TENANT PROTECTION ACT, 1996 / LOI DE 1996 SUR LA PROTECTION DES LOCATAIRES
MULTIPLE DWELLING STANDARDS ASSOCIATION
CANADIAN PENSIONERS CONCERNED, ONTARIO DIVISION
ONTARIO HOME BUILDERS' ASSOCIATION
COUNCIL OF ONTARIO CONSTRUCTION ASSOCIATIONS
ONTARIO RESIDENTIAL CARE ASSOCIATION
MUNICIPALITY OF METROPOLITAN TORONTO
CANADIAN MENTAL HEALTH ASSOCIATION
CONTENTS
Thursday 26 June 1997
Tenant Protection Act, Bill 96, Mr Leach / Loi de 1996 sur la protection des locataires, projet de loi 96, M Leach
Mr Robert Levitt
Multiple Dwelling Standards Association
Mr Jan Schwartz
Canadian Pensioners Concerned, Ontario division
Ms Gerda Kaegi
Miss Mae Harman
Mr David Hulchanski
City of Toronto
Ms Kay Gardner
Ms Pamela Coburn
Ontario Home Builders' Association
Mr Al McLean
Mr Rob Cooper
Mr Scott Seiler
Mr Gary McIlravey
Council of Ontario Construction Associations
Mr David Surplis
Parkdale Tenants' Association
Mr Bart Poesiat
Ms Anna Thaker
Ms Jeanie Lee
Supportive Housing Coalition of Metropolitan Toronto; WoodGreen Community Housing; Robin Gardner Voce Non-Profit Homes
Ms Brigitte Witkowski
Ontario Residential Care Association
Mr Rick Winchell
Municipality of Metropolitan Toronto
Mr Alan Tonks
W.J. Realty Management
Mr Sam Grossman
Canadian Mental Health Association
Mr Glenn Thompson
Ms Ruth Stoddart
STANDING COMMITTEE ON GENERAL GOVERNMENT
Chair / Président: Mr David Tilson (Dufferin-Peel PC)
Vice-Chair / Vice-Présidente: Mrs Julia Munro (Durham-York PC)
Mr MikeColle (Oakwood L)
Mr HarryDanford (Hastings-Peterborough PC)
Mr CarlDeFaria (Mississauga East / -Est PC)
Mr EdDoyle (Wentworth East / -Est PC)
Mrs BarbaraFisher (Bruce PC)
Mr TomFroese (St Catharines-Brock PC)
Mr SteveGilchrist (Scarborough East / -Est PC)
Mr MichaelGravelle (Port Arthur L)
Mr RosarioMarchese (Fort York ND)
Mrs JuliaMunro (Durham-York PC)
Mr MarioSergio (Yorkview L)
Mr R. GaryStewart (Peterborough PC)
Mr DavidTilson (Dufferin-Peel PC)
Mr LenWood (Cochrane North / -Nord ND)
Substitutions present /Membres remplaçants présents:
Mr JimBrown (Scarborough West / -Ouest PC)
Mr DwightDuncan (Windsor-Walkerville L)
Mr BillGrimmett (Muskoka-Georgian Bay / Muskoka-Baie-Georgienne PC)
Mr JosephSpina (Brampton North / -Nord PC)
Mr WayneWettlaufer (Kitchener PC)
Also taking part /Autres participants et participantes:
Mr PeterKormos (Welland-Thorold ND)
Mr DavidTurnbull (York Mills PC)
Clerk / Greffier: Mr Tom Prins
Staff /Personnel: Ms Susan Swift, research officer, Legislative Research Service
The committee met at 0911 in room 151.
SUBCOMMITTEE REPORT
The Chair (Mr David Tilson): The purpose of the meeting is to review and consider the report of the subcommittee. Mr Duncan, could you read the subcommittee report, please?
Mr Dwight Duncan (Windsor-Walkerville): I've read it.
Interjection: Out loud.
Mr Mario Sergio (Yorkview): He's not sure he wants to do that.
Mr R. Gary Stewart (Peterborough): Give it to Jim. He can do it.
The Chair: You read it, if he doesn't want to read it.
Mr Steve Gilchrist (Scarborough East): "The subcommittee met Tuesday, June 24, 1997, and agreed to the following:
"(1) That in addition to advertising in each of the cities that the committee will be travelling to, an ad will also be placed in the French daily paper in Ottawa.
"(2) That the Chair, in consultation with the clerk, has the authority to solve any scheduling problems.
"(3) That the Chair, in consultation with the clerk, will decide how many interpreters the committee will use during each day of hearings.
"(4) That the subcommittee members will go back to their House leaders to request that the committee be allowed to do the following:
"Hold two days of hearings, during the committee's regular meeting time, in September.
"Travel for six days during the recess in September and/or October.
"Have one day of clause-by-clause consideration during this recess.
"Immediately report the bill back to the House when it resumes sitting in October."
If I can speak briefly to the report, Chair, there's no doubt that, by a two-out-of-three vote, that is the report of the subcommittee. Unfortunately, in clause 4 the other two members were relying on certain decisions to be made by the House leaders or the government House leader that have not been made.
First off, there was no House leaders' meeting at all. Second, the calendar motion we have adopted does not have a recess in September or October. So I move an amendment to the report of the subcommittee, namely, that section 4 be replaced and read:
"That the committee meet on August 5, 6, 7, 8, 11, 12, 13 and 14, 1997, for the purpose of public hearings in the cities outlined in the subcommittee report of June 12, 1997, and that clause-by-clause consideration take place on August 28 and September 4, 1997."
Mr Duncan: Why would you propose that we meet on Fridays and not on Monday?
Mr Gilchrist: August 4 is a holiday.
Mr Duncan: The one week is. It would work a little bit easier for the --
Mr Gilchrist: Excuse me. The second week is Monday, Tuesday, Wednesday and Thursday.
Mr Duncan: I see.
The Chair: Any questions, comments, debate?
Mr Sergio: As we had left it last time and per the committee report we have now, I went ahead and made arrangements for the first two weeks in August; I believe a deposit has already been made. As I mentioned to you before, I'm taking two weeks of French immersion lessons and I am not planning to be here the first two weeks in August.
The Chair: As Chair, I'm governed by the majority of the committee and the wishes of the committee. I don't know whether anyone can respond to that.
Mr Duncan: Might I suggest that it would be a little easier in terms of scheduling of our members if we could move Friday, August 8, to Friday, August 15.
Mr Gilchrist: I wouldn't have a problem with that.
Mr Rosario Marchese (Fort York): That wouldn't be helpful to me, because that week I am here and I'd prefer to be part of those. I want to argue against this generally, for a variety of reasons. Shifting one day doesn't really solve it for me, because this is a political question, really.
August is a difficult time. Generally, we meet at the end of August, that I can recall. People are almost back from their holidays, at least many people. People begin to pay attention to the issues later in the summer than in the middle of the summer. July is completely out of the question in terms of what people will do and won't do, as I think people understand, not just for the purposes of the public but for your purposes. For our purposes, of course, people need a rest, but for the purposes of the public, July is completely a waste. August is too, I would argue. We're doing something where the majority of people are likely not to pay too much attention.
I have to tell you, I'm a bit upset by this scheduling. We had agreed in the subcommittee two weeks ago or a week and a half ago, whenever we talked about it, to try to schedule some days late in August, during our session -- I thought that was reasonable -- and then immediately after, we were going to do two weeks or so of hearings, six days of hearings plus clause-by-clause. I thought that was a reasonable thing for the members and for the general public who would be interested in following and participating in debating this issue.
This, in my view, does a great disservice to the general public that has a great interest in this. By the general public, I don't mean the general public but rather tenants who, in my view, are very concerned about what you folks are doing with these legislative changes.
I'm telling you, I'm really protesting these dates, not just from a personal view but from a general and political view in terms of the fact that most people won't have a sense that these things are going on. It's very complicated to organize and very complicated for people to get here in the summer. I'm stating my objection to what you folks are doing with the scheduling.
Mr Gilchrist: Mr Marchese, I appreciate that coming back August 18 to continue work in the House certainly has changed the way that things operate in August. But I would just draw to your attention that we already have expressions of interest from more people than we could accommodate in Ottawa, London, Hamilton and the two more days in Toronto. So in terms of your comment that this might disadvantage people or somehow not have a full hearing in those towns, five of the eight days are already filled and we haven't even placed the advertisements yet. I think that is less of a consideration than it might be. I appreciate the clerk apprising us of the number of presenters who have already expressed an interest in appearing.
Our biggest problem is that the calendar motion that has already been adopted by the House has us coming back August 18 and does not speak to a break. The premise on which we had our earlier discussions does not appear to afford us the opportunity to change.
0920
The Chair: I have Mr Marchese and Mr Duncan on the list to speak, unless Mr Gilchrist has some more comments to make. I interrupted because I'm concerned about the process with the motion that's on the floor. The motion doesn't really refer to the subcommittee report.
Mr Gilchrist: I said that orally. I said I amend section 4 --
The Chair: Okay. So your intent is that 1, 2 and 3 stand and that section 4 has these dates you've referred to, August 5, 6, 7, 8, 11, 12, 13 and 14. Is that your intent?
Mr Gilchrist: That is correct, and the two days of clause-by-clause.
The Chair: And the two days of clause-by clause on August 28 and September 4.
Mr Marchese: For the record, Steve, yes, the calendar motion has us coming back. That doesn't make it easier or better. The fact that the government has done that doesn't change anything, other than that they've decided for political reasons to bring us back in August.
In terms of the hearings, you can get deputants to come, I suspect, and that's not a big deal. No one pays attention to the issues in the summer, by and large. We all know that. Some will be paying attention, no doubt, but generally the summer is a difficult period. You know that, Steve.
I'm not talking about our ability or inability to fill spots. That's not what I'm getting at. I am getting at the fact that the summer is a difficult time to get people's attention to the issues. I think you know that, I think your friends there know that, and I think the government knows that. I'm protesting that. We will get deputants, no doubt about that. That's not sufficient for me.
Mr Duncan: My reading of your government House leader's comments in the media this morning were that the intention is that the House will adjourn after about a month. That's quoted in this morning's Globe and Mail.
I think there is nothing to be gained by jamming these things into the first two weeks in August. There's a whole variety of reasons. We'll look forward to full attendance by the government at all these hearings as well. I think it would serve the public interest if we went back to our House leaders and said that a schedule that accommodates hearings in October -- I'll remind members of the committee opposite that the original motion doesn't contemplate -- it allows an escape latch, if you will, that the bill has to be reported back no later than November 1.
I don't understand the motivation in jamming these hearings into the first two weeks in August. I suspect there's just an element -- the government will probably argue that they have to have the bill by this date. I would tell government members opposite the bill won't be proclaimed, in any event, likely until November or December.
We'll certainly be there whenever the hearings happen, but it's crazy to jam them in when you're jamming them in because of (1) the lack of public interest, and (2) it would be very difficult for members. Let us be candid. We all go back to our constituencies in the summer. We all try to get our holidays in in the summer. It makes scheduling a lot more difficult.
It's going to be more difficult, I would submit, for government members because the obligation is on you folks to form quorum. We will be there at each stop. It's silly, the game that's being played. The government's own motion -- it's passed, it's in the record -- says the bill can be reported back as late as November 1. We can play these games and do this. We'll be there at all the hearings, but it's real silliness, in my view.
Mr Wayne Wettlaufer (Kitchener): I think everybody's missing the point here. Last year we travelled in August, and it was on the proposed legislation. There was no lack of interest; there was no lack of media coverage; there were no problems at all.
In so far as this year is concerned, the House is coming back sooner. It's coming back on August 18. Those who are concerned about wanting to spend time in their constituency will have the entire month of July to spend there. It is not abnormal to have only one or two weeks' holidays in the summertime, for those of us who have not been in public life before. It shouldn't inconvenience you in July. As far as August is concerned, that is the best time to travel. Committees generally travel in August in the summertime. It's the only way to get out to the public outside of Toronto.
Mr Marchese: The comments by Wayne are not helpful at all. I have to tell you, they're not helpful.
Mr Wettlaufer: Sorry. I tried to be.
Mr Marchese: Last time we travelled it was August 19. It was not the beginning of August; it was the middle of August. Also, it was a proposal, not a bill. This is a bill now, not a proposal. He makes it appear as if somehow we're missing the point. I don't know what point we're missing. What the hell are you talking about? We're not missing any point here.
The point you're making is that you want to rush this through to get it out of the way as fast as you can because you don't want to go past September. Say that. If you say that, it's clear and I understand it. But if you're saying we're missing some point -- we're not missing any point. We travelled August 19 on a proposal, and yes, we had people who came to depute.
This is a bill now, before we come back to a House sitting. There is a reason for that. I know why you're doing it. I'm telling you clearly why you're doing it. You want to get it out of the way because you don't want it to get in the way of other issues and you don't want to extend this issue beyond September. You don't want to do that, because the more you extend that into September, October and November, it gets politically messy for you and your buddy Mike Harris. That's the issue. I know that. Say that, though, but say it clearly so people will understand it.
Don't make it appear somehow for the record that we're missing some point. We're not missing any point. The real point has nothing to do with people's holidays, although people will take their holidays. People will work in July; I will do my work in July, because it's my intention to get out in my community in July. It's got nothing to do, necessarily, with people's holidays. It has a lot to do with people in the summer not paying attention to the issues, and this affects 3.2 million people.
Mr Wettlaufer: That isn't true.
Mr Marchese: What isn't true? I don't get it.
Mr Wettlaufer: They pay attention to the issues.
Mr Marchese: So that's the issue here. We're not confusing anything. It's quite clear. We're objecting to that, not anything else.
Mr Duncan: We'll be there in August. We look forward to seeing the government members there, all of you, and we'll have fun. I remind you that one of us likely will not be there at all the hearings. We'll release those this week so that you'll have to maintain your quorum in all these communities. Have a nice summer.
I would move, by the way, that we have the hearings the last two weeks in July and that we add three days.
Mr Gilchrist: There's a motion on the floor right now, so you can't do that.
Mr Duncan: I would add a further amendment to this amendment, that we meet in the last two weeks of July and add three additional days of hearings. I sense the government members are very anxious to be out this summer meeting with people, so I'll make that motion.
The Chair: Just so I understand, Mr Duncan, you're suggesting an amendment to the amendment which will say we will meet the last two weeks of July?
Mr Duncan: That we meet the last two weeks of July. I further propose that we add three additional days of public hearings to accommodate all the delegations that want to be heard. I sense the government members want to have extensive public hearings on this, and I am quite prepared to be there every day to make sure you can be there to hear those public hearings. I hope the government will support that, based on what my colleague opposite just said.
The Chair: The problem, Mr Duncan, is that this committee is governed by the order of the House, and the order of House has specified the number of days as being eight days. That amendment you have put forward expands that, and I don't think the committee can do that.
Mr Duncan: I would move, then, that we send it back to the House leaders to request those additional days in July so we can all meet and hear the extra delegations.
Mr Gilchrist: That's substantive. That's not an amendment of my amendment.
The Chair: Mr Duncan, the problem with that is that it's not the House leaders who decide these things. A motion in the House restricts the time to eight days, so that amendment as well is out of order.
0930
Mr Duncan: Then I'll move that the eight days of hearings that we're proposing be held in the last two weeks of July.
The Chair: It appears we have an amendment to an amendment. That amendment appears to be in order, Mr Duncan. Debate?
Mr Sergio: To the parliamentary assistant, what is the purpose of bringing this amendment now?
Mr Gilchrist: The purpose is to conform with the motion of the House that we have eight travel days prior to the return of the fall session, which begins on August 18.
Mr Sergio: I have no problem with the eight days. Why are you changing the dates?
Mr Gilchrist: I'm not changing any dates that deviated from that House motion. The motion that's before you, voted on by your party and the NDP, does not conform. Obviously, September and October do not fall before August 18, so they are outside the spirit of the House motion and we cannot deviate, as the Chair has just indicated, from the House motion.
Mr Sergio: Mr Chair, at the beginning you said that the House will be sitting right through, starting August 18.
Mr Gilchrist: The Chair didn't say that. I said that the motion we passed in the House simply says the fall session starts August 18.
Mr Sergio: Let me finish. I would assume that you have brought this motion here with the assumption that the House will be sitting starting August 18 and going right through, so there would be no time for the committee to meet in September or in October. Have you ascertained for sure that the House will be sitting right through after August 18?
Mr Gilchrist: All I know is what has been voted on in the House. We voted on two motions, one which says, starting August 18, the fall session, without a break --
Mr Sergio: Mr Chair, I would suggest that before we continue debate on this one here, because we seem to have difficulties for various reasons, and no reason has been put on the floor that we don't want to sit because we don't want to sit. There are some serious difficulties with it. Why can't we ascertain exactly if the House will be sitting right through? If it doesn't, then I think our problem is solved. I don't think the committee will have any problem in sitting in September, since we have plenty of time to have the report ready for November 1.
The Chair: Mr Sergio, there are two comments I have with respect to your request. First of all, I would prefer that we restrict our debate to the amendment to the amendment which has been made by your caucus that we meet the last two weeks of July. I believe the House motion, which I have asked the clerk to get me a copy of, states that this must be dealt with in the summer session, which will end -- if you have a copy, you could read it. We're governed by the motion of the House, Mr Sergio. It's as simple as that.
Mr Sergio: I realize, but I wasn't fully finished. The thing is this, that unless you as Chair --
The Chair: If I could read the motion to you, which we are governed by, which was moved by Mr Johnson and passed in the House on June 24: "That notwithstanding standing order 6(a), when the House adjourns on Thursday, June 26, 1997, it stand adjourned until Monday, August 18, 1997, which date commences the fall sessional period."
The former motion of the House, if I recall, says that the public hearings of this bill must be disposed of in the summer session. We're governed by the orders of the House. No matter what members of the committee may feel or wish, we are governed by the order of the assembly and we have two orders that say that the public hearings must be wound up by August 18. That's the problem.
Mr Sergio: I just want to say this: It seems that there is still some doubt if the House will be sitting right through starting August 18. I think it would be proper for the Chair to ascertain for sure that is the case.
The Chair: Mr Sergio, it doesn't matter whether the House is sitting right through or not. The fact of the matter is that the motion that's been moved and passed in the House says that this bill must be disposed of by this committee by August 18, or by the summer session. Do you have the wording of that one?
Mr Duncan: It also gives an escape hatch of November 1.
Mr Gilchrist: No, for clause-by-clause.
The Chair: With respect to clause-by-clause, but with respect to public hearings, I think we're governed by that first order.
Mr Sergio: Unless, Mr Chair, you make every effort to find that out, then we have no other choice.
The Chair: I'll read the other motion that I've referred to, which is a motion that was passed June 2. There are a number of provisions, but one of the provisions says, "That the standing committee further be authorized to meet to consider the bill for eight days during the summer recess." The summer recess will end prior to August 18, so the public hearings must be heard prior to August 18. It's as simple as that. Members of the committee can wish all they want to proceed into the latter part of August or September, October, November, December; we don't have the authority to. We're governed by the orders of the assembly.
Mr Sergio: I hate to say this, Mr Chair. You always have the majority here and you always get your way, sooner or later. It doesn't matter what we say. The thing is this: I don't see any reasonable effort being made by you, the parliamentary assistant, the members on the government side to try and suit everybody. That is most unfortunate. If you want to sit in July, all of July, three weeks in July, let's do it, but you will not see me here in the first two weeks of August, as we have already made arrangements.
The Chair: Mr Sergio, it's regrettable that you would comment on my actions. I can only tell you I'm governed by the orders of the assembly, as is everyone else in this place.
Mr Duncan: I would propose the last two weeks in July, and let me just be quite candid with you, Mr Chair. From a scheduling perspective, I can ensure better attendance of our members the last two weeks of July than I can the first two weeks of August. We will be there the first two weeks of August, but in the interest of facilitating full attendance, it would certainly make it easier for the official opposition to have its members all present if we do the hearings the last two weeks of July.
I believe that if the government really wanted to make an effort to accommodate, it could. You're the government and you've got your reasons for not wanting to do that. Enjoy it. We'll be there whenever you have it. I just think it's really unfortunate that we're all going to be in an awkward position, whether we have them in July or whether we have them in August. I suspect it'll be a problem for a number of the delegations as well, whether you have them in July or August.
I just think that if you really wanted to, we could have discussed this issue more. I sensed earlier there was a willingness on the part of the three parties on the committee as well as the House leaders. I don't know why we can't do that now. I understand you've got motions in the House. Motions in the House get changed from time to time through discussion, through openness. My amendment is the end of July.
Let me be clear. It will be easier for us to schedule the last two weeks of July than the first two weeks of August. It's unfortunate that we're put in this position. I've spoken with a number of organizations that are giving presentations and they can be ready by the end of July. I just think it's unfortunate that rather than deal with an obvious problem of scheduling people when the House isn't sitting, we're just going to come in, decide on a number of days, force the government members as well as the opposition members to accommodate, for whatever reason, I don't know why, without at least the opportunity to discuss it in a civil manner.
But that's fine. I propose the last two weeks of July. From a scheduling perspective, it makes more sense for the official opposition. I apologize to any government members who have other plans at that point in time, either in their constituencies or holidays, but in terms of being candid with you, Mr Chair, and with my colleagues on the committee, from a scheduling perspective, the last two weeks of July make more sense for us. We will be there the first two weeks of August, but from a scheduling perspective, the last two weeks of July make more sense.
Mr Stewart: I'd like to comment that it doesn't matter whether it's the last two weeks in July or the first two in August, there are going to be people who have made other plans. So be it and let's get on with this thing. You have two motions on the floor. I would suggest that we call the question.
0940
The Chair: Mr Marchese had his hand up. I'm going to allow Mr Marchese to have the last word.
Mr Marchese: I know you're governed by the motion of the House and that you, as Chair, abide by that. Part of the motion is that we would have clause-by-clause by November 1. The committee can decide which eight days we would be travelling, so there is nothing in there that says, "You will do it before August 18." You are not prescribed by that, Mr Chair. You are not governed by that. This committee decides the dates. I wanted, for the record, to tell you that.
This committee could decide to do it in September, could decide any time in September or after the House adjourns, to do it late September or early October. We could do it then and then have clause-by-clause before November 1. It's the decision of this committee as to the times. This committee, through Mr Gilchrist, the parliamentary assistant, and the other members, have decided in conjunction with the government that they want it before August 18. That's the politics of this issue. I just wanted to put that, again, for the record.
The Chair: Just for the record, Mr Marchese, I'm going to read the House order as passed on June 2. This is with respect to the general government committee: "That the standing committee further be authorized to meet to consider the bill for eight days during the summer recess." That has to be read with the motion that was just passed June 24, which states, "That notwithstanding standing order 6(a), when the House adjourns on Thursday, June 26, 1997, it stand adjourned until Monday, August 18, 1997, which date commences the fall sessional period."
The Chair interprets it that this committee must dispose of its public hearings during the summer session, which ends I guess August 18. That's how the Chair interprets it.
Mr Marchese: Mr Chair, your government is altering the seasons. It altered the season in January. It's altering the seasons again in August. They're deciding what seasons come and go now. That's really the problem.
Mr Joseph Spina (Brampton North): The leaves are going to fall in July.
The Chair: This meeting started some time ago.
Mr Marchese: Okay, Mr Chair, we're ready to go.
The Chair: I think we've had adequate debate. We first of all have Mr Duncan's amendment, which essentially says that we meet during the last two weeks of July. All those in favour of Mr Duncan's amendment? All those opposed? The amendment is defeated.
Interjection.
The Chair: I've been corrected. The amendment to the amendment has been defeated.
The amendment to the report of the subcommittee, just so members are clear, is that the committee meet on August 5, 6, 7, 8, 11, 12, 13 and 14.
Mr Duncan: On a point of order, Mr Chair: I did suggest to the parliamentary assistant --
Mr Gilchrist: Mr Marchese then disagreed with that, so it would have to be another amendment.
The Chair: We're in the middle of a vote here, Mr Duncan.
Mr Duncan: I just wanted to point out that I had suggested that it would be easier again in accommodating, to be sure that we have our members, if we could do Friday, the 15th, rather than Friday, the 8th, but apparently that poses problems for Mr Marchese.
The Chair: It doesn't appear to have agreement, Mr Duncan, so I guess we can't please everyone.
Mr Duncan: Yes.
The Chair: Is everyone clear as to what the amendment is?
Mr Gilchrist: They all have a copy in front of them.
Mr Marchese: On a recorded vote.
The Chair: Mr Marchese requests a recorded vote. All those in favour of the amendment which is before you? It essentially deletes --
Interjections.
Mr Stewart: I'm amazed how you can be so smart, Mr Sergio. You just blow my mind that you're so intelligent with these comments you make.
The Chair: I'd like to vote on this, Mr Stewart. This essentially deletes section 4 of the subcommittee report.
Ayes
Doyle, Gilchrist, Munro, Spina, Stewart, Wettlaufer.
Nays
Duncan, Marchese, Sergio.
The Chair: The amendment is carried. Therefore, I would ask for a vote on the approval of the subcommittee report, as amended.
Mr Duncan: On the report, point 2, my understanding was that what we agreed to at the subcommittee meeting was that the Chair would have the authority to solve scheduling problems around one group or another, not one day or another. If we could just have wording to that effect in the motion, that would satisfy the official opposition.
The Chair: What wording are you suggesting, Mr Duncan?
Mr Gilchrist: Within any day?
Mr Duncan: "That the Chair, in consultation with the clerk, has the authority to solve any scheduling problems within any day."
Mr Gilchrist: That's fine. We have no problem with that.
Mr Marchese: You assumed that was the case. Right, Mr Chair?
The Chair: It appears we're going to have to vote on your amendment, Mr Duncan. All those in favour of Mr Duncan's amendment? Carried.
All those in favour of the report of the subcommittee, as amended? The motion is carried.
Mr Marchese: Mr Chairman, I'd just like to ask for a recess.
The Chair: Sure. That's reasonable. We'll recess for 10 minutes.
The committee recessed from 0949 to 0958.
Mr Duncan: Mr Chair, I've just been informed that the House leaders are meeting today. I'm not certain why they are meeting, but our House leader has agreed to put the issue of scheduling on the agenda for that meeting. I wanted to speak to the parliamentary assistant prior to this session starting, but he's not back yet. I wonder if it would be in order to simply say that we would be prepared to revisit -- here's the parliamentary assistant now -- the scheduling issue subsequent to that meeting.
The Chair: I'm in the hands of the committee, which, in turn, is in the hands of the House leaders. Your point is taken and we'll see how the day progresses.
TENANT PROTECTION ACT, 1996 / LOI DE 1996 SUR LA PROTECTION DES LOCATAIRES
Consideration of Bill 96, An Act to Consolidate and Revise the Law with respect to Residential Tenancies / Projet de loi 96, Loi codifiant et révisant le droit de la location à usage d'habitation.
ROBERT LEVITT
The Chair: Our first delegation is Robert Levitt. Good morning, Mr Levitt. You have 15 minutes to make your presentation, which includes time for questions from the committee.
Mr Robert Levitt: My presentation is based upon the written document I submitted today as well as the one from last summer's hearings. My presentation is in three parts: the first clarifies various claims, the second is a historical perspective and the last is advice to assist the government members.
I expect order to be consistently maintained throughout my 15 minutes of allotted time. I was pleased on June 12 at how quickly the four women in the front row were stopped from interrupting, but then nothing was done when Ms Davis-Bonar, who was confined to a wheelchair by MS, was being distracted by the open chuckling by Philip Dewan of the Fair Rental Policy Organization while she was trying to outline issues concerning the disabled.
Part 1, myth versus fact: Minister Al Leach said on June 12, 1997, "All of these protections...remain in place for tenants as long as the tenants continue to live in the apartment." The result of Bill 96 is that many people will be financial prisoners of their apartments. Should they need to move to be close to a job, whether it be a new job or a job to get off government assistance, move due to changing family size, move due to a changing financial situation or to get away from a threatening domestic situation, they are not protected. Conversely, vacancy decontrol in Bill 96 is a direct financial incentive for unscrupulous landlords to force tenants out so they can raise the rents as much as they can get away with.
On that same day the minister said, "If harassment occurs, an enforcement unit in my ministry takes action. And the current maximum fine for...harassing a tenant is $25,000." The minister's PA, Mr Gilchrist, called the doubling of the maximum fines "staggering." Property standards violations are also being doubled from $50,000 to $100,000. Yet in 1996, under this government, there were fines for both harassment and standards violations totalling only $63,200 for 57 charges, for an average fine of only $1,109. This amounts to nothing more that a licence fee to permit harassment and violations. Claiming that doubling maximums will fix the problem when no fine ever comes close to maximum is a staggering deception on the government's part.
The government likes to label such legitimate concerns as fearmongering. Yet on March 7, 1997, I attended a landlords' seminar sponsored by Coinamatic, which had Derek Lobo, a Sarnia and Brantford landlord, as its speaker. Mr Lobo did not seem to care about Bill 96, even after it had been out for over three months, because he said you should get as much as you can out of sitting tenants, but before you give them increases, you should test the market with new tenants to see what the market will bear. But the really offensive suggestion he made was that good pet owners will be willing to pay extra rent for their pets and that perhaps $1 per pound of pet should be added to the monthly rent. I never got to ask Mr Lobo whether perhaps seeing-eye dog owners should be charged even more because they must really want to keep their animals.
Mr Leach said before this committee on June 12, "Rent control has got to go." This has obviously been the goal all along, as Mr Leach has repeatedly stated his goal is to "let the markets control rents." The term John Parker, PC MPP, came up with was "Trojan horse," and that is exactly what vacancy decontrol in Bill 96 is. It's a Trojan horse to make people complacent that they are safe as long as they stay in the very same unit. Either through attrition, since some 70% of tenants move at least once in every five-year period, or by surprise by future legislation that will wipe it out entirely, all real control over rents will be eliminated by this government against the wishes of the citizens.
Of course there are backup methods to emasculate rent controls. To quote one of the pros cited in the June 1996 issue of the landlord lobby group FRPO's newsletter:
"Elimination of the Rent Registry: The absence of a rent registry will make it virtually impossible for any future government to reimpose strict controls based on former rents."
Unlike their newsletter to their fellow landlords, FRPO was less than frank with this committee. They talked about rent controls being harmful and wrote, "Economists are united in their consensus that rent controls ultimately lead to a deterioration in the quantity and quality of rental housing." This statement is completely false. Perhaps this is why they don't even try to substantiate their many claims. Professors of economics Frank Denton, Andrew Muller, PhD in economics, Leslie Robb, PhD, Christine Feaver and Byron G. Spencer, PhD in economics, all of the economics department of McMaster University, completely disagree with FRPO in their report Testing Hypotheses About Rent Controls.
This study was an independent statistical study commissioned by Canada Mortgage and Housing Corp, which found that, "There is no convincing evidence that controls affect the responsiveness of apartment unit starts to either vacancy rates or rents" and that, "There is no evidence that controls increase the proportion of occupied rental dwellings in need of major repairs."
This compares with the Greg Lampert report which, as part of its terms of reference, used an industry report as its basis and had to consult both on September 14 and November 9, 1995, with the following special interest groups: the Fair Rental Policy Organization of Ontario, the Urban Development Institute/Ontario, the Greater Toronto Home Builders' Association, the Ontario Home Builders' Association, the Canadian Bankers Association, the Metropolitan Toronto Apartment Builders Association and the Ontario Association of Architects. Mr Lampert's hands were tied by the ministry's terms of reference and his report had to be based upon the "industry insiders." Nowhere does he say that rent controls caused any of the problems, only that the landlords and builders claim they are a psychological barrier to construction with no evidence whatsoever to back up these claims.
There is simple evidence of the truth in the example of British Columbia. In spite of the claims Mr Leach made last summer that it was the NDP in BC who ended rent controls there, a claim repeated by others in this government, it is not so. This is just another myth being perpetuated by this government. It was in fact the Social Credit government who repealed controls in BC in 1983. They promised the people of BC that thousands of new units would be built and new jobs created -- very similar to the unsupported claims Mr Leach made.
In BC just the opposite happened. In 1982, with rent controls about 8,000 private sector rental units were constructed, which then dropped every year without controls to about 1,000 annual units in 1986. Landlords demanded mortgage subsidies from BC, which they got in 1989, but annual construction to this day still has not exceeded 2,500 units, less than one third of the 1982 levels under rent controls. The promised units and jobs never materialized.
There are similar claims that rent controls are the reason construction stopped in the 1970s, but if you look at the chart on page 17 of the Ontario government's own New Directions paper, you will see that construction started plummeting after 1972, three years before rent controls came into effect, but coinciding with the 1972 federal and provincial tax restructuring. It was that restructuring, which eliminated many tax incentives including depreciation allowances and subsidies, that led to the drop in construction. Apartments are not just a commodity; they are part of community infrastructure that was built with the assistance of taxpayers through tax breaks and subsidies.
A University of British Columbia study called Urban Rental Housing in Canada, 1900 to 1985, shows there has always been a shortage of rental housing without government intervention. It is what University of Toronto professor David Hulchanski calls "market failure." The free market will never provide the needed units, especially at the low-priced end of the market.
Rent controls keep on getting blamed for lack of construction, poor maintenance and everything short of atmospheric ozone depletion. But the Urban Development Institute in their speech before this committee blamed items such as taxation, development charges and the cost of serviced land for the lack of construction. When further questioned, they could only label rent controls as a psychological barrier to construction without providing evidence for this claim.
Just a few weeks ago, the East York building inspector, Mayor Prue, the landlord and the 91 Cosburn Avenue Tenants' Association gathered after an inspection of the building. Jeffrey Wynn, the landlord, said some of the repairs could not be done for two years because he could not afford them. He didn't blame his company's financial woes on rent controls; he blamed it on having just bought an additional 720 units in two buildings in Parkdale to add to their existing 18 high-rise buildings.
Mr Leach says that the annual 10% average profits for landlords over the past 10 years reported in the very respected Globe and Mail Report on Business are false. The government is claiming that landlords are only making 2% to 4%. But on the July 20, 1996, Global Television's Focus Ontario program, Philip Dewan did not dispute the Globe report. He just compared 10% to the rates he falsely inflated for Ontario savings bonds.
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I have here some building sales sheets from a PC Party contributor, J. J. Barnicke Ltd, and they are claiming returns on equity of 14.4%, 18.2%, 16.7%, 17.6%, 23.7% and 11%, not the 2% to 4% the government is suddenly claiming. The government is getting so desperate for numbers that might appear to support their position, now they have come up with "80% of apartment buildings are six units or less and are owned by small businessmen...." The percentage of buildings by size is irrelevant, as a very small community might have four buildings of six units and one of 216 units. In this example, 80% of all buildings are the small ones, but 90% of all the units are in the big building. As for being owned by small businessmen, that appears to be another unsupported claim.
I have requested the source of Mr Leach's claims from the ministry, but as has been their habit, they have not answered my inquiry and it appears I will be forced to once again do a freedom of information request to see if there is any basis for these government claims.
Then there is the new tribunal. Landlords can still make whole building applications, but now tenants will be forced to make applications individually for every apartment. This will not speed up the process, as the government claims the tribunal will, unless it is by means of discouraging most tenant applications. Then there is the filing fee, which is not to be waived in any circumstance, which will likely be a barrier to the disabled and elderly, as well as anybody on a fixed income or government benefits. A tribunal with these barriers is no protection whatsoever to the majority of tenants.
Democracy is a slow and inefficient process. Governments whose priorities are efficiency are sometimes less than democratic and honest. Recently when asked by reporters what his favourite book was, Premier Harris said, "Mr Silly." After reading and hearing all the unsubstantiated or outright false and misleading statements being used by the government to support Bill 96, given the misnomer of the Tenant Protection Act, while it removes many of the most important protections tenants presently have, I am led to wonder what books the architects of this misinformation have been reading. What comes to mind is the book Through The Looking Glass by Lewis Carroll and the passage: "`But "glory" doesn't mean "a nice knock-down argument,"' Alice objected. `When I use a word,' Humpty Dumpty said in a rather scornful tone, `it means just what I choose it to mean -- neither more nor less.'" Or perhaps, "The great masses of the people...will more easily fall victim to a great lie than to a small one," this latter quote being from Mein Kampf.
Part 2, a historical perspective: Those who can't remember the past are condemned to repeat it.
In 1971, Republican New York state Governor Nelson Rockefeller brought in vacancy decontrol, very much like the present Ontario government is doing. Due to the devastating social as well as financial impacts of these changes, in 1973 Rockefeller commissioned a state study into the results of his policies. Data from landlord groups in New York City showed average rent increases of 52% above guideline levels in 1972 for decontrolled units. For poor renters, making up 34% of the decontrolled units, governments ended up assisting these people so they could afford a place to live.
Page 10 of the report says, "The lower-priced rental accommodations experienced the greatest percentage increases under vacancy decontrol, averaging 60.6% city-wide and 74% in both the Bronx and Brooklyn."
The Chair: If I can assist you, Mr Levitt, you have one minute.
Mr Levitt: I thought I had about three more. Anyway, the conclusion of the study was:
"No beneficial side-effects have resulted from vacancy decontrol; major capital investment has slowed, new construction has been unaffected....
"Vacancy decontrol has placed an extreme hardship on the tenants of this state, particularly on the elderly and the poor, in the form of increased rent and insecurity.
"The vacancy rate of the Metropolitan area is 2.03%, much below that level needed to provide free market competition. The policy of returning vacant apartments to the free market has failed because the free market does not exist in the Metropolitan area."
Governor Rockefeller admitted his mistake, repealed vacancy decontrol and brought back rent controls, but the electorate did not forgive him and for the next two decades there were only Democrat governors elected in the state.
You have already had high-profile Conservatives, such as Mr Keith Norton and Mr Michael Walker, objecting to Bill 96 because they understand what the impacts will be. What will the voters do when they see the negative impacts, not just on tenants but on all property owners, as well as on local businesses?
The Chair: Thank you very much for your presentation this morning. Unfortunately there's no time for questions. I'm sure members would like to question you, but your time has expired.
MULTIPLE DWELLING STANDARDS ASSOCIATION
The Chair: The next delegation is the Multiple Dwelling Standards Association and the presenter is Jan Schwartz. Mr Schwartz, good morning.
Mr Jan Schwartz: My name is Jan Schwartz and I'm the president of the Multiple Dwelling Standards Association, MDSA for short, on whose behalf this submission is being made.
Our organization, which dates back to October 1970, does not represent builders or developers. Most of our members entered the rental housing field as investors, having purchased existing buildings, predominantly older structures. Many of these people put their life savings, or a great chunk of it, as a down payment on a six- or 10-plex. Some others pooled their resources and formed partnerships in order to acquire a 50- or 60-unit building. These investors and landlords came from different walks of life, working in offices, factories, shops, various professions. Many of them still do. Others have enough units to require their total full-time involvement and depend entirely on their rental income.
A substantial number of our members have reached the age of retirement and their rental income represents either their sole or primary source of income. A considerable number reside in their own buildings. In fact, the smaller the building the more likely it is to be owner-occupied. Contrary to popular belief, the bulk of the province's rental housing stock is owned by such small-scale landlords rather than by large corporations of builders and developers.
Last summer, the housing ministry released an information package with rather revealing data: 80% of rental buildings in Ontario are made up of four or fewer units, indicating that the bulk of landlords own small buildings, and only 23% of rental units are found in large, high-rise buildings of 100 or more suites. Unfortunately most of the small-scale owners do not possess the financial, technical or management sophistication of larger corporate landlords. Nevertheless rental housing has been an accepted part of the investment activity in this province for many years.
However, an unexpected turn of events took place in 1990. A new government emerged in Ontario with quite different ideas about the structure of ownership in the rental housing field. The impact of the NDP rent control legislation was particularly harsh on the smaller landlords who didn't have the means to survive the blows delivered by the retroactive Bill 4 and the Rent Control Act, 1992, which remains the law of the land to this very day but hopefully for not much longer.
The proposed new Bill 96 is a definite improvement over the current law but it fails to recognize the realities of the present market condition. Five years ago we would have embraced such a bill enthusiastically. However, our concerns today are not the same as we had in 1992.
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The vacancy rate is the highest in many years, particularly in older buildings. In many cases, when a unit is vacated, the landlord has to lower the rent or take chances on borderline applicants. This in turn results in increases in bad debts. Above-guideline rent increases, for all practical purposes, have disappeared. A vast majority of rents across the province, including Metro, are now below the maximum level.
Obviously, the market has become the ultimate protector of tenants. The market has done a better job in this respect than any of the rent control systems in the past, including the current one initiated by the Rae government. In view of this, it is hard to comprehend the argument that upon vacancy decontrol rents will go right through the roof. Such talk is nothing but scaremongering propaganda. Although the turnover is the highest in many years, landlords are lucky these days if they can rent a vacant unit for the same rent the previous tenant paid. As for the units with chronically depressed rents, unfortunately tenants in those units sit tight. They hardly ever move. Why give up the bargain of a lifetime? Most of the turnovers occur in the higher-priced units and the market forces take care of the overpriced cases. And that is how it should be.
The only cases where the market is powerless are the cases of certain buildings or individual units with chronically depressed rents. And this is one case where Bill 96 does nothing about it. A number of buildings have two-bedroom units where the rent is cheaper than some one-bedroom apartments. Surely a way could be found to eliminate such inequities. Under the Liberal regime they introduced equalization for similar units in a certain given building. Why perpetuate something obviously wrong? Why not even try to fix it? How would you feel or how would anyone feel if you paid $800 a month for a two-bedroom apartment while your neighbour next door paid $715 for a three-bedroom apartment?
Now some comments about section 122 of Bill 96. When the consultation paper entitled New Directions for Discussion was released last summer, one of the proposals seemed particularly attractive to small-scale landlords with a limited number of rental units. In smaller buildings, the relationship between landlords and tenants is more personal and quite different than in high-rise complexes. Although rent increases above the guideline are not permitted under the current law without filing a proper application, it is not uncommon for a tenant and landlord to agree between themselves to an above-guideline increase in consideration of certain improvements to the unit, such as, for instance, a new frost-free refrigerator, a new counter top in the kitchen, carpeting, painting etc. In this example, an increase of $60 a month, or 10%, on a rental of $600 made good sense to both parties.
In the past, we at the MDSA discouraged such arrangements for two reasons: First, they were unlawful, and second, they could backfire if the tenant at some future date refused to honour this gentleman's agreement. Now, at last, it is being proposed for the first time in over two decades to legitimize such agreements made voluntarily between tenants and landlords.
To us, it looked like common sense had prevailed at last. After all, why should the government intervene when both parties to an agreement are satisfied with the deal? The five-day cooling-off period seemed fair enough. However, the imposition of a 4% cap, plus the requirement that no such agreement can be made before 12 months have elapsed since the last rent increase, make this entire section redundant. To make this great idea workable, the two handicaps -- the 4% cap and 12-month waiting period as outlined above -- must be removed.
Now I'm ready for some questions.
The Chair: We'll start with the Liberal caucus.
Mr Duncan: How much time, Mr Chair?
The Chair: We've got time for a couple of questions each.
Mr Duncan: For a small investor, let's say for somebody perhaps like yourself, when they initially invest, in your statement you said they would perhaps use their life savings as a down payment and then I presume finance, either through a bank or other financial institution, a mortgage to pay off the balance of the purchase price. What is the impact of declining interest rates on the financial statement of a small landlord, say, as opposed to a rent increase?
Mr Schwartz: The mortgage is running until it matures. If somebody has a mortgage which just happened to expire at this point, obviously there will be the benefit of a lower interest rate.
Mr Duncan: Can I just ask one other question? I've never invested in a property. When you take out a mortgage for an investment property like this, is the interest rate renewable? Can you get different renewal periods, one year, three years, five years, the way you can on a homeowner's mortgage or is the financing different?
Mr Schwartz: In most cases, I would say a mortgage would run 10 years or five years. It depends at which time you started.
Mr Duncan: Do you have the same flexibility a homeowner has when you renew your mortgage, a one-year period or a two-year period?
Mr Schwartz: In some cases it could happen, but that's not the majority of cases.
The Chair: Mr Sergio.
Mr Sergio: Do we have time?
The Chair: Yes, you do.
Mr Sergio: Just a quick one. I guess every investor when they purchase a property for investment purposes expects some return on their investment, even though they may say, "It's a long-term investment." When you purchase that property, you would make arrangements, as a wise investor, to see that year after year you prepare for those necessary repairs, even though legislation allows you, the landlord, a 6.8% increase automatically every year. Would 6.8% be a good return? Would that give you the possibility to maintain your buildings?
Mr Schwartz: When you buy an apartment building, you take on a lot of risks such as you could not foresee when you bought the building. I'll give you two examples. One example is vacancies. There was a time when there were very few. Today it's a completely different picture. Today vacancies have increased. For the last year or two, they've been going up and up. If you have a number of vacancies in your building, then your whole initial calculation is out of whack. Second, breakdowns, especially older buildings. Most of the members in our organization have buildings that are 50 years old, 40 years old, even older, and things break down. Again, you cannot foresee everything.
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Mr Sergio: Under the proposed legislation today, a municipal inspector can come in and say, "Your building is deficient in these particular areas," and he's going to give you a summons immediately, without warning, without time limits. He's going to say: "You've got to fix it. There's a fine for you, because you're not maintaining your building." Under the proposed legislation, that municipal inspector doesn't want to know your vacancy in the building, if it's 70%, 10% or whatever. Your building is deficient; therefore you are guilty of not maintaining your building. What do you say to that?
Mr Schwartz: That's terrible.
Mr Sergio: Scary?
Mr Schwartz: Sure it's scary.
Mr Sergio: Are you saying you don't like this part of the legislation the way it's being proposed?
Mr Schwartz: Look, today the market rules --
Mr Sergio: Are you familiar with that part of the legislation?
The Chair: Give him a chance to respond.
Mr Schwartz: Today it is just like it used to be many years ago, before rent control ever came into the picture. What does an owner do if all of a sudden he's being hit with some major problems? The roof is leaking so badly that he can't fix it any more, he's got to replace it, and the electrical system, the plumbing system -- it can happen all at once. In the pre-rent-control days you didn't have some place where you could apply for a capital expenditure and get an increase. The market was controlling the rents. The situation today is very similar to the way it used to be before 1975.
Mr David Turnbull (York Mills): Mr Schwartz, welcome to the committee. I know you have presented to many committees in the past, and I'm aware that predominantly your membership is the people who own older buildings and particularly smaller buildings.
Can you perhaps clarify for the committee the aspect of the fact that some years ago some landlords wanted to set up sinking funds in order to repair buildings and that Revenue Canada disallowed that and therefore forced landlords always to contemplate paying for renovations out of their current income and only after they'd actually repaired the buildings? Could you further comment on what the impact will be on a chronically depressed building, given the fact that they have a cap of 4% on repairs?
Mr Schwartz: A free market can be cruel. You're talking about a 4% cap on capital expenditures, which is better than 3%, which is what it is today, and it's better in other aspects as well. But if the market tells you that you can't get more than a certain amount, what do you do? You're in a tough spot.
Mr Turnbull: But on a chronically depressed building --
Mr Schwartz: People with chronically depressed units, the way it is set up now and has been for many years, they're stuck in an impossible position, because their rents are so low compared to similar units in the area that it's most unfair. I did mention here that this bill did nothing about chronically depressed rents.
All our thinking is still dated back to the days where the market would allow you more and if you needed more above the guideline, you applied for capital expenditures. This whole picture has changed. I had to replace a roof two years ago and I decided not to apply because I didn't want to upset my tenants. Most of my rents were at the market level. Sure, I had about 10% which you might describe as chronically depressed, but for the sake of those few I wasn't going to jeopardize my relations with the rest of the tenants.
The worst thing for me would be that they start shopping around, because we're in competition with newer buildings. My buildings don't have underground parking. They don't have air-conditioning. They have just a fridge and a stove, no other appliances. Anybody who wants to shop around can find something newer and possibly cheaper, so for me to disturb them with just the mere fact that I'm making an application would be suicidal.
The point I'm trying to make today is that we are in a different world today. The market is controlling the majority of rents. Only 10% or 15% at the most of chronically depressed are being controlled by the legislation. The rents may be 20% below market and there's nothing you can do about it.
The Chair: Thank you, Mr Schwartz. You're time has expired, but you've certainly stimulated some questions. Thank you for coming.
CANADIAN PENSIONERS CONCERNED, ONTARIO DIVISION
The Chair: The next delegation is the Canadian Pensioners Concerned, Ontario division; Gerda Kaegi and Mae Harman.
Ms Gerda Kaegi: I'm Gerda Kaegi. Beside me is our president, Mae Harman. I'm going to do the presentation on behalf of Canadian Pensioners Concerned. What I'd like to do is speak to the recommendations we've made. I know you have the documents before you, so I'd like to go into some of our concerns and not just repeat what you've already got in writing.
At the heart of our issue is the conflict between the needs of tenants and the wishes and needs of landlords, and at the heart of this conflict is the health of our communities, the health of our fellow citizens. We do accept that there is a vital role for the market or private sector to play in the development and provision of housing. However, we see housing as a right, as a necessity of life itself, thus we also see a role for the community and the state in the provision of this human necessity. Given these views, we are making the following arguments about Bill 96. I hope that after I've given our overview of the issues, perhaps we can have some discussion.
We believe the Legislature must play a key role in developing the policy in this area. We are addressing clause 3(m), exemptions from landlord and tenant protections, with this recommendation. We argue that any future changes to the classes of accommodation exempted from the protection of this legislation should be brought to the Legislature and the public given a voice, such as we are having today. Therefore, we recommend that the regulatory power should be limited to not bringing in exemptions from the landlord and tenant protections; that they should be brought in, if necessary, as amendments to the legislation.
Second, as stated earlier, we see housing as a right that every citizen should have access to. If citizens cannot meet the demands of the market, we as a society must ensure that they have access to safe, affordable housing. The market will produce to meet market demands and where the producers can maximize the return on their investment. In recommendation 2, we argue that only through the retention of fair rent controls will we be able to ensure that all citizens will be able to have a home.
This has become even more important today because of the withdrawal of the federal and provincial governments from the field of social housing. Therefore, we argue that rent controls should be inclusive. We suggest that new units might be granted a grace period of exemption, but ultimately they should be covered by the legislation.
Recommendation three: We are very concerned about the well-documented practice of some landlords to discriminate against certain types of tenants: people on welfare, single-parent mothers, low-income families and low-income individuals. We understand the need of the landlord to protect his or her investment. However, we argue in recommendation 3 that Bill 96 would strengthen the hand of those discriminatory landlords by giving them the right to income information on prospective tenants. This is totally unacceptable, in our view. There's a very interesting story on the front page of today's Globe and Mail that highlights this issue. We recommend that the term "income information" be removed from sections 36 and 200 of the bill.
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Recommendation 4: We have been living with a severe shortage of safe, accessible and affordable housing, particularly for people with disabilities, pensioners and all those with low to modest incomes. We argue in recommendation 4 that we must retain the Rental Housing Protection Act until there is an acceptable supply of rental housing to meet the needs of our citizens. We argue, furthermore, in recommendation 4 that the government should develop ways to ensure an adequate supply of affordable rental accommodation to meet the needs of populations that cannot pay market rents.
In recommendation 5 we are making a similar argument. We believe that irreparable harm will be done to the stock of affordable rental housing if you agree to vacancy decontrol through the inclusion of section 116. We argue that this clause will do nothing to create new rental housing, and developers have said the same thing. We ask for the elimination of this clause.
What I would like to do is turn to our concerns about care homes. We have been arguing with government after government that their legislation in this area is very discriminatory, that residents or tenants in care homes are not given the same right to the consideration of the state and society as other tenants receive. Let me explain.
Recommendation 6 repeats a concern that we have held for a number of years. The whole field of care homes is diverse and confusing. We desperately need to have the government bring clarity and certainty into this area. We therefore ask that the legislation define exactly what a care service is and we urge you to use the current regulations covering the care home information package as the minimum list of services.
Issue number 7: We are puzzled by the suggestion that the exemption for rehabilitation and therapeutic services from the landlord and tenant protections should be extended from six months to a year. If someone lives in such a facility for even six months, they are likely to have no other home. We are concerned that unscrupulous landlords could use this new proposal as a way to exempt their homes' facilities from the application of the act. Our recommendation 7 calls for the retention of the current wording limiting the time to six months.
In recommendation 8, we are very troubled by subsection 92(1), the notice of termination, demolition, conversion or repairs. Once notice has been given for the termination of the tenancy on grounds of demolition, conversion or repairs, the landlord is required to "make reasonable efforts to find appropriate accommodation for the tenant."
In recommendation 8, we argue that the landlord be required to find comparable accommodation and the tenant must be willing to accept it. An appeal process could be designed that would ensure that tenants and landlords will follow the intent of the legislation.
Recommendation 9: The idea that a landlord would be given the power to determine whether a tenant should be transferred to another home horrifies us. We argue in recommendation 9 that we believe this clause is clearly discriminatory. It even violates the practices and procedures in place today that govern the determination of the needs of an individual for care services and their placement in a care home. No one can be placed in a facility without their personal request for such a placement. Furthermore, this power could be used to intimidate vulnerable residents. I think everyone is aware that tenants in care homes tend to feel very vulnerable and dependent on the goodwill of their landlord.
Recommendation 10: We find subsection 95(1) to be highly discriminatory by denying residents of care homes the protection given to other tenants against increases in charges related to their accommodation. A non-care-home tenant can only face a rent increase over a 12-month period. Care home tenants, according to the proposals in Bill 96, could face three to four service charge increases over the same length of time. The bill only requires that a landlord give 90 days' notice of an increase. Our recommendation 10 calls for the elimination of such a clearly discriminatory policy.
Finally, in recommendation 11 we go on to request that section 95 be amended to include the current protections found in subsections 9.1(1) and (5) of the Rent Control Act whereby a landlord cannot give notice of rent or service charge increases if the tenant has not been given a care home information package. We believe the inclusion of such a clause will go a long way in ensuring that landlords do give their tenants this very important information package.
Thank you for your time and attention. I have tried to highlight the issues and the thrust behind the recommendations we have made in hopes that we could perhaps have some discussion.
Mr Marchese: Thank you very much for the presentation. This government says that with this bill they're restoring balance because there hasn't been balance in the past with rent control, that tenants were given an unfair advantage, I guess, over the landlords and this restores that balance. How do you respond to that? They do say that.
Ms Kaegi: We have been very clear, even going back to the presentation we made on Bill 120 and the comments we made to the discussion paper that preceded Bill 96, that we do not accept that argument. In the past, there have been steady increases allowed to landlords to pass through the costs of renovations, to pass through the costs of maintenance. We believe landlords are protected, just as tenants need to be protected. We do not believe this restores a balance. We believe it in some cases creates a greater imbalance. We do recognize, however, that there has been some tightening up of protections for tenants, but the balance is not there.
Mr Marchese: I just wanted to say that this government wants to hold hearings on this bill, and they're going to be doing it on August 5, 6, 7 and 8, 11, 12, 14, and 15, before they bring the summer session back on August 18, something we haven't ever done before. I wanted you to know that so you might inform the people you're connected to that August 5 is going to be here in Toronto and that they might want to come by and talk to the parliamentary assistant and to these other fine fellows on the other side about how they feel, whether they feel protected or not protected by this bill. I thank you very much for coming.
Mr Gilchrist: Thank you both for coming before us here today. You certainly have a very full set of recommendations. I appreciate that, and I can tell you that we and the ministry staff have certainly made note of that and we'll take into consideration all your recommendations. But I'd like you to clarify a couple of things if you would, please, in the very limited time we have.
You made a specific reference to the income checks but you didn't comment on the other aspects of that section. Is it your submission that other business practices such as asking for landlord references and credit checks as opposed to income checks, that sort of thing -- that you believe that's appropriate and it's only the income check that you're suggesting is inappropriate?
Ms Kaegi: In the more fully written presentation, yes, we have accepted that the other checks are appropriate. We also, though I didn't put it in the written submission, know that landlords now are in fact asking about income. This Globe and Mail article highlights the problem about the use of income checks in particular. We don't express a concern about the other checks that are available.
Mr Gilchrist: The only other thing -- and I sincerely would like your views on this. You started your presentation by saying, and the word may be abused, that housing is a right. How do you reconcile that with the current legislation, if it is your submission that the status quo -- or is it your submission that the status quo is acceptable, in light of the fact that in all of Metro last year only 37 new units were built and in all of Ontario only 1,420? With 120,000 more people moving to Ontario, how do you reconcile those two things, that the marketplace under the current law is not providing housing for those people, particularly at the lower end of the spectrum?
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Ms Kaegi: I can respond by informally responding to the discussions I've had with members of the Urban Development Institute and others in the development industry. They have argued since the 1970s that there have been other strategies in terms of housing development, in terms of investment of capital, that have provided greater returns, faster returns, rather than the rental market. So there are a multiplicity of reasons for the lack of development of rental accommodation. No one could attribute the creation of rent controls as a limit on that market, and they themselves do not make that argument.
Mr Sergio: I thank you very much for coming down and making a presentation to our committee. I have a number of questions, as you have expressed a number of serious concerns. Let me say that these concerns have already been expressed by a number of other deputants. I just want to touch on a couple of things, if you can expand on them. First of all, has your group been consulted or contacted by the ministry for some input into the proposed legislation? Have you met with the minister or staff?
Ms Kaegi: We made a submission on the discussion paper that was released prior to the presentation of Bill 96. We have made deputations in the past. I have tended to hold the housing portfolio for Canadian Pensioners Concerned. I can turn to our president to see what other forms of consultation were raised.
Miss Mae Harman: No, we have not been approached.
Mr Sergio: Just one quick question, because I know we haven't got too much time: Especially with recommendation 9, concerning the impact on rent related to nursing homes and stuff like that -- let alone that the concern with nursing homes has been expressed with the cuts and downloading, how it affects the health care system, now we're going to housing as well -- when you talk about the increase in charges and stuff like that, because of the various actions of the government, owners of nursing and retirement homes are faced with unprecedented, unexpected extra charges, if you will, from the local municipalities with respect to hydro, water rates and stuff like that. Those are charges that an occupant, a tenant of a nursing home or retirement home, will not see until the owner of that house comes and says, "You've got to pay another $100 a month." How does that affect the occupant?
Ms Kaegi: The point we are raising is that the tenants and residents of care homes are treated differently, because a tenant in an ordinary building can only have an increase in the charges once a year, but the charges for services -- for food, for nursing, for whatever -- can go up every 90 days if you push it to the extreme. The cost of labour in terms of food production or nursing is not going up every 90 days.
What you are doing is allowing a landlord in these situations to essentially, as we say, constructively evict tenants. You can escalate the charges higher and higher so somebody is forced to move. We've had examples of this. I can go back to one in Toronto, the Grenadier. I notice George Monticone from ACE is here. I remember the long dispute of people who were forced to move out of a place they had just moved into because of the massive escalation of the charges. We feel it is clearly discriminatory. I hope I answered your question.
The Chair: Mr Sergio, we've run out of time.
Thank you, Ms Kaegi and Miss Harman, for coming this morning and making a presentation.
DAVID HULCHANSKI
The Chair: The next presentation is David Hulchanski. Professor, good morning.
Mr David Hulchanski: Good morning. I brought with me today my daughter Anna, a future tenant.
The Chair: Good, we need her help.
Mr Hulchanski: She finished first grade yesterday. She was walking around the building and I think very smartly picked up a brochure called: "Yes, you can mortgage. How to become a homeowner." That's in essence what I'm talking about, and I think I'm essentially answering a question Mr Gilchrist asked of the last speaker.
I have some copies I've circulated before of my presentation in August of last year to this committee, when I talked about the impact in British Columbia of removing rent controls. That information is in this other presentation; you can look at it if you want.
Today I'm switching the discussion a bit to macro-level issues and asking you the big question, what is the rationale for residential rent controls and what is the relationship of rent controls to new construction? This is really at the heart of what is happening here and now with this proposed legislation.
I was asked this question back in 1983 by the Ontario Commission of Inquiry into Residential Tenancies, and I wrote research report number 6 for the commission, entitled Market Imperfections and the Role of Rent Regulations in the Residential Rental Market, a nice long academic title. What it talked about back then was the beginnings of what I thought was market failure; I simply called it "market imperfections" back then.
When there is inadequate market demand and thus little new supply in the rental housing sector, vacancy rates remain low and tenants require adequate regulations to provide some degree of balance in the landlord-tenant relationship. The normal market dynamics of supply and demand no longer protect tenants from rent gouging or widespread discriminatory behaviour. There are no normal market dynamics happening in terms of supply and demand in the rental market. Bill 96 is based on the assumption that there are normal market dynamics waiting to be unleashed once the shackles of inefficient regulation are removed.
Given the failure of the supply part of the rental housing market in the early 1970s in Ontario, there are four rationales for rent regulation. This is what I wrote back in 1984. These four things -- protection of security of tenure, maintenance of the affordability of the existing rental stock, prevention of regressive income redistribution and mediation of conflicts relating to rental tenure, including protection from discrimination -- are essentially what the current landlord-tenant and rental housing stock legislation seeks to do.
Rent regulations are a response to market failure. Ending rent controls will have no positive impact on the rental housing supply problem. Macroeconomic factors, not a set of regulations, have caused the rental supply problem.
There is nothing inherently good nor inherently bad about rent regulations. I want to make that very clear. I know of no researchers who support rent controls in principle. If conditions in particular rental markets require them, fine; if not, fine. It is an empirical research question. For some, I know it is a matter of ideology, a set of beliefs and/or economic self-interest. The evidence about real housing markets and real tenant households does not matter for some. The objective public policy question, however, is whether a particular set of circumstances requires a particular set of regulations.
The rental sector problem in Ontario is the near total lack of private sector rental housing construction. This was just referred to. Last year, there were 931 private sector rental units built, but they were either investor condos or something called life leases. Ontario has about 1.3 million renter households. The 900 units are just 2% of total housing starts. Social housing starts were also just 2% of total housing starts, down from 28%, and it will of course soon be zero, thanks to the termination of social housing construction.
My message today is a very practical and pragmatic one: We must pay attention to the economic realities of new investment in rental housing. That's the key thing. What are the realities about new investment in rental housing? We must pay attention to the economic realities of what tenant households are able to pay for their housing. These two do not match. There is a very big gap between the two and the gap has grown since the 1970s.
My first point is the existing rental stock and the potential for new supply. There is virtually no relationship between the current owners of existing rental stock and potential new investors in rental housing. The gap between the risks and the profitability of investment in existing rental stock and new construction is huge. They are two different types of investment. They're not connected any longer.
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In terms of the existing and now aging stock of rental apartment buildings, the regulations over the past 25 years have succeeded in maintaining these buildings as an excellent investment for those with the money and inclination to buy and manage rental properties. There are continually articles in the business pages about what a good deal existing rental buildings are. Even in RRSPs now and for senior citizens and for people to invest for retirement, there is a very strong market for these buildings as medium- and long-term investments.
A recent study for the Metro Toronto council's housing stakeholders' panel just a few months back called Prospects for Rental Housing Production in Metro compared the economics of existing and new rental buildings. There are pro formas in that report. They compare them very carefully. The study found that returns are substantially higher for existing buildings, and compared to new rental project scenarios, there are very few risks in the existing buildings.
The report states very clearly, "There appears to be little prospect of new rental housing development." This is even recognizing that this legislation will likely go through, that rent controls won't exist. "There are concerns that severe shortages could occur, with attendant negative consequences for tenants, particularly those with lower incomes.... The potential returns from investment in new private rental properties in Metro are extremely poor." About half of Ontario's tenants live in the greater Toronto area.
The main point in that report is, "Without changes which result in higher returns from new rental projects, there will be little new private rental investment in Metro." The report goes on about the variety of things that need to be done. Some are giving special treatment to rental housing, some are ending unfair treatment to rental housing, some involve massive subsidies, frankly.
In short, there is no private sector rental housing development sector in Ontario today and there will be no private sector investors interested in rental housing construction unless massive subsidies are made available and a variety changes are made in the treatment of rental housing. The problem with rental supply is first and foremost an economic problem. The financing numbers don't work. That's the whole issue. The financing numbers don't work, and this legislation doesn't affect the financing numbers.
Why don't the financial numbers work? That's my second point. This is the difference between market demand and social need. Markets respond to market demand, not social need. About one third of all tenants in Ontario are receiving social assistance. The median income in tenant households is about half that of owners. Using the Toronto CMA as an example, the real income of tenant households declined by 8% over the past 20 years, it declined in real terms by 8%; that of homeowners went up by 20% in real terms. How can you have a market in something very expensive when the consumers can't afford it and they're losing money on top of that? The item is becoming more expensive and the potential consumers have even less money than they had 20 years ago. That's the crux of the problem.
In 1991, tenant households in the Toronto area had a median income of $33,000, while owners had a median income of $64,000, a gap of $30,000. The supply system for homeowners works because homeowners have money to stimulate market demand. The supply system for tenants doesn't work because most tenants don't have enough money to stimulate economic demand. They simply have social need.
My final point, and it's sad I even have to raise this in conjunction with landlord-tenant legislation, has to do with discrimination by some landlords, and I emphasize "some." Not all landlords discriminate, but there are more than enough who do, and that's why we have protections in the Human Rights Code.
Many of the larger landlords and property management firms in Ontario have been engaging in what is known in economic literature as statistical discrimination. This is a term used to describe the judgment of individuals based on group averages instead of their individual characteristics. Some alleged propensity of the group is applied to all members of that group and then they're rejected.
The use of minimum income criteria is a very simple, convenient and easy-to-use excuse for screening out individuals some landlords consider to be from inferior groups on the basis of negative stereotypes and prejudices that exist in our society. If there was any validity to the simple rent-to-income ratio as a determinant of risk, we would need to ask why, on a continual basis for as long as such data have been collected -- and I've looked at it since the 1930s -- a substantial number of Canadian renter households have managed to spend a huge percentage of their cash income on rent and not default on their rent. I have a table, table 2, at the back of my paper.
The 1991 Canadian census reports that one third of Ontario's renter households -- that's about 400,000 households -- pay more than 30% of their income in rent; 15% -- 200,000 households -- pay more than 50% of their income in rent. How do they manage to do this? They should be evicted or starve or what? They do it by all kinds of ingenious measures. If the housing expenditure-to-income rule of thumb, based on this 30% or 35% of income, is valid and reliable, close to 200,000 households will be facing eviction right now, on the 50% line. Where's the logic to this? The reason for the absence of massive defaults is abundantly known. The rent-to-income ratio is not a valid predictor of risk.
Further, it is important to note that the risk of default is relatively small even though so many current tenants are paying well above 30% of their income on housing. A study by N. Barry Lyon Consultants a year or two ago points out that in the Toronto area the risk of tenant default was found to be "relatively insignificant as a determinant of the viability of a residential rental business." Bad debt was found to be about 1% of gross revenue. Court fees and eviction service fees represent 0.1%, one tenth of 1%, of gross rental income and arrears represent about 0.3%, three tenths of 1%, very small numbers. Even if these were to double or triple, they would have a very small impact on renting. Vacancies for a few months can add up more quickly to those numbers.
The issue before us in sections 36 and 200 of Bill 96 is not financial risk but the freedom to discriminate. Some landlords do not like the protections offered to some groups by the Human Rights Code and they selectively apply income criteria as an excuse in rejecting some tenants. The evidence indicates that it is the larger landlords and property managers who selectively use income criteria. They arbitrarily select a rent-to-income ratio and selectively apply it to some households but not to others. Smaller landlords, those with just a few units, tend to have no idea what income criteria are. This is, in effect, economic jargon.
My research indicates that it was after the Human Rights Code was amended in the early 1980s prohibiting discrimination against people on social assistance that the use of income criteria became an increasingly common practice by the larger owners and managers of rental housing.
In summary, what will Bill 96 do? There's a term I heard in a meeting a year ago called "dehousing." There is already a process of dehousing taking place in Ontario's larger cities. Growing numbers of individuals and families who cannot afford to pay rent any longer find themselves doubling up with others for a while and/or in rooming houses, emergency shelters or on the street. Bill 96 will harm the most vulnerable tenant households in the province. It will result in greater homelessness.
The certain impacts of the government's proposals include rising rents, the transfer of a huge amount of money from tenants to owners. For example, if only 20% of the renters in Ontario pay only $50 extra as a result of this legislation -- only 20% and only $50; pretty conservative -- that adds up to $156 million being transferred from tenants to owners. What will they get in exchange? Nothing. Everything stays the same. They're living in the same place; they're paying more. Nothing changes. As I noted, there's no connection between the existing stock and potential new investors; new investment, the numbers don't work. This bill isn't going to change that.
Finally, Bill 96 is a one-sided caving in to one interest group: owners of existing rental buildings. It will mainly harm low-income Ontarians. The bill is yet another example of mean-spirited treatment of the group whose crime seems to be having a low income. This legislation will hurt many young adults, older people, immigrants and refugees, single mothers, people with disabilities and all people on social assistance. These low-income households have no choice but to rent in the private sector. The government is not building more social housing and, as I have pointed out today, this government is not addressing the economic realities of why rental housing construction is not taking place. That's the key thing. Let's address the economic realities of why rental housing construction is not taking place.
In summary, the rent control system and the related tenant and rental stock protections that currently exist are a response to the problem of inadequate rental supply; they are not the cause of the problem. This committee should recommend that this legislation be scrapped and that new proposals for rental housing supply be brought forward. The system of regulations affecting the existing rental stock does need to be reviewed and amended, but such amendments must be based on a careful assessment of contemporary realities. There shouldn't be a throwing away of 25 years' experience in developing landlord-tenant legislation and rental housing stock legislation.
The Chair: Thank you, Professor Hulchanski. Unfortunately, there is no time for questions, but I'd like to thank you and Anna for coming and making your presentation this morning.
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CITY OF TORONTO
The Chair: The next delegation is Kay Gardner, councillor of the city of Toronto. Good morning, Councillor Gardner.
Ms Kay Gardner: Good morning, Mr Chairman. Here we are again.
The Chair: Here we are again, and some of your material has been distributed to us.
Ms Gardner: I have with me Pamela Coburn, who's the director of inspections and the chief building official for the city of Toronto. She'll want to deal with inspections and maintenance, which is a big part of this bill. I will speak and then she will make a presentation, and then you can direct all your important questions to her.
I've been asked by Mayor Barbara Hall to present formally to you Toronto city council's submission on Bill 96, the proposed new landlord-tenant legislation. I would like to add here that at our last council meeting, which was on Monday and Tuesday, where we turned down the Maple Leafs, we condemned you most severely for this legislation, unanimously also.
The Chair: I'm not sure whether that's a compliment or what that is.
Mr Marchese: That's a condemnation of you guys.
Ms Gardner: The government. Are these the good guys on this side? I want to know which are the good guys.
Mr Marchese: The good guys are over here.
The Chair: We're all good guys.
Ms Gardner: This report was prepared by the city of Toronto's commissioner of community services, Mr Tom Greer, in concert with our housing department. This brief is a superb and trenchant analysis of the cruel and all-out attack on Ontario's tenants embodied in Bill 96.
In one fell swoop it destroys 25 years of work by three successive governments of Ontario -- the Conservatives under Bill Davis, the Liberals under David Peterson and the NDP under Bob Rae -- to enshrine in law a code of protection of tenants' rights and welfare. This savage attack on tenants offers not a shred of protection for tenants. What a cynical name this bill has been given: the Tenant Protection Act. This act is in fact a measure that will impoverish tenants while it enriches landlords.
Our report states that the bill will produce higher rents and reduce security of tenure, a clear potential cause of an increase in homelessness, as well as a serious reduction in the stock of affordable rental housing by easy conversion of apartments to condos and the demolition of apartments to be replaced by luxury units or by large-scale renovations as an excuse to send rents to the moon.
I ask you to mark the fact that our existing framework of tenant protection was erected not solely by government action but by the struggle of tenant organizations such as the Federation of Metro Tenants' Associations, the women's movement and literally dozens of grass-roots tenant groups in every neighbourhood in the cities of Ontario. They will not take lightly to being raped by Bill 96.
One argument in favour of Bill 96 made by the Minister of Housing, Mr Al Leach, is that it will enhance better maintenance of apartment buildings. Ms Coburn is going to speak on that, but this is false. It will do the opposite. The present provision of imposing a rent freeze on apartments where municipal work orders are not fulfilled is to be abolished, so dirty apartments will become dirtier and run-down apartments will become more decrepit.
What is the ultimate purpose of Bill 96? The purpose of Bill 96 is to destroy rent control and to destroy all important legislation which protects tenants. Yes, this is an act to destroy rent control. Even the rent registry is to be thrown into the trash can. This is an invitation to unscrupulous landlords to gouge tenants by charging illegal rents, because only by consulting the rent registry may a tenant find out whether he or she is paying an illegal rent. While compassionate men and women everywhere in Canada are demanding that governments act to alleviate child poverty, Bill 96 callously creates a law to deepen child poverty.
I do not, of course, have sufficient time to read the entire city brief into the record, but I ask you, I plead with you to read every word yourself. This, after all, is a bill that will impose severe hardship and anxiety on thousands, yes, thousands of our citizens. Some 64% of households in the city of Toronto are tenants. Read particularly on page 2 the section headed "(b) Other Proposed Changes," itself a condemnation of this act. I especially ask that you read carefully the chart on pages 3, 4 and 5, which in a nutshell shows how the act guts tenant protection legislation.
Before I leave I want to say one thing. I have spent 22 years in the tenant movement, 10 years as a volunteer organizing and 12 as a city councillor. You had not, when you were elected, promised the people in Ontario that you would abolish rent control. I plead with you to look upon this legislation with the eyes of reason. You still have time to say, "We were wrong." It is not cowardice to say you were wrong. I think it is noble to acknowledge when you have made a mistake when thousands of people are pleading with you to please look again and act wisely and compassionately. Thank you for hearing me out.
Ms Pamela Coburn: Good morning. Thank you for the opportunity to speak today. I, as Councillor Gardner indicated, am the director of inspections and chief building official for the city of Toronto, and in that capacity I'm also responsible for enforcing property standards. I appear before you today not as a politician but as a practitioner. I'd like to share with you some of my experiences in attempting to enforce property standards in the very large numbers of rental residential properties we have in the city of Toronto within my area of jurisdiction.
The goals and objectives of the staff and the legislation, in my view and, I believe I can fairly state, in the view of my colleagues, is a vehicle to ensure that properties are maintained properly. They provide the home for large numbers of people in our city. They provide an economic interest for the owners of those buildings. The position we work from in terms of resolving problems in ensuring these buildings are maintained is that everyone has a common interest and a common goal in making sure these homes and this real estate and this economic value is protected. We approach all our enforcement and inspection programs in that fashion.
It has always been, since the early 1970s, the position of Toronto city council that prosecution is an absolute last resort; that we undertake all sorts of negotiation and discussion along the lines of extending time to comply when orders are issued, trying to establish improved relationships between landlords and tenants when it has resulted in people becoming entrenched and unable to resolve their problems as it affects both of their interests.
In many cases I believe we've been effective in doing that, with, unfortunately, some very notable exceptions. I'm sure you're all familiar with West Lodge apartment towers. The concern I have and that the city has had in striking a team of people to deal with high-rise building conservation over the past year and a half is that this may well be the direction that many of our large rental residential properties will go in the future.
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We have a real interest in wanting to know that they're being maintained properly. I am not so much speaking to the economics of building new rental housing but the mechanics by which we ensure that the existing rental housing is maintained properly.
I can tell you unequivocally that the prosecution process accomplishes very little, if anything, at the end of the day. It takes many months to effect, and the mechanics are such that if an aspect of an existing order is complied with prior to the time that matter goes before the court, a court may make a determination that that matter is not properly before it because all the items of repair do not remain outstanding at that point.
Having said that, with the very few cases we do bring before the court because we have no other means of resolving them, we end up with the very insignificant average fine of $370 per offence. When I consulted with my colleagues -- and Toronto-area chief building officials provided a paper to the Ministry of Municipal Affairs and Housing on this point on January 23 of this year -- we found that our experience is very much the same, that the average fine is no higher than $500 per offence. It's a very insignificant motivator to the underlying reason we're all in that business: to get the problem resolved at the end of the day.
The proposals in the bill, I would suggest to you as a practitioner, are not going to be effective. Increasing fines is not going to be effective. The fines levied by the court right now are nowhere near the maximums already available to justices of the peace. I realize that the judiciary is at arm's length and we have no means, necessarily, of encouraging them. We've tried to present our cases in the most effective way we can, but we've been unsuccessful in encouraging them to levy larger fines. I have to say that my preference would be to avoid the court process entirely and to have any money that might be set aside put back into the buildings. That is always the effort we put forward.
The only effective means we have ever had to get repairs made, and made in a timely way, is the order to prevent rent increases. By and large, we're dealing with business people, and they may not understand the complex mechanical systems that make a building function or not function. They may get a range of advice from engineers and architects and contractors about what kind of repairs are necessary. That can all be very confusing, and that's where our role is important, to help weed through some of the fog and get them to effective, appropriate solutions.
But when we can't get people to come to the table and have those discussions with us, we need something to motivate them. The court process does not do that. If and when it does, it's long after the problem has been identified. It results in what might generously be described as a slap on the wrist. We walk out at the end of that process with no assurances that the problems are going to be resolved in a meaningful way, neither for the tenants nor, unfortunately -- as we saw in West Lodge, when an apartment building is sufficiently run down, it ceases to be of any income value or real property value to the owner and they find it in their economic interest to walk away.
The Chair: Ms Coburn, if I can assist you, you have about one minute left.
Ms Coburn: Thank you, sir. The last point I want to make is that we have had some successful discussions with staff at the Ministry of Municipal Affairs and Housing and with the Ministry of Consumer and Commercial Relations relating to concerns about the operation of elevators. This is another area of standard maintenance. You may or may not know, and it's included in my brief, that there is no requirement for providing elevators in buildings, so we look to maintain the systems and the elevators in place.
Our property standards people are in and out of these buildings regularly for all the problems I've outlined to you just moments ago. For that very reason, we're in an ideal position to issue orders and be an effective means of trying to make sure those elevators are maintained as well. They provide not only access for people to come and go from their buildings, but also access for emergency services. I believe that's the substance of my --
The Chair: Thank you, Ms Coburn, Councillor Gardner. Unfortunately, your time has expired. I know members of the committee would like to ask questions, but --
Ms Gardner: Next time, Mr Chairman.
The Chair: We'll be looking forward to hearing you another time, Councillor Gardner, as always.
ONTARIO HOME BUILDERS' ASSOCIATION
The Chair: The next delegation is the Ontario Home Builders' Association, Andy Manahan, Al McLean, Rob Cooper. Good morning, gentlemen.
Mr Al McLean: Good morning. My name is Al McLean. I'm obviously not the Al McLean, if you can overlook that and forgive me. I'm the first vice-president of the Ontario Home Builders' Association, and I'm a developer-builder from the Stratford area. With me today is Rob Cooper, who is also a vice-president of OHBA and a builder in the Hamilton area. OHBA staff member Andy Manahan, the director of industry relations, will assist during question period.
I will ask Rob to lead the presentation and then I will make some concluding remarks. Before I pass the baton, I should note that neither Rob nor I are in the rental business. It doesn't make economic sense. The minister has stated that nobody in their right mind would invest in building a rental unit under the current conditions. Hopefully, then, our comments will be viewed as rational and compelling.
We follow the Toronto delegation. We reference a report commissioned by the municipality of Metropolitan Toronto this year which concluded that the prospects for rental housing production in Metro are not good unless a number of reforms are implemented. The returns from new rental investment are only 3% to 4%. The report stated that it would make more economic sense and entail less risk to buy an existing building. This doesn't add to our rental stock or our housing choice.
Across Ontario, the lack of rental construction is evidence that investment behaviour is guided by such basic criteria as returns and risk aversion. Long-term risk analysis has been impossible in an environment where additional layers of regulation are added every few years. We should note that the commissioned report and other reports have shown that one of the biggest factors preventing rental accommodation from being built is a high level of municipal taxation, much higher than that of single-family homes. That will be addressed a little later.
OHBA is here to offer support for the delayering which will result when Bill 96 is passed in the Legislature. Obviously, this is a controversial issue and there are polarized views about rent control. But surely everyone must agree that the system is broken and that the status quo is unacceptable.
Mr Rob Cooper: The Ontario Home Builders' Association represents over 3,400 member companies involved in Ontario's residential construction industry. Our membership is made up of all disciplines involved in residential construction, including builders, land developers, renovators, trade contractors, apartment owners and property managers, mortgage lenders, housing consultants, economists, planners, architects, engineers and lawyers. Together they produce 80% of the province's new housing.
Unfortunately, the current tax and regulatory conditions have impeded private rental supply. In 1996 there were only 931 private rental units built, or just 2% of the over 43,000 total housing starts in Ontario. Contrast this with the 1970-74 period when an annual average of 27,196 private rental starts were built. Rent controls have been in place since 1976 and this has had a negative effect on the housing industry. Ever-tightening controls and unfavourable tax treatment have made private rental construction more difficult, even though interest rates are at all-time lows and there is an abundance of capital looking for a reasonable return.
A little bit of tinkering will not result in significant production of new rental. OHBA has already stated that the current proposals contained in Bill 96 are necessary to increase supply but will not be sufficient to stimulate the construction of rental apartments. We remain committed to the view that the elimination of rent controls will not only encourage new supply but will also restore balance in landlord-tenant relations.
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It is generally acknowledged that rent controls are a major barrier to new construction. Many housing economists have pointed out the distorting influence that rent controls have had on rental housing production in many different jurisdictions across North America. In Ontario, the introduction of rent control legislation in 1975 and the tightening of rental legislation, particularly over the last 10 years, has severely diminished the incentive for builders to expand the stock of rental housing. Rent controls have also made it difficult for owners to repair the existing housing stock. By passing Bill 96, with selected amendments, a better environment will be created for rental investment and a positive signal will be sent that rental construction will make economic sense in the near future.
Perhaps the most significant report done recently is one commissioned by the Ministry of Municipal Affairs and Housing and completed by housing economist Greg Lampert in November 1995. The Lampert report clearly outlined the measures which all levels of government could take to encourage the construction of new rental housing.
Scholar Anthony Downs prepared a paper entitled the High Cost of Rent Control for the National Association of Home Builders in the United States. He referenced a number of studies that demonstrate how higher-income households are the principal beneficiaries of rent control laws, not the poor. Similarly, consultant Dr John Todd last year prepared a paper for the ministry which concluded that underpriced units tend to be occupied by preferred tenants with higher incomes and secure jobs.
Controls artificially increase the demand for rental accommodation, because certain tenants who would otherwise be able to afford condominiums or houses continue to rent, according to Dr. Todd. These tenants enjoy very low rents in prime locations because their rents were frozen at below-market rates when rent regulation went into effect in January 1976. Even with historically low mortgage rates which have made home ownership housing more attractive, these tenants will often remain in the apartment if their monthly rents are relatively low compared with mortgage costs; an example would be under $600 a month for a well-maintained building.
A number of measures were cited in the Lampert report as being important to improve the tax and regulatory environment. As the committee members are aware, an array of taxes is included in the final price of any new house or apartment building. Some of these are directly under the influence of the Ontario government while others are either local or federal in nature. Lampert prepared generic pro formas that illustrate that there exists a gap between economic and market rents. In the Hamilton market, the gap is about $150 per month per unit, and in the Toronto market, the gap is about $260 per month, using typical land, construction and other costs.
As OHBA's primary mission relates to increasing supply, we will make comments that focus on areas that both fall within this government's sphere of influence and fall outside of its direct jurisdiction.
(1) GST Impacts: The GST on rental is a full 7%, while for most ownership housing it is effectively 4.5%. Both the Ontario Home Builders' Association and the Canadian Home Builders' Association based in Ottawa will continue to lobby the federal government on fairer tax treatment for rental.
We would ask the Ontario government and individual MPPs to dialogue with the federal government so that MPs are informed as to the negative influence of the GST and are in a better position to influence policy decisions.
(2) Even more important to us than GST impacts are property taxes. The level of property taxes on rental is a major impediment to investment. The Lampert report estimated that property taxes account for $1,200 of the nearly $3,000 gap between the economic rent required to make the project viable and the achievable market rent.
Overall, the Fair Municipal Finance Act will result in a more consistent property tax system in Ontario and is long overdue. In many municipalities, however, the tax rate on an apartment unit is two to five times the rate of an ownership single-family housing unit and municipal leaders may not wish to tackle this issue at the risk of upsetting other constituencies.
OHBA recommends that the provincial government monitor the municipal response to property assessments on rental very closely. We would further suggest that a pilot project be initiated to implement a more equitable property tax system for apartments. We believe that provincially driven reform is inevitable, both to ensure fair treatment for apartments and to encourage supply.
(3) The bigger picture: Ontario cannot rely solely on ownership housing production. Our supply of rental has been dismal when compared to our population growth and immigration into urban areas. By contrast, in the United States the new private rental housing industry is alive and well and the rental share of the total multifamily housing starts is two thirds, approximately 280,000 units per year. This healthy rate of construction occurs in many centres which have vacancy rates of between 8% and 10%.
Although the provincial vacancy rate rose from 2.3% to 3% in 1996, the level remains too low in larger markets such as Hamilton at 2.2%, Kitchener at 1.8%, and especially Toronto. Interestingly, there was a sigh of relief when Toronto's rate rose from 0.8% to 1.2% last fall. This is not a healthy situation, as it limits choice. It also reinforces our argument that additional supply will be needed, particularly in the Toronto market.
In CMHC's Rental Market Report of last November, it was noted that the province's younger renter-aged population will grow in the coming years. At a recent OHBA meeting it was highlighted that the nature of employment is changing for a significant segment of the population who must relocate frequently. For example, contract positions are much more common today. Finding suitable and well-located rental accommodation is a preferable option over home ownership for these people. To remain prosperous we must cater to the demand of a mobile workforce.
In response to an industry questionnaire directed to all parties on non-profit housing in 1994, we received a response from the PC Party that stated: "Rather than an expensive and cumbersome non-profit program, a Harris government would assist individuals and families through a shelter allowance program which would provide assistance to those most in need and generate significant savings for taxpayers." The Ontario government must consider implementation of a targeted shelter allowance program as a means of assisting families in need.
Mr McLean: Stimulating rental construction will accomplish a number of objectives: It will create needed housing for tenants; it will create construction jobs; and it will create taxes for the municipal, the provincial and the federal governments. It should be added that jobs will be generated by new construction and also through the renovation and retrofit of existing buildings.
Ontario Home Builders' Association members will play a major role in the resurgence of the private rental market. Bill 96 represents a positive step to achieving this aim. This is a complex issue which touches upon the most important need that people have: a home. The differential impacts on society that rent controls have had were likely not anticipated by advocates who wanted to protect less affluent tenants. Rent controls have benefited well-to-do households who live in apartments at artificially depressed rents. The poor have suffered by not having adequate choice in housing, mainly because of rent controls.
There continues to be uneasiness about rental construction in the industry for a number of valid reasons. Members may recall that rent controls in 1987 were imposed retroactively on post-1975 buildings, resulting in financial losses for the owners of many of these buildings. A removal of rent controls altogether would alleviate the uncertainty that investors have when decisions to proceed with rental or condominium projects must be made.
Changes are necessary to improve upon the legislation. In this regard, we support the positions taken by the Fair Rental Policy Organization and we hope that the committee strongly considers their suggested amendments during the clause-by-clause process. Nearly 22 years of rent control in Ontario have had a major distorting influence on our housing market. These proposals will begin to undo the damage. Further changes are required to property taxes, the GST and a number of other factors. It will take time for the market to function properly again. It will take time for investors to become comfortable with rental again.
In conclusion, these reforms will provide a better future for Ontarians and will increase our housing choice.
We would be pleased to answer any questions you might have.
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The Chair: We have time for a quick question and a quick answer.
Mr Gilchrist: I'm sorry, I had to speak in the House and I just came in the middle of your presentation, but I've read the entire brief. I would ask you to comment a little further on your second point, property taxes, because I couldn't agree with you more. I guess it's very frustrating to you, to the industry and to tenants in particular that not one municipal government has seen fit to fairly assess property taxes on an equitable basis when comparing apartments and single-family homes.
I wonder if you could give us some guidance. You recommend monitoring them. What sort of time period do you think would be appropriate to suggest to municipalities that they seek that goal of equitable treatment, given the significant impact that would have on rents across the province?
Mr McLean: I'd have to say that I'm not sure we would be in a position to suggest a time other than the quicker the better. If something could be done in the next two years, that would obviously be preferable. We believe that we see a correlation between municipalities that have lower property taxes on rentals, perhaps one and a half times single-family homes -- I would suggest that London is something in that neighbourhood, with a high vacancy rate and much more choice in housing -- and most of the Toronto area municipalities, which might have three to five times the property taxation on apartments as they do on single-family housing, with a much lower vacancy rate and less choice for tenants.
Mr Duncan: I think it needs to be put on the record that until recently the province did assessment. Municipalities do a mill rate but assessment was the purview of the province until recently. We would have thought that if the government were serious about property tax reform, they would mandate municipalities instead of leaving it as an option to municipalities.
We're very sympathetic to a number of the arguments you've made around the regulatory barriers and tax barriers. We don't share your view, by the way, on rent control. We think there's a place for price regulation in Ontario. Professor Lampert's study has said that there are a number of factors, and you've cited all of them, that would have a greater impact.
Ultimately the issue comes down to how you stimulate rental housing. You have indicated in your presentation that landlords can expect a 3% to 4% return on their investment. Earlier today we had a presentation that included a number of documented pieces of evidence from a leading real estate brokerage in Toronto that says that in fact returns on equity on apartment investments in today's market would be in the vicinity of 11% to 14%, and they are detailed here. They're from a major Toronto real estate agency, and I assume landlords wouldn't suggest that they're not telling the truth.
The other point Professor Lampert made, and I want to come back to this, is the notion around the greater security of investing in existing rental housing buildings as opposed to new development. You had suggested that in the absence of rent control there would be more new units come on, but I believe under the current law there's a five-year exemption to rent control for new development. I wonder --
The Chair: Actually, Mr Duncan, we don't have time for a response. Mr Marchese.
Mr Marchese: Mr McLean, I just want to tell you and the others that I don't have much sympathy for the arguments you advance in general and also very specifically as well.
I would refer you to a paper written by Professor Hulchanski. I'm not sure you were here when he made that presentation. I urge you to get a copy or I could give you mine and get another copy later. He argues this: "Vacancy rates fell dramatically between 1971 and 1974, from about 3.5% to close to 1%. Private rental starts fell from a peak of about 40,000 per year in 1972 to a few thousand in 1975." He goes on with a few other arguments. Rent controls came into play in 1975, much later.
There is no evidence whatsoever that you're presenting that says the elimination of rent controls will in fact encourage new supply. You have no evidence whatsoever. The study you give, of Lampert, clearly helps us out in this regard. It helps me out, not you. There is only $200 worth of money to reduce that $3,000 gap per unit that's committed to lowering administration due to reform of rent regulations -- 200 bucks. You know that because you refer to it. So much of what needs to be done to get housing starts has to do with other things, not really rent control. That's the basis of this document, and it's gong to affect a lot of tenants. Yet you argue with confidence, "Without being a landlord, this is going to help tenants," and you argue with confidence that the elimination of rent controls will encourage supply. How do you do that?
The Chair: Unfortunately we don't have a chance for that response either, Mr Marchese. We have to proceed to our next presenter. Mr Cooper, Mr McLean, Mr Manahan, thank you very much for coming this morning. It's too bad we can't proceed, but we're out of time. Thank you very much.
Mr Cooper: We'll meet them in the hallway.
The Chair: I'm sure you will.
SCOTT SEILER
The Chair: The final delegation this morning is Scott Seiler. Mr Seiler, good morning. The floor is yours.
Mr Scott Seiler: Good morning, members of the committee. My name is Scott Seiler. I'm generally here representing organizations primarily dealing with people with disabilities, but today I am here as a tenant in the province of Ontario and as a disabled person. I'd like to describe a little bit of what's going to end up happening to many, many people in the disability community when they end up passing this law actually helping landlords scoop tenants, to be very frank.
I would like to start out by saying that I find the 30% put on to renters extremely objectionable. That you must earn at least a minimum of 30% of the rent to be able to get an apartment I think is a very big mistake. For instance, in my own life, my wife and I are both disabled and we do not earn huge amounts of money. Most people with disabilities do not earn large amounts of money. We live in an apartment that is fairly expensive, well beyond the 30% rate for our rent, and if we were to be going into this apartment with this new legislation, there would be no way we would be able to rent it according to what the landlord would say. We would be well above that.
In fact, to be very honest with you, with the kind of income that we both have, I would suggest that we would not be able, under the 30% rule, to get any rental accommodation anywhere in the province of Ontario. We would not earn enough money. Our 30% would be about $110 a month or $130 a month in rent, and that would be all we would be able to afford if they applied the 30% rule to our income at this present time.
With all the changes that are going on around us and around this bill that we're talking about here today, the Tenant Protection Act, or what I'd like to call the landlord protection act, it encompasses so many different areas. For instance, there are going to be very large changes to social assistance for those who are disabled and to the employment programs for those who are disabled. I'm not going to be eligible, according to the definition of disability that's going to be there, for any of those support types of programs.
As time goes on, I will become less and less employable simply because I will not have access to things like assistive devices and other equipment through the newly developed program that's happening right now to take the place of the vocational rehabilitation program. I'm going to be out of luck as far as finding work in the future is concerned, because my ability to get assistive devices is going to be gone, and that impacts on my ability to rent.
I would like to know what the government is planning on doing around this type of issue. We are going to see more and more people marginalized. The 30% issue, that your rent cannot be any more than 30% of your income, is going to have a huge effect on people like myself and my wife. We are basically going to end up homeless or semihomeless or having to move in with family. I don't think that's an appropriate thing for us to have to do. There should be other means for us.
To be very frank, what's going to end up happening with many, many people is, you're going to see people ending up more on the street. You're going to see people who are in the lower-income brackets ending up more and more in very, very substandard housing. In fact, what the 30% rule will do in this piece of legislation is lock out all low-income people from rental accommodations in Ontario. We are going to be stuck in boarding homes, on the street and living with family and friends, and quite often in very poor circumstances.
Mr Duncan: In addition to your concerns about the bill in general, you're advocating specifically that it will affect those on disability even more than it will others and that therefore it has a disproportionate impact on people such as yourself.
Mr Seiler: Yes, sir, even those who are not on any kind of disability pension at this particular time. If they happen to have to be on a disability pension, how will they come up to the 30% when their maximum income is $930 a month and your average one-bedroom apartment in Metro is going to cost you between $600 and $800 a month?
Mr Marchese: I have a great concern for people with disabilities and the third of all tenants who earn less than $22,000 or so. These people will be seriously affected. It will include people with disabilities. They will be seriously affected by the decontrolling that will increase rents. We have no doubt about that. We've seen this in New York; we've seen it in British Columbia. They tell us no. We've seen the evidence and it's going to be a problem.
All I can urge you to do, Mr Seiler, is this: That you talk to other people who live in your building to come here on August 5 when we're going to have hearings again, starting in Toronto, and that other people begin to become aware of these problems. I know that you've been here before, but I think we need to see other people from where you are living come and share their views and concerns with the Conservative members of this government. I hope you'll come. Thank you for coming.
Mr Gilchrist: Thank you, Mr Seiler, I appreciate your coming before us here today. As someone who has a family member who is disabled and a tenant, I can assure you that nothing in this bill will do those things. I must say that your entire presentation is premised on a giant lie. No one has put in this bill -- there is no suggestion that there be a 30% rule. There is a great myth floating around out there. I think it is utterly scandalous that tenants are being misled this way by certain vested interests and certain stakeholder groups.
The fact of the matter is, right now in Ontario 195,000 tenants pay more than 50% of their income. The other myth is, it is currently legal for a landlord to ask for income checks. My question to you is: If landlords have been getting their monthly rent cheque from those tenants, 195,000 of them, month after month; if the tenants obviously are happy with their premises, or they would have moved presumably; if the landlord was able to ask for income checks when the tenant went in there; why would you believe that now, just because the bill codifies that landlords can do that, landlords would say, "You know, I really don't like getting $300 a month; I'd rather get zero."? Why would landlords throw out tenants in that circumstance? Why would you believe that a landlord who currently rents to somebody at, say, 50% of their income would change their rules?
Mr Seiler: I'm actually not saying that anybody's going to get thrown out. What I'm actually saying is that it will be nearly impossible for people to rent a new unit. They will actually be stuck in the unit regardless what type of behaviour is going on, how well the unit is maintained or anything else. People will be trapped in the unit that they're in, both because of having the ability for rent to go up when the tenant moves into a new unit and because of the 30%. The 30% is there and it is not a big lie. To be very honest with you, I get very frustrated when people say what's in the bill is not in the bill.
Mr Gilchrist: You show me in what section it says 30%, sir. There is no mention of a 30% rule. There's no mention of any per cent anywhere in that bill. If somebody has told you that, sir, they are lying to you. That's the bottom line.
The Chair: Mr Seiler, thank you very much for coming and making your comments to us. That appears to conclude the delegations this morning. I will recess this meeting until 3:30 this afternoon.
The committee recessed from 1155 to 1556.
The Chair: Good afternoon, ladies and gentlemen. Although orders of the day are continuing, it is my understanding that the House, by unanimous consent, has given this committee authorization to proceed. Members of the public, I regret the delay. We'll try to proceed as best we can.
GARY MCILRAVEY
The Chair: The first delegation is Gary McIlravey. Mr McIlravey, good afternoon.
Mr Gary McIlravey: Good afternoon. My name is Gary McIlravey, and I am a partner in a company called Proof Positive Real Estate Research. That's what I'm doing now. For about 12 years I was vice-president of a company called N. Barry Lyon Consultants Ltd, which is a firm which provides residential development consulting advice, mainly to the private sector industry; house builders, developers and some landlords in Ontario.
I'm here to present information which I believe will be useful for the committee in considering section 200 of Bill 96, which would amend the Ontario Human Rights Code to permit landlords to select prospective tenants based on income criteria.
While I was with Lyon Consultants, we were retained in 1994 by the Human Rights Commission to research the question of whether there's any justification from a business standpoint in landlords disqualifying low-income applicants on the basis of income information. I was a lead researcher on the problem. Barry Lyon also was directly involved, and we presented the results to the board of inquiry in 1995.
In the context of the research, we conducted a survey of landlords to determine what percentage of various types of landlords actually used income criteria in qualifying their tenants. We also reviewed survey data from landlord and tenant court to determine the risk of default in the tenant population, or actually the incidence of tenant default in the tenant population. On the basis of data from the landlord and tenant court as well as fee schedules from professional eviction services, we estimated the average legal and arrears cost arising from defaults. We also examined financial statements from residential rental properties to determine the significance of default in determining the overall profitability of the rental business.
As a result of the research, we concluded that the use of income screening or income criteria is not justified from a business standpoint, the primary reason being that it boils down to being an insignificant cost in the overall balance sheet of doing business. We estimated the costs of default, including legal costs, not receiving back rent, sheriff's costs, to be less than 1% of gross income. Other aspects of the rental business come in far and away higher, and I'll get to them in a second.
If reducing default is a prime reason for implementing income criteria, but the actual costs of defaults are insignificant when you view them in the overall cost of doing business and in the profit line of the building, it follows that one conclusion you can draw is that implementing income criteria has little justification from a business standpoint.
There's also, in our experience, little or no conclusive evidence that's been brought to light that shows that tenants with higher rent-to-income ratios indeed are likely to default to a greater extent than people who have lower rent-to-income ratios.
There was a study done in response to the board inquiry for the Fair Rental Policy Organization, and I was made aware of that through the submissions of Mr Dewan, who I believe spoke before the committee. However, having reviewed that report and the report that he referred to, as well as some work done by Professor Michael Ornstein of York University, I think Mr Ornstein's work showed that the work Mr Dewan referred to, which was done by Comquest Research, was flawed not only in its sampling frame but also in some of the analytical techniques that were used. So while they found in that report that there was a correlation between higher rates of default and higher rent-to-income ratios, in fact the results were flawed, and when Professor Ornstein retraced the data and corrected it for the flaws he identified, there was no significant difference whatsoever in the rate of default.
We reviewed tenant qualification practices in the rental industry as well. We did two things. We looked at what the rental industry does when you qualify a property manager, what you tell them, and what the incidence of the actual use of income criteria in the marketplace is.
On the first point, we sought out a handbook from an association called the Toronto Property Management Training Association, which is an institution that provides a course in property management. From their handbook on property management, we reviewed duties and responsibilities of the property manager. It covers a range of the areas: keeping the property leased, collecting income, paying the property taxes and maintaining the physical integrity of the building.
There's a whole section, chapter 9, of that document that's called "Assessing Prospective Tenants." It's listed on page 5 of my summary. I won't read it through. It lists virtually every technique, such as, are they a good credit risk, will they be able to pay the rent on time, are they likely to remain in the building for some time or do they have a bad rental history? There's no mention in the documentation for that accreditation of using income criteria in assessing a tenant. We found that to be somewhat of an omission inasmuch as it seems to have been stated in some quarters that the use of income criteria is a standard method for evaluating tenants. In fact, it's not even mentioned in the documentation to become a property manager.
Second, we did a survey of available apartments in the Toronto area between March 28 and April 4, 1994, based on the Renter's News. We basically selected at random; we called 183 managers of rental buildings. We tried to talk to more but they didn't return calls. That target number was based on the number of listings that were in the Renter's News. We were trying to get a representative sample. We stratified it based on building type, whether the building was a high-rise, a low-rise, a town house, a mom-and-pop basement apartment.
We had someone pose as a renter, so they would act as if they were looking for a unit. We found that virtually all managers contacted qualified the prospective tenants by checking references, 99%; 96% checked to see if the person worked; 95% required first and last months' rent; but the majority, 72%, did not use income level as a method of qualification; and under one third, 28%, did use income.
Interestingly, when we did a cross-tabulation, we found the incidence of using income criteria as a qualification technique was much higher in apartments over five storeys and town house complexes and much lower in low-rise apartments and in apartments rented in homes, which led us to the conclusion that bigger landlords are much more likely to use income criteria and smaller landlords are much less likely to use them. If you consider the impact of one vacancy on a building, because of a default or otherwise, it's a lot greater on a five-unit apartment building in a house compared to a 500-unit building that's more likely to be managed by a larger company. We found that result interesting.
We also estimated the impact of default on the profitability of rental businesses. As I mentioned earlier, we found that it was almost always less than 1% on gross income regardless of what building example we used, and we were using actual examples of actual buildings which were transacted in the Toronto area.
These results correlated very closely with some work that was done by the Residential Tenancy Commission in 1984, which undertook a survey of landlords' cost-revenue statements which had been filed as part of their applications for rental increases. Of 829 applications that were made between 1981 and 1983, it was found that the cost of bad debt to Ontario landlords averaged $25 annually or $22 a unit in buildings of more than 50 units, $2 a month a unit or less. This was less than costs such as elevator maintenance, $31 over the year; grounds keeping, $27; and the like. The overall cost of bad debt related to gross income in that study was around 0.7%, which was pretty much in line with what we found in our study.
We estimated that the actual extent of landlords' eviction proceedings occurred in approximately 3% of the tenant population in a given year in Metro Toronto, and that was based on actual statistics provided by the courts; 3% per year or 0.25% per month. Taking that into account and taking a typical building of 150 units and coming up with a typical rate of default, then taking all of the costs of default -- the first and last months' rent, assuming they never did get paid back, which is very rare since it's already in hand in the last month's situation; the costs of the sheriff; the costs of an eviction service -- we found that the total cost wound up being about $1,627 per year for a typical building of that size, or about 0.6% of the gross income stream. Again, we saw some correlation in our own analysis and one 10 years earlier, and it showed that the impact of default is less than 1%.
The Chair: Mr McIlravey, as you know, we've probably got a time problem here. I'm wondering if there's a possibility that you could condense some of your presentation.
Mr McIlravey: Yes, I'm just getting to my conclusions now.
The conclusion is that most businesses have bad debt. Bad debt of less than 1% of income is common in virtually all forms of business. We checked that with Dun and Bradstreet, and it's virtually in line with any kind of business. However, most businesses don't turn away potential customers because of their bad debt and because of that relatively minor risk. Considering that the effect of a typical level of bad debt on profitability and return on investment is minor, eliminating bad debt entirely is going to make a difference of less than 1% on the bottom line, and even if it were to double because of income criteria being taken off, it would have an impact of less than 2% on the bottom line.
In a nutshell, we found there's no evidence to suggest that people of higher rent-to-income ratios are more likely to default than not, and we found that even when defaults occur, the bottom-line cost to the typical landlord, at least in the Toronto area, because that was where our survey was done, is insignificant, very minor. If that is the case and if income criteria are being considered to reduce defaults, then we believe they're inappropriate.
The Chair: Thank you, sir, for coming. I'm sorry to rush you. As you know, through no fault of the committee, we do have a time problem and we're already about three delegations behind. I thank you for your cooperation. I know all members will read your report.
COUNCIL OF ONTARIO CONSTRUCTION ASSOCIATIONS
The Chair: The second delegation is the Council of Ontario Construction Associations, David Surplis. Good afternoon, Mr Surplis. I'll be telling all delegations the same, sir, that because we're behind, if I could ask each of you to shorten your presentation somewhat, we'd appreciate it.
Mr David Surplis: No problem. As the Chairman has indicated, my name is David Surplis. I'm president of the Council of Ontario Construction Associations. We're appreciative of the invitation to appear here to lend our general support for Bill 96. You can find out about COCA, if you don't know about it, at the back of our brief. We represent about 50 construction associations right across Ontario in everything except the building of houses, which of course is done by the Ontario Home Builders' Association.
COCA, like almost every other group around here, develops policy through committees and consensus and so on with volunteers. Because our volunteers have a number of political sensibilities, we rarely take positions on issues that don't affect construction directly. So we're here today to tell you, yet again, that rent control and tenant protection programs do affect the construction industry directly and painfully.
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Many of you have heard us say it before, but it bears repeating that for the last seven years the non-residential sector of the construction industry has been in severe recession. We get our hours from the union hall. They keep good track of them. Last year we were operating, in terms of hours, at approximately one quarter of the capacity we reached in 1989 and one half of the rolling average from 1974 to 1989. So there's lots of unemployment in our sector of the construction industry. Unfortunately, as we've said too, many times a lot of people, when they think of construction, think, "Oh, housing," and housing is doing fine, so therefore construction must be doing fine. I'm here to tell you that the other side of construction has been doing very poorly and we're only beginning to come out of it.
The one thing our members have become aware of -- we're here on all kinds of issues, as a number of you are aware -- one thing we haven't been able to solve is the effect of political interference in the business cycles. Back in 1990-91 you probably wouldn't have heard us say something like that, but within hours, literally within hours, of the introduction of Bill 4 by the NDP government in 1991, or late 1990 it was, our telephones lit up like the proverbial Christmas tree, because virtually all our contractors who were working on apartment buildings were ordered off the job and all their workers were sent home. That was it. It just ended the work on restoration and renovation of apartment buildings. The lenders to the landlords couldn't see a return, couldn't see a recovery of the money, hence the end of the job.
Literally hundreds of our workers were thrown out of work within hours of introduction of that bill, not passage, but introduction of that bill, so we learned to watch them very closely. In fact, we came here jointly with our unions to make a plea about allowing some cost pass-through, but we got nowhere, except that we learned a lesson to watch social policy as well as economic policy.
Our members also came to realize that rent control is a political invention and it has very serious meaning for contractors. We weren't surprised to learn that it first came up in 1975, when Mr Davis announced it in response to a charging Stephen Lewis, and from that day to this it has been a politically inflamed issue, as you know. We also know that the pressures surrounding this issue mean that a clear-cut decision to eliminate rent controls is virtually impossible in Ontario.
From the construction industry's point of view, sifting through the hundreds of briefs and studies and public pronouncements that you've heard from just about everybody here, there's one fact that stands out above all others and that is that the entry of the government of Ontario into the rental housing market in 1975 spelled the end of large-scale apartment construction. That's all we know as contractors. In the years prior to 1975, tens of thousands of apartments were built in Ontario; in 1996, there were under 50 built in Toronto, the largest housing market in the province. From 40,000 in 1972 to a few hundred in 1996 is an unmistakable sign of the problem.
We've lost a lot of jobs. As I point out in the brief, we didn't lose them all, because some of the workers who were working on apartment building restoration went on to other things and perhaps built condos, that kind of thing. But that demand for apartments was lost to the economy. Then what happened? Various governments decided to play developer, but the non-profit housing experiment proved to be a huge drain on the public purse, so the Harris government today has put an end to it. But there's a problem with that. Just as other governments realized that the public purse had to be used when the private sector was forced out of the market, there has to be a realization that private investment has to be encouraged when the public-purse spending has stopped.
But unfortunately we don't believe that Bill 96 by itself will provide the necessary conditions to allow the private sector to meet the pent-up demand. As everybody has heard from the development community, there is no guarantee that Bill 96 will attract private investors back into the rental market without many other changes, like reduced development charges, a more reasonable approvals process, equity and tax treatment of rental property and so on, some of which, as we grant, are beyond your jurisdiction. It's unreasonable to expect that any kind of boom will develop in rental housing with the simple passage of this bill. We agree that it is a meaningful reform, a step in the right direction, and we recommend you look at the amendments suggested by the Fair Rental Policy Organization, the UDI, the Ontario Home Builders' Association and so on.
Strictly from our point of view, from the builders' point of view, there is much better news on the subject of capital expenditures. We've been here many times over the last six or seven years to tell you about the absolute need for capital expenditures to preserve the viability of the existing stock in Ontario. We even helped commission a lot of the studies that have been cited by everybody. The figure that most people use is that there's a pent-up need for about $10 billion worth of renovation, restoration, repair, rehabilitation, whatever you want to call it, in the apartment field, just the present stock we have.
A huge backlog of capital repairs has developed since the passage of Bill 4, and it is imperative that this necessary work be undertaken, because almost 75% of all rental units in Ontario were built prior to 1972. At 25 years of age, these buildings require replacement of major building systems and their components. The fact is, and we readily admit it in the construction industry, that the construction techniques were not as advanced 25 years ago and many balconies and parking garages are seriously at risk, not to mention outmoded mechanical and electrical systems and energy-inefficient building envelopes. The problem is that a lot of people can't see that. Just the other day I was told about railings around a high-rise apartment that blew off in a high wind. Nobody could see that was coming, everything looked fine, but that's the problem.
As I say, I don't need to belabour the point about capital spending, because Bill 96 goes a long way to addressing it. But what I can assure you, from what we've heard from the landlords and prospective developers, is that there will be lots of work generated in the restoration and repair sector of our industry as a result of this bill, and that's important. First, as I said, the buildings really need it, and second, there's very high unemployment still in the ICI sector, that's the industrial, commercial and institutional sector of construction.
The $10 billion that is needed, the capital work that is needed, we're told by the Fair Rental Policy Organization and its members that the changes proposed to the Rent Control Act in this bill will allow landlords to recoup enough of the capital costs and projects to address the requirement will begin immediately. In fact, a number of FRPO members have already started projects in anticipation of the passage of Bill 96.
The bottom line is that the capital provisions will address the preservation of existing buildings, will create thousands of much-needed jobs and will ensure the maintenance of quality accommodation for tenants. We support these provisions and we encourage the committee to do so as well.
To recap, the contractors in COCA support Bill 96 as a step in the right direction. We don't believe it will result in resumption of a full-blown market in private apartment building without additional changes; for instance, making sure the municipalities treat rental and owned accommodation equitably eight years in the future.
You've already been given lists of amendments by groups like FRPO and UDI and the home builders. We recommend them to you. We're very happy with the opening up of capital provisions that allow the restoration of the existing stock, and so on balance we feel that progress is being made. Of course, finally, we would prefer to see rent controls disappear entirely, but we are appreciative of the efforts made by Mr Leach and his staff. If you have time for questions, fine; if not, I'm happy to --
The Chair: Knowing particularly Mr Marchese would love to ask you some questions, unfortunately we've had a delay in the committee and we're not able to ask you any questions.
Mr Marchese: You were spared.
The Chair: Perhaps at another time. Thank you very much, Mr Surplis, for coming.
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PARKDALE TENANTS' ASSOCIATION
The Chair: The next delegation is the Parkdale Tenants' Association. I have three names: Bart Poesiat, Anna Thaker and Jeanie Lee. Thank you for coming. You may have heard my comments that we're running unbelievably late. I'd ask that you cooperate with us and try and condense some of your remarks to us to enable people who are following you to make presentations. The floor is yours, and could each speaker identify themselves.
Mr Bart Poesiat: We will do that immediately, Mr Chair. On the far right is Jeanie Lee, who is an executive member of the Parkdale Tenants' Association. Next to me is Anna Thaker, who is also an executive member of the Parkdale Tenants' Association as well as the president of the West Lodge Tenants' Association, a building that has been named many times. My name is Bart Poesiat.
Thank you for allowing us to speak to you. A few words about Parkdale and the Parkdale Tenants' Association: The association is a grass-roots community organization first formed in 1971 to help fight against rent increases and improve tenants' lives in Parkdale. The Parkdale Tenants' Association is made up of Parkdale tenants, ordinary people, many on low incomes. The unemployment rate in Parkdale currently hovers around 45% to 50% and we survive on the meagre dues of our membership, $7, or $3 for the unemployed. Nevertheless, we have had some successes over the years.
We believe that decent, affordable housing is a right of every individual. We have always worked for the rights of tenants to secure long-term housing through keeping apartments affordable and in good repair and increasing the number of affordable apartments. As we've said many times in the past, the Parkdale area, especially south Parkdale, has a fine collection of slum buildings that have been turned over from one landlord to another. Many people have made profits out of those buildings at the expense of the people who live there.
We've certainly had our problems there, but nevertheless, under the type of legislation that we have been able to achieve over the last 25 years, we have been able to achieve some successes, one of which is 103-105 West Lodge, where the tenants are currently poised to buy their own building. Although that achievement has been temporarily defeated, perhaps partly because of Bill 96 and the prospect that the building is going up in value, there have been substantial repairs made. There's been a long history of struggle. Many people have been exploited there, but at the same time the situation is looking up and that's through the efforts of tenant organizing. We have a lot of experience in that.
Other examples are the Tabco buildings in the 1980s, where a landlord tried to get away from rent control by converting to quasi-hotel units. We've been able to keep other buildings open. Obviously we're not always talking about the market here. We're talking about social forces, trying to keep people from becoming homeless. It's as simple as that in Parkdale. In Parkdale, it's very simple. You're on the street, you're in a crummy rooming house or you're in a crummy apartment. Trying to keep those apartments affordable and trying to keep them half decent is one thing that we have succeeded at. As my colleagues here are going to point out in three minutes each, that will not be so achievable under Bill 96. I think there will be a lot of problems trying to keep those apartments affordable and trying to keep people from moving into even worse accommodation and trying to keep those apartments in a half-decent state of repair.
I'll pass it on to Anna.
Ms Anna Thaker: My name is Anna Thaker. I've lived in that slum building about 18 years. I am fighting in that apartment more than 10 years landlord after landlord after landlord. What the landlords do is they make money, they leave the building. The Rent Control Act and rent protection, even though it has its faults, we have achieved success because our rent has been frozen since 1990 due to the thousands of work orders issued by the city to the landlords. They have practically violated every law in that building. Because of the tenant act, we took them to court and we achieved success.
At present, any landlord who does not comply with the law could receive a rent penalty. A landlord cannot increase the rent unless they comply with the order. This present government wants to eliminate that. My request is for them to just please come in our building and live and then tell us, with the present law, how we're going to live in that kind of condition.
With the present Rent Control Act we have stable and affordable rent and the living conditions are improving. Not only that, we tried to convert our building into a co-op without any government assistance.
What do you think the landlords will do? They will evict the tenants without any reason whatsoever. They will break the backs of the tenant associations and harassment will increase on a daily basis to make life miserable so tenants won't have a choice but to leave the building.
The government is saying that as long as you live in that apartment the rent will not increase above the guideline. I have one request to the government. Suppose I am living in a bachelor apartment. If I get married and I have 10 kids, should I live in the bachelor apartment? Or should the government say that I cannot have a kid so I can live in that apartment? Because I can overcrowd my apartment, what is the landlord going to do? According to my opinion, I'll be living in a jail, not in an apartment.
In my building tenants are in a low-income bracket and more than 30% or 40% are on social assistance. I have to ask the panel, if the tenant does not have a choice but to move, where are they going to find affordable rent if they are on social assistance? If they have to pay more money than social assistance gives them, who is going to compensate? That is my question. I think the last time I asked the same question. The government didn't answer that question.
Bill 96 is telling landlords that they can increase the rent as much as they want to. I have one question: What percentage of my income am I supposed to pay in rent? Government is not telling that. If I pay more than 40% or 50% for my rent, how am I going to contribute in the economy? It's not only going to hurt the tenants, it's going to hurt the small business, it's going to hurt practically everyone.
If the government says this proposed Bill 96 is great, how come the builders and developers are opposing it, besides the tenants? In the end, I have to say that this proposed Bill 96 has given the incentive to my landlord to buy this building back again with a highly inflated price which we could not afford, going back to square one, turning it into a slum building. The sad part of everything is that the government will allow him to do that or help him to do that.
One more thing: If we lose our jobs, we go to welfare. Up to now, the government didn't give me the statistics on which landlord had gone to welfare, because government reduced the welfare 21.6%, but he didn't reduce the rent by 10%. My question is why the government is trying to punish only the tenants.
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Ms Jeanie Lee: I'll just go over the two areas of the bill that I think will adversely affect tenants. Those are the supply of affordable housing and the loss of security of tenure.
First of all, the supply of rental housing: The government claims that removing rent controls when a unit becomes vacant will provide incentives for developers to build affordable housing. We heard from the deputant just before us that Bill 96 is no guarantee that rental housing will be built. In fact, they want a lot more done.
We, the Parkdale Tenants' Association, believe it will not do anything to increase affordable rental housing, but will eventually decrease the amount of affordable housing. How will it do this? First of all, by allowing conversions to condominiums. I'm sure other groups have raised these issues before, but I think they bear repeating. All the nice apartment buildings that are in fairly good shape will be converted to condominiums. Right now that is not allowed. Landlords will do this because they can make more money in the short term.
Secondly, it removes restrictions to demolition of rental housing. Buildings can be demolished, if they are on valuable land, to be redeveloped into more profitable properties.
Thirdly, as we all know, the cost of building affordable housing far exceeds the rent that tenants can manage to pay, which is why more rental housing hasn't been built so far. The economic equation just isn't there. We think that even if new housing is constructed after this bill, with no rent controls on those new units, with a fairly low vacancy rate and with the continuing demand for rental housing -- because there is a growing population in the GTA and it has been projected that it's going to grow by 4% to 6% per year -- even if there are new units built, they will not be affordable for low-income tenants. In fact in other jurisdictions that have lifted rent controls, such as Vancouver and I believe New York in the early 1970s, there was not a great deal of housing being built. So it didn't work.
The second item is the loss of security of tenure. Right now, tenants are fairly secure once they're in their apartment building and pay the rent. This new bill will allow for easier and cheaper evictions, because landlords will no longer have to go through the court system to evict someone. They will simply be able to evict someone through a tribunal. Not only that, there is now a large financial incentive for a landlord to do so, because once a unit goes vacant, there are no rent controls. So we see an increase in evictions.
Not only that, tenants will have less time to respond to an eviction order through the tribunal than they do now to the court system. Of course, whether an eviction goes through or not depends on the sympathetic ear of the members of the tribunal. These members, of course, will be appointed by the government, as far as we know. There may also be fees to appear before the tribunal, should there be harassment and other situations like that.
Lastly, I just want to say that I heard Mr Leach in an interview on radio recently when the new bill was being introduced. He was asked to explain the lifting of rent controls. He responded that housing is a commodity like anything else and therefore should be subject to market forces. We're here to say to Mr Leach and this committee that housing is emphatically not just another commodity. It is a basic need and it is critical to healthy families and healthy individuals.
The Globe and Mail just this Saturday wrote exactly on this issue, the devastating impact of losing permanent housing. It is a deep and downward spiral for those who end up in shelters and on these motel strips. When social workers were asked what we can do for these families, they said -- this is a quote from the same article: "The first and major step is to find them homes that allow them to live with some dignity."
I want to remind this committee that there are motel strips in this city that are dedicated to providing the last resort to families who can't afford the rent and have been evicted and can't scrape together first and last to find another apartment. With the passage of this bill, this situation can only get worse, because after they're out of their apartment, the apartment goes to the highest bidder. We believe it is wrong and in the end economically unsound to force people to bargain in the marketplace with little economic means against other people with much greater economic means for a basic need such as housing.
Mr Poesiat: Thank you very much. We'll cut it short. Maybe there's room for one question, I don't know.
The Vice-Chair (Mrs Julia Munro): No, I'm sorry, but I do appreciate your coming. Thank you very much for sharing your views with the committee.
SUPPORTIVE HOUSING COALITION OF METROPOLITAN
TORONTO
WOODGREEN COMMUNITY HOUSING
ROBIN GARDNER VOCE NON-PROFIT HOMES
The Vice-Chair: I'd like to call on Brigitte Witkowski, from the Supportive Housing Coalition. Good afternoon and welcome to the standing committee. As I know you have been here, you have heard the instructions that we are trying to catch up with the time we lost earlier, obviously through no fault of anyone. We appreciate your cooperation.
Ms Brigitte Witkowski: I actually did try to edit, so I have given my submission to Mr Prins. Probably by how many days you've sat, you're not the standing, you're the sitting-very-far-back-in-your-seat committee. I have to do this for nerves, a silly joke, then we'll get into the serious stuff.
I'm here on behalf of a coalition of three voluntary sector housing providers. One is the Supportive Housing Coalition of Metropolitan Toronto, one is WoodGreen Community Housing Inc, which is part of WoodGreen Community Centre, and Robin Gardner Voce Non-Profit Homes. Two of the three, WoodGreen and Robin Gardner Voce, are housing providers that rent to both subsidized and market rent tenants. I want to state that.
Though we manage non-profit rather than for-profit rental housing, we believe the essential nature of the business is the same. The core business is housing and renting units. We select tenants for market rent units using the same criteria as private landlords.
All three of us are very concerned over the potential impact of section 200 of Bill 96, and that's what I want to speak to today. In our opinion, authorizing the use of income information to disqualify potential tenants is going to have disastrous consequences for many disadvantaged households and on the rental market as well. Those are two concerns.
We want to ensure the committee is aware that the Fair Rental Policy Organization of Ontario, FRPO -- that's how I'll refer to it in my remarks -- which lobbied for the legalization of income discrimination, doesn't really speak for all landlords in the province. In fact, when you look at the data, the majority of landlords don't believe in income discrimination. FRPO in this instance is representing the minority of large developers who presently use income criteria to exclude social assistance recipients and other groups which they consider undesirable.
It's important to clarify that section 200 of Bill 96 is about the discriminatory use of income information in tenant selection. It's not about a landlord's ability to ask about income information. Those are really separate. One doesn't mean you can't do the other. As the Honourable Al Leach recently stated, landlords already have the ability to ask for income information, so we don't need amendment to the code to give them a right that already exists.
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Similarly, section 200 is not about the non-discriminatory use of income information. For example, the members of the coalition regularly use income information, in the form of rent-to-income ratios, to determine eligibility for subsidized units and the level of subsidy. However, this use of income information isn't contrary to the Human Rights Code, as it doesn't unfairly disadvantage groups which are protected. The use of maximum-income criteria is meant to benefit protected groups. No amendment to the code is needed to permit landlords to use information in this way either. However, section 200 will allow landlords to use income information in the form of minimum-income criteria in order to disqualify low-income individuals and families.
FRPO has admitted that the most commonly used income criterion is the 30% to 35% rent-to-income ratio and that this is what landlords will likely apply if section 200 is passed. Professor Michael Ornstein calculated that this would actually result in the exclusion of all social assistance recipients, 92% of all unattached women under 20, 51% of female lone parents and 60% of unattached black women, among others, and I could give you other statistics elsewhere. Apart from the unfairness of this discrimination, we ask that the committee consider the immense consequences in terms of housing policies which are implied by this potential for exclusion.
A building with fewer social assistance recipients, single mothers, families with children and refugee households is seen by many landlords and by much of the public as a more upscale, desirable property. Authorizing the use of minimum-income criteria will allow landlords to screen out those individuals whom myth and prejudice, not reality, label as undesirable tenants. In fact, when presently applied by landlords, minimum-income criteria are rarely, if ever, applied equally to all applicants; they are applied much more rigidly to members of groups that landlords consider undesirable.
FRPO has further suggested that the discriminatory consequences of income criteria can somehow be mitigated as long as the 30% rule is applied in combination with credit and reference checks. Let's just think about this. You take minimum-income criteria in conjunction with other criteria. That's not going to remove the unfair disadvantage which low-income households face. It would be unprecedented for the Legislature to permit a discriminatory practice as long as it is bundled together with non-discriminatory practices. Something wrong covered in something right doesn't make the wrong thing right, and that's really what this is about. In fact, it's going to result in confusion among landlords regarding how income information should be applied and little, if any, improvement for disadvantaged people.
As a case in point, there was an attempt to figure out how to bundle this basket together, and the rules became so complicated that no one was able to follow them. I think landlords really need to know what's legal and illegal and whether it's legal or illegal to exclude disadvantaged groups because of income.
Furthermore, it has been suggested by FRPO that authorizing the use of income information to disqualify low-income households will merely maintain the status quo, because the use of minimum-income criteria by landlords is already widespread. That's not true. A recent survey by N. Barry Lyon Consultants showed that only 17% of small landlords and 40% of large landlords use income criteria. When FRPO says small landlords are particularly vulnerable to default, they neglect to tell the committee that small landlords, on the whole, do not use income criteria.
FRPO tries to reassure the committee that section 200 is permissive, not mandatory, that it permits landlords to discriminate but does not require it. FRPO says that all landlords would never use income criteria because the result would be hundreds of thousands of homeless and higher vacancy rates. It would again be unprecedented for the Legislature to legalize discrimination using FRPO's justification. It's sort of like saying discrimination against women in employment should be legalized on the basis that it would be permissive rather than mandatory and that only some employers would ultimately discriminate, and you could substitute for "women" any other group you choose.
As an alliance of housing providers, we believe we are in a strong position to assess the alleged business case for using income criteria in tenant selection. It's our opinion that there is no evidence of any valid business reasons for the use of minimum income criteria; in fact the evidence suggests the opposite is true.
Some large landlords like Bramalea and Shelter Corp have tried to justify the use of minimum-income criteria on the basis of minimizing the cost of default, but there is no evidence that income criteria are an accurate predictor of the probability of default. The study commissioned by FRPO which examined tenant default rates and rent-to-income ratios in Bramalea and Shelter is the only study of which anyone is aware that puts these assumptions to a statistical test.
In FRPO's submission, Philip Dewan stated that the survey of tenants at Bramalea and Shelter showed a significant correlation between default and rent-to-income ratios. That's irresponsible. He neglected to tell the committee that the quote he read from ComQuest Research was written before Mr Ornstein had reviewed the data. As Gary McIlravey said earlier, Professor Ornstein discovered that ComQuest had made a fundamental error in calculating the rent-to-income ratios of non-defaulting tenants; when he corrected for that error, he found that the defaulting tenants didn't have a higher rent-to-income ratio than non-defaulting tenants. By the way, when Professor Ornstein's results were presented to the human rights tribunal, FRPO didn't dispute it, and that's important to note. So there's no objective evidence that excluding low-income tenants will reduce default rates.
Surveys have further shown that default is always a result of a negative change in life circumstances rather than an affordability problem present at the beginning. Not surprisingly, people who experience an unexpected negative change may have low incomes when they default. However, this is as a result of the change and is not a justification for disqualifying low-income households when they want to rent.
Mr Dewan argues that because Professor Ornstein predicted that a possible consequence of the unexpected 21.6% cut to welfare would be that tenants would be unable to pay their rent, he was implying that income criteria are a valid measurement of the likelihood of default. In fact, Professor Ornstein was just saying default may result from an unexpected decline in income. Who can predict what happens? None of us is immune to changes in life. We just have to deal with it when it happens, but you don't start disqualifying people on the basis of what might happen.
Tenant self-selection, in combination with credit and reference checks, is the best method of reducing default. It's important for the committee to appreciate the difference between being a landlord and being in a business in which the primary concern is risk assessment, such as credit, lending or insurance. Landlords are not primarily risk assessors; they're housing providers. If risk assessment based on income was central to our business, there would have been studies on how best to use income information to reduce default; there aren't any studies.
While we want to avoid default, it's a relatively minor component of our business. It's usually less than 1% of our income; that's how small a concern that is. Our major concerns as landlords are mortgage, realty taxes, gas, hydro, water, management, repairs and maintenance, and maintaining good relations with our tenants.
Most businesses rely on consumers themselves to determine what they can afford. Consumers determine what food they can afford, what clothes they can buy and what type of telephone service or cable television to purchase. A telephone company is just like a landlord. The telephone company relies on the consumer to pay for the service on a monthly basis and will incur costs in the event of default. However, the telephone company doesn't attempt to determine whether a household can afford a particular service and deny service to low-income households. In the market for rental housing, self-selection by tenants is traditionally relied upon as the basic principle of selection.
Insurance companies and credit lenders cannot rely on self-selection, because high-risk applicants would stand to benefit; there is no benefit for a low-income tenant to rent an apartment they can't afford. That's the logic of it. No prospective tenant seriously desires to go to the trouble of securing first and last month's rent, hiring a moving van, cleaning and possibly painting the apartment, moving the furniture, paying the installation fees for telephone and cable, only to default on rent and face eviction. It's a heck of a lot of work to do to then say, "I'm going to default now." Eviction is traumatic and humiliating, and afterwards it's extremely difficult to secure alternative accommodation. So I don't think landlords are well placed to determine what a tenant can afford.
Income criteria are not sensitive to important factors such as family composition, household priorities or other sources of income or assistance such as family and community supports. Renters self-select on the basis of complex decisions about affordability. That's rather true. I had a secretary who wanted to rent an apartment and this 30% approach was applied to her. What ended up happening was that they wouldn't rent to her because her income didn't meet the $30,000 threshold. That fact that she earned $26,000, that she had a secure job, that she had an ethnic community she wanted to live close to rather than on the fringes of Metro, none of that mattered, and the fact that she was going to lose some costs in order to come to work didn't matter.
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The essential nature of the rental housing business is to provide a basic necessity in exchange for the payment of rent, usually the largest single item in a household's budget. Rent is paid in advance, and prospective tenants are generally required to come up with cash or a certified cheque for two months' rent before they can even sign a lease. This cash requirement at the outset of the tenancy is in itself a very thorough screen of ability to pay.
FRPO suggests in an example to the committee that if the committee didn't legalize the minority practice of income discrimination, a 16-year-old with a part-time job at McDonald's will be able to rent the most expensive penthouse on the Toronto waterfront, and he also suggested that this is a reality witnessed every day in landlord and tenant court across the province. Well, I stopped to think about it, and my father-in-law lives down at Harbourfront. I thought, "A teenager would have to come up with approximately $7,000 required for first and last months' rent in a certified cheque." I don't think so. It's impossible to imagine that such an applicant would survive the normal interview process which we use to ensure that applicants are serious and would be responsible tenants. That's business.
There is no evidence that income criteria are superior to the economical and efficient screen of advance payment in cash, combined with a tenant's own ability to weigh the complex determinants of affordability and choose the most affordable and appropriate apartment. The best method for reducing default is to make tenants aware of the exact cost of renting an apartment and then rely on them to make sound choices. Even if income criteria did reduce the risk of default, which on the evidence isn't the case, this benefit must be weighed against any costs of imposing such criteria. The alleged benefit must be weighed against the loss in rental income that comes from restricting the demand for apartments by disqualifying potential tenants.
Contrary to the estimate proposed by FRPO, the study by N. Barry Lyon, consultants on rent arrears, and the study by two large landlords found that on average, legal costs and rent arrears for default were at most less than approximately one and a half months' rent and more likely less than one month's rent. Using income criteria to screen out applicants dramatically reduces eligible renters. This leads to increased vacancy rates. Because of associated costs, having an apartment go unrented even for one month will have a greater impact on profitability than renting to a tenant who eventually defaults. In 1993, Bramalea lost 20 times more rental income through vacancy than through arrears.
Marketing vacant units is a far more important component of the landlord's business than is disqualifying prospective tenants on the basis of supposed risk factors. This means that landlords are more likely to discriminate on the basis of income when vacancy rates are low, precisely when vulnerable households are at the greatest risk of being completely cut out of the private rental market.
Reducing eligible renters on the basis of an untested assumption that renting to more low-income applicants will increase the minimal cost of default is utterly irrational. Default rates could be more intelligently addressed by measures taken after tenants have rented apartments than by discriminatory attempts to assess the risk of default at the time of renting. As a landlord, that's why we have payment plans, because it's far cheaper to keep a tenant in your apartment than have to go through evicting them and marketing the unit.
Finally, a reasonable rate of default is simply an accepted cost of doing business which can be factored into the rent. Every business I know of includes some default costs similar in nature to those of landlords. These costs are built into the price charged for the commodity or service. You go to the Bay and buy a suit and the suit has in it the theft rate, covering their price. You go to a landlord and the landlord's price includes the default rates in the cost of doing business. That's business.
If used properly, credit checks, credit references and landlord references are a valid way of assessing the creditworthiness and therefore default risk of prospective tenants. Therefore, we agree with Chief Commissioner Norton that these selection criteria should not be used to disadvantage young people or newcomers to Canada merely because they don't have, or don't have access to, credit records, credit references or landlord references.
The FRPO submission raises the issue of how one assesses the default risk of a newcomer to Canada or a young person who has none of these records or references. According to FRPO, if a landlord can't refuse such a tenant based on income criteria, the landlord is obliged to rent to the person on good faith. Well, that's not quite true. There are many other ways in which a landlord can ascertain the suitability of a prospective tenant. A concerned landlord could ask for other references. A landlord could interview prospective tenants and discuss their responsibilities as a tenant.
The point is that income criteria should not be used to disqualify such applicants. It just means, be creative. To allow landlords to exclude the majority of young people and newcomers because their incomes are almost invariably low is simply unthinkable. Our experience is that these tenants tend to be very anxious to prove themselves and will go out of their way to pay their rent on time, even where the rent absorbs a high percentage of their income.
It's our contention that many landlords take pride in the fact that what they are providing is a basic necessity. In other businesses that provide the necessities of life, it is not an acceptable business practice to disqualify people on the basis of income level. We accept a higher level of social responsibility in ensuring that no one is prevented from getting housing because they happen to be less affluent. Everyone has a right to decent housing. The Human Rights Code should reflect it. We agree with Commissioner Norton's recommendation that income information be deleted from section 200 of Bill 96 and that the section be amended to clarify that the absence of credit records, credit references or landlord references shall not be the basis of disqualifying prospective tenants.
Thank you for your attention.
The Vice-Chair: Thank you very much. We appreciate your bringing your ideas forward here today.
Ms Witkowski: I'll bounce out of my seat so you can get to the next person.
ONTARIO RESIDENTIAL CARE ASSOCIATION
The Vice-Chair: I call on Rick Winchell of the Ontario Residential Care Association. Good afternoon and welcome to the committee, Mr Winchell. We are playing a bit of catch-up here with time. We certainly welcome you here and are prepared to hear your remarks today.
Mr Rick Winchell: Thank you for the opportunity to address this committee on Bill 96, particularly the care home section of the proposed act.
As executive director of the Ontario Residential Care Association, I speak for the 300-plus owners and operators who maintain comprehensive standards of personal care delivery for more than 17,000 retirement home residents across the province. Having spoken to many of our residents and their families since the introduction of the Residents' Rights Act, 1994, I believe I also echo many of their sentiments as well.
The Residents' Rights Act was the previous government's effort to regulate, in part, the retirement home sector. It has been an abject failure. The application of apartment laws on care settings, without the necessary amendments to meet the different and changing needs of this special population, has been a source of needless frustration for care providers and residents alike.
For the most part, the care home section of the proposed bill addresses our concerns. More importantly, the section removes restrictions that currently compromise our ability to deliver expected and appropriate care.
We support the return to evening bed checks. The current law prohibits this practice, despite a resident's request or need, without a 24-hour written permission for each and every entry.
We applaud the bill's much-improved resident notice period that reduces a person's or an estate's exposure from as much as 89 days to a maximum of 30 days. The current resident notice provision severely punishes someone who dies or someone who is moved to a higher level of care.
We support the bill's recognition of the increasing demand for respite care. The Residents' Rights Act has no provision for the needs of elderly people seeking short-term convalescent stays.
We also support a process that recognizes the importance of transferring residents to a higher level of care when their needs exceed the resources of a retirement setting. Critics of this provision falsely argue that this places the rental housing tribunal in the position of making medical decisions. These claims are levelled by people who misunderstand the long-term-care referral process. Placement in long-term-care settings requires an assessment by professionals working in community care access centres. Nowhere in the proposed bill is an operator or the tribunal empowered to make medical decisions.
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Under the current law, a lengthy court procedure is required to transfer a person who disturbs the quiet enjoyment of other residents. It's a dangerous and inappropriate practice. Suggestions that the proposed law gives landlords new ways to evict people who are living in care homes is, I think, a misrepresentation of reality. Retirement home residents are not evicted. They are transferred to more appropriate care settings when health and safety risks are identified by qualified medical professionals. It is clearly the humane and responsible thing to do.
We also support the concept of full front-end consumer disclosure. We believe that residents should know precisely what services are expected for the fees they are paying. However, the current legislation requires a very complex and confusing care home information package, CHIP, as well as a detailed residents' agreement. Many residents, and I mean the majority of residents across Ontario's retirement homes, refuse to sign these intimidating and highly legalistic agreements. We believe that a more streamlined and user-friendly combination of the two packages would indeed benefit our older consumers.
Long before the current legislation, a single-page service disclosure effectively served the purpose for thousands of satisfied residents. The Residents' Rights Act has failed miserably to protect a frail population whose average age is 84.5 years. Security of tenure may be very important to a healthy person, but for someone who requires assistance with activities of daily living and whose condition can change overnight receiving appropriate support is the priority.
Bill 96 finally recognizes that the needs and interests of residents in retirement homes are very different from tenants living in an apartment building.
The Vice-Chair: Thank you very much. Because you've been so much briefer, I'll entertain questions from caucus members.
Mr Marchese: Thank you, Mr Winchell. Good to see you again.
Mr Winchell: Good to see you, sir.
Mr Marchese: There are a number of people who have concerns about section 91 in particular, as you know. The group that came this morning, the Canadian Pensioners Concerned, have stated how worried they are about the particular section and its use of the ability to transfer people out. You say that they are not evicted, of course.
Mr Winchell: That's correct.
Mr Marchese: They are transferred to a more appropriate care setting. On the previous page you talk about their being transferred to higher levels of care. The question is, where would they be transferred to, given that, by and large, we have a hell of a time finding a place for people to stay? We understand the concept of transferring, but I think there's a problem in terms of where you would have these folks transferred to. Do you think there's a problem in that regard?
Mr Winchell: There's definitely a problem in underbedded long-term-care jurisdictions, but I understand that the government is looking at reallocating long-term-care beds. I think it's important to understand that one thing that is working now on behalf of our residents, and it's a welcome change, is that the government has now reversed the previous government's decision to prohibit home care to retirement home residents. Now we are seeing home care being delivered into retirement homes, giving those people who are on waiting lists the additional topped-up care while they await placement in a long-term-care facility.
Mr Marchese: Perhaps you have that information. If it's written somewhere, I'd like to see it. I'm not sure that that's so.
Mr Winchell: You're not sure that what's so.
Mr Marchese: You talked about additional topping-up home care. I know it's a hell of an area to get into in terms of what kind of care they get, if any, the reduced level of care that people are getting. You talked about somehow additional topping-up care.
Mr Winchell: That's correct. I can say unequivocally that through the new CCACs, home care is now being provided for the first time since the previous government took over. Home care is being provided for retirement home residents. That is providing the additional care that they might require while they sit on a waiting list for long-term care.
Mr Gilchrist: Thank you very much for your comments. I appreciate that your perspective, obviously, is of someone who works in that sector. You don't have to speculate; you see the stuff on a day-to-day basis.
There's no doubt we've had some people come in with some concerns about the wording in the act, that the landlord may apply to the tribunal for an order to transfer a tenant if the following conditions are met: the tenant no longer requires the level of care provided and the tenant requires the level of care the landlord is not able to provide. Then the tribunal may only issue an order if appropriate alternative accommodation is available and the level of care the landlord is able to provide, when combined with community-based services that you've just alluded to, cannot meet the tenant's care needs.
Could you give us an example perhaps, to put a human face on this, of the sort of circumstances you face under the current law that you wouldn't under these changes in terms of tenants who may need a different level of care as they age?
Mr Winchell: Certainly. I'd like to preface it by saying that we have said from the outset of the Residents' Rights Act that this is a round peg in a square hole. This is the current government's best effort at trying to fix what I consider a very poor situation. Having said that, yes -- by the way, there is a section, just read, about when a person is deemed to need less care -- that clearly doesn't refer to retirement homes because retirement homes cover the spectrum from independent all the way through to heavy assistance care. I'm not sure how that fits the retirement sector.
To put a face on it, if we have someone who has advanced dementia and who is disturbing the quiet enjoyment of the other residents, the current situation forces us to go through a very lengthy and I think a fairly destructive court situation. Can you imagine asking the other residents to come on down to court and testify against a resident? It's just an untenable situation. It makes no sense whatsoever.
More important, let's say a person is careless with smoking. We've talked about this in the past. We've got serious problems with a person who has early dementia or advanced dementia and is smoking beyond the rules. We're talking about a very serious safety risk. They go to a place where they can get constant supervision.
Mr Duncan: I want to come back to sections 92 and 93. Section 92 says that a landlord who gives a tenant of a care home a notice of termination under section 51 shall make reasonable efforts to find appropriate alternative accommodation for the tenant. It has been suggested that that could be amended to say that a landlord who gives a tenant of a care home a notice of termination under section 51 shall be required to find comparable alternative accommodation for the tenant. You support section 93. Would you support that amendment to this bill? If not, why?
Mr Winchell: I'm not sure what you mean by comparable. It's very important to understand. I'm not aware of a single retirement home resident who has ever been evicted using the landlord and tenant term. We're talking about people who require a higher level of care. We're not talking about comparable, we're talking about stepping it up.
Mr Duncan: I think Mr Lightman identified a number of situations --
Mr Winchell: I happen to vehemently disagree with a lot of what he says.
Mr Duncan: Perhaps. I'm not saying he's right or wrong, but they've been identified. You're saying it would only be done either in the interests, apparently, of the individual affected or in the best interests of those around that individual. Then wouldn't it make sense that, if you're a care provider, you should be required to find comparable accommodation? The definition of comparable could be spelled out in regulation.
Mr Winchell: That practice has been going on for years. Now we're talking about higher levels of care. I don't think comparable is the right term at all. We're talking about trying to find heavier, more supervised care.
The Vice-Chair: Thank you very much, Mr Winchell, for appearing here before us today.
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MUNICIPALITY OF METROPOLITAN TORONTO
The Chair: Members of the committee, the next delegation is Alan Tonks, the chair of Metro Toronto. I must congratulate the members of the committee. When I left we were about half an hour behind and now we're only about five minutes behind. Well done. I don't know what that means.
Mr Alan Tonks: Don't stoke up your optimism with me coming before you that you're going to make time. It's not my reputation to help in that respect.
The Chair: I'm sure Mr Tonks will cooperate the way you always do. You may proceed.
Mr Tonks: Thank you very much, Mr Chairman. I'm here in my role as the chairman of Metropolitan Toronto council, just to clarify who I represent. I'm here representing the perspective and the intention of the council, to talk about the proposed Tenant Protection Act and a provision which authorizes landlords to collect income information from tenants, which was obviously the focus of the last few deputants. I know I'm not the first one here to focus on that element.
You may recall that I appeared this summer before the committee on the tenant protection proposals before they were introduced in the Legislature. At that time I raised a number of issues and there are not many of them that have been addressed in this legislation. Metro still has those concerns, and I ask you to reconsider the proposals I had originally put before you.
However, I would like to focus my remarks on the issue of income information, because that's what the council has directed me to do. Put very simply, collection of income information raises the spectre of income discrimination. From two perspectives, you can appreciate why that's important to us: first, we are involved in the devolution issue with respect to housing and, second, we are the operators of one of the largest housing inventories in the social area in the province.
I will indicate for you why Metro has interests beyond that, why the application of income criteria may result in discrimination on the basis of income and why this leads to broader quality-of-life concerns for Metro council.
This issue has been brought strongly to the committee's attention and to the minister's attention by the chief commissioner of the Ontario Human Rights Commission. In fact I am here today because the chief commissioner's position was brought to the attention of the council, which then adopted a motion referring to the chief commissioner's letter and endorsed his concerns. That council motion is being submitted to you for background information.
Why is Metro interested in this question? Because we are all too familiar with the affordability problems of low-income tenants in the Metro Toronto market. Metro administers a GWA system supporting 83,000 recipients. The municipality will soon administer other forms of social assistance, potentially supporting another 65,000 households in Metro. We house 21,000 low-income households in our housing company. We have another 38,000 applicants waiting on the housing registry waiting list and we operate that list jointly with the provincial housing authority. We run by far the province's largest hostel system, accommodating an average of 3,100 people per night. Housing problems are a very large part of life of the people using these municipal services and we must be concerned about changes that will affect their housing situation.
The question at hand is the practical effect of legislation which would allow landlords to apply income criteria in selecting tenants. At a recent lengthy Human Rights Commission hearing inquiring into landlords' use of income criteria, landlord representatives argued that a 30%-of-income criterion was a sound business practice. This was cited as a traditional indicator of where rental affordability problems start. In other words, if the rent payable amounts to over 30% of a tenant's income, the landlord considers that tenant to be a poor financial risk.
A decision on that case is still pending, but there is no doubt that many landlords are applying this criterion at this present time right across Metro. I recognize that the bill does not speak to such a criterion, but without clear limitations on the use of income information by landlords this will be the practical effect.
While this business practice sounds reasonable in theory, I propose to provide you with a reality check on the situation of low-income households renting in the Toronto market. I will cite for you some statistics on rent and income based on 1991 census data. First of all, please note that most low-income people are, and I stress this, renting units in the market rather than in social housing. Among Metro tenant households with incomes under $41,000 the majority living in market units paid over 30% of their income on rent. Among those with incomes under about $23,000, some 62,000 households paid over 50% of their income on rent. Those are staggering statistics.
We know from national and provincial data that affordability problems have become much more common in the 1990s. We are awaiting with some trepidation the 1996 census rent-to-income data for Metro so that a similar analysis up to date can be made. However, as a provider of social services, Metro is also aware of other indicators in addition to census statistics.
First, housing waiting lists: Virtually all those 38,000 households on the waiting list currently pay over 30% of income in rent, many of them far more than that. Every month that waiting list just keeps growing, as the population of greater Toronto grows but its supply of affordable housing does not.
Second, welfare recipients: Welfare recipients receive a basic allowance which is intended to cover items such as food, clothing, transportation and children's needs, plus a shelter allowance which varies depending on the amount of rent being paid. In May 1997, the most recent data, 63% of the welfare caseload, or 52,000 households, paid over the maximum shelter allowance on rent. In other words, they are cutting into their basic allowance that should go for food, transportation and so on just to cover the rent. About 29,800 households were paying more than one quarter of their basic allowance on rent, on top of their shelter allowance. In fact, any family household on welfare paying over $511 a month, the price of a low-end bachelor or a basement apartment, is cutting into their basic allowance to pay the rent. These households are paying well over 30% of income in rent and often over 40%.
The point to be made is that it's very difficult for low-income tenants to find housing they can afford without squeezing their budget. This is true whether they are on social assistance or whether they are among the much larger number of working poor. Paying less than 30% of income on rent when you have a low income, under about $20,000 to $25,000, is usually just dreaming.
Clearly, considering the statistics I have been citing, the effect of applying a 30%-of-income criterion, or even a 35% or 40% criterion, will possibly deny low-income people the opportunity to rent an apartment that is anywhere near average rents. They will only have available to them small or bottom-of-the-market units, regardless of what their family really needs. The effect is discrimination against low-income people.
The existing Ontario Human Rights Code contains a provision prohibiting discrimination in the matter of accommodation on the basis of a person receiving public assistance. The very point of this provision is that housing is a basic right, even for low-income households. They may not be able to get Visa cards and car loans and other things that most of us take for granted, but they must have shelter. They should not be denied housing on the basis of an arbitrary percent-of-income criterion that a landlord applies as a "good business practice." These households will tell you that they will stretch their budget to pay for housing, as is evident from the figures I have cited to you.
The principle that underlies that provision of the Ontario Human Rights Code should guide this legislation today. Social assistance recipients and others with low incomes cannot afford housing at a rent based on 30% or 35% of income. Authorizing landlords in the Tenant Protection Act to consider such criteria could well lead to discrimination based on income, precisely what the Human Rights Code stands against.
Let's go one step further. If landlords do apply an income criterion -- 30%, 35% or whatever -- to deny accommodation to low-income tenants, what happens to these households? Where do they go? There will always be other places you can rent but, in return for fewer questions being asked, the landlord may feel less obligation to maintain the building, even if the rent is just as high, or may not operate by the book, knowing that tenants have few other options. There will also be smaller units at lower rents, but at what social cost to the family living in those cramped quarters? There are basement apartments or other units, but in closer quarters with landlords. In sum, options become limited. In extreme cases, these households may become part of our homeless.
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At our Metro Housing company, we have concerns as social housing landlords about maintaining a social mix in our buildings. This philosophy extends to the community at large. We have all heard of the social problems that can arise with all-low-income-household buildings. That is why we strive to maintain mixed-income social housing. Left unchecked, there is a fear that this sort of income discrimination could reinforce a disturbing pattern we see emerging more strongly in Toronto of growing differences between the upscale or middle-income parts of town and the not-so-upscale areas. Social division and polarization in this city are becoming much more evident, moving Toronto in a new and I would say extremely undesirable direction.
All in all, the financial risk faced by landlords if they cannot utilize income criteria may pale by comparison to the social consequences. Metro, as the provider of social services, will be left to deal with these consequences.
This is not to ignore the legitimate business concerns of landlords. Rent is by far the largest monthly commitment most tenants make. A tenant with a $1,000 monthly income paying $800 in rent is likely sooner or later to run into problems, which become the landlord's problems too. In fact, our Metro Housing company has these same legitimate business concerns about ability to pay when it comes to tenants in our own market rent units.
We have to realize that the tenant is at least as much aware of this issue as the landlord. A tenant generally won't rent that $800 unit on a $1,000 income. Tenants don't need the landlord to dictate to them that they cannot stretch beyond 30% of income, or 35% or 40%, to pay the rent when, based on the statistics I cited earlier, most have to.
Landlords have other ways of safeguarding their legitimate business concerns. Landlords have, and must continue to have, the ability to do credit checks and checks of previous landlord references. These are what reveal a real risk to the landlord, not the fact that a tenant with a $1,200 monthly income wants to rent a $500 apartment. There may also be cases where landlords should legitimately be able to ask for cosigners as guarantors, perhaps in the case of tenants with no credit or rental history.
In conclusion, let me return to the issue before you: whether to allow landlords to require income information from prospective tenants. I urge you to reconsider the social consequences of doing so. I remind you again that Canada and other countries have signed a United Nations declaration committing ourselves to goals that include adequate shelter for everyone, preventing homelessness, and equal access to affordable housing.
We must maintain the housing choices open to low-income households, not restrict them. Our aim should be to reduce the number of households requiring subsidized housing and those who, when all else fails, end up in our hostels. Without providing strict controls on the use of that income information, the provision before you can work against those very basic principles.
On behalf of Metro council, I urge this Legislature to delete the reference to income information in the proposed Tenant Protection Act.
The Chair: Thank you, Mr Tonks, for your presentation this afternoon. We have your written presentation and supporting material. I know all members will review both those documents. Thank you again for coming.
Mr Mike Colle (Oakwood): No questions?
The Chair: Unfortunately, we're out of time. I know you all would like to ask questions, but we're out of time.
W.J. REALTY MANAGEMENT
The Chair: The next presentation is W.J. Realty Management, Sam Grossman. The floor is yours, Mr Grossman.
Mr Sam Grossman: Thank you for the opportunity to address this committee. My name is Sam Grossman. I'm here representing W.J. Realty Management. Our company has been in the business of building and managing apartments in Ontario for approximately 40 years now.
Most of the apartments built by us still remain in our portfolio. We consider ourselves long-term landlords. We have always taken pride in our ability to use good, solid management practices in order to maintain and manage our apartments. This, in turn, we feel has enabled us to foster good tenant relationships as well as excellent relations with our numerous employees and tradespeople.
We've reviewed this proposed Bill 96, the Tenant Protection Act, and we're quite concerned over some potential negative impacts to our business of certain sections, which is what I'm here today to address.
The first section I would like to deal with is vacancy decontrol. This is the most significant change in Bill 96, the introduction of vacancy decontrol, which is really one of decontrol and recontrol, since the unit is subject to restrictions on increases after rerental.
Few people realize that this vacancy decontrol will benefit mainly the minority of units with rents which have been significantly depressed by rent controls over the years. Both to provide fair returns to owners and to ensure they have the ability to maintain these units in the housing stock in the future, it is vital that at some point these depressed rents be allowed to rise to current market levels. But there should be no mistaking the fact that this will happen slowly, over a long period. Units with bargain rents are obviously those most coveted by knowing tenants, with low turnover in these units being the result.
For the majority of units, vacancy decontrol is a valuable linkage to the market but will have little impact in the short term. Tenant advocates have stated publicly that average rents in the province will go up by 20% to 30% as a result of vacancy decontrol. I'd like to be clear that there's no support for such statements. No evidence, no studies, no reasonable basis for argument have been offered. It simply will not happen. In our own portfolio, we do not have a single apartment unit which we would ever consider raising by such a percentage.
In order to emphasize this point, I have attached to my written presentation copies of a small sampling from just two of our buildings which illustrate vividly how we are not charging even the presently approved legal maximums.
If you refer to some of the attached notices of increase which I have shown you and you look at line 3 of those items, you will see what the new rent charges to those particular tenants will be. If you look below that, opposite "Calculated Maximum Rent," this is the maximum legal rent which we would be entitled to charge for such units. If you want to look at the discrepancy between those, you can readily see that we're charging on some of these units anywhere from $80 to $100 a month less than the current legal maximum. Therefore I would say it's obvious that we couldn't even think about larger increases, since we're not even able to charge the current legal maximums.
In Metro Toronto, the present vacancy rate is 1.2%. CMHC's own study concluded the impacts of vacancy decontrol will be minimal. Vacancy rates are on the rise again. A joint study which they released in 1996 found that at least 50% of units already have rents below their legal maximums. Again, I refer you to my examples. These units are effectively decontrolled. There is no restriction on our ability to increase the rents back to maximum, save for the simple fact that the market will not sustain an increase. Conditions have allowed tenants to bargain prices downward.
Even in the remaining units, potential increases on vacancy are modest. A report commissioned by the government last year examined the issue of potential rent increases in unprecedented detail. Economist John Todd's analysis demonstrated that even assuming the complete removal of rent controls, rent increases would be limited in both number and magnitude. Most significantly, he refuted the allegations that vacancy decontrol would have horrendous impacts on low-income tenants. I quote from his report: "Overall, the availability of low-priced units to low-income households is not likely to change significantly."
As well as looking at what can reasonably be expected to happen in Ontario, there is another, real-world test of such a program: the experience of other jurisdictions with vacancy decontrol in place. It is interesting that the critics of vacancy decontrol have not presented one word of evidence to demonstrate the "massive" rent increases they allege such a program allows in cities like Vancouver or Los Angeles. The reason is obvious: The evidence does not exist. Vacancy decontrol functions very well in jurisdictions where it is in place.
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To cite just one example, the average rent increase for a two-bedroom unit in Vancouver last year, under vacancy decontrol, was 2.3%, or half a per cent less than the rent control guideline in Ontario. Average rent changes for other unit sizes ranged from a 3.3% to a 1.2% decrease, even though the market is as tight in Vancouver, with a 1.1% vacancy rate, as in Toronto, with its 1.2%. So much for the threat of vacancy decontrol.
The next issue I would like to address is decontrols in a soft market and the loss of legal maximum rent. The reason the idea of maximum rent was introduced by the Liberals and maintained by the NDP was that it recognized the desirability of allowing landlords the flexibility to move rents down when demand fluctuated, something they would be willing to do only if rents could rise up again as markets recovered. The current proposal would allow the rent to rise back to the market level only on vacancy, meaning there would be a real loss in income for so long as the tenant remained in place.
The result would be that landlords would stop discounting rents in soft markets, such as prevail in most of Ontario today. A landlord who is now taking the guideline rent increase because of market conditions would be forced to adopt a "use it or lose it" strategy under these proposed rules, charging the guideline increase so as not to lose it for the future, even if this meant increased vacancies. The result of this would be higher average rents for tenants, something I am sure was not the intention of this government.
It's important to remember also that landlords such as ourselves have earned these legal maximum rents because of conscientious investment in property but could not take increases due to market conditions. Therefore we should have the flexibility to adjust rents should conditions change in the future. It becomes critically important to ensure that the discounting rules which are prescribed relative to section 113 of the bill are sufficient to maintain this right.
On the subject of discounting, having explained its importance in my previous section, I would like to say that we are most concerned over the absence of detail contained in section 113, which refers the issue to accompanying regulations which apparently do not yet exist. Because the regulations are such a vitally important part of this legislation, it is extremely necessary for us to be given the opportunity to comment on drafts of these regulations prior to their being finalized.
We note that your own ministry has established precedents for the issuance of draft regulations for comment under Bill 98, the Development Charges Act, on March 24 of this year. We respectfully suggest that there are equally important concepts under this Bill 96 which need to be fleshed out through regulations.
We also feel it is appropriate to raise the details of the discounting formula which we would advocate, keeping in mind the soft market factor described in section 2. We propose that the equivalent of one month's rent spread out in equal monthly instalments over the annual lease term would be appropriate. In my example of a monthly rent of $750 per month, that would equate to a monthly discount of one twelfth of that amount, which comes to $62.50, which would enable a net monthly charge initially of $687.50. It should be noted that the landlord would be entitled to maintain the above discount so long as the current tenant remained in occupancy.
In addition to this, we feel it would be more appropriate to increase the discount up to two months, if required, in the first year only of an occupancy. This would not only help to compensate for the effects of a soft market but would also enable a willing landlord to provide assistance to a tenant with a temporary financial problem. If not utilized in the second year, the additional month's discount would then become null and void.
The final point I would like to address is the human rights provisions under sections 36 and 200. I would just like to preface my written remarks by making a few comments, because I've heard from some of the earlier speakers here today on this particular issue. At the outset I have to say that I really think there are some things being taken entirely out of context and other things which are rather difficult to understand.
The first thing that's being taken out of context is that the use of income criteria is something new and revolutionary that hasn't been done in our business before. In the 40 years that we have been landlords in this province, income criteria have always been one of the considerations that have been used in deciding whether to rent an apartment or not.
The often quoted figure of 30% of income or, as Mr Tonks mentioned, 35% or 40%, whatever criteria you want to use, has never been used by most of the landlords I know as any sort of absolute criterion. It is simply one criterion that landlords have to use in determining whether to grant credit, which is in effect what they're doing, to a prospective tenant.
Interruption.
Mr Grossman: Excuse me. May I finish my remarks? I didn't hear anybody else being interrupted here.
The Chair: We've been doing so well today, ladies and gentlemen. If you could just hold off, it won't be long. Thank you.
Mr Grossman: Thank you.
In any case, what I wanted to say is that we didn't remain in business for the last 40 years of renting apartments and being landlords by being totally out of touch with the realities of the marketplace. We know who our tenants are. We know very well what income conditions are in the greater Toronto area today and we are familiar with income levels of the people who apply for our apartments. We are also keenly aware of the effect that vacancies have on our apartments, and we know very well that we cannot afford to unnecessarily incur such vacancies.
There are other things mentioned, which of course any prudent businessman would always use, such as seeking guarantors in cases of low income, seeking sources of other income. These are all factors which any prudent businessperson would consider. However, we feel it is ridiculous to deny a landlord who is in the business of granting credit to tenants the right to attempt to judge their ability to pay, and we feel that, where insufficient, they should be refused accommodation. I don't think that any reasonable person would dare to suggest such a practice in any other type of credit business, and we therefore strongly urge that the status quo be maintained. I would like you to particularly note that in most other --
The Chair: If I could interrupt, you have one minute left, please.
Mr Grossman: Okay. In most other credit granting business, losses are limited to specific amounts, but a landlord's loss for a non-paying tenant is not limited to any specific amount because he has squatter's privileges and he thus causes the landlord future losses for unknown periods of time.
If the status quo were interfered with, I can assure you the effects on our business would be chaotic due to the staggering losses we would suffer in uncollectible rents. This in turn would have the ultimate effect of raising rents to good tenants, since this would be our only way in our controlled business of recovering our losses.
The Chair: Thank you, Mr Grossman, for coming this afternoon.
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CANADIAN MENTAL HEALTH ASSOCIATION
The Chair: The final delegation this afternoon is the Canadian Mental Health Association. I have two people listed: Ruth Stoddart, manager of policy planning and development, and Glenn Thompson, executive director. Good afternoon.
Mr Glenn Thompson: Good afternoon, Mr Chairman and members. Thank you very much for seeing us.
The Chair: Believe it or not, I think you're the first delegation where we're actually on time, so if you could proceed, we'd appreciate it.
Mr Thompson: We'll try to keep you that way. At this point in the session, I'm sure you may feel a mental health association is the appropriate group to see from your own point of view. We have stress-in-the-workplace assistance available at the door if you feel the need.
The Chair: You should see what's going on upstairs.
Mr Gilchrist: I was going to say, we need you every day with the folks opposite.
Mr Thompson: You've introduced us, Mr Chairman, so I won't repeat that. Our plan is not to try to repeat the content of the document that we've put before you -- it's quite long and complex -- but we want to spend a bit of time on the areas that are of most concern to us. At the same time, I guess I'd say, since we're proud of the piece that we've written, we hope you'll see it as a piece because I think it does hang together in a conceptual way. When you have an opportunity, I hope you'll spend the time looking at it in that kind of way.
It's especially important to us that you separate out in your considerations the concerns around this bill as they may impact on people with mental disorders. That's our particular field of interest and, more than anything else, we want to be sure that those individuals are not disadvantaged by changes in legislation and indeed, if possible, that they can be advantaged because there are certainly situations where difficulties occur at the moment.
I think most of us probably in this room have someone in our immediate acquaintance who has a mental disorder. There's very little for those people in life that's as important as housing accommodation. It literally and figuratively is a platform for everything else that happens. We can spend extraordinary amounts of money on psychiatric care and the like for individuals, but if we don't have a platform, a stability, for those individuals, most of that goes down the drain. I think you'll find that if you speak to people who have a mental disorder -- it may be so evident that one wouldn't even have to do that -- the fact of the matter is that many people who have a mental disorder are living in very severe economic situations. It seems to go together and therefore housing becomes critical for them.
First, a word about CMHA, in just a word or two. We're a non-profit, volunteer-led, charitable organization. We've been around in Canada since 1918, in Ontario for about 45 years. We have 36 branches in Ontario. We deliver a good deal of the direct housing services for mentally disordered people through government funding. We're a significant provider, we feel, and our branches would feel they have a very significant part that they're playing and a strong opinion on these matters. They would see housing for disabled persons with mental disorders as a right, as something that is just simply key to all the other things that one does in working with those individuals.
Obviously that housing needs to be affordable, it needs to be decent, it needs to be accessible, safe, well maintained and stable. The supports that are provided to people in that housing need to be flexible in part because the individuals -- if you know something about mental disorder in your family or among your friends, you'll know that the illness is a very cyclical one. People don't altogether, in many cases, get better. They get better and then they drift again. Whatever we do in a housing sense in this landlord and tenant legislation needs to relate to that, has to accommodate to that fluctuating illness. It isn't like a broken leg, where you're laid up for a while and get better as a result of good care and literally get back on your feet. Relapse is a reality and permanent cyclical problems are a reality.
We think that costs must be geared to the low-income potential of the people we represent, and rent controls of some sort and notice periods are essential to make that possible. We think that vulnerable people are not going to be in a position to negotiate to take on the kind of position that other individuals may be able to take on in relation to landlord and tenant matters. Often they're just simply not physically and mentally able to do that. To have that written in as a requirement for them is a bit of a fiction really in terms of what will be the reality.
We think access has become a very serious problem. With no shelter allowance, with reduced GWA and with lower building of accessible and affordable housing, there's going to be a growing problem, we foresee, for people with mental disorders. Thank goodness, I would say, that long-term care has a growing and developing program and a significantly funded one in Ontario because there are many, many people -- those of us who are aging quickly are probably in many cases going to require assistance that relates to mental disorders, so that's a very important aspect of long-term care. Those two programs fortunately are coming more closely together.
I'll hand over to Ruth Stoddart to pick up from there.
Ms Ruth Stoddart: There were three specific areas of the new legislation that I wanted to discuss in a little more detail. The first one is to do with the Human Rights Code. From the previous speaker's comments, I understand that this committee has been hearing a fair bit about these proposed provisions. The Human Rights Code as it presently exists prohibits discrimination on various grounds, and two of those grounds right now are disability and receipt of public assistance. Our organization well understands that landlords do require certain things from prospective tenants such as credit checks, references, rental histories, the usual things that landlords would get from someone applying for an apartment.
Our large concern, though, is that if landlords are allowed to use so-called income information to essentially pick and choose tenants, far more people with low incomes are going to be denied housing than presently occurs. A prime example would probably be the one on the front page of this morning's Globe and Mail. There was a large story about a woman living in a shelter. As soon as landlords heard she lived in a shelter they refused to rent to her. Not only people on social assistance but vulnerable people and particularly people with mental illness who are on limited incomes, if landlords are now allowed to discriminate on the basis of income, are going to have an even more difficult time than they do already finding decent housing in which they're able to live.
The second area I wanted to talk about, and there are two parts to this one, was the care home provisions in the proposed new legislation. The first concern that the CMHA has is about the exemptions from landlord and tenant legislation that are allowed for care homes. It will be the new clause 3(k) of part I of the legislation. Essentially it allows care homes to be exempted from Landlord and Tenant Act provisions for various reasons, including that the accommodation is intended to be for no more than one year.
I could certainly argue either side of that one year. For example, someone who's having a hip replacement probably will not need care for a year. The other side of the argument would be, for example, with the downsizing of institutional services by community and social services, there's going to be a large number of people with severe developmental disabilities who may end up in care homes. To use this legislation to move those people from home to home on a year-to-year basis certainly upsets any kind of stability they would have.
Our branches have indicated to us that most people with mental illness tend to stay in a care home situation between one and two years and that this one-year provision would be very difficult for them to accept. If they operate under the Landlord and Tenant Act, then a lot of the care provisions don't take effect, and these branches have chosen to operate under the exemption for care homes so that supports can be provided for people. As I say, however, they've indicated that the one-year limit would pose a large difficulty. What we suggest is that for those care home operators who are applying to the tribunal for an exemption, the tribunal perhaps consider on a case-by-case basis how long that exemption should be rather than having a blanket one-year exemption that's intended to cover all people with all sorts of disabilities in care homes.
The other large area of concern to us, also to do with care homes, has to do with the proposal regarding transfers of tenants in and out of care homes. The new legislation proposes that a tribunal can determine that in cases where a tenant needs more care or less care than they're currently getting in their accommodation and if appropriate alternative accommodation is available for the tenant, the tribunal can issue an order having the landlord evict that tenant and they move. We have several problems with this proposed part of the legislation, not the least of which is in a lot of areas of the province there just isn't appropriate alterative accommodation available and I don't know where these people are going to end up.
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A secondary problem is that a tribunal can issue an order on the landlord's instigation to remove a tenant from a care home, but there's no mention of any sort of advocacy or assistance on the part of the tenant in the care home. People who do not read, who do not read English, if they're handed a legal-type document, may not comprehend what that document's about or what it's going to do to their housing and to their supports.
A far larger concern about the transfers in care homes is the apparent conflict of this part of the legislation with the Ministry of Health's mental health reform process. That process emphasizes that people should be able to receive services according to their needs, that services and supports should be separate from accommodation, which was a lot of the reason for the original change from the Landlord and Tenant Act to the Rental Housing Protection Act, which separated accommodation and supports.
These sections about transfers in care homes suddenly appear to be not disregarding but acting contrary to the Ministry of Health's mental health reform policy. We believe that rather than having someone move if their care needs increase or decrease, as has been indicated by the Minister of Health, that person's supports, which should be coming in and out of the accommodation to them anyway, should be increased or decreased, particularly with people with mental illness. As Glenn has stated, their illnesses are often cyclical, and to think of moving a person every three months or every six months back and forth would involve a huge amount of disruption not only to that person but also to the landlord.
In conclusion, I'd like to say that the Canadian Mental Health Association believes that housing is a right and that the proposed legislation seems to confuse the supports that many people require with their rights as tenants. Again, this is the conflict between housing and health or community and social services. We believe that anyone, including people with mental illness, who lives in housing that offers support services has the right to both affordable housing and security of tenure, as do all tenants in Ontario.
The Chair: Thank you, Ms Stoddart and Mr Thompson. We appear to have time for questions if the members of the committee -- you look as if you don't want us to ask you questions.
Mr Thompson: We're here for them.
The Chair: Let's try and see if they have any. I don't know where we are. Mr Colle?
Mr Colle: Thank you very much for bringing something to our attention again that sometimes we forget about. In terms of your initial statement about the trends and the pressures on housing as it relates to people with mental disorders and so forth, what signs are there that there's a growing demand and a growing shortage of accommodation that's affordable and available?
Mr Thompson: I think the best evidence is the plan that the previous government had to put in place a great deal of non-profit housing, which some of us thought was aimed at the right numbers of disabled people and others. The truncation of that program has provided difficulty. The population growth continues, the growth of the aged population continues, and I think the numbers of mentally disordered persons, both among the growing younger population and the seniors, is going to put a growing demand on all the supported housing for people with mental disorders.
There's not much doubt that there's a growing population of that group in the community and in a sense we're glad that the population of people who are mentally disordered is out in the community as opposed to in institutions. As all of you will know, the Ministry of Health has embarked upon a major downsizing of hospitals, including psychiatric hospitals. Of the 10 provincial psychiatric hospitals that have housed people for many years, many of them are closing altogether within about two years.
There are going to be substantial numbers of people in the community requiring what some people call wraparound psychiatric care, a very intensive kind of care -- assertive case treatment teams is what the Ministry of Health is calling the teams they're putting in place. They have one in the London area now and several others are being put in place right away to assist people with serious mental illnesses to live in the community. All those people are living in the community. There are growing numbers of them, and they're going to require accommodation that's continuous and safe and reasonable for them, hopefully in their own community. In the future, hopefully they won't be coming from a hospital; they'll be staying in their community.
That's our concept, that many dollars can be saved and many people can be saved, in a sense, to remain in their own community if we engineer it properly. But housing is a major part of that engineering.
Mr Marchese: I do have one question. We had Rick Winchell from the Ontario Residential Care Association. He recognizes the importance of transferring residents to a higher level of care, he says, and he objects to people speaking about some of these folks being evicted. They would be transferred, he argues, to a more appropriate care setting when health or safety risks are identified. The example he used was of dementia. I'm assuming he means Alzheimer disease, but there could be possible variations?
Ms Stoddart: There are various dementias, yes.
Mr Marchese: Part of my question was, where do these people go? As far as I know, there are waiting lists. He's saying they should be transferred somewhere. I thought you mentioned that part of what you're talking about in terms of providing services and support versus accommodation is that if someone needs an additional level of service, you provide that, you negotiate for that. He's saying, "We don't have that level of care; therefore, we're going to help them to transfer somewhere else."
There are two problems. First, where do they go? Second, how that is used in terms of as a tool to get rid of some people they don't like, and third, how come they don't think about providing the level of service to meet that different need? What is your response to Mr Winchell?
The Chair: Mr Marchese, we've got a problem. We've got about three minutes left and I think you've used your time.
Mr Marchese: All right, a quick response.
The Chair: I know that, but I'm going to ask Mr Gilchrist. There's no time to respond.
Mr Gilchrist: Thank you both for coming before us here today and ending our session. I'd just like to clarify if I could, Ms Stoddart. You made a comment at one point in your presentation that there was no advocacy and that there was no one speaking on behalf of the people that you saw possibly being affected in sections 92 and 93. I would like to draw your attention to section 4. Absolutely every single one where there isn't agreement goes to mediation. These will be mediations of people expert in the field and nothing in this --
Ms Stoddart: That's not advocacy, though. I'm sorry.
Mr Gilchrist: You're presuming something and I think slighting those who would be in that position. You're fully aware of the CCAC provisions right now, and to presume that anything's going to be reduced -- I think the wording is very clear. If someone is in need of a higher level of care than is currently being allowed, if that higher level is not available, the tribunal will not allow the transfer. It will not allow things to go back. In deference to my colleague over here, I must correct him. People will not be thrown on the street. The landlord would not be allowed to transfer out if there's no place to go to.
Mr Marchese: Let's hear their response.
Mr Gilchrist: I am curious to know, with the section in there that says absolutely everyone will have someone advocating on their behalf, there will be mediation, and absolutely to the same standards that the CCAC has in place today, why is that not appropriate?
Mr Marchese: Stop.
The Chair: I'm going to stop it. I'll say stop. Please proceed.
Mr Marchese: There's still one minute.
Mr Thompson: May we respond, Mr Chairman?
The Chair: Yes, please. Very briefly, because bells are ringing.
Mr Thompson: I think it's a question of the difference, as Ms Stoddart is saying, between advocacy and mediation. Our concept would be that many individuals will need more than a mediative process. But I think it's really important to pick up the earlier question, to put together the housing supports with the psychiatric care. If there's a wraparound kind of system for that seriously mentally ill person, they're not going to survive just with housing or just with psychiatric care. It has to be a combined affair between the two ministries, which is --
Mr Gilchrist: We agree.
The Chair: Thank you, sir, and Ms Stoddart, for coming this afternoon and making your presentation. You've given us material which we will read. That concludes --
Mrs Julia Munro (Durham-York): Mr Chair, I have a question. One of the earlier presentations included information that gave people's names and addresses --
Interjections.
The Chair: Could I have some order, please.
Mrs Munro: I'm actually asking for legal advice here in terms of this being on the public record, if there is a mechanism here or we need to consider that it not be.
The Chair: You'll have to repeat. I don't think members of the committee are --
Mrs Munro: The presentation that was given to us earlier this afternoon included people's names and addresses.
The Chair: Oh, on the forms. Yes, privacy you're --
Mrs Munro: Yes.
The Chair: Unfortunately, Mr Grossman was the presenter, as I recall, and he has left. I quite agree with you, although the committee doesn't have control over documentation that is presented to us. It's not that the committee presented documentation.
Mr Marchese: Sometimes you might advise them before they read it that there are some liability questions when people do that.
The Chair: That's right. The names were not referred to in the record. Meanwhile, members of the gallery have it, members of the committee have it, and it may be kind of pointless to start blacking things out, and who knows?
Interjections .
The Chair: Order. The Chair is going to take the position that we do not have control over documentation that is given to us. We have control over documentation that the committee presents. But thank you for your comment.
Mr Gilchrist: And we will not disseminate it further.
The Chair: Absolutely.
That concludes this afternoon's proceedings. I'm going to adjourn the proceedings until August 5 at a time and place which will be announced.
The committee adjourned at 1801.