Transcription du comité 1996-août-21 | Assemblée législative de l'Ontario

(The Chair) Mr Jack Carroll: Good afternoon. Welcome to the meetings of the general government committee as we listen to presentations on proposed changes to the rent control legislation.

ANDRADE CONSULTING GROUP LTD

The Chair: Our first presenter this afternoon, from the Andrade Consulting Group Ltd, is Mr John Andrade. Welcome, sir. Your time is 20 minutes. Should you allow any time for questions at the end, they would begin with the Liberal Party. The floor is yours.

Mr John Andrade: First of all, I should give the committee some background. Some people have referred to me as one of the old warhorses in the sense that I've been involved in one way or another with the rent control system for just about 21 years. I've been in private practice since 1979, representing the owners and managers of rental properties, so it's fair to say that while I'm a practitioner, the bias in my practice, in our firm, is that of representing the owners. I think that's reasonably well known to people in the field.

Our firm provides consulting services to landlords, financial institutions, pension funds and property managers. It's like déjà vu, because I've sat in this chair in this room on numerous occasions in the past as the government of the day from time to time has seen fit to make changes to how rents are regulated in this province.

I was involved with the Thom Commission of Inquiry into Residential Tenancies in the early 1980s and took part in the Rent Review Advisory Committee, which advised the Liberal government in 1986 in setting up what was then called the Residential Rent Regulation Act.

While my bias is clearly on the landlord's side, in that I represent landlords and owners, I want to give a few comments, not comprehensive, dealing with certain aspects of what is proposed from the point of view of a practitioner.

I want to touch first of all on the guidelines. There is a proposal, as the committee knows, in the government paper to essentially leave the statutory guideline as is, and I think that's reasonable in the sense that people have got accustomed to it. They essentially know it's configured. It's got certain advantages. It's a three-year moving average, so it's probably not susceptible to drastic changes on an annual basis. There's a certain degree of continuity and predictability.

Having said that, there are certain things which have to be borne in mind. The formula was supposedly based on two things: a factor for inflation, that is, inflation affecting rental properties, and a factor for major expenditures and other items. Essentially this guideline was devised some 10 years ago and has been modified over time.

As a practitioner, what I found most disturbing was that during the previous government's tenure one Minister of Housing took what in my experience of 20 years was the unprecedented step of politically interfering with how the data were put together to arrive at a guideline which was to her liking; and certainly from my point of view as a practitioner I think it serves the public interest best if in this go-round we put in place certain rules -- in statute is preferable to regulation -- under which neither this present government nor any future government can simply administrate a fiat, a change in how things are calculated to achieve a desired result.

There's no question that the political approach plays the major role here, but once the government has decided on how the rules are to be, then direct political interference should not be countenanced.

There is another part of the guidelines dealing with capital expenditures, and there seems to be a belief that the 2% is for capital expenditures. Certainly all the studies which were done in the mid-1980s show that really 1% is for capital and 1% for return on investment. That's how the program was originally devised, and I suggest that simply because the previous government made an arbitrary decision that the 2% was for capital does not make it so, despite what some people east of Toronto may think.

I would also like to comment on the proposals concerning frequency of rent increases. It's proposed that they continue to be once a year. I think that's appropriate. People have become accustomed to that happening. The exception would be, because of the proposed vacancy decontrol provisions, where they come into effect, obviously in a turnover of a unit midyear there should be an entitlement to adjust the rent at that point without regard to the previous anniversary.

I'd like to speak for a couple of seconds concerning the proposals for how above-guideline rental increases are generated. The government, as I understand it, is making two proposals: that a landlord can make an application for above-guideline rental increases where there are capital expenditures and where certain operating costs justify the increase. It's proposed that there be a 4% cap on the capital expenditures and that there can be a two-year carry-forward, a two-year period during which, to the extent that your capital allowances exceed the cap, they can be carried forward.

From a public policy perspective I think this is an improvement over the current system. Under the current system there is simply no return on capital expenditures. The proposed system I think will help arrest the deterioration which is taking place in rental housing because of the inability to finance repairs and hopefully will correct the deterioration which was precipitated by previous housing policies.

There is one problem, however: The government proposes that the carry-forward be limited to two years. I'm not sure what the public policy perspective is there. Certainly if the government is saying there should be a cap with respect to capital expenditures and that cap remains in effect for each year, there doesn't seem to be any pressing reason why there should be a two-year cutoff. To have a two-year limitation sends a bad message to the investor community and to owners because essentially it tells them that you may do expenditures which you may claim and never have a chance of recovering because of a two-year limitation.

I suggest it's far better that the 4% cap be maintained but that there be an unlimited ability to carry costs forward. Tenants aren't being penalized. It's the owners who won't be recovering their costs until year X. Simply taking away that two-year limit sends a signal, "You can't get it all in one year, but we will recognize your costs eventually."

Certainly the proposal by the government not to put a cap on increases resulting from utility costs and taxes is welcome. My clients were faced with the unacceptable decision, under the previous government, under which they could face huge increases in municipal taxes generated by another branch of government but they couldn't pass on those costs even though they were completely beyond their control. They were limited to a 3% cap which applied to increases in municipal taxes, and there was no carry-forward in respect of increases in municipal taxes.

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I'd like to touch on one item concerning reduction in costs arising from cost decreases. One of the proposals by the government is that there can be a rent reduction where taxes go down. I don't have a difficulty with that. My clients will tell you -- some of them have been here; some more will be coming -- that doesn't bother them because their net operating income remains the same.

What was a severe penalty in the past was when landlords -- it's still the law as we speak -- were subject to rent rollbacks following expenditures for energy conservation. In Ontario today a tenant can make an application to have your rents rolled back if you're a landlord because you've done what every other branch of government encourages you to do: Put in expenditures to save money.

With respect to other areas of rent reduction, it's my submission that the abatement process is a better process to go by. There's a consideration to meld parts of the Landlord and Tenant Act with the Rent Control Act. If that's done or even if that's not done, it's my submission to the committee that the appropriate way to deal with rent reduction is by way of an abatement. That way there is no permanent impairment of rent, and if things are restored, the abatement can be lifted.

I'd like to speak briefly concerning the rent tribunal. The government has put forth certain options as to how the program should be administered. It's my submission that there should be an independent tribunal to administer the tenant protection program which is proposed.

I'm not casting any aspersions on the people in the Ministry of Housing. They do a good job. But quite frankly, justice has to be seen to be fair and impartial, not just fair and impartial. It's the reason why we have the OMB; it's the reason why we have many boards and tribunals across this province. There has to be a clear distinction, a clear demarcation, if you will, between the Parliament of Ontario and the executive branch of government, and the independent adjudicator which makes a decision.

There should not be a perception that a public servant can score points by being hard on a landlord or being hard on tenants. At the same time, that public servant shouldn't have to worry about his prospects of promotion because he's taken an independent viewpoint. It's my proposal that there should be a completely independent agency. If people who are presently rent officers under the Rent Control Act and other staff wish to be part of that program, in my view they should have to leave the public service and join that agency through order-in-council appointments.

It also may be interesting to note that the government could consider tendering out support services in such a tribunal. There's no reason why the clerical staff of the tribunal would have to be public servants. It could be done by the private sector through a tendering process.

With respect to appeals within the system, under the Rent Control Act there is no appeal on questions of fact where there's an error. There is an ability to request what's called a reconsideration, and that works well some of the time, but there should be a statutory right of appeal within the independent tribunal which deals with the question of appeals. There should be an appeal of right to one or three senior members of the tribunal.

Right now, surprisingly many reconsiderations are handled by, it appears, officers from out-of-town jurisdictions who simply aren't as busy as some of their urban counterparts. That may be a good use of human resources; it doesn't necessarily lend itself to the best way of decision-making.

Finally, I'd like to touch very briefly on the question of maximum rents. There's a proposal by the government to do away with maximum rents by freezing maximum rents and eliminating them on vacancy turnover. If we were having a true system of vacancy decontrol, wherein units become vacant permanently, doing away with maximum rents might be somewhat more palatable. As it is, we really only have a temporary system of decontrol for a brief moment in time during vacancy.

It's our proposal that maximum rents be maintained. My clients would tell you that they have earned these maximum rents, and they're able to charge tenants less when times are tough because they know that when times are better for all of us they can move up somewhat closer to the maximum level of rents. Doing away with maximum rents will simply force landlords into a straitjacket where they would have to, or they would feel the need, to charge all tenants maximum rents every year, and that would be counterproductive.

Mr Alvin Curling (Scarborough North): Mr Andrade, you have almost become an expert in this field, and you have contributed. I've known you for a long time, and you try to be as fair as possible. In just the couple of seconds that I have, there are two quick things I want to raise to say how complex this issue of housing is. When we try to address it solely on these kinds of points, we'll never attack the real source of what's causing us to have an inadequate supply of affordable housing. When we try to address it through the rent control system, every government starts tampering with it, just as we've seen in the past. I think this also is a tampering with the process and not addressing it fully. You have set out the complexities. Do you feel that every individual, every resident in this province should have access to affordable and safe housing?

Mr Andrade: I think the issue is one of affordable incomes. I don't think we have a housing problem; we have a poverty problem which society as a whole has to address. If somebody is earning $10,000 per year, you will never be able to deliver to that person housing at a rate which is self-financing. It behooves all of us to pay for that person's rent. I have no difficulty with that.

Mr Rosario Marchese (Fort York): Mr Andrade, many of the tenants that have come in front of this committee disagree with you and disagree with a lot of landlords who come here saying we should remove rent controls altogether. Many of them have made the case, as you have, that somehow you're not able to get the good rate of return you want under the current system because the guideline doesn't allow for enough money to have the necessary funds for capital expenditures. We think it does. Had I the time, what I wanted to ask you was for you to give us case studies to show us why it is, on a year-to-year basis, that what is given to you on a regular, yearly basis is inadequate. If you have the time, given that you don't here today, you might send me that information so that I can ask other people the question or use it as a way of dealing with these matters.

Mr Andrade: I'll try, but I'll say one thing: If you look at what's happened in restoration in this province, which everybody says is needed, it's fallen precipitously in the last five years. It's not coincidental that the law had changed.

Mr Bart Maves (Niagara Falls): Thank you, Mr Andrade, for a very thorough presentation, thought-provoking in several areas. One of the major problems, obviously, in Toronto is that we had 20 units built last year. The units that get built year over year has declined by a great number since rent control came in, and especially since 1990 when the government decided to enter into the business and compete with the private sector. In your mind and the minds of the folks you work with and work for, what's the chief reason why there is so little building going on in Toronto at this point in time?

Mr Andrade: There are many reasons, but I'll give you three very quickly. Number one is the red tape in going from developed land to the construction stage. Number two is that you have very high taxes once you build on the property. It's 25% of your gross rents. Number three is attitude. Unfortunately, even with the changes done by the present government to try to improve investor confidence, people still worry that the screw will turn. That's why it requires a very strong signal from the government. Although in some ways the paper is a disappointment, it's a very good first step which is needed to restore investor confidence in the province.

The Chair: Thank you, Mr Andrade. We appreciate your coming and expressing your views to us and your involvement in the process.

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SCOTT SEILER

The Chair: Our next presenter is Scott Seiler. Good afternoon, sir.

Mr Scott Seiler: Hello and good afternoon to the committee. I would like to speak very briefly about rent control and my concerns about the elimination of such. One of the things I find very interesting is that the previous speaker just gave three reasons why rent control is a bad idea and is stopping the growth of building rental units in Ontario. I think it's very interesting that two of them have absolutely nothing to do with rent control. I find that's really kind of an ironic thing to hear at a committee hearing for rent control.

The second major comment I want to make is that I think this government is going to make a fatal mistake in changing rent control. The size of the rental population in the greater Metro Toronto area is enough to displace this government permanently, and I think this government had better take that into consideration before it makes any changes to this legislation. This type of legislation is a government killer, it affects so many people. I must warn this government to please refrain from changing this legislation as it's proposing to do within the bill that it's circulating.

I have some grave concerns about the bill. We're in an area that's quite an interesting thing here. We see the government wanting to allow landlords to raise the rent in between tenants pretty close to as much as they want. In real terms, if you continue to have rent control while you're a sitting tenant and once you've rented a unit but there's no way of regulating how much a person charges in between those two times, there is no such thing as rent control. That's a fraud when you get the majority of people moving every five years. That is not rent control, because what will happen is that you will get many people who will move from one unit to another and the unit will go up 20%, 30%.

We have another interesting issue here: How will the government know how much it goes up when the rent registry disappears? There is no way of tracking rents then, and once that registry is gone, just like many other things that the government has gotten rid of that will actually be able to educate and prove what the government is really doing, such as the Ministry of Community and Social Services library and many other different things, so no one can get any information any more out of government, it's really a travesty of justice here.

We've also got an issue of harassment. The government has decided to put an anti-harassment clause and way of dealing with harassment within its paper. It's very interesting, but what I'm really afraid of is that it will not stop harassment because harassment is a difficult thing to prove in the context of a rental unit. Are you going to set up a video camera at the person's place and tape everything that goes on? Are you going to bug their phones to find out what is said on the telephone so you can prove what's happening?

What's going to end up happening here is that we're going to get lots of claims of harassment and absolutely no one is going to be guilty of it, because there's going to be no way of legally proving that there is harassment. If that's the case, then there's another phoney clause, as far as I'm concerned, and basically a fraud being perpetrated on the Ontario public. I think this government has to come to terms with those things. Those are not things that are going to be enforceable.

The appeal system: Any form of internal appeal is usually a whitewash. We've learned that through all kinds of other sources. For instance, I would suspect that other appeal boards like the Social Assistance Review Board are going to either be gutted or disbanded. I would suspect that any appeal board that is set up that is within the government's purview and run by government will be exactly the same.

We need the courts to deal with this situation, just the same as we have them today. In your document, you talk about how tenants have to hire a lawyer. Excuse me, but tenants have the crown, which is represented in the ministry, to represent them. There is no lawyer hired by a tenant. There is a lawyer hired by the landlord, but not by the tenant. The crown represents the tenant. So there's a little bit of misinformation within your document that I have some concerns about.

We've talked about in the document as well what will happen in care facilities. That has a special ring to me, because I was personally involved with the creation of Bill 120, which was to make sure that garbage bag evictions stopped and the abuse of seniors and persons with disabilities in care homes ended. I think it's incredibly important that the clauses that were brought in in Bill 120 are retained within any kind of legislation for tenant protection, because we, as a disabled community, as senior citizens' groups, will not stand any longer for things like garbage bag evictions. We will, as many times as we can, hit the front page of the paper with what's going on.

We have to be very tough and we have to remind your government that we who rent are the majority of citizens in this province, not a minority. We are not a special-interest group and we will not under any circumstance be called a special-interest group. If you want to protect landlords, then that is fine, but you will end up paying the consequences at the polls.

Mr Marchese: Mr Seiler, it is true to say that this government has taken the guts out of rent control as we have understood it. The problem is that they're trying to deceive the tenant by calling it a tenant protection package --

Mr Seiler: Absolutely.

Mr Marchese: -- and trying to appease the landlord because they're not going far enough. As the previous speaker mentioned, the elimination of rent control is a good step. They didn't say it in that way, but they see that as an important first step. The other steps come with what Mr Lampert suggests needs to be done, and that requires, as one of the previous landlord developers said, a red carpet. You know what that means.

Mr Seiler: No taxes, no nothing.

Mr Marchese: They don't call that intervention, but it's intervention to have rent control.

I agree with you about harassment being a very difficult thing to evaluate, to assess and to adjudicate on. As much as you might have an anti-harassment unit and all that, probably poorly staffed, in the end how do you prove it? It's going to be a terrible thing.

I've come to the conclusion that the courts are a better way to go, because ultimately tribunals end up being appointments by the government, and in this particular case I have no faith that neutrality is the order of the day.

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The previous person representing landlords talked about the fact that they don't get enough money for capital repairs and that's why the ceiling under the current legislation is simply not adequate. They've increased it by 1%. They will pass through now property taxes, if these ever becomes law, which would increase it to who knows what. What is your opinion about that particular part of the package?

Mr Seiler: I think that one of the largest problems is that there is absolutely no guarantee that I can also prove that any repairs have been done either. I think it's going to be very difficult for that to happen. Or landlords are going to be able to do very, very patchy repairs and then charge you as if it was a full repair. That's another thing that I very much worry about with the repair clause.

But the cost of repairs, for instance, in my own experience as a tenant, I have been charged more than what was allowed under the fixing of a unit for the replacement of a fridge that took three months to replace, and we had no fridge for three months. That type of scenario is actually not so uncommon. I find it actually kind of interesting. We hear in the Sun and in the many newspapers and television stations of the horror stories of the bad tenant, but we very rarely ever hear the stories of the bad landlord who hasn't fixed anything in 20 years and doesn't owe a cent on the property.

Mr David Tilson (Dufferin-Peel): Your comments with respect to process, sir -- and you're right, there are situations where prosecutors proceed currently, it could be property standards bylaws, it could be that type of prosecution, but many of the incidents are for personal disputes between the landlord and the tenant. It may involve something that doesn't involve bylaws -- collection of rents, arrears of rents, those sorts of things -- and there have been facts given that the process is unduly long for both the tenant and the landlord to receive proper recourse, whether it be final inspections by property standards officers, processes through the courts which are adjourned, delays; it can go on for literally weeks. It has been put forward to the government, at least, that this process is not working. Having said that, it is believed that the status quo simply is adequate and that a new process through mediation, arbitration -- and I think the government is very flexible in the paper, as you can see, as to what sort of concept is being proposed.

Mr Seiler: I think that there's absolutely no problem with saying that there can be mediation, but to eliminate the court procedures completely and the ability for someone to go to court is the wrong way to go.

Mr Tilson: Would you have any problem with it being mandatory, that before you do any proceedings, there be some form of mediation between parties, and if you don't have mediation between parties, which is less expensive for everyone, including the state -- that it be mandatory before any proceedings take place?

Mr Seiler: Just as long as it's mandatory afterwards that it automatically goes to a court if there's no settlement at mediation.

Mr Tilson: Okay. You made some comments with respect to the aging stock, and Ontario's housing stock is aging. The ministry gave evidence on the first day that over 60% of the housing stock is 25 years or more, that there have been small additions to the rental stock since the late 1970s, and they also have pointed out the obvious, major repairs linked to age, that older buildings require major investments, which again is obvious, whether it be for parking or balconies or that sort of thing.

My question to you is, how are these renovations going to take place? How is this restoration going to take place? Where's the money going to come from to do all these things?

Mr Seiler: It stands to reason if the building is 25 years old and the building has not been paid off after 25 years -- or unless the building has been flipped back and forth from one landlord to another to raise the costs of the building, which is common, actually, because I know that is what happens in private rental units, in condominiums. Quite often they're flipped back and forth and every time they're flipped the rent goes up and the service usually goes down.

Mr Tilson: Except, ironically, even the non-profit buildings are starting to fall apart.

Mr Seiler: I think that has nothing to do with landlords. You are the landlord, if that's the case, sir, as the government of Ontario.

Mr Tilson: No, that's not true. A non-profit corporation is the landlord.

Mr Seiler: Or a non-profit that is run by government regulation. Well, then, maybe the non-profit --

Mr Tilson: No, that's not true either.

The Chair: Thank you, Mr Tilson. Mr Sergio.

Mr Mario Sergio (Yorkview): With this proposal the government is poised to eliminate totally the rent control system as we know it today. They have failed to provide us with any solid proposal on how to create new affordable units on the market. The minister himself has said that the removal of rent control will not spur new construction. What would be your recommendation to us to recommend to the minister?

Mr Seiler: To increase the stock?

Mr Sergio: Not only to increase, to start some new construction.

Mr Seiler: To increase and start. I think that one of the things is that we may be having to look at some alternative ways of increasing stock in rental units such as renovating buildings that are being used as office towers, that have absolutely no use whatsoever because they've been sitting half-empty and three-quarters-empty since the end of the 1980s. We need to do an awful lot more things like that.

I don't think, unless we give the so-called "red carpet" treatment to builders, we are going to see any increase. So if we want to increase the stock, we're going to have to find alternatives other than those big builders building new apartment buildings for people to live in. Unless we do what the previous gentleman suggested were the real stumbling blocks for rental buildings being built, I don't think we'll see any rental buildings being built unless we give the builders absolutely every single thing that they want.

Mr Sergio: Such as?

Mr Seiler: Such as no taxes, no GST, no rules on how they can build a building; nothing. They don't want any kind of things that would make it difficult for them to run their business. So it is really and truly all business-related. It has nothing to do with the hundreds and hundreds of thousands of tenants in this province. It is only a business proposition.

Mr Sergio: Are you familiar with the ministry's announcement of yesterday?

Mr Seiler: With the ministry's announcement of yesterday of what?

Mr Sergio: With respect to some changes to the building code for new homes.

Mr Seiler: I have done a submission on the building code issue, and I was extremely critical of what was happening and the gutting of the building code.

Mr Sergio: One more question by my colleague. We share on this side.

The Chair: It better be a short one.

Mr Bernard Grandmaître (Ottawa East): We'll share a very short one, Mr Chair. You heard the ministry saying that they wanted to get rid of the 84,000 social housing units in the province of Ontario and under, let's say, the private sector where people are enjoying low-income units at the present time. Do you think that by selling these 84,000 units the government will provide you with more adequate housing?

Mr Seiler: I certainly think they'll provide somebody with a more adequate income, but I'm not so sure that there'll be any more housing available. In fact, I would suspect that much of the housing that is in the locations that they're wanting to sell will be very quickly -- the people will be evicted, the buildings will be torn down and huge condominium structures will be put up in their place.

The Chair: Thank you, Mr Seiler. We appreciate your attendance here this afternoon and your input.

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METRO NETWORK FOR SOCIAL JUSTICE

The Chair: The next presenter represents the Metro Network for Social Justice, Domenic Bellissimo. Good afternoon, sir.

Mr Domenic Bellissimo: Thank you, ladies and gentlemen, for allowing me to present this afternoon. My name is Domenic Bellissimo. I've prepared a copy of my brief for each of you.

I'm a member of the steering committee of the Metro Network for Social Justice here in the Metro area. The Metro Network for Social Justice is a coalition of non-governmental organizations in Metro Toronto which share the common goal of a socially just and equitable society.

Founded in 1992, we're a non-partisan network affiliated with the Ontario Coalition for Social Justice. We currently have a membership of 187 organizations who have chosen to affiliate with us as the Metro network. Our members include social service organizations, faith and anti-poverty groups, labour and social planning bodies. Members range in size from small self-help community groups who receive no funding and are made up of a few dozen residents to large labour and community organizations with thousands of members. We can therefore say that our member groups represent tens of thousands of individuals who are collectively a part of the network. A great number of them are tenants in the greater Toronto area.

I wish to use my time today by making specific comments about the tenant legislation proposals and include a number of more general observations, if I might.

As a social justice network, we are obviously concerned about the issue of fairness. In our view, the proposals before us here do nothing to achieve equity in society and in fact will result in a further gap between those who own large properties and those of us who are tenants. In our opinion, fairness is not simply about striking an exact balance between the interests of wealthy property management companies and individual tenants. That would suggest that both of these groups in society have the same access to resources and power. I would venture to guess that no one in this room would agree that they have the same privilege or the same access in the province of Ontario.

Perhaps I might address a few specific concerns that appear in the proposals.

First, it appears to us that the government is planning to effectively end rent control in Ontario as we know it. We do not support these provisions as a network regardless of whether they'll take effect immediately or whether they'll take effect as tenants move from their current units or location. According to many of our members, about a quarter of tenants move for various reasons each year. Your own government studies that I've seen show that at least 70% of tenants move at least once in five years. It would appear to us that the real agenda is simply to raise the average rent for all tenants in Ontario. Each time someone vacates an apartment, the rent can be increased to whatever amount the marketplace will bear. We would like to ask, what about a person's ability to pay in this time of economic crisis when jobs are scarce and the jobs that are in Ontario seem to be paying less each year?

The second concern we have is that the proposals here will also raise the limit on rent increases. Landlords can currently apply for an extra 3% above the 2.8% that you've allowed this year. As a tenant, I would suggest that is more than a fair provision, given our current economic situation. As an education support staff myself, I have not seen a 5.8% increase in my wages for 15 years. In fact, I've had a loss of 7% in earnings for each of the last three years and am in constant fear of losing my job due to education cutbacks. For capital repairs, rents will be allowed to be increased by up to 4% above the guideline and there will be no limit how high rents can be increased due to utilities or the anticipated actual value assessment, which we have no doubt will be coming and impacting on Metro very shortly. It could mean, therefore, that rent increases will be closer to 10% and that's certainly in violation of what law already exists of the 2.8% increase in the coming year.

Our third concern is that by the proposal to remove the rent registry, you're removing a fundamental right of tenants: the right to know the legal amount of rent on an apartment and what services have been allowed to be included within that rent. Under the new vacancy decontrol proposals, landlords will be free to discontinue services which were previously included in the rent. It would certainly be harder to monitor without a rent registry what services were included. While the vast majority of small landlords treat their tenants with respect -- and we wish to stress that -- in our opinion this action will strengthen the hand of that very small minority of large apartment landlords who may abuse this situation if they choose.

Our fourth concern of course is that by ending the Rental Housing Protection Act, more affordable rental homes will disappear from the Metro area, to be replaced by whatever type of building produces the highest return on investment. We, as a network, understand that the government hopes that some of these provisions will result in more rental housing. However, the reality of the high cost of developing and building rental housing in large cities, such as Toronto and others, will continue to mean that few new rental housing units will be built. We would suggest that the real problem has not been the Rent Control Act or the provisions in the past, but rather the artificially inflated prices during the so-called speculation boom a few years ago in Metro. This kind of marketplace phenomenon of treating housing as a commodity and the shift towards building luxury condominiums contributed greatly to our 1% and lower vacancy rate. It wasn't strictly due to the issue of having rent control.

Fifth, as a network, we would agree with the sentiment that the dispute mechanism in the Landlord and Tenant Act needs to be redesigned. It needs to be fine-tuned. We'd agree with that. If a tribunal system is to be put in place, and it's extremely vague in the proposals as they stand right now, those responsible for being decision-makers must not be chosen entirely from the business community or be political appointments by the elected government of the day. That certainly weakens, from government to government, the provisions that are put in place regarding tenants. The people must be knowledgeable, they must be neutral and they should also include tenants, as well as homeowners. To the best of my knowledge, we never ask whether someone is a tenant or a homeowner when they're dealing with issues of disputes between tenants and landlords.

In conclusion, let me sum up by urging you not to proceed with the proposals in this discussion paper. Coupled with the recent announcements about wanting to sell off public housing, the recent decisions to end construction of non-profit and co-op housing, we can only assume that tenants' fears in this province are well founded.

Whether in the area of housing, health care or education, we, as the Metro Network for Social Justice, believe that government has a fundamental role to play in protecting collective rights, not only individual property rights. The provisions in this legislation will add to a growing economic disparity between citizens in our communities. Overwhelmingly, these provisions will hurt the poor, by far, and recently arrived immigrants, who in many cases are often working at two jobs just to pay the existing rent they have now.

I've appreciated the opportunity to present these brief thoughts to the legislative committee. We hope that you will give them serious consideration when making your recommendations. Part of the democratic process in Ontario is not only welcoming input from people but making sure that input finds its way into the legislation at the end of the day.

If I might add on a personal note, I've been a tenant since 1980 myself. I've always chosen to rent from small landlords, three or four apartments or less, and have overwhelmingly had positive experiences with those landlords. It's been quite different from the situation that I've heard from friends who live in Parkdale or St James Town or some of the other areas that are very high density with a small concentration of landlords owning a tremendous amount of stock.

Presently, my family and I own a home that we rent out. We have two apartments and the existing tenant-landlord act, despite some of the drawbacks that I mention, and the rent control provisions have proven to be very effective for us as landlords. We've treated our tenants with respect. There have been very clear policies that we've chosen to follow, and I think tenants have benefited from that and so have we in realizing a return on the home that we bought a number of years ago.

Finally, I might want to make another suggestion that's been raised with me a couple of times by people and that is, why not have or initiate a bill of rights for tenants? There are some provisions in the existing legislations that give tenants fundamental rights. Why not enshrine those in the province of Ontario? After all, this is the kind of Ontario that we want to live in, that has an income disparity that is not approaching that of the inner-city, large, urban areas in the United States, where I've travelled a great deal.

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Mr Bruce Smith (Middlesex): Thank you for your presentation. I'm certainly pleased to hear that you've had very positive experiences from a tenant's perspective yourself. By your own admission there are areas for improvement from an owner's perspective.

I want to pose a question to you, because ministry officials have told us that a substantial portion of the rents are now at market rate and in their advice, if I could share these statistics with you and perhaps get a comment on them, they've indicated to us that over 50% of all private rental units in the province are being charged less than their legal maximum rate. Secondly, furthermore, about 30% of all the rental units are being charged at least $60 per month less than their legal maximum rent.

From my perspective it seems that landlords have already had the opportunity to raise their rents but they haven't actually done so. Why would you see any difference occurring under our proposed system, and perhaps why would that have occurred? If I could get your thoughts on those ministry statistics, I'd certainly appreciate it.

Mr Bellissimo: I can only speculate. I think probably part of the factors have been that landlords have not been able to rent apartments given the economic crisis in the province: the lack of jobs, the number of people who I work with in the professional sector who have lost their jobs. Middle managers, who in the past were earning $60,000 and $70,000 and were able to rent very decent apartments, are not able to rent those accommodations any more. So I think that might be part of the economic reality.

If less than 50% of the apartments are under the market rate, certainly the solution to raise those rents for landlords is not to eliminate rent controls completely. It perhaps could be to make a change in the amount that you're allowed to raise the rent. Go to 3%, go to 4%, with the proviso that there are going to be caps. If you remove rent control completely, it would seem to me that you're going to have a wildly speculative process that begins where, in an apartment building, a unit that's vacated twice would see that rent rise twice, while the next door neighbour's rent would be grossly different. I could see that that's going to create a tremendous amount of tension between tenants living in the same building and between some tenants and their landlords.

Mr Ernie Hardeman (Oxford): Thank you for the presentation. I want to assure you that we are holding these hearings to hear from the public and to have that implemented into legislation, recognizing that we hear very diverse opinions on what needs to be done. So it's going to be very difficult to come up with something that would incorporate all the recommendations made.

One that I wanted to question on was that you referred in your presentation to assessment and the new proposals on actual value assessment. I wanted to hear your comment on the present system where two identical buildings, one being owner-occupied and one being tenant-occupied -- because one is considered commercial and the other is considered residential, the municipality can collect some 400% in Metro taxes, I believe, on the rental accommodations. Obviously, as a tenant, you would see it as a problem, but as the homeowner that has rental units that are considered residential, do you think the answer is to even that out, that the other residential properties should pick up the difference between those two and have equalization of the tax factors?

Mr Bellissimo: I think the one thing that all of us would agree on is that the property tax system in the Metro area is broken and it needs to be reformed. I don't think there'd be any disagreement around that. Living in different areas of Metro, you pay vastly different property taxes and it's reflected in your rent.

The solution, though, I think is to try and look at people's ability to pay as well as simply raising everyone's rent to a level that was already in some cases quite high, and I think quite high because of housing booms, quite high because of development being concentrated in specific areas of Metro. Any kind of levelling out of property taxes to make them more fair or equitable across the cities and boroughs needs to be done by keeping in mind the kind of provisions that have caps on how much of an increase there's going to be. It needs to keep in mind people's ability to pay, certainly some of what I heard from Mr Crombie the other night about seniors not being forced out of their homes. It doesn't only impact on seniors. It impacts on a lot of working people who have recently been affected by the economy.

A number of years ago the Fair Tax Commission came up with some terrific recommendations that could help level out and make more fair the property tax in Metro Toronto. One of the recommendations is that we do need education on that.

The Chair: We do need to go on to --

Mr Bellissimo: I'm sorry.

The Chair: We're cutting into Mr Curling's time and he gets very upset when we do that. Mr Grandmaître.

Mr Grandmaître: I want to keep on with the actual value assessment, this new proposed assessment program that Mr Leach is endorsing -- I think. We don't know yet. We haven't seen any impact study, but it seems like Mr Leach is endorsing this kind of new assessment program.

A previous presenter pointed out that one of the reasons why rental units are not being built today is that 25% of municipal taxes are accorded to a unit. Let's say you have four units, so 25%, 25%, 25%, 25%. We don't know the impact of AVA, only what we read in the newspapers. According to these newspaper articles, they're saying that there might be a 40% shift between commercial and residential assessment. If this shift takes place, those taxes will go up; the residential taxes will go up. How can this government afford to build more units if municipal taxes will go up? Do you believe that the government can do both: abolish rent control and implement AVA?

Mr Bellissimo: No, certainly not. I think you'd end up having just a disastrous situation where people would be forced out of their apartments. There would be a lot of vacant apartments because people couldn't afford to pay the increases. I think it would be even more disastrous than the situation that currently exists right now.

I think though that people are desperately being convinced that there's something tremendously wrong with rent control in the province, and I'm not sure that's the situation. When I see statistics in your legislation proposals being given only by one organization, the Fair Rental Policy Organization, which to my knowledge speaks more on behalf of landlords than it does of tenants, then I would suggest that there is an agenda at work, and it's not one that favours tenants.

Mr Curling: Mr Smith was just about answering our question very well, that the landlords are strapped at not getting adequate rent for their property. Since the maximum rent is there and they're not charging it, don't you think that is an area? They could raise their rent and then start making some investment on their capital by fixing the buildings? Don't you think that is there?

Mr Bellissimo: Sure.

Mr Curling: Would you agree with me that the answer is not rent control that is causing people not to build?

Mr Bellissimo: Of course not. I don't think rent control is the issue at all.

Mr Marchese: Mr Bellissimo, just a few quick comments, and a question if I can throw it in.

First of all, with respect to the bill of rights for tenants, don't bet on it from this government. They're tearing the guts out of rent control. This is not the government that would introduce a bill of rights for tenants.

Secondly, your point about the rent registry: It was a basic protection for the tenant. They're taking that out. What that means is they're attacking the tenants. Indirectly, by not protecting them through a rent registry, they're attacking them.

The Rental Housing Protection Act: You're not the only one who has said this. More affordable rental homes will disappear. Richard Fink, a lawyer who has appeared before this committee, who's done work for the last 20 years, has seen the loss of many rental buildings, and he said, "When this goes, you can see a greater loss of rental buildings," and that's reiterated by many.

I agree with your statement that government has a fundamental role to play in protecting collective rights and not only individual property rights. This government disagrees with you. They think you're a socialist or worse -- who knows what? They know I'm a socialist, so it's okay, but for the rest of you who say these things it's really bad. I thought I'd let you know this.

The question I wanted to put to you is, the increase under the current system will go up from 5.8% to 6.8% now, plus the pass-through of taxes and hydro and who knows what other user fees, items like the charging of garbage fees and so on that might be passed through as well, some person commented. One of the members across said in a question, "Units declined since rent control, and since government decided to compete with the private sector we've seen the loss of units." Can you just comment on that as a remark?

Mr Bellissimo: I don't see the two things as having a correlation at all. I think the government, in providing public or social housing or money available for cooperative housing, is a benefit and a long-term investment for society. The reason rental units have disappeared is that there had been a boom in luxury condominiums, conversions to lofts, other kinds of commercial ventures, that gave a higher return on investment. From what I see recently in the business pages of the newspapers, the simple fact that this legislation is being proposed as it is has meant that housing stock and apartment buildings are being seen as a very profitable business to get into. I hear that there's quite a boom in people wanting to invest capital in rental accommodations, and that must be because there's a number of people in society wanting to make a huge profit from this vast increase in rents, rent control being removed and other benefits that would accrue to that small group in society.

The Chair: Thank you, sir. We appreciate your attendance here today and your input into our process.

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METRO COALITION OF HOUSING HELP

The Chair: Our next presenter is from the Metro Coalition of Housing Help. Welcome.

Mr John Bagnall: I would like to begin by expressing our appreciation for this opportunity to address the standing committee on general government. Our coalition represents housing help centres that provide housing registry and housing information services in Metro Toronto. Each of us provides a range of housing help services in the respective area we serve. These services include operating housing and home-sharing registries, doing housing counselling, providing information and referral, doing crisis intervention, providing landlord and tenant education and support, assisting with housing applications and other documentation, and doing informal mediation and negotiation involving landlords and tenants.

The large majority of people who contact us to get help in locating housing are in low-income situations and are in urgent need of finding housing. They include low-income families, single people and seniors, homeless and near-homeless people, women who are victims of family violence, people discharged from institutions such as hospitals, people such as the physically handicapped who require special-needs housing, newcomers who experience barriers as a result of factors such as language or race.

Our aim is to help people find or maintain their housing and to prevent or reduce the human and economic cost of homelessness and institutionalization. The principal way through which we provide assistance to housing seekers is through our listings of private market housing vacancies, including both apartments and other self-contained housing listings and home-sharing listings. Through the operation of our housing registries, we work on a regular basis with a variety of landlords, ranging from small landlords renting a room or a single apartment to landlords of medium-sized and large buildings. In this respect, we consider both landlords and housing seekers to be our regular clients.

Our primary interest with regard to the consultation paper, the New Directions paper, is in respect to the section that deals with landlord-tenant dispute resolution, and specifically our interest is in regard to the mention that is made in that section that consideration is being given to the role of front-line mediation as a way of resolving disputes between landlords and tenants prior to formal adjudication. That is mentioned on page 9 in the first paragraph of the consultation paper.

We would like to indicate that based on our experience as housing help centres, we believe that front-line mediation, or informal mediation as we sometimes refer to it, can definitely play an effective role in dealing with landlord-tenant conflicts. This type of mediation in fact is something that has been practised at housing help centres in order to deal with landlord-tenant disputes for a considerable time now. The primary elements of informal mediation, as we understand it, involve a four-step process in which the mediator works both with the landlord and the tenant.

In the first step of this process, the mediator facilitates communication between the two parties regarding their respective situations. In the second step, the mediator facilitates the exchange of information between the parties in regard to their respective problems and expectations. In the third step, the mediator helps the two parties to search for and to negotiate a solution. In the fourth step, this solution is expressed in an agreement between the parties.

This type of mediation is based on the free consent of the parties. It requires that both parties be informed of some basic principles in advance. These principles include, firstly, the goals, the nature and the conditions of the mediation process; secondly, the stages and procedures of mediation; and thirdly, the voluntary nature of the process that provides for the right of either party to withdraw from the process. So it's based on a voluntary consent of the parties.

We would envision that informal mediation could be a logical element that would fit well within a wider system of landlord-tenant dispute resolution. We would envision the possibility of a system that would have a continuum of dispute resolution services that would include both formal and informal dispute resolution. Two-way referrals between services providing informal mediation on the one hand and those providing formal dispute resolution on the other could ensure that simpler cases would be routed off and handled through informal mediation, thereby reducing the burden on the formal dispute resolution service and providing a more cost-effective service.

At the same time, we know from our own work as help centres that informal mediation has a useful role to play in reducing the financial and human costs that can result from unresolved landlord-tenant conflicts, especially in areas such as Metro Toronto where the vacancy rate is low. This type of mediation can provide a means through which landlords and tenants who are in conflict may in some cases be able to work out their differences in a way that avoids societal costs of an eviction. This is not to say that informal mediation can save all tenancies or that all tenancies necessarily should be saved. Clearly some cannot be saved. Some are not economically viable.

Moreover, some landlord-tenant disputes simply cannot and should not be resolved through a process that rests, as does informal mediation, on a voluntary basis in cases where one party or the other party is clearly not going to meet its obligations or is not respecting the rights of the other party to dispute needs to be dealt with through a formal dispute resolution procedure which provides appropriate safeguards against abuses.

Nevertheless, we can say that based on our experience as help centres, through informal mediation it has been possible to facilitate landlords and tenants in finding solutions to problems that otherwise definitely would have resulted in evictions. Through these interventions, it has been possible to avoid an outcome that would have been very costly both to the landlord and probably have resulted in the tenant being required to go to a shelter.

In conclusion, we view front-line or informal mediation as a method of dealing with landlord-tenant conflicts that has been tested by experience, that is cost-effective, and that can help to reduce the human and financial costs of these conflicts. We welcome the fact that the ministry is giving consideration to this type of mediation in its planning and we would like to indicate our support for recognizing this type of mediation as a significant element of an effective and efficient system for landlord-tenant dispute resolution.

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Mr Sergio: Thank you very much for your presentation. I have a couple of questions with respect to rent control, which you said very little about, by the way. First, how do you feel about the total elimination of rent control? Second, the Minister of Municipal Affairs and Housing, Mr Leach, has said on various occasions that all the assisted housing now within the jurisdiction of the provincial government, the old Ontario Housing, as it becomes available on the market will be refitted and sold to private people. How do you feel with respect to the removal of rent control and the sale of the assisted housing within the jurisdiction of the Ontario government?

Mr Bagnall: I guess you could appreciate that basically our group as a coalition has specifically identified this area within the proposals, dispute resolution matters, where we have gotten together and discussed and come to conclusions and been able to present our views, with the idea that we've got experience in this area, that we're familiar with this area and that we think we could advance the discussion in this area in an effective way. We have not gotten together to give ourselves a mandate to discuss these other points in terms of the matters you raise. Basically, I don't have a specific response to that in terms of what you're raising in those specific areas. Basically, as a group we are talking to an area where we have experience and can, we think, make a contribution in terms of advancing the discussion. So I can't respond in a specific way.

I can say that from our impression in terms of the general thrust of the changes that are being proposed by the government, we expect that the kind of mediation we're talking about is going to be needed in an increasing way, that there's going to be increasing need for the kind of mediation we have talked about in our proposal, but that would be as much as I could go into in terms of that.

Mr Sergio: But when the controls are lifted from a unit and another tenant has to move into that unit at the maximum price the market may bear, what negotiation is there for the tenant? Either he pays whatever the landlord wants or he won't get that unit. At what point or where would the negotiations come in?

Mr Bagnall: In terms of our experience, there is a discretion in terms of what the landlord can do in a particular case. Again, the issues around which mediation arise can vary a lot, as you know. It could be issues that relate to a variety of factors in terms of the relationship between a landlord and tenant. It could be in relation to privacy, in respect of privacy of the tenant. It could be something in relation to --

Mr Sergio: That's with disputes which --

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

Mr Marchese: I support generally mediation as a step to dealing with the problems tenants and landlords might have, and that's some of the work you're obviously doing. Can I ask you, have you been getting government support in the past?

Mr Bagnall: Yes, our program has.

Mr Marchese: Has this government continued with the support?

Mr Bagnall: Yes, it has.

Mr Marchese: You haven't commented at all about -- or maybe I missed it -- a tribunal and/or the courts and which of the two you think might be more appropriate in terms of dealing with disputes. Do you have an opinion on that?

Mr Bagnall: No, we don't have an opinion as to whether -- I think it's going to depend on a number of variables. We have not ourselves discussed and resolved in terms of which direction we would advise to go.

Mr Dave Boushy (Sarnia): The reason I'm interested in asking these questions is I have a similar organization coming and seeing me next week and I'd be very much interested to compare your ideas with theirs. The first question is, how many people did you deal with in 1995 or 1996? Within a year, how many people would you deal with?

Mr Bagnall: We serve large volumes of people. Our number of calls would be well over 2,000 in a year.

Mr Boushy: Two thousand per year?

Mr Bagnall: Yes.

Mr Boushy: What is your budget?

Mr Bagnall: Each help centre is a separate entity. I'm from Etobicoke Housing Help Centre. Our budget I believe is $110,000.

Mr Boushy: So for $110,000 you served 2,000 people. Am I correct?

Mr Bagnall: Yes. I'm speaking off the top of my head in terms of the numbers.

Mr Boushy: And the $110,000 comes from the provincial government, funded totally?

Mr Bagnall: Yes, we're funded under the Ministry of Municipal Affairs and Housing.

Mr Smith: Thank you for your presentation as well. We heard a similar presentation yesterday which essentially endorsed a negotiation or mediation process in the front end of the system and an adjudication process being retained at the back end. As an individual who has been involved in help centres, I was interested if perhaps you could quickly give us an overview of what your intake process might be and the time frames you're experiencing in terms of mediating disputes or what you might envision those time frames could be.

Mr Bagnall: It can vary considerably. A lot of our mediation would take place in regard to landlords who were previously listed with us, who are familiar with our service, whom we've worked with before. It can work very quickly if we get a call from a landlord indicating that they're having a problem in regard to their relationship with their tenant. Then we can respond immediately in terms of contacting both parties and finding out the substance of the issue and what perspectives each has in terms of their situation and their needs and their expectations. Then basically, if the agreement is something that obviously can be solved quickly, then we can move on it right away. It can be very quick in terms of the operation.

Mrs Lillian Ross (Hamilton West): I think it was an excellent presentation. Do you think that dispute resolution mediation should be mandatory at the first step, between the landlord and tenant?

Mr Bagnall: We would certainly say we would like to see a thing that would encourage both the landlords and tenants to reduce conflict, which would be through that; it would be the obvious way of doing that. Conflict is costly. If you can stem it at an early point, then you can reduce these long-term costs, these social and financial costs. So, absolutely, we would support a process that would require the earliest possible intervention in terms of dealing with possible conflicts.

The Chair: Thank you, Mr Bagnall. We appreciate your attendance here today and your input into our process.

REGIONAL MUNICIPALITY OF PEEL

The Chair: Our next presenters are from the regional municipality of Peel: Roger Maloney, commissioner of housing; Pierre Klein, regional councillor; and Terry Kingsmill, a policy analyst. Welcome, gentlemen.

Mr Pierre Klein: Thank you very much, Mr Chairman, and standing committee members. My name is Pierre Klein. I'm the regional councillor for the regional municipality of Peel. I also sit as a local councillor on Caledon council and I serve as the chair of housing for the region of Peel. With me today is Roger Maloney, the commissioner of housing for the region of Peel and general manager of Peel Living, which is our non-profit municipal housing corporation. Terry Kingsmill is our policy analyst, as you've noted. Roger and I will share our presentation and we will then be pleased to answer any questions.

First off I'd like to thank you for allowing the region of Peel to appear before you and comment on the matters that are before the committee. We believe that the region of Peel is able to offer its comments from a very unique perspective, both geographically and historically as a municipal government and as the largest landlord in the region of Peel.

The region of Peel comprises the area municipalities of Brampton, Mississauga and the town of Caledon. It includes an array of natural environments, rural areas, small settlement communities and everything up to extremely urbanized neighbourhoods. Peel has very old, mature communities in some areas and is experiencing explosive growth in other parts of the region. Overall, our population has grown at a rate of 20,000 to 25,000 people per year, and we expect that rate to continue for the foreseeable future. Our demographic patterns are shifting, as they are in other municipalities, with a population which is gradually becoming older and more non-family-oriented, but in conjunction with our growth all types of circumstances and needs are on the rise. Rental housing requirements and prospects vary enormously across our vast region.

Peel regional council was probably the first, back in 1985, to say anything formally about rent controls. Our council has steadfastly maintained its opposition to rent controls since 1985, which I suspect makes us a very rare bird in municipal governments. We also advocated for targeted shelter allowances in 1985 and have done so repeatedly since then, reflecting a unique municipal track record.

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The region of Peel was one of the first municipalities in Ontario to create its own housing company, Peel Living, which is now 20 years old. Peel Living is one of the largest non-profit housing corporations in the province and is the largest landlord in the region of Peel. Peel Living's waiting list is over 13,000 families. That's approximately 30,000 people. This is the second-largest waiting list in the province of Ontario, second only to the Ontario Housing Corp list covering all of Metro Toronto. Peel Living's board of directors consists of 18 of the 22 members of regional council, and this is very indicative of the high level of interest and concern for housing needs that we as regional councillors have.

The philosophy of the regional council has always been that it is the role of the private sector to serve the vast majority of housing needs. Participation in Peel Living reflects the commitment by the region to meeting needs which cannot or are not being met by the private sector. Peel Living has an excellent working relationship with the private sector and with the non-profit sector. We work hand in hand, for instance, with the local social planning council and with the Fair Rental Policy Organization of Ontario.

Peel Living has extensive experience in the worlds of development and property management, and we have been trying to find ways to create housing without the usual non-profit subsidies. This brings a practical understanding to the matters that are now before your committee. We have some unique credentials. The time constraints, unfortunately, through this consultation process did not permit us to make and develop detailed positions on each and every piece of the proposed New Directions. But because of our experience and leadership in this area we have thought through many of the relevant issues, and Peel agrees with the implied message of this whole legislative package, namely, that the best tenant protection is an adequate supply of decent housing. We also agree that the current situation is not encouraging that supply.

The proposals put forward in the New Directions for Discussion generally move in the right direction, but I must say there is a very serious flaw, and that lies in its very limited focus. Unless the Legislature is able to deal with the whole gamut of housing policies, New Directions will do very little to assist supply, and the legislative changes alone to rent controls could do much more harm than good.

At this point I ask Roger Maloney, commissioner of housing, to speak to specific aspects of the legislation.

Mr Roger Maloney: On the subject of rent controls specifically, the region of Peel has called for the phasing out of controls to encourage the private sector to produce rental housing. We recognize that private sector rental housing has been hampered by the continuing economic viability gap between what it costs to construct and operate rental units and what tenants, especially those on fixed incomes, can afford to pay. That gap will not be addressed by rent controls in the absence of other supply initiatives and in the introduction of a shelter allowance program. From our perspective, we see that a balanced program is needed.

We would definitely encourage the province to go further with rent controls than proposed. A clear signal should be sent out that rent controls will be completely eliminated, but this elimination must be tied into a planned and rational way to remove the other impediments to rental housing development and also supply an income assistance program for tenants whose situations will worsen when controls come off.

With regard to the Landlord and Tenant Act itself, the region of Peel, in consultation with several other parties, developed a series of recommendations for reform. These recommendations were put forward to the Ministry of Municipal Affairs and Housing this past spring. A copy of that report is being circulated to you today, I believe.

The region supports the streamlining of the landlord and tenant legislation to encourage private investment in rental housing and to reduce the lengthy and cumbersome delays in the current legislation. That said, the region of Peel believes that thoughtful, not radical, modifications to the existing legislation and processes will best protect tenant rights and due process of law.

To this end we've offered many detailed recommendations in that report. I'll just note a few of them. We've talked about general set-asides, set-asides of judges' judgements, damage applications, abatement of rent, discretionary powers of a judge, the role of the registrar, and misrepresentation of income in public housing, to mention a few. A lot of those things come from our knowledge of the Landlord and Tenant Act by the fact that we manage 5,600 units.

As for the dispute resolution system under the Landlord and Tenant Act, although New Directions appears to favour some form of adjudication or arbitration model, the region of Peel believes its position is an effective alternative. We're saying as a region that we support modifications to the existing court processes, leaving the court process system itself intact. Increased powers to registrars would result in the majority of cases not being presented to a judge, thereby eliminating an unnecessary bottleneck in the courts.

The region believes that inherent in the current judicial process associated with administration of the Landlord and Tenant Act are many delays due to a lack of knowledge of the process by both parties, deliberate attempts to postpone cases, and many avenues of appeal. We would cite the Small Claims Court procedure as in itself offering several ideas for improvements in terms of all evidence being disclosed up front and limited opportunities to delay proceedings.

The judicial process associated with the administration of the Landlord and Tenant Act should be amended to provide full evidence disclosure in advance of any hearing before a registrar or a judge. Mediation efforts at the registrar stage should be initiated to trim overall court administration costs and to promote speedier resolution of landlord-tenant conflict.

In our view, the imposition of an entirely new adjudication system across the entire province would be problematic. However, if the province is set to follow this path, pilot projects should be used to work out the bugs. The region of Peel has offered itself as a candidate for such a pilot project, if that's the direction that's decided upon.

On the matter of conversions, the region has maintained a very firm policy. Although the region has no objection to the overall goal of the Rental Housing Protection Act, which is to preserve existing rental stock, the region has maintained its concern that the act itself was not the most appropriate mechanism of achieving this goal.

Although the region supports the repeal of the act, it would appear that suggested reforms will throw the baby out with the bathwater. There's no notion of protecting rental stock. There's no provision for municipal approval for demolitions, major renovations or conversion of rental buildings. The region of Peel maintains that approval authority for condominium conversions should be delegated to the regional municipalities. Approval would be based on sensible criteria: retaining the original objective of the Rental Housing Protection Act while removing the barriers that many building owners see as a negative in terms of improving the quality of their buildings.

With the announcement of the tenant protection package of reforms, the development industry went on record saying that the removal of rent controls alone was not sufficient to make production of rental housing an attractive investment. In fact, we are concerned, in Peel, that the tightening of already low vacancy rates will trap or discourage many tenants from moving, especially from affordable or chronically depressed older stock, in the absence of other assistance. We're also concerned about the impact on seniors, single-parent families and all those on fixed incomes in the absence of expanded supply.

Rental reports done in Peel by private appraisers have indicated that the removal of controls will result in pressure on rents unless supply is otherwise increased. Reports from conservatively minded economists cited favourably by this government tend to support the region's position of a balanced provincial housing policy. For instance, Lawrence Smith views special-needs housing -- housing for people who are disabled, mentally ill, homeless or people with large families that have low incomes -- as not likely to be forthcoming in the private sector without substantial subsidies.

Mr Smith, in his paper entitled Ontario Housing Policy: The Unlearned Lessons, states quite clearly, "A non-profit program dedicated to these groups would be appropriate."

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Likewise, I would cite a 1990 study done for the greater Vancouver area by Clayton and Associations that called on senior levels of government to step in with the production of newly built affordable rental housing or income supplements to meet rental housing needs not being met by the private sector, this in a province which eliminated rent controls in 1983.

In conclusion, committee members, Peel regional council supports the general directions proposed before you, and in many ways we think you should go further. But the province cannot just walk away from its responsibility for the housing needs of the most vulnerable people in our society. Legislation should proceed as part of a balanced strategy which removes financial and regulatory impediments to the private sector production of rental housing and which provides income and supply programs aimed at those who are unable to compete.

At this point, that concludes our presentation here. Pierre and I and Terry would be pleased to answer any questions you may have.

Mr Marchese: Thank you for your submission. It sounds to me that in Peel you are Conservatives with a soul at least, and that's better than what we get from this current government.

Some of the members on the other side have said that units have declined since rent control, and they also say they've declined since government has decided to compete with the private sector. You've been building, and many municipalities have also been building, recognizing what you've said -- that there is a need for that low-income person and that if you weren't building, it probably wouldn't be built. What do you say to them when they say units have declined since rental control, but particularly the other part, and since government has decided to compete with the private sector in building non-profit and presumably cooperative housing?

Mr Klein: I would suggest to you that the reason we have been massively building non-profit housing is because of rent controls. It's because the private sector has not been providing rental accommodation within a vast region of Peel that's growing rapidly. That's the reason we're so much in the non-profit. If there would be enough supply, we wouldn't have to build as much. There's still a role for non-profit.

Mr Marchese: Even Mr Leach says that the removal of rent controls is not sufficient to get the market going.

Mr Klein: Oh, I agree.

Mr Marchese: Even he admits that it's a problem, and he learned that obviously through a report that Mr Lampert did, because in his previous remarks he thought, "Eliminate rent control and they're going to start building." What are you going to put on that red carpet to get the private sector to build? What are you going to put on that carpet?

Mr Klein: There are a number of aspects that we've alluded to. One is that there have to be changes in the way assessment is done for multiple units versus somebody who owns a home.

Mr Marchese: That's one. Is that enough?

Mr Klein: That's one. That's not enough.

Mr Marchese: What else?

Mr Klein: Rent control has to be phased out.

Mr Marchese: You told us that. What else?

Mr Klein: I told you about that. There are GST implications, which are at a federal level.

Mr Marchese: That's a big help to them.

Mr Klein: There is capital tax on new rental buildings at the provincial level.

Mr Marchese: A big help. Okay.

Mr Klein: On our side of things, it's lot levies and the cost per unit. That's our responsibility. Those are a number of aspects. We've been working, and I've been discussing, with the largest land owners in Peel in the rental business about ways in which we can try and make some of these changes, but it's going to be a large task. It cannot just be focused on rent control alone; it won't work.

Mr Marchese: We agree and Mr Leach agrees with that too. So my argument is, why remove rent controls if that's not the issue? Because that isn't the issue. In my view, that's not what the landlord wants. The landlord says that's good, because he wants to maximize his profit as much as he can, but for him to build he says, "I want that security, true, but I want all these other things. I want you provincial governments to intervene by cutting taxes, cutting development charges, equalizing property taxes, having the GST" -- isn't that a big giveaway by governments to the private sector?

Mr Klein: Sir, I would suggest that you look at what the province was like before the need for rent controls. Rent controls should have been a short-term resolution to a very difficult situation in the province. We have to get ourselves to a position where there is a balance in the system again, and that means looking at the entire spectrum: those issues that you have also raised, but also the issue of rent control.

Mr Marchese: Mr Klein, the tenants are not on your side on this. They disagree with you completely.

Mr Maves: Thank you, gentlemen, for an excellent presentation. On the front page you talk about the number of folks in Peel who are on a waiting list. On page 2 you talk about a shelter allowance program. You're suggesting that the two are related, that if there's a shelter allowance program people would be allowed to move wherever they want and there would be less of a need for you to construct more housing, a lower waiting list?

Mr Maloney: Certainly. That's definitely true. Our position has always been that there's no way we can house the 13,000 households on our waiting list, which is 30,000 people. We're only a small player. The reason we became a big landlord was the private sector wasn't building and we took advantage of the programs.

From our perspective, there are a lot of units in Peel that are private sector now where rent supplements could take place. We think it's important to provide those individuals on our waiting lists with other options because we're saying to people, "We're not going to house you in the next 10 years if someone new is coming in the door because we don't have much turnover and we're not building. We're not really a solution for you, unfortunately."

That's what we think is needed, some sort of a shelter allowance program, to complement what the private sector will hopefully do, with us coming in to pick up on the end of special-needs persons, whom the private sector doesn't want to house, those type of persons.

Mr Maves: If we were bringing in a shelter subsidy program where subsidy followed the person instead of the unit, would that be another thing, along with the removal of rent controls, that you think would be a step along the way to increasing supply?

Mr Maloney: Yes, that's certainly another avenue we would support.

Mr Klein: It's a step, but we have to emphasize that there is a broad base of legislative changes that have to occur on all three levels of government in regard to housing. It's not just a one-stop solution or a two-stop solution. We have to look at all the impediments and things that have changed in this province since the need for rent controls.

Mr Curling: Your presentation provoked a lot of thoughts. As a matter of fact, all three of us here are anxious to get to you to ask you some of these questions. One minute you're saying that we must have non-profit housing, of which you are a great contributor. Then you say you're in it because of rent control. Let me tell you: The private sector will never build at the lower end. It wouldn't matter if we gave them all the red carpet. They would be at the top end. Then you came in of course as government, and it's your responsibility, the responsibility of all of us, to provide decent, affordable and safe housing for all the people, especially at the lower end of the market. We have to be there. This government is selling off all the non-profit housing to the private sector.

Mr Klein: We're willing to buy.

Mr Curling: You may have to build more non-profit. You're telling me now that shelter allowance will do that. As soon as the individuals move out of their homes, the rents are going to go up. Would you require more shelter allowance at the time then, to accommodate those people and those new skyrocketing rents that will go up at that time? Do you predict there would be more shelter allowance?

Mr Klein: It's a broad base of problems that have to be solved. We can't just say that shelter allowances are going to be the only thing that's going to solve it or rent control removal is the only thing that's going to solve it. It's not going to be that simple. The reason we have so much housing stock in the region of Peel is because we grew at a time when rent controls came in and therefore we started to fill a void greater than we think we should have filled in terms of meeting just the needs of those the private sector would not build for.

Mr Grandmaître: You've been very successful. Would you say that you're better managers than the government?

Mr Klein: Definitely. No question.

Mr Grandmaître: And you'd be interested in buying 84,000 or whatever number of units that are up for sale?

Mr Klein: We're interested in taking over.

Mr Grandmaître: You're willing to buy them and manage them and you would make a profit? Is that what you're telling us?

Mr Maloney: No, I don't think we're saying we're willing to buy them, because we don't have that kind of money.

Mr Grandmaître: Well, that's what your friend said. He's willing.

Mr Klein: We'll take over.

Mr Maloney: What we have said is that there is a local housing authority in Peel and we have already put forward a report saying it doesn't make sense to have two housing agencies in one municipality. The two should be amalgamated, even if we manage the asset. In terms of our being good managers, we think we're one of the top managers in Ontario. We've proven that with our track record.

Mr Grandmaître: Are you making a profit at the present time or breaking even?

Mr Klein: We lost $800 last year -- breaking even.

Mr Grandmaître: Great management.

The Chair: Thank you very much, gentlemen. We've enjoyed your presentation and we appreciate your involvement in our process.

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MUNICIPALITY OF METROPOLITAN TORONTO

The Chair: Our next presenters are from Metro Toronto, Alan Tonks, the chair, and Shirley Hoy, the commissioner of community services. Welcome to our committee.

Mr Alan Tonks: Good afternoon. It's good to see you all struggling through this summer trying to wrestle this particular issue to the ground. My empathy is certainly with you.

As chairman of Metro, I am here on council's behalf, along with Shirley Hoy, the commissioner of social services, and Lynn Morrow, who is from my office, to bring you Metro's position on the proposed tenant protection legislation. I really do appreciate the opportunity to enter into a dialogue with you on the issue. My remarks this afternoon will highlight our major concerns. I also have with me a written submission that goes into more specific detail, of which I believe you'll be given a copy.

Metro recognizes the provincial government's desire to balance the concerns of landlords and tenants to arrive at a system that protects tenants, yet also provides the right conditions to ensure investment in maintenance and, hopefully, new construction.

Metro is also concerned with the impact of public decisions on both quality of life and economic vitality in our community, because most certainly the quality of the housing stock is a direct factor in influencing quality of life. I will focus on three areas that must be foremost for any government that has these concerns also: availability of housing; affordability and security of housing; and finally, maintaining stable, prosperous communities.

Before saying more about these, let me set the context by outlining for you why rental issues are so important for us in Metropolitan Toronto. The reasons have to do with the prevalence of renting, the tight markets and the rapid social change which is occurring within Metro's boundaries.

Province-wide, rental housing affects 36% of Ontario households, but in Metro rental housing is a much bigger part of the overall picture. For example, Metro is home to one third of Ontario's tenant households; that's 450,000 tenant households. Fully 52% of Metro's households rent their home. Metro is a community with higher housing costs, more low-income households and more rental affordability problems than elsewhere in Ontario.

Most people would agree on the importance of housing affordability. We don't want young families to have to give up hope of buying a home, as many did in the 1980s, nor do we want tenant families to be able to afford only shabby or overcrowded apartments.

In Metro, affordability problems are common among low-income tenants. One third of Metro tenant households have low incomes, under about $23,000 -- one third. They cannot easily afford even rents for inexpensive, small units. Metro, in 1991, had about 62,000 low-income tenant households paying over half of their income on rent. More broadly, about half of Metro tenants could not reasonably afford rents higher than today's averages. Metro, in 1991, had 140,000 tenant households with low to moderate income paying over 30% of their income on rent.

Let us be clear that the private rental stock is the main issue in rental affordability. Only one quarter of low- to moderate-income tenants have subsidized rents that are geared to income. A substantial majority of unsubsidized Metro tenants with low to moderate incomes pay more than 30% of income on rent, and that's a staggering figure.

Vacancy rates in greater Toronto are much lower than elsewhere in Ontario. This arises from the particular conditions of demand and supply here, especially in Metro. The Lampert report, done last fall on encouraging private rental supply, pointed out the distinct conditions in the Toronto market. The costs of building rental units here are much higher than elsewhere, mainly due to land costs. On the other side of the coin, rental demand is much stronger here. Each year, several thousand households come to Metro from other parts of Canada and abroad and most of them rent. Metro has documented these forces in our recent housing study.

So in precisely the part of the province where we most need to build apartments, it is the least economical place to build. Rental housing supply-and-demand issues in Toronto are on a scale far different from elsewhere in the province. They defy easy solutions. Metro Toronto is experiencing rapid social change generated by forces at work in the greater Toronto housing market. Metro has a large population of tenants reaching retirement over the next 10 to 20 years. They stay in Metro while young families buying homes mostly move out into the 905 suburbs. Meanwhile, new tenants move in.

Tenants' incomes have dropped further behind homeowners' incomes in recent years due to the recession, restructuring and fiscal constraint that we have been experiencing. Our priority as a metropolitan government must be to manage this change to ensure availability of housing, to ensure affordability and security and to maintain strong, stable communities.

One way Metro Toronto has traditionally managed housing issues is to be directly involved. Our Metropolitan Toronto Housing Co started building 40 years ago and now houses 20,700 tenant households, mostly subsidized. Metro also funds or administers programs that provide 400 care home beds for elderly persons and about 700 care home beds for persons with psychiatric disabilities. We run and fund some long-term hostel beds.

Let us move on from this setting the scene to talk about those three concerns I identified at the beginning of these remarks.

First, how can government in Ontario, in Metro, ensure adequate availability of rental housing?

One of the objectives of the government's proposals on rent control is to restore investor confidence and bring the private sector back into building rental apartments. Metro agrees that steps to encourage private rental construction are one essential element in rental housing policy. Canada Mortgage and Housing Corp's estimates and Metro's own housing study show that we need up to 6,000 new rental units each year in greater Toronto and we are not getting those housing starts.

A small part of this investor confidence issue is to lighten up the heavy hand of regulation that perhaps deters investors, but the larger part of this issue is how to narrow the gap between the market rents today and the higher rents it takes to generate enough revenue to pay for a new building. It is the economic viability gap that makes new units uncompetitive and deters investment. The gap could be narrowed either by raising rent revenues or by lowering costs or, which I would suggest and probably would agree, the only real option is by a managed combination of both of those.

Available evidence suggests that the decontrol contained in the tenant protection legislation will not lead to adequate volumes of construction in Metro Toronto or in greater Toronto. The gap is still too large for most investors, and condos present a more attractive alternative. What we may expect, relying on the British Columbia experience of decontrol as a guide, is a few hundred expensive new rental units each year in greater Toronto. But we are comparing hundreds of new units to thousands of new tenant households needed each year, and in greater Toronto the new units may be offset by the loss of units through condominium conversion, which the repeal of the Rental Housing Protection Act will open the door to, and I'll say more about that in a moment.

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Tackling the cost gap by raising rents across the board is unlikely to achieve the desired increase in construction. It will be necessary to take steps to lower development and operating costs. We understand that the government is also looking at a number of suggestions in this regard, as recommended in the Lampert report this fall, and I'll return to these points in a moment.

The record also shows that tax breaks and incentives were a key part and a key tool in Ontario in the 1970s and 1980s and are the main underpinning of rental production existing in the United States today. We urge the government to look at these kinds of options and not just leave it to deregulated rents to close the gap, because there will be a significant negative impact from deregulating rents as the government is proposing.

This leads us to our second concern: How can government ensure affordability and security of housing?

Affordability and security matter to us all. For a homeowner, it's the long-term benefit of a mortgage and the equity it builds for them. Government has stepped into the home buyer market with measures such as registered home ownership savings plans, down payment borrowing from RRSPs and so on. Similarly, for rental housing, there is a significant role, and must be a role, for government to play.

So Metro is glad to see the government's intention to retain two key elements of the existing legislation. These are the basic protections in the Landlord and Tenant Act governing grounds for evictions and so on, and the rent control for tenants-in-place.

These basic tenant protections were put in place by the Ontario government almost 30 years ago. They help keep a balance of power between landlords and tenants and ensure due process. The main uncertainty regarding these basic protections is the shape of the new, unified system that is proposed to deal not only with rent regulation but with the landlord and tenant matters that are now being handled by the courts. The government's stated objectives are speed, efficiency, procedural fairness and administrative simplicity, but the details are not known. To ensure that tenant protection is real, we suggest that the system adopted should have the following components:

It should be independent and knowledgeable and have mediators who are knowledgeable, arbitrators or adjudicators; it should have a quasi-judicial, not just administrative, process in regard to serious landlord and tenant matters such as eviction, with provision for appeals; it should have rules and procedures that ensure adequate notice and access to information for tenants; and it should have adequate resources to carry out its functions.

Measures such as these would ensure an adjudication system with sufficient autonomy, resources and procedural safeguards to ensure that tenant protection is realized in practice. This will require a firm commitment by the government in this time of constrained public resources.

The second of the two main elements to be retained is rent control for tenants-in-place. This includes the rent increase guideline and the cap on above-guideline increases. These measures will help alleviate the incidence of so-called economic eviction where a tenant is forced to move and uproot their lives because they can no longer afford their rent. This supports affordability and security. But we know that approximately one in every five tenants moves each year and about 70% move in any five-year period. With this kind of turnover, a large majority of rental units will go to unregulated market rent levels before the end of this decade.

Although individual tenants will indeed remain protected as long as they remain in their unit, the overall affordability of the rental housing stock will not be protected. Government's concern must not be just about tenant protection for individual tenants but the overall supply of affordable housing in our communities.

Deregulated rents are likely to lead to faster rent increases in the Toronto area. Even with the regulated rents, affordability problems for tenants have been steadily worsening. This was true even in the good years of the 1980s, as some incomes lagged and as tight markets made it harder to find an inexpensive apartment. In the 1990s, problems have become much worse, as incomes have declined, especially at the low-wage end, and with unemployment remaining high.

In Metro, tight markets are now permitting landlords to start catching up to the legal maximum rents that they had fallen behind during the recession. Average rent increases in recent years have outpaced general inflation and outpaced tenant incomes. Deregulation of rents in the absence of new construction is a recipe for faster rent increases, and therefore more tenants with affordability problems and more tenants forced to choose substandard and overcrowded housing in our community will be the result.

This brings us to our third concern: How can government retain stable and prosperous communities? The housing market has a significant impact on the character of our communities. The types and the prices of housing affect who lives in the area. Metro today is a mixed and vibrant community, but we are facing some challenges. The retention of rent control for tenants in place will protect some stable, middle-class or older tenants, but the loss of overall rental affordability will mean growing problems for newer and younger tenants.

People who pay too much in rent make up for it in other ways. They go to food banks; food bank usage has risen sharply in Metro. They spend less on clothing and consumer items; many of our small businesses are suffering as a result of less disposable income. They are more likely to fall back on publicly funded social services; hostels are an example in the extreme. Metro has seen a 40% to 50% increase in numbers of two-parent families and of children using our hostel system from 1991-95. People with difficulty affording their rent are likely to move more often, so their children shift from one school and neighbourhood to another.

In the absence of enough new construction, more rental housing needs will be met by basement apartments and older homes being rented out. Those things have their place, but they are not the sole solution, and in any case the government is moving to restrict that option. To keep Metro recognized worldwide as a livable metropolis, we must keep both stable, older neighbourhoods and economic vitality. One important step to stimulate the Toronto economy is to continue rental construction, which has been a very significant generator of jobs in construction and building supply firms over the last few years. We need not just a tenant protection package; we need a strategy to ensure this economic vitality.

Stable communities are maintained in older municipalities in various ways. Two key tools that will be affected by the government's proposals are control over conversion to condominiums and incentives to maintain property standards.

The government's proposals will lead to more frequent conversion of rental buildings to condominiums. This is especially true in Metro Toronto, with our many well-located rental buildings and our strong condominium market. Control over condo conversion is an important tool for older municipalities in Metro to manage change in an orderly way, in the same way that subdivision approval is an important tool for the growing 905 suburbs. Condo conversion means loss of affordable rental housing. The risk in Metro is that apartments in more favoured areas will be gradually converted to condo, leaving low- and moderate-income tenants fewer choices about where they can live. This would gradually produce the kind of segregated city we have so far been fortunate enough to avoid.

If outright control over condo conversion is to be lost, we would like to see other tools to manage change, for example, power to place reasonable conditions on, but not prevent, condo approvals. Perhaps a portion of the resulting windfall gains could go towards rental production. I invite the Minister of Municipal Affairs and Housing to enter active consultation with Metro and other municipalities to explore such options.

Property standards are important in mature communities such as Metro. We have more than 130,000 rental units in buildings over 30 years old, and not all of these are well maintained.

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To conclude, the government's proposals must be assessed in terms of the three broad concerns I have addressed here. Such concerns were the focus of the second United Nations Conference on Human Settlements, which I attended in June in Istanbul, Turkey. Housing is a key building block of our cities, and governments must make housing decisions that ensure quality of life in the next century. Canada and other countries at the conference signed the Istanbul Declaration, committing ourselves to goals that include adequate shelter for everyone, preventing homelessness and equal access to affordable housing.

Our suggestion to you is that the government's proposals at this point are not sufficient to reach these goals. Metro respects the government's desire to ensure economic vitality by deregulating, reducing administrative costs and encouraging investment. But the proposed tenant protection legislation is not the comprehensive approach that is required. It attempts to deal with some symptoms but not the core issue.

Simply put, the core issue is to reduce the gap between the revenue generated through rents and the cost of building and operating rental accommodation while not reducing average incomes and purchasing power of tenants.

In the absence of any national housing policy, it is the main urban centres that will suffer the most. We urge the province to take action on some specific suggestions it has received and join with us in developing an overall strategy.

These are the specific suggestions that should be made to the province in order to deal with these issues: Reduce the property tax burden on new rental apartments to a level similar to that of condos, which would result in an improved financial viability; decrease GST costs for private rental construction to reflect that accorded to new-ownership housing; remove the provincial capital tax on new rental buildings; improve financing terms by taking a lead in making indexed mortgages more available, looking at use of immigrant investor capital, channelling pension fund moneys and considering loan guarantees to get the best possible lending rate.

Beyond this, I invite the government to participate in a dialogue on the complex issues I have touched on. Metro will be hosting a Cities of Tomorrow forum on November 13 to 14 this year. Experts from other cities will join policymakers in our own province and region. Our goal is to better understand and identify what kinds of fiscal and legislative capacities and what specific strategies will enable us to manage the scale of economic and social change taking place in our cities today. In doing this, we will examine case studies from other jurisdictions. Housing will be one of the main themes, and I hope we can take away from that forum some ideas to work with.

Mr Chairman, thank you for your indulgence and for the extension of time that you have given me.

The Chair: Thank you very much, Mr Tonks. We appreciate your presence here today.

707-717 EGLINTON AVENUE WEST TENANTS' ASSOCIATION

The Chair: Our next presenter is Alan Hill, president of the 707-717 Eglinton Avenue West Tenants' Association. Good afternoon. Welcome to our committee, Alan Hill and Penny Gerrie.

Mr Alan Hill: We are grateful for the opportunity to address the committee this afternoon. We're taking a slightly different perspective than the one taken by the last two presentations; ours is a more personal one because we are residents and tenants in the two buildings here in Toronto.

We found the vagueness of the discussion paper frustrating and unhelpful. It is very difficult to respond to something so woolly-minded and lacking in clarity. The proposals appear to be preoccupied with the needs of landlords but offer no evidence to substantiate that landlords are hard-done-by. In fact, a private sector survey cited by the Globe and Mail showed that for the past 10 years landlords in the apartment sector have enjoyed a 10% return on their investment, higher than any other sector and certainly higher than the 3.4% return of, for instance, the Eaton Centre. Clearly landlords are not in penury.

If maintenance is an issue, much of the deterioration can probably be attributed to the past neglect of landlords. Why should a new generation of tenants be forced to pay for past neglect?

Speaking of the new generation of tenants, what about projections for future needs? The consultation paper provides no information on tomorrow's housing needs. All the tables and graphs stop at 1995. No demographic trends are cited. No economic forecasts or projected housing needs of the new workforce are considered in the paper.

We believe that the demand for housing with affordable rents will increase: by younger Canadians who are told that they must have lower expectations, facing a working life of contractual employment, frequent retraining and loss of job security; and by the aging population whose retirement years of living on fixed incomes will increase with early retirement and longer life expectancy. These pressures will be intensified by the government's withdrawal from assistance to social and non-profit housing.

If the government thinks developers are going to rush out and build rental housing, it should think again. The costs to developers would be prohibitive and they could build only for the high-end market. They simply could not produce housing to meet the income levels of those seeking moderately priced accommodation.

But the most troublesome part of the paper for us, and others who live in older, smaller buildings with moderate rents, is the business of conversions, and it is this we wish to address.

Ms Penny Gerrie: We represent the tenants' association of 707 and 717 Eglinton Avenue West. We are paying the price of the conversion madness that gripped this city in the 1980s.

Our buildings were privately owned and managed by the couple who built them in the late 1930s. Mrs Watson lived in one of our apartments throughout her life. She managed and maintained the buildings to the highest standards and must have been one of the most responsible landlords in the city. She personally selected all the tenants and took great interest in their welfare. She managed to create an environment which produced a close-knit community of people, and the tenants were generally proud to live in these beautiful art deco buildings. Sadly, she became incapacitated and the management of the buildings was handed over to property management companies.

This was the beginning of declining standards. The tenants organized themselves into tenants' associations when they began to receive requests for rent increases which were way out of line of anything we had experienced in the past. They successfully fought a request for a 34% increase, which was reduced by the rent review commissioner to 18%.

Membership in the tenants' association was 100%, and we agreed to form a cooperative. Through the Federation of Metro Tenants' Associations, we put together a proposal to purchase the buildings that was approved by CMHC. Alas, those who had power of attorney in the owner's name turned us down. Subsequently, without so much as informing the tenants of their intentions, both buildings were sold to speculative developers for less than our original offer. All of this took place prior to the introduction of the Rental Housing Protection Act.

The new owner, a numbered company, promptly divested itself of all units by selling equity to a diverse group of people, only one of whom was a tenant. It became a saga of buying and selling, people moving in and out, illegal rents being charged, maintenance standards continuing to decline. Tenants naturally became anxious about security of tenure and a number felt sufficiently pressured to seek other accommodation.

Today, of 50 units at 717 Eglinton West, only 12 are occupied by original tenants. At 707 Eglinton West, 21 of the 64 units are occupied by original tenants. What was once a close-knit community has largely fallen apart. We're divided between owners and renters, and we know a number of units are rented to new tenants who are paying illegal rents.

Because of our experience and particular concerns, we want to deal first with the section on security of tenure and conversions.

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Mr Hill: We strongly object to the loss of power of municipalities to control conversions, demolitions and renovations. The housing needs of Toronto are not the same as those of smaller communities. Vacancy rates vary from community to community. The municipality is in the best position to know the needs of its residents and to protect rental housing stock.

Older buildings like ours have more reasonable rents, but lower property values also make them attractive to developers, speculators and investors. The repeal of the Rental Housing Protection Act would result in a rapid loss of moderate rental accommodation. Hardly a day went by at the time our buildings were being converted that newspapers didn't carry a story about an older building being taken over and older, long-term tenants being evicted.

Toronto isn't short of expensive condo housing, but it's very difficult to find moderately priced rental accommodation. As mentioned earlier, moderate rents will become even more rare with the loss of government assistance in non-profit and social housing. Not only will new projects not be undertaken, but rents will rise significantly in existing projects as tenants are forced to bear all costs.

We know that all older buildings haven't been maintained as well as ours. Until a decade ago, we were fortunate indeed. We, as well as our previous landlord, benefited from the interrelationship of a high level of maintenance and a stable tenant population. Much has been made of the movement of people who are tenants. The buildings in which we live have tenants who have been there 40 years, 45 years, 30 years, and the majority have been there for 20 years.

The current rent control system has a mechanism that allows landlords to pass maintenance and other costs to tenants. Our fear isn't of increased and reasonable maintenance costs, it's being forced out of our homes through eviction or through less direct means. As tenants who face possible eviction because of conversion, we want to be allowed to remain in our homes until we choose to leave. As model tenants, we deserve this. The government's vague references to "extended tenure" make us very anxious.

Our proposal is not unreasonable. Attrition has reduced our number from 114 to 33 in the 10 years of co-ownership. Most of us have lived here for over 20 years. Many are very frail and live on very modest incomes.

We want foremost to protect our continued tenancy, but as tenants who choose to live in smaller, older buildings, without the conveniences of newer high-rises, we urge the government to reconsider its proposal to repeal the Rental Housing Protection Act and to allow municipalities to protect this kind of moderately priced rental stock.

We also want to make a few comments on other sections of the government's paper, especially protection from unfair rent increases.

Ms Gerrie: The government obviously has more confidence -- absurdly so in our experience and opinion -- in both the reasonableness of landlords and the strength of tenants to negotiate rents or volunteer to pay for capital costs or new services. At least under the present system, students and others who may not have strong community connections have access to the rent registry and documentation on the legal rent for a prospective apartment.

Under the proposed system, the easiest way to get a large increase is to get a new tenant. We worry about harassment. As older tenants in both tenancy and age, we feel more likely to be targeted because of our modest rents.

Our anxiety is not eased by the government's vague proposals for a dispute resolution system. Harassment is sure to increase, but it can be very difficult to initiate a complaint, much less substantiate it, prove it or monitor it. If the government thinks the present system is cumbersome and bureaucratic, it will have to come up with something brilliant to manage harassment complaints. We need more details and clarification on what the government is proposing.

Mr Hill: The government's proposals relieve landlords of the responsibility for proving increased costs. Moreover, they make it easier for landlords to avoid necessary repairs.

Our experience has been that withholding rent increases is the most effective way to enforce outstanding work orders and to help ensure tenant safety. We could still be waiting for work to be done on 1989 orders if the rent control office hadn't ordered the suspension of rent increases in 1992. It still took two years, and although increases of the intervening years were added to our rents in the end, it forced the landlord to do the work.

The government's proposals to give property standard inspectors more powers and to increase the maximum fines will do little if municipal cutbacks and downsizing reduce the number of inspectors and if maximum fines are not ordered by the courts.

With regard to the Landlord and Tenant Act, the vagueness of this section is worrisome. On the one hand the government says grounds for eviction, except for unauthorized sublets, will remain unchanged; on the other hand it proposes to improve the ability to enforce landlord rights.

Our continued tenancy during our building's conversions to co-ownerships was protected because of the existing Landlord and Tenant Act. We would strongly object to any changes that gave similar right-to-evict powers to co-owners or other ownership schemes that are now given to condo or single-family dwelling buyers and owners. Leave the act alone, please.

What the government is proposing is vague and alarming. We could say that because we've recently held a meeting of our elderly tenants, who are thoroughly alarmed, given the stability that tenants have enjoyed for the past half-decade.

We would like to have an opportunity to make more substantial comments after we see the proposed legislation. In the meantime we urge the government to consider its proposals very carefully. If the purpose is to increase rental housing stock, removing protection against conversion won't help. In fact, it will reduce rentals, and moderately priced ones at that. Instead, the government should be looking at ways to remove the real barriers to building rental housing: property and sales tax inequities, and development and financing costs.

Thank you, Mr Chairman. We have a question, if we may ask it of you: Can anyone clarify what is meant by "extended tenure" when it applies to conversions?

The Chair: Maybe a member from the ministry can answer the question. The parliamentary assistant has stepped out.

Mr Karl Cunningham: What the government is proposing is that in cases where there is a conversion, there would be specific provisions that would allow a tenant of that unit to remain in that unit despite the fact that the unit has been converted to a cooperative or a condominium.

Mr Hill: Would it protect the rent that the tenant is paying, or would it suddenly transfer the costs of the conversion over to the tenant, whether it be prorated or whether it be amortized or whatever?

Mr Cunningham: The proposals suggest that the tenants in those circumstances would have the same rights as other sitting tenants, so that not only would security of tenure continue for that tenant, but the existing legislation would as well.

Mr Hill: The tenant would not be subject to major rent increases.

Mr Cunningham: No. Our current proposal is no; they would not be treated as vacant units would be.

Mr Sergio: As long as you stay in that particular unit.

Mr Hill: Yes, of course. I understand that.

Mr Smith: Thank you for your presentation. The committee has heard concerns expressed about the removal of municipal control on conversions and, in a similar vein, concerns expressed about the absence of statutory definition around equity co-ops. We've also heard from an individual who is in a conversion process, where they have a 100% agreement for that conversion to take place, yet there's a barrier for the conversion to take place due to city of Toronto policies. Obviously there are some encumbrances in this area that need to be addressed. With the short time that we have, I wonder if you have any ideas -- I recognize that you articulated your concern very well -- whether there's a common ground here to address these concerns from your experience or if you have any solutions to the problem.

Mr Hill: I think there is a possibility if there is consultation with the people who are actually resident. You people are all legislators. We've just heard from Metro Toronto; we've heard from Peel. We are the people who live in these buildings. We're the ones who experience at first hand what happens. We would like to have the opportunity -- not here this afternoon; it would be impossible to address all the concerns in probably half a minute -- and there should be some mechanism where we can sit down with you and talk these things over, where you use our collective intelligence, our collective experience so that it isn't simply a matter of government pushing everything at us as we seem to be experiencing in life at present.

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Mr Grandmaître: I'm going to follow up on the first question of conversion, especially converting to co-ops. I'll give you an example of let's say a 25-unit building, where 75% of the people agree that it should be converted but 25% don't agree. Are you telling me that this 25%, let's say 12 units, will remain as rental units and their rent will not increase? Is that what you're telling us? Is that what the legislation guarantees?

Mr Cunningham: There's no legislation. What we're proposing is that in those kinds of circumstances, first of all landlords would be given the statutory right to convert, but existing tenants in those buildings would be given added security of tenure. They wouldn't be forced to move as a result of the conversion. What's open for consultation is, how long should that security of tenure be in cases of a co-op or condo conversion? Should it be lifetime? Should it be another type of limited period?

Mr Grandmaître: Until they move.

Mr Cunningham: Until they move.

Mr Marchese: I've got some quick comments on your presentation. You're quite right that the elderly, generally speaking, are very alarmed. I was at a meeting this morning where most of the elderly people talked about how frightened they really are about decontrolling rents and other measures that are being introduced in terms of the anxiety these provoke. So you're not the only one.

Secondly, on the issue of negotiating rents, when power is unequal you can't negotiate; you can only negotiate with equal partners. You can't negotiate -- a little renter, an elderly, unemployed psychiatric survivor -- with someone who's got a great deal of knowledge and power. It just doesn't happen.

Mr Hill: We know that from past experience, sir.

Mr Marchese: I bet. On your point about the Rental Housing Protection Act generally, Mr Tonks talked about the condo market being very strong here. Mr Fink, a lawyer, talked about his fears, in the field for over 20 years, that this will mean the conversion of rental accommodation in quick measure, so we need to worry about the general implications it will have in terms of finding affordable housing as well as being worried about what happens to individual people who live in such units. You're right that we should be looking not at rent control, taking that out, but what we need to do to build, and that's not the issue.

The Chair: Thank you very much. We appreciate your input into our process this afternoon.

RAMSDEN PLACE TENANTS ASSOCIATION

The Chair: Our next group is the Ramsden Place Tenants Association, represented by Jaqueline Swartz, president, and Lyn Rayner, director and treasurer. Welcome to our committee.

Mr Lynwood Rayner: My name is Lynwood Rayner, and I'm director and treasurer of the Ramsden Place Tenants Association. I had hoped to have our president, Jaqueline Swartz, here with me today. Unfortunately her paper sent her down to cover the first convention and she's still down there covering the second one. As it were, I'm flying solo today.

Our presentation, as you may have seen already, is very unlike Metro Toronto's or the Peel government's. It's more like the predecessor, the people on Eglinton Avenue, a tenants' association like ours. It's a perspective from tenants on the front line fighting the rental wars, and we're hurting.

You see that on page 2 we have a comment summary, and if time permits I'll go over that at the end of the presentation.

We're a two-building complex directly north of Queens's Park here; 400 suites at 30 and 50 Hillsboro. Our tenant association started in the mid-1980s, when we decided to defend ourselves against the increases that were coming at us. By the time the dust had settled and we had fought several hearings we ended up with an increase of about 28% over a period of about two or three years. That's been compounded since then. The result is, even as I left our buildings today, people are leaving.

The two buildings are very well maintained. We have no problem there. We have a progressive landlord, caring superintendents and a superb location. We're just overlooking a park near the Rosedale subway station. But we're hurting. We're hurting because the rental increases that have been allowed thus far have been so high, compounded in the period of time since they were initially granted, that we are now very fearful of the future.

When we saw this discussion paper some members got together very quickly. The executive looked it over very quickly, Jaqueline Swartz and myself, and we were astounded. We could not quite understand initially what was meant by tenant protection when the very opposite appeared to be written on the pages.

This presentation is very much from the point of view of what the members have told us. We're not dealing with facts and figures so much as personal opinion gained from our members.

Through the TV service of the Ontario Legislature we've been privileged to follow some of the submissions from the parent group, the Federation of Metro Tenants' Associations, the United Tenants of Ontario and others, and generally speaking the criticisms of the proposals as outlined in that paper mirror our own feelings. They mirror the RPTA's feelings. Rather than go over them in great detail again, I'll skip over them but touch on some points that may not have been touched on previously.

The term "tenant protection" defined: As I said, our members were aghast when they saw it. They said, "If this is protection, if this is tenant protection, pray tell, what is non-protection?" One of our members said, "This is a pure example of doublespeak." One of the members of your committee used that term I think on the opening day.

"Doublespeak," as you know, came from George Orwell. As you can see in our presentation, I've compiled a few other examples: "War is peace"; "Freedom is slavery"; or my favourite from his novel Animal Farm, "All animals are equal, but some animals are more equal than others." If George Orwell were alive today he'd have a field day with this discussion paper. Far be it for me to invent new Orwellian phrases, but the temptation is just too great. Into the modern literary lexicon we might add, "Tenant protection is the removal of tenant protection." Orwell would feel right at home.

The governing party of Ontario has now encompassed and is practising doublespeak. However, tenants in Ontario will not be fooled. They too have read Orwell, but little did they think it would come to Ontario in 1996.

It should be pointed out that this phenomenon is not confined to the tenant problem. Look at the environmental proposals. The governing party tells us that to "save the environment for our children and our children's children" they will abolish many environmental regulations, cut the number of inspectors, slash funding and -- hear this -- have the polluters or potential polluters monitor themselves. This is necessary, they say, to save the environment for the future. Heaven help us in the interim.

We're dealing here with a free-market fundamentalism. A well-respected developer on your opening day recounted how he had built the first apartment building with elevators and he wondered if tenants would come, and they did come. He commented in a somewhat folksy or whimsical way that he loved tenants, oh he loved tenants, he couldn't do without tenants. Leave it to him, as the vernacular goes, for tenants were his baby. Said he, "Abolish the regulations, spade into the ground, work for construction people, prosperity all around."

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I appended a note of levity here because we have been very serious. "`Boy, do I know chickens,' says the fox. `I couldn't do without chickens. Chickens are my life and blood, so to speak.'" But the chickens say, after they emerge from their so-called apartments -- coops, of course -- "Who we are to turn to if the fox just neglects to keep his word?" That is, if there are any left in any shape to complain. "And, more importantly, to whom will I complain?" The association of benevolent foxes perhaps?

To be fair to Mr Goldlist, he's a respected developer and he did have some solid suggestions we agree with -- the unfair taxation, the extra taxation levied against apartments municipally here in Toronto as compared to condominiums and single homes. This is a disincentive, but mostly it's very unfair. Mr Goldlist mentioned $75 per unit could be reduced if that were looked to. Our municipal people, our council promises to do something about it, but each time our association has mentioned it there are problems. We're still waiting.

We're puzzled, however, by Mr Goldlist's repeated question that went: "Non-profit housing? What mean this non-profit housing?" He couldn't understand the need, it appears, for affordable non-profit housing. If Mr Goldlist is listening, and to you members of the committee, it's not difficult to understand: "non-profit" as in non-profit education, non-profit police forces, non-profit court system, non-profit military and so on; non-profit for the purpose of service to the public rather than just a potentially exploitative service that provides the service but with the main objective being profit -- not bad in all cases perhaps, with the public good often becoming secondary in the process.

The free market fundamentalism beliefs of the governing party of Ontario today are beyond belief. You believe the free market, given the chance, can solve most problems, provide most every service, even provide all the housing a growing population needs today. The free market as we know it in the western world, and possibly even others, has consistently been unable to provide affordable or low-cost housing to people who are unable to meet market rents. Time and time again it's been shown, and I've heard it in the presentations before me -- I hear it still being argued -- that given the chance, they will provide it. They're not. They can't.

In the area that we live in on Hillsboro Avenue, on Yonge Street, on Davenport Road, nearby they're building high-end condominiums. We don't see any others. In fact, right on the corner of Yonge Street and Belmont there's a condominium going up and they're naming it right after us: Ramsden. God knows why.

From what we can see, the discussion paper doesn't appear to mention affordable low-cost housing. If it does somewhere, we've missed it, but I haven't seen it. So we ask the question, why not? It's a serious problem. Why isn't it addressed? Are you assuming that if you don't address the problem it might just somehow go away, the people just disappear, the need won't be there?

More on this business of private builders being unable to provide this low-cost, affordable housing: Figures fly around all over the place, and over a period of time we've gone after them and Jaqueline Swartz has amassed some. Canada Mortgage and Housing says it can cost upwards of $200,000 to put a single unit on the market. The figures vary, as I say, but it is indisputably highest right here in the Toronto area. Even if the figures could be shaved to $150,000 or less, this easily translates into a rental of $1,500 or more. The builders will tell you this. They're not talking low-cost or affordable housing; they're building high-end units, as I've said, for outright purchase that the owners buy and then put up for rental. We've never been able to figure out who these owners are, whether they're from offshore or maybe somebody just around the corner, but not around my corner.

Who can afford this? Who can afford these rentals? Certainly not the poor souls who've had their welfare cut by 21% or more, or the victims of downsizing, the jobs that have taken the expressway south or west to Asia, or the seniors -- especially the seniors, not the coupon-clipping seniors, your favourite kind of the governing party, but the other ones, the ones the governing party doesn't really like to talk about: the quiet, hidden ones, out of sight. They're out there, but nobody hears about them. So we ask again, why is this particular problem not being addressed in the paper? Out of sight, out of mind, perhaps?

Other presenters have repeatedly pointed out that the governing party promised to preserve rent control. This was, of course, before the election. As the member for Scarborough North pointed out, they continued to promise it even during the recent by-election in York South. So I'll add one more to this discussion, a personal one: The member for the riding of St Andrew-St Patrick, where we're sitting right now -- I think we're in St Andrew-St Patrick --

Ms Isabel Bassett (St Andrew-St Patrick): Right.

Mr Rayner: -- promised, when I met her in the hallway, that rent control would be preserved. Yes, it would remain. She's an old colleague of mine. The member's an old colleague of mine from the Toronto Telegram, and I talked to her briefly in the hallway. It's a matter of trust, we felt, because colleagues generally in the journalist business tend to respect each other, especially when they're on the same side. So I pointed out to our tenants in the newsletter that rent control would be preserved. But, alas, a phantom special-interest group, certainly not the tenants, appears to have a prior claim.

The reason I'm referring to this is that at one time Conservatives did keep their promise. The best example, in 1975, was Conservative leader Premier William Davis. He pointed out that in 1974, rents were skyrocketing. The private sector was not building affordable housing and there were no hints of rent control. So where was the affordable housing? That's the situation even today, although we have rent control, and now rent control is being blamed. Premier Davis saw the problem 21 years ago and moved to try to correct it. Everybody's blaming the problems today on that rent control.

We will admit the problems are complex; there's no denying that. To be fair, it's not entirely the builders' fault. High land cost, construction, materials, labour, governmental regulations, all serve to push up building costs. I'm telling you something all of you know. But to do nothing in this particular problem of affordable, low-cost housing versus high-end is to court disaster. It's the old business of, "There ain't no light at the end of the tunnel if you don't do something about it."

In my own case, in my own building, rents tended to go askew before the establishment of the rent registry. The only thing the Conservatives did not do in 1975 which most of us regret is they kept talking of a rent registry, but they never got around to implementing one. Now my neighbour across the hall, with exactly the same one-bedroom as mine, is paying $250 more than I. Under the proposals in the paper, this problem will escalate if the proposals are implemented. Neighbours with lower rents are resented. We're being accused of having a "free ride." But ours is the legal rent.

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When we moved into our present apartment in the early 1970s my rental was $166. Today, under control it's $750. This amounts to an increase of 452%. Although I've worked as a journalist, broadcaster, a PR practitioner of sorts -- certainly not as a public speaker -- my income, however, has not increased with that degree of percentage. There's no way that I'm earning 452% more. It may be my fault, but others are in that category too. So who's getting the "free ride"?

Constant mention is being made of the lack of financial incentives for landlords to maintain their buildings. It appears to go against the grain even to suggest that tenants should be paying more, against the grain, as far as landlords are concerned, to suggest that they should be maintaining their buildings based on what tenants are paying. Tenants should be paying more and more and more.

There are several reasons why some landlords, and some landlords only, are neglecting to maintain their buildings, and luckily our landlord is not one of them. Buildings are flipped and reflipped --

The Chair: Excuse me. You've got one minute to wrap up, please.

Ms Rayner: All right. Buildings are flipped and reflipped and now the proverbial goose has come home. The tenants are the sitting ducks and they're paying.

Obviously, I'm going to run out of time, so I'll say to you that if rent controls are removed our tenants in our two buildings, our members and others, fear for the future. If the affordable housing crisis is not resolved, if the supply of affordable low-cost housing is not increased, a crisis will follow. Let me say this: As the crisis deepens, some future government will bring back a true rental control in some form to protect vulnerable people. And it's our belief that it will return with a vengeance.

The Chair: Thank you very much, Mr Rayner. We appreciate your attendance with us this afternoon and your input into the process.

GARDINER, ROBERTS

The Chair: Our next presenter is Carol Albert from the law firm of Gardiner, Roberts. Good afternoon. Welcome to our committee.

Ms Carol Albert: Thank you, members of the committee, for the opportunity to address you. My name is Carol Albert. I'm a lawyer and a partner in a law firm in Toronto, and just so you have an understanding of my background and why I am here, I have been practising for 14 years -- not quite as long as Richard Fink -- in the area of landlord-tenant residential tenancy law. I appear before tribunals, courts; I've appeared before all the various levels of the rent tribunals in the various incarnations since the Residential Tenancy Commission, and before the Ontario Court (General Division), its predecessor, and the Divisional Court in appellant levels.

I am here to offer some of my experience and recommendations with respect to matters of process and procedure, and to speak to you as a practitioner and not as an advocate or lobbyist on behalf of any one group or another. I will focus my presentation on process and speak to you on three of the points, but I will leave you with a paper that I believe has been circulated which has a little bit more detail on these and other topics.

The three points I wish to address in my remarks are, firstly, the proposal to move out of the court system the landlord and tenant dispute resolution, the present landlord-tenant court types of applications.

Secondly, I will address the issue of the structure of a decision-making body or a tribunal to deal with either residential rent regulation issues solely or those issues plus the Landlord and Tenant Act type of issues that are proposed to be moved out of the courts.

Thirdly, I will address the issue of mediation as a necessary component of any newly created dispute resolution system.

To begin, as you are aware, at the present time landlord-tenant disputes that are in front of the courts are matters that deal with termination of tenancy, arrears of rent, assignment and subletting of apartments -- the matters that deal with the relationship of landlords and tenants. The decision-makers in those cases are federally appointed judges exercising jurisdiction as judges of the Ontario Court (General Division). Frequently, the fact situations that are presented to the courts in these cases are heartbreaking. A judge is required to make a correct decision in law and to make that decision regardless of the hardship that may result to one of the parties. That is a fact and that is a reality. My submission to you is that adjudication of these types of disputes ought to remain with the courts, and the rationale for this is the need for independent decision-makers who are impartial in perception but also in practice.

The problems that I have heard about the court process to date deal with delays. It's anticipated that if the system is moved into a tribunal it could be made into a quicker system. I was here when the representatives from Peel were making their presentation, and I agree with many of the process types of recommendations they make for speeding up the court process. These recommendations -- giving the registrar, for example, more powers -- would go a long way to remedying the problems that are being experienced today in backlog, in particular in the Toronto area.

Those problems can be addressed. There is no need to move wholesale the entire dispute resolution process of those matters into a tribunal, and the concern I have as a practitioner is that to do so would very possibly result in the whole system grinding to a halt. I do, however, address in my paper -- and if time permits, will address here -- how, if the matters are moved to a tribunal, the process could be designed to at least try and keep these things moving quickly.

When matters are dealt with by judges in courts, why is there a perception in the public that judges are impartial? I address this point because the next point, when we move to structure of the tribunal, a very critical point, is, how does one go about selecting adjudicators? Judges are independent and they are impartial. Tribunals, on the other hand, will inevitably be seen to lack independence. This would be particularly so when there are short-term appointments. Members concerned with reappointment subconsciously may feel a pressure to give a performance that is acceptable to those exercising power of reappointment. Impartiality and the will to give unpopular decisions are to a greater or lesser extent impaired from the outset. I emphasize this point because we are dealing with many heartbreaking and very difficult hardship cases that go before the courts on eviction matters.

A tribunal is not likely to develop a special expertise in landlord and tenant matters. Landlord and tenant matters are inevitably matters that turn on fact and on law. Unlike rent regulation, which is highly technical and highly complex -- and a tribunal develops an expertise dealing with those matters -- landlord and tenant disputes are different. There is no benefit to be gained from tribunal adjudication on landlord and tenant matters -- eviction, abatement and those kinds of things. For those reasons, those matters ought to stay in the court. For reasons of lack of time I will move on to the next point.

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In terms of setting up a tribunal structure, and this is my second point, assuming that the landlord and tenant matters are transferred, or if they're not and only the rent regulation matters are dealt with by the tribunal, one must look at how one can safeguard against those problems that would be inevitable in any new tribunal being structured. One has to start from the point of independent decision-making by an independent body. There must be separation of the ministry and the decision-makers. That's a critical element of a system that has justice inherent in it.

In terms of method of appointment, it's recommended in my paper that the appointments be by order in council, that they be for terms that are sufficiently lengthy as to permit independence -- and five years is a suggested number -- and that the appointments be on competition. We're not looking at a question of patronage or political connections; we're looking at competition on a merit-based evaluation: skill, intelligence, knowledge of the law, ability to control process, experience -- all of those factors. Order in council doesn't mean that those factors are thrown out the window; it means that a very careful process is put in place to ensure that the members have qualifications that are appropriate and the ability to carry out their function effectively. In my paper, I address points that deal with qualifications and training.

With respect to the process itself, how can one design a process that will move along quickly? This is an extremely difficult challenge that the ministry and the government face in designing a process. First, right now a registrar in landlord-tenant court deals with matters as the first member of the judicial system to address a problem. The registrar, if matters stay in the landlord-tenant court, should have enhanced powers to dispose of all of those applications that have no defence, no merit in the defence, no applicant pursuing it or absence of payment into court if the money's disputed. Let me just break that down on a couple of the points.

Right now, the registrar does not have the power to dismiss an application or issue judgement on an application where the defence has no merit. In other words, if the defence is such that if all the facts entered are proven to be true, could the defendant win, and if the answer is no, the case should not go forward. If the tenant's reason for not paying the rent is, "I have no money," that is not a defence that could win in law and the registrar should have the power to sign judgement, and the registrar does not.

If, on a parallel train of thought, we're now looking at a tribunal making these kinds of decisions, there should be a hearing officer in place who would perform that same front-end function of getting all the cases placed before that hearing officer at first instance, disposing of all of those that can be dealt with by default judgement or dismissal at an early stage, and then only move to the hearing those that have a defence in writing and merit in that defence, that could win if proven to be true. That would weed out a lot of the cases that are presently in front of the court.

If one takes a day and spends it in the courtroom of a judge such as Mr Justice Kane in the Ontario Court at 361 University, you would see a judge who goes through 40 cases in a day. A significant concern at a tribunal is that in my experience I've never seen a tribunal member in the rent system in my 14 years who could possibly go through 40 cases in a day, and there are reasons for that. What one would need, if it was a tribunal setting, is a screening process at first instance to move the cases along. I've elaborated on these points in my paper. Again, out of respect for the time that we're dealing with here, I'm going to move forward.

Mediation is my third point. You heard from speakers addressing you on the question of mediation. In my submission, mediation is a necessary and valuable component of the justice system. Mediation is being embraced in all aspects of litigation in Ontario; courts, tribunals and litigants alike are all embracing mediation. It's not the panacea that one might think it could be, but it is a solution in appropriate cases.

Appropriate cases involve a number of factors. Mediation must be voluntary. One cannot be forced to agree -- that's an oxymoron -- but for those parties who wish to enter into a mediation opportunity, there should be that opportunity through the decision-making structure that allows it to happen at the front end quickly and without delaying the process.

Mediated solutions should be encouraged by the legislation. One very critical change is needed in legislation that we've had in the rent control area since the beginning of the various schemes of rent regulation and rent control over time, and that is the removal of the prohibition on entering into agreements to the contrary of the act. There may very well be situations where the parties wish to design a solution that works for them, but on the strict letter of the act it wouldn't be enforceable. That prohibition should be removed.

One then asks: What about the fragile party? What about the unequal bargaining power of the parties? Those problems can be addressed in a number of ways, and I'll give you two suggestions. The first one is a cooling-off period for a settlement, as in other consumer protection legislation. A second possible solution to the fragile party, where that party is of insufficient financial means, is an agent or counsel of a duty counsel nature, someone to assist that party in the mediation model. The fact that there may be some fragile parties out there doesn't mean one should dismiss the whole opportunity that mediation presents to us.

In terms of who the mediators should be, this is an interesting question. We have at the present time a pilot project at the ministry where mediation is being utilized, in some cases successfully but in other cases not. The situations in which it is not successful give rise to comments that I have as to how to make it a more successful opportunity.

The main concern I've experienced in the mediation pilot project is the lack of separation of mediator and ministry. Mediation by its very nature requires disclosure of certain facts by parties that one wants absolute assurance will remain confidential. In fact, as a practising mediator, one of the practices mediators have is to destroy their notes after a mediation is over. Everything should be confidential. When one is disclosing to a ministry official that one has charged illegal rents, what guarantee is there to that party that disclosing that won't result in enforcement proceedings? So there's a lack of trust if there's a built-in closeness of the mediator and the ministry. There has to be a separation. How can that be resolved? Using outside mediation models such as the new pilot project in landlord and tenant. We've heard from the self-help group. There are mediation projects out there. More can be designed. There are independent mediators. All of these present opportunities for that to be used.

Timing: As I referred to briefly, mediation must be brought in at the early end of the process, before the hearing date and not in any way to delay the hearing date that's being assigned to the case.

I have included in my remarks a couple of comments about what have turned into marathon hearings under the present system, marathon hearings being those that go on for days and days on end. These don't have to happen. There are reasons why they happen, and those reasons can be addressed in the proposed legislation. I urge you to take a look at those portions of the paper.

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By way of conclusion then, the government of Ontario is facing a very difficult task in overhauling a system of justice that is probably the only glimpse that most people ever have of our justice system. Access to the courts is an ancient civil right and if landlord and tenant applications are removed from the courts to a tribunal, then the government must recognize the grave responsibility it faces in redesigning a dispute resolution that would impact probably more residents of Ontario than any other adjudicative process in the province.

Justice delayed is justice denied. We've all heard that. The sheer volume of cases dictates that an approach to dispute resolution in the newly designed system must include mediation, an ability to process cases quickly and decision-makers who have the capacity, qualifications and experience to process those cases quickly and fairly.

Thank you very kindly for your time, and if there is any time left, I'd be pleased to answer questions.

The Chair: Thank you very much, Ms Albert. You've done a remarkable job of filling in exactly 20 minutes, so unfortunately there is no time left for any questions. We do appreciate your interest and your presentation here this afternoon.

HALTON HOUSING COALITION

The Chair: Our next presenter is the Halton Housing Coalition, represented by Gwen Maloney, the general manager of the Halton Non-Profit Housing Corp, and Ted Hildebrandt, the chair of the Halton Housing Coalition. Welcome to our committee.

Ms Gwen Maloney: As I've been introduced, I am Gwen Maloney and I'm general manager of Halton Non-Profit Housing Corp. Ted Hildebrandt, who is with me, is the senior social planner with the Halton Social Planning Council. As well, he's the chair of the Halton Housing Coalition.

The comments which we are making today represent the Halton Housing Coalition, which is a coalition of non-profit housing and service providers in Halton. We've been in existence for approximately four years, and we're concerned about advocating on behalf of the needs of low- and moderate-income renters in Halton. We've been involved in a lot of initiatives that look at efforts by government and others which affect the supply of housing.

We thank you for permitting us to make a presentation today. I am very impressed with the quality of submissions that we've heard today, and I was in attendance last night, listening in as well. There are very many wise people around Ontario who are making presentations to you. They have had a lot of experience and their comments are thoughtful and, I think, very helpful.

My concern is that the legislation that may come out of this process should be one which is a win-win situation. If we come up with legislation and people say, "The tenants aren't happy, the landlords aren't happy, we must have done a good job," I don't think so. I think you have the resources, you have the input from many wise people who can give you food for thought to come up with an improved form of legislation.

Mr Hildebrandt and I have focused our oral presentation on issues which we think affect the supply of affordable housing in Halton, and we are also going to be submitting a more detailed paper to the committee in writing prior to the deadline.

As a provider of non-profit housing in Halton, I've had experience in developing and managing a portfolio of 735 homes for low- and moderate-income people. I also have a waiting list of over 1,200 families and individuals in Halton who are looking for affordable housing.

I was very intrigued by the concept put forward in this proposal that if we remove rent control, rents will naturally rise to their natural level and that new construction will be stimulated. Before we embrace this idea, I think we should look at the costs of new construction and the economic rents which new construction forces. I've provided two examples, which are in appendix 1 of our handout. One is a 91-unit townhouse project in Burlington and the other is a 126-unit apartment building.

In the case of the townhouse project, using some fairly standard figures, I found that the economic rent, or a rent which covers all costs and provides a level of profit for the landlord, would be about $1,152 per month. In the actual case that this is based on, the rents that are received are $240 per month less than the economic rent. So it's not an economically viable proposition for a landlord to build here. In effect, we have found that in Halton, where people are approaching $1,000-a-month rent, they're looking to buy. They're not interested in renting. They can easily buy a house at that rate. Building townhouse projects in this situation probably is not feasible for the rental market because our landlords are up against the competition of ownership.

The case of the apartment building, however, is very concerning. Here, the economic rent example is $1,300, but the current rents that are being received on average are $684 a month. Those rents are very typical for that market. What we have here is, if an investor wanted to build such a building, he would have to see the marketplace rents almost doubling before he would have a product that would be attractive to renters in Burlington.

We feel that in both cases current market pressures of the cost of construction and the current market rent rates discourage new construction. We're concerned that before new construction can be stimulated, you would have to see a tremendous change in the rental rates that are being charged in the market. So I guess we just question that construction will be stimulated by the movement that's proposed here in terms of rent controls.

My second comment relates to the cap on capital improvements. I just used the statistics that were provided by FRPO to look at what amount of capital improvements are going to be required here to bring existing housing back up to standard, and my calculations are that it would be about $12,500 per unit in capital improvements. This equals a cost pass-through of a rent increase of almost 20%. With the proposed legislation, a landlord could only have a 4% increase, so again, I think we're going to have a tremendous disincentive or lack of ability of landlords to really bring their properties back up to standard.

Mr Hildebrandt is going to take over the presentation from here.

Mr Ted Hildebrandt: At this point, I'd like to build on some of Ms Maloney's comments about the cost of doing capital repairs and tie that to the proposal in the discussion paper that the Rental Housing Protection Act be eliminated.

I think that landlords will be very tempted to get out of the rental market completely because it is impossible for them to maintain their stock within the proposed rent guidelines. In most markets, and particularly in Halton, the same factors are in place today that spurred the government to implement the Rental Housing Protection Act in the first place, so we're strongly opposed to the elimination of this protection.

In Halton, we have a very low vacancy rate. It's an average of about 1%, and as you can see in our appendix 2, we've included rates: for Burlington it's only 0.9%; in Oakville 0.5%; and for Milton-Halton Hills 1%.

The average rents are not affordable for low- and moderate-income earners. We have found that tenants in receipt of social assistance are forced to pay up to 75% of their total benefit on shelter, leaving them with as little as $300 per month to feed, clothe and provide for their family. What will happen to this family if rent control is removed, as proposed? They can't afford more rent. Measures such as doubling up, overcrowding in substandard housing or even breaking up of families are inevitable. In our appendix 3 you can see some information about the affordability of housing for low-income people in Halton.

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I think the proposed legislation will have the effect of reducing the number of rental units in Ontario through the conversion of apartments to condominium or through demolition. This point was also touched on by earlier submissions. Rental rates will be driven up as the vacancy rate goes even lower. Low- and moderate-income tenants will have less choice and higher costs. Already in Halton, according to the 1991 census, more than 30% of renters pay more than 30% of their income on housing. This is above what it is considered that people should be paying on housing. We can only expect this to increase over time.

Another aspect of the proposed legislation would allow tenants and landlords to negotiate an above-guideline increase in their rent. We find this very interesting and can see that this might be a powerful tool for the tenants. Tenants now have the opportunity through this proposal to negotiate together for improvements in their building. Landlords, if they choose to participate, might be challenged to open their books to demonstrate what they can afford, and they could also be held accountable by the tenants for how much money is spent on these above-guideline improvements.

As a tenant, I would first question, where did the money for capital improvements go that I've been paying in rent over all these years? Did it go to the capital improvements that were supposed to be covered in that rent? We would ask that the committee consider a process whereby tenants are not asked to pay for deferred maintenance which should have been done to maintain the building at minimum property standards over time.

Finally, the proposed changes will have a significant impact on tenants and landlords. For tenants to be able to exercise their rights and benefit from the protection of the legislation, such as the new proposals around harassment, they will have to be well informed. How does the government propose to do this? The decision to close the housing registries in Halton this month is not a signal that the government is committed to informing tenants of their rights. Where will the tenants turn in the future for advice on rent increases, protection from harassment and assistance in ensuring that their homes are maintained in a decent manner?

Thank you for the opportunity to come before the committee. We will be making a more detailed written submission before the deadline. We'd be pleased to answer any questions that you might have.

Mr Curling: Thank you for your presentation. I think you have touched on some very important points here. With the selling off of the non-profit housing that is being mused about by the Minister of Municipal Affairs and Housing, do you think this would bring a greater pressure on the affordable stock?

Ms Maloney: Yes, it would. I think there are 120,000 non-profit or social housing units in Ontario, and that's a significant portion of the stock. Yes, if people were forced to pay the break-even rents, it would not be feasible.

Mr Curling: The minister, I expect, sooner or later will bring in a shelter allowance. Some of the landlords are coming in saying that shelter allowance is the way to go. It makes it more flexible for tenants to go where they can. With the proposal of the tenant protection package here, it tells you that rent control will go. With the lifting of the guideline, rents can go to any level that they want after somebody vacates. Don't you see that there would be an enormous amount of money needed for shelter allowance for people to access affordable housing at the time? I just don't see the sense of it. I don't want to put words in your mouth, but would you not agree with me that this is a ridiculous way to go? Where would we get the money from?

Ms Maloney: Clearly, there's no more money in government coffers for more geared-to-income housing. They've told us that. I can't see you can make shelter subsidies universally available to everybody who qualifies. You would have to set up another bureaucracy to administer this, and I don't think we'd want to recommend that either. So yes, you can't afford to meet the gap. You can never, ever solve everybody's problems here, but the proposals here I don't think will improve low-income people's access to housing they can afford.

Mr Tony Silipo (Dovercourt): Thank you very much for the presentation. I want to first of all agree very strongly with your opening comments and hope that government members particularly listen to your warning when you say it's important that we look for some solutions that make sense to everyone, that we not just simply come out of this saying, "Well, if nobody's happy then somehow we've found the right answer," because we won't have found the right answer.

I'm particularly struck by the two examples you give about the difference between the market rents and the actual rents that are being paid and the argument you make that this makes it, as I've understood you, really unreasonable, uneconomical for private developers to build. I'd just like you to talk a little bit more about that in terms of what you see happening if the government persists, as they seem to be, with this line of in effect removing the various limits that exist now, the various protections that exist now, and creating exactly this kind of situation where they claim that landlords will be encouraged to build. Your experience would seem to indicate that they won't be. So what are tenants going to be left being able to do?

Ms Maloney: I think tenants will be forced to double up, to live in overcrowded situations and put themselves further and further behind in terms of what they can afford to provide for their families. Their disposable income will get lower and lower for the other things that are important.

I heard a little bit of Chairman Tonks's speech and I can't disagree with what he said about the impact this will have on families. As I say to my tenants, if you don't have a place to live, you have nothing. If you can't start out with some place to live, you can't start to get your life in order. I think it will have really disastrous impacts across the board for our society.

Mr Hardeman: Good afternoon. When we started with the hearing process, the minister pointed out quite clearly that there are more issues that need to be dealt with and to deal with the affordability and availability of housing. I find interesting in your presentation the two examples that Mr Silipo referred to. I understand the problem between the fair return on the investment of the landlord and the market rent that it presently is, but my biggest concern with the two examples is the difference between multiple and high-rise type accommodations, which I suppose, not knowing all the figures, should be the most economical way of providing the housing, and yet in your analysis it is far more costly. Could you maybe explain to me the reason for the high-rise being the far more expensive way of providing the housing?

Ms Maloney: Yes. It's always a surprise. Running a high-rise with elevators, with fire safety systems, with all the regulations, is much more costly to a landlord than to run a simple townhouse project where all you have to do is cut the grass and remove the snow in the wintertime. Your obligations as a landlord of an apartment building are a lot greater and they come with higher costs. You have to heat it; you have to maintain the common elements. It is surprising. Everybody always thinks you're getting better value for money if you intensify the use of the land, but you're not necessarily going to make more money or to do it cheaper in terms of running it.

Mr Hardeman: Further on that, is it because for people in high-rises there are more services provided that that would happen? It seems to me that when you can provide a service for that many people at the same time, that should be the economical way of dealing with it. Are there are other charges or other costs associated differently with the two types of housing that would make the cost of operations greatly different?

Ms Maloney: Yes. Basically with a townhouse community, a landlord's costs are very simple. They're maintaining the units, doing repairs, clearing the snow, cutting the grass, paying taxes and utilities for the common lights and that sort of thing. With an apartment building you have all of those costs plus you have to maintain the elevators, inspect the elevators, which are required by law; you have to have an emergency fire system. For taller buildings of course you have to have generator systems that have to be inspected. You need onsite staff who are there maintaining and cleaning the building every day, which again is higher cost, and you have again the normal wear and tear. Unfortunately, that adds up. I wish it wasn't that way.

The Chair: Thank you, folks, for coming this afternoon and making a presentation to us. We appreciate it.

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ROBERT LEVITT

The Chair: The next presenter is Robert Levitt. Good afternoon. The floor is yours, sir.

Mr Robert Levitt: Good afternoon. I'm pleased to have this opportunity to speak before you today. I must admit, though, that I was a bit disappointed by the selection of MPPs from the governing party attending these hearings the two previous days. I'm sure they were all competent members interested in this topic, but other than the minister, who attended only for the first day and only for two hours, none was from Metropolitan Toronto, where this week's hearings are being held. The majority of the governing party's members were from areas with tenant populations below the provincial average and none, other than the minister himself, comes from a riding with tenant constituencies in proportions even close to the Metropolitan Toronto averages. Why weren't there any members from Metro the two previous days? This did give me the impression your government is ignoring the impact these proposals will have, especially the impact on the greater Toronto area.

At one time, government policies were guided primarily on the basis of what was in the public interest, with economics setting the limitations and being one of the means towards those goals. These days it seems fashionable among many politicians for the goals to be set based upon the latest economic fads or the demands of special-interest groups, with the public interest getting left behind. But then with tenants making up one third of the Ontario population and more than one half of Metro Toronto's, tenants are the public interest.

Each of you by now will have received a copy of my paper, a critical analysis of the New Directions for Discussion paper and the process that led up to it. My report outlines how the government proposals will not attain their claimed primary goal of getting housing built. Neither will it create jobs in this province; it will cost jobs. It will also cost the provincial and municipal governments money at a time when they are already trying to cut their expenditures.

Just on an economic basis, and ignoring the appreciable negative social effects it will have, vacancy decontrol of rents will be a recipe for economic disaster that will affect all citizens of Ontario, whether they be tenants, homeowners or business owners.

This whole process has clearly been tainted from the start. Greg Lampert, who was commissioned by this government to study how to get new rental housing built in Ontario, candidly admits the intention of the government was to relax rent controls, regardless of the study. Then the study, which was supposed to be the basis for the proposals before us, consulted exclusively with those who would benefit financially as builders and landlords in such changes. Not only did they conclude that they want rent controls removed but, lo and behold, the tenants had too many rights and landlords too few.

The primary fault, of course, lies with the government for consciously deciding to pander to special-interest groups and to show total disregard for the public interest. This still does not excuse Mr Lampert, whose study is full of supposition and provides little evidence of his claims. In spite of the special consideration given to landlords and developers in the consultation process, ultimately proposals were made that only benefit landlords and would accomplish very little towards the claimed goal of creating new rental housing, never mind affordable rental housing.

The Lampert report states that the foundation for his report was the private rental construction report written by landlord and developer lobby groups. Furthermore, a document titled "Did You Know," included with the Ontario Ministry of Municipal Affairs and Housing news release of June 25, 1996, states, "An estimate by the Fair Rental Policy Organization puts the current cost of repairing major structural problems at $10 billion." Yet on page 2 of the government's Common Sense Revolution booklet above the Premier's signature there is a sentence: "Our political system has become a captive to big special interests." I thought this government was going to avoid this practice, not elevate it to new heights.

Never does the Lampert report, nor this government, question the validity of any of those figures being provided to it by landlord and developer lobby groups. The Lampert report is nothing more than special-interest lobby group promotional literature paid for at taxpayer expense.

One of the few groups the government consulted with in the creation of the Lampert report was the Fair Rental Policy Organization of Ontario. Yet I outline in my document how Mr Philip Dewan, president of the organization and also of the Rental Housing Supply Alliance, not only makes unsubstantiated claims, but has publicly made blatantly false claims, yet the government seems to have an unfailing loyalty to FRPO, an organization whose former chairman was recently released from prison for $67 million worth of fraud.

Any changes in legislation must be based upon a proper knowledge of the facts and factors, not purely upon political dogma. All aspects of housing must not be examined in isolation. They must be looked at simultaneously to come up with a workable plan. Furthermore, all groups affected by any changes must be equally involved in consultations, not just certain special-interest lobby groups, as was done in the two meetings with the ministry for the Lampert report. Groups that must be included are advocacy groups for tenants, the elderly, the poor, the disabled, groups for alternative housing, municipal governments and planning departments, small business organizations, plus others.

The mandate for the Lampert report had an extremely narrow focus, but besides creating an inherent bias in favour of these lobby groups on whose own studies the Lampert report was based, it did not look at the effects that suggestions it recommended would have on most sectors of Ontario's economy and society.

A study to determine the social and economic impacts of these changes over the past 13 years in British Columbia since they repealed rent controls, including any effects on the revenues of all three levels of government, the effects on employment and the demand for social services must be fully undertaken, taking into account both the differences and similarities in the situations between BC and Ontario. Not to do so is risking the whole province's future on mere speculation.

In the Toronto Star leaders' debate of April 3, 1995, Mike Harris said: "The current rent control program is not working very well for tenants. We want to bring in a rent control program that will truly protect tenants and give them lower rents. We will replace nothing until we have a superior plan in place to work better."

The proposals before us today will not protect tenants and will lead to much higher rents over time through vacancy decontrol. This plan has no evidence to support its claims and is vastly inferior to what already exists. Proper in-depth and impartial studies need to be done at the foundation, even before any consultation process begins, and all groups need to be included. Only then will there be any basis on which the government can make an informed judgement on these changes, which will not only affect the over three million tenants in Ontario but all the people of Ontario.

Are these proposals for changes in tenant-landlord legislation good for tenants? No. Will these changes get needed affordable rental housing built? No. Are these changes good for retail businesses? No. Will these changes be good for urban communities? No. Will these changes be good for municipalities? No. Will these changes help the province in fighting the deficit? No. Will these changes create jobs? No. Will these changes be good for the Ontario economy? No.

These changes will only benefit landlords, and at the expense of the rest of Ontario, both economically and socially. So why even consider them? These proposals don't need to be modified; they need to be scrapped.

Thirteen years ago, British Columbia's Social Credit government repealed rent controls with promises of a rental housing boom and lowered vacancy rates. The construction never happened. BC's vacancy rates are about the same as Ontario's and the Social Credit Party is pretty much extinct. Now the present government in Ontario is blindly following the mistakes of the Social Credit in BC 13 years ago. Will your fate be the same?

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Mr Marchese: Mr Levitt, obviously you've been following the proceedings. Your concerns are very similar to many others' who have come here. Other than the landlords, you're all united against this and the only ones supporting this are the landlords and the Conservative Party. I've called that collusion. They will deny it, of course, but there is a connection.

It seems to me that what we need to worry about is what tenants fear and what they're saying. Part of what you're saying is that rent control is going to hurt most of you, it's going to hurt most tenants; it will benefit the landlords at the expense of tenants. Is that a fair comment?

Mr Levitt: I go beyond that and I say that the drop in disposable incomes will mean a drop in spending in the retail sector and restaurant sector. This is actually an argument that Bill Davis used over 20 years ago to bring in rent controls, that landlords were sucking the money out of the economy, which was costing jobs and hurting the economy in all sectors.

Mr Marchese: In fact, I made that point on the opening day, when I said that when people end up paying more for rent, the disposal income that normally would have been spent -- because this is the sector of the population that's going to spend -- if that is taken away to give to the landlord, it's going to further dampen the economy because you're taking money away from all those things that most tenants will buy, that we need, and that will spur the economy. So I have to agree with you on that.

Mr Levitt: And it still won't get anything built. I had a conversation with Richard Lyall at the Metropolitan Toronto Apartment Builders Association and I asked him what was the most important thing and he didn't even list rent controls. I can give you a transcript of the conversation. He listed property taxes, GST and issues like that. He said he's not going to be building.

Mr Marchese: But as you said, Mr Lampert says very much the same thing. They say the rent controls won't do it. But the landlord sees that as a prerequisite. You see, they want it, because they want to be able to jack up the price as much as they can get. But the real story around building is not that, so why are they doing rent control, why are they decontrolling, in your view?

Mr Levitt: I think this government really believes what they're saying. They haven't sold out or anything like that. They really believe from their lack of knowledge that this will work. Al Leach even in the Legislature, before the study had even been completed, said "We will be phasing out rent controls." That was before the Lampert report was even finished.

Mr Marchese: Very true. Thank you very much for coming.

Mr Tilson: Thank you very much, sir, for coming to the committee and giving us your thoughts, notwithstanding you obviously don't like a word that we're doing. But that's fair.

I must say, though, that I represent a semi-rural urban area, the municipalities of Orangeville, Grand Valley, Shelburne, Bolton. Do you know what a lot of those people say about many of the policies of the former Liberal and NDP governments? They created laws that were strictly for Toronto and they took great exception to many of the laws that were put forward by those governments in the last decade. I will say that the landlord and tenant problem -- because there are problems for landlords; there are problems for tenants. Anyone who says the status quo is working is wrong, and if they say it's working, I invite them to come to my riding where there's no question that there are no new buildings being put up. Why is that happening?

I suppose we can get into a philosophical argument as to the fact that the NDP tried to take over housing and created such a bureaucracy it made it almost impossible and not economically viable for people to put up buildings. Tenants don't have choices to move to other locations. These are common occurrences. They're happening in Toronto and other areas, but it's certainly happening in my riding and I must say, sir, I resent the fact that you don't think that I, from a semi-rural urban area, can come and hear the concerns of people across this province. That's what this is. This committee is going to travel to all areas of the province to hear all concerns, not just from Toronto, but all over this province. Because these are serious problems which our government intends to address, and we're going to listen to the people.

I think where you're a little confused is that this is not legislation, this is a paper. I hope that people will come and put forward suggestions as to how to solve these problems and not just say, "We don't like this; we don't like that," that they will come forward and put forward suggestions so that our government can create a policy that hopefully will solve the problems that were created by former governments.

The Chair: Mr Wettlaufer, a quick minute.

Mr Levitt: Can I reply?

Mr Wayne Wettlaufer (Kitchener): He said most of what I would have said.

Mr Levitt: I'd like to reply to that. First of all, my paper does give suggestions. Secondly, just two weeks ago on CITY-TV, it was Mike Harris who said -- he was talking about economics -- "As Toronto goes, so follows Ontario." So if you kill Metro Toronto, he is suggesting, you're going to kill all of Ontario. So I don't think you should feel resentful; you should be looking at your own policies, or in this case, your proposals.

Mr Curling: Mr Levitt, I want to thank you for your presentation. I'm not at all surprised that you feel suspicious about government not coming through with their promises, or ramming things down people's throats when they've made up their minds before they even have any discussion or any consultation. Bill 26 was an example of that, and many of their colleagues over here who were following blindly to support that didn't even read the blessed thing.

The fact is that what you're talking about, many of the things that are in the tenant package today are things that they may be sitting on in some basement now, writing the legislation.

The fact is that you come forward here and give us your view. We hope they will listen. Many people who bring some rather cogent remarks and very pertinent warnings about what's going to happen have told this government that if they bring in something called a tenant protection package and a housing strategy and a housing policy, how on God's earth can they attack this huge problem, blame it all on rent control and then say, "We're going to move forward."

That's why they have so many confusing thoughts around the issue here. One minute they're going to protect tenants and they want to phase out rent control, then they want to bring rent control in at one stage when they have a by-election, and then when the tenants face them, they're going to protect tenants with a tenant package.

Therefore, I understand what you're saying and I know you have that concern. I'll give you some moments to respond.

Mr Levitt: Basically, I talk more about the economy than tenants in particular. I think this is going to severely hurt small business. They are talking about creating jobs, and this is going to kill jobs. According to the Canadian Federation of Independent Business, while over the past several years we've been losing jobs -- let's not talk about the past few months -- but generally we've been losing jobs, the only sector that was creating them was those businesses with under five employees, yet those will be the ones hurt the most by the drop in disposable incomes among tenants. They say they're pro-business, but they're completely ignoring small business, and what hurts tenants does eventually hurt small business and hurt the province.

Mr Curling: As you said, it's not rent control, it's a lack of income for people to have access to affordable housing. They should stop blaming it on the tenants, because you don't have enough money to do this. So we come and pass that back and forth.

Mr Levitt: They haven't even done any independent research. They basically had Lampert rewrite the landlord report, and none of the data has been substantiated, never mind I can't get a copy of the report. I can get a copy of the Lampert report, but not the reports it was based upon.

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

I don't believe our next group has arrived. We have information from their house that they're on their way.

The committee recessed from 1639 to 1653.

KATHERYNA DMYTROW
STEPHANIE DMYTROW

The Chair: Welcome to our committee. You have 20 minutes. If you allow time for questions, they will begin with the government. The floor is yours.

Ms Stephanie Dmytrow: We apologize that we are a little bit late, but there's really bad traffic with the Exhibition in the southern end of Toronto.

We just wanted to make a few points. My name is Stephanie Dmytrow, and this is my mother, Katheryna Dmytrow. My father was also scheduled to appear, but he's not well and he couldn't come today.

The first point is that we feel rent control and the bureaucracy that's entailed by it should be scrapped. What I mean by bureaucracy -- for example, I remember one time I was at the ministry and one of the clerks there explained to me that he spent half a day correcting a two-cent deviation. We believe this is a waste of taxpayers' money and we think there should be changes. We commend the changes that are being made, we're happy with some of them, but we think some are not sufficient, and I'm going to touch upon some of these points.

Two, we believe the needy and the poor should be helped, but rent control is not the answer. We believe government subsidies should be created for people who cannot pay rent at any particular time in their lives, at some critical time, at any time etc.

By the needy and the poor, we do not include the following people whom we have had as tenants. We at one point had a female tenant, an executive, who was making an income of over $70,000 annually, and her monthly rent was $290. We had other tenants who were paying the same, roughly, approximately $300 a month, $200 etc, who were taking trips to Indonesia. There are electronics, very expensive products, being purchased. We see this when we're throwing out the garbage. We just feel this is an inconsistency and something's wrong with this picture.

Then there is the matter of what is a market rent and what our rents are. Our rents now range from the lowest rent being in the high $300s range to the highest rent being in the low $500s range in the High Park area. We have two buildings with 22 units in each building. We're small landlords. We feel that we have very clean, well-maintained buildings in a good area. Our rents do not compare with what rents are in the area. The rents are between $750 and $800.

Mrs Katheryna Dmytrow: A one bedroom.

Ms Stephanie Dmytrow: For a one-bedroom; we have mostly one-bedroom units. I know that many years ago the rent was $400 a month for one room. This has to be changed. Meanwhile, what's happening is that taxes, hydro etc, everything is going up. The increase that's allowed for next year apparently is going to be similar to what was allowed for this year. That doesn't help when other expenses are going up. The claim is that there was no inflation, but the insurance companies say otherwise. They say there is inflation, so they're raising their rates by 3%. It's a problem, especially for small landlords as ourselves.

Then there's the question of repairs. Apparently now there will be some greater flexibility there, but in the past we have put on new roofs, put in boilers, done brick pointing, painted entire buildings. These are all very large expenses, and we've not been able to recoup our costs. I don't know how it's going to work in the future. Certainly I don't assume it's retroactive, I'm not sure, so that really doesn't help with what our current situation is. It might help down the road but it doesn't help with what's happened up to this point. Also, what's not been covered is when apartments or units are damaged by tenants. It's very difficult to recoup those costs. We've found that's a real problem.

This brings me to inspections. If it's something created by a tenant there are no actions taken. However, if it's some paint chipping or some minor detail it's almost harassment. We are being bombarded -- there are phone calls to the inspectors, who then come and inspect these things. I find there's a real inconsistency with regard to even inspections, because I know at one point I was with my mother in Kensington Market, looking at an apartment. It was I think three units in a home. There were rats in this building. There were holes in those floors. Where were the inspectors? Yet they're at our buildings where there's some paint chipping. Bureaucracy for the sake of bureaucracy, they have to put a stop to it.

A friend who is living in a unit on King Street -- there are children, not pets, urinating on the carpets there -- is paying $750 a unit. I'm not suggesting that anyone should pay $750 for a unit in a building such as that, but I'm just saying that somewhere we have to look at what's being provided and what people are able to charge for what is being provided.

Another thing we've found is that subletting has been a real problem. We understand that under the new provisions it will not be allowed. That has been a problem because you cannot interview potential tenants and then you cannot safeguard your current tenants, your good tenants. Sometimes there's a situation with overcrowding. It may not be permanent, but there are too many people in one unit. We found we didn't get anywhere when we would call because it wouldn't be under the jurisdiction of a particular inspector; it would be some other bylaw. I think that should be looked at as well, not just repairs.

Mrs Katheryna Dmytrow: Excuse me, usually they say it's a visit, but a visit, how long can this take? One week, a month or two or three years.

Ms Stephanie Dmytrow: Yes. The rationale behind it is that they're just visiting, but really they're long-term tenants. Half a year is sort of a long visit.

Eviction procedures, notices. Sometimes tenants give very short notice. What's the recourse? There really isn't one. Sometimes they're maybe not your best tenants so you just let them go and that would be it. But there should be a sense of balance there as well, I feel.

1700

Just on a psychological note, I read somewhere something about a new phrase, "dispute resolution." To me this sounds much better. I would like to take the antagonism out of this situation, the whole relationship. I think we should just drop that word "landlord" and just call landlords "owners," because that is what they are: owners of buildings. When we remove hostility, I think it would be both in favour of the tenants and in favour of the owners.

The other big problem with very low rents is that there is simply no cash flow. My father is 72 years old. He has cancer. He has to go in and do plumbing repairs because you cannot lay out all the money; you must have a little bit of a reserve in case something critical happens, particularly with an older building. Our buildings are in good repair. But if you have to repair a roof after X number of years, there's a big cash outlay. Particularly in the past, when you couldn't recoup these costs you were in a corner.

I think rent control is particularly hard on the small landlord. With the new legislation that's coming out, if there will be no rent control for new buildings, that's fine, that's good for owners of new buildings, but it doesn't really help small landlords and landlords of older buildings, which I know are important because there are people who can only afford to pay X number of dollars in rent. But the onus and the whole brunt of that should not be on the small landlords, owners of older buildings. Somehow the government has to step in there and help out those tenants.

Mrs Katheryna Dmytrow: And landlords.

Ms Stephanie Dmytrow: Yes. It's difficult to make ends meet. The argument sometimes is, "Well, there is a gain when you sell a building eventually somewhere down the road." Meanwhile that doesn't put bread on the table and it does not pay for repairs, especially if they are large.

Finally, I would just like to say that we've come today because we don't have a lot of units but we feel it's very important that everyone's voice is heard. These are our main concerns. We feel that the needy and the poor should be helped; we just don't feel that rent control is the route to go to achieve that.

Mrs Katheryna Dmytrow: There are a lot of people who are working and they're collecting welfare.

Ms Stephanie Dmytrow: Fraud is another problem. We had welfare fraud. There is a lot of fraud with apartments. As you know, people collect welfare, they work, and then they're in apartments which are really undervalued. That is just not right. That's what we have to say.

Mr Maves: Thank you for coming in and fighting the traffic to make your presentation today. I was struck by your first comment about being in the ministry office and the person working there spending a whole half-day working on a two-cent exchange. We had a gentleman in here yesterday telling us about a landlord spending $40,000 and the ministry spending $150,000 to correct a $35 dispute. I think it's that type of bureaucracy that you've witnessed and that the previous person told us about that we're trying to address.

Many folks come in here and tell us about these astronomically high rents and the astronomically high rents we're going to get. You mentioned some particularly low ones. Could you tell us what your rent ranges are again and explain to me how it is that they're so low.

Ms Stephanie Dmytrow: I think the lowest rent is $395, if I'm not mistaken. I'm sorry if I don't know it to exactly the dollar. Is it $395?

Mrs Katheryna Dmytrow: We bought the building 10 years ago, and the rent was very low to begin with. I think you should know that. When the controls came, the rent was maybe $170 or $180 or even lower. So how do you expect it now to be $800 or $900?

Mr Maves: What's the highest rent that you have?

Ms Stephanie Dmytrow: I think it's about $525, perhaps $540.

Mrs Katheryna Dmytrow: It's $530. There are three rents over $500.

Ms Stephanie Dmytrow: But that's only two or three of the rents; the rest would be in the $400 range.

Mr Tilson: Can I ask a question?

Mr Maves: Sure.

Mr Tilson: On this issue of chronically depressed rents, and that was a big topic that came up with the NDP pieces of legislation, have you got any suggestions as to how we could solve that? Obviously, if you were to take these chronically depressed rents and just say, "Here's the going market rate," that would create great problems for tenants. Have you got any suggestions as to how we could solve that?

Mrs Katheryna Dmytrow: Yes. How about the taxes?

Mr Tilson: That's an issue we're working on too, but I'd like you to comment directly on --

Mrs Katheryna Dmytrow: It doesn't balance.

Ms Stephanie Dmytrow: I think it took a lot of dollars and it cost a lot of money to run the former program, the rent control program. I would take those dollars and put them towards those tenants who need the extra help. That's what my suggestion would be.

Mr Grandmaître: You say that your average rent is between $300 and $500 and most of your apartments or units are one-bedroom apartments.

Ms Stephanie Dmytrow: Yes.

Mr Grandmaître: And you believe that the present legislation should be scrapped. If it is scrapped tomorrow morning, how much would you charge for your apartments or units?

Mrs Katheryna Dmytrow: What people can afford to pay in this area.

Ms Stephanie Dmytrow: Something that's comparable in the area. I don't think it would go as high as -- I mean, $750 to $800 is the average range, and it would depend on the tenant. We have some older tenants.

Mr Grandmaître: It would depend on the market as well.

Ms Stephanie Dmytrow: Yes. It would depend on our expenses also and what we have to cover. It would take a full analysis to do that and I really can't say, but I know I would be charging more than $300 and $400.

Mr Grandmaître: Three hundred dollars seems to me very low, very cheap.

Ms Stephanie Dmytrow: Because it was rent control and it was very low to begin with.

Mr Grandmaître: Have you been taking advantage of the old legislation and increasing your rent annually by 2.4%, 2.5%, 2.8%?

Ms Stephanie Dmytrow: Yes. That's with the maximum allowable increase. That's what the total is for that. It's just one unit. That's the lowest unit.

Mr Grandmaître: Also you claim that you had to replace your boiler, your roof, do brick pointing, and you weren't compensated for this?

Ms Stephanie Dmytrow: At that time it was very difficult. We were told by consultants that a lot of bureaucracy is involved, it takes a very long time and it would be very difficult to recoup our costs. It takes a lot of energy to get organized and you have to pay money. If we're not really making any money, we're just losing more money, why would we do that? We were advised not to at the time.

Mr Marchese: I'm not sure you were paying those consultants, but if you were, you should fire them. They weren't very helpful to you, obviously. Just to blame the bureaucracy for not going through to recovering your cost is a real shame. First, the fact of the matter is, you were allowed 2.8% and an extra 3% if you could show that you have other extraordinary repairs. In this case you did, so for this consultant -- I don't know who that person is -- to tell you not to go through with it is improper. Second, removing rent control will not solve the two-cent problem that took the civil servant half a day, as Mr Maves said. It doesn't deal with that. That's a different problem the government will have to continually deal with, but rent control is not the problem.

The other problem you raise is that it's difficult to make ends meet. I understand that, we all do, but remember this: A third of the tenants, there are a lot of them, make less than $23,000, and a substantial majority of those who are unsubsidized, with low to moderate incomes, pay more than 30% of their income on rent. I understand your problem, but I'm equally concerned about those poor people who are going to have a hell of a time.

What they haven't told us is, with this decontrolling of rents, removing of rent control, what's the cost going to be to the tenants? They haven't done that study. Is it going to hurt a lot of people? They haven't said, they never say that, but I think it's going to hurt a lot of people, and that's the kind of question I want to ask them: Have they done the studies to show how much rents are going to go up, and whom is that going to hurt? Do you worry about that for some of those people?

Mrs Katheryna Dmytrow: Excuse me. You know what? It's a lot of old people. I believe it. I'm older too; I'm old too. But you how hard I work? I work very hard.

Mr Marchese: I appreciate that.

Mrs Katheryna Dmytrow: Okay, you appreciate that. Then I have young people and they're not working or they're working and collecting welfare. What do you say about that?

Mr Marchese: But I agree with you. That's a different story.

Mrs Katheryna Dmytrow: You don't agree with me.

Mr Marchese: No, I'm sorry, I do agree with you. If they're cheating on welfare, they should be out. They agree and we agree, but that has nothing to do with rent control, ma'am.

Mrs Katheryna Dmytrow: Excuse me. Who's going to put them out? The tenants have rights. Where's my right?

Mr Marchese: I understand. It's not rent control, though.

The Chair: Thank you very much for coming to present to us today. We appreciate your interest in the process. We're now recessed until 6 o'clock.

The committee recessed from 1710 to 1800.

CORTOR MANAGEMENT LTD

The Chair: Our first presenter tonight is Helen Zavitzianos, president of Cortor Management Ltd. Good evening. Welcome to our committee.

Ms Helen Zavitzianos: Honourable members of the standing committee on general government -- there are only gentlemen here, no ladies, in the audience -- as you have been told, I'm a principal in a small management company that looks after residential buildings ranging from a high-rise to a single bungalow.

I have also served as a representative of the small landlords on the Residential Rental Standards Board, which was disbanded by the NDP. The standards board was set up to help the province in its goal to formulate and enforce an acceptable standard of maintenance to preserve Ontario's housing stock. Take note that for structural concrete deterioration -- balconies, garages -- there's no reasonable preventive maintenance you can do.

The present government is commendable for wanting to ensure the enforcement of maintenance and repair standards for the benefit of the tenants and for the province's interest in the residential stock. All this is excellent. It is the proposed method of enforcing the standards that is highly objectionable.

You propose to enforce maintenance standards by fines. If you believe that fines are an effective method to obtain compliance, so be it. The fine can be paid to the municipality or the province, in the form of taxes, assessment, what have you, but heaven forbid, not by rent reductions. Reducing the rents is counterproductive. Number one, if a landlord is short of cash, rent reductions will make it even harder for him to comply and also will make it impossible to get a loan from the bank. With a reduced rent roll, how can you get the money?

The province wants to abolish the registry. If you impose rent reductions, you have to set up another bureaucratic operation to keep track of the reduced rents. Keep it simple. Let the municipality fight it out with the landlord. Do not involve the tenant and the landlord in an antagonistic situation. It promotes acrimonious confrontation tactics. In another vein, an example of enforcing a new standard is the fire code retrofit. That is currently implemented successfully without imposing rent reductions.

The second way you want to impose compliance is that you also want to eliminate the notices of violation and work orders. Should those be abolished, I strongly believe that will be the greatest assault on our democratic principles and civil liberties. Such a course of action is totally unnecessary and totally unacceptable. It debases both the municipality and the landlord. It throws our whole tradition of an honourable dialogue into the domain of a jungle.

The elimination of notices of violation and work orders is neither prudent nor justified. Empowering the building inspectors with such sweeping, dictatorial policing authority to slap on fines is utter lunacy. It smacks of communism. It is a practice that invites abuse and corruption. Landlords, like any other Canadian, should enjoy the privileges bestowed on all of us by the Canadian Charter of Rights and Freedoms. Landlords are entitled to a reasonable amount of time to comply with any infraction of maintenance standards and bylaws. The present process of notification should be maintained.

In conclusion, and by no means accepting the remaining of the government's proposals as perfect, I would like to suggest the government invite for a round table discussion representatives from tenants, municipalities and landlords to review your proposals, clear misunderstandings and reach compromises. Separate submissions from tenants, landlords and municipalities are useful but antagonistic. A round table discussion, on the other hand, promotes consensus, accommodation, respect and understanding, and can formulate courses of action that will cause the least friction and damage.

These are very difficult times. Landlords are going bankrupt -- St James Town, Bramalea, all the buildings you see for sale because of foreclosures. Also, tenants have great difficulty paying the rent. I believe it will get worse before it gets better. We need the understanding of facts and the cooperation of the governments -- all levels -- tenants and landlords. We need workable laws to regulate the rental residential industry so as to deliver an effective, fair and dynamic service.

I thank you for listening and I wish good luck to us all.

I still have three minutes and I would like to add something extra. First of all, personally, I would say for my company that we have no axe to grind because we have never received in the 25 years I have been in business a work order. We have very satisfied tenants. We get all sorts of appreciation letters, and I enclose three. One is from a single mother on welfare who hasn't paid some rent for over a year, and she's still a tenant there.

Also, I would like to make a comment about today's article in the Globe and Mail where the tenants complain about exploitation by the landlord, the problems that would arise. I would always say that the 20-80 principle applies to landlords and to the tenants, but the majority of the landlords today cannot charge the maximum rents they're entitled to. The tenants cannot pay. We cannot charge what we're entitled to. It's no use having them there and evicting them. Also, who is exploiting? Our two-bedroom apartments, which are very spacious and wonderful, go for a maximum of $760 a month. In my mother's senior citizens' apartment, the two-bedroom goes for $847 a month.

I think this is all I have to say. I still have one minute, but I'll turn it off. I'm open for questions.

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Mr Grandmaître: Thank you for your presentation. On page 1 of your presentation, "Reducing rents is counterproductive," the present legislation doesn't talk about reducing rents. Can you amplify or give me more --

Ms Zavitzianos: It is my understanding that the fines should be imposed on the landlord in the form of reduction of rents. I don't think that is wise, for the reasons I provided.

Mr Grandmaître: For violations.

On page 2, you say that a round table discussion should take place. We were told by the government that a great deal of consultation took place with tenants and municipalities and landlords, especially tenants and landlords, and that's the best piece of legislation they could come up with.

Ms Zavitzianos: As I have told you, I was on the standards board. The Liberal government set it up. You had representatives from the landlords, the municipalities, the tenants and the province. The province and the municipalities were at loggerheads, and the tenants and the landlords, and you came to some sort of an understanding. It was illuminating to see the consensus and the agreements. We had difficult times. I find when you get submissions from the different parties, the landlords, of course, when any piece of legislation comes out, are afraid they're going to lose their top dollar, their bottom dollar, whatever. For the tenants it's their home and they're afraid to lose their home either for excessive rent increases or living in a place that is not adequately maintained. They have very real fears. So they come and they attack with very unreasonable demands. I think if you put them face to face, sometimes you could get a dialogue with some more meaning.

Mr Grandmaître: You also say that tenants have a great difficulty paying their present rent. Do you believe that by abolishing rent control some landlords will take advantage of the lack of legislation and increase rents by ridiculous amounts to make it more difficult?

Ms Zavitzianos: That they cannot do because there is the market, which doesn't allow you to. But there are a lot of depressed rents and there will be substantial increases there.

Mr Marchese: Thank you, Madam Zavitzianos, for coming. You're to be commended for not having ever received a work order. Obviously, you're one of those landlords who maintains the building well and wants it that way.

Ms Zavitzianos: I think the majority of the landlords have an investment and will do everything they can to preserve their bread and butter.

Mr Marchese: I understand that. We don't hear that from many tenants, so it's nice to know that some of you want to do that, but many tenants obviously have been finding a lot of landlords where that is not the case. It brings me to the point of the elimination of notices of violation of work orders. You're saying, "Please don't do that," where you argue, "Landlords are entitled to a reasonable amount of time to comply with any infraction...." That sounds fair. The problem I guess is where you have a fight between tenants and the landlord and it's endless and it never gets done. What is a reasonable time, do you think?

Ms Zavitzianos: It depends on what it is, because when you have the tenant call the municipality without having informed their superintendent or the management, and they arrive there, if it is a leaky tap, then it's done immediately. If the roof is leaking and it's wintertime, you have to wait for the first sort of thawing day. You have to wait some time. There are things that cannot be done. If they have potholes in the parking lot, it cannot be done in the winter, period.

Mr Marchese: I understand, although for the most part, from what I gather from you, if you notice a problem, you get it fixed, and you probably do it very quickly. You don't seem to be the type of landlord who's going to wait around for a couple of months or a year or whatever it takes to fix a problem. That's my sense of the way you are as a landlord. Not everybody's like that.

Ms Zavitzianos: It depends on what it is.

Mr Marchese: I had a question much similar to the Liberal member's, and you're saying to his question that they won't be able to raise the rents because the market won't allow it. If that is the case, if you're right, why do we want to remove rent controls? Because that's effectively what they're proposing through decontrolling. Why do we remove them then?

Ms Zavitzianos: I don't talk like a landlord, but I don't think it would be politically safe to remove them entirely because the low-income tenant would feel threatened, and I think it's nice to have security. A home is a sacred place. Whether it's real or imaginary, you have to give the occupant some sense of security. It's a very unstable and cruel world.

Mr Hardeman: Good evening. I thank you for coming in and I'm quite impressed with your attachments to your presentation with letters from tenants whom you have served. It seems that you take your job very seriously and do a good job of it. Some of us could take lessons in serving our clients that well.

I also want to point out that the document we're referring to today is a discussion document, to hear what the public thinks of it, and I appreciate the fact that you've brought out a couple of the proposals in it that you have concerns with. I just wanted to question it and get your opinion on whether it's an understanding situation or whether you do really believe it's wrong.

The first one is the issue of the fines being put forward in the form of rent reduction. I don't believe the discussion document proposes to do that. The discussion document is that fines can be imposed and rent reductions could take place for services that were not provided. If that's the case, would you not think that was a fair approach? If the apartment had been rented based on a swimming pool being available, and for six months the swimming pool was not available, would it not be fair that a rent reduction was applied because that service had not been provided?

Ms Zavitzianos: I think that would be reasonable in that respect.

Mr Hardeman: Just to clear that up.

Ms Zavitzianos: But there'd be very few things, services.

Mr Hardeman: The other issue is that of the work orders as opposed to it being an immediate penalty for an infraction. I think the present system takes a long time. If we have an unwilling landlord and a significantly demanding tenant, the process can take a long time to accomplish something that should not take long to do. Part of that is because even after the property standards officer has looked at the problem, they can still do nothing. They can issue the work order and now we have to give a certain length of time for this to be accomplished. If we want to be resistant, of course, the landlord can then take to the final length of that time to do it when it was something very simple.

Would you not think it may be appropriate that a property standards officer, being an impartial third party, would look at it and if it's a serious thing that could be fixed immediately, he should have the right to be able to make him do that so we wouldn't have to go through that long-drawn-out process of work orders?

Ms Zavitzianos: It's not that long, because it depends on what the infraction would be. You get a notice, it can be done in five days. Once, I don't know what happened, some service, we had a notice that we have to put it back in service in 24 hours. It had something to do with -- I can't remember -- the gas, Consumers' Gas, and of course Consumers' wouldn't do it. We had to get -- well, it was done. But, anyway, if it is something serious, you have to do it within hours, and you do it.

The Chair: Thank you, Mr Hardeman. Thank you, Ms Zavitzianos. We appreciate your attendance here this evening and your input into our process.

Our next presenter is Andrea Addario.

Pam McConnell, city councillor? She's not here either.

I guess we will recess until such time as one of the next two presenters arrives, so please don't go too far away.

The committee recessed from 1821 to 1840.

PAM MCCONNELL

The Chair: Our next presenter is Pam McConnell, city councillor for ward 7. Welcome, Ms McConnell. You have 20 minutes to use as you see fit. Any question time you allow would begin with the New Democrats. The floor is yours.

Ms Pam McConnell: If I could ask a couple of members of my community to come and join me at the table, they'll be here to answer some questions, and they're all here. If you'd come up and bring a chair, please.

Members of the committee, I appreciate very much being given the opportunity to speak to you about the provincial government's consultation paper on tenant protection legislation. I, as you have heard, am the city councillor for ward 7 in the city of Toronto, and as you can see, I've brought with me some of my constituents, who are also, as it happens, constituents of the Honourable Al Leach. They are the residents of St James Town, Canada's most dense urban community, which consists of 18 high-rise rental apartments. St James Town has 14 buildings that are private rental and four which are Ontario Housing high-rises. St James Town has a population greater, if you can imagine it, than the town of Lindsay, more than 18,000 residents.

On Monday you received from our mayor, Barbara Hall, the presentation from the city of Toronto on the government's consultation paper. I wholeheartedly endorse the city's position, and as a member of the city's rent control subcommittee and as a representative of these St James Town buildings and constituents as well as many other tenant buildings within my ward, I have been very involved, as you can imagine, in the last year on this issue. Meetings have taken place at city hall and in my community, newsletters written and petitions and postcards collected, and very much debate and work have been done on this matter. And tonight, here we are trying to sum it all up for you in about 10 minutes.

I want to do two things so as to not simply repeat the city of Toronto's earlier presentation.

First, with the help of my friends tonight I want to paint a better picture for you of life in a tenant community under the current tenant protection legislative regime and then ask how anybody could support weakening that legislation. During the question time, I will be asking my friends to answer some of your questions about the real impact for them of having less protection than they have now.

Second, I will pick up on one element of the city's position that needs the urgent attention of this committee and which is critical for St James Town tenants; that is, asking for provincial legislation to give the city the authority to establish and enforce operating performance standards for elevators in apartment buildings.

For some of you, the discussion about rent controls and tenant protection legislation may be a discussion about market forces and less government regulation. Our perspective is grounded in the reality that the majority of the households in the city of Toronto are tenant households, maybe 63%, and in St James Town, 100% of the households are tenant households. So for us, it is a community and its future and how to raise our children that is really at stake here. Seniors who want to live at home as long as possible and have to worry daily about higher rents and extra charges and sometimes no hot water, garbage in the halls and elevators that never seem to come also care about this debate. The apartments are not, for most people in St James Town, just a temporary kind of market choice.

Imagine politicians in this building amending bylaws so that suddenly a community the size of Lindsay is instantly made to feel insecure and depressed about their ability to continue to live in their very own homes. In some buildings in my community, tenants under the current regime are routinely being charged for parking spaces when they don't even have cars. They're being charged illegal charges for utilities such as an air-conditioner or a little apartment-sized freezer. They watch in horror as new landlords suddenly get rid of more than half of the building's cleaning staff and the garbage overflows on every single floor every single weekend because there's nobody to empty the garbage chutes. Rats start patrolling the halls, and perhaps to save on some of the utilities the ventilation is routinely turned off, even in the garbage rooms, even in the bathrooms as well as in the hallways. Hot water is not always available more often than not in some of our buildings. Burned-out lights take forever to be replaced in the hallways and underground garages and elevators are totally unreliable. Fire hoses are never rotated, extinguishers are never checked and, in one building in my ward when I sent in the fire inspectors, 43 out of 47 extinguishers were missing.

It does not follow that this is inevitable. Other buildings of the same age in our community are not being rapidly run down by these kinds of management practices. Other tenants aren't being charged illegally and they are not being served legal papers for evictions on minor lapses and sometimes clerical errors at the drop of a hat.

What is to be done? In Toronto's rental market, to assume that thousands and thousands of households could suddenly leave and move to comparable accommodation owned by a more respectable, responsible landlord at the same rent is laughable, not to mention that they should not be forced from their homes and from their neighbourhood. If the community also has a significant component of recent immigrants, as we do, who may not have the knowledge of our laws and the language proficiency to get the justice they deserve, then things will be even more heart wrenching.

Under the current legislative regime, and with a great deal of effort, tenants can oppose the illegal charges and complain to their municipalities about property standards' violations and try to get rent increases halted until work orders are completed by the landlord. It's not a perfect system and not every tenant knows or achieves their rights or has access to legal help or has the energy to fight every single stratagem of a determined landlord. It can take years for municipalities to pursue negligent landlords on building violations. But we've learned a lot from the infamous West Lodge experience, which I'm sure you've heard about in our city of Toronto, and we try to intervene quicker so that buildings don't deteriorate so fast. We've learned to use the OPRI, or order preventing rent increase components of the rent control legislation.

It is unimaginable to me and to these constituents who sit in front of you from St James Town and from all the other rental buildings in my community that this situation could be made even tougher for tenants: No rent registry to check on previous rents and operating costs to see if the landlord is cheating; no rent controls if I move; rent controls can go up if the municipality work orders aren't completed. If the city does manage to get the work done and puts it on the property tax bill, my rent goes up anyway.

Enough already. In St James Town there isn't much discussion about the market forces or the ideological blinkers that underpin the proposals for these changes. In St James Town the discussions are in English and in Tamil, they are in Tagalog and in Chinese, in Somali and Korean and Spanish and they are talking about all of these things. They know that it will be in St James Town that the new legislation will hit the pavement, so to speak, with very few words and with all the force and unyielding impact of something thrown from the rooftop of one of their 34-storey buildings. Discussions won't be of much use to them then.

But there is one opportunity that is presented to you today in the government's consultations which, with your help, could result in solving a long-standing problem. I speak of the elevators in apartment buildings. Did you know, for example, that a builder is not required to provide an elevator in apartment buildings and that if a landlord has one, the municipality cannot require the elevator to operate at all? The province, to be sure, can inspect an elevator to see if it is safe, but our building inspectors cannot force a landlord to turn it back on or to run it efficiently. Sounds unbelievable, doesn't it?

To grasp what this means in real terms of St James Town, let me seek your indulgence for a moment to give you what I draw as an analogy. I have to take you back again to the city of Lindsay, my device to ensure that this painting of St James Town is really in the proper perspective.

Imagine that the residential streets of Lindsay all have gates at each and every intersection and that these are operated by the push of a button once a vehicle or the pedestrian leaves the home and goes to the corner. Sometimes the gate opens very quickly, sometimes it takes a little while and sometimes, inexplicably, one waits for half an hour or more. When each gate does open, it only stays open long enough for a few of the neighbours at a time to whip through. Sometimes the gate's locked shut and later you find out it's out of order. Sometimes there are municipal officials keeping it locked for half an hour or an hour at a time because some other municipal works truck is going to be passing through and doesn't want to have any obstructions. When you turn around and walk to the other side of the block, there's an even longer lineup and you wait for a long time before your turn comes to leave.

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Some neighbourhoods in Lindsay don't have much trouble with their gates and you find yourself getting kind of defensive. Why are you late for work again? Some days you give up and you're walking your small child to school because the delay is too long and, besides, you don't want to risk her never making it back at lunchtime because of the delays. When should you start worrying after school when she isn't home right away? You might not find her right away if she's stopped at a gate a couple of blocks away. It's hard to arrange to bring your ailing mother over for Sunday dinner; she can't stand waiting too long. You certainly don't send your daughter to the corner store for milk just before dinner or for a package of disposable diapers for the baby when you're running out for the evening.

It's not as if you can pick up and move to another neighbourhood. Even if the rest of the family could cope with the leaving of their friends and their neighbours and their classmates, there aren't really many empty houses in Lindsay, and there's no guarantee that the new neighbourhood won't have the same old gate problems next year that you have this year.

Of course, there's always election time, and you and I both know that you can vote in better politicians and get them to hire more competent staff and put an end to this deterioration of the equipment and the sloppy management practices. After all, the entire community life, even the safety of its residents -- because, after all, gates make no exception for ambulances; people who need ambulances still have to go down gates, or elevators as I'm describing it -- not to mention the entire functioning of the economy in Lindsay is affected. That's exactly the circumstance here.

Unfortunately, the town of St James Town is not a democracy. There are no elected officials who control the staff who maintain and use the gates. Now, I'm an elected official who's almost but not totally helpless to respond when my constituents call me with the gate or the elevator complaints I have just outlined. But you can give me and my staff that I work with at the city of Toronto the power to respond effectively. You can open in effect the gates of the town of Lindsay.

Like the city's bylaw on the provision of heat in rental units, we could establish together some reasonable performance standards to ensure that apartments in the sky have the same access to transportation down to the ground and back up again. We don't need to control the manufacturing of elevators any more than we need to control the manufacturing of furnaces, but we do need to make sure that they are kept in good repair and that they are actually running at a reasonable frequency for the number of people they are required to transport. Our inspectors could then respond to complaints about lengthy delays or non-functioning elevators and require, once and for all, landlords to fix these problems.

Timing is absolutely essential. The provincial government has said that when it tables new tenant legislation it may give municipalities some more powers to enforce the maintenance standards. Elevators have not been mentioned in this paper except by the city of Toronto. A draft bill on this was submitted previously to the Minister of Consumer and Commercial Relations by our city and we have included this in our request and presentation to your committee.

I would ask that the government please include in the bill presented for first reading in the Legislature this particular amendment. Please help the residents of St James Town to enjoy the same freedom of movement and the opportunity to show up to work on time and to go to school on time as the good residents of Lindsay.

I urge the committee to abandon the proposals that are outlined in the tenant protection legislation, New Directions, and instead to work with our tenants and their representatives as well as landlords, to develop a much more comprehensive housing strategy. The lives of 18,000 people in St James Town, not four miles away from here, depend on your decision. Thank you very much.

Mr Marchese: Ms McConnell, thank you very much for your presentation and to the other tenants for coming. I can't imagine a whole community of people having to suffer through such bad management practices. We know that there are good landlords. We heard from one who was just here earlier, Helen Zavitzianos, who's just an excellent person in terms of how she treats her tenants. But from what you describe in this community, that's not the same treatment you're obviously getting. On top of that, you'll soon be dealing with a greater anxiety and that is decontrol of the rents.

Now do you feel that somehow taking away those controls is going to help your community in any way -- any one of you -- or will it add to the anxiety that you're already suffering? You're already suffering many of the problems, having to deal with a landlord who's not responding to the problems you've got, and now you're going to have to face another problem. If you move, your rents are going to be increased somewhere else, so you won't be able to find better accommodation somewhere else. What is your sense of all this?

Ms McConnell: I think what you're seeing are nodding heads here. These are the exact concerns of all of our tenants within St James Town.

Mr Marchese: I wish you luck and I hope this government responds.

Mr Hardeman: Thank you, councillor, for your report. I recognize that the start of the report generally deals with the situation as it exists today in St James Town, the problems residents are having and the problem with lack of maintenance and so forth. I wonder if you could give us some indications other than the better rules or more autonomy for local municipalities to deal with the enforcement of property standards; if there are some things you could recommend that could be done, that need to be changed, to improve the lives of people in St James Town. Looking at this whole package as something beyond just the issue of the rents, but about the living conditions of these people, what could we be doing in this legislation to improve that part of St James Town?

Ms McConnell: I think you could be saving the current legislation that we have that allows tenants to go forward and to get rent abatements when landlords do not adhere to their responsibilities. I think that many of these tenants are just about to go through that process. It's difficult enough to do it as a group. To do it individually, I believe, is impossible. These are the tenant leaders in some of the buildings, and it has been hard enough for them -- hasn't it, for you? -- to even be able to talk to other tenants within their buildings.

I think that rather than try to eliminate some of the protections they have, you need to strengthen those. The abatement issue is a very important issue. The only thing that makes landlords pay attention when they are poor landlords, not good landlords, is when you ring their rent bell and when you say, "Forget it."

Mr Grandmaître: I want to talk about building inspectors. I can recall, and I'm sure Mr Tilson will recall as well, when Bill 120 was introduced building inspectors from Toronto were asking for more power to enforce the maintenance standards bylaw. What would be your backlog in the city of Toronto as far as maintenance standards are concerned?

Ms McConnell: I'm sorry, I don't have that answer for you and I can't wing it off the top of my head. What I could say to you with regard to that is that we continue to have very serious problems in places where landlords don't adhere to the standards. As long as landlords are playing the game fair, then this system works okay. It is when you spend your time with a landlord that is running always around you -- and that's what happened to us at West Lodge. It took us money and effort, full-time inspectors to be in those two buildings time after time after time. So you're looking at two different mechanisms. One is, how's it working if things are going along okay? It's not that bad. How's it working if things are not going okay? It's awful.

The Chair: We appreciate you and your folks coming here tonight and participating in our process.

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ASSOCIATION OF CONDOMINIUM MANAGERS OF ONTARIO

The Chair: Our next presenter is J. Robert Gardiner from the Association of Condominium Managers of Ontario. Welcome, Mr Gardiner. The floor is yours.

Mr Bob Gardiner: My name is Bob Gardiner. I'm a lawyer at the firm of Gardiner, Blumberg. I act primarily for condominium corporations and boards of directors, so I'm here today to speak on behalf of the Association of Condominium Managers of Ontario, the legislative review committee. Thanks for the opportunity to talk about the tenant protection improvements.

The Association of Condominium Managers of Ontario, ACMO, is the only organization in Ontario dealing with condominium property managers' concerns. It has 400 members, of whom 200 are property managers, and about 200 of whom are condominium directors and professionals and building trades representatives. It has established an accreditation program for condominium managers, has various publications and educational seminars, and is currently involved in changes that are proposed to the Condominium Act.

Property managers are on the front line when problems happen in condominium corporations, so they have a concern about the impact of the proposed tenant protection legislation in one particular circumstance. I would just point out that condominium corporations are landlords in some cases for superintendent suites in their buildings or for situations where they lease common-element parking spots or guest suites or lockers and sometimes they also lease out business premises. All of those situations are basically well provided for, and I guess I would say that probably most of the points that are being considered in the white paper would affect condominium corporations in the same way they would affect other landlords and tenants. So we're not here to make specific comments on other parts of the tenant legislation. Our focus is on the issue of conversions.

The reason for that is that on page 10 of the white paper there's a reference to security, tenure and conversions which indicates that it's contemplated that conversions of rental buildings into condominiums or cooperatives would no longer require municipal approvals. That issue in itself is not a concern of ours. I'm sure that you will all deal with that in your wisdom in so far as to whether or not it's appropriate for municipalities to regulate when conversions take place. But we want you to consider the implications of what will happen if you do remove the requirement of municipal approvals of conversions from rental to condominiums, because basically that will likely open up the floodgates of people who would like to make those conversions who've owned buildings and who would now like to change them into condominium buildings. There are various market forces which come to bear which make sense for someone who owns particularly an older building to convert it into a condominium corporation, especially since they're in a much better competitive position than the builder of a new condominium corporation who has to fight their way through more expensive building costs these days, the payment of GST, the Ontario New Home Warranty Plan enrolment requirements and other things of that nature.

Our concern is on behalf of the purchasers of units and on behalf of the condominium corporations that result once a conversion takes place, because we're concerned that there will be insufficient reserve funds for the condominium corporations in conversion situations much of the time, that technical audit reports may not be prepared, that the Ontario new home warranty protection would not apply to conversions, and that disclosure statements wouldn't necessarily inform purchasers about existing building deficiencies and the underfunded reserve funds.

Let me give you an example. Our firm acts for a condominium corporation that is now an owner-directed board of directors; it has taken over from the declarants. A lot of the purchasers have just bought within the last year. There was no disclosure of the nature of the building deficiencies or the underfunded reserve fund. There was no reserve fund study conducted. There was no technical audit study done by the engineers to find out what the building deficiencies were. There was no Ontario New Home Warranty Plan protection.

A number of purchasers bought their units, and, like most people who buy in condominiums, they had no way of being able to tell what was wrong in the building; it's very hard for an individual to ever find that out. When the new board of directors was appointed, they hired some engineers and they found out $750,000 worth of repairs were required for the roof and the balconies. So people who had just bought this year or within the last several months now find that they have to fork out $14,000 to $18,000 per unit to pay for these kinds of repairs.

Our first concern I'd focus on, then, would be the reserve fund. Under section 36 of the Condominium Act, at the present time condominium corporations are required to establish a reserve fund which provides for the major repair and replacement of common elements, including the expected costs, when components of the common elements break down, of repairing those. Of course, it's the unit purchasers who have to pay for those repairs by their contributions to the reserve fund. The problem is that there's nothing set out in the present Condominium Act that says that declarants have to fund that reserve fund properly; that's an obligation of the condominium corporation and its owners.

In this situation, you have a case where the owner of an existing rental building who converts to a condominium doesn't have to set up a reserve fund properly. He probably has aged rental stock and in many cases may not have kept it up to a good quality of standard of repair and may be tempted to simply slap a coat of paint over the rust to flog units and make money at the best price. That won't happen in every case, but it's likely to happen in various cases. In the past, where municipal approvals were required in situations where there had been sort of a gate as to how many conversions were going through, that situation was not as bad as it would be if those approvals are removed.

The issue we have is that we're not trying to tell you to stop the removal of municipal approvals; if you think that's a wise thing to do, go ahead and do it. We're just saying that if you do that, then the basic problem needs to be addressed that in conversion situations certain things should be done.

The first of our recommendations, at the top of page 4 of our brief in bold type, says that in the case of a conversion, the Condominium Act should be amended to require conversion declarants to obtain a reserve fund study by a prescribed person; that could be an independent engineer or an architect. The study should be on behalf of the condominium corporation, and the reserve fund study should be done before the condominium corporation is registered.

Our second recommendation would be that conversion declarants should be required to ensure sufficient funds are currently on hand in the reserve fund. That could either be their own contributions or they could be obtaining that from purchasers. But when people buy into a condominium corporation, they should know what they're buying into, they should have some idea of what kind of repairs they'll have to do and what they'll have to fund out of the reserve fund. So we're saying that when someone does a conversion, they should at least have to make sure sufficient reserve funds are on hand.

Our third recommendation has to do with the technical audit reports. There are currently proposals which are being considered to amend the Condominium Act to require technical audit reports in the first year of a condominium corporation. That's an engineered study to find out what the construction deficiencies are in a high-rise building or a townhouse. That would often be used as a basis for a claim to the Ontario New Home Warranty Plan. It's something that is not currently a requirement of the Condominium Act, but we're recommending that it should be. Particularly in the case of a conversion, we're recommending that the Condominium Act should be amended to require conversion declarants to obtain a technical audit report on behalf of the condominium corporation, prepared by a prescribed person. It should disclose all of the building deficiencies, not just those limited by ONHWP, and it should be done before the condominium corporation is registered. Also, the conversion declarant should be obligated to complete those repairs prior to selling the unit. That way, the purchaser of a conversion building is in the type of situation that would be similar to buying a newer building if the building was built properly.

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Our fourth recommendation would deal with the Ontario New Home Warranty Plan. At the present time, that doesn't cover a conversion situation. The limited warranty that a purchaser can get under the Ontario New Home Warranty Plan, while not ideal, at least provides some protection to other residential forms of housing, but not to conversion. We understand it's presently under consideration to change that requirement so that ONHWP will provide warranties. We are certainly urging that the ONHWP warranties and the compensation fund that they have, the registration enrolment requirements in ONHWP and the technical audit requirements should be made applicable to conversion buildings, and the ONHWP act should be revised accordingly.

Finally, with regard to disclosure statements, as you know, in the case of a purchaser of a condominium unit, they're entitled to receive a disclosure statement at the present time from the vendor of condominium units. But there's nothing that requires a conversion vendor to disclose what building deficiencies there are or the underfunding of the reserve fund subject to a very ethereal possible claim that there's a major issue that's not being disclosed.

In essence, section 52 of the Condominium Act as it now exists should be improved to require either the disclosure statement or the first-year budget to disclose to purchasers the kind of building deficiencies that are revealed by the technical audit study and whether those building deficiencies have been repaired, whether there's a reserve fund study completed, whether the reserve fund is adequate to provide for the repairs and whether the ONHWP protection is inapplicable. So we're asking for those types of provisions to be put in the Condominium Act in a highlighted section of the disclosure statement in the case of a conversion.

Basically, those are our recommendations. We appreciate that there is progress hopefully being made in changing the Condominium Act at the present time. We've had very good opportunities and very good dialogue with the Ministry of Consumer and Commercial Relations, but we had not ourselves twigged to this conversion issue as well as we might have until we began considering it in this context.

We realize that the context here is simply to decide whether or not municipal approvals should be allowed to continue as requirements or whether they should be removed, and that's what you have on the table. From our point of view, we're simply saying that if you do cease requiring municipal approvals, you will open the floodgates to conversions. There will be an awful lot of purchasers who will not be well protected, and they will suffer financially because they will not be able to compare apples to apples when they do a purchase of a conversion building compared to an existing building or a building that had gone through the ONHWP process and had established a reserve fund.

Mr Jim Flaherty (Durham Centre): Thank you, Mr Gardiner. It's nice to see you again, because, as you know, I'm responsible for our condominium reform in Ontario, and you and I and the Association of Condominium Managers of Ontario have met many times over the past seven or eight months. I appreciate in particular your raising the issue concerning conversions, because it is a fact of life in the development industry and the conversion industry that is becoming more prevalent.

I appreciate also that a number of the amendments that you're proposing relate to the Condominium Act. As you know, with that act we are at the stage now of revising the working draft on the basis of submissions of organizations such as the Association of Condominium Managers of Ontario, which you represent. In particular, I think we need to take into consideration the specific issues of technical audits or performance studies and reserve fund studies, which you have raised -- with respect to reserve fund studies, so that we make sure, concerning the used housing stock, that purchasers or renters are not put in a position of surprise when they purchase a converted dwelling.

Thank you for your assistance on this point and for your continued assistance and the help of the Association of Condominium Managers of Ontario in our efforts to modernize and reform the Condominium Act.

Mr Gardiner: We very much appreciate the relationship we've had with the ministry and its staff working our way through a series of meetings on the Condominium Act. We must say that we're encouraged by many of the provisions that might come forward in that regard. I suppose it's become this forum that has actually twigged us to the necessity to think harder on behalf of consumers with respect to the unique problems presented by conversions. There are some refinements here that deserve fresh consideration, with respect to both the Condominium Act and the ONHWP act.

Mr Curling: I can tell you that you're way ahead of us in the opposition because you see draft legislation that is already on the road and this is a consultation process. I'll tell you, in the cellars of this place they're drafting all of these things already while we're having discussion.

However, I listened to your presentation. I just hope that you're mindful of the fact that when we have conversion to condominiums, it's a matter of the depletion of any affordable housing going in one direction. That's why people object to this conversion matter, because this is rental stock that is going out into condominiums.

It's rather interesting too, and I'm sure you're quite aware of the fact, that, as you said -- and you pointed that out -- "I hope that they bring the thing up to standard so they can sell it those who can buy." In the meantime, many of the non-profit and many of the government projects are being terribly neglected, awfully neglected. The government itself has been a terrible landlord, not maintaining those buildings up to a certain standard, and now bringing it up to a standard so it can sell it to those who can afford it. Those who can't afford it, who can't buy the condominiums, will be subjected to the depleted stock, will have to find somewhere else.

The objection I have is that when those affordable stocks are gone, I wonder where those people go. On the other hand, it's really pathetic that as we dry up the bottom end, the landlords and developers will never build at the lower end. I'm not at all shocked, but that's the prediction. I'm glad that you're trying to protect those who'd like to buy, but in the meantime, as you meet with the folks who will draft the legislation, ask them to protect those tenants who can't buy.

Mr Marchese: Mr Gardiner, as a first remark, I'm very happy that you and Mr Flaherty are working very closely together and that things are coming along just fine.

Second, if this government is mad enough to go through with this proposal, then I hope it will do exactly what you propose, because you've raised some very good points with the reserve fund and the technical audit suggestion.

What you have indicated is what many others are indicating, and that is that if they go through with the elimination of the Ontario rental protection act, we're likely to see many conversions. You're confirming that with your presentation today, it seems. We've been telling them that when happens we're taking out of the market a great deal of rental accommodation.

Do you think other landlords should have a reserve fund to deal with capital projects in the same way you have?

Mr Gardiner: I think it would be a wise thing for landlords to do in rental situations. I must say that in condominium situations there are many unit owners who get very upset by having to have a reserve fund in a condominium, and some property managers do as well. But on the other hand, at least it provides a way of funding repairs that are often humongous problems.

I'm not qualified to comment about how bad the state of repair is in the rental area other than what I suspect, that it's God-awful in many cases. As a concept of requiring anyone who owns a high-rise building where people are living, it seems to me that rental owners should be thinking about protecting the building's future in that way. That's not something I'm speaking specifically to today, but I can see that it's a viable concept.

The Chair: Thank you very much, Mr Gardiner. We appreciate your input into our process. Have a good evening.

1920

O'SHANTER DEVELOPMENT CO LTD

The Chair: Our next presenter is Jonathan Krehm from O'Shanter Development Co Ltd. Good evening, Mr Krehm.

Mr Jonathan Krehm: Good evening and thank you for the opportunity to appear here tonight. I'm one of the owners of the O'Shanter Development Co Ltd. We currently manage some 1,800 apartments in the Metro Toronto area. We have been in residential property management for over 30 years. This is -- I've lost track -- at least the third bit of legislation. I'm getting quite used to coming to this room. In our organization I have personally overseen our rent review departments and conducted well over 100 rent review hearings under four different acts. So I'm very familiar with how the various bits of legislation have been piled on each other and the way the system has worked and does work.

There has been a pattern to the legislative and regulatory changes since rent controls were introduced in 1975. Rent regulation in the past 21 years has operated on the assumption that the industry was highly profitable. Reality has been otherwise for a long time. The following studies generated by the Ontario government looked carefully at the financial state of our industry, and I'd like to direct Mr Marchese in particular to these studies because he was questioning Mr Andrade this afternoon about what proof did we have about the financial state of the industry.

The first bit of proof we had was published in 1982 by the Ministry of Municipal Affairs and Housing. It was authored by Pat Laverty and called The Impact of Rent Review on Rental Housing in Ontario. The Thom commission research study 7, prepared by Campbell, Sharp, titled Survey of Financial Performance of Landlords, was published in October 1984. In August 1989, Royal LePage's real estate consulting services prepared, for the Ministry of Housing rent review policy branch, Financial Trends and Other Characteristics of Ontario's Residential Rental Stock.

I would like to run through the conclusions of these three reports. If anything, the financial state of this industry, as most industries in this country, isn't better in 1996 than it was in 1989. We don't have time for that, but I have included with my submission an appendix which runs through the major conclusions of these three reports on the financial viability of the rental housing industry in Ontario since the early 1970s, and the conclusions were the same in all three reports. This industry has been stripped of its reserves and its capital by rent regulation. It operates with returns that are far below what risk-free returns are. If you had put your money into government bonds in the 1970s, you not only would have had a much simpler and better sleep time, you would have had better returns. That is all three reports inclusive.

The real problem we have is that every rent control regime starts from the assumption that this industry is taking in big gobs of money and that keeping controls on for the needy, supposedly to help those in social need, is a possibility. What we have done is stripped the industry of capital for 20 years. The rental housing stock is in dire condition. Ten years ago the estimates were $10 billion, what was needed to fix it up. They are far higher than that now. That was the estimate of a long time ago. The unfortunate thing with the present legislation, although it's the first time there have been some areas of suggested improvement, is that it buys into the same assumptions that previous legislation did, that this industry needs to be policed and controlled in its revenues and that there will somehow be some benefit to the needy in the province by restricting the revenues of this industry.

I don't have a lot of time so I'd like to go into some of the specific proposals in the discussion paper; not all of them because they've been very well covered by many other briefs.

On the stated proposals for allowing greater-than-guideline increases for capital expenditures, I think the cap should be higher than 4%. I would suggest 6% and that the carry-forward provisions be unlimited.

Whatever cap you put on it, you're going to be trapping some landlord and some rental housing stock in terrible shape. The worse off it is, the more money that needs to be spent, you're going to be condemning it to demolition or just to running into the ground. There are all sorts of examples. We're not at the Bronx yet, but you can drive around Toronto now and see the boarded-up apartment buildings that have already occurred because of the controls of the last 21 years.

The continuing ability of tenants to apply to reduce rents continues the most draconian feature of the anti-industry provisions brought in by the previous government. I was shocked to see that these provisions were being left in the government proposal. I suggest rent reduction applications should be limited to property tax decreases and withdrawal of services. You're not going to get people to spend money they don't have to fix up their buildings by reducing their rents and giving them less money. It doesn't make sense and it never has.

I also think the proposals to allow negotiated rents between tenant and landlord are good, but I don't understand why there's a cap on it. I don't understand why two parties can't come to agreement. If there was to be, as in much consumer protection legislation, a cool-off time whereby either party could get out of it in 72 hours or a week, whatever you want it, that's fine too. Give people the right to change their mind in a brief period of time, to reconsider it and to get advice.

Maximum rents should stay in place and continue to increase by the guideline. It does not need the rent registry. We all have the information; we can all do the arithmetic.

Another issue for discussion was maintenance. Dealing in this section of the paper, there was a question suggested of whether eligibility requirements should be required for capital expenditures. I say not. I own my building. Most of the money I have to spend on it is to keep it up and modernize it in terms of building code standards, but when I want to improve the building I'd like to have some of the rights of a property owner.

With the proposals on maintenance there has been continuing a police mentality, that if we give building inspectors more authority to police building owners, somehow we will end all problems in rental housing stock. I operated 500 units in Calgary for some eight years. The last building was actually -- and I'll get to that later on if I have time -- converted to condominiums. We in our property saw a building inspector three times in eight years on 500 suites.

In Calgary, interestingly enough, the property taxes are not quite one third, about 40%, of the level that they are in Metropolitan Toronto. It might have to do with what sort of municipal services are there. The rental housing stock in Calgary is in twice as good condition as that in Metropolitan Toronto. Although they have a thin market, they have supply being built. People will build in that market because it's a free market. When you had 15 private sector units being built in Metropolitan Toronto last year, that's an indication the industry is already dead. If you want to revive it, get rid of what's killed it, which is these controls.

1930

If you continue along the rights of turning property violations into quasi-criminal offences, there has to be a full right of appeal given to people, property owners, to be able to have a right of appeal. In municipalities where their housing standard bylaw is under the Planning Act, they have that by law. In the city of Toronto, where it's governed by the City of Toronto Act, that is not the case. The city of Toronto maintains that under certain kinds of notice -- they send them by registered mail -- there's no right of appeal for a work order. That should be eliminated. There should be a right of appeal if you're going to allow people draconian provisions in terms of policing.

I would then get on to what I think is the most positive aspect of the legislative package, which is the repeal of the Rental Housing Protection Act. I think the last deputant's presence here is an indication that people are worried about the competition of low-cost, affordable home ownership housing. I also agree heartily with the last deputant's suggestion that there should be proper reserve funds and studies on any conversion.

As I mentioned earlier, I was involved in a condominium conversion in Calgary. It was a 90-suite project. It was 15 years old. It was sold out over a year, exclusively for home ownership, as there was a rather brisk market in condo conversions in Calgary and Edmonton in the mid-1990s. There have not been drastic rent increases; the market absorbed it. There was new construction as a result, and it gave an opportunity for people to buy their homes at a level that wouldn't be available otherwise, and there was substantial refurbishment of that housing stock. When we converted 90 units in Calgary, we spent on physical improvements just inside the units over $15,000 per suite. They were turned into essentially brand-new product, and it was cheaper than having new construction.

There is one problem with the government's proposal. The stated intention is wonderful. It says, "Demolitions, major renovations, and conversions of rental buildings to condominiums or cooperatives will no longer require municipal approval." Unfortunately, if you just repeal the Rental Housing Protection Act, you have not lived up to this policy. If the government repeals the Rental Housing Protection Act, municipal approvals will still be required under section 52 of the Condominium Act, which requires a condominium description to be put through the same planning process as a plan of subdivision under the Planning Act.

Generally, municipalities approve plans of subdivision under the Planning Act, regardless of who has the approval function. Subsection 51(24), which sets out the criteria for draft plan approval, includes obligations to consider whether the description is premature or in the public interest or if it conforms to an official plan. Municipalities could thwart conversion using these subsections. Section 51(24) of the Planning Act gives municipalities authority to turn down applications.

I suggest that conversions of existing rental buildings be exempted from section 50(2) of the Condominium Act. Without this exemption, the proposed legislation will be dysfunctional. Condominium conversion could bring the refurbishment of a portion of Ontario's rental housing stock. Conversions would provide the least expensive possible form of home ownership in a given market. They provide employment for trades and help stimulate the economy. These projects need much less lead time to get started than new construction projects.

We support majority tenant approval being necessary for conversions, with the caveat that once proper notice provisions have been met, a majority is defined as being a majority of respondents, just as in any election in this country. The tenure for non-purchasing tenants should be guaranteed, and I would suggest a period of three years to ensure that tenants are not displaced against their will.

This legislative package is very disappointing. It preserves intact much of the regulatory framework of the previous regime. There are on the regulatory side minor improvements, including the vacancy decontrol-recontrol proposal. The most positive part of it is the repeal of the RHPA, but I must say, for the government of free enterprise, I was a little disappointed.

Anyway, thank you very much for the opportunity to be here.

Mr Grandmaître: I agree with you that most of the high-rise buildings were built in the 1960s and the 1970s. How come these same buildings -- and you will agree with me that being in housing today is a business, a big business.

Mr Krehm: It is a business, yes.

Mr Grandmaître: Definitely. How come these same buildings today are in need of $10 billion of repairs? Is it bad management by landlords?

Mr Krehm: The biggest reason is the suppression of rents and values due to rent regulation. By the way, if one took the 1960s single-family housing stock or the office building stock, there would be a substantial amount of refurbishment needed in that sort of building stock.

Mr Grandmaître: No, I'm talking about landlords.

Mr Krehm: The difference is, we don't have the ability to finance it. We can't pay for improvements.

Mr Grandmaître: After 25 years, this building should be paid off. It should be paid off, or else it's bad management.

Mr Krehm: Again, this attitude and this sort of thing -- you've been regulating this province, you squandered $10 billion on non-profit housing programs at 40% greater than the cost of building it according to CMHC, and you still have a housing crisis. When are you going to learn that it doesn't work?

Mr Grandmaître: I'll tell you, sir --

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

Mr Grandmaître: I'm a landlord. I know.

Mr Krehm: I've heard it for 15 years. I'm sick of it, quite frankly.

Mr Grandmaître: But you've never understood.

Mr Marchese: Mr Krehm, do you support having a reserve fund for rental properties?

Mr Krehm: Where are we going to get the money? Are we going to be able to raise it through rents? Sure. If we can raise it through rents, absolutely. No problem. Let us have it like there is --

Mr Marchese: Mr Krehm, you were supporting the idea of a reserve fund for the conversions. You said that.

Mr Krehm: Absolutely.

Mr Marchese: But in terms of a reserve fund for regular rental properties --

Mr Krehm: Absolutely, if we can raise it from the revenues, the only place it can come from. If there is going to be a toll put on rents to put into reserve funds, great. No problem.

Mr Marchese: All right, so you're saying that some people think this business is highly profitable and that's a mistake. Is it profitable, though?

Mr Krehm: When you say it's profitable, please refer to the literature.

Mr Marchese: You've asked me to refer to it. We have only a few seconds. I'm following your report. You said here that many assume that the industry is highly profitable, and they're wrong.

Mr Krehm: Let's quote --

Mr Marchese: But are you doing okay?

Mr Krehm: Let's see what Royal Lepage said. "As outlined above, profitability was already declined at the date" --

Mr Marchese: Mr Krehm, listen. We don't have the time.

Mr Krehm: -- "of the implication of the legislation."

Mr Marchese: Listen to me, Mr Krehm.

Mr Krehm: "The introduction of rent review legislation's appearance is" --

Mr Marchese: We don't have time.

Mr Krehm: We can go on ad absurdum with this.

Mr Marchese: Let me just -- are you doing okay?

The Chair: Thank you, Mr Marchese.

Mr Krehm: Am I doing okay?

Mr Marchese: Yes.

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

Mr Krehm: Am I in business? I'm still in business, yes.

Interjection.

Mr Krehm: That's your definition, Mr Marchese, not mine.

Mr Wettlaufer: Mr Marchese, I've got the floor.

The Chair: Mr Wettlaufer has the floor.

Mr Wettlaufer: Mr Krehm, I'd like to follow up something that Mr Grandmaître posed to you. That relates to the 25-year ownership period, and why isn't the building paid off. The members of the opposition parties keep referring to the amount of time that tenants move, but nobody seems to attach to the number of times a building might change hands over that 25-year period. Could it change, on average, every five to 10 years?

Mr Krehm: Quite possibly, yes. That's quite possible. Again, Mr Grandmaître is sitting there saying that's flipping --

Mr Curling: You said it.

Mr Krehm: -- and that there's something evil with selling buildings. Again, there's been an attitude about this industry that doesn't apply to other sorts of property in this society. We just want to be treated like everyone else, Mr Grandmaître.

The Chair: Thank you, Mr Krehm, for waking us up. We appreciate your presentation tonight.

1940

TORONTO MAYOR'S COMMITTEE ON AGING

The Chair: The next group is the Toronto Mayor's Committee on Aging, represented by Lois Neely, the chair; John Ravenshad, the chair of the housing work group; and Margaret Bryce, the coordinator. Welcome to our committee. The floor is yours.

Ms Lois Neely: Thank you, honourable members. You'll notice I'm wearing the new Toronto mayor's committee T-shirt with our new slogan: "Not over the hill; still climbing." We hope that's what most seniors are still doing, still climbing, but unfortunately our incomes are not. They're fixed. In fact for many seniors they're tumbling backwards downhill very fast. The low interest rates are great for the housing market, but for seniors on a fixed income, they're just taking the butter off the bread.

The Chair: Excuse me. Your voice will pick up a lot better if you --

Ms Neely: I'll sit down now. I wanted you to see this super T-shirt. We let the men pick out the colour, incidentally. We had a contest and this was the winning slogan.

We have no way to change our fixed incomes. All around, we're being told to stay out of the job market. It's because of our extremely constricted financial position that we appeal to you tonight to consider our very special but very real housing needs.

Let me just say that I am a senior, born in Toronto's east end in 1925. That makes me 71. I've contributed to this country's manpower by producing four children and 12" grandchildren. My four children are all working and paying taxes in Ontario. I've lived all my life in or near Toronto. In 1960, when I was just a kid, we turned our Veterans' Land Act home into a nursing home to care for seniors who had nowhere else to go. Later we incorporated as non-profit and built a new 75-bed nursing home. For 20 years I was administrator. I say all this to indicate that the concerns of seniors have been with me for a long time.

Over the years I've been a homeowner, a landlord and, for the past 20 years, a tenant. Ten years ago I led the fight in our building against a 33% increase of rent, and we won. The landlord got only 8%. But I soon learned about harassment. This isn't in your text; this is the preamble. Our landlord was very angry and he used all the tricks in the book till finally I caved in. I thought I was a pretty strong person, but he reduced me to a basket case and I left. Now I'm a tenant in a superb building at Yonge and Davenport, where there are also nine floors under the retirement care home legislation. Some of the units are geared to income. All this to say I've been through the mill.

You have before you the text now of the Toronto mayor's committee, what they'd like me to say to you. Let me just highlight it for you.

The Toronto Mayor's Committee on Aging advises Toronto city council on issues which affect seniors in the city of Toronto. We're part of the city of Toronto; we support the position on tenant protection adopted by the city of Toronto which was presented to you on Monday by Mayor Hall and Councillor Gardner. We're grateful that you've also given us a time slot to talk particularly about seniors and the impact of the proposed legislation on seniors.

Many people believe that seniors are well-off and that they all own their own homes. This is not true. About 95% of Ontario's seniors have annual incomes below $36,000. Less than 5% can be said to be well-off. In the city of Toronto, seniors are much like other people. About one half are renters, one half are homeowners. Senior tenants tend to be less well-off than seniors who own their own homes. In the greater Toronto area, more than 51,000 senior households, or 55% of seniors in rented accommodation, had an annual household income in 1990 of less than $20,000. That's their household income. Seniors' incomes are fixed and seniors rarely have any hope of increasing their incomes. There's no way they can accommodate their budgets to sudden increases.

Since 1975, under rent control, seniors have had reasonable security of tenure and peace of mind that they could stay in their apartments as long as they wished. That peace of mind is about to be shattered. We firmly believe that many seniors will not be able to afford the allowable increases proposed in your discussion paper and will be forced to look for a new place to live, but they won't be able to compete in the private marketplace. In the GTA, there are just not enough low-cost apartments to go around. The consultation paper proposes to end rent control in order to encourage the private market to provide new rental housing. We don't think it's prudent or fair to count on the private sector to provide the housing stock for low-income people. They're not in a position to provide housing where there's no reasonable chance of profit.

Many low-income seniors now live in rental housing provided by non-profit organizations and municipalities especially for seniors. The non-profit program has been a boon to seniors -- it really works -- but there's a long waiting list for subsidized units. About 6,000 seniors in Metropolitan Toronto are on the waiting list of the seniors' central housing registry for subsidized housing. We're concerned that they will be waiting forever and never get suitable affordable housing. We're therefore asking the government to reinstate the non-profit program in order to provide housing for needy seniors.

We're concerned about the proposed cancellation of the Rental Housing Protection Act. We believe that many older apartment buildings and retirement homes will be converted to condominiums and the tenants evicted. Again, seniors will have a lot of trouble finding new apartments which they can afford. They'll have to compete with other low-income tenants for the very few apartments which are vacant, now less than 1% in Metropolitan Toronto.

Seniors who continue to occupy the same units will continue to be covered by rent control, you say. But we believe seniors occupying units covered by rent control will receive less service than new tenants who are paying more rent. We're worried that seniors will be vulnerable to harassment, and I remind you I've been there. They can be intimidated during the day when few people are around. Many seniors will not have the energy or the resources to defend themselves and will simply choose to move out. But where will they go?

I would like now to turn to the other issues of special concern to seniors, the provisions related to residences which provide services which are called care homes in the legislation. The presentation from the Advocacy Centre for the Elderly deals most competently with these issues. We support their brief in its entirety.

The consultation paper proposes that service providers be allowed to transfer residents of care homes who need more service to some other facility. We recognize that people who refuse service or who need more service than can be provided pose a challenge to landlords and service providers. This is a problem to all landlords, not just the operators of care homes. However, there is no such thing as a transfer.

Since 1994 admissions to nursing homes and homes for the aged have been controlled by the placement coordination service in each region. In Metropolitan Toronto there are about 3,500 people waiting for a bed in a long-term-care facility. Even landlords who own both a care home and a nursing home are not able to effect a transfer. They are not in charge of the admission process. Seniors should not be forced to move to a long-term-care facility without their consent or the consent of their substitute decision-maker. It must be recognized that the proposed transfer is a euphemism for eviction.

Operators of care homes have asked for a fast-track eviction procedure. We're concerned that the procedure could be used to evict people who complain about the service or who are otherwise seen as troublesome. We agree with ACE that the procedure should be available only in congregate housing where space is shared and where the person poses a danger to the health and safety of other residents.

We therefore ask you to carefully consider the impact of the proposed legislation on the lives of Toronto's and Ontario's seniors. We would like to think this government believes that our seniors, who have built and served this country so well, are now in their later years entitled to security and peace of mind. I thank you.

The Chair: Thank you very much. We've got about four minutes per caucus left for questions, beginning with Mr Marchese.

Mr Marchese: Thank you very much for coming again, as you often do on many matters of interest to the organization. You've highlighted one concern that the advocacy centre as well has highlighted, and that is you just can't force people out without their consent. None of the members on the other side has commented on that and I'm not sure the staff is qualified necessarily to speak on that particular issue, but it would be good for staff or one of the members to speak to that. I think you and the centre have raised a very good point about that.

You're not the only ones who have spoken about the Rental Housing Protection Act. Many are worried about the implications of that. In fact, a representative of condominiums is saying he was concerned that many of the buildings would be converted to condominiums and he wanted some protections around that.

Ms Neely: That's right. Seniors don't have the bucks to go and buy a condo.

Mr Marchese: And that's another matter. Exactly. So we're very concerned that we would be losing affordable rental stock once that is out of the way. Most submissions have stated the same concern.

You've also talked about asking the government to reinstate the non-profit program. That's just a dream. This government is not interested in doing that.

1950

Ms Neely: Hey, anything's possible.

Mr Marchese: I'm not sure.

Ms Neely: We wouldn't be here if we didn't think so.

Mr Marchese: I'm just not sure. Peel Non-Profit came and they talked about the fact that even they recognize that governments have to be there to provide that kind of housing because the private sector simply will not build. They know that.

Ms Neely: Charitable does a darned good job of it, if you'd let them have a go at it again -- charitable non-profit.

Mr Marchese: We need to change governments for that, I think.

Ms Neely: No, we don't.

Mr Marchese: You've raised another point about seniors and fears, anxieties that they have around this, and many have come in front of this committee worried about what it means to decontrol. They have talked about being on fixed incomes, but I'm not sure -- government members have not responded to this. They never really respond to that fear, and I hope they will. But I believe it's a real fear. Most tenants are very poor. A third of them earn below $23,000. Many of them are seniors, obviously, and many are not; they're just working poor. What happens to them? They don't talk about that.

There are implications -- and they haven't done any studies to tell us that this is not a problem, that we shouldn't worry. They have no study. So our perspective is it's going to be a real concern because many of you will be hit with a rental increase. Is that not your feeling?

Ms Neely: I think we've laid that out in our paper.

Mr Marchese: Do you think that by getting rid of rent control somehow the private sector is going to get out there and build?

Ms Neely: We made that point too. We're afraid it's not going to happen. We're scared, sure.

Mr Marchese: So why are they, do you think, introducing this decontrol kind of proposal?

Ms Neely: I don't pretend to think with the government. We're here to do our job and they have some intelligent people who put it together and this is an area that we're afraid of, that's all. I think we've made our point.

Ms Bassett: Thanks, Ms Neely, for your presentation. I'm interested, so perhaps you can clear it up, to know how often on average seniors move from apartments.

Ms Neely: Not very often. They dig in. You know that.

Ms Bassett: That's what I'd heard, but it was rumour and I hadn't had time to check it. If they don't move, we could remove some of the fear from them because the rent will not go up.

Ms Neely: Except the harassment there that we brought in because they are paying less rent than newcomers. If there's a way to turf these people out, the landlord and their flunkies will do everything they can to get them out. I've experienced it.

Ms Bassett: Of course, as you mentioned in your presentation, you said you've been through the mill and you knew that, so it's already going on, and I've seen it in my riding.

Ms Neely: That's right. I've been reduced to a basket case by harassment from a landlord.

Ms Bassett: You don't look like a basket case.

Ms Neely: I was five years ago.

Ms Bassett: Anyway, this government is really the first government to address the anti-harassment protection for tenants, and we believe, with a firm policy, that we can be very harsh and correct the problem with derelict, if you'd say that, landlords.

Ms Neely: I think you can do it with younger people, but older people are fearful. We've lived under authority. They're vulnerable. They're afraid that if they get attacked they'll have nowhere to turn. A lot of seniors are totally alone in the world. They don't have a family, they don't have friends, and so they will not fight. You get a bunch out here in a body that sounds like grey power, but individually, living alone in an apartment, they will not. They can't handle it. It's a physical part of aging.

Ms Bassett: All right. That's a good point.

Mrs Ross: I guess the important point to make here is that it is a discussion paper, there's no legislation yet --

Ms Neely: Right.

Mrs Ross: -- and we're interested in hearing some of the points. I'm a little confused because I'm trying to understand the issue as best I can. A couple of presenters before you raised the issue about oh, all kinds of things. I couldn't even imagine living in these types of situations where ventilation was turned off, garbage wasn't picked up, taps were turned off. You said yourself you experienced some --

Ms Neely: Bad times.

Mrs Ross: -- situations that you wouldn't want to repeat again. Even with all that happening, why do you think that what's there is good? You've been harassed, you've had problems before even with rent control in place. Don't you feel that some changes need to be made to make things better for tenants?

Ms Neely: If there's a way to do it, but I don't think taking off rent control is the way to do it. We'll always have human nature which will peck on the lower order if they can to get more money out of the deal, and I don't think you can legislate that change. This was an individual thing. I got harassed because I made trouble. If I'd laid quiet like everybody else in that apartment -- they didn't get harassed, I did, because I cost the landlord a lot of money.

Mrs Ross: A lot of people have come here and said that builders won't build affordable housing. Let me just put something before you and get your opinion on this. If builders build an apartment that is a luxury apartment, somebody will move into that, somebody who is able to afford that, which means they'll move from an apartment into that one. That apartment then becomes available and somebody in another lower income will move into that one and so on down the line. So even though they're not building what you would term as affordable housing for the poor people, somewhere down the line somebody's going to vacate an apartment. Do you see what I'm saying?

Ms Neely: Yes, I hear what you're saying, but I don't think we're going to live that long.

Mr Curling: An excellent point. I think if it was said more often, the government would get the picture, that trickle-down, voodoo economics -- some people won't hang around for 60 or 80 years. Even with that, it won't happen, because the people who are building are building at the top end of the market and you've got to wait until they drive that end down somehow.

Ms Neely: All we know is we've got 6,000 seniors waiting for affordable housing in the city of Toronto.

Mr Curling: The word that comes to mind now when you see a discussion paper like this, as they put it, and the legislation which is now being drafted inside the basements of some places right now as we speak, is fear. The seniors are fearful. They live in fear where they are. Would that be a proper word for us to say, that seniors are living in fear?

Ms Neely: They're not living in fear now, but we're living in fear of what might happen when the lid goes off. All we can say is, I believe we have competent government. I believe in government by elected representatives. I have confidence that you will do what's right, and we ask you to consider these proposals and worries and concerns that we're putting before you tonight.

Mr Curling: If I may just point out a couple of things in watching the pattern of this government, first, to begin with, we saw the reduction of allowance to some of the most vulnerable people by 22% in their income. We saw also the cancellation of non-profit housing that was serving people who are in greater need of affordable housing. About 385 projects were cancelled right off the bat. They say it's a discussion paper, but we know they're going to convert all of the non-profit housing or convert rental units into condominiums for those who can buy. Therefore the affordable rental stocks will be gone. We also hear that the minister is proposing to sell off some of the non-profit housing. Therefore that's the pattern they're going. Now they're saying to all those who are living in those rental units: "If you should ever move, if you dare move, that rent within the building that you're in will go right up. So you'll be going into another unit with a high rent."

Do you still have confidence? I know your presentation was excellent. With your presentation, do you feel that the government will listen? I ask one other thing: Would you invite them -- all of us -- to visit many of the projects out there? We're talking about sitting in this nice little room here. If they could visit West Lodge, if they could visit some of the seniors' homes, maybe they could have an understanding of what people are living in and how they live.

Ms Neely: Sure. I think you should come and visit where I live. I live at Fellowship Towers, which has nine floors of retirement care and six floors of apartments. It's a great place to live. It's so nice and safe.

Again, I really feel that governments are missing the boat if they don't promote the charitables to get into the business of housing. They'd put money into it; they'd put energy in it. It's a win-win situation. In the city of London, I understand they've turned some of the city housing over to the Pentecostal Assemblies to run, because they do such an efficient job. Look at it, that's all I'm saying. We're not saying scrap everything, but have a look at non-profit and give the charitables a nudge to get back in the business. They were doing it a few years ago; they need encouragement to go into it again.

The Chair: Thank you very much, folks. We appreciate your coming out and making a presentation to us, and your input into the process.

2000

ACT! 33 COMMITTEE
VERTICAL WATCH

The Chair: Our next presenter is Miss Suzette, representing ACT! 33 Committee and Vertical Watch. Welcome to our committee. Should you allow time for questions in your 20 minutes, they will begin with the government. The floor is yours.

Miss Suzette: Good evening, everyone. ACT! 33 stands for the Association of Concerned Tenants, about 1,000 of us, who reside at 33 Isabella Street, and Vertical Watch is the crime prevention program, like Community Watch, designed for apartment dwellers. Thus we are a vertical community.

I am Miss Suzette, and as the chairperson of ACT! 33 and Vertical Watch of our building, I was overjoyed when I first heard the term "tenant protection package." It sounded like exactly what we were after. We were in the process of explaining the many benefits of 24-hour mandatory security for high-rise apartments, and I thought finally Mr Leach and other legislators had listened to us and wisely acted on our suggestions.

Having read through the protection papers, as you all know, there are no references whatsoever to the safety and security of rent-paying tenants, yet it is a sad reality that crime prevention must also be now legislated in order to be enforced by certain landlords. Criminals will continue to victimize tenants if landlords are not legislated to provide 24-hour security today. Since you are asking for commonsense improvements, we would like to suggest that before you even consider raising our rents, you legislate fair laws to protect us in our apartment homes.

Since we have been asked to speak from personal experiences, I'll use our building at 33 Isabella as an example. When I moved in 23 years ago, this beautiful new building had all the services imaginable: swimming pool, laundry, party rooms, game rooms, tennis courts, saunas, exercise room, meeting rooms, and I believe we had camera security at that time.

Today, we still have the same red carpets in most of our hallways, accented by years of vomit, poo-poo, snow and salt, frayed from overuse and subjected to chemical cleaners for the last 23 years. We still also have the same locks to our front doors, which means every person who has ever resided at 33 Isabella and chose to keep their keys still has access to our premises. Only after years of requests have we now a security camera aimed at the top of people's scalps at our front door. But you know what? No one's taping and no one's watching when crime occurs.

We have retained the tennis court, two saunas, and are blessed with a tuck shop which is a commercial tenant. We no longer have any of the other facilities except our laundry room. We do, however, have a beautiful, enticing front yard complete with flowers and trees, and you also would want to move into our impressive-looking building if you passed us by. But we have no full-time nor even part-time security. On weekends, approximately 1,000 people and about 1,000 pets are left to fend for themselves since we have no working staff on the premises. As we speak, ladies and gentlemen, we are without superintendents.

Yet our rents will again be due on the first of each month and our yearly increases will follow. Regardless of the lack of services, we must pay our full rents. It's the law.

Let me show you a glimpse of what happens in a law-abiding, no-security high-rise apartment. It's Monday morning. The front glass lobby door has been kicked in again, and amid shattered glass, you try to tiptoe to get outside your front door. Should you have your pets with you, broken shards of glass could cut their little paws. For others, bicycle tires and rubber-soled shoes are at risk.

Upon your return, your newly fixed front door lock does not accept your key. You can't get into your own home. You group together and wait for someone to open the door from the inside. You no longer bother to report this inconvenience to the management because it's too frequent. What's the point?

Tuesday: When you arrive home, you notice that your mailbox has been left open. You remember using your key to shut it, but perhaps you forgot. As you look around you, you notice that there are other people who seem to have forgotten to close their mailboxes too. It isn't until the next week that you realize some of your income cheques are missing. They didn't seem to arrive in the mail. But it's rent time and you must pay your rent regardless. It's the law.

Wednesday, you do your laundry. While you step out of the laundry room to buy some more soap, someone steals some of your shirts, blue jeans and, would you believe, men's underwear. What can you do? Not much. There's no working camera that's secure and doing anything for our laundry room. But aren't we paying for the laundry room facilities as well? Management really doesn't want to hear this.

Thursday, you go down to your garage and find that your car has been broken into, your transmission gutted. But you've been lucky. Your neighbour, who parks next to you, tells you they stole his car altogether. You both report this to the supers, who tell you to call the police. The police tell you to call your insurance company, and there's nothing more you can do. Management claims no responsibility. But didn't they make recent repairs to that garage again, and whose money did they use?

Friday, your toilet bursts or your fridge dies and is emitting poisonous gases. But since it's the weekend, you have no chance for repairs until Monday or Tuesday, because in our building, nothing happens over the weekend. You see, there is no active staff in our building of 1,000 people, who pay rent Saturdays, Sundays and holidays too.

Saturday, while you went grocery shopping, thieves emptied your apartment and no one saw a thing. If you'll remember, there's no 24-hour security in this building and no weekend staff. You know what? All the thieves know it. Twenty-eight floors of merchandise, if you can take it, and who's going to stop you?

Finally, Sunday, our day of rest, except for the fire alarms, which ring --

Mr Marchese: Thank God there's only seven days.

Ms Suzette: I'm finally on Sunday now, the day of rest. The fire alarms ring incessantly, causing swarms of firefighters and ambulance and police to quickly descend at our apartments, but they can't find the fire. Someone is playing with the alarms all day, at everyone's expense. There's no one to stop them.

Then, when you least expect it, on a good Sunday you get stuck in the elevator for about an hour, and there's no responsible building staff to get you out. You can imagine how excited the fire department is to be summoned for the fourth or fifth time to help us that day. Still they come, and so does the ambulance, and so does the police. What needless expense, ladies and gentlemen, and you want to legislate landlords like ours to receive more money?

As tenants, we move into a building and we pledge to pay a monthly or yearly fee for our rent in exchange for working services. We all believe this also covers our safety and security. Yet when our lockers are broken into, our apartments are robbed and our vehicles are dismantled, we find out differently. When we sign our leases, we believe that in return for rents, we will reside safely and happily and problem-free in our homes, and that must be the law.

When we tenants move, I think we all know that as tenants we are only paying guests in the house of a landlord and we proceed to act accordingly. But once we move in, how does our landlord host behave? Some landlords certainly honour their agreements, and some don't. Those who do not respect the rights of their tenants are also the landlords who know that they are not legislated firmly enough to provide their tenants with security, safety and human compassion.

It is those negligent landlords who have brought us here today. It is those negligent landlords who make tenants' lives a nightmare. It is also those landlords who caused the formation of the Federation of Metro Tenants' Association 22 years ago, and still continue to force new tenants to band together and fight for their paid rights. It is those landlords who must now be legislated instantly and severely. They should not be rewarded by forcing their tenants to hand over more money in lieu of higher rents and repairs.

2010

Bad landlords who refuse to place rent-paying tenants' interests first should not be allowed to remain in the landlord business. Of course, we equally feel delinquent tenants should also be evicted at the first proof of causing criminal activity which directly affects the tenants, such as running a crack house, drug dealing in the apartments, stealing from tenants and harassing residents. This too must be clearly and swiftly legislated before there is justifiable possibility of even raising rents.

We all seek peaceful coexistence, and it appears that in 1996 coexistence between landlords and tenants must also be legislated. So we respectfully disagree with your present tenant protection package and we see no commonsense justification for raising our rents; none whatsoever.

As we stand today, I would rather be here requesting that our rents be lowered since we are not getting the services we are paying for. However, today we ask you to turn things around, turn things around in a way that will benefit everyone -- tenants, landlords, builders and the government -- everyone whose lives are affected by tenancy. Imagine a world of happy tenants and rich, worry-free landlords. You know what? This can be a reality tomorrow.

Legislate equally beneficial laws to all tenants, landlords and builders. Make it clear that being a landlord is a business and being a tenant is being a customer, thus the relationship is very clear: services in exchange for moneys paid.

Legislate that criminal activity will not be tolerated in tenant buildings. It means instant eviction, to protect the rest of your law-abiding, rent-paying tenants. And yes, delinquent tenants should also be dealt with and punished by eviction if they are affecting the safety and security of other tenants.

Most importantly, we ask you, legislate 24-hour security to all high-rise apartments and this positive crime prevention process will instantly benefit all tenants; it will protect the property of all landlords; it will save millions of police, firefighter and ambulance man-hours and certainly court time. Twenty-four-hour security in high-rise apartments will make safer communities -- it will return to us Ontario the safe -- and hiring security staff will create thousands of jobs.

It is time to legislate security and safety and to prevent crime at a building level. It is time to enforce caring and compassion. It is time to do good.

We urge you to put yourselves in the place of us tenants, to walk 28 floors in our shoes, so to speak, and expand your understanding of what life would be like for you if you had to experience our daily robberies, landlord disputes, neighbour harassments. What would it be like for you to live our daily frustrations as victimized, rent-paying tenants, and add the threat of higher rents now? Try to imagine how you would feel if your stairwells were used for hotel rooms by junkies, your lockers rampaged, you had to step over bodies, bloody hypodermic needles and used condoms in your backyards. If you had to smell the scent of urine and human defecation inside your elevators on the weekends. Try to imagine what it would feel like for you to taste fear for your safety inside your own homes. All of this you have the power to change, to legislate.

Ladies and gentlemen of the government, we urge that in the next few weeks and months, each time you make new laws, please remember that you're affecting the lives of everyone around you. As tenants, we are your cashiers, your waitresses, your bakers, your bank clerks, we're at the CNE, your security guards. We are members of your family and your friends. So keep our faces in front of you, and as you decide on the new and improved laws to save rent controls and to bring about better landlord and tenant rights, keep us in mind.

We don't need protection, ladies and gentlemen; we just need good and fair laws. What is the formula for making fair laws? Before each new decision, ask yourselves this question first: Who is going to benefit from this action? Whom is this action going to benefit? And, if your answers come up, "Everyone," then and only then will you be fulfilling the trust we have all placed in you to date. Ladies and gentlemen of this government, we ask you to do good. Please do good for everyone. Thank you.

The Chair: Thank you. You've allowed about one minute per caucus for a comment or a quick question, beginning with the government.

Mr Hardeman: Thank you for a very informative and interesting presentation. I do hope that the events as you related them day by day were not all the days in the same week. I think that's more than anyone could be expected to bear.

I do have some concern that in fact all these things are happening under the present regime, the present system. So I think it's fair to suggest that what we presently have is not solving the needs of the housing situation in our urban centres. Other than more legislation or legislation to legislate the acts that need to be done, do you think in the proposal that's before us to make it easier to enforce the rules and regulations and property standards and so forth, that's going to be a help to some of the situations that you've put before us?

Miss Suzette: Well, only if you're mandating good laws is anything going to be a help, and if you're mandating good laws they should be very clear, precise and simple. There's no need for all the confusing wordage. We're tenants, we pay rent to a landlord. The landlord's the businessman. He either has the money to be a landlord or he doesn't. If he wishes to be a builder or not, he either has the money or he doesn't. It's a very simple business proposition to me. Why are customers or tenants expected to foot the bills for a new business for a builder? This is what we can't seem to comprehend. I don't know of any other businesses where the customers are footing the bills for a future development. If I buy a product, I go to the store, it works, I'm happy, I go home. If it doesn't work, I go back and get an exchange. You cannot seem to be able to do this in a landlord and tenancy situation, but it should be the same thing. We're customers. The landlord is our proprietor.

Mr Curling: Miss Suzette, you have walked us emotionally through your day and your life -- not only yours but many people who are under those kind of conditions. Many in the government say that that's the status quo. Do you believe the status quo should stay? I think what you said is that this direction they are going is going to make it worse. You're handing over the full responsibility, you're rewarding the people with more money to maybe do worse. You carefully and rightfully stated that there are good landlords who follow the law.

I want to thank you very much for bringing that personally to this committee and I would hope, too, that your invitation could be extended that we could visit your building --

Miss Suzette: Not on Mondays, because you can't get in.

Mr Curling: -- and many other buildings -- we'll try and get in. Because I think to personally be going there would help this committee to understand how people are suffering and why we should not hand this responsibility to this free market.

Mr Marchese: Miss Suzette, you have catalogued very comically but tragically the life experience of tenants in that building. What you have also enumerated is the following: You're paying year after year, earning less and less but paying more and more rent. You were expecting certain things to come as a result of that. They're not forthcoming. In fact, it's getting worse and worse.

Miss Suzette: Right.

Mr Marchese: It's a typical situation that you describe. Then you say rent control was a good thing. They're about to decontrol them and you're saying, how's that going to help, other than adding to the burden? Not only do you have to suffer these problems but you're going to have to pay more for it.

I would also like to add that Mr Krehm who came here earlier said that the capital expenditures are insufficient and inadequate. He proposes that instead of the 3% that we currently allow under the law for extraordinary expenses, it be increased to 6%. I'm not sure what some of the other friends on the other side think about that, but I know that from the litany of problems you've raised that's not going to help. In fact it'll make your situation worse.

The Chair: Thank you very much, Miss Suzette. We appreciate your coming and being part of our presentation.

2020

YORK EAST NEW DEMOCRATIC PARTY RIDING ASSOCIATION

The Chair: The next presenter, representing the York East New Democratic Party Riding Association, is Gerard Vandeelen. Welcome, sir. You have 20 minutes to use as you see fit. Questions, should you leave time for them, will begin with the Liberals. The floor is yours.

Mr Gerard Vandeelen: I've come here tonight to basically address the document New Directions in a generalized sense, I guess, after reviewing it and speaking a bit to our riding about it.

Let me tell you something about the riding briefly. It is East York basically. It encompasses almost three wards of East York. Of that, about 50% of the riding is made up of tenants. If you want to look at East York, the whole borough, as it were, that also includes part of the Don Mills provincial riding, which has a 63% tenant rate. Some of the neighbourhoods in East York and York East are Thorncliffe Park, for example, and Crescent Town. They're two of the ones that stand out in mind. It might be noted by the Conservatives on the panel that actually the residents of Thorncliffe Park sent a member to the government -- closely, but close enough when you're looking at tenant voting.

At any rate, I'd like to now address some of the economics of this proposed legislation. One of the things it comes out and states is that it's here to protect against double-digit increases. I guess there's been a lot of talk that this is going to bring in higher rents, and that seems to be the assumption I make as well. Let's look at what that's going to result in.

With the government's tax cut that was recently initiated, that has the effect of bringing out higher property taxes, I believe, down the line, and that is going to be shifted on to rents and that will result in higher rents.

The repairs and public utility increases that are proposed are going to bring out higher rents. When you get higher rents, what this results in is higher wage demands -- I would think that would follow -- and from there higher inflation all around.

Another thing higher rents may produce is something that this government seems to have gotten out of the business of, which is public housing, co-op housing. If the rents become higher, where are tenants going to go if they can't afford them? They're going to be back looking at the government for some kind of assistance, and that may put you back in the business of public housing.

Another area is it could produce more basement apartments. We've had that discussion with different municipalities that are very against basement apartments and would like them to go away etc.

Higher rents, the higher inflation, is that going to lead to higher house prices in the end? It could very well be. If people are paying so much for an apartment, then who's to say that a house should be that much cheaper?

The landlords, of course, come in the best on this, I believe, because they've already got a built-in system against inflation and perhaps of inflation, with the guidelines that are in place now. This is going to give them a better shot at that.

Speaking a little bit about the repairs and utility increases that this bill would involve, it seems to me to be fair at the moment the rate that it goes where your rent can be increased for higher utility services. A good example might be last winter, I guess, with the heavy hydro load that a lot of people had to put out because of the cold winter. But what is being proposed is that those increases stay, and I can't see the reasoning behind -- next winter could be balmy and certainly not like last winter, and that is just going to be pure profit going into the landlord's pocket.

I think they should at least fluctuate, as they currently do, or stay the same for a period of years. If you are going to allow them to go up and stay up, then let them stay there but not have another increase. Say next winter becomes that much worse than the previous one, well, the rent went up on the last winter and that's where it stays for a period of years, like three or five years could come up, and then look at another increase down the line.

The 2% currently is supposed to be being spent on maintenance and this the proposal wants to remove as well. I don't agree with that. At the moment maintenance repairs are not being made. There have been examples of that, and the deterrent to the landlord is currently small fines. In the meantime, the tenants have to keep paying their rent. And we've heard earlier this evening about boarded buildings that are just sitting there because improvements can't be made. Well, I might suggest to the committee that perhaps some of these buildings are boarded because the rent increases that were collected weren't put to the maintenance of those buildings and that's why they're sitting boarded up today, because they weren't spent where they should have been spent.

As for the removal of municipal approval for demolitions and conversions, I hesitate to think what our council -- I can't speak for them, what they'd feel about that, but I know enough about how residents' groups would feel about it, totally against it, that you would just allow demolitions to occur at will, in a sense without any municipal involvement. That I can't fathom either.

To tenants themselves: I believe that this legislation could open the door to a lot of intimidation and harassment of tenants leading to evictions. That I don't believe is sounding an alarm. I come from a workforce in the post office and improper evictions, I would say, are very similar to unjust dismissals, and I've seen a lot of those, working at the post office. I know what happens with a lot of them because I work with temporary employees there and they don't have the same rights as other members do under the union. So you get people intimidated or fired and they leave. They don't fight it, they don't know how to fight it, they don't wish to fight it, whatever. So people's rights are being infringed in that respect, and this is tantamount to the same thing. You're going to have people intimidated into leaving and they're going to leave. Some will not know what their rights are. They'll just leave. Some will not want to fight it, to enter into the hassle and the red tape that fighting it may involve. That is a very serious concern of mine and something the committee really needs to look at seriously. If you're going to go ahead with this legislation, make sure that something is very well put out in that respect. I don't know if it's going to be enough just to say, "Oh, we're going to have an agency that will look at evictions." We have a labour board now, but I dare say there are thousands of people who get fired who don't end up at the labour board. They just go on to whatever the next job is.

The legislation, as the government has said, is intended to protect tenants instead of units. Well, I don't see the evidence of that. One point is that they would get the first refusal on an option to purchase the unit. To my mind, most tenants live in apartments because they can't afford regular housing, and I guess the dream of most tenants is to have a house. Why they cannot save to get to purchase this house, I don't know. There are many reasons for that. Many of them are busy consuming. So I don't think first refusal on an option to purchase is a great carrot to hang out to tenants as to how we're going to protect them.

The dispute resolution system I believe should come under the administration of the government. Adjudicator appointments, either public tender or government employees is whom I'd like to see on that.

One last suggestion in wrapping up is that you may want to look at a system of no rent increases for a fixed period of years until a new tenant arrives. That might alleviate the massive increases that may come because of this legislation. Maybe if you say, "We're not going to have any increases in rent for a period of five years," and when the new tenant comes in, that's when you battle it out, that's when you negotiate. Maybe that's something the committee needs to look at.

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Mr Curling: Thank you for your presentation. In the area you are at there's a high concentration of seniors, I understand, in East York. What would be the impact you see? I know the seniors have just presented their point of view. I'm just wondering, are there concerns that you see in East York that the impact of this tenant protection package will do? Do you have any comments on that?

Mr Vandeelen: Not a lot. I'm well aware that that's a constituency of our riding, but to my mind a lot of that has been taken up in actual housing, like bungalow residences. There are seniors up in the Thorncliffe area, but a lot of them are in condominiums, so I don't know in what respect that's necessarily going to affect them.

As for tenants who are actually in buildings, I see how it would affect those who are facing rent increases. It's going to affect them harder than a lot of other people. It's going to affect them the same as people who are on minimum wage, something to that effect. They just won't be able to afford rent increases, and where are seniors going to go?

Mr Curling: Landlords now are poised to advocate about shelter allowance. It's nothing new; it's there now. Do you believe that shelter allowance, as it is and how the government is poised to bring in shelter allowance, will be helpful for people, or do you feel that less should be given or more would have to be given now that they'll gut rent control and therefore access to buildings or access to units would cost more? Do you see the government giving more money for shelter allowance in this instance?

Mr Vandeelen: Yes, to put it simply. That's not an area I've looked into a great deal, but from everything else I've said I believe it to be yes.

Mr Curling: Thank you.

Mr Marchese: I just have one question. I know there was a meeting at Flemingdon Park community centre a couple of weeks ago and I understand it was an interesting meeting. Mr John Parker came to represent Minister Dave Johnson because he couldn't make it in his riding. Were you there or did you hear about that meeting?

Mr Vandeelen: I heard about it. I wasn't there.

Mr Marchese: Oh, I see. So you won't be able to comment.

Mr Vandeelen: No.

Mr Marchese: Okay. I heard that it was interesting meeting. There were 300 tenants who had shown up. I think it rattled Mr Parker a little bit because the 300 people --

Mr Tilson: I don't think so.

Mr Marchese: Oh, yes, it did. I can tell you it did. The 300 people who went to that meeting told Mr Parker in no uncertain terms that they like rent control and that they like the system the way it is and that they shouldn't touch it. I thought it was a good meeting.

Mr Curling: I would too.

Mr Marchese: I expect, as time goes on, if this government dares to introduce legislation, that we're going to have lots of tenants who will become aware of what decontrolling means. Once they become aware that once you leave your unit they can increase it as much as they think they can get, a whole lot of people, 70% of who move in approximately five years, are going to say, "This is going to hurt me a little more than I thought," and you'll see them coming out to your meetings a little more frequently and you will hear them a little more audibly as time goes on. Thank you for coming today.

Mr Vandeelen: I'd like to just add that it may have rattled Mr Parker. I only know that after that in the local newspaper he was referring to the rent control legislation as rent review legislation.

Mr Marchese: Jeez. That was a Liberal cause.

Mr Tilson: Your party was in power for the last four years, over four years, from 1990 and I can tell you that I, for one, as someone who sat there in opposition, certainly didn't like any of their --

Interjection.

Mr Tilson: I did indeed. We have heard delegations; you heard the lady just before you who spoke about conditions in apartments with respect to security; we continue to hear stories of maintenance problems, about how buildings are deteriorating and not being repaired. You have made comments as to several improvements. You said that perhaps there shouldn't be any increases for five years with respect to rent across the board. You appear to support the process changes as long as they're independent, but --

Mr Curling: Don't stretch it too much.

Mr Tilson: I could be wrong, but that's what you appear to do. My question to you is that notwithstanding the criticisms of your party's housing policies with respect to maintenance, the criticisms with respect to security tonight -- the woman ahead of you -- have you any suggestions? That's all this process with this committee is: reviewing a paper and listening to suggestions as to how the system can be improved. Do you feel that the housing policies of the government of Ontario can be improved, and if you do -- obviously you must think about this because you're a member of the NDP riding association -- do you have any suggestions as to how to improve the NDP's housing policies?

Mr Vandeelen: No. I think we had been on the right track.

Mr Tilson: So everything's just perfect the way it is?

Mr Vandeelen: It had been perfect.

Mr Tilson: Thank you. I have no other questions.

Mr Vandeelen: It has not been perfect any more.

The Chair: Any other questions?

Mr Maves: The assumption is made that if a unit is decontrolled, the rent will go through the roof. You've said that tonight and Mr Marchese has on several occasions. There's a number the ministry has given us that 50% of landlords are currently charging less than the allowable rents because the market won't bear the rents they're allowed to charge. That's the case now. They could charge more now --

Mr Marchese: If that's the case, keep rent control in.

Mr Maves: -- but 50% of them aren't charging that amount. Why do you think that all of a sudden the market will just suddenly bear higher rents and everyone will start charging higher rents?

Mr Vandeelen: It's a possibility. That's what I'm stating.

Mr Maves: It's a possibility now that they can raise them, but they're not.

Mr Vandeelen: Yes, but are you entertaining that we should gamble and have that and have inflation skyrocket again? That's what it could lead to, I think.

The Chair: Thank you, sir. We appreciate your taking the time to come down and make your thoughts known to us tonight.

2040

REALSTAR MANAGEMENT

The Chair: Our next presenters, representing Realstar Management, are Jamie Macdonald and David Langill. Gentlemen, welcome to the committee.

Mr Jamie Macdonald: My name is Jamie Macdonald. I'm vice-president of finance for a company called Realstar Management. I've been in that position for the last eight years. Beside me is David Langill, who's also with Realstar and is vice-president of corporate development and responsible for all mortgage financing and acquisitions. David has been with Realstar for about 10 years.

Realstar was founded in 1973 and is in the business of long-term investment and management of apartments. Realstar is one of the largest property managers in Canada and currently manages approximately 23,000 units, of which 17,000 are located in Ontario and the balance throughout Canada and the United States. The majority of the 17,000 units in Ontario are located outside of Metropolitan Toronto in such centres as St Catharines, Kitchener, London, Barrie, Ottawa and Peterborough. Realstar is owned by senior management, the Ontario teachers' pension plan and the CIBC.

Realstar manages buildings that are in the upper quartile of the rental market in terms of building quality and rent levels. There's a strong sense of ownership in our buildings which is demonstrated by our reinvestment of cash flows back into the properties. In our non-Metropolitan Toronto buildings the majority of our tenants are seniors. We also pride ourselves in maintaining responsive lines of communication with our tenants, which helps us to achieve near-full occupancy on an ongoing basis.

With respect to the proposed legislation, we are optimistic with a number of the positive steps that have been proposed. However, we are concerned with the issue of the elimination of legal maximum rents and want to focus our attention tonight and the attention of the committee to this one particular issue.

First of all, one of the government's objectives with respect to changes in the legislation is to let the market establish rent levels. The proposed legislation, we feel, does not meet this objective and imposes a greater degree of control than the existing legislation.

We understand from industry statistics that more than half the apartment rents in Ontario are currently determined by the open market and are not restricted by legal maximum rents. Under the proposed legislation all units will be subject to rent increases limited by the statutory guideline amount, except for those that turn over in a particular year and are re-rented at market.

Approximately 95% of the actual rents in our buildings in Ontario are rented at below-maximum rents. When an existing tenant renews a lease or if a new tenant moves into the building, the rent is negotiated between the tenant and ourselves. In many cases, tenants are prepared to pay a higher rent in order to have some improvements made to their unit. This may include new appliances, new carpets, repainting of the units etc. Tenants are often prepared to pay extra rent in order to defray the cost of the improvements to these units.

The proposed legislation, we feel, may increase a level of antagonism between tenant and landlord. For example, we believe that the ability of the landlord and tenant to negotiate the rent will be impaired as the landlord in many circumstances will not be able to increase the rent above the statutory guideline amount even if the tenant is prepared to pay more to help cover the cost of in-suite improvements.

Mr David Langill: All existing tenants and tenants coming into our buildings are aware of and have accepted the fact that the legal maximum rents may be substantially higher than market rents. Tenants have demonstrated their confidence in the open market to prevent excessive increases, as demonstrated by a very low turnover in our portfolio and full occupancies that we maintain in our properties.

Ontario has been operating under various rent review and rent control legislations over the last 10 years. The concept of legal maximum rents has been accepted by landlords, tenants, investors and the lending community. The system of legal maximum rents provides protection to tenants against excessive rent increases by landlords.

In addition, landlords have been provided the ability to increase legal maximum rents for such items as financial losses, investment in capital expenditures, extraordinary cost increases and changes in financing costs. This has been an earned legal entitlement to the landlords which the proposed legislation wants to eliminate.

We provided to each of you a couple of case studies that review the implications of the current and proposed legislation. I draw your attention to the first page, case 1, which deals with the impact of the proposed legislation in a market where rents are increasing. Just to step you through it quickly, the year 1 legal maximum rents are identified at $1,200, a market rent at $900, actual rent being achieved at $900. There's no loss of rent to the landlord to market rents or to legal maximum. As you'll see, legal maximum rents increase at a rate of 2.8%, whereas the market rent increases at a rate slightly higher than 5%, assuming that the market is performing in that fashion.

The proposed legislation identifies the impact that the limitation of legal maximum rent to contract rates will place and the impact it'll have on the loss of rent to market as well as the loss of legal maximum.

The second scenario shows an immediate reduction in legal maximum rent potential on turnover of the unit in year 2 of $284 and subsequent losses to market rent as well as the loss of legal maximum rent in years 3 to 5.

This permanent loss of legal maximum rent potential and market rent is of significant concern when applied to all units in a single building or when applied to an entire portfolio such as ours.

Our experience is that both the investment and lending communities take significant comfort in a property where the market rents are less than legal maximum and increases above statutory guideline amounts are possible, if required by the landlord.

The proposed legislation will revert all units into a fully controlled position, which we believe will lead to uncertainty by lenders and investors as the higher rent potential is lost. This will make refinancing of existing debt and/or financing of capital expenditures more difficult for landlords to achieve. As well, it would be more difficult to attract new investment into our industry.

We're quite pleased that the proposed legislation provides that the landlord may invest in capital expenditures and make an application to increase the rents above the statutory guideline amount. We are concerned, however, that once the landlord has done that, achieves a 4% increase above the statutory guideline amount and then negotiates a rent with the tenant commensurate with the allowable increase, the new rent becomes legal maximum.

If on subsequent turnover of the unit, if it's re-rented at a lower rent, if there's a softening of the market, then the legal maximum rent is reduced and the potential for the 4% increase is lost forever. That increase is what was required by the landlords to fund the previous capital expenditures. Any entitlement for the above-guideline increase earned by a landlord in respect of capital expenditures must be maintained, otherwise the incentive to invest in capital expenditures will be undermined.

This contradicts another of the government's objectives, as we understand them, of improving the physical condition of the rental stock in Ontario and providing stimulus to Ontario's construction industry.

Mr Macdonald: We feel the proposed legislation does not fairly provide for circumstances where landlords are required to discount rents to rectify a vacancy issue or to operate in a soft market. While discounts may be of a temporary nature, the potential income of the property will be permanently impaired because the legal maximum rents for those units which have been discounted will be immediately reduced to those discounted rents.

As an example, in the city of Ottawa today we're going through sizeable vacancies and rents are being reduced city-wide in the magnitude of 5% to 10%. Under the proposed legislation, these lowers rents will now become the new legal maximum rents and it would take many years for a landlord to return to the rental levels prior to the downturn even while the market has improved some time prior to this.

If I can refer you to case 2, we are comparing the implications under the current legislation to the implications under the proposed legislation with a very similar set of circumstances with the first situation, with the exception that in year 2 we see a reduction in the market rent from $900 to $850 and then recovering in years 3 to 5. Again, you'll see in the top line under the current legislation legal maximum commencing in year 1 at $1,200 and increasing from years 2 to 5 at the statutory increase amount, assumed to be 2.8%.

2050

You will see that under the current legislation the market rent goes from $900 to $850 and then returns to $1,000, $1,050 and $1,100, as we're assuming that the actual rents would continue to follow the market. Under the proposed legislation what we find is that in year 1 we have no change. We have tenant A in here paying market rent of $900. At the end of year 1, tenant A vacates and tenant B comes in. The market has moved downwards to $850. The new rent is $850 and the legal maximum has dropped to $850. As compared to the current legislation, the legal maximum rent has immediately dropped $384. In year 3, we have a turnaround in the market; the market has improved. However, the actual rent can only increase to $850 plus the statutory guideline amount, which we have assumed in this example at 2.8%. Meanwhile, the market rent has improved to $1,000. Accordingly, the landlord in this case has lost rent to market of $126, and this continues on in years 4 and 5 with the amount of loss of rent to market increasing.

Following David's comments, this is another example where we feel the legislation needs to address that particular set of circumstances.

Under the existing legislation, the legal maximum rent is increased annually by the statutory guideline amount or if there are any additional applications for capital expenditures or excessive cost increases. Under the proposed legislation, this entitlement is not automatic. If the market will not support the statutory increase, the difference is permanently lost.

Very briefly, as an example, if in year 2 with a tenant the statutory increase amount again is 2.8%, but the market will only allow a 1% increase, that difference in 1.8% can never be recovered until such time as the unit turns over some time in the future.

The last point I'd like to make is that in units where the market rents are below the legal maximum rents we believe the proposed legislation will significantly increase the turnover in units as sitting tenants will recognize the potential of the landlord to increase the rents above the statutory guideline amounts. By simply transferring to a like unit in the building or another building, the tenant enjoys an immediate reduction in the legal maximum rent and minimizes the exposure for future rent increases. As an example, if the current legal maximum rent is $1,200 and the current actual rent is $900, the tenant could receive future rent increases up to $1,200. By moving to an identical unit in the building and paying the current market rent of $900, the tenant's new legal maximum falls from $1,200 to $900.

In conclusion, while the proposed legislation moves positively with refinements to capital expenditures and in various other areas, it has negative implications in such areas as the elimination of legal maximum rents. Without substantial changes to the proposed legislation, we are in favour of the retention of the existing legislation with amendments to the capital expenditure areas as provided in the proposed legislation and we also firmly believe the concept of legal maximum rent should be maintained.

Mr Marchese: Mr Macdonald and Mr Langill, is it fair to say you're unhappy with the government in terms of its not going far enough with its proposal? You would have liked a complete elimination of rent control as one of the things you're looking for?

Mr Macdonald: In our portfolio of properties, as we mentioned earlier, about 95% of our units would be operating basically in a free market environment because the rents that are being paid are below the legal maximum rents. Ideally, yes, the one area where the existing legislation -- sorry.

Mr Marchese: That's fine. I had a few other quick things I wanted to get to. Are you guys losing money or making some money in the field?

Mr Macdonald: It varies from property to property.

Mr Marchese: But generally, overall, you guys are doing okay?

Mr Macdonald: We make small returns on the property, yes.

Mr Marchese: I'm not sure I understood you correctly. If rent control were to be eliminated, this would stimulate the construction of rental accommodation. Did you say that, Mr Langill?

Mr Langill: No, I said the elimination or reduction of the legal maximum will serve as a deterrent to attract investment capital to the market.

Mr Marchese: I see. One of the things that many of the tenants came here to say is that they simply are paying quite a bit and sometimes there is no fair return for that in terms of services. Many have proposed, of course, that the capital expenditure is simply not enough and they need to raise it. They have raised it by 1%, from 3% to 4%, and someone else has suggested a 6% increase, which I think would make it very difficult for most tenants to afford. Their increases in wages are not ever going to meet that desire of yours to get that money to do whatever you want. These people are saying: "Our wages have been frozen for many years. We couldn't afford what you folks want." How do you deal with that?

Mr Macdonald: Those are very difficult questions, and I'm not sure that both the industry and government have fully understood the implications of the fact that in Ontario we've had five or six years of a very poor economy where real wages have not grown. It is a concern. One of the reasons why there are so many units now that are below legal maximum rents is because the market and the incomes of people in Ontario can't support high rents. It is a problem.

On the flip side of it, as I think we're all aware, the rental housing stock in Ontario has deteriorated significantly, and a lot of these, like repairing garages and exterior moisture penetration, replacing windows, new heating systems and so on, cost a lot of money. How does it get paid?

Mr Maves: I'll be quick because I think Mr Hardeman would like to ask you something. With regard to legal maximums, can I summarize by saying that you either want to maintain the legal maximums or don't have recontrol?

Mr Macdonald: I think so, yes.

Mr Maves: I don't want to dismiss that. I understand that and I thank you for that. That's a very good scenario to have.

There's a constant debate about profitability. Mr Marchese constantly brings it up. The previous gentleman brought it up. A previous presenter said that there are three studies that show it's not a very profitable sector. I want to understand. You own a building. You purchase a building; in 25 years you pay it off. You run it; you put money into it. At the end of that 25 years, to me, most of your profit's going to be when you resell the building. Why wouldn't you maintain it? Because if it's in good maintenance and you can sell it at a better price, there's your retirement. That's number one. Why aren't you guys maintaining these buildings? Number two is, if it is profitable, why did you only build 15 units last year?

Mr Langill: Why which?

Mr Maves: Why did people only build 15 units in Toronto last year?

Mr Langill: To address your first question, we do maintain our rental stock. Our properties are in the upper quartile of every market throughout Ontario to the other locations in Canada and the United States. We invest in them for the long term. We've never sold a building. We don't trade in real estate at all. We've been at it for 23 years, and our intention is long-term investment and good, quality housing accommodations to the market.

It's a profitable business for us. We're not going to say it isn't. It's a reasonable investment. It's not one where you're going to retire on the annual returns from the property. Long-term capital appreciation is certainly important to us. Deleveraging of the real estate by paydown of the debt is important to us. To keep up the building, increasing the debt periodically to finance the costs of renovations, be it renovations necessary for items that Jamie mentioned or items that are required to update the buildings for safety reasons, such as the fire retrofit legislation that was enacted -- all those items we don't take exception to.

We believe very strongly in providing good, quality product. We maintain near full occupancy in our entire portfolio. We don't have large turnovers. We operate our buildings to a very selective tenant base, primarily seniors and discriminating professionals. They're demanding tenants and we make sure we provide good accommodations.

We have had the same questions that you have. Why not maintain them? In some of the situations we have seen, we've assisted lenders on foreclosure proceedings and takeovers where investors had gotten into properties, paid too high a price for them and the rents couldn't carry them. They were in inflationary times in the latter part of the 1980s. They had expectations. Rents at that time were increasing 6%, 8%, 10% a year and they weren't to be sustained. They were buying them on the basis of --

The Chair: We're cutting into Mr Grandmaître's time. He's getting really upset over here.

Mr Langill: I'm sorry.

Mr Grandmaître: You say that you're in the long-term investment business and that's the way a landlord should look at a major building. But how many landlords are in the long-term business when they look at their portfolio? Let's say they have 10 or 15 buildings; I would call that developer or builder major. They will keep that stock. But what's happening now is that small developers -- I'm talking about six, eight and 12 units -- these people stay in the market for maybe five, six or 10 years and then get rid of them. Then these buildings get refinanced a second time. That's what's really ruining the market as far as I'm concerned.

Mr Langill: If they trade at improper levels, I agree.

Mr Grandmaître: Absolutely. In the last five or six years very few people have traded because of the market. They didn't make any money. They wanted to get rid of it because they were losing too much money.

Mr Langill: It was a buyer's market in the last few years.

Mr Macdonald: One comment just to add is, and also, Mr Marchese, to your comment, is that I think that the income levels of Ontarians generally have been flat or decreasing.

Mr Grandmaître: Right on.

Mr Macdonald: People's wages are decreasing and there is a pressure there because, on the one hand, you haven't had a rental stock which has been kept up. We're very much the exception, because we have long-term capital investment programs that we do every single year. We update them for a three- to five-year period. We're trying to anticipate to get the stuff early and fixed quickly. I'm not sure that there are that many landlords out there who are doing that.

Mr Grandmaître: Very few.

Mr Macdonald: I think one of the problems is that you have a situation where there are limited incomes available to support an investment in the rental housing stock. It's expensive to keep it up. Taxes are high, utilities are expensive and there are costs of actually running the building that are also very costly, that cause the rents to be higher than --

The Chair: Thank you. We've used up all the allotted time.

Mr Tilson: It's all over.

The Chair: It's all over for this evening. Gentlemen, thank you very much for your interest in coming here this evening and making a presentation.

Mr Hardeman has a paper he wants to table before we leave.

Mr Hardeman: There have been a number of questions during the hearings thus far about the consultation process that was done to reach this discussion paper. I have to share with the committee a list of all the parties that were consulted -- the tenants, the advocacy groups, the development industry and so forth. I table that with the committee for your perusal.

The Chair: Thank you very much, Mr Hardeman. The committee stands adjourned until 1 o'clock tomorrow.

The committee adjourned at 2103.