SUN PARLOUR INCOME PROPERTY ASSOCIATION
WINDSOR WOMEN'S INCENTIVE CENTRE
CAW COMMUNITY DEVELOPMENT GROUP
WINDSOR-ESSEX COMMUNITY ADVOCACY NETWORK FOR PERSONS WITH PHYSICAL DISABILITIES
SCARSDALE TENANTS' ASSOCIATION
WINDSOR-ESSEX BILINGUAL LEGAL CLINIC
WINDSOR ESSEX LOW INCOME FAMILIES TOGETHER
CANADIAN ASSOCIATION OF RETIRED PERSONS, WINDSOR-ESSEX COUNTY CHAPTER
GREATER WINDSOR HOME BUILDERS ASSOCIATION
BUSINESS AND PROFESSIONAL WOMEN'S CLUBS OF ONTARIO
CONTENTS
Tuesday 3 September 1996
Rent control
Sun Parlour Income Property Association
Mr Ed Meyer
Windsor Women's Incentive Centre
Ms Janet Greene-Potomski
CAW Community Development Group
Mr Earl Dugal
Danzig Enterprises Ltd
Mr Tim Fuerth
Windsor-Essex Community Advocacy Network for Persons with Disabilities
Mr Dean LaBute
Scarsdale Tenants' Association
Mr Donald Fraysure
Windsor-Essex Bilingual Legal Clinic
Ms Patricia Broad
Windsor Essex Low Income Families Together
Miss Christine Wilson
Canadian Association of Retired Persons, Windsor-Essex County Chapter
Mr Bob Lesperance
Mr Tim Fuerth
Greater Windsor Home Builders Association
Mr Albert Schepers
Legal Assistance of Windsor
Ms Carol McDermott
Business and Professional Women's Clubs of Ontario
Ms Susan Lescinsky
Mr David Lyons
Mr Joseph Krall
STANDING COMMITTEE ON GENERAL GOVERNMENT
Chair / Président: Mr Jack Carroll (Chatham-Kent PC)
Vice-Chair / Vice-Président: Mr Bart Maves (Niagara Falls PC)
*Mr JackCarroll (Chatham-Kent PC)
*Mr HarryDanford (Hastings-Peterborough PC)
Mr JimFlaherty (Durham Centre / -Centre PC)
Mr BernardGrandmaître (Ottawa East / -Est L)
*Mr ErnieHardeman (Oxford PC)
*Mr RosarioMarchese (Fort York ND)
*Mr BartMaves (Niagara Falls PC)
*Mrs SandraPupatello (Windsor-Sandwich L)
Mrs LillianRoss (Hamilton West / -Ouest PC)
Mr MarioSergio (Yorkview L)
*Mr R. GaryStewart (Peterborough PC)
Mr Joseph N. Tascona (Simcoe Centre / -Centre PC)
Mr LenWood (Cochrane North / -Nord ND)
Mr Terence H. Young (Halton Centre / -Centre PC)
Substitutions present /Membres remplaçants présents:
Mr BruceCrozier (Essex South / -Sud L) for Mr Grandmaître
Mr AlvinCurling (Scarborough North / -Nord L) for Mr Sergio
Mr John L. Parker (York East / -Est PC) for Mr Young
Mr Peter L. Preston (Brant-Haldimand PC) for Mrs Ross
Mr BruceSmith (Middlesex PC) for Mr Flaherty
Mr JosephSpina (Brampton North / Nord PC) for Mr Tascona
Clerk / Greffière: Ms Tonia Grannum
Staff / Personnel: Mr Jerry Richmond, research officer, Legislative Research Service
The committee met at 1307 in the Hilton International Hotel, Windsor.
RENT CONTROL
The Chair (Mr Jack Carroll): Good afternoon. Welcome to the standing committee on general government hearing on proposed changes to the rent control legislation. We are delighted to be here in Windsor today on a beautiful summer afternoon. We apologize a little bit for being late, but some of our members got hijacked by some local southwestern Ontario people and they were a little late getting here, but they have now arrived.
We are here today to listen to the concerns and the comments of the people from Windsor and Essex county about the proposed changes and, as usual, I'm sure you will allow that process to come forward and take place and allow the dialogue to be between the people at the table and the presenters.
I understand that Mr Maves has a quick comment he wants to make before we start.
Mr Bart Maves (Niagara Falls): Thank you, Mr Chair. It is great to be in Windsor this morning. On the weekend in Niagara Falls, the city of Niagara Falls hosted the bantam major triple-A baseball championships. The city of Windsor's representative team went to the finals against Welland and needed to win two consecutive games to win the Ontario championship, and they did do that successfully, winning 9-4 and 10-3. I had the honour and privilege of throwing out the opening ball in a championship game and I stayed to watch a very heavy-hitting Windsor team beat Welland. So I just wanted to offer my congratulations to the city and the boys on that team.
The Chair: Okay. Thank you, Mr Maves.
SUN PARLOUR INCOME PROPERTY ASSOCIATION
The Chair: Our first presenter this morning represents the Sun Parlour Income Property Association, Ed Meyer, director.
Good afternoon, sir. Welcome. You have 20 minutes. Should you allow any time for questions, we rotate the questions and we divide the time up evenly. We would begin with the Liberals. The floor is yours.
Mr Ed Meyer: Thank you, Mr Chairman. Mr Marchese is out in the hallway. I wonder if we might give him the hook so he can be here for the proceedings.
My name is Ed Meyer. I'm past president of the Sun Parlour Income Property Association. I am very pleased at the opportunity to speak before the standing committee on general government concerning a consultation paper on rent control. I was originally scheduled to speak to you as president of Obolus Ltd, a multiresidential income property management company serving our valued tenant customers in Ontario since 1988, of which I've been past president for three years. I understand that your committee has been notified of this schedule change in advance.
I have been involved in this local association of residential income property owners and managers for over 12 years, and also with our Ontario umbrella group, the Fair Rental Policy Organization of Ontario. Since my views as president of Obolus Ltd and our position on this residential housing industry for Sun Parlour are, for the most part, united, I am pleased to speak before you on behalf of Sun Parlour Income Property Association.
Firstly, I'd like to applaud your efforts and your bold initiative, for the first time since the inception of rent controls in 1976, to finally address and reform the very real deficiencies of this well-intentioned but misguided legislation. I have spoken to government standing committees of the past, welcoming them to accept the initiative to truly address the immense negative impacts of this legislation on the Ontario residential rental housing market, equally disastrous for tenants and income property owners and managers alike. Today, by your actions and statements, you are committed to a real course of true legislative reform for the benefit of not just the tenants, the income property owners, but as well for all of us as Ontario taxpayers.
Over the past few months of consultation and through the past few weeks in these standing committee hearings, you have heard the many concerns and opinions across Ontario from both sides of the residential rental property marketplace, from the consumers and the owners of our industry. If you use only one litmus test in the review of these comments and in the tabling of proposed legislation, please let it be this: do not allow any item of legislation that creates an antagonistic atmosphere between tenants and income property owners.
As an income property owner and manager, I can assure you that my financial success rests solely on my ability to serve and to please my valued customers. This is fundamentally true for our entire industry. However, the rent control legislation of yesterday more often than not placed tenants in the perceived role as "prey in need of protection" and the income property owner or manager in the perceived role as "that gouging predator." This, more than anything, has done more real and present harm to the Ontario rental housing market than all the other artificial barriers to service and stability this rent control legislation has cast over all of us for so many years.
Fundamentally, the free market system will provide Ontario with the most affordable, well-maintained and stable rental housing stock. The final end result of rent controls as we know it today is not affordability, it's not maintenance standards or stability, but rather that the existing stock of rental housing will be 100% public housing in Ontario. These may be fighting words for many in our industry, positions one can take totally for or against, but let's look closely at the free market using a model all of us can understand.
Restaurants, for example, and restaurant owners operate totally within the free market system. How many of us know a restaurant that has prospered and was successful by overcharging customers and offering substandard food? We can all smile at the obvious answer. In fact, we know that restaurants that overcharge for food either lower their prices or go out of business. We also know that a restaurant serving substandard food either quickly improves the quality of its food or it goes out of business. Furthermore, if restaurant owners are not getting the customers into restaurants that they need to make a fair and required profit, we know that they generally lower their prices to the customers, not raise them.
Finally, what happens if business in a restaurant is really brisk? Perhaps there are too few restaurants in the area and a new restaurant opens up close by. Well, again, the restaurant customer will notice that the prices in the restaurant will be lowered to entice customers to come in, not raised.
This is how the free market system works and its principles are how Ontario and Canada became great. Yes, our industry is presently artificial in nature because of 20 years of rent controls, and yes, rent controls should only be phased out in order to protect both tenants and income property owners and managers alike in the short run.
But look to the other provinces, and to Michigan, our abutting neighbour to the south of Windsor, for that matter. They have no rent controls and they enjoy stable residential housing markets, at equal or more economical rental rates than us, and with maintenance standards that frankly exceed our own. Perhaps even more important, they enjoy a normal and healthy vacancy rate that allows their citizens to freely move at will from well-maintained apartment to well-maintained apartment and from city to city.
Well-intentioned but misguided rent control legislation and the bureaucracy to run it are very expensive to maintain. This public cost is even further suspect if one considers, according to the government's own data, that only about 1.3 million housing units, or 36% of the total estimated 3.2 million housing units in Ontario, are rental units. The majority, or 64%, are owned by Ontario taxpayers who are being asked to finance rent controls, and even if these rent controls were totally effective, they have absolutely no benefit whatsoever to the majority of Ontario taxpayers.
In fact, one reason that Ontario taxpayers who rent can't presently find decent rental accommodation in their city of choice, besides the fact that income property owners haven't been building any of these units for over 20 years since rent controls were enacted, is because existing renters, who normally would buy a house or build a house for their growing families, can't pass up the artificially low rent payments they enjoy compared with the greater cost of a housing mortgage. This point should not be overlooked, since historically renters and homeowners alike have reasonably paid about 30% of their real income on housing or rental costs. This is why public housing requires generally 30% of their occupants' income as rent. Remember, the eventual end result of rent controls, in the opinion of many experts in the industry, is 100% public housing, where occupants will be required to pay 30% of their income on housing anyway.
Let's not also forget the unfortunate statistics that the majority of public housing occupants would prefer to live in private housing. This is the reason that governments of the past have offered public housing construction cost moneys or low-interest loans, at the expense of Ontario taxpayers, with the understanding that only 10% to 25% of the suites being constructed will be public housing.
With little time available today to address the specific items of the proposed tenant protection legislation we would like to mention three important items of interest.
If you maintain rent controls in some fashion, please do not remove the rent registry. This rent registry is the only way that property owners and managers will discount their rents to the tenants within the rent control legislation and this is to the real benefit of tenants.
Please do not remove notice of building code or standards violations, or work orders required to fine or prosecute an income property owner or manager for non-compliance. These safeguards provide all involved with reasonable avenues of action, without the real fear of abrupt, arbitrary or unjustified prosecution. Remember, for the sustained health of the Ontario residential rental marketplace, do not allow any item of legislation that creates an antagonistic atmosphere between tenants and income property owners.
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I list point 3 as a suggestion of this income property owner and management company and not on behalf of Sun Parlour Income Property Association. If rent control legislation is here to stay, in all fairness to Ontario taxpayers, please do not fund it publicly. Legislate into being a regulatory committee similar to the Professional Engineers Ontario, with the sole mandate of protecting the rights of the public, the tenants; educating income property owners and managers in their responsibilities to the public and to the tenants; managing the rent registry; and managing existing public housing.
Make it self-funding within the industry, requiring all property owners and managers of one unit or more to pay an annual membership fee based on per-rental unit quantities, with a minimum and a maximum and with mandatory membership and membership registration numbers required to be present on all income property owners' and managers' advertising and leases.
Require an annually elected board of directors, elected by representation in specific configurations of your determination by the Ontario income property owners and managers, by Ontario tenants and a specific number appointed by the Ontario provincial government. This board of directors should be legislated real authority to review and revise rent control guidelines, property maintenance standards and the Guide to the Landlord and Tenant Act for the benefit of tenants and income property owners and the entire industry in Ontario.
In closing, I wish to thank the Honourable Al Leach, Minister of Municipal Affairs and Housing, and you, the members of the standing committee on general government, for your courage and your leadership in pursuit of real change for our residential rental housing industry.
Mr Alvin Curling (Scarborough North): Thank you very much for your presentation and for your recommendations too, because quite often people don't come and make recommendations. I won't ask you a question because I have just a minute. I just want to remind you that when the guideline was being presented as legislation, landlords were applauding this because that guideline brought a guaranteed profit to their business. There's no business I know of that you get into and they will give you a guaranteed profit. That is why you say, "Keep the rent registry," because the legal maximum rent that you're trying to charge you're not getting anyhow because of the market.
I would just take issue with you when you say that many people have "artificially low rent payments they enjoy compared with the greater cost of a house mortgage." The fact is that it's an affordability problem. Those who would like to access better homes haven't got the income to do so. I agree with you, I don't expect landlords to finance it, but the government has done this by a guideline that gives you a profit all along.
Mr Rosario Marchese (Fort York): Mr Meyer, there are several questions I would have liked to ask, but I'm only going to ask one. You have a statement here that says, "Do not allow any item of legislation that creates an antagonistic atmosphere between tenants and income property owners." We appreciate that, most of us, on both sides. The difficulty is that the compromise is a very difficult one. You make it appear like removing rent control is the best thing we could do for everybody, but for many tenants removing rent control will create yet another discussion or another antagonistic approach between landlord and tenant.
Mr Meyer: I agree entirely. I think our industry is very artificial in nature because of rent control legislation. I feel it's very important, first of all, to comment on the last comments. We think as an industry, and we believe the tenants also believe, that what you are doing today and what you intend to do is right on the money and that you are to be commended for your courage.
Mr Marchese: I wasn't saying that.
The Chair: Thank you, Mr Marchese. Mr Maves.
Mr Meyer: If I could answer that question for a moment.
The Chair: Unfortunately I've got to be really tough on the time because we have a full day.
Mr Meyer: Certainly.
Mr Maves: Thank you for your presentation. On page 2 you mentioned that "existing renters, who normally would buy or build a house for their growing families, can't pass up the artificially low rent." That's a huge problem in Toronto and a big reason for the low vacancy rate, that we can't get those people out of apartments. How bad a problem is that in Windsor?
Mr Meyer: I think it is a problem in Windsor as well, talking in a local nature. You may notice that housing starts in Windsor over the last year are record housing starts, and because of the extremely low interest rates that exist today, in part because of the government's dedication to lowering them, people are moving out of rental units and the industry is becoming a little better with respect to vacancy rates for new tenants coming in.
I would suggest that it's very important that rent controls are phased out, because we don't want instability; we don't want our customers upset. They're our valued customers. You may want to look at maintaining the rent registry and perhaps increasing it to a flat 10% maximum increase a year so that no one under any circumstances will receive an increase of over 10% but all tenants may receive an increase of 10%. That may allow rent controls to be phased out in a more orderly fashion.
The Chair: Thank you very much, Mr Meyer. We appreciate your coming forward today and giving us your input.
WINDSOR WOMEN'S INCENTIVE CENTRE
The Chair: Our next presenter is Janet Greene-Potomski, executive director of the Windsor Women's Incentive Centre. Good afternoon. Welcome to our committee. The floor is yours.
Ms Janet Greene-Potomski: Good afternoon. I am Janet Greene-Potomski. I thank you for the opportunity to respond to the government's discussion paper New Directions, relating to tenant protection legislation for the province of Ontario. Before I begin, however, please allow me to provide you with some background of the centre which I represent today.
The Windsor Women's Incentive Centre is a non-profit, charitable organization serving women in this community since 1981. Our mandate is to promote and enhance the status of women, and we effect this mandate through counselling, skills training, community development, public education and research.
Because of the nature of our work, we are entrusted with women's accounts of inequities they meet on a daily basis. For purposes of today's discussion, I would like to share some realities many of these women face when seeking and maintaining shelter.
Statistically we know that women, many of whom are single parents, earn 70 cents on every male-earned dollar in Canada. We also know that no longer are women in the paid labour force earning pin money or top-up incomes for family luxuries. We know that most women in the paid labour force today are primary income earners, particularly within single-parent families, and for those who are living with a spouse or partner, their incomes help meet the basic expenses of living.
Sound financial planning dictates that 25% of one's gross income should be allocated to housing, either through mortgage payments or rent. Many of our clients who are working in the paid labour force earn minimum wage or little above that. For instance, a woman earning $10 an hour has a gross yearly income of $20,800; 25% of that amount is $5,200, or $433.33 a month. Current free market rent rarely meets that figure even with rent controls and protections in place. The balance must come from moneys left for food, clothing, heat, utilities, transportation, insurance, taxes and now uncovered medical and dental needs, and the list continues.
We also know that in today's labour market many wage earners are losing their employment due to corporate restructuring, layoffs due to economic shifts and layoffs due to current political policies and strategies. In order to seek new employment opportunities, many of these people are leaving their communities and evidently in short order will encounter rental costs governed by free enterprise and profit only. We also learned that highly skilled workers have encountered wages significantly less than what they earned in their previous employment, leaving them even further behind economically.
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Only this last week a woman consulted with me about accelerated levels of harassment she has incurred at the hands of her landlord. She has been spat upon, called insulting and lewd names, has continually had photographs taken of her and her guests by this person, has returned to her home in the evening finding items out of place, and has further encountered her landlord standing near her window wearing nothing but a robe while exhibiting various sexual behaviours.
Although she holds receipts for her paid rent, she recently received a notice of eviction, stating that she was in arrears for rent payment. She was advised that the moneys owed were extra costs assessed over the past several months which were allocated to property enhancement. This woman is clearly being harassed, both criminally and ethically. Although there are presently legal remedies to this problem, she finds she has been reduced to proving her credibility to the authorities in place who are meant to prevent such occurrences. She hesitated taking photographs of her landlord as he stood in her window, as she was afraid she would be cited for harassment herself. What proof does she have that her landlord has been entering her home while she is away? Further, harassment is rarely conducted in full view and earshot of witnesses.
I'm not implying that the current system is working for her. I am questioning, however, how the proposed legislation and protections indicated within this discussion paper will guarantee her right to safe and harassment-free shelter for herself and her children. When the opportunity is present to garner higher rent payments from a new tenant, how will such harassment truly be prevented and stopped? The tenant, particularly a low-wage-earning tenant, is powerless against unscrupulous behaviours of a landlord who often has the economic ability to realize the best supports money can buy.
The discussion paper talks about the development of an enforcement unit which will ensure that tenant complaints will be investigated. It further proposes the development of a dispute resolution system which should preclude the need for tenants seeking legal advice and appearances in court, should they have a legitimate complaint.
On the face of it these changes appear to be beneficial. However, I question the resources made available to staff such a unit and the criteria set forth to select adjudication authorities for the proposed dispute resolution system. Will the members of this authoritative group include tenants, particularly low-income tenants? How often will the opportunity arise for such hearings and where will they be located? If each municipality is required to enforce and adjudicate landlord-tenant issues, will the municipality be required to financially support this service? With the recent and forthcoming cuts to municipal grants, will our property taxes then be increased to fulfil these obligations? What will be the right of appeal under this system, and what financial obligations will complainants have to endure to realize an effective appeal?
My understanding is that rent controls were developed because offshore investors were purchasing large quantities of rental properties and, in order to realize a sizeable profit, artificially created reduced vacancy rates by renting only limited numbers of dwellings, thereby pushing free market prices for rent upwards, beyond the reach of many tenants. How will the proposed legislation prevent such speculation?
This past weekend I had an opportunity to visit a friend who immigrated to Canada and settled in Windsor over 30 years ago. He came to Canada as a skilled barber. From the day he landed he worked at his trade, enduring various requirements to prove his suitability to live in our country. However, he believed that the challenges before him would pay off later as he enjoyed the society created by Canadian conscience.
He owns his own business, lives in a one-room apartment at the back of his shop, regularly visits community hospitals, offering his barbering services to patients for free, and will often refuse payment from customers who have found themselves without paid work. He is a man of unwavering principle and has a keen sense of what is right and what is unfair. His lifestyle is anything but luxurious. However, he had faith that his new home in Ontario would reward him with the benefits he has paid into and supported over the past three decades. He has willingly paid into that system, believing that a better society was created out of that Canadian conscience.
He now looks at Ontario as a vacuum, sucking the benefits he worked for, paid for and supported away from him, his neighbours and many of his clients. He shudders to think of the future of the three-year-olds who climb into his barber chair for their first haircut as they grow up into a society which forgets about those who need the very most.
The changes to tenant rights are just a part of the new system which will create this new society which is eliminating that conscience of our youth. I believe, as do those I represent today, advantages given to only a few and not accessible to all end up being destructive for everyone. Thus the challenge is before this government to ensure that not only the wealthy and well educated benefit from these changes, but that benefits extend and embrace the most disfranchised in Ontario. Thank you.
The Chair: Thank you. We have about two and a half minutes per caucus for questions, beginning with Mr Marchese.
Mr Marchese: Ms Greene-Potomski, I agree with the last paragraph entirely. In fact this is the political divide we have, obviously, in Ontario and in this room. On the other matter, that gets settled at election time, really. That's the only way to deal with those political differences.
You've raised a few issues of concern, and I agree with them as well. The harassment component of this proposal is a problem. While it's supposed to give comfort to people because it will exist and it will seem to have some teeth, there will be several problems. First, it needs to be initiated by someone, and that's a problem. The other problem with the anti-harassment unit is that of course it requires resources, and we're very worried, in a time when governments are cutting back, whether the resources are going to be there. I think you make the point that it's not going to work. Is that what you're saying, or is it that it could work if we put in resources?
Ms Greene-Potomski: Oftentimes I'm the eternal optimist. I find that I must look at this from both points of view, having been a landlord and having been a tenant, and also many of my clients are tenants. There could certainly be changes to our current established legislation, but changes that need to enhance the security of tenants and also allow landlords to make a decent living.
Mr Marchese: Sure, but it's going to be a problem, as I see it.
Ms Greene-Potomski: There are going to be problems. It's very, very vague, and I'm very concerned about the vagueness within the discussion paper, recognizing that indeed it is a discussion paper and asking for recommendations.
Mr Marchese: I understand that. It's not going to work, in my view, the anti-harassment unit, because it's complaint-driven, and people who are vulnerable tend not to know how to do it and tend not to do it because they're frightened. That's part of it.
The other part is what Mr Meyer was saying earlier on. He's saying we should let the market take care of things, that it will find its own equilibrium. In fact, he was even proposing that we just let the landlord raise it 10% a year. Do you think the market will protect the kinds of people you're speaking of?
Ms Greene-Potomski: No. The market, in order to continue driving, must be able to seek the best dollar for the effort it has placed into the community. There will always be people who are of financial means who will be able to meet those rent payments, no matter how high they are. The unfortunate situation is that those who are least powerful in our society will be driven to substandard housing. All we have to do is look across the river and see those who are living in cardboard boxes, cars and on the street.
Mr Bruce Smith (Middlesex): Thank you for your presentation this morning. Over the last three weeks, this committee has heard a great number of cases such as you described this morning, both from a maintenance and harassment perspective, and I agree fully with your initial assessment that the system does need some changes.
Having said that, and given the criticism I've heard about the proposed anti-harassment unit, if you were given the opportunity to identify three critical start points, given that this is a discussion paper, what would those critical start points be for you in terms of protecting tenants in this province?
Ms Greene-Potomski: Number one, when a tenant applies for a lease on shelter within an apartment or home or whatever that shelter is described as, they aren't also at the same time provided with any piece of paper, not provided with any kind of background on what their rights are, what is suitable under the Landlord and Tenant Act, the Co-operative Corporations Act. They must then be able to ferret out who in their community would have that information available to them. It would not be at all harmful to include within a registered lease the information on exactly what are the rights, what are the expectations of the tenant, and numbers and contacts of people within those communities who could help them either interpret or enact those rights. That would be the very first thing.
Also, particularly within large structures, co-ops, condominium structures that are rented, not purchased, large apartment buildings, it seems to me that within the licensing of operating that business, it would not hurt to have tenant meetings where issues can be brought forward to the attention of the owner or of the manager so that these issues can be resolved in an efficient, low-cost and hopefully very positive manner.
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Mr Bruce Crozier (Essex South): Good afternoon. I want to establish very briefly that this is the first opportunity I've had to sit on the committee, although I'm from the southern part of the county, so some of the questions I ask today may have been asked before of other groups.
The intent behind this, in my understanding, is to find that common ground between tenants and landlords. I think we all agree that's the best of both worlds. Can you tell me, since rent controls have been in effect since 1976 and you've had some experience with people working in that area and their needs, is rent control working today?
Ms Greene-Potomski: Certain aspects of rent control are definitely working. Most tenants have a comprehension of what would be the legal limits of rent, what would be the legal limits of increases in rent, and it seems to have levelled the playing field for those who are seeking shelter. Certainly there are those, according to the current policies and legislation in place, who still miss that goal of seeking their own place to live and must seek subsidized housing, which also is being reduced drastically. If the subsidized housing were not being reduced at this point, the rent controls in place would probably have a much better opportunity to realize their potential.
Mr Crozier: When I asked if it is working, your experience perhaps would be more from the perspective of the renter. Do you see that it's in any way tipped in favour of the renter as opposed to the landlord, from your perspective?
Ms Greene-Potomski: Oh, I wish it were. See, the landlord may not be an incredibly wealthy person. When I had rental properties, I was not an incredibly wealthy person, but at the same time I had the financial ability, by using those buildings as equity, to seek loans if I had to; to realize the very best legal advice I could achieve; to realize the very best contracting and advice on contracting work I could receive etc. As a landlord, I had money behind me that most tenants don't have behind them to secure the safest, healthiest, cleanest shelter they can find.
The Chair: Thank you very much, Ms Greene-Potomski. We appreciate your input here this afternoon.
CAW COMMUNITY DEVELOPMENT GROUP
The Chair: Our next presenter is Earl Dugal, director of the CAW Community Development Group. Good afternoon, sir. Welcome to our committee. The floor is yours.
Mr Earl Dugal: Thank you very much, Mr Carroll. First of all, I'd like to thank you for allowing our organization to speak on Tenant Protection Legislation: New Directions for Discussion.
We in our organization feel this proposal is the single biggest threat tenants in Ontario have ever faced. We feel that having a safe, affordable place to live is a right of all Canadian citizens, regardless of race, income or any other prejudicial things that might be out there.
The current Landlord and Tenant Act and rent control legislation are fair to both landlords and tenants. The current government stated that they would not touch the rent control legislation. We feel they should keep their promises and leave it alone. We feel the New Directions for Discussion will be a deterrent to tenants in the following ways.
(1) Waiting lists for affordable and subsidized housing will become longer. Windsor's vacancy rate is continually declining, expected to hit 1% by the fall. The waiting list for subsidized housing for two- to four-bedroom units are averaging from a one- to three-year waiting list. The waiting lists have already increased and are forecast to increase even more due to the other cuts by the Ministry of Municipal Affairs and Housing:
A large percentage of non-profit developments were cut that were supposed to be built.
Forcing provincial non-profit developments to meet their cores, leaving units empty until market tenants fill the units, allowing people to live in unacceptable housing.
Putting larger constraints on the budgets of non-profits, making it very difficult for them to operate.
The working poor, seniors and low-income individuals will be most affected by this new legislation. They have been continually hit by the current government changes.
(2) Over one third of renters pay more than 30% of their income in rent. The result of renters paying more than 30% of their income in rent is an increase in the number of evictions based on non-payment of rent and an increase in food bank users.
In April 1996, 66% of social assistance recipients were paying more than their shelter allowance in rent.
Eighty-three per cent of all two-parent families with two children receiving social assistance had shelter costs above the shelter maximums.
(3) Vacancy decontrol: We feel that vacancy decontrol will lead to landlord intimidation. Even the Tories anticipate that there will be landlord harassment. They have created an anti-harassment unit and have raised fines for tenant harassment.
With about 20% of tenants moving each year, vacancy decontrol will see a rise in overall rent levels. Vacancy decontrol will hit the most vulnerable tenants: seniors, the poor, the disabled, students and the unemployed.
The discussion paper proposes to have tenants and landlords negotiate a rental fee. Tenants will not have much leverage. It is a landlord's market, especially in the Windsor area, having a forecast vacancy rate of 1%.
Decontrol has not increased rental construction in British Columbia or the United States. Why would it work in Ontario? British Columbia has some of the country's lowest vacancy rates and the highest rents.
(4) Harassment: The response to this concern is that an enforcement unit will be set up to investigate tenant complaints against harassment. We do not feel this will resolve tenants' concerns against harassment. We feel that the tenant will be forced out of the unit before the enforcement unit acts, leaving the tenant to find housing in a market where the landlord can set rents at a high level, making it very difficult for a person to survive.
The Rental Housing Protection Act prevents the demolition or conversion of affordable rental housing to other uses. The discussion paper gives landlords the freedom to convert rental units to condos and to demolish existing apartment stock. Again this could lead to landlord intimidation. The enforcement unit explanation in the discussion paper leaves several questions unanswered. There is no explanation on how the process is going to work, or who is going to be on the harassment board.
(5) Tribunal: The current court system in dealing with eviction and other tenant issues is fairer to both the landlord and tenant. It is a well-defined process that has worked very well in the past. If it is not broke, why fix it? Is this really going to be a feasible alternative?
We agree that something must be done to encourage the creation of more affordable housing. We disagree with what the government has proposed. Tenants have been continually hit by the changes imposed by the current government. This plan is not going to encourage landlords to build more rental units.
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Landlord groups have been saying that the changes in the Tory paper alone are not enough incentive to build any new rental stock. What this plan is going to do is put more individuals on the street. We propose that the government place non-profit and cooperative housing back on the agenda. Non-profit and affordable housing supplies tenants with well-kept, affordable accommodation.
Tenants and members take pride in their developers. Non-profit and cooperative homes bring pride to the community. Instead of forcing tenants to live in inadequate homes, give them an opportunity to live in housing that builds communities. It is the responsibility of the government to provide housing to its citizens. It is a shame that one of the richest countries in the world has people living on the streets.
We are asking that the government move forward on housing issues, not backward. The only way to increase the affordable housing in Ontario is for the government to get back into the housing business. Thank you very much.
Mr Joseph Spina (Brampton North): Mr Dugal, thank you for your presentation. There's a unit complex on Ypres just near Central Avenue that is sponsored by the CAW and has the CAW logo on the front. I wonder if you could clarify for me what percentage of that housing complex -- because I'm assuming it's a subsidized complex. It's a very attractive one with a day care centre and a seniors' tower and so forth -- what percentage of that project was funded by the union?
Mr Dugal: The funding for the development itself was nothing. The child care, which is a separate entity altogether, there was an amount of money that was given by the Big Three in order to construct it for sticks and bricks.
Mr Spina: You're talking about the --
Mr Dugal: The child care centre itself. Child care, yes.
Mr Spina: So who paid for the development? Who funded the development?
Mr Dugal: The government did under the Homes Now program itself, the housing.
Mr Spina: So why does it have a CAW logo?
Mr Dugal: No, it doesn't have the CAW logo. I wish you'd go back and take a look at it. It says Labour Community Service Centre. The child care centre itself is the CAW's child care centre under Labour Community Service Centre, which is a non-profit board. If you're going to raise the issue about the CAW, please raise it in the vein that you know what you're talking about. I'd appreciate it.
Mr Spina: Then my question is this: If the CAW is concerned about people who may be harmed by this or the opportunity that we should have more housing for lower-income people, is this not an opportunity for the labour unions to participate in delivering some of these services to lessen the load on the provincial tax base?
Mr Dugal: Our CAW national is also looking into trying to develop some type of a housing program that would be for home ownership. We were also working with the previous government about working through some of the dollars that were coming out of our pension fund to do something in regard to the housing. Unfortunately, the government was defeated by this government who has definitely not been friendly to us whatsoever. I had personal meetings with Mr Al Leach in regard to some of the issues that were coming forward on the cooperative movement in his office in Toronto.
Mrs Sandra Pupatello (Windsor-Sandwich): Thank you, Mr Dugal, for coming today. I need to comment, and you can certainly comment again, on Mr Spina's confusion with issues relating to non-profit housing. What he was intimating was that the government has had trouble, and they have, in controlling the soaring costs of funding non-profit housing. Their answer to that, which has been the answer to every problem they've faced, is to throw the baby out with the bathwater, so instead of trying to address the real issues in housing, they just decide to throw everything out.
Mr Spina certainly has confused issues like the CAW housing units -- and it's certainly not the only one in this community; there are many. If you're questioning where the private funding comes from, private funding, like the CAW moneys that they put forward, actually makes the housing community as a community because, as you well know, the government money is simply for bricks and mortar. They don't provide moneys to make the apartment community as an actual community. So perhaps after we're through tonight we'll take you on a tour of the non-profit housing communities and show you private funding, for example, CAW money that has been put forward.
Mr Spina: Is this a question, Mrs Pupatello?
Mrs Pupatello: I think we've got to be sure about what we are asking and make sure that we at least know the issues.
Janet, who presented just before you, said something very significant and that was that not only are they going after the rent control that affects the private development, but at the same time with all the cancellations in the non-profit corporations -- and I was involved in one of those as well that lost this funding as soon as the election was over. When you see those two things happening at the same time, what do you see as the result for those on the very lowest income level in our community?
Mr Dugal: As we're finding out, today in our organization we're having an average of between 400 to 500 people who come into our office looking for affordable housing and there is no market for that. All we can see happening is that number growing even more so if this type of legislation is put forward.
But I guess one of the concerns I have, and I should raise it, is the fact that this government has done absolutely no research at all about what will happen if there is no other housing built and what we should do about trying to house some of the people who are still looking for housing. That's the real question that's out there today. Again I'd like to ask the Chair, if there is going to be a committee structure, to do some research to find out that question.
The Chair: As Chair of the committee, I have no idea of the answer to that question.
Mr Marchese: Mr Dugal, thank you for the presentation. A few quick questions. You've read the report, obviously. One of the stated intentions of the government, Mike Harris and many of the others, was that they wouldn't do anything that would hurt tenants. In fact they were going to make sure that the tenant was protected. Did you read anything in this document that would lead you to believe that somehow tenants will be protected?
Mr Dugal: No.
Mr Marchese: I didn't either. One of the other things that they said was that of course the present situation needs to be fixed because it's a problem and so what we need to do is create incentives for the developers to build. Did you read anything in this proposal that somehow gives you the sense that we're going to have housing created by the private sector?
Mr Dugal: To be quite honest, I haven't seen anybody -- and we've been working in the field for 10 years -- come forward to talk about building any type of new housing for rental in the last year or two years or whatever and I don't see anything coming forward even after that. All we're doing is putting more people out on the street.
People have got to start realizing that there are people out there who have no place to live and if we create now another problem for people, it's going to mean more people out on the street with no place to live. What do we do with those people? Again, there's no answer to that. All there is is: "Let's change the legislation to help the landlords, to protect big business, and for the people who can't afford it, it's too bad." That's the sad part about what's happening today.
Mr Marchese: I agree. I want to tell you, I will predict that they will create a housing crisis. The government isn't building. The private sector hasn't been building for the last 10, 20 years. They say that as well. The rental housing protection will get rid of rental accommodation that is affordable and in the end, in four years' time, before they're out of office, they're going to say, "Well, we're going to have to put out that carpet out there in order to get them to build because we have a crisis on our hands." That's what I think they're creating, by the way, is a housing crisis.
Mr Dugal: And I agree.
The Chair: Thank you, Mr Dugal. We do appreciate your input here this afternoon.
I'd just like to ask the members of the committee to please understand that we are here to listen to the presenters and conversations going on among yourselves make it very difficult for me as Chair to hear what they're saying. So I would ask you to please show the respect that the presenters deserve and that is to listen to their presentations.
Our next presenter -- and I don't know whether she's here or not -- is Kay Kavanaugh.
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DANZIG ENTERPRISES LTD
The Chair: I understand that Tim Fuerth, vice-president of Danzig Enterprises Ltd, is here. Good afternoon, Mr Fuerth. Welcome to our committee. The floor is yours.
Mr Tim Fuerth: Thank you, Mr Chairman, members of the committee, for showing the patience of travelling the province for the last two weeks and for the remainder of this week listening to various submissions on this very important issue dealing with the housing policy.
We've heard various comments already today. I have provided you with a fairly detailed package containing, I believe, some 18 recommendations that we put forward to at least assist in addressing this problem.
It's been suggested that there's a housing crisis or that at least a housing crisis will be created. I submit to you that at least in Windsor, and I think it's probably indicative of the province, that in fact the housing crisis already exists and it exists because of the policies that have failed over the past 15 to 20 years under rent controls.
In my submission I've provided quite a lot of detail, but there are a number of unmistakable facts. One fact is that in Windsor in October 1995 we had a 1.8% vacancy rate in private rental structures. The second fact is that the vacancy rate is projected to be 1% in October 1996.
Also, according to Canada Mortgage and Housing Corp in its October 1995 rental report, it is indicated that since 1984 80% of all multi-unit high-rise rental construction in the city of Windsor has been assisted construction and 100% of all row housing development has been assisted construction.
It doesn't take a rocket scientist too long to figure out that in Windsor there really has been no private rental construction for some 12 years now and it doesn't take a lot to figure out that that aging rental stock is deteriorating day by day and certainly rent controls contribute to, as we'll hear, I'm sure, from a number of subsequent presenters, the deterioration of that rental stock.
In our submission, we've indicated 18 recommendations. Probably first and foremost, it's appropriate to deal with the discussion paper which was released.
Our overall comments on the discussion paper: Its intended effect is to stimulate housing construction and to improve the quality of the rental accommodations, and that's important. If you walk around Windsor and start looking through apartment buildings, you're going to see that there are a number of apartments that are available for rent. Most of them are very poorly maintained and rent controls really have contributed to that.
It's indicated in our submission that we've constructed about 700 new apartments in the late 1970s, early 1980s. We've constructed nothing since then. We hear day in, day out from tenants coming particularly from out of town looking for apartments how disappointed they are in both the cost of the rental accommodation here and as the quality of the stock and how inferior it is in relation to the rest of the province.
The real fundamental problem has been kicked around so far today, but it hasn't really hit the nail on the head. The problem in itself, it seems to us, is not that rent controls work or don't work. There are lots of rhetorical arguments that can be made, whether it's good, bad or indifferent. The real problem is that people don't have the incomes necessary to actually pay the rents that are supported by the cost of running the structure, the property taxes, the mortgages and so forth. That really is the fundamental problem we face, that the tenants can't afford to pay the rents. It's not that the rents are high or low; it's that the people can't afford to pay those rents.
In our proposal, we've suggested that an approach should be pursued to investigate a shelter allowance system whereby those people with lower incomes who are really in need of assistance, that that assistance should be targeted to them rather than the assistance being targeted to every renter, whether their income is $10,000 a year or $100,000 a year. There are a lot of millionaires who are benefiting from the current rent control system.
That's the approach we believe the government should really be pursuing and that will take out all of the rhetorical arguments that the various parties have been throwing about in terms of whether rent controls are good or rent controls are bad; the reality is that there are costs incurred to run a complex; the reality is that the property owner has to pay those costs. And the reality is that if you keep rent controls and you keep rents artificially low, the owner of that property has to pay his mortgage, he has to pay the property taxes, he has to pay the utilities and he has to pay the insurance. The nuts and bolts of it are that when there's money left on the table -- and there's not going to be very much of it -- that money is going to be all there is to fund improving and repairing those buildings.
As I emphasize, certainly in Windsor the stock of apartment buildings is aging, and aging quickly. Unless there are additional funds available for those property owners to refurbish them, those tenants are going to come into our office day after day and complain about the inferior quality of the rental stock in this city. There can be no mistaking it.
Our view on the proposals: It is entitled "Tenant Protection Legislation" and there seems to be a lot of discussion on whether it's an appropriate title. Our view is certainly that it is an appropriate title because as far as the tenants are concerned, they will be getting protection. There are a large number of rental units in the city of Windsor -- I believe it to be a majority of the rental units -- where the units are being rented at lower than the maximum rents, the rent control rents. It's hard to imagine that any landlord is going to start increasing their rents to unrealistic and unreasonable levels and empty their building, as was suggested by one presenter before, that there's a scheme to have a low vacancy rate by not renting your apartments. As I say, as a landlord it does absolutely no good because you still have your property taxes to pay, your mortgage to pay and the like. That's a foolish argument that has been put forward.
Our view is that the proposals that have been put in place clearly protect the tenant. There is some benefit to landlords potentially, but on the whole -- and you probably haven't heard this and you may not hear it again from a landlord -- our view is that if you're not going to have market rents or something that will approach market rents over a predetermined period of time, you should just leave the current legislation in place because what you're proposing is worse than what we have now. I don't know if you've heard that, but certainly that's our view.
Mr Marchese: We haven't heard that.
Mr Fuerth: We should leave it the way it is. I heard the comment, "If it's not broke, don't fix it." My feeling is it's broke, and if we're going to break it some more, we might as well leave it broke the way it is rather than just break it worse than it already is.
We have contained in our material a number of recommendations that I think are self-explanatory -- I'm watching the time. Certainly there are a number of aspects of the Landlord and Tenant Act that bear looking into. The pet provisions in the Landlord and Tenant Act need to be strengthened. Landlords need to be given some additional powers to prevent damage to their units because of those tenants who don't follow pet provisions.
Our thought, as we've set out in the discussion paper -- Mr Meyer earlier this afternoon suggested that annual guidelines should be 10%. Our view is a little bit more conservative. Our view is that perhaps the guideline should be 4% to 5% a year over a period of time, which would have the objective of over five to 10 years bringing rents to the market level but will at least protect those sitting tenants from exorbitant -- and I consider 10% certainly to be exorbitant. I'm not sure that I would consider 5% to be an exorbitant rent increase.
The discussion paper talks about preventing unfair rent increases. There's a real problem with everyone's interpretation of what exactly the word "unfair" means. To one person it means different things. Is it really unfair that a landlord should have the right to earn a reasonable return on his investment? Certainly a number of the housing groups, as we've heard, that support rent controls haven't put any of their money into rental structures and I'd encourage a number of those entities to use their own funds to build new construction, new rental units. Is it really unfair that a landlord needs a higher rent increase to properly maintain a building so that the tenants have a place they're proud to live in? I would submit to you that it's not unfair.
The reality, and I guess another unmistakable truth, is that you get what you pay for and only what you pay for. When we have a system where rents are controlled, tenants are going to get what they pay for, and if they're controlled and they're controlled on the downside, ie, biased towards lower rents, they're going to get worse quality apartments and fewer of them. There's just no mistaking that fact, because in the end you get what you pay for and only what you pay for.
I've spoken now for approximately 10 minutes. I'd like to use my time, if I could, to answer any questions on what I've said and on our submissions.
The Chair: Thank you, Mr Fuerth. We've got about three minutes per caucus, beginning with the Liberals.
Mr Curling: I am going to try to ask a question and get Mrs Pupatello to ask you another. There's so many things here that I totally disagree with you on, but again the fact is it provoked a lot of questions here. I will go straight into it actually, but thank you for putting forward some recommendations.
One of them is recommendation 1, but before we go to that, let me quickly tell you this. Your guideline that you were getting all along had maintenance and all the operating costs involved in that, and a guaranteed amount of profit that you could get. No other industry gets that. But you're saying here now in recommendation 1 that allowances should be paid directly to landlords to ensure that Ontario taxpayers funding such a system would know what their tax dollars are actually being used for.
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I put it to you: If you were working somewhere and paying rent at another place, do you think that landlord has a right to come to your company and say, "You send that person's pay slips over to me so I can guarantee my rental amount of money coming to me"? Do you feel that is fair?
Mr Fuerth: I guess what I feel is fair to the Ontario taxpayer is that if they're paying for shelter, those funds should, in the end, end up paying for shelter. Certainly one of the items contained in our report is that under the current system where people are receiving shelter allowances -- and let's not fool ourselves or let's not kid ourselves. If you go and sit in the courthouse here, which in Windsor is on Thursdays every two weeks for landlord and tenant court, invariably most of the evictions are for non-payment of rent. Invariably, most of the people who are tenants have been there before -- you start to recognize all the faces and the names -- and invariably they're receiving shelter allowances. But obviously those shelter allowances that we as taxpayers are funding aren't getting to the landlord to actually pay for that housing.
Mr Curling: I won't follow through on that, but let me ask you another one: actual market legal rent. You're a landlord now. Do you get the legal market rent that you charge for, or do you charge for less?
Mr Fuerth: In terms of the maximum rent?
Mr Curling: Yes.
Mr Fuerth: In some cases we're charging the maximum rents.
Mr Curling: And some are paying less?
Mr Fuerth: In other cases, we're not.
Mr Curling: So the guideline allows you to go to that maximum legal rent anyhow.
Mr Fuerth: That's correct, but what's being proposed under the proposals is that the rent registry be in effect abolished. I don't go so far as the previous presenter in suggesting the rent registry be maintained, but I do think the onus in the case where there's an application for an illegal rent -- that by taking the rent registry at the date of transition, the onus be on the landlord to prove that the rent three years from now is in fact the legal rent. So there's no need to maintain the rent registry at great cost to the taxpayer when the onus of proof can easily be placed on the landlords, which is really where it should be.
Mr Marchese: You said one thing I agree with, and that was that people don't have incomes to pay for rental accommodation. That's something that has been said by Professor Hulchanski, who says the reason the developer has not been building is because there is an affordability problem. There is no demand because people can't really afford to buy or to rent at rents that are excessive or housing prices that are just too high. So we have an affordability problem, therefore there's no demand, therefore there's no supply. Basically, that's what he said.
While I agree with you that that is the case, that people don't have the income really to pay for rents that may be excessive, you on the other hand seem to suggest that a 4% or 5% increase a year might be all right, and presumably by saying so you're assuming that people can afford that. Is that more or less fair?
Mr Fuerth: I talked earlier about the definition of "unfair" and people's interpretation. What I would submit to you is that a particular rent increase where those funds are being used to improve, to refurbish that rental structure, in my view would be a fair increase because the tenants in that structure will in effect be getting their funds returned to them in terms of a better-quality place to live, a place to be proud of.
Mr Marchese: I have two problems with that. First of all, I'm not sure that people can continue to afford more than what they are paying. We're hearing a lot of people saying that more and more of their income is going into housing, and that's a problem. You're suggesting that paying a little more might not be so bad because they'll get a better return in terms of the building, but the real problem I have is that many people have already been paying for that. The assumption you're making is that landlords are of course putting back every penny that they've been getting through the guideline and above the guideline, that it has been going back into the repairs of the building. What guarantees are there that if you remove rent control, somehow every penny will indeed go into maintenance?
Mr Fuerth: The guarantee is a market system. If a landlord isn't repairing his building and the person next door has a building and he is putting the money back into the building, it's going to be much easier for that landlord next door to rent his unit. The landlord who is not repairing his building, not putting the money back into the property, is going to have invariably over a period of time a very deteriorated and ultimately an empty building on which the property taxes still have to be paid, the mortgages still have to be paid, the insurance still has to be paid, the utilities still have to be paid.
Mr Marchese: Rent control, however, is not creating such a problem at the moment.
Mr Fuerth: No.
Mr Marchese: Once we remove it, then the competitive forces will take over, but at the moment rent control is preventing this thing from happening.
Mr Fuerth: In some cases, yes.
Mr Marchese: I don't see that at all, but I have another question for you. In terms of building affordable housing, we know that the private sector doesn't build, has not been building, doesn't want to build because there's no fair rate of return -- whatever that is -- to the developer. Who should be building affordable housing for people who clearly are having an affordability problem?
Mr Fuerth: I think the issue is not affordability as a problem but addressing that problem of affordability by putting the funds into those tenants who are truly in need. There are a number, as I've mentioned already, of beneficiaries of rent control who could afford to pay more rent. I think the problem is that we cast everybody with a broad brush, that you need assistance to avoid paying a fair rent, rather than directing the funds to those people who truly, genuinely and legitimately are in need of assistance.
Mr Marchese: But we're doing that now.
Mr R. Gary Stewart (Peterborough): Thank you, sir, for your presentation. I have to applaud you because you have come forward with some recommendations. It's my thought that these hearings were about listening to people and finding recommendations or reform of the present system that appears not to be working.
I want to go back to recommendation number one, which is to pay directly to landlords. We have heard more and more over the last couple of weeks that landlords are not getting involved with affordable housing because they are concerned about not getting paid, period. I hear, as Mr Marchese just mentioned, that rate of return is the reason they won't build. Maybe it isn't rate of return, but not getting paid, period. We're hearing about people who are in apartments for 18 months and paying two months' rent; 16 months and paying three months' rent. I guess my question to you is, and it goes along with what Mr Curling was saying, if the landlords were guaranteed payment of rent through shelter subsidy, do you believe they would start to rebuild again?
Mr Fuerth: I believe they would, and I believe the reason they would is because the rate of return would increase. Every lost dollar in rents that you're not collecting is reducing your rate of return. I did address earlier the shelter allowances, and there's some discussion about it being unfeasible that they be paid directly to the landlord. Certainly that may be true. One of the organizations, Ontario Fair Rental Policy, put forward what I thought to be a very good proposal in the sense that if the rents are guaranteed and if tenants default on their rental payment, a landlord would simply go to the appropriate office and make notification of the fact that the rent has been missed and it will be paid.
I think it would also mean that those less advantaged people in society would have access to a greater selection of housing than they currently have.
Mr Stewart: I think that's what we're hearing. Another thing came out a number of times, and that is, why do we always have to build new housing? Is there not another way? Everybody seems to want to be in a new place, and I guess all of us are in the same boat, but if we're going to have subsidized housing or if we're going to build non-profit or whatever, or generate somebody to do it, why do we always have to do new? When we look at statistics over the last few years, the government was paying $100,000 a unit and the private sector could do it for $60,000 or $70,000. In your mind, do we need new units? Why don't we start refurbishing some older buildings? Do you think the landlord would do it if he's going to be guaranteed payment?
Mr Fuerth: I think there would be a tremendous incentive. If you're doing a return analysis, if you can conclude with certainty that your rental income will be there, it would make it that much more forceful an argument to in fact do so.
Mr Stewart: And old or refurbished instead of always building new.
Mr Fuerth: Yes.
The Chair: Thank you very much, Mr Fuerth. We do appreciate your attendance with us this afternoon.
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For our next presenter, I'll go back to Kay Kavanaugh. Is she here yet? Then we'll ask Dean LaBute, chair of the Windsor-Essex community advocacy group.
Mrs Pupatello: Mr Chair, is Mr Fuerth, the last gentleman, the one who is on at 7:20 tonight?
Clerk of the Committee (Ms Tonia Grannum): He's cancelled at 7:20.
Mrs Pupatello: He's not on at 7:20, so you have made a change to the agenda, Mr Chair?
Clerk of the Committee: No, he's vice-president of the group.
Mrs Pupatello: But you have opened up a later slot?
The Chair: Yes.
Mrs Pupatello: Thank you. Just so we know. You've set some precedents there today, Mr Chair.
The Chair: I haven't set any precedent. The precedent is set.
Mr Marchese: Mr Chair, a quick clarification. That was the Windsor-Sandwich riding association?
The Chair: No, it was Danzig Enterprises. He gave you a written submission.
Mr Curling: But he's not presenting later on.
The Chair: He is presenting later on again for another fellow. The clerk has a letter on that. Somebody else has designated him to make their presentation because of illness. Bill Taylor, because of illness, has asked that Mr Fuerth make his presentation.
Mrs Pupatello: So is Bill Taylor not on at 5:40?
The Chair: No, Mr Fuerth is making his presentation for him.
Mrs Pupatello: So the fellow at 7:20 is not on, but he's being moved to 5:40.
WINDSOR-ESSEX COMMUNITY ADVOCACY NETWORK FOR PERSONS WITH PHYSICAL DISABILITIES
The Chair: Good afternoon, Mr LaBute. Welcome to our committee. The floor is yours, sir.
Mr Dean LaBute: Thank you, Mr Carroll, and good afternoon, ladies and gentlemen. My name is Dean LaBute, and I'm the chair of the Windsor-Essex Community Advocacy Network for Persons with Physical Disabilities. We welcome this opportunity to appear before you today.
Ladies and gentlemen, throughout history there has been an ongoing struggle between those who have power and those who do not. You will find throughout the annals of history what took place centuries ago. Themistocles's cry to Euripides of "Strike if you must, but hear us first" applied then and applies today.
If the government of the day wishes to proceed with new directions, it has an incumbent responsibility to listen to the people and to act upon their recommendations. That is what we expect of a democratically elected government, and we expect no less.
The Harris government's paper entitled New Directions, ladies and gentlemen, happens to be most intriguing. We look upon this paper as failing to make the transition from the tossed sea of cause and theory to the firm ground of result and fact. If it is the intention of this government to put forward this paper strictly as a discussion paper, then you are to be commended, for you have stimulated discussion across the length and breadth of Ontario. But if it is the groundwork for proposed legislation, then I tell you, ladies and gentlemen, that New Directions is the bastard child of the illicit union of dogma and propaganda, conceived on a bed of false and blind hope in the free market system.
The result of the implementation of this document as it stands would be detrimental to the more than 3.3 million tenants in Ontario. Those 3.3 million tenants in Ontario have reason to be concerned because tenants' rent rates will increase, will in fact skyrocket. There will be many people seeking housing but unable to afford it. The question then is, where do they go? That has been posed before to you.
If this is continued through to its illicit end, it is our contention that where these people will go has already taken place in history, and history will be repeating itself. Go back to Steinbeck's book, The Grapes of Wrath. In there, in the Dirty Thirties, we had tent cities erected because people had no place to go and no means to keep a proper roof over their heads. Is that what we foresee for Ontario? I hope not, ladies and gentlemen. Absolutely not.
The facts remain as the following: This document fails to recognize the changing demographics of Ontario. Canada, as you know, is unique in the world in that we have a larger segment of our population as baby boomers than any other country in the world. In fact, baby boomers represent 34% of the population. Their needs are changing. The need for rental accommodation will change, will in fact increase. These issues are not addressed in this document.
Between 14% and 16% of the population of Ontario are people with disabilities. With 3.3 million tenants in Ontario, you're looking at approximately 500,000 people with disabilities who are tenants. That will continue to grow, because according to Health Canada and Stats Canada, it is projected that by the year 2015, one in four people in Canada, therefore one in four people in Ontario, will have a disability. Consequently, they will be unable to maintain a single-dwelling home and will require to go into apartment living or some other means of accommodation to suit the changing needs. We are all growing older; we are all living longer. A byproduct of growing older and living longer is disabilities. Consequently, the housing market today and in the future will have to adjust to meet the changing needs of the citizens of Ontario.
We implore you to listen to what the people have to say and to act on that accordingly, for in good government and under the democratic process, we abide by the rules of majority government, but it's incumbent upon the majority government to watch for and protect the rights of the minority. In this case, we're talking about the tenants of Ontario. In doing so, you will be contributing to good government.
As for recommendations, we recommend, because of the importance of this subject, that a commission be struck by the Ontario Legislature to do an in-depth study on the issue, to address the current needs and the future needs of tenants of Ontario; and that that commission be comprised of members of the Legislature, landlords and tenants; and that they have the ability to come back uninhibited by ideology or dogma but rather to come back with what's in the best interests of all tenants of Ontario. That is one recommendation.
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A second recommendation would be that you recognize the changing demographics of the population of Ontario and provide that that be acknowledged in the final product brought forward for the benefit of all people of Ontario.
Therefore, you will protect the rights of those in the minority position, you will be looking out for the best interests of all Ontarians and you will see to it that we have a level playing field for both landlords and tenants.
I have heard, sitting in the chair waiting to make my presentation, about the concerns of landlords about their return on investment. It's my understanding that compared to any other sector in the last 10 years in Ontario, the rate of return on investment for landlords has averaged 10%. I am not familiar with any other sector in our economy that has maintained that level of return on investment.
There have been comments made about housing stock, the depleting amount of housing stock and the decrepit shape of housing stock. That I blame on this government and the previous governments, be they NDP or Liberal, going back to the time of Mr Davis, because there was not the mechanism put in place to properly monitor housing stocks and see to it that buildings were properly maintained. There was a component, as I know and you know, provided in rent that in addition to a profit margin, money was to be reinvested in the upgrading of the stock. That has not been done. The question that must be asked is, why was that allowed? When I hear that there is millions and millions of dollars in work required to bring the housing stock to standard, why has it been allowed to deplete to that point?
I say to you that you have an opportunity, as members of provincial Parliament and as representatives of the people, to act on behalf of all the people and act fairly and equitably. I would entertain any questions.
Mr Marchese: Thank you, Mr LaBute, for your presentation and for some of the observations you've made. First of all, we have read as well that there is a 10% rate of return -- not average but annual rate of return -- over the last 10 years. Even if that person who did that study in the Globe and Mail was wrong and the rate of return is 5% a year, that's still quite good, don't you agree?
Mr LaBute: In today's economy I would say that the other sectors of the economy would very much entertain and welcome a rate of return of 5%.
Mr Marchese: You made another point about maintenance and not putting into place any mechanism to make sure that whatever money was received by the landlord at the guideline level or above the guideline went back into maintenance. That's a real problem, because we have a lot of landlords saying, "We have a stock of buildings that is deteriorating." It makes it appear that all those dollars they've been getting over the years have been poured back into those buildings, but we still have a poor stock of buildings and as a result we need to get rid of rent control to fix that problem. Do you think if we remove rent control, somehow those landlords would put more money back into the buildings? Do you have a sense of that?
Mr LaBute: When rent controls were brought in by the Progressive Conservative Davis government, in 1974 as I recall, there was a need then, I maintain there is a need today and there will be a need in the foreseeable future. I see no other reason for the removal of rent controls, but they can be built upon. You have a foundation and it is not perfect. They can be built upon and made to benefit all parties concerned.
Mr Marchese: I have a quick question on the issue of disabilities and whether or not accommodation will happen for them. My fear is that the private sector has not built around people with disabilities in the past and they certainly haven't been building very much at the present time. My concern is that unless governments do the building to take care of the kinds of accommodation that needs to be put in place with people with disabilities or with HIV, we're never likely to see that unless somehow something is going to happen in the future. What is your feeling about that?
Mr LaBute: I share that point of view, but the fact remains that in Toronto, where you people emanate from, you have Professor David Foot at the University of Toronto who has written an excellent book on the changing demographics of Canada. It outlines clearly, unequivocally what will take place in Ontario and in Canada in the next 20 years. I suggest you read that book and incorporate it when you're drafting legislation and suit your legislation to address the changing needs of the population, and therefore you will address the needs of the disabled.
Mr Ernie Hardeman (Oxford): Thank you, Mr LaBute, for your presentation. First I want to make sure -- I heard you mention that the rate of return on investment was fairly good considering today's economic times. I point out that the figures being used are over a 10-year period. There were some different economic times in that 10-year period, and some of the years are no return or very little return. I'm not suggesting that's the end to the problem.
Mr LaBute: Yes, and I stated that the average over the 10-year period was a 10% return on investment.
Mr Hardeman: A previous presenter made the comment that if we were not going to totally decontrol, for the landlord's benefit the present system was better than what we were proposing because of the decontrol and recontrol on units.
We have consulted with some 60 different groups and organizations, both in the development sector and in the rental sector, and they all told us the system was broken and needed some repair, that it wasn't working, that quality accommodations were unavailable for the price people could afford to pay. Having said that, what would your suggestion be if the discussion package is not the answer and the present system is not the answer? Almost everyone involved has told us that. What do you think we should be doing as it relates to the two packages that would solve some of these problems of trying to get decent accommodations for people to live in?
Mr LaBute: As I stated in my first recommendation, we are of the opinion that to serve the best interests of the more than 3.3 million tenants in Ontario, it warranted a commission being struck, not tied to any ideology or dogma from any of the three parties but rather given the clear, unequivocal mandate to search out, investigate and come back with recommendations, therefore being an independent, arm's-length commission from the government. The government would not be chastised for adopting any recommendations that were brought forward through the commission. Rather they would be commended for acting upon and fulfilling their obligation to act.
Mrs Pupatello: Thank you, Mr LaBute, for coming to speak to us today. You have been quite busy since the last election. You launched a successful appeal against changes to the building code. The minister at that time was not aware of the significant impacts on the community of people with disabilities, and you were very successful in doing that, so we're glad you're back again, although they're not giving you any rest since the election.
Nevertheless, you quoted David Foot. In dealing with demographics he not only addressed the future but also the present, and he called them senior seniors, that today we have senior seniors who are probably the poorest Canada has ever seen and that the grouping of senior seniors will increase, that as the boomers move to seniors and seniors to senior seniors, they will become more poor. So it's an issue today, not just an issue tomorrow.
What the government is currently proposing in lifting that one-time increase -- for example, most of our senior seniors are women on fixed income and are considered poor. If a senior senior woman becomes very disabled and would prefer to move to an apartment that's close to the front door, say, of the building, in moving from the third floor at the end of the hall to the first floor by the front entrance -- that move within the same building -- she could face a significant increase in rent. The problem is that she can't move there because this current government would allow that rent to go up, but she can't afford that rent now as she's probably paying more than what she should be paying, more than the 25% recommended. Governments say you shouldn't spend more than a quarter of your income on rent.
What do you see happening to senior seniors, most of whom are women, and they are the poorest women Canada has ever seen?
Mr LaBute: If these and other questions are addressed by such a commission, they have to take into consideration the change in dynamics and the economic dynamics of the aging population and accommodate for it accordingly.
The Chair: Thank you, Mr LaBute. We appreciate your coming forward this afternoon with your suggestions and your input.
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SCARSDALE TENANTS' ASSOCIATION
The Chair: Our next presenter is Donald Fraysure, chair of the Scarsdale Tenants Association. Good afternoon, sir. Welcome to the committee. The floor is yours.
Mr Donald Fraysure: Thank you for hearing my presentation. I'm Donald Fraysure, chair of the Scarsdale Tenants' Association. The Scarsdale Apartments are a complex of two buildings of three storeys each with a total of 48 units on Tecumseh Road East in Windsor. These are a private investment for income apartments. This is my third time before the standing committee. They all dealt with rent legislation.
My presentation, like the others, is based on the government's discussion paper as much as one can, considering its lack of precise information and its reliance mainly on generalities.
We start with page 1 and what the government calls "Goals for a New Tenant Protection System," with the following breakdowns:
"Protect tenants from unfair or double-digit rent increases, evictions and harassment and provide strong security of tenure."
(A) How can double-digit or unfair rent increases be avoided when tenants' rights are forgotten and landlords' rights become paramount? The first empty apartment in the province after the law's passage starts the build-up of landlord greed, as is man's nature when he has a chance. Multiple vacating of the same apartments will make double-digit rent increases common again regardless of market rents. It is very evident that without any kind of cap on vacant apartment increases, government's promise of no such increases being allowed means absolutely nothing. We so-called sitting tenants could be economically locked into what could be increasingly bad situations with 8% to 10% annual rent increases. This holds true particularly for seniors and people on fixed incomes.
(B) Economic evictions will become the tool of some landlords, along with harassment, to have even a larger turnover of tenants than the present 25% annual average. We get the promise of yet another bureaucratic enforcement unit for the relief of harassment. Again, are legal questions being taken out of the hands of legal experts and judges and put into the hands of bureaucrats? This with the promise of less red tape on page 1. Harassment is still one of the hardest complaints to prove.
(C) How can tenants have a strong sense of security of tenure with the most basic of tenants' rights being withdrawn, starting with more loss of available affordable housing with the actions of the government in regard to non-profit and co-op housing?
"Create a better climate for investment in maintenance and new construction."
(D) This legislation will not create a climate for investment. Several presenters from construction and development before the committee have said that rent control is not the culprit. How many times does it have to be pointed out just to look to British Columbia, among others, to learn that this type of legislation does not work? There has been no increase in rental housing construction there since the legislation banning rent control was passed.
"Improve enforcement of property maintenance standards."
(E) We, to a point, back your property maintenance standards improvements on pages 3 and 4. For instance, be more realistic in the fines levied. Are they enforceable? Fines now levied are usually in the low hundreds at the most. Work on it; be sure that what you do works. We agree that the present laws and bylaws are too weak. They need to be streamlined, and that includes the two-tiered system to settle disputes. Again, you are dumping on the municipalities responsibilities without spelling out where aid, both financial and manpowerwise, is to be found.
We have had direct working contacts with our city of Windsor housing department. In my last presentation before the committee I pointed out our plans. We followed through and had a building inspector and work orders, the whole bit. I must say the work that was passed and the amount left undone but passed left a lot to be desired. Our next step under Bill 121 was to go to the local rent control office, and a rent officer handled our case. The case was partially solved by the landlords and tenants negotiating a settlement. The landlords put aside a $25,000 trust to start on a list of needed repairs. The tenants withdrew their list of filed complaints. This was done with a minimum of the rent officer's input. In the end the repair list was still not fully done.
We learn now that there is an outstanding account number from Canada Mortgage and Housing Corp against Scarsdale Apartments to finish a list of repairs and maintenance that includes some of the windows and other items from our old complaints or else a holdback will be imposed. It is very evident that our landlords have to be forced to get the proper repairs and maintenance done.
Our experiences certainly point out the need for stronger provincial enforcement of repair and maintenance standards, but in a better way. With the high rate of construction in Windsor and the area, property standards officers are and will be increasingly snowed under with work. Has this contingency been planned for?
"Costs no longer borne" will no longer "be calculated for capital expenditures."
(F) The use and need for capital expenditures, page 3, should be clearly and specifically spelled out once and for all as to the definition, limits and responsibilities of the usage of these expenditures. We do not agree that costs no longer borne should be done away with. Also, the additional 1% to lift the cap to 4% is uncalled for and unfair. What is to be the final usage of the 2% in the guidelines for the sitting tenant's rent? It is now for capital expenditures, but is it not to be accounted for under the new legislation? Another hidden profit?
We point out the above because of our experience with previous legislation, RRRA 1986. This was in regard to a phase-in for financial loss for the years 1989 and 1990 for an additional 10% to our rent. I would like to quote from Hansard of August 22, 1991. This is from my second presentation before the standing committee: "Even with our landlord no longer able to claim financial loss," for 1991 "he will be able to receive...financial loss from 1989 and 1990. Hence...this amount compounded...remaining on our rents, becomes an additional windfall profit to the landlord. That should be corrected."
Now, five years later, this compounded windfall still remains in our rent and the landlord profits.
This is what can happen with the 4% per year. It will continue as a windfall profit to the landlords like the phase-ins in our rent. Even after the capital repair is paid off out of the rent increase, it will continue in the rent. There should be an annual financial statement of proof to assure tenants that they are not being ripped off again.
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Another allowable rent increase for the landlord is the increase based on property taxes and/or utilities, with no limit under this increase, but the tenant cannot ask for a rent decrease based on a decrease in rates.
Another tenant tax burden is the discrepancy in some situations where tenants pay many times the tax cost of the residential private home owner. This should be assessed at an equalized tax rate for all.
"The rent registry will be eliminated and maximum rent will no longer be calculated."
The rent registry should not be eliminated. It has taken years to build up this pool of information for both landlords and tenants. This is the only place with a list of maximum rents for comparison and it is an inventory of housing units. It is another example of the withdrawal of tenants' rights by the government.
"To care for tenants instead of units."
In targeting tenants instead of units, will you live up to one of your promises, in which you said, "We will target those most in need through shelter subsidies"? Does this apply to seniors and people on fixed incomes, among others, now living in the private sector when their rent exceeds the acceptable 30% of their total income? Will they be on a separate listing or will they be added to the public sector list which costs $2.5 billion a year now? With a total of 1.5 million tenancies in the province, where will the money come from? Only the landlords who receive the subsidies will come out ahead. You have used the Clayton-FRPO study which recommends subsidies and was financed by landlords through their organization, FRPO, to their advantage.
Using a round figure of $16,000 for the poverty line in Windsor-Essex county, we find that a 30% acceptable housing cost works out to only $4,800 a year. There are many people with incomes of $1,000 a month or less, mainly single women and widows and some seniors. Their rents are hitting over 30% to 50% or even more. With a local public housing waiting list of two years and with a very uncertain future in the field of affordable housing, what happens now? Keep rent control.
In Scarsdale alone, an average 12 to 15 of the 48 units are rented by seniors. Several others are rented by fixed-income tenants. I haven't invaded their privacy, but I know a large percentage are paying more than 30% for their rent.
As an example, we submit the following chart of the recent rent history of the Scarsdale Apartments. That's on the last page. It is principally broken down since our present landlords took over on July 27, 1990. Since our rent change date is June 1, we used that date for the annual date. You will notice a very fair investment return based on the legal increases alone for the six-year period. The total is 34.8%, or $198.75, for my two-bedroom apartment. In fact, an almost $200 increase in rent for that period seems excessive.
Referring to figure 3 on page 16 in the discussion paper and also on the next page, you will see the smoothing out of the impact of inflation on rent increases, especially from the point of more active rent control in the 1980s and the passage of the rent control Bill 121 in 1991. The grid lines comparison is of the guideline and the consumer price index. Government must agree that rent control has proved effective, as you retained it for one sector of the rental market, the sitting tenants. Why don't you admit it is the best system and use it all the way? Keep rent control.
Mr Hardeman: Thank you very much for your presentation. I want to go to page 3, as you're suggesting we keep the registry. The landlords have made a number of presentations and they also have concerns about removing the registry because of the maximum rents, which they would lose under the removal of the registry of course; after the sitting tenant has left the apartment, the new tenant is no longer covered by the maximum rent. Do you have a concern about keeping that maximum rent in place, recognizing that the landlord who made a presentation a number of delegations ago pointed out that more than 50% of his renters in the city of Windsor were not at maximum rent now? Keeping the registry would provide them with the opportunity to raise that maximum rent at any time they saw fit.
Mr Fraysure: I would say what I say in my presentation. It has taken years to get this information, and what comparison figure are the tenants going to have if they move from one building to another? They have no idea. It could vary. They don't know how much was paid last year, the year before last, unless they have some kind of registry.
Mr Hardeman: But in the decontrol of the second tenant to a unit, the registry would be not needed because there was a negotiated rent, so what was paid last year may have been less or maybe --
Mr Fraysure: But in these negotiations, what's the tenant going to base his figures on? If that apartment is worth X number of dollars maximum rent today, then if he goes in tomorrow he has something, but if he goes in six months from now, he has no idea. He can be told anything.
Mr Curling: Thank you very much for your very concise presentation. You've covered many things that many tenants have come forward to say. The New Directions discussion paper is based on Lampert's report, a consultant they paid a lot of money to to tell them some of these things, and he says that even when rent control goes, they will not build; more has to be done before they start building.
There's one thing I've asked many of the landlords, and maybe you can help me on this one. It's said that close to $10 billion worth of maintenance is needed to fix all these units around Ontario, but inside the guidelines all along a calculation was made for them to do that. Now they're asking for more. They're asking for all these things to come off before they can do that. I asked them what they have done with that money, $10 billion. Do you have any comments on that, whether we should proceed in taking off rent control, proceed in making a long list of things that Lampert says they want so that new affordable units can be built? Do you think they will be built even if we do that one more time?
Mr Fraysure: I watched some of the Toronto TV and it seemed to me that they were asking for, as you say, the red carpet. They have had this much money. When the increase on my apartment went up $200 in six years, where did that money go? There was a turnover of my apartment building in 1987, and in a period of 33 months, there were five different landlords. The price of the sales on the apartment building went up, on a million-dollar investment, approximately $600,000 in those 33 months. Where did that money go?
Mr Marchese: Mr Fraysure, thank you very much. You made several comments I would like to touch on, but I may only be able to ask one. You've heard some of the government members say that the system is broken. You've heard some of the developers and landlords this morning say that the system is broken. They attribute that system breakage to rent control. They say that's what's caused all these problems. They talk about your not having to worry because the market will take care of you; it will find its equilibrium. You've heard some people say, "If you have annual increases from 4% to 10%, that's not so bad either, because you tenants will get a better building as a result of that through maintenance." Some landlords argue that we're not experts, so we can't even comment on this; only they can comment. Do you feel the system is broken in this way and we need to get rid of rent controls to protect you better?
Mr Fraysure: No. As I said in my presentation, several developers have said that rent control isn't the culprit; the culprit was taxation and other factors. Fix those factors, sure.
Mr Marchese: Do you agree with a proposal that the government might want to implement to make sure there are measures put in place so we know every cent they get in terms of annual increases, or beyond increases, that it gets spent on maintenance? Do you agree with something like that?
Mr Fraysure: I have said that over three different presentations. I've said it here, that there should be some proof.
The Chair: Thank you very much, Mr Fraysure. We appreciate your input here this afternoon.
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WINDSOR-ESSEX BILINGUAL LEGAL CLINIC
The Chair: Our next presenter is Patricia Broad from the Windsor-Essex Bilingual Legal Clinic. Good afternoon and welcome to our committee.
Ms Patricia Broad: Thank you for allowing us to contribute to this discussion. We base our submissions on the experience we've had with landlord and tenant matters.
The Windsor-Essex Bilingual Legal Clinic offers legal assistance to people in the Windsor area who meet our income criteria. While we assist many people with Workers' Compensation Board and social assistance matters, we also help people with their landlord and tenant matters. This provides firsthand experience with the dramatic effect that the Landlord and Tenant Act has on individuals in our society. As such, we have a direct interest in the discussion paper, Tenant Protection Legislation: New Directions for Discussion. It is our concern that if these proposals become legislation in their present form, we will lose affordable housing and more people will be on the streets.
It is clear that the tenant population is both sizeable and has certain distinct characteristics. I would draw your attention to the Globe and Mail report of Tuesday, August 20, 1996, which says, "About a third of Ontario's population, 3.3 million people, are tenants, and they pay $10 billion a year in rent. Renters tend to be less affluent, with tenant households having an average household income of $34,000 a year, compared with about $60,000 a year for homeowners.... Normally, about 20% of units become vacant annually."
Although the discussion paper is entitled Tenant Protection Legislation, it proposes a measure which will result in a very unfair proposal against tenants. This measure is that the landlord will be able to negotiate any rent on a vacant apartment. This measure, in our submission, is completely unfair against the tenants. We find it unfair against the tenants as it will provide an incentive to evict existing tenants.
Landlords rent accommodations in order to secure a profit. Under this legislation, the best way to make a profit will be to evict existing tenants in order to rent out the premises for a higher rent. As such, it is clear that the government has created an incentive to evict existing tenants to get a higher rent.
In practice, unfortunately, it is fairly simple for a landlord to evict a tenant. They can harass tenants until the tenants cannot live in peace in the apartment, or they can bring an application under the Landlord and Tenant Act under the provision that they want the premises for themselves or a relative. This is a very difficult application to counter and to prove that the landlord merely wants to evict the tenant. Once the landlord is successful and the tenant has left, the landlord can then rent the apartment to someone else at a higher rent.
Under these provisions, the evicted tenant must try to find a new apartment and try to bargain a rent for it, knowing she has a time limit to find an apartment and to move. The landlord can get a new tenant for a higher rent, basically any rent they can successfully negotiate and charge.
It is important to put this in the context of the fact that many tenants have found that their ability to bargain has been eroded. The idea that a landlord and tenant should be able to bargain for rent is a shift towards the free market concept. This concept supposes that it is fair to bargain because the bargaining parties are equal. However, a landlord and a tenant are not in equal positions to bargain over the rent. It would appear that although the discussion paper is called Tenant Protection Legislation, it is unaware of the reality facing tenants.
It has been noted that the government has not provided studies to explain why vacancies occur. We frequently have tenants phoning us and indicating that they're having difficulties paying their rent as a result of the general welfare cuts or because they are losing their jobs. They hope to move in order to find an apartment they can afford. Under the proposed legislation, this affordable housing will not be available to them. They will have to try to bargain a decent rent.
Tenants are not in a strong bargaining position. People move because they cannot afford the rent, because they have given 60 days' notice, because they have been evicted; as such, they are under considerable time pressure to find another apartment or they will find themselves on the streets. This will affect their ability to bargain effectively.
Further, general welfare cuts have contributed to the erosion of the bargaining ability of tenants. It is our submission that it is unfair of the government to then push them into situations where they will have to attempt to fend for themselves. Those who cannot fend for themselves will end up on the streets.
Unfortunately, while tenants may wish to bargain effectively for new apartments, they will not have the means to do so. Given the very low vacancy rates -- I believe it's 0.8% in Toronto, 1.6% in Windsor -- a landlord is in a very powerful bargaining position. The landlord will be faced with tenants who have to move in a specific period of time and who will have next to no choice but to take the rent as it is set. If they do not, the landlord is guaranteed that someone else will be interested in the apartment.
The government would have us believe that with these proposals being put into place, there will be more investment and this would lead to more apartments, and that should equalize the rents. It is our submission that there is no guarantee that this will be the result of this legislation. However, there is a certainty that it will be more difficult for tenants to find affordable housing.
We are also concerned with the proposal affecting the tenant's right to sublet an apartment. You probably know the proposal very well, that there should be a provision indicating that the landlord has the right to refuse a tenant's right to sublet an apartment. The Lampert report, released in the fall in 1995, estimates that 25% of tenants move every year and that over a five-year period 70% of tenants move at least once. In this economy, people need to be able to move in order to find jobs. A tenant must be able to leave an apartment easily to relocate.
The problem arises that when a tenant signs a one-year lease, the landlord can hold the tenant to this lease unless the tenant is able to sublet. This places the tenant in a very difficult position. Restrictions on a tenant's ability to move interfere with their mobility. It is our submission that it is unfair to restrict them in this manner.
Further, it's been our experience that it would be unnecessary to put this provision in the legislation. Landlords who are concerned about approval over a prospective subtenant can put this proposal in the lease themselves. To put it in the legislation itself is to significantly interfere with a tenant's mobility even if it's not important to a landlord.
We also read with interest the proposal concerning harassment. We applaud any protection for tenants from harassment. However, it is our submission that it would not stop a landlord from harassing tenants until they move. It is difficult for a tenant to protect himself or herself from harassment. Getting a right enforced is always a lengthy and difficult process. A landlord is likely to risk steps a tenant may take so that a landlord can take higher rent. It is our submission that if the government is truly committed to being fair to tenants, it will eliminate the incentive to evict, namely, decontrolled rent.
Our submission regarding rights to privacy is that, at minimum, they should stay as they are set out in the Landlord and Tenant Act.
We also read with interest the models proposed for dispute resolution. If the government should decide to move towards a model where landlord and tenant matters are decided by tribunals instead of courts, it must ensure that it is staffed by experts who are unbiased, otherwise there will be poorly made decisions and the courts will be flooded with judicial review applications.
Further, it is our submission that there must be a code of ethics to ensure that the public can expect a consistency of treatment from the decision-makers.
It is our submission that any proposed model should not restrict access to justice in any way. As such, we support a two-tier system with an unrestricted right of appeal.
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Further, there should be no application fees and no threat of an award of costs. Tenants need access to justice, and a financial barrier would be an unfair restriction.
Further, it seems reasonable that all landlord and tenant matters should be decided in one area in the interests of administrative efficiency and ease of access to all parties.
In conclusion, in his release called Rent Control Changes and You, the Honourable Al Leach states that he hears from tenants about the problem of choice. However, the proposals reduce tenants' choices. While I'm not armed with statistics as some people have been, I do question whether or not being a landlord is truly unprofitable. I don't understand, if this is the case, why landlords aren't trying to sell their apartment buildings and why they aren't going bankrupt. The government has not provided information regarding these considerations.
It is our submission that the solution is not to decontrol the rent and force the tenant to pay. Without affordable housing we will find more people on the street. That's the conclusion of our submissions. Thank you.
Mr Curling: Thank you for your presentation. We hear very much what you and quite a few groups from across the province are saying. Maybe you could help us with this dilemma. We understand that women face the greatest struggle in the affordability sector, access to affordable housing. This is encouraged, it seems to me, or is being heightened by some actions taken by the government lately, like the reduction of 21.6% for welfare recipients' allowances. Of course more women are on welfare, therefore that need access to affordability is made greater.
The suggestion is that the rent registry would be eliminated, therefore shopping around would be completely gone and no one would have to drive around to find out where all this is and what kind of rates are on the units themselves. Women are also faced with the fact that they receive about 70% of what men earn in income. Is that what you see in your area, in some of the struggles that women have?
Ms Broad: Unfortunately yes, we see this again and again. We see many women tenants, single mothers on welfare with children, struggling to get by and they are very vulnerable people. They require a certain amount of security. If, unfortunately, something goes wrong and they have to move, under the proposed legislation they'll be in a very difficult position. It will be extremely difficult for them to go out in the time limits that are set by the legislation to find another place, to bargain effectively, hopefully in the same area so their children can go to the same schools. They have many other considerations that come into play because of their position. We see a lot of single women and older women.
Mr Curling: I don't want to cast a dark cloud on these New Directions. There must be some sort of glimmer of hope in this discussion paper. Is there any part of this paper where you would say to yourself, "Yes, the government with this discussion paper is moving in the right direction, and there seems to be some tenant protection aspect of this in New Directions"? Is there any part where you'd say, "Here's a direction they are going in that would be helpful to women"?
Ms Broad: It was encouraging to see a rent abatement for harassment. In my submission, this is a very good idea. I think it's also long overdue, because I believe it would be a disincentive to landlords to harass tenants. The provisions regarding harassment, for us, was a recognition that this is viewed as a problem. As I said, it's quite easy for a landlord to put a tenant in that position.
Mr Marchese: In your introduction you give some statistical information about renters. One piece of information we got is that a third of all tenants make less than $23,000. That's quite significant. We heard a few landlords this morning. One of them proposed a 10% increase in the annual guideline and the other one thought it was a bit excessive and that perhaps 4% to 5% might be all right. Can you predict the effect that would have on the segment of the population I mentioned that you represent?
Ms Broad: Easily. The number of people who are tenants and who receive less than $20,000, I would imagine a sizeable proportion of them are welfare recipients who are having a very difficult time right now even paying the rents they have. Many of them receive under $500 a month and have to pay rents at around $300 a month if they're very lucky and can find rents that cheap. They can't afford a rent increase and they're certainly not in a position where they can go out and bargain with someone who is in a better bargaining position than they are. I'm sorry. I don't mean to go on.
Mr Marchese: That's all right. I want to agree with you on a few points. Other than the landlords and the Tories, there seems to be a great deal of disagreement on some of these points. First of all, many have said what you said: that the bargaining position between landlord and tenant is unequal. Landlords almost get offended. One of them said: "How could you offend tenants this way? How could you say they're not able to?" and so on. But most of the people like yourself who have come in front of this committee have argued that there is no equal power.
On the issue of harassment, many have also mentioned that the onus is put on the individual to bring the complaint forward. For some people -- seniors, vulnerable people, people with disabilities -- it isn't that easy, and they've added that into the mix. In terms of the dispute resolution mechanism, many have argued that the system works well now. If you're going to have a different system in place, they've got to be experts and they've got to be unbiased; they certainly must not be political appointments in terms of that bias. Many have said what you've said, and I think there's consistency around those views. I thank you.
The Chair: Thank you, Mr Marchese.
Ms Broad: Sorry, could I just comment on one thing that Mr Marchese said?
The Chair: Unfortunately we've had to be very tough on the time frames, and his time was up.
Ms Broad: Okay, certainly.
The Chair: Maybe Mr Maves will let you do that on his time.
Mr Maves: I've got a quick question I've been trying to get through today. We've heard in a lot of places that property taxes on apartment buildings are much higher than they are on residential buildings. In Toronto it's four and half times higher. In some cases the property tax component is up to 40% of the cost of the rent. Do you know what the comparative numbers are in Windsor?
Ms Broad: For property taxes? I'm sorry, sir, I don't.
Mr Maves: No idea?
Ms Broad: No idea, sorry. It doesn't come up. My submissions are really based on what we see at the clinic on a daily basis.
Mr Maves: Another thing: Mr Marchese alluded to the gentleman talking about 10%, and at that point in time the gentleman had been talking about high-income people who were in very low rent units. It was an economic incentive for them to remain in those units. That's a problem I think we have: We can't get some of these high-income people out of low-rent units. Do you believe that high-income earners should have the same protection as low-income earners, or would you support a system that protected low-income earners and freed up spaces currently occupied by high-income earners?
Ms Broad: I see where you're coming from with that point. The only difficulty, I would say, with a system that could do that is that administratively it might be very difficult to put in force. I'm not sure how the government could do that. It would also interfere with a lot of principles that are currently in place. If it could be done I'd have to know about the way it would be done to make sure that's what is happening. If the end result is more housing for more people, that's always a very good goal. Certainly in the clinic system that's something we want to see. However, I wonder how you could put that across, put that into place.
Mr Marchese: With rent control. Just remove them.
The Chair: Thank you very much, Ms Broad. We appreciate your input this afternoon.
Is Kay Kavanaugh in the audience yet? No? We will take a recess. We're not sure that anybody is going to show up from Obulus Ltd, so unfortunately you're going to have to be available again in 20 minutes in case he does show up. We'll recess for 20 minutes.
The committee recessed from 1520 to 1540.
The Chair: Welcome back. In view of the fact that no one is here representing Obulus Ltd and they are our last presenter before our dinner recess, we will now recess until 5 pm.
The committee recessed from 1541 to 1700.
WINDSOR ESSEX LOW INCOME FAMILIES TOGETHER
The Chair: Our first presenter this evening is Christine Wilson, representing the Windsor Essex Low Income Families Together group. Come forward and have a seat, please. The floor is yours.
Miss Christine Wilson: Our presentation isn't gigantic but we hope it's dramatic enough. I've also given copies of what I intend to say to you.
WELIFT is the Windsor Essex Low Income Families Together. We're a non-profit group run by and for low-income people. Our group was formed one year ago in response to government cutbacks. As there was no other voice for poor persons in Windsor and Essex county, we decided that it was necessary to find a way to band together for support, information-gathering, sharing and to present a face to poverty. We must speak for ourselves so that others can learn who we are, why we find ourselves in poverty, and most importantly, to allow the general public a chance to meet reality instead of statistics. Statistics are very often misleading and can be manipulated to present a picture that may be the opposite of the truth.
WELIFT does not propose to present to you an eloquent prepared diatribe on the consultation paper on rent control. We are most confident that our fellow social justice advocates have expressed the pitfalls of this proposal. Instead we wish to offer you a view into the situations of persons living in poverty.
The current government slashed welfare by 21.6%. As you know, this means that tenants were slashed 21.6% of the income allotted to them for rental payments. In turn, you did not see landlords slash their rents. The rental difference had to be taken from food allowances. In reality, tenants found that their food allowance was actually slashed by 57.5%.
Across Ontario, many, many persons have been forced off of their disability pensions. Disabled persons have taken a more severe beating. The cut in allowances to them is a whopping 44.1%. The reality that these tenants found was that there was an actual cut of 79.5% of their food allowance -- 79.5%. You did not see their landlords slash their rents either.
The decrease in social assistance shelter allowances is unrealistic. It is equally unrealistic to assume landlords will assist their tenants with rent reductions. Further, the lack of affordable housing in Windsor and Essex county is threatened by the government's desire to rid itself of public housing.
Families living on meagre paycheques or social assistance with two or more children are finding the less-than-1% vacancy rate does not provide sufficient safe, affordable housing. These families are forced to live in inadequate, unhealthy situations.
The lifting of rent controls will reduce affordable housing for the most vulnerable in our society. You cannot expect that a landlord will not desire to create more profit. While increasing one's income is not a crime, it is a moral crime for us to allow for an unmonitored rental market. An upward surge in rents will result in increased homelessness.
WELIFT is in dismay over cuts to housing information services. Services such as these offer a bridge between tenants and landlords. Information services of any kind have proven time and again to be of great value. Without information, one has very little power. It is important for you to know that persons living in poverty do not have access to newspapers advertising housing information. If people living in poverty must wait several days to view the copies at libraries, then you can be assured they will not be able to find the best properties at the lowest rents.
The increased strain upon legal assistance clinics due to appeals over welfare cuts will place a further burden on tenants who live in poverty and the clinics which attempt to assist them in landlord-tenant disputes. A strain has already been placed upon these clinics over the number of poor persons who have been forced out of their homes because of the cuts to social assistance benefits.
The members of WELIFT ask that you hear us today. We are the people who will be most affected by the decisions of this government. We feel that if any changes take place, the government is responsible to assemble a committee that will be comprised of tenants, landlords, concerned citizens, representatives of legal clinics and representatives of the current rent control system. This committee can assess the current system, decide if any changes are necessary, work to seek solutions and offer recommendations to the government.
We feel that changes made without the intense scrutiny of the public is unfair. It is of importance to note that the poorest people in the province of Ontario do not have trust for a government that is allowing their children to go hungry and proposes to remove rent controls. Thank you for hearing us.
The Vice-Chair (Mr Bart Maves): Thank you very much for your presentation. We have a little better than four minutes per caucus for questions or comments, starting with Mr Marchese.
Mr Marchese: Welcome. We thank you for -- I thank you at least -- for bringing a human face to the people who are in a low-income kind of bracket. We tend to sometimes, governments, make decisions in the abstract and we forget what the implications might be for people who are usually at the bottom strata of society, for a variety of reasons. I always believed, in reading this proposal, that this would have a very dramatic effect on the working poor, on people on social assistance, people with disabilities, seniors, students and many other groups in society.
Did you get a chance to read the report, the draft proposal?
Miss Wilson: Yes, I did.
Mr Marchese: Because one of the stated aims of that report was to help tenants and to make sure that they weren't going to get any increases that obviously would hurt many people. Did you read anything in that report that you think might be helpful to any of you?
Miss Wilson: I think it can be viewed that way and it can be viewed in another way. I think there's too much fear in the way a lot of it is written up. A lot of it can be misinterpreted by people. So when I make this presentation, it's not just myself and what I've read. I'm presenting to you from the perspective of a lot of people, the members of our group, many of whom didn't understand the document at all. It doesn't make any sense to them. The greatest comment that they had was that there should be a committee together. That's why I stressed that at the end. A committee can help break things down.
Government often, even in a document like that, thinks that the document is worded so it can be understood by people. Our newspapers know that they have to publish newspapers at about the grade 5 level for the mass public to be able to understand what the article is about. So I think it's kind of unfair. There may be things I understand, but speaking for a lot of other people, I don't think a lot of people really understood there was anything there that's going to help them. It's too loose.
Mr Marchese: In fact, it's a very good point that you make because often we write reports and we assume that everybody either will read it, can read and will understand it. Then, if they don't respond, we blame them because we say it's been out for weeks, we've been having hearings, so presumably people should know. But it's a very unfair assumption to be making of a lot of people. I think you make that clear on the second page where you say people either don't have access to newspapers or they don't read them, or can't, many of them.
Miss Wilson: Yes, that's a problem too. We have our immigrant community, our new immigrants, that don't understand the language. To get a lot of these things translated and understandable for that community is very difficult. We have a number of people in our group in that situation. They barely have a grasp of the language.
Mr Marchese: We're not going to get any translations from that side.
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Mr John L. Parker (York East): Thank you very much for your presentation here this afternoon. I appreciated your comment towards the end of your paper where you indicate, "We feel that changes made without the intense scrutiny of the public are unfair." I think that's a fair comment to make and it's a fair concern to raise.
In fairness to the government, I think that's what this committee hearing process is all about. This committee is in its third week of hearings right now and it's travelled the length and breadth of the province. It's spent some time in Toronto, it sat in Thunder Bay, in Sault Ste Marie, in Ottawa, Peterborough, Hamilton. We're now here in Windsor. We'll be here until after 8 o'clock this evening hearing from people such as yourself with comments on the minister's paper and on the rent control system in general. Tomorrow we'll be in London, the day after that we'll be in Kitchener.
I think the point of these hearings is to hear from people from all sides of the issue and to hear their comments and to hear their ideas. That is why I asked that I be put on this committee during the course of these hearings. I'm not normally a member of this committee but it was important to me that I participate in this process because I wanted to hear from people on the rent control system in this province and on the paper that the minister has put forward with his proposals.
I represent the riding of York East and I live in the riding of York East. That's a Toronto riding with a great number of tenants. I think many of the tenants in my riding have many of the same concerns that you've articulated in your paper. With a low vacancy rate, they're concerned. They're worried about where they're going to live. They feel they're trapped in their units because they have very few alternatives available to them as they look around.
Beyond that, they're also concerned about where they're going to live in the future and where their children are going to live in the future. As the population in Toronto in particular increases -- and I don't know the situation in Windsor, but the population in Toronto is increasing dramatically just through natural growth and also as people move there from elsewhere in the province, elsewhere in the country and from around the world. A great number of people are moving to my riding and they're wondering where the housing will be for them into the future.
So I'm part of this committee process looking for answers to those questions, for solutions to those problems. I'm interested in your guidance, in your advice as to how best to address those challenges.
Miss Wilson: I think in the first place one of our concerns is that this is too much of a rush job. Like a lot of the other cuts that have taken place, we don't feel that enough consideration was given to things and more needs to be. We really do believe that there should be a committee that is comprised of landlords who have dealt with a lot of these problems themselves, a committee that's comprised of --
Mr Parker: I understand that. That's in your paper. But let's say we have that committee. What would your submission be to that committee?
Miss Wilson: Pardon me?
Mr Parker: I appreciate that point. You put that in the paper. That's the process, but what would your recommendations be as part of that process?
Miss Wilson: We would have to view the whole picture and then make the recommendations. I don't propose to make those recommendations at this point. But I think the committee should consist of landlords, tenants themselves, representatives from the legal clinics who have fought the landlord-tenant battles, who know at first hand from experience in their dealings what things have hindered them. I think we can all meet here and those of us who are more in the know in the community, who can find out about these things, who can find a way to these -- I was fortunate that a couple of members of provincial Parliament called me to let me know that this was happening. Not everyone is that fortunate, so not enough people have been able to express themselves.
I think a committee comprised of members of provincial Parliament is nice and good and it's necessary too, but we still need a committee that is comprised of the people who are going to be affected on both sides, and we could get some more fair understanding -- not just landlords, not just tenants, but the people that have been involved in the legal battles.
Mr Parker: Well, we've been hearing from all those people.
Mr Curling: Thank you for your presentation, and I think you're right. Let me follow through with what Mr Parker was saying, because as you said, it's a consultation paper, so it's a matter of discussion and we want to bring everything on the table. What they didn't tell you, though, which you do know, which you have pointed out, is that before that happened they cut 21.6% from the poorest people and said, "I want you to come and negotiate with us." Then what happened also is the rent registry, legal services, and all the funding to help people were also cut. They're saying, "See, we want to discuss this, we want to have consultation," but by the time the poorest of people come to the table, they're at a disadvantage.
What also happened is that they have not told you that they've had extensive discussions with landlords about what they see the situation to be, and the poorest of people, who are much more subjected to what the downfall would be because it's their home, were not consulted. They said, "No, we are consulting you now." So you see, it is very difficult to have a discussion when most of your powers have been taken away.
I'd like you to help me, because this is an extremely good paper -- just explain to me. I know while you have 21.6% of income allotted to them for rental payments, they're using it for other things now. They had to then go and negotiate with their landlords. I saw you had here that food allowance was actually slashed by 57.5%. What do you mean by that?
Miss Wilson: That's the reality cuts. I didn't have time to photocopy this one; I wish I had. Before the cuts, we'll go with the example of the person on general welfare who was receiving a total of $663. The rent was allotted at $414. That left them a balance of $249 for food and other needs. After the cuts they were reduced to $520 a month, allotted $325 for rent, and that left them supposedly with a balance of $195 for food and other needs.
The majority of tenants were not able to secure this elusive housing at $325. It doesn't exist. So then we're left with the reality of what these people are living in. They have not left those apartments at the $414 rate. So now their cheque is $520, the rent is still $414, and they are left with a balance of $106 for food and other needs. If you take those two, the $249 they had previously and the actual $106 they have now, you compare that, that's a difference of $143, which works out to 57.5%. Their cut was only 21.6% across the board on their cheque, but as long as their rent remains the same -- they're unable to find this $325 apartment -- they are living with a 57.5% cut. So it's a much more drastic cut than the picture that was given to the average citizen who believes it's just 21.6% of the food budget. That's just a single person.
Mrs Pupatello: Christine, I have a quick comment and a question maybe you can answer. Landlord groups who have appeared here today have said that they as a group should not be the ones who are subsidizing those who are the most in need, that if government is really going to help those who need the help, why are the landlords having to take that in terms of lack of profits, because they in fact are being more supportive than other citizens in helping the poor? That was put forward today by others.
They may or may not have a point there, but you mentioned landlords aren't going to slash the rents they are charging by 21.6% just because people had their rates slashed. So what do you think the answer is? The landlords personally shouldn't take the additional hit, and you mention that. How is the provincial government going to be responsible to ensure that everyone has affordable housing? Coming from Windsor, and this area has one of the highest low vacancy rates in Canada --
The Chair: Thank you very much, Mrs Pupatello. Unfortunately, there's no time left for the answer to that question. Thank you very much for coming forward this afternoon and giving us your input. We appreciate it.
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CANADIAN ASSOCIATION OF RETIRED PERSONS, WINDSOR-ESSEX COUNTY CHAPTER
The Chair: The next presenter is Bob Lesperance, chair of the Windsor-Essex county chapter of the Canadian Association of Retired Persons. Good evening, sir. Welcome to our committee. The floor is yours.
Mr Bob Lesperance: Thank you very much. First of all, a little explanation. The Windsor-Essex county chapter of CARP has 4,876 members and spouses in Essex county, almost doubling the 2,800 that we had when we organized in 1994. We are included in about 151,000 members who live in Ontario and about 230,000 members across Canada. We're a non-profit organization, getting no money from any government, any party. We subsidize ourselves internally. We hope this makes us independent. We hope it makes us impartial.
Approximately 20% of our members are renters in Ontario, and they spend about 25% of their income on paying rent. The percentage of our members who are renters is slightly higher -- I'm sorry; that was 20% of Ontario seniors -- than the 16.5% of the total 1.3 million renter households in Ontario.
Since I'm only allowed 20 minutes, my presentation is slightly longer, so I'm going to zip through a couple of points. But I understand you all have a copy.
Some general observations: In general, we support the broad objectives of New Directions and the proposed tenant protection legislation to expand rental property stock. The lack of rental accommodation has led to a reduction in units with corresponding overvalued rents in some properties. If more apartments are built, tenants will have more choice at different levels, which they do not always have today. You heard the rental rates in this area are fairly low.
We also believe a fair balance has to be struck between the rights and goals of the landlords and the rights and needs of the tenants. In fact, in real life today it's no fun being a landlord and it's no fun being a tenant. That's a real-life fact. For example, both landlords and tenants have reciprocal responsibilities such that if the tenants do not get proper service, landlords do not receive the required rents. Similarly, both landlords and tenants have a responsibility to properly maintain the property which the one owns and the other rents. Landlords deserve a reasonable return on their investment, while tenants deserve to pay fair and not exorbitant rents.
In CARP's view, the government's role in this relationship is to assist in developing an environment in which the necessary balance between the landlords and the tenants can be maintained. This is the position we think the government should be in.
The New Directions discussion paper is only a start in the review of rent control. I'll add to it here. Unfortunately, we think most of it's already gone, but we think it should be a start. Not being accompanied by concrete legislation, it is somewhat difficult to provide useful input to the proposals. Nevertheless, the general principles underlying the proposed change of direction for the rent control policy in Ontario raise some very serious concerns. Changes introduced should be eased in rather than introduced quickly. A lot of seniors particularly are still shell-shocked at some of the changes.
Some general observations on the stated goals for a new tenant protection system:
The proposals actually focus on units rather than tenants, despite what is being said.
Under the current rent control system, new buildings are exempt. However, that exemption has not increased the building of new rental properties. We haven't seen a lot of new rental properties going up.
Removal of rent control by itself will not stimulate the building of new rental properties. Other complementary actions will also have to be taken, such as shifting or reducing the so-called soft or hidden costs, things that are necessary in a community -- the schools, libraries, roads etc -- for building new rental properties paid by developers or reclassifying rental properties from their current status of commercial properties. Either of these changes will impact adversely on the tax base of municipalities by shifting costs from the developer to the municipality, principally the homeowning taxpayer, and reducing the tax base of the municipalities.
As well, because of the long-term nature of the investments, banks have to be persuaded to loan funds to developers. For this exercise, I tried to borrow money to buy an eight-unit. The payback time was 15 years. They wanted no part of it, yet my personal credit record is very good. They don't loan on that, period. That was the end of it.
The tax rate for apartment buildings should be reviewed, perhaps to develop a new blended property tax formula. I have difficulty with this because I'm a taxpayer and I see a blended one as moving the tax burden from one group to another group. Nevertheless, it's something that could be looked at, for example, where the building is situated at commercial rates and the tenant units at residential rates. That is something that could be looked at.
Cost-efficient administration and reduction of red tape should not be introduced at the expense of the reduction of municipal approvals. Landlords should not be permitted to demolish, make major renovations or convert their property without municipal approval any more than a house owner can do. If they're meeting the zoning bylaws, they can do whatever they wish. They can do that today. But if they don't, the changes that are being proposed should not override the local municipality's power to do that.
While landlords have the right to their property and to realize a reasonable profit from their investment, the right is tempered, as an earlier presenter indicated, by a social duty to the municipality or society in which their property is located and to their tenants.
Protection from unfair rent increases: It must not be forgotten that over the past five years, 1992 to 1996, under the current rent control system, rent increased by a cumulative 11.5%. CARP is concerned that increases factoring in "extraordinary operating costs" will not be capped, especially after rents have been allowed to float. This could lead to excessively unfair rent increases. If the market will bear it, there will be excess ones. If the market won't bear it, that won't happen.
Harassment, if proven, and reduced extraordinary operating costs by a landlord should be added to the tenant's grounds for rent reduction; in other words, an abatement. There's not much there now for that.
The goal of simplifying administration should not override the right of fairness or the right of tenants to know why their rents have increased. In claims by landlords to increase the rents of sitting tenants, landlords should still include costs no longer borne in calculations for capital expenditures, operating cost information, with subsequent notices of rent increases after an above-guideline increase has been approved. In other words, you've got to give details to your tenants. Decision-makers must continue to supply written explanation for every rent control decision increase issued.
The voluntary nature of any agreement entered into by tenants to pay for capital improvements or a new service must be put in writing to ensure no undue harassment or pressure has been put on the tenant. As we get older, with some of our memories, we think what it should be, not what it really is. That should always be in writing.
The rent registry should not be abolished since it provides necessary information both for tenants about prospective landlords and for landlords about prospective tenants, and ensures equality in the system.
Other issues to be discussed, and which I think need a lot of discussion: Should there be no eligibility test for capital expenditures? An example we hear in the rumour mill is that a building in Toronto needed new door-sills. They put in solid marble. They were allowed under the rent control to increase it. The kickback came in through the back door for the price to the builder. Unusual, maybe, but it does get around.
Reduction for inadequate maintenance and withdrawal of services should be based on the length of time between a documented complaint by the tenant to the landlord or the Ministry of Housing or its representative and compliance by the landlord, if merited.
Maintenance: CARP agrees with the proposal of charging landlords with violating property standards as well as providing informal notice before issuing a work order. On the other hand, landlords should have recourse to compensation if a tenant does not take proper care of his or her rented unit. They are limited by many laws as to just how much and what they can do.
If a municipality does not enforce its property standards bylaws, the province should have the power of inspection for compliance. It should also be able to publicize its actions and the reasons for them.
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General provincial and municipal property standards should be made known to the landlords and tenants and reviewed every five years, especially in regard to fire prevention.
Landlords should be informed of tenant-initiated inspections but the confidentiality of the tenants who inspired this inspection must be maintained. Moreover, there is no need to inform the mortgage holder -- the people usually in our case are out of town -- of any actions taken against the landlord on an individual basis.
The Landlord and Tenant Act: The big concern we have is harassment since seniors who rent tend to live in their rented unit for a long time and because of their age they are particularly vulnerable to harassment and require special protection. Details on the anti-harassment process are lacking in this document -- didn't find much in there -- and need more specifics on where it's going.
Access to the anti-harassment process must be simple and broadly available throughout the province. Tenants should not have to pay application fees for access to the anti-harassment process nor should they have to pay fees for legal representation at any hearings. To charge them reduces accessibility, especially for those below the poverty cutoff, whether seniors or not, and seniors on fixed incomes.
Those who lay complaints of harassment need absolute guarantees of protection during all phases of the process: the laying of the complaint, remaining in the rental unit until the complaint is heard, while the complaint is being heard, after a decision is rendered, especially if the decision is in favour of the complainant, as does the landlord need protection, especially if the complaint against him or her is absolved. On the other hand, if the complaint is found to be frivolous by either side, a determinant should be developed, for example, a fine or a legal charge should be assessed.
Other issues for discussion: Interest on the last month's rent should be 0.05% above prime at the time of the deposit. During disputes, rent should be held by the tribunal in escrow until the dispute is resolved.
Tenants must allow landlords to have access to apartments in case of emergencies and for repairs with 24 hours' notice.
The dispute resolution system: CARP suggests the introduction of a new dispute resolution system independent of the courts. We understand that the landlord-tenant court Ontario division is currently backlogged and that sufficiently trained mediators or enforcement personnel may not be available since those who are available have expertise in other areas such as human rights or employment standards. Outsourcing for personnel will add additional cost and could be seen as lacking impartiality.
CARP suggests that retired judges and lawyers should be hired on a reasonable per diem to serve as mediators. Training would be minimal and their impartiality above reproach. CARP has offered to assist in implementing a search for these people among our membership and among retired seniors in general. We believe that the prospective mediators should have to go through an objective selection process, for example, interviewed and assessed by government human resources personnel in the Ministry of Municipal Affairs and Housing, and appointed by an order in council, subject to approval by the Lieutenant Governor, to signal the seriousness which the government attributes to their role. Of course, sufficient funding and staff should be allocated to the new system to ensure an efficient and expeditious operation.
In regard to appeals, CARP favours a two-tiered internal system to avoid burdening the already heavily loaded court system.
CARP also feels that the mediator should have the power to award judgements, thereby eliminating the role of the registrar. Employing retired judges as well as elevating their appointment to a high status will help ensure the capabilities of the mediators to render a judgement.
Public access and efficiency: CARP supports the idea of having a landlord-tenant system serviced by the rent control offices, which should be expanded in number if necessary to ensure wide and easy access across the province. Incorporating the rent control office with other government offices is a good idea.
CARP, however, is opposed to imposing any application fees because it will raise a barrier for seniors, especially seniors on low or fixed incomes. Indeed, imposing application fees on anyone, regardless of age, should be considered only after the new system has been in operation for at least a year and has banked experience to determine the nature of the applications. In fact, CARP would expect the entire system would be reviewed after the first year of operation. CARP also recommends that seniors should not have to pay for any legal representation they might require in the new system.
Security of tenure and conversions: If conversion could offer affordable ownership opportunities to tenants, then they would not be tenants in the first place. Conversion enables landlords to dispose of their property as they wish and is of limited benefit to the tenants.
Any changes to density of rental buildings should remain the responsibility of municipalities, not the province. Furthermore, demolition, major renovations and conversions of the rental buildings to condominiums or cooperatives must continue to require municipal approval and conform to municipal standards to avoid unchecked urban sprawl and other possible urban blights that would not affect or concern those not living or paying taxes in the municipality. To take this right out of the control of municipalities is anti-democratic.
Other issues for discussion: CARP believes that approval from tenants should be required for conversions, demolitions or renovations. However, sitting tenants should have the right of first refusal if their unit is converted to a cooperative or condominium within at least three months of receiving notice of the conversion.
Sitting tenants in a unit that will be demolished, renovated or converted must be protected by being compensated for the loss of their unit, because if they are being forced by the action of the landlord to move from a rent-controlled unit to a unit which is not under rent control, their rent will increase. The amount of compensation should be no less than one and a half times their current rent for no less than three months. This amount will enable them to adjust to the increased rent over a reasonable time.
Care homes: I think the paper is lacking in any care home management or control whatsoever. I happen to be involved. I'm at the age where I'm in between parents and children and grandchildren. Care homes are night and day from a registered nursing home. I've got a lot of information and details on care homes, and it takes up most of the balance of my presentation. So to leave a little time for questions, I'll end up saying that home care owners must obtain municipal permits before they can convert, renovate or demolish their facility. If their request is approved by the appropriate municipal agency, the home care owner must find alternative, comparable accommodations for residents. If the rental fee and other costs have to increase, then the home care owner must pay the resident the equivalent of one and a half times the resident's costs at the owner's facility for three months. On the other hand, the tenant must provide proper notice of termination of residency or be held responsible for one month's rent.
Like the owners of any rental unit, owners of home care facilities have the right to their property and to earn a reasonable return from their investment. But that private right must be tempered by a larger social responsibility for the good of the owner, resident and community.
I get too involved and too stirred up, so I've given you the written part on the care home. I'm open for questions, Mr Chairman.
The Chair: Basically, sir, there are only a couple of minutes left, so it's not an effective time to entertain any questions. Did you want to make a closing comment?
Mr Lesperance: Yes. I personally rented only a very short time when I first started out in life as a young man, so I had to do a lot of research from the other side, from I guess you would call it the owner's side, if we have such a thing as a true owner, because they're usually absentee investors on the rental side. It's a business that no one likes to see changes in. Quite frankly, my biggest feedback has been that the way the changes are coming, bang, bang, bang, they'd be much happier with no changes. They're learning to live with it. They don't like it. Things such as the government cuts to low-income people now complicate it. We heard earlier what happens.
The one situation we can't take by itself is the rental market. Other things are clearly making this a problem. If you could keep them separate, the rental business, as a tenant and as a landlord, is not too bad by itself. But in view of other changes that have come in, particularly the cuts to the welfare and the low-income people, it is causing problems in this area as well as others. I feel that's a crime, but I don't know what I can do about it.
The Chair: Thank you very much. We appreciate your input here today, sir.
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TIM FUERTH
The Chair: Our next presenter is Tim Fuerth, presenting on behalf of Bill Taylor, who, due to illness, was not able to be with us today. Questions, should you allow time for them, Mr Fuerth, would begin with the government. So the floor is yours.
Mr Fuerth: Thank you again for the opportunity to address the committee on the impending legislation. Certainly I've had the advantage of sitting in the room where some of the other presentations have been made, so before I address some of the things I'd like to raise, I'd like to comment on some of the suggestions.
We heard previously that when the shelter allowances were cut some 20% or 21%, there were no landlords slashing their rents. I think it's fair to say, on behalf of a landlord, that our mortgage company wasn't coming suggesting we slash our interest rate, the city wasn't suggesting we slash our property tax payments; the whole list goes on. I won't bore you with the detail. But the reality is that those costs the landlord was incurring continue to be incurred at that same level; in fact they're probably higher costs because there's a greater risk of uncollection on rents.
The other comment is that I seem to hear from some groups that landlords have been raping and pillaging the tenant groups with exorbitantly high rents and not putting the money back into their buildings. As someone who is certainly intimately familiar with our Windsor rental market, I'd like those same people to explain the, I would guess just on a quick count, at least 1,000 units in the city over the past three years that have been lost by the owners of those properties either through power-of-sale or foreclosure proceedings because they couldn't make the bills.
I'd also like those same parties to explain why there's a long, long list of rental properties in the city where the property taxes are in arrears. Obviously those landlords haven't been making exorbitant -- we've heard the number 10% -- profits on their return on investment when many of them are losing their properties to the banks, and invariably it's going to continue under the current system.
Having said that, I learned a lesson in my earlier comment. I'd left too long for questions, so I'm going to talk a lot this time. There's been a lot of rhetoric floating around the room from the various sides, and I guess all of it is actually pretty common, it's old rhetoric, and frankly it's maybe a little bit stale. What I'd like to do is spend the next few minutes addressing some suggestions. I did include a submission earlier in the day.
Certainly in Windsor, and that's the municipal area where we operate our apartments, we're owner operators, we're not absent owner operators. We take pride in our buildings and the tenants that occupy them. When we look at the issue -- and it seems to me the issue is making the rent affordable -- there are a couple of suggestions that I would make, certainly and particularly in Windsor, that would go a long way towards that.
The first one -- and I missed the section earlier; someone mentioned property taxes. I'd like to tailor it to the Windsor scenario. In Windsor we have the benefit of market value assessment, which is unlike the GTA, where there are some huge property tax discrepancies. We're on a 1984 base year for property taxes. Unfortunately, what happens is that the municipality in Windsor -- and for the life of me, I can't understand why the tenant groups aren't screaming bloody murder, because they're the ones that are being really raped -- the city sets its class factor. I've submitted the calculations in my brief to make it clear. Nuts and bolts of it: When you determine the property tax liability of a house or apartment, you take the 1984 market value, the fair market value in 1984 --
Mrs Pupatello: Can I interrupt just for a moment? Which brief are you referring to?
Mr Fuerth: The Danzig brief.
Mrs Pupatello: So are you reviewing the submission you made earlier or are you speaking --
Mr Fuerth: What I'm doing is --
The Chair: Mrs Pupatello, Mr Fuerth has the floor.
Mr Fuerth: I'm addressing some of the solutions that I think would be of benefit to both landlords --
Mrs Pupatello: But he's representing someone else, Jack.
The Chair: Mr Fuerth has the floor.
Mr Fuerth: If you'd like, I won't refer to the brief but I'll just summarize my comments. In Windsor property taxes are assessed on a house or an apartment by the following formula: The property tax is equal to the 1984 market value times a class factor times the mill rate. The mill rate for apartments and houses is exactly the same. The 1984 market values were derived based on the market values. The problem is the class factor. If you have a property that has six or fewer rental units, which would include condominiums, which would include single-family housing etc, the class factor is 17.5% times that market value to arrive at assessed value.
When we look at apartments, the class factor for an apartment structure with greater than six units is 35.5%. It doesn't take a genius to figure out that those tenants, if they're in a building that let's say for discussion purposes was worth $500,000 in 1984, they're paying twice as much in property taxes as a homeowner who owned a property in 1984 of an equivalent value who just happened to have less than six units, perhaps one, perhaps three. But it's unmistakable that there's a very clear bias in the level of taxation for tenants. As I say, for the life of me I can't understand why the tenants, particularly in the city of Windsor, haven't really been focusing on this, because it really is them that are paying those property taxes.
To make matters worse, what really happens is that the tenants get fewer services for their property tax dollars. They're paying twice as much in property taxes, but the city doesn't pick up refuse from the building, which they do from a house, as an example. There are a number of other services that tenants don't have available to them that houses do. That would certainly be a suggestion. I'm trying to be helpful in terms of how you get those rents down and make them affordable. There's a very clear bias.
I've also indicated in my submission, and I apologize for referring to it, that subsection 60(4) in the Assessment Act, which deals with condominium conversions, should be repealed. We had quite an interesting situation where we converted a building back in the early 1990s and we had identical units right beside each other. If someone bought the unit, they were paying approximately 70% lower taxes than the unit right next door which happened to be rented by a tenant. There's a real inequity, and this section of the Assessment Act prohibits that adjustment to property tax amounts.
The second item, and you probably haven't heard this before, but certainly we see it fairly frequently: When you really boil down the cost of an apartment building, 20%, at least in the city of Windsor, goes to property taxes and roughly 20% to 25% goes to pay the utility bills, so you have to concentrate on those big-ticket items. How do you get those costs down?
There have been studies done by Ontario Hydro that when you take a rental structure that's bulk-metered, one meter for the building, and meter the units individually and have tenants pay their electrical consumption, the consumption in that building is going to drop anywhere from 20% to 30%. You don't have to take my word for it. Those are Ontario Hydro statistics. The technology is readily available where meters can be installed on existing electrical panels so it doesn't involve rewiring buildings. It's a simple digital meter that gets into the electrical panels. The local utility would have the advantage that they can actually dial into these digital readouts by modem, so they can issue their property tax bills without any meter reader ever setting foot in the building.
I think it's fair to say that tenants would certainly save some money under that scenario because at least they're getting those electrical costs, which are included in their rent under a bulk meter system, significantly reduced. It's pretty hard to argue with the premise that you should pay for your electrical consumption.
Under the current scenario I'm sure we've all seen apartment buildings with their windows wide open in the middle of winter. Invariably, if you go into those units, the heaters are blasting and the tenants have the windows wide open to get fresh air. I don't have a problem with that as long as the tenant wants to pay for that electrical consumption rather than the rest of the tenants paying for it.
Those are a couple of comments I have in terms of how you can take a reasonable step in terms of reducing rental levels.
Landlords, we have to remember, aren't getting those property taxes and sticking that money in their pockets; landlords aren't taking the money for utilities they're collecting in their rents and sticking it in their pockets. Invariably it's all going out somewhere. The real trick is to figure out ways to get those costs down.
With respect to the electrical metering, we would support Ontario Hydro's taking a lead role in terms of this type of retrofitting of buildings. The cost runs around $300 a unit, depending on the size of the structure, which obviously Ontario Hydro is well suited to do, and it will also serve their purpose because it will reduce the amount of electrical consumption. As I said, their own numbers say that it would be a 20% to 30% reduction, and there have been conversions of this type that prove it out. It's not theoretical; it's actual fact that experience has shown that's what the reduction is.
Those are a couple of items. Rather than talk about rhetoric, I thought it might be more useful and perhaps appropriate to address some ways by which those rents could be reduced to make them more affordable for tenants.
At this point I have to commend the current government for taking the initiative. When you look at a situation where there are 3.5 million tenants in Ontario and there are roughly I believe 130,000 or 140,000 landlords, it would be very easily and politically prudent for a party in power to sweep this problem under the carpet, and that's really what's happened under the last two administrations we've had in this province. The problem has been there. It's there today. It has been swept under the carpet because politically it was imprudent to deal with it. I must commend this government for at least dealing with it, particularly when you recognize that there are 3.5 million tenants who vote and there are only 140,000 landlords. It's not a fun thing to do, it's not a winning proposition for any party that's in power, and I think it should be commended for taking that step.
That also goes without saying with respect to the property tax reforms that are being proposed. That again is very difficult to deal with. A lot of property owners are going to be adversely affected, but the government is at least on track to do the right thing, to do the thing that's fair, to do the thing that's equitable and to do it quickly.
Having said that, I would like to address some specifics in the discussion paper.
Mrs Pupatello: Which paper is that?
Mr Fuerth: New Directions for Discussion, that discussion paper.
Mr Marchese: The landlords' paper?
Mr Fuerth: No. The discussion paper.
Mrs Pupatello: The Danzig paper?
Mr Fuerth: No. The discussion paper.
In any event, we make a number of suggestions, and some of them are not necessarily significant. Certainly with the aging population -- we heard about Dr Foot's book earlier -- there's a renewed and growing emphasis on security in these rental structures. The problem is, as we see it now, where landlords aren't able to request refundable -- I emphasize "refundable" -- key deposits, most landlords aren't in a position to invest in some of the really good systems that are out there, the card access system, the non-duplicating key systems, because there's a much greater cost to those systems, and as tenants leave and don't turn in those access cards or those non-duplicating keys, that landlord has not just increased the security but also his costs in the process. I think that reasonably what should be provided for is a refundable deposit based on actual cost. What's imprudent about that?
There was some discussion about the interest rate on the last month's rent deposit. My view is that it should be somewhere in the neighbourhood of 2% to 3%. Certainly 6% was appropriate at a time when it was first set, when you could earn that rate of return on a bank account. Today, in most cases, you cannot earn 1% rate of return on a bank account. You also have to take into account the fact that in addition to the lower level of interest rates generally, many of those tenants are receiving that interest tax-free. They are not paying tax on that interest. It goes without saying that to put them on the basis as though they had invested the funds, a lower interest rate would be supported.
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In terms of the proposals, we support the proposition, as I mentioned earlier, that the rent reduction for extraordinary reduction in utilities -- operating costs, specifically utilities -- be deleted because it has impeded property owners from making those investments. They make the investments and tenants get the benefit and there's no point for the property owner to make those investments.
With respect to inadequate maintenance, our view is that the tenant obviously has a right to quality accommodation and the landlord has an obligation to maintain those facilities. Tenants should have that right, which they have in law, but they should be making applications for rent reductions or abatement for inadequate maintenance through Small Claims Court, for two reasons: One, they're very impartial, which in our experience some rent control hearings haven't been; but more important, we find that the vast majority of inadequate maintenance applications that we face -- we have several hundred apartments, so we've seen it all -- in most cases the person who makes the application never attends the hearing; in most cases the person didn't have any evidence that there was inadequate maintenance; even worse, in most cases they admit at the hearing that they had never told the landlord prior to making the application.
Here we have the ministry staff running around, processing all these applications. If someone contacted the landlord and said, "Jeez, this tenant gave me this application. What do you have to say about it?" the landlord could at least present an unbiased, or perhaps biased but at least a balanced approach to the situation rather than the ministry staff spending a lot of time on these applications which invariably never result in rent decreases or reductions. That's certainly been our experience.
We had a very substantial one recently where a portion of bricks fell off a building and we ended up reworking the whole building. There was one application. The rent officer added every tenant in the building, and when we had the hearing, which was set for three days in Windsor, the rent officer showed up, we showed up, one tenant -- not the tenant who made the application -- showed up in support of the application and four tenants arrived supporting the landlord; they were so appreciative that the landlord invested the money in the building for their benefit without, by the way, seeking an above-guideline rent increase.
We hear a lot of these horror stories, and if they had to file in Small Claims Court, perhaps had to pay a fee, whether it's a fee to the Ministry of Housing or an application fee in Small Claims Court, at least there would be some requirement on their part to put forward an amount of money rather than it being a free service. If you want to harass your landlord, make a rent reduction application; it costs you nothing and your landlord is going to go through all kinds of hoops to defend it. In the particular case I mentioned we had to get engineers to come to the hearing, and after nobody showed up, the rent officer decided there was really no purpose in doing that, but unfortunately we incurred a great deal of cost in preparing for the hearing.
If the ministry or some arm of the ministry is allowed to continue to hear these applications, our view is that they should, as a matter of (1) courtesy, and (2) prudence, contact the landlord and explain the circumstances in the application. The landlord may very well say, "You're right, the ceiling was falling down, but for this and this reason we couldn't do it right away but we've got it on the slate to do it in two weeks," or the landlord may say, "Jeez, that's funny, I've never heard anything from the tenant." Before we start the bureaucratic wheels turning for processing these applications, at least give the ministry an opportunity to determine whether on a first look it makes any sense.
The rent registry, I believe, should be continued, as I set out earlier. A number of landlords in the late 1980s made substantial investments in their buildings, and those investments resulted in increases in rent, which were approved by the Ministry of Housing. The proposition that the rent registry would be abolished or eliminated would penalize those landlords that spent the money on their buildings and reward the people who didn't spend money on the buildings, because over the years they still got the rents at the same level without making the investment in their structures for the benefit of the tenants.
One of the most difficult problems we have in enforcing rent collections in applications to the courts is that the courts don't enforce a provision in the Landlord and Tenant Act which requires the tenant who disputes an eviction for non-payment of rent to pay the moneys in court. I've never, in the years of experience I've had in this sector, seen any judge actually require that, notwithstanding the fact that it's required, and we believe that those types of statutes are there already. They are just not being enforced. We think that through the Ministry of Attorney General that should be changed so that those provisions in the act are enforced the way that they are written. If what is written in the act is wrong, then change the act, but certainly it's in the act now, and the jurisdiction, the legal courts, should be enforcing that.
I'm just about out of time and I'm sure there are a couple of people who want to ask me some burning questions. l will end my presentation at this point and again thank the committee. I'm sure it's been arduous for you over the past three weeks, travelling the province. I think it's important that you make a prudent and prompt decision on this matter.
Mr Harry Danford (Hastings-Peterborough): I'll try and be brief so you will have time to answer the question. You mentioned the tax rate and how it affects apartment buildings and that the market value here in Windsor is a 2-to-1 ratio, and in some other centres we've heard it's 4 to 1 or whatever. How much of an effect or an impact would that have on the trade? It all boils down to the tenants being the ones paying and that's the bottom line and the effect is on them. How much of a difference in impact would there be in relief if you were to update present accommodations or even stimulate new development? Can you give me a brief answer?
Mr Fuerth: I think it would have two significant impacts: One, it would reduce rents, because for those units where tenants are paying $1,300 or $1,500 -- most tenants haven't got a clue how much tax they're paying -- it would automatically cut the tax in half. Inherently that means there is room for rents to be reduced. Two, as far as new construction, it makes it more affordable. You have more people, a greater segment of the population, who can afford your product or service, so that should stimulate demand, thus stimulating construction.
Mrs Pupatello: Who were you speaking on behalf of just now? Who is Bill Taylor?
Mr Fuerth: He is a gentleman who owns some rental properties.
Mrs Pupatello: But all the "we" and "our" just now were referring to Danzig?
Mr Fuerth: No, "we" as us in terms of our discussion paper.
Mrs Pupatello: You, including Bill Taylor?
Mr Fuerth: Yes. You'll notice I also have a time later on in the agenda that I have agreed to relinquish.
Mrs Pupatello: So you're going to appear three times?
Mr Fuerth: No. I've agreed to relinquish that time.
Mrs Pupatello: How kind of you. With all the trouble you have in your business, how do you make any money, or why do you stay in the business you're in?
Mr Fuerth: The problem is that it's pretty hard to pick up our apartment buildings and move them across the river or to a different jurisdiction where the rules are a little more favourable. We're here because we have buildings that are situated here and you can't move them.
Mrs Pupatello: But you obviously make money.
Mr Marchese: That presumably would be the case with a lot of other landlords in terms of being in the same situation.
Mr Fuerth: That's correct.
Mr Marchese: You mentioned something in the beginning of your discussion about hearing a lot of rhetoric, or you said much of it is rhetoric. Can you remind me what the rhetoric is, whoever said whatever is rhetorical?
Mr Fuerth: The rhetoric, for instance, that a comment was made earlier that we're going to have a housing crisis in four years. The reality is that we've had it for years, at least in Windsor, and that's obviously what I'm most familiar with. That, to me, is rhetoric. It's making broad statements to support a particular point of view, as an example.
Mr Marchese: Do you see the private sector building in the next little while or so?
Mr Fuerth: I think it's fair to say that the private sector will not be building until the contents of the new tenant legislation comes forward.
Mr Marchese: Do you see the government building?
The Chair: Thank you, Mr Marchese. Thank you, Mr Fuerth. We appreciate your input here this evening.
Is Mary Godwin here? Obviously you're not Mary.
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GREATER WINDSOR HOME BUILDERS ASSOCIATION
The Chair: Next, the representative for the Greater Windsor Home Builders Association, Mr Schepers. Welcome to our committee, sir. You have 20 minutes.
Mr Albert Schepers: I don't think I'll take 20 minutes. I suspect that you've probably heard much of what I have to say. I'm Albert Schepers. I'm the past president of the Greater Windsor Home Builders Association and I sit on the technical committee for the Greater Windsor and the Ontario Home Builders Association. Rather than go into all the information that you've probably heard in other areas from the Ontario Home Builders Association, because it's the same thing, our position is that rent controls really don't work, and something else has to be found.
The proposed legislation is a step in the right direction, and I think Windsor probably is a good example of where things are happening at this stage of the game. At least in Windsor we're having some houses being built. Some of those houses are being taken over by people who are in apartment buildings, but it's not enough. We need more apartments being built and plain and simple is that people have stopped building apartment buildings because they can't make money at it. If the government wants to do it, can try and make money at it, that's fine, but I think we've got the experience that way in what's happening, and I think what we have to do is find another solution. Perhaps one solution is that instead of rent controls there should be a rent subsidy for people who need it, but something needs to be done.
The problem right now is that the rent controls are based on the assumption that all the tenants are essentially crooks, and I don't think that's the case. There are some unscrupulous landlords, as well, but I think in fairness they're not all unscrupulous and there are probably are just as many unscrupulous tenants as there are landlords. That's the long and the short of it.
I think really what we need to do is assess what the legislation has done, whether there has been a benefit to the community as a whole, to the province of Ontario, with the current legislation, and then let's make changes to it so that we see a benefit in Ontario to both tenants and landlords. I think there has to be a fairness on both sides.
The Chair: We've got a fair bit of time per caucus for questions, about six minutes, beginning with Mr Curling.
Mr Curling: Thank you for your presentation. Yes, I presume you have spared us the same thing that home builders associations have been telling us. I don't think you've spared us anyhow, because I think that Windsor is very important. The kind of development that you are doing here is just as important as in Toronto or in Thunder Bay. One of the things I've been asking too, and I hope you can give me an answer to all of this, is the state of the stock that we have now in rental property, because it's been in terrible disrepair. It's been awful. There's about $10 billion worth of repairs to be done to it.
You said that rent control does not work. When I hear that, I leave it hanging because it has been a great profit to the landlords -- great profit. As a matter of fact, it guarantees a return on their investment -- guaranteed -- to the point that they even have a legal maximum rent which they can't even offer because the market is saying to them, "You're ahead of me," and the market rent is much lower. But again the stock continued to be in terrible disrepair.
The whole aspect of this is that that money has already been given to the landlords to repair those buildings and now they're saying, "Take this away so we can repair the buildings." What happened to that $10 billion that was given to the landlords to do the repairs, because I haven't gotten an answer all over the province that I've been trying to get.
Mr Schepers: I don't know that that money's been given to them. If I can perhaps describe it in a way that it has been described to me by builders of apartment buildings, in essence, when the act was brought about, when it was enacted, essentially the people who built apartment buildings went on strike. They said, "We can't build."
In fairness, yes, there are people who own apartment buildings who say, yes, they can survive with the per cent increases that are in the act and that's true. But I think in fairness, we also look at the stock of public housing, particularly in Toronto, and look at the state of disrepair, and why that has not been kept up. I think the same argument can be made with government housing vis-à-vis private housing. Nothing has been kept up.
The normal course of events is that with the older apartment buildings, the rents generally don't increase because newer apartment buildings are built. People move out of the older units. They move into the newer units where the rents are higher. They want to move into another space. They want to spend a little more money. They want something a little more ritzy and the older units then take in the newer tenants, the people who are just coming on stream who don't have the money.
That's typical of what used to happen, but since then, they haven't built new apartment buildings so the rents have gone up just on those units. I think you also need to look at the current state of housing that was funded by the provincial government. In fairness, don't just look at housing stock that's private, but look at the public housing stock.
Mr Curling: I fully agree with you that the housing stock in public housing has not been repaired, but that doesn't answer the question anyhow, what happened to the money.
Mrs Pupatello: Has there been new building of apartment complexes since 1975?
Mr Schepers: In fairness, I can't answer that. I can tell you that there have not been a lot of large buildings built, and I think those that have been built have been condominiums. There have been small rental units built, duplexes or town houses.
Mrs Pupatello: So if I took a tour around Essex county, I would barely find a new apartment building that's been built in the last 20 years?
Mr Schepers: Oh, no, you would.
Mrs Pupatello: It makes me wonder that there aren't major other reasons why developers are not building apartment buildings.
Mr Schepers: Maybe there are.
Mrs Pupatello: In fact, the people that I know in the construction business mention all kinds of other factors, and if I don't say rent control, neither do they. They speak of things like interest rates. They certainly speak of return on investment, but they've never linked it to rent control, and because there are so many other factors involved in developing, it makes me wonder why developers think now there's going to be this sudden lift and there'll be all this building because those other significant issues for them, for developers, are still there.
Mr Schepers: I have to agree with you, but I think if you go round, you will find that the apartments that have been built are smaller units. They are probably built by smaller developers as opposed to the large-scale developers, the people who build large buildings. The small buildings that you find --
Mrs Pupatello: They're more economical, wouldn't you say?
Mr Schepers: Sure they are.
Mr Marchese: What you like about the tenant protection package is that the government's proposing to decontrol many of the units, and that's a good step?
Mr Schepers: I think so, yes.
Mr Marchese: Is it fair to say that some of the rents are likely to go up when they introduce decontrol?
Mr Schepers: Certainly.
Mr Marchese: Is it also fair to say that will cause some problems for a lot of tenants, a third of whom make below $23,000?
Mr Schepers: It's possible.
Mr Marchese: Do you think that's a concern or is that something you should worry about?
Mr Schepers: As a citizen, yes. I think we should all be concerned about that, but I also believe there are forces that will counteract that. I'm not an economist, but I would certainly say there are other factors that will come into place that will see some offset, and there will be some people who, it doesn't matter what we do, will be in a bad position.
Mr Marchese: Yes, they will be. They are now.
Mr Schepers: Yes.
Mr Marchese: So the role of government is to worry about how to house people, because some of us think it's a right and others obviously don't. Those of us who believe that housing should be a right worry about what kind of housing gets built if at all and how we house them because many, due to no particular reason of their own, find themselves in very difficult times. Some of them work at very low minimum wage and so it's very hard. When they spend 50%, 60%, 70% of their wages on housing, it's a problem.
Mr Schepers: Correct.
Mr Marchese: You've agreed that people are not building. I think you said that people are not building because they're not making money.
Mr Schepers: That's correct. They're not putting in apartment buildings like they used to because of the economics. I think it was stated; there are other factors. Rent control is not the prime mover, but it's there.
Mr Marchese: Mr Lampert, the guy who wrote the report for them, obviously says rent control is a minor issue in the scheme of things.
Mr Schepers: Correct. I think the home builders agree with that.
Mr Marchese: Oh, they do, and many of them talk about it. Some do, some don't, because they want a lot of things like reduction of development charges, equalizing property taxes which a few other people mentioned earlier. They want to cut in half the GST payable, cut in half the CMHC mortgage insurance fee, eliminate the provincial capital tax and so on. They want a whole lot of things.
Mr Schepers: There are a whole lot of things that need to be brought out at this point.
Mr Marchese: That's why I say if they need all of that, why wouldn't we as a government be creating, building affordable housing, as we did, the NDP, non-profit and co-operative houses. If no one else is building because they say they can't afford it, because there's an affordability problem, would you not agree that the governments should be staying in the business of building houses?
Mr Schepers: No.
Mr Marchese: You don't agree with that.
Mr Schepers: If they want to stay in the business, I would suggest it's got to be completely changed. I say that because single-family houses were being built cheaper than some of these town house projects.
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Mr Marchese: All right, I understand: You want the government out of the way and they do too, right? Nobody's building affordable housing -- nobody -- because there's no money in it.
Mr Schepers: I disagree. There are homes that are being built cheaper and they can be purchased cheaper than what some of the subsidized houses were being built for. Perhaps there needs to be another mechanism, another way of looking at things. Let the private industry build them, because there's the competition. I know this, because I worked with a builder for two years, and the cost of building a single-family house was cheaper than building a single unit --
Mr Marchese: All right. So there is no rent control on new units. That's a plus for the builders who obviously want to build.
Mr Schepers: Sure.
Mr Marchese: But we're not seeing much of that construction happening. Is that correct?
Mr Schepers: At this point, no, we're not.
Mr Marchese: So you want something from them in order for that to happen.
Mr Schepers: Yes, that's correct.
Mr Marchese: What do you want from them?
Mr Schepers: I think some of the other factors that are in the Lampert report have to be brought about. It's not just provincial; there's the federal government. The GST has got to be revamped because of the effects it has. There's an advantage to home builders, because they have a rate of about 4.5%. But for apartments, it's 7%. There's no discount on GST. Development charges are horrendous. The idea of development charges, the idea of --
Mr Marchese: The list I mentioned.
Mr Schepers: Yes, everything that's mentioned there.
Mr Marchese: Those are incentives, of course. Do you see those as giveaways to the developer or they're not giveaways necessarily by doing that?
Mr Schepers: No, no.
Mr Marchese: That's just an assistance we would be giving you to build affordable housing. Is that correct? It's not a cost to the taxpayer or anything.
Mr Schepers: That's exactly right. We don't want anything from the government. What we want is for the government to back off and get its fingers out of the pie.
Mr Marchese: All those things.
Mr Schepers: Exactly.
Mr Marchese: That's not intervention by the government; they're just helping.
Mr Schepers: Correct.
Mr Spina: Thank you, Mr Schepers. A couple of my questions you've already addressed and I'm going to allow time for my colleagues, but I want to ask you this short question: It was demonstrated over the past year that Windsor has one of the highest construction permit values in the province. That was my understanding.
Mr Schepers: When you say "values," you mean?
Mr Spina: Sorry, number of permits. I wondered if you had any guesstimate as the builders' association as to what percentage of those might be rental.
Mr Schepers: I would suggest that most of them are single-family. That is, in the area that I'm in, I can tell you that most of the building permits that have been taken out in the residential sector have been in the single-family or duplex type of homes.
Mr Spina: So not multiple-dwelling, rental type units.
Mr Schepers: No, no. There's very, very few of those.
Mr Spina: My next question was going to be the incentives, but I think you've addressed that already, so I'll defer to my colleagues.
Mr Maves: Just quickly, I'd like to clarify something in the Lampert report. Mr Marchese seemed to think that Lampert had suggested that rent controls have nothing to do with it. But quickly, out of the executive summary, he says: "After 20 years of ever-tightening rent controls and changes in the balance of landlord and tenant legislation, government action is required to encourage significant amounts of new private rental investment. The major initiatives recommended for the government to encourage new rental investment are outlined below." First and foremost he lists, "Relax rent controls and reform landlord and tenant regulations." So to say he doesn't care about it or it doesn't make a difference is folly in the extreme.
The first question is a quick one. Roughly 80% of landlords around the province have small units, six or four or less. Many of these people are older, ready to retire and so on. Is that the same profile as in Windsor?
Mr Schepers: I think that's reasonable, yes.
Mr Maves: You said you had a guesstimate that about 1,000 people had lost their buildings over the last few years.
Mr Schepers: I'm sorry, roughly what?
Mr Maves: The previous presenter had said that roughly 1,000 owners had lost their buildings in the last few years. Do you know a lot of landlords who have lost their buildings over the last year? You don't have a number?
Mr Schepers: No. You see, the people who are owners of the small units won't be members of our association, only because they've picked them up over the last few years. They may have purchased them as an investment to try to keep things going. But I know a lot of them are struggling, because I have to work with them when they've got to put up handrails. As a consulting engineer, I get involved with some of them. I know they just don't have the money to spend.
Mr Maves: There's a myth that the government builds affordable housing. You started to address that. The housing the government built in the last few years was actually more expensive than what the private sector could build.
Mr Schepers: That's correct.
Mr Maves: The reason why there's lineups to get in is because it's subsidized housing.
Mr Schepers: That's correct.
Mr Maves: So if the government subsidized a unit that cost $1,100 and the individual put $300 towards it, they'd subsidize that to $800. If they're subsidizing a person for a $600 existing unit, they'd be able to subsidize two and half people instead of one.
Mr Schepers: That's right. My view on this is that we build subsidized housing -- we build town houses, we build complexes -- where we put people who can't afford regular houses, and we put them in an area that readily becomes identified as affordable housing. Now, if we could take this same person -- and I hate to say it, but we need to get people to buy into and have ownership, because until they have ownership, they don't take any care. I won't say this about all tenants, but there are some tenants who just don't care. They'll go in, they'll take advantage of it, they'll break things, they'll put holes in walls. A good example was in the newspaper. I think it was last week here in the city of Windsor. But they don't have any care concern, because they don't buy into it.
If we could take these same people -- and some of them, it doesn't matter what we do, they're going to be the same, and it's the same with landlords, so let's have that as a given -- but if we took these people in subsidized housing and had a house built or if there was a house built and we subsidized them so that they could buy into it, I think we would see far more housing being built by the private sector cheaper than what's being built in these developments, and I think we would find more people taking ownership and I think we could house more people.
Mr Parker: The answer I'm going to invite you to give may overlap some of the comments you've just made in response to Mr Maves, but let me proceed none the less. As I see it, we as a government, we as legislators, have to address a number of issues in this field. At least three of them are the following: One is fairness to all tenants; one is the development of a supply of housing that will meet our current needs and address our needs on into the future; and one is directing assistance to those who require assistance. There are those people in our society, people who need help, and there will be people who need help with housing.
Mr Marchese was suggesting earlier that the answer to that problem is that the government should provide it. You were trying to respond to Mr Marchese and you had some thoughts of your own on that subject. I just want to invite you to expand on your thoughts.
Mr Schepers: They haven't been fully developed, but I feel that rather than bricks and mortar, we've got to invest in the people and let them select where they want to live. If we can have a house built in a subdivision -- and Windsor's probably a good example. When the legislation came about that we had to have 25% of the housing in every new development be affordable, Windsor was way ahead of the bandwagon. In fact at that time I think probably 90% of the housing in the city of Windsor was essentially affordable, that is, it was the most economical housing that you could buy. That's still the case. There are builders out there who build homes that are affordable, that is, they're in the lower-price bracket. Maybe the rest of the province needs to take lessons from Windsor in the way they've done it.
I think we can then give people maybe a housing allowance, something of that nature, if they're really in dire straits, but at the same time, it needs to be tied in. If these people take a housing allowance and they trash an apartment, what good does that do to the landlord? You miss one point: We have to be fair to the landlords as well.
The Chair: Unfortunately, our time is up, but we do appreciate your coming forward, Mr Schepers, with your ideas and your input.
Mrs Pupatello: Mr Chair, before the next group comes up, I have a submission in written form from a constituent in Windsor. Her name is Margaret Leach. She's on a disability allowance. I won't read it, but if we could have this copied for the members of the committee.
The Chair: The clerk will have a copy of it.
Mrs Pupatello: I encourage the government members to read this. She's been very active in our community, but I hope you do take the time to read the letter.
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LEGAL ASSISTANCE OF WINDSOR
The Chair: Our next presenter is Carol McDermott from Legal Assistance of Windsor. Good evening and welcome to our committee. The floor is yours.
Ms Carol McDermott: Thank you for allowing me to address the committee. I am appearing on behalf of Legal Assistance of Windsor, a poverty law clinic sponsored by legal aid and the faculty of law at the University of Windsor.
As the landlord-tenant lawyer there, I supervise students who are representing clients with a variety of housing problems. Our clients include people who are on various forms of social assistance and the working poor. The vast majority of our clients' housing problems are related to their inability to pay for decent housing and their inability to force their landlords to properly maintain the housing they do pay for. Our clients don't negotiate the rents. They don't bargain for the services they get. They settle for the existence they can eke out with a sense of desperation. Since the cuts to welfare payments that came into effect last fall, they found themselves needing to resort to food banks more and more often. Many of them do without hydro and telephones and water because they can't afford to pay those bills in addition to their rent.
The proposals to eliminate rent control whenever a tenant moves out would just give landlords that much more incentive to encourage tenants to leave that much sooner. Already one local notable landlord is trying to force tenants to sign an agreement to terminate when their lease expires because, as he said, he thinks he can bump up the rent as soon as this act is passed. So even though tenants who complete one year's lease have a legal right to then continue on as month-to-month tenants, this landlord is trying to force them, by saying, "It's nothing, just sign it," to sign an agreement to terminate which will effectively end their tenancy. The minute this legislation that he thinks is going to be passed is passed, he'll waltz in there and raise their rents as much as he can possibly do, which is, as it is proposed, any amount. This is a landlord, from whom you've heard today, who frequently cannot charge the legal maximum rent because his units are so overpriced and so poorly maintained that nobody would pay that for them anyway.
I beg to differ with Mr Fuerth that our courts don't require tenants to pay rents in before they dispute a landlord's application. In my experience, which has been fairly considerable over the last six years in landlord-tenant court, the courts do enforce that.
A recent time when I was in court with that particular landlord the tenant could not afford to continue to live in the apartment because their disability cheque had been decreased to the point where it just wasn't economically feasible. But rather than leave in the middle of the night, as some tenants are forced to do, this tenant wanted to agree to terminate their lease within a couple of months. That would give the landlord time to re-rent the apartment and would give the tenant time to find another place. The landlord would not consent to that. I said: "Just consent to let them out. This gives you a couple of months to re-rent. It gives the tenant a couple of months to find another place, and with the vacancy rate the way it is in Windsor, you can easily re-rent it. In fact, you have a legal obligation to mitigate your damages and re-rent it." As this landlord indicated, there were a lot of vacant units in that building and it was very difficult to re-rent them because they were well overpriced.
It's not that there's really a lack of housing. It is that there is a lack of affordable housing. Taking rent controls off will not mean that there will be more affordable housing. No evidence has been presented to prove that taking rent controls off, which this proposal would effectively do, would encourage people to build more housing. Even if it did, new units would not be priced at a level that our tenants could afford to pay. What would happen is they would be pushed out of the few units that they can now afford to pay and there would be even fewer that they could move into. They don't have a lot of choices. They usually move into a unit because it's what they can find and what they can afford.
Occasionally, when a story that I hear over the telephone is disturbing enough, I'll go out and do a home visit. Not long ago, I went to an apartment specifically because I was concerned about how bad it sounded. When I got there it was clearly a firetrap. The bathroom door had to be kept constantly closed because the toilet didn't flush. The bedroom door had to be kept closed because there was no heat and the cold was escaping into the rest of the unit. When I sent that tenant to another social service agency for some related assistance, while the tenant was out somebody else moved in.
Affordable units in Windsor are so rare that tenants stay in them even though the stories they tell of the lack of maintenance and repair and the harassment and treatment by the landlords are often so horrendous that my first reaction is to say, "Well, why on arth did you move in?" I know why they moved in, as they'll tell me. They moved in because it was better than being on the streets.
The proposal to have an anti-harassment unit is interesting and I love the idea of having some kind of office with people who are mandated to enforce tenants' rights and protect them, but there already is a compliance and enforcement unit at the Ministry of Housing that is supposed to enforce the Rent Control Act. Unfortunately, it's situated in Toronto and staffed with I think two or three investigators who are responsible for investigating infringements of the act throughout the province. With that amount of staffing they're really not capable of having a very big impact on the problem.
There are other provincial offences set out in the Landlord and Tenant Act, the Rent Control Act and the Rental Housing Protection Act which could provide some teeth to protect tenants' rights. But unfortunately, because of cutbacks in the judicial system generally, it's very difficult to get a justice of the peace to lay charges under any of those acts and it's more difficult to get a prosecutor to enforce them. Most of our tenants are not sophisticated enough or literate enough to be able to prosecute their own informations. Although it would be interesting to have some anti-harassment unit, if that's only brought about because of a change which is providing a financial incentive for landlords who harass tenants into moving, then I don't see a lot of point in it.
The maintenance provisions: I think it's wonderful to simplify some of the problems of inspectors enforcing housing standards. Unfortunately in Windsor, as I think is true in many other municipalities, the number of inspectors is declining dramatically because of cuts to their budgets. Furthermore, certainly in Windsor, the priority for housing inspectors is to inspect new buildings, not follow up on complaints. So tenants often have to wait days or weeks before an inspector will come out. Then they're often so rushed that they will only really put any pressure on the landlord if it is the most serious problem. Usually by that time, if it's that serious the tenant just has to move because it's a safety issue.
I applaud the idea of codifying what a landlord should do with chattels left behind by a tenant. That's a problem that can be resolved fairly simply by providing a solution that sets out some pretty clear criteria for determining when a premise has been abandoned. That could be very useful and could be very simply done.
I think there are some improvements which could be provided by the delivery system. In all three acts, the Landlord and Tenant Act, the Rent Control Act and the Rental Housing Protection Act, there are a number of substantive rights that have been added and developed over a great many years. I think they're very important. They have been refined by legislation and by case law to the point where they present a good balance now. I think there are some problems in procedure that create some time problems, create some confusion and that leads to some complaints by landlords.
Certainly in Windsor one of the problems is that landlord-tenant court only sits every other Thursday. When you look at the forms that landlords serve on tenants, they're a bit wordy, they're confusing and some of the procedure is complicated. Landlords who don't know what they're doing can make a mistake fairly easily and then could be back at the drawing board starting all over very early. If the timing has happened with the court only sitting every other week and occasionally a judge not being available, I can see how occasionally it can be a slow process to get a defaulting tenant out. It doesn't have to be slow if you do it right, but sometimes the process is a bit cumbersome.
I think that could be cleared up fairly easily. The forms could be simplified. A proper form could be provided for tenant applications. Right now there's really only a form for landlord applications, not tenant ones, and that needs to be added.
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In terms of a delivery system, it would be wonderful to provide for mediation. In most cases, the vast majority of cases, arrears are the problem and the tenant doesn't have a lot of choice because the tenant doesn't have a lot of money. So the tenant's not in much of a bargaining position. For those circumstances, mediation isn't going to be very helpful. But for other circumstances, such as tenant-to-tenant problems, mediation could be very helpful and I think that could save some of the court time.
An administrative tribunal could also divert some of the matters out of the court system. Although I'm not sure that it would necessarily be cheaper, it could be less cumbersome and people could have a hearing that protects their rights and guarantees they have had a fair hearing without some of the technicalities and time delays involved in the court system.
In my paper, I've included a list of recommendations at the very back. They can be basically summarized under two conclusions. I think the substantive rights that are provided by the three acts are good and should not be tampered with. I think the procedural framework can be made clearer, simpler and faster. Although none of those recommendations will encourage more building to alleviate some of the demands of lack of housing, I don't think those recommendations would cause some of the negative problems that the proposals would.
I'd be happy to answer any questions, if there are any.
The Chair: Thank you, Ms McDermott. We've got about two and a half minutes per caucus, beginning with Mr Marchese.
Mr Marchese: One of the substantive areas of change here is the decontrolling of rents. That, to me, is a fundamental discussion. It's really key to what is being proposed, although some other changes are equally important, like the elimination of the Rental Housing Protection Act. Do you think you need to be an economist to be able to comment on whether rent controls are good or bad? Do you have a view on rent controls generally?
Ms McDermott: There's been a lot of discussion today about whether rent controls have worked or not. I think first of all you have to ask, what were they designed to do? I don't think they were designed to encourage building. I think they were designed to prevent economic evictions. If they were designed to prevent economic evictions, they have worked. They have given tenants some sense of security. They have given them some power to say: "No, no. You can't bump up my rent 50% just because I've asked you to make some reasonable repairs." I think they have worked very well in that regard.
Mr Marchese: I agree. They make the link, many of them, between rent control and building and rent control and maintenance and make the assumption that the reason why buildings are in a sad state of disrepair is because of rent control. Do you have a view on that?
Ms McDermott: Yes. I'd like to see where the 2% has gone. I don't think it's gone into maintenance repair. I think it's gone into landlords' pockets. I think 2% could have made some significant impact on the maintenance and repair over the last number of years.
The other issue is that if you buy a building that has been allowed to deteriorate over the last 10 years thinking that you're going to apply for an above-the-guideline increase in order to make it up, if you've bought it with your eyes wide open, then I have no sympathy.
Mr Marchese: A few people got trapped in that, I suspect, and so they blame it all on rent control obviously. But I haven't seen any evidence suggesting that if you lift rent controls, all of a sudden our buildings will be maintained any more, and there's no evidence to suggest that rent controls prevent people from building.
I know Mr Lampert suggests that's an essential first step, meaning landlords would love not to have rent controls and they see that as a very positive thing so they can charge whatever rents they want, but in and of itself it will not cause any construction, and I think you'd agree with that?
Mr Hardeman: Thank you for your presentation. As we've been travelling the province, we've been hearing a lot about the maximum rent allowed under rent control and the actual rent that tenants are being charged. We find that in the areas where we have low vacancy rates, the majority of landlords tend to be at the top of the allowable rent. Where we have high vacancy rates, we tend to be considerably below the allowable rent. In your presentation you mention that in the cheapest of the apartments in the Windsor area -- incidentally, Windsor is a reasonably low vacancy rate -- the landlords were not up to the maximum rent?
Ms McDermott: I didn't mean to imply they were the cheapest of the rents, but there are some units that are highly priced at the legal maximum rent just because at the time rent control first came in they were overpriced, and they now have been allowed to deteriorate to the point where nobody will rent them for the price that the legal maximum would allow. So that landlord is renting at sometimes $100 and $150 less per month than the legal maximum would allow, but then saying, "If you complain about anything, we'll bump it up immediately," or "If you refuse to renew for another year at the end of your first year, we'll bump it up immediately." They will threaten to bump the rent up to the legal maximum, where no other tenant would rent it at that rate.
Mr Hardeman: The other issue is the harassment commission, and you suggested that you were somewhat favourably disposed to that part of the discussion paper. One of the things that is brought up continually through the hearing is that the decontrol is going to create the need for that harassment commission. We've heard a lot of presenters say that harassment already exists. Could you give us some idea why a landlord today would harass a tenant to get him out?
Ms McDermott: Sometimes just because there's a power imbalance and some people like to harass people who have less power than they do. Sometimes it's because they're going to bump the rent up even though it's illegal, but at least it's easier to control their doing that. A lot of landlords now will serve the tenant with notice saying the landlord's going to move in himself or herself just so they can raise the rent either to the legal maximum if it's been rented below that before or to something beyond that, because they don't think anybody's going to find out, which of course if you get rid of the rent registry, they would do.
Mrs Pupatello: Thank you for your presentation today. I found it very succinct. The most important sentence, I thought, was, "The problem is not rent control but the fact that new housing cannot be built at a cost that tenants can afford to pay." It goes back to the argument that when I speak with people who build apartment buildings, the issue is never rent control. Their discussion has everything to do with every other reason why they cannot build an apartment building that they can rent up. If you had to go today with all the money in the world, you can find an apartment anywhere. That is not the problem. I find it difficult that we're honing in on this rent control and tend once again to be pitting sides: developers versus tenants, landlords versus tenants. It's one more method of division in Ontario.
Do you agree with something that was said earlier by someone you may know, that rent controls are also flawed because a substantial percentage of tenants have the means and income to pay more rent, but controls prevent this, and the objective should be to assist only those who are genuinely in need of assistance? That was submitted by Danzig Enterprises. Do you agree with that?
Ms McDermott: I'm certainly familiar with that presenter. No, I don't agree with it. Certainly my clients are not those people who are being prevented from paying more than they could afford to pay because rent controls are keeping the rents so low.
Mrs Pupatello: You could argue there probably are some places where this is the case.
Ms McDermott: There may be. I don't think it's in Windsor. I wonder who these builders think they're going to rent to if they're going to build these brand-new units that are going to be priced so much higher than the units that are presently available. Who are they going to rent to? Wouldn't those people who could afford those kinds of rents be able to afford to buy a house?
Mrs Pupatello: Or if they were in a position to move from a home to an apartment because of the ease of apartment living, they'd likely buy a condo to maintain the equity in a thing they owned.
Ms McDermott: Exactly.
Mrs Pupatello: I find that strange too.
The Chair: Thank you very much for your input this afternoon, Ms McDermott. We appreciate it.
BUSINESS AND PROFESSIONAL WOMEN'S CLUBS OF ONTARIO
The Chair: Our next presenter is representing the Business and Professional Women's Clubs of Ontario, Susan Lescinsky, vice-president, public affairs. I understand she's going to share her time with Mr David Lyons.
Mrs Pupatello: It's too bad we can't afford to give him his own time slot like we can Bill Taylor.
The Chair: Just for your information, he was offered his own time slot and decided not to take it.
The floor is yours. You have 20 minutes. Should you allow time for questioning, it would begin with the government.
Ms Susan Lescinsky: I'd like to thank everybody for coming, the Chair and all the members. My name is Susan Lescinsky. I am a member of the Business and Professional Women's Club here in Windsor and I'm also the vice-president of the Business and Professional Women's Clubs of Ontario. Our club is a non-partisan, non-profit organization which promotes the interests of working women in the province of Ontario. We also operate under the Canadian Federation of Business and Professional Women's Clubs for improvement of the status of women in all phases of society. We have women in all business and professional occupations, including business owners, managers and employees, both inside and outside the private and public sectors, and our organization has been here since 1927.
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Some of the areas that have been discussed in the discussion paper that you have brought forward we agree with, having to do with more powers given to the property standards officers, increasing fines for offences as well as consequential offences, and streamlining violation orders. What we are concerned about are the increases to rent, the removal of the rent registry and the rent control on new properties, and the right of owners to convert, demolish or do major renovations to the property.
What we want to bring to your attention are some of the facts in the province having to do with women. In 1995, women made up 51% of the population of Ontario. They also headed 83% of lone-parent families. Women are the lowest-paid wage earners, making approximately $20,662 a year. Rent consumes the largest portion, which is 20%, which leaves the remainder to be divided between transportation, food and clothing for their children, plus other miscellaneous items.
Statistics Canada states that households that make under $20,000 have the largest portion, 44%, of affordability problems when it comes to renting. With 70% of lone-parent families renting, this is a very big concern of ours. Looking at the average wages of women and what they pay out for rent as well as what they have to put forward for other necessities, they have to depend on affordable housing to be able to look after their children. As you can see, a very big portion of our population are going to have to be worried about affordable shelter and also where they live. In the last year those on social assistance have seen their shelter allowance decrease from $652 to $511 for a single parent with one child and from $707 to $554 for a single parent with two children.
Older women are also very vulnerable. In 1991, 41% of those over 75 years old lived alone. The average income of seniors is only $27,000 a year. With women living longer than men and living on their own, rent is an important factor when it comes to budgeting.
The rent registry: We feel this should stay in place to protect tenants. It provides checks and balances for a system to ensure that rents are not excessive.
Rent increases: Under investigation now, the current property tax system is being changed to actual value assessment, under which the ministry itself admits there could possibly be up to 40% in increases. This could be very precarious for both landlords and tenants. Taxes under this system are considered extraordinary operating costs and will be included as part of the rent which is then passed on to the tenant. This could raise rents quite significantly even if the government did cap the amount allowed in the increases for the year. This could cause a ripple effect for the people renting as they start moving around and looking for affordable housing. At the same time, the rents will be going up as people move in and out of tenant buildings.
The municipalities will now be able to recover for inspection of property or emergency work that is being done by the municipalities, and it will be added on as part of the municipal taxes. This allows the landlord to negate their responsibilities and to pass the costs on to the tenants. If the landlord cannot abide by work orders and property standards, then the cost should not be reflected back to the tenant but should be placed as a lien against the property and appropriate fines imposed. This was part of what you had suggested in your discussion paper, and we agree with it.
With wage levels at a standstill, people constantly in transit in jobs and the uncertain outlook on the employment horizon, people need to ensure that appropriate shelter is available to them. Economists state that there was a slight increase in the levels in 1994, but even then Canadians were roughly earning now what they were earning in 1976. They did not keep pace with inflation in 1995. If wages are not going up, then allowing rents to increase without any restrictions would be detrimental to tenants.
Statistics Canada has also stated that 4.3 million people -- one out of every four -- face a major job change in the next 12 months. Because of changes in the job market, people have joined, quit, lost or found new jobs. An estimated 17,000 people between the ages of 16 and 69 face major job changes within the next year. The government's own Lampert report revealed that more than two thirds of Ontario tenants will be moving once every five years. With the fluctuation in the workforce, the minor increase in wages and the movement of workers, how can rents increase and people still have enough money to live on?
The minister says the marketplace will control the rent, but when vacancies are low, how can they be controlled when there is no market value? The idea that tenants can then bargain for a new TV or microwave doesn't make any sense. Unless there is a large vacancy rate with unemployment low and wages being able to bargain, then there's no way that this situation could possibly occur.
You asked for some input on several points. Dispute resolutions: Even though an independent agency would be subject to its own policies and legislation, it would still lose accountability if it isn't going through the minister's office. We would prefer to see the government look after its own legislation and have direct accountability through the ministry.
On appointments of adjudicators, appointments by order in council could easily turn into patronage appointments. The same thing could happen when tendering comes about. Costs could rise for both tenants and landlords if companies set out to make money at the cost of landlords and tenants by adjudicating disputes attached with high fees. To make the system fair and to ensure gender equality on all agencies, boards and commissions, the appointment of government employees should be through their own process.
Security of tenure and conversions: Sitting tenants have the right of first refusal to purchase their units in case of conversion. If these tenants are on fixed incomes and the amount of tenure is very short, how will they have a chance to be able to worry about where they're going to go? If vacancy rates are low, the extended tenure time is limited to a short period. People could be out in the streets or in hostels. Another concern, again, is that they'd be looking for a new place to live, and with rates going up every time tenants go in and out of buildings, there's a lot to worry about.
We believe that even though properties need to be renovated, there should be maximum allowable increases to keep in line with feasible wage gains and inflation rates. The cutbacks to allowances for shelters for social assistance recipients, construction of non-profit housing very minimal, meagre wage gains and the lifting of rent controls would put individuals at the mercy of landlords to either pay the increase or forfeit their shelter. For those women who are living alone with children to feed and clothe while working for minimum wage and trying to make ends meet and for senior women who are on fixed incomes, the socioeconomic devastation will be great. The need for more food banks, secondhand clothing stores and substandard housing would be the norm of the province.
I'd also like you to have a look at the last two pages of my brief. Those are resolutions that are passed by our organization yearly. They are brought before our whole membership and they are passed and they are presented to government every year in briefs. These are the ones that relate to the housing and also to the appointments.
I'd like to turn my extra time over to David Lyons.
Mr David Lyons: I'd like to thank everybody for coming to Windsor and thank Susan in the Business and Professional Women's Clubs of Ontario for the opportunity to allow me to speak here today.
I'm here to represent the views of young people. Today we see that the views of young people are not being equally represented. Today marks the day that all levels of school are back in session. That means I should be in class right now attending.
First this government has made cuts to health care, then education. In education we've seen an increase of 20% in tuition. At York University, the tuition went up by $686 a semester. Is this fair? No, it's not. It's going to cost us more and more to get an education to leave school in three or four years to head into the job market. Now this government wants to get rid of rent control.
Many young people have a lack of information and a lack of knowledge about rent control, and many young people fear eviction if they speak out against their landlord or if they complain to their landlord about the way their living arrangements are. Many young people would just put up with the harassment. In Windsor, speaking to youth, a semi-detached three-bedroom home will go for approximately $875 a month, plus utilities. That means that three students need to move in to split the costs of the rent and the utilities. So we're looking at $1,100-plus. This is already an outrage living and trying to go to school. If not, you can look into rooming-houses, where rooms are going for $400. There's about an average of five rooms to a house; anywhere between four and five rooms, $400 a room. That means you have a common bathroom and a common kitchen. There's no privacy.
Many of these students are forced to live near the campuses in these houses and in these rooms because classes start early or classes end late or we need to study at the university library. Classes on average start at 8 am, and the public transit system here in Windsor does not start till 6 am. So if students look to move outside the campus area and move further into the east end, we're looking anywhere from an hour to an hour and a half bus ride in the morning or after school to get home.
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There will be an obvious increase in rent around campus if this discussion paper is passed and turned into legislation. It's phenomenal to live here in Windsor and attend school. As I stated earlier, there's changes to OSAP, and the federal student loans are placing young people intending to pursue a post-secondary education in a sticky financial situation. It just makes it harder and harder for us to attend school and to try to get a job and to graduate.
Young people are the voters of tomorrow. I know that not all young people are Tory youth. With the cuts that have gone on to health care, education, tuition increases and the possibility of abolition of rent control, I am sure young people will not be voting Tory next election.
Mr Smith: Thank you for your presentation. I want to come back to an issue that Mr Hardeman raised with the previous presenter, because it's an issue that we've addressed over the last two weeks on a number of occasions, and that's on the maximum rent issue. I guess I'm trying to reconcile in my own mind the concerns tenants have with the elimination of maximum rents. To be honest with you, pretty well in every community we've been in, landlords have asked us to retain the maximum rents, because they're concerned the market forces are going to press it down and they won't be able to retrieve that at a later date. Given that fear they have -- and in some communities, in fact in Ottawa we've seen a decline of 3% or 4% in the actual rents -- what do you think is the reason behind that and your concerns of whether rents are going to skyrocket or increase?
Ms Lescinsky: You're asking me?
Mr Smith: Certainly.
Ms Lescinsky: One of the concerns that we have is if the rent goes up too high, if you're talking to women who are lone-parent families, that's a very, very important part. I do agree, and I think most of the members of our organization would agree, that, yes, there are some reasons why landlords have to make sure -- because we have landlords who are in our organization who are saying, "We have to be able to make sure that we can fix up the places and we can get something back so that we're not going in the hole." I can feel for those landlords, but we do have to also make sure that we're able to balance both: able to give the landlords something so they can fix up their places and also make sure that people who are in positions where they have less money coming to them are looked after.
If you're looking at the social assistance recipients who have less money coming to them now and they've got children to feed and they're working and they're trying to make ends meet, and then all of a sudden they have to move or there is an increase in rent, how are they going to make it if there's nothing on the other side that's helping them to be able to keep up with the small wages they make? There's only 1% of disposable income that's left in between, Statistics Canada has shown. I mean, 1% is not a lot to be able to even allow for rent increases.
Mr Smith: Would you consider a 34.8% increase in rents over a five-year period excessive?
Ms Lescinsky: Thirty-four per cent in five years? No.
Mr Smith: You would think that's a fair amount.
Ms Lescinsky: I'm trying to divide it out quickly to see, because you'd have to divide it per year, and then 12 months into every one. It would be a small percentage. But when you're talking about rent increases, you're not talking about over that length of time; you're talking about per year. What is that portion of increase that's going to be attached?
Mr Smith: The reason I'm asking is because an earlier presenter -- I believe it was Scarsdale Tenants' Association -- has experienced a 38% increase over a five-year period under the current rent control system. I'm just trying to get a sense of whether you feel that's a fair number.
Ms Lescinsky: I really couldn't answer that. I really wouldn't know.
Mr Hardeman: Thank you very much for the opportunity and thank you for your presentation. You referred in your presentation to the reassessment process we're going through to market value assessment, or a value-based assessment I guess is the proper term. You suggested that you feared that would increase the taxation on rental accommodations, when in fact we've heard over and over that there seems to be an unfair advantage to owned units as opposed to rental units. In some areas in fact, it's 400% higher taxation on a rental unit than on exactly the same condominium unit. So it would seem to me that a fair assessment system should improve the lot of the people who are renting their accommodations. Would you not agree with that?
Ms Lescinsky: The rent would still increase. If you've got 40% that's being increased in one year, that's quite high. So what I'm saying is there should be some limitation that is put.
Mr Curling: Thank you both for your presentation. In trying to respond to the government's proposals, whether or not they're fair, if earnings could exceed the increase, then it would be all right. If earnings are up just 5% and rent goes up 34% over that time, you realize who's losing out on this. We've got to put the matter of affordability in perspective.
I think you've touched on some very good points, and some of the answers I was looking for about women and the impact it has on women which you addressed here are right on. I've extracted some pertinent facts out of this and I hope the government will take that into consideration.
If you don't mind, although there are quite a few things I would like to address, let me take the opportunity to ask the young gentleman here. Over the time we have been around, students of course have had a great impact. They move quite regularly, especially when they are students. They have been subjected to OSAP -- not this government -- loans that have been slashed, they've cut grants, tuition fees have gone up, user fees have been done, and now you're hit with a higher rental accommodation fee. Do you think this will adversely affect education, where the government wants young people to be trained more? Will this impede accessibility to proper learning and training?
Mr Lyons: Definitely. A lot of people aren't going to end up going to school. We're going to end up dropping out of our first year -- because we won't be able to afford to go back a second year -- and working in the factories. A lot of us have high goals set. We won't be able to. Education is just going to cost us too much.
Ms Lescinsky: No factories are hiring.
Mr Lyons: Yes, that's even true. There are no factories hiring. That's an assumption I'm making. There are even no jobs out there. I've been unemployed since February, and it's costing me mega-dollars to go back to school. I probably will not be going back in January because of the fact that I can't afford it.
Mr Curling: Let's go back to the job market, because sometimes we can't put rent control in isolation. Talk about earnings -- I think the question was very well said by Mr Smith: Is this excessive or is this fair? When you take everything else into consideration, like jobs for young people this summer, was it more difficult to get jobs for you to supplement your income or supplement your tuition fees?
Mr Lyons: Yes. I haven't had a job since February. I got laid off and I could not find a job. The job market and the competition out there is phenomenal.
Mr Curling: So the nail in the coffin now would be just to pull out rent control and say, "That's it."
Mr Lyons: And say goodbye to our education. That's about it. I think a 34.8% increase in rent over five years is phenomenal unless we have income coming in or an increase in OSAP and government loans.
Mr Curling: Why would the government want to do this? Why would they do this then? What is your feeling?
Mr Lyons: My feeling is so the rich can get richer and the poor can get poorer.
Mr Marchese: I agree with that.
Interjection: It's your line.
Mr Marchese: David, just quickly, I wanted to say I agree with the presentation of your views around this matter. I wanted to say that my daughter is going to the U of T this year. She lives at home and can almost walk to the U of T, so it's nice, but not many students who have to go from home to some other university are going to be so lucky. I suspect a lot of them don't realize this proposal is afoot, and once they discover the implications of this, I think we're going to see a lot more students organizing against it, because it will be against their interests when they find out rents are going to go up.
To Ms Lescinsky, a question: Some of the presenters have almost made it appear that getting an increase of 5% or 10% is an important thing because landlords need that fair return. What we have known, in everything that I have seen, is that they get a fair rate of return at the moment. We can disagree whether it's 10% a year or 5% a year, but we suspect they're doing okay. You have landlords coming here saying, "Five per cent is all right," or other members arguing, "What's fair for the poor landlord?" About a third of all tenants make less than $23,000 and I'm worried about how they're going to make ends meet, yet the members talk about fairness. I know you're worried about it, because you mentioned that. Don't you worry about those kinds of increases?
Ms Lescinsky: Oh, definitely. That's really what we based our brief about, because we're concerned about people who make under what is considered the poverty line, or very close to. People who make $50,000 or $60,000, if they do rent -- most of them have homes of their own by that time -- they don't have to worry about that. That's not a concern of theirs. Where the concern lies is for women and children and for men and children who are in lone-parent families, who do not make the amount of money that is necessary for them to have adequate food and shelter and clothing for themselves and their children. Food banks already are being blown wide open and it's going to get worse if we don't look after individuals in the province of Ontario.
Mr Marchese: It's incredible how power and privilege can shape the policies of society. It's interesting, we have landlords who come here and of course they're in complete agreement with the Conservatives. They're both on side with this particular view.
Mrs Pupatello: Not all of them.
Mr Marchese: And we have most other people, like yourselves and other tenants and other organizations, very worried about the implications of decontrolling rents and the elimination of the Rental Housing Protection Act. It seems like they're the only experts who can comment on it. Do you feel qualified to comment on the issue of rent control?
Ms Lescinsky: Just by looking at statistics, you can almost make some comparisons. I don't think you have to be a rocket scientist or Einstein to be able to look at what the figures really are. There are no increases in wages. It's flat, it's dead, it's at a standstill. To be able to say to people, "We'll raise your rent," and not have to worry about adequate shelter for them after that just does not make any sense. There are 11 million people in the province of Ontario and 3.5 million are renters. That's a big portion of our province to whom we're saying, "We won't worry about you now."
The Chair: Thank you, Ms Lescinsky and Mr Lyons. We appreciate your input here this evening.
Linda Girard from the Windsor Coalition Against Poverty has notified us that she's unable to attend, but she is submitting a written brief. We asked Mr Fuerth to cancel. Is Joseph Krall here? We'll recess until 7:20, or earlier if Mr Krall or Mr Samuel arrives.
The committee recessed from 1904 to 1925.
JOSEPH KRALL
The Chair: Luckily, our next presenter has arrived a few minutes early: Mr Krall, executive director of the Federation of Windsor-Essex County Tenants Associations. You have 20 minutes, sir. The floor is yours.
Mr Joseph Krall: Good evening. My name is Joseph Krall and I approach this committee today out of grave concern over the proposed New Directions related to rent legislation. I would like to thank you for this opportunity to voice my concerns.
This presentation is not being made on behalf of any special-interest group. However, as you may be aware, I was the executive director of the Federation of Windsor-Essex County Tenants Associations, also known as FOWECTA, from October 1992 through August 1995, when provincial funding was terminated. FOWECTA was the advocacy and information voice for 20,000-plus Windsor and Essex County tenants, and as agent on rent control applications, we aggressively helped tenants to collect far in excess of the $55,000 per year community partners grant we received. Therefore, I've had extensive personal experience relating to the problems being faced by private sector tenants, particularly related to rent legislation.
Regarding the New Directions, even the key proponents appear to be misinformed regarding its effect upon tenants. For example, Premier Harris was quoted on June 25 of this year as saying, "No tenant will have their rent go up any more under the system we're proposing than under the current system." Further, Minister Al Leach has stated: "There are many aspects of rent control that work -- those we will not change. There are many aspects of rent control that need to be improved -- those will be improved." Based on what I've read concerning the proposed changes, it would appear that total rent increases and rent levels will be higher and the proposed improvements amount to regressive, hurtful changes for tenants and an improved guarantee of profitability for landlords.
The discussion paper makes several references to a lack of maintenance and repair in the existing rental stock. However, the proposed improvements will only make a bad situation worse. For example, New Directions proposes to improve the problem by eliminating the rent freeze which currently applies to a building that has outstanding property standards violations. This is improvement?
Further, since the current system does not create any incentives for landlords to put money into maintenance, under New Directions, landlords will no longer be accountable for the portion of the guideline increase which is earmarked for maintenance and capital work. I ask you, is this an incentive for landlords to do the required work?
In all fairness, increasing fines and creating offences related to property standards violations is a positive move. However, I strongly suspect that enforcement and prosecution of these offences will be extremely limited, thereby negating any possible benefits and certainly not creating any incentives.
In respect of new construction, I cannot see anything in the proposed legislation which will encourage same. The greatest need for rental units is at rent levels well below the profit level related to new construction. I seriously doubt that anything proposed in this legislation will encourage a developer to build one-bedroom units renting at $700 per month if his break-even point is $1,100 per month, that is, unless of course landlord welfare, or shelter subsidies as some prefer to call it, are going to be a surprise part of this package of incentives and protection.
Eliminating the Rental Housing Protection Act will abolish and not provide a very basic protection required by Ontario tenants. Without question, this province will lose affordable rental accommodation and tenants will lose their homes. In spite of the major barriers under the RHPA, we have seen a few local tenant-initiated cases of conversion which provided affordable purchase opportunities to tenants, and FOWECTA did not oppose those initiatives. However, I have heard many landlords threaten demolition or conversion over the years and I am certain that several would have followed through if not stopped by the RHPA. Eliminating the RHPA, particularly in conjunction with other ruinous aspects of the proposed legislation, is tantamount to a mass eviction of Ontario tenants and will surely result in the progressive elimination of affordable rental housing. To allow this housing to disappear at a time when we are not building public housing and the private sector is unable to build will certainly guarantee this government a prominent place in the Ontario hall of shame.
Call it what you may, but this tenant protection legislation is anything but rent control. By eliminating the rent registry and allowing rent levels to rise to whatever the market will bear as they become vacant, affordable housing will become a thing of the past. In general, tenants move quite frequently and I suspect that it will not take very many years for these new protections to impoverish a broad cross-section of the renting public in this province.
Particularly in a low-vacancy market like Windsor, the proposed legislation is a recipe for disaster. In representing hundreds of tenants at rent control and counselling hundreds more, I found no shortage of landlords who were willing to go outside the parameters of legislation. Illegal rent, illegal charges and illegal evictions could always be justified in some way or another by the offending party or his solicitor. Even upon receipt of an order outlining the violation and ordering restitution, many would repeat the offence with new tenants. Compounding this problem, there was only token, travelling prosecution of these offenders by the ministry. Local efforts to obtain prosecution were sabotaged by a crown that refused to prosecute these matters, preferring to deal with more serious issues like seatbelt violations.
The new legislation promises to protect tenants by adding a new level of useless bureaucracy and cost in creating an anti-harassment unit. The irony is that the anti-harassment unit is only required as a result of tenant protection legislation, which transforms those who live in affordable housing into sitting ducks. Even worse, I suspect that most tenants will run from this bureaucracy and that those who seek its protection will be very disappointed in the results. The real incentive here will be for landlords to get rid of tenants in affordable units so that the rent may be raised and/or services reduced.
Quite simply, you cannot protect a tenant if you remove all protection related to the unit. Real people live in these units and these real people will be forced to pay many more real dollars with the new protections that they would have under the existing system.
Further, landlords will be able to apply for an additional 4% related to capital repairs, up from 3%, and do so without proving that they have already spent the 2% for maintenance built into the guideline, as they are required to do under the existing system. Under the proposal, once a capital expense has been paid, it will stay in the rent forever, instead of being removed as it is now. Although somewhat unclear, it would appear that the proposal is also opening a door to unnecessary luxury renovations, and if that isn't enough protection, tenants will also lose the right to seek a reduction in rent due to a reduction in the cost of heat, hydro or water.
The only real protections which are not being plundered by the current proposal are those that exist when a tenant moves into a unit. Unfortunately, however, any real protection will be negated by the serious financial damage which has already been done by the time that tenant actually moves in.
It would appear that one of the unwritten goals of the proposed system is to guarantee profits to landlords. In virtually any other business enterprise, profits are generated by applying sound business practices to a sound investment, not by legislated gouging at the expense of the consumer. Why then are profits being guaranteed to landlords at the direct hurtful expense of tenants, irrespective of whether that landlord has made foolish investments or runs a tight ship? Regrettably, it would appear that a well-heeled landlord lobby has convinced this government that such a guarantee will result in the restoration of existing stock and the construction of new units. As I've already mentioned, these events are unlikely in any measurable form. Why then are we guaranteeing profits to landlords under the guise of tenant protection?
While the discussion paper lacks detailed specifics, I have concerns about changes which automatically give a landlord rights that he or she hasn't required in a lease agreement. For example, as a result of these changes, a landlord's consent will now automatically be required upon sublet or assignment and privacy protection will be automatically waived after a tenant has given notice of termination. In both these examples, a landlord can currently receive these rights by virtue of an agreement between the parties, but it is not an automatic legislated guarantee of absolute control as proposed in the new protections.
Regarding a new dispute resolution system, I would applaud a one-tiered system which would streamline the process without prejudice to tenants. However, the discussion document lacks specifics and I must express a serious concern over any efforts to broaden the grounds for eviction and to develop a fast-track eviction process. Locally, we do not encounter the delays illustrated in the discussion document.
Any fast-track proposals are extremely prejudicial to the average tenant who is uninformed about his or her rights. Conversely, it would be sheer stupidity for a landlord to be uninformed about the laws related to his business enterprise. Most landlords are also at a financial advantage and are more likely able to afford high-powered professional assistance and advice. Therefore, regardless of the merits of any dispute, this creates an advantage for the landlord and prejudice towards the average tenant.
The proposed changes concerning care homes and mobile home parks are for the most part regressive and hurtful. It is not necessary to open the door to abuse by creating a fast-track eviction, nor is it necessary to allow higher-cost pass-throughs. Neither of these changes legislate protection to the tenant.
The proposed tenant protection legislation fails miserably in achieving its goals. For example, the goal to protect tenants from unfair or double-digit rent increases, evictions and harassment and to provide strong security of tenure I grade an F. These proposals will not do any of the above.
In respect of focusing protection on tenants rather than units, I grade it a D-- because there is not much real protection left for tenants upon implementation of these proposals. Protection and guarantees have actually been focused on landlords.
In regard to the goal to create a better climate for investing in maintenance and new construction, therefore creating jobs, I grade it a D--. This proposal will do nothing to bring about new construction and is most unlikely to inspire any measurable increase in maintenance.
Regarding the goal to improve enforcement of property maintenance standards, I grade it an F. I believe this is total hogwash. This proposal will do no such thing and is most likely to inspire additional abuse by allowing rent increases while there are property standards violations.
In respect of the goal to provide a faster, more accessible system to resolve disputes between landlords and tenants, I grade it a D--. I feel it's most unlikely that landlord and tenant disputes will be settled any faster under the new proposals and the lack of particulars in the discussion document erodes any possible optimism.
As to the goal to deliver a more cost-effective administration with less red tape, I grade it again a D--. This system will create new levels of bureaucracy, and in the absence of cold, hard facts I find it most unlikely that this goal will be attained.
The proposed legislation has been marketed as tenant protection legislation but could most accurately be described as landlord protection or protection erosion. In consideration of 3 million-plus Ontario tenants, I urge this committee and all elected members to reject these proposals.
Mr Crozier: Good evening, sir, and welcome. Just for my own information, at the conclusion or when FOWECTA was no longer in existence, which was in summer 1995, I think you said --
Mr Krall: It was the end of August of last year.
Mr Crozier: -- who would you say is able to speak for those tenants you spoke for prior to that date?
Mr Krall: There really is not a group functioning in anywhere near the capacity that FOWECTA was, so I believe the answer is, there is none.
Mr Crozier: When you say that you aggressively helped tenants to collect far in excess of the $55,000-a-year community partners grant that was received, I see that you're not saying you helped the tenants collect anything they were not entitled to.
Mr Krall: That's correct. In all these cases they were illegal overcharges that we assisted the tenants in making a claim to recover.
Mr Crozier: So your service was helpful to those tenants because they didn't have the resources that perhaps those had whom you were making a little more honest.
Mr Krall: That's correct. In most cases landlords were represented by lawyers, in most cases fairly high-priced lawyers. We were just there evening the playing field.
Mr Crozier: Can you see this becoming even worse under this legislation than it is under anything proposed in the paper, as opposed to what it is now?
Mr Krall: With the exception of legal clinics, which provide very limited services in these areas because they're dealing with broad-based issues, there really is nowhere for tenants to turn in seeking help, so they will have to somehow find a way to deal with it themselves.
Mr Marchese: Mr Krall, the reason this government has introduced this proposal I think is to restore balance in the system because they feel that landlords have been unfairly treated and that tenants have too many rights or that the law was tipped in their favour, so they had to create some balance. Do you get the impression, in all the work you've done in the past, that somehow landlords were being undone or hurt by the policies that we put into place and that tenants had the upper hand? Do you agree with that?
Mr Krall: No, quite the contrary. I hear that comment from a lot of people. I think there's been some good lobbying that would get people to believe that. My experience is quite the contrary. Most tenants who came to my office were very uninformed in respect of their rights and obligations and many of them were being very aggressively handled by a landlord who knew full well his rights and quite often went far over the line.
Mr Marchese: I like the report card as you've done it. No one else has done it in this way and I think it's quite simple, literate. I know they disagree with you, but these are the points this report makes. You stated quite clearly how it doesn't accomplish the stated purpose of those goals.
I have another question with respect to affordable housing. Obviously they don't want to build. The private sector is not building because they can't really make any money out of it. Do you think governments should be building affordable housing?
Mr Krall: I believe that government has an obligation to provide affordable housing, that housing is a basic right that should be afforded to all the people in this province.
Mr Stewart: Thank you, sir, for your presentation. I'm quite interested in your report card. First of all, this is a discussion paper, and second -- we're hearing as we go around the province that rents have decreased with vacancy rates going up etc -- I'd like your report card if you had looked at some of the first words: "protect tenants," "focus," "create," "improve" and "provide." What appears to us in these hearings is that what we have had in the past is not working. I think the key words in this report card, if we can create and if we can focus and if we can improve, will then become a level playing field for both tenants and landlords.
Mr Krall: I believe we have a pretty level playing field at present. Landlords who are disadvantaged by current legislation for the most part have made very poor investments that they are asking you to bail them out of. We had cases back in the 1980s where buildings were sold at inflated prices because financing costs could be passed on to tenants. Many of those landlords are crying foul now because their rents cannot be raised to the exorbitant levels that were previously allowed.
Mr Stewart: We hear they're going down. When I hear the stories we've heard here, and other places around the province, of abuse and harassment and wait lists etc, surely to goodness what we have in place now is not working. We have to create, focus and improve.
Mr Krall: I don't believe that the directions this discussion paper is suggesting the government is moving to will do anything to address the issues you've just mentioned.
The Chair: Thank you, Mr Krall. We appreciate your input here this evening.
Is Mr Samuel in the audience? We will recess until Mr Samuel shows up.
The committee recessed from 1944 to 2000.
The Chair: Welcome back. The United Tenants of Ontario's southwestern representative, Vincent Samuel, has chosen not to be here on time for his appointment, so that is the last of our presenters for today.
We thank you very much, people of the city of Windsor, for coming forward with your ideas. It was nice to be in your fair city and not lose any money at the casino because we didn't have time to go there. We appreciate your input.
The committee stands adjourned until 12 o'clock tomorrow in London.
The committee adjourned at 2001.