LONDON HOME BUILDERS' ASSOCIATION
NEIGHBOURHOOD LEGAL SERVICES, LONDON AND MIDDLESEX
PERSONS UNITED FOR SELF-HELP LONDON
COHEN HIGHLEY VOGEL AND DAWSON
ONTARIO MANUFACTURED HOUSING ASSOCIATION
LONDON SOCIAL PLANNING COUNCIL
LONDON AND AREA TENANT FEDERATION
NEIGHBOURHOOD LEGAL SERVICES, LONDON AND MIDDLESEX
LONDON PROPERTY MANAGEMENT ASSOCIATION
EAST LONDON UNITED CHURCH OUTREACH CLUSTER
LONDON AND DISTRICT LABOUR COUNCIL
1095 JALNA NON-PROFIT HOMES TRANQUILITY HILL HOMES
CONTENTS
Wednesday 4 September 1996
Rent control
London Home Builders' Association
Mr Joe Hoffer
Neighbourhood Legal Services, London and Middlesex
Mr Jack Carroll
Persons United for Self-Help London
Miss Bonnie Quesnel
Mr Steve Balcom
Cohen Highley Vogel and Dawson
Mr Joe Hoffer
Ontario Manufactured Housing Association
Mr David Rice
London Social Planning Council
Mr Bruce Wright
London and Area Tenant Federation
Mr Leo Bouillon
Neighbourhood Legal Services, London and Middlesex
Ms Cynthia Harper
London Property Management Association
Mr Bill Amos
Ms Morghanna MacIsaac
Mr David Winninger
East London United Church Outreach Cluster
Rev Susan Eagle
Old Oak Properties Inc
Mr Bernie Bierbaum
Mr Bill Armstrong
LIFE*SPIN
Mr Andrew Bolter
Mrs Irene Mathyssen; Mr Alex Mitchell
Norquay Homes Ltd
Mr Michael Howe
London and District Labour Council
Ms Patty Gunness
Ms Christine Sorko
Twin Elm Tenant Association
Ms Marylin Bolender
Mrs Mary Jane White
1095 Jalna Non-Profit Homes; Tranquility Hill Homes
Mr Bert Rupple
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)
*In attendance /présents
Substitutions present /Membres remplaçants présents:
Mr AlvinCurling (Scarborough North / -Nord L) for Mrs Pupatello
Mr John L. Parker (York East / -Est PC) for Mr Young
Mr BruceSmith (Middlesex PC) for Mr Flaherty
Mr JosephSpina (Brampton North / Nord PC) for Mr Tascona
Also taking part /Autres participants et participantes:
Mrs MarionBoyd (London Centre / -Centre ND)
Clerk / Greffière: Ms Tonia Grannum
Staff / Personnel: Mr Jerry Richmond, research officer, Legislative Research Service
The committee met at 1201 in the Radisson Hotel, London.
RENT CONTROL
The Chair (Mr Jack Carroll): Good afternoon, everyone. Welcome to the continuing hearings by the standing committee on general government relative to proposed changes to rent control. We're delighted to be in London on this beautiful summer day and are looking forward to having some input from various people in London. Everybody is allowed 20 minutes. Any time they leave for questions we rotate evenly between the three caucuses, just so you know how the system works.
LONDON HOME BUILDERS' ASSOCIATION
The Chair: Our first presenters today represent the London Home Builders' Association: Joe Hoffer, the legal counsel, and Ian Lowe, the first vice-president. Good afternoon, gentlemen, and welcome. In your 20 minutes, should you allow any time for questions, they will begin with the New Democrats, assuming there's somebody here by then. The floor is yours.
Mr Joe Hoffer: Good afternoon. First of all, I'd like to thank you for the opportunity to appear before this committee today. My name is Joe Hoffer. I'm a lawyer with Cohen Highley Vogel and Dawson, and our firm is legal counsel to the London Home Builders' Association. Seated beside me is Ian Lowe, first vice-president of the London Home Builders' Association.
The London Home Builders' Association was formed in 1952 and has a membership of 218. The membership is made up of builders, land developers, renovators, housing industry suppliers, apartment owners and managers and numerous other small businesses which provide a broad range of services to the housing industry. We wish to highlight for this committee that the constituents of the London Home Builders' Association are not just involved with the industry requirements of people who own their own homes. This association's constituency also involves people who service the rental housing industry and who have a direct interest in the policies and legislative initiatives which are now being formulated by the province in connection with residential tenancies laws.
I have distributed a written presentation which I'm going to pretty much stick to as part of this. It's essentially divided into building a case for the need to amend the proposed policies which are contained in the discussion paper and then a series of recommendations for amendment which the home builders' association proposes be made to these policies in an effort to encourage construction and renovation in the rental housing sector.
The consensus among home builders' associations across the province is that the long regime of rent control, which has continuously existed in Ontario since 1976, has had severe negative impacts on the home building and housing industry. In a community like London, there's very little incentive for the construction of new rental units. We recognize clearly that there are economic and demographic reasons for that, but rent control is a major barrier to the construction of new rental units. Landlords and owners of property have to make a 20-year investment, and in a legislative regulatory system where you have changes in political parties and changes in legislation every four years, there's too much uncertainty to believe they won't be affected by rent controls somewhere down the line.
The main concern that we wish to address today, however, has to do with the impact of the policies that are contained in this discussion paper on the potential for employment in the construction industry: employment in renovation, retrofit and rehabilitation of existing housing stock.
Right now London has lots of supply, but what's needed and what would create immediate employment in London would be the opportunity to engage in construction and renovation projects. That type of work stopped in 1990 when the NDP passed Bill 4. There was a lot of work under way, and it came to a standstill. Bill 4 and the Rent Control Act have left virtually all renovation and owner-driven construction at a standstill since, and it's hoped the new legislation proposed by this government would encourage owners of buildings to get out there and start building again. There is a pent-up demand for that type of work within a narrow sector of the apartment industry.
We've looked at the policies that are proposed and we've asked whether these policies will encourage owners to invest in existing housing stock and create much-needed employment for the construction sector. In our view, the answer is that these policies will not have that effect. The reason for that is that the decontrol/recontrol proposals, particularly in a soft rental market like London's, will mean that an apartment building owner will be restricted to limited annual increases regardless of the size of investment in the rental property. Even if the landlord receives an order for an above-guideline increase, in a soft market like London's the benefit of that order will be lost for rental units which turn over any time after the order issues.
Suppose I get an order that gives me a 4% increase above the guideline, and two months after that order is to take effect, a tenant moves out and I can't realize the benefit of that 4% increase or a market increase that exceeds that 4% that I got in the order. I've completely lost the benefit of that order because I'm back into a recontrol situation and I've rented out in a soft market. As an investor, I'm not going to be inclined to make that kind of investment in a market like London's.
If, on the other hand, I have an assurance that maybe not today but in three or four years I might be able to catch up and take the benefit of that order, I might be more inclined to do it, especially because labour rates are much better today; maybe the market will turn around in future. I'll go ahead and make the investment. With the policies that are in place in this discussion paper, it's very likely that the owner won't do that.
A second point is that if a substantial investment is made in renovating a residential complex, a building owner will have to increase rents to the maximum permitted by the legislation each year or forever lose the right to take an increase so long as the existing tenant remains in the unit.
The policies proposed in this legislation, because they propose to do away with maximum rent, mean that a landlord either on turnover of a tenancy or with a tenant who's already at maximum will consistently have to try to take the full benefit of the annual guideline increase or the ordered increase; otherwise they will completely lose the benefit of that order or of the annual statutory increase. They won't be able to catch up in future.
What you've done with these policies is you've put us back in the situation that landlords were in between 1976 and 1985 where they couldn't catch up in a soft market. In a place like Toronto it probably doesn't matter, but just about everywhere else in the province it is a big issue. After all, you are governing in respect of all of the province.
The third point is that the retention of strict rent control policies creates uncertainty for building owners who are considering making a 20-year investment in their building. It was hoped when the discussion paper was announced that there would be some relief from strict rent controls. That hasn't happened, and that creates uncertainty for buildings and investors. They tend to stay away from an environment where every four years they're subject to new and retroactive legislation.
The other point I would refer you to is that the Lampert report, which I'm sure you're all familiar with, recommended that this legislation or that housing policy generally move towards ultimate decontrol. There are none of those features in this legislation. It's not clearly transitional. The perception of the legislation is that it would be open to any government in future to simply reintroduce rent controls and do away with the decontrol features of this legislation, so that uncertainty remains. It is hoped that you would revisit the recommendations of the Lampert report and move more towards a transitional phasing out of rent controls over the longer term.
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The recommendations by the London Home Builders' Association with respect to the proposed legislation:
(1) Retain the concept of maximum rents so that landlords who rent units in a soft market will have the opportunity to catch up if and when the market improves. Retaining the concept of maximum rent will also make it easier for landlords to forgo a rent increase in a particular year with the prospect of possibly catching up at some later date. It's the way it works in at least 70% of the market in London today, which is effectively decontrolled. If you keep the maximum rent concept, it will continue to work that way. If you eliminate the maximum rent concept, landlords will be forced to take an increase every year.
(2) Allow landlords and tenants who wish to negotiate with each other for improvements to their rental unit or to a residential complex to agree on an appropriate rent chargeable for the unit. If people want to agree to something, why can't they do it? It's possible to put safeguards in place to protect the tenant from duress or whatever other allegations might be made. Once that agreement was reached, if it exceeded the existing maximum rent, it could form the basis for a new maximum rent, again so the landlord isn't put in the position of having to increase every subsequent year thereafter and can catch up somewhere down the line.
(3) In terms of the dispute resolution system, ensure that disputes are resolved by knowledgeable, experienced and independent decision-makers in an expeditious fashion so that landlords and tenants are not saddled with the burden of lengthy hearings and the uncertainty which accompanies any prolonged legal dispute.
(4) Ensure that any rent control provisions will permit the investor to recover the cost of building improvements and renovations even though that recovery may not materialize in the foreseeable future. Back to the example I gave you earlier, an owner says today: "I can't get 4% or 6% or 8% even if I do all of this work, but I see the prospect maybe in four or five years of getting it. I'll take the risk." But if this legislation goes through, the landlord or the owner is not in a position to take that risk because there's going to be turnover in the building. He can't predict what the turnover will be, but when that turnover occurs, the benefit of the order will be lost.
Finally, the proposal for the repeal of the Rental Housing Protection Act is viewed by the industry as a positive step towards encouraging renovation, recycling and alternative use of buildings. The London Home Builders' Association supports the repeal of the Rental Housing Protection Act and the introduction of measures that will ensure that sitting tenants have security of tenure and opportunities to participate in the revitalization of their homes.
I really don't have anything else to add. There is a portion in the written submission that I've given you which deals with related regulatory changes. We would ask that you review those recommendations. They mirror or pretty much are consistent with the recommendations by the provincial organization of the home builders' association. I'd ask that you review them if you have the opportunity because those other related regulatory changes are required in order to encourage people to invest once again in the rental housing industry.
Those are our submissions and we'd be happy to take questions.
The Chair: Thank you, Mr Hoffer. We've got two minutes per caucus for questions, beginning with Mr Marchese.
Mr Rosario Marchese (Fort York): Mr Hoffer, you're representing the home builders and you're speaking again, I understand, at 1 o'clock to represent the other law firm as well?
Mr Hoffer: At 1 o'clock I'm speaking to present the views of a practitioner of law. It's really a different perspective.
Mr Marchese: I'll wait for that perspective at 1 o'clock then.
Mr Hoffer: I'm glad you'll be here.
Mr Marchese: Yes. Oh, definitely I'll be here for you.
There are people who are not paying at their maximum rents, and I'm not sure what the situation is in London but I suspect that a lot of landlords are not charging at that level. Is that correct?
Mr Hoffer: That's correct.
Mr Marchese: Would you say that decontrol is likely to increase rents for many tenants, however?
Mr Hoffer: No. It shouldn't have any effect. At least 70% of the market right now is effectively decontrolled in London, so --
Mr Marchese: Decontrolling would allow the landlord obviously to raise rents, but as far as you're concerned, rents are not likely to go up because they're not charging up to maximum legal rents anyway. So effectively we shouldn't have any problems on them?
Mr Hoffer: Some rents are going to go up and other rents are going to come down. There'll be an adjustment. The history of decontrol in the past has had that result. In units where there are depressed rents, which are below market, those rents will go up. But someone is going to have to compensate in the sector of the market where rents are high, if you like, and those rents will probably come down.
Mr Marchese: Do you think we have a big problem in terms of some buildings where there are individuals who are paying very little and that decontrol is likely to get at that problem? Is that what you're thinking?
Mr Hoffer: No. I think the problem is that you have situations where people are paying rent which is well below market and well below what they can afford, and you have owners of those buildings who are unable to make any meaningful capital improvements to those buildings because they'll never see a return under the existing rent control regimes. That's where the problem is.
Mr Bruce Smith (Middlesex): Thank you for your presentation this morning. For the last two weeks we've heard a great deal about the issue of affordability, and to a certain extent the issue of supply. By and large, the two have been addressed in the Toronto area, whereby there's an affordability issue and a supply problem. In many other areas of the province it seems to be an affordability issue and, as you've mentioned here in London, the supply issue isn't as great.
Yesterday in Windsor we had a presentation where an individual suggested to us, albeit not in the paper -- I want you to specifically address the issue of government intervention, which my colleague opposite has very well defended over the last two weeks. In Windsor we found that single-family dwellings were being built at a cheaper price than government-subsidized units. In your view, has that been the experience here in London, or can you comment on that at all for me?
Mr Hoffer: The only comment I can make with respect to government-subsidized units is that the general consensus is that where government subsidies have been given, both in the construction of units and in the ongoing management of the units, the cost is phenomenally higher than it is for private accommodation. I think there isn't a landlord in London who wouldn't gladly take the benefits that subsidized managers and builders are receiving over what they're getting in the marketplace.
Mr Smith: We also have heard a great deal about this $10 billion of maintenance that's required, and you alluded to the fact that if appropriate provisions are in place, that could have some economic spinoff, employment spinoff. A lot of tenants have raised concerns that they've already paid for that. In your opinion, have landlords in this province put the money in their pockets and run with it?
Mr Hoffer: Not at all. If you look at the rent increases that have occurred in London, the province has allowed, for example, for statutory increases every year. In London landlords haven't been able to take those increases. To some extent they've had to take, if they could, savings from decreased interest rates and plow that into maintenance. In other cases they've had to eat the cost of the maintenance themselves. You'd be hard pressed to look at the London market and point to problems with their maintenance.
What I was talking about in my presentation and what's needed in order to stimulate the construction sector are the conditions where a landlord could recover the cost of capital improvements. I'm talking about new fridges and stoves. I'm sure the landlord would much rather put in a new fridge and stove than have to send the maintenance man up there once a month to repair the thing.
Mr Alvin Curling (Scarborough North): Very interesting. Thank you for your presentation. I'd have loved to follow through on that, but there are some other pressing questions I want to ask you. Are you aware of how many people are on the waiting list for housing whose incomes are below $20,000, in other words, who are having problems of affordability?
Mr Hoffer: I'm not aware of it offhand but, as I understand it, the municipality here does keep statistics on affordability and that London has a very high affordability rate.
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Mr Curling: How long would it take, if rent control goes, were wiped out, for you to build for those people at that end of the market?
Mr Hoffer: Well, if rent control were eliminated, first of all in London it may well be that the supply is here. I don't know how many people are doubled up; I don't know how many people are staying at home rather than moving out into the marketplace. But if rent control were abolished altogether, certainly that would encourage people to build. Whether they do it or not would then depend on demographics and what they thought they could get by way of return. But in a place like Toronto there would be no problem. You'd see a lot of building going on.
Mr Curling: In your paper you talk about demographics and economics, and I thought that somehow you'd know those people at the bottom end and would say, "Well, you might have to wait six or seven years before we really come to deal with you folks at that end of the ladder," but you said you're not quite sure how long.
Mr Hoffer: I've never seen a study that would support that premise. You have a very simple situation in London. You have an oversupply of rental accommodation. The official vacancy rate is 4%; that's the CMHC-reported rate.
Mr Curling: But as an average, though.
Mr Hoffer: The real vacancy rate is probably higher than that. When you say there are a bunch of people waiting to move into rental accommodation, I don't know how many people there are or if there are any. I've never seen anything to support that. There may be people on waiting lists for subsidized housing. That doesn't surprise me.
Mr Curling: Those are the ones we are concerned about.
The Chair: Thank you, Mr Hoffer and Mr Lowe. We appreciate your input here today.
Mr Hoffer: Thanks for the opportunity to appear.
NEIGHBOURHOOD LEGAL SERVICES, LONDON AND MIDDLESEX
The Chair: Our next presenter, a presentation that I'm personally looking forward to, is from Jack Carroll, a volunteer with Neighbourhood Legal Services. Good afternoon, sir. Welcome to our committee. The floor is yours.
Mr Jack Carroll: Thank you, Mr Chairman. In addition to being a lawyer, I am a registered professional engineer and I taught computer science for about a quarter-century.
What I'm talking about today is a structure for settling disputes arising from residential tenancy. Residential tenancy is a market transaction, and we grant that the landlord should make a fair return on his investment, but also that the tenant who is paying several hundred dollars a month for accommodation should be treated as a valued customer. Unfortunately in any market transactions disputes are going to arise. The objective of this government, as stated in its discussion paper, is to settle those disputes efficiently and fairly. There is talk of fairness. We don't want to see landlords turning tenants out of their homes just because somebody is able to pay more rent, nor do we want to see a tenant living rent-free anywhere from six weeks to six months while legal manoeuvring goes on.
The system I'm talking about today is modelled a little bit after the Swedish court system. I have here today behind me Dr Stewart Kowalski, associate professor at the University of Gövle.
On the second page on my submission is a block diagram of how this system would work. If you notice, at the top I have the Minister of Municipal Affairs and Housing. You might like to see an independent commission, and there's no reason there couldn't be an independent commission except that it would cost the Ontario taxpayer from $2 million to $3 million a year to put it there. From a philosophical point of view I like to see the government carry the can for what it does and leave it to voters to reward or punish them at the polls.
The key person in this system is the director, although the director has the power to delegate anywhere within the system. We're going to allow this person to lay charges in provincial court for offences that are spelled out in the new Landlord and Tenant Act or the tenant protection act. We're also going to allow him or her to launch actions or defend actions in General Division court, where these actions stem from a judgement of a tribunal, and to go to Divisional Court if one of the adjudicators needs additional power such as to state a case; in other words, a contempt citation, an injunction, a writ in the order of mandamus or prohibition, for example.
The heart of the system is a panel of adjudicators. These will be legally trained individuals holding office for, let's say, five years and subject to reappointment. There would be maybe 20 to 50, depending on the caseload.
As a new feature -- this is derived from the Swedish court system -- we would have a panel of assessors. These assessors would work and be paid only when they're appointed to assist an adjudicator or nominated to sit on a panel part-time. They would be lawyers, tenant advocates, businesspersons, engineers, architects, city planners. There would also be a list of mediators that would be maintained by the senior adjudicator in each region.
On the next page we start talking about what the procedure would be. The piece of bologna there is either the beginning or the end. The box is an action that's taken. The diamond is a question that has to be resolved.
The first step we have is an application to the director to be made either by a landlord or by a tenant. The director appoints an adjudicator to handle the case. These adjudicators are legally trained and have some experience in handling landlord-tenant matters.
The adjudicator decides if he needs expert advice, and if he does he will appoint an assessor with the requisite skills. He might have an engineer in to look at the structural characteristics of a building. We would avoid having the litigants bring their own expert witnesses and having two engineers get into an argument over whether the plumbing needs to be fixed.
Then we would have an exchange of documents. I don't mean anything exciting here; I mean leases, demands for payment, rent receipts, inspection reports, photographs and things like that -- copies to each of the parties and a copy to the adjudicator. These are the preliminary matters.
Then we go into solving the dispute. We try to do it as quickly as possible and to each party's satisfaction in so far as is possible. First of all, is there a default? If there's a default but documents are being submitted, then the adjudicator can decide based upon the paper. No one has to come to the hearing actually.
The next step is mediation, but not compulsory mediation. Both parties have to agree on a mediator, all have to agree to go to mediation and they both have to agree on a mediator from the list maintained by the senior adjudicator in the region. If that succeeds, go away. The problem is settled.
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Now we get to the disputes. If we have a question of law, the mediator can settle the dispute arbitrarily, either alone or with the advice of a legal aid-trained assessor he has appointed to assist him. However, if we have a question of mixed law and fact, then and only then do we go to a hearing. At the time we go to a hearing, each party will have the right to pick an assessor from a list of assessors according to his curriculum vitae. We have then a three-person board and we go to a full board hearing in which the general rules of public law will prevail.
The savings on the efficiency of a system like this are that you first seriously consider mediation. To my mind, there are a lot of things that can be mediated and resolved in a landlord-tenant dispute: time payment of arrears, appointment of a guarantor, cooperation on repairs -- the landlord supplies the material, the tenant does the work. We have to investigate all of those avenues and I've a whole list of the things that could be suggested here. Then if the mediation fails for one reason or another, we go into a pre-trial conference and maybe we can settle it there.
The adjudicator would be clothed with almost all of the powers of a General Division judge sitting in landlord-tenant court. He couldn't hold somebody in contempt, but then he could have delegated to him by the director the power to ask the Divisional Court to do that. But hopefully we would have very few disputes that would go to a full board hearing. I have not addressed who would pay for the assessors in the full board hearing. I'll leave that up to you gentlemen if you wish to incorporate any of these ideas in your coming legislation.
I'd like to take questions on this at this time, if anyone has any.
Mr John L. Parker (York East): Mr Carroll, thank you very much for appearing today and thank you very much for your submissions. Let me begin with the observation that the minister's discussion paper puts forward the proposal that a new mechanism be put in place to deal with landlord-tenant disputes and that such disputes not be left entirely to the courts.
We've received a number of deputations on that point, mostly people saying they like the idea or they don't like the idea. What the minister asked for was for some ideas to put some flesh on the bones of the minister's proposal and I think you're the first person who's done that for us, so thank you very much for that. I appreciate the model you've developed here and the recommendation that you've made for us here.
I'm very intrigued by the flow chart diagram that you've developed, outlining the steps in the procedure. For me it would be useful to have a matching flow chart just outlining the steps that are involved in the current system, and I'm just trying to imagine in my mind what such a flow chart would look like. Maybe you could just guide us. Would it have more boxes in it or fewer boxes in it, if we were to take the present system and map it out?
Mr Carroll: It would have fewer boxes. In the present procedure you have an eviction, let's say his landlord has to serve a form 4 and wait out the time, and then there's a form 7 and there's a hearing before the deputy registrar. Then there's the long wait for a hearing with a General Division judge and possibly even an appeal to Divisional Court after that.
Mr Curling: Thank you very much, Mr Carroll, for your presentation. Putting this down as a flow chart gives me an idea where you want to go and what you want to accomplish. I don't know if this is putting you too much on the spot to ask you what kind of cost this would have incurred, if these costs would be greater than what exists now through the Ministry of Housing. That's one question I would have, and maybe you don't have that cost factor, the amount it would cost.
The other question I have is the appointment process. Who would be director and who would be appointed to these boards?
Mr Carroll: I would say the director should be appointed by the Lieutenant Governor in Council.
Mr Curling: It's a political appointment then.
Mr Carroll: Yes, and should serve at the Lieutenant Governor's pleasure.
Mr Curling: What that really states is that these appointments will be made by political appointment by the Premier or by the Minister of Housing, and how fair that would be. There are concerns that sometimes these things are stuck in any way. Is there any advice you could give us, if this was being implemented, as to what advice the Lieutenant Governor would be acting on in order to get these appointments to be placed on these boards?
Mr Carroll: You're talking about the director, or the adjudicators as well?
Mr Curling: Anyone who is appointed by the Lieutenant Governor in Council.
Mr Carroll: The director would be the only one directly appointed by the Lieutenant Governor. The adjudicators would apply to the director and he would make the appointment with the advice of a panel of adjudicators.
Mrs Marion Boyd (London Centre): Thank you very much for coming forward with your suggestion. I know how complicated the situation is under the current two pieces of legislation for both landlords and tenants. I think what you're trying to do is come up with a procedure that streamlines it for the benefit of both.
I'd like to refer to something you didn't talk about, which was your overview of how the system would be run. One of the points you make is that this would only work if the director that you've identified in this, the director of tenant protection, had the right to lay charges under the Provincial Offences Act for harassment, and you give a great list of the numbers of kinds of harassment that you yourself have observed during this time. I think that's something that we hear from tenants all the time, that if you deregulate rents then the harassment issue for tenants to get them out of there so rents can go up when that place is re-rented is a real issue. Do you see this as a way of stopping that kind of harassment?
Mr Carroll: The ideal situation is for the landlord to treat the tenant with dignity and for the tenant to treat the landlord's property as if it were his own.
Mrs Boyd: One of the comments that has been made is that if there were some guarantee to landlords that whatever the process is in the long run they would not be out any money, they would not miss these months of rent that now they may miss while they're tied up in the process, they would be nicer to their tenants. Is that just wishful thinking?
Mr Carroll: No, I think it could very well work out that way, if this kind of procedure would work, and I think it will.
The Chair: Thank you, Mr Carroll. We do appreciate your input here this afternoon.
Mr Carroll: Thank you, Mr Carroll.
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PERSONS UNITED FOR SELF-HELP LONDON
The Chair: Our next presenter represents PUSH, southwest London, I believe, Bonnie Quesnel and Steve Balcom. Good afternoon and welcome to our committee. The floor is yours.
Miss Bonnie Quesnel: Thank you very much for allowing me to come and make a presentation this afternoon.
Issues surrounding proposed dwelling rental amendments: Persons United for Self-Help has been actively striving to establish equity for persons with disabilities over the last 14 years. We understand better than most the desperation that individuals with disabilities face when system changes leave them sliding through the crater-sized cracks. This is occurring even now in the transportation sector, as subsidies for accessible taxis are being cut. Londoners with disabilities are facing the possible loss of these vehicles. The private sector and market forces do not make it profitable to provide specialized services such as these. Is this an example of what will happen to accessible housing in the future?
Currently these individuals contact us regularly, expecting us to perform magic to make the system and their lives right again. In the past assistance was possible, because we knew that legislation or policies addressed most relevant issues, if you looked hard enough. This kind of knowledge or magic is getting more difficult to find. We have looked at the shifting definitions, responsibilities, accountability and resources, and see that the fragile and the disabled are being forgotten, overlooked or ignored. Programs that were initiated to create a safety net for the vulnerable are being lost in the frantic shifting spree. This kind of shift does not create long-term resolutions. This kind of shift only hides the problems where light and remedy never reach them.
The residents' rights: The Residents' Rights Act provides protection from arbitrary evictions for tenants with disabilities and others. The current act acknowledges differences and separation of housing issues and support services issues. The New Directions discussion paper proposes changes which would merge the two distinctive elements, and in so doing, eliminate all existing protections.
A major privacy loss is reflected in the recommended absence of the need for 24-hour notice of a landlord visit. Landlords would be able to enter a unit any time between 8 am to 8 pm. Care home tenants face even more compromised guidelines. The potential for institutional-type bed checks has already been identified as a potential community service-based abuse.
Rent control: The lifting of the rent controls would do more to establish pockets of ghettos in Ontario than any other piece of legislation ever has. People with minimum incomes, people with disabilities and other disenfranchised groups will dig in, no matter how bad a situation they are in. They will have no option. They will not be able to afford to move.
Harassment techniques may be utilized by landlords eyeing larger profits. Increased fines may be seen as Stop signs for harassment, but intimidated tenants may not be forthcoming with harassment complaints. We all know the personal risks involved in making such complaints. Do you risk your reputation or your home against those who can afford lawyers and advisers?
Care homes: In 1995, all people who occupied rental units were included under the Landlord and Tenant Act. This successfully closed one of Ontario's major system cracks. Previously, units where support services were provided had been exempt from such coverage. These same types of units are now identified as care homes. Care homes are subject to many exceptions to the currently proposed system rules:
Landlords may transfer residents to alternative facilities when the level of care changes. Who makes that decision and what is their vested interest? This would be a useful tool to intimidate those complainers I referred to earlier. Imposed transfers would be dangerous to the individual and his or her personal rights. Only the most vulnerable will experience the brutality of this unrestrained abuse of power and control.
This proposed amendment also violates the provision for individual consent by persons being admitted to care facilities, as outlined in the Health Care Consent Act.
While adequate protections are mentioned in New Directions, none is specifically identified. I have just cited a good example of this.
Housing providers and service providers are not always the same entity. New Directions assumes that the two positions are the same. Given your assumption, would landlords not involved in the provision of service to a person with disabilities have new powers to transfer or assess the individual's care needs?
Individuals' right to risk, right to choose and right to exercise independent decision-making will be seriously compromised by this legislation.
The tenants' bill of rights may offer some protection to people with disabilities, but it's not enough. It is not the same protection that the individuals sitting around this table have or would be willing to have.
The separate fast-track evictions proposed for tenants living in care homes put people with disabilities in peril. There is no evidence that tenants living in care homes are any more likely to threaten other tenants, and there are provisions under other legislation to deal with immediate threats. Why treat us differently? Would we have the right to the same type of hearing as under the ordinary eviction process? How can you prevent care providers from dumping nuisances, complainers and those who are not easy to serve from care homes? If evicted from a care home which an individual requires, where will he or she go? Is the London mental hospital big enough, or do you have another plan? People only disappear in government statistics.
Current legislation establishes a process that care home landlords must follow before they convert, renovate or demolish a building. This ensures that alternative comparable housing is available in the community. Your proposal does not explain or give details about the process for obtaining alternatives, nor does it say anything about the quality of the alternatives.
In closing, financial and physical access for people with disabilities is marginal and limited. The proposed changes will only make the situation worse because market forces will not meet the needs of those who require more for less. Those with little income, those who require physical access, those with social and emotional needs, will not find accommodation in your Ontario and will be the first to be evicted by landlords on your fast track. It sounds like a fast track to nowhere. We suggest you keep the current legislation in place. Thank you.
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Mr Curling: Thank you for your presentation. One of the things I'm hearing as we go around the province and listening to all the presenters, they have stated that they felt the policy the government is developing is done in isolation; as a matter of fact, the consultation process was not quite open in the sense that they have based their New Directions paper on Greg Lampert's report, who consulted developers and landlords and home builders.
I may be wrong on this, so may I ask you this then: Did the minister consult with you in the preparation of the new direction in which he intends to go?
Mr Steve Balcom: To the best of my knowledge, no. One of the presumptions is that persons with disabilities are going to be protected because we are one of the few "populations" that will have access to subsidized housing. So it was a presumption on the Conservative government's part that there was no need to consult. Nobody even offered us any input or even thought that we would need any input or have any input, for that matter.
Mr Curling: The other areas too, not only of consultation with the people who have a vested interest in homes, like yourself and developers and home builders -- I would say they do have an interest too and they should have an interest -- that seemed to be lacking as you read the New Directions, it seems to me, the government did not consult with its own ministries, like the Ministry of Health and the Ministry of Community and Social Services. Did you see a lack of that in the paper?
Mr Balcom: Definitely, and I'm glad you brought up that point, because one of the recurring themes that has been going on since this government took power, you have to look at -- again, when you're talking about people who are marginalized, as with persons with disabilities -- the cumulative impact of what's been going on in the last year. So you can't necessarily look at housing or rent geared to income in isolation from the Ministry of Health initiatives or MCSS initiatives, because they all potentially impact upon each other. Time after time after time, after every presentation that we and others have taken part in, it's plainly obvious that this government has not even communicated with its own ministries to see what potential impact existing legislation is going to have. This is just another example of the obvious.
Mr Marchese: I want to thank you both for your presentation and say to you that there have been many people like yourselves, and people in the whole field of concerns around disability, mental illness and other vulnerabilities, who are concerned about what's contained here because of the potential for abuse.
The care operators have come and have all agreed that these proposals are very good, that what's here in terms of transferring residents and fast-tracking and converting and renovating or demolishing facilities is something that they see as very useful. You, on the other hand, have come here and said, "We're worried about the potential for abuse."
One organization has come in front of this committee and said, "We have seen no evidence given to us by any care operators as to why it is that they need any of these provisions." So, to the present, the only thing care operators have provided is hypothetical instances of why it is they might need to be able to transfer somebody or to be able to, in terms of privacy, enter into someone's room, and the like. Why is it, if they tell us they are only concerned about you, that they really care, that you are worried about this?
Mr Balcom: The easiest answer I can give you is past experience. That's the most direct answer I can give you. History has proven differently and I dare say that history will indeed prove us right. Because when you look at the presumed benevolent nature of our supposed "caregivers" -- and I use that term very loosely -- with all the best of intentions, what you are setting us up for and many other groups who are vulnerable is the -- I don't even like to use the word "potential" for abuse because I know it's going to happen. The reason I know it's going to happen: There have been enough consumers who have been in those situations, which was the whole rationale behind the Advocacy Act; there was enough history there -- and I don't want to get into that issue because it's another issue, but the need for protections is clear and it's real. Once you give service providers and operators of care homes -- and I don't even like that word because it's one step away from institutional, just in the very nature that's it's used and it's intended.
The point I want to make is, presumptions are made: "You need help doing this. You should do this." My gut response to that is, who makes those decisions? Who is the individual or individuals, plural, who are supposed to be making those decisions on my or other people's behalf?
Mr Bart Maves (Niagara Falls): Thank you for your presentation. Just quickly, to Mr Curling's comments about consultation, I'm aware that the minister has met with Advocacy Resource Centre for the Handicapped, Advocacy Centre for the Elderly, Canadian Mental Health Association, Ontario Association of Non-Profit Homes and Services for Seniors and several other groups on these care home provisions.
In part of your paper you talk about the bed checks. On page 11 of our discussion paper they provide an example of someone with a serious heart problem who wishes to have staff look in on him at night. Contrary to Mr Marchese's comments, I think we have heard people from care homes who've talked about occasions where they've had a need to go into people's rooms. In your opinion, is there ever an occasion where something like this is necessary and is there anything we could put in place to safeguard abuses such as the tenant initiating a certain bed check and agreeing to it beforehand?
Mr Balcom: Again, we're talking specific instances. I'm sure there are individual instances where an individual may indeed want that to happen. But, again, treat that as an individual case: You have an individual agreement with that individual about when they went into the premises, under what circumstances they were to enter the premises, and I would think out of respect in due course give a copy of an agreement to the tenant as the tenant, and the service provider would have a corresponding agreement. It's just like a contract.
Mr Maves: So it would have to be --
Mr Balcom: Spell it out.
Mr Maves: Cases could be there but it should be spelled out and strictly enforced.
Another comment you made was about transferring, and the paper says, "Transfer residents to alternative facilities when the level of care needs change, subject to appropriate protections." We've had care homes say that attending physicians should agree first before there's any kind of transfer. Would you agree with that or are there other types of protections?
Mr Balcom: Like I said, who's making the decision? Again, this isn't rocket science, folks. If I'm in a care facility and my needs change I would think, out of respect and the right to dignity and privacy, that I should be the first one who gets spoken to; again, individual instance, where health care professionals are deemed necessary, not just in isolation with a specialist or even a GP making the unilateral decision on my behalf, but in conjunction with the individual with the disability. Then you bring in the individuals who are necessary. But you don't presume to know and make decisions on behalf of anybody.
The Chair: Thank you, Miss Quesnel and Mr Balcom. We appreciate your input here this afternoon.
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COHEN HIGHLEY VOGEL AND DAWSON
The Chair: Our next presenter, on behalf of Cohen Highley Vogel and Dawson, is Joe Hoffer. Welcome back. Any time you allow for questions would begin with Mr Marchese again. So the floor is yours.
Mr Hoffer: Good afternoon once again. I indicated earlier that I'm a lawyer practising here in London, Ontario, and I've been practising in the area of residential tenancies law since 1986. I've worked with the Residential Tenancies Act, the Residential Rent Regulation Act, Bill 4, the Rent Control Act, and have had some experience in dealing with those statutes in addition to the Landlord and Tenant Act.
I asked for this opportunity to address the committee from the perspective of a lawyer who practises in this area and in the hope that I could provide some constructive suggestions for changes to the proposed policies.
I want to deal with three areas: first the proposal in the discussion paper to abolish the concept of maximum rent; second, the dispute resolution process; and third, some substantive landlord and tenant issues.
In terms of the proposals to abolish maximum rent, as a practitioner, when the Residential Rent Regulation Act was put in by the Liberals, I provided advice to clients, pointed out what the concept of maximum rent was, pointed out that they could bring an application, they would receive credit for that under the formulae provided under the legislation, and even if they could not collect those rents in the marketplace, there was a cushion that some day in future they might be able to collect those rents.
Many landlords made substantial capital improvements to their buildings, undertook rehabilitation work in buildings that were older and obtained such orders. A large number obtained orders or had done the work, expended many hundreds of thousands of dollars, and then the NDP came in and said, "Those orders are void and everything you've done is basically meaningless." Some of these landlords, under the transitional provisions of the Rent Control Act, applied again. The theory was, "Even though you're not going to get very much of a return, the legislation does recognize a return for certain capital improvements and you will be given credit in your maximum rents." I have some landlords, clients who went out and twice obtained orders under legislation, and with these proposals they're again going to lose the benefit of maximum rent. When any tenant who's living in that unit moves out, the landlord re-rents in a soft market and the benefit of the maximum rent they got under those last two orders is now void.
It's very frustrating to give advice in that environment. It's even more frustrating for investors who are trying to make a decision whether to invest in a property, when every piece of rent control legislation that comes along seems to have this retroactive voiding effect of any benefit of the legislation that went before.
I have looked long and hard at the discussion paper and at some of the policy background. I cannot find anywhere any public policy rationale for the proposal to eliminate maximum rent. There's none in the discussion paper. There's none anywhere that I found in the material. There are no economic reasons given as to why maximum rent should be abolished. I suspect this is entirely driven by bureaucrats in Toronto where the expectation is that when you move to decontrol, the rents are going to go up. That's a Toronto mentality. If you're in the rest of the province, you'll find that we are basically decontrolled and rents either stay the same or, if you're dealing with a tenant who's been in an apartment for 10 years, the rent may well go down when that tenant leaves because the landlord has been increasing the rent over a number of years and can't charge the same rent in the open market.
There are administrative reasons which have been given to abolish the maximum rent concept, namely, the cost of the rent registry system. The simple fact is that if you tell every landlord what their maximum rent is, which is proposed in this discussion paper, then the landlord has to keep that record. Rent control has files on every unit in the province. There's no reason why they can't keep a copy of that, and if 15 years down the road somebody needs to know what the maximum rent is, the onus can be on the landlord to establish it. That's been done for many years; since 1976 that's been done. We don't need a rent registry to preserve the calculations or to preserve the methodology for determining what maximum rent is.
I've given you a written presentation. I ask you to review it on the subject of maximum rent and to have regard to some of those comments when formulating or revisiting the notion of getting rid of maximum rent.
In terms of dispute resolution, as a practitioner I'm opposed to the transfer of the procedural and administrative processing of landlord and tenant disputes from the court system to a separately constituted tribunal. The existing court system has offices in most major communities. They're already there. The system is in place, the forms are there, the staff is there, and I cannot understand why you would take that infrastructure and put it into an entirely new system of infrastructure. You're going to need offices. If you're going to deal with landlord and tenant matters you're going to need more offices than you have rent control offices today. You're going to need staff. Are you going to take staff from the court system and put them in this new system? Really what you're doing is duplicating an existing service with the proposals for this landlord and tenant dispute resolution system. So as both a practitioner and a taxpayer it makes absolutely no sense.
I recognize, however, that that's the proposal, and if it does go forward and a new system is created, I urge the committee to recommend that the policies be formulated in such a way as to preserve the basic structure that exists so that disputes are dealt with quickly. Right now in the court system the vast majority of disputes are dealt with very quickly. It's only those few cases that go over to a hearing that tend to have adverse consequences, but they're a relatively small number. If you preserve the basic steps -- the first meeting in front of a registrar or whatever you want to call that person -- and then put the matter over to a hearing if there is a dispute, you'll still deal with landlord and tenant disputes fairly efficiently.
In terms of appeals, I've made some recommendations in the paper. I don't intend to go into them in any detail here.
The last area I want to deal with is what I would call loopholes in the existing landlord and tenant legislation, and I would ask this committee to make recommendations to close those loopholes.
I've attached to the written presentation three case studies that deal with loopholes. I'll deal with them in order, starting at page 9 of the paper that I've given you.
First there should be a mandatory requirement in this legislation that rent arrears be paid into court as a precondition to the hearing of a landlord and tenant dispute. There's provision for that in the Landlord and Tenant Act now, but registrars have a wide discretion as to whether or not to require payment of arrears into court, and it's often ignored. As a result, by the time you get to a hearing three or four months down the line with a tenant on whom you're not going to be able to enforce the judgement, the landlord has lost three or four months of rent for absolutely no reason in circumstances where there is no dispute. If you require that the arrears be paid in, then at least you're not going to have a situation where people are able to abuse the provisions of the legislation and buy themselves three or four months of extra time.
The second recommendation is to strengthen the assignment and sublet provisions to ensure that disputes are resolved quickly. I think it doesn't take a genius to anticipate that if this legislation goes forward, the assignment and sublet provisions will be critical and there will be a need that any disputes over assignments or subletting are resolved quickly. There is provision under the Landlord and Tenant Act now to deal with that. The new legislation should fast-track those kinds of disputes similar to eviction disputes so that there isn't uncertainty for a long period of time about assignment and subletting.
I've given you an example of how the system existing now can be used really as a loophole to avoid any determination of assignment and sublet issues for some months. The case I've given you deals with a crack dealer who illegally moved into an apartment, terrorizing the tenants and the landlord, and because of the way the existing system works, it could have taken up to two months to get the person out. Fortunately when I pointed out to the representative of, I'll call it a community legal aid clinic, that this was going to be one of the examples I would use in a presentation to this committee, that lawyer just walked away from the thing and we were able to bring an application quickly and get a decision from the court evicting the tenant.
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The third case study involves the provisions of the legislation right now which allow tenants to set aside a default judgement without any notice to the landlord. The way this loophole works is that the landlord brings an application to recover arrears of rent, gets a judgement because the tenant doesn't dispute it at all, and after the judgement is served on the tenant, the tenant is able to go to court without any notice to the landlord and ask that it be set aside. All they have to raise is the slightest ground of dispute. Whether there's any merit to it or not doesn't matter. I've never seen a judge refuse to set aside one of those judgements.
Quite often the judgement doesn't require that money be paid into court, so when the landlord finally finds out that the judgement has been set aside, it's the landlord who has to take steps to try to get the money paid into court and to try to get a hearing date set down.
The example I've given you involved a tenant who was known by the landlord to be judgement-proof. It was imperative that the landlord act quickly. The landlord did. The tenant fell into arrears. The landlord got default judgement. The judgement was set aside with the assistance of a community legal clinic on the basis that the Harris cuts had affected the tenant's ability to pay the rent. The landlord's position was, "That's fine, it may have affected your ability to pay a portion of your rent, but you haven't paid any rent." The judgement was set aside. The landlord didn't know about it until later. The landlord had to bring a motion to have the hearing put on. The landlord had to bring a motion to try to get arrears paid into court. That didn't work for technical reasons that you'll see outlined in the case study.
Ultimately the tenant bought five months of free rent before the landlord could get them into court. Then the tenant never showed up for the hearing and the community clinic never showed up for the hearing. The landlord once again, five months later, got the same judgement that he had in October of the previous year, and of course the judgement was unenforceable. When they did a judgement debtor examination with the tenant, the tenant said, "I spent the money," and that's what it came down to.
This case study is given to suggest that that provision be abolished and that some attention be given in the new legislation to requiring that there be notice to the landlord if you're going to set aside a default judgement and that payment of money into court be required.
Finally, case study number 4 deals with the provisions right now which allow a landlord -- in this case it took a year before the landlord was able to get judgement for arrears and terminating the tenancy. The tenant brought a multiplicity of proceedings that the landlord had to defend, had to be present for, as they're expected to do under our laws. At the end of the day, four days before the writ was to be issued, the tenant paid the arrears into court and that ended it. The landlord had to start all over again the next time a dispute came up with the tenant.
I've made a recommendation to close that particular loophole, and I ask that all those recommendations be forwarded to whoever ultimately drafts legislation here.
Those are my submissions, and I'm happy to take any questions.
Mr Marchese: Mr Hoffer, one thing many legal clinics have said, and they agree with you on this, is that the present system works fairly well, that 95% of cases are dealt with expeditiously and only 5% perhaps are very difficult to deal with, but they said they weren't certain that because of that the whole system needs to be overhauled. I want to tell you there was a great deal of agreement in this regard and that a new system, as suggested, would not only be costly to the taxpayer, as you've indicated, but in addition there would be other problems in terms of expertise and who these people might be. They particularly talked about political patronage appointments, which would severely affect their ability to do that, and I presume you agree with that as well.
Mr Hoffer: Yes.
Mr Marchese: There is mediation, however, in this proposal. Do you have any disagreement with providing mediation type services where it is voluntary?
Mr Hoffer: Obviously, voluntary mediation services are welcome. My experience, first of all, is that any landlord who's having a problem with a tenant paying their rent will talk to the tenant. Court is a last resort. By the time that you get into a formal mediation process, even if it's voluntary, there's a very hardened dispute between the parties. It may still be used to resolve it, but if it's mandatory or if it can be used to delay the proceedings in any way, it shouldn't be a part of this system. My experience is that every opportunity for delay will be taken because the tenants who abuse the system, and I'm talking about a very small number of tenants, know that the landlord is never going to be able to enforce the judgement and every delay they can take the opportunity of is going to give them another month's free rent.
Mr R. Gary Stewart (Peterborough): Thank you, Mr Hoffer, for your presentation. Over the last couple of weeks we've found a great deal of variation in the various municipalities that we've been in. A lot of them are saying that legislation, whether it be this or in the past, is driven by Metro and the big urban areas. You just made the comment as well that much of it is done by the bureaucrats in Toronto. Do you feel that if there are certain standards put into place in an act, more authority could be and should be given to the municipalities where there is such a variation across this province, whether it be vacancy or whatever? Is that a possibility?
Mr Hoffer: I don't see that as a possibility.
Mr Stewart: Can I ask why?
Mr Hoffer: I think municipal politics is much more subject to the whims of change than provincial politics and there are too many influences and not enough safeguards in municipal politics to ensure that everyone's interests are protected. I think the province is in a better position to govern with respect to all of the people in the province. Municipalities tend to look after their own, and that can be very dangerous.
Mr Stewart: I appreciate that, but certain flexibility built into this that would allow some of that, because certainly the concerns in Thunder Bay may not be the concerns in London, or Windsor against Peterborough, or Killaloe against Ottawa. I guess that's our concern. We're hearing it. We're seeing in this that as the vacancy rate goes up, the rental costs go down. There are many people in this room and many people have been in the room who say, "No, that's not true." But if you look at the statistics, that's happening. Yet if you talk Toronto, it's a whole different ball game. I guess that's where my concern is.
Mr Mario Sergio (Yorkview): Mr Hoffer, on your previous presentation you said that rent controls are a major barrier. I suppose that would be a major barrier for builders and developers to come on board and start building affordable housing again.
Mr Hoffer: Yes. It's a major barrier to investment in the rental housing industry.
Mr Sergio: At the same time, you also said that this proposed legislation here won't do. We have had previous presenters, people like Minto and Goldlist, saying that rent control is not the problem. They mention a list of things that they would want to see from the government in order for them to move back into the construction field.
You went a bit further this morning and you said, "We want to have a guarantee that if I'm going to invest, 10 or 20 years down the road I want to make sure that a subsequent government must give us the assurance that it won't come back and undo what this government is going to do for us." As a lawyer and representing the building industry in the area, tell us, how would you formulate that a government would give you that guarantee?
Mr Hoffer: First of all, I never said I wanted a guarantee.
Mr Sergio: Yes, you did.
Mr Hoffer: No, I didn't, and I never said that builders wanted a guarantee.
Mr Sergio: You're speaking on behalf of the industry, aren't you?
Mr Hoffer: Yes, and the way to achieve an element of certainty would be to abolish rent controls. I maintain that position. It doesn't mean that every provincial government is going to be bound. We know that can't happen. Believe me, landlords know better than anyone else that can't happen. But if you dismantle the existing system, there's a greater likelihood that you can rely on the legislation and that it won't change.
Mr Sergio: You want a better mechanism in place?
The Chair: Thank you very much, Mr Hoffer. We do appreciate your input.
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ONTARIO MANUFACTURED HOUSING ASSOCIATION
The Chair: Our next presenter is James Brother, chair of the Ontario Manufactured Housing Association, and with him is David Rice. Good afternoon, gentlemen. Welcome to our committee. The floor is yours.
Mr David Rice: Thank you. Mr Chairman and members of the committee, my name is David Rice. I am here on behalf of the Ontario Manufactured Housing Association, or OMHA. The OMHA is an organization which represents about 110 mobile home parks or land-lease communities throughout the province. Translated into housing sites or rental sites, that's roughly 20,000 rental sites throughout the province. Our association represents the manufacturers of mobile homes in the province, landlords and owners and developers of mobile home parks and also land-lease communities.
Personally, I am a director of the association and also a member of our family business. I think my dad and his partner started about 30 years ago and we presently own or operate and manage about 2,000 land-lease sites throughout the province.
By now I am sure you've heard a lot relative to the proposed legislation from a lot of other people throughout the various areas where you've been. We, as an association, don't really want to go ahead and go over a number of points that probably have been very well presented by the various positions.
The most significant point that needs to be recognized and understood by the committee, however, is the vast differences between apartment buildings and mobile home parks. When I use "mobile home parks," it would also include the term "land-lease community." Really it's only a zoning difference as to what the difference is. Both of them are communities where the land is leased to an individual who mostly owns the home that sits on that land, and a landlord would own the whole community or the mobile home park.
The most significant point that needs to be recognized and understood by the committee, we believe, is that the present legislation and preceding legislation did not really clearly think out the differences, in our opinion, between apartment building leasing and mobile home park leasing. Even tenants who live in these communities along with us all agree that the present legislation does not work, as it doesn't recognize even the lifestyle differences that can be offered between mobile home parks and apartment buildings. We welcome the new legislation that the government has proposed and we certainly welcome this opportunity to talk before you today.
Mobile home parks are unique, and in Ontario really they offer a significant alternative in accommodation. You, the committee here, have an opportunity now to ensure that existing mobile home parks remain a good, viable and affordable alternative form of accommodation in the province.
What we'd like to do today, rather than going through detail, we have produced two booklets for you. One is a really detailed approach as to how we and our members feel, point by point, the proposed legislation affects our industry. The other is pretty much what I'm saying to you today.
We don't intend to go through the point-by-point. What we'd like to do is just touch on four general items: the annual guideline as it's proposed, the cap on the capital expenditures as it's proposed, maximum rent and prepaid rent as it would be in whatever changes there would be in the Landlord and Tenant Act. We'd like to address these points, the guideline, the cap on the capital expenditure, maximum rent and prepaid rent, all from a mobile home park owner's perspective.
Before we do that, we feel it's very imperative that you as a committee understand why we say that mobile home parks are unique and why the legislation, the guideline and the cap on capital expenditures, needs to treat mobile home parks differently than it does and has tended to do with apartments. In saying what we're all going to say, we sincerely understand that mobile home parks and land-lease sites represent a very insignificant number of rental accommodations throughout the province, but the reality is this legislation has affected and is proposed to affect our industry and therefore we need to think about it. We'd like you to think about it really in a separate sort of ballpark than apartments because these mobile home parks are different.
Although a lot of tenants think that we landlords of mobile home parks just sit back and count the money every month, I assure you that we as family businesses do a lot more. We look at it and we say that land-lease communities and mobile home parks are like little villages or little municipalities. We run these little towns that we talk about. Some of them have their own sewage plants or sewage facilities that they operate and maintain; others have water plants and water facilities. They build roads, fix potholes like a municipality, plow snow, collect garbage, dispose of the garbage, maintain recreation facilities like a town or maintain park land, and even control the communities as to how they look and how they're run, which basically is how they are marketed, via a system almost like a bylaw enforcement officer would in a municipality. Then after dealing with all of that, we have to deal with the landlord and tenant business of being a landlord and dealing with tenants.
In fact, for many of our members, so much self-sufficiency exists within the communities or these mobile home parks that all that the local and provincial governments really supply are health- and safety-related items such as ambulance service, police service and fire protection. I say this because many of our communities are designed for seniors, so even education or schooling isn't required.
The point we are really trying to make is that these are like little towns. That's the way we consider them. They may vary from 20 units to 1,200 or more homes, but they are little towns and we say that the mobile home park is very different than apartments. We have one community in the Bowmanville area where we have over five miles of road that we have to maintain. It's different than an apartment where an apartment has a driveway and a parking lot. Very different costs come into play. Other communities, as I mentioned before, have their own sewer and water plants that they have to maintain and operate. It's very different than an apartment building, where usually all you have to do is run your lines to the street and hook up to the municipal services. These are all variables that make apartments and mobile home parks different.
But the most significant difference is the rent. I believe what you've heard over the last month or so is that the average rent throughout the province on apartments is roughly $700 a month, or something like that. The average rent among our members is $125 a month. That leads to what we want to address about the guideline and the cap on capital expenditures, because when you're dealing with these low, low rents and you apply a percentage to them, you end up with very low increases. An increase, I guess, is an increase, but you have to think of it in real dollars and in reality what those dollars are.
Relative to the annual guideline, to date the guideline has not worked, what has been in existing legislation. Even what's proposed we don't believe will work. Some may argue that it works for apartments, yet we are dealing with rents that are four, five or six times less than average apartment rents. As a result, guideline increases have been four or five times less, and because each increase is less, even geometrically less, the spread between what is deemed to be market or even average market rent between apartments and mobile home parks continually gets wider and wider and wider. For instance, if you think of an average rent of $125 a month and you apply roughly a 3% increase, that's like a $3.36 increase per month, or a $36 to $40 increase per year. That amount of money, in real terms, is not a lot of money, and that's where the problem comes in.
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The bigger problem in our communities is that the BOCI, or building operating cost index, generally weighs maintenance at around a 15% figure. In communities of our members, the maintenance part is included in our rent just like it is for an apartment; of the $125 a month, included in that is operating and maintaining of these communities. The maintenance aspect for us is averaging well above 80% of the rent and in some cases 110% of the rent. On $125 a month rent, we average over $110 a month in maintenance, and that's due to the nature of the communities and the various things we have and the low dollar amount of the rent. In order to maintain these little villages, a substantial amount of maintenance is required, $110 out of $125 in rent. That surely does not leave much room for error, let alone the ability to maintain the standards within these communities that the tenants and even the landlord want to keep the community at.
Remember, most of our members are not large corporations but family, ma-and-pa operations. Mobile home parks that were started by people like my dad and my uncle 30 years ago had rents that gave a proper return for the time, and they were probably designed -- I know ours were -- so that the rent would be our return on investment, and the other costs, for maintenance and operating, were a pass-through, much like within a condominium. They would be a pass-through, so that's actually what was spent, and depending on the style of community that was being marketed, the maintenance varied as a result.
Under the present legislation it can't be done. Under the proposed legislation, the way we read it, you can't separate out maintenance and operating costs. You have what we call a gross rent, which in our case right now averages at that $125. I don't want to mislead you; there are many communities that have a lot higher rent than that, but the average throughout the province of our members is $125 a month.
When I say that the maintenance is in some cases 110% of rent, you'll say, "Why do people stay in the business?" The best answer to that, in my mind, is just that it's really the way of life of the people in these family businesses; it's what they've known all their lives and they stay in it. The way they survive is by selling new homes and making enough money off the new homes to subsidize the rental operation.
But because the rents are so low, you need to address the guideline, we believe, differently than for apartments. We think you should, when you arrive at a guideline and deal with that guideline, actually say, "We recognize, because of these low rents, that there has to be a different guideline than for apartments." We're dealing with rents that are chronically depressed or so low that they don't reflect today's market. We believe the market today, on average, should be around $300 a month and we have people who are well below that, as I said.
These family businesses, if there is a way of catching up -- which we are going to mention here in a second, how we believe a guideline could allow them to survive and continue to maintain their developments the way they were intended to be. We feel the guideline should be three time the apartment guideline or an actual dollar amount. The key to the dollar amount is that then you're not dealing with a per cent relating to a very low rent. We believe the guideline for a land-lease community should be three times the apartment guideline or $50 a month per annum, whichever is the greater of the two. We believe that would work until it caught up to market, and then all of a sudden, once you're at market, market will then start to dictate. The developer or the landlord will say: "Should I be spending this? Where am I?" The market will determine what the actual increases should be. But there has to be a catch-up, and we felt that was the best way to do it.
We're very happy with the idea of vacancy decontrol, that when the person moves out you're dealing with the controls that will be there between the tenant and the landlord, rather than the unit or the site or the land, in our case, and the landlord. One could argue, "Hey, that's going to solve your problem of these very low, low rents." There's no question it will help. But there are two factors in our industry that again are a little unique, reasons we say vacancy decontrol is not good enough.
First is that with rents low, like $125 a month, there's a tendency for people not to move, because their only alternative is a lot higher rent in another community or somewhere else. And again unlike apartment buildings, in our company's communities we offer 20-year leases. We don't offer month-to-month or one-year leases, we offer 20-year leases, so we have a tendency for people to stay. We have many people who have stayed over 20 years in our communities. So even if this legislation existed as proposed and a person moved in tomorrow, that person, the way it reads, will be controlled for 20 years. We have one member in our association that hasn't had anybody move out of his community for the last five years. That's why we say just the vacancy decontrol isn't good enough. It will help, it will be a blessing, but there has to be something else.
Similarly, the second thing I want to talk about is the cap on capital expenditures, and really the argument is virtually the same: Because it's a per cent relating to a low rent, the actual real dollars you're talking about are not very great. For example, a typical mobile home park might have 50 units in it, with an average rent of $125 a month. If you're going to have capital improvements like a new roof on the recreation centre or roads repaired or street lighting, if you worked out the 4% on that, it works out to about $3,000 that landlord would have to spend on capital expenditures for his community. We all know $3,000 isn't realistic. You'd spend more than that certainly on the roof of a building, but even on the lightbulbs of the streets. It doesn't work. We feel the cap for land-lease communities or mobile home parks should be three times again, or $50. So we're saying we feel it should be 12% of rent, or $50 a month, an actual dollar amount, whichever is greater, until things are caught up.
Two other quick things. I just want to touch on maximum rent. We feel that the concept of maximum rent shouldn't be abolished. We have a little bit of a different approach, though, because in our communities, the home owner owns the home and we lease the land. When it comes time for that person to move, usually what they do is sell their home in the community and move and leave the home, sell it to Mr Jones, the new person coming in. We then, under the proposed legislation, will have an opportunity to bring the rent up to market. If that rent jump is significantly high, there's a tendency that the person's value they will get for their home will reflect that; it could be reduced. If that maximum rent is there, we feel it can be used as a reference point to take away a lot of tenant and landlord concerns at the time the person moves. It's there and everybody says, "Yes, that's what is going to be." It eliminates the arbitrariness -- I don't know if that's the right word -- the arbitrary decision of a landlord. We feel there is real value in keeping maximum rent.
We agree that the change in the Landlord and Tenant Act to allow assignments and subletting to be denied by a landlord is necessary. We're happy even if the only reason we can deny other than financial would be that we've got to move that unit to market rent.
The final thing we touch on is prepaid rent. I'm not a lawyer, but in the Landlord and Tenant Act the prepaid rent is not even addressed. What we in our communities find is that because a lot of our communities are designed for seniors, a significant number of our market has ready cash because they've just sold their home in London or Windsor or Toronto or wherever they happened to be. They've got ready cash and they'll buy their home and buy it without a mortgage. What they're more concerned about is inflation and future costs and what the rent will be. We feel there's a real market for people to come in and say, "Here, I'll prepay my rent so I can fix, maybe even freeze, the rent for the term of my lease," even if it's 20 years. We feel this can be done via arm's-length trust agreements and trust companies to secure the funds so there isn't a situation of a bad landlord running off with the money.
The main reason we bring this up is that the problem today is really with the judicial system in Ontario. The judicial system has ruled that prepaid rent is akin to security deposits, and as such a prepaid rent can't be any more than the Landlord and Tenant Act says it can be for a security deposit. We suggest that the proposed legislation clearly say in the Landlord and Tenant Act part that prepaid rent is permitted, so long as it is not obligatory on the tenant and is voluntary on the part of the tenant; that the prepaid funds are to remain in an account managed by an arm's-length third party such as a trust company; and that prepaid rent is legal and not a security deposit.
That really is all we have to say on this. We'd be glad to answer questions. There was one question --
The Chair: Mr Rice, unfortunately you've used up all your time, but we do appreciate your input here today and your suggestions. Thank you very much.
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LONDON SOCIAL PLANNING COUNCIL
The Chair: Our next presenter is Bruce Wright, director of the London Social Planning Council. Good afternoon, sir, and welcome to our committee.
Mr Bruce Wright: I'm a member of the board of directors of the London Social Planning Council, an association formed to bring individuals and agencies together in the interest of social planning for the city of London.
Perhaps I could start by saying that the question of affordability has been one that the council itself and many of its member agencies have been involved with. It came through to me this spring when a flood of people came through the door of our clinic with disconnections by London Hydro. It appears to me that this is a hidden effect of the affordability problem, that they've managed to eke out the rent, but finally London Hydro said: "Look, we've got all these arrears piling up. We've got to take action." Hundreds of people were disconnected in a very short period. They waited until spring had come. Some of those people were able to manage; others had to move. The figures we have don't include utilities, but our experience is that most people pay utilities in addition. If they've got to pay electric heat, they can be in real trouble.
That's what brought it to our attention. There are other agencies involved with consumers of mental health services: the mental health association, Family Services London, Mission Services of London, people who deal with special-needs populations, the developmentally handicapped and so on. We're greatly concerned that the deinstitutionalization which is government policy is going to add to the problem. They're going to have particular problems, because they're on social assistance, finding affordable housing.
That's how it came about that we decided to look at this particular area and not look at the whole omnibus aspect of the legislation.
We looked to see what facts indicated this, because we knew we have this relatively high vacancy rate in London so economic theory would dictate that there shouldn't be a problem, so then why are our clients having problems? But we look at some indications of this. There was a report done just last June by the policy division of the welfare department in London, showing some difficulties. There is indeed a waiting list for rent-geared-to-income units. Waiting for a co-op is one to three years. I believe the difference would relate to the size of units and so on.
London and Middlesex Housing Authority has an average monthly waiting list, or did in the last year we have the figures for, of about 1,000. That waiting list can be even longer than three years, depending on the need. They have a point system; it's not just first-come, first-served at present. Emergency shelters, particularly family emergency shelters, are at capacity already frequently during the year.
There are some figures which would explain at least one portion of those with low income, and those are the ones on social assistance and welfare. That's the table that was produced by the welfare department this spring. Over on page 3 we can point out -- the paper itself pointed out -- how it meant that most families would have to go down if they wanted to be able to pay rent out of their shelter allowance, that is, larger families would crowd into smaller units.
Even in London it looks like there will be some kind of force-out of smaller units. There'll be competition for the two-bedrooms and even the one-bedrooms. The people who normally would be expected to be able to afford those won't be able to do that. As I point out and the table points out, utility costs are not included, and that just tightens up by up to $100 a month if you're on electric heat. That's why the welfare department concluded that affordability is a key issue in accessibility to housing in London.
Looking at the proposed legislation, really looking only at the abolition of the RHPA, the effect will probably be less drastic than in the larger cities with the tighter housing markets, but it should encourage further conversions. We expect that the housing stock will be reduced and that many of those will go out of the rental market, perhaps half.
Looking at the phasing out of rent control -- and that seems to be what the effect will be. Over a period of years, the majority of units will be taken out of rent control, will be taken to market rent. One surprising thing to me, it turned out that during rent control the vacancy rate actually dropped in London. If you'll notice, in 1987 it was 1% and in 1995 it was 4.1%. So what does that tell us about the effect of rent control in the first place? If rent control didn't dampen the market -- it seems to be irrelevant -- decontrol on the overall market will probably have no great effect. It certainly won't increase.
This is something to ask the builders: Why was it that vacancies increased over this period, despite rent control, and what are your plans now with rent control off? Will that move you into the market? Our feeling is that whatever happens with the overall market -- and this is what we take from Professor Hulchanski's paper delivered to you a couple of weeks ago. He talks about effective market demand. It appears to us that rent control or no, nobody's going to build for the low end of the market.
We conclude that gradual rent decontrol will not increase the supply of affordable housing and we fear some negative impacts, particularly on the portion of the population we're concerned with, and that is with lack of repair. We really are concerned that the municipalities will not be able to monitor repair effectively, even though there's a step in the right direction in giving increased powers to inspectors. There's just a lack of resources.
London has only five inspectors for all its residential houses, and that's not enough. They have an elaborate weighting process to winnow out the ones they really have to go out to immediately -- stair railings or something being shaky -- but the bulk of problems are going to wait for up to six weeks before the inspector can actually come out, and that's a long time to wait. We fear it's a recipe for conflict between landlords and tenants.
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What we expect is that tenants will not want to move because they'll be afraid. They'll look around and they'll see that rents are even higher than they're paying now. Competition for low rental will be severe. They'll be facing higher rents, so they're going to stick. Many of the people I talk to now say: "Look, I'm going to leave. Rather than fight with the landlord, I'm going to leave." Unless there's a very prompt monitoring of repair situations, I see that there's going to be more conflicts and the possibility of harassment. In both those cases the enforcement of offences is not handled, is not prosecuted, by the crown office. They just don't have the resources to do that.
That really leads to our recommendation that there be some provision associated with this omnibus bill to provide grants in aid to the municipalities and maybe extra resources to the crown, because this is going to be an important element of maintaining good landlord and tenant relations: to make sure there's prompt attention to complaints by tenants. That's really one of our strongest recommendations. We also suggest that the orders prohibiting rent increases should be maintained as well.
That's briefly our presentation.
The Chair: Thank you, sir. We've got about two and half minutes per caucus for questions, beginning with Ms Ross.
Mrs Lillian Ross (Hamilton West): I have a couple of questions that maybe you can help me with. It was a good presentation, but I wonder if you can tell me -- on page 2 of your document you talk about the number of people on waiting lists. Maybe this is a stupid question, but where do you think these people are living now? They're on a waiting list, but where are --
Mr Wright: They're in private housing and would like to move into a place where -- most of them will be on social assistance and they would like to move into a situation where their shelter allowance -- that is the one area where shelter allowance still meets the rent and utility cost. They'd be much better off in rent-geared-to-income housing. The longest lists for co-ops would again be for those units which would be subsidized. That's why it's a long wait.
Mrs Ross: You made a comment that "No builder finds it profitable to build for the low end of the market." I made this comment earlier and I'm going to make it again. It's true that builders build, obviously, to make a profit. Landlords are in the business not for the benefit of everybody else but to make some sort of profit. However, if a new building is built, don't you feel that some people -- not everybody who's in rental accommodation is at the low end of the income scale. Several people in rental accommodation choose to be in rental accommodation, even though they're in a high-income area. I'm suggesting that if they build a new building, some people who are in older buildings will move into those new buildings, thereby freeing up their accommodation, and someone else will move up to that, and so on down the road. I know other people pooh-pooh this idea, but I believe that is what happens. Could you comment on that?
Mr Wright: I don't have any personal experience in that. It's a good question to ask builders who come later on and on other occasions. Professor Hulchanski's study of the market seems to indicate that the movement's likely to be the reverse of that, depending on the economic situation, but at present he doesn't think the high end of the market is very large, that it's a very small market. Particularly with the possibility of condominiums, many people who would otherwise go into high-end rental accommodation like the greater security of condominiums.
Mr Curling: Thank you for your presentation. As a matter of fact, your presentation answered quite a few questions I was asking previously about the waiting list in London in terms of who we are addressing some of the affordability concerns to. You put not only a face on it but also a figure.
I feel an urge to talk about the trickle-down theory the government seems to really believe in, that if we feed a lot to those on the top, some of the food will fall off and those at the bottom may get some gravy, may get some bread. The problem I have with that is that I don't mind waiting around for food, but if I wait too long I'll starve to death.
How long would someone with $15,000 or $20,000 a year income wait to get affordable housing? They are asking, where are those people who want accommodation? Even in Toronto, where I'm from, some of those people are in terrible conditions -- medically it's poor -- and they are waiting to go into affordable units. How long a wait do you think it would be for people on that waiting list who need decent, safe, affordable accommodation?
Mr Wright: I can't put a figure on that. When I was talking about London housing, people who are in extreme need get a few more points, so of the few units that become available out of the relatively small stock -- and I made the point that that stock will not be increased -- they can perhaps get in in a period of months. But some who don't have particular needs and are just struggling to meet their shelter costs could wait a matter of years, even in London, and I think it's not nearly as tight as Toronto.
Mr Marchese: Thank you very much for your presentation. I'll just try to make a few quick remarks. Ms Ross makes a comment that Mr Lampert speaks to, that is, if they do build it will be with a great deal of government assistance in terms of tax cuts in a number of different areas, and if they do build it'll be at the high end. But Mr Lampert, as Ms Ross argued, says that's okay because those who are in existing units will move to the others, therefore leaving room for many others to come and fill those spots.
That assumes something. It assumes that those people are ready and willing to go into accommodation at a higher standard where they will be paying more. I'm not sure that's the case. I suspect if they could pay more, they'd probably be in a condominium setting or buying their own house, is my suspicion. I'm not sure that trickle-down theory works.
But at the heart of this discussion around this proposal is whether we should eliminate rent controls, and they're proposing decontrolling as a measure to get there. The debate is whether or not we should let the free market take care of people and take care of the rents or whether rent control should be there to offer some basic assistance to low-income people by and large. Do you have a position, philosophical or political, on this?
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Mr Wright: Yes, I guess it's implicit. I didn't make it explicit thinking that perhaps this is a touchstone for the government to remove rent control as much as possible and that it's not in the cards. But I think we'd all feel much better if rent controls did remain, particularly from a concern for the lower-income members of our community.
Mr Marchese: Many landlords disagree with that view, and certainly many of the members on the other side disagree with that because they feel we shouldn't be intervening in the market, that the market will find its own equilibrium. The landlords argue as well that they will not charge prices they can't afford, so why worry? Do you worry?
Mr Wright: I'm worried. I was very convinced by reading the presentation by Professor Hulchanski, the housing economist, that this is not a normal free market, when he talks about effective demand. It's skewed market, the housing market. I think just freeing it up is going to leave some people out in the cold.
The Chair: Thank you, Mr Wright. We do appreciate your input here this afternoon.
LONDON AND AREA TENANT FEDERATION
The Chair: The next presenter is Leo Bouillon from the London and Area Tenant Federation. Good afternoon, sir. Welcome to our committee.
Mr Leo Bouillon: Even though it's not written, I'd like to thank you for the opportunity of allowing me to speak this afternoon.
I would like to open by asking: When was the last time you went out and spent up to half of your income monthly on a large purchase? Did you expect this purchase to be unsafe, unhealthy or defective?
I as a tenant pay $800 monthly on rent and feel that as a consumer -- I have bought my accommodations for that month -- I have the right to ask for and receive certain things. I expect accommodations to be safe and to meet certain safety and health standards. If these expectations are not met, I feel I should have an effective means of complaint, a way to be able to get what I pay for.
This government in its wisdom will make it more difficult for people like myself to get a fair shake. You claim that the system will be fairer. What you should have said is that you are catering to the people who have put you in power, the developers and landlords. Are they not a special-interest group?
Although rent control exists to accommodate tenants who may have issues over poor living conditions, illegal rent increases etc, the system is flawed, and the only other avenue for tenants is to hire legal counsel. It is my feeling that this leads to a system which is inaccessible to those people who are poor or on fixed incomes.
What has happened to the rent that tenants have been paying over the years, the 2% for capital expenditures that was supposed to be used by owners of rental property to ensure their housing stock stays in good repair? Even more amazing is the fact that rental properties are not accountable to me as a consumer and yet I pay their mortgage.
For the most part London landlords are responsible and have good business practices. The problem is with the slum landlords, who are an embarrassment to such organizations as the London Property Management Association and should be to the city of London. What I'm referring to is the landlord who provides substandard housing and who has the audacity to complain but has never put money back in to maintain his property. In the high end of rents there is much respect for the consumer, but they are paying for that privilege. The lower-end consumers are faced with problems of depleting funds and depleting housing stock and now the threat of losing the privilege of their housing to a greedy landlord who has been looking for an excuse to get more money.
There should be a system in place that in my opinion would be fair. If you are to force landlords to license their businesses, as most other businesses do, there would be accountability. If a business was unable to get their licence because of poor maintenance practices, that business could not be sold or transferred until it has met the requirements necessary to renew its licence, you would definitely see substandard housing change its face. The cost should not be passed on to the consumer because of neglect on the part of the landlord. If anything, that individual should be charged for bad business practices.
There is constant reference to the fact that the proposed changes to rent control will increase the rental housing stock. Rent guidelines would not apply to new construction. Have the Minister of Municipal Affairs and Housing and his staff actually read the rent control legislation? When the legislation was passed in 1992, new housing was exempt from controls for the first five years for the encouragement of new housing stock. Is your exemption magic? If there hasn't been much movement in the construction of new housing then, what will proposed eliminations of rent control guidelines do? Let's face it: If you believe there will be a major shift -- as Mr Leach has put it, "create a better climate for investment and maintenance and new construction, therefore creating jobs" -- then you've been sold down the golden path.
On other issues under the Landlord and Tenant Act: "Tenants may not withhold rent they owe when they have a dispute with their landlords." This statement really blows me away. You talk about fairness and how these proposed changes are going to help everyone concerned. Well, you've just taken away the only bargaining tool that tenants really had. The one and only way a tenant could make his landlord stand and take notice was to withhold rent until the issues were resolved. I know you have a commitment to those, again, who have helped elect you, but why would you take this privilege away?
The interest on last month's rent should be paid annually. The tenant federation has received as many as 75 calls annually on this very subject. In most cases, interest had not been paid and became such a problem for the tenants trying to collect it that they just gave up. The rate of interest should stay at its present rate. For years landlords had the upper hand when the rates were as high as 10%. The other alternative is to look at a fair system. If we're going to do that, let the interest rate reflect what the market is dictating. If rates go up, so then should the rate of return, and vice versa if the rates go down.
Subletting is another area of concern. Again, from most of the calls received by the federation, landlords took advantage of people's misfortunes. Callers complained that because of the situation with job transfers and the like, they were forced to pay as much as one month's rent to get out of their leases even though there was a law in place that forbids this kind of practice. Out of frustration and desperation, tenants would just pay and move on their way.
Although I believe the dispute resolution system could be effective for both tenants and landlords, as discussed in the tenant protection legislation, I have deep concerns about government's ability to come up with any feasible ideas of their own. In essence, they are asking the community to come up with effective ideas of our own and to try to sell them to a largely unsympathetic government. If they can't up with a firm idea on this issue, what assurances can they offer as to who will be responsible for the system, who will be held accountable? What kind of qualifications should an adjudicator have and what length should he or she should be appointed for?
The last issue I will touch on is the mobile home parks and land-lease communities. Having spent many hours organizing 12 tenant associations and being involved with the Bill 21 process and seeing it through, I firmly believe this is one area that needs the safeguards and protections now in place. The cap on special-cost pass-through provisions for capital expenditures mentioned on page 13, "Other issues for discussion," again should be placed under the same category as those that apply to slum landlords. If a business does not apply proper measures, then it fails. Does that same businessman start up another business and pass the cost on to the consumers? Then the same should apply here. I reiterate, where has the money paid in good faith by the tenants gone? If the landlord has not maintained his park, why should the tenant pay twice for the service that should have been provided for in the first place?
In closing, my last question is directed at the present government. Why have you spent all this money on public consultation when you often reply, "We're only following the mandate that has been given to us by the people who have elected us"? In the past, you have told us that your minds are made up and nothing will change. Then why would you put us through this process, knowing fully well that what you have proposed is, in the end, fact? Thank you.
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Mr Curling: Thank you very much for your presentation. You've touched on quite a few areas and I'll try just to give you a quick commentary on what happened.
As you know, the Greg Lampert report that the government has commissioned, asking Mr Lampert to go around and talk to developers and ask them what direction they should go -- their New Directions paper was based on the Lampert report. One of the suggestions Lampert told them to do is to rush this thing through quickly because it can be painful and there were going to be high rates of rents that may happen, so there's a "Get it over quick before the next election so you can get elected" insinuation there. That kind of stuff tells us that they did not intend to have any consultation with the broad sector.
In the meantime, while the minister stated that this is a consultation paper, what he has done is put things in place. I believe that legislation is right now being written in some basement, because they've cancelled social housing; they have cut 21.6% to the most vulnerable, creating a greater need for these people. In the meantime, all along they have told them, the developers, that they will not build, no matter what you do in taking off rent control, at the lower end of the area there.
Having said all that, because I just have to vent some of that emotion I have, because this is what has been told to us and this is what we know, the question you ask about the capital expenditure, I have not gotten an answer either on those capital funds that they got in order to fix those buildings, and they're run-down. Do you think it's fair that they should be asking more money now in order to fix this neglected $10-billion maintenance of buildings around?
Mr Bouillon: My personal opinion is that it has been paid for already, so why pay for it twice? The landlord had the opportunity of using the 2% to make sure his property was well maintained. Because he has neglected to do so, there should be some other means -- the tenant shouldn't have to pay for that; the landlord should be held responsible to make sure his building is in proper condition.
Mr Curling: I'm glad that you identify the fact that the guideline, this magical guideline, is not a mystery itself. Within that guideline there are provisions made for maintenance. As a matter of fact, I was partly responsible for that, which they call the building operating cost index, which makes provision for the maintenance of buildings, and now they are asking for more. I'm very happy that you have identified knowing that. Tenants should know that and residents should know that. That is already taken care of.
Mr Marchese: Thank you, Mr Bouillon, for coming and presenting some of your views. We've heard much of the same throughout Ontario in terms of concerns that people have. The Conservative members say the system is broken. In fact they're the only ones that are saying this, and the landlords; they agree with each other: The system is broken and it needs repair. Much of what they're saying is that we've got to get rid of rent control, only they're beginning with decontrol as a first step.
Mr Bouillon: Exactly, yes.
Mr Marchese: Part of what they're also saying about why there's a need for change is because the system is tilted towards the tenant; that's really the problem. The reason they're proposing this protection package, which is not really for tenants, as it says, but for landlords, is to bring about some balance. You've had a lot of experience from what I've heard. Do you feel that the system somehow is tilted towards the poor tenant and that we need some fixing in that regard?
Mr Bouillon: The tilting, again, is a question that has been of course brought up by the landlords and the Conservative government. As I mentioned, there are flaws within the rent control legislation, which I will admit to, but what do you do? Decimate a whole piece of legislation because it's not working in the landlord's favour? I don't see the point in all that. You've spent millions of dollars working, putting this thing together, and now you're just going to throw it out the window, rewrite the whole thing, and to what end?
Mr Marchese: I agree with that. One of the landlords -- I thought he was a landlord; if not, the lawyer, I believe, Mr Hoffer -- said that many of the landlords are not taking that guideline increase, which is 2% or 2.8%. Is that, in your experience, real? Are these landlords not taking their 2.8%?
Mr Bouillon: The only person I know of whom that has ever happened to is myself. My landlord has decreased my rent, but that is something I don't hear about every day, believe me.
Mr Marchese: I didn't think so. Coming back to rent control, what the Conservative members argue, and the landlords, is that rent control has ruined everything and that what we need to do is let the market take care of rates. Do you feel protected by the removal of rent controls? Do you think people whom you've been organizing with would feel somehow protected by the market if we did this?
Mr Bouillon: No. Tenants right now are really concerned about that particular issue. If rent control is gone, then where are they at? There are some provisions within the Landlord and Tenant Act as well that could be literally taken away. One of the things I mentioned is that a bargaining power tool, to me, is being able to withhold my rent if my landlord would not comply. I don't mean frivolously or anything. We've seen situations in London where, for example, the landlord has not paid utility bills; utilities get turned off.
Mr Maves: Thank you for your presentation. On the first page you say, "I expect my accommodations to be safe and meet certain safety and health standards." We agree and that's why we've put several provisions in here regarding maintenance. You went on to say that these proposals don't give the tenant a fair shake but cater to the landlords.
I'm going to read some of the maintenance provisions we've put in here. I wish you could tell me which one of these cater to landlords. Violation of a property standard will be made an offence; the requirement that a notice of violation be issued prior to work order will be removed; removing this step would allow work orders to be issued requiring that a property be repaired as soon as a problem is identified; property standards officers will be given more powers, including the authority to have a property inspected by a qualified expert when an owner does not provide sufficient information; maximum fines will be increased to $25,000 for a first offence, $50,000 for subsequent offences; provincial courts will be given the power to issue prohibition orders; these orders can prohibit a landlord convicted of a property standards offence from repeating the offence; non-compliance with orders can lead to additional fines and imprisonment. Which one of those caters to the landlord?
Mr Bouillon: Maybe I can answer that in a different way. Because of the involvement I've had over the past several years, I've seen situations where the landlord's responsibility, as we all know, is to maintain his property. Some of the stuff you're proposing, sure, is great. The problem is, are you prepared to put in the necessary money to make sure that all this is going to be complied with?
Mr Maves: So these maintenance provisions are a step in the right direction as far as maintenance goes?
Mr Bouillon: Sure. The problem is if you're not going to follow through on it, and this is what we've found over the past years. For example, if a tenant complains to the property standards office, in most cases it'll take two or three weeks for the inspectors to get out. If you want a system that's going to work, you're going to have to be prepared to put money into it. This present government has shown us that it's not prepared to do anything like that.
Mr Maves: So the existing system doesn't work, but don't change it.
Mr Bouillon: You asked me a question about property standards, did you not?
Mr Maves: I asked you which one of those catered to landlords.
Mr Bouillon: What page are you at?
Mr Maves: Page 4. I just don't see any of the maintenance proposals that cater to landlords.
Mr Marchese: Rent control does; the Rental Housing Protection Act does --
The Chair: Mr Marchese, this conversation is between Mr Maves --
Mr Maves: With regard to safety and health standards, we're addressing that. I don't see any of those that cater to landlords.
Mr Bouillon: It's certainly not catering to the tenants, believe me. It does not. Again, if you've been involved in the system instead of sitting back in an office somewhere where you're not exposed to this kind of thing --
Mr Maves: I know the system doesn't work right now. That's why we're changing it.
The Chair: Thank you, Mr Bouillon. We do appreciate your input this afternoon.
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NEIGHBOURHOOD LEGAL SERVICES, LONDON AND MIDDLESEX
The Chair: Our next presenter is Cynthia Harper, executive director of the Neighbourhood Legal Services, London and Middlesex. Good afternoon, Ms Harper. Welcome to our committee.
Ms Cynthia Harper: Mr Chairman, committee members, my name is Cynthia Harper. I'm a lawyer and I'm the executive director at Neighbourhood Legal Services, which is a community legal clinic in London.
Neighbourhood Legal Services is funded by the Ontario legal aid plan. We provide legal representation and information to low-income residents of the city of London and the county of Middlesex. We also provide community education and community development. Our mandate is also to perform law reform functions for the economically disadvantaged residents of the city and the county.
In 1995, Neighbourhood Legal Services provided information and representation to over 2,000 tenants in the city of London and the county of Middlesex. We have represented tenants before the courts. We have acted on landlord and tenant matters, on rent control matters. We have assisted tenants who live in co-ops. We have heard from tenants who are concerned about having their accommodation converted to condominiums, and we have also heard concerns from tenants who live in government housing. We also have extensive experience in appearing before different tribunals in other areas of the law, such as the Social Assistance Review Board, the Workers' Compensation Appeals Tribunal and so on.
First of all, I would like to thank you for coming to London today. I wish I could attend before you today and say that with a vacancy rate of 4.1% in this city we do not have tenant concerns. Our clinic represents tenants only and we hear these concerns on a daily basis. London is seen as being a very affluent city. You're told that we do not have a supply problem. What we hear at the clinic day after day is that there is a problem with the affordable housing in this city and that there is a supply problem, that is, a supply of affordable and properly maintained housing in the city for lower-income residents.
We hear the same sort of concerns that you have probably heard over and over again in the other cities that you have travelled to. The fact that we have a higher vacancy rate does not necessarily mean that these tenants in the city do not need landlord and tenant protection. What we have heard from our clients is that some of the proposals being made in this discussion paper are not protecting tenants.
Today I would like to just raise a number of the concerns that we have heard from our clients. We have provided to you an extensive brief which has dealt with many of the issues in the discussion paper and I'd ask you to please review that.
I would ask you, first of all, to consider some of the comments that were made by the representatives from the social planning council today. There was a report that was presented by Jennifer Kirkham of the department of community services called Accessibility to Housing in London. One of the conclusions of that report is that there is an affordability problem here.
We are very concerned that the proposals that are made in this discussion paper will have an impact on affordable housing, in particular those dealing with vacancy decontrol and the repeal of the Rental Housing Protection Act.
First of all, with vacancy decontrol, we feel that this will have an impact on the rental market over the next few years. As the Lampert report points out, it's estimated that approximately 20% of tenants move each year and, over a five-year period, 70% of tenants have moved at least once.
When we speak with our clients, we hear that they move and they move for a number of reasons. When they are in a position now of having to negotiate their rents with landlords, with no restrictions on the rent, we feel that the negotiation process will probably be more like a take-it-or-leave-it situation. That's especially true for low-income clients and those on social assistance. While there is a vacancy rate of 4%, this does not mean there is a glut of supply of affordable housing in this city.
As I've mentioned, our clients move for a number of reasons. One of the concerns we have is one that is pointed out in this paper. The implementation of vacancy decontrol may lead, and in fact it's probably expected that it will lead, to a need for strict controls to prevent tenants from being harassed by their landlords.
It's been our experience that it's extremely difficult in the present system for tenants to enforce their rights under the Landlord and Tenant Act or the Rent Control Act. While the Landlord and Tenant Act provides for certain offences for violations of the act, such as changing the locks without the consent of each party, interfering with the vital supply of housing, distraining a tenant's goods and so on, our experience has been that it's extremely difficult for tenants to access the system and to use that system properly.
In the city of London the police are extremely reluctant to lay any types of charge under the act. If a tenant wishes to lay a charge, they have to attend before a justice of the peace. On many occasions when I've called up the justice of the peace, I have been told that I have to draft the actual charge for the tenant. The tenant then has to appear before a justice of the peace and ensure that the charges are laid. As you've heard, the crown attorney's office is very reluctant to accept these charges.
Ultimately, what happens is that a tenant who is being faced with breaches of the act, and serious breaches, by a landlord must not only act as investigator but must act as a witness at the hearing, must lay the charge and ultimately must be the prosecutor of the charge. It's been our experience that when a conviction is rendered in any type of landlord and tenant matter, the sentence is minimal.
So we welcome the types of measures that are being introduced; however, we wish to point out that a harassment unit may not be effective in the long run. It must be financed properly and ultimately it may not lead to tenant protection from harassment.
Another concern is the Rental Housing Protection Act. This discussion paper basically is going to repeal the Rental Housing Protection Act. It's changing its focus to protecting the sitting tenant and is removing the requirement for municipal approval.
A report was done by the city of London called the Report on Condominium Conversion Approval Criteria and Process, dated June 19, 1996. This report states, "Rental units have been removed from the market due to conversions to condominium without the concurrent construction of new rental units, resulting in a decline in the overall number of rental units on the market."
In London we are seeing rental units being lost to the conversion process and we're concerned, without any controls at all, that even in London we are going to be seeing the loss of more affordable rental accommodation.
One of the concerns I hear over and over again from tenants in this city is that dealing with the lack of repairs. The discussion paper itself says, "The current system does not do enough to ensure that buildings are kept in good repair." Many of our clients complain about repairs, and we welcome the proposed changes that have been outlined to assist enforcement officers in having more enforcing mechanisms available to them. However, as has been pointed out to you previously, these reforms are not going to be efficient or effective unless there is some funding given to the municipalities in order for them to carry out these enforcement functions.
In London we have five bylaw enforcement officers. They have a waiting list; it takes some time for people to get out. This is in a city where the city was found to be negligent in a case called Mortimer v Cameron and was found to be 40% liable in a judgement of over $4 million.
One issue I wish to raise as well is that dealing with the dispute resolution system. There's one thing Mr Hoffer and I may agree on -- there aren't many -- but that is that the jurisdictions of the courts should remain in dealing with landlord and tenant disputes. These are very serious matters. People's homes are at stake, and the discussion paper talks about removing the landlord and tenant matters over to a tribunal. It talks about having these reforms that are there to ensure a quick, efficient system with fair decisions, and it talks about having a high standard of procedural fairness and a reduced cost.
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I propose to you that simply moving these matters to a landlord and tenant tribunal is not going to resolve the issues. The court system is there. In our experience, it works effectively. I have to admit that there are some barriers to access that need to be addressed. Especially with our clients, it's very difficult for them to bring litigation, but there are measures that can be taken. For example, mediation may be introduced, we may have a duty counsel system, and even doing such simple things as having forms available to tenants to allow them to bring litigation would certainly help them.
For example, now a tenant may bring an application to the court for an order that repairs be done and for an abatement of rent, but it's difficult to do that on their own because there's simply no form available that they can just fill out and bring. There are other forms, but no forms for a tenant to bring that application.
If there is going to be an alternative dispute resolution system, the following are our recommendations.
First of all, it must be independent of the government and subject to legislation.
The appointment process is critical. Adjudicators must be selected by way of a fair and open and established process. Appointments must not be simply rewarded to the lowest bidder.
Adjudicators must be well qualified and impartial. Political appointments are not acceptable and will undermine the credibility of any tribunal that is set up.
Of vital concern as well is that adjudicators must receive ongoing training and it must be in substantive law as well as in policies and procedures.
Voluntary mediation should be a part of the process.
The process should be governed by the Statutory Powers Procedure Act and that act should apply to all of the hearings. There must be rules of procedure and these rules must be simple and they must be publicly available to anyone who wishes to use the system. This will put all parties on an equal footing and will establish to the parties just what is expected of them.
Furthermore, because residential tenancy law is very complex in many cases, the tribunal should have charter jurisdiction.
There should be appeals from any tribunal system to the Ontario Court, Divisional Court and that should be on questions other than fact alone.
Furthermore, it is vital to tenants that there should an automatic stay of eviction orders upon appeal.
In order to ensure access to the delivery system for low-income tenants and landlords, we recommend that costs be awarded in the discretion of the tribunal but only in exceptional cases. Furthermore, if filing fees are going to be paid, they must be minimal. Both landlords and tenants must have access to this system.
We would also recommend that any system that is set up should have a public legal education component. This tribunal or administrative system should provide information to landlords and tenants, not only about the process itself but about landlord and tenant legislation in law.
Finally, it is critical that any system that is set up be properly funded. A system that has workers who are overworked, where the system is underfunded, is going to experience delays, and that will not result in justice for either landlords or tenants.
Finally, we would ask that any implementation be carefully planned and policy must be developed and training must be first in place before that system is introduced and is up and running. Thank you.
Mr Marchese: Ms Harper, I have two quick questions. The first one is around what Mr Maves was asking the previous person. He was commenting on the fact that the provisions to have enforcement officers enforcing proper maintenance is a good thing and it's for tenants really.
Ms Harper: That's right.
Mr Marchese: But you've raised a problem. You say, "Well, unless you have enough resources to make that happen effectively, it exists on paper but nothing more than that."
Ms Harper: That's precisely what our point is, yes.
Mr Marchese: Is there anything else in this paper, this so-called tenant protection paper, that is protecting tenants?
Ms Harper: Not that I could see. I had read this paper with much interest and no, my conclusion is that in fact some protections that are there are being taken away from tenants.
Mr Marchese: Let me just read you the whole list. The Rental Housing Protection Act, does that help tenants?
Ms Harper: No.
Mr Marchese: The costs no longer borne, does that help tenants?
Ms Harper: No.
Mr Marchese: The rent registry, does that help tenants?
Ms Harper: It helps tenants but the elimination does not.
Mr Marchese: I'm sorry, that's right, the elimination of it. Decontrolling of rents?
Ms Harper: No, that does not.
Mr Marchese: The increased costs on capital costs from 3% to 4% plus including taxes and utilities, does that help tenants?
Ms Harper: No.
Mr Marchese: I didn't think so. Orders preventing rental increases?
Ms Harper: No, we suggest that that remain.
Mr Marchese: Of course. All of these things are being taken away and they assist the landlord.
A question on the whole issue of a dispute resolution system: I agree with that position, and that's been my view all along. But one lawyer yesterday in Windsor stated a particular problem. She said the system is a bit confusing, however, because there are a number of different forums for dealing with disputes so you might have a provincial offences court dealing with some, the rent control officer, Small Claims Court, the landlord and tenant court. She made a good point, I felt.
How do you deal with this confusion of the variety of different forums to deal with problems?
Ms Harper: I know there are a number of forums but I think it depends on what the situation is. For example, with rent control matters, they're more of an administrative nature usually. So in that system, with an administrative component, the rent control system is not all bad in the way that it is set up to be a tribunal. It's our position, with landlord and tenant matters, where the act deals mostly with evictions, that they are most suited to be in court.
Mr Ernie Hardeman (Oxford): Thank you for the presentation. One of the issues that you brought up was the increased rent when a unit becomes vacant and the negotiation problem with the second tenant, that you feel that the landlord will dictate the price as opposed to negotiating with a new tenant. Landlords have made presentations before us here in London suggesting that presently over 70% of the accommodations are below the allowable market rent. So in fact the market is keeping the rent where it is as opposed to rent control. What would lead you to believe that because it became vacant that all of a sudden those circumstances would change and we would see dramatic increases in the rent on the second occupation of the unit?
Ms Harper: My experience has been more with the lower-income tenants and the rental units that are not getting a lot of rent. Our concern is that in that niche there's not an oversupply of housing; in fact there's an undersupply from what my clients are telling me. It's very difficult to find housing in that rental range and, as well, it's very difficult to find housing that is properly maintained and where the repairs are being done. It may be in certain areas, yes, they are getting less than maximum rent but my experience has been that for lower-income tenants, that's not happening.
Mr Hardeman: The other issue, if I could quickly, was conversion, your concern that we will lose a lot of rental stock through conversion because it does not require municipal approval. Again, it shows that there is a difference in different areas of the province. In London they have not refused very many conversions as it is. In your opinion, why is there a difference between not having municipal approval and having a municipality that approves every application?
Ms Harper: Again, I think it just opens up for landlords a further possibility for us to lose the affordable housing. In addition, not only is there going to be no approval needed for conversions, but no approval needed for demolitions or major repairs. A lot of tenants express the concern that if it's going to be converted they need to have protection.
Mr Sergio: Are you familiar with the Lampert report?
Ms Harper: Yes, I am.
Mr Sergio: Good. This was written for the government, paid by the government. It suggests that the shelter portion be paid directly to landlords. How do you feel about that?
Ms Harper: I don't agree with that. Perhaps I can explain to you: At the clinic we have many clients on social assistance where one of the options for them is to have their rent directly paid by social assistance to the landlord, and we've opposed that on most occasions. There's only a very rare occasion we agree with that. Part of that is that it takes away from people their own dignity. It takes away from them the ability to control how that rent money is being used. You've heard today that on many occasions the only way to get repairs done for a tenant is to withhold that rent until they're done, and that takes away that option.
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Mr Sergio: Do you think that it's because a few or a lot of tenants are delinquent, if you will, that it's such an extreme for the government to take, let's say, such an extreme action?
Ms Harper: Sorry, I didn't hear the first part of your question.
Mr Sergio: Wouldn't that be a very extreme action on behalf of the government?
Ms Harper: Oh, definitely, yes. I don't think it's necessary and it's certainly extreme.
Mr Sergio: What would it do to the number of people who can't assist themselves in locating affordable properties?
Ms Harper: It's going to be very difficult for them, and we're seeing that now in a city like this.
The Chair: Thank you very much, Ms Harper. We do appreciate your input here this afternoon.
LONDON PROPERTY MANAGEMENT ASSOCIATION
The Chair: Our next presenter is Bill Amos from the London Property Management Association. Good afternoon, sir. Welcome to our committee.
Mr Bill Amos: Good afternoon. My name is Bill Amos and I'm the president of the London Property Management Association, or the LPMA. We're an association that's a non-profit group comprised of approximately 200 members of both large and small landlords in and around the London area. Thank you for the opportunity to address the standing committee to discuss the changes to the present landlord and tenant legislation.
Many of our members are also members of the Fair Rental Policy Organization of Ontario, which I understand has forwarded a submission to the standing committee that we strongly support. I've left with you a summary of the topics I wish to discuss today, there being four of them to touch on.
The first area I wish to deal with is that of rent control. The most economically efficient system, of course, would be for the complete elimination of rent controls, to let the forces of demand and supply dictate the market. We realize that due to the political pressures this may not be realistic. Prior to the most recent provincial election, and shortly thereafter, there were many reassurances that there would be drastic changes to the present system which would both decrease the political influences to the rental market and restore the economic factors.
Due to the current slump in the economy in most municipalities, London being one, and possibly with the exception of Toronto, they are currently in a situation where vacancy rates are high and the market dictates the market rent levels being charged. Anyone looking at the classified section of the local newspaper, the London Free Press, can see page upon page of advertisements where landlords are trying to interest tenants in their properties.
Under the proposed legislation, in most cases with new residents, if the concept of maximum legal rents is completely lost, in bad times landlords will have to follow the market conditions and perhaps not charge the annual statutory guideline amount, and then in good times they'll be limited, based on the statutory guideline which is based on past economic growth or negative growth. A freeze of the maximum rents on units with existing residents will also erode the concept of maximum rents, which will eventually result in the same situation as the vacant units which are re-rented. If this doesn't bankrupt the property owners, it may certainly cause a decrease in service, supply and choice in an environment of constant growth. This is a no-win situation for the landlord, the tenant and the economy as a whole.
Segregation of tenants into groups of existing and new tenants can do nothing but create barriers with landlords when inevitable situations occur where one rent level is obviously much different than another due to ceilings on chargeable rents, whether it be the maximum rent on the existing tenants or the statutory guidelines for new tenants. There must be some uniformity in the mechanism by which landlords can equitably charge for equivalent services rendered.
There are a number of instances where landlords and residents are both agreed on a rent increase based on an increase in service or an upgrade to their unit. There should be a mechanism with the new legislation that allows this without restriction when there is consent by both parties. The mechanism should include protection against any undue influences and there should also be a cooling-off period after a signed agreement is made.
I understand one of the reasons for suggesting the elimination of maximum rents is to eliminate the costly rent registry. By putting the burden on landlords to prove the maximum rent when there is a question regarding that, the rent registry can be eliminated while at the same time preserving the maximum rents.
New construction of multiresidential buildings is an area for which the government is hoping to stimulate growth. How do you see these proposals provide any incentive for developers and/or landlords to build new projects? There's insufficient incentive under the current system, and these proposals only make matters worse.
The same applies to the renovation of existing stock in Ontario. Approximately three quarters of Ontario's current stock of privately owned rentals is in excess of 20 years of age. Obviously, at this age many buildings require refurbishment, which translates into economic stimulation in the workplace, which can be nothing but good for our economy. Why would landlords even think of doing work other than what is necessary with restrictions that are increasingly forcing us into a corner?
The next area I wish to address is that of property standards. The loss of the requirement that a notice of violation be issued prior to a work order might be appropriate in a limited number of instances where there's a physical risk involved, but there must be a clear requirement in most instances that residents notify landlords in writing of needed maintenance and ensure a reasonable opportunity for us to rectify any problems. Should there be changes to the present legislation in this area, it must also provide landlords with the right to inspect units, with 24-hours' notice to residents, to determine if there are any problems within the units.
In the case of substandard properties there must be a clear definition of what "substandard" means in order to alleviate the majority of frivolous complaints. Regardless of changes to the system, filing fees should be implemented to reduce the number of insignificant complaints.
It's imperative that there is good communication between all parties: the property standards officers, the landlords and the tenants. This legislation is going in the opposite direction.
The final area I wish to touch on is that of the dispute resolution system. For the most part the current system functions well as long as the situation is straightforward and everyone follows the proper procedures. Obviously this is not always the case. We agree that changes are necessary to ensure that disputes are dealt with in a simple and expedient manner. Should a decision be made to proceed with the suggested system, we recommend that those appointed be individuals who have the qualifications and experience to properly deal with the issues and not be subject to any political influences.
In summary, I'd like to reiterate the areas I've touched on.
First, the elimination of maximum rents, as the proposed legislation suggests, would do nothing but increase an already bad situation for owners of current stock and for stimulating growth in the area of new development.
There must also be a mechanism by which landlords and tenants can agree to a rent for upgrades in their units without having to go through the government to do so. The proposed changes to the mechanism on which property standards function must be one of communication. Landlords must have the ability to at least correct a problem prior to an order being issued. We need an open communication system between residents, property standards officers and landlords.
Last, I noted the dispute resolution system. Whatever is done, simplicity and fairness must be the main objectives. It takes years for landlords and tenants to get into a position whereby they can negotiate freely about rental accommodation, but political intervention by previous governments has negatively influenced this process. It's our request that changes to the present legislation be made for the benefit of all parties involved: the landlords and the tenants. Thank you.
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Mr Smith: Thank you for your presentation. Over the last two weeks we've heard a great deal -- you alluded to the issue of supporting the Fair Rental Policy Organization of Ontario -- about the outstanding amount of money that's currently in place with respect to maintenance: $10 billion. Many tenants have come before this committee expressing concern that they've paid for that already.
As someone who represents landlords, and as you're aware, I represent a part of this city, how can I be assured that tenants in this city haven't already paid into it? And have landlords simply put the money in their pockets and run, or where has the money gone?
Mr Amos: The ability of landlords to charge rent increases over the past number of years in London is almost nil. The majority of our members I have talked to have noted that they have not taken rent increases over a number of years because there is so much competition out there. In many cases they've taken decreases in rent to keep existing tenants. They've put a number of upgrades into the suites of current residents and into vacant suites to attract new tenants. They've been doing what they can to try to keep their buildings filled in an open market.
As I mentioned, right now the laws of supply and demand are dictating the rent levels that landlords in London and a number of communities in the area can charge. Looking at this -- I think Mr Bouillon noted it when he was giving his presentation -- the majority of landlords in London are not a problem with substandard properties, and we have done nothing but put money into our projects over the last number of years to upgrade them in order to attract tenants. We have to do that.
Mr Smith: We have had a number of presenters, some 80% of them landlords who have less than five or six units, family investments. Do you feel the paper should include some provision that addresses the small landlord situation or should we retain the generic flavour the paper has currently with respect to landlords? Is there an opportunity to address that? Should we address it?
Mr Amos: Various areas of the paper I think should be addressed as a whole for both large and small landlords, especially in the area of rent controls. A small landlord often doesn't have the ability or know-how to go to the government and apply for what needs to be done to renovate a suite so he can charge more rent or to go and get a situation with an existing or new tenant whereby they agree to a rent without political intervention. In those cases I can see there being a problem, but as a whole I think the changes to the legislation and the current legislation shouldn't really be segregated between large and small landlords.
Mr Curling: Mr Amos, do you feel that adequate consultation has been given to this issue?
Mr Amos: What issue is that, sir?
Mr Curling: Whether adequate consultation has been given to this housing policy or rent control policy, not housing policy really. Do you think the government has consulted enough?
Mr Amos: I know representatives from the London Property Management Association have been involved with the consultation process. There has been a lot of input that we have offered. Yes, I feel that there has been a large amount. We have been disappointed with the paper which is being suggested, based on the some of the assurances we were given prior to the PCs being appointed as our current government.
Mr Curling: Are you, the London Property Management Association, a member of the Fair Rental Policy Organization?
Mr Amos: No, we are not. We are supporters of them, though.
Mr Curling: Are you aware that FRPO agreed to rent control in 1986 with the guidelines and everything?
Mr Amos: Yes.
Mr Curling: And you are saying that FRPO is disagreeing with rent control now?
Mr Amos: Ideally in the landlord community, rent controls are not a good idea. We believe that the law of supply and demand should be used to determine rent levels. I believe, in speaking with representatives from FRPO, that they are of that opinion also.
Mr Curling: Did you know that FRPO also agreed for the rent registry to be established?
Mr Amos: Yes.
Mr Curling: What I'm trying to say here, Mr Amos, is that much of what the fair rental policy people are coming out with and stating and these developers, they're all agreed on this, and I presume the opportunity to say we have a government and we can wipe this out, and now they want a guarantee that any other government that comes in would never change it, which they can't get anyhow. Not even I or anybody else in that line can.
Mr Amos: I agree with that.
Mr Curling: Tell me something then. How do you feel about the cancellation of non-profit housing, which would have a great impact on affordability of those who want affordable units? Do you feel it was a good direction for the government to cancel out non-profit housing?
Mr Amos: Yes, I do. I believe there are other methods by which the government can assist those in need of affordable housing without providing the actual housing. The cost of it is immense.
Mr Curling: When do you think the industry will build for those people at that bottom end of the market? Most of the people at the lower end, with small income, low income, have to wait around until those on the higher end are satisfied with accommodation. When do you see that the industry will be satisfying those on the lower end? I don't think they have the money, and it's profitable for them to do so. How long a wait do you think there would be before this happens?
Mr Amos: That, of course, is dependent on the economy to a large extent. I believe that if the government is going to be involved with subsidizing housing, there are mechanisms it can use other than building subsidized housing. In other words, they can facilitate more people than they can at the present time.
Mrs Boyd: Thank you for your presentation. I'm curious about one thing. You started off by saying that you have about 200 members, 75% of whom are small property owners with 25 units or less. Can you tell us how many of those would be much smaller property owners? We've heard from some groups that when we're talking about affordable housing, when we're talking about the real problem of low-cost housing, we need to be looking at encouraging the building of very small units -- one or two in a building and so on. What proportion of your members would be very small land owners or property owners?
Mr Amos: Very small -- you mean a few?
Mrs Boyd: Fewer than 10 units.
Mr Amos: Possibly 50%.
Mrs Boyd: Okay. Of your members, would you say there's a good mix and a proportional mix of low-end and high-end rental properties?
Mr Amos: Yes.
Mrs Boyd: The real focus here needs to be -- as you probably heard from the presentations, the concern that we have -- around the low end as opposed to the higher end of the market. You indicated that you first of all believe there should be no rent control regime at all, but then you made a statement that not only have the policies of previous governments prevented the building of affordable units, but the policies that are being proposed by the current government also prevent the building of affordable units. Other than just no rent control at all, what would encourage the building of affordable housing?
Mr Amos: The reason I made the comment that the elimination of rent controls would assist in this area is that there's a certain view of political intervention upon developers, even in the area of a small number of units. Everyone wonders what's going to happen down the road: Are they going to have the ability to recoup their investment, whether it be in the housing industry or any industry? Where you have a situation of intervention of any kind it makes people wonder. I think the elimination of rent controls would at least give some confidence in developers' minds that there may be some light at the end of the tunnel.
Mrs Boyd: It would satisfy some ideological perspective of how they use their money as opposed to the reality of providing homes for people?
Mr Amos: I believe so, yes.
Mr Marchese: Just a quick question: You said some landlords have not been raising rents over the last year, maybe two or three?
Mr Amos: Correct.
Mr Marchese: In this particular instance you say the market doesn't permit it, really.
Mr Amos: Yes.
Mr Marchese: So in these years rent control has not been a problem, has it?
Mr Amos: No, it hasn't.
Mr Marchese: But you want to eliminate it.
Mr Amos: We don't know five years down the road what the market is going to be like in that regard. We want to be assured that should the market bear it, we have the ability to collect those rents.
The Chair: Thank you, Mr Amos. We appreciate your input here this afternoon.
Is Rev Susan Eagle in the crowd? No?
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MORGHANNA MACISAAC
The Chair: I understand Morghanna MacIsaac is. Good afternoon. Welcome to our committee. We appreciate you being early. The floor is yours.
Ms Morghanna MacIsaac: Good afternoon, ladies and gentlemen. Thank you for coming to London. My name is Morghanna MacIsaac. I am a tenant living in a government-subsidized apartment who will be directly and adversely affected by the Harris government's proposed tenant protection legislation. I'm here today on behalf of the critically vulnerable tenants who live in subsidized housing, as many are unable to articulate their fears and a great many more are unaware of how they may ultimately be affected by this proposal. For this reason my remarks will be confined to the crucial issues respecting rent-geared-to-income housing.
I'm sorry, I'm very nervous. Please bear with me.
I need you to study me carefully and listen to me closely as I am but one of the millions of tenants facing potential homelessness under this proposed tenant protection legislation. Not so very long ago I was much like you: a gainfully employed taxpayer with a living wage, an affordable apartment I was comfortable in, interests and activities in which my paycheque allowed me to participate, and health good enough to keep it all going. One by one, each of these was lost to me on a significant level. My health failed and I struggled to survive on welfare during the long wait for approval of my disability benefits application.
I became enmeshed in the social services system where the London and Middlesex Housing Authority, herein after referred to as the LMHA, is a driving force in that vortex which can engulf the vulnerable and needy, killing their pride, eroding their self-esteem, and routinely relegating them to the status of faceless and worthless. After enduring nearly six years in this system, attempting to get well while constantly battling for my rights to fair, equitable, respectful treatment by housing and social assistance personnel, I present to you today as a tenant who will ultimately be forced into homelessness under the proposed tenant protection legislation: a middle-aged, single female, suffering disabilities which prevent her from seeking employment -- which is next to nil at best in the general population and virtually non-existent in her age group -- living in subsidized housing on a fixed income with no family or significant other to rely upon for assistance and support, economic or otherwise.
Specifically I wish to speak to the issues of protecting the most highly vulnerable tenants from landlord harassment and interference and ensuring these same, often fragile people are afforded competent, adequate access to justice in pursuit of their rights as tenants.
Under harassment and loss of affordable housing, I need you to know that as a tenant of the LMHA since 1991, my experience has been uniform in its elements of abusive maltreatment, interference, harassment, and diabolical discourtesy and disrespect for my personal rights, property and privacy. Additionally, I have endured chronic LMHA incompetence, which resulted in a condition of rental arrears on my account wilfully and deliberately been ignored when I have written letters of complaint, and been subjected to harassment and abuse which would rarely be attempted and never tolerated by either landlords or tenants in the private sector. I am talking about systemic abuse, ladies and gentlemen, and the LMHA is rife with it.
I would be homeless today without the guidance and support of London's Neighbourhood Legal Services on the four occasions I've been harassed and threatened with eviction for an arrears situation created by LMHA.
Most tenants in public housing are on fixed incomes, be they pensions or some form of social assistance. A significant number are former psychiatric patients discharged from closed chronic care units and group homes under this government's cutbacks to social programs. Others are victims of substance abuse, some lack education, are intellectually challenged, are fleeing violence or recovering from traumatic abuse, and some are comprised of the working poor. Is it reasonable to expect a major percentage of such tenants to be equipped to deal with threats, abuse and/or interference from a bureaucracy like the LMHA? Is it any more reasonable, as New Directions contends, to expect such tenants will possess the ability necessary to negotiate with a landlord for an affordable rent in market housing once they're fast-track evicted from their subsidized unit?
The proposed tenant protection legislation has systemic abuse built right into it in the form of vacancy decontrol, which in effect tells landlords the way to raise rents is to harass the current tenant to move out, and provides landlords the financial incentive to do just that. In order to counter the problem of harassment this government has admitted its proposal will create, it intends to introduce an anti-harassment protection unit, yet makes no mention of funding, policy or staffing requirements for this new bureaucracy.
My legally documented experiences with the LMHA have proved repeatedly that unless a tenant has the knowledge, courage and tenacity necessary to challenge the arbitrary, intrusive acts of this housing authority's personnel, the threat of housing loss looms very large indeed. For most, the mere threat is enough to drive them from their homes in fear and ignorance of their right to protest. Many London housing tenants are isolated from society and have no knowledge of the resources available to them, or are afraid to ask for help and/or don't know whom to ask. Many more are fearful of reprisals should they make a complaint of any sort and would rather tolerate unsatisfactory living conditions, enduring abuse and harassment, than risk loss of their shelter altogether. I know of others whose medical conditions have been dangerously exacerbated by LMHA agents who have harassed them with complete impunity.
Through my experiences with this housing authority, I've also learned that even the proscribed persons and/or bodies purported to address such abuses, that is, the London and Middlesex Housing Authority general manager, board of directors and the Ministry of Municipal Affairs and Housing, more often than not turn a deaf ear to or redirect a tenant enduring official abuse, finding it preferable to impugn the tenant's credibility rather than recognize an obvious breach of power and process by one of its own. In my case, one of my disabilities was used against me by the LMHA to summarily invalidate my very legitimate and thoroughly documented complaint.
From beginning to bitter end, my efforts to obtain reasonable, equitable treatment were deliberately ignored or actively frustrated by London housing personnel, and mine is not a unique story. Many tenants have experienced multiple episodes of abusive arbitrariness on the part of housing personnel, which begs the question, does it make any sense at all to further empower the LMHA or a similar housing body with fast-track eviction processes when that body is demonstrably incapable of competent, temperate administration? Yet this is what the New Directions discussion paper is advocating, giving more power to landlords while leaving critically vulnerable tenants bereft of the protective legislation they've counted on for the last 25 years.
Most people are not in subsidized housing because they want to be, but must be in order to avoid living on the street. For many, subsidized housing is the last stop before homelessness. The years-long waiting lists for this type of housing clearly illustrate the critical shortage of affordable housing which currently exists for countless numbers of people in this province, chiefly seniors, the disabled, the chronically unemployed, those on social assistance and the working poor. The province has already killed cooperative and non-profit housing programs and is now considering selling its realty holdings in buildings like the one I live in. Should this come to fruition, I and millions in similar circumstances will become homeless.
Equally chilling to tenants is the ministry's premise that tenants must be protected from evictions without just cause, yet will permit an eviction which allows a landlord to tear down perfectly habitable affordable housing for profitable conversion purposes. How does such an eviction constitute just cause? How can an eviction because a tenant is unable to afford the down payment to purchase his or her apartment be deemed eviction for just cause? These are precisely the types of evictions which would be allowed by eliminating the requirement for municipal approval for demolitions, major renovations or conversions. Such proposals clearly weaken security of tenure, not strengthen it.
Loss of affordable housing will escalate weakening of tenants' bargaining power in the rental marketplace, create combative conditions between landlords and tenants and push the low- and fixed-income tenant into the street much more quickly, with far fewer timely redress measures for that tenant. How can this government possibly present a discussion paper which will condone economic evictions under the name "tenant protection legislation"? In order to protect the tenants in the units, it is necessary to protect the units, thereby dictating the Rental Housing Protection Act remain solidly in place.
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Ontario's Ombudsman, Roberta Jamieson, stated the following in her annual report to the Legislature respecting the examination of all privatization initiatives to ensure accountability and complaint-handling are explicit and integral to any new schemes:
"The right of the public to hold public servants accountable for any unfairness in the provision of government services is one of the hallmarks of democracy. As governments search for solutions to provide services in a more cost-effective manner, it will be important to address the issue of how the right to complain will be preserved where public services are delivered by private means."
It is imperative this committee understand that without stringent harassment protection, rigorous deterrents to same and rent-geared-to-income housing available to people like myself, we will have no place to live, nowhere to go but out on the street. One cannot get a mortgage on pension or social assistance income to purchase a converted unit, any more than one can expect to negotiate a fair and reasonable market rent on such limited income. The reduced rents we pay in subsidized housing are all that stand between us and homelessness, which for many would ultimately mean an early death. "Pure melodrama," you may say. I assure you most emphatically, this is the stark reality facing vulnerable tenants like myself under the proposed tenant protection legislation. We in disadvantaged circumstances will comprise the next inflation of homeless statistics in Ontario, unless the current Landlord and Tenant Act, Rent Control Act and Rental Housing Protection Act remain unchanged. There are no other options for us.
Under the heading of "Access to Justice," following is another quote from Roberta Jamieson, Ontario's Ombudsman, describing evidence of increasing despair in complaints to her office during her annual report to the Legislature. This neatly sums up the current dilemma facing the impoverished tenant population of Ontario:
"It would be tragic to accept that less money means less fairness when economic circumstances are making those who have the greatest contact with government more and more vulnerable."
Under the proposed tenant protection legislation, the Landlord and Tenant Act will be brought under a quasi-judicial tribunal and taken out of the courts, with a further plan to introduce a mediation service. My experiences have conclusively proved that without competent, knowledgeable legal personnel in my corner, I would not be before this committee today, for I would long ago have lost both my source of income and my living accommodation. London's Neighbourhood Legal Services is the only reason I retain both of these today. It is crucial that under any new system the decision-makers be knowledgeable and impartial in landlord and tenant issues, and not political appointments made by the current government.
Consideration is also being made with respect to charging application fees for addressing landlord and tenant disputes. A user fee system to protect one's rights is a gross injustice to all tenants. No matter how small such fees may be, they will absolutely preclude low- and fixed-income tenants from bringing legitimate tenancy issues to adjudication.
If mediation services are made available, they must be voluntary and be conducted by well-trained and qualified mediators. This is particularly crucial in situations where there is inequality of bargaining power, such as in the usual landlord and tenant relationship.
To conclude, the current Rent Control Act has a generous rent guideline, affording landlords rental increases of up to 5.8%, which is far greater than the wages or pensions of most tenants will increase by this year, and dramatically preferable to the 22% cut in income suffered by social assistance recipients.
If the government goes ahead with the proposals in the New Directions discussion paper, it will mean the end of rent control in Ontario. Tenants will have their rents go up by more than allowed in existing law and there will be less affordable housing through vacancy decontrol and the elimination of the Rental Housing Protection Act. When combined with the government's decision to end the construction of non-profit and cooperative housing and the possible sell-off of public housing in this province, tenants like myself will absolutely have nowhere to live and will perforce swell the already burgeoning ranks of homeless persons in Ontario.
The social costs of this proposed legislation are too high and will destroy the lives of millions already severely economically and socially disadvantaged. It will deeply divide tenants with its provisions for widely diverse rents, create friction and animosity between landlords and tenants and ultimately force many previously marginalized poor into the street. Crime rates will rise as the dispossessed fight to survive in a climate of fear and hostility, while those fortunate enough to retain living accommodation will virtually be at the mercy of their landlords, accepting whatever treatment and living conditions are afforded them, so long as their shelter is not taken from them.
I refuse to accept this as the portrait of Ontario the Harris government consciously wishes to paint and hang for viewing in the world gallery. The government has an obligation to consider the interests and protection of all members of society and to provide a forum where legitimate grievances can be addressed. The proposed tenant protection legislation threatens all these things, and it is your committee which can prevent these threats from being carried out. On behalf of the frail, vulnerable and impoverished tenant population of this province, I urge you to do so.
Thank you for the opportunity to present these concerns and recommendations to you today.
The Chair: We've got about a minute per caucus for questions.
Mr Curling: I'll just make some comments quickly, then, because I only have one minute and I wanted to ask you a question. The government says that this is only a discussion paper that they have presented here, but as we speak, as you know, and before, the funding to tenancy advocacy groups has been cut. The most vulnerable people in our society, their allowance has been cut 21.6%. As we speak too the building code regulations that sometimes would have protected some of the people are being amended immediately -- but this is only a discussion paper. Nothing's being done; we're only discussing this. But the powers that be make changes as we speak. Is this a government you can trust to carry out your discussion today?
Ms MacIsaac: Not by my standards, no.
Mr Marchese: Just a few quick remarks. First of all, I want to thank you for bringing your personal experience to this committee, because that's how we are guided, through the experience of people like yourself, and if we don't learn from that, then I'm not sure where else we're going to learn from.
I want to tell you that institutional abuse in the way that you've described it at the London and Middlesex Housing Authority is inexcusable, in the same way that we find abuse with some tenants by some landlords is indefensible and inexcusable as well. Wherever we see it, we need to fight it.
You mention a number of interesting things that we need to worry about. It's interesting: People with power and privilege don't see the kinds of things that you're talking about --
Ms MacIsaac: No, they don't.
Mr Marchese: -- so they'll dismiss you as being melodramatic.
Ms MacIsaac: Absolutely.
Mr Marchese: But everything you say here is of concern to a lot of people, including the sell-off of public housing, which should concern everybody else who lives in your complex as well.
The minor user fee is not so minor.
Ms MacIsaac: I don't know what it is. I just know it's a proposal and it scares me.
Mr Parker: Thank you for your presentation today. It was very compelling and tells quite an important story. I was quite concerned at your comments of the abuse that apparently you've suffered in your public housing accommodation. Clearly you're not happy with the changes that are being recommended here today, but I sense that you are not happy with the situation as it stands. Do you have any recommendations for any changes to the system that we currently have, any ways that we can improve it?
Ms MacIsaac: Frankly, I would like to see, and I have mentioned this to some people, an impartial board, or I will use "tribunal" because I don't know a better word at this time, to address concerns like mine for people like me in public housing, as opposed to having someone in-house to go to, such as I did in my situation. I went to the general manager and I went to the board of directors, and all of them interact. They serve each other's interests. I would like there to be an impartial body instead of tying up the resources of London's Neighbourhood Legal Services with things like this. They have such a caseload, the last thing I wanted to do was bring them in on this, but I needed their help. There was nowhere else for me to go.
The Chair: Thank you, Ms MacIsaac. We do appreciate your input here this afternoon.
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DAVID WINNINGER
The Chair: Our next presenter is David Winninger. Good afternoon, sir. Welcome to our committee. The floor is yours.
Mr David Winninger: Thank you very much, Mr Chair and members of the committee, for the opportunity of presenting today. I might indicate that as a lawyer, in the past, I've represented tenant associations in connection with rent reviews and landlord and tenant issues before the General Division. I'm also a former member of the Legislature and a former chair of the London and Middlesex Housing Authority. I understand the previous presenter had a good deal to say about that.
While this discussion paper is fairly generally worded and not too specific, I think it's useful to provide commentary at this early stage on the proposed reforms, and hopefully there will be a further opportunity for public submissions once the legislation has been introduced.
First, dealing with the provision of housing in Ontario which the discussion paper speaks to, there are many reasons, I believe, why developers are not building new rental accommodation and landlords may not be investing in their buildings other than the mere existence of rent controls. The cost of labour and materials, interest rates, market conditions and demographics certainly play an important role in these decisions. Now that the baby boom wave has passed and many of those who previously required rental accommodation own their own homes, I believe there are not as many people entering the rental market for the first time as there were a few years back.
Many of those seeking rental accommodation cannot afford to pay the high rents that developers and landlords demand to feed their profit margin. This is why London can have a vacancy rate approaching 4% at the high end of rental accommodation while affordable accommodation is not available to our low- and middle-income earners.
Government investment in the non-profit and co-op sectors made good sense while it lasted. It provided access to affordable, quality housing. This investment also created jobs for building trades -- architects, engineers, electricians, plumbers and so on -- and a stock of permanent social housing was established as a permanent asset for the people of Ontario. This was halted with the stroke of a pen when the Conservative government took office in 1995.
Now this government, acknowledging the shortage of affordable rental accommodation in Ontario, proposes a system of decontrol/recontrol provisions to stimulate housing investment. When a unit becomes vacant, as I understand it, rent controls would be removed and rents would be determined by the market. Once a unit is occupied again, controls would be reinstated.
Dr Applebaum, a professor of sociology at the University of California who specializes in issues related to housing, studied the impact of rent controls in three California cities to assess the probable impact of decontrol/recontrol provisions similar to what this government is advocating. Similar claims were made: there was a shortage of low-cost housing, a rise in market rents compared to tenant incomes, and a lack of initiative and funding from state and federal governments to alleviate this problem. It was argued that by lowering profits and discouraging investment in rental housing, rent controls contribute to the crisis that rent controls seek to address, and pressure mounted to weaken rent control by imposing decontrol/recontrol provisions.
In his report published in 1991, Applebaum determined that half the renters benefiting from rent controls earned less than $20,000 a year, and less than a third of them earned over $30,000 a year. So that tells us something. However, with rent controls, the percentage of tenant income spent on rent declined. When Los Angeles introduced decontrol/recontrol provisions like this government is suggesting, the percentage of income for rent increased, with the highest increase for the low-income earners. Further, Applebaum determined that under decontrol/recontrol, by the year 2000, the rent for a typical Santa Monica unit would be 72% higher under decontrol/recontrol than it would be under normal rent controls, and the rent paid as a proportion of income would increase to 41%. Similarly, the number of unaffordable units would increase under a system of decontrol/recontrol.
Applebaum concluded that rent control provides a low-cost alternative to government subsidies without appearing to have an adverse effect on local housing markets.
To now remove regulatory control of rent increases for new tenants is to me beyond belief. Many of these new tenants are the people who benefit the most from rent controls: seniors who move out of their homes, students seeking housing to attend college or university, and disabled people leaving institutions and seeking to live independently.
There is no requirement to remove controls completely from newly constructed units. Already there is a five-year moratorium on controls for new buildings that acknowledges development costs of landlords.
Rent controls have been finely tuned already to ensure that landlords have sufficient income to maintain their buildings while at the same time keeping rents affordable. Not only does the statutory annual increase provide for regular maintenance; the existing law further allows increases to cover capital expenditures for major structural repairs to meet health and safety standards, measures to conserve energy, to promote access to the disabled, and extraordinary increases in taxes and utilities. By increasing the cap for capital expenditures and removing the cap altogether for extraordinary increases in taxes and utilities, I believe this government is creating a recipe for escalating rents the average tenant simply cannot afford.
Further, the government is seeking to allow landlords to continue to build into their rent the cost of capital repairs long after the repairs have been fully paid for. Why should costs no longer borne be factored into calculations of the landlord's capital expenditures? Once the capital repair is paid for through above-guideline increases up to 3% and carryforwards for up to two years, this added cost to the tenant should be removed once it's paid for, as provided in the previous amendments to Bill 121, the Rent Control Act.
Further, in its discussion paper, the Ministry of Housing indicates that tenants must be protected from double-digit rent increases. If that is the case, there's no need to change the present law under the Rent Control Act, which does not permit such increases.
Further, adequate maintenance of buildings is safeguarded under the existing legislation by ensuring that landlords who do not properly maintain their buildings cannot qualify even for normal annual statutory increases. Under the government proposal, rent increases will still be allowed notwithstanding the work orders that exist against rental complexes.
It is foolhardy to seek to eliminate the rent registry. This is perhaps the biggest flaw in the discussion paper. This enables tenants to know what the maximum rent should be. For years tenants had to do their own research, if they were lucky enough to have the skill, knowledge and resources to do so, to establish what the lawful rent should be. That involved calculating increases in rent for years prior to when they moved into a dwelling. They then had to compare that to the statutory increases allowed under a variety of successive legislation that established statutory limits.
The wonderful thing about the rent registry is that landlords can no longer get away with charging whatever rents they feel they can get away with. Many in London have in the past, and many rebates were finally awarded, but many tenants went without getting their rent rebated and the landlord was allowed to benefit from charging unlawful rents. So I believe this rent registry, which has been in effect since 1986 and has worked well for tenants, should not be eliminated.
The tenant, moreover, can no longer turn to tenant advisory agencies such as the London and Area Tenant Federation, which had its funding stopped by this government early in its mandate. What relief can there be for a tenant when she is pressured into signing an above-guideline agreement for rent to pay for a capital improvement or a new service when there's not even government approval required any more for these above-guideline increases where a tenant might be pressured into signing an agreement? Where does the tenant go to achieve equal bargaining power? Again, I believe this initiative should be stopped right now.
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If this government truly wishes to protect tenants from evictions and harassment and to promote security of tenure, there are many provisions already existing in the Landlord and Tenant Act which do exactly that and are designed to achieve these objectives. This act already achieves, I believe, the fine balance required to protect the tenant's rights while allowing the landlord to evict for cause.
In the past, since you're looking at changing the Landlord and Tenant Act, I've made a couple of recommendations for changes that could be introduced into the government legislation.
First of all, one change would specify that notices under the Landlord and Tenant Act that are served on people who lack sight, who are blind, would not simply be posted. I had a former constituent who was evicted from his unit when he didn't have the eyesight, the vision to see a notice that was posted on his door telling him where and when to report to court. When he finally found out, I believe it was too late. So if there were a provision in the Landlord and Tenant Act that would be sensitive to the needs of disabled people, I think that would go a long way towards protecting tenants better.
Secondly, there should be an obligation on landlords to provide receipts to tenants. I know of one London landlord who refuses to give receipts even for cash payments. When tenants finally need a receipt at the end of the year, this landlord has the temerity to charge a fee of $25 or $35 just to write out a receipt for rents already paid.
As far as alternative dispute resolution goes, I believe there's nothing wrong with facilitating access to alternative ways of resolving disputes between landlords and tenants as there is extensive documentation proving that such alternative resolutions work. Tenants, however, tend to have unequal bargaining power with landlords, so funding should be restored to tenant counselling services across Ontario such as the London and area tenant federation.
Decision-makers must function independently and be appointed by order in council. I'm speaking now to the method of adjudication. If we take the adjudication in landlord and tenant matters away from the courts and place it with a statutory authority -- a board or a commission that has the authority to do so -- these people must be independently appointed and be seen to be impartial. They should apply for these positions and be carefully screened as they will be exercising quasi-judicial powers that affect a very basic right of a tenant, and that's the right to shelter.
Decision-makers should not tender at the cheapest price, as indicated in the discussion paper as one of the options, as this will encourage decision-makers to substitute quantity for quality in their decisions. Neither should decision-makers be a department of government, as they will be perceived to be partial. Just imagine a government official ordering an eviction from public housing from the London and Middlesex Housing Authority. A conflict in roles would clearly be seen in a government employee making such decisions.
I believe it is appropriate that appeals from these statutory decisions, these administrative decisions, still lie to the Divisional Court on matters of both fact and law. I don't necessarily agree that there should be a rehearing in every case.
However, please do not regard such a system of adjudication as just another opportunity for a revenue grab. While landlords will almost certainly have the financial resources to pay greater fees for access to adjudication, tenants on the whole will not have the wherewithal to pay those fees. I believe if adjudicators have the ability to award costs at the close of their decisions, it will deter frivolous cases and applications from being brought before the board, if that is what is established to deal with these issues.
I believe it is contradictory for the government in its discussion paper to decry the lack of development in rental housing and then propose to water down the Rental Housing Protection Act. While this government proposes to protect sitting tenants, there will be no requirement for municipal approval of demolitions, major renovations and conversions of rental buildings. I'm surprised that municipalities are not actively resisting this fettering of their ability to plan how housing needs might best be met.
For example, residential intensification may be hampered as developers choose to build in the suburbs and tear down or convert from apartments in the inner cities. There is already a problem with landlords pressuring out tenants so they can convert to condominiums. Such a proposal will contribute to the destruction of affordable city housing and I believe reduce the number of units currently available.
As far as care homes go, I'm surprised that the government would seek to roll back many of the rights allowed residents of care homes under Bill 120, the Residents' Rights Act. Certainly Professor Lightman had taken the time to make a comprehensive report on how security of tenure for care residents could be improved, and action was taken that acknowledged the special attention these care home residents require. Now it is proposed that fast-track evictions, often referred to as green-garbage-bag evictions, be reinstated. Further, privacy needs may not be respected when vulnerable people, including seniors and the disabled, can be coerced into signing agreements that give staff carte blanche to enter rooms at will.
Finally, on the issue of mobile home parks and land-lease communities, legislation was passed with the consent of all parties in the previous government to better protect the rights of tenants in mobile homes and land-lease communities and to give them many of the same protections that are enjoyed by other tenants. Built into the annual rent increases is a capital cost component which is designed to cover infrastructure upgrades such as water and sewer systems. Why should landlords in land-lease and mobile home parks simply pass through their capital expenditures for infrastructure upgrades when such costs are already provided for in the increases to the base rent? I imagine the only reason must be to drive up the landlords' profits.
It would also appear that this government may be intending to prevent tenants from erecting For Sale signs on their mobile home lots by restricting these signs to bulletin boards and windows. This would certainly play into the hands of the mobile home park owners that make a very decent profit from reselling mobile homes of tenants, and they're a very captive market, as many of you know.
Those are my remarks today. If there's any time for questions, I'm happy to entertain them.
The Chair: Mr Winninger, thank you. You've used up all your time except for a couple of minutes, which isn't an effective time for questioning. Do you have a final comment you'd like to make?
Mr Winninger: Again, this is just a preliminary discussion paper and I think it's designed to provoke some thought and maybe focus on some of the reforms that are needed, but I would urge this government, when the time comes and the legislation is introduced, to afford the public the same opportunity that they're afforded now to come forward and make submissions in an effective way.
The Chair: We appreciate your input here today.
EAST LONDON UNITED CHURCH OUTREACH CLUSTER
The Chair: Our next presenter is Rev. Susan Eagle from the East London United Church Outreach Cluster. Good afternoon. Welcome to our committee. The floor is yours.
Rev Susan Eagle: Thank you very much. There are some copies of my brief that are about to be brought up to you that are at the printers.
I'd like to begin by explaining the capacity in which I come to speak to you today. I'm a community worker in London; I have been for the last 12 years. I work for a cluster of United churches, seven United churches and a Presbyterian church, that do outreach work. It is in the capacity of dealing with tenants who've had housing problems for the last 12 years that I speak to you today.
While statisticians describe vacancy rates, I assist people who are searching for affordable housing where at the end of the day, no matter what people say the vacancy rate is in the city, the vacancy rate for those folks is zero. While emergency housing agencies can describe increases in the numbers of homeless people coming through their doors, I deal with people who don't even figure in those statistics because very often they have doubled up with other families and hope that neither the landlord nor children's aid will discover that fact and consider it unacceptable.
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It's for that reason today that I wanted to speak to you about some of those real-life situations that I have encountered out in the community.
The United Church of Canada has for a long time been an advocate of stable housing out of a belief that housing affects not only the physical wellbeing but also the emotional and psychological wellbeing of people. Healthy people need healthy housing.
My own experience in the community has been to observe that one of the most critical factors of achieving any quality of life is indeed the procurement of stable housing. That includes not only the issue of affordability but the housing condition itself. I've discovered that very often those two are mutually exclusive, that decent housing is very often expensive and affordable housing is very often in deplorable condition. My concern is that I see nothing in your proposed legislation that will effectively remedy that problem.
The New Directions discussion paper does deal with the cost of housing but it deals with it from the perspective of how to cause builders and developers to create more. I don't disagree that builders and developers and landlords need to be able to make money out of their investments.
However, the paper suggests that one significant problem with the current system "is that it discourages capital investment, both in existing buildings and in new supply," and points to the lack of new construction in the last few years as proof of that fact. My question is, if the government is so concerned about the lack of new construction, then why did it so precipitously cancel the 300-plus new construction projects that were already approved when it took office last June? All of those projects were to be built by builders and developers working in consultation with the community. In addition, many of those projects were to deal with hard-to-house people, with whom landlords and developers very often don't want to deal.
Doing away with rent control may encourage landlords to build more housing, but if so it's out of some false belief that if the restrictions are taken off they can charge more money. The removal of rent control does not change the reality that many tenants don't have money to pay. The real problem is affordability, and it won't matter how much new housing is produced if no one can afford to live in it. The subtle suggestion that there a lot of tenants out there who could afford to pay more if only landlords could get at them is simply not borne out by fact, at least not by the experience that I've had in the community.
What the removal of rent control will mean, though, is that more tenants will struggle for less and less housing and find it harder and harder to pay for it. As rates go up they need to search for smaller and less well maintained housing units to offset the higher costs.
Landlords will continue to justify poor housing conditions on the grounds that it's the only way they can afford to make it affordable for poor people to live in.
Your discussion paper asks how capital expenditures should be calculated and whether there should be an eligibility test. It's critical that there be some independent assessment and that the obligations of regular maintenance be excluded from capital expenses. We already have the problem of landlords who allow a building to fall into disrepair so that major repairs can be passed off as capital improvements.
While I haven't always found the rent control office to move as quickly or as efficiently as I would like to see them, I do believe that it's important to have an office and maintain the capacity for doing assessment and monitoring of those situations.
The issue of maintenance: I need to tell you that when I first began as a community worker in this community, I asked an inspector one day about the poor housing stock in this city. His response was to say, "There are about 1,000 bad housing units in this city, but if we condemned them all where would the people go?"
Where too would those tenants be able to go if they had to pay more money for housing? That problem has only worsened since last year when social assistance cutbacks were introduced and people have even less money to seek decent housing.
There are two critical issues I see with maintenance according to your discussion paper. The first is budget problems with the requirement that municipalities take more responsibility for enforcement of standards. The system in London is set up only to respond to problems. It doesn't undertake monitoring or education or prevention, and already there are delays in the system that we presently have.
Attempts to streamline the system have been made, but enforcement is not strong. As we discovered with housing conditions at the Cheyenne apartments, where I have worked for the last number of years, the standards bylaw provided only a minimum standard and the allowable delays in the system meant that it took more than five years before standards enforcement reaped any significant benefits.
During that time tenants' health and safety were jeopardized, and I cannot see anything in your discussion paper that improves standards enforcement at a time when there is going to be fiscal restraint. How are you going to ensure that it happens and that municipalities put money into it when there are budget cuts? In fact, downloading responsibility exclusively to municipalities while doing away with rent freezes makes the situation even worse. That's my concern. At the Cheyenne housing it was only the provincial application of a rent freeze and visits from the provincial enforcement officer that finally made a difference in that situation.
In answer to the question raised about the discussion paper and provincial oversight, I think it's very important that the province continue to stay involved in that aspect. You also can't ask people to enforce standards if there is no acknowledgement of how that's paid for.
The alternative dispute part of the discussion paper, I'd like to speak to that for just a moment. I was part of a community group here that explored the possibility of alternative dispute resolution in dealing with landlord-tenant matters. Out of that research we proposed to the city and the province that a pilot project be undertaken that never materialized, but I continue to believe there are some landlord-tenant matters that can be resolved through mediation and/or arbitration. This needs to be done cautiously and through voluntary pilot projects.
The court system, with its adversarial environment and the fact that a situation is usually at a crisis point before it's dealt with in the courts, means that even if the situation gets resolved, usually the two parties have become far too polarized to ever have a harmonious relationship after that. Very often the tenancy is simply terminated. A landlord-tenant situation is not just a contract. It's an agreement between two people around living conditions, so the sooner we can resolve it and mediate it and come to some kind of harmonious resolution, the better for both parties involved.
Even if we move, though, into any kind of resolution of dispute, there are a couple of things I think need to be acknowledged. One is that there is an imbalance. Repeatedly I have dealt with tenants who were afraid to speak up about housing conditions or other matters because they were afraid of reprisal, and they were aware there was no other accommodation available for them if they did speak up and make a fuss about the existing housing. Negotiation for tenants with landlords is only possible if they know they've got another option and another place to go. For tenants who are desperate, there isn't an option. Already I've had tenants offered even reduced rates if they'll say nothing about housing conditions. Your discussion paper does not acknowledge those concerns. It doesn't look at how those concerns might be addressed.
It seems to me your discussion paper was drafted from the perspective of landlords and bureaucrats. If that's not so, I'd certainly like to know, but there is another perspective that dearly needs to be inserted into your discussion paper: the situation from the community, where people are struggling to survive.
I hope that you would take a further look at some of those issues I have further outlined in the paper I've presented. In addition, in the appendix at the back four pages of the report you'll see I have taken seven examples from your discussion paper and added a further ending. I don't know if I've got time to share a couple of those with you.
The first example in your book, on page 2, talks about Darcy, a landlord who makes major repairs to the building's balconies and gets 2.8% increase in repairs. The rest of the story goes this way.
Darcy has a long history of delaying maintenance until the problem becomes a major repair. Since the balcony repair was granted a 2% increase above the guideline, he lets the roof and walkways go. He negotiates a slightly higher rent with a new tenant because he promises that repair work is about to begin. He continues to delay repairs and does a major renovation job and applies for an increase above the guideline. Since the rent registry has been terminated, there is no way to know that he has already increased rents significantly. Tenants living in the building are already stretching their budgets to pay for poor housing. Many are living on fixed incomes. Now they are told they will have to pay more or leave.
The last example I want to use, just at the very end of my appendix, is number 7 in your book, page 8. This is the story of Celine. Celine is aggressive, anti-social and noisy, making life miserable for landlord and tenants. "In the new system the time it takes to remove a tenant will be shortened considerably. Currently, it can take up to five months."
The rest of the story on Celine goes this way. Celine was in line for non-profit housing, but the project was cancelled by the province just after the June 1995 election. Celine was looking forward to the non-profit because community supports for hard-to-house residents were included in the planning. Now that the project is cancelled, Celine will go from private rental to private rental, with continuous disruption to her lifestyle that makes her more insecure, aggressive and hard to live with. She will be constantly evicted, even more quickly with the new streamlined system, by landlords who will justify their actions on the grounds that she a problem. Celine will join the ghetto circuit until she finally ends up on the street. Thank you very much.
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Mr Marchese: Thank you for bringing some of these experiences of yours to our attention. It's these kinds of things that I think we need to know about in terms of problems that people who are marginal, people with mental illness, people with disabilities and people with low incomes generally have to face. It seems to me that we need systems in place to protect them.
The government and landlords say, "We know there are a few people who are needy, or some people are needy, so all we have to do is provide shelter allowances and that would take care of those who are in need." Does that deal with it?
Ms Eagle: It doesn't even begin to deal with it. It's very hard to explain it all, if you haven't been out in the community with people who are struggling, in a really fast 20 minutes, but shelter allowances alone simply will not do that.
In the Cheyenne community we worked for five years before we were allocated housing co-op status. We had to jump through all kinds of hoops set up by the ministry, and I don't disagree that those should have been there, because we had to prove the need; we had to show how the community was coming together; we had to demonstrate that developers were not building large units and units for the ethnic community that was living there.
A shelter allowance simply doled out to a few people here and there won't even begin to provide the kind of stability of housing that people need.
Mr Marchese: On the other hand they argue that the kind of housing we've created, the NDP, in terms of cooperative housing and non-profit housing is simply too costly and the taxpayer has had to bear a great deal of that cost and it's rather unfair for the taxpayer to have to pick up that cost.
Ms Eagle: Let me respond really quickly to that. We were allocated startup money for the co-op last year, and all that startup money would be paid back to the government with the first mortgage draw we would get. The government sent us a cheque for $30,000 and the next day cancelled our project, thereby making us ineligible to get the mortgage that would have allowed us to repay the government money. There is nothing more wasteful than what happened last June and July with the cancellation of the housing projects, because we paid it back through mortgage.
Mr Maves: I don't know what the case is in London. I usually ask this in each city; you seem to be quite involved with housing in the city. In Toronto there's a great inequity in residential property taxes and apartment taxes. People in apartments pay four and a half times the tax rate that people in residential properties pay. Is there a similar inequity in London, and what is it?
Ms Eagle: I'm sorry, I can't answer that question.
Mr Hardeman: Thank you very much for your presentation, Rev Eagle. You speak to the Cheyenne situation and the inability of the city to correct that problem. In the proposal we have the ability of the municipality to correct the problem and charge it back as taxes, in the form of taxes on the property. Do you see that as a benefit to the type of situation that you had?
Ms Eagle: Yes, and at Cheyenne it was done in that situation, where finally the city went in and cleaned up the cockroach infestation and some of the dangerous conditions that had been identified by Ontario Hydro and then billed that back to the landlord through taxes.
I was trying to say that I think the province and the city have to work hand in hand. It can't simply be offloaded on the city, especially when municipalities right now are looking for ways to save money, and I know that tenants don't have a loud voice when it comes to being a priority when there's a budget cut happening.
Mr Curling: Thank you very much for your presentation. You speak of the most vulnerable in our society, and we are very grateful to have an individual like you addressing that.
I presume some of the decisions which were made previously by the government have made your work a little bit tougher. How do you see a proposed speculation by this government to sell off the 85,000 units they have now and getting into the hands of the private sector? Would that give you a greater challenge?
Ms Eagle: Yes. There's a waiting list now.
I also serve on the board of the local housing authority and chair the city's advisory committee on housing, so it's from all those different aspects that I speak, although I'm trying to just wear the one hat today. But yes, the more we do away with affordable housing and social housing for people, because I consider not just public housing but social housing, the more difficult it becomes, and we're back to the inspector who said, "If we condemn this housing, where will those people go?" We're going to have more -- people are caught. You can't condemn housing if there is no other place for people to live.
Mr Curling: I'm trying to understand some of the social responsibility of government, because I have asked the Minister of Housing quite often in the House, who said he wants to be out of housing. I try to find in New Directions any kind of hope that we could protect tenants and the most vulnerable. Is there any part of the New Directions paper for discussion where you see any hope?
Ms Eagle: Yes. Some of the goals that the government has identified; I like some of the goals that are listed and I'd like to see them actually act on them and seriously implement them: the one about protecting tenants etc.
I believe that encouraging municipalities to take more responsibility around enforcement is very important. I like the section on alternative dispute resolution, with some cautionary provisos. But my big concern is to even start with the attitude that the government should get out of housing. As soon as you get out of housing, you push the problem into other areas.
Where you have tenants who live in bad housing you end up with sick people; you end up with people who don't go to school properly; you end up with all kinds of other problems in the community. Good housing is a preventive thing. It saves you all kinds of other costs down the road. It would be irresponsible for a government to say they want to get out of housing.
The Chair: Thank you very much, Rev Eagle. We appreciate your attendance and your input here today.
We're now recessed until 5 o'clock.
The committee recessed from 1557 to 1701.
OLD OAK PROPERTIES INC
The Chair: Good evening, ladies and gentlemen. Welcome back to the hearings of the standing committee on general government. Our first presenter this evening is Bernie Bierbaum from Old Oak Properties. The floor is yours.
Mr Bernie Bierbaum: First of all, I thank you very much for your time. I'm going to make my presentation brief. I appreciate your patience in listening to the various submissions.
Old Oak Properties has developed, constructed and managed properties in the London area since 1955. Approximately 50% of our portfolio is in residential rental properties. The remaining is in high-rise office buildings and warehousing. The warehousing consists of 34 multi-tenant buildings. The office portfolio consists of five office towers downtown. Our residential portfolio consists of 2,600 one-, two- and three-bedroom rental units in 22 locations in the northwest and north-central areas of the city, as well as downtown. Old Oak owns and operates all of the above with approximately 100 employees.
The residential units were constructed from 1955 to 1994. In 1994, we stopped residential construction, laid off all of our approximately 100 construction employees and have consequently sold 95% of our construction equipment, including overhead cranes, concrete batching equipment and excavating equipment.
I am the vice-president of development for Old Oak Properties. I began working full-time in 1976 in the development of commercial, residential and industrial properties. I was born and reside in London, and I am a major shareholder in Old Oak Properties Inc, which is a family business.
The market today in London is a free market. As mentioned earlier, we stopped building rental housing in 1994, after a period of 39 years of growth. Depending on the site, it takes an average of five years for us to prepare a piece of land for construction. In the late 1980s, we had intended on building a new 200-unit building in spring 1994 as part of our 10-year construction plan, but found that market forces proved that rental rates were too low to support new construction, even on land that we had owned for many years. Had we purchased the land recently, the option of developing the property could not have been considered. We were forced to lay off all construction employees and sell off all our equipment, as mentioned, because in our opinion a market change would take at least five years. The market had finally stopped us from constructing new residential units.
In existing occupied rental residential space, the competition was so intense that we were offering free rent, rent discounts, new carpets with choice of colour, new paint in all units and overall reduced rents. This condition still stands today.
The existing maximum rent system, which shows a variance of up to 20% over the market rent, gives us the window to possibly escalate our rents through leasehold improvements. We watch our competition carefully, provide a superior product with additional investment, and the tenant receives the benefit.
You'll notice a chart showing the municipal address of various locations and apartment units in London. You'll see the legal maximum rents and the market price. As you look at the chart, you'll notice the big spread between the legal maximum and the actual market price. There are several one-bedroom units in there. The higher-rental-rate units, for example, at 251 Platts Lane, unit number 220, with the legal maximum of $824, the actual market price is $729. I could give you a chart that goes over several pages that shows this condition. This is the condition that we have throughout the city.
I suggested earlier that London is a free market and I base that on the following facts.
Although vacancy rates are shown in about the 4.5% level by Canada Mortgage and Housing, the actuals in the industry on units constructed from 1970 to date are closer to 10% to 12%. It is a renter's market and rent control in its current form does not affect the majority of rentals in the London market.
Maximum rent is up to 20% or more above market rents. Net rents have been decreasing in London over the last 10 years since costs have been increasing.
Because of open competition, London's rental accommodation quality is good to excellent. London landlords have a good reputation and the renter receives the benefits.
Eliminating rent control will not affect the London market. Because of the current oversupply situation, nothing would happen for many years if we eliminated rent control today in the London market. We know that rental accommodations must have low rents because of the competition, and that will not justify investment in new residential accommodations in London for many years.
We are requesting that you do not change the existing legal maximum rent level to the proposed takeaway of legal maximum on first turnover. If we cannot see an opportunity to reach the current legal maximum rent on existing tenants, we and other landlords will seriously consider leaving the marketplace since there will be no incentive to invest.
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We are fortunate that our 2,600 units in 22 buildings can balance out any individual net cash flow losses at this time. What I mean by that is, from year to year, depending on the investment that we've put on the buildings, whether it's in roofing, windows or inside replacements, we are constantly juggling, because of the intense competition, the net losses from one building to the next. For those landlords who cannot, I can see them handing back their properties to lenders for mortgage value or less. Many honest, hardworking landlords could be wiped out and tenants would have deterioration of their buildings.
We need a reason to stay in the rental housing business. Our industry invests into the future. We will take a risk if we see an opportunity. Raw land can take up to 10 to 15 years of development time to bring it into the marketplace serviced. As I mentioned earlier, even serviced land, when we go through the process of negotiating with the municipality, when we go through the engineering that's required -- that can take up to five years. If we do not see a possibility of an opportunity, we will not provide rental housing.
How can our Ontario government set a policy to satisfy landlords and tenants? Of course, that's the million-dollar question. I understand that the majority of Ontario's rental accommodations are in the greater Toronto area. The political reality historically has been that the GTA solutions have been imposed on other Ontario markets, where the results are the reverse of the GTA. I have a recommendation or a suggestion: If our government can regionalize policies, it will have the flexibility to react to market changes in separate geographic areas.
We support the existing maximum rental policy. It gives us the hope that we may some day reach our legal maximum rent. We maintain our buildings beyond our competition and provide excellent management. If the vacancy rate reduces, we can plan on providing more new rental accommodation. If rent control is eliminated, it will not affect our rents because of competition.
I wish you the best in finding a solution that satisfies both the GTA and the other Ontario markets.
Mr Smith: Thank you very much, Mr Bierbaum, for your presentation. In your paper you describe the London market today as a free market. I want to get your opinion as to whether or not the move to a decontrolled system will have any negative impact on the rental market in this city, and in the area for that matter, given your statement that we're essentially in a free market situation now.
Mr Bierbaum: I mentioned earlier that in my opinion, if there was no rent control in the London market today, there would be no negative impact for tenants.
Mr Smith: One of the other issues we've heard in a number of cities is the disparity or discrepancy that exists between taxation levels on rental units versus single-family residences, for example. In some cases we've heard that the difference is as much as four and half times the taxation burden on rental accommodation. What is the situation in London with respect to that particular issue?
Mr Bierbaum: I can refer to one example. We have a 16-storey apartment building downtown that is registered as condominiums. We have developed it in such a way that we rent the units until such time as they're sold. When the condominiums are sold, the actual tax rates are about half those of the rental rates.
Mr Smith: Tenants, from what I've seen, are paying a higher share of municipal property taxes than are single-family dwellers or others. Would that be a fair conclusion as to your experience?
Mr Bierbaum: In our particular properties, yes.
Mr Smith: The recommendation you put forward about rent control policies on a regional basis: Do you have any concerns about what the impact of that might be in terms of outmigration of tenants to other communities and the capacity of those communities that might receive new tenants to capture them within their framework? Do you have any concerns about regionalized policies?
Mr Bierbaum: Again, the London situation is very unique. We're a satellite. Migration -- we're surrounded by an agricultural circle. In this particular area I can't see that being a problem.
Mr Curling: I wanted to say thank you for your honesty and forthrightness. You're one of the first developers who has come and said openly that the bogeyman is not really rent control. As you said, whether it's in or out, it wouldn't affect what's happening here right now. I tend to agree with you. As a matter of fact, I don't think rent control has anything to do with the fact that we're not building. It's because of affordability that people are not renting. Also, there's availability. As you said, there is a 4% vacancy rate in London, and in 1994 you said there were 1,134 people on the waiting list. It still doesn't address the affordability aspect of it.
Any suggestion of what the government could be doing in addressing those in need at that bottom end of the ladder? If you rent out those vacancies you have today, although you're giving all this free stuff, benefits, to tenants who can afford it, still there are people at the bottom end who couldn't pick up your wonderful apartments, and I'm sure you're on the verge of even losing some. Any suggestion of what the government could be doing in the affordability area?
Mr Bierbaum: We have a range of rental rates that start in the $400 range, up to product that is in approximately the $1,000 per month rental range. Those numbers include utilities, cable TV and, in some cases, underground parking.
I've received, to me, disturbing facts that in subsidized housing the actual subsidies are close to $400 or more and in addition to that there's another $400 in payments. My recommendation is that the private sector -- and obviously we in the private sector have samples of product available at $400 -- can provide that without subsidies.
Mr Marchese: Mr Bierbaum, do you think there are going to be any increases in rents as a result of decontrol?
Mr Bierbaum: As I mentioned earlier, in the London market, because we have an extreme oversupply, we have the cash reserves, we have the raw land that's available and serviced to build apartment buildings right now. In fact --
Mr Marchese: I was asking, once decontrol comes into effect, where landlords can charge whatever it is they think they can get on the unit, do you think increases will happen?
Mr Bierbaum: In London at this time, I could not afford to build another apartment building and I can't afford to increase my rents.
Mr Marchese: So tenants here have nothing to worry about.
Mr Bierbaum: No. There is an oversupply in London. There's incredible competition. We couldn't do that.
Mr Marchese: In terms of decontrol and rents generally, we heard earlier from somebody who said they have not given a rent increase in their buildings for quite some time, two, three, maybe four years. Is that your experience?
Mr Bierbaum: That's true. We have buildings where we have reduced the rents as they come up.
Mr Marchese: So rent control is not a problem.
Mr Bierbaum: No.
Mr Marchese: If rent control is not a problem, why do you want to get rid of it?
Mr Bierbaum: Perhaps I didn't expand on that in my presentation. I fully support the existing rent control system, which has a legal maximum. That maximum is up to 20% over the current market rents. I support that 100%. What I do not support is the recommendation that if a unit became vacant, that unit would no longer be registered at the previous level, but the new registration would be 20% lower.
Mr Marchese: I wasn't asking that. I was asking --
The Chair: Thank you, Mr Marchese, and thank you, Mr Bierbaum. We do appreciate your coming forward this evening and giving us your input.
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BILL ARMSTRONG
The Chair: Our next presenter is Bill Armstrong. Good evening, sir. Welcome to our committee.
Mr Bill Armstrong: First of all, thank you for having me here. My name is Bill Armstrong. I am a paralegal. I have been a paralegal since 1985, representing tenants, mainly, in front of the rent control system. For the last couple of years I've represented both landlords and tenants in front of the rent control system and the courts. Over the years, I or members of my agency have been in front of -- I think this is our third set of committee hearings on rent controls or rent review or whatever you want to call it.
I think I have a bit of experience with rent controls. I've handled literally thousands of cases here in London in front of the different tribunals, both single claims for illegal rents and also a large number of claims to do with large increases of 20% to 30%, which came under not the rent control legislation but its predecessor.
My main comments after reading over your document are that, first of all, I think eliminating rent controls for older buildings would be a mistake. I think this would cause unnecessary hardship for tenants in that the affordable market would quickly disappear. Based on my years of experience in the area of rent controls, I believe you would see over a period of a year or two the older units' rents rising between $50 and $100 per unit per month.
One thing I would support is certainly a consideration of eliminating rent controls, but only on new buildings. This would achieve what I believe the government is trying to achieve by stimulating new growth in new rental units.
Some other observations I had in reading over your material: eliminating the rent registry. I think the rent registry is necessary if you're going to have rent controls; obviously, with no rent controls, no need for a rent registry. But my position is that rent control should stay, at least on buildings that exist now. I just don't understand how you can justify that that's going to stimulate new growth. It's just not going to happen.
Another area is the increased fines. Fines, I believe, are $20,000, $25,000, and you want to raise them to $50,000. Whatever the new amount might be, the fact is that during my years of experience I've never once seen a fine levied. I've seen the most horrendous cases brought before rent control and not once did I ever see a fine levied. I can't speak to what's gone on during, let's say, the last year with the new government and how the rent control system is today. It's the same legislation but a new government. Maybe they've tightened up on people who are abusing the system. But I have to say, under the previous two governments, there was a lack of activity in enforcement as far as illegal rents were concerned. If rent controls are going to stay, there's no point in increasing fines if you're not going to fine anyone.
Those are the main areas I'm prepared to speak to now. I'm happy to entertain questions.
The Chair: Beginning with the Liberals, we've got about five minutes per caucus.
Mr Curling: You've given us a good opportunity. Most people leave us a minute or so in which to ask questions.
There are certain things the government has put in place now that are poised to eliminate rent control. That's what they intend to do; that's the effect of this discussion paper. The concern I have is not so much for those who can afford access to rental accommodation, and "afford" means that the income they have does not allow them access to decent, safe accommodation.
What suggestion would you give the government to help people have access to affordable accommodation? In London, although there is 4% vacancy, I'm sure that what is available and affordable for those people is much less. About 1,100 people now seek accommodation and I'm sure a high percentage of those can't afford even $400 or $500 for a one-bedroom or two-bedroom unit. What suggestion would you give to the government?
Mr Armstrong: I guess the most important thing is preserving the affordable housing stock, and traditionally, affordable housing stock has been the older units in older buildings. By lifting rent controls, the rents will increase. Even with a 4% vacancy rate, which is a figure that's been mentioned, I believe those are probably what we would consider middle or high-end units, not low-end units. I think the issue is basically preserving the stock, and by eliminating rent controls, that stock of affordable units will quickly disappear.
Mr Curling: As to the public housing that the government owns, although no mention of it was made in New Directions, the minister from time to time has mentioned selling off those units. Do you feel that is another blow for the affordable stock we have?
Mr Armstrong: I realize the new government's taken a different direction in co-op housing. Personally, I think that was a mistake. I think that was an area that should have been pursued. It brought new units on line, new affordable units. There was a market for those units. To eliminate those units from being available left people in lower incomes looking only at the older buildings and older units, and in many cases not units that younger families might be interested in: town houses, that sort of thing.
Mr Curling: You said they could take rent control off new buildings. Presently and in the past, buildings that are new are not covered under rent control for five years. You're saying that any new buildings now should not have rent control in perpetuity?
Mr Armstrong: That's an interesting point. There was a time when new buildings, built roughly between 1975 and 1985, weren't under rent controls. I very clearly remember many of the different groups, which I know are or were here today, using that as a reason why there weren't any new buildings being built. But the fact is that when rent controls weren't on new buildings there weren't any buildings being built then either. So to suggest today that lifting rent controls is going to create a new boom in housing -- I really seriously doubt that. There's a history here. We've been through this before, and I just don't see that as being something that's going to happen.
Mr Curling: So you wouldn't be in agreement with taking rent control off new buildings then? You'd keep the same five years that is given right now?
Mr Armstrong: I would suggest that that policy should continue, yes. On new buildings, no rent controls.
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Mr Marchese: Mr Armstrong, I'm not sure how long you were here for these deputations but you may have heard a number of landlords saying that decontrolling the system will not affect the market too much because, they argue, as Mr Hardeman often reminds us, the landlords are not charging to the legal maximum rent at the moment. So because we have a system that basically is working at the moment as it is, they really can't afford to increase rents because people can't afford it. So then, I asked him, if that's the case, why do we need to eliminate rent control and I didn't get a good answer from the person before. I don't think I got an answer.
Are you worried about that? They say: "Don't worry, we're not charging up to the maximum rents right now. We can't really afford to do any increases and, by the way, with decontrol, we're not likely to increase the rents because of those factors." Shouldn't that relieve you of any concerns you might have?
Mr Armstrong: I think that not charging the maximum rent may be true on some units. On other units they may be charging the maximum rent, so I guess someone could sit here and say: "Yes, we aren't charging the maximum rents. If rent controls came off on this building tomorrow, we wouldn't raise the rents to the maximum." That's simply because, obviously, they couldn't rent it for the maximum.
We have to remember we went through a period of time not too long ago when some landlords were in front of rent controls year after year receiving 10% and 20% increases because these were buildings that were just losing a lot of money and on the books they could justify these increases, though they could never rent these units for these rents. I think in a lot of these buildings, the high rent that was established and set a while ago has carried through and that's why they can't go to their maximum rent today. But again, by lifting rent controls, you've got these older units, because the rents are controlled, the rents are low, people stay there a long time, this may in fact keep the market, even on the more expensive units, down a bit.
Mr Marchese: I should say, Mr Armstrong, for your benefit, because it supports much of what you've been saying, people are very worried, and I can't see that tenants could be so dead wrong about their experiences as tenants over the last 20 years. They must know something that I don't know, that they don't know if they're not landlords, and so we've got to take guidance from people who have to suffer through the tenant-landlord relationship. So they say, "If you decontrol, we're very worried and we're likely to experience increases." I believe that to be the case, although the landlords are trying to tell me, "Don't worry, we're not going to get any."
Mr Armstrong: I don't know much about the Toronto market, I've never been involved with it, but speaking for the London market, and I think I know the London market fairly well, there's no doubt in my mind, if you take off rent controls, first of all, we have probably a very large portion of the apartment buildings here in London controlled by perhaps a dozen major developers. They have an association. I would never suggest that there would be price fixing, but certainly that lends itself to higher rents, in my mind. I know that many of these developers in the past consistently, whenever given an opportunity, didn't follow the rent control legislation, constantly raised their rents as much as the market would bear. Again, I think they would take advantage of the lifting of rent controls.
My other concern is of course there are the unscrupulous individuals who would seize any opportunity to encourage a tenant to move from a building, knowing that in due course they would be able to get substantially more for that unit. It's just too great a temptation for a few.
Mr Marchese: You've read the proposal, have you not?
Mr Armstrong: I must admit, I can't say I've --
Mr Marchese: More or less.
Mr Armstrong: I've glanced over it, yes.
Mr Marchese: Is there anything in this tenant protection package that you see supports tenants?
Mr Armstrong: The one area that I notice, where you want to eliminate the court and make it one tribunal, rather than the courts, to deal with landlord and tenant, and another whatever you want to call it to deal with rent controls or rent review issues, is to streamline that into one area. Especially if you could make it user-friendly, non-adversarial, I think that would be a good idea.
Mr Marchese: Do you have any concerns about how that tribunal might be appointed?
The Chair: Mr Hardeman, followed by Mr Spina.
Mr Hardeman: Thank you very much, Mr Armstrong. I just wanted to clear up the answer to Mr Marchese. Did you say you hadn't read the document thoroughly?
Mr Armstrong: No, I didn't say I hadn't read it. I can't say I'm an expert on it. If you're asking me what's on page 3 on the third line, I don't know.
Mr Hardeman: I wanted to deal with the issue of the maximum rents, and recognizing that the maximum rents are based on what the rent was when the program started and allowing the government increases that were allowed each year, that's where the maximum rent is today.
Mr Armstrong: That's my understanding, yes.
Mr Hardeman: So it was a market rent based on allowable increases, but the market could not stand that amount of increase.
Mr Armstrong: My understanding is that, yes, in many cases landlords couldn't rent the units for the maximum allowable amount. That's correct.
Mr Hardeman: So we can assume in the London market that in fact they are now getting what the market will bear.
Mr Armstrong: That would be hard to say. It depends on the building. Obviously, I would say most units that are charging the -- that would be hard to say. I couldn't really say whether they would or they wouldn't. Some would, some wouldn't. It depends on the building.
Mr Hardeman: I guess my concern is that if it is what the market will bear, I find it hard to understand why, with the decontrol, we would expect the rents to increase.
Mr Armstrong: I think you're going to have a different market. Again, some units are under rent controls. The maximum amount is a low amount, an affordable amount. Obviously, if rent controls come off, those amounts quite possibly might increase. Obviously, landlords are going to take that opportunity to experiment and see what is the maximum -- not legal maximum but the maximum -- rent they can get for their units. Obviously, you're going to see people experimenting and that's going to start to push the rents up.
Mr Hardeman: The other thing you mentioned in answer to Mr Marchese's question, about your concern that the market would be controlled by too few people, are you suggesting that through this process it's going to be more attractive for large investors to invest in the rental market?
Mr Armstrong: I'm suggesting that if rent controls are not on new buildings, that might attract new investors. I'm suggesting that on older buildings, to maintain rent controls would be the right thing to do.
Mr Joseph Spina (Brampton North): Mr Armstrong, thank you for your presentation. I just wanted to focus on the particular point that sort of tailed off with Mr Hardeman, and that is the rent controls not being applied to new buildings. You feel this might broaden the market -- did I understand that correctly? -- to other investors, to perhaps expand the --
Mr Armstrong: It gives them an opportunity, yes. Again, it's exactly where I think the government's headed. If there's going to be stimulation in the market, not having rent controls on new buildings will obviously -- either people will feel it's an attractive proposition or it's not. By taking them off the older units, I just don't see how that's going to affect that scenario.
Mr Spina: Help me bridge this one now, and this is sort of the other side of the coin, I guess. Do you feel that if this was one of the approaches taken, would it help to address the problems that were represented by many of the people representing lower-income groups? Would it help to alleviate the situation with respect to affordable housing?
Mr Armstrong: I think, again, keeping rent controls on older buildings will maintain the affordable stock. To introduce new buildings at market value, whatever that market may be, I don't think will have a major impact on the affordable units and the availability of affordable units.
Mr Spina: Am I given to understand, then, that there would be sufficient affordable units at this point? I thought that's what you said.
Mr Armstrong: I wouldn't say there are sufficient affordable units, because obviously there are a large number of people who would like to get into co-op housing, these sorts of housing units, and there aren't enough to go around. The government's already taken its action in its direction to do with co-op housing. So again, I don't think there's sufficient housing in certain areas.
The Chair: Thank you, Mr Armstrong. We appreciate your input here this evening.
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LIFE*SPIN
The Chair: Our next presenter, representing LIFE*SPIN, is Andrew Bolter. Good evening, sir.
Mr Andrew Bolter: I'm director of community development programs at LIFE*SPIN. By way of background, LIFE*SPIN stands for Low-Income Family Empowerment*Sole-support Parents Information Network. It's a community-based non-profit organization which provides information about access to services and meaningful employment for low-income people. We often assist our clients in their dealings with the government's social service agencies. We aim to gain access to and share and promote the exchange of knowledge of social and community services that are available for individuals and families. We are committed to creating an environment of trust, respect and self-empowerment within ourselves and our community, and we treat all our clients with respect and dignity and appropriate concern.
LIFE*SPIN is a front-line organization dealing directly with people who are poor, both the working poor, whose numbers are increasing, and those who find themselves on social assistance. We deal daily with fellow Londoners who are finding it impossible to find appropriate shelter, food, clothing, work, and cannot pay their hydro, gas or, if they have a phone, their phone bills. Our clients are people who are in constant struggle to maintain the basic fundamental necessities of life for themselves, or themselves and their families, and shelter, food and clothing.
We're also actively engaged in supporting and assisting community development projects which will tap into the resources and talents of those in the low-income community who cannot utilize their talents, skills and energy because of a lack of opportunity and access to capital to start community-based businesses. We believe that healthy communities need a truly local economy so that everyone in the community benefits. We believe that the fundamental economic problem with our society is the problem of the concentration of wealth and the siphoning of wealth out of our communities. It's unbelievable to us that this government has portrayed our economic woes as being caused by the poor, who seem to have become the scapegoats in this government's agenda.
I would like to note that many of LIFE*SPIN's clients are referred directly to us from the constituency offices of our local MPPs -- Dianne Cunningham, Mr Wood, who's here today, Bruce Smith, Marion Boyd, who's also here. The LIFE*SPIN phone number is also provided by the city of London to general welfare applicants during the application process in case they need our help. We see these as an endorsement of our organization by the province and the city of London as regards our credibility, our contribution to our community and the valuable service we provide, which will continue with their support.
From our front-line perspective in London, we see that things are getting worse for the poor in this province. There are now more food banks than McDonald's restaurants; there are more children living in shelters in Toronto than single males. Our phones are ringing off the hook, and people can't afford to pay their rent, their hydro or buy food. Londoners are hurting as a direct result of the deliberate policies, choices and actions of the Ontario government, not only through cuts to welfare, but also other changes that have a huge and disproportionate impact on the poor and the most disadvantaged.
We're seeing changes to workers' compensation, legal aid, health and safety, employment standards, removal of subsidies for public transit, deregulation of environmental standards, the family benefits definition of "disabled" is being rewritten and today we're here dealing with an attempt by a government to take away the rights of tenants with its ludicrously titled tenant protection legislation, which would appear to have been written by and for the landlords of this province.
The proposed changes to the Landlord and Tenant Act and rent review and the Rental Housing Protection Act, along with other changes to programs and government services, are going to compound the detrimental impact of recent government actions on the poor. After reviewing the proposed changes to the landlord-tenant legislation, we are at a loss to understand how anyone could imagine that anyone other than the landlord and large property management companies is going to benefit from them.
I'd like to critique some aspects of the proposed legislation; first of all, the availability of housing for low-income families. We have to distinguish, I think, between what I would call mainstream apartments or rental units and affordable rental units for those who are in the low-income bracket.
The present rent control legislation exempts new rental housing from rent control legislation for five years, yet there has been no evidence that this has provided developers with an incentive to build rental housing, especially low-income housing. The government's own statistics support this. If the private sector is not going to provide low-income housing, who is? The government has already decided to abandon its responsibility to provide affordable public housing. There seems to be a doctrinaire and naïve belief that somehow the free market will provide the most efficient and so the best solution.
The plan to scrap the Rental Housing Protection Act will further erode the availability of affordable rental stock. A recent report to the community service committee of London city council, prepared by Jennifer Kirkham of the department of community services, finds that 25,000 of the 138,000 households in London were below the poverty line; 7,890 or 31% of one-tenant families in London pay gross rent equal to or greater than 30% of income, which is the accepted upper limit of affordability. Evictions rose from 578 in 1994 to 708 in 1995, a 22% increase, and we believe this number is going to drastically increase as the cuts to social assistance bite this winter.
London and Middlesex Housing Authority had a waiting list in 1994 of 1,134. Community Homes, which is a housing co-op agency, had a waiting list of 1,300 in 1994. We have six emergency shelters in London, and there's been an increase of 31% in the average use per month. So people are obviously looking for affordable housing.
We believe the need for low-income housing will increase as the present economic policies create more and more unemployment and underemployment. Most new jobs are low-paying, casual and contract jobs. What is the true cost of a homeless human being freezing in the street? There were three such cases in Toronto last winter, and given the increasing inability by the poor to pay their hydro service and the resulting hydro cutoffs, we are likely to see people freezing in their homes. The changes proposed today will only serve to ensure that such deaths occur in the streets. People going hungry and without shelter and dying in the streets are not signs of a progressive or caring society.
This government is abandoning rent control just as it has abandoned public housing. Why? Surely any government has the responsibility to make sure that everyone in its jurisdiction has adequate shelter. I remind the committee that the right to shelter is a fundamental human right. The reason we need rent controls and social housing is that the market does not, cannot and will not serve the needs of the poor who face systemic discrimination. Adequate housing is not optional. We all need it. It is fundamental to individuals' health, psychological and otherwise. Our society believes in controlling the cost of many commodities that are not necessities -- cable TV, telephone rates etc. Why not housing, which is a necessity?
I quote Andrea Horwath's recent article in the Hamilton Spectator, which I think everyone should read, because it goes to the heart of the matter. She writes: "Many studies of health and wellbeing indicate clearly that a decent home is one of the most fundamental building blocks on which we construct the other complex parts of our lives. Its quality and stability are determinants of physical, emotional and mental health and these are the key to the healthy development of our children."
I ask the government committee members to show us their evidence and explain exactly how this new legislation is going to result in adequate housing for the poor. Could you explain to me and to us where the working poor, seniors on fixed incomes and those on social assistance are going to live? What percentage of their incomes are you expecting them to spend on rent? Where are the studies that any responsible government would obtain before embarking on such a radical path of social experimentation which threatens such a fundamental right?
This government should guarantee that the shelter portion of social assistance will be deemed to be the average cost of rental accommodation for the recipient in their geographic location, depending on their and their dependants' reasonable accommodation needs. For instance, a one-bedroom apartment would be reasonable for a single person or a couple, a two-bedroom apartment for a single mother or a couple with a child. This would be much like linking support payment increases in child support matters to the consumer price index and would protect the poor in this province. This seems to us to be common sense. If you believe in the efficiency of markets, then this will be the most cost-effective and humane way of ensuring that the poor are housed.
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I'd like to speak briefly about the harassment issue. You propose to set up a harassment unit. Traditionally, the poor have been ghettoized and bad landlords have harassed and victimized their low-income tenants because there is nowhere else for them to go. The expense of moving is a disincentive for the poor to move. The poor are made up of the most vulnerable members of our community. The proposed legislation will encourage some landlords to harass tenants into moving out so that they can jack up the rent on the unit. We know that despite assurances of a mechanism to deal with harassment by landlords, harassment will take place and people will be forced to leave their units.
Proposed harassment units would have to exist in every community and be prepared to investigate every case of harassment promptly and have the power and the mechanism to obtain restraining orders against landlords. We do not believe this government is prepared to provide the necessary resources for an effective anti-harassment unit to be set up. We must remember that many people who are disfranchised and marginalized by poverty simply do not complain and are easily victimized.
Anyway, harassment is not often as overt as the cute little example provided on page 7 of the New Directions document. In that example, the landlord turns the heat down and makes a big noise. It's much more likely that Janet, the character in the example, will be harassed in more subtle and insidious ways. There could be verbal harassment of herself and her children. The landlord could make unwanted sexual overtures to her. Her family could be threatened. Her car, if she could afford one, could be damaged. He could make malicious and unfounded reports on the 1-800 snitch line to the welfare department so that she is repeatedly investigated by welfare. He could make similar reports to children's aid about her children. He could induce other tenants to make life miserable for her. This is more typical of the type of harassment that can be expected and that we see from landlords.
How could Janet ever prove this was taking place? It would simply be her word against the landlord's. As a lawyer, I know that there are huge evidentiary problems in such cases.
Now the issue of subletting. The discussion document proposes to take away the right of a tenant to sublet or assign their lease. Subletting should continue to be a right where a tenant needs to leave prior to the end of the lease agreement. If this is not the case, then a tenant is simply trapped for economic reasons to the full term of the lease. If you cannot sublet or assign your lease, then how can a tenant ever get out of a lease? The present law states that you can assign your lease or sublet your unit with permission of the landlord, and that permission cannot be unreasonably denied or withheld. This right must continue. In October 1996, following the drastic cuts to shelter allowances, social assistance recipients were instructed by this government to find alternative living arrangements that they could afford on their reduced budgets. This proposed legislation entraps them into breaking new laws in order to survive if they cannot afford their rents.
We would also like to point out that this proposed change is just plain stupid in terms of our local economy, which our local MPP should have pointed out to you. Our local economy is based largely on post-secondary education and research. This means a large student population resides here for eight months of the year and then leaves to return to find temporary employment in order to fund their continued education. The proposed legislation places a ridiculous and undue burden on students already struggling with the cutbacks to education. It places an undue burden on our local economy, which further reduces local employment opportunities.
It's time that this government considers the interconnections between various legislative changes it is making and time it considers the effects such changes have on everyone in our communities.
Now the right to withhold rent. The right of a tenant to withhold rent in a dispute with a landlord, as is the case with the current law of this province, must be maintained. The present law requires that the rent be paid into court pending the final decision. This right to withhold rent is often the only bargaining chip a tenant has. This right has been exercised in London in cases where there are substantial risks for the families residing in substandard conditions. Should a single child in our community die because of such things as electrocution from exposure to bare wires, we will hold the province responsible. To remove the only legal recourse a tenant has to ensure the safety of their family is not only irresponsible, it's deplorable.
To conclude, we found that the government discussion document is so vague that it's not really easy to respond in detail. But we have learned that this government tends to act before it thinks about the consequences, especially when it comes to hurting those who are struggling to survive in our society. I hope that you start to think about the consequences of what you are doing. I can tell you that you are doing great damage to the fabric of our society and our community. Please start to think.
Instead of gutting the Landlord and Tenant Act, rent review legislation, and scrapping the Rental Housing Protection Act, this government should be actively engaged in social policy and planning around making sure that all Ontarians have adequate and decent and affordable places to call home.
The Chair: Thank you, Mr Bolter. We have one minute per caucus for questions, beginning with Mrs Boyd.
Mrs Boyd: Thank you very much for your presentation. It was very helpful to have a sense of what it's like to work in an agency and really be working with the people. I think we're very struck by the fact that that's what seems to be happening here. Those who have contact with real people who require affordable housing take a very different position than those who make their living out of charging rents to those same people. We're seeing that split and it's growing as more and more people come and speak to this committee, and it's what's been happening with many of the changes this government is having because it really is widening that gap.
I think you were here for a previous presentation where we were hearing how marvellous it is in London that our market rents are so much lower than the maximum rents, but how maximum rents should be kept. And the government keeps making the point, why do we need rent control if market rents are so much below the maximum rents? And there was a hint in there, wasn't there, that when things get better, the landlords are hoping, first of all, to go to the maximum rent and then just keep on raising those rents?
The Chair: Thank you, Mrs Boyd.
Mr Hardeman: Thank you very much for your presentation. I just wanted to quickly go to the issue of non-profit housing and how it relates to affordable housing. In your opinion, is there any reason that makes the government-sponsored housing actually cheaper accommodations? Is it better run? Is it cheaper built? What's unique about that that makes it more affordable than the house in the private market?
Mr Bolter: I just think it's a question of availability. I think the obligation of the government to provide shelter outweighs issues of market and whether it's cheaper or not. I think from our perspective there just is not the available accommodation to house the least advantaged in society. Therefore, from our perspective the government is under a duty to provide public housing because there's no other availability.
Mr Hardeman: Spending the same amount of government money, could it not be spent and provide more housing for more people through the private sector? The landlords have been telling us on a regular basis that in fact they build and operate the unit for less money.
The Chair: Thank you, Mr Hardeman. Mr Sergio.
Mr Sergio: One minute is not very much even for a short question. We have heard this morning that London enjoys a free market today; rent control is not doing anything. From your presentation I see that London has some 25,000 people living below the poverty line, yet London has a 4% vacancy rate. Does it mean then that 25,000 people or so can't afford the units that are within the 4% vacancy rate?
Mr Bolter: That would be my interpretation of those numbers. If they could afford them, I suspect they would be taking those units.
Mr Sergio: Which means there are no affordable units for 25,000 families or people within the London area?
Mr Bolter: Exactly.
The Chair: Thank you, Mr Bolter. We do appreciate your input this evening.
1800
IRENE MATHYSSEN ALEX MITCHELL
The Chair: Our next presenters are Irene Mathyssen and Alex Mitchell. Good evening. Welcome to our committee. The floor is yours.
Mrs Irene Mathyssen: On behalf of Mr Mitchell and myself, I would like to thank the committee for the time that has been set aside for our presentation. It's essential that this committee hear from members of our communities and understand thoroughly the impact of some of the proposals for change to rent control put forward by the discussion paper before any such changes occur.
The fundamental right to safe, affordable housing is not a luxury in any society, be it affluent like Ontario's or economically disadvantaged. The security of a proper home enhances the quality of all our lives because it ensures the wellbeing of the elderly, low-income families, single-parent families, the mentally and physically handicapped and, perhaps more significantly, the children who will determine the social and economic future of our province. A safe and secure home reduces family stress, promotes good mental and physical health and enhances our communities. The assurance of a safe, secure home is essential if we are to have the kinds of neighbourhoods that permit a positive quality of life for all the members of the community.
Since our time is limited, I can only outline some of my concerns regarding New Directions for Discussion. I'm sure that this committee has already heard at length from others who deal directly with a wide range of landlord-tenant problems. I've worked in the London-Middlesex community over the last few years and I'm familiar with some of those issues faced by landlords and tenants. I'd like to relate those real situations to the discussion paper.
I'll begin by saying very directly that while there is always room for improvements to any existing statute, many of the proposals in the current government discussion paper are not going to benefit the people of this province who are looking for safe, affordable housing for themselves and their families.
My concerns with the government document begin with page 1. The stated purpose of the proposed changes are to "protect tenants from unfair or double-digit rent increases, evictions and harassment and to provide security of tenure."
The existing rent control legislation allows rent increases of 2.8% plus a possible additional 3% above the guideline for capital expenditures and extraordinary operating costs. This total of 5.8% is certainly not double-digit and it's less than the 6.8% proposed in the discussion paper.
This first stated objective is misleading and inaccurate. There seems to be some confusion on the part of the minister with the contents of the 1992 Rent Control Act and the Liberals' Residential Rent Regulation Act of 1986. On page 2 of the discussion paper it states, "Capital expenditures need to be capped to avoid the problem of the 1986-1990 system, when tenants experienced rent increases of 30%, 40%, or even 50%."
I agree absolutely. Some of the most serious issues for tenants have been landlord applications for rent increases that in no way enhanced anything except the landlord's personal profits.
A case in point is a small community in rural Middlesex comprised essentially of seniors on fixed incomes. These seniors were informed in 1987 that there would be a substantial increase of 12.32% in rents for 1987-88. Again, in 1988-89, the landlord was awarded 14.9%. The tenants appealed this increase, but despite their appeal an increase of 13.9% was awarded to this landlord. The landlord then appealed the 1% reduction and asked for an additional 13% for 1988-89. Tenants were very concerned because this meant they would be compelled to abandon their homes due to this exorbitant increase in rent. The landlord applied for further increases in 1990-91, and the basis for all of the landlord's requested increases was capital expenditures. Interestingly enough, the capital expenditures had more to do with expensive and nifty toys for the landlord than maintenance or upgrades to the facilities. The last application for a substantive increase in rents in 1990-91 was based on costs associated with recreational facilities that the landlord had terminated in 1990, and the repair and relocation of tennis courts and shuffleboard courts that did not and do not exist.
Tenants do indeed need protection from this kind of landlord and the double-digit increases of the late 1980s, and that's precisely what Bill 4, the Residential Rent Regulation Amendment Act, did and the 1992 Rent Control Act continues to do. These tenants are protected by the 5.8% cap and that protection must be maintained.
For the sake of time, I'm going to move to the top of page 3.
The last point on page 2 of the discussion paper is also problematic. The closure of rent registries will make it impossible for tenants to determine the fair rent for a unit. New tenants moving into rental accommodation are not protected from excessive rent increases. They will be obliged to "negotiate" their rent without the benefit of any regulatory restrictions. Some 31% of Ontario's tenants already pay more than 30% of their income in rent. Add to this the impact of social assistance cuts to the poorest Ontarians and the cancellation of more than 380 co-op and non-profit housing projects for low-income families, seniors and the mentally and physically challenged in July 1995, and it's clear that renters in this province are faced with one obstacle after another when looking for a secure and affordable home.
I would like to tell the members of the committee how some low-income tenants in the city of London manage. At the beginning of my presentation I indicated the importance of safe, affordable housing. Its importance cannot be stated too strongly. Every effort must be made to increase the supply of safe, affordable accommodation.
A four-building community of three-storey walkups built in the early 1960s was purchased some years later as an investment by a landlord who seemed intent on maximizing the income from these properties. In order to do this, he stopped all maintenance. Over a period of time the apartments began to deteriorate to the point where windows and ceilings leaked, there were constant mould and mildew problems, painting was pointless, there were continual sewage outbreaks in the basement due to the lack of primary maintenance, burned-out hall safety lamps were never replaced, and garbage chutes were abandoned and left as a safety hazard for young children. The landlord would barge into an apartment whenever he wished, creating a very uncomfortable environment for his tenants, and particularly the tenants who were single mothers.
Objections to these circumstances were passed off by the landlord as the fault of the tenants. He blamed them for the condition of the buildings. Many of these tenants felt trapped because they could not afford to move. They finally and successfully banded together as a committee to create their own co-op housing. I was present at the opening of that co-op in 1991. This community of people had created a healthy, positive and safe environment for their families. One tenant at the opening ceremony told those gathered how proud she was to be able to provide a proper home for her 8-year-old son. He in turn explained that he was no longer ashamed to bring friends home to his house and how good that made him feel about himself and his family. Five years later, this co-op is an attractive and thriving part of the neighbourhood.
Predatory landlords are easily able to intimidate tenants when there is a shortage of affordable housing, and there is such a shortage. The actions of the provincial government, and many of the proposals in this discussion paper, have recreated the tenant trap. The Ministry of Housing's own study, the Lampert report, has concluded that the proposed changes to rent control will not increase the supply of affordable housing.
I would like to draw the attention of the committee members to an article attached to this brief from the London Free Press of August 17, 1996. It's entitled "Social Assistance Cutbacks Make Housing Search Tough." This article explains the work of the London Housing Registry and makes the point that London, unlike the tight markets of Toronto, Hamilton or Windsor, has a good supply of rental units. You've heard that today. Unfortunately, these units tend to be in the upper price range and are therefore inaccessible to low-income families and individuals with only one income.
The article goes on to point out that the registry expects to see "a steady increase in clients who are looking for housing. From September 1995 to this month," August 1996, "there were 6,000 calls to the registry, up significantly from other years." In addition, "Louise Stevens, general manager of the London and Middlesex Housing Authority, says affordability is the main reason tenants are applying to the authority for rent-geared-to-income units."
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The groups not mentioned in the article are seniors and the mentally and physically challenged. I'm sure you've already heard from representatives of those groups in regard to the difficulties in finding accommodation. The proposed changes to the Ontario statutes related to tenants and rent control will further exacerbate this situation because rents will be allowed to rise while new affordable units will not be added to the housing supply. Does anyone imagine that landlords will be negotiating lower rents with tenants moving into vacated units?
There are of course resources for tenants like the London Housing Registry. Unfortunately, the registry lost all provincial funding last month. Four of its five staff members have lost their jobs and the agency is hoping to survive with one staff person and some support from the city of London. It's unclear how the needs of thousands of applicants will be met. I would like to ask this government how it proposes to meet the needs of those people.
One final area that requires your attention relates to leased-lot communities. I'd like to turn the floor over to Mr Mitchell. He's got extensive experience in that regard.
Mr Alex Mitchell: Good evening, ladies and gentlemen. My name is Alex Mitchell and I'm a past president of a tenants' association in a mobile home park, an owned-home, leased-lot community.
I am very concerned when I hear the government is considering repealing the Rental Housing Protection Act. If this were to happen, there would be virtually no protection for the tenants of owned-home, leased-lot communities. These tenants, mainly senior citizens, have purchased their homes in good faith from the landlord, who is the land owner. They run the risk of being turfed out on to the street and losing the equity they have in their homes if a landlord decides to put to the land on which the home is situated to another use. Consider the difficulty and the horrific expense of moving one of these modular homes. The term "mobile" is not accurate. Many of these homes are not mobile at all.
The RHPA should not be repealed. Careful consideration must be given to the consequences of doing so.
Page 13 of the discussion paper outlines the responsibilities of the tenants and the landlords in mobile home parks and leased-lot communities. Bill 21, the Land Lease Statute Law Amendment Act, 1994, adequately covers the responsibilities outlined on page 13. What is lacking is enforcement.
In one park with which I am familiar, the tenants maintain their leased lots as well as some part of the landlord's property. The tenants maintained and upgraded their units, thereby living up to their responsibilities. At times the landlord did not. He unfairly withheld permission for a building permit if one was required for a unit upgrade, and when permission for upgrade was given, the landlord charged $70 to tenants for a permit for which the municipality charged $35. And despite these disincentives, the tenants continue to live up to their responsibilities as tenants.
Further, the discussion paper indicates that tenants will have the right to display For Sale signs on their homes. The tenants already have the right to sell or lease their homes under Bill 21. Unfortunately, in some leased-lot communities, the landlord places unreasonable requirements on tenants who sell privately or through a real estate agent before he will give consent for the sale or lease of a property. He has, for example, insisted the tenant sign a tree agreement for the removal of trees from the lot, or asked for legal fees well in excess of the nominal administrative fee set out in Bill 21. The question regarding how a landlord can incur legal fees for the sale of a mobile home that the tenant is selling has yet to be answered by this landlord.
Should the tenant sign an agreement with the landlord to sell the mobile home, the landlord charges $60 for a PPSA search if the home is registered in one name and $120 if it is registered in two names. This search is pointless since it is the buyer who needs to establish that there are no debts against the unit. These charges by the landlord are highly questionable, particularly when one considers that the cost of such a search is $7 at the London courthouse.
The same landlord has also insisted that an inspection of sewage connections and water supply be carried out by a plumber named by the landlord before the landlord will provide consent for the sale or lease to proceed. The tenant is then charged $110, payable to the landlord, for the cleanout of the septic tank. The company that does these cleanouts charges $80 for this service.
Recently a tenant found that a sewage connection plate was galvanized downpipe. She contacted the conservation authority which referred her to the municipal building inspector. This tenant was told that she must obtain a permit through the landlord and pay a $30 fee before the building inspector could look at the pipe. The tenant knew she would not be able to get the cooperation of the landlord and simply replaced the pipe with the proper pipe as required by the building regulations. This is not the first time that tenants have found an improper sewage pipe that had to be replaced at the expense of the tenants. Landlords must indeed take responsibility for the maintenance of the infrastructure.
As I have previously indicated, existing law, including Bill 21, already sets out landlord and tenant responsibilities. There simply needs to be better enforcement and a quicker response by the Ministry of Housing to tenant complaints.
I have some concerns with regard to the suggestion that the landlord maintain a publicly accessible bulletin board for tenants selling their property. I am concerned about the location of these boards and who controls them. As I've already demonstrated in my presentation, not all landlords act in good faith when it comes to the sale of a home.
In regard to the tenants' right to sublet, it is not possible under the terms of the lease currently used in some parks. These leases normally expire within one or two months from the date of the lease and the tenant then becomes a statutory tenant. Landlords should not be permitted to issue a lease of a very few months to someone who has just purchased a modular home at a cost well in excess of $50,000. Leases must have a longer term, with more protection for the tenant.
I would also like to draw your attention to the issue of property taxes. In a situation with which I am very familiar, the municipality bills the landlord, who in turn collects taxes from the tenants for the lot and the housing unit. The landlord is able to hold this money and collect interest on this money until he remits the taxes to the municipality. Land taxes are supposed to be included in the rent. In this case they are not. This is a bad situation which is highly suspect.
Recently a 91-year-old widow signed an agreement for the sale of her mobile home with the landlord. The terms of the sale are attached to this brief. Some of these terms are as follows: a commission of 8%, plus GST, of the sale price; plus 2% plus GST on the sale price for the advertising and paperwork preparation. In addition, the vendor agrees to have the maple and evergreen trees and stumps removed at her own expense before closing. This lady has lived on the same site since 1976.
Finally, I'd like to discuss problems created when the landlord is given the right of first refusal. The right of first refusal has been misused by the landlord to acquire a home at bargain basement prices. He then makes minimal renovations and increases his selling price by as much as 50%, and sometimes more.
I therefore respectfully suggest that the regulations be amended to give the landlord 72 hours after he is advised the unit is for sale to purchase that unit, and he should not be permitted to intervene after a firm offer has been received from a prospective buyer and other people have done the legwork needed to sell the unit. In Florida and Arizona, park owners have no input and cannot interfere in the sale of mobile homes. They are restricted by the state law.
My last word on this subject: Don't abandon current tenant protection legislation, including Bill 21, just to satisfy some landlords. Enforce rent control and Bill 21 with a timely response from the Ministry of Housing and action on legitimate tenant complaints.
Thank you, ladies and gentlemen.
The Chair: Thank you. There's only about two minutes left, no time to do any good questioning. Do you have a final statement that either one of you would like to make?
Mr Mitchell: I think timely enforcement by the ministry when it is reported that there are infractions. I can see no reason why the lady I mentioned had to pay $30 for a permit for the local inspector to come and inspect a drain pipe that's definitely in contravention of any sanitary regulation.
Mrs Mathyssen: I'd like a final word. This government has an obligation to the vulnerable people of this province. Don't forget them.
The Chair: Thank you very much. We appreciate your input here this evening.
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NORQUAY HOMES LTD
The Chair: Our next presenter is Michael Howe from Norquay Homes. Good evening, sir.
Mr Michael Howe: Thank you. My name is Michael Howe. I'm with Norquay Homes Ltd. Norquay commenced building small single-family homes in 1972. Over the years the company has expanded into land development and general contracting, commercial, office and industrial rentals, as well as residential rentals. We currently own and manage over 1,100 residential rentals in London, Woodstock, Goderich and Chatham.
Let me start by saying that I support the positions taken by Fair Rental Policy Organization of Ontario, in particular:
Rent control and the rules under which we operate our buildings are being modified on a five-year cycle. This legislative instability makes it difficult to obtain the financing over 30 years that is required to construct new buildings or even to finance existing buildings.
The private rental sector is being used to implement the social policy of providing affordable housing for the minority of needy tenants.
By the removal of legal maximum rent, this legislation is taking away earned capital expenditures and rent increases forgone as a result of depressed market conditions and dooming the rental housing sector of most of the province outside of Metro Toronto to a future of insufficient cash flow to properly maintain their buildings. This policy alone will result in the bankruptcy of many existing provincial landlords outside of Metro who are at present barely able to continue operating as a result of high vacancies and reduced rents. Freezing rents at present levels at the bottom of a financial cycle will be disastrous.
The legislation should be amended to allow landlords and tenants to negotiate rent increases in exchange for specific improvements that are above and beyond the property standard requirements and for which the tenant is prepared to pay.
The legislation must be amended to allow a notice period for landlords to repair deficiencies before it becomes an offence.
The legislation should provide for the ongoing operation of the provincial courts as the arbiter of disputes and non-payment of rent issues. With a little streamlining, the present system can provide timely resolution of these issues without creating a new and parallel bureaucracy through the Ministry of Housing.
Permanent rent abatements and rent reductions should be discontinued if, and only when, the offending deficiencies have been corrected. Failure to remove this provision will make it increasingly difficult to finance any residential building, whether it be new or existing.
I fully support the provisions which would allow a landlord to control subletting. This provision will prevent the situation arising where rent-controlled suites are sold from one tenant to another.
I don't propose to go into the merits of these points, as I'm sure you've heard in detail from others before me about these issues. Rather I would like to discuss the impact that this legislation will have on my company if left in its present format.
First of all, Toronto is different from the rest of the province. As I said earlier, we have rental units in London, Chatham, Goderich and Woodstock. These municipalities have not shared in the recovery and growth experienced in areas of Metro. Vacancy rates are high, rents are depressed and incentives of one to two months' free rent to attract new tenants or retain existing tenants is the norm.
For example, we have a 42-suite building in Goderich, constructed by us in 1987, at which time the rents were $440 for one-bedroom suites and $495 for two-bedroom suites. The current legal maximum rent for this building is $664 for one-bedroom suites and $725 for two-bedroom suites.
As a result of an almost continual 15% vacancy rate, we are charging only $475 for a one-bedroom and $542 for a two-bedroom. However, we are forced to offer the first month free to attract new tenants. As you can see, when you deduct the incentive, after 10 years we are charging virtually the same rent as we did when the building was new.
We have continued to maintain this building in a first-class manner, as we attempt to do with all of our properties. Notwithstanding that, it has consistently generated insufficient cash flow to cover the cost of doing so along with paying the mortgage and taxes. We believe that the employment situation and the economy in general in Huron county and Goderich will improve over time and we will perhaps be able to charge some portion of the forgone rental increases, as well as recoup some of our losses, if we look after the building.
The proposed legislation as presently contemplated would freeze this building in time, denying us the necessary cash flow to make major repairs and replacements when the various components of the building reach the end of their useful life expectancy or to recover the rent increases we have been unable to take as a result of the economic climate.
Our other buildings throughout southwestern Ontario have experienced similar economic conditions. At this time, in our entire portfolio of over 1,100 suites we have none that are rented at the legal maximum. In fact we have some of our higher-end luxury units that are today renting for less than they did when they were constructed in 1989.
The inability to increase rents in accordance with the current legislation has taken place against the backdrop of ever-increasing municipal and education taxes, the imposition of non-deductible GST, as well as increased costs of maintenance and replacement as the buildings age, leading us to an inevitable cash crunch if we have our ability to recover forgone rent increases taken away.
If the goal of this legislation is to get people like me back constructing residential rental suites, it will fail miserably. Recently we considered constructing new residential rental buildings in the Toronto area, where demand is high and vacancies are low. In the absence of a resolution of the issues raised here today, as well as assessment inequities, we would not proceed under any circumstances. Such a venture would be far too risky and in all likelihood impossible to finance.
Our industry shares the same concerns and beliefs that members of all three political parties share: that every person in Ontario is entitled to decent, well-maintained housing and that those who can't afford that housing should be provided with the assistance required to maintain their housing needs without exceeding a reasonable percentage of their personal resources.
Our company provides rent-geared-to-income units to the various local housing authorities in each of the municipalities in which we have buildings located. I believe that these types of arrangements should be expanded or, in the alternative, a shelter allowance program should be developed which would allow people to remain in their present accommodation without having the stigma of being forced to move to a subsidized housing project in the unlikely event that such a unit were even to become available, especially where the assistance is only required for a short term.
There are cost-effective ways to achieve a truly fair social housing policy at a fraction of the cost spent on direct ownership and without the burden being borne by the private residential rental sector through rent controls.
I leave you with the following thought. If you truly want to create a well-maintained, adequately balanced supply of housing in all areas of this province, consider the following:
If we are to continue down the path of decontrol/recontrol, you must maintain the concept of maximum legal rent, a concept that was included in both the NDP and Liberal versions of rent control.
Allow landlords and tenants to negotiate improvements to suit each individual tenant's wishes.
Allow landlords a reasonable time under the circumstances to remedy a deficiency before being charged with an offence.
Leave the resolution of disputes and non-payment of rent with the courts, but streamline the process.
Finally, develop a cost-effective shelter allowance program that truly meets the needs of those in our society who require short-term and long-term housing assistance.
The Vice-Chair (Mr Bart Maves): Thank you very much. We have about four minutes per caucus for questions, starting with the government caucus.
Mr Stewart: Thank you, sir, for your presentation. I want to go back to page 2, where you're suggesting that the ongoing operation with provincial courts etc should continue the way it is "with a little bit of streamlining." Do you want to expand a little bit on that?
Mr Howe: I think one of the areas should be that the adjudicators -- they're not presently allowed to make binding decisions and they should be able to make judgements. Secondly, I think that in the instance where the issue is related to alleged non-repair, maintenance issues, the rent should be paid into court to ensure that it's not simply an attempt to avoid paying the rent.
Mr Stewart: Also on your page 5, you're suggesting, "Allow landlords and tenants to negotiate improvements" to the suites etc. We're hearing over the last couple of weeks that that won't happen. Do you want to comment on that?
Mr Howe: Who's saying it won't happen, or why won't it happen?
Mr Stewart: Those who say that many people do not have the ability to negotiate rents and/or upgrades, whatever it might be. They're saying that's an impossibility, that no negotiations will happen.
Mr Howe: For example, you may have a unit that's 10 years old and has a 10-year-old carpet in it. It's quite adequate to meet the property standards; however, the colour may be a little bit dated. The tenant may well be prepared, in exchange for a $15 rent increase, to get new carpet throughout the suite. That's the type of thing that a tenant is certainly in a position to negotiate.
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Mr Stewart: Do you think there will some negotiations done on the actual rent itself? Again, we're hearing that people do not have the ability in certain areas to do that.
Mr Howe: I can speak for this area and all of the areas where we have buildings. If a tenant has a problem and they come to talk to us, we're going to talk to them because we can't afford another vacancy.
Mr Stewart: I think I have to agree with you on that. The final one is, we have heard again over the last couple of weeks that the minute we make a change, basically everybody's going to be harassed by the landlord. Do you wish to comment on that?
Mr Howe: I don't believe that's the case. With the vacancy rate as high as it is in the various municipalities we're involved in in Ontario, that's not going to happen. It's not a situation. We need the tenants, we need the customers. They're our customers.
Mr Stewart: A comment was made the other day that if you walk in to do business with Simpson-Sears, they don't spit on your boots so you'll walk out. The landlord and tenant thing -- I think this is what we're trying to do, to make a level playing field that will be good for both parties.
Mr Curling: Thank you, Mr Howe, for your presentation. Do you believe the government should cancel rent control?
Mr Howe: My personal belief is that if I knew that it wouldn't be reinstated by the next government, I would say yes to the answer.
Mr Curling: Okay. You said you constructed a building in Goderich in 1987 and the rents were $440 per month for one bedroom. Rent control was in place in 1987, at the time.
Mr Howe: Yes, sir, it was.
Mr Curling: In 1996 now, you said that same building has a legal maximum rent of $644. That's about a 50% increase under rent control.
Mr Howe: Yes, sir, that's correct. That's based on all of the allowable rent increases; the statutory increases, no special increases.
Mr Curling: So rent control helped in this situation then.
Mr Howe: Not collecting the rent.
Mr Curling: No, I'm saying that it allowed the legal maximum rent to be moved up almost 50%. You couldn't get it, really, but it still allowed you. It told you: "You want a free market? Here's a free market." You're saying no. I'm saying it gave you even better than a free market. It tells you that you can go up even beyond what the market will bear.
Mr Howe: No. I can only collect what the market will bear. What you're proposing to do under this legislation, or what's being proposed here, is to take that away now.
Mr Curling: But you can't have your cake and eat it, you know.
Mr Howe: Oh, I think you can.
Mr Marchese: Oh, yes, sir.
Mr Howe: I think what you're trying to do is create a very unfair situation where landlords in Toronto, because of a tight market and a better financial situation, are able to take those rent increases. They are at their legal maximum. It's nothing if you take it away from them today, but it is something for us. All right? You're taking something away from us that you are not taking away from them.
Mr Curling: All right, let's say you earned that; you earned the legal maximum rent. The tenant earned the maintenance too, which totalled about $10 billion of maintenance that was never done. I'm talking about overall. Are the landlords prepared to give that back now then, since the tenants have earned that through the legal guideline?
Mr Howe: I can't speak to that, Mr Curling, because I do my maintenance, whether we have the money or not.
Mr Curling: I know. I think you're a good landlord. I have no doubt about that. I was just speaking in a corporate way, that the $10-billion maintenance that's not been done is there. They said, "We didn't do that because lots of things happened." I was going to ask you too -- help me out in this -- I don't think wages actually increased 50% since 1987 to now. Rents are given the provision to increase 50%, but wages didn't follow that. And your argument is solid, the affordability. The people at the bottom end can't afford your apartment at what it was guaranteed for or what it can be legally rented for. So affordability is the problem, not rent control really.
Mr Howe: Let me deal with your first question. I would have to say that as far as the outstanding $10 billion of repairs are concerned, perhaps we should also offset the rent increases that we're not allowed because of the cap on capital construction, or the cap that was put on my $200,000 worth of renovations when your government came into effect and set aside rent increase orders that I had.
Secondly, as far as rental increases being 50% and wages not being able to keep up are concerned, what you're proposing here is now to limit my increase to today's level, but wages may well make a major jump in the next couple of years. What happens to me then?
The Chair: Thank you, Mr Curling. Mr Marchese.
Mr Marchese: Mr Howe, you got a clap from some of the people in the room with your last point on page 6, which was to "develop a cost-effective shelter allowance program that truly meets the needs of those in our society who require short-term and long-term housing assistance." Can you describe briefly what cost-effective might mean?
Mr Howe: I think the general rule of thumb -- it's been quoted here by other people and it's certainly the same one that's used for mortgage payments -- about 30% of income. The studies that Clayton did show that the cost of doing that in Ontario would average $154 per needy tenant, leaving them in their existing location.
Mr Marchese: Thirty per cent seems reasonable.
Mr Howe: Yes.
Mr Marchese: Would you agree that it's something the government perhaps should announce or speak about before it does any decontrolling of rents, or do you think that should come after the fact? And would that worry you and/or some of the people who have been advocating for that kind of an allowance that certainly would meet their needs? They're not sure that might happen. Would you agree that the government might put something out that speaks to this in advance of this measure?
Mr Howe: I think it would be nice to know that the issue is going to be dealt with and that it's being looked at. I don't have a problem with that concept at all.
Mrs Boyd: May I ask a question?
Mr Marchese: Sure.
Mrs Boyd: I'm very curious as to whether you lost tenants as a result of the decrease in support for social assistance recipients over the last year.
Mr Howe: We've not noticed a major change or shift as a result of that particular issue.
Mrs Boyd: Have you noticed a major increase in the number of tenants unable to pay their rent?
Mr Howe: No. In fact our arrears at this point in time are probably at an all-time company low.
Mr Marchese: We do believe, on the other hand, that this has affected many landlords and we've heard of many instances in these hearings where that has been the case. It's interesting that it hasn't affected you, but it has affected many landlords that we're aware of. We think that's caused more problems to landlords than anything else in the last year.
Mr Howe: I'm not aware of any landlords who have approached me with that issue and I'm very involved in the landlords' association.
Mr Marchese: You mentioned that two measures might get you to build, and one of them is to eliminate rent controls. Let me just read it: "In the absence of a resolution of the issues raised here today, as well as the assessment inequities...." You were talking about keeping the maximum legal rents. That's important to you as one issue. The other is the inequity in tax assessment. These two measures alone would allow you to build. Is that more or less what you are saying?
Mr Howe: As well as implementation of a housing policy that would include some kind of a shelter allowance, which I believe would go a long way towards getting our industry back to work. I'm not saying that any one of these is cast in stone, but they're issues that have to be dealt with.
Mr Marchese: Since 1992, there have been no rent controls on buildings, on new construction. That obviously wasn't sufficient to get people to build.
Mr Howe: I don't think that in itself solved the problem, because we finance our buildings over 25 and 35 years. A five-year rule is just not sufficient any more to make that kind of a capital expenditure and that kind of a financial commitment.
The Chair: Thank you very much, Mr Howe. We appreciate your input here this evening.
1840
LONDON AND DISTRICT LABOUR COUNCIL
The Chair: Our next presenter is from the London and District Labour Council, Patty Gunness and Christine Sorko. Good evening. Welcome to our committee.
Ms Patty Gunness: Thank you. It's going to be a little bit different than I originally intended. About 10 minutes ago I met Christine, and Christine didn't know until today about these hearings. My intention was to present to you a story, to read to you some excerpts from the story that is in the written submission. What I'm going to do instead is give you a few minutes of my position and the position of the London and District Labour Council, and then instead of reading excerpts from the story, I'll ask you to just take that with you and read it later, and listen to what Christine has to say.
Already for over two weeks now you've been listening to submissions regarding this paper on a point-by-point basis as well as to general residential tenancy issues. The London and District Labour Council believes that these changes are simply one step in the plan of the Harris government to remove all supports from the poor and working people of Ontario. Our presentation, therefore, will deal with the proposed removal of tenants' rights with this view.
This committee and the people of Ontario should not be fooled into seeing all of the Harris cuts to social programs as separate issues. They are not separate issues. The Harris government has a plan. In 1996, the International Year for the Eradication of Poverty, the strategy of the Harris government is to eradicate the poor. However, he only has one term in which to do this and therefore he's acting very quickly to complete his mission before the next election.
The friends of Harris would like to pretend that they are not selfish, cold and heartless, and therefore Harris has created a method of removing the potential for anxiety and sleepless nights for his supporters. This method is to give titles to destructive changes that imply the opposite result to that intended. The tenant protection legislation is another example of this. The plan proposed removes protections tenants may now have but allows landlords to get rich off the misery of their tenants.
If the Harris government has its way, by the next election the rich and upper-middle-class will be richer, the lower-middle-class will work for the rich without adequate protections, and that is because of the reforms to the Labour Relations Act, the Employment Standards Act, the health and safety act and workers' compensation legislation. Those who are presently living on low incomes will be slave labourers due to the welfare cuts and workfare or will have been eradicated because of starvation due to the welfare cuts, exposure to the elements due to removal of tenant protection or untreated disease and illness due to health care reforms.
To show how real the likelihood of this result is, what we have done is to use a favourite method of the Harris government, the sample situation. Although I'm here today in the capacity of executive member of the London and District Labour Council, my employment is as a community legal worker at a legal clinic. As such, I see on a day-to-day basis the victims of the Harris cuts and reforms. The example you will read in the written submission uses real situations faced by real people, and these real people are represented by Tom and Mary.
The lie that the removal of rent controls will encourage the rich to provide more affordable housing is the same as the lie that the tax cut to the rich will encourage job creation. The rich will spend their tax cuts elsewhere. They won't spend it in Ontario. The poor, who have had their welfare benefits cut and whose incomes are now reduced, are the only ones who spend 100% of their income in their communities. This is going to affect the economy but not in a positive way. There will be less money in the local economy because those who spend their money here have no more to spend.
This proposed legislation simply takes more money from the poor so the government can give it to the rich. The madness of the Harris agenda must be stopped before the entire social fabric of this province is destroyed. This committee must do its part to prevent the eradication of the poor, and you must begin by saying no to this proposed legislation.
I heard some of the previous speakers and I heard some discussions on the availability of affordable housing in the London area. I've heard many people talk about it in general terms and say, "Yes, there's plenty of housing but, no, it's not affordable." I have also heard from landlords who say: "If rent control is removed we won't jack up the rents, because we need tenants in there. We're not going to leave our apartments vacant by jacking up the rents so that poor people can't afford them."
Well, this afternoon I decided to look in the London Free Press and just see how many affordable units were available in London. There were so many vacant units that I just didn't have time to go through them all, so what I did was I centred on the unfurnished apartments in duplexes. What I found was that today in London, of the units where the prices were actually listed, which I also noticed with surprise -- it's been a long time since I've actually had to look through that section, and so it was very noticeable to me that quite a substantial number are not putting the prices in. I don't know about anybody else, but to me that's always meant they must be really expensive because they must only be for people who don't care how much they spend or don't need to know how much it costs before they look at it. Why would a landlord deliberately not put the price in the paper if the result is going to be that many, many people are going to call and as soon as they hear how much it is they're just going to say, "No, thanks"?
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Anyway, of the ones where the prices were listed, there were 13 bachelor apartments; not one of them was within the welfare budget. There were 129 one-bedroom apartments; not one of them was within the welfare budget. There were 112 two-bedroom apartments; four were within the budget of a single parent and a child on social assistance. There were 23 three-bedroom units and six four- to five-bedroom units, none within the budget of welfare. This is a total of 283 unfurnished apartments: four within the budget of a welfare recipient. Those are today's hard facts in London and I hope that helps you.
I'd like now to give Christine an opportunity to tell you her story.
Ms Christine Sorko: I'd like to begin by passing around some things for the Chair to look at and also the council.
My story began on March 13, 1995, when I rented a seven-bedroom farmhouse that had no heat and an inadequate water source. Over the course of 16 months I exercised every possible avenue that there was for me to access those, and still over 16 months I had no adequate water and no heat for my children. Because I am a part of the poor sector, I was unable to go anywhere else for affordable housing, considering I had just claimed bankruptcy and left my husband of 10 years.
I keep hearing everybody say "the poor sector." I'm only one single woman with two children and I am a part of the poor sector. I would like you to understand that if the changes go through the way they're going through now, where there are less rights for tenants, there's going to be no way for us to ever get ahead in life. There's going to be no way for us to protect ourselves from landlords such as the one I fought for 16 months, and I'm still in appeal presently.
I have no idea where I'm going to go with this. All I know is that I need somebody to listen to me and I've been trying to get somebody to listen to me for a long, long time. To understand all the compliance orders and to understand going to your municipal offices and to understand at Christmastime going to your municipal offices and telling your council representative that you're going to have to send your children away for Christmas somewhere they don't want to go because your pipes have frozen and you've got two feet of water across the main floor of your house and nobody will do anything to help you -- that's where I'm coming from and that's where a lot of people before me and after me are going to be coming from. People freezing in the street is nothing considering freezing in your home, a home that you pay rent for, a home that you're fixing up.
I was hearing about long-term lease agreements. Long-term lease agreements mean nothing. I had a five-year lease at this place, a five-year lease at $400, which was affordable to me, and it meant nothing. That five-year lease agreement meant literally nothing. My children and myself freezing for over 16 months, two winters, meant literally nothing.
In those pictures you'll see that I went to the extent of ripping 11 layers of wallpaper off the kitchen and the dining room. I fixed up the whole main floor of the house. I subfloored. I fixed my piping myself. I chopped firewood myself. I did everything for myself and even went to the extent of going to Mr Hardeman's offices and trying to complain. I complained to my municipality, who took a very, very long time to get around to providing me with a compliance order. Once I did get a compliance order -- we're talking about fines being levied -- there was no fine levied for my landlord. He went 16 months, two winters, violating all of our bylaws that exist in southwest Oxford county and not one fine was levied to him. Not one.
My pipes froze. My dishes froze in my sink. I'm passing pictures around of frozen dishes in a sink. Plants died. If a plant can't live in a house, neither can people, and that's the way I lived for the last two winters. Going into the third winter, I decided I was going to move. I wasn't going to approach my municipal offices any more. I wasn't going to try to get help from anybody. I was just going to fight through the appeal process. Even the rent control process didn't help.
On August 4, my house burned down. I'm still in appeal, fighting for a house that I can't even live in any more. The point is that what happened was wrong. What is most undignified is that I had to suffer the most horrible indecency that you can think of, having no adequate water, which everybody in Canada is entitled to, and having no source of heat but a wood stove in a seven-bedroom house. That is an indecency. Nobody should have to suffer, especially anybody of the human race. I know dogs that are treated better than that.
My house burned down as a result of arson. It's under investigation right now. The gentleman who was a couple of times before us from LIFE*SPIN was talking about women who can get harassed by landlords. I've had punctured tires. I've had my house broken into. I've had my house ransacked. I've had windows broken. I've had the threat of my landlord coming with his big tractors, pulling my house down from the main beam in my house, and three weeks later my house is burned to the ground with no insurance and no possible way for me to recoup anything.
Then I move into a two-bedroom apartment when I had a seven-bedroom house and all of a sudden I get a letter from mother's allowance saying, "I'm going to cut you off mother's allowance because we've had several complaints." When I was listening to him speak, I thought he was speaking about me, because it happens. Where do the complaints come from? The hotline that's set up. Who knows how many times people have called? Who knows who's called? Nobody really knows. All I know is that I've been treated unfairly by lots of different agencies.
I don't really have anything else to say except that it's not "an" issue or just "the" issue. It's all the issues combined together and the eradication of the poor sector, and I am part of the poor sector. I'm a tenant and I vote also. I've been voting for 10 years and I wish with all my heart that every other tenant in Ontario would vote, because if the tenants would vote instead of sitting back and passing by the chance to vote, maybe we wouldn't be in the position that we're in now.
With all the protection which now exists, I couldn't get any help. I couldn't imagine, if all these proposed changes go through, what would happen to people like me and my children. Could you imagine? It's very hard to walk to your tap and get water when your pipes are frozen. It's very hard to fix anything when you've got no money. And it's extremely hard to lobby people who don't want to help you in the first place. Thank you.
The Chair: We've got about a minute left, if either one of you wanted to make a final comment.
Ms Gunness: I probably had some, but I thought our time was up so I didn't bother. I would say thank you.
The Chair: Thank you very much for coming forward this evening, both of you, and giving us your input. We appreciate it.
1900
TWIN ELM TENANT ASSOCIATION
The Chair: The next presenters are Marylin Bolender, the president, and Keith McLean, the first vice-president of the Twin Elm Tenant Association.
Ms Marylin Bolender: Good evening. My name is Marylin Bolender. I'm the president of the Twin Elm Tenant Association in Strathroy. With me is Keith McLean, my first vice-president. We are pleased to be given the opportunity to respond to the proposal paper New Directions for Discussion: Tenant Protection Legislation.
We live in a park that is an owned-home, leased-lot community. We are homeowners first and tenants second, who pay taxes on our homes and on the site we rent. As an owned-home, leased-lot park, we differ from apartment or home renters in that if we are unhappy with the land owner/landlord, we simply cannot pick up and move. However, if Mr Rice and Mr Brother could tell us where we could get a rental site for $125 a month, perhaps we could investigate that possibility.
We can try to sell our homes, but in many cases the land owner places so many obstacles in the way of a sale that potential buyers back off. Bill 21, the Land Lease Statute Law Amendment Act, 1993, gave us the right to sell our own homes. However, if we do not use the landlord as the agent for the sale, he simply will not allow that sale to go through.
We feel there should be separate legislation for owned-home, leased-lot communities with rules and regulations enforced by the law and the government. We need more protection for our people in owned-home, leased-lot communities, many of whom are widows or seniors and live on fixed incomes. Contrary to Mr Rice, who said that many have ready cash, the majority does not. Our people need to be protected from unethical land owners. Many seniors, especially women, are easily intimidated by what they perceive as landlord authority and most certainly need this protection.
The proposal in the discussion paper to allow landlords to negotiate the rent with new tenants creates some serious problems for owned-home, leased-lot residents. If by chance we are presented with an offer to buy our home and the landlord sets a much higher rent for the lot, that prospective buyer would justifiably refuse to complete the purchase. Who would be willing to pay significantly more for rent than the previous tenant had paid, particularly if there are also mortgage payments to be made on the housing unit? This proposal would make resale for us as homeowners nigh impossible.
In our owned-home, leased-lot community we homeowners keep up the maintenance on our homes and on our leased lots plus a good deal of the common areas. Why should the land owner be allowed the set yearly increase in rents plus a huge increase on the rent for a resale property when he has spent so very little money for park upkeep? A part of the rent should, by virtue of good land owner management, be set aside every month by the landlord for capital expenditures. Poor money handling on the part of the land owner is not the fault of the homeowners, and we should not be held responsible for major repairs like roads or septic systems. If my home needs repairs and I can't pay for it, the landlord certainly won't pay for me. I need to budget accordingly and so should they.
In situations where there is a legitimate capital expenditure, there must be a reasonable cap on the amount passed on to tenants. It certainly should not simply be added to the rent year after year. There needs to be some accountability on the part of landlords regarding how the automatic rent increase for capital expenditures is spent by landlords. Tenants at the very least deserve to see where their money is going, and there must also be a clear reduction in rents when expenditures have been paid for and the amortization period is over, otherwise we end up paying forever.
The decision regarding a capital expenditure should not be the landlord's alone. Homeowners and someone at arm's length should be involved in the decision or the landlord could assess and spend at will. We could easily see a return to the extravagant and unnecessary renovations of the mid- to late 1980s. In addition, about the choice of tradespeople hired to do major repairs for land owners, this should be a joint decision. Land owners can exercise too much control regarding who may work in a park. Since homeowners are paying for these major repairs, homeowners should have a part in deciding who will complete the work.
Since 1989 the tenants in our park have had a 51% rent increase, including two whole building reviews, with a third still in the works. In 1988 the land owner was allowed a 12% increase. In 1989 he was allowed a further 14.8%, which was then appealed by the homeowners. This amount was reduced by the rent review board to 13.9%. However, instead of being done then and there, the land owner proceeded to appeal that decision. That case was finally decided in spring this year. The 13.9% awarded in 1989 was upheld. Now we are faced with the problem of recouping the 0.9% owed to homeowners by the landlord.
When the landlord was awarded 12% and later 14.8%, the homeowners had to pay up immediately. For some this meant a considerable hardship. On top of all this the landlord applied for a whole-building review for 1990-91. This was turned down by rent control, but once again the decision was appealed by the land owner. We homeowners have been involved in legal battles since 1987-88 and they go on and on.
This case will be heard by rent control on October 4. As of yesterday we were advised of the change. We hope it will be resolved and at least part of the issue settled. Even with all these increases coming to the land owner in 1990, he arbitrarily closed down the tenants' clubhouse and seized all club assets. He also denied access to the swimming pool. The club was funded by New Horizons grants and the hard work and donations of the homeowners. To date, six years later, not one item -- dishes, pool table, books, furniture, piano etc -- has been returned to the rightful owners.
We made an application to rent control for a rent rebate due to the reduction of services. Not one thing has been done about the matter, so the homeowners have proceeded to take the case to Divisional Court. Once again I wish to impress upon this committee that we need protection from unethical landlords who reduce services but apply for increased rentals. Unfortunately all we have been getting are legal bills that we have to pay to protect ourselves and our homes.
I would like to return to the discussion paper and review it with the owned-home, leased-lot situation in mind. On page 5 under the heading "The Landlord and Tenant Act" there is reference to simplifying the dispute resolution system. We agree that the process for resolving disputes is far too lengthy and most certainly too expensive. To date, we have had to pay legal fees of nearly $30,000 to protect our interests. This should not be allowed. There needs to be a faster way to settle disputes and to enforce the final decisions.
I have had a rental dispute with the land owner and received a decision in my favour in the courts this past spring. There's a copy of the judge's decision in the paper. Unfortunately I'm still awaiting restitution. The land owners had started a co-op in our park. This co-op was formed by management, for management, with management -- in December 1994 it was cancelled by the Minister of Finance on the grounds that it was formed for improper purposes; a copy of that cancellation is also with my brief -- the prime reason for the creation of the co-op being a very generous increase in rent for the land owner.
After the minister's decision was rendered, the land owner refused to return our rent to the rent control guideline. Instead of my paying a rent of $156 a month, the land owner demanded $277. That's a great deal of money every month. After waiting eight months from the dissolution of the co-op for a reduction, I consulted rent control. If you had done away with the rent registry, I could never have gotten the proper amount that should have been charged for my lot. I consulted rent control and was advised of the proper amount due. I tendered that amount to the landlord. Of course it was refused by management. After enduring seven months of improperly served legal papers I was forced to hire a lawyer, at my expense, for a case which I should have been able to handle myself if it had been handled properly in the first place by the landlord and his agent.
I finally got to court, and the judge agreed that rent control had advised correctly regarding the amount of rent. I paid all rent due that day. To date not one cent of any moneys overpaid by me has been returned by the land owner. I was sold into the co-op by lies and misleading figures, and so were another 23 homeowners. There is something wrong when the system lets us down once again; all we get is the proverbial runaround. Where does it all end?
1910
A new dispute resolution should be in place through an independent agency. It should be made as simple as possible and must ensure that tenants are protected. Once a decision is made by this independent board, steps should be taken to ensure the decision is enforced.
Privacy: As homeowners we have the right to deny access to our homes. Land owners may inspect the land but not our homes. They have no money invested in them and therefore, unless invited in, there need be no entry by the land owner.
Harassment: There needs to be better clarification of what is meant by harassment. Many seniors are afraid of eviction from their own homes and are afraid to complain about the blatant harassment to which they are subjected. There are many instances I could tell you about if time would permit. I'd be happy to give you a sense of the harassment some homeowners have experienced during question and answer period.
Security of tenure and conversions: If an owned-home, leased-lot community is converted to a cooperative, applicants for the co-op must be thoroughly investigated by the appropriate ministries to ensure that a fiasco such as we just went through cannot happen again. To seniors it can be a life-threatening situation: You lose your money, your home, your dignity and your health. Not all co-op applicants are honest and trustworthy.
Care homes: We are not involved, so there's no input.
Mobile home parks: Tenants must retain the right to sell or lease their own homes without interference by the land owner or outrageous fees for facilitating the sale. The right to purchase goods and services of our choice must also be ensured. If we deal with a tradesman not of the land owner's choosing, that tradesman is often banned from the park.
Regarding the obligation to maintain our homes, the pride of home ownership is very evident in our park. I wish I could say the same of the land owners. Landlords have an obligation to maintain the grounds and the infrastructure without charging unreasonable fees. Please enforce this firmly.
In our community, minimum lawn care is done and absolutely nothing else. Fences are falling down in disrepair, some badly in need of a coat of paint. The weeping bed smells atrocious. The roads and services all need work, but the landlord continues to disregard this and will until the situation goes beyond repair.
All problems in our park have gone through all the proper legal channels: judges' decisions, rent review guidelines and government bills like Bill 21. Still our land owner ignores the law and his obligations. We need somewhere to turn for help.
I advise and humbly ask this committee to ensure that we receive genuine tenant protection and strict enforcement of the law. All tenants need protection and all tenants need someone to whom they can turn for help.
I thank you for the opportunity to speak.
Mr Sergio: What you have said is what we have heard from other tenants in a situation like yours as well. That is an area that I hope the government people are listening and hopefully change this particular proposal here that I think should be brought back totally as it doesn't do anything to solve your problem, and I'll tell you why.
It says here, "requirement for a notice of violation prior to work order will be removed." You would think that now if you've got a problem, the inspector comes and will issue a work order right away. Right?
Ms Bolender: Ha, ha, ha, ha.
Mr Sergio: It doesn't work that way, because the next line says, "notice requirement for property standards officers will be streamlined." Now, which one is first: the total elimination or streamline it? The government must get it straight first before we get some answers for a problem like yours. I hope that what you said will sink in and will be able to bring some relief to a situation like that.
Ms Bolender: So do I.
Mr Marchese: Thank you, Ms Bolender and Mr McLean, for the presentation. It's quite amazing to hear your stories as we heard Christine's stories just before you. She said, "Imagine, suffering the kinds of experiences I'm suffering under rent control and under the existing policies, what it would be like to change all of that and have to go through less protection as we're seeing with what is being proposed." It's quite frightening.
You mentioned a few quick things and I want to ask you a quick question if I can. No repairs have been done, very little maintenance and yet the annual increases have been happening.
Ms Bolender: Exactly.
Mr Marchese: I have to agree with you with respect to accountability of where those moneys are going because we've heard lots of stories of bad disrepair, moneys being received but not being spent. It's an incredible story to hear. Can you answer another question with respect to cost pass-through? They will be eligible for a higher cost pass-through allowance for capital expenditures under the new proposal. Can you tell us how that would affect the tenants if they did that?
Ms Bolender: It scares me to death to think that this could even happen. Our tenants are all seniors, and as I said before very easily intimidated. If the landlord can at will say, "Okay, I need to fix this and I need X amount of dollars," for a lot of our people it's not in their budget. It's just unconscionable to think that we have to pay again when we've already paid once.
Mr Smith: Thank you for your presentation. As Mr Marchese has indicated, we've heard quite a bit of input on this issue across the province, and particularly so in Thunder Bay when we were in northern Ontario. My feeling of the whole issue is the issue of home-owned, leased-lot communities is not very well understood in the first place.
Ms Bolender: Exactly.
Mr Smith: So there's a challenge there, and that's an issue we're going to have to address as part of this report. You raised a concern about a cap on pass-through expenditures. Have you given any thought of how that might be calculated? What is a reasonable capping procedure? I realize that will vary from site to site because we have a variety of servicing arrangements and conditions on different sites across the province. Have you given any thought to that issue?
Ms Bolender: We did to some point. Just a second here now until I find it.
Mr Smith: I think you raised in your presentation -- you simply made reference that there has to be a cap.
Ms Bolender: There has to be a cap and I do have it someplace here. Sorry. Capped at 4% over a two-year term. This comes from the owned-home, leased-lot federation to which we belong. We had a meeting in Newcastle and that's what we came up with, that it would be capped at 4% over a two-year term.
The Chair: Thank you very much folks. We do appreciate your input into our discussion process.
Ms Bolender: Thank you for the opportunity of approaching.
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MARY JANE WHITE
The Chair: Mary Jane White? Good evening. Welcome to our committee.
Mrs Mary Jane White: Good evening. Thank you for allowing me to address the committee this evening. Unluckily it seems, I'm one of the landlords. I've just got a statement that I'd like to make and I'm going to make it short and sweet.
Progress enters all parts of life if we let it. What used to be known as trailer parks progressed to mobile home parks, which are now known as land-lease communities. These land-lease communities are becoming an important part of homes offered.
I have been involved with mobile home parks for many years, and as an owner of one of these communities, I have struggled to maintain a certain integrity. The rent I receive for my mobiles is $113.69 a month. In three years, I have received a $9 increase per site. At the rate we are going, it will take at least 10 years to get to $150, which is still very, very low. The higher the rent, the more the guideline increase; the lower the rent, the lower the guideline increase. An apartment which pays $500 a month will receive a $14 increase. We will receive $3.18.
I have just had to put in a new septic system for three mobiles, which cost $10,000. The city water is coming through at a cost of $16,000, not to mention the new lines that are needed after the city water is through.
Many things could have been done in the past if the money had been there. I have been in touch with rent control many times, I have written my MP, I have written Al Leach. Communities like mine cannot continue to operate in this manner. Waiting for a tenant to sell or leave is absolutely ludicrous. We will probably wait for 10 to 20 years. There is no turnover in our park. Isn't it a disgrace that I would have to wait for someone to die in order to get a higher rent?
We have waited for a government that will listen. Please do. You're not helping tenants in this way. Conditions cannot improve, but deteriorate. Give us some help. Set a base rent at least of $175.
There are a few cases, such as a park that is located close to Seaforth. This park receives $89 a month rent. It has 35 homes. The septic systems are failing. They have been approached by the MOE, and $63,000 is the cost to put in a new system for these mobiles. If this fellow cannot get a loan, he's going to walk away from the park. What is going to happen to the tenants there? Either the municipality or the government will take over. I don't know if they are willing to pay the repairs for the system. We, as members of the OMHA, know and we're wondering if you've done your homework on that situation.
Also, another park situated right in London on Springbank Drive. It's quite a lovely park. The tenants there pay $137 a month. They are looking at having to do repairs on the sanitary sewer system to the tune of $8,250. Effective January 1996, the city of London instigated a sanitary sewer surcharge based on how many cubic feet of water are billed. Property taxes were lowered to accommodate this charge. Since the Cove mobile home park pays the water bill, Cove also is required to pay the sanitary sewer surcharge; however, the tenants receive the property tax reduction. Is this fair?
I guess you're seeing both sides of the coin. The only thing I have to say is that I realize there are a lot of parks that are receiving adequate rents, but there are also a lot of parks that aren't. If it continues, they're not going to be able to do the repairs that are necessary.
The Chair: We've got about four minutes per caucus for questions, beginning with Mr Marchese.
Mr Marchese: Mrs White, you've heard the previous speakers on this.
Mrs White: Yes, I have.
Mr Marchese: Do you have a reaction to all of that?
Mrs White: Yes. I feel deeply sorry for their situation and there's got to be something that can resolve both sides. I understand their situation and I hope they can understand my situation.
Mr Marchese: I appreciate that. Would you say that their situation is unusual?
Mrs White: I really don't know. I can't answer that. I haven't been involved with anything of that type. As a landlord, I bend over backwards to try to appease and help people out. I'm certainly not going to leave someone without heat.
Mr Marchese: But you are a landlord of a park?
Mrs White: Mobile home park, right. Which is a little different from apartments and houses.
Mr Marchese: Sure, I appreciate that. How long have you been a landlord of a mobile park?
Mrs White: I have been involved in parks and mobile homes all of my life. I've owned my own park since 1988. However, my family has been involved in the mobile home sales and parks my whole life.
Mr Marchese: But since 1988, you started owning your own park.
Mrs White: That's correct.
Mr Marchese: And the rents were what when you got there?
Mrs White: They were somewhere in the vicinity of $79 to $80.
Mr Marchese: And since then, they're now at -- what did you say?
Mrs White: At $113.69.
Mr Marchese: So you have been applying for an increase yearly?
Mrs White: That's right.
Mr Marchese: Have you managed to put some of that back into repairs, or you really can't because you're not making a whole lot. Is that it?
Mrs White: No, absolutely everything that I have received has gone back into repairs.
Mr Marchese: Are you doing all right?
Mrs White: No, I'm not.
Mr Marchese: Can I ask you, when you got into the business in 1988, did you have a business plan? Did somebody make you a business plan to say that you've got a problem here, but you got into it anyway?
Mrs White: We're a family of park owners and this is something we've done our whole life. This is the only thing that I really know -- mobile home sales, travel trailer sales and mobile home parks. I got into it with the hopes that maybe things would get a little better. I didn't really realize what I was getting myself into in the ownership of my particular park. We have systems that are old, that need to be replaced. Every cent I am receiving is going back into the park to repair and upgrade it.
Mr Marchese: You heard Mrs Bolender talk about the number of increases they've had and the number of maintenance problems they've had with this landlord. One of the questions they raised around capital dollars and guideline dollars and beyond guideline dollars, which they received in the 1987, 1988 and 1989 period, was that it didn't seem to go back into the maintenance of those homes. Would you support an accountability mechanism that lets them know where your money is going?
Mrs White: Absolutely.
Mr Marchese: I'm not sure what else we can ask you. Clearly, we have some good landlords in this field and some bad ones. We've obviously heard of some pretty bad cases.
Mrs White: Yes.
Mrs Boyd: Have you been applying for and receiving over-guideline increases for capital expenses?
Mrs White: No, we haven't.
Mrs Boyd: Can you explain to me why not?
Mrs White: Because if I were to receive over-guideline expenses for my park, I would be receiving somewhere around $1,000 to $1,200 a year more. That would take 10 years to pay for that one system. I guess I should have. I just felt that I was totally overwhelmed with the rent control system. I didn't feel that it was going to help matters. It's the same with a lot of these other park owners. Three per cent is going to give me somewhere in the vicinity of $1,100 a year more.
Mr Maves: In the area, how many mobile home parks are there?
Mrs White: In my area?
Mr Maves: Yes, in the London area.
Mrs White: I'm not particularly in the London area, so I really can't comment on that. In my area there are two other parks. They are a little newer than what my park is and they're receiving somewhere around $170 a month.
Mr Maves: Roughly how many people or families are housed in these mobile home parks in your area?
Mrs White: One has 53 homes, I think the other has somewhere in the vicinity of 45 homes, and I have 31.
Mr Maves: If this imbalance that you're facing right now isn't rectified and the one person who's worse off at $89 a month, that supply of homes would just be lost?
1930
Mrs White: I don't really know exactly what would happen if that park owner at $89 a month were to, let's say, give up and walk away. Would the municipality be willing to step in and do the necessary repairs? Are they willing to put that amount of money into something they're not going to get back? Are they willing to let those people lose those 35 homes?
Mr Maves: It's a bad situation. We don't want to lose stock. So regardless of whether you did a business case scenario or not, it would be nice to see a flexible rent control system that would allow that stock to stay on the market for people.
Mrs White: That's right.
Mr Maves: You mentioned that you put everything you get back into your park. For $113 a month, can you tell me what types of costs you have that maybe most people won't see on the face of it?
Mrs White: Yes, I would be more than happy to. I have a dumpster in the park, and that dumpster costs me $87 a month. I have snow removal that I have to pay for. That costs me $500 in the wintertime. Just recently, as I said, I spent $10,000 of saved-up money in the bank on putting a new system in for three mobile homes. The rest of the mobile homes are sitting on older septic systems which we have to keep maintained. Therefore, we are pumping them quite frequently, and it costs somewhere in the vicinity of $75 to $200 per system to pump. The water lines that exist in the ground right now are old and in terrible disrepair, so we are constantly digging and having those repaired. I am the only one to look after the park. Therefore, I have to hire outside help. I maintain the grass in the park. It just goes on and on.
Mr Maves: It's very clear from the presenter before you and yourself that the system's not helping anyone.
Mrs White: No, it isn't. Especially the people who have such chronically depressed rents.
Mr Sergio: We had quite a few landlords coming to us and saying, "Look, I'm entitled to make a profit."
Mrs White: Yes, I think everyone should be.
Mr Sergio: Would you say that you would like to make a profit?
Mrs White: Yes, I really would, and down the line I'm hoping it may turn out that way.
Mr Sergio: That's being honest. Do you mind if I ask you a question? You've been in business all your life?
Mrs White: Yes, I have.
Mr Sergio: You've been struggling?
Mrs White: Yes, somewhat.
Mr Sergio: Usually a landlord who can't make it after so many years says: "You know what? I'm selling, I'm getting out of it."
Mrs White: That's right.
Mr Sergio: Why are you persisting?
Mrs White: Number one, the majority of parks with such chronically depressed rents are not sellable.
Mr Sergio: For you to make it worthwhile, make a good living, make a profit, how much would you have to rent or lease the site for?
Mrs White: I would like very much to see across the board people receiving at least a $200-a-month rental per site, but I feel $175 would be more than adequate for myself to do the repairs. As I said, next summer I'm looking at $16,000 for the city water that's going to be coming past the park; that's not bringing it into the park.
Mr Sergio: Do you believe the market would bear that amount of $175 a month?
Mrs White: I believe my park would. I believe the park on Springbank Drive here in London would. I realize that the park I'm talking about near Seaforth is so chronically depressed that to increase it to $175 you're looking at somewhere near $100, but for repairs and maintenance to be provided on that park it does need that form of rent.
Mr Sergio: Last week up north, I think it was in Sault Ste Marie or Thunder Bay, one landlord said that a tenant brought in his mobile home and sublet the unit at a much higher rent.
Mrs White: Yes.
Mr Sergio: Do you have cases like this in your park?
Mrs White: No, I haven't yet.
Mr Sergio: Have you heard of cases like this?
Mrs White: I have.
Mr Sergio: Do you think that's possible?
Mrs White: That they would sublet at a higher rent? Yes, it is possible.
Mr Sergio: And there is nothing you can do as the owner?
Mrs White: If you look at the rents I've mentioned, it wouldn't take very much to be getting a higher rent.
Mr Sergio: But it's allowable, it's no problem, they can do it? Under the present legislation, they can sublet their unit?
Mrs White: If you have landlords who have been so seriously depressed for such a long time, there is no fight left in them. If subletting occurs, at least the mobile's there and there is money coming in.
Mr Sergio: Mediation: Do you do any of that?
Mrs White: Myself?
Mr Sergio: With your tenants?
Mrs White: No, I haven't had to.
The Chair: Thank you, Ms White. We appreciate you coming forward this evening and giving us your input.
1095 JALNA NON-PROFIT HOMES TRANQUILITY HILL HOMES
The Chair: Our next presenter is Bert Rupple, president of 1095 Jalna Non-Profit Homes and Tranquility Hill Homes. Welcome to the committee.
Mr Bert Rupple: Thank you, ladies and gentlemen. What I've heard from this committee at other locations doesn't seem good. Like all government legislation proposed in the past and passed into law, this white paper is also meant to lessen the bite on the well-to-do and the fortunate against protection afforded for the not-so-fortunate and those in need of protection. Protection is not needed by the landlords and developers that this new bill will afford.
Twenty minutes is not enough time to cover the wrongs with this white paper. I believe that I'm allowed 10 minutes, with 10 minutes for questions.
The Chair: You can split the 20 minutes up however you want, sir. You can talk for the whole 20 minutes and allow no time for questions. That's your choice.
Mr Rupple: In all my years and my past education, I cannot recall a government in Canada that has done so much against the masses. Only in Europe, Africa and South America have right-wing governments committed so many atrocities against the populace. We know of Germany in the Dirty Thirties, apartheid in South Africa, and the dictatorial rule and the class conflicts of our southern hemisphere neighbours.
No, you say? There's no semblance, and I'm trying to compare apples and oranges? But, ladies and gentlemen, there is. In Germany it was race: fatherland against the Jews. In Africa it was race: blacks and Afrikaners. To the south are the poor majority against the wealthy minority, and the minority are the European people against the native Indians. In Europe -- Germany -- as well as the Middle East, it was the wealth of the Jews and their intellect that were used in the attempt to eradicate that race. In South America, the multitude of the poor are held under the heavy thumb of the wealthy to suppress any advancement of locals by our Canadian and American international corporations, with the support of governments that run those countries today.
1940
If directors of public, private and not-for-profit incorporations can be held responsible for their actions, so should you, members of Parliament, who are responsible to the public service and the laws of the provincial and national governments. Since you directly affect the lives of people you're concerned with, someone must be able to hold you accountable for your actions, and not just at election time.
At present, only the electorate can do nothing except at your whim, when the Premier calls an election if he feels the time is in his favour. There should be some form of member recall by the electorate when members of government get out of hand and, carte blanche, pass bills that are not in the interests of the majority and favour the minority.
We have here in London hundreds who are seeking affordable housing. The government claims it has saved $500 million over two years by wiping out allocations for non-profits. These non-profits would not have cost the province anything compared to what this government is going to cost the province, in addition to setting the social structure back 20 to 25 years.
The subsidies paid out in the plan were to be paid back to the government after five years under a co-op or a non-profit. Now, what has it cost the taxpayer? Nothing. The mortgages are from private banks. Those mortgages are paid back from the rents of the non-profits; therefore, it hasn't cost the taxpayer anything. The government says it's costing $500 million. What it did cost them was the difference of the rent geared to income, which they're paying out anyway.
I represent two non-profit tenant associations. We were planning not to use government grants, only the borrowing power the government afforded us. With the rent geared to income, we could have placed 150 of the 420 families we have on record into affordable accommodation. But no, a loose-lipped candidate from northern Ontario thought it would elect him if he used the welfare system and people on welfare as a whipping stone. Instead, it will now cost the province hundreds of millions of dollars for the damage it has incurred, plus court costs, the time, manpower and effort, just because of a loose-lipped egotist who wanted a pat on the back by his right-wing buddies.
In fact, I don't see any of the ministers of this government cutting back on themselves. Do you? They now ride around in chauffeured limousines at the taxpayers' expense. I'm not an NDPer, so I'm not complaining because of that.
Landlords are continuing to ride roughshod over tenants by doing very little in repairs. The repairs they do are with wrong materials, makeshift or non-applicable materials for the job they are intended for. This adds cost to the building and depreciates its value. You people are proposing that the landlords be given more free hand. What is this going to do? More shoddy work and workmanship.
As an example, rotted wood about windows and doors is supposedly repaired with black roof tar. A couple of hours' labour; the cost, approximately $25. It's been done twice in the past month and it'll be done throughout the winter. The total cost, if done properly, would have been $80 with new wood and properly painted.
The act doesn't even touch on such matters. These are the things that you should be interested in, not saying, "Oh, the rent's going to stay the same until I move out and then you can have the right to extend it at any level you want." Well, as an example, this is only one instance. The same landlord has already told a number of tenants, including myself, that when rent controls come off he will allow anyone to get out of their lease. You know what that does. That increases the rent to exorbitant amounts without doing the proper repairs to the building. You haven't done anything to answer that. This bill doesn't even cover that. You're better off with the old Landlord and Tenant Act and the Residential Rent Regulation Act and the Ontario building standards act. Those three acts alone we could do something with, but not with this new one.
If you think this new bill will do wonders to protect the tenant, you should think again. It does very little and less than the current Landlord and Tenant Act, as I've reiterated, and the Residential Rent Regulation Act combined with the Ontario rent.
If there are any other questions, I'll certainly answer them. I have the figures with me. I don't have the facts, but I do have those figures because I've been going over them for months.
The Chair: We've got about three minutes per caucus for questions, beginning with the government.
Mr Maves: You mentioned non-profits. Are you the president of a non-profit?
Mr Rupple: I am the president of two non-profits.
Mr Maves: I'm just curious, because I don't know how this is determined. How does someone become a president of a non-profit?
Mr Rupple: Well, we're the first in the province. We came into existence during Evelyn Gigantes's time. We were a tenant association. We decided that, enough of this, we were going to form our own non-profit and a tenant association non-profit. So all our members were members immediately. They elected a board of directors and I was elected to that board. As chairman of the board, I was also founding director of 1095 Jalna Tenants Association Inc. I've tried to leave the job three or four times. I've ended up re-elected each time and in addition I've taken on the responsibility of a tenants' advocate for the city of London.
Mr Maves: You mentioned that non-profit housing, the government -- for the next however many years your mortgage is for 35, which I think is normal -- subsidizes on a rent-geared-to-income basis each unit. What's the average that each unit's subsidized for?
Mr Rupple: The Ministry of Housing had put a stipulation of 70% would be subsidized housing; 30% would be market value rent. The 70% was based on their income, $27,000. That today is around $28,000. You would then receive a portion of your rent from the province.
1950
Mr Maves: What's the average subsidy for those units, the 70% that are RGI? What's the cost per unit to build? What would be the rent if it was just free market?
Mr Rupple: The cost of these units is approximately between $80,000 and $100,000, provided you build them according to the ministry standards.
Mr Maves: What's the rent per month on market to pay it off?
Mr Rupple: Market value on those units is around $850, $800 a month.
Mr Curling: I'll just follow through on that because I'm so glad you brought up non-profit because, with respect to my colleagues, I'm not quite sure how embracing they are to non-profit. Explain to us again, do those who have market rent in there pay the same amount of money as if they had gone next door to the private sector and paid that same amount?
Mr Rupple: That is true.
Mr Curling: Therefore, they are not subsidized by government?
Mr Rupple: Usually those market value rents on a non-profit and a co-op are much higher than what it is for the market value rent on the general public.
Mr Curling: So if someone has a belief to say that people who are in market rent units in the non-profit are not being subsidized by government, as a matter of fact, they are subsidizing government.
Mr Rupple: They're subsidizing the government, yes; not the government subsidizing them.
Mr Curling: You see, I want to understand it because I thought I understood it that way all along, but many of my colleagues sometimes believe that they are carrying it on the backs of the government.
Was the concept one of where we don't want to ghettoize people in low income but to build a community, that's why the non-profit came about?
Mr Rupple: Yes. Our non-profit came about as a tenant association non-profit, which are the only first two in the province of Ontario whereby the tenants control the board of directors, elect the board of directors, who administer the non-profit in such a way that it either breaks even or makes a slight profit. If it makes a slight profit it pays off that mortgage faster.
We had a scheme where we would take and run our own non-profit without a subsidy from the government. That subsidy now is the operating difference between what you would have for your full budget and what you would require to operate the complex for a year.
Mr Curling: The private sector states that if you could get that RGI and give it to them they could develop a community as well as a non-profit co-op. Could that be achieved if we just chased those people out of the non-profit and say, "Give it to the private sector; we can develop the same community?"
Mr Rupple: No, no, you couldn't, because you wouldn't have anyone who would be willing to organize. We don't get anything for this. It's been said that we are looking for a job. That was during the election. I've worked for five years now, I've lost $50,000 a year in business, and I have a business loss on paper of $23,000 a year for the last five years.
Mr Marchese: Mr Rupple, you obviously know this government has no interest in non-profit housing or cooperative housing.
Mr Rupple: Certainly. I certainly do.
Mr Marchese: I just wanted to be sure of that. We, as the New Democratic Party, and formerly a government, believed that we needed to create housing for those who have low incomes by and large, and we felt it was the government's responsibility to do that. They argue differently. They argue the government should not be involved in this issue of housing because they say the private sector should do that. Do you want to comment on that? Mr Rupple: Yes, I certainly do. How would you like to be paying $750 a month in rent as a mother on mother's allowance with two children receiving less than $1,000 a month? What are you going to buy for groceries? What are you going to buy for day care? What are you going to buy for food, clothing, medical expenses? What entertainment are you going to have in life? And I certainly know that you people have a lot of entertainment compared to what these people would have.
Mr Marchese: When you have power and privilege it certainly is a little better than most. No doubt about that.
Mr Rupple: I can afford entertainment, but I can certainly assure you that mothers on mother's allowance can't.
Mr Marchese: Part of what we did with cooperative housing was to create communities that we felt were livable communities. In the past many governments built housing where they housed all people who were very poor and, as a result, it created a lot of problems. In the cooperative housing model we have different people of all income ranges, of all different communities, housing the various different needs of people and, as a result, you have a community that is able to sustain itself and is able to accommodate the various income differences and sometimes racial differences as well. That's why we speak of communities as cooperatives. I'm not sure that the private sector builds communities that take all of these things into account. Are you aware of any?
Mr Rupple: Yes, they do. Various groups do. There are some groups -- well, I would class them as bigoted; maybe you would too -- where they have one group for one nationality, another group for another nationality. As a tenants' association, I represent everyone.
The Chair: Thank you very much, Mr Rupple, and thank you, Mr Marchese, for your questions. We do appreciate your being here tonight, sir, and giving us your input.
On behalf of the committee, thank you to the folks of London for your input today -- we do value it -- and for your hospitality. We now stand adjourned until 11:15 in Kitchener tomorrow.
The committee adjourned at 1956.