other scenario that I would like to bring to the committee's attention is one that does not involve a client of mine that is in such need; it involves a client of mine who owns a fiveplex that is substandard. It is what I would call a slum. The landlord has done nothing to maintain this building, has not been able to afford to do so, to come to his defence.

Basically this is a building in which five families are living in conditions that I would never expect anyone in Canada to be asked to live in. The building is subject to about $60,000 worth of work orders from the city of Windsor building department and the landlord has been told by the city of Windsor that if he fails to do this work, his building is going to be shut down and he is not going to be allowed to operate.

As of 28 November, the landlord is faced with a situation with the proposal of Bill 4 where he has two choices that he has to weigh. Does he spend $60,000 out of his own pocket without any hope of compensation to do the improvements to a building where he is already incurring the liability of having tenants there, of paying hydro, water, etc, and is making no money anyway, or does he allow the city of Windsor to come in and shut it down, vacate it, something he could never do himself, in which case he would only have to pay taxes and his insurance and he would save $60,000?

It is very, very clear what this particular landlord would want to do and the people who suffer are the five families that are living there now. They are going to find themselves on the street because the landlord is unable to use any sort of vehicle that will help pay for the cost of bringing that property up to minimum standards.

The interesting corollary that I have made reference to here and that I think is of great importance in the long term is that when this landlord went to the city of Windsor and said, "Okay, you guys can come in. You can shut it down. You've got my permission. That is what I have decided to do," immediately the minimum standards decreased. He was no longer subject to closure. The minimum that they required of him had become less. I think that is what you will find as time goes on and people do not maintain. They will not be subject to closure. They will not be subject to strict remedies on the part of the government or the tenants because the alternative is to put people on the street where there is not yet an adequate supply of public housing to house them.

The conclusions that came from the seminars I conducted are listed on the following page. They basically are:

1. The proposed amendments are retroactive indefinitely. They are not simply retroactive to 1 October 1990. That I think is patently unfair, and it is ridiculous to suggest to people that the effect of this bill is only going to go back to the point the NDP became the majority government. In order to get a rent increase effective 1 October, you must have given notice in June. In order to bring an application before rent review services, you must have applied in June.

As I indicated in that first case scenario, you have people who received orders years ago who are still waiting for the benefit of that order to be flowed through to them. They are having their orders annulled. There is no possible way it can be assumed that this legislation, if it goes through, is only going to affect people from 1 October onward.

2. The proposed amendments deny increases previously ordered which were lawful at the time that they were ordered. Not only that, it denies people the right to rely upon the current state of the law when they make decisions as far as acquisitions and capital expenditures are concerned, and tenants -- do they rent? Can they afford future rent increases?

3. The proposed amendments do not take into account that many rents are already below fair market value and the effect is to prevent landlords from ever correcting the situation. This is what I am saying about the woman who is denied her phase-in. There is no way, if there is not a vehicle allowed such as a financial loss allowance, that you are ever going to change the status quo. Everything will continue to go up, but in the same relation to each other. Unfair rents will continue to be unfair.

There is no possible way that it can be argued that the rental scenario in Toronto is the same as the rental scenario here in Windsor. There are many communities in this province that were bouncing back from the 1981 recession and their rents had not yet caught up to fair market. There is no question that without any curb on fair market value for property, rents which are controlled do not keep up with the value of property which is not controlled.

4. The proposed amendments penalize the landlords who have worked the longest and the hardest with the lowest rents. There are many people who, I am sure, have come before the committee and have told you that they bought a building years ago. They have no financing on it. They have continued to improve it. They have good tenants. They do not want to alienate their tenants. They have not raised their rents for years. Some of them did not raise it for years before 1985, some before 1976. They are locked into lower rent scales.

It puts them in a situation where they may have been taking a minimum rent, because all they want to do is cover their costs, knowing that eventually they are going to recoup when their nest egg hatches. This is their retirement fund. They are some day going to sell this building. Now if you cannot allow a purchaser a financial loss allowance for buying at fair market value, he will not pay fair market value because the rents will not increase to catch up to what a fair purchase price is. No one will buy that man's building for a fair price. His nest egg just broke.

5. The proposed amendments will result in hardship for the tenants, especially those living in substandard accommodations. That is my second case scenario.

6. The proposed amendments will -- sorry, that is item 6.

7. The proposed amendments are discriminatory against landlords. Landlords are an identifiable group, recognized by their livelihood and are having their livelihoods restricted based upon the nature of that livelihood. I would like to go back and make reference -- I think it should be clarified.

There have been a number of remarks by people making presentations today as to the comments by the Minister of Housing last Saturday. That was at a seminar that I organized. Mr Cooke very kindly accepted our invitation to attend as guest speaker and it was a very informative meeting.

However, in the course of this meeting what happened was that one landlord got up and asked the minister: "What portion of the population is being benefited here by Bill 4? Who is it that is being protected?" Mr Cooke embarked on a lengthy answer, but in the course of this answer he stopped and said, "If what you are asking me is do I represent the people in this room, the answer is I do not."

Everyone in that room took that to be a statement that he is not interested in representing landlords or contractors; there were quite a number of contractors there at the time. That added to the very clear direction of Bill 4 as being stated to be to limit the ability of the landlord to take increases from tenants. It very clearly says to landlords that this is discriminatory. They are being told that because they are landlords they conduct a business that is deemed reprehensible by the government and so it is going to be restricted, and if possible, shut down.

8. The proposed amendments force the landlord to carry the cost of GST-related increases for at least one year without hope of an increase. I do not want to get into this. It is too involved. The fiscal periods have been changed. You cannot bring an application for one of the two grounds that have been stated as still being available until 1992.

I am being signalled that I have only one more minute here and I do not want to waste time going through our conclusions. What I would like to do is make my recommendations.

Ms Poole: We can offer our question time for the presenter to finish his conclusions.

The Chair: Five minutes extra.

Mr Laing: Okay.

9. The proposed amendments fail to allow a landlord to recover the cost of financing losses that will result from these changes. The second grounds of increase that are still available under Bill 4 relate to increases in financing costs. What has failed to be conveyed by the media, I think, is that those changes in financing costs relate only to the financing that resulted from acquisition. It does not allow the landlord to go get an increase because he has to refinance based on the fact that he is losing money now.

10. The proposed amendments do not allow a landlord to improve the building and seriously jeopardize his financial ability to structurally maintain the building. This has been gone into at length by many other people who have made presentations and I do not want to waste time going through it.

11. The proposed amendments do not allow a landlord to provide additional services to the tenants such as the assumption of hydro costs on a meter conversion. Under the current legislation it is possible if a landlord picks up the tab for services previously not included in the rent and becomes included in the rent, such as when a 12-unit building that used to have 12 meters gets converted to a one meter building. It used to be that he could have the average cost of the hydro added on to the rent so that he is not put out of pocket. That is no longer the case. That vehicle has also been eradicated by Bill 4.

12. The proposed amendments restrict the landlord's ability to recover rent money that is due from tenants. The landlord must pay any money due immediately or the tenant can subtract it from the rent. Bill 4 allows tenants 12 months.

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13. The proposed amendments will destabilize the value of land since a building's value will henceforth be determined by the level of the rents, not the quality of the real estate. I could get into economic philosophy for a long time on this; however, what I am basically saying to you is that if you allow rents to dictate the value of the building rather than the quality of the building to dictate the value of rents, you have got the tail wagging the dog and no one will know what their property is worth in relation to each other.

14. The proposed amendments will disproportionately penalize long-term landlords who have owned their properties for many years and who have not charged rents at a maximum. This I have already gone over. This is a repeat.

15. The proposed amendments fail to recognize the simple truth that their effect is to force unprofitable landlords into an involuntary partnership with the government in the business of providing subsidized housing, and as a result fail to provide the landlords with any compensation for the real value of this service that they are providing.

16. Bill 4 appears to be premised upon certain assumptions that are simply not true:

(1) All landlords are currently profitable.

(2) Rents in the province are currently fair.

(3) Comparable buildings charge comparable rents.

(4) The entire province suffers the same housing problems experienced in Metropolitan Toronto.

(5) All landlords, if given the opportunity, will take advantage of tenants and abuse the system.

(6) All tenants in the province of Ontario are just simply too simple-minded to be able to figure out for themselves if a unit is worth what they are asked and if they can afford it.

None of those assumptions, I think, are true and they seem to form the basis of this legislation.

17. Ultimately the price for Bill 4 will be borne by tenants and taxpayers.

As I said, what I would like to get into specifically is the recommendations that I would like to present to this committee.

First, recognize the partnership that has developed between unprofitable landlords and the government.

Mr Tilson: Mr Chair, if I have five minutes, he can have four and a half of those, because I would like to hear these.

The Chair: Okay, that is fine.

Mr Tilson: I would like to make one brief statement. You are quite right. I think it is most improper for members of this committee to make comments on something that is currently under review. I made comments and I apologize. I do not know who your client is, but I apologize to your client for that. Having said that, you can have the rest of my time.

The Chair: Do the NDP want to keep time for questions?

Ms Harrington: I think he might want some response from us.

The Chair: Okay, that is fine. You have until 5:30, sir.

Mr Laing: The first recommendation that I have for the committee is that you recognize the partnership that unprofitable landlords have been forced into in providing subsidized housing for the citizens of the province of Ontario. It is a valuable service. No one is suggesting that there should not be subsidized housing. No one should have to pay more than 25% of his income to rent.

However, there are minimum costs to providing that service. The government gets them. The government receives $671 per month for that public housing unit that I made reference to before. The tenant is paying only a portion of that. The same cost applies to the private stockholder. The landlord who lost that tenant would gladly have provided additional services if that landlord could have got the same $671 a month. Presumably the tenant would have preferred to stay in her original home.

If the committee has the ability to make recommendations as far as changes are concerned, I think those changes should be made not to how private landlords conduct their business, but to how subsidized housing is made available to the people of Ontario. There should be an allowance given to landlords who are currently being forced to provide subsidized housing out of their pocket without any form of reimbursement.

Bill 4 serves to make that situation worse. They are even being denied the right, over a period of time, to get their losses phased in. They are being told that it is their obligation to continue to provide that subsidized housing and in the meantime we are going to take your source of income away by building more public housing units. The logic absolutely defies me. There should not be more public housing units built. There should be subsidies made available so that people can continue to live where they are currently living at an affordable rate for both the tenant and the landlord.

Second, I think that this committee should recognize that not all tenants in Ontario are in need of protection. This is one of the problems that constantly boggles my mind. I get up in front of a group of tenants at an appeals hearing and I have people across the table from me who are making far more money than I am. They are tenants who are living in a controlled atmosphere where they are never going to pay fair market value.

Bill 4 makes that situation worse. It is ludicrous to suggest that someone who chooses to live in a luxury apartment building, where they have everything from pools to Jacuzzis to tennis courts, should be subject to the same protection that someone who is barely getting by should have available to them.

It costs. It is taking money away from the person who is in need. The people who can afford to take advantage of this system are doing so. Quite honestly and frankly, landlords are doing it but so are tenants. The finger should not be pointed just at the landlords for partaking in this system to their own advantage. A tremendous number of tenants, 80% of the tenants in this province, are not in need of rent control.

Third, I would ask that the committee recognize that there is a difference between capital expenditures that are structural and capital expenditures that are aesthetic. You have absolutely no argument from this rent review consultant that there are landlords who take advantage of the manner in which the current legislation is worded. It is very, very easy for a landlord to use something like an unnecessary capital expenditure to up the rent. He knows, especially if he gets his management administration allowance, that his cost is going to be covered for that and in the long term his rents will never go down. It is a very feasible investment if you can afford it.

What I think the committee and the government have to recognize is that there are not that many landlords who can afford to take advantage of that loophole. You have to be very big and very strong financially in order to do the kind of improvement you are talking about. When you talk about marble halls and microwaves, as reference was made to earlier, you are taking about large buildings. You have to buy a few hundred microwaves before it makes any major difference in your rental income. That is not the case with a duplex or a fourplex or a 12-plex. Those landlords do not have the money to take advantage of the system in that way.

I believe that the regulations that were brought into effect last April go a long way to address that. Tenants should be put on notice. Tenants should have some say in whether they want aesthetic improvements in their unit. However, by broadbrushing all capital expenditures you are failing to recognize that the tenants do not have a say on whether the roof should be replaced or the heating system is defective or the electrical system is dangerous. Those are things that must be done whether the tenant likes it or not. The tenants are inevitably going to have to be asked to help bear the burden of that, because you cannot ask the landlord to go into a loss scenario. You are putting everyone at risk when you do that, because a landlord might not do necessary structural improvements that are mandatory.

Fourth, and almost finally, this committee has to recognize that the amortized cost for capital improvements is not an enrichment for the landlord. The way the system works now is that over time you are reimbursed on the amortized basis for capital improvements you did a long time ago. When you put on a new roof, it is amortized at the going interest rate over 15 years. Fifteen years later you are finally going to be reimbursed for the roof you put on 14 years before. It is not money going into the pocket, which should be available for the new roof that is probably going to be necessary in that fifteenth year. You are going to have to do the whole process again so that 30 years later the second roof is paid for.

It is not appropriate to suggest that landlords should have a reserve fund, especially since reserve funds were legislatively banned. A landlord cannot ask people to pay for future improvements he may or may not do. All that is being done, like a mortgage payment, is that he is being reimbursed for payments that were made in the past, not putting money into a savings account for the future.

Fifth, do not allow Bill 4 to be retroactive. I have no other comment or great words of legalism for you other than to say that this is so grossly unfair and inappropriate that it defies description. I cannot understand how the government can believe that there is any justification for making people go backwards and pay for things that were not due at the time. You are penalizing people unnecessarily. You are taking away from people who went through the system, obtained orders, participated in the system and are now being brought to account for it as though they somehow did something wrong back in 1990. It is simply not fair. It does not make sense, and there is no profit in it for either the tenant or the landlord.

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The final comment I wish to make is to please, please recognize and remember that when you hear from tenants that there are all sorts of landlords out there abusing them and abusing the system, those are not the real abusers. The people who come before rent review are the people who are participating in the system. The real abusers are not before rent review. They do not come here, they do not register their rents. They terrorize tenants into paying unlawful rents and intimidate them from addressing their own remedies under the current system. Those are the people who give landlords a bad name. The people you are hearing about, with long descriptions of rent review applications and processes, are people who are within the system, who are obeying the law. I would say the smallest percentage have done anything that could take advantage of the system. They would not be in the system if that is what they were trying to do.

Ms Harrington: Well, where to start? I am sure you have heard from Mr Cooke, on this business of retroactivity, that there are 130,000 tenant families out there who will at this time still get increases in their rents which are over and above the guideline. Even going back to that date of 1 October, there is still all this flowing through that we are not stopping.

I am glad we agree that there are abuses within the system. I appreciate the fact that you have conducted the seminars, tried to get landlords together. That is a very useful thing. What I want to ask you, at the end of this, is whether in future, that is, in the next few months, you would consider doing that type of thing and giving input to our government as we try to establish the long-term legislation?

Mr Laing: Without question.

Ms Harrington: Good, because we need to hear from all sides in a most reasoned approach. I certainly cannot agree with all of what you have said, but you have raised some interesting points. In your conclusions you have stated that the assumptions of Bill 4 are worth taking back and looking at very carefully.

I was going to mention your statement that some of the operators with the lowest rents are some of the people who are hurt the most. I think there is something worth looking at there. Those people started in the system with very low rents. You are, of course, concerned with the capital costs. We know that capital costs have to be put in, the updates have to be there, and we have to work that out together. The refinancing is something else, refinancing for loss not for repurchase of a building. That is something we have to consider.

I just wanted to conclude by saying that the private operators, your 200 people here in Windsor and across the province, are very important providers of housing in this province. That is so obvious. We do not want to distort that fact. We need you and we are willing to work with you over the long term.

Mr Mammoliti: How long do I have?

The Chair: You have 35 seconds.

Mr Tilson: Five, four, three --

Mr Mammoliti: Can I have another second?

The Chair: Yes, you can. The clock has not started yet.

Mr Mammoliti: Sir, it is obvious that you are pretty bright. I mean, you are a lawyer.

The Chair: The statement was right. I do not think he said it because he was a lawyer.

Ms Poole: On a point of order. Mr Chairman: There has never been any correlation between being a lawyer and -- I am married to one. I know.

Mr Mammoliti: I am sure he is bright as well. Can I have another 35 seconds?

The Chair: No, your time has expired. I am joking. Go ahead.

Mr Mammoliti: I just want to ask you one thing, actually two things. Can the average person understand the language of the legislation that is there now, Bill 51, rent review?

Mr Laing: No.

Mr Mammoliti: Therefore, they have to hire a lawyer to deal with their problems. Yes or no?

Mr Laing: I would say, without being facetious, that tenants can understand the legislation very well, landlords cannot. Landlords have to hire lawyers, tenants do not.

Mr Mammoliti: Okay. The last question. Who can afford you? Landlords or tenants?

Mr Laing: I would say that half of my clients cannot afford me. They are all landlords.

Mr Mammoliti: That leads me to believe that your statement earlier that 80% of tenants do not need help is false.

Mr Laing: I am saying that 80% of the tenants do not need subsidized housing. The people who are being protected by this legislation and should be protected are a small minority. All landlords and the majority of tenants are not in need of that same protection, and that should be recognized. We are bringing it down to a common denominator.

Mr Mammoliti: But they cannot afford a lawyer to represent them, and landlords can.

Mr Laing: No. I am saying that all of my clients are landlords and half of them cannot afford me. They are not making any money off their buildings.

Mr Mammoliti: So tenants obviously cannot afford you.

Mr Laing: The tenants do not need me.

Mr Mammoliti: But you are a consultant, are you not?

Mr Laing: Tenants only need to go down to rent review services and say, "I think I'm paying too much rent," and then all the work is done for them.

Mr Mammoliti: Is that all they have to do? You sit here with a straight face and say that is all they have to do?

Mr Laing: I devised the form that is currently used by rent review services. It is a question and answer, and when the tenant fills out that form there is nothing further needed by the administrator in order to process that tenant's application.

The Chair: Very good. Mr Laing, your time and the committee time has expired. I want to remind the committee that our session for today is over. You will probably receive some information through the mail from the clerk and/or myself. I wish you all a safe trip home.

The committee adjourned at 1737.