Committee Transcript 1996-Aug-22 | Legislative Assembly of Ontario

Mr Rosario Marchese (Fort York): I want to quickly table some questions to the government that I would like them to respond to at some point. Obviously I don't want them to answer these questions today. These have emerged in the course of our discussions. For the record, I'd like to read them:

(1) Can the government table any studies that show the impact on tenants of the proposed changes to rent control?

(2) Can the government table any studies showing how many units will be built across Ontario and in Metro Toronto as a result of their proposed changes to rent control? How many jobs will result? What rent levels will likely be charged in these buildings?

(3) Will the government commit to tabling their entire package of policies designed to bring about private sector rental construction prior to the end of public hearings into the tenant protection package?

(4) Can the government table estimates as to how many rental units will be lost due to the proposed scrapping of the Rental Housing Protection Act?

These are the questions that continue to plague me, but at least many of the deputations raised similar ones. I would like the government at some point to respond to them. If they don't do that, I will continue raising these questions.

The Chair: Okay, Mr Marchese. We've passed out a copy of the questions to all members of the committee.

ONTARIO ADVOCACY COALITION

The Chair: Our first presenters this afternoon represent the Ontario Advocacy Coalition: Patti Bregman, Mae Harman and Orville Endicott. Welcome. You have 20 minutes to use as you see fit. Should you allow time for questions, they would begin with the government. The floor is yours.

Ms Mae Harman: Thank you for this opportunity to present our views to these hearings. My name is Mae Harman. I am co-chair of the Ontario Advocacy Coalition, which represents 49 organizations of disabled and seniors throughout the province. With me are Orville Endicott, who is our coordinator, and Patti Bregman, who is a lawyer with ARCH, which is one of our member organizations.

The Ontario Advocacy Coalition has as its prime interest working towards the availability of advocates for all vulnerable people who need help in understanding their rights and carrying out their own wishes.

Tenants are often vulnerable because the supply of rental housing is scarce, and it is especially difficult for persons on low incomes to obtain appropriate and adequate housing that is within their means. The proposal to eliminate rent controls adds to the problem.

Among the most vulnerable are those persons with special needs who live in care homes. Orville Endicott will make our presentation and speak especially to this latter issue.

Mr Orville Endicott: I'm very glad that Patricia Bregman was able to be here, because she has been hospitalized and I was pressed into service because of her illness. I'm still going to say what I came to say, but I'm happy that Patricia will be in position to field your questions because I think she could probably do a better job of that than I could.

Mae has raised the issue of vulnerability, and that's what we're here to talk about. Our coalition is concerned with people who are vulnerable in our society because of disability or because of advancing years.

When Professor Ernie Lightman completed his study of unregulated accommodation in the province, which I'm sure you're familiar with and hope you will become more familiar with during the process that leads to new legislation, he entitled part one of his report, "Where You Live Can Make You Vulnerable," and that is certainly true.

Conversely, if you are already vulnerable, the issue of where you live becomes one of overriding importance. Very often vulnerability leads to people being placed in substandard dwellings, places where they have very little say about what happens to them on a day-to-day basis, so the issues that are being addressed by this committee are of very considerable importance.

I want to start out by suggesting two or three principles that I hope you will keep in mind as you work towards the conclusion of your committee work.

The first principle I would call the principle of empowerment. When you are talking about vulnerable people, you are talking about people who are not on a level playing field. They are very often subject to decisions that are made possibly and usually in their interests, but not always in their interests, decisions made by people more powerful than they are.

Consider the issue of empowerment. Consider the issue of a residence being a residence. Very often when a person has a label of some kind of disability or is a senior, the fact that they live in a particular place where they also receive services changes the context of that place and it becomes more of a facility than a home. I think all of us hope that throughout our lifetime we will be able to say we live in a place that we can call home. That is the importance of some of the recent legislation that has been introduced, particularly in response to the Lightman report a few years ago.

The other principle that is of considerable importance is that of non-discrimination. Non-discrimination is a protected principle under the Ontario Human Rights Code and under the Canadian Charter of Rights and Freedoms. It means basically that you are entitled to be treated in the same way as anyone else as long as being treated in the same way as anyone else preserves or enhances your equality with others.

There comes a point, particularly for people with disabilities, where being treated the same way as everybody else makes them unequal with everybody else, so you have to think in terms of accommodation of special needs. I suppose in the context of what you're talking about, the word "accommodation" has a double meaning. It means the roof over your head and it also means the care that is taken to see that special needs are adequately accommodated.

When we look at the discussion paper that was released by the government, we see in it potentially useful ideas and potentially harmful ideas.

One of the potentially useful ideas is the provision that bed checks between the hours of 8 pm and 8 am will be permitted with the authorization of the tenant. This begs a couple of questions. One is: Who will make the bed checks? Does the tenant have any control over that? For example, if you're female, can you say, "I want the bed check to be done by a female rather than by a male attendant"? So will the tenants in care facilities, in care homes, be able to specify the kinds of things that would go on during those otherwise private times? Will there be a potential to expand from the notion of a bed check to some actual intervention, such as assisting the person to turn over at night, which is sometimes very difficult? Another question begged by the proposal to allow bed checks is: What if the landlord is not the service provider? Under the long-term-care legislation the policy is to keep separate the issues of residence and the issues of care, so if someone else is providing care, would it be possible for someone else to actually do the bed check?

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The issue of whether the landlord is or is not the service provider could be of considerable importance with respect to other proposals that are contained in the discussion paper.

We also think there is potentially value for vulnerable persons in the provision that a shorter notice period would be required when the tenancy has to be terminated involuntarily. But again this begs a question: How do you measure what is voluntary and involuntary? Is it involuntary termination if the person needs perhaps additional service that could be provided in the home? This may apply more in terms of the landlord moving to terminate the tenancy. Basically we believe that issues of care should be subject to as much control as possible by the person receiving the care.

Some of the more disconcerting proposals we see in the paper include the transfer to alternative facilities when the level-of-care needs change subject to appropriate protections. Again, what are these appropriate protections to be? They should be clearly spelled out.

What about the issue of consent? Under the Health Care Consent Act, which became law only a few months ago, people are required to provide their consent. They're entitled to consent to their admission to a care facility, and in the absence of their own personal ability to provide such consent, provisions are made for a substitute decision-maker to do that.

This raises questions about voluntariness. It obviously means that the person himself or herself is entitled to make decisions about the level of care they need and indeed about the level of risk they may be prepared to live with. Those are not decisions to be made by a landlord, I'm sure you would agree. They obviously have to be taken into consideration in implementing a proposal like transfer to alternative facilities.

Fast-track evictions could obviously be a problem for people. The presupposition seems to be that people in care facilities are more likely to behave in a way that would make it necessary to terminate their tenancy abruptly. We question that presumption. We don't think there is supporting evidence for it. We do think there would be alternative ways of dealing with a problem that may in an isolated case arise, just as it would arise in any rental accommodation situation. One of the solutions could be a restraining order to deal with behaviour that is clearly not only objectionable but threatens the safety and security of the landlord and of other tenants.

We're concerned about questions of conversion of properties, demolition or renovation. Are these going to result in a lessening of the availability of accessible residential accommodation?

We're concerned about the abolition of rent control generally, but particularly in the case of vulnerable persons who may be subject to harassment. I know the intention is to take steps to control harassment by a landlord, but obviously a vested interest is going to be there for landlords to get somebody out, because when the new tenant comes in the rent can be raised. That is a concern that we feel particularly applies in the case of vulnerable people.

I think I'll stop at that point. We have about five minutes left and we will certainly entertain your questions. I'm going to ask Mae Harman, before we end -- maybe when you tell us that we have 30 seconds left -- to read the one recommendation that will appear in the brief you are going to receive from us by the deadline of August 30. Because of Ms Bregman's illness, that brief is not ready for circulation today, but it will be in due course. It is in draft form, so you should have it very soon. I think it's time now for dialogue.

Mr Bruce Smith (Middlesex): Thank you for your presentation this afternoon. I think it's fair to conclude somewhat, and I don't want to do that prematurely, that there's been generally qualified support for the portion of the discussion paper that speaks to care homes, with the exception of some comments that specifically address some of the issues you've raised, specifically around the issue of transfer of residents. I'm wondering if you've given any thought, and you alluded to it in part in your presentation, to what the formal process might be for transferring patients.

Ms Patti Bregman: To be honest, we don't think there is a formal process that's acceptable. What you have to understand about this is that we are talking about people's houses. Prior to the Residents' Rights Act, what was happening was people were being coerced and forced to move against their will.

Think about this: An 80-year-old woman who has a daughter with cerebral palsy and suddenly the mother is making some demands because she doesn't think her daughter is being cared for well enough. This is happening. This is not something that's a figment of our imagination. The mother, if she knows her daughter can be transferred without consent, is not going to say anything, and that's when people get hurt.

There's no need to have it. Basically, this assumes that people with disabilities want to live where they're at risk, and that isn't the case. There are different solutions for dealing with the problems. We recognize that with budgets, a care provider may not be able to provide, within their budget, all of the services. The solution isn't to go back to a system of removing people; the solution is to say: "Let's bring in additional long-term-care services. The family's willing to pay for two hours of additional service."

This is working now. This is what's happening now. There was a great deal of concern after Bill 120. In fact, there hasn't been a problem. There are creative ways to deal with it and also take into account the landlord's problem without taking away what we consider is a fundamental right. I can't think of any way you could come up with something.

Mr Alvin Curling (Scarborough North): Thank you for an excellent presentation. You have presented to us quite often and we appreciate your presentation here.

In Mr Leach's message to Parliament, he stated, "Most tenants' organizations have told us they like the protection provided by the current rent control system and in fact would like an even stricter system." To me, if that's the case -- and you're saying too that you like it -- all these changes will bring greater hardship, especially to seniors and people who are vulnerable like you. But he said, "We have to change it because the landlords say they will not build under these conditions." Two questions to you.

Ms Bregman: The reality is, number one, there were landlords prepared to build accessible housing, and the government pulled the funding out from that. There was money committed already for long-term-care funding.

We can't overemphasize the problem for people with disabilities with the removal of rent control. What is going to happen when you have a very limited number of accessible apartments? Most people with disabilities and seniors are on fixed incomes. The unemployment rate for people with disabilities is well over 50%. They are not going to be in a position to bid up. In fact, with new user fees and additional costs, the few accessible houses that are available are going to go and there's no guarantee that accessible housing will stay in the hands of people who need it. There's nothing to ensure that the wonderful apartment on the ground floor, in a building that doesn't have an elevator, is going to go to the person who's got three kids, one of them in a wheelchair.

There is a huge shortage of accessible housing. The waiting list for accessible units that are affordable is astronomical. If you go ahead and deregulate rent control for this population, what you're going to find is families who can't cope and people moving out of the community. You say you want community, friends and family to support them. If the housing isn't there, if you can change housing over to condominiums, you're not going to have friends and family, because what has happened to people in the past is they're moved from London to Peterborough. It doesn't do much good. There are inquest reports to support the fact that the lack of housing has led to the movement of people to locations where supports can't be provided. We're really concerned about that, and when we move away from rent-geared-to-income housing, that concern will go up even more. It's a really significant impact.

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Mr Marchese: Thank you all for coming. It's good to see you again in a different forum. I want to just make some quick comments and tell you that we're very worried, as well, about the conversion of rental apartments into condominiums. In fact, Mr Gardiner from the Association of Condominium Managers of Ontario is concerned, too, about that and he was estimating that there will be a flood of rental accommodation converting to condominiums. To us, that's a loss of units. We want to ask them: Have they estimated what that loss is?

Ms Bregman: Can I add one more thing, though, that hasn't been in the discussion? Our concern is not only that, but it's a retrenchment of what was added last time around which was including care homes under the Rental Housing Protection Act. Because what was happening is the retirement home operators who decided they wanted to cater to the people who could pay $2,000 a month were converting suddenly. Again, we were seeing people literally being shifted with 24 hours' notice from Peterborough to Kingston and back to London, with no controls. If you're going to take rental housing protection away from care homes, you have to be far more specific about what you mean when you say, "If there's available housing." You have to examine: Is that available housing accessible? Is it near the services they need? Is it in the same community where they're going to get their support? It's not enough to say: "Yes, if they move 100 miles away, it's available."

We had litigation going prior to this change because of the situation that arose in Peterborough where there was a conscious attempt by the operator to have certain people moved out because they got welfare and couldn't afford the tripled rent.

It's not only the condominium conversions that we're concerned about, it's what's going to happen to existing care homes, which just don't exist in large numbers.

The Chair: Thank you. Did you want to make that one recommendation?

Ms Harman: Yes. The one change that should be made to the legislation is to make it clear that landlords cannot refuse entry to any person or agency who is providing a care or support service. Just as landlords cannot prohibit the entry of necessary services, such as those relating to repairs, landlords should not be able to intimidate tenants into not accepting services because it is against the landlord's wishes. This is particularly important where the landlord may also be a service provider.

The Chair: Thank you very much. We appreciate you being here today and giving us your input.

LABOUR COUNCIL OF METROPOLITAN TORONTO AND YORK REGION

The Chair: The next representative is, Pat Clancy, vice-president of the Labour Council of Metropolitan Toronto and York Region. Good afternoon, sir. Welcome to our committee.

Mr Pat Clancy: First of all, we'd like to thank you for allowing us the opportunity to come and make our submission. I'm making this submission on behalf of the Labour Council of Metropolitan Toronto and York Region. The president, Linda Torney, would have been here except she has been tied up for a few weeks on another project.

This brief is being submitted on behalf of the Labour Council of Metropolitan Toronto and York Region, which represents workers in both the public and the private sectors. Our 180,000 members work in industry, construction, services and the public sector -- in fact, virtually every sector of the local economy. Many of our members are among Ontario's 3.5 million tenants. Throughout our 125-year history as a central labour body, we have consistently stood for, not just the rights of workers in the workplace, but the rights of those less fortunate than ourselves, and for the health and quality of life of the community. Our organization is presenting this brief because of a concern over the government's proposals which radically turn back the clock on tenants' rights in Ontario.

The provincial government's discussion paper is the biggest attack on tenants' rights in over 20 years. If this government's proposals become enshrined in legislation, it will mean the end of rent control in Ontario. The proposals will also result in less affordable housing, poorer relationships between landlords and tenants, and less maintenance work being carried out by landlords.

The government's proposal would virtually end rent control in Ontario. Called vacancy decontrol, the proposal allows a landlord to levy an unlimited increase in rent when a new tenant moves into an apartment. As a result, the incoming tenant would pay more rent under the government's proposals than she/he would have under the current legislation.

The government's own study of last fall estimated that 25% of tenants move every year. This study also estimated that over a five-year period about 70% of tenants move at least once. This means that within five years, the majority of apartments and rental homes will have had their rents decontrolled. The majority of tenants in Ontario will be paying more rent under the government's proposals than they would have under the current law.

Our members have suffered dramatically from the effects of recession. Most workers lost jobs that they had held for years, have exhausted UI benefits and have no hope of employment in the job market where unemployment continues to be almost 10%. Before we get into any argument about where that number is, that's a number that was just recently released by Metro. Some have lost homes and become tenants. Others have been forced to relocate to cheaper accommodation or forced to relocate in an effort to find work. In addition to job loss, they will now experience increased cost for housing.

Even for those tenants who don't move, the government's proposals offer less protection from rent increases than the current law. The current Rent Control Act already has a rent guideline which is generous to the landlords. Under existing controls, they can increase rents by 2.8% plus they can apply for an extra 3% above this guideline. An increase of 5.8% far exceeds recent consumer price index increases, as well as wage and salary increases of workers, both unionized and non-union workers. Pensioners and others living on fixed incomes would be even further disadvantaged under the government's proposal.

Current figures indicate that 3,600 people are evicted each month in Metro Toronto. The government's proposals will lead to an increase of close to 8% to 10%. Coupled with the 22% cut in social services benefits, the proposals surely would lead to even more evictions and contribute to the already crisis-level problem of homelessness in Metro.

Tenants will also be worse off under the government's rent proposals because the province wants to get rid of the current costs-no-longer-borne provision of the current law. Under the Rent Control Act, once a capital repair has been paid for through rent increases, it comes out of the rent. Under the government's plan, tenants will be forced to pay for the repair through an increase in the rent forever.

The government's proposals also consider requiring tenants to pay for unnecessary or luxury renovations. This would be a huge step backward for tenants.

Vacancy decontrol: Under this fine example of Newspeak, our community will lose affordable housing, already in dangerously short supply, as rents are raised without limit each time a new tenant moves into a unit.

Vacancy decontrol will also have a negative effect on landlord-tenant relations in the province. In effect, the government will be telling landlords that the way to raise rents is to harass or somehow convince the current tenants to move out of the apartment. The government has already admitted that its proposal will lead to harassment of tenants by landlords. It proposes the establishment of an anti-harassment unit to deal with the problem it will be creating. Given that enforcement units in the areas of health and safety, employment standards and similar consumer protection units are being downsized daily by this same government, it is difficult to believe that any anti-harassment unit would be staffed at anything near the required level.

The reality is, however, that most tenants harassed out of their apartments don't want to spend time filing anti-harassment forms. Of necessity, they will simply spend their time looking for new apartments in this now decontrolled market and they will, as we have pointed out earlier, be spending their time searching for new jobs; at least, they will have to do that to help pay for their new rent.

It took a long time to get the rent registry set up and operating effectively. Tenants are now able to check with the local rent control office to learn the legal rent on an apartment and what services, ie, hydro, parking, are to be included with the rent. Vacancy decontrol will do away with the rent registry. Under the government's vacancy decontrol proposal, landlords will be free to set rents at whatever they wish and free to discontinue services which were previously included in the rent. Once tenants move into a new rental apartment or rental home, they will be covered by a rent control guideline, but the financial damage already will have been done.

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Ending the Rental Housing Protection Act. Currently, local governments are able to limit the demolition or conversion of affordable rental housing to other uses, such as condominiums, because of the Rental Housing Protection Act. The government proposes to eliminate this law. As a consequence, developers will be encouraged to demolish affordable rental housing in favour of more lucrative land uses. Tenants will lose their rental homes and the community will lose affordable rental housing.

Maintenance: The province proposes to devolve powers to municipal property standards inspectors and increase maximum fines for property standards violations. This proposal fails to acknowledge that in many communities there are insufficient resources to fully, effectively enforce property standards. Provincial reductions in funding to local governments will make the property inspection situation worse. The increase of maximum fines will do little to help maintenance because courts generally levy only minimal fines against landlords who violate property standards.

It is unacceptable that the provincial government is proposing to take away the tool of the rent freeze due to property standards violations. This method of the rent freeze has been effective in larger municipalities because it results in a significant financial penalty each and every month that repairs are not completed.

The government is proposing to take Landlord and Tenant Act disputes -- ie, evictions, privacy issues -- out of the courts and have the issues decided by a tribunal which will also decide on rent regulation issues. The discussion paper is vague as to how this new tribunal will operate. However, it is our view that under the new system the decision-makers must be knowledgeable, neutral and not political appointments made by the government of the day.

The discussion paper states it can take up to five months to evict a tenant. This is not the reality faced by most tenants. In most cities the court system is quite efficient in evicting tenants. Again, approximately 3,600 people are evicted in Metro Toronto each month, yet the minister has publicly stated he wanted to make it easier for landlords to evict tenants.

In conclusion, we believe the government should be spending its time ensuring adequate supplies of affordable housing rather than depleting an already inadequate supply.

Mr Mario Sergio (Yorkview): Mr Clancy, the minister himself has said that the elimination of rent control alone will not spur the construction of new affordable rental units. In your view, if this is the case, what should the government be doing to assist builders, developers to come out of the woodwork and start building new affordable rental units?

Mr Clancy: We ourselves, as a labour council, at one time were in the development of co-op housing. Co-op housing was a well-moving proposition. People were getting housing at reasonable rates and the contractors that were developing and building the houses were making good money.

Mr Sergio: But the funding is no longer there now.

Mr Clancy: The funding has now been taken away, so one of the fairest systems of providing housing no longer exists. If the government is really concerned about whether entrepreneurs will get back into developing housing, I think if they went to the people in the co-op industry they would find that they would be quite ready and willing to take on that responsibility.

Mr Marchese: There has been a great deal of unanimity around some of the issues you have raised. Other than the landlords and the Conservatives, everybody else agrees that we should maintain the costs-no-longer-borne provision. They want to take it out. We say we should maintain it.

We are very worried and the public is worried about the whole Rental Housing Protection Act. We think that the current system in place protects affordable rental accommodation. If you simply abandon that, many of these buildings will be converted. One lawyer, Mr Fink, said as much. The Association of Condominium Managers of Ontario also is very afraid that many of these rental units will disappear.

You made another good point and I want to add a point: Some people who have come here -- developers, landlords -- are doing okay. They don't tell you how much money they're making but they say it's profitable, maybe not very profitable -- we don't know what that means -- but they're doing okay. The current system says they can charge up to 5.8%, and you said wages are going down. Inflation is down. People with low incomes have much lower incomes than before. We think the current system protects us and still gives the landlord a reasonable rate of return. You agree with that, obviously.

Mr Clancy: Yes, we agree with it. I don't think anybody put anything in my mouth. My brief stated that we didn't agree with those things that the member raised, and for a couple of reasons. First of all the development of housing was doing very well. Builders were making money, people who supplied building materials were making money, and that was because a lot of it was subsidized and people were getting into good housing at a fair rate. This government has taken that away from us in the province of Ontario.

As far as rent controls are concerned, the people who are renting facilities do quite well. They do have the ability to make at least 5.8%. If they could justify why they should get that, at least they had that ability to do that. That was a far greater increase than people even in my union, the Autoworkers, were getting for increases on an annual basis over the last few years.

There seems to be some greed and it seems that this government, in their wisdom or lack thereof, wants to make sure they help their greedy supporters to be able to get more money. If they do that by, for a short period of time, limiting development, then when development really starts to be needed, they will be in there and they will be gouging like hell. You and I both know that.

Mr Wayne Wettlaufer (Kitchener): Thank you, Mr Clancy, for appearing before us today. I certainly wouldn't deny that there is some greed on the part of some landlords. However, I think we have to realize what the statistics say: that 80% of apartment units are in buildings of four units or less. That's throughout the province of Ontario. Some of those landlords have also appeared before us this week, and not all landlords are doing quite okay. I'm glad that Mr Marchese said that some are doing okay. Some are not doing okay. We heard the figures in the last few days.

The thing I am concerned about is when you talk about the anti-harassment unit. I realize that maybe it won't be Utopia when it's complete, but we are the first government that has ever tried to bring in an anti-harassment unit. I think you will admit that harassment is going on now and has been going on for many years by some of these bad landlords.

However, will you not also admit that there are some bad tenants? You talk about 3,600 evictions in Metro Toronto. I wonder how many of those 3,600 are for perhaps vandalism or non-payment of rent. Surely you don't expect that someone who owns a small unit, who may be supplementing their pension with the ownership of this unit, would be expected to absorb a tenant not paying his rent. Could I hear from you on that, perhaps?

Mr Clancy: I think that the point of tenants not paying their rent is a serious situation. This government is making it more serious because it's downsizing everything. They're downsizing employment. They're downsizing all those things that would be able to help those people pay their rent. I think we have to take a look at that. If that's the question you're asking me, then yes, we agree that people being unable to afford to pay the rent is a serious problem in a community like this and in a province like this. The government, instead of making the problem greater -- and your friends in Ottawa are helping you very well doing the same thing, taking money out of workers' pockets. But the government in this province is prepared, for the purpose of putting more money in the pockets of the wealthy, to take money away from the pockets of the poor, and in my opinion there's no justification for that. We all have a right to live in this province and we all have the right to have jobs and we all have the right to the needs that are part of what we've established over many years.

The Chair: Thank you very much, Mr Clancy. Our time is up, unfortunately. We appreciate your coming here this afternoon and giving us your input into our process.

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KYLE RAE

The Chair: Our next presenter is Kyle Rae, a councillor from ward 6. Welcome to our committee.

Mr Kyle Rae: Good afternoon. I represent an area in downtown Toronto called ward 6, where 70% of the residents live in rented dwelling units. More than 13,000 of those units are in high-rise apartment buildings. There are more than 11,000 condo units in that same area, and it is estimated that more than 50% of those condos are rented to individuals in the ward. Most of them are in the north Jarvis or Church-Wellesley neighbourhood, a very stable neighbourhood, and it's my assertion that the reason it is stable is because we have rent controls in this city.

I've heard some comments about the small landlord. Most high-rise apartment buildings in my ward have hundreds of tenants in them. Many are so large that come election day there are two polling stations in the building. Some of you are familiar with Manulife, because I know you live in Manulife, and there are three polling stations because it's such a large building with so many tenants. In fact, because you all live in Manulife I always lose that poll. I've never won it.

Mr Sergio: I don't.

Mr Rae: Good for you. Mike got out just in time.

I've heard some comments, table talk, and I've also heard in the press of people who have been very upset about the city of Toronto taking a role in this matter. They believe we should not be spending money; we should not be organizing tenants. I have news for you, for those of you who don't understand the situation in the city of Toronto. The chief building official of the city of Toronto is charged by the province to inspect buildings to ensure that they meet the building code of this province, so I am the one who gets the phone call about the elevator that doesn't work, the balconies that are crumbling, the security at the front door that no longer works and the garages that are falling in. That's who gets the call. You don't get it. The city of Toronto, members of council get it.

If there's a problem with the fire code, you don't get that phone call. We get the phone call. We send out the fire inspectors. They do the work to ensure that the stairwells are clear, that the handrails are still in place, that they're not on the floor, and that alarms are either working or they don't keep going off every three minutes. We do that work, not the province. When there are vermin, air quality issues and sanitation problems in the buildings, you don't send out the staff; we do. The city of Toronto's public health inspectors do that.

For those of you who couldn't understand why the city of Toronto takes so much interest in this matter, I hope you understand why now. We deal with it day in and day out. Our staff work on it, and not only our political staff but our inspection staffs in many branches in the municipality. We do that work. So are we interested in maintaining safe and affordable housing stock? You betcha we are.

There is one jurisdiction that went through what you're trying to do, and they did that in 1971 to 1974: New York City. They experienced what you're doing. They called it vacancy decontrol, which was known as VD for short. More than 400,000 units were placed on the open market due to that process, and those 400,000 units went out there because landlords harassed their tenants and pushed them out, and that housing stock was lost to regulation. They have gone back to it, and now they're worried because they've got a new governor who they think is not going to sign the bill next year, and so they're now organizing to stop the deregulation of rent control in that state.

It was interesting too that in that state they looked at the impact of rent regulation and they found it had no impact on the starts of new apartment buildings, none whatsoever. I have the report here if you're interested in it.

Early this week I was interested to read in the Globe and Mail that you had a deputant by the name of George Goldlist, the chairman of Goldlist Development Corp, and he was very unhappy that the government is not moving further on the issue of deregulation of the housing stock. That surprised me. I'm not sure I understand what Mr Goldlist's problem is. He is in a joint partnership with the province of Ontario today to redevelop the Ballet Opera House site, and he's going to put in 300 condo units this year and another 700 condo units later on in 1997 or 1998. What's stopping him from putting in rental accommodation today? There's nothing. If he wanted to, he could build it.

The development industry today no longer wants to take the responsibility of ensuring their properties comply with the building code, the fire code and public health issues. They don't want to do it. They want to offload it, build the condo, get the bank to give them the mortgage, and they walk away and leave it in the hands of the condo corporation. That's what they do today. It's a new era of residential development in this city. I don't think we're going to go back to apartment building as we've seen in the past, in the 1950s and 1960s. It's game over. What I'd like to see is rent controls being placed on the condo units that are being rented out to people, and I'm one of them. I rent a condo unit. That's where it should be going.

I think this government should be leaving rent control alone. If you are really and truly interested in neighbourhoods, in communities, in the built form of our cities and the upkeep of that built form, and stability, then you would beef up the capital improvement requirements that are needed. Too many landlords have flipped their properties over and over again, now find themselves in dire straits, and the tenants are left holding the bag. You're going to make it even more difficult for tenants. That is wrong. I don't believe that's really what you want to do in this province. You want to build strong communities, and you build them with rent control and with the rent regime we have had in the past; you don't go and deregulate it.

Mr Marchese: Mr Rae, thank you for your submission, you and many other councillors who have appeared before this committee. I have personally thanked all of you for your involvement, because I think you, as a city government, have a social responsibility towards your tenants, and we in Metro here have a lot of tenants. Most of these members on the other side are not within Metro, and I'm not quite sure they understand the seriousness of the sensitivities around this particular problem we share, you and I, in downtown Toronto.

Rent control, you said, does nothing to stimulate housing starts. We've heard that over and over, including from Mr Lampert, who has written a report for the government. In fact, it does nothing except enrich the landlord and impoverish the tenant. I think they understand that simply decontrolling will do nothing for that, but as I've said often enough, they are in collusion with the landlords, because other than the landlord and the Conservatives, nobody else agrees with them on that.

Mr Rae: What I don't understand is, who is this person who is going to start building these apartments? I have not seen one. I deal with the development industry day in and day out. They build in downtown Toronto, the biggest to the smallest. I have small to the one I told you about which they are going to start building in the fall, 308 units at the corner of Grosvenor and Bay, the biggest of all. Are they interested in building apartment buildings? No. The paradigm has changed. We no longer are building that kind of unit. Not one person in the development industry has said they want to build apartment buildings; not one has said that to me.

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Mr Marchese: Let me raise another point, because a person came here called Miss Suzette yesterday from 33 Isabella.

Mr Rae: That's right, in my ward.

Mr Marchese: She catalogued a litany of woes from 20 years to the present, where you would think the landlord would be using the money they have been getting for capital expenses, including that extra 3% if there are extraordinary capital expenses to be made, for the kinds of woes they've been having over the last 20 years. But on the other side they say, "But we need it, because the landlords say that unless we do something about the repairs, these things are going to crumble." The question that Ms Suzette was raising is: "They're not spending now. We're in trouble because we have a lot of problems."

Mr Rae: They're paying off the banks because they flip the properties. They're not putting the money back into the buildings. We send out the building inspectors to make sure the new fire code regulations get complied with. My worry is that this government is interested in getting rid of rent regulation and the next thing is going to be moving off from the fire code and the building code and eradicating those responsibilities. Those are the things that cost the developer so much, maintaining the properties for fire and building code, and they don't want to do it any more. They build the condo and they give it to the corporation and it's: "Bye. I've got my money and it's in the Cayman Islands."

Mr Marchese: Can you tell us from your experience the effect this will have on the lowest income people, a third of whom earn less than $23,000?

Mr Rae: We know that something like 30% of the people who are in the lowest income who were living in apartment buildings have been thrown out through economic removal from their units because their welfare cheques have been cut by 23%. That's downtown Toronto. That's what's happened in this city. There are more people living on the streets and in hostels because of economic evictions caused by the welfare cuts.

Mr David Tilson (Dufferin-Peel): Thank you, Mr Rae. The city of Toronto has some problems with respect to tax assessment and it may or may not be resolved as a result of Mr Crombie's commission that's going around. I'm sure you've read the Lampert report or someone's referred it to you, the provision dealing with mill rates, which the city of Toronto does have control over.

Mr Rae: No, we don't.

Mr Tilson: Actually, you do. Are you telling me the city of Toronto doesn't have control over mill rates?

Mr Rae: You have assessment responsibilities; we don't.

Mr Tilson: I'm sorry, but you have control over your mill rates. That's the question.

Mr Rae: You do the assessing; I don't.

Mr Tilson: I think you'd better check the rules again because the mill rates are applied differently in different cities and the highest is Toronto, according to Mr Lampert at least. And that's one of the reasons, it's been suggested by many in your ward in particular, that rents are out of whack compared to other parts of the province. In the city of Toronto, according to Mr Lampert, rental accommodation is taxed at 4.2 times ownership. The point Mr Lampert is making, as you know, is that rental housing appears to be higher than ownership housing.

As an individual who represents a large proportion of rental accommodation as opposed to ownership housing, my question to you is, because this is an issue, and whether you and I can agree on that issue, what are you proposing to do about that?

Mr Rae: That issue isn't really in front of us but I am on record with the constituents of my ward that I believe rental accommodation should not be assessed at four times what someone who owns a property in north Toronto with a backyard and frontyard and maybe a basement is. They don't have that enjoyment in downtown Toronto, and I think that is wrong. I support removing the commercial assessment that residential properties have, removing it from the commercial sector and putting it into the residential sector.

Mr Tilson: Mr Maves had similar questions on this issue. I guess the fact of the matter is that this whole issue of assessment and the fairness between ownership housing and rental housing is going to come up in the future, whether it's going to come up through your council or whether Mr Crombie is going to raise it, and I presume he will.

Mr Rae: He will.

Mr Tilson: I guess what I'm trying to say, because the city of Toronto is the worst offender across this province on this whole topic --

Mr Rae: Worst offender in what sense?

Mr Tilson: The worst offender across this province on this topic. My question --

Mr Rae: Mr Tilson, the city of Toronto is not the same as Tillsonburg. It's a very different situation. Your government has walked away from providing the services that are needed in a large urban community. You've turned your back. We need that assessment to be able to deliver the services, the schools, the --

Mr Tilson: Are you telling me, Mr Rae, that you're not going to do anything?

Mr Rae: I've already told you what I'm supporting.

Mr Tilson: What are you going to do?

Mr Rae: I've even talked to Mr Crombie about it, that the people who live in high-rise apartment buildings who are paying commercial rates should be paying a residential rate.

Mr Tilson: Are you saying you support the position that Mr Lampert has taken --

Mr Rae: I haven't got Mr Lampert's position in front of me.

Mr Tilson: -- that it's unfair that rental housing should be taxed four times what ownership housing is, 4.2 times, in the city of Toronto?

Mr Rae: I don't believe it should be taxed that high.

Mr Tilson: I'm sorry?

Mr Rae: I've already told you that three times now.

Mr Tilson: Okay. Thank you. I'm looking forward to hearing you debate on that.

Mr Bernard Grandmaître (Ottawa East): Councillor, you did say that 70% of the population of your ward were renters and you also had 11,000 condos, and half of them are rented?

Mr Rae: Half of them are in the hands of tenants.

Mr Grandmaître: What is your wild guess: What will happen to 6,000 or 5,500 condominiums after this law is in place?

Mr Rae: I've rented a condo for the last six years, several condos, and they have used the benchmark of the rent control when they've not needed to. They have used it as a benchmark. My sense is with that benchmark gone, they'll just increase the rates; there will be no moral suasion any longer.

There has been this compliance when it was not necessary. In fact, in New York, new apartment buildings that are built comply with rent regulation although they are exempt from rent regulation. It's in their interest because it guarantees them a rent increase. Instead of having to go and negotiate individually with tenants, they opt into the program. If you take away the program here in this province, you'll see the condo market -- I'm not sure that you'll see more units built. What you'll see is the units that are on the market increase in their rent.

Mr Grandmaître: But you don't see any more condominiums being built?

Mr Rae: I wish there were more.

Mr Grandmaître: Why wouldn't they build more condominiums?

Mr Rae: I wish there was more development happening in the city of Toronto, but it's not at this time. There are very few applications to build residential property at this time.

They're waiting. I brought the clippings from the Toronto Sun of February 4: Beat the landlord. Beat the system. Imagine how painful paying rent will be when the government takes rent control off. So they're all sitting around waiting like hawks and then they'll decide what to do.

Mr Grandmaître: Also, Mr Rae, I want to take you back. We were discussing Bill 120. I'm sure you're very familiar with Bill 120 because you were one of our guests who talked about Bill 120. I can recall that most municipalities were saying, "Look, we want more inspecting powers."

Mr Rae: That's right.

Mr Grandmaître: "We want to go into basement apartments; we shouldn't need a warrant," and so on and so forth. "We should respect the building code, the fire code." But most municipalities didn't want to pay for these inspections. Do you think this is fair? If you want the power, you should pay for it.

Mr Rae: It depends on what sector -- if you're talking about when I came forward, I think it was Bill 26.

Mr Grandmaître: Bill 120.

Mr Rae: Which was -- what was the other name of it?

Mr Grandmaître: We used to call it the basement apartment bill.

Mr Rae: No, I didn't come to that one. I came to Bill 26.

Mr Grandmaître: We missed you then.

Mr Rae: Yes. I didn't come to Bill 120. I support basement apartments.

Mr Grandmaître: But don't you think -- and I agree, because half my political life was spent in municipal politics. I wanted the power to inspect, and yet the provincial government didn't want to give us that power. But now, with Bill 120, you had this power but most municipalities were saying, "No, we don't want to pay for these inspectors."

Interjection.

Mr Grandmaître: Why not? It's your responsibility. Mr Rae just said that he keeps getting phone calls.

Interjection: Are you talking property standards?

Mr Grandmaître: Yes.

Mr Marchese: Okay, what do you think --

The Chair: Mr Marchese, why don't you let Mr Rae answer?

Mr Rae: I'm sorry; I wasn't here for Bill 120 so I'm not going to comment on it. I'm here to deal with rent control.

Mr Grandmaître: Was it Bill 26, Alvin?

Mr Curling: Must be. Everybody was against Bill 26.

Mr Rae: I came to speak to Bill 26 and ask for more jurisdiction in inspection with the licensing commissions. They're in the hands of a level of government that doesn't respond to problems and should be in the hands of the local municipalities.

The Chair: Thank you very much, Mr Rae. We appreciate your input into our discussions.

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MULTIPLE DWELLING STANDARDS ASSOCIATION

The Chair: Our next presenter is Jan Schwartz, president of the Multiple Dwelling Standards Association. Good afternoon, sir. Welcome to our committee.

Mr Jan Schwartz: My name is Jan Schwartz and I'm the president and general manager of the Multiple Dwelling Standards Association, MDSA for short. Ours is a not-for-profit organization incorporated provincially in October 1970. It is the oldest province-wide landlord organization, whose members consist almost entirely of investors who purchased their buildings rather than built them. We do not represent builders or developers. Collectively, the membership owns about 62,000 residential rental units throughout Ontario. More than three quarters of the buildings are located in the greater Toronto area.

The majority of our members own just one building. Some of them put their life's savings, or a great chunk of it, as a down payment on a six- or 10-plex. Some others pooled their resources and formed partnerships to buy a larger building of 50 or 60 suites. They came from different walks of life, working in offices, shops, factories, various professions; we even have a bus driver. Many of them still do. Others have a sufficient number of rental units which require their full-time involvement and depend entirely on their rental income.

A substantial number of our members have reached the age of retirement and their rental income represents either the sole or primary source of income, or a chunk of it. A considerable number reside in their own buildings; the smaller the building, the more likely the owner resides there in one of the units. These owners are often referred to as mom-and-pop operators.

Contrary to popular belief, the bulk of the province's rental housing stock is owned by such small-scale landlords rather than by large corporations of builders and developers. In the recently released ministry information package, you will find under the heading "Did You Know" the following information: 80% of rental buildings are made up of four or fewer units, indicating that the bulk of landlords own small buildings; only 23% of rental units are found in large, high-rise buildings of 100 or more units. It's all in the ministry's package.

To conclude my opening remarks, I would like to stress the point that rental housing has been an accepted part of the investment activity in this province for many years. Of course, in 1980 a new government came in with different ideas.

Concerning the discussion paper itself, we will respond with a more detailed written submission shortly. Today, due to the time constraints, I will limit my remarks to just a few issues which cause our members grave concern.

First, vacancy decontrol: We call it decontrol-recontrol. It has been confirmed by rent control administrators that in the last couple of years applications for above-guideline increases, for all practical purposes, have disappeared. Double-digit rent increases are a thing of the past. Today, when tenants move, the owners are lucky if they don't have to reduce the rent. A vast majority of rents across the province, including Metro, are now below the legal maximum level. It's the market that has become the ultimate protector of tenants. The market has done a better job in this respect than any of the rent control systems in the past, including the current one initiated by the Rae government.

In view of this, it is hard to comprehend the argument that upon vacancy rents will go right through the roof. I've heard in the last few days' time, over and over, "Landlords will charge what they want." It was repeated like a broken record.

Mr Marchese: And we'll repeat it again.

Mr Schwartz: Such talk is nothing but scaremongering propaganda, and you may continue it as long and as often as you want. Only a few chronically depressed units may be subject to a higher increase, but this could be fixed by a reasonable cap of 5% to 6% per annum and phased in over two or three years. However, in practical terms, tenants in these units sit tight; they hardly ever move. Why give up a bargain of a lifetime? The turnover occurs in the higher-priced units and the market takes care of the overpriced cases. A number of rents have been reduced in the last year or two. Frequently, landlords skip increases altogether because vacant units are rather costly.

The next problem, agreements between landlord and tenant to be legalized: That seemed like a good idea. At last, we thought, common sense has prevailed, but this measure may turn out a half-measure if a cap is introduced. It is hard to comprehend why government intervention is necessary when two adults have reached an agreement. Needless to say, the agreement must be voluntary. We do not object to a cooling-off period, which is common practice in other cases. The argument that is sometimes brought up by tenants' spokesmen that tenant and landlord are not equals and cannot make free agreements I'm afraid is an insult to any renter.

Next, discrepancies and variances in rent levels within a building ignored: It is not uncommon in today's market that some tenants of a one-bedroom unit pay $50 more than their neighbour living just next door pays for a two-bedroom with two parking spaces. You can imagine how that tenant in the one-bedroom feels, especially when his neighbour has a better job and a higher income. The landlord is absolutely powerless to help in this scenario. We suggest that an application for equalization be introduced whereby a guideline, like 2.8%, could be allowed for the entire building, and under such a scheme similar units will have similar rents. The landlord would apply, suggest how he proposes to apply the 2.8% guideline for the building and redistribute it in a more equitable way.

It was too late for me to include it in writing, but I was told half an hour before I came here about a case where an elderly widow got a discount of 10% and paid $300 instead of $330, going back to 1974. After 20 or 21 years of rent control, that difference of $30 has grown to $92. It just gives you an idea how these inequities originated.

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A cap of 5% above guideline would prevent any unreasonable increases and a phase-in over two or three years would eliminate the existing inequities. We did have, under the Liberals -- and Mr Curling, I'm sure, remembers -- equalization, where these discrepancies could gradually be narrowed down and eventually eliminated.

Finally, a word about what we call professional tenants, who use the present Landlord and Tenant Act to fleece unsophisticated owners: The Landlord and Tenant Act must be overhauled to prevent unscrupulous so-called professional tenants from taking advantage of the law and cheating mostly small-scale landlords out of five, six months' rent, which is not unusual, particularly in Metro. We landlords don't like to go to the courts; we use the courts as a last resort.

The more sophisticated corporations are right on top of things. If a tenant doesn't pay the rent on the 1st or 2nd, bang, they have special staff who will serve him with form number 4 and thus minimize the loss to one month, two at the most. The small landlord doesn't operate that way. He's not going to serve the tenant on the 2nd, 3rd or 5th with an eviction form. He'll wait, he'll try to be helpful, and of course he's being taken advantage of. Before you know it, it's the end of the month and he still hasn't paid and the next month comes along. The form which is being used now, number 4, says you don't have to move for another 20 days. This is just like giving another month of free rent. It just doesn't make sense. Why, when he already owes you two months' rent, do you have to give him another month free? We believe those 20 days should be cut in half, to 10 days. There's no need to give them an extra free month.

Another problem that we find is bothersome is this maintenance business, which smacks of some of the worst political regimes that many of us endured some years ago, before we came to this wonderful country. This kind of treatment, where there is no warning, where just a breach of a standard is enough to be ticketed and fined hundreds of thousands of dollars, especially small landlords, some of them ethnics who don't quite understand everything the way they should -- I think the proposal in this paper that it should go straight to a work order without any advance warning is absolutely unacceptable.

I'll leave a few minutes for questions.

Mr Morley Kells (Etobicoke-Lakeshore): Mr Schwartz, it's good to see you again. I'm interested particularly in your statement that a vast majority of rents across the province, including Metro, are now below the legal maximum level. Does your organization have any documentation to back that up?

Mr Schwartz: We're constantly in touch. We talk to our people. We ask them. We exchange information and opinions. Right now, when a tenant moves, first of all we have to spend about four times as much on advertising as we used to before. These are mostly older buildings -- 25, 30, 40 years old. In spite of what we hear about low vacancies, you pick up the newspaper on a weekend, Saturday, and you still see all kinds of ads in the papers. Prices are reasonable. I've seen one- and two-bedrooms between $550 and $750.

Mr Kells: I really don't have any argument with your contention. You have an organization, as you describe, of small owners, but you have constant communication with them. It would seem to me that it would be in your best interests to at least take some kind of survey on rents that you can use. In other words, we hear the same statements all the time from, if you will, the other side of this equation. When I see a statement like this, which I believe, because I believe it from what I see in my own riding, I think it would be in your best interests to take at least some kind of survey that would back up your contention that the majority of maximum rents aren't being reached.

I'm more interested, if I have time -- we have the argument that developers will not build any more rental accommodation. I'm wondering, because you're somewhat between a developer or, as you've made a point, removing yourself from the developer class, what do you think it would take for the development industry to start building again?

Mr Schwartz: As I said, and you confirmed, I'm not a developer or builder. We're in a different class. They have other options; we don't. What I mean by this is, a developer or a builder doesn't have to build rental units. He can build condominiums, he can build hospitals, he can build hotels. He doesn't have to stay in Ontario. He can go to Florida or Alberta, anywhere.

Mr Kells: Let me try it again --

The Chair: Thank you very much, Mr Kells. Mr Curling.

Mr Curling: Mr Schwartz, you were just right on in answering Mr Kells there.

Again, I want to thank you for presenting. You have been an advocate for the small landlords for a long time and have done a very good job.

Mr Schwartz: I served on your committee, the Rent Review Advisory Committee.

Mr Curling: You did so, and very effectively, sir.

One of the most challenging areas that we had in those days was the small landlords, as you said. Most of those units are rather difficult and have more difficult challenges than the larger landlords. In answering Mr Kells a minute ago, maybe -- I think he knows the answer too, that many of those larger landlords or developers will not build because there's not an effective market out there for them. As you rightly said, they can build other things, because I for one don't believe at all that they are suffering in that aspect. I know they have great challenges out there that would like some more returns.

Do you think by this new direction that they're going on, the only purpose is to build affordable housing? Will they change their minds after they have gutted rent control, that they will start building on the one hand?

Mr Schwartz: I'm sure you've listened, and I've heard their arguments too. They were saying, and I agree with that, that this is only a first step. It remains to be seen how far the government is willing to accommodate. I don't want to be repetitive, because it has been said over and over again, what are the requirements that have to be met in order for them to build. They are businessmen. They are not doing it for altruistic reasons. It has to make sense, business sense. No matter what business it is, building or whatever, you have to make a certain profit.

Based on the market rents today, it's very difficult to build unless you can get a rent of, what, $1,100, $1,200 a month, and that becomes --

Mr Curling: Would you support --

The Chair: Thank you, Mr Curling. Mr Marchese.

Mr Curling: Oh, my. This is short.

Mr Marchese: Mr Schwartz, we don't disagree in your statement here where you say that "a vast majority of rents across the province, including Metro, are now below the legal maximum level." I have not disagreed with that. I don't know what Mr Kells was talking about, but we think that's true. So if that is the case, why do we need to decontrol? Why do we get rid of rent controls, if that is the case?

Mr Schwartz: Because market conditions change. Things are not the same today as they were a year ago or two years ago or three years ago. If you were to ask me what I think will happen in the future, I do not foresee in the next two years, the foreseeable future, that there will be a sudden change. I think rents will stay more or less where they are now.

Mr Marchese: But if that is the case then, controls don't hurt you and they protect tenants, because they feel they're protected. So why not leave the system --

Mr Schwartz: The market protects tenants.

Mr Marchese: No, no. We take it a different view in this regard.

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Mr Schwartz: Well, that's what I said. I thought you agreed with me.

Mr Marchese: No, no. You're saying you agree with getting rid of rent controls, and I'm saying if you're not getting up to the maximum, keep rent controls. Because they don't affect you -- obviously you're doing okay -- but the tenant feels protected. That's what I'm saying. You're not saying that.

Mr Schwartz: I said that --

Mr Marchese: I know what you're saying.

Mr Schwartz: You know what I said?

Mr Marchese: I read it.

Mr Schwartz: You have a copy.

Mr Marchese: Yes. It says --

Mr Schwartz: I said that the market has done a better job than your legislation.

Mr Marchese: That's what they say, and I'm disagreeing with that.

The Chair: Thank you, Mr Schwartz. We've enjoyed having you here this afternoon. We appreciate your input.

DAVID HULCHANSKI

The Chair: Our next presenter this afternoon is David Hulchanski from the Centre for Applied Social Research, faculty of social work, the University of Toronto. Good afternoon, sir, and welcome to our committee.

Mr David Hulchanski: I have a seven-page set of comments which you have before you. I'll only speak to some of what's on those pages. There are four attachments to those pages, sort of an appendix. I hope to have time for discussion.

I'm a professor, as you noted, at the University of Toronto in the area of housing policy and community development. In the 1980s, I was a professor at the University of British Columbia in Vancouver. It was in 1983, the year rent controls were abolished in Vancouver, that I became an assistant professor in the school of planning there. I was director of research for the UBC Centre for Human Settlements at that time. We carried out some research on the impact of rent decontrol in British Columbia. In 1984, I was a consultant to the Ontario Commission of Inquiry into Residential Tenancies; 10 years ago, the Thom commission.

So what is the problem? Why are we here today? I agree with the introduction to the consultation paper that the trouble is due to the fact that "the private sector has no interest in investing in rental accommodation." This is the central thing: The private sector has no interest in investing in rental accommodation. I think we all agree on that. But then, what happened to market demand for new rental supply?

There's a supply-and-demand equation in any market. If we agree there is no private sector supply, what happened to private sector demand? In order for a good or service to be supplied on a market basis, the demand needs to be -- what? -- effective market demand. Consumers have money in their pockets. Any business plan that a bank looks over includes an analysis of the number, type and price sensitivity of potential customers. If there are not enough customers able to afford a particular product, there can be no long-term viable business supplying such a product.

This is the heart of the issue. There's all kinds of other things being said here, but this is the heart of this issue. Where are the paying customers for new rental supply? "There aren't very many," is the answer of course, because the income gap between owners and renters is huge and has been getting larger.

This was not always the case. This was not the case in the 1960s. Okay? Right now the gap is something like 80%. The median income of homeowners in the province is in the $60,000 range -- this is household income -- and that of tenants is in the $30,000 range. It depends on different metropolitan areas. It's close to half; tenants have close to half the income.

The gap was much, much smaller in the 1960s. Remember, there weren't condominiums in the 1960s. That was introduced in the early 1970s, the opportunity to own an apartment. You creamed off higher-income renters into the home ownership sector by doing that, so you lost customers for new construction.

Furthermore, what has been going on is that the real income of renters has decreased since 1971. We have census data from 1971. Compare them to 1991, hold things constant for 1991 dollars, and tenants have lost real income; homeowners have gained real income.

How can a tenant or a potential investor in rental housing compete with those odds? The people with the money are in the ownership sector, and the ownership sector can always outbid. A condo developer can always outbid somebody building rental housing for a piece of land because the population they're going to house has a higher income than the population that the investor in rental housing will attempt to house.

What we have in Ontario is a great deal of social need, more than effective market demand. This is my whole point, really: Where is the effective market demand for new rental housing in this province? There are customers without enough money. That's what's happening here.

That's not the case with the ownership sector. Supply and demand works in the ownership sector. If you have decreased demand, supply happens because it's effective market demand. When people stop buying for various reasons, supply stops and there's just a lag for those two things to catch up. They've never caught up in Ontario.

There's been an unfortunate attempt to rewrite history over the recent 15 to 20 years in Ontario. Which came first, rental market failure or rent controls? Ontario's rent controls were introduced in July 1975. The government's consultation paper contains an appendix with some helpful graphs explaining why a Conservative government in 1975 had no choice but to respond with rent regulations.

When you look at those, you see that vacancy rates fell dramatically from 1971 to 1974, from 3.5% to about 1%, a dramatic fall before 1975. You also see from those graphs that rental starts fell. They were building 60,000, 50,000, 40,000 per year in the late 1960s. In 1972, it was 40,000 and it fell to a couple of thousand in 1975. These things, again, happened before the introduction of rent controls.

Finally, the CPI was just of course climbing dramatically, starting in the very early 1970s, peaking in 1981, and that just threw everything up. As I say here, it changed all the normal economic rules of the game for building, especially rental housing.

What we have in Ontario is market failure in the rental sector and we've had it for a long time. There aren't enough paying consumers. These are negative macroeconomic conditions which have combined to bring us to this point. It's not some regulation or some individual action here or there. It's a whole combination of macroeconomic conditions.

Some of you will remember the oil shock, the energy crisis in the early 1970s and all the things that happened. I moved to Toronto in 1972. The city could still buy houses for $3,000 or $4,000 in 1971-72 to clear land for a park. By 1975, it was around $40,000, $50,000, the inflation in house prices.

We find not only in the consultation paper but elsewhere numerous insupportable claims about the negative impact of rent controls and there's no reliable evidence on these things. I know the literature on this. I cite some of the literature. I didn't make this an academic paper, but I do cite a couple of things.

Building maintenance is supposed to be discouraged. Where do we have evidence of that? We have evidence of a very healthy buying and selling of existing rental stock. Just like a homeowner, somebody who wants to keep the property value of their rental building up will maintain it because they want to sell it and get more than somebody who doesn't maintain it. It's that simple.

We have a situation where some landlords maintain their buildings really well and some don't maintain them well, and any changes that are being proposed here aren't going to change that. Those who maintain buildings will and those who haven't have their reasons and they will continue not to.

Then there's the claim that construction is discouraged, but how can construction be discouraged if there's no effective market demand out there? Macroeconomic circumstances have discouraged construction, not other things. These difficult times that resulted in rent controls in 1975, as I said, happened before rent controls. They're not the result of rent controls.

Imagine if you could take a million households and lock them up for 15 years and run an experiment on them. Well, they didn't lock them up, but British Columbia in 1983 did away with rent controls. They did everything they were told to do by conventional economists. The minister said, "These deregulatory measures" -- that was in 1983 -- "will ultimately result in new real estate development, more jobs and a continuing healthy availability of rental accommodation." It's more than a dozen years later. Last year, the government published a report on rental housing saying, "British Columbia is home to the lowest vacancy rates and some of the highest rents in Canada." Not much changed except rents went up in British Columbia. There was no new rental supply.

So what's the rationale for rent regulations? It's regulatory protection due to this market failure. I outline here that there are in fact four reasons to have rent controls when the market isn't working. When the market's working, you have vacancy rates of 3% or 4%. Let's say you're a landlord and you have one vacant unit for one year. That's $800 a month, let's assume. It's vacant for one year. That's $9,600 per year in lost rent. Let's say you're a big landlord and you have 500 units. That's not too big, but you have a 4% vacancy rate. That's 20 units. That's $192,000 a year lost, a severe fine for landlords if they're unable to attract and keep tenants. That's the way the market protects tenants, by having a 3% or 4% vacancy rate. We didn't have that in the early 1970s before rent controls and we haven't had it since.

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Given this, there are four rationales for rent regulations. I wrote these up in a report for the Thom commission, Market Imperfections and the Role of Rent Regulations in the Residential Rental Market, 1984. One is security of tenure, to protect tenants from economic evictions. If the rent is raised and they can't afford it, they have to move. That's an economic eviction. Maintenance of the affordability of the existing rental stock is another reason for these regulations, as are prevention of a regressive income redistribution and mediation of conflicts relating to rental tenure.

I won't address three of these in the interests of time. I'll just mention one: the prevention of a regressive income redistribution. If the market is not working, what is protecting tenants from being taken advantage of? The primary landlord-tenant issue is the amount of the monthly rent. The government's proposals not only allow but encourage a massive transfer of money from tenants to those who are lucky enough to own rental property in the province.

Let's assume conservatively that only one third of Ontario's 1.3 million tenant households, so only 430,000 households, will pay higher rents due to rent decontrol upon vacancy in the coming three years -- make it four years, whatever -- and that the monthly increase is only $100. Only a third are affected and only by $100 and only over three years. That's half a billion dollars; a $520-million transfer of money from tenants to landlords, a redistribution for what? What will the tenants receive for this money? How will paying additional money to existing owners -- remember, existing owners -- result in an end to market failure, the assumed ideal of supply and demand and equilibrium and all that? How will we get that by having some tenants pay extra money for their existing units?

There's a trickle-down assumption here that I address. One of my appendices has two pages on this that I wrote for the Thom commission. It's assumed that you build some units for high-income people and that the renters will leave their rent-controlled units under this proposal for these higher-cost units, freeing up the rent-controlled units, which of course are now rent decontrolled, and then a lower-income tenant can somehow move into there. This is called filtering of the housing stock. The older stock goes to lower-income people, higher-income renters get the better stock and all that. But you note the income pyramid for tenants, as in owners, is a pyramid; there are very few people at the top. There can never be enough units built for people at the top for that to happen, for units to filter down.

There have been 20 years or so since any research has even been done on this. It's just one of those throwaway theoretical things, assuming an ideal world and all that. This kind of thing doesn't work. I offer some documentation there.

I'll conclude now. I find many assertions rather than evidence throughout the consultation paper to back any of this up. Certain rules and regulations or legal protections do not work. We're told they're harmful, they're inefficient, they provide barriers and all this. Where's the evidence for these assertions? Where's the analysis that the proposed new regulations will be better than the existing ones? There isn't any.

The assertions are followed by proposals that benefit owners of existing rental stock, mainly larger corporate owners. There is no conceivable way that tenants will be better off. There will be no significant supply of new rental units because the problem is a lack of effective market demand. It's not rent controls. It's not these regulations.

The number of tenants forced out of housing altogether will continue to grow. This is happening a bit already because of the negative macroeconomic conditions. This will only worsen the situation that people are increasingly calling dehousing. A process of dehousing is taking place where people lose their housing, double up or end up in shelters or on the street. These proposals will harm the most vulnerable tenant households in the province.

I believe there are four certain impacts of the current proposals.

One is rent gouging, the transfer of a huge amount of money from tenants to owners with very little, if any, benefit in exchange. There's nothing fair about that, to pay more and get nothing more.

The second impact is dehousing: the harassment of some tenants by some landlords -- only some, but how many; more than two or three? -- so as to obtain vacant, rent-decontrolled units to either raise the rents or to convert and all that.

A third outcome is demolition and conversion of rental stock. Even tighter vacancy rates will result due to the loss of rental stock once the Rental Housing Protection Act is changed or abolished.

Finally, there will be at least a temporary glutting of the condo market, especially the middle and low end. There will be construction job losses, a potential decline or stagnation of property values for some condo owners, a potential loss of new municipal tax base as existing rental units are converted to condominiums rather than having the new, more expensive construction built because the converted rental units will be cheaper. They can compete and beat any new construction of low-end condo units.

There's another thing you have to estimate: the cost to the municipal tax base and to homeowners' taxes when rental units become condominiums because then they're taxed at a different rate. So there's a loss of tax base there.

To arrive at the conclusions I'm arriving at, we need simply examine the patterns of rational economic behaviour. What will people do? What is in their rational economic interests under the proposed new regulatory environment? That's all you have to do.

In summary, rent controls and the related tenant and rental stock protections that currently exist are a response to the problem of inadequate supply. They are not the cause of the problem.

This committee should recommend that these proposals be scrapped and that new proposals for rental housing supply be brought forward based on a recognition of the problem of the lack of effective market demand among Ontario's tenant population. Let's address the problem. Thank you for your time.

Mr Grandmaître: I want to talk to you about the failed BC experiment. You agree that the private sector is not interested in providing more rental units to keep the vacancy rate quite low so that the low level can be taken advantage of. What is the responsibility of the provincial government in Ontario, not to compete with the private sector, but to provide safe and affordable housing? What is the role of the government?

Mr Hulchanski: There's a nice philosophical question. The role of the government is that when something isn't working and people are being harmed by something happening out there which we can do something about, we try to do it. If we know people are dying of some disease, some private sector firm may not come forward to stop that, but somebody representing all the people comes forward to do it. That's the role of government.

In the home ownership sector, what's the role of government? Little things even things out. In a market that doesn't work, where we have a third of our population and half the population of a place like Metro Toronto living, there's a role for government to pay attention to those problems.

Mr Marchese: Thank you, Mr Hulchanski, for helping to demystify some of the concepts and assumptions that have been made by the proposal. Given that there's only a minute, there's not too much time to ask questions other than agreeing with those statements you made, that there is going to be, as a result of this proposal if it ever becomes law, a shifting of money from tenants who are largely poor or relatively lower-income folks to landlords who are doing relatively okay.

Mr Hulchanski: They own property, whatever. Right.

Mr Marchese: The other comment you made is that there will no significant supply of new rental units because the problem, the lack of effective market demand, is not even recognized. Even if we bailed and gave away the whole shop, put out the red carpet and got rid of development charges, equalized property taxes, halved the GST, eliminated provincial capital tax, with all that, we're still not dealing with the demand.

Mr Hulchanski: I ask, where are the paying customers? There will always be a small niche market at the upper end, so some units could be built if you did all that.

Mr Bart Maves (Niagara Falls): Thank you for your presentation. You mentioned that several economists in BC told them what they thought should be done: decontrol. I note that there have been some other folks here who've talked about economists and countries that have had controls, and some of their comments have been, "Rent control appears to be the most efficient technique presently known to destroy a city, except for bombing." A university of Chicago economist said, "If educated people can't and won't see that fixing a price below market level inevitably creates a shortage, it is hard to believe in the usefulness of telling them anything whatever in this field of discourse." I understand that there are many economists who see it in a different way than you do.

I want to address your market demand. It seems correct to me, because 50% of landlords right now are charging less rent than they could be charging. That indicates they can't get that rent, so they're not charging that rent.

The Chair: Thank you, Mr Maves. Unfortunately a minute goes by so quickly. Thank you very much, sir. We've enjoyed your presentation this afternoon. We appreciate your interest.

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RUTH HARPER

The Chair: Our next presenter is Ruth Harper. Good afternoon, Ms Harper. Welcome to our committee.

Ms Ruth Harper: Thank you. Mr Chair, Is it permitted to generally comment on comments that have been made previously?

The Chair: You can do whatever you want with your time.

Ms Harper: I'll probably refer to comments made previously when I talk in general.

I want to applaud the current government's plan to make changes, and ask to simplify by combining I think six different pieces of legislation. That can only confuse, rather than simplify and make it easier for everyone to understand legislation and law.

Reading the discussion paper, I pause over certain parts of it. I'm very concerned about parts of it, and two particular parts of it saddened me and in the end made me quite angry. The issues of finance and economics and legal proceedings I'm going to leave to people who understand them far better than me. I will not pretend to understand macro- or microeconomics or other such issues.

For eight years I've worked in the management office of an apartment building, 14 storeys in Etobicoke. The office is located in the lobby of the building and has an open-door policy. It is not just in my position of manning the management office but also in my awareness of the media today, and in the past few years it's very clear to me, as I'm sure to most people, that right now there's a very ugly stereotype about landlords, management and superintendents. This is not to deny the fact that there are bad landlords, bad management and bad superintendents, as there are with any occupational group. But previous comments have perpetuated, by saying tenants are largely poor and landlords are largely well off, the stereotype. I hope all of you are aware and I don't need to waste time to go into the details of what I call the ugly stereotype.

The ugly stereotype also is perpetuated by previous comments that -- I've forgotten the amount -- transfers of millions of dollars of rent will be taken from tenants and given to landlords, and this is rent gouging. Let us not forget what the landlord or management company must do with those millions of dollars. They pay taxes, they pay all the utilities in many buildings such as mine and they pay for repairs and maintenance, whether it's in-house staff or outside staff. The landlords would be left, I am sure, if a proper accounting was taken, with a lot less than these millions of dollars that were previously mentioned as being transferred from tenants to landlords. You cannot simply say that so much is paid in rent and this is the landlord's money. The landlord has an obligation, the biggest of which is to mortgage companies.

This stereotype, in my opinion -- this is what angers me about your proposed legislation -- unfortunately is perpetuated by your legislation, and I'm not saying this facetiously. In the areas talking about harassment and maintenance, it saddens me to see that there is no mention of the tenant's responsibility. Maintenance of a rental unit -- the landlord does not live there. I don't happen to live in that building and some of the maintenance staff do not live in that building. Who lives in the apartment, who uses the apartment and who, according to the Landlord and Tenant Act, has a joint responsibility with the landlord to help maintain that unit? But when it comes to the section of your proposed legislation about maintenance, I only read things about the landlord.

Unfortunately, currently there is no recourse in current legislation or law for an outside agency such as a building inspector to direct the tenant to clean up the greasy stove that caused the oven fire, which caused the stove not to work, which caused it to be replaced, and because the landlord owns the stove, the building inspector has no choice but to cite the landlord and to say the landlord must replace. If a stove is so dirty, just to give a very simple example, I do not think this tenant is fulfilling the responsibility of what I think is called "ordinary cleanliness" or "good housekeeping" as according to the Landlord and Tenant Act.

I would like to just make a footnote here. I'm not talking about the vast majority of tenants. I'm talking about a very small number of tenants, just as I believe the proposed legislation is talking about a small number of landlords. That is why we need the legislation, for the small number of landlords who do not maintain. But you must also please change the legislation to address the issue of tenants who do not fulfil their responsibility for good housekeeping.

The other part of the proposed legislation that I believe perpetuates the stereotype is the harassment issue. As someone who is there five days a week, and I interact almost hourly on some days with maintenance staff and the superintendent, tenants are not the only ones who get harassed, and yet you read the proposed legislation and you would think that tenants are the only ones who ever get harassed. My goodness me. Supers? They're never harassed. No one ever bangs at their door drunk, threatening them, at 2 in the morning. Nobody ever comes into my office swearing and cursing at me. It was the only time I know of it in the eight years, but my super last year was attacked, completely unprovoked, as she was bending down to put a wood wedge in a door so she could vacuum.

Please do not, through your proposed legislation, perpetuate the stereotype that is false. If necessary, recognize in a preamble to the legislation that there are bad tenants and there are bad landlords, and I would be the first to admit there are some very bad landlords. But right now, as the legislation stands, it does not recognize that there are indeed a few bad tenants with regard to harassment and maintenance, just as there are a few bad landlords with regard to harassment and maintenance.

Mr Marchese: Ms Harper, I don't disagree with what you're saying at all, because all of us know that there are some bad tenants and bad landlords, but if that's what we need to deal with, then let's deal with that.

The guts of this proposal is to eliminate effectively rent control. We disagree with that profoundly, because we think it will hurt tenants. The other part of the guts of that proposal is the removal of the rental housing protection, because it's going to get rid of a lot of rental accommodation, affordable rental accommodation. That's really what draws the conflict in this discussion, because the Tories say, "The opposition comes; they have nothing good to offer."

When they introduce a proposal that effectively tears the guts out of something that tenants have fought for, that I and other colleagues have fought for, then we have conflict. If they introduce something that says, "How do we deal with the bad tenant? How do we deal with the bad landlord?" then we can talk about that, but that's not what's before us. What's before us is something that profoundly changes what has been fought for for a long decade. That's where you get a lot of strong disagreement.

I have no problem with you when you say we should deal with the fact that some superintendents get harassed -- that's not nice; some tenants get harassed by landlords -- that's no good; and some landlords are not good landlords because they don't do the repairs. We should talk about that, but this proposal doesn't deal with that, you see.

Ms Harper: I feel the proposal does deal with the bad landlord with regard to the enforcement unit with respect to harassment and the changes with respect to building inspectors' powers and what will happen, for example, in the proposal with ticketing and applications for rent reduction, in harassment cases etc. I respectfully disagree with you. The legislation does deal with bad landlords; it does not deal with bad tenants in the same way.

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Mr Marchese: I respectfully disagree with you as well. I don't know if you were here listening to what Professor Hulchanski said earlier on. I agree wholeheartedly with his entire presentation, and with respect to the anti-harassment unit and strengthening that, we've heard from countless seniors and people who represent the disabled that it's not an equal match here. If some landlord, some bad one, decides to harass you, the fact that you have a serious anti-harassment unit is not going to help that 75-year-old lady who we are told by seniors is very intimidated by those who have power and in whose care they find themselves. They're not going to go out and complain to this anti-harassment unit so they can get that big fine, because they're frightened. So although you think that's there and it's going to have an effect, a lot of seniors are saying, "That's not going to help me."

Mr Harry Danford (Hastings-Peterborough): Thank you very much for your presentation. I appreciate your comments about the stereotyping because I think we've all heard, certainly in the few days of hearings we've had here, and we understand that tenants are not all necessarily low-income and landlords are not going to incur huge increases. I think that's a fair statement, and the numbers in those categories are probably quite small. What's trying to be obtained is a balance.

I'd be interested in your comments very briefly: How do you propose and what specific things would you do to change that, to provide the balance so that we could stabilize between those two segments?

Ms Harper: In general, you mean, with rent control? My main concerns about rent control are not about rent increases. For example, the current unit of what they call rent control -- not unit, but department or ministry, section of the housing ministry -- in itself is used to harass landlords with false applications, or applications that prove groundless, I should say, for rent reduction.

I think the current rent control is such a large beast, and rent increase is only one part of it. I think that to recognize the responsibility in basically what is a rental agreement, albeit a rental agreement regarding a necessity, but a rental agreement, it must be fair to both parties. When it comes to rent increases, I don't think we'll ever be able to do what is fair for both sides, because right now, as will happen from time to time, we are in an economic slump. However, costs of certain items, if you want to call it that, that landlords must buy or pay for are not decreasing each year. However, wages are not necessarily increasing or even remaining the same. So in a sense, the economics that we face at certain times in Ontario will certainly aggravate the disagreement between tenants and landlords. But I don't think we should be blind to what is aggravating the situation. It's not that private landlords own buildings; it's that we are in bad economic times and wages are not increasing. They were in the early 1970s.

I think that, as the previous speaker mentioned, there are other economic factors at work here, and those must be kept in mind when you're trying to get a balance.

Mr Wettlaufer: Ms Harper, thank you for appearing today. I was particularly intrigued with your comment about some tenants not keeping stoves clean and what have you. I used to insure a lot of apartment buildings, and I have inspected many of them and have seen what some tenants do to some buildings. I wonder if you could give us an idea of the percentage of your costs each year which goes into maintenance as a result of tenants' misbehaviour, shall we say.

Ms Harper: I couldn't give you an exact percentage. It would be fairly low. This is not a major cost, fortunately, in our building. At the same time, although it is not a major cost, to me it does not in any way lessen the unfairness of the situation. I understand from other people I have met that in some buildings it is a greater percentage of their total cost. I believe that in my building I am very fortunate -- for whatever reason, I'm not sure. But I don't think the percentage of the cost is really the only factor that should weigh whether or not the proposed legislation should consider this point. I think it is the fairness. Many people, in talking about rent control and rent legislation, talk about what is just, what is right, what is fair. I think those words apply to that issue also.

Mr Grandmaître: I agree with you that there is a joint responsibility between tenants and landlords, because I would say that 50% of my phone calls in my constituency office are about bad landlords, and another 50% are about bad tenants.

My question is, in your eight years of experience as a manager of a major building, do you think that rent controls in the province of Ontario have worked?

Ms Harper: Worked to what end?

Mr Grandmaître: Everybody's advantage.

Ms Harper: Because of my personal experience, I would have to say no. I not only work there, but I am one of the eight partners who bought the building. Another building, for example, which was in the city of Toronto, we bought with eight other people and we lost. Rent control has impacts, and every time a government changes the legislation, it will impact. The current government changed the legislation and it had a major impact.

One day I was at an acquaintance's house and she was waiting for the sheriff to come. Because of the previous government's retroactive cancellation, they lost the buildings, they lost her house. Basically, she was totally bankrupt. This had been her source of income, her job, so not only losing your place of residence but losing your job and losing everything.

I have seen that side of small landlords. I've seen landlords in the last six years who have gone bankrupt. I'm not talking big landlords; I'm talking small people who have other jobs, and certainly not jobs in upper management. They don't wear suits to work. I have seen that. So I, through my own personal experience, cannot say to you that I think rent control has worked because of my personal experience and the experience of people who I call friends and acquaintances.

Mr Grandmaître: What would be the vacancy rate in your own building, the average, let's say, over the last five years?

Ms Harper: Until last year, we never had an apartment go empty. We've been very fortunate. Last year I think we probably had maybe three months total of an apartment being empty; not the same apartment, but total. This year so far we've had two months.

Mr Grandmaître: What's the average rent of the one-bedroom and two-bedroom?

Ms Harper: The parking charges are separate, but since many people have a parking space, I'll tell you with parking, and it includes utilities but not cable. The one-bedroom is $789, the one I'm currently renting for October 1 that's being advertised, and the two-bedroom that's currently being advertised for October 1 is $949.

Mr Grandmaître: Do you agree that rent controls should be abolished?

Ms Harper: I don't think there should be no legislation that applies to the area of rental housing. I think it has to be fairer in the ways I have spoken about in accepting that it is a joint responsibility. I think it should not perpetuate stereotypes of any kind. I think the difficulty is when, as I said before, the beast becomes too unwieldy. Rent control is necessary because there will always be a few bad landlords and a few bad tenants, and it is for those people that I believe the legislation is necessary.

The Chair: Thank you, Ms Harper. We've enjoyed your presentation and we appreciate your interest.

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MARTIN ZARNETT

The Chair: Our next presenter is Martin Zarnett. Welcome, sir, to our committee.

Mr Martin Zarnett: My name is Martin Zarnett and I'm a lawyer practising in Toronto. A substantial portion of my practice relates to housing law, including mortgage enforcement, condominium work and residential landlord and tenant law. Unlike many who will speak to you during these hearings, I represent both landlords and tenants, although primarily landlords.

Today, I will confine my comments to the dispute resolution procedure and not to the other related issues such as rent control, property tax reform, Rental Housing Protection Act reform etc, although I will briefly touch on these areas in conclusion. As a practitioner in the field, I will give you my assessment of what works and what does not work.

Contrary to what you may have heard, the system relating to the resolution of landlord and tenant disputes under the Landlord and Tenant Act is not broken. In fact, having regard to the alternatives, it merely needs to be streamlined to provide for more efficiency.

I have prepared a three-page response to the discussion paper which I hope you will find helpful in your deliberations. I have three main points to my presentation: (1) maintain protection for landlords and tenants by maintaining the court; (2) reform and streamline the system and eliminate certain hearings; (3) utilize your well-trained court staff and local registrars and permit mediation and dispute resolution.

To expand upon these points:

(1) Maintaining judges in the system: Both landlords and tenants benefit by having non-political decision-makers adjudicating disputes. These decision-makers are section 96 judges. This is an important protection that should not be lost for either landlords or tenants.

No one would think about transferring mortgage disputes to a tribunal, although the result, being the loss of a person's home, is the same. The fact that the arrears of rent may be $1,000 or $2,000, in my view, is one small cost in an eviction proceeding. A significant portion of the costs that tenants incur is not reflected in a judgement that a landlord obtains.

Conversely, landlords want to be assured that decision-making bodies are making decisions relating to evictions on an independent basis. This is one of the factors that any investor would examine before determining to invest in residential rental property in this province. For all of their perceived faults, I know of no other organized decision-making body short of settlement that produces better results in the long run than judges, who have no political interference because they are appointed for life.

(2) Streamlining the procedure: 80% to 90% of the cases heard by the courts relate to arrears of rent. A significant proportion of those cases where hearings are booked come before the local registrar and are dealt with by way of default judgement. Further, any time that a tenant appears the matter must be heard by a judge, no matter how frivolous the dispute.

To reform the system, arrears cases and non-arrears cases must be streamed into two separate categories. Arrears cases should proceed to the court office, supported with evidence of arrears such as an affidavit of the landlord's representative, and the landlord should be entitled to judgement without a hearing. Notice periods in a notice of termination should be reduced from 20 to 10 days.

To provide for tenant protection, judges should be given the ability to impose sanctions and refund rent if the landlord's representative misrepresents or misstates arrears. So the judge will have a very powerful tool in dealing with landlords who transgress this particular procedure. Further, tenants should be permitted easy access to set aside such "without notice" judgements upon proving that they have paid the rent to the landlord or by paying the money into court after they have been served with the judgement or the sheriff's notice to vacate to stop an eviction.

This simple change would save between 50% and 75% of the present cost of operating your system, as every dispute at the present time must have at least one hearing. Landlords, of course, would have to be extremely careful in the preparation of their applications due to the significant consequences of providing false material to the court. Tenants would be required to complete minimal paperwork as mandated by legislation should the landlord not be truthful in his materials. The cost of running the system would be dramatically reduced.

Non-arrears cases, such as for damage, illegal acts etc, would continue to receive hearings, although the local registrar's role would be significantly altered, which leads me to my final main point.

(3) The new roles for local registrars and court officials: Whether you wish to utilize the Ministry of Housing representatives in this endeavour or whether you wish to utilize your existing court staff, who are extremely knowledgeable in landlord and tenant matters and who understand that for all of the parties time is of the essence, a new role for local registrars must be implemented.

The new system I propose would emphasize the private relationship and agreements between landlords and tenants. Local registrar's hearings as we know them would be abolished and the matter should proceed immediately before a judge. Local registrars would be trained in mediation and dispute resolution techniques, and local registrars and other members of the bureaucracy would work in conjunction with judges to pre-try cases and, where agreed by the parties, mediate complex and lengthy disputes and save the valuable public resource of court access.

In the Toronto region, where the bulk of the province's applications are presently heard, a pilot project has already been implemented which to my knowledge has been extremely successful and in my cases has been invaluable to settlement. This pilot project so far has saved at least two trial days for me, and of course for the courts, the tenant and the tenant's representatives.

Just as an aside, I was speaking with one of the judges who is on this committee yesterday. Unfortunately, due to a shortage of local registrars in your Toronto office, that has been suspended until September, which again is a different issue altogether.

Rumours have already surfaced that the dispute resolution system is being transferred to a Ministry of Housing tribunal. If that is the case, it is unfortunate and will lead to a decline and not a rise in the confidence of landlords who will invest in this province. If the time lines previously used by the Ministry of Housing are any indication of how disputes will be adjudicated and resolved in the future, then it will not bode well for the future.

On page 3 of my response, which I hope you all have, I have set out a number of other reforms that I propose as being beneficial to both tenants and landlords. I could probably go on between now and 8 o'clock tonight with other reforms, but I'm not going to do so in this context.

Cost: A figure of $300 for the province has been cited as the average cost for each eviction in Ontario. With my proposals, the province's cost could ultimately be reduced to $75 an eviction. If you consider your recoveries of $45 per file to issue an application for eviction and $48 to issue each writ of possession, the expectation is that the cost to the province could be brought down to zero while keeping your user fees the same and maintaining your access to impartial decision-makers.

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My last point deals with confidence. Investment in real estate is long-term. Unlike liquid assets, which can be moved quickly, investment in, and construction of, residential rental real estate requires long-term confidence in the economy, legal structures and the stability of the policies of the provincial government. Change, regulations, taxes and the inability to earn a return on investment mean that private sector construction will not commence.

The private sector, even in housing, notwithstanding some prior speakers, prior to the implementation of rent controls in 1975 had shown that it was able to provide for the needs of people seeking accommodation. When private housing is viewed as a public resource, long-term investment in construction stops. When rent controls are used to subsidize existing tenants, regardless of need, when taxes are imposed at rates higher than other investments, when regulations are arbitrarily and retroactively passed, confidence is gone and the public is then required to step in at tremendous expense.

In conclusion, the proposals I have suggested strike a balance between the rights of landlords and tenants. It is the middle ground between the law as it existed prior to 1975 and the law as it exists today. It will increase confidence because it will leave protections in place that have existed in this province for 130 years and will confirm the province's commitment to legal stability in relation to landlord and tenant disputes.

I thank you for your time in considering my presentation and look forward to any questions you may have.

Mr Tilson: Thank you, sir. There have been several people who have come forward to talk about the process of landlord and tenant issues, disputes, and there has been some criticism that the process now currently takes too long for either a tenant's rights or a landlord's rights. You started commenting on a general dispute resolution system and you went as far as to say it's unfortunate, but you didn't continue with that. I'd like to hear more about that. You appear to be supporting the first part of what is suggested, which is the mediation, although it sounds like you'd prefer that registrars do that, as opposed to a system of mediators. Finally, I'd like you to comment, because I don't think you referred to the appeal process, as to whether there should be an appeal process, and if so, on what.

Mr Zarnett: I'll quickly answer your questions. First, what has to be done is to shorten the notice periods. The reason that it takes so long is because you have lengthy notice periods. A tenant knows if they've not paid rent. The fact that they have 10 days or 20 days in a sense is immaterial. They're going to have to come up with the rent in 10 days or 20 days. If you shorten the notice periods, that will be one cure. Eliminate duplication. If you eliminate the duplication between a registrar's hearing and then going to a judge, that of course will save time and the matters will be dealt with more efficiently. If you take a look at those two things, there's no reason why a dispute can't be heard and decided within the first month the tenant goes into arrears.

With respect to appeal, I don't see that there should be any change in the appeal procedure to the Divisional Court at the present time. They should be, in a sense, appealed on very important grounds. I know that the Divisional Court, because I deal with those cases myself, will take a good, hard look at an appeal when a motion to quash is brought by the landlord or the tenant. If there are frivolous grounds, those can be weeded out very quickly as well. The system is not complicated as it presently exists and it provides for significant protection for both landlords and tenants.

Mr Grandmaître: We were told yesterday that more than 3,500 eviction notices were issued in Metro last year. In your presentation today, you say that 80% to 90% of your cases are related to arrears in rent. Do you think that with this new legislation your percentage will increase or decrease? Do you think that people will be able to afford higher rents? Because when you remove rent control, I'm sure that some landlords, if not all landlords, will take advantage of their low rents.

Mr Zarnett: If I may, then, respond to you, firstly, it's probably 35,000 and not 3,500 applications in Toronto.

Mr Grandmaître: Thirty-five hundred.

Mr Zarnett: There's no question it's 35,000. They go through 10,000 every three months, so there are 35,000 I would say to you.

Mr Grandmaître: Not 35,000, I'm sorry; 3,500 they said.

Mr Zarnett: That might be evictions, not applications. I know there's 50,000 across the province of Ontario in any year. The answer is I don't think that my proposals will -- there will be no rise in evictions whatsoever to the proposals that I am making in relation to the government's presentation, for the simple reason that rents --

Mr Grandmaître: No, no, I'm saying with the present legislation that's before us.

Mr Zarnett: Do you mean vacancy decontrol?

Mr Grandmaître: Yes.

Mr Zarnett: Vacancy decontrol will only affect people who leave their units. So if people stay in their units, there will be no increase in evictions.

Mr Grandmaître: But 20% of the people move every year.

Mr Zarnett: I'm not sure where those 20% of people go, but the market, of course --

Mr Grandmaître: Ask the government.

Mr Zarnett: In my view, I don't see that there will be an increase in eviction.

Mr Tony Silipo (Dovercourt): Mr Zarnett, thank you very much for your presentation. As someone who's had a little bit of experience in landlord and tenant court, certainly nowhere near your level of experience, I certainly agree with the thrust of your presentation, which is that if we're interested, as the government says it is, in making the system simpler and more straightforward, which I think would be beneficial for both landlords and tenants, there are ways that you are suggesting to do that within the existing system. If I hear you correctly, there are many benefits to be gained from keeping the existing system, rather than scrapping it and moving to either an administrative or a quasi-judicial body.

My sense is that the government perhaps has underestimated the costs that would be involved in that, unless what it's looking at is something that would provide far, far less equality of service than we get now through the court system. I guess I just wanted to sort of make that point. If you have any further comments, please make them. But just to sort of emphasize what I hear you saying, which is in fact that there are ways in which the present system can be streamlined and still maintain the basic protection that's there by having a judge at the end of the day be the one that would be making decisions in those cases where it warrants that kind of an impartial look at resolving a dispute between a landlord and a tenant.

Mr Zarnett: Let me respond again. I didn't expect myself to come here agreeing with you, Mr Silipo, but I do agree with you. I agree with you, firstly, that in the present system about 70% to 80% of the cases are presently settled. That's the way it works. You go down to court, down to 361 University, or in any of the courthouses across this province, because it's not just Toronto that I appear in, and a significant majority of the cases are going to be settled. So the system already works.

The cost of setting up a new tribunal, both to the province and to the parties, is going to be tremendous. I don't want the government to underestimate the costs that are going to be incurred by the government in setting this up and providing for individual adjudicators -- the figures that I've heard are $100 to $150 per case -- when a simple change like this, which many tenants' groups may not agree with me on, can reduce your costs by three quarters.

I don't believe that taking it out of a judge's hands, when landlords and tenants have had the ability to take their disputes to a judge, is going to reduce the costs. If it goes to a tribunal, the costs will not be reduced. So I would agree with you that if it's left in the courts but we streamline the process and make some amendments that make a little bit of sense here, we can strike a balance. We can maintain some resort to impartial decision-makers, as opposed to politically appointed decision-makers, whether they're appointed for a three-year or a five-year term.

The Chair: Thank you, Mr Zarnett. We appreciate your interest in our process and your input today.

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NEIGHBOURHOOD LEGAL SERVICES

The Chair: Is Julia McNally here? Julia represents the Neighbourhood Legal Services. Good afternoon. We appreciate your attending with us this afternoon.

Ms Julia McNally: Good afternoon. It's my pleasure to be here. I am here today to speak against the proposals set out in New Directions and argue for the continuance of the existing system. I come today to speak both as a lawyer who specializes in landlord and tenant issues and as a member of an organization working in and for a community of tenants, many of whom have low and moderate incomes.

Neighbourhood Legal Services is a community legal aid clinic. We're located in the east side of downtown Toronto. We represent the area east of Yonge Street to the river, south of Bloor to the lake. This is a multi-ethnic community with people who are recently arrived from all parts of the world, with second, third and fourth generation immigrants, and with aboriginal people. The community is rich in cultural diversity but, frankly, many of its members are very low in income. The vast majority of the people in the community live in rental housing, whether it be public, private or social housing. These people are vulnerable to economic changes and to political changes.

They have already in the past decade suffered tremendous pain. They have been hit hard by the recession, they have been hit hard by the loss of industrial jobs and they've been hit hard by the policies of this government, especially the cut to welfare. We've seen approximately $1 million a month leave our neighbourhood to go up to Rosedale.

We worry that with New Directions the tenants in this community will suffer even more, and I'm talking here about real suffering. I'm not talking about not being able to buy a new set of golf clubs. I'm talking about not being able to put nutritious food on your table, about not being able to get adequate housing, about four or five adult men sharing a crowded room in a rooming-house and paying $400 to $500 for the pleasure each a month. I'm talking about retired couples, families, living in dank, dirty basements infested with roaches. We're talking real suffering. It's our prediction that if New Directions goes through, this suffering will occur in our communities -- not just in downtown Toronto but across the province.

What I propose to do in my deputation is focus on the question of dispute resolution system, pose two questions to the government, and then try to leave time to respond to any of your questions.

Before I get into my comments on the tribunal, I wish to say that Neighbourhood Legal Services endorses the statements of tenants and tenant groups that have already been made opposing New Directions. In particular we endorse the submissions made by Metro Tenants Legal Services, the Tenant Advocacy Group, the Federation of Metro Tenants' Associations and the United Tenants of Ontario. We urge that you listen to the voice of 3.3 million tenants in this province and listen to them when they say this is not a tenant protection package, this is a landlord windfall package.

Now I'd like to turn to some comments on the proposed tribunal. I've provided you with a copy of a submission sent to the Ministry of Housing and prepared by the Tenant Advocacy Group. It's quite a detailed submission and we make some preliminary comments but then focus on our suggested structure for a new tribunal if it should be created. I'm not going to touch on all the points but I urge you to read the document. As well, in the TAG submission to this body there is a lengthy section on tribunals. I endorse both those documents and urge you to read them.

I don't often agree with Mr Zarnett, but we do agree on the issue that the court must stay. The court system has provided relatively good service to both landlords and tenants. It's not perfect, by any means. Mr Zarnett has offered some suggestions for change. Neighbourhood Legal Services doesn't agree with those suggestions for change and has many of its own, which I'm not going to present to you today because I don't think the issue is on the table. However, if the issue does get on to the table, the question of reforming the court system, we would urge that a committee representing landlord and tenant interests and all parties be set up to investigate ways of improving the court system.

It's our submission that the government's reasons for creating a new tribunal are ill-founded and that a new tribunal is not necessary. The government, in New Directions, states that the current system is too complex, too confusing and too inefficient. It's our submission that by and large the system is not too complex, nor too confusing. Most parties navigate through the system and there are resources currently available to help parties. There is duty counsel at the court, there are clerks at the court, there are clinics, there are lawyers and there's a clinic for landlords. They are not perfect. We could use more. But there are certainly systems there and landlords and tenants work their way through the system.

There are certainly some simple steps that could be taken to improve the system. Among them, duty counsel at the court could be increased -- that's a lawyer who's available to answer tenants' questions -- and simplified forms could be adopted at almost no cost, in particular simplified forms that included causes of action that tenants might be interested in.

On the question of inefficiencies, some exist, but frankly, the Ontario Court (General Division) offers very, very fast dispute resolution. Most issues get resolved within two to three months from the day the first notice is served to the day judgement is issued. Two to three months is faster than any court currently operating in Ontario. If you go to Small Claims Court, which is supposed to be the accessible, quick court, it takes you six months to a year to get in the door and then, if you're lucky, you'll have a trial, but maybe it's too crowded and it will be adjourned. If you go to Ontario Court (General Division) civil side, it takes years to get through a matter. This court is quick. It's also quicker than most tribunals. Many tribunals take six months to a year to get to a hearing and then to get a decision. Yes, perhaps landlords would like to get their tenants out quicker. Maybe they want to lock the doors again and kick them out as we did in the bad old days, but this is a civilized society and tenants have certain rights. Two to three months is pretty darn quick. You're not going to get it faster anywhere else.

Finally, to the extent that there are inefficiencies, and I have seen some, they're not a problem of the forum, they're a problem of underfunding. They're a problem of not enough judges sitting and not enough clerks available. If you want the system to work properly, it has to be funded properly.

It's our position that Landlord and Tenant Act disputes should stay in court. They are contractual issues that require serious, thoughtful adjudication by neutral adjudicators, and judges are in a good position to do that. It must stay in court with all the current rights. That includes a right to a trial. I disagree fundamentally with Mr Zarnett's suggestion that certain matters should not go to trial. All matters, including arrears, should go to trial and tenants should have the opportunity to argue their case and argue for relief against forfeiture if that is necessary.

It's our position that a new forum will lead to an administrative nightmare. In particular if the government is seeking to cut costs and does not properly fund this tribunal, you're going to have excessive delay. Everybody is going to be frustrated. It's not going to work. However, if this government and this committee decides that a new tribunal is necessary, then in our document that I submitted we have a number of suggestions for the way it should look and I'm just going to highlight some of those now.

First and foremost, in any new tribunal the substantive rights of tenants must be maintained, and those include:

Maintaining the current notice procedures. I should note that New Directions suggests that; New Directions suggests keeping the current notice procedures, there's no suggestion that they should be cut. They're not particularly long now and any cut in them will reduce tenants' security of tenure;

Second, the right to request what's called relief from forfeiture must be maintained. That's the right to go before a judge if you're in arrears and to explain to the judge why you are in arrears and ask to be allowed to stay in your apartment and to pay the money back on a repayment basis. That right must continue in any new tribunal along with the right to a trial, and that's the final point: There must be a right to a hearing on all applications.

Those are the substantive rights that must remain. In terms of tribunal members, tribunal members must be appointed by way of advertised competition and chosen on the basis of merit and skill. They cannot be chosen on the basis of political connection. Further, tribunal members must be representative of the broader community. That means representative both of the multi-ethnic community but also of tenants and landlords.

Next, tribunal members must have knowledge of legal principles, including administrative law, contract law and landlord and tenant law. This is not some fluffy area. Landlord and tenant law is law. It's contract law, it's tort law, it's administrative law and it's interpretation of legislation. This is serious law. The amount of money may not be huge, but at stake are the vital interests of tenants in their homes. So this has to be taken seriously.

1530

Next, tribunal members must be sensitive to and aware of the reality of landlord and tenant disputes. In particular, they must be aware of the disparity in power between landlords and tenants, because there is in fact a disparity in power. I know that people have come before you today and another day saying there is no such disparity of power, but it does exist and in fact it was recognized by the Tory government in the 1960s when it introduced the landlord and tenant legislation originally. There is a disparity and that has to be recognized.

Finally, there must be a balance between formality and informality in any new tribunal. By that I mean that the tribunal must be formal in the sense that it is independent of government and bound by basic rules of procedure, in particular the Statutory Powers Procedure Act. This can't be loosey-goosey. We have to run proper hearings where people have a chance to make arguments and introduce evidence. However, it must also be informal in the sense that it's accessible to both tenants and landlords, accessible to those who don't speak English as a first language and conducted in relatively plain English rather than legalese.

This tribunal, if it gets set up, as I said, must be serious. Tenants' vital interests in their homes are at stake. If they lose their homes, they lose their security. This raises serious matters requiring serious adjudication.

Another issue that has been raised is the question of mediation. We are somewhat wary of mediation but support it going ahead on certain very specific terms. Mediation must be voluntary. The mediators must be trained mediators, sensitive to the power imbalance between tenants and landlords and to the issues. NLS would not support the use of local registrars as mediators. We believe that anybody who acts as a mediator must have gone to a proper mediation course, must have skills in the area. This isn't something you can just pick up and go in and do. This is a skill that gets trained. Certainly the government's ADR pilot project doesn't just take people off the street. The people who are working as mediators there, resolving disputes between corporations, are serious mediators with real training. Those same type of mediators are needed in this arena. There should be no corner-cutting on this area.

Finally, it must be acknowledged that mediation is not necessarily faster than a trial. In proper mediation you sit down with both parties, work through all the issues. This should not be seen as a way to speed up the process and circumvent justice.

Those are all the comments I'm going to make now on the tribunal. I refer you to our submission, which goes through much more detailed issues quite extensively. However, I would like to end this section by saying if this committee decides to look at the reform of court, what it should do is recommend setting up a multiparty commission or committee to develop proposals. This is not the forum to reform the court system -- it's not on the table -- and this is not the proper process for doing it.

I would like to end by asking two questions of the government and requesting an answer, and then I'll be prepared to answer any questions you might have. The first question I have relates to the issue of construction and supply. This government has raised the very serious problem that there has not been enough construction or supply of rental housing in Ontario. I wonder then and wish to know why this government cancelled the apartment and houses legislation which provided an excellent source of rental supply in the private market at very little cost, why that was jettisoned and why instead the government is pursuing this high-risk, abandon-rent-control approach to construction which has proved unsuccessful in British Columbia. That's my first question.

My second question deals with maintenance. In New Directions the government says that it wishes to induce landlords to repair by providing them with rent increases. However, landlords already have a statutory obligation to repair that's set out in section 94 of the Landlord and Tenant Act. Landlords already get a 2% rent increase each year to allow them to do repairs. Why, I wonder, is this government asking tenants to pay more to have landlords do something that they are already obligated to do? It strikes me that this is like asking a mother of young children to pay her ex-husband money to get him to fulfil his obligations under the law to pay her support. It's absurd. It makes no sense. Landlords have an obligation to repair. Tenants should not have to be paying them extra money to get it. So why is this government asking tenants to do so?

Those are my comments and questions. I hope I get an answer to my questions and I'm happy to answer any of yours.

The Chair: Thank you very much. The parliamentary assistant to the minister is not with us today but we do have a representative from the ministry.

Mr Sergio: This is more of a political question.

The Chair: The questions you've posed are more of a political nature than of a ministry nature. In the absence of the parliamentary assistant, I don't know that anybody on the government side, none of whom are experts on the issue, is prepared to answer those questions.

Mr Sergio: Maybe the Chair would like to answer those questions. You've got the answers, I guess.

Mr Smith: Mr Chair, we appreciate the questions being posed and we'll certainly note them. I think the committee and certainly the government members would like to take the remaining amount of time to direct some questions specific to the proposal to the presenter, if that's possible, please.

The Chair: I didn't quite understand. Are you saying that you will get back to her with the answers?

Mr Smith: Certainly. I think that's certainly the position I'll take.

The Chair: That's the best we can do today. We have about a minute per caucus left for questions of you. We'll see how that goes, beginning with the Liberals.

Mr Sergio: You have a very good question, but the answer is very simple: They just want to get out of the housing business. I believe it's one area that the government should get back into and not abandon the tenants, who really need protection and need affordable housing. No one else than the government knows how many people are on the waiting list, and to abandon those thousands of people to the free market, I think it's just a terrible copping out by the government, really. Why did they eliminate all the funding instead of perhaps making some changes to the program and continuing to provide some much-needed affordable rental accommodation?

Julia McNally, you have touched on a large scale on most of the aspects with respect to the relationship and problems between landlords and tenants --

The Chair: Thank you very much, Mr Sergio.

Mr Sergio: I haven't placed my question yet.

Interjection.

Mr Sergio: You wasted three minutes trying to get a question which you couldn't provide -- Mr Chairman, with all due respect, you are the Chair, you've got six, seven members and you wasted three minutes of the committee's time, and I can't even place one question?

The Chair: We basically have an agreement on time, Mr Sergio, that we've stayed with.

Mr Sergio: I think you should take into consideration, Mr Chairman, that you wasted five minutes trying to answer questions from the deputant here, and I can't even place a question? I find that very offensive, Mr Chairman.

The Chair: Mr Silipo.

Mr Silipo: Ms McNally, time doesn't allow us to get into things in much detail. I just wanted to make a brief comment and if there's any time, if you have any response, I'd appreciate it.

I agree very much with you. You've heard my response to the previous deputants around the process and the sense that I think changes could be made to the present system. When I look at what you and what TAG has suggested, I don't hold out a lot of hope that if there were to be a tribunal we'd get anywhere near those kinds of protections, because it would be seen by the government to be probably more expensive than the present system and perhaps in their view even more cumbersome, as they would see it.

But I do think very much that your suggestion that if we're serious about coming up with a better process, let's put together a group of people to focus specifically on that. I think that would be a good way to go and I hope that members on the government side are listening to your suggestion and that of others. What you're saying is, there are ways in which we can make the present system better, but what's come before us so far isn't it.

Ms McNally: No, that's correct.

Mrs Lillian Ross (Hamilton West): Because our time is limited, the same as the opposition members, I'll be very quick here. You made at the very beginning of your presentation some comments that some families have experienced situations where they had cockroach-infested residences and we had presentations yesterday, some very awful stories about what experiences some tenants had. I guess my question to you is, given the nature of some of the stories you've heard and the people you've represented on their behalf for their protection, are you telling me that the status quo is all right, to leave things alone? Don't you feel there should be some changes made so that we can make things better for tenants?

Ms McNally: Absolutely. We need changes to ensure that maintenance is done. Neighbourhood Legal's position is that paying extra rent is not going to do that. Right now we have mechanisms. People go to court; they get orders. Some landlords fulfil them; some don't. We need better mechanisms for enforcing those orders and we need the city to have more power to go in, investigate and repair.

The Chair: Thank you, Ms McNally. We appreciate your being here today. Unfortunately, 20 minutes does not give us a lot of time but it is the agreement among all the parties that we restrict the presentations to 20 minutes. We appreciate your attendance.

Is Peter Bruer from the Conflict Resolution Service here? We'll have a 20-minute recess.

The committee recessed from 1541 to 1559.

CONFLICT RESOLUTION SERVICE

The Chair: Our next presenter has arrived, Peter Bruer from Conflict Resolution Service. Good afternoon, sir. Welcome to our committee.

Mr Peter Bruer: Good afternoon and thank you for the opportunity to speak to you about the very important changes being considered by this committee. My name is Peter Bruer. I'm on staff at the Conflict Resolution Service at St Stephen's Community House here in Toronto. I'll address my remarks today to only one part of the New Directions white paper, that dealing with the mechanisms for dispute resolution and the possibility of a role there for mediation. Mediation is a small part of the New Directions discussion paper, but I believe it has the potential to be a big part of the future.

Our Conflict Resolution Service has been practising community dispute resolution for over 10 years. We draw on the expertise of 75 volunteer mediators in the community -- representatives of many of the cultures, backgrounds and neighbourhoods we serve. We are backed up by decades of experience in community mediation elsewhere in Canada and the United States. We share mediation services presently with services in North York, Scarborough, Windsor, Ottawa-Carleton, Kitchener-Waterloo and Simcoe county, among others. The field is developing rapidly, especially where there is money available for coordination of services.

The community mediation model that we use embodies several important principles. We seek to rebuild the relationship between parties to a dispute, not just to resolve a particular problem. Parties must come to mediation voluntarily and they must enter into agreements voluntarily. Responsibility for finding the solutions to the problem lies with the disputants, not with the mediators, adjudicators, judges or other people. This necessitates that the people who come to mediation be in a position to bind themselves to an agreement and that they be well enough informed to know what they're agreeing to.

We start by facilitating communications between the people involved, helping them understand each other's position, even if they don't agree. We encourage people to talk about their needs, about how a dispute affects them, rather than about their legal rights so much. Our experience demonstrates that people who understand each other are likely to find the grounds for an agreement. Then they go on to generate possible solutions to the problem, to weigh those solutions and, if they can, to make a written agreement. The agreements made in mediation work because of the process involved. The parties find the solutions themselves and they accept them voluntarily. The agreements work.

We are currently engaged in a pilot project that is directly relevant to the issues that you're dealing with at these hearings. Conflict Resolution Service has set up a landlord-tenant mediation project, which I coordinate -- it's been funded by the United Way of Greater Toronto -- to determine whether community mediation can resolve disputes where eviction for non-payment of rent is the issue, certainly one of the more difficult and one of the more common issues, and whether it can do so faster, more efficiently and more humanely than the courts can.

I'm sure you know and have heard from countless other people in these hearings about the difficulties, the delays that exist in resolving landlord and tenant disputes in the current system. The costs can be calculated in dollars terms: costs to the courts, to the sheriff's office, to the legal aid plan, to landlords for cleanup and re-renting and carrying vacancies and so on. There are also tremendous social costs involved to the people, the families, the children, who are dislocated, housed in hostels, who have a harder and harder time to find housing. In the long run, and perhaps most importantly, there is a cost to the whole community where, again and again, problems are resolved in a way that pits us against each other rather than finding solutions between ourselves.

We're asking you today to think seriously about creating a significant role for community mediation in the system that you ultimately recommend to the Legislature. There are many good reasons why you should do this.

First of all, diversity makes any system stronger. Mediation doesn't work in all cases, but neither do the courts or tribunals. Often parties to a dispute will leave a dispute unresolved or even accept defeat rather than go to court, rather than face that conflictive situation. With limited options we get limited successes. Community mediation offers an alternative.

Second, mediation can be very cost-effective. Common sense will tell you that a dispute resolved essentially by the people involved, with the help of a volunteer-based, non-profit community organization, perhaps resulting in an agreement that makes no demand on the courts, sheriff, hostel systems, housing help services, is cost-effective. A long-standing tenant-landlord mediation service in the state of Connecticut, for example, has demonstrated savings in emergency shelter costs alone to the state of $2.75 million a year. This is a state that may have a population similar to that of greater Toronto. The cost savings in legal fees were also significant.

Third, mediation encourages communities to acquire the skills and experience to regulate themselves. There is no reason why the landlord-tenant community can't take more responsibility for its own problems.

Communities can learn to deal with much of the conflict natural to everyday relations. We can't avoid conflict; conflict is a part of life. The landlord and tenant community already demonstrates an impressive potential to do this. The vast majority of rental disputes never see the light of day. They're resolved by a discussion between the tenant and the superintendent or the manager, or whatever. For example, one large management company routinely accessing the mediation option could set an example that could affect the whole community, and several of Metro's larger landlords are already interested in what we're doing here.

Fourth, many of the communities that comprise the province of Ontario are deeply rooted in dispute resolution traditions based on mediation. I spoke recently with somebody very active in the East African community in Toronto who said, on hearing what our mediation service does, "That sounds exactly what we've been doing traditionally in our community in East Africa for centuries." This is a tradition that belongs to those people and they belong to this country.

I hope these brief comments will lead you to take community mediation into serious consideration as a component of the dispute resolution mechanism that you end up with. It has a great deal to offer. I want to close with some specific recommendations in that direction:

(1) That you continue pilot mediation projects and experiments that various ministries are currently or have recently engaged in, but broaden their scope to include community-based mediation services like ours, not just professional services or services directly working out of the courthouse and so on.

(2) That you include the St Stephen's conflict resolution service and other community mediation services like ours, and I mentioned earlier that there are several already, in discussions about community mediation's potential contribution to landlord-tenant resolutions.

(3) That you set up a dispute resolution system in the legislation that the House eventually passes that allows for mediation and for the principles of community mediation to function alongside or within it.

Thank you for your time and attention. I'm happy to answer any questions that you have this afternoon.

Mr Marchese: Mr Bruer, what kind of training does the group get and from whom?

Mr Bruer: Our mediators are trained internally by ourselves; we have trainers on staff. They get at least a three-day, full-time training session. They also get additional training in landlord and tenant relations, law and so on, and they get the training that comes from mentoring and partnering. We don't mediate cases singly. Cases are mediated in groups of two and three, and often four and five mediators are involved. A lot of the training takes place on the job, so to speak. A lot of our mediators have a lot of other formal training. They're lawyers, professional people, building managers, social work students or whatever. They bring other training into the profession as well.

Mr Marchese: What is the difference between the service you provide, which is community-based, and the professional services you were alluding to?

Mr Bruer: There may not be significant differences in a lot of cases. Our model is a bit different from the model that other services function under. There's a spectrum of things called mediation; some of them become arbitration or negotiation, deal-making. Pure mediation involves a model where the mediators are simply there to foster communication and understanding and don't intervene in the problem-solving in the case.

I think the most significant difference, though, is that we have a large pool of mediators that come from the communities. This is a volunteer thing for them. They are coming as representatives of the community, as peers of the people who are in dispute, who understand the people because they've stood with them in the same place in their lives, because they speak the same language -- and we speak 27 different languages at Conflict Resolution Service -- because they come from the same background, they're the same age and so on. I think there is where maybe the difference is made: We pay a lot of attention to that.

Mr Marchese: So you mediate as well in different languages?

Mr Bruer: We do. Sometimes it can be very complicated, but that's what it takes.

Mr Marchese: That's great. What is the rate of success?

Mr Bruer: Four out of five times a case goes to mediation, Conflict Resolution Service can help the parties make an agreement. The vast number of agreements are kept for the reasons I cited earlier. We follow up with the parties and for the most part agreements are kept. Our success rate is about four out of five. Not all of the cases that we get involved in end up in mediation. Sometimes the parties find a different way to resolve it, sometimes they decide that mediation isn't for them.

Mr Marchese: Do the legal clinics use your services?

Mr Bruer: They do. We get referrals from legal clinics, politicians' offices, children's aid society workers and welfare case workers, co-operatives, unions -- all sorts of different places. The landlord-tenant project is going to find referrals from organizations, obviously, that have a lot to do with landlord and tenant matters. Legal clinics have been one source.

Mr Maves: How is mediation generally initiated?

Mr Bruer: By one party or the other to the dispute finding out about us. Maybe that's through one of the sources we talked about earlier; maybe they simply know we exist or they look us up. They contact us and say, "I have a problem with my landlord," or "My tenant, they're not paying the rent," or "I'm not able to pay the rent and they're going to evict me." We talk to that first party, make them aware of what mediation is, how it differs from other means of resolving disputes and get their consent to proceed. If they think this is a good idea, they're willing to try, we then contact the second party and say: "This person would like to mediate the problem that they have with you. Are you willing?" That's where mediation can stop, obviously, but it can also proceed.

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Mr Maves: I'd imagine initially when you contact maybe a landlord for the first time, they'd be fairly sceptical about who you are and why you're calling and so on?

Mr Bruer: I haven't found that yet. We've spoken to both landlords and tenants initially and in the second case, and found that the response is good. This is what makes me say I think there's a lot of potential in this community. There's a lot of realism, there's a lot of goodwill, if it can be found, maybe not everywhere and always the problems rise to the surface. But I haven't discovered that yet. I'm sure we will.

Mr Smith: As you're probably aware, the previous presenter addressed this issue as well. In her presentation, she focused on the issue of voluntary mediation and I was interested to get your perspective on whether or not there's a role for mandatory mediation versus voluntary and what, if any, implications there might be between the two.

Mr Bruer: I guess all I can say about that is that our service and the model that we've been practising for 10 years is exclusively voluntary and it really doesn't work if it isn't voluntary. If the parties are compelled to come to mediation, then they're not coming with a willingness to make an agreement that they are going to be comfortable with; they're coming to be told how to solve the problem or to be asked something like discovery in court perhaps. Our model requires that they be willing to be there on their own terms, that they can only voluntarily agree, they can't be forced to and so on.

But as I said, "mediation" is word that is used to capture a whole spectrum of alternative dispute resolution strategies and models and so on, so it's not inappropriate to say it can be involuntary.

Mr Wettlaufer: Mr Bruer, many of the evictions, many of the court cases relating to evictions, take two to three months to settle and quite often we have landlords who will wait up to 60 days to even present it to court, and then, of course, if there are adjournments, it's going to go on that much longer, and then the judge will allow 20 days for payment into court. So we could have a small landlord who needs that money to pay for his mortgage or pay his taxes. We could see that he could be anywhere from four to six months without receiving rent. Do you see a role for mediation to speed up this process?

Mr Bruer: Mediation isn't going to speed up that process, because obviously the two are disconnected. Mediation can resolve a dispute more quickly than that. We've been engaged recently in a couple of very fast mediations where landlord and tenant have been brought together in the course of a week or a week and a half. In one case, an agreement was reached, a resolution was found; in the other case, it wasn't. Certainly, it's possible, and we understand that we have to provide a system that is going to be not another hoop to jump through, not another piece of red tape to cut, but something that may cut the red tape in some ways without endangering the rights of either party, without putting anybody in a vulnerable position because the process is getting ahead of them.

We also are very careful to make sure that the parties are comfortable with the speed at which things are operating. They don't have to be there. They have to get their information ahead of time and know exactly what they're doing. But yes, it can happen more quickly because it's largely in the hands of the parties. They don't have to wait for the judge to do something. If they want to mediate two weeks later, they can set that date themselves and we're available.

Mr Curling: Thank you, Mr Bruer, for your presentation. I have no doubt at all that you do an excellent job and quite professional. I presume that if there was no conflict, you would have no resolution to it, meaning that if all things were running evenly, maybe we wouldn't have to set up an anti-harassment committee and what have you, but we have a lot.

Do you feel, then, that one of the main strategies of the government, especially in this situation, is to make sure that most of the things that are causing the problem be resolved much earlier? In other words, tenants come in here regularly and talk about -- a lady was in here yesterday and she walked us through a week of some really terrible times that she had --

Mr Marchese: Miss Suzette.

Mr Curling: Yes, Miss Suzette from Isabella. The fact is that if many of those things are resolved or being done, we wouldn't have this kind of board or people spending more time trying to resolve if the elevator works, if the laundry room door key fits and all of that. Do you think that's where the concentration should be really at: to have these things resolved long before it reaches you?

Mr Bruer: I don't think anybody would deny that if there aren't causes for conflict, we don't have conflict, then we're all better off. But it will be a part of relationships. You know, the best-made plans will go askew and people are human beings. We need to be able to deal with conflict when it comes up. Often things are not in the control of the parties.

Certainly, I think it's true that the earlier you can find the source of a conflict, the earlier parties to a conflict will try to resolve it, the better, before it becomes a crisis, before the options fall away, before the deadlines come. We make every effort in the work we do to get in on the ground floor of these things. But I think what you're saying is self-evident, in a sense. If things don't cause conflict, we don't have conflict and we can all go home. I'll be out of a job; that would be a bit of problem, but I can live with it.

Mr Curling: That's my point. But the fact is, though, that I think tenants have been telling us for years and years that the concern is that they're purchasing a certain product and it's not being delivered. Landlords are also saying that some of the purchasers that they have, in all fairness to them, have been more or less brutal to some of their property. There is a law that deals with that. But it outweighs that many of the things that are happening today are the fact of gross neglect.

The problem I have, though, with all this is that the people at that end don't have any more patience for all of this type of thing. Human rights, for instance, a long lineup and people don't get it resolved. So the poor and those who are working, it costs them much more to come to resolve their problems, which can be avoided, and government has been more or less abdicating its responsibility in carrying out some of the enforcement itself. Do you feel there is a lack of enforcement that is causing this too?

Mr Bruer: What community mediation attempts to do is to address the problem from the point of view of what the needs of the parties are. We have a dispute, we have a problem over non-payment of rent or whatever complicating factors. You can look at it as a question of rights: What does the law say and who's in the right and who's in the wrong and decide the question. Somebody wins and somebody loses. Or you can look at it as a question of needs: What does this person need, and why? How do they feel about the problem? How does it affect them? What does this person need? How does it affect them? Is there any way in which both persons' needs can be met? Are there any common grounds? Are there things that can be exchanged?

That's the mediation model that we follow and that's what works four times out of five when the parties are willing. It isn't going to work four times out of five when the parties aren't. It isn't going to work five times out of five.

So I think mediation can solve problems in a different way and it can address those kinds of problems from a different perspective. It doesn't really speak, then, to the analysis that you're putting forward, maybe. It comes from a different perspective.

The Chair: Thank you, Mr Bruer. We appreciate your interest in our process and your attendance here today.

TONI PANZUTO

The Chair: Our next presenter is Ms from the Federation of Metro Tenants' Associations. Good afternoon and welcome to our committee.

Ms Toni Panzuto: Good afternoon, everyone. For the past few days I have listened to the people who have appeared in front of this committee to express their views on the government's discussion paper. Since I have been a tenant all my adult life, I was most concerned with what the tenants had to say. I have listened to their opinions about the proposed changes to the six pieces of tenant legislation and how they thought the future and the quality of life of Ontario's tenants would be affected.

I commend and applaud the presentations put forth by tenant organizations and individual tenants. I agree with their primary points that if this committee endorses the proposed changes as they stand, it would be detrimental to tenants and extremely beneficial to landlords. However, I disagree with many of them on one fundamental point: I cannot agree that tenants should accept the status quo or that the legislation should remain as is. I fully concur with presenters saying to government, "If it isn't broken, don't fix it," or for that matter, "If there isn't a crisis, do not invent one," but I feel that even though the present legislation isn't broken, many improvements could be made to it to strengthen tenants' rights.

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To illustrate my point, let me give you an account of what the tenant protection legislation, as it stands, has done for me recently. In November 1995, the building I had resided at for two and a half years changed ownership once again. The new owner, Ibrans Investment Ltd, made good on his promise to substantially raise the rents and evict anyone who could not afford the increase. The rent control system was a great help to him in this plan. Because the system had been so generous to the previous owners, the entire building was paying rent at a so-called rent discount, since no one would pay the sky-high maximum rents. Rather than have the building half vacant, previous owners had lowered the rents to a market value rate, in response to the economic realities of the last few years.

Lucky for me, my yearly rent increase notice came due about the same time that the new landlord came aboard. Consequently, in November last year, I was notified of a 9% increase, as opposed to 2.8%. As of March 1, 1996, my rent was to increase by $65, or to a monthly amount of $790. But this was not the only bad news for me. Just a few months earlier, the government of Ontario had seen fit to slash my monthly income by $264, or 21.6%, pending approval of my long-term disability benefits. Unable to meet the increase, I wrote to the landlord requesting that he delay implementing the increase and accept the existing rent of $725.

For this effort, I was served with form 4, a notice of early termination. Additionally, the landlord repeatedly sent the superintendent to my door with the message, "Pay the increase or pack your bags and get out." Of course, the landlord was still accepting and cashing a monthly cheque of $725. On April 13, 1996, I came home to find a notice of a court application for an eviction order taped to my apartment door. Although the landlord was collecting $40,000 each month from the building, he wanted to evict me and my son for the sake of $130 in arrears. On April 25, 1996, I attended at the registrar's office, 20 kilometres away, in Brampton. Contrary to the registrar's optimism that the matter could be resolved then and there because the arrears in question were so minor, a court date was set for June 13, 1996.

While I was at the registrar's office, I tried to settle the case with the landlord's court agent, David Rubin. He dismissed my concerns and tried to intimidate me into moving out. He told me that I was not handcuffed to the building and I could move any time I wanted. He arrogantly refused to understand that if there was an alternative that I could afford, I would have been out of his client's roach- and mice-infested building months before. It did not matter to him that the extra $65 per month was coming out of the money I needed for food for myself and my son.

I also began a difficult search for legal representation. I believed, like many tenants, that the Landlord and Tenant Act provided relief to tenants in dire straits. I also believed that I had the right to have a lawyer to put the legal arguments to the judge. At the last minute, I was able to get a community legal clinic to take my case. By the way, that was South Etobicoke Community Legal Services.

Owing a grand total of $260, we marched into court. Judge Belleghem spent two hours listening to both sides of the case. Although he was obviously sympathetic to my situation, he stated that the existing legislation gave him no alternative other than to evict me. He did exercise some human compassion and gave me until August 31 to find alternative affordable housing for myself and my 11-year-old son, as long as I kept paying the rent at $725 per month.

What is the landlord doing with all the new money that he is getting from these rent increases? He spent a lot of it to build a new suite for the superintendent so that he could rent the super's old suite out to a paying tenant. He finally did something about the lack of hot water. That's about the only thing that he did, something that, by the way, Mr Goldlist's people had told me I had to get used to because the building was so old. Mr Goldlist apparently, it's my understanding from what I heard on the first day of hearings, actually cares about tenants. Meanwhile the mice and roaches multiply and the plaster keeps falling off the walls in the hallways and apartments.

After almost two months of looking for something I could afford, I finally rented a one-bedroom apartment just yesterday. I encountered discrimination in many forms while on this quest: for being on public assistance, for having a low income, for being a parent, for being a woman. My child and I came very close to ending up on the street or in a shelter as a result of this system of tenant protection that's in place at present. Speaking of shelters, my Conservative MPP, Carl DeFaria of Mississauga East, suggested that my son and I could go to one if we got evicted. This was the only brilliant and helpful suggestion he could come up with in response to my housing dilemma.

I have read the discussion paper and have tried to imagine how things would have been if the minister's proposals were the law. First, my eviction probably would have happened faster. Maybe this would have been very good news for Ibrans Investment, but it would have been a disaster for me and my son. Probably we would have ended up in a shelter or a seedy motel where they send families that the shelter has no room for, especially nowadays, because of the avalanche of evictions due to the 21.6% cut in assistance. This is a preposterous solution for a government that wants to cut expenditures. Would the people who hear eviction cases in the minister's new plan have time to listen to my situation or would they just judge me according to their political biases? Where is the proposal for helping tenants in difficult circumstances to keep their homes?

Would the minister's plan offer any relief from the problem of unexpected rent increases to the legal maximum? Not that I can see. The maximum rent would stay in effect until I move out. With rents rising all around because controls were ending on vacant units, the landlord would be able to get to the maximum even faster.

How would these proposals help me when I am out looking for a new place? Many rents would be higher, since there would be no controls on available units. There would be fewer units around because the minister decided to allow demolition and conversions of existing apartments. Even if developers started to build, would they rent their new apartments to someone with a monthly income of $957? From what I understand, I could not afford these units even if I gave them 100% of my income.

In summary, the existing system is not working for me and thousands of low-income tenants. The rent control system is too generous to landlords. The courts are all too ready to evict people for amounts of money that most people would not bother to sue for in Small Claims Court. Landlords spend maintenance money on things that are of no benefit to their tenants just to increase their profits. Landlords have no respect for human rights legislation, and politicians scapegoat tenants who are unfortunate enough to be caught in the welfare system. Nothing proposed in the discussion paper would be of any assistance to tenants, but it is low-income tenants who would be hit the hardest.

When the Minister of Housing says that the Mike Harris government knows there is trouble in the Ontario rental housing market, what he really means is that there is unrest in the landlords' camp. Landlords are impatiently waiting for the Tories to make them even wealthier and they will reciprocate by doing their part at election time. Enter tenant protection legislation. Talk about adding insult to injury. I guess even a government that has displayed such disregard for people's basic needs could not be so blatant as to call the report the landlords' protection legislation, because that is exactly what it is.

As for Mr Leach's recent comment that he would rather do what's right even if it means losing votes, I don't believe he knows what the right thing is, or if he does, he is ignoring it. But he's right on the money about losing votes. He may have committed political suicide, along with a number of his colleagues. I hope the members of the committee won't join him in his suicide mission.

Last but not least -- I shouldn't even remind anyone of this but it seems to have been forgotten in the scope of basic needs -- I'd just like to say that housing is a right, not a privilege.

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Mrs Ross: Thank you very much for coming forward. I just want to stress to you that this is a discussion paper. We're very interested in listening to what you have to say to us.

It's obvious that you've said you don't think the protection act as it is now, rent control, is not working properly, that you've got problems with it.

Ms Panzuto: Obviously, from what I've just illustrated, yes.

Mrs Ross: What would you do to change it, to make it better?

Ms Panzuto: To change it? As I said, obviously it is not working, especially for low-income people. Why would you take that away from tenants? Were you to stick to the proposed changes put forth in the discussion paper, it would be a disaster for tenants.

Mrs Ross: Let me ask you specifically one question. A lot of tenants have come forward and said the guidelines that are in place with maximum rents are important and significant and they need to keep them in place. You're coming forward and saying no, you don't think that's appropriate. Can you tell me why you think that? Some groups are saying it should be kept in place to protect them and you're saying that it doesn't protect you. Maybe you can explain the difference.

Ms Panzuto: When did I say they did not protect me?

Mrs Ross: You mentioned that because the maximum rent could go up, your rent went up, so you didn't feel it was significant that it was there. You felt it shouldn't be there, that he shouldn't be allowed to go to a maximum.

Ms Panzuto: As a matter of fact, this particular landlord did not raise it to the max. For a building that's mouse-infested and roach-infested it's actually ludicrous that the maximum rent for my present unit is $907.18. So he did not raise it.

What he was able to do because of the present legislation, though, and practically destroying my life while doing so, was to raise it -- because the maximum rent was in place and he's still looking like Santa Claus, in other words, by saying, "Well, I'm not really raising it to the $907.18."

Mrs Ross: He could. Right.

Ms Panzuto: In actual fact this man has done nothing in terms of repairs or what have you. The only thing he has given us is hot water.

Mrs Ross: You've been listening to the discussion. Have you heard a lot of people come forward and say they thought that dispute resolution, sitting down and discussing some of the issues with a mediator, might help a lot? You said you've gone to court, it's taken two hours and didn't help your situation. Do you think that a mediator might help in some instances rather than going to court?

Ms Panzuto: Are you referring to the tribunals that are being proposed?

Mrs Ross: Some sort of mediation system. I don't know what it would be. I'm just wondering what you thought of that idea, if it would be beneficial.

Ms Panzuto: As I said in my presentation, I think that there will be lots of political biases and lots of loops to jump through because of that. Were something like that to be instituted -- a lot more work and planning and input from tenants which I don't feel this government is planning to do. My understanding is that it's planning to basically stack it with its own people and not really having --

The Chair: Thank you. Mr Sergio.

Mr Sergio: Ms Panzuto, thanks for coming down and telling the committee your happy-ending adventure. The minister also said on Monday, when he introduced his proposed legislation, that no change means no choice. He's also proposing to amalgamate -- although some of them are disappearing completely with rent control as we know it today -- six statutes into one.

Knowing what you know and what you went through, is rolling those six statutes into one going to make the system more streamlined or more cumbersome?

Ms Panzuto: I think it would be more cumbersome.

Mr Sergio: People not only in your situation, but especially people who cannot help themselves the way you did through your process, what's going to be their situation? Where are they going to go?

Ms Panzuto: Perhaps some of them might put up tents at Queen's Park. But definitely lots of people are going to end up on the streets. There are no two ways about it. That's going to happen.

Mr Sergio: A large part of the renters are seniors. If situations such as this were to happen to seniors, what would it mean to seniors? Chaos?

Ms Panzuto: It would mean chaos. It would mean unnecessary hardship. It would mean that seniors will have no choice. There will not even be a choice in whether they're going to eat or they're going to pay the rent.

Mr Sergio: Of course the situation, Ms Panzuto, is that we don't have enough affordable apartments. Also the government and the minister, Mr Leach, are contemplating selling off the stock we have in place now, some 84,000 units. He did say that as units become available, they're going to refurbish them and sell them to private investors. Do you believe that the government has a role, a responsibility --

Mr Tilson: Where's the market?

Mr Sergio: At market value, yes. Do you believe that the government should get into the housing business and provide affordable housing or that they should get out completely, as they did in cutting funding for non-profits and so forth?

Ms Panzuto: The government of Ontario has to fulfil its mandate to all citizens of Ontario, not only to the privileged few, the rich ones. As I said before, housing is a right, not a privilege. As such the government does have a key role to play, and yes, it does have business in housing.

To give you an example, I have been on co-op lists for a number of years, one of them, as a matter of fact, for six years. It certainly has not helped me any to find housing, because that was taken care of by the Ontario government as soon as they came into power. So yes, they should get back into the business of housing.

Mr Marchese: Ms Ross says this is a discussion paper. In fact, most of them have said this is a discussion paper. I urge people who are listening and yourself -- this is an indication of where the government is going and would like to go, would like to have gone further to help landlords even more, but I think they're too afraid to go further than that.

If it were a discussion paper, they would have introduced questions that people would respond to as opposed to saying, "We're going to decontrol the system."

The Chair: They're in the paper.

Mr Marchese: Oh, really.

Interjections.

Mr Marchese: "We're only going to decontrol the system. What do you think?" That's the discussion paper.

Ms Panzuto: "We're going to do it anyway, so tell us about whether you like it or not."

Mr Marchese: Yes. This is not a discussion paper. What they're doing is getting a sense from the public whether or not they're going to fight back against the elimination of rent control. If they are, they're going to back off, but if the public is going to fall asleep at the wheel, they're going to say: "This is fine. We can go ahead with these half-measures." That's what they're doing.

What you've raised is important because this government, by cutting welfare support, has created a crisis not just for people like you but for landlords as well, because they've created rent arrears; they've created tenants who can't pay their rent, and then you have a whole lot of people being evicted. We don't know, of those 4,000 people who have been evicted, whether this is the major reason, but we suspect that's a big reason why they've done that. They're creating a housing crisis by doing what they've done. Do you think you're one of the few that's in this situation?

Ms Panzuto: Oh, no, definitely not. We know that and the government knows that. Of course you know that. The government of Ontario has created lots of hardship for lots of people. When you attack the basic right of food and shelter, all I can say is, "Shame."

The Chair: Thank you. We appreciate your attendance here this afternoon and your interest in our process.

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SIMCOE COUNTY LANDLORD ASSOCIATION

The Chair: Our next presenter represents the Simcoe County Landlord Association: Patti Richardson. Welcome to our committee.

Ms Patti Richardson: Thank you very much. I did not bring a printout of what I want to say today. I do have a written response that I am going to send to Mr Leach as per his invitation.

I want to start out to say that, as you noted, I am representing the Simcoe County Landlord Association, which is made up of several thousand small-unit landlords in the Simcoe county area.

Being a small-unit landlord myself, I can only speak for myself on behalf of the landlords in our area as small-unit landlords, not as major corporations represented by multiple units in the greater Toronto or larger metropolitan areas.

The introduction of this tenant protection legislation has drawn many and mixed feelings from the small-unit landlords in Simcoe county. A lot of them are bewildered by the existing rent controls and landlord and tenant legislation and are increasingly bewildered by the new proposals. They're not sure if this is good for them or bad for them. What they want to know is, how can this legislation create a more fair situation between landlords and tenants?

More than 55% of tenants live in small-unit buildings of 10 units and under in the province of Ontario. When you get to buildings that are four units and smaller, that percentage is 40%. I would suggest to this panel that the effects of this legislation are going to affect equally landlords and tenants in these smaller units.

The fairness that these landlords talk about is, what is good for the landlord should also be good for the tenant. When these landlords make investments in these properties, it is not for the big-profit bottom line, as the speaker just before me thought that her landlord was after. These landlords are community-involved people like you and I. They invest in their community, they take pride in their ownership and their investments. They in fact are probably friends most of the time with the majority of their tenants. They want to provide affordable and good-quality housing. They want to create for themselves an investment that will become their retirement and/or their legacy for their children. They are not out there to have their properties deteriorate from a maintenance perspective, so as to whittle away at their investments. They want to provide good housing.

The fairness aspect comes into place with respect to the fines and the penalties imposed on landlords. If you impose a $10,000 penalty on a major corporation which owns thousands of units within their portfolio, inasmuch as I would expect that would hurt them, I don't think that would bankrupt them.

But you take a landlord who owns a single-family home or a duplex or a fourplex who is trying to provide not only for themselves and their family, but for other families who live within their units. If for some reason a $10,000 fine is levied against them, they virtually are bankrupt. Now the bank, another major corporation, is going to own their building and they will have to take a look at this property like the major corporations look at the multiple high-rises. "This is the profit point. How can I get my money back out of this building?" They'll look very seriously at how they can enforce their rights through this legislation.

Most of the landlords in Simcoe County are saying: "Let's make it fair. If you are going to impose fines for a landlord who may create a deficiency in his property, then perhaps through determining how that deficiency occurred. If at the same time we find out that the tenant had caused this deficiency, there should be a fine levied against the tenant." That would make it fair. It may not be happier for the person who gets the fine, but it makes it fair.

In addition to that, with respect to the enforcing of the rights of landlords and tenants under the legislation, currently it is, for small-unit landlords, a bewilderment. They're not quite sure exactly what procedure they should take. Talking about one of the most minor infractions, being that of non-payment of rent, regardless of how that non-payment comes about, landlords are left to their own resources to try to represent themselves. When they finally make their representations through to the courthouse, they find on the day of the hearing that free representation is afforded to the tenants. That representative in our area is called Simcoe Legal Services and does not afford any representation to the landlord. Again, that is not fair.

If someone is in need of representation, they should be able to get it, if this government is going to put something in their budgets to do that, so it should be equally afforded to the tenants as well as to the landlords.

Once they get to that situation, they find that -- again, I'll step back one part. A lot of the smaller communities in Simcoe county don't have a lot of the major, non-profit buildings in their communities so it is the position of the small-unit landlords to provide that affordable housing, so they are very much market driven. They cannot charge the full maximum rents and also expect to get tenants to rent in their buildings and be able to stay there without a high turnover.

When there is a situation, as the speaker before me suggested, that there is a major reduction in the amount of funding that some tenants are receiving through government assistance, it does put them in a position of: "Please, Mr Landlord, can you not increase my rent? Can you roll it back?" A lot of these small-unit landlords have done that.

When the situation becomes chronic and they end up in a court situation, where they have to obtain a judgement to terminate the tenancy, to get a judgement for arrears, the Landlord and Tenant Act, says, "Yes, you can get a judgement against a tenant who is in arrears," but under the Courts of Justice Act and the General Welfare Assistance Act, there is a further protection that says, "But if the tenant happens to be someone who is in receipt of this, they are technically judgement-proof and you can't enforce your judgement." That's not fair.

If all tenants are going to be treated fairly and if all landlords are going to be treated fairly, if you are going to get involved with dispute resolution, then everybody has to be treated the same. You have to be able to enforce your rights, to collect your rents and the tenants have to enforce their rights to be able to pay rents that are fair.

I think this committee should also look at all of the legislation that works in conjunction with this new legislation and make sure that if this legislation says you can do something, that the Courts of Justice Act or the General Welfare Assistance Act and any of the other acts that help to enforce this legislation also work together with that.

The other part that is afforded in the Landlord and Tenant Act is representation for smaller landlords by agents. I think we can all recognize that large corporations probably have major property management firms which are very well versed in all of the parts of the Landlord and Tenant Act. Or they have in-house counsel or very quick access to counsel so that they are represented quite readily. I think the speaker just before me said that aptly, that she was dealing with the agent representative for the landlord.

When you get into a court situation and you are going to be represented, the landlords who are trying to represent themselves feel very pressured that if they don't have someone to represent them, they are not going to know all the aspects, that they won't be treated fairly when they're there.

But when they finally get through all of the hoops and the circles and they figure out what they're supposed to do, or they manage to hire an agent instead of a lawyer for the sake of cost, when they get there the courts won't recognize that an agent or a landlord representing themselves are worthy of any costs that they've incurred to get to that point. In fact, there is a recent decision set down that registrars can't deal with costs; it has to go in front of a judge. That means landlords just have to come back.

That's further reinforcement to say, "Let's make sure that the legislation also looks at the other acts that reflect against it." Landlords should have the ability to call on agents to represent them. That means that if they incur costs, they should be able to have those costs assessed fairly, as they would be if there was a solicitor.

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I can only stress that from a maintenance perspective, talking about the enforcements that are going to come under this new tenant legislation -- again I am trying to bring everything out today with the look of fairness -- the current situation under the Rent Control Act affords a tenant to contact someone from a rent control office to go out and take a look at the building. The rent control office at this current time doesn't make any effort to contact the landlord in the first place, doesn't make any effort to determine whether or not the landlord has had an opportunity or any conversation with the tenant with respect to completing any of the deficiencies. Yet a work order is issued. Well, this isn't so onerous at this time because through the number of years landlords have learned how to work with this legislation and try to come out creating a resolution solving the problem. At the end of the day, the tenant may move out but the landlord still owns the property and he still has to make those repairs.

It would be a shame if there isn't some further protection put in place there, as well, for the landlord. I think these kinds of maintenance deficiencies should be looked at fairly between both tenants and landlords. If you give the authority to the municipalities and their bylaw enforcement officers to look at that, it should be under the situation that both landlords and tenants can look at this together.

I don't have any statistics to give you but I can probably guess that most of you will agree that many times deficiencies in the units are also created by some of the tenants who live there, whether through negligence or whether through just bad maintenance procedures. So if a landlord is going to be accountable for the conditions of his building, I think the tenant should be equally accountable for how they take care of those buildings.

The biggest example that many landlords in our community give us is: "When I bought this building and I renovated it into a fourplex, it was all brand-new carpet, all brand-new drywall and painting and everything was nice." After five or six years, if he never rented the apartment out to anyone, it would probably look exactly the same, with a few cobwebs in the corner, but that wouldn't have satisfied his reasons for going through that effort, so he has to rent the property out. But if the landlord spends thousands of dollars on a yearly basis replacing carpet, replacing light fixtures and repainting apartments that is a result of negligence on the part of the tenant, I think that is not fair if there's not also some controls put in place that say everyone should be responsible to each other. There should be some accountability on both sides.

I ask you, in closing, if you can consider those thousands of small-unit landlords throughout Ontario. Consider the fairness that is required for both parties to continue to get along harmoniously, as we believe most small-unit landlords do at this point in time, so that the landlords aren't oppressed by great fines that make them so nervous they maybe want to give up their investments, but the tenants know that there will be some accountability for their behaviour, both towards paying rent and for the ongoing maintenance and upkeep of the property.

In the future, if we can create a greater fairness between landlords and tenants, I think you will find more landlords who want to invest, who want to create more and better and affordable housing, and then that will lessen the burden on the government to have to provide provincial housing or non-profit housing, and therefore look towards more accommodating the individual, the person who needs that housing, into units as opposed to creating buildings.

Mr Curling: Thank you for your presentation. I think it's quite balanced and quite objective. Jan Schwartz was here earlier on and he represents most of those multiple small landlords, and he expressed some of the concerns that you talked about there too. I find your presentation extremely balanced.

Would you say that the real enemy in all of this would be the government -- and I express it in this way. As the previous presenter stated, when they got 22% -- some of the most vulnerable people -- less in their income, she said over $200 less income in order to purchase accommodation and food, and then has to turn around to landlords like yourself to plead, to say, "Could you reduce it because the big landlord has whacked me over the head with a 20%?" So you in turn come back and have to drop that. In other words, you have to suffer a reduction in your income. Would you say it started there, that really the cause of not paying rent is because of the lack of income and that's where the real problem is?

Ms Richardson: No, I wouldn't say that's where the problem is at all. I appreciate that this government had to address the costs in the welfare and the social assistance system, and I don't think that is causing the problems in the landlord and tenant world. I think, though, it has created a problem in that small-unit landlords have tried to accommodate tenants. They are trying to live in a market situation. I think the world of legal maximum rents -- in as much as it's nice to look on a piece of paper and say, "Jeez, my unit's worth $952.26," I can only collect $595. In the world of market conditions, this is what is happening.

I was taking her example and bringing it forth that many landlords have been confronted with these kinds of requests. Many small-unit landlords in communities that don't have a lot of non-profit housing are providing affordable, low-income housing. They are not governed by all of the regulations that the non-profit buildings have, so they don't have all of the bells and whistles that go along with these beautiful buildings that have been constructed throughout Ontario, but they are still trying to provide affordable housing.

Mr Marchese: Ms Richardson, you appear to me like a good landlord. We've had a few good landlords coming in front of this committee, and they tell us how they maintain their buildings on a regular basis. It doesn't appear to me that you would allow a deficiency to be permitted for too long a time. You would correct a problem whenever there's one that arises; is that not the case?

Ms Richardson: That's usually the case, yes.

Mr Marchese: You'd probably admit there are a lot of landlords who let things go for quite a long time. That causes a problem for tenants as well. Would you say that's probably fair to say?

Ms Richardson: That's a fair statement.

Mr Marchese: If there is a violation and tenants are affected by that, where they have to live with those problems, how would you deal with it? What would you think is reasonable to deal with a serious violation?

Ms Richardson: I think, as I said, if it's dealt with fairly and it's found that the deficiency was created by the landlord, then through the dispute resolution process the answer and the order should be that whatever this deficiency is be corrected. At the same time, however, if it is found that the deficiency was created because of lack of attendance to that item by the tenant, I think the same consequence should happen.

Mr Marchese: I understand that part as well. But if the landlord is in breach, if the landlord is the person who's been avoiding the repairs, not wanting to do the repairs -- it's going on and on; it's creating a lot of social and psychological problems for the tenants -- is the fine not something that you would find reasonable in order to get them to do the job? Or do you think we should just go through the court system and however long it takes is fair and whenever it gets settled, it gets settled?

Ms Richardson: I find the amount of the fine that you're speaking of in this proposed legislation exorbitant in the eyes of a small-unit landlord. Their profits by the end of the year would not even be anywhere close to the fine they may get. I think that if the landlord looks at it and says, as an example, "Jeez, if I don't fix up this leak in the roof, I could face a fine of $10,000," at the same time the tenant should know that, "Jeez, if I don't make sure I make the repairs and do the cleaning and do the things I should do, I'm going to be faced with that fine."

Mr Wettlaufer: Ms Richardson, I'd like to follow up something that Mr Marchese said, and that is that you appear to be a good landlord. Would you not say that this is indicative of most small landlords, that most of them are good?

Ms Richardson: I would say that's true. I think there's an element of small landlords who are confused by the legislation, and what may appear on the outside as someone who is trying to circumvent their obligations is simply someone who is trying to do everything they can to maintain both the property and the happiness of their tenants.

Mr Wettlaufer: One other question: The members of the opposition parties constantly refer to flipping properties. As you know, 80% of the buildings in Ontario which are rented out are small-unit buildings, lower than four units. You also made reference to the fact that 55% of tenants live in buildings of 10 units or less and 40% of tenants live in buildings of four units or less. How many of the owners of these small buildings would you say flip properties?

Ms Richardson: I'm also a real estate broker and I can tell you, in the last six or seven years, virtually none. In the smaller communities, the market values of those properties just aren't there. Most small-unit landlords are in this for the long term. These are investments they want to be proud of. I drive by my properties in my small community of Penetanguishene and if the grass is growing out of the side of the building, I need it cut out because I'm proud of this, because I'm a community member. I'm involved in my community, and most of these small-unit landlords are. They don't buy these buildings just to let them fall apart and let rats and mice and rodents and everything else infest them, because how can you be proud of your investment if you do that?

They also can't sell them, so the only thing you can do is maintain them, make sure you have as much full occupancy as possible, and to do that you have to make sure that your tenants are happy and that they are comfortable and that you attend to them.

The Chair: Thank you very much, Ms Richardson. We appreciate your interest and your input into our process.

Mr Curling: Just before we recess, could I table some questions to the committee, and you want me to read this, Mr Chairman.

(1) Can the government table for the committee its plans to assist low-income tenants to afford rental housing?

(2) What is the estimated dollar amount allocated within the Ministry of Municipal Affairs and Housing's budget for shelter allowance? Will that amount be greater than the $500 million that was cut last July from the shelter allowances paid to social assistance recipients?

(3) Can the government share with the committee its studies conducted that show exactly how much repair work is needed in Ontario's rental housing?

(4) Can the government tell us how high your projections show existing rents will have to increase to pay for the repairs?

I submit this to the committee, Mr Chairman.

The Chair: Thank you, Mr Curling. We'll now recess until 6.

The committee recessed from 1703 to 1802.

BLACK ACTION DEFENCE COMMITTEE

The Chair: Our first presenter this evening is Owen Leach from the Black Action Defence Committee. Good evening, sir. Welcome to our committee.

Mr Owen Leach: Mr Chair and members of the Legislature, a little background: The Black Action Defence Committee has been active in defending the interests of people of African origin and African descent against racism and other historical factors that affect our community. It also endeavours to advance and uplift our community in the attainment of its goals.

People of African heritage have been in Canada long before the dawn of its existence. Many have lived in various communities across this country for many generations, yet it's often felt that we have "just arrived on the last boat." It is, however, true that our numbers in Ontario have increased considerably from the 1950s onward, most of whom came from the Caribbean and the continent of Africa. We now estimate 350,000 of the Ontario population.

It therefore follows that shelter, one of the requirements of a civilized life, would be of great concern to us, especially in a climate such as Toronto's, whose temperature might range from -30_ to +30_ Celsius. It means that adequate housing becomes critical in the life of everyone if we are to live comfortably, enjoy good health and, in extreme circumstances, preserve our life. Just ponder on the severity of climate that claimed the lives of three street people in Toronto this winter.

Government should recognize housing as a right for its people. It is not just a commodity we can take or leave. The government should aim to provide secure, adequate, affordable housing. New Directions does not. Instead, it introduces a policy of privatization and insidious rent decontrol which will create insecurity, high rents and wider disparities in the standard of housing. Think in terms of luxury housing at one end and increasing slums at the other.

The African Canadian community has a high tenant ratio. Consequently, any housing policy that impacts negatively on tenants in general will also disproportionately affect our community.

Vacancy control gives absolutely no protection to new tenants. It opens the door to rent gouging and discrimination of many kinds. In a racist society anti-black discrimination in housing will increase, as the landlord will be able to pick and choose whom he or she wants according to his or her prejudices. It would be easy for a racist landlord to make a rent prohibitive to a tenant he or she does not like or even to gouge the prospective tenant with extortionate rents. There would be no way of checking out the landlord, as the rent registry would be non-existent.

Furthermore, this has happened against the background of a recession. Many tenants are today paying 50%, in some cases 70%, of their cheques in rent; not only those on welfare, but also the working poor. New Directions doesn't give much hope to these people. New Directions leads us in a very wrong direction, because as it decontrols rent, it grants supply market control to developers and landlords.

We demand that the privatization be reversed, and we believe that it would be racist to enact the changes in New Directions as they will impact negatively on the African Canadian community. They also create the conditions where racial discrimination in housing can increase.

We also demand that rent control be retained.

The landlord must also not be allowed to demolish rental property without municipal control; otherwise the supply of housing could be drastically reduced. Thank you.

Mr Marchese: Thank you, Mr Leach, for your presentation. A few questions, one around the whole issue of harassment. They are proposing to create a strong anti-harassment unit, because landlords, knowing that if the unit becomes vacant and they can increase the rent to whatever it is they think they can get, might harass people. Do you think that in the community you are aware of harassment is something that is still likely to go on in spite of the unit they would put into place, where the fines might be significant? Do you think that will have an effect on landlords with respect to harassment?

Mr Leach: Landlords are very powerful. They are in a situation very often where they can pit themselves against one tenant at a time, and invariably that tenant has a very difficult time. It takes a very strong tenant, a determined tenant, to really fight a landlord, and even when they do that they know they are jeopardizing their situation in housing. I saw it mentioned in relation also to rent increases. I don't know if you meant to implement it in regard to racial discrimination, but in any case, we see what happens in the Human Rights Commission, which has a big bureaucracy and lots of procedures, and yet lots of people are frustrated by these procedures that are set out. I can't imagine how such a thing would operate effectively. I guess a tenant will have to go through hell to bring a case against a landlord and win it.

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Mr Marchese: We've heard lots of cases as well around the Human Rights Commission -- at least I've seen many constituents who have come complaining about the process, how long it takes, the unevenness of the whole situation and the treatment they get -- but that's a whole other discussion.

A landlord can get now up to 5.8%, which includes 3% more if the landlord says, "These are the extraordinary capital repairs we need," so they potentially could get up to 5.8%. They're recommending that it be increased yet another percentage point, to 6.8%, including passing through on top of that any tax increases and hydro increases, which would bring it up to whatever level. In your experience, are people you know working, first of all, or getting any wages sufficient to cover for such costs?

Mr Leach: I don't know if landlords should be increasing any rents at all. I don't know why it's built into this whole thing because I know a lot of people who are working are paying 50% of what they're getting -- and more -- to rent. Wages aren't increasing; they're decreasing. There's a downward spiral of wages at this time. When you talk about increases and passing on costs not borne -- I think they use that term --

Mr Curling: No longer borne.

Mr Marchese: That's another matter.

Mr Leach: These are ripoffs. Why are you making it more costly for a tenant and giving a handout to the landlord in the process? I am in the taxi business and I know that people haven't got money. The taxi business is down in the dumps because people hardly have any money to go anywhere, right? Having rent increases should be out of the question.

Mr Tilson: Thank you, sir, for coming to us tonight and expressing your concerns. I'd like to talk a little about maintenance. Many tenants are coming and saying the landlords have ripped off the system, that they have received adequate rent over the years. With regard to the fact that the statistics that are coming out are that 10% of all rental stock needs substantial repair work, more than $10 billion in repairs is needed to rental buildings across Ontario, many tenants are saying that the landlords have ripped off the system, that they have received all kinds of money and that this shouldn't be; in fact, where's the money? That's the question.

Then, on the other side of the coin, we're having landlord groups and statistics, at least in the Ministry of Housing, show that 80% of all rental buildings are made up of four or fewer units. In other words, they're not all high-rise, big-building-type landlords; they're small landlords. There may be some in your organization for all I know. I don't know about that; maybe you can help me with that. They say: "That's not true. We don't have all kinds of money. We're good landlords. We've done this, we've done that, but we still need money to repair our buildings."

I've got paper all over the place here, but there are stats, I seem to recall, that 70% of buildings are older than 20 years. Someone can correct me, but a large amount of the housing stock is old buildings and they're falling apart -- concrete balconies and parking garages and all that sort of business. I understand many tenants don't have any money because salaries haven't gone up much. What can the province do? What can any government do, whether it be NDP, Liberal or Conservative, to solve this housing stock that's falling apart as we look at it?

Mr Leach: We went through a period of lots of speculation in this city with landlords making a lot of money, speculating and flipping properties. I've got to ask, where did that money go?

Mr Tilson: Yes, I know. That's one side of the coin. There are probably some people who did do some flipping, but not all landlords are bad. I defy anyone to say that because that's just not true. Nor are all tenants bad. We've got a problem. I guess the purpose of this -- this isn't legislation; this is a paper -- is that the government is genuinely looking for suggestions from the public, from organizations such as yours, to solve some of these very serious social problems.

I have another question for you, and again we're looking for advice, on the topic of harassment. Mr Marchese has referred to it as an enforcement unit, and you have indicated that the enforcement unit simply won't work. You have also indicated throughout your comments that there has been harassment; you have mentioned racial discrimination with respect to housing. My question to you is -- and this is seeking advice. I mean, you want the province of Ontario not to have discrimination. As a representative of the Black Action Defence Committee, if the enforcement unit that's being suggested by this paper -- and that's all it is -- won't work, what will work?

Mr Leach: What I'm saying is that I want rent controls to remain and be strengthened.

Mr Tilson: I know that. I'm talking about discrimination and harassment.

Mr Leach: I notice you were discussing the matter of tribunals. I think you also need to bring some ordinary people in on these tribunals. It sounds like you're going for people way at the top for these tribunals, and I think you need to bring grass-roots people on these tribunals who know what life at the grass roots is about.

Mr Curling: Thank you, Mr Leach, for your presentation. I think you brought about some light of things that have not really been thrown on the table, and I'm glad that you did so. Just a few minutes ago I was talking about that.

A couple of the things: It's almost like a deliberate attack on the most vulnerable in our society where this New Directions is going, taking away the rent registry, for instance, where you know where your rents are and all that and you can't be discriminated against. So those who are the most undesirable in our society according to some landlords -- you know, the immigrants, the blacks, the disabled, the male student, all of those we don't want in our building -- you can see that if there's no registry and there's no control, as they walk in, the price goes up. Then they would say, "Let's go to human rights." With that line that goes around the building four times, your case will be heard in about five years, but you want accommodation today.

So the first attack, I think, where this New Directions should go -- "What can you do?" he asks. I'm sure you say put back the rent registry where we know what the rents are.

Mr Leach: Yes.

Mr Curling: They will start circling around, "What can we do?" Stop doing what they're doing, to begin with, and then that's what they can do. But you know, "I want your help," they say. "We want your help." They are saying this rent control, what you have in place, is not perfect. People like yourself have come in here and told them that. Of course we need it to be strengthened. Then it's, "What can we do?" "Strengthen it," they say, "Protect the tenants," in that line.

Recession has hit most of those vulnerable people you have there, sir. You have said it so well. The fact is, they are the ones now who will be faced with this new direction. This direction is going to give power to the landlords. The landlords have said, "I'm so happy that you're on our side." Because this is the same minister -- who's not here, of course, but I'm sure he's listening right now and reading all our presentations -- who says that rent control must go. He said that one place, and then another time he said, "We will protect tenants."

Do you have any confidence at all that your presentation will make an impact on this committee, that they will change through some of the points that you made? What can they do? Do you feel confident, leaving here, that they will listen, we all will listen and make those changes?

Mr Leach: I can tell you, I come here because I feel that I am not going to sit back and see everything destroyed, but when I hear Al Leach say that he's too concerned if he gets elected the next round, I understand that he doesn't care what happens; he's going to do what he wants to do. So as a citizen, I come here to make my position public.

In terms of the attitude of the government, I feel that it isn't listening. So I'm speaking to everybody who wants to hear. That's my view of it. The government itself seems to me determined to do what it wants to do and pretend that it's listening when it isn't.

The Chair: Thank you, sir. We appreciate your input into our process and your being here with us tonight.

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CO-OPERATIVE HOUSING FEDERATION OF CANADA (ONTARIO REGION)

The Chair: Our next presenter is Bill Morris from the Co-operative Housing Federation of Canada. Good evening, gentlemen. Welcome to our committee. The floor is yours.

Mr Nick Sidor: Actually, I should probably begin by saying that I'm not Bill Morris. My name is Nick Sidor. I'm from Ottawa. I'm currently serving as the president of the Ontario council of the Co-operative Housing Federation of Canada. I want to add that this is a volunteer position. With me today is Dale Reagan, who is managing director of the Ontario region of the Co-operative Housing Federation of Canada. He is based here in Toronto.

The Co-operative Housing Federation of Canada (Ontario) represents more than 540 Ontario housing cooperatives, containing 115,000 people. As I'm sure you all know, housing co-ops are mixed-income communities that are owned in common and operated by their residents. Our Canadian cooperative housing movement has more than 25 years' experience in supplying affordable, cost-effective housing to low- and moderate-income Canadians.

I want to thank the committee for the opportunity to be here and to be heard tonight on this important initiative. I want to add that our perspective on this issue is an industry perspective. We are in the business of building and supplying affordable rental housing. Along with many others who are relying on evidence and sources of data and analysis to inform this committee, we believe that we are certain of four simple and basic truths. I'll make those four points and then perhaps say a couple of more words and then stop for questions.

First, as I'm sure you all know, affordable housing in Ontario is in short supply. All of us in this room agree that Ontario needs more rental housing. We should understand that both the supply of rental housing and its affordability have been worsened by policies pursued by the present government. These include thoughtlessly cancelling proven and effective non-profit and cooperative housing building programs and decreasing shelter allowances for nearly half a million Ontario renters. That was point one.

Point two: We also seem to agree that the plain and simple reason for the supply and affordability problems is that the for-profit sector is unable to build new rental housing because there's no profit in it. Our sector and most of the other parts of the housing industry have spent a long time looking at this and most of us have concluded that the plain and simple reason is that tenant incomes have not kept pace with the cost of building new rental units. Not only that; it's clear that the for-profit building market chases home ownership dollars, and there are obvious reasons for that as well. When the average tenant income is $35,000 and the average owner income is $60,000 a year, the economics of that are pretty unmistakable if you're in the business of selling housing.

It's an even more telling statistic that one third of tenant incomes in 1993 -- that's before the social assistance cut -- were below $20,000, so that tells you why the private market prefers to build for the ownership market.

It's important to recognize that there's no profit in it even with the long series of federal and provincial programs to help builders and developers, including tax and investment incentives: MURBs, ARP, CRSP, CORSP, ORCL, you name it. These programs stretch back to the middle 1970s and didn't solve affordability or supply problems.

It should be abundantly obvious to everyone that decontrolling rents will not help tenant incomes increase, nor could it possibly help to provide the dollars that are needed to overcome the huge and growing affordability gap that now exists. The costs of construction are simply too high. Our written brief, which you have, contains a summary of the evidence on this point, plenty of evidence from plenty of credible sources that the government appears to have ignored in developing its rent decontrol proposals. The fact of the matter is that housing is complicated and there are no simple solutions. That's point two.

Point three needs to be made as well, and that is that owning and operating existing rental stock in the for-profit sector is a business that already generates solid profits, as well as healthy capital appreciation when buildings are sold. The average annual rate of return in Ontario according to the Appraisal Institute of Canada is between 11% and 13%, depending on the type of building. That's the average annual rate of return over several years. Operating rental housing is a particularly solid economic proposition in the medium and longer term when the costs are amortized. In other words, in the private for-profit sector, the ones that operate in a businesslike manner are not suffering.

Point four is what rent decontrol will do, and we should all understand this: It will put windfall profits into the pockets of landlords who own Ontario's existing apartment buildings without any guarantee and without a shred of evidence that it will promote the development of a single new affordable housing unit.

If we are serious about encouraging new housing supply and making that new housing affordable, we need at least two policy instruments.

First, we need subsidies or loans that bridge the initial gap between the cost of construction and the ability of tenants to pay. I'd just point out that in the housing programs that were cut last year, those bridge subsidies were repayable. That's the first instrument.

The second policy instrument we need is income supports or shelter allowances for the one third of Ontario renters for whom market-based rents are out of reach. If these are administered by community-based non-profit housing providers, so much the better.

Last, we need a system of managing these policy instruments that does not rely on battalions of bureaucrats, the ones who are now in place in Ontario, nor the shelves full of rules and regulations that all of Ontario's housing providers, including cooperatives, now face. I'm sure no one here would believe that government officials can better manage housing than the people who own it, be they members of cooperatives, community-based non-profit groups or even for-profit landlords. There is evidence that Ontario's approach to managing its cooperative and non-profit programs has caused social housing costs to skyrocket, with a good-sized chunk of those costs landing at the feet of taxpayers.

Our sector submitted detailed cost-saving proposals to the Ministry of Housing more than two years ago. We resubmitted them nearly a year ago to this government. We hope members of this committee have an opportunity to look at them, and we would be pleased to provide you with copies.

In conclusion, we urge the members of this committee to reject the proposed changes and advise the government to re-examine its policy direction and turn its attention to the affordability challenge that is the real problem facing Ontario's landlords and tenants. Thank you.

Mr Kells: I recall these figures -- I think I recall them correctly -- over the last couple of years, and I have had a number of debates with your Bill Morris on this subject. If I recall correctly -- and as I said, I think I am correct -- the average subsidy per co-op unit was over $900 and the annual subsidy was just bordering on $1 billion a year. That $1 billion a year was based on 35-year mortgages. So the 115,000 people -- and of course we're not talking units, we're talking people -- are costing the taxpayers' purse $1 billion annually. If we kept doing that, we would never resolve the tenant problem but we certainly would be well on the way to more than bankrupting Ontario. As long as that debate continued, we've never had a satisfactory answer.

Compare the 84,000 units that we have of Ontario Housing, and if I recall correctly, the annual cost deficit on that was in the $300-million to $400-million range. I always found it very difficult to compare what it cost us for our Ontario Housing units and what it was costing us for the co-op movement.

At the same time, your people always talked about this mythical crossover point where we started to make money or started to break even, and there never was any explanation about what happened with maintenance or indeed emergencies that would hit in maybe year 15 or year 20.

In all due respect to your movement -- I understand the altruistic reasons and I have no quarrel with that -- it just becomes hard for the public purse to pay this kind of money for the kind of units involved.

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Mr Sidor: If I take it that there was a question in there --

Mr Kells: Oh, yes, there was a question.

Mr Sidor: -- I'd like to address a couple of things and then perhaps turn it over to Dale to help out.

First of all, that $900 a month includes both the bridge subsidy that declines and is repayable and the rent-geared-to-income subsidy. So trying to project that out into the future as a cost that occurs every year is just plain wrong.

Mr Kells: Well, has it gone down yet?

Mr Sidor: For example, I live in a co-op that's nine years old, a federally sponsored co-op, and we get no more bridge subsidy of any kind. All we get are rent supplements for the households that live in there.

There is strong data from CMHC that suggest that cooperative housing is 17% lower to operate than non-profit housing and 71% more cost-effective than government-owned housing. I haven't directly compared between Ontario Housing and the co-ops in Ontario, but I can tell you that CMHC's evaluation said we were 71% more cost-effective on a per unit basis than government-owned housing.

Mr Dale Reagan: I don't want to move this into a debate about cooperative housing programs, so let me very quickly comment that the reason we're bringing the focus at all on the successful program solutions that were rejected is that clearly, as everyone I think recognizes, there has to be some way to address the need for affordable housing. We've demonstrated in our paper -- and I think others will have demonstrated to you -- that it's impossible in this marketplace for housing to be built without some kind of assistance. Our argument is that using a non-profit system with controls in place, and especially the type of system that we used under our programs where there is repayment, is the most efficient system for taxpayers.

Mr Sergio: Thank you very much for your presentation. I fully agree with the conclusions of your recommendations.

The present government has killed all the funding for co-op, non-profit, any type of assisted housing. The present government accuses the former government of killing rent control because of what they did during their last term in office. In the meantime, we have a four-year waiting list, many of those in dire straits for affordable accommodation. We have unemployment going up and income going down. We need, we've been told, about 6,000 affordable housing units per year to make some headway.

You have said three things: subsidies or loans, income support and a good system of management. We also had developers in here saying to us, "You have to eliminate rent control" -- first step -- "the GST and lower or eliminate taxes on rental units." I wonder -- you as a business person in the business community -- what else we have to do for developers to come up and build new affordable units. A double red carpet? What else do we have to give them?

Mr Sidor: I have mixed feelings about this, because in a sense the cooperative movement is developers. Of the money that goes into the cost of that housing, a large proportion of it is paid back by the residents in the cooperative. So we are also concerned with the high cost of housing and the high cost of constructing housing.

I've seen the developers' wish list. I guess my feeling is that those are subsidies from the taxpayers, plain and simple, just the way that affordable housing in other countries is funded through non-profit, community-based housing providers who get subsidies or through individual residents who get subsidies.

My list of things that would reduce the cost of housing in terms of its cost to build is not quite as long as the developers', but there are some measures that could be taken by the government, especially in the regulatory area, which would --

Mr Sergio: What would you recommend to us that we recommend to the government?

Mr Sidor: For one thing, it would be useful to streamline the regulatory process for getting approvals for housing. I am sure you've all heard that countless times. It's a nightmare out there not just for private for-profit developers but also for the non-profit sector.

I have observed that the Ministry of Housing is not always -- I'm trying to be diplomatic and not political, but the Ministry of Housing is not always the most effective organization at assisting in the development process when it comes to the social housing programs and that drives up costs as well. So those are a couple of things.

Just to return to your first comment, we should all be clear that we are facing a housing crisis and an affordable housing crisis. Other countries have solved that in part by accepting the non-profit cooperative and non-profit community-based sector as an integral fair partner in the overall housing market. That's what we believe Canada should do and what Ontario should do.

Mr Marchese: Thank you, Mr Sidor and Mr Reagan. The problem we've got is that this government doesn't believe in cooperative housing. You've known that for quite some time and they've said that publicly. It's not as if they hide it.

The problem is that many people don't understand what cooperative housing is all about. I suspect many in this room probably don't know either and many outside of this room think that cooperative housing is just like MTHA. They see no difference. So we've got a problem. You have a problem in terms of making it clear what you stand for. I raise that because if we don't make that clear to the public about how to understand one form of housing from the other, it's a serious problem.

They argue that two things have destroyed the housing situation: one is rent control and the other is the competition of the co-ops and non-profit sector with the private landlord. Do you believe that's what has caused the housing crisis we've got now?

Mr Sidor: I actually heard that one in a couple of places where I've popped up to talk to folks, that the competition from Ontario's social housing programs was driving the private developers out of business.

Mr Marchese: Yes.

Mr Sidor: I think it's important to get a statistic on the table on this, and that is the statistic that public, non-profit and cooperative housing taken all together has never amounted to more than 7% of the housing market in Canada and in Ontario.

It's my belief, as a business person with another hat on, that a business person who can't compete with a business that has 7% market share is doing something drastically wrong and shouldn't be crying the blues about competition. At that kind of rate, if there was profit in building affordable rental housing, there would be builders building it. The fact of the matter is that there aren't, there haven't been. Before rent control, there weren't. So I don't see how we can point the finger at rent control or the cooperative, non-profit sector as the engine that's killed private development of affordable housing.

Mr Marchese: Mr Kells obviously says and the other members say that it's a drain. Cooperative housing is a drain on the taxpayer -- this other mythical taxpayer, talking about myths -- but that's really what they argue. They say if we got rid of that and moved it to the private sector, everything would be all right. All we would have to do then is give shelter allowance. Now the problem is, we already give shelter allowance, $2 billion worth, but they're saying, "We would continue with that, but we will let the private sector do it because it's cheaper." Do you think that is the solution to some of the housing problems we have?

Mr Sidor: The standard that most industrialized countries use for need of shelter and need of assistance is when a household is paying more than 30% of its income in shelter costs. So if a household is paying more than 30% of its need in shelter cost, presumably they need some kind of assistance. That's the standard that Canada has always tried to attain. That's the standard that other industrialized countries have tried to shoot for.

If in fact rent decontrol sends up the cost of rental housing, and we're still trying to get that 30% affordability standard, then what we're talking about are shelter allowances that will make the piddling amount spent on cooperative and non-profit housing in the past five years look like pocket change.

We should be all clear on that. If we're intending to have affordable housing for low- and moderate-income people in this province and not use programs that directly deliver new units like the ones that were cancelled last year, then we're talking costs that make those programs look like pocket money. That's our view.

The Chair: Thank you, gentlemen. We appreciate your input into our discussion.

1840

ANNE PARKER

The Chair: Our next presenter is Anne Parker. Good evening, Ms Parker, we welcome you to our committee. The floor is yours.

Ms Anne Parker: I apologize for not being down early enough to get copies of my brief made, but they will be made afterwards and distributed to people if they would like to read it afterwards.

Good evening. My name is Anne Parker and I am submitting a brief because I am a concerned citizen of this province. From the time that I first heard about the government's intentions to interfere with the rights and protections that tenants have with regard to their homes, I have been horrified to think that supposedly intelligent and responsible elected individuals would deliberately put their own fellow citizens at risk.

To clarify this, it is necessary to point out the simple facts of nature, that we are all biological beings and that we must have four basic things to sustain life: air, water, food and shelter. To take away any of these will result in death. These facts are undisputable. We saw evidence of this last winter with people freezing to death on the streets of Toronto. The proposal of legislation making shelter more difficult to hold on to for some, and unattainable for others, is criminal and should be seen as the unacceptable act that it is.

At a time when economic uncertainty leads to continual cutbacks, downsizing and job loss and more and more people are finding themselves with less or no money for the necessities of life that have to come first, rent and food, this government is proposing to remove the protections and controls that have given assistance and security to tenants for many years.

Many people from all three political parties have worked over the past 25 years to create six pieces of tenant protection legislation because they recognized that a civilized society protects all its citizens. Why is their experience and wisdom being totally disregarded by this present government? Shouldn't we all be learning from our predecessors rather than ignoring them?

With regard to health concerns and crime, when hard times force all other businesses, as well as the retail housing market, to cut back their economic expectations, why is the rental housing market constantly expected to sustain annual increases despite the economic reality in which the tenants live?

If these proposed changes, which are anti-tenant and pro-landlord, come about, it will mean increased helplessness and hopelessness for many individuals in our society who are already stretched to their limits. The psychological distress this will cause will lead to increased health problems that will have more people turning to an already overburdened health care system. I presume the government would prefer to see this system being used less rather than more seeing as it's trying to cut costs.

Hopelessness temporarily alleviated by increased alcohol and drug consumption carries its own list of problems both for the individual, such as negative effects on mental and physical health, and for society as a whole, such as increased inefficiency and lost job time.

Despair, which is a natural result of the increased costs and increased concerns and problems, can be internalized by some leading to depression and withdrawal from society, but for others the frustration and anger will be externalized leading to increased violence and crime. Some of that will be necessary simply to survive. If a person can only manage to bring in enough money through odd jobs to cover the rent for a particular month, then theft is a logical alternative for acquiring the necessary food that they also need to exist.

With the government cutting a massive number of jobs and not creating new ones, what do they expect will happen to these unemployed people and how do they expect them to survive? If fair and legal opportunities are not available, what are people going to turn to? Isn't increased crime going to result in increased costs to the police force -- another area where the government would like to see cutbacks in expenditures. You cannot destroy people's chances to have a better life and not expect your actions to have serious consequences.

With regard to the area of disposable income, for those individuals who have money left over after paying for the necessities of rent and food, that disposable income is expected to go a very long way these days. Small businesses and corporations alike, as well as institutions such as hospitals and schools which are constantly asking for money to help with their situations, and charities, are all vying for a piece of that pie. The more money having to go for rent, the less there is available to distribute back into society among all these groups.

I have an example written out whereby if we have a building with one landlord and 10 tenants and at the moment each of those tenants has a spare $10 to spend, if they'd like to go to a movie, they can purchase 10 tickets, the landlord can purchase one, and we have 11 movie tickets being purchased, keeping that particular industry going for a short period of time. If there is a $10 rent increase, taking away the only spare $10 that they have and that going into the pocket of the landlord, we have no tickets being purchased by 10 tenants and still only one being purchased by the landlord, resulting in a total of one ticket being purchased, not doing a great deal to keep that industry sustained.

Concentrating more money in the hands of fewer individuals does not redistribute the wealth and therefore does not create and sustain jobs. Therefore, it is in the best interests of all these different groups -- small businesses, corporations, the different institutions and charities -- to fight to retain rent control if they want to keep more disposable income in the hands of the tenants.

Personally, I've found in the 11-unit building that I'm living in that I have seen over the past 10 years the number of people being able to afford cars drop from 10 to two at the present time, which obviously adversely affects all automotive-related industries, which will not be getting income from these people -- insurance, gasoline, Canadian Tire, repair shops etc. The significance, obviously, of disposable income is very important.

With regard to new buildings, it has been proposed that there is a need to build new rental buildings, presumably so that landlords can charge higher rents and make more money. The problem with that idea is that we are already at a maximum top end for rent for most people. The people who can afford that or a bit more are logically switching to buying rather than continuing to lose any more money. This is a very logical alternative. Why pay $1,000 in rent when nowadays, for a little bit more than $1,000 a month, you can own your own property? Why would the builders expect that people are going to gladly shell out $1,500 in rent in their new buildings when they could own for that price?

In the 1970s, huge government subsidies gave landlords the incentive to build rental housing. Is the government proposing at this point in time, when it's supposedly cash-strapped, to also offer huge subsidies to developers and landlords to encourage building?

Surely if buildings were properly managed and appropriate funds channelled back into maintenance along the continuum of time rather than any extra money being considered profit and going simply into the pockets of the landlords, the affordable rental housing market picture would look quite different and quite a bit better at the present time. I think we need to have a lot more honesty being used in order to find out what the real state of affairs is in this industry and why things are the way they are. To what extent has mismanagement and greed led to what we're seeing in the rental housing stock? If it is the fault of the greed of the landlords, then it certainly isn't the tenants who should be penalized.

If these two aspects -- mismanagement and greed -- have had a negative impact on the state of the rental housing market, then why is the government proposing to make it a lot easier for mismanagement, such as landlords letting their buildings run down to encourage tenants to leave, and greed -- allowing unlimited rent increases on vacant units -- to flourish? Their proposals are certainly advocating that these two things are a good idea and should be allowed to flourish, when in fact they are to a great extent part of the problem.

The government claim that tenants will have the protection of the anti-harassment unit is a hollow offering. They know that most tenants are unaware of what to do to fight back, are afraid to fight back or can't afford to fight back. To make sure that little or no help is available to tenants, the government has already cut funding to the very organizations designed to help the vulnerable with these concerns. It's destroying some and severely crippling others.

The idea of unchecked prejudices, which is a serious concern: If landlords are allowed to charge whatever they want for incoming people, any particular bias that a landlord has against any particular group, be it for race, sex, sexual orientation, whatever reason, it will be much easier for them to simply present an astronomical figure to these individuals, which they know they can't afford, to keep them out, making it look like simply that's the cost of the apartment that they want rather than it's because they deem these individuals undesirable. So racism and all the "isms" will certainly flourish.

1850

I thought we had been working hard to develop a code of human rights. Why is this now being ignored and why are we devolving? We live together, all of us as a society, which is a body of people who are interdependent on one another. If we don't work together, acknowledging that there must be basic human rights, with biological necessities coming first -- because if we're not alive, the rest of the preferences or the rest of the luxuries coming afterwards aren't really of much use to us, so our biological necessities have to come first.

If we don't recognize that there is a need to have those for all the citizens, then parts of the body, the unit of society, will cease to function in a healthy manner and eventually, just as if part of our own individual bodies is -- I don't want to use the word "infected," because that's putting a very negative stereotype on tenants, as if there is something wrong with them. They are simply disadvantaged for a lot of different reasons. If they need assistance, just as if we have an injured arm or an injured leg, if we tend to ignore it, it is eventually going to catch up to us and it will affect the workings of the whole body. So to think that there's a large part of our society, three and a half million plus tenants, and that we can disregard what is best for them is definitely going to affect everyone. If we don't work together, then we're working against each other, and that is to the detriment of all of us.

The Chair: Thank you. We have a little under three minutes per caucus left for questions, beginning with the Liberals.

Mr Curling: I enjoyed your presentation. We've been listening here for a couple of days, and you have been consistent in what some of the other tenants have brought forward.

Let me read something from the minister's doublespeak here. In his statement he said that a vacant apartment is locked into a rent which was being paid by a tenant who is no longer living there. The impression here is that the tenant is gone, who had signed a lease anyhow. This tenant had signed a lease, had paid rent and over the years had gotten their increase through the guidelines, and he said he wants to discontinue that. He wants to know that if a tenant is gone, a landlord has a right to raise those rents. One would get the impression that this is wrong and he's going to change that to give the landlord a better opportunity.

Is the apartment really locked in a rent after the tenant has gone or is it that there is rent control that has given increases over the years -- the last time was 2.8% -- and he has a right? Do you see that commonly outside here, that this apartment is locked in a rent that is paid by tenants? Do you see that?

Ms Parker: I think there's a greater picture where we're all locked into an economic reality that is affecting all of us. Times are tough; they're getting tougher. Money is getting shorter for everyone, and while ideally we would all like to think that unlimited resources and unlimited wealth would be nice for all of us, we're all affected by the situation. Tenants have limited resources, and even though a landlord would like to be able to raise rents astronomically, where does he assume the money is going to come from?

Most people who are working and who have jobs have had wage freezes, others have been cut back to part-time, others have lost their jobs altogether and there is not an unlimited resource for the tenant. So I'm not quite sure where the landlord thinks that unlimited money is going to come from. On the horizon, it doesn't look as though there's going to be a lot of jobs created, as if affluence is just around the corner and therefore we all want to get on the train and cash in on it as soon as we can.

Mr Marchese: Ms Parker, I really have enjoyed the commonsense expressions that you have stated here today. It's the kind of humanity that I think we need in society. It's the kind of humanity that red Tories used to bring to politics, but that soul has disappeared, unfortunately, from everything I see on the other side.

One of the arguments the Conservative members make in defence of the landlord, as opposed to the community interests, is that the rental stock is in bad shape and we're going to need approximately $10 billion, we are told, to do the repairs. One of the members says, usually and frequently, "Tenants are saying the landlords are ripping off the system." Not everybody's saying that necessarily. They're saying some landlords, the bad ones, are not putting money back into the buildings. We've built into the rents a component that would permit repairs to happen. In the 2.8% there's capital money that should be spent, and if there are additional repairs, there's an additional 3% they can apply for. Some of us argue that should be enough, and if they're using that, those buildings should be in good repair. My question to them as well is, what's happening? I think you had the same type of question that you were raising as well.

Ms Parker: I'm wondering at what point the buildings are paid off, because certainly they must reach a point when they are paid, just as with a homeowner's house. Usually after 25 years, the homeowner's house is paid off. Certainly if these are competent and capable and honest businessmen, then the large buildings would also be paid off, at which point all the income is then available for maintenance as well as profit. Also along the line, though, I'm sure there must have been money that was available that could have been put back into maintenance, if they didn't want to put it into their pockets.

All other businesses have to put the business first as they're going along rather than saying, "There's all this money coming in; I'm going to take as much as I want." Anyone can do that, but the business is going to suffer. I don't see why landlords don't expect that the rental units will be suffering if they are focusing on themselves.

Also, with the original government subsidies of massive amounts of money that were given to developers back in the 1970s, they only had a very small portion to pay, whereas when people are paying for their houses, they have to pay for the whole thing and manage to get it paid off in 25 years. If you're only paying for a quarter of your development costs, it certainly shouldn't be taking you that long to get your building paid off and to have money available for maintenance and upkeep.

Mr Maves: Thank you, Ms Parker, for your presentation. You started off fairly aggressively attacking our government and I'd like to start off with a little bit of a retort. You spoke of two things, a bad economy and the government protecting its citizens. I think our retort to that would simply be that a government protecting its citizens doesn't necessarily mean that we have to provide every aspect of life from cradle to grave. I think we have learned from our predecessors that trying to be all things to all people drives up taxes as well as debt. This destroys economies and causes the loss of jobs and the increased demand for yet more and more publicly provided services.

We've been in this downward spiral in Ontario for seven years now and as a duly elected government we're trying to reverse it. I think the July job stats of 30,000 new jobs in Ontario say that we might be on the right track. To us, we need to put in place an economic climate which is conducive to investment and therefore job creation, which will increase those incomes which you say are low and make it hard to afford rents.

Mr Marchese: Everything's okay.

Mr Maves: We have two different philosophies. We have a different philosophy from them, and I think it's only fair that I have an opportunity to enunciate ours.

One of the things you did mention was, and we have a continuing debate about this, landlord greed versus some landlords don't make enough to cover repairs and maintenance. You made an accusation that landlords had been quite greedy and had been making all these increases over the years and asked what they had done with the money; they'd been banking it. I wonder how many landlords' books you've looked at and how many landlords you have discussed this with.

Ms Parker: Not a lot personally, though I do have enough intelligence and awareness from the length of time that I've been alive to be aware of human nature and what goes on. Actually, I do know people personally in the building trade who have been involved with landlords and have told me of the stories of what does go on: the penny pinching, the counting of the toilet rolls in the common areas. The landlords are the multimillionaires, yet they penny-pinch.

1900

This is not too much of a stretch of the imagination to realize that there is definitely going to be a percentage of individuals who do carry on like that. I guess a lot of other people are aware of that, which is why the protection legislation was brought in in the first place. Because unfortunately, I guess selfishness and greed is a fairly pervasive common human characteristic, and it's very easy for the powerful to survive. It's the more vulnerable who need help and who need protection, and they are a part of our society, unless you want --

Mr Maves: We've had several landlords --

The Chair: Thank you, Mr Maves. Thank you, Ms Parker, we appreciate your input into our process.

APPLECREEK CONSULTANTS LTD

The Chair: Our next presenter is Harold Sand, representing the Society of Rent Review Consultants. Good evening, Mr Sand; welcome to our committee. During your 20-minute presentation, any time you allow for questions would begin with the New Democrats. The floor is yours, sir.

Mr Harold Sand: First of all, I'd like to make one clarification. I am here tonight on behalf of my consulting firm, Applecreek Consultants, and not really on behalf of the Society of Rent Review Consultants of Southern Ontario. They are a board of which I am a member and I think in the matters that were asked of me I erroneously mentioned them as one of the references, but I'm not here to speak on their behalf. So I'd just like to make clear that I am here speaking on my own consulting firm's behalf, Applecreek Consultants.

One of the most serious problems facing us today in housing is the deteriorating condition of a substantial portion of our rental housing stock. Much of the rental housing stock in buildings of 20 units or more built between 1950 and 1975 is in need of major repair and upgrading so that they can provide modern living accommodation at current standards. According to reports previously completed, the cost of this work could be approaching $10 billion.

Since 1975, when rent regulation was put in place, landlords have been reluctant to spend money on their buildings. Most landlords have only spent money in preserving structural integrity, and even then, have been unable to complete even necessary work because of the lack of funds needed to do the work. These buildings could easily require between $10,000 and $20,000 per suite in repairs and upgrades, depending on the age of the building, quality of original structure and past capital programs.

A list of repairs would include, in the common areas, roof replacement, brick replacement, garage waterproofing and roof slat repairs, hallway carpet replacement, elevator overhauls, boiler replacement, hot water tank replacement, intercom replacement, drywalling of hallways, hallway light replacement, garage light replacement and installation of security monitoring systems.

Inside the units: new lighting in the kitchens and hallways, new toilets, new bathroom vanities, new closet doors and tracks, new windows and balcony doors -- the current are single-glazed -- caulking and proper sealing of windows and balcony doors, repair of plaster due to water penetration, replacement of kitchen cabinets, new fridges and new stoves.

Buildings with the lowest rents are probably buildings which were built before 1970 and have had little or none of the above work done to them since 1975, and thereby were unable to have an above-guideline rent increase approved. If even half of the above list of repairs and improvements are done to buildings built prior to 1970, you're looking at an expenditure of at least $10,000 per suite. According to the tables attached to New Directions for discussion, there are approximately 800,000 rental dwellings that are more than 20 years old, and of these 800,000 approximately 700,000 would be in the private sector. The amount of money in needed repairs is $10 billion, and dividing the $10 billion by the 700,000 private rental units results in an average of $15,000 per suite in necessary repairs.

The current legislation which provides for a 3% cap in above-guideline increases and the proposed cap of 4% would be a substantial impediment to having work done in the buildings most in need of repairs. It is probable that the buildings most in need of repairs are likely to be buildings that have not had any major renovations done during the last 15 years. They would also not have had any rent increases due to capital expenditures, and therefore, are likely in many instances to have lower rents than buildings that were renovated in the last 15 years. It's fairly safe to say that up until October 1990 most capital programs resulted in rent review orders granting rent increases. The current rent control regulations would grant a landlord a rent increase of approximately 10% to 12% of money spent on eligible capital. If one assumes an average rent per suite in the buildings most in need of capital expenditures to be $600 per month or less, the 4% cap would represent $24 per month, or $288 increase per year. In order to justify $288 in rent increases, a landlord needs to spend only $2,300. The justified rent increase resulting from a $20,000 expenditure would represent, over eight and a half years, a phase-in of 4% of the original base rent.

Since current rent regulations require landlords to spend the money and pay for the work before applying and rent increases only start to phase in the year following the first effective date of increase, a landlord would only start to receive enough rent to recover his or her costs after 10 years.

Since the landlord who has to borrow to do the above work has to start making payments from the date he pays for the work and not 10 years after completing it, it should be fairly obvious that the private lending industry would be unwilling to advance the funds needed to complete the repairs in a timely fashion.

Even if the lenders would advance funds as the increases started to take effect, secured by a building with such major deficiencies, landlords would have to come up with the funds for the first two years of the program, which is when rent increases start to cover the costs of borrowing the money for the following year's program.

If landlords undertake major renovations as rent increases provide the funding to pay for the work, the tenants will be forced to endure constant disruption of their enjoyment of their homes as these landlords will be forced to stretch capital programs over periods as long as 10 years.

Another problem that will face the landlords who cannot fund programs over a short period of time, such as one or two years, will be the provision in the act that permits tenants to suggest that some or all of the landlord's costs are due to neglect and the rent officers should therefore disallow them.

It's also possible that, as the time taken to do necessary repairs stretches out, tenants will be able to successfully apply for rent abatements or reductions for the landlord's failure to maintain his building up to the standards required. Lending institutions will be aware of the possibility that even after a landlord has been granted rent increases to cover the cost of borrowing funds, unless the repairs are completed and done quickly, tenants will be able to apply to reduce rents and would likely meet with some degree of success.

It's our opinion that a choice must be made in the drafting of the legislation between avoiding rent increases exceeding 4% above guideline and proper maintenance of a very substantial portion of our housing stock. It's our belief that there is great misconception about large numbers of 30% to 40% rent increases being granted for capital expenditures between 1980 and 1990.

During this time frame, I was one of the most active rent review consultants in southern Ontario. Although there was a large number of rent increases of 20% or more, these frequently contained many components other than capital. During most of that period, the guidelines were significantly higher. Landlords could get up to 5% for financial loss. Extraordinary costs in any category were permitted. As well, increases could be passed through for financing cost increases. During those 10 years, a landlord would have had to spend up to $12,000 per suite to receive a rent increase for capital of about $1,800 to $2,000 per annum, and very few landlords did or we would not be facing the $10 billion in necessary work.

It is total folly to expect landlords to complete the repairs required to bring buildings up to standards without either eliminating the 4% cap or raising it significantly so the capital programs can be completed in a reasonable time.

A simple example of how unworkable the current system is is the problem of having buildings meet the fire code retrofit. This cost is generally under $2,000 per suite. However, even though the buildings have had close to four years to have this work done, a very substantial number of buildings still do not have the work done for lack of funds or reluctance of landlords to go into debt to complete the work.

It's our opinion that the legislators face a clear choice between preventing rent increases greater than 4% above guideline for totally political motives, and thereby allowing a significant number of rental units to continue to provide ever-declining housing standards, or you can put forward amendments that will provide at least a 10% cap with unlimited phase-ins.

1910

The second choice will unfortunately cause some tenants to face unaffordable rent increases, but rents will still only rise to the market level. On the positive side, this will permit the preservation of most of our current housing stock, and the most positive aspect would be the creation of anywhere up to 50,000 man-years of work for at least the next four years, assuming that $40,000 worth of repair or renovation will create one man-year of work, without the expenditure of any tax money whatsoever. Further spinoff benefits to the government would be the collection of over three quarters of a billion dollars in additional sales tax on the $10 billion in renovations plus at least 50,000 workers finding gainful employment instead of unemployment.

The Chair: Thank you, sir. We've got about three minutes per caucus for questions, beginning with Mr Marchese.

Mr Marchese: Mr Sand, the present proposal says that they could charge up to 6.8% plus passing on hydro on top and taxes.

Mr Sand: Extraordinary increases in those costs.

Mr Marchese: Is it your sense that people in this depressed economy with wages very low and 1.2 million unemployed somehow could afford these costs?

Mr Sand: I'm not saying that every tenant who would face a rent increase could afford it, but they would be facing a choice of either having a rent increase or having no home at all because of the deterioration of the building.

Mr Marchese: Ms Parker, who just preceded you -- I think you may have been here for her presentation -- said very much what I said. In the past 20 years since the 1970s that you were talking about when buildings had been built, what have the developers and/or the landlords been doing with the money that --

Mr Sand: Trying to meet costs of hydro, taxes. Taxes per suite are over $2,000.

Mr Marchese: My sense of the questions I've asked two landlords -- in my question I've asked them, "How are you doing?" One of them was ticked off with the question.

Mr Sand: I would be too.

Mr Marchese: You would be too?

Mr Sand: I went bankrupt as a landlord.

Mr Marchese: He said the perception is that some people think you're making high profits, the landlords. I said: "Well, let's take `high' out because I don't know what that means. Are you profitable?" He didn't like that either. He said, "Yes, we're doing okay, more or less." I think if you're doing okay that somehow implies to me that there's money, and if there's money, there's money to pay the costs of hydro, taxes and all the other stuff and I think there's also money to do the repairs. My view is that some of the landlords haven't been putting the money back into the building. That's the problem.

Mr Sand: Sir, $20,000 is not an amount that can be accumulated from any level of profit earned by any landlord over the past years. Those buildings deteriorate far faster than profits would ever have provided income to cover them.

Mr Marchese: You know what I would love is a study from a 20-year period of each building, if you'd open up the books, to see where the money has gone; how much they've gotten every year -- it would be beautiful to see that -- how much money went back into repairs, if any, if we could see that. If you have such a study, please give it to us. I really would like to see it. I'd like to be proven wrong. If you've got it, please send it to me.

Mr Sand: That would have to come from every landlord. Unfortunately, I haven't got the books of every landlord available to me.

Mr Kells: I don't want to appear to be agreeing with my colleague across there, but I find --

Mr Sergio: That would be a first.

Mr Kells: It will be a first. I find your numbers somewhat suspect and inflated in the sense that you used the tenant numbers and you divided it into the costs.

With all due respect, a lot of this all happened because of the Liberal legislation. I was on the Rent Review Hearings Board and I understand perfectly. What happened is there were a lot of sales that went on at the end of the 1980s. They bought them at the high, quite willing to use the legislation of the day to get that capital repair in there, indeed even if they had the loss. You appeared before those boards many times.

Mr Sand: Many times.

Mr Kells: The only thing that happened that ruined all this is that the NDP won the election of 1990 and they turned the tables. Unfortunately, many, many landlords got caught in that squeeze. The landlords that had a building for 25 or 30 years -- this is where I somewhat agree with my colleague -- maybe if they had put something more back in, you wouldn't be facing these extreme situations today, and I don't think they're as extreme as you say.

Now, I don't know what you're going to do, but you're not going to, in my honest opinion, get this government to do what you asked. If we believed, with all due respect, that litany and that money as you worked it all through, then I don't know who in the world could pay the money that you're talking in terms of repairing the buildings and I don't know why we should.

Mr Sand: Mr Kells, just to answer the question, first, I'm not saying every building is in the condition that would require --

Mr Kells: I used the big numbers.

Mr Sand: There are big numbers, Mr Kells. A large numbers of buildings that were built after 1970 are in reasonable shape. A large number of medium to smaller buildings that were built in the 1950s and 1960s are not, and there is a substantial number of rental units contained in those buildings. We're not talking of the 250 --

Mr Kells: There was a lot of profit taken out of those buildings over that period of time.

Mr Sand: In many instances, sir, when they're resold, if you suggest that taking out a profit is against this government's policy, then you are suggesting that --

Mr Kells: Do not put words in my mouth. What I said was that --

Mr Curling: You've noticed it, Mr Kells. I like that.

Mr Marchese: I'd like to know what you said. Could you repeat that?

Mr Kells: I said that if you make a considerable profit over a long period of time, you've got to put some back in like I put some back in my house.

Mr Sand: Mr Kells, the new landlord is facing the repair bill.

Mr Kells: The new landlord.

Mr Sand: That's correct. The gentleman who bought the building.

Mr Kells: He knew about the building when he bought it.

The Chair: Mr Kells, excuse me. Mr Curling.

Mr Curling: It's not my time but I like what you're saying. Mr Sand, you've been around a long time.

Mr Sand: Yes, I have.

Mr Curling: You were around when the guidelines were being drafted. That guidelines take provision for any kind of inflation, any kind of cost increase in hydro, all that. The landlords were protected from that kind of cost. So when they want another cap now at 4% more, I want you to answer me, what did they do with that money? You said they were trying their best to keep up with costs. Isn't that 2.8% of the guideline which was given to keep up with costs?

Mr Sand: Mr Curling, as you well know, the guidelines vary, depending on which government is in place, as previous history, current history or future history. When the costs that landlords were suffering -- the tables show the CPI index as being substantially higher than the guidelines -- the guidelines were not keeping up. The guidelines were falling so far behind that landlords' actual dollar nets were diminishing annually at a time when inflation was rampant. In other words, the real profit was gone. There was no profit at all.

Mr Curling: Mr Sand, it is the landlords and tenants who created that guideline. They sat down together.

Mr Sand: Sir, that guideline came in after the landlords got killed.

Mr Curling: When the CPI came out it was calculated according to the guideline. The question you never answer is that when they were getting those, why did they not put something back into the building?

Mr Sand: Simply because the guideline only provided for cost covers.

Mr Curling: In the meantime it's your investment, and the guideline also made provision for a return on your investment. When a new landlord comes into play in the last two, three years or five years and says there is $10 million worth of work to be done, what happened to the 10 and 15 years they were putting back in? You want it all in the five years and say, "We're not going to repair it at all, but the money we had and we got, the other landlords, and the government was trying to protect that -- I wonder what they got -- went somewhere else." I think we want to know where that money went.

Mr Sand: Mr Curling, there are numerous landlords I represented who came before rent review tribunals with money spent -- $5,000 to $10,000 -- and today they need to do work again similar in quantity. There has been no provision in the current or past legislation that would have allowed that landlord to accumulate $10,000. There was no provision for a reserve fund. It was taken out at the beginning of the rent review legislation. I was there when the discussion took place on the floor and there was a proposal to create a fund similar to a condominium structure, where a landlord was forced to or voluntarily could create a fund for reserves to put up roofs. That was deliberately eliminated from the legislation. A landlord could break even. The purpose of rent review was to allow landlords rent increases as they spent the money. Now you want to say, "Don't spend the money," or "You already have the money in your pocket." You can't have it both ways.

The Chair: Thank you very much, Mr Sand. We appreciate your input into our process and your attendance with us this evening.

1920

PARKDALE COMMUNITY LEGAL SERVICES

The Chair: Our next presenters represent the Parkdale Community Legal Services: Lilith Finkler and Ken Woroner.

Ms Lilith Finkler: I have to say if I'd realized it was quite so entertaining I would have come a lot earlier.

Mr Sergio: You can come back tomorrow.

Ms Finkler: I might do that.

I wish to begin this deputation by thanking the committee for the opportunity to speak before you here today. I'm Lilith Finkler, a community legal worker at Parkdale Community Legal Services. We are a community legal aid clinic funded by the Ontario legal aid plan and York University. We provide legal services to low-income members of the Parkdale community, which is located in the southwestern corner of the city of Toronto. We also play an active role in community organization, education and law reform. We represent hundreds of tenants each year, many of whom are residents of care home facilities.

I am a psychiatric survivor and a former tenant at a non-profit housing project. I have not lived in a boarding-home but I have spent the past four years advocating on behalf of and in conjunction with many tenants who do. I will speak on the proposals related to care homes as raised in New Directions. Ken Woroner, a staff lawyer at our office, will then speak with regard to some of the other issues.

Bill 120, which extends coverage of the LTA to care facilities and non-profit housing, was a positive legislative change. It provides psychiatric survivors in boarding-homes with the same procedural protections that other tenants have enjoyed for years. Many psychiatric survivors welcome this change. We believe that a tenant with a disability is a tenant.

We do not support the notion of so-called fast-track evictions. Persons with a psychiatric history are no more violent than any other group in society, therefore any attempt to institute such statutory provisions would have a differential negative impact on an already vulnerable and stigmatized group. The Criminal Code and the Mental Health Act contain provisions for dealing with situations where someone is a danger to themselves or someone else. We are not necessarily stating here that we support the use of the aforementioned provisions uncritically. None the less, such laws already exist and new ones need not be created.

We have serious concerns about the notion of voluntary bed checks. First, in boarding-homes tenants typically live two or three to a room. When the landlord checks on one tenant, they automatically interfere with the right to privacy of others in the room. Second, operators already monitor the personal lives of their tenants in extremely intrusive ways. For example, one tenant was sexually engaged when the operator conducted a bed check. The operator, whose religious beliefs did not include premarital sex, allegedly separated the couple and threw the woman out.

In addition, nightly bed checks present an opportunity for a predatory operator to sexually assault vulnerable women. Psychotropic and neuroleptic drugs administered in the evening often inhibit the tenant's cognitive and physical abilities. Most psychiatric survivors would experience difficulty protecting themselves in this situation.

While legislators may argue that these bed checks would be voluntary in nature, one must acknowledge that when there is such a tremendous power differential, the penalty for refusing may well be eviction. That is precisely why tenants with psychiatric histories require the same protections that other tenants enjoy. We are not special. We are oppressed. A system that values people with disabilities would accord us the same rights and privileges that non-disabled people already have.

It is inadvisable, in our view, to allow care operators to transfer residents to alternative facilities. Boarding-home operators transfer tenants to psychiatric facilities. The motivation for doing so may not be strictly out of concern for the tenant, however. The operator may be experiencing financial problems. In that situation, landlords might first ensure that they receive their rent. Then they send the tenants to the hospital so they can save money on food and utilities for the rest of the month. One operator, in anger at the welfare cuts last year, apparently sent her tenant to Queen Street to take his shower. She told him, "Let the government pay for the water."

According to your current document, an anti-harassment unit will be established to protect tenants from unscrupulous landlords. I would like to know how boarding-home tenants will be expected to contact such a unit. Most, but not all, boarding-homes provide a telephone for use by their tenants. Typically it is located in a public place, in listening range of staff and the operator. How can a tenant complain when the very subject of their concern is watching?

Furthermore, many people with psychiatric histories also have physical disabilities. There is very little accessible housing for wheelchair users, and these individuals are often trapped in rooms, unable to leave the premises without assistance. One tenant, a wheelchair user with MS, for example, had angered the operator of her home by complaining to a visiting reporter about the physical condition of the building. The operator withheld food and drink from her for three days. An acquaintance of the woman in question came by and discovered what was going on. How are individuals such as this woman supposed to lodge a complaint with the anti-harassment unit? Are members of this unit prepared to inspect personally each boarding-home on a regular basis? How else can serious abuses be prevented?

It is necessary to place the lives of boarding-home tenants in a social context. The largest majority in Parkdale are survivors of the psychiatric system. They have been deinstitutionalized without the necessary supports, abandoned by the very system responsible for their care.

When we speak of laws, we refer to the paper it is written on rather than the people it affects. If laws are not enforceable and impact upon us only negatively, of what benefit are laws to us? The attitudes behind the laws must also change.

Instead of allocating funds to bureaucrats to rewrite legislation, give the money to survivors. Increase the amount of family benefits rather than devising creative ways to cut people off. Do not empty out the psychiatric hospitals in this province until sufficient housing is available in our communities. Do not abandon us to cockroach-infested, lice-ridden structures. Stop the forced drugging which chemically lobotomizes us and renders us incapable of fighting back. Build more affordable housing so that we have a choice in where we live.

Many of us do not want to be in shared accommodation. Workers who are paid to help us live alone or with family and friends. They live in independent, self-contained units. Why is housing for us so often shared accommodation? We want and need privacy too. Why are we expected to develop social skills in such an environment? If it's so therapeutic, why do workers not inhabit such accommodation themselves?

Take the money used to pay social workers who control our lives and use it to provide community economic development initiatives. This will allow us some financial independence. Our psychological wellbeing, like that of others, is tied to economic stability.

If those of you around the table truly wish to assist us in our journey, then do not withdraw one of the few legal protections we now enjoy. Bill 120 altered landlord and tenant legislation in significant and valuable ways. These changes should remain in effect. Thank you.

Mr Ken Woroner: My name is Ken Woroner. I'm a staff lawyer at Parkdale Community Legal Services. Parkdale Community Legal Services played an active role in the brief which was submitted to you by the Tenant Advocacy Group on Monday this week. We fully endorse that brief, as well as the brief presented by Legal Clinics' Housing Issues Committee and the brief to be presented by the Coalition to Save Tenants' Rights, an organization to which we belong. Rather than repeat the points made in those briefs, I propose instead to spend a few minutes on some selected topics.

First I thank the members of the committee for participating in this process. I would ask that when you consider the submissions being presented, you try as much as possible to set aside any preconceived notions and affiliations you may have, including your parties', so that your findings are guided by the content of the submissions.

New Directions refers to the need for laws governing landlord-and-tenant relationships to strike a balance. We would, of course, agree with the need for a system that treats tenants and landlords fairly. However, we believe it is very important to recognize that fair treatment of tenants and landlords cannot exist without recognition that in the vast majority of cases tenants and landlords do not come to their relationship as equals. Tenants have fewer resources than landlords, have language problems in many cases and have less access to information and representation. No law can possibly be fair if it does not recognize this fundamental reality.

When I try to understand the motivation behind the proposal to remove rent control from vacant units I can think of only two possible rationales. One is that by removing rent control, the government is enabling landlords to increase their incomes. Considering that landlords only constitute a small proportion of the population and are already doing relatively well for themselves, I can't imagine that this reason could possibly be the actual justification for the proposed change.

A second explanation, the one given by the government, is that the removal of rent controls will lead to the construction of affordable new housing. Yet I have heard builders and developers admit in the media and before this committee that these changes will not by themselves lead to new construction. They list a litany of obstacles that are responsible for the lack of new construction, with many issues being beyond the control or jurisdiction of this government.

At best, then, the notion of removing rent controls for the sake of encouraging new construction is a gamble. I submit that the government should not gamble with the lives of millions of tenants. These changes will surely result in widespread harassment, dislocation and increased rents. Builders are saying they cannot or will not build new units at existing rents. The only logical conclusion is that rents will rise. Why should tenants be the ones to pay for new buildings which will then be owned by landlords?

1930

I have heard much talk about the value of the market as a means to achieve appropriate rents and encourage new construction. However, I urge you to consider that market forces make no provision whatsoever for any human element. The concept of individual human beings and societal values is entirely foreign to the market. That is one of the reasons why we as a society have chosen to create governments in order to protect us from the potential dangers of the market. I would submit that as our elected government representatives, you have an obligation to protect tenants, many of whom are vulnerable members of society, from unregulated rents.

On Monday of this week, a Mr Goldlist of Goldlist Development Corp told a story about how an unnamed politician had once told Mr Goldlist that tenants do not vote. I don't know whether there is any truth to that statement or not, but I predict that if vacancy decontrol is instituted, more of the 3.5 million tenants of this province will be voting in the next election than ever before.

In closing, the changes proposed in New Directions touch on numerous pieces of legislation and, if implemented, will have a very substantial impact on the lives of millions of people in Ontario. Bearing this in mind, my impression is -- I believe you've heard this from other presenters as well -- that New Directions and the related process are based on insufficient information, consultation and analysis. I would suggest, if the government is intent on making changes in this area, that at a minimum, introduction of legislation be delayed so that an independent body can be established in order to adequately examine all the potential impact of these or any other suggested changes.

This concludes my prepared statement, but there are one or two other points I'd like to make based on some of what I've heard before. One thing in particular is with regard to a question from Mr Maves to Anne Parker, who spoke two persons before me. You asked Ms Parker how many landlords' books she had checked. I guess the question was in respect to some kind of evidence that landlords are actually doing as well as some of the tenants who have appeared before you have indicated. As I heard that, I had an answer of my own, which I now have the opportunity to give, which is something that I think you've heard before. That is simply to quote the Globe and Mail, which says 10% over the past 10 years, which is better than any other sector, according to the Globe and Mail. So I think there is some evidence in terms of how landlords have been doing. I think that statistic also goes to a certain extent to the question of where money should come from in terms of repairs.

There's one other point I wanted to make, and that's in respect of something that was said by Mr Kells in his comments to the last speaker regarding maintenance problems often stemming from sales of properties in the late 1980s, and that there were inflated prices at that time. My comment with regard to that is simply, why should tenants be the ones to pay for bad deals that were made by landlords before the bust in the real estate market? That's all we have to say.

The Chair: We've got a couple of minutes per caucus for questions, beginning with the government.

Mr Maves: I'll let my colleague, who has the statistics on the 10% -- the largest proportion of that 10% over the last 10 years was increased value between 1985 and 1990, the value of the properties. It wasn't an actual cash return, it was the increased property values, and that completely reversed itself in the 1990s. Mr Smith has the numbers. I don't know if he wants to give those.

Thank you both for your presentation. I was quite concerned about the beginning part of the conversation and the fear around the bed checks. I had never thought of it that way. The example that has always been given to us is that in some care homes there were people who had been quite ill and actually would want someone to check in on them. An example given was someone who had had a serious heart attack, was seriously ill, and would want the people at the care home to check in on them. That's what they meant by the voluntary agreement to have bed checks, and I had never contemplated that other people wanted it for any different reason. Do you believe there is a place for this type of thing?

Ms Finkler: I think we have to understand that different people with different disabilities may have different experiences. The experiences that I'm describing are those individuals who live in boarding-homes who are primarily people with a psychiatric history, and unfortunately, their experience of bed checks is that it's a form of licensed abuse. I have to tell you that it's been excruciatingly difficult for me, because I've heard from many different individuals the same story over and over again, and when I attempt to advocate on behalf of these individuals, they tell me to stop because they're terrified of being evicted.

Mr Sergio: I believe the area that you come from, that you are speaking of on behalf of the Parkdale area there, is one of the areas, or perhaps the highest area, in need of assistance, and that is an area that has in the last year or so seen the closure and the elimination of assistance to a number of agencies as no other in Metropolitan Toronto, perhaps even Ontario. We have heard from many tenants' groups and individuals as well as to the particular needs of tenants, but none as great as we know in the Parkdale area.

You both have alluded to a number of living conditions of tenants in your area there, and how do people deal with particular problems within the existing system? As you have mentioned, it's very difficult. Contemplating the proposed legislation, would that make it harder for tenants and groups to deal with?

Ms Finkler: Yes. For example, one of the things I do as part of my work is go to visit the boarding-homes. When we get together, I try to go out for coffee, because of course those individuals who are mobile are really afraid to talk in the house. So I go out for a walk to one of the restaurants and I say, "Okay, what's your problem?" and they'll say, for example, "The landlord comes into my apartment," or into their room, or the staff do. According to the personal care bylaw, people are supposed to have a key to their own little locker place, and so what happens then is that the staff come in at night, take the key from around their neck, go to the locker, take the money from their family benefits cheque and then put the key around their neck. An individual can actually see the person stealing their money and yet do nothing about it because of a physical limitation and because of the fear of confrontation with the operator.

Mr Sergio: That's because of the lack of privacy --

The Chair: Thank you, Mr Sergio.

Mr Marchese: In the few moments that I've got I just want to thank you both for a number of things that both of you respectively have said and done: you, Ms Finkler, for your ongoing advocacy in the whole field of concerns around people with disabilities. You've done that when we were discussing the Advocacy Act and the Advocacy Commission, which we lost terribly. They have repealed everything that we have done. But your efforts obviously were not unnoticed by many of us, and you continue to do this under this section which is titled "Rights of Operators."

Under that section you were raising concerns about how that affects the rights of people who are vulnerable and people with disabilities. I think your concerns have been shared by many people who have come to this committee, and I think members on the opposite side have heard it -- I hope so.

Mr Woroner, you've raised two points that I just want to repeat, because I think they're important. Tenants and landlords do not come to their relationship as equals, some of us have said. Some of the landlords don't like the fact that we say that. It's almost as if we offend them when we say this. But it's true. Tenants do not come as equals to landlords, and you point out that they have less resources than landlords, have language problems, have less access to information and representation, and no law can possibly be fair if it does not recognize that reality. So it's important that you said that.

The other point is, "I urge you to consider that the market forces make no provision whatsoever for any human element," and that's a fact. It leaves in its trail a whole long list of tragedies and victims along the way. That's the market that they support, and it's important for people to remember that the market forgets victims.

Mr Woroner: I wanted to add one thing in terms of the question from Mr Sergio, which is, how do people deal with current problems? From my experience representing tenants, most people just put up with their problems, to be honest, in the Parkdale neighbourhood. That's usually because they have enough other problems and because they also, unfortunately, have very little faith in the ability of the current system to solve their problems.

I just want to add as a final remark that if the changes that are proposed are made, there will be all the less likelihood of people pursuing their rights, because they're going to be that much more afraid of having to move and suddenly being faced with vacancy decontrol, meaning uncontrolled rents.

The Chair: Thank you very much, Ms Finkler and Mr Woroner. We appreciate your involvement in our process and your input.

1940

EAST YORK TENANTS ALLIANCE

The Chair: Our next presenter is Mary Jo Donovan, representing the East York Tenants Alliance. Good evening and welcome to our committee.

Ms Mary Jo Donovan: Good evening. My name is Mary Jo Donovan. I am the chair of East York Tenants Alliance.

Before I proceed with our presentation, I would like to acknowledge a number of others who have appeared this week whose presentations we endorse and whose opinions we share. In no particular order of merit they include Metro Tenants Legal Services, which provides a unique and absolutely essential service to the tenant population of Metro and has provided this committee with a cogent and articulate response worthy of your careful consideration; Lorraine Katryan, who certainly gave you much food for thought; United Tenants of Ontario; the Federation of Metro Tenants' Associations and the Tenant Advocacy Group, who all provided perceptive and informative briefs which should have persuaded even the most resistant right-wing hardliner; the Ontario Coalition of Senior Citizens' Organizations and others who have spoken so well on behalf of senior citizens, bringing their years of wisdom and insight to bear on this consultation; and Bob Levitt, whose oral presentation was lucid and enlightening and who has provided you with a written brief which is well worth a careful look. There were many others who certainly merit a mention here and with whom we heartily concur but it is not possible to name them all.

This is our response to the Conservative government's white paper, A Proposal to Gut Rent Control and Tenant Rights and Decimate the Available Stock of Affordable Housing. Perhaps you're surprised at the title used in this presentation. I know it's not the same as the title on the government proposal. I looked at the title and I said to myself, "This looks promising." Then I read the whole paper and I realized that something was very wrong. It occurred to me what must have happened. The very busy people in the Ministry of Housing must have been working on two papers at the same time and inadvertently mixed up the titles. I have undertaken to correct this oversight. Good old Janet and Ann and Carl and Scott and the others did not ask me to do this, but I'm a compassionate and generous person and I know what it's like to have a mistake remain in the record forever, so I've set the thing right and from now on we can all relax and call this paper what it really is.

So you want to gut rent control. Why don't you come right out and say so? If this is such a great idea, why are you trying to hide the facts behind a bunch of misleading verbiage? Why has John Parker stopped using the term "tenant protection" and is now calling it a rent review proposal? If this is such a great idea, why has Dave Johnson refused to meet with the 63% of his constituents who are tenants to explain to them just how great it is? Why did he sneak into his riding to hold a so-called town hall meeting in July, to which no tenants and very few others were invited, including many who supported and campaigned on his behalf in the last election? Is it possible that the reason for this is that he finds it difficult to face the tenants and stab them in the back at the same time?

At least John Parker had the courage to come to the East York Tenants Alliance rally on May 30 and face the people he claims to represent. There were about 300 tenants there of all political persuasions and they were unanimous in their rejection of this government's plans regarding tenant rights and rent control. Mr Parker appears to be a very pleasant and likeable person, but he had to stand there and take the flak for a Mike Harris initiative designed to reward a small special-interest group of landlords. It is worth noting here that the ones who yelled at him the loudest and were the most vehement in their denunciation were self-declared Conservatives.

The government members have hastened to assure a number of sceptical presenters that they have every intention of reading and evaluating these briefs and giving careful consideration to the opinions and suggestions of those who have come here and others who have made written submissions only. But your response to date at these hearings does not support that contention. There have been many instances of this, but we will mention only a few.

Philip Turk of Gallery Specialty Hardware was here to discuss fire safety retrofits of apartment doors. He was concerned about the implications of a recent communiqué from the Ontario fire marshal. He was concerned that the retrofit requirements for a fire rating of 20 minutes could be undermined and that many tenants could be left with a door which had only a seven-minute fire rating. The government members ignored the fire safety aspects of this presentation and instead wanted to know how much this was going to cost the landlord. When told that the total cost, installed, was $135, Mr Maves immediately launched into a calculation of how long it would take the landlord of a three-unit building to pay this off. Not only was it offensive to dwell on the cost of a door rather than the lives of the tenants which could possibly be in jeopardy, but Mr Maves also got his arithmetic wrong and arrived at an erroneous conclusion. These were his exact words, which I have recorded on videotape: "So if I had three apartment units at 500 bucks apiece with this 3% increase, that's 15 bucks a year, 45 bucks a year, it would take me about two and a half years to pay for that."

Of course, this is entirely incorrect. The correct figures are far different. A 3% increase on a rent of $500 is $15 per month and $180 per year. For the three units, the total increase is $540. This, however, is beside the point. Every guideline increase contains a bonus of 2% for the express purpose of covering the cost of minor capitals. The 2% that was collected the previous year is used to pay for the doors so the landlord already has the money in advance for this purpose, or at least a large portion of it. If he wants to bother, he can probably go to rent control and get the rest. In this instance, the doors would cost $405 and the 2% would provide $360 of that in advance of the purchase.

Another member remarked it would cost the landlord one month's rent on a unit to pay for the three doors. The fact is, it does not cost the landlord anything. It costs the tenants, who are obliged to pay the additional 2% increase year after year, even if the landlord does no minor capitals. The only time a landlord is obliged to account for the 2% is in the year that he makes an application for an increase above the guideline. Many landlords simply pocket the 2% and allow the building to deteriorate and then apply for an above-guideline increase based on capital expenditures which are in reality the costs of deferred maintenance.

In another instance, a government member challenged the benefit of a reserve fund, claiming that it would not be sufficient to replace a roof. I've used the same figures as in the case of the door above, and calculated that the 2% over 20 years would amount to $7,200. I made inquiries regarding the costs of a new roof for a three-unit building, which is basically a two-storey house. Depending on how extensive the repair or replacement, it would cost a minimum of $1,500 and a maximum of $3,500. This is less than half of the funds available if they have been used for nothing else in the meantime.

The point is that the landlord would have the money to do the work if he used it for the purpose for which it was collected. Bear in mind that this is only the 2% which he has collected from the tenants each year. If he would do as other businesses do and put a portion of his profit back into the building via a reserve fund, he would have ample money to maintain and upgrade his property. Instead he imposes an unfair financial burden on the tenants via an increase above the guideline.

The way the government members are tossing around facts and figures at these hearings is typical of the kind of inaccurate and misleading information that continues to be disseminated by government members in the media and through direct mail householders and newsletters. Following Peter Tabuns's presentation, a government member of this committee leapt at the opportunity to comment on the fact that Toronto was using taxpayers' money to pay for the campaign to keep rent control and save tenants' rights. But this government is spending far more of the same taxpayers' money to destroy those rights and gut rent control. In striking contrast to Andrade and FRPO, Real Star Management presented persuasive arguments for keeping the present system and demonstrated the benefits of the rent registry and legal maximum.

Andrade had the nerve to say that landlords don't repay their buildings because rent control has a negative impact on profits to the point of financial hardship, which makes maintenance and repair impossible. Andrade provided absolutely no proof of this.

We, on the other hand, have provided proof of the exact opposite in the attachment to this deputation, prepared by East York Tenants Alliance board member and ward 4 representative Shelley Davis, using documented information. Her submission shows clearly that despite an estimated profit of over $1 million, this landlord had to be forced via property standards work orders to do the necessary repairs on his building.

Shelley has also prepared detailed comment on behalf of East York Tenants Alliance on the issue of the proposed repeal of the Rental Housing Protection Act. It is our position that vacancy decontrol and the loss of the Rental Housing Protection Act will effectively gut rent control and deprive us of most of the rights which we now have.

Mike Harris has made some reckless promises to the landlords. He is wedded to a badly flawed philosophy and he is determined to forge ahead and do exactly as he pleases, regardless of who gets hurt and how much damage is done to this province. You've been sent here to man the front line and endlessly repeat the assigned mantra, regardless of what you may think or believe privately. Harris is calling the shots and you have to fall in line or you're right out of luck. You may wish to consider this in the midst of your deliberations: In three and a half years, we will call the shots and Mike Harris will be gone and you will be gone with him unless you assert your own integrity and protect your own interests now.

This is supposed to be a discussion paper, but despite your assurances to the contrary, we are under no illusions as to the effect of our participation here. We have been asked to come here and calmly discuss the impending disaster that will effectively destroy all the rights and security upon which we rely for our peace of mind and wellbeing. This is like being asked to enter into an in-depth, scientific discussion of the cause and consequence of tornados while watching one heading straight for your house.

1950

Most presenters have come here and thanked this committee for the opportunity to speak. While I value my right to be heard, I have no intention of thanking Mike Harris for imposing upon me this unwarranted hardship and spoiling what should have been a period of rest and recreation.

This whole thing is a crock and I personally resent it. I resent having my summer taken up with meetings and briefs and pointless discussions. Everyone involved has a right to resent it, including you people. We have all been obliged to participate in a farce so that Harris can play his political games and give to the landlords through the back door what he dare not give them through the front door. He has tried to stack the deck and protect the Metro members from a direct confrontation with their constituents, but I want to point out to you that even small-town and rural members have about 25% of tenant constituents and that is more than enough to determine the outcome of an election.

It did not escape my notice that as soon as the government members had access to Bob Levitt's comment on the composition of the committee, they quickly hustled Isabel Bassett into her place in order to try to undermine the point being made in his presentation.

In closing, and notwithstanding any previous comments, I would like to thank Mr Carroll, the Chair of this committee, for starting on time and keeping these hearings on schedule and for his very capable and good-humoured performance.

The Chair: Thank you very much for your comments and your presentation. That probably earns you an extra 10 minutes. We've got about three minutes per caucus for questions of Ms Donovan, beginning with the Liberals. Mr Curling.

Mr Curling: Thank you, Mr Chairman. He still owes me a minute, but it's okay. He said he gave it to me before. Yes, he has been conducting the proceedings very well.

I want to thank you for the presentation. It actually cut through all the grease and came right to the point and this is what we want to hear. We want to hear that people who come and make these presentations -- I know that you also feel like many of us, that if this is a consultation, this is a discussion, you wonder, will the government listen or will this committee listen to some of the suggestions themselves?

Is there anything in your presentation that you feel this committee will listen to and change, or will anything that you say today make a difference so that they could put forward -- they will, of course -- they intend to gut rent control. Do you think that anything you said at all would have given it some hope?

Ms Donovan: Those of them who are politically astute will have paid attention.

Mr Curling: I am so happy that you have some hope, because we're here pushing very hard. That's some hope and I know we have some great compassion of my colleagues here. I have lived with them for almost a year now and some of them do have that kind of compassion. I want, of course, as you come forward and say directly that they understand that gutting rent control is somehow taken away, just complete that protection of those tenants.

As Mr Leach said in his speech, "We need to protect the tenant as long as the tenant lives in the apartment," and he goes on, "but when the tenant moves out and the apartment is vacant, it's vacant." So the consumer out there, coming back to any kind of apartment -- no, hope that God helps them coming back into another apartment that is affordable. I fear that. I think there will be no apartment affordable for them to come back to. They'll be on the street and somehow the landlords, I think, wouldn't care because they want their profits. I just hope that we can appeal to the members here and I had hoped that some more Metro members are here. I know Ms Bassett came and Mr Kells came, they keep rotating in. Because in the urban area it concerns people very much how their apartment would be protected and the affordability will be protected.

Mr Marchese: We thank you, Ms Donovan, for coming and for making such a strong presentation. I know it's a strong concern of yours and all of the tenants you've been speaking to over the last month or two on this matter.

Mr Leach has come in front of this committee and said he's consulted tenants. In his presentation, he said that tenants are a priority of his and that's why he's introduced this package, which is called the tenant protection package. To your knowledge, has any tenant asked for an increase in rent which this proposal implies?

Ms Donovan: No, I haven't heard any tenants ask for any changes to this legislation. Unless you want to go back to Bill 4, I think you better leave it alone.

Mr Marchese: What I meant to say is that this proposal is going to mean that as soon as you move out, you're going to get an increase. I can't imagine any tenant saying to Mr Leach, "Please do that for me because I want to pay more."

Ms Donovan: No, I highly doubt it.

Mr Marchese: The other proposal in this is to move beyond the 2.8% guideline that we have at the moment and on top of that the 3% for extraordinary capital expenses. They want to add that to 4%. In addition, they also want to pass through hydro and taxes and in addition to that, costs no longer borne. It seems to me in terms of where you're living and the kind of tenants who are there, if this were to be applied, I'm not sure how any of the tenants that you know could cope with such increases. Is that a fair statement?

Ms Donovan: It's difficult enough to cope with the 3% above the guideline, which is already a landlord ripoff and a concession that was given to them in the last piece of legislation.

As I pointed out in my presentation, there's absolutely no reason why landlords should not reinvest some of the profits into their business the same as everybody else does and not let it deteriorate and then expect somebody else to come along and pick up the tab.

Mr Marchese: Ms Donovan, keep up the fight. Dave Johnson, the minister, is going to listen to you.

Mrs Ross: Ms Donovan, thank you very much. I want to assure you that we are listening. It is a discussion paper. As a matter of fact, several of the recommendations from people and suggestions that have come forth have been discussed among ourselves and some of them we feel are -- for example, the lady previous to you made some suggestions with respect to care homes that we didn't even think of, and I think she gave us something to think about there. So we are listening and we are hopeful that we're going to put forward something that will be a good piece of legislation.

I wanted to ask you, though, of the 3.5 million people who are tenants in Ontario, do you think all of them are needy people, low-income people?

Ms Donovan: The government has its own statistics which identify the tenant population incomes between $20,000 and $30,000. There are maybe 2% that are above that. The majority of tenants earn between $20,000 and $30,000, and if you really wanted to do the right thing as far as protecting tenants is concerned, you would have a blanket rent-geared-to-income policy.

Mrs Ross: I don't have any statistics on that. I have asked for them, so I'm interested in knowing that.

Ms Donovan: They're gathering dust somewhere in the ministry.

Mrs Ross: Well, I'll get them. Also, before I forget, I just wanted, in defence of Ms Bassett, she was subbed in and was here prior to that presenter you mentioned. So I just wanted to state that. But also do you think that --

Ms Donovan: I would like the government members to realize that I'm not blaming them for anything. You're not in the cabinet. You do what Mike Harris tells you to do, and that's that.

Mrs Ross: The other thing is that even though we're not from Toronto, I come from Hamilton and we do have tenants there as well, so I'm concerned about the issue.

We've had presentations from some landlords --

Ms Donovan: Can I ask you something? Are your concerns going to be listened to? You could be the most compassionate, empathetic person in the world, but Mike Harris is the one who's going to make the decision. That's the problem. Can you convince him?

Mrs Ross: I believe that our concerns will be listened to.

I wanted to ask you also, we've had presentations from some landlords, not all of whom are owners of huge developments, some who are small land owners and some very sincere, I must say. Would it be fair to say that there are good landlords as well as bad landlords --

Ms Donovan: Certainly.

Mrs Ross: -- and the majority of them, I think, are good. Would you agree?

Ms Donovan: There are even some good Conservatives.

Mrs Ross: We agree with that too. Am I out of time?

The Chair: No, you're done, Ms Ross. Thank you very much, Ms Donovan. We've enjoyed your presentation and we appreciate your taking the time to come and give us your input. Have a good evening.

Ms Finkler: Since we're so conscious about accessibility, does anybody know how to fix a flat tire?

The Chair: Do we have a problem there? I wonder if maybe we could get somebody in security who might have a pump who could help.

Ms Finkler: I think it needs a whole new tire.

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LANCASTER/WINDSOR HOUSE TENANTS' ASSOCIATION

The Chair: Our next presenter represents Lancaster/Windsor House Tenants' Association, Rosemarie Herrell and Jim Loftus. Welcome to our committee.

Mr Jim Loftus: Good evening, members of the panel. Thank you for the opportunity provided to our tenants' association to present our tenants' concerns respecting the proposed tenant protection legislation.

As noted, I am Jim Loftus. I'm accompanied by Rosemarie Herrell. Rosemarie is the president of the Lancaster/Windsor House Tenants' Association, and I, in addition to acting as their agent in earlier rent control hearings, am president of the 7 Roanoke Road Tenants' Association in North York. I've had my own share of concerns about the Rent Control Act, 1992, and I have successfully represented my own tenants in the landlord and tenant disputes both at 361 University Avenue and 45 Sheppard Avenue East. By the way, members of the panel -- never mind, I will tell you that later.

Just before we go into our presentation, I want to say that no doubt you'll have heard many times before tonight much of what we are about to present and you'll probably feel like the tired professor who's hearing that same old lousy essay for the 33rd time. But as with the repetitive TV commercials, ads and jingles, you, like our children, will begin to dig our message, sing out our song and perhaps even buy our products.

To begin with, if we were living in a perfect world, such as those envisioned in Plato's Republic or Thomas Moore's Utopia, we might be able to trust in the decisions reached by our legislators or, as in landlord and tenant relationships, that the landlords and tenants could negotiate on a level playing field. Unfortunately, sadly in fact, our world is far from perfect. We are devoid of trust in our legislators and the field is tilted almost vertically in the landlords' favour. Why? Well, as Plato, Moore, Marx and some of the other boys discovered in attempting to put their idealistic theories into practice, human nature being what it is is such that the haves want more and the rich simply want to get richer. Having said that, please allow me to lead you through our presentation.

On behalf of the Lancaster/Windsor House Tenants' Association, representing over 100 units, we have taken an active part in educating tenants on their rights. We also encourage them to participate in any way they can to improve the enjoyment of their home. Through a survey we conducted, many issues have surfaced and we have experienced the soul-destroying frustration of going through rent control hearings. Yet despite the shortcomings of the Rent Control Act, 1992, this leaky umbrella provides tenants with far more protection than is contemplated in the tenant protection legislation discussion paper.

This government is planning to end the present system of rent control. From our tenants' experience, we know there is much room for improvement. We know the act needs more teeth in it; it does not need replacement. The last thing we need is the abolition of rent control.

Strange how this Ontario government of Mike Harris made no mention of scrapping rent control during the 1995 election campaign or in the Common Sense Revolution document. Why?

The tenant protection legislation this government has introduced is no protection at all. How can it protect tenants when it eliminates the six laws that protect tenants: the Rent Control Act, the Residents' Rights Act, the Rental Housing Protection, the Landlord and Tenant Act, the land lease act and the vital services act. Without these laws, uncontrolled rent increases leave tenants and their families vulnerable and open to eviction. It contributes to anxiety and a feeling of insecurity. A level playing field it is not.

This proposal allows rent controls to be lifted so the landlord can charge a new tenant whatever rent he wants. We already have the situation in our complex where a tenant was intimidated and harassed when requesting maintenance service of the superintendent. When he and other tenants submitted written charges of harassment to the client service representative at Rent Control Programs, North York, they were frustrated and disheartened when told that charges of harassment are difficult to prove in court. Right on.

The tenant is now looking to move elsewhere. How many other tenants, especially seniors who are on their own or single parents on low incomes, would be trapped in this revolving-door effect? Leave one building only to enter another at a much higher rent because it is now decontrolled. Maybe I should have asked how many could afford to move, even if they were in an unpleasant situation, for example, lack of maintenance, elimination of services, harassment etc. The large majority of tenants in our complex are seniors on fixed incomes. They are already struggling with cutbacks, clawbacks and user fees imposed by this government and the federal government.

The current Rent Control Act has a generous rent guideline. Landlords can increase rents by 2.8%, plus they can apply for an extra 3% above this guideline. In fact, our landlords have already received an additional 3% increase for so-called extraordinary increases in taxes, hydro and water. An increase of 5.8% is far more than the increase in wages or pensions that tenants can expect. The government's proposal will raise this limit. Although all renters will suffer, seniors and others on fixed incomes will suffer particular hardship if controls are abolished.

While landlords are allowed to increase rents, the majority of renters are experiencing reduced incomes as a result of the previously mentioned cutbacks and the social contract legislation which has affected all people working in the public sector and many people in the private sector. Real losses for these people range from 5% to 10% or more. In addition, many of these people have lost their jobs or are in danger of losing their jobs as a result of this government's job-cutting strategies.

Currently, local governments are able to limit the demolition or conversion of affordable rental housing to other uses, such as condominiums, because of the Rental Housing Protection Act. This new proposal will make it easier for developers to tear down rental buildings. Since we acknowledge that low-income rental units are at a premium, why would such a proposal be put forward? Tenants who cannot afford to move will also lose their accommodation if their buildings are converted to condominiums and they cannot afford to buy the unit. Quite simply, this will mean a community will lose a greater amount of affordable rental housing. It is absolutely certain that this government's proposal will do nothing but further reduce the stock of affordable rental housing.

With respect to maintenance, municipal governments, would that this proposal become law, will be given so-called new powers to prosecute landlords who do not do repairs on their buildings. Yet municipal governments already do not have enough resources to inspect buildings properly and to make sure maintenance and repairs are adequately done. Inspectors now lament that they lack both time and power to enforce minimum standards, which incidentally would be more appropriately termed "substandard" in the eyes of most tenants. We do not need the abolition of rent control to ensure that adequate maintenance and repairs will be performed. All we need is the full enforcement of the power now available. Simply put more teeth into the existing act. While on this point, why are landlords allowed to increase rents even if there are work orders for maintenance and repairs still outstanding? Where is the protection when municipal officers fail to prosecute negligent and irresponsible landlords?

In conclusion, it is clear that the proposals in the tenant protection legislation discussion paper will not be in the best interests of tenants because:

(a) With vacancy decontrol, the reality of the imbalance built into the tenant-landlord relationship is ignored for it is based on a false image of supposed equality between landlord and tenant. No equality exists now. It is ludicrous therefore to consider that a tenant might negotiate a fair and equitable rent when moving to another unit within the building or in another building elsewhere. With the scarcity of rental accommodation in the Metro area, the power balance weighs heavily in the landlord's favour. There is no negotiation here. The landlord says, "Take it or leave it." In the real world, negotiation of rent is a non-starter.

(b) By shifting the focus from the units to dealing with individual tenants in negotiations, one of the most fundamental and effective forms of tenant self-help, that of the tenant association, is eliminated. If protection is focused on the individual, tenants will see themselves as isolated and in competition for the better deal and an edge in dealing with the landlord. Rather than co-operate and see other tenants as neighbours and their building as a community working to achieve common ends, the government's changes will encourage the social deterioration of rental buildings, as with the deterioration of the entire social fabric of this province, I might add.

(c) There is a plan to discontinue the rent registry or a tracking system whereby new tenants can ascertain whether or not they are charged exorbitant rents and sitting tenants will have some degree of assurance that they will not be evicted or forced out in order to rent to a new tenant at a deregulated rent. As well, by dividing the building into those tenants who are paying a regulated rent and those paying a new, unregulated rent, this will pit tenant against tenant.

(d) Many of the changes proposed respecting property standards will not encourage landlords to do repairs and maintenance as required. The government realized this by basing many of its improved maintenance provisions on giving municipalities increased powers to enforce property standards bylaws. At the same time, the government is encouraging landlords not to do repairs by eliminating two of the most powerful incentives for landlords to maintain their rental property. Eliminating the orders prohibiting rent increases is actually a disincentive to maintain buildings by allowing landlords to obtain rent increases while ignoring municipal work orders.

Also, officers now have too much discretion about whether or not to charge owners for non-compliance. Tenants feel that if owners were in fact charged with non-compliance, they may be more willing to comply with the property standards. Tenants' current frustration results from the reluctance of officers not only to charge owners for non-compliance but even to issue violations in the first place. The proposed change does nothing to encourage or to ensure that officers will charge property owners who violate property standards.

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Furthermore, increasing the maximum fine will do nothing to encourage owners to maintain their building, because currently few charges are laid, and when there is a charge, owners are not being charged the maximum. Enforcement office statistics show there have been only 29 convictions under the Rent Control Act as of July 18, 1996. Fine amounts have been from $500 to $3,000 -- very much below the possible maximum.

(e) The government's proposal states that an enforcement unit will be established to investigate tenant complaints of harassment, that fines for harassment will be increased and that rent reduction applications for harassment will be allowed. There is a section in the Landlord and Tenant Act which is similar to the proposed harassment section. Very few prosecutions have been initiated and even fewer have ended in convictions. The police, crown prosecutors and the courts generally do not take them seriously. The proposed enforcement unit will have to be adequately staffed and funded in order to give the proposed harassment provisions any teeth, which is unlikely, given the government's cost-cutting agenda, for example, reduction in legal aid services.

(f) There is no inherent connection between rent control legislation and the inability or reluctance of the development industry to provide adequate supply of rental housing. The goal of attaining increased rental housing supply from the private sector developers is a myth that is unsupported by concrete evidence. The British Columbia experience after the elimination of rent control was that of limited increase of housing, high rents and low vacancy rates. BC tenants also experienced a diminution of their legal rights. Should Ontario tenants look forward to giving away their legal rights in return for maybe a few hundred new units? I think not.

Landlord groups agree that changes in this legislation alone are not enough incentive to build any new rental stock, and developers have said that to increase the rental stock not only will they require reforms to rent control, they will also require a reduction in federal, provincial and local property taxes and levies.

(g) Ultimately the goal of tenant protection legislation should be the protection of tenant rights. The government proposals fail miserably on all counts. The government would do well to inject an element of common sense into its housing agenda by jettisoning its proposals until it has plans that will in fact protect tenants fully.

However, let us close this brief hearing on a positive note. Tenants applaud those intelligent, reasonable and responsible landlords and developers who agree that in order to increase the stock of affordable rental accommodation, we must bring about a change in our taxation system. Property taxes on rental units should not be two, three or four times greater than that of a single family dwelling. Remove the tax and levy burdens and encourage landlords, developers and investors to build more affordable rental accommodation.

Even better, let's encourage the development of more rental housing, more jobs and economic growth by providing a tax holiday or moratorium for two, three or more years, just as we did in the mid-1940s and 1950s, to encourage major industries to move into Scarborough's Golden Mile, for example, or as our neighbours to the south do to entice many of our long-established industries and manufacturers to move to tax-free havens and thus encourage economic development in states or countries with little or no economic benefit to Ontario.

By the way, just before I close in this, let me leave you one more of good old Tommy More's ideas of equality under the law. He stated that we cannot have two laws -- one for the rich and one for the poor, one for the powerful and one for the powerless, one for the haves and one for the have-nots. There can be only one law, that which protects all citizens equally. Thank you again for the opportunity to present our concerns.

The Chair: Thank you, sir. We've got about two minutes per caucus for questions, beginning with Mr Marchese.

Mr Marchese: Thank you both for coming and for your presentation; very cogent, I think, in terms of your interest in protecting tenants generally and some suggestions in terms of what they can do to build.

Your point about harassment is a very critical one. You are among many who said harassment is difficult to prove, and that's a fact. To make it appear that you've created an anti-harassment unit and all of the problems will disappear, that once you've instituted a proposal that says, "As soon as they move, you can rent at a higher rate," somehow harassment will disappear, it won't because, as you said, harassment is difficult to prove. I thank you for that point.

The other matter you've raised is the rent registry. It was designed to protect tenants. The elimination of that doesn't offer protection any more to the tenant, and I think you're right in making that point.

In your conclusion, you say, "Remove the tax...burdens." "Property taxes on residential rental units should not be two, three or four times greater than that of a single-family dwelling." Do you think that in itself might be sufficient?

Mr Loftus: First of all, that tax levy is not borne by the landlord; it is actually borne by the tenant. But if they were lowered, for the comparable space in my unit, for example -- I also have a summer cottage where the tax on that property, even though it's a large property, is about one quarter of that which I pay in actuality for my apartment. Four or five months of my rent go directly towards paying the taxes. If I were taxed on the same basis, that is, on a per-square-foot area, and based on a single property, not on a commercial basis, I think our rents could be lowered considerably. Maybe there would be some more room for better maintenance of the buildings, although I believe the landlord is adequately recompensed at the moment under the 2% for the cost of repairs.

Mr Tilson: I appreciate your comments about maintenance and whether there are any teeth in existing property standard bylaws, whether municipalities have the resources to enforce those bylaws.

The paper did refer to this topic. I don't know whether you had an opportunity to read them, but there are about half a dozen bullet points on page 4 and the top of page 5 of the paper putting forward a number of suggestions.

I come from a small riding, a rural-urban municipality, and they don't have the resources like perhaps some of the larger municipalities do for enforcement.

You may wish to comment, but one of the proposals is the municipalities' ability to recover costs with respect to court costs, for example, if they proceed or they do things. They may even repair at the landlord's expense. That in turn would be put on the tax roll.

Mr Loftus: Put on what?

Mr Tilson: That would be put on the taxes.

Mr Loftus: But who pays the tax bill in the end, sir?

Mr Tilson: The landlord.

Mr Loftus: No, the tenant does. That's passed on to the tenant directly. That's one of the major flaws in this entire legislation. Everything the landlord gets passed on to him, he immediately passes on to the tenant.

Mr Tilson: So then if that's inadequate -- that's really what I'm getting at --

Mr Loftus: It's a major inadequacy. It's flawed tremendously.

Mr Tilson: My question is --

The Chair: Thank you, Mr Tilson.

Mr Tilson: I guess I don't get a chance to ask it.

Mr Curling: You're right, exactly, about who pays the piper afterwards. It's just back to the taxpayer.

Let me go back to the harassment fines -- and I really enjoyed your presentation. Mr Leach said, "The cost to the landlord will be $50,000 if he tries to harass this tenant." As you know, if $50,000 is threatened for the landlord, he's going to get his lawyer, and the tenant, who hasn't much time really, the person who will be harassed, is the undesirable he wants out of his building. Do you see a tenant really getting the kind of resources needed to fight this, like lawyers and the time off from work? Do you see this $50,000 being effective?

Mr Loftus: No. I believe I presented some figures earlier. First of all, I doubt if a case would even come to court. Many tenants, I believe, would be afraid of going to court, because you've got to pay a price. It's a big jump to make, but I see it as a similar situation to a woman trying to accuse somebody of rape. She is made to look like she doesn't know what she's talking about and she really doesn't have a case. Therefore, they're afraid to go to court.

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Having written three or four pages on harassment, my own landlord's representative said, "Mr Loftus, we would have one hell of a time trying to prove harassment, even though you're dead right." I documented it very well, but he simply said, "You would not make a case of it in court." So this is going to hold no real value at all.

The Chair: Thank you, folks. We appreciate your input and your taking the time to come and be with us tonight.

Mr Loftus: Can I ask one question, sir? Are there people on the panel who are now residential rental tenants or have been in the last five years?

Interjection.

Mr Loftus: Then maybe you people will have some indication of where our real concerns are, since you're in the same boat.

CANADIAN MANUFACTURED HOUSING ASSOCIATION

The Chair: Our next presenter is Douglas Barker, past president of the Canadian Manufactured Housing Association. Welcome, sir.

Mr Douglas Barker: I'd like to thank the committee for allowing us to appear this evening and present our brief.

The Canadian Manufactured Housing Association represents the manufacturers of mobile and modular homes, together with the suppliers of goods and services to our industry. Our association also has representation from community owners and operators and home dealers.

Of the approximately 19 manufacturing members across Canada, six are located here in Ontario. Their manufacturing efforts represent a direct $15-million-per-year influx to the Ontario economy, and the spinoff effect from that is about another $30 million.

Units from our manufacturers are situated in over 125 mobile home parks or land-lease communities across the province and house 20,000 to 30,000 citizens.

The members of our association, together with our affiliate associations, have a significant capability to provide affordable housing for the citizens of Ontario, and I might add, without any subsidy. This ability is directly affected by the legislated planning and legal framework within which we do business.

Some members of this committee, others sitting in the Legislature and staff will recall that CMHA has previously been active in assisting and formulating legislation for mobile home parks and land-lease communities. We support now, as we did then, legislation that gives fair and equitable treatment to both tenants and landlords. We applaud the intent to consolidate six existing pieces of legislation into one new act.

As the interest of our members relates to land-lease communities and mobile home parks, this presentation will speak specifically to matters affecting these communities. These communities may be older parks that have been in existence for a number of years and have modest facilities relating to services and amenities. Alternatively, the community may be a modern land-lease community specifically developed for that purpose. Normally, the latter are targeted to the retirement age group.

In either case there's a similar but very unique landlord-tenant relationship in that the tenant owns his housing unit but leases the site on which it is situated. This is substantially different, I suspect, than most of your presentations here tonight and throughout your hearings on the apartment situation where you're talking about the renter. We're talking here of a person who owns their unit and has it situated on a piece of land that is rented or leased.

I'd like to speak to some specific points that we would like to see in new legislation.

First is balanced landlord-tenant protection. Needless to say, the proposed legislation must provide a balance of landlord and tenant protection. This will result in well-operated and maintained communities and in tenants who will enhance their lifestyle while increasing their equity in their homes.

On the subject of fair market rent, the provision for a landlord to re-lease a site at fair market rent when the existing tenant moves is supported. However, we would like to extend that further. We feel that the new rent should be excluded from further rent control. Let the free market do its job. We understand this is now being done in British Columbia in relation to mobile home parks and I'm advised that it's working well.

It's felt that all units within a park should over the years reach a uniform market value rent. Continuing rent controls will continue a variation of rent levels within a park community, and that has the potential to create landlord-tenant problems and indeed problems of tenant to tenant.

The rent control guideline formula: The principle of continuing with the current rent control guideline for sitting tenants is acceptable. However, mobile home parks have two distinct abnormalities that must be addressed:

(1) Rent in mobile home parks is considerably less than in apartments. Applying the typical guideline increase creates a continual widening between these rents. We'd recommend that the guideline for mobile home parks be three times that of the apartment guideline.

(2) The majority of older mobile home parks, due to initial very low rents and 10 years of rent control, are in dire economic straits. Rents of $100 to $150 a month are unfeasible and need to be adjusted to ensure community survival and long-term health. We suggest the guideline address this situation by allowing annual rent increases to be the greater of guideline times three or $50 per month.

Similarly, on capital expenditures, we are recommending that the formula be three times what is currently being recommended.

Required capital expenditures on infrastructure upgrades is one point that we're very pleased to see being considered in the new legislation. The discussion paper has recognized this need for a cost pass-through allowance for capital expenditures when a public agency requires infrastructure upgrades, ie, water and sewer. The paper questions what cap should be placed on this allowance.

These requirements are outside the landlord's control but will be defined by appropriate engineering studies and subsequent municipal and MOEE approvals. It is recommended that the actual costs involved, as attested to by the approval agency, which would normally be the Ministry of Environment, be amortized and charged on rent. Once paid, this cost would fall away from rent. Similar to the provisions of the Local Improvement Act, we think tenants should have the option of paying this expenditure as a lump sum and not be subject to rent increase.

The same procedure could apply in regard to capital expenditures that the tenants might want to do in their community. They might want to propose some upgrade. We would see that occurring in the same way: actual cost amortized through, and drop-off rent once that is paid for.

Rent reduction application: The right of a tenant to make an application for rent reduction due to inadequate maintenance, reduced or withdrawn services etc is recognized. We suggest that reduction should be based on the actual cost, not a perceived value.

Maintenance: It must be recognized in mobile home parks and land-lease communities that the landlord's maintenance obligations relate to the rental site and support infrastructure, not the residential unit which is owned by the tenant. Conversely, the tenant has the obligation to maintain their unit to appropriate standards. We would like to see legislation that allows the municipality to deal directly with the tenant in regard to property standards of the unit.

We support the position that the owner be notified in the event of a tenant-initiated inspection and vice versa, so that either the tenant or the owner can have the opportunity to fix it before it becomes a confrontational situation.

Sublets -- assignment of lease: The discussion paper appears to recognize the landlord's right to charge market rent on subletting. We support that position, recognizing that the sublease must automatically be subject to all other obligations of the original lease. Similar provisions should apply to investor units with each change of tenant.

Abandoned property: This is a special problem which fortunately is very infrequent in mobile home parks, as the personal property is the unit and it is very seldom abandoned. However, the removal of an abandoned home from a site is expensive to the landlord and substantially reduces the value of the abandoned home. We suggest the new legislation be formulated to allow, after 60 days, the sale of the home, similar to a power of sale. From the money received, the landlord would be funded for shortfalls in rent and reasonable costs, creditors registered to the home paid and the balance held in trust for the tenant.

Dispute resolution: This is a complex issue. At this time we've not completed our position and we'd like to come back to the committee with some further documentation on that. At this time we'd recommend that an agency should handle disputes in mediation. Perhaps that mediation could be done by an office such as the provincial facilitator, who now intervenes in some instances before Ontario Municipal Board hearings. We suggest that an application fee be required to reduce frivolous objections.

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For Sale signs were discussed in conjunction with Bill 21, and tenants and landlords can agree among themselves whether the sign should be in the window or on a public display board.

We'd like to introduce two new items.

Positive discrimination: Many modern land-lease communities are retirement oriented and function exclusively in that regard, and the people have invested in them specifically for that purpose. We would like to see the new legislation provide for positive discrimination in the form of zoning specifically for retirement communities. Recent decisions in British Columbia and the US have supported the principle of zoning related to age.

Finally, we'd like to suggest at some time down the road a land-lease communities act. Land-lease communities and mobile home parks, being unique and distinct from apartment and condominium units, can best be served by a distinct land-lease community act. This would be a preferred alternative to being part of legislation that principally relates to other unit types and tenures. We intend to work with the government on the new tenant protection act but are anxious to pursue a separate act specific to land-lease communities.

The Chair: Thank you, sir. We appreciate your presentation.

Mr Smith: Thank you for your presentation. It's certainly an area of interest for myself because I have two such sites in the riding that I represent with respect to land-lease communities.

You raise, on page 3, the issue of infrastructure upgrades. Has the association done any calculation as to its understanding of outstanding or potential infrastructure costs that would be related to communities across the province? Do you have any feel for what that dollar amount might be?

Mr Barker: No, I do not have a feel. I am, as a matter of interest, a practising engineer and this is my area of involvement. I would suggest it has a potential of being quite substantial. But I emphasize again that with the proper legislation I think that can be done by landlords and tenants without any government subsidies.

Mr Smith: On the issue of establishing a cap, and you raised that and identified it in your paper, albeit you've suggested that those costs flow through as the discussion paper suggests, have you given any thought to what an appropriate potential cap might be? Given my impression of what the outstanding costs for infrastructure development might be in these communities, I think we'd be looking at some fairly substantial dollars, as you've suggested.

Mr Barker: I don't think that's necessary. I look at some of our projects, and we can service from scratch a community, if we take a new community, for something in the range of $3,000 to $4,000 a site for the provision of sewage and water facilities. If you take that and amortize it over 10 or 15 years or something it's not substantial. When you add them all together, yes. If you have a 100-unit community and you add it all together and it comes to $300,000, yes, that's a lot money. But if you're amortizing that over 100 units, it's not that substantial, and I think the citizens could well absorb that.

Mr Smith: The issue of positive discrimination and zoning related to age, could you elaborate your experience of what you've read into the US decisions and the British Columbia decisions on the matter, and where we've been and where we're going to with respect to zoning according to age?

Mr Barker: I'm not aware of anything currently in regard to zoning and age here in the province. Many retirement communities that now function do so strictly on their marketing to retirement and the types of units and amenities and facilities that are provided. They're oriented towards seniors and that does work, but at the same time I've had some of those seniors express a concern to me that they're investing in those units. They would like the proper zoning, age zoning, for them just to protect them.

Mr Sergio: Mr Barker, I see you have restricted your presentation solely to the mobile home park. I can appreciate that is your field, that's your business, but of course the government has a wider picture to look at. Your site of business is very minute compared to the requirements of providing rental accommodation for thousands of renters. Is it specifically leasing of these mobile homes? They are not sold?

Mr Barker: The units are purchased by the persons who will occupy them, so they own the unit. They have equity in the unit. They're situated in a park. The situation we're talking about is leased land. As it appreciates in value over the years they have the equity in that unit. They do not have equity in the land.

Mr Sergio: I understand. Having said that, do you think it would be appropriate or the right thing to do, given the situation in your own mobile home business and in providing affordable rental accommodation, for the government to make available some lots of land it owns for the provision of affordable rental accommodation and possibly mobile home parks?

Mr Barker: I think it would be very helpful if that could be done. That would help the situation.

Mr Sergio: If you were to deviate a little bit from your own interest as a mobile home operator and looked at the proposed legislation -- we call it proposed legislation; some of us call it a draft proposal. It came to us with different names, both at the same time from the minister himself. One is called reform of tenant protection legislation; we have another one which the minister calls the tenant protection package, so even the minister himself or the ministry doesn't know what to call the same documents. The same documents are being called by two particular titles.

Do you think the government should take very serious, active participation in providing affordable housing of all types or should they leave it solely to the private industry?

Mr Barker: I think it should be left to the private sector.

Mr Sergio: Totally?

Mr Barker: Undoubtedly there will be a small number of people who, whatever the situation is, will need assistance on housing, and the government should be involved in that, but by far the vast majority of it should be left to the private sector.

The Chair: Thank you, Mr Barker. We appreciate your attendance and your input into our deliberations here tonight. We will adjourn until 9 o'clock tomorrow morning.

The committee adjourned at 2041.