Transcription du comité 1996-août-23 | Assemblée législative de l'Ontario

The Chair (Mr Jack Carroll): We will get started. Mr Marchese is not here, but out of respect for those who have showed up on time, we will begin. Our first presenter this morning is Jim Rootham of the Fort York New Democratic Party Riding Association. Good morning, Mr Rootham.

Mr Jim Rootham: Good morning, ladies and gentlemen. I would like to thank the committee for this opportunity to examine the proposal for changes to the tenant protection system in Ontario. My name is Jim Rootham. I'm a member of the executive of the Fort York NDP Riding Association.

I spent six years as the chair of the finance committee of the Alexandra Park housing co-op. In this position, I was responsible for all the financial planning for the co-op. This experience gave me a good understanding of the economics of operating rental housing in Toronto. In preparation for this presentation, I have read the Lampert report commissioned by the government and the New Directions paper. The New Directions paper raises several goals. I am going to focus on one in particular.

On page 1 of New Directions, one of the goals listed is to "create a better climate for investment in maintenance and new construction, therefore creating jobs." The solutions proposed in New Directions and the Lampert report will not meet this goal. The underlying assumption in these reports is that an unregulated rental industry will produce enough accommodation to meet everyone's needs. The whole point to relaxing regulation and accepting the consequent increase in prices is to generate more supply. The Lampert report is entirely a plea for everything to be given to landlords so that they will produce housing, but even the Lampert report closes with a gloomy estimation of the effectiveness of the deregulation proposals. The last sentence of the Lampert report, on page 69, is, "However, it seems likely that the regulatory changes alone will not be enough to stimulate substantial amounts of rental investment in Toronto, which presents the most serious problem for rental supply in Ontario."

It is important to note that there are no examples in the history of large urban areas of unsubsidized private rental accommodation housing the complete population at a standard that we now consider necessary. The classical examples of unregulated housing markets at work are the factory towns in the 19th and early 20th centuries. Most of the housing for the working classes in those places was described as slums. It seems likely that going back to the same kind of economic strategies that produced slums then will produce slums now. Any legislation based on the New Directions paper or the Lampert report really ought to be titled the Slum Lord Protection and Encouragement Act. I find it difficult to believe that you're willing to be seen to be promoting policies that have these effects.

New rental accommodation is so much more expensive than older accommodation that it cannot effectively compete in the marketplace. The level of rents required for profitable new construction cannot be sustained by any economy, much less one in which the incomes of many people are under attack. It costs a lot to build new rental housing. Most people cannot afford the rents required to pay those costs. The people who can afford that level of rent are much more likely to want to buy a house rather than rent.

I have several charts here to illustrate my remarks. Some of the references in the paper you have may refer to a slightly different set of charts; there was some confusion about that. The first and most basic is the number of rental starts in Ontario from 1971. This chart is from the government's New Directions paper. You will note a dramatic fall in the rental starts in the early 1970s. If we want to encourage new rental housing construction, it is likely to be helpful to understand why construction ceased. In particular, if we assume an explanation for this declining construction that is not correct, it is impossible to create policies that will work. I will consider several possible explanations for this construction pattern.

First, let us look at demand. This chart includes the rental starts for Ontario and the vacancy rates for Toronto, also from the New Directions paper. If demand for housing had fallen off, then it would show up in vacancy rates. However, as we see, this was certainly not the explanation for the decline in rental housing construction. From 1970 to 1972, the vacancy rate was very high relative to the rates that prevailed after 1975. But this is exactly the period in which construction was booming. There seems to be some response to tight supply in the 1985-90 period, but given the much lower rates of construction compared to the early 1970s, it seems that there must be a more significant factor at work. In general, over the whole period, we can say that construction had died but demand was still firm.

Next, let us consider rental rates. This chart includes rental starts for Ontario and the rental price index for Toronto from 1971 to 1995. As we can see, rental rates rose steadily over the period. However, it is obvious that rental construction did not respond to this strengthening of prices.

This chart includes the rental starts for Ontario and the year-over-year rental increases for the period. As you can see, increases in rent are quite low during the early 1970s.

0910

This chart includes the year-over-year increases in rent and all items for the period. During the period of the greatest construction, the rental increases were very low relative to the other inflation in the economy; in other words, the price of groceries was going up faster than the rent. When the rental increases caught up to, and occasionally surpassed, the total inflation rate, there was almost no rental construction. According to classical economic theory, this is a bizarre result. If you will recall the basic economic theory of supply and demand, when prices rise it is expected that more suppliers will enter the market to increase supply. But this did not happen. Rents went up, but units were not built.

The explanation for this peculiar behaviour lies in the government intervention in the rental housing market. As far as private rental construction is concerned, the most critical intervention -- or perhaps the removal of an intervention -- was the tax reform of 1972. This change removed the accelerated depreciation allowance -- capital cost allowance -- for rental buildings for most taxpayers. It was left in place for companies in the business of real estate. There was also a change to remove the avoidance of taxes owing on older buildings whose capital cost allowance was now less than the actual depreciation. In other words, two forms of significant tax breaks for investors were removed.

We now have an explanation for the paradoxical behaviour of the rental construction industry. The boom in rental construction had no, or at least very little immediate, connection to the rental market. The builders of rental housing at that time were basically tax farmers. The rewards for constructing new rental housing flowed primarily through the tax system, not through tenants' rents.

The next question to consider is why there is a private rental housing market at all if the only incentive for the private market to construct rental housing is to collect government subsidies. The next chart shows the current profitability of a one-bedroom apartment in Toronto, depending on when it was built.

The revenue line was interpolated from the chart of average rents for one-bedroom apartments in Toronto as a function of the construction date, exhibit 3-14, in the Lampert report. It has been adjusted for other income using the ratios in the Toronto pro forma, exhibit 3-17, in the Lampert report.

The cost line was constructed from the same Toronto pro forma in the Lampert report. It was adjusted in two significant respects. The rental unit was converted from a 1,100-square-foot two-bedroom unit to a 950-square-foot one-bedroom unit. This was done to be consistent with the chart of average rents by year of construction. The other significant adjustment was the addition of 3% of rent allocation for replacement reserves; for example, a new roof or replacing all the balconies. This corresponds to my experience of the requirement for major replacements which are not covered in the Lampert pro forma. This is a conservative adjustment. I have also included vacancy loss as an expense rather than a reduction in income.

The historical costs were derived from the current costs by the use of the construction costs index, exhibit 3-11, and the land costs index, exhibit 3-12, from the Lampert report. In the years prior to the data available in the report, I used the Toronto cost-of-living index.

This analysis could be considered a little crude. Given access to more historical data and the actual, as opposed to the estimated, costs of constructing one-bedroom apartments, it would be simple to improve on it. However, the fundamental structure of the situation would not change.

You will note that the profitability of older rental units is substantially higher than that of new ones. Given the cost structure of rental buildings, this is very much to be expected. The declining-balance method of paying mortgages contributes to this. As time goes on, the amount paid in interest declines, eventually dropping to zero. The costs of rental buildings are dominated by the initial construction cost. As inflation occurs, even at a very low level, the costs of old buildings drop dramatically compared to new ones. This is the fundamental reason why new rental construction is unprofitable while the rental business as a whole is very profitable. New buildings don't pay; old ones do.

This chart also has implications for the economics of investment in building maintenance. The older buildings which are supposed to be in need of more money for large-scale maintenance projects are the very buildings which are generating a profit. The profitability of a building is not necessarily an economic incentive to spend money on maintenance. The only purely economic motivation for increased maintenance expenditure is an empty or potentially empty apartment. In a time of low vacancy rates, unscrupulous landlords make more money than responsible ones, since they spend less and can charge as much.

This chart also brings to mind one of the effects of a recommendation in the Lampert report. Lampert suggests that the property taxes be reduced on rental buildings to the level of owner-occupied dwellings. Lampert does not address the issue of where the resulting revenue decline would be made up. If this change is implemented in the absence of a regulated reduction in rent, the owners of older buildings, and eventually new buildings, would enjoy a substantial windfall profit. This proposal is not mentioned in New Directions. Reducing taxes is a form of public subsidy. Lampert and this government would probably balk at that characterization, but even Lampert recognized that public subsidies are required to make private construction an attractive investment.

The same kind of windfall profit, but a much larger one, would also be created by a rental regime in which the rents were high enough to finance new construction. However, given the increasing polarization of incomes, renters are simply not going to be in a position to pay the kinds of rents that the gap on the right-hand side of the graph illustrates.

Indeed, renters are already having difficulty with the current level of rents, as is illustrated in the Lampert report by a chart showing the growing percentage of renters paying more than 30% of income on rent. It has risen from a low of 20% of renters in 1982 to more than 35% of renters in 1995. I would strongly suspect the proportion is even higher today. The 30% standard, by the way, is Canada Mortgage and Housing Corp's determination of when a household is in core need with respect to the cost of their housing. In other words, if you're paying more than about a third of your income on housing, you're paying too much.

Given all these difficulties, when does rental housing get built? The only time rental housing gets built is when governments invest money in it. This can be via the tax system for private construction or direct subsidies to private construction or direct government investment in public or cooperative housing.

The proposals contained in New Directions won't stimulate construction of new rental housing and will serve only to drive rents up and reduce the supply of affordable housing. The government's stated intention is to stimulate new construction, but even the report used to justify this proposal is dubious about how effective it will be.

I'm asking the Legislature to turn down the government's proposals simply because they will be ineffective in achieving the goals set out for them. They won't work.

Mr Mario Sergio (Yorkview): Thank you for your presentation. You have brought excellent information to the attention of the committee. I have one question for you. One of the objectives of the proposed tenants' reform package here -- I'll just mention three, and I would like to have your comments for the benefit of the committee here. One of the objectives is to protect tenants from unfair and high rent increases, harassment and unjust evictions and to provide strong security of tenure. The second one is to focus protection on tenants rather than on units, and the third one is to provide a faster, more accessible system to resolve disputes between landlords and tenants. As part of a ratepayers' association, I wonder what are your comments with respect to some of the objectives of the package.

Mr Rootham: The objectives are certainly worthy. The question about whether or not this particular set of proposals is going to achieve those objectives is I think substantially at question.

I particularly focused on a slightly different objective. My understanding is that many people have been making comments about the likelihood of these proposals meeting the objectives you've talked about, and my sense is that the conclusion is that these proposals simply won't do those things either. So while the first page of objectives is considered to be quite wonderful and sweetness and light, when you get into the nitty-gritty, there seems to be a complete failure.

Mr Rosario Marchese (Fort York): Jim, thanks for coming. I'm not sure whether you were here when Professor Hulchanski was here.

Mr Rootham: My understanding is that we basically agree except that I don't think there was ever any effect of demand.

Mr Marchese: I praised him for demystifying some of the concepts and assumptions, and I want to do the same with your presentation. I want to say Fort York NDP is well represented by you this morning.

Mr Rootham: Thank you.

Mr Marchese: He said yesterday that what the effect of this proposal would be is to transfer money from the tenants to the landlord. Is that a fair statement?

Mr Rootham: That is an absolutely correct statement.

Mr Marchese: On the issue of demand and supply, part of the problem, just to get your reaction to that again -- he said that the reason there is no supply is because there is no demand, people don't have the money to buy, and essentially if you want to create that demand what you have to do is give all those giveaways, as the Lampert report says, to the developer, but even if you do that he says that what will be built will not be at the low end but at the high end.

Mr Rootham: That's certainly true. Except under conditions of extreme overcrowding, building for low-income tenants is not particularly profitable. In the limit you can be profitable, but at that point you're talking about the cages of Hong Kong. Those probably make money.

0920

Mr David Tilson (Dufferin-Peel): Sir, you represent Mr Marchese's riding association and I can tell you that the facts are to date that your government's housing policies over the last number of years have simply been an absolute disaster. They've gone nowhere. Facts have been presented to these hearings that still more than 10% of all rental stock needs substantial repair work; there's still more than $10 billion in repairs needed to rental buildings across Ontario; there's all kinds of apartment buildings around this province with literally dozens of work orders for maintenance; there's buildings with hundreds of work orders that are outstanding.

The most important fact that's been presented is that last year only 20 private-sector rental units were built in the city of Toronto. Across the province I don't know what they were, but I'm sure they were not much substantially higher.

Non-profit housing: If you witnessed any of the hearings from the Provincial Auditor or the public accounts committee, they show that that whole program was an absolute disaster. It was completely wasteful. In fact in some cases it approached fraud. A taxpayer paying for these things, that policy didn't work. Tenants continued to come to these hearings talking about unsatisfactory health conditions and conditions of their buildings and terrible actions that landlords are taking.

Your presentation is almost entirely a critique of this paper. The purpose of this paper is to ask individuals, whatever political affiliation you are, or if you have no political affiliation, to come forward and offer suggestions to improve the housing policies of this province. Do you have any suggestions to improve the current housing policies of this province?

The Chair: Unfortunately, Mr Tilson, we don't have time to hear the answers, so maybe he could put those in writing to us. Thank you very much, sir. We appreciate your attendance here this morning.

MELCHIOR MANAGEMENT CORP

The Chair: Our next presenter is Ms Ardel Johnston, Melchior Management Corp. Good morning. Welcome to our committee.

Ms Ardel Johnston: Good morning. As the Chair has indicated, my name is Ardel Johnston. I'm a lawyer by training and I have worked almost exclusively for apartment owners for the past six years. As such, I believe that I've developed a good working knowledge of the area, its problems and hopefully its potential.

I have prepared a paper but I'm not going to read from it today. I think that's kind of a boring exercise. I am going to paraphrase some of the ideas in the paper. I hope that you'll have time to take a look at them. Particularly I would hope that you would at least have the time to take a look at the conclusion on the last page and a half.

I'd like to begin today by defining what rent control is. I think there are a lot of definitions of what rent control is. I think from the landlord's perspective rent control is the continued expropriation of income, and therefore equity, without compensation. A lot of the speakers who have spoken in the past few days have addressed the issue as an issue of money as between landlords and tenants, and in effect there is a question of money; that's obviously the basis of why landlords invest. It is a business and we understand the business aspect. However, rent control attempts to address a social issue by putting all of the burden of that social issue upon the landlord.

I've read with interest the comments of Mayor Barbara Hall and Chairman Alan Tonks. The Toronto Sun has reported that Mayor Hall believes that the proposed reforms will kill affordable housing within five years. They quote her as saying that many groups will be severely affected, including seniors, low- and moderate-income families, low-income singles, the hard to house, those who are psychiatric, new immigrants, refugees and single-parent families. I note that list reads like the who's who of social program delivery service.

It seems the municipalities are very afraid of the responsibility of having to provide housing for these groups and the costs that involves. There is no question that these people need affordable housing. What we question is whether rent control is an appropriate method to deliver that service and, secondly, whether it is appropriate for society and governments, be they municipal, provincial or federal, to place the social responsibility for providing affordable housing solely on apartment owners.

On the first point, the delivery of the service to the group that needs the service, the evidence is that rent controls are extremely poor at delivering services to those in need. Take, for example, a situation where the cost of rent in a 100-unit rent-controlled building is $750 per month. Assume that the landlord could otherwise rent the units for $850 per month. Perhaps half of the existing tenants could afford to pay that amount and perhaps half couldn't; perhaps they couldn't even afford the rent at $750 a month. Under the current system, the landlord has no flexibility to adjust his rents. He cannot afford to give assistance to the needy tenants because he is forced by legislation to give assistance to all.

The government has essentially expropriated the landlord's right to earn $10,000 of income per month, which incidentally is the equivalent of depriving the owner of about $1.2 million in equity as evaluated by lenders and appraisers. Presumably the purpose of that expropriation is to assist the needy, but not all tenants are needy.

A good number of tenants are not needy at all. In fact, we recently were given an opportunity at one of the projects which we manage to apply for a CMHC program to improve the building. The project has very low rents and the CMHC program would give landlords money on an interest-free basis forgivable over time in recognition of the fact that the rents would not ever be sufficient to do the kind of work that an older complex requires.

The only catch was that eight units out of the 24 had to be supplied to tenants earning less than $26,000 per year, which was considered to be the affordable income limit. We couldn't meet that target. Only two of 24 units were in fact rented to people who would quality for low-income housing. The rest of the tenants were much above that amount.

The second issue I want to address today is the question of fairness.

Nowhere is the disproportionate result greater than in buildings where rents are chronically depressed. We manage one building in the city of Barrie which is located directly on the bay. It has extremely large units; literally everything is included in the rent -- heat, hydro, water, parking, taxes. The rent for a two-bedroom unit is currently $532.

Let me assure you that the waiting list for these units is very long. The landlord can afford to be very choosy when selecting a tenant. Not surprisingly, most of the tenants in the building are professionals, such as teachers or nurses. Some are retirees who cashed in the equity in their homes and businesses and live on their interest and their pensions. Many leave their units vacant for the winter and fly south to sunny climates.

The point is, these people are receiving a subsidy from the landlord's pocket in the neighbourhood of $5,000 to $8,000 per year, and we question whether these are the people who could most benefit from this subsidy. Is it fair that the landlord should pay? Is there a better way to deliver a service? With respect to the persons who do need housing cost assistance, I ask again, is it fair that the landlord should pay and are they being served by the rent control program?

Landlords didn't create high unemployment. They didn't cause pensions to be insufficient to meet the cost of living. No one suggests that food stores should be required to hold the line on prices in the face of other independent economic factors.

0930

I've assumed that we're here today in recognition of the fact that the rent control system is not working. What we need is a fair system, one that delivers the service -- affordable housing -- to the people in need at a reasonable cost, which we believe should be borne by society and not solely by landlords.

What is fair? At the very least, fairness should require that people in a similar unit in a similar building be charged the same rents. This is not the case currently. In certain buildings, for historical reasons that have no relevance today, rents are not equal for equivalent space. The application of percentage-based increases has skewed that difference over time through the miracle of compounding, and that difference has become more pronounced.

We have an example in one of our buildings, where some of the one-bedroom units are more expensive, and now significantly more expensive, than some of the larger two-bedroom units. The price for the two-bedroom units is all over the map in that building. For no apparent reason, some two-bedroom units are more than $100 more per month than others. There is no rhyme or reason to that. As I have said, the tenants who can least afford to pay are not necessarily the tenants in the least expensive units. For the higher-paying tenants, the status quo is status woe. They would like to see an element of fairness. They don't understand why they are paying more for the same service that their next-door neighbour is receiving.

We strongly urge you to include in the legislation a provision to allow for equalization of rents within a building for existing tenants by allowing landlords to take larger increases on the lower units in exchange for taking lower increases on the higher-priced units. Equalization is not about putting money into the landlords' pockets; it doesn't do that. It's about levelling the playing field for all tenants so that everyone pays their share and receives the same products and services.

Returning for a moment to the case of a building with a chronically depressed rent, the landlords who own these buildings are in desperate need of your consideration. Tenants in these buildings rarely move. They know they have a great deal and they aren't about to give it up. As I have indicated, in one case where we manage a building that is all-inclusive, the rents for a two-bedroom unit average $532. The landlord must make that money pay for heat, hydro, water, taxes, maintenance, landscaping, snow removal, mortgage, a superintendent, and somehow manage to put money aside for capital improvements. Is it any wonder that maintenance and capital improvements are left undone?

Even if the landlord could somehow finance the improvements under the current system, in all likelihood he won't even recoup his costs. Three per cent of $532 isn't very much money, particularly if you look at how the system works with respect to the current amortization periods, which are extremely long and require that the landlord take a lot of money out of his pocket up front, with a potential for receiving part of that in return over a very long period of time.

It's not surprising that the owners of buildings with chronically depressed rents have been losing their buildings in this province. Again, the reasons these units are rented for such low amounts is historical. Perhaps the owner secured long-term financing and wasn't raising rents to cover increased interest charges immediately before the rent freeze came into place. Perhaps the owner really believed that rent control was a temporary measure so instead of saving up his money and his work and doing improvements on a five- or 10-year schedule, he consistently spent money on the building, thereby depriving himself of the ability to earn an extraordinary rent increase. Again, whatever the historical reasons, they are of little relevance today. These landlords are not making big profits. Most can barely get by. They would probably sell, if they could, but who would buy such an investment?

As a group, if we ignore their plight, we do so at our peril. As we have pointed out, these units are not necessarily rented to the needy. We propose that those buildings with chronically depressed rents should be given an opportunity to phase in rent increases over time, perhaps five or 10 years, to allow them to return to a market-averaged rent. That rent could be calculated by the province from the information available to them, pursuant to the new property tax assessment guidelines. This would eventually get those landlords on to an even plane with others and give them the ability to finance necessary capital improvements. That will create employment, which is a happy corollary. Surely this would be preferable to the other option, which is ultimately to lose those units because they are uneconomic to run or to force the landlords to become slum owners, also shortening their useful lifespans.

Next, I would like to address the issue of converting to condominiums or cooperative housing. The first issue that I would like to look at here is the question of what the goal is when we sit here today. Is the goal to simply preserve rental units in the economy or is the goal to provide an affordable housing alternative? I think that apartments converted to condominiums do provide an affordable housing alternative.

If I can own a condominium unit with an equal or lower monthly payment and a chance to develop my equity, shouldn't I be allowed to do that? Shouldn't I have the choice? Hadn't we better be certain that we are not denying opportunity to those single-parent families, singles and low- to moderate-income tenants, before we decide to protect them by preserving rental units? We believe that conversions open up a world of opportunity to those tenants by providing them with a better option.

That said, we understand that condominium ownership is not for everyone. We believe that the legislation should minimize the impact on tenants by giving them a notice period to allow them time to move. That period should be about one year. Longer-term tenants who have an emotional stake in their dwellings should get an extra month's notice for each year of residence. The notice should be the first step that a landlord takes in the whole long process of conversion, and the notice period should run from the first day of that notice, thereby allowing the landlord to comply with all of the other conversion periods while the notice period runs.

Landlords should be encouraged to give tenants the first option to buy their units and should give a rent credit, perhaps to a maximum amount of money or a maximum of six months' rent, to any tenant who chooses to exercise that first option. That would recognize the fact that a landlord has a savings involved in selling to an existing unit holder.

I would like to address, in the time remaining to me, a few issues which were discussed in the working paper and don't really relate to the main portion of my paper.

The first issue is maintenance. We believe that maintenance is the cornerstone to good building ownership but that maintenance is a responsibility that is borne in fact by the tenants and the landlords. While it's the landlord's obligation to do the work, the tenants must bear up to their responsibility to inform landlords when the work needs to be done. The landlord does not live onsite; particularly, under the proposals, does not have access on a regular basis to the unit. What we would like to see is the legislation codifying what is currently good business practice, and that is that the tenants should be obligated to inform the landlord in writing when maintenance is required, prior to having a property standards officer step in.

We believe that frivolous applications should be discouraged by the use of a nominal charge in the range of $25 to $50. It should be payable by the tenant at the time the complaint is laid, and when the inspector comes to view the property, if the landlord is indeed in default, the tenant should be entitled to reduce the amount of that payment from his rent, thereby putting the burden of that payment on the landlord's shoulder.

The charge, as I said, should be recouped by way of a rent reduction if the property standards officer believes the call was justified; for example, if it results in a work order or a work direction. As the fines proposed in the paper are punitive, the landlord should in every instance be entitled to be present at the time of an inspection by a property standards officer.

There is one issue that the paper doesn't mention that to landlords is a major issue, and that's the area of cleaning and damages. It has some overlap with maintenance.

Currently, under the changes made by the NDP government in the last legislation, the landlord has no ability to recover the cost of damages caused to the unit by a tenant against a tenant, other than to take them to court. As you may be aware, Small Claims Court often takes two or three years to get a resolution, and then you're left with a judgement that you have difficulty enforcing.

We think, out of fairness to the landlord and to all tenants, who essentially bear the costs of maintenance in terms of repairs to those units out of a maintenance budget, that those costs, where damages are caused by a tenant, should be easily and clearly recoverable to a landlord.

0940

We also believe that the law should mandate the use of move-in and move-out reports so that it is clear what the condition of the unit was before and after the tenancy. We believe that there should be a regulated cost for common cleaning tasks that tenants currently choose not to do, such as cleaning fridges and stoves. I can tell you that if you go into a unit and you find the fridge empty, it's one issue; if you find it full of rotting food, that's a major cleaning issue.

Repairs of tenant-caused damages should be chargeable to the tenant at the landlord's actual cost, and the landlord should be entitled to deduct those charges from a deposit which should be characterized as a security deposit, not as a last month's rent.

I know I'm running short on time so I want to very quickly just touch on a couple of issues.

The Landlord and Tenant Act, as it works in Barrie, works very well for landlords, and what we would really hate to see is a new solution imposed that works for Metro that would interfere with what is already a working system in Barrie. I've made some comments in my paper with respect to the small improvements that could be made in that system vis-à-vis timing.

The one major change that we would like to see is the courts having an ability to mandate a settlement arrangement between landlords and tenants where there's a proposal for payment which the landlord is willing to accept, and then to be able to enforce by way of writ of eviction that payment arrangement. Currently that is not the case and the landlord must go back to square one.

The Chair: Ms Johnston, you're down to your last 30 seconds.

Ms Johnston: I didn't think it would take this long and I really apologize for that.

Having said that then, perhaps if I could just turn you to my conclusions, if you have the opportunity. Thank you.

The Chair: Thank you very much. We appreciate your input into our deliberations.

BURTON-LESBURY HOLDINGS LTD

The Chair: Our next presenter is Richard Burton from Burton-Lesbury Holdings Ltd. Good morning, Mr Burton. Welcome to our committee.

Mr Richard Burton: Good morning to you. You're new faces. I'm an old face here. I've been making submissions to these committees since 1975 when we started the temporary rent control then, at the time to complement the federal legislation.

I'm a very small landlord. Together with my brother, I am following in my father's footsteps. We only own 300 units. You guys need me a great deal. We're the builders of Toronto and we're the people who have housed Toronto. I won't cover everything and I didn't really make a formal paper because I want to talk more freely. I thought it would make a presentation that was more sincere, so I'll just touch on a few things.

Decontrol of vacant units: The tenants don't seem to like this. They're afraid they're going to be somehow harassed out of their apartments. But there is a market out there. I'm a landlord, I know there's a market. This first guy here who was talking, he's got economics from Jesse Ketchum public school. He doesn't know anything. I rent apartments. I know what creates vacancies and I know I've got to work awfully hard to rent apartments. I have to keep my rents realistic. I have to keep my apartment very, very nice looking. I have to give a good, clean, painted apartment to a new tenant or I won't rent it. I'll suffer a vacancy. I know that. This guy doesn't, and the tenant committees that are making submissions don't know it. They don't run apartment houses like I do.

There are scads of other vacant units. There are all sorts of condominium units. When rents start getting around $700 or $800, tenants will rent these condominiums, and the owner of the condominium might be renting it at less than it cost him or her. But there are vacant units. There are all sorts of basement apartments, apartments above stores. I've just rented my son who's going to school now here in Toronto a very nice apartment above a store, a one bedroom, centrally air-conditioned for $520. So I don't know where these guys are getting their numbers from, perhaps outer space.

I wouldn't believe these fearmongers like Kay Gardner who gives us some speech. Here she says, "If we have decontrol we're going to have 60% rent increases." I've honestly got to say, and not meaning to insult the woman -- she works hard -- I don't think she's bringing all the sandwiches to the party. Rents will only go up by affordable rates. If the landlord tries to get more, then the landlord will have a vacant unit and vacant units don't pay rent and that doesn't pay expenses.

Sure, there are a lot of tenants who are paying too much and who will be paying too much of their income towards rent, and that's very wrong, but you guys have got to help them. They probably also have trouble paying their grocery bills. I know a guy who lives in the Manulife building and a guy who lives in the Lonsdale Towers opposite Upper Canada College and they like rent control. They tell me frankly: "You know what? My rent's only $2,500 instead of $3,000." But this guy's still protected against rent control. He doesn't need rent control. I think the idea is to assist those tenants who are poor and give them the money.

This idea of harassment and tenants' fear that they'll be harassed out so the landlord can replace the tenant with a higher-rent-paying tenant I believe is nonsense. First of all there is security of tenure. I think because of this vacancy decontrol, landlords have more to be afraid about than tenants do, and tenants will start subletting their apartments or assigning them. They've been doing it legally, illegally; somehow perhaps they'll be renting it out and the old tenant will still be tendering the cheque to the landlord so the landlord may never know about it. I understand this goes on in New York. So I don't see that happening again. It is fearmongering without any soundness.

Speedy evictions: Up until now evictions have been handled by the courts and there was some reference to the Supreme Court of Ontario many years ago. I understand that's changed and now non-judges will be able to make eviction orders. I'm very frightened of that. These non-judges who have judgelike powers will be somewhat non-professionals. I urge you that when you do get these people, they should be trained and they should have to follow proper jurisprudence and stare decisis case law.

There should also be some sort of mechanism for emergency speedy evictions. We had a tenant who was seriously mentally ill. He went outside to attack somebody who he thought was putting electricity into his apartment. He came after him with a knife. Luckily that other tenant happened to be a policeman who could handle himself properly. But this tenant, after he made bail, still hung around and the other tenants were very frightened.

Evictions for non-payment of rent should also be speeded up. A legal aid worker bragged to me two or three years ago that they can hold up an eviction by as much as three months and squeeze three months' rent out of a landlord, and they do that. I know a lady where it was done. She just rents out three rooms in her house and she was financially devastated.

The concept of maximum rent is a good one and I suggest that you keep it because it's part of a free system. Tenants are still protected by market forces. Tenants are still protected by security of tenure. Maximum rent, vacancy decontrol, it all adds up to a free market and the free market will mean that units will be built. When we get into this units will be built, there's been criticism, "If we remove rent control alone landlords won't build," and that's right. But there are so many roadblocks, and I know because I'm a builder and I'm a landlord.

We even tried to build some infill units to use some unused garage space to build units, but there are just too many hassles. There are all sorts of taxes, lot levies, special assessments, the buildings department and of course the higher realty taxes which are three or four times the rate of private units. Kay Gardner doesn't tell her tenants that the municipal government is responsible for each unit paying about $1,000 a year in taxes.

0950

So make the rent control easier and remove all the other multiple roadblocks and disincentives. Make it easier for landlords to build and you will have units, and then you'll have a market. Wouldn't it be great if we had here a price war like there is with Pepsi-Cola and Coca-Cola with apartments? Boy, there would really be lower rents and better apartments.

I think most urgent -- I was talking about it before -- is the government's got to get out of the building business because you guys don't know what to do. You don't know how to build apartments and you don't know how to rent apartments, and whenever you do you mess it up badly. It costs double, triple, four times as much for you to build and rent apartments, and the figures are not secret.

There were some buildings at Bathurst and Eglinton, again a Kay Gardener child, and you guys ended up paying well over $100,000 to buy these units and to fix them up. And by the way, the repairs you did there was what was generally frowned upon when the private sector did it. You were well over $100,000 and you didn't add any more units. The private sector knows better. They're far more cost-effective. They're far more diligent. Let us do it because we know what we're doing and frankly you don't. You guys govern and leave the building business to us.

Looking back on my notes, it's a fear that only high-end units will be built. That's probably right, but if high-end units are built, then the lower-end units will be freed up. Those landlords, to stay competitive, are going to have to fix up those buildings and keep their rents reasonable or they'll be vacant. That's all I've got to say.

Mr Marchese: Mr Burton, needless to say, I disagree with you and with the previous speaker whom we didn't have a chance to ask some questions. But I'm glad you're bringing all the sandwiches to the party, because somebody should, obviously.

Mr Burton: You must be an NDP.

Mr Marchese: How did you guess that?

Mr Burton: Because you don't know what you're talking about.

Mr Marchese: It seems here, Mr Burton --

Mr Burton: Are you a builder?

Mr Marchese: It seems that you and the free-market Tories who support you are the only ones who understand, and it seems as well that all the other people who have come in front of this committee don't understand because, first of all, they're not landlords and they're not builders. So thank the merciful Lord that you're here with all this wonderful builder and landlord knowledge to enlighten us, those poor folks of us who are here and listening and have come as deputants who know nothing about it.

Professor Hulchanski says the reason you are not building is because people can't afford it. Their wages are down; they're unemployed, and largely by Liberal and Conservative policies. They're not building because people can't afford to build. Then you say -- Mr Hulchanski says that even if you give all the giveaways that you want -- that this is where you want government to intervene, very interestingly enough -- you'll be building at the high end and you seem to admit that -- and then you say you'll free up all the other units. What other units? The Rental Housing Protection Act which protects those rental units -- are likely to be converted, likely into condominiums, they say. What units are going to be freed up?

Mr Burton: I don't think they're going to all be converted. You see, again, you don't know. You're not a builder. You don't have a clue. What was your job before this?

Mr Marchese: I was a teacher many years ago.

Mr Burton: Of course you were a teacher. You know nothing about building and about running apartments.

Mr Marchese: Thank God you're here.

Mr Burton: You're all the same, all you teachers.

Mr Marchese: Thank God for bringing the sandwiches to this party, because you're the builder and you know and all the tenants don't know anything.

Mr Burton: I guess we also have to thank God that for some reason He found a purpose for you, because you don't know what you're talking about.

Mr Marchese: Thank you for coming in and protecting tenants, Mr Burton.

Mr Wayne Wettlaufer (Kitchener): Mr Burton, I have a question relating to a government-sponsored non-profit home -- not home, an apartment -- that was built in my area. It was completed last year and I had occasion to visit, attend the opening. This building was 200 feet long, roughly, built for seniors, and there were no sprinklers in the building, there was one fire extinguisher at each end of the building on each floor, the windows were very narrow, too narrow for a senior to get out in the event of a fire. I wonder if you could comment on that type of fire protection, in view of the fact that a private builder would probably have to do more.

Mr Burton: I guess the building shouldn't have been built. Somehow, some municipality approved specifications that they should not have approved. I can tell you now, in my buildings, which are about 35 years old, I'm spending now -- they happen to be low-rise, so I fall under a less stringent part of the fire code -- $600 or $700 a unit to bring them up to code. If some municipality messed up here, then you should definitely go after the building. I certainly want to keep my buildings safe. I know my insurance company is also knocking at my door all the time to make sure that the buildings fall within the code, because they obviously don't want to be having to pay out if there is a disaster.

Mr Wettlaufer: But this was the previous government's code, under which this building was built.

Mr Burton: Yes, but the code is changed now and all landlords are required to bring their buildings up to current code.

Mr Wettlaufer: It's only one year old.

Mr Burton: Then something went wrong, somebody made a big mistake, probably the municipality.

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

Mr Burton: I know Mr Curling from the old committee days.

Mr Sergio: He's a champion.

Mr Alvin Curling (Scarborough North): The good old days.

Mr Burton: He's a good guy, and he's getting better looking.

Mr Sergio: Of course; he's a Liberal.

Mr Curling: That's my time; watch it.

Thank you very much for your presentation. You said that the government should get out of the housing business. You are consistent with Mr Leach, the Minister of Housing, who doesn't want anything to do with housing. I think government should play a very, very strong and important role in Housing. Tell me, Mr Burton, could you name one property that the government has built in the last, say, 15 years?

Mr Burton: A property the government has built?

Mr Curling: Yes.

Mr Burton: No, I don't know them, but I know they --

Mr Curling: They haven't done any. Because when you say they don't know about building, people have this perception that the government is building. It is you and the developers who are building it. All the government has done is support it, mortgage it.

Mr Burton: Then they're --

Mr Curling: I just want to make that very plain.

Mr Tilson: The Ministry of Housing operates those. They supervise the buildings.

Mr Curling: The fact is, even if there are no elevators or what have you, or it is badly done, government isn't building any buildings. I want to get that very clear.

Tell me one other thing. Do you believe, Mr Burton --

Mr Burton: Wait, let me answer that one. There might not be government masons and carpenters out there --

Mr Curling: You told my colleague that he's a teacher --

Mr Burton: They're still so mixed in there that they are creating a cost for that building that the private sector wouldn't create. They're getting into these co-ops. These co-ops are the greatest thing because they've got 5% mortgages. That money doesn't come from outer space; it comes from taxpayers. I don't care from what level of government, it's still my pocket and other taxpayers' pockets.

Mr Curling: So you agree the government is not building any of these and they are not contractors themselves.

Mr Burton: Okay, next question.

Mr Curling: Do you believe that it is a right for every individual in this province to have access to decent, affordable and safe accommodation? Is it an inherent right?

Mr Burton: Absolutely, and those who can't afford it, help them, but don't help the guy who lives in the Manulife building at $3,000 a month. He doesn't need you and he shouldn't have you. Just give the money to the needy and also help them with their groceries and to buy diapers for their kids too. It's stupid. You guys are giving away scads of money to people who don't need it and you're running this mammoth rent control machine. I don't know how many millions it costs.

Mr Curling: But the maximum rent is a powerful --

The Chair: Thank you, Mr Curling.

Thank you, Mr Burton. We appreciate your attendance with us today and your input into the process. Good day.

1000

WEST SCARBOROUGH COMMUNITY LEGAL SERVICES

The Chair: Our next presenter is Sheeba Sibal, from West Scarborough Community Legal Services. Good morning. Welcome to our committee.

Ms Sheeba Sibal: Good morning. My name is Sheeba Sibal. I work with the West Scarborough Community Legal Services. I'm a community legal worker there.

Our clinic serves west Scarborough, which is bounded by Victoria Park and Midland, and Lake Ontario to Steeles. We're a non-profit organization and 50% or more of our caseload deals with landlord and tenant issues. Our clinic is also involved with the Scarborough Tenants Association and we have firsthand knowledge of all the problems the tenants face when they're trying to get property standards inspectors out to inspect their buildings.

I live in Scarborough and have lived in low-rent, affordable housing and have tried to get into high-rent, non-affordable housing, but the landlord didn't want me there. But that's a different issue.

A number of tenants and tenant advocates have already presented extensively to this committee their views on the proposals in New Directions and have essentially informed the government that they don't like it, that they don't think it's tenant protection. We endorse those views. In fact, we specifically endorse the reasoning and recommendations made by the following organizations: the Legal Clinics' Housing Issues Committee, the Tenant Advocacy Group, the Federation of Metro Tenants' Associations, the Coalition to Save Tenants' Rights, United Tenants of Ontario, the Advocacy Centre for the Elderly, and the Scarborough Tenants Association, which will be presenting its brief this afternoon.

We also want to endorse the submissions made by the Tenant Advocacy Group regarding the tribunal issue which was given separately, prior to the hearings, to the ministry itself.

We believe New Directions is not the vehicle to give any incentive to landlords to build more. It's really a fraud on the tenants. The first issue we take with the government is with the process in which this whole thing is being carried out.

First, the government decided by itself that the private market solution is the only solution. They went and hired a consultant who only consults with landlords and builders, does not have any input from the other players who will be affected and gave the report to the government, which the government put in their New Directions package. The government paid Mr Lampert. What is it doing? It's taking taxpayers' money and giving a mouthpiece to landlords to lobby the government. Where's the fairness in all that?

What the government should have done was to get a commission, get all the parties at the table and get their views out, then prepare some sort of package to present to the public to give their opinions on.

We see three separate issues. One is creating more housing stock, the second is repairing and maintaining existing stock and the third is better administration of rent control and the Landlord and Tenant Act.

In so far as the first issue is concerned, creating more housing stock, getting rid of rent control is not going to solve it. Most builders have said so. What they really want are incentives, so what we're looking at is that the government will have to put out some money to landlords to make it profitable for them to invest in rental housing. The government willy-nilly will have to get into the housing market. They don't want to do non-profit housing, but they will have to give money to the builders.

Second, landlords say there is no money now in their pockets to maintain the buildings that have fallen into disrepair. The government doesn't want to put out the money to help those landlords, which is fair. The landlords should have done that in the first place. Where are we going to get that money to get the landlords to maintain their buildings?

The third issue, as I said, is the administration of justice. Administration of justice is never cheap and never will be. If this government is trying to look for a cheap solution, it never will find it. So long as this economy is governed by the motive of greed, you will not find justice, you will not find fairness and you will not find compatible relationships between landlords and tenants.

To give just one example of what this process has started in the relationship between landlords and tenants, this is the first thing we heard yesterday when a couple of tenants called us. They are long-term tenants in this particular low-rental building. They wanted to switch their apartments for some family and personal reasons. They approached the landlord, the landlord agreed, everything was done and the paperwork was ready. They are to move into different apartments in the same building on September 1.

Lo and behold, a couple of days ago the superintendent walked to these tenants and said, "If the New Directions package proposal goes through, will you sign an agreement now that your rents will go up?" What were the proposed rent increases? For a one-bedroom, from approximately $450 to $850; for a two-bedroom, from approximately $600 to $900; for a three-bedroom, from approximately $950 to $1,200. This has started now, when there is no legislation. What's going to happen when the legislation actually passes?

The second issue has nothing to do with the package but shows you how the landlords manipulate the system. When the economy went into a depression, the fact is that a lot of people lost their jobs and couldn't afford the rents they were paying. A lot of rental buildings got very high maximum rents even though those buildings were not properly maintained, and in an open market they wouldn't fetch that rent. Landlords, realizing what the situation was, started offering discounted rents. What was the catch? They would make the tenant sign an agreement together with the lease saying, "Give us post-dated cheques for the 12 months you're signing the lease for," which is illegal under the Landlord and Tenant Act -- they cannot demand it, but it was a separate agreement, you see -- and several other clauses like no pets and things like that, which are also illegal under the Landlord and Tenant Act.

If the tenants complied with those conditions, then the discount rent would apply. If the tenants did not go along with those conditions, they would have to pay the maximum legal rent, which could mean a difference of about $200 to $300 between what they were paying and what the maximum legal rent was.

What was the effect? The tenants kept their noses clean. What does that mean? They did not ask the landlord to do any repairs in their apartment, and someone just suggested it should be mandatory on the part of tenants to ask the landlord for repairs. They do want to. They can't, because if they do they know that, come next year, the landlord is going to increase the rent above the maximum legal rent per the guideline, which they cannot afford. That is what is happening in the real world out there. You sitting here don't know it. This is what we're doing to bring it forward to you.

Mr Marchese: Mr Burton knows. He's a builder.

Ms Sibal: Yes, he's a builder.

Let's talk about Scarborough. We have approximately 28,900 units in high-rise apartment buildings -- private rental units, not non-profit and MTHA. This is just private rental. It translates into 650 high-rise buildings. What do we have? We have 12 property standards inspectors in the city of Scarborough, and only two inspectors are assigned to high-rise apartments. What does that translate into? Only one inspection per year of a building is done. That is if the property standards inspector is not hauled away on an emergency call and the regular inspection goes by the wayside. Landlords know that nothing is going to happen to them. Work orders will come and go but landlords will live on forever. Nothing is done.

You're giving more powers to the municipality. That's an excellent start; that is good. Hopefully they will get an incentive to do some work, but it will not happen unless and until they have more resources to get more inspectors. The province isn't willing to give that. You're giving powers without the clout. What's the point? Inspectors are not going to be effective unless there are more to do the job.

I have given 10 recommendations in my brief. I don't think I will have the time to talk about all of them but I suggest that you have a look at them. They are on pages 7 and 8 of my brief.

Let's talk about solutions. I don't know the gentleman's name, but I noticed him asking several times, "What's the solution?" I'm not Mr Lampert; I am not a builder; I am not an architect. I don't know the economics of all this but I believe I have some common sense. This is a home-grown solution that we've thought about and maybe the government should look at it. We say, give landlords the cash incentive that is needed.

1010

There was a speaker on the first day, a Mr Goldlist, who suggested getting rid of the 7% GST and, "Don't give us sales tax and reduce the property taxes," a few thing like that, an endless list. I know the federal government is the one which handles the GST, so the province can't do much about it. I'm not sure if this government wants to get rid of the sales tax for the builders, and it's the municipalities that will make a big noise if property taxes are reduced.

It's a tough political situation. So what do we have? It's back in your laps. The province has to do something about it and you have to put out some money. You'll have to figure out how much money you want to spend. You'll have to get an idea from what the builders want, and the province will have to figure out how many units are actually needed to alleviate the market so that the vacancy rate is not so low.

The other thing the government should take into consideration is the impact, that the need for more units is not equal across the province, that 60% of the building stock is concentrated in four major cities: Toronto, Ottawa, Sudbury and Windsor. This was from a study done by the Co-op Housing Federation. We're talking major stock in four cities and the other 40% spread across the rest of the province. What are really affected are those metropolitan cities or cities where there is a larger population concentration. You can't expect a builder in Barrie to say, "I'm hurting." There are not enough people living there. They will hurt.

What's the solution? We're saying, give some cash incentives to builders and let them start building rental housing, but it's not going to be a free-for-all thing: "Here is the money. Build, and let's forget about it." No. It's got to have some conditions to it.

The 2% increase, the rent under the heading of capital expenditure that the landlord gets every year, should be pooled in a capital reserve fund. This condition will be applicable to all landlords of new buildings and all existing buildings under rent control. Every item of capital expenditure has a lifespan, so a builder or landlord should have a fairly good idea of staggered times, when the next item will need to be repaired or replaced etc.

They can, when that particular capital expenditure is needed, put in a submission to the funding pool and get the money. Under no circumstances will they be allowed to get money for any other reason except capital expenditures or before it is actually needed unless they can show that damage was done because of an earthquake or a tornado or a flood or things like that which the landlord has no control over.

We say keep rent control but guarantee to landlords a percentage of profit over the inflation rate. Because capital expenditures will be taken from finances available in the pool, there will be no need for the ministry to calculate the costs-no-longer-borne provision which they are saying is administratively too expensive.

We say retain the provisions for the above-guideline cost of 3% and the two-year carry-forward, not more than that.

We also say that the landlord should be obliged to get a licence. Like any other business, if you operate a business you get a licence. You get a licence to be a landlord, to run your building; you pay a fee to the municipality to get it. That licence will be renewed at the regular fee if there is no work order. If there is a work order pending against you, you will get the licence but at a higher fee.

When it turns out that the licence has been given to that landlord at a higher fee, it means there's something wrong with the building. It could be because there's a problem with the maintenance or that the landlord doesn't want to invest or there's some other problem. At that point in time the landlord will have to submit to an audit to see what the problem is to make sure the expenditure is actually made on the maintenance he's supposed to be doing.

We believe that if the developers are really sincere in building, they should have no problems. They're getting better incentives. But if they're greedy they won't build, and then the government knows what the intentions of the builders are.

The second is upgrading of the existing stocks. Where are we going to get the money? We all know when a new building is built you don't need immediate repairs, and we also know that the buildings that do need repairs at this point in time will need repairs but over a length of time. It's not as if all the buildings are falling down on us and they all need repairs today.

There's going to be a plan which will need to be made by the government in conjunction with landlords and the municipalities as to which buildings need major repair, which are really in such a shape that if the repairs are done they can be brought back to standards, those buildings which need to be done now and those buildings which can be looked after five years down the road.

Where the money is going to come from is the capital reserve fund. Once the capital reserve fund starts, there will be money there. People who are putting it into the capital reserve fund won't need it tomorrow. They will probably need it five or six years down the road. So here's a pool of money which the landlords can access. They can be given it by submitting some sort of a plan which should be looked at by the engineers and accountants hired by people from the capital pool reserve fund. See the feasibility of it and then give a loan to those landlords on either an interest-free or soft interest rate.

The landlords would again have to submit to auditing, to see to it that those moneys taken out are spent on what they're taking it for and not invested in some overseas investment or something like that. Once the restoration work is completed, those landlords will get a licence from the municipality with a clean bill of chit, and the same process would then start applying to them.

This restoration plan that I've suggested can be staggered over a period of time. The interest on the loan, which the landlord would pay to the capital reserve fund, could be utilized to pay for the employees of the capital reserve fund.

The other thing, which I missed in the last bit, was that those builders who sell their properties once they've built it with the incentive, and they sell it for a profit, will return the incentive to the government, with or without interest, it's up to the government to decide. That incentive then can be reused for another landlord.

Who would this government choose to pay? How would they know that this was a good or a bad builder? Go back to your rent registries, look at them, look at those landlords who have taken extraordinary rent increases but not used them in their buildings. You can look at a building and see what the state of affairs is and you can look at your database and see how much money they've taken. Those builders you don't give money to. You give it to the builders who have a good record.

In conclusion, I have to say that if this government is really concerned about tenants, then you will give serious thought to what I have said today. You will either set up a committee to study its feasibility or get a research analyst or someone to do research on this, to look at the cost factors and then make a decision. Don't pass this legislation just like this.

The Chair: Thank you, Ms Sibal. You've used up your 20 minutes so there's no time for any questions, but we do appreciate your input into our deliberations..

ONTARIO FEDERATION OF LABOUR

The Chair: Our next presenter is Ross McClellan from the Ontario Federation of Labour. Good morning, sir. The floor is yours.

Mr Ross McClellan: Good morning, members of the committee. I'm director of legislation for the OFL and I'm very pleased to be able to make our presentation on behalf of our membership. We believe, as a matter of fundamental principle, that decent affordable housing is the right of all Canadians, that tenants have the right to security of tenure in their own homes and that our governments are responsible and accountable for ensuring that these rights are enjoyed by all our people. It's with that spirit in mind that we make our submissions to your consultation.

For those of you who are interested in trivia, I was a member of the standing committee that looked at the 1975 rent control legislation that was introduced by the Davis government. Since that time every elected government has introduced its own version of rent control. The Davis Conservatives liked rent control so much that they had three versions, the Peterson government and the Rae government also brought in their own versions, and here we are with the Harris government yet again. But this is the first initiative that has the avowed intention of phasing out rent control.

Under the government's proposal in the consultation paper, all new apartment units will be exempt from rent control and landlords will be given a window of decontrol for each rental unit which becomes vacant. Since about 25% of units change tenants each year, this is really a phased abolition of rent control in Ontario. Within four years virtually all units will have been decontrolled.

1020

It's our view that before government undertakes such a major change it should answer the question, what problem is it trying to solve with this decontrol proposal? According to the consultation paper, the heart of the problem set out is as follows, and I'm quoting from the document: "The Mike Harris government knows there is trouble in the Ontario rental housing market. Landlords have no incentive to invest in their buildings. Builders are not building new buildings." If that's the problem the government is trying to solve, it's crystal clear to us that phasing out rent control is not going to solve that problem.

After 20 years of debates about rent control in Toronto, there are really only two schools of thought. One says that problems in the rental housing market, which are real, are caused by rent control and tenant protection laws. It's held by this school that they act as barriers to profitable investment and if they were eliminated the private market would start building rental housing again, and we've heard that argument here again this morning.

The other school argues that rent control is an effect, not a cause, of the problems and a symptom of a rental housing market that is totally dysfunctional and which remains incapable, in straight economic terms, of building affordable rental housing.

Since last fall we've had the report by Greg Lampert, The Challenge of Encouraging Investment in New Rental Housing in Ontario, which was commissioned by the government. It's an excellent report, in my view, one which gives an historical perspective and which analyses the economics of Ontario's rental housing market with real rigour and clarity. We disagree with some of Mr Lampert's conclusions which openly and candidly incorporate the agenda of the housing development industry. But the economic facts marshalled by Mr Lampert settle once and for all the issue of cause and effect in relation to rent control.

Mr Lampert answers the central question on page 1: "There is serious doubt whether relaxation of rent controls will itself be sufficient to stimulate private rental investment on the scale required." That's because, no matter how you slice it, the economics of the private rental housing market don't work, for reasons that have absolutely nothing to do with rent control. Mr Lampert does us the service of identifying this reality and pointing out what the causes of the problems really are.

Let me quickly run through this again. I apologize if it's repetitive, but I think this is extremely important.

First, taxes and subsidies: Mr Lampert shows that the huge success of the private housing market in the 1960s and 1970s was the result of huge tax concessions and subsidy programs to housing investors. On pages 28 through 38 of his report, he reviews the far-reaching changes to the treatment of housing investment for income tax purposes that have been introduced since the tax reforms of 1972. A partial list includes major restrictions on the use of capital cost allowances for tax purposes, the abolition of MURBs, the end of the capital gains exemption, the new burden of the GST on the housing industry, land transfer tax and big property tax increases.

On top of the closing of hundreds of millions of dollars worth of tax breaks, the federal and provincial governments have killed a host of grant and loan programs which pumped more hundreds of millions of dollars of tax money into the hands of the so-called private housing market. We can remember their acronyms: MURBs, LDs -- for limited dividends -- ARP, CRSP, ORCL, ORCGP, and Renterprise -- Mr Curling will remember Renterprise. Each of these programs plowed hundreds of millions of dollars of tax subsidies into the private developing industry. All of these programs have been abolished. The so-called free housing market which built so much rental housing in the 1960s and 1970s depended on the steady feeding of tax dollars for its success. When it was weaned from its feeding of tax dollars, starting in 1972, it fell flat on its face and it's still lying there. Again, this is not my analysis, this is Mr Lampert's analysis, and I think people should look very carefully at what he has to say.

Second, development delays: Killing the golden egg-laying goose is only the first of three major economic hurdles confronting the rental housing industry, starting in the 1970s. There's a whole set of additional costs resulting from delays due to the complexity and red tape of the development approvals process. Decontrolling rent will not take one second off the development approvals process or save one penny of cost due to approvals delay.

Third, Mr Lampert points out the obstacle to the supply of private affordable housing created by the high interest rate policy of the government of Canada and the highly restrictive lending practices of the finance industry. Lampert points out that the real mortgage interest rate has been well above 5% since the 1980s as part of the new -- not-so-new -- zero inflation policy of the Bank of Canada. The labour movement has been arguing for many years now that long-term high interest rates have created a state of permanent recession. The devastating effect on the housing industry is just one more example of the wrongheadedness of that policy.

The only programs which have succeeded in supplying affordable rental housing over the past decade have involved subsidizing interest rates on the part of government down to the level of about 2%, and under these programs -- I think my number is right -- about 80,000 units of affordable rental housing have been built for families and seniors in Ontario since 1985. Without this additional pool of housing the supply problem in Ontario would be catastrophic.

In the face of these economic facts of life, pointed out by Mr Lampert, the end of subsidies and tax concessions, development delays and usurious rates of interest, what's the bottom line? Mr Lampert points it out: There's a gap of $3,120 per unit in his pro forma examples between what it actually costs to build an apartment unit in Toronto and what the market will pay in the form of rent. Those are the basic business facts of the rental housing market in this province in 1996, and these facts have nothing to do with rent control or tenant protection.

The housing industry proposes to solve its economic problem, as Mr Lampert tells us quite openly and honestly, by reintroducing huge tax subsidies to the private rental housing industry. That's essentially his solution, and you've heard that again this morning. The housing industry is proposing a package of reduced development charges, reduced property taxes, reduced GST, reduced CMHC insurance fees and the elimination of the provincial capital tax, and that's their supply program. It has nothing to do with rent control.

The attached table from the Lampert report, called "Overcoming the Gap," summarized on page 6 and detailed on pages 58 to 62 of his report, as set out on page 6 of our document, shows the tax subsidy program of the housing industry. This is their solution to the supply problem: reduce development charges; equalize property taxes -- that's a $1,200 per unit cost; halve the GST payable, etc. It all totals $2,965 in subsidies per unit. Of this amount, a total of $200 per unit is projected to come from reform of rent regulations, by which the housing industry means the radical decontrol of rent and a significant diminution of the tenants' right to security of tenure.

It's not yet clear to what extent the government is prepared to adopt the total legislative reform program of the housing development industry, but even if it is adopted in its entirety, 100%, it will still leave a dollar gap of $2,920 per unit, according to Mr Lampert's business case for an apartment in the city of Toronto.

To say that this is not a solution to the troubles afflicting the rental housing market is a monumental understatement. The government and the housing industry have failed utterly to make a compelling case for decontrol. It's a fact that the housing industry hates rent control and they have reasserted this fact. But it's also a fact that nothing in the fundamental economics of rental housing will change unless the government follows the advice of the housing industry to reintroduce massive tax giveaways and subsidies. The tax giveaways will have to be big enough to eliminate the economic gap of $2,920 per unit in Toronto, and that's hundreds and hundreds and hundreds of millions of dollars in tax expenditures that's being proposed here. These taxpayers' dollars will be earmarked for the construction of top-of-the-line luxury housing.

1030

At the end of the day, there really are only two policy options open to government: Government can subsidize the private sector to build luxury housing for the rich -- and that's basically what's being proposed by the housing development industry -- or government can subsidize the construction of affordable housing for low- and moderate-income Canadians. Mr Lampert's report, I think, has demonstrated the essential truth of this axiom that there are only two possible choices: subsidize at the top or subsidize for low- and moderate-income folks.

We argue that the present rent control regime should continue. It has successfully overcome the excessive bureaucracy of previous programs, which were based on a bureaucratic review and justification of rental increases. The current system, with an annual hard cap on rent increases, permits the market to operate effectively below the level of the cap, while protecting tenants from unscrupulous landlords. Such an authority as Mr J. J. Barnicke has stated that landlords have been able to make good profits under the existing system, better than 15%, he's quoted as having said.

Turning to the question of tenant protection, we feel that there's even less justification for changes to tenant protection laws than there is for a decontrol of rents. These changes are a fundamental assault on the principle of security of tenure, and like all previous misguided efforts in this direction, they are going to produce turmoil and strife, followed eventually by a recognition that the just demands of tenants for the secure enjoyment of their own homes is an irresistible force. We will limit ourselves to two comments.

Firstly, the establishment of an administrative tribunal to hear cases under the Landlord and Tenant Act will be a welcome step if, and only if, the Ontario tradition of respect for the independence, integrity and accountability of administrative tribunals is respected. The suggestion in the paper that the important quasi-judicial work of an administrative tribunal could be turned over to private contracts is, quite frankly, abhorrent. It's as abhorrent as the suggestion that judicial appointments should go to the highest bidder. I don't see any difference between the two propositions. Hopefully the impartial administration of justice in Ontario is not and will not be put up for sale or out to tender.

Nor should the final interpretation of fundamental legal rights of tenants and landlords be a job for bureaucrats. A landlord-tenant tribunal must be a full-fledged administrative tribunal with qualified members appointed by and accountable to the Lieutenant Governor in Council and with sufficient tenure to ensure independence.

Finally, the proposal to repeal the Rental Housing Protection Act will be a disaster for many tenants, especially in the Toronto area. Many of the victims of economic eviction which will result will be seniors on low and fixed incomes, and it was precisely to protect these folks from this kind of rapacious behaviour that the act was passed in the first place. Repealing the act is simply going to cause an epidemic of economic evictions. Everybody in the city of Toronto knows that. Chairman Tonks, who's not given, in my experience, to hyperbole, has described the proposals as catastrophic, potentially.

In conclusion, we believe that the major changes proposed in the consultation paper will produce a number of major crises in the housing market. Decontrol of rent during a period of historically low vacancy rates will send rates soaring, and there will be an epidemic of economic evictions of the most vulnerable tenants. We'll all be back here in three or four years trying to repair the damage if the government proceeds in this direction.

Mr Ernie Hardeman (Oxford): Thank you very much for your presentation. I appreciate the analysis of the Lampert report and I think it's important that the report has been mentioned many times during our hearings. In fact, it was a report commissioned to see what it would take for the development industry to start building rental housing. I think you outlined that fairly well.

I think the minister said in his presentation on Monday morning that this discussion paper before us is just a discussion document and it is only one of the factors that require addressing if we're going to meet the housing needs.

One of the incentives that we keep hearing will be required is equity in property taxation. Of two similar buildings, one a condominium and one a rental, the taxes on the rental one are four times higher. I guess my question really would be: Is the equality, or evening that out, an incentive to the builder, or is that addressing fairness to the renters, recognizing that everyone does come forward, and rent includes the cost of taxation and as they pay for the rental unit, they're paying their own taxes on their unit. So in making that fairer, is that an incentive to the renter or the landlord?

Mr McClellan: Two quick comments: It's an incentive if it's passed on to the tenants. The problem is going to be, though, you will discover that when you try to equalize property tax across the province of Ontario, everything that you take away or give with the left hand has to be given or taken away with the right hand. So the bulge will come out on homeowners. If you take $1,200 per unit, or whatever the number is, off an apartment in Toronto, somebody's going to have to pay for that, whether it's homeowners or small business people. All of the efforts to reform the property tax system have foundered on that shoal, including the most recent market value assessment proposal in Metro Toronto. So it's a big, big problem that you haven't solved in anything that I've seen yet.

Mr Curling: Mr McClellan, it's good to see you.

Mr McClellan: Good to see you.

Mr Curling: You have a great interest in housing and have been having quite an objective view about that ever since I have known you.

It seems to me one of the things we're talking about is Mr Lampert's report. Maybe this could be a formal request, that before we even proceed in even drafting any kind of paper for the minister, Mr Lampert should appear before this committee so that we could have a good discussion, because of some rather relevant things and pertinent and direct things he has mentioned. In some respects, the housing protection act and this new direction -- the tenants are complaining that although what we have in place is not perfect, it should not be scrapped or repealed, and to get rid of it would be disastrous because there are two basic things that must be addressed.

One of the things the consumers are saying is that they're not getting is a good, affordable and decent place to live -- in order words, repairs are not being done -- and the other is that the new supply is not coming in. If there was a strengthening in this, would you think that one of the main things they would like to see is that repairs are done, and just in commenting -- I know the short time I have -- that the guidelines that were put in place were done in a way that landlords had adequate funds in order to do that? Furthermore, even when the government went further and said, "There's a 3% that you can also apply for," people have come forward and said, "It should be 4% now and 5%." Do you think even doing it that way, any kind of repairs will be done and new affordable housing will be built?

The Chair: Unfortunately, Mr Curling, you haven't given Mr McClellan the time to answer the question.

Mr McClellan: I would just say that perfection is the enemy of the good.

Mr Marchese: Ross, I know you're not Mr Burton, who is a developer and landlord and knows everything, and I know you don't bring all the sandwiches to the table either, but you did bring some interesting facts that you drew from Mr Lampert's report, which was well researched. One of the points you made that he also makes is that you can't build unless you give all those tax breaks. Mr Burton says that co-ops take away from the taxpayer at the moment. But he doesn't say, for example, that in order to build, you've got to do what Mr Lampert said, and you've outlined all that long list. I think in the end, you're drawing from that very taxpayer too. Do you want to just briefly comment on that again?

Mr McClellan: There are only two choices. You can subsidize at the top end, and that's what Mr Lampert is proposing -- a whole new program of tax expenditures and tax subsidies -- and that will be successful, but you have to raise the public policy question: Is that the best use of taxpayers' dollars, or is it better to subsidize at the bottom end of the market for low- and moderate-income people? That's a decision the government will have to make. But there's no question that if you want housing supply, you're going to have to subsidize the industry, and Mr Lampert has demonstrated that.

Mr Marchese: They know that.

Mr McClellan: Absolutely. There's no way out of that.

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

1040

SPAR PROPERTY CONSULTANTS LTD

The Chair: We're going to go to Heather Waese, SPAR Property Consultants Ltd. Good morning and welcome to our committee.

Ms Heather Waese: I'm the president of SPAR Property Consultants Ltd, a consulting company that represents landlords across the province. We've provided assistance to landlords with residential holdings from a six-plex to a portfolio containing more than 5,000 suites. Since 1982, the company has represented over 300,000 rental units through four separate pieces of legislation.

Personally, I have lectured on rent regulation before the Law Society of Upper Canada, many landlord organizations across the province, and I've even been asked to speak at some of the programs sponsored for the staff of the Ministry of Municipal Affairs and Housing. Since 1985, I've been a director of the Fair Rental Policy Organization of Ontario.

The paper that I have tabled here today covers a number of issues that were addressed in the government's proposal of New Directions. Today I'd like to speak and just highlight a few of those areas on a brief basis. While the government's proposal has incorporated a number of suggestions that I believe are an improvement over the current legislation, I'd like to take this opportunity to highlight some of the problem areas only today.

The first topic is that of legal maximum rents. The government discussion paper proposes ultimately to eliminate legal maximum rents. I don't believe its an elimination that will benefit tenants, and I believe landlords most certainly would be unfairly dealt with. Maximum rent is a calculation of all guideline increases and allowable increases had landlords made application to the Ministry of Municipal Affairs and Housing from 1985 to today.

Under the Residential Rent Regulation Act, tenants were afforded the ability to challenge each annual rent increase, even if it didn't exceed a guideline amount. Under the Rent Control Act, that ability was further expanded to allow a tenant to challenge the rent at any time for any rent. Therefore, if a landlord was not providing a reasonable standard of maintenance and repair or if he had reduced a service, the rents would have been reduced accordingly. Therefore, the landlord earned the right to charge those maximum rents.

The previous two governments, which have been equally anxious to represent tenants' interests, have embraced the principle for a number of reasons. First, landlords could reduce a rent for a tenant who is experiencing financial difficulty without fear of any permanent loss of revenue. With maximum rents, landlords, in their preparation of notices of rent increase, if they made an error, had the ability to rectify that error in the subsequent year and still be entitled to charge a legal maximum rent.

Under a system without a maximum rent, a technicality on a notice of rent increase would be void and they'd lose the rent in perpetuity. Landlords could recover for capital expenditures even if they chose not to implement the award without the penalty of losing the amount that they had just earned. It also provided for greater certainty for lending institutions, which in turn assisted landlords in borrowing funds in order to do the capital improvements.

The removal of maximum rents would also negatively impact on tenants. Landlords would be reluctant to discount the rent for their good, long-standing tenants who may be in temporary financial difficulty. Necessary improvements might be delayed if landlords felt that they wouldn't be able to incorporate into a market rent the awards that they had just been given.

Landlords would be compelled to charge the full amount of even a guideline increase for fear of losing that excess amount that they would potentially forgo. I believe this would particularly disadvantage those sitting tenants, because it's a sitting tenant who is more likely to pay a guideline increase rather than incur the inconvenience and cost of moving.

The next issue I would like to discuss is that of vacancy decontrol. This has received a lot of attention, but after reviewing the benefits and disadvantages of vacancy decontrol and then recontrol, I don't believe that the landlords' initial response of optimism or the tenants' response of concern is really founded. Units where the rents are below those for similar accommodation have traditionally maintained low turnover rates. Under the proposed system, those turnover rates will just further reduce. Landlords will not be able to achieve market rents and tenants will bequeath those units as part of their estate.

At the other end of the spectrum, government statistics show that one third of all rental units in Metro Toronto and in excess of 50% of the units outside of Metropolitan Toronto are not charging the legal maximum rents. On turnover, a landlord may not even be able to charge the current rent that he had been charging the previous tenants. Obviously, vacancy decontrol wouldn't benefit that landlord.

In fact, the system would give incentive to those tenants whose rents are at the higher end of the market to move to either another unit or another complex. It would be possible under this proposed system for a tenant with a current rent of $1,000 per month but a maximum rent of $1,200 a month to move across the street and negotiate a rent with that landlord at perhaps $975 a month. You'd wonder whether that $25 a month savings would be worth the move. But if that new rent had an original maximum rent of $1,250, that tenant, by simply making the move, eliminated the maximum exposure he had in his original unit, saved $25 in his move monthly, and now is in another unit, identical to the first one, that had no maximum rent.

This turnover of rental units at the upper end of the market would result in increased vacancies, perhaps a reduction of rents, certainly loss of maximum rents, and an increased maintenance cost to landlords to prepare units for new tenants. In this case, only the transient tenant would benefit.

New Directions put a proper perspective, I believe, on the issue of maintenance enforcement, and that's the next area I'd like to address. It stated that most landlords look after their buildings; however, from time to time, there are serious health and safety issues that go unremedied. Removing the notice of violation provision and imposing a system of ticketing or laying charges I do not believe is a reasonable response to this problem.

In discussions with property standard inspectors, I was advised that notices of violation are issued for those contraventions that are not a health and safety issue to tenants. Work orders are then issued to the more serious problems and a reasonable time frame for compliance is allowed. Generally, the process worked well. The difficulties arose out of the limitations of the municipality. There were insufficient numbers of inspectors available and the turnover of staff occasionally contributed to a foulup of the system.

I do not believe that the automatic offence system proposed would better address the shortcomings of this current system. Both penalties could be appealed and cause further delays in resolving the problems.

Building bylaws address a wide scope of maintenance standards. In any given reasonably maintained building you will find a contravention today. The landlord may not even be aware of this contravention that exists in his own property. There must be a requirement in the new legislation for landlords to be advised of a contravention and given reasonable time to rectify the problem. This thought was also incorporated under the Rent Control Act.

One major shortcoming, though, of the Rent Control Act was the imposition of permanent rent reductions for inadequate maintenance. I believe it provided little incentive for landlords, once they were penalized, to correct the problem. If a rent abatement was imposed, I think it's more likely that a landlord would act promptly in order to terminate that abatement.

1050

The Rent Control Act also does not recognize the ability to reinstate rents when a discontinuance of service is restored. For example, some landlords discontinued the service of window washing when the province imposed a new bylaw requiring landlords to install roof anchors on the roof whenever any exterior work was being done. Later, the need for exterior repairs such as railing replacement or balcony concrete work compelled landlords to incur this at substantial cost, and once they had already installed the roof anchors, they would have been most agreeable to restore the service of window washing but for the inability of the legislation to restore the rent. In this case, both parties lost.

One further oversight in the Rent Control Act was the inability for landlords to receive compensation for the provision of a new service, one not previously incorporated in the rents. The most frequently requested service in a hearing of my experience is that of security. Both landlords and tenants would benefit from this increase of service, but the landlord was reluctant to incur such a cost without any compensation even though the tenants were anxious to pay an increased rent for that service. I believe there would be a benefit if thought is given to the incorporation of such a provision.

The paper that I've tabled addresses some other issues and the ones that I've now addressed today in greater detail and I would ask that you read through that and hopefully find some material or at least some thought for the future legislation.

Mr Sergio: Ms Waese, thank you for your presentation; very thorough. It seems that among the many concerns that we hear from both tenants and landlords has got to do with maintenance, repairs and communication between the two, partly because landlords say they don't have the money to conduct the repairs and partly because of the system, that it takes too long. If this is the case within the existing legislation, how do you think the problem is going to be solved or improved with the proposed legislation?

Ms Waese: I'm not certain that the problem in every case is that of lack of funds and I'm not certain that the problem is even exacerbated by the length of the process, because currently the process is a very short process. But I believe that there is a communication problem between landlords and tenants. They don't advise tenants when they're proposing to do work and so the inconvenience that they're put to, they find an insult. A lot of tenants do not advise landlords of problems that they have in their unit until they are large and annoying problems and that causes personal confrontation between the parties. So I'm not sure that's a legislative issue; I think that's more an educational issue.

Mr Sergio: Your mention of giving a landlord a particular time to rectify a problem: What would be a reasonable period of time, let's say, to fix a railing that is broken and is a health hazard?

Ms Waese: I think a responsible landlord would immediately attend to that.

Mr Sergio: Something that went to court and the court said, "You've got to do it within six months," and six months go by and nothing has been done, what happens?

Ms Waese: Are you asking currently or what should happen?

Mr Sergio: Both.

Ms Waese: Currently, if a landlord does not comply with a work order, then an order prohibiting a rent increase is imposed, and in some cases, if it's a financial issue, that has little impact to the landlord. I think if a landlord does not comply with a serious deficiency within a six-month period that he's given, then at that point in time I don't see a problem with fines being imposed.

Mr Marchese: Ms Waese, can you summarize the recommendations that you have for the government with respect to its proposal?

Ms Waese: I thought my paper did that adequately. I had my 10 minutes. It would take more than that to do it again.

Mr Marchese: Really? Okay.

You mentioned very briefly that where there's a problem, there's a problem of communication between tenants and landlords often and that sometimes they don't tell you until the problem is really major. Is that something that you think could easily be rectified by a landlord, say, having a meeting every now and then, either once every six months or every three months, to indicate to the tenants that if there is a problem within the unit that they should tell you so that it can be rectified, because you seem like the type of landlord who wants to get things fixed? Is that something that is done or could be done?

Ms Waese: Personally, I do, and I advocate it to all of my clients. Certainly during the process of a hearing where a landlord's seeking a rent increase, discussions take place that I hope after the fact continue on in the same lines. I do believe that there is an improvement and an enlightened tenant has a better relationship with his landlord.

Mr Marchese: In terms of getting more housing built, I don't think you touched on that. That's one of the main points the government really is talking about, although the real issue here is rent decontrol, for the most part, with other minor things thrown in. In terms of getting more housing built, one of the things Lampert says is you've got to do a lot of things to get the developers to build. Some people on the other side say the co-ops have been a big giveaway and a big tax expenditure, meaning we, the taxpayers, paid. But if we do what Lampert says, in terms of reducing development charges, equalizing property taxes, halving the GST and all of that and eliminating provincial capital tax, isn't that a big tax give-away that we, the taxpayers, would have to provide in order to get the developer to build?

Ms Waese: I'm certain that it is, but the economic professionals have addressed that issue, have looked at what impact it would have and actually what resulting income the government would receive after doing that. It's not my personal expertise, but I think it's something that should be at least investigated.

Mr Tilson: I'd like you to talk a little bit about, in the few moments left, the chronically depressed rent issue. The paper does not mention that. Several delegations have mentioned it, and one did earlier this morning. The problem with dealing with it is that when you have a rent here and a rent up here, there is no corresponding benefit for those tenants who are that far apart. The second difficulty is that to do that it could create another bureaucracy which we can't afford. The bureaucracy of the rent control is something we can't afford, and it might create another bureaucracy. The third is finding a universal formula to deal with the chronically depressed rent issue -- how you do it, in other words.

Most people have come and said to spread it over three to five years or a period of time. But so far, I haven't heard anyone come forward and say how we would do it. Have you or any of the people you work with come forward with any suggestions that a government such as ours might use in dealing with this issue?

Ms Waese: The issue of chronically depressed, as you said, was addressed by so many governments. One actually incorporated it into legislation but never proclaimed it. It is a difficult issue because that's the source of affordable housing. But it's also an issue that those tenants who occupy those units are not necessarily those who need it, and therefore, at least those landlords who are providing a reasonable level of maintenance, what should be awarded a rent in excess of what they're able to charge, perhaps rather than a percentage increase, meeting certain criteria of maintenance, should be entitled to a minimum dollar amount because a percentage of such a small number doesn't really move the increases up to anywhere near a market rent. But again, there would have to be some subsidies for those tenants who occupy the affordable units who really need those affordable units.

Mr Tilson: It's a tough issue.

Ms Waese: Definitely.

Mr Tilson: And quite frankly, with due respect, I'm still no further ahead. Somewhere along the line a formula's going to have to be created and suggestions are going to have to be put forward as to how a government makes sure that the landlord isn't walking all over these tenants and it would be unfair to jump a rent from here way up to here in one bang. That would be really unfair.

But with the proposals of the paper, in my opinion -- and this isn't the party's opinion -- the issue of the chronically depressed rent is going to become even more exaggerated. I don't know whether you have any thoughts on that.

Ms Waese: There are certainly enough interested parties in that area who could put their minds together, because they intend to benefit from that if it's feasible.

The Chair: Thank you, Ms Waese, we appreciate your input into our process. Have a good day.

Our next presenter is not due until 11:20 and he is not here, I understand, so we will recess until 11:20.

The committee recessed from 1100 to 1119.

FLEMINGDON COMMUNITY LEGAL SERVICES

The Chair: Our next presenters are here representing Flemingdon Community Legal Services, Mr Brook Physick and Mr Butch Windsor. Welcome, gentlemen.

Mr Brook Physick: Butch Windsor will be presenting the submission for our legal clinic. Mr Windsor is the vice-president of our legal services. He is also the president of Crescent Town Tenants' Association, which with over 1,300 residential rental premises makes it one of the largest residential rental complexes in Ontario. He's had extensive experience in landlord-tenant matters as well as rent control and is by profession an urban planner. At the end of Mr Windsor's presentation, both he and I will be here to respond to any questions which may be forthcoming.

Mr Butch Windsor: Flemingdon Community Legal Services is a community legal clinic with a volunteer board of directors which is funded under the Ontario legal aid plan. We provide legal services to low-income people in our catchment area in specified areas of law focusing on housing, social assistance and immigration. We also provide general legal services to the deaf community throughout the Metropolitan Toronto area.

Flemingdon Community Legal Services disagrees that the rent control system as it presently exists is the disincentive to capital investment that the government claims it is. It is our belief that other factors such as high taxes on residential apartment buildings, the high cost of land, GST costs for building materials, development charges and site plan controls have been more significant in discouraging capital investment in new rental buildings.

Underlying the philosophy of the government's proposals is the premise that the marketplace consists of individuals who freely negotiate and enter into mutual agreements. This is not so in tenancy matters. Inequality of bargaining power was recognized as being a characteristic of landlord and tenant relations some 25 years ago by the Ontario Law Reform Commission. Beyond the innate unequal relationship, tenants are unable to freely negotiate agreements because of the shortage of available apartments as evidenced by the low vacancy rate in Metropolitan Toronto.

Tenants are vulnerable and hindered in their ability to negotiate tenancy agreements maximizing their own self-interests because housing is a basic life necessity for them; for the landlord it is a business. Tenants have limited financial resources and some studies show that actual income is decreasing. Unemployment has remained consistently high in the past six or seven years. Social assistance benefits have been cut. In reality, tenants are forced to enter tenancy agreements less representative of free choice than otherwise because of a low-vacancy market and adverse economic conditions.

The clinic agrees that the current notice period, restriction of rent increases to once per year and the use of increase guidelines should be continued.

We have three areas we wish to discuss and will summarize in brief. They are vacancy decontrol, rescinding of the Rental Housing Protection Act and maintenance issues.

Regarding vacancy decontrol, the problem here is not that tenants who continue to live in apartments will not be protected by the legislation. The problem is that once they move out the rent of a vacant apartment can rise to an amount deemed appropriate by the landlord. This figure may at any time following the initial increase actually provide for a lack of ability by the tenants to use the apartment in the future. Incomes are going to determine their ability to use it. This problem is particularly compounded in a low-vacancy market such as we have here in Toronto. We are also concerned that this ability to set rents will encourage landlords to vacate the apartments for unreasonable reasons and reduce the affordability of the apartments once the rents are increased. We also believe there will be an impact on the ability of tenants or their agents, such as our office, to negotiate any repayment of rent arrears, which is presently being done today.

Rescinding the Rental Housing Protection Act will allow termination for conversions, demolition and extensive repairs without municipal approval. This change will allow for the removal from the rental housing stock of current apartment supply and operate to create greater scarcity. There will be greater competition for scarcer resources and thus higher rents at bargaining time. If the higher rent is not forthcoming, the landlord can simply convert, demolish or whatever.

The government's proposals to deflect the impact on tenants will not alter the basic fact that the rental housing stock will shrink. Extended tenure for sitting tenants only delays the effect. The right of first refusal for purchase of the unit is unlikely to make home owners out of tenants. The basic economic realities will prevail.

It may be expected that this government's proposal by itself will contribute greatly to the depletion of rental housing supply stock as the more affordable apartments are converted to condominiums where developers can maximize profits. It flies in the face of the government's stated concern about the size of the rental housing stock and tenant protection.

To summarize the two points we've made so far, the combined effect of vacancy decontrol and the rescinding of the act will compound the tenants' plight and will further detract from tenants' ability to bargain on equal terms with landlords. On the one hand, rents will be allowed to find the market level in a low-vacancy market, which means they will rise; on the other hand, the government is allowing the depletion of the stock to further decrease supply and so escalate the competition for scarce resources and rents further.

Regarding maintenance, we feel that the elimination of the orders prohibiting rent increases is the elimination of a prime function used by tenants to ensure required maintenance issues are completed by landlords. The legislation's ability to show landlords that maintenance is important was in itself often not effective. Many landlords did little until the order was in place. Removal of this tool effectively takes away the most practical means of ensuring maintenance.

It was a simple system which did not force municipalities into the courtroom and would continue to provide the municipality with an effective means to arrange for compliance of property standards violations. The municipality's greater authority in property standards matters proposed in the legislation is good for tenants, but its effectiveness requires the OPRIs or an equivalent alternative to be in place.

The legislation proposes to increase the fines for violations of maintenance by landlords, which are ineffective in current court practice that is issuing minimal fines. This means the effectiveness of the implementation of your legislation is undercut by the court system. We have been a supporter of minimum fines. Without it, tenants can be made to live in hell, such as no hot water, water penetration etc.

The proposed legislation is also ineffective for municipalities that do not have property standards or their enforcement. The legislation needs to be very clear as to how this will be handled.

Mr Marchese: Thank you both for the presentation. One of the things that has been stated by quite a number of people is that at the present moment about 50% of units are not being charged the maximum allowable rent. When I heard that my point was, if that is so, why do they want to end rent control by decontrolling? If that is the case, why not keep the present system? Is that something you would agree with?

Mr Windsor: We have 1,320 units where I live. I don't see that they're charging less than what they're allowed under the law. There are some, but it's been ineffective in the way it's been implemented. Where it has been used, it's created a situation where the rents in the apartments differ greatly. There's up to a $200 difference in the rents for the same units. The proposed changes will encourage that those units be vacated and then re-established at the higher rents.

Mr Marchese: Let me understand clearly: You're supporting decontrol?

Mr Windsor: No.

Mr Marchese: You're not? Okay. One of the issues that has been raised many times by many other people as well is that by simply getting rid of rent control through this method of decontrol, there's not going to be one housing unit that will be built. A number of experts have said this, including Mr Lampert, who's been hired by the government, although these members never talk about this. They never touch the issue of rent control as an issue that will not build any units, although in the past Mr Leach said that will do it, that will be the incentive for the developers to build. Now none of them is touching it. If that's the case, I wonder why we have this issue here. That's one question.

The second one is that to build we really need to give away a whole lot, and Mr Lampert tells us what we need. We need to reduce development charges, equalize property taxes, have the GST payable, eliminate provincial capital taxes. Those are a whole lot of giveaways that we're going to have to give to be able to get the developer to build. If we do that, isn't that a big giveaway to the developer and won't that cost us taxpayers a whole lot? Is that an opinion you might share?

Mr Physick: Are you suggesting that with all of those other factors involved to get developers to build that's going to be problematic for taxpayers?

Mr Marchese: Yes.

Mr Physick: And that they should therefore decontrol units?

Mr Marchese: Oh no, not "therefore," that second part. Just leave that part out of the picture for a moment. What Mr Lampert is saying is that in order to get things built, rent control won't do it.

Mr Physick: Right.

1130

Mr Marchese: To get the units built we're going to have to give away a lot, and it's a lot of subsidies to the developer, really. The reason I raise this is because they argue on the other side, the free-market people, that building cooperatives and non-profit housing is really bad; it ruined everybody. We're saying we're the only ones that build that kind of housing, because it's affordable to the people in need.

Mr Physick: Right.

Mr Marchese: So it's an appropriate thing for governments to do, to spend some money to do that. They're saying: "Oh, that's bad. What we've got to do is let the free market people take care of it." But if we do that, we have to give away a whole lot, and even then, says another professor, what will be built will be units at the high end. I see that as a problem. Do you?

Mr Physick: Yes.

Mr Dave Boushy (Sarnia): You expressed concern about a tenant moving to another location facing higher rent. Let me tell you, I'm a landlord, not a big one, but I have a success story to tell you. I have a tenant who has been living in a semi-detached home for 12, 13 years. The reason he has lived there so long -- he cuts the grass; he paints the home inside and outside. I pay for the paint and the material -- because he created his own incentive to stay longer. I only raised the rent three or four times during that period.

The pressure for a tenant, as we're proposing, to stay put rather than move to another location for a higher rent, in my opinion will make the tenant take care of his unit better. He will stay longer, make the landlord happier, and therefore the relationship has become better. Do you agree with that, and therefore the fear you stated is not correct?

Mr Physick: No, I don't agree with that.

Mr Boushy: Why not? How about my success story?

Mr Physick: I'm pleased that you have a success story, but at the same time I think we have to realize that we cannot pass legislation that forces tenants to stay in apartments, because if they wish to move, if their families get larger, if they end up having to move to another community or so on, they are going to end up being hurt by the escalation in the rents, particularly if they move to an area that has a very low vacancy rate.

I think there are a number of situations where tenants do take care of their apartments and they do stay for many years. I think that's clear. Vacancy rates certainly in our area are very low, so when we see the "transiency" rate of tenants, that just isn't the same as it was many years ago. Our legal services are located in a community in North York that has a very high tenant population, and at one time the transiency rate of those tenants may have been three years. It's now 10, 15, upwards of 30. That's longer than a lot of people live in purchased homes. So I don't see that we need to necessarily bring in new legislation that is going to compel tenants to stay in a particular unit so that they can take better care of it.

Tenancies are people's homes, regardless of whether they stay there one year or stay there 30 years. I don't see how this legislation would be changing that fundamental reality of tenants' lifestyle, but what it is doing is impacting on their choice.

Mr Bart Maves (Niagara Falls): In one portion of your brief you talk about conversions and say that the better, affordable apartments will be converted to condominiums where developers can maximize profit. We've had a lot of people talk about there are a lot of people eager to convert their buildings where they're not making profit into condos so they can make a better profit. That indicates to me that there is indeed a problem with the current system which makes that so attractive. Can you tell me what else is occurring that's pushing the move to the condo market for landlords?

Mr Windsor: I missed the last part of your question.

Mr Maves: If you could tell me what else is occurring. We know about the different tax treatment, four and a half times higher for apartments than it is for condos. What else is happening to push that move to convert to condos?

Mr Physick: Other than the tax advantage?

Mr Maves: Yes.

Mr Windsor: I think there are a lot of issues, repairs being one of them. I can think of an example where we've gone through a fire retrofit recently. Landlords pay those costs. If it was in a condominium-type situation, the actual owners of the apartments would be paying for it. In a sense, once you've sold the building, the profit's there. There's nothing else you're taking out of it. As long as the landlord continues to own the building, those types of expensive repairs that have reason to become important are still being paid. They're reducing the amount of profitability that the buildings have.

Mr Curling: Thanks for your presentation. I think Mr Maves should go back and read the Lampert report and also the presentation made by the Ontario Federation of Labour, where they list actually some of the things that impede people from really building affordable housing. As a matter of fact, again I would request that Greg Lampert come before us before we present any kind of legislation, for us to have some interaction with him, because I think the report is quite pertinent to what we're doing.

One of the questions I have and I am not able to get an answer -- maybe you don't have the answer. Built within the guidelines all along was -- it takes care of profits, it takes care of maintenance, it takes care supposedly of repairs, all of those things that happen, and landlords will come before us and say, "We need 3% more, 4% more in order to do that." Do you know what is happening to that money all along when they're collecting it, because it's $10 billion? The Conservatives said, "It's the NDP and those Liberals who have caused all those buildings to run down." I thought that provisions were made. Do you know what had happened to that money, why it was not turned in? Is it because of inadequate enforcement of work orders? I don't know. Do you have any comment on that?

Mr Windsor: We don't see the books in our building. We've always suspected that what's happened is that the money that's been made on the complex has been used to fuel other developments in the condominium field. They haven't been turned back into repairs on the building. It's only with the fact that we got rents frozen that we got a new water system. That had been a problem for over six years. We had to go to the most extreme position that we could take to get the water system repaired. But there was always money being made on the apartments and the money seemed to not be available to do these repairs.

Mr Curling: So getting 4% above the guideline now will not stimulate any kind of activity in any better repairs then, so the rundown will continue.

Mr Windsor: I'm speaking personally from our own complex, but that seems to be the problem. We had to go to extremes to get repairs done. We had to fight and argue for these things. The fire retrofit still hasn't been completed. There are still problems and it's been ongoing for a long time. Why not fix it, get it over with? How much do you spend by coming back and repairing things over and over again? Like I said, it took so long to get it done. The money that was lost by having the rents frozen would have paid for the water system to be replaced. The landlord would not have been out that money, and in fact he lost twice because we had the rents frozen and then he had to pay for it.

Mr Curling: Do you have a comment?

Mr Physick: Mr Curling, it's a good question and I think we've all asked the same question many times. In our service we service the municipality of East York and it has probably some of the older rental housing stock in Metropolitan Toronto. We've often wondered where that repair money has gone, not just on the basis of the guideline increase but also on the basis of going to rent control and getting increases for increased maintenance and not doing it.

This is why we raised the issue in our submission regarding the elimination of the OPRIs, which we felt was an important factor that was within the system that would actually act as an incentive to ensure that landlords did those maintenance repairs where they were actually taken out on the buildings. Now clearly there could have been a lot more exercise of the OPRI situation, but in our experience where OPRIs were taken out, it certainly did act as an incentive, and the government intends to abolish that in accordance with its proposals.

The Chair: Thank you very much, gentlemen. We appreciate your interest and your input into our process. Have a good day.

1140

COALITION TO SAVE TENANTS' RIGHTS

The Chair: The next presenter is the Coalition to Save Tenants' Rights, represented by Gord Stevenson and Nancy Hindmarsh. Good morning and welcome to our committee.

Mr Gord Stevenson: Nancy Hindmarsh and myself are community legal clinic lawyers. Nancy formerly worked in Hamilton and I work in Toronto. We're here to speak to you about the process you're going through today.

The Coalition to Save Tenants' Rights is a coalition of tenants' organizations in Toronto: UTOO, which was the United Tenants' Organization of Ontario, some seniors' groups, the city of Toronto -- the NDP and the Liberals had members in the group -- and community legal clinics.

What I propose to do is briefly go through our submission. I understand that you've been sitting for a while and have had opportunity to hear tenants' concerns. I'd like to touch on what we feel are the major concerns for tenants, given the proposals that the government is making.

At page 1, I refer you to the four elements that tenants feel must be contained in any legislation in order for it to be effective and defend tenants' rights. First of all, there has to be a cap on increases in maximum rents. Secondly, rent control must attach to the unit, not to the tenant. Attaching it to the tenant is a way of entering into a situation where continuity is disrupted and it opens tenants up to less protection than they are receiving presently.

Thirdly, tenants feel that the Rental Housing Protection Act must be maintained in order to prevent landlords opting out of the housing supply market without municipal input. Lastly, with regard to maintenance, as the previous presenters mentioned, tenants feel that there needs to be some link between the amount of the increase and the repair of the building. To destroy that link, as the new legislation proposes to do, by taking away OPRIs in a sense provides an incentive to the landlord to not make the repair by removing the financial element of the penalty that he would face.

Briefly in relation to vacancy decontrol, at page 2, at the bottom, number I.i: As you're no doubt aware, studies indicate that 25% of apartments turn over per year, so you're looking at a situation where the whole market will be in the majority turned over by the end of five years.

At page 3, number iii: The problem -- I heard a previous presenter speak to this -- landlords are concerned also about the removal of the maximum legal rent concept. From the tenants' perspective, the removal of maximum legal rent, combined with the application of rent regulation once a new tenant moves in, is going to create a situation where there is going to be enormous focus placed on the initial tenancy agreement.

At the time of negotiation, which we all hope would be between equal parties but which the law reform commission recognized some 25 years ago as not being the case, by these proposals you are creating a situation where there is going to be increased pressure at that focal point in a low-vacancy market when a tenant moves into a new place. This is going to make things very difficult for a tenant in terms of negotiating an affordable rent.

Lastly, the combination of this factor -- that is, vacancy decontrol -- with the Rental Housing Protection Act repeal, is going to create a situation whereby there's going to be a compounded effect because the removal of the controls for conversion is going to allow for a decrease in the amount of housing supply. This in turn, in a market of low vacancy and vacancy decontrol, is going to create a situation where there's going to be more competition for fewer units, which in traditional terms means that rents are going to rise. It's going to decrease affordable housing.

Personally, in dealing with the courts, landlords these days will, all thing being equal, make an agreement to settle cases where, for example, the problem is arrears of rent. They'll make an agreement for the tenant to pay it into the future. There is an eviction crisis in that evictions are up 33% from January 1995 to 1996. There will be no incentive for a landlord to settle those cases any more. In a low-vacancy market, when the landlord goes to court he is better off to evict that tenant and put in a new tenant whom he can charge a rent that is not under rent control.

From my own experience and working in the courts, my expectation is that, whether it is a tribunal or courts, landlords will be very reluctant to settle cases they would have done as a routine matter in the past. Also, and perhaps this is fear on my part, I believe that in the future landlords will also take peripheral tenants to whom they may have extended some kind of leniency in the past to court because it's in their economic interest to re-rent the apartment at a market rent in a low-vacancy market.

No doubt, during this week you've heard about the effects of these changes for students and transient populations and disabled people, seniors, people on fixed incomes. This is going to be devastating if and when they have to move. As we know, students move quite frequently.

Moving on to maintenance, as the previous presenters indicated, there is some merit to the government's plan to streamline the process and have the municipalities involved. My concern is that this is occurring at a time when funding to the municipalities is going to be cut, so it's going to put more pressure on the municipalities.

The other problem that I foresee with it, as I mentioned previously, is that in relation to OPRIs you're taking away the financial incentive that connects maintenance with the amount of rent charged. If maintenance is really your concern, why would you take away something that is working in some of the larger municipalities in a way that ensures some modicum of maintenance. To me, it just doesn't make sense and it leads me to question what the rationale is for taking away OPRIs.

Finally, in terms of security of tenancy, I mentioned the Rental Housing Protection Act before, and no doubt many tenant speakers this week have done so. The combination which will allow for buildings to be moved out of rental housing into the private market and buildings -- this legislation was passed at a time in Toronto when several buildings were being moved out. If a tenant doesn't know or can't know that his landlord, if he is unable to realize a certain amount of profit he wishes to realize on a building, can wholesale move his building into the private market, it doesn't provide them with security of tenure.

While this is an extreme case, I work in the area in which 1002-1004 Lawrence was. You may have over the week heard that this was the building where George Chuvalo was hired to come in and deal with the tenants, many of whom were elderly. I'm not suggesting that this is what's going to happen, but in my worst moments I am concerned that taking away the Rental Housing Protection Act will open the system up to abuse by those peripheral landlords who will want to move tenants out.

1150

Finally, in relation to access to justice, what we're speaking about is the new tribunal that's being proposed and the court system. We've laid out there the principles that we feel are important to be maintained. There's been some suggestion of this becoming a privately funded or privately run situation. We strongly urge that this not be turned over to the private market. Justice for tenants is equal to justice in all other areas of the court, and the impartiality and independence need to be maintained.

Those would be my comments at this time, subject to that I have some questions I might have for the government members, if time allows.

Ms Nancy Hindmarsh: Good morning. I have a few areas of concern I want to flag. Then we have some questions and then we would field some questions, time allowing.

New Directions, to me, is a mishmash of disincentives and incentives. Its purpose and legislative intent are not clear to me. It's called a tenant protection package. I'm very concerned in that it focuses on the unit; it seems to be a product protection package. We forget that the renters are consumers and need protection. It looks as though the rental unit certainly is being focused on and there's a decontrol on it, but we have to remember that rents must be linked to maintenance and landlords must maintain buildings to charge rents. Maybe licensing landlords is a solution here. They have a product; they have to maintain the product. It has to be healthy; it has to be safe; it has to be secure. I don't see that New Directions addresses that.

Another concern I have here is that there is no money. The ministry says there's no money -- no money for tax incentives, no money for subsidies, no money for builders and investors in the rental housing industry. If there's no money, then how do we maintain and how do we administer the new tribunal system, for instance, which is going to have to be properly funded with lots of resources? Because I'm not aware of, and I dare the committee to come up with, an administrative tribunal that administers its agency, its department, its ministry as cost-effectively and as quickly as the landlord and tenant courts presently. There's room for improvement in the landlord-tenant court, but as far as processing evictions or abatements is concerned, it doesn't have the delays; there's some backlogging. If we have a new tribunal, that is going to have to have a lot of resources and funding to look at eviction. We're looking at eviction of people out of their homes. This isn't something that we delay for six months until the tribunal can hear it.

For me and the coalition, the New Directions protection package seems to be not particularly well thought out, which brings me to a third area of concern, and that is research. I understand there's no money for research in the ministry and there's no research component. We have a lot of statistics and a lot of them have come from the Canada census -- granted, it's census 1991 -- and also from Canada Mortgage and Housing Corp, CMHC statistics. We look at these and determine what the supply and demand of the market is. The market is not something that is just broadly brushed. The market is 3.2 million tenants, and I understand through Chandra Pala at the Ministry of Community and Social Services that 41% of Ontario's tenant households are socially assisted. That's a 1994 statistic; I imagine it's higher now. I understand from the newspaper yesterday that one third of Metro's tenant households have an income of under $23,000 a year. That's a comparable figure. We're looking at maybe half of the tenants in Ontario are low-income tenants. How are they addressed in this package?

I've used more time than I meant. Go ahead with your questions.

Mr Stevenson: I guess the first question that I might have, if this is proper procedure, Mr Chairman --

The Chair: Basically, we are here to hear what you have to say, but if you choose to ask some questions, that's fine. Mr Hardeman would be the representative from the ministry to whom you should direct those questions.

Mr Stevenson: Mr Hardeman, I was just wondering, how does the government reconcile repealing the Rental Housing Protection Act, which for all intents and purposes is going to reduce the existing housing supply, with its stated intention of creating affordable housing? I don't believe the government has said "affordable housing," but creating housing. I know the government's interested in encouraging new housing starts and they've been a problem. It seems that the two are directly opposed to each other, those two intentions. I don't see how repealing the Rental Housing Protection Act is going to create a larger supply of rental housing stock.

Mr Hardeman: I'm not sure that I can take the four minutes that are left for the presentation to go through the total process of dealing with individual issues in the discussion paper. I do want to emphasize that it is a discussion paper, as the Chairman said, to get the comments from the presenters as to what's good and what's bad and what should be changed within the document.

As it relates to the conversions, the process or the intent of the legislation is to improve the housing stock within the province for people to live in. If presently maintaining it as rental stock is decreasing the ability of having it properly maintained for suitable housing, we need to look at alternatives to provide the type and the quality of housing that the people are entitled to, as opposed to just saying it is locked into that and it shall go down the quality ladder until it no longer can be used for housing. We need to provide a way to put that back in a condition where it can be used for the people who presently reside in it.

Mr Stevenson: I understand that quality is a major concern of the government, but I don't know that reduction of the existing housing stock is going to make it better for tenants in the sense of accomplishing the goal that the government has stated of attempting to create new housing starts. This is a major concern. I just don't see how the two fit together. I agree that quality is a concern, but it would seem that if the opportunity to take units out of the housing stock exists and there is money to be made there, it's going to happen and that's going to directly impact tenants. There are just not going to be the number of units, and this is going to happen at a time when vacancy decontrol is in effect, so the market is going to bear the rents. In effect, what you're doing is collapsing the size of the market, which increases competition for scarce resources and drives up the rents. This is the tenants' concern in this situation.

The Chair: If you want to finish up with a comment.

Mr Stevenson: Thank you very much. We look forward to seeing either this legislation go by the way or the next government.

The Chair: Thank you for your input. We appreciate that.

We are now recessed until 1 o'clock.

The committee recessed from 1200 to 1300.

ONTARIO ASSOCIATION OF CHILDREN'S AID SOCIETIES

The Chair: Welcome back. As is our custom, out of respect for those who come to share their ideas with us, we do start on time.

Our first group this afternoon represents the Ontario Association of Children's Aid Societies, Diane Cresswell and Jessica Downton. Welcome to our committee. Should you allow time for questions in your 20 minutes, they would begin with the government. The floor is yours.

Ms Diane Cresswell: Thank you for inviting us to appear before the committee. My name is Diane Cresswell, and I am the manager of communications with the Ontario Association of Children's Aid Societies. I would also like to introduce Jessica Downton, my colleague, a youth liaison worker who works with us at OACAS, with Youth in Care Connections Across Ontario, a network of youth in and from care in Ontario.

The OACAS is a provincial association that represents 50 children's aid societies in the province of Ontario. The mandate of the children's aid societies is expressed in section 15 of the CFSA: to investigate allegations of child maltreatment, to protect children and to provide services to families, and then to prevent circumstances requiring the protection of children.

Child welfare is not simply about the investigation of allegations of child abuse and neglect and taking children into care. It is about the early identification of risk and the amelioration, to the greatest extent possible, of the conditions which lead to maltreatment. It is also about galvanizing communities and a whole range of other support services to strengthen troubled and stressed families and to assist in the protection of children where necessary.

The 55 children's aid societies in Ontario provide substitute care to more than 18,500 children annually and provide support and counselling to more than 100,000 families with children each year. We estimate that children's aid societies would come into contact with more than 250,000 children in Ontario each year.

Children's aid societies have been in existence for more than 100 years. Over the past century, we have learned about the causes of maltreatment of children and have developed an understanding of prevention strategies to assist families in crisis. Some of the social conditions frequently found in families on CAS caseloads are poverty, social isolation, inadequate housing and high-risk neighbourhoods, a family history of abuse and addiction to alcohol and drugs. It is the compounding effect of such conditions that creates the highest risk for children.

Adequate housing is a basic need for all families and a significant contributor to the health and wellbeing of children and families. The children's aid society is one of the few community services that provide support services to families and children in their own homes. Consequently, child protection workers have a bird's eye view of the conditions in which families live and the substandard level and quality of some rental housing.

Housing problems and poverty are recognized as potential risk factors for children in relation to reported and confirmed cases of abuse and neglect. Changes to the landlord-tenant legislation could have a profound effect on two groups of people who are well known to children's aid societies: young families who are struggling to support their children on limited incomes or on social assistance, and young people who are forced to leave their family homes at age 16 or 18.

A significant number of the referrals made to CASs are as a result of evictions, inability to find adequate accommodation and the lack of affordable housing units. The majority of families served by children's aid societies are single-support mothers with low income or on public assistance.

Families who are receiving service from CAS are under tremendous pressures. The additional stress of inadequate and unaffordable housing can compound problems and have a profound effect on the ability of the family to provide a safe and nurturing environment for their children.

The Toronto CASs surveyed their family services workers and recognize that in 18.4% of the cases, the family's housing situation was one of the factors that resulted in temporary placement of a child into care.

Lack of housing should not be a reason to admit a child into the care of the CAS. Whenever possible, the CAS will find both financial and material support on a short-term basis to maintain children and families together. Nevertheless, there are circumstances when adequate housing is not available or where other family members are not willing or able to help the family. As a result, some children are admitted to care. Using foster care in these circumstances is an unnecessary use of valuable foster care resources and an inefficient use of taxpayers' money. The cost of providing service to a child in his own family home is approximately one tenth of the cost of providing service to a child in an out-of-home placement. Separation from parents, even for a short period of time, has long-term detrimental effects, especially on very young children.

For many children in Ontario, the family home is not a safe haven. On any one day in Ontario, there are approximately 9,500 children and youth in care. More than 4,000 of these young people are over the age of 13 and are likely to grow up in the care of the children's aid society as wards of this government.

About 50% of young people in the general population between the ages of 18 and 24 continue to live in their family home. This is not so for the youth served by the children aid societies. Many are forced to move to independent living situations before they are ready or prepared to do so. Some youth in care may not have any other choice but to live independently as early as age 16. Most young people in the care of the CAS are living independently by the time they are 18 years of age. All youth in care identify housing as an issue.

For those young people attending post-secondary education, only a few gain access to university residences. Even when this is possible, during the summer months many have no home to return to and therefore are forced into inadequate and often costly accommodations. First and last month's rent is an impossibility for these young people.

In a recent survey, Covenant House reports that 47% of 200 young people surveyed who sought refuge there had previous contact with Ontario's child welfare system.

We are not going to comment on all the proposals made in the New Directions consultation paper. We refer you to the excellent written response to the paper submitted to you by the Children's Aid Society of Metropolitan Toronto included in your package that we have distributed today. I will comment on the section of the consultation paper that talks about protection from unfair rent increases.

We support a universal rent control system. We oppose a plan that sets up a two-tiered system that disadvantages a group of people who are at the stage in life when moving residences may be necessary. These are young growing families or youth moving to independence. These are the families that the children's aid societies serve.

The proposals made in the consultation paper provide full protection to sitting tenants and no protection to non-sitting tenants. We believe that adequate housing will remain in the hands of the sitting tenants. We also believe that rental rates for inadequate accommodation will be raised. Having no cap will push rents in Ontario upwards.

Allowing landlords to raise the rents on vacant units with no ceiling or cap will prohibit people on low incomes from being able to move from substandard housing, because it will generally push rents upwards. We fear that some tenants will be subject to harassment and eviction when a landlord is eager to vacate the premises in order to increase the rent.

Families involved with the children's aid societies and young people forced to live independently are among those who contribute the highest proportion of their income to rent. The Toronto children's aid society's submission that is in your package highlights some telling statistics, by comparing average rents in Toronto to the current social assistance rates in Ontario. The charts in appendices 5 and 6 show that it would be impossible for a young, single parent on social assistance, with a child, to afford much more than a bachelor apartment -- hardly healthy or appropriate living conditions for a parent with a child. If that same single parent moved to a one-bedroom unit, he or she would spend a significant portion of the basic allowance provided which should be allocated to the necessities of life.

Further increases to rent will prevent families from providing the necessities of life to children and will make families more dependent on food banks, churches and other social agencies. There will be little opportunity for the young person or the family to improve their living situation or to get a hand up.

1310

We fear that the changes to the legislation will have significant impact on the families, young people and children we serve. Families who have come into contact with the children's aid societies are dealing with many problems and stresses. The inability to find and secure adequate shelter for the family increases stress on the family and reduces the family's ability to cope and provide a nurturing and safe environment for children. The end result could be the need for temporary or permanent placement of the children.

Without choices and options, families will not be able to improve their housing situation. Pressures will impact on the family's interactions and their coping mechanisms. The family will take longer to become self-sufficient and take full and independent responsibility for their children.

Without choices and options, young people from the child welfare system will not be able to move out to a self-sustaining independent living situation. They will end up returning to a situation dependent on social agencies and social assistance. Youth in care and from care desperately do not want to repeat the cycle of their parents or their family.

I'm going to ask Jessica to make a few comments to explain the difficulties she has encountered under the current situation in finding adequate accommodation for herself.

Ms Jessica Downton: Good afternoon. My name is Jessica Downton and I'm a youth who has been living independently for nearly two years. I grew up in a rural community just south of Ottawa, and at the age of 15 I was placed in foster care. After nearly a year of living in foster care, I decided that I had come to a point in my life where it was time for me to go out and start preparing for independent living while I still had support from the CAS.

For three months I searched in the town where I was attending school for an affordable, decent place to live. After a tireless search, I finally found my answer: a room in the basement of a private home. For $300 a month I had a clean place to live. However, the landlord was reluctant to rent to me. He had a meeting with my social worker, requesting that the rent be paid directly to him by the CAS.

When looking for housing, landlords asked the following questions of me: "How old are you? Do you work? Where do you get your money? Why aren't you living with your parents? Do you have a boyfriend? Do you have references?"

In June, after my 18th birthday, support from the CAS ceased and I was forced to leave the county, my school, my friends, and my social support network, because there are no jobs in Rockland -- certainly not a job with enough hours or wages for me to manage to pay for rent, phone, food, clothes, hydro, and still have enough hours in the day to go to school. So at the end of June off I trooped to Ottawa to find employment and a place to live. Thankfully, as a child I was blessed with courage and was able to advocate for myself in order to obtain a unit in a subsidized building run by the youth services bureau of Ottawa-Carleton.

Keep in mind that prior to the cessation of support from the CAS I had a wonderful social support network, people who were willing to go to bat for me and advocate on my behalf, people who were aware of supports out there: my doctor, two social workers, foster parents, and guidance counsellors.

Unlike many other youth, I was able to get a subsidized unit. If the changes in the legislation go through, I will be more likely to remain in subsidized housing for a longer period of time, thus preventing the opening of subsidized units for other youths who are either living on the streets or in abusive relationships and/or dangerous living conditions. I will not have as much opportunity to move forward, meaning those behind me will have even less opportunity to move forward.

I don't want to see it come to a point where young people will have to make a decision about whether they will stay home where they are being beaten or whether they will tough it out on the streets. The reality is that many will choose the streets, because there's no affordable housing out there and subsidized units will be full of people like me, people who are unable to move forward because of the high cost of housing. Youth in general, but especially youths on social assistance and those in care of the CAS, are considered undesirables in apartment buildings and are therefore faced with a dismal future. It makes me sad to think that some youth are struggling to get enough money to pay for an apartment that is crawling with cockroaches and vermin. It's important for them to have the opportunity to be off the streets, even if it means living in a broken-down apartment building that most people wouldn't even want their dog to live in.

I see it every day: youths who are struggling to make it in this world, where the rules are not written for them, much less in their favour. Some young people cannot afford to eat because their money is going towards rent. I see young people who are trying desperately to get an education, to plan a better future in tough times. I am one of those people. Perhaps the government, as well as landlords, proposing to change the legislation on rent control ought to take a look into the future, because we, as the young people of today, are your future.

Mr Hardeman: I do hear that there are many problems that exist in the present system. Obviously, your difficulty in finding and maintaining appropriate accommodations has all happened under the present regime. Recognizing that this is a discussion paper to come up with some answers to the problems that exist today, could you give us some direction as to what you think we should do if what is being proposed in the document is not appropriate?

Ms Cresswell: The recommendation I would make, most particularly in terms of the recommendation we've commented on, is that this should not be a two-tiered situation by any means. We feel that rent control should remain as it is. The recommendation that suggests that when a vacancy occurs the rent can be increased will be absolutely a barrier to many of the families we work with and the children and youth who will be growing up in the care of children's aid societies. We would suggest that the situation should remain as it is.

Mr Sergio: Ms Cresswell, Jessica, thank you very much for your presentation. You have mentioned a number of things, but I'm going to be brief because I want to leave time for my colleague to make a comment as well. You mentioned that substandard housing conditions are a major contributor to not only some youth, but also families splitting, and derived from there, a number of major problems. You also say that even today you find it very difficult to keep youngsters and families together. How would the proposed legislation, which I'm sure you're familiar with, improve the situation you're facing now and that a lot of young people are facing now?

Ms Downton: I think it's important for there to be caps on the rent, because otherwise it will be impossible for me to get out of the unit I'm in now and other youth will not have a place to go; other youth who are now on the streets won't have a place to go. With caps on rent, it will be possible for me, perhaps in a year or so when I finish high school, to go out and find a better-paying job that will enable me to find an apartment that is not subsidized.

Mr Marchese: Thank you both for coming. Earlier today a Mr Burton came, who was a developer and a landlord. He dismissed most of the deputants, and I would think he would dismiss you as well, as not having the expertise to comment on some of these matters. I want to thank you for bringing the expertise that both of you bring, because you are in the field, you know exactly what's happening to people like yourselves.

I had two questions, but I can only ask one. I have observed that the fact that they've cut welfare rates has created rent arrears and has created tenants who can't pay their rent. From the experience you've had, is that true?

Ms Cresswell: Certainly that has been reported by our children's aid societies in the field, and in fact those are the families who come forward to the agency to request help at that time. There are very few families that want to come to the agency to ask for assistance because of housing, yet some people are absolutely forced to do that because they cannot keep up with payments of rent and other bills as a result of the reductions in social assistance.

The Chair: Thank you very much, ladies. We appreciate your input into our deliberations.

1320

LANDLORD'S SELF HELP CENTRE

The Chair: Our next group represents the Landlord's Self Help Centre: Mr Fred Campbell, the vice-president, Mr Marvin Gord, a director, and Ms Susan Wankiewicz, the executive director. Welcome to our committee.

Mr Fred Campbell: Mr Chairman, members of the committee, fellow presenters and observers, we appear today on behalf of Ontario's only self-help clinic for small landlords. Thank you for the opportunity to present our recommendations and concerns about the tenant protection legislation that's being proposed. We appreciate that you have a very tough job trying to balance all the issues and the needs of various groups, and we trust that you will take the time to carefully listen -- I'm sure you will -- and come up with a fair and, hopefully, a balanced piece of legislation.

I'm Fred Campbell. I'm the vice-president of the Landlord's Self Help Centre. I'm one of 12 members, volunteer members, of the board of directors. With me are Marvin Gord, a fellow board member, and our executive director, Susan Wankiewicz; she has been employed with us for a number of years. We have four full-time employees. We're going to make a brief presentation; hopefully, there will be time for questions. We will have, by the end of next week, a document to give to you.

What about the Landlord's Self Help Centre? Perhaps this would help you in terms of our perspective and the perspective we try to bring to this consultation today. We provide advice and consultation to small landlords. By that, I don't mean people who are four feet tall, but people who have only one or two units, not many units, and in many cases they are owner-occupied facilities. The Landlord's Self Help Centre was founded 21 years ago by an elderly couple who lived in downtown Toronto who had some problems with tenants. We're located conveniently downtown on Atlantic Avenue, just down at Dufferin and King. We have four full-time employees and, as I mentioned, 12 board members. Several of our board members are small landlords, and some of us are tenants. I happen to be a tenant, and I also have a few apartments that I rent out. I don't live in the building I have with apartments in it.

In 1995, last year, our organization responded to 20,000 inquiries related to the legislation and its implementation and use. We conducted, through our staff and volunteers, 327 seminars, with attendance of 1,644 persons. We produce self-help kits. We produce lots of brochures like this to try to educate the public and small landlords. We produce a newsletter frequently, and we provide the script for four of the Dial-A-Law messages available through the Law Society of Upper Canada.

Many of the issues that come to us come to us on these themes: information about how to start a rental process at the front end without getting into difficulties and problems, how to do it properly. Perhaps up to 75% of the inquiries and problems that our workers respond to have to do with the termination of a lease for non-payment or for breach of the agreement. We also get a lot of inquiries about access to show the apartment either to rent it again or if the building is for sale and the people want to have access. We also get a lot of inquiries about abandonment of possessions.

Who are our clients? Who are the people we are providing information to? We will provide information over the telephone to anyone who calls. For the most part, these are landlords who are unsophisticated, who don't have a lot of knowledge and only have a small number of units, perhaps one unit in the house in which they live. Typically, these people are renting out apartments in the same building they live in; 29% of these people, our clients who get full service from us, are 65 years of age or older; 59% are 50 years of age or older; 87% of them have an annual income of under $15,800; 28% of them are unemployed; 38% of them are on pension; and 60% of them have a mother tongue that's other than English. Now, these landlords are indeed unsophisticated and in most cases cannot afford legal advice when they get into difficulties.

What I would like to do is to give you a few of our recommendations that come from this client population -- just a few of them -- and then the rest will follow in our paper that we will get to you.

On page 5 of the consultation paper, it says that the notice period "works well" -- notice to terminate, that is, when there's non-payment or there's a breach of obligation. This hasn't been our experience. We are of the opinion that the overall process of terminating a tenancy agreement should be somewhat streamlined and shortened. Remember that 75% of our work relates to this issue. At the present time, after the form 5 has been issued it can take six to eight weeks before a tenant can be required to leave, and then there is the proposal for 30 additional days if the tenant has left behind their possessions, so a number of weeks, perhaps even up to three months, can pass by while the landlord does not have the opportunity to go ahead and rent the apartment.

Consider the problem particularly for some of these unsophisticated small landlords. Lots of times they don't act immediately; they sort of let things ride. They think the tenant will pay, and they sometimes wait weeks, even wait months. You can say that they shouldn't, but that's reality: Sometimes they do. They end up, in some cases -- we can give you examples of people who borrow in order to pay their mortgage. They borrow on their VISA, that sort of thing. That's extreme, admittedly, but it does happen.

We also recommend that the tenant be given seven, not 14, days to pay rent in arrears after the notice has been given, because what happens in practice is that by this time of the month sometimes, in August, say, this month, the notice is given, and it's almost the end of the month before the tenant may then pay. Now you're into September 1 and the rent's not paid, and you go through this process again, sometimes many, many times. We would therefore suggest that you consider the issue of persistent late payment of rent.

When a tenant fails to pay their rent on several occasions, say four in one year, we think that would be reasonable and fair grounds to look at terminating the lease. When you consider that most leases go for one year, sometimes two years, if you have to wait to the end of the lease to terminate these people, we think that's unfair. We suggest that if there are four late payments in one year, a pattern of delinquency has been established and it means the landlord should be able to do something about this.

The whole issue of abandonment of property is outlined in your paper on page 6. We think it would be reasonable, given that the landlord has gone through all the current process, that the time in which the tenant is required to get his or her possessions out or in which the landlord has an opportunity to do something about it should not be 30 days; it should be less, and we suggest that you consider seven days as a reasonable amount. Often the landlord has obtained a writ of possession, the tenant has left, but the belongings are still there. So the question of removal, disposal or storage is a problem and, in some cases, it's a cost to that tenant. It's a particular hardship if it's a small landlord.

1330

The other issue you're proposing that we are in favour of is the issue of sublet, or the assignment of a lease. We know that some tenants will sublet without the landlord's permission, and we think that it needs to be made very clear that the tenant who sublets without permission from the landlord should not be allowed to stay if they are not a suitable tenant and the landlord should certainly have a method or mechanism in which that person can be evicted.

The issue of privacy and the issue of a landlord's access to a rented facility -- that's at the bottom of page 6 in your consultation paper. We ask that you look at further clarifying the section and that you please be more specific in laying out in the act as to when a landlord can enter, under what circumstances, with what notice, and clearly indicate when a landlord can enter without notice, because that still seems to be confusing to us when we look at it as it's currently being suggested.

We also ask that you consider expanding the right to enter not only to show the apartment to rent, but to show the apartment when the apartment or the building in which the apartment is is for sale. That's at the bottom of page 7. We have situations where a tenant will give notice of termination and then refuse the landlord the opportunity to show the premises. That makes it very difficult. Sometimes 24 hours' notice is given to a tenant saying the landlord wants to show the facility, they arrive with a client, and they are unable to get in. This does not seem fair.

In terms of the sale of the property, we think that this is a fair and viable reason to terminate a lease at the end of the term. Our experience has been that many landlords have assumed that that provision was already in the legislation and they will call up and say, "Give us the form that we need to use in order to give notice of termination because the building has been sold."

We also suggest that in the situation where the landlord is not the owner -- that is, let's take a situation where you have a house and you have a tenant with a lease who then sublets part of the rental space to a third party. We think that there should be provision for that party also to be terminated in the case of the sale of the property. It doesn't seem to be there at the present time.

We would also ask that you might consider making a recommendation that the form in respect to notice of termination have in it some indication that the landlord has a right to show the facility while the tenant is still in possession.

I'm getting near the end. Yes, this is the last recommendation that we're going to make here.

The question of exemption for shared facilities: We recommend that this be extended in the act to include people who are subtenants, if you understand what I'm saying here. You're familiar with that piece of legislation, but often you'll have, as in the previous example, a tenant with a lease who has subletted part of the facility and they share the kitchen or they share the bathroom.

Finally -- this is a suggestion that is probably outside of the purview of this study but certainly has occurred to many of us on our board and to our staff -- is the issue of the need for increasing the rental stock. The folks from the children's aid who were just before us certainly talked about the need for affordable housing for young people in care etc. We note that that is a need in Toronto particularly and other large cities in the province. We know that new construction is expensive and that in many cases tenants who would like to move into these new facilities can't afford them because the cost of construction means the rent is high and excludes a lot of people.

We know that a lot of apartments, particularly in Metropolitan Toronto, are in poor condition, especially apartments that are in buildings with a small number of units, say less than 10 in a building, and there are thousands of four-unit buildings in Metropolitan Toronto, sometimes called fourplexes or whatever, double duplexes, that are in very poor condition but are quite large, sometimes with apartments 1,200 or 1,400 square feet. We know also that there are lots of older homes in Toronto that could provide additional housing. So we suggest that the provisions that were in Bill 120, in respect to basement apartments, be reconsidered and relooked at as a viable means of increasing affordable apartments, particularly in larger cities.

We also suggest, if you have any purview in this area, that you look at the issue of intensification of, say, buildings like fourplexes, particularly those that are on main arteries that could easily accommodate more units. There are a lot of single people, a lot of couples who in fact could benefit and would take smaller units that are close to the city and rely on public transportation etc.

We wish to thank you. If you have questions, Susan, our expert, will respond to the technical details.

Mr Curling: The Chairman is setting me up, and I won't ask a question; I'll just make a comment. Jan Schwartz came in and talked about the small businesses, the mom and pop industry itself. Maybe I could ask a question. Do you feel that the small businesses that provide shelter should be regulated?

Mr Marvin Gord: I don't quite understand. What do you mean by "small business," Mr Curling?

Mr Curling: Say that you're a small business, a small landlord, and you're considered a small business, not as a big high-rise, and I'm asking if you feel that your industry should be regulated.

Mr Gord: Yes, I'd have no quarrel with that. I'd just like to qualify and probably clarify something.

Mr Curling: It's just a short time they gave me, that's why I had a short question.

Mr Gord: If I might, our landlords are not small business people; they are in many instances more indigent than the tenants to whom they rent. Their incomes are well below $20,000. They are seniors who have to share their home and the termination process sometimes becomes a very hostile environment to the point where they have to leave their own home because they can't stand it. They're elderly women who have a pension and no other resources.

Mr Marchese: Mr Campbell, you seem to me to be quite knowledgeable, actually, in the whole field and we thank you for your submission. You made two interesting suggestions: one, with respect to this government reconsidering basement apartments. We felt as a government it was important to do that. People were looking for that and it was a way of providing affordable housing to people. The other one is intensification, a very good suggestion as well.

Your comments around small landlords would have been very useful if that was the only subject of discussion for us to talk about, because I think small landlords have a real problem in this regard. I really believe that that is true. But the guts of this proposal is something different. What this government is trying to solve is the whole problem of landlords not having the incentive to invest in their buildings and builders not building new buildings. That's really the question they're trying to solve. But is getting rid of rent control the answer? That's really the guts of this proposal. Is that, do you think, the answer to their problems?

Mr Campbell: I think that some control is necessary and useful, but on the other hand, I think, for example, the case presented by the child welfare people, they're looking at the problem from the point of view of keeping rents low.

1340

The problem there, if I may suggest, has to do with subsidizing the young person. A young person should be able to rent an apartment in the market so that we shouldn't have to discriminate against them. We shouldn't have to ghettoize people with low income. We should be able to subsidize the individual so they can afford market rent. Don't subsidize the facility, the apartment. Subsidize the person so that they can go out and live like the rest of the world, including child welfare children.

Mr Wettlaufer: Mr Campbell, thank you for your presentation. I'm very interested in reducing the adversarial complex that exists between landlord and tenant and I'm not too sure how we go about it. One of the things I've heard an awful lot this week, we all have, is the rights of tenants. I would like to think that landlords have some rights too. The first question is, what rights could you tell us you think they might be?

The second is, there's been a fair amount of criticism about the amount of profits that landlords make and I think sometimes that landlords don't share some of this information with the tenants and I wonder if that would help, if you did share that. The two questions, if you could, please.

Mr Campbell: I think that the rights of property owners and landlords should be balanced against the rights of individual tenants. We need a balanced system. I think it's our perspective that the current legislation is biased in favour of the tenant.

I am a tenant myself. I live in a building and I have a couple of small rental units myself. I see it from both perspectives. It needs to be fair and I don't think it's fair the way it is at the present. Some aspects are not fair.

The Chair: I'm going to have to cut you off. Sorry there wasn't more time; unfortunately 20 minutes goes by very quickly. Thank you very much for your interest and your input. We appreciate it.

Mr Campbell: Thank you very much.

SCARBOROUGH TENANTS ASSOCIATION

The Chair: Our next group is the Scarborough Tenants Association, represented by Dianne Urquhart and Stan Roberts. Welcome.

Ms Dianne Urquhart: I will hand out copies of our brief at the end of the day. We assume you'd prefer them stapled, so you'll have to wait.

The Scarborough Tenants Association was formed in 1994 by tenants who were fighting to resolve primarily substantial disrepair in high-rises in Scarborough. We're a coalition of tenants' associations, active tenants and tenant advocates who have tried to address a range of issues. We have always maintained our main focus is disrepair, primarily in the high-rises.

After this week of hearings, I don't think you want to hear detailed analysis of every provision, so we're going to try and give just a summary of the view of our members. Our basic position is that we're very concerned about the changes proposed in the discussion paper and we're adamantly opposed to the general direction it leads.

We feel there's no question it's going to make the situation worse for tenants but also for the economy in general. The proposals are based fundamentally on incorrect assumptions, so we'd like to explore that a little bit. Basically, it's the antithesis of protection. I'm going to turn it over to Stan for a few minutes to give an overview of the sentiment of some of our members.

Mr Stan Roberts: I have labelled my part of this presentation "`New Directions' or No Direction?" As you all know, housing is an issue of fundamental importance to every society. After all, the well-known saying that "A person's home is his or her castle" still holds true today.

Unfortunately, this concept is forcefully being changed in this province by our ruthless government bureaucrats and their financially powerful developers, working together to maintain their self-serving interest in keeping the rental housing business a profitable venture at any cost.

But who pays this cost? Of course you know, it is the disadvantaged tenants who are powerless and have little or sometimes no choice in deciding on the price of facilities they can afford for decent living accommodation to call their home.

Somehow it seems that tenants are regarded and treated as substandard people and second-class citizens, all because of the bottom line of the landlords' agenda called profit. This concept must change immediately and restore the dignity into the heart and lives to this large sector of our society.

After all, tenants make up over 52% of the residents of this province. Remember, tenants are also consumers. Without them, there would be no landlords. There would be fewer cars sold, department stores and groceries would be literally non-existent, and of course there would be absolutely no need for useless politicians to deliberately betray this large sector of the community with broken promises and new and oppressive legislation like the government's New Directions. This would have been better named No Direction in the Lack of Common Sense Revolution.

It does not take the proverbial rocket scientist or brain surgeon to see the impact on the lives of tenants who are forced to pay more than the acceptable 30% of their income for accommodation. I ask this committee to wake up and smell the coffee.

With less disposable money after paying the new so-called decontrolled higher rent, the tenant is forced to do without many basic necessities, which of course translates into the loss of jobs, and the deterioration of the economy continues.

It is well known that this government has declared war on the poor of this province. The infamous, "bent-up tuna-cans" minister has been quietly reshuffled into another ministry after his public display of insensitivity to basic human needs in a mean-spirited type of politics. So much for one of the revolutionaries.

It is quite clear that the Minister of Municipal Affairs and Housing, Mr Al Leach, is imbued with the same spirit in his approach to the landlord and tenant issues. I would like to suggest that Mr Leach should resign immediately and a new approach be taken by the government to act honestly and constructively in effecting changes to the six pieces of legislation, especially the Landlord and Tenant Act and the Rent Control Act.

The minister claims the current system does not work and suggests a complete overhaul to fix it. Perhaps Mr Leach would have a complete engine job done on his car, and a complete paint job if he got a flat tire, or redecorate his palatial bathroom because of a leaking faucet, and calls this "looking at the whole picture."

Who will stop a landlord from using this complete overhaul approach to justify unnecessary upgrading at the tenants' expense, resulting in high rents, and justify this action by Mr Leach's proposal that "will give landlords greater incentive to maintain the buildings."

In his remarks to this standing committee on August 19, Mr Leach clearly indicated that this whole issue is orchestrated solely by the landlords' agenda, and I quote: "Unless we fix the system, property owners won't invest in buildings and they won't build new rental units. They mean what they say." I wonder who's in charge.

It's quite clear that Mr Leach intends to appease landlords to have their way in keeping the balance of power over tenants. This is hardly the "exercise of democracy at the grass-roots level" he referred to earlier in his comments.

Mr Chairman and committee members, you have heard the phrase in politics before, "Read my lips." Remember that the next election is not far off; you will rue this day. We tenants also mean what we say. In the meantime we intend to fight for justice.

In this economy of declining incomes and lost jobs, as companies are forced to downsize, tenants are already forced to abandon their homes and seek refuge in overcrowded shelters or with compassionate relatives and friends at great inconvenience and humiliation. Consequently the situation is forcing more people to use food banks and the already overburdened charitable organizations.

This is not a landlord and tenant issue that needs to be fixed by any means. It would be more commonsensical if this government were to focus on the root of the problem: long-term job creation. As you know, it is not the Rent Control Act that has caused the decline in construction of new rental housing in the past, and the removal of this piece of legislation will not change the situation.

The government's proposal to create a faster and more efficient process to resolve disputes in a less formal system of adjudication, instead of using the courts, is very vague and misleading.

While the wheels of justice turn slowly, the Ontario court is the only forum where tenants can be fairly represented at this time to settle disputes under the Landlord and Tenant Act. I disagree with the proposal to replace this effective piece of legislation with the tenant protection package.

1350

Ms Urquhart: We'd like to take a few moments to raise our main concerns. We'll refer you in our written brief to a few appendices which list in more detail our recommendations around the costs no longer borne and some of the more technical details.

We have two concerns: first, the group of proposals which, taken together, allow landlords to raise rents to whatever supposedly is fair market rent, which eliminates tenants' access to necessary information and encourages harassment of tenants, which will make the situation worse for tenants and for the economy in general.

Increasing the rent when a vacancy is created will not meet the stated goals and will create extreme suffering. Ostensibly this has been brought in to encourage investment in new housing. You've heard this week from many builders and developers that it's not going to do that: It's not enough; it doesn't go far enough. Why proceed with this then? Certainly not in the interests of tenant protection. Where are the studies that have shown that this is in some way going to benefit tenants? There are none because it won't benefit tenants.

The reason to proceed is solely to cater to developers who are not satisfied with a 10% return on investment. That's already higher than most other sectors, certainly than any other rental sectors. What profit margin does the government think is actually reflected in a true market rent: 20%, maybe 30%? There's a Chinese proverb apparently which says, "Beware what you wish for because you may get it." I'm afraid this is the situation we're faced with.

Where are the tenants who supposedly will be able to pay these fair market rents? The government wants controls lifted to these market rents. We already have experience with this in Scarborough. There are hundreds of units and dozens of landlords who rent below market unit rent at this point, legal maximum rent, because they can't rent at the full rent. They've already priced themselves out of their market.

Market rent is tied to people's income, not to the profit margin that landlords decide they want. You can't get blood out of stone. Even if these proposals push us to a serious housing crisis where there's a serious shortage of affordable housing, the most desperate persons cannot pay more money than they have. That's a situation we already have in Scarborough.

Maybe we're proposing to extract more out of tenants at the so-called high end of market rent. There is a certain cap on that too. Tenants, by and large, will not pay more for rent on an ongoing basis than they would have to pay for a mortgage, and we're already reaching that point now: a two-bedroom going at $1,000, $1,100. You're looking at the same carrying costs as a mortgage, so those tenants too will move on.

The outrage is that the package, taken together, gives landlords a manifesto on how to evict tenants in order to gamble that they'll be able to extract more money.

Many of our members have lived in their apartments for five, 10, 20, even 30 years. I'm not sure where they're supposed to go. We already have heard from developers that they're not going to be building more units based on this, so I guess we just dump them out on the street like so much garbage. All right, maybe we accept that this is what we're going to do, but I suggest there's no one else who can move into those units. If you look at Scarborough and other municipalities around the periphery -- Etobicoke -- you already have experience of that.

Harassment will increase dramatically. It's already happening as the economy has worsened; it's going to happen more. I'm sorry, but it's an insult to tell tenants that they will be protected by this anti-harassment unit, because it won't happen. It hasn't happened under the enforcement unit we have now and it cannot happen with this new anti-harassment unit. Even if it did, even if we had prosecutions and fines and so on, what consolation is that to a tenant who has been evicted, to a family that's put out? It's very nice that their landlord gets fined even the maximum $1,000, but where does that put them? It puts them nowhere. It doesn't address what the problem is, which is that people need to be allowed to stay in their homes.

The rent registry has to stay. It's the only means tenants have to know what services they're supposed to be getting.

The abolition of the Rental Housing Protection Act is a tremendous loss and will only exacerbate things. It's quite a mind warp to understand how this could be included in something called tenant protection. Obviously there's the intention to provide freedom to investors to dispose of their property as they wish.

Again we have experience of that in Scarborough. What happens when you push the maximum legal rent up beyond what the market will bear? Presumably you convert to condos. What happened in Scarborough? We have a glut in the condo market. They can't get the prices they wanted, they can't bear the cost, so what did they do? They went whining to the government to get rent supplements to rent the condo units. You've had deputations from some landlords who are accepting rent supplements on condo units for tenants. That was a bailout of the condo sector, and there's nothing in the economy to change that process.

Obviously this is going to be a loss of residential housing. It's not going to be an increase or protection or anything else.

To move on to the second issue of maintenance, any tenant protection package has to address disrepair in the rental stock as it exists. In Scarborough we have roughly 650 high-rises. That's over 100,000 families in those units. By and large, they're 25 to 30 years old because of the history of development there and many of them are in massive disrepair. That's been acknowledged by the city. The major structural and mechanical systems are breaking down. We're talking about capital repairs on these buildings that are running into the tens of thousands, to millions of dollars in other cases.

We applaud increasing maximum fines in recognition of the seriousness of property standards infractions. However, unfortunately we feel it's a hollow victory. Municipalities do not have the resources to use that and in some cases -- Scarborough -- they don't have the political will to use that. To quote our director of property standards: "At the end of the day, if all I'm getting is a fine, especially if it's against the individuals and not the corporations," it doesn't mean very much. "The question you're asking is what can be done to actually get the repairs physically done. At the end of the day there is no court order that forces them to do it."

What's needed is an integrated approach. The threat or deterrent of a prosecution or fine is one element, and that's fine; the resources to the municipalities to enforce that are needed.

We held a public inquiry into disrepair in October 1994 and set forward a series of 13 recommendations which would provide an integrated approach. I'm going to list those out for you at the end.

There has to be an automatic mechanism for tying rent levels to repair levels, where the rent money that is withdrawn or held in abeyance then goes directly to repairs. Obviously the rent freeze we have now is the most logical. It's the only thing we have that ties rent directly to maintenance, and it has to stay. It has made a difference in Scarborough. It would have made more of a difference if the city had enforced its standards, but the government's proposal to do away with the automatic rent freeze will be a serious blow to the possibility of getting actual work done.

This idea of allowing greater increases for capital work is a bit of a problem. There's nothing in the package that ensures in any way that this money is going to go to capital work. That's the whole problem we've had for the past 20 years. There have been millions of dollars paid by tenants for capital work, even in the 2% increase per year in the automatic guideline, and where did it go? In some cases it went into the buildings. In Scarborough in a lot of cases it certainly did not. Who are these people who didn't reinvest it? Who are these people who went off with it? Where is that money?

What is different here? "Let's give them 4%, let's give them 6%," but what requires that it still goes back into the buildings? Nothing. Again it's just more money out of tenants' pockets with no provision that it will go back in.

One way to do that is with a capital reserve fund. We won't go into it in detail, but the 2% capital cost would be an obvious source of funding. Another useful source would be the revenue from these fines, so rather than those fines going into the provincial coffers to reduce the deficit, they could actually go back and be used for repairs. That would be a useful use of those fine moneys when they are levied.

We also recommend that municipalities be permitted to recoup as municipal taxes the moneys they spend on necessary remedial work, legal costs and so on. This is mentioned in the proposal, but it's not clear to me from reading it whether that's in fact there or whether it's just a comment that it would be a fine idea.

In summary, we have participation from roughly 200 buildings in Scarborough. We've only been around for a year and a bit. We're growing regularly. That's fairly substantial participation. We have here 500 letters from individual tenants which generally support our proposals, so we have the details here.

I'll just list the specific details or the specific recommendations that we have to ensure the preservation of the existing stock which would represent an integrated package:

Ensure that the automatic guideline which is allocated for capital work is being used on capital work.

Change the Rent Control Act so that there's a mechanism for decreasing rent when a rent freeze is put on if the work continues not to be done at incremental stages over time.

Amend the Planning Act to provide that officers and directors of corporations can be held personally liable.

Increase fines for convictions, which you've done.

Educate justices of the peace on the seriousness of this and give them the authority to order the work done, which is missing in this legislation.

As I said, amend the Planning Act so that the municipality can recoup its cost.

Put substantial resources into the enforcement branch of the Ministry of Housing, maybe equal to the fraud squad for welfare or other of the kind of scrutinizing bureaucracies we put in place.

Change the Rent Control Act so that a landlord must provide certification that there are no violations of minimum building and safety standards in order to collect the automatic guideline increase. Since this would require greater resources from the municipalities for inspection, give more money to them to enforce their standards. Thank you.

The Chair: Thank you very much for your input. We appreciate your taking the time to come and share your ideas with us.

1400

CITY OF YORK COMMUNITY AND AGENCY SOCIAL PLANNING COUNCIL

The Chair: Our next presenter is from the City of York Community and Agency Social Planning Council: Dan Goldberg, who's a tenant; Wendy Gage, Horizons for Youth; and Thelma Bradley, the co-chair of the board. I obviously named off one too many names. Welcome to our committee. We appreciate your being here. The floor is yours.

Ms Wendy Gage: At this point it doesn't seem that Thelma has been able to attend today, so I'm going to speak on behalf of Thelma. My name is Wendy Gage and I work for Horizons for Youth, which is a shelter for youth in the city of York. But I'm here representing Y-CASP, which is the City of York Community and Agency Social Planning Council. Y-CASP is a non-profit, charitable organization that brings together residents and service providers in the city of York to identify and respond to human service issues which impact on the lives of residents in our community.

The city of York in particular is a high-need, underserviced municipality in Metropolitan Toronto. We have about 140,000 residents and we are a low-income community with many new immigrants. Over half our households are tenants versus homeowners. We'd like to share with you today some information about our community and some of the concerns we already have from tenants in the city of York about the proposed changes in rent control legislation.

Y-CASP conducted a demographic profile of the city of York and there are some key points that are relevant to this proposed change in rent controls. The city of York has the lowest average household income in Metro Toronto. In 1991, the average incomes were $45,083 for the city of York as compared to $54,601 for Metro Toronto and $52,225 for Ontario. We also have a higher rate of unemployment in the city of York, 11%, compared to 10% for Metro Toronto and 8% for Ontario.

Our families comprise of a lot of single-parent families: 17.5% for the city of York, compared to 16.3% for Metro Toronto and 13% for all of Ontario. Of the single families, those headed by a female parent are 85.2% in the city of York, compared to 84.8% in Metro Toronto and 83% in Ontario. We also have a higher rate of seniors in the city of York over the age of 65: 13.7% in the city of York, compared to 12.8% in Metro Toronto. So as you can see, we've got, as I said before, quite a low-income community. We've also got a community filled with single parents and unemployed people.

In terms of housing, there are 56,130 occupied private dwellings in the city of York, and the number of rental units is 30,260. The percentage of tenants in the city of York is 53.9%. A lot of people in the city of York rent.

There's a higher average ratio of rental versus ownership dwellings in the city of York compared to Metro Toronto. In terms of affordable housing, which is defined as housing costs that don't exceed 30% of gross annual income, 35% of York's tenants are already spending more than 30% of their household income on rent.

In terms of vacancy rate in 1995, ours is 1% in the city of York compared to 0.8% in Metro Toronto, which is slightly higher. But it's expected that's going to drop in 1997.

One of the activities that Y-CASP participated in was on June 25, the same day that the government released its discussion paper on the tenant protection legislation. We had a rally with over 200 people, and some of the comments we heard that day really revealed the anxieties that people in the city of York are feeling about these changes. I want to take this opportunity to share with you some of the things they said.

One tenant said: "People are upset about this decision. In my opinion, rent is already too high, no matter how much landlords charge."

Another said: "It's terrible that landlords will be able to increase rents for vacant units at their own discretion. Landlords are going to pocket the money and not do repairs."

A senior said: "Speaking on behalf of seniors in rental buildings, we have fixed incomes and must pay rent, buy food, pay for our cars, gas, oil and repairs. How can a senior, receiving low income, afford this? How will they live? And they can be evicted at any time."

Another individual said: "The present government doesn't understand this education. They're closing an anthill and opening a volcano. What do people have to rely on except welfare if they're evicted? The little people are being hurt by education, health care, cuts to welfare," and this, actually.

Another said: "If you're not making $40,000 a year, you won't be able to live. I fear evictions for forming tenants' associations."

Another said: "The proposal represents no rent control for tenants. It'll make tenants prisoners of their own apartments." Having sat on the committee that organized this rally, that was a common concern, that people were going to become prisoners of their own homes, that they won't be able to leave.

A representative from the children's aid society pointed out that these changes will hurt kids. It represents discrimination against income. At the children's aid society 18% of their admissions are due to housing, and these proposed changes will only make the situation worse.

Another tenant said: "I'm not confident that calling my MPP will have an effect. I feel that seniors will not be listened to unless we have a lot of money."

Another said: "I doubt that Mike Harris will consider affordable rents an issue. I have a big fear that we will never be able to move."

The mayor of the city of York pointed out: "In the city of York, we already have a high proportion of slum landlords" -- crack houses and prostitution happening. "These places have very poor security for tenants. What will happen with maintenance and security when this law passes? Harris said he wouldn't touch rent controls."

Finally, someone said: "I see my rent going up and it's already $722 for a one-bedroom apartment. There must be some control here. Landlords are rich already."

As you can see, a lot of people in the city of York are very concerned about these proposed changes. I myself have serious concerns about the passing of this proposal, as I believe it represents further discrimination against marginalized people in this province: the poor, seniors, single parents and people who cannot afford homes.

As I said before, I work for Horizons for Youth, which is a shelter for homeless youth in the city of York. Many of the youth at our shelter are under the age of 18, so they can't even vote and they don't have a part of this process. I'm trying to give them a voice here. Many of our kids rent and most of them exist on social assistance. They exist on social assistance because they've been kicked out of their homes, because they've got abusive families, because they've had an immigration sponsor who refuses to sponsor them any more. So they have to live on social assistance. A lot of them are on social assistance to get themselves through school.

My experience with these youth is that they're already discriminated against by landlords. They don't have a lot of money to spend on rent -- $325 is not a lot of allowance for rent -- and they're often refused affordable options because landlords perceive them as being too young to be responsible.

Another thing that I observed from working with these kids is that they face evictions at a much higher rate than adults do. What I see is, a lot of these are illegal evictions. Landlords kick them out and they don't know the legal process. They don't know what they can do and they don't know how to fight against it.

Most importantly, these kids move a lot. We can't expect a 16- or 17-year-old to have the same social skills and the same abilities to stay in a place. We take that for granted. These kids move a lot. If they're going to be moving a lot, they're going to face changes in rent every time they move into a vacant unit. This is my big concern. In the last six months at Horizons for Youth we've had our beds filled to capacity and we've even provided emergency mattresses on the conference room floor for homeless youth, making our occupancy rate 102%. We're full to overflowing, and the situation is similar in other shelters in the city.

1410

The only thing I can see with these rent changes is more kids are going to get evicted, more kids are going to have a hard time finding affordable housing and we're going to see more youth on the street. That means more youth involved in street crime, such as prostitution, and more youth living in squats, which we've already seen is a problem.

I'd like to just pass over to Dan Goldberg, who's a city of York resident.

Mr Dan Goldberg: I'm a senior citizen and I've lived at 145 Marlee Avenue for the past 23 years. This is one of the buildings involved in the infamous Cadillac flip of 1982. I see nothing in the proposed legislation to protect tenants from this happening again. As a senior and a veteran of the Second World War, I think I speak for other tenants, veterans and their widows living on fixed incomes. With the abandonment of social housing policies, with no rent control protection, are we being sacrificed by this government for a promise they have made to landlords?

The building I live in was bought in 1986 from the bankruptcy trustee, and even with rent controls which have been in place, my rent has more than doubled, from $425 to $884, so I do not think landlords have suffered. I recommend that the present tenant and landlord act remain as it is.

As you can see, the people of the city of York are very concerned about how this proposal will affect them. The demographics of the city of York show we would be seriously affected by the erosion of tenant protection. We have a high proportion of renters, and this bill will really hurt our community. I would also look to add that while these changes are aimed at encouraging new development by landlords, British Columbia has already tried this approach, with no success. Why are you trying a model that has already proven to be ineffective in other jurisdictions?

The recommendations of the board of directors of the City of York Community and Agency Social Planning Council are:

That the Ministry of Municipal Affairs and Housing strike from any proposed tenant legislation any provision that would include rent decontrol of vacant units.

That the Ministry of Municipal Affairs and Housing strike from any proposed tenant legislation the abolition of the Rental Housing Protection Act, which preserves the existing stock of rental housing.

That the current provisions regarding the rights of tenants in care homes be retained, as the difficulties addressed by the changes proposed in the discussion paper can all be dealt with under the current legislation.

That the government reconsider its position on public sector involvement in the provision of affordable rental housing and hence resume its support for non-profit and co-op housing.

Thank you for listening to our concerns and recommendations. We look forward to positive results from these hearings.

The Chair: We have a short time for questions. Mr Marchese, you have two minutes.

Mr Marchese: If I can, two quick questions. Thank you for your submission. I support your recommendations wholeheartedly.

There's one comment that Mike Harris has made, and indeed the entire government, and that is: "Landlords have no incentive to invest in their buildings. Builders are not building new buildings." Do you think that by decontrolling, by increasing tenants' rents, that somehow landlords will build?

Ms Gage: As Dan said, we've already seen this model tried in British Columbia unsuccessfully. What's going to be different here that it's going to work?

Mr Goldberg: I'm a retired electrician and I was in the construction business for 45 years. I have a lot of friends who are developers, contractors, whatever. Not one of them would consider building rental units at this point in time, no matter what happens. It just isn't there; they just won't build.

Mr Marchese: Another quick question: The government's welfare cuts, in my view, have been worse for landlords. How is that? Two ways: they've created the rent arrears by the cuts they've made to welfare recipients, and they've created tenants who can't pay their rent because they've lost a great deal of income. Is that your experience in the work that you have done with young people?

Ms Gage: With the young people, no. The tendency is for them to end up in some housing with absent landlords, for landlords to legally evict them for things like -- I'm trying to think of some -- it's usually around they don't like the kids, the kids are too young, they've had a party, that kind of thing. So the kids come home, they've got a lock on their door that the landlord has put there and their stuff is on the front lawn or they never get it back.

Mr Maves: Thank you very much for your presentation. Just quickly, we've been through this a lot in this province: in 1975, then they had changes in 1977 and hearings in 1981 and hearings in 1985-86, hearings in 1991 and I think in 1993 there were more changes, and now we're at it again. Ever since we've put in a system of rent control, we've never gotten it right.

Mr Goldberg hit the nail on the head. One of the problems we're facing is this lack of supply. You said builders won't build right now, no matter what. You know developers and they won't build.

I was looking through some notes that were made the last time we had hearings, in 1981. A University of Toronto economist concluded that rent review in Ontario contributed substantially to the reduction in new rental housing starts, and by keeping rents low increased demand for rental housing, and thereby contributed to the rental housing shortage. We're trying to strike a balance here. We're trying to find the right balance, as governments have been trying to find it for a heck of a long time.

In your discussions with your developer friends, why do they say they won't build?

Mr Goldberg: They'd sooner build condominiums.

Mr Maves: Why do they say they'll build condominiums instead of rentals?

Mr Goldberg: It's easier for them to deal in condominiums than rental units. It's not because of rent control. Rent control has nothing to do with it. The investment for them is better -- it's their investment. They'd sooner invest their money in condominiums than rental housing, no matter what. Even if you take rent controls off completely, they won't build any rental units.

Mr Sergio: Ms Gage, did you say that you have 140,000 tenants in York, or did I misunderstand you?

Ms Gage: No, 30,260.

Mr Sergio: From the last comment by my colleague on the other side that you, Mr Goldberg, hit the nail on the head that it's a lack of affordable housing, I hope he concurs that rent control is not the problem, it is the lack of affordable housing. With your presentation, you have really crystallized the situation as to why we need rent control and perhaps to even improve upon it, because you have people with the lowest income, you have the high unemployment, you have a high number of senior people and you have a high percentage of single parents. Therefore, as a community, you have all the necessary ingredients as to why the government should continue protection and should give affordable accommodation.

One of the changes that the proposed legislation intends to do -- and we call it by so many names now, it's either a draft, it's a working paper, it's a reform of tenant protection and by some other names we call it a tenant protection package -- that's from the minister himself. One of these changes says subletting -- this has to do with subletting -- and assignment procedure to allow the landlord to set the new rent at the end of the lease for a new tenant and allow landlords greater control on who occupies the unit.

If this were to be law tomorrow and you were a tenant and you were to leave that unit and you were a tenant looking for a new unit, wouldn't you be scared? Do you remember the presentation by the young person from the children's aid society? Wouldn't that be just chaotic, to be confronted to go and look for an apartment, if you are a young one, or perhaps one in a low-income situation or from a minority group, to have something like this in the legislation?

The Chair: Mr Sergio, that was an interesting question. Unfortunately, we don't have any time to have it answered.

Thank you very much for your presentation this afternoon. We do appreciate your input.

1420

NICHOLAS BUGIEL

The Chair: Nicholas and Olga Bugiel.

Mr Nicholas Bugiel: My sister couldn't make it today. She had an operation on her leg.

The Chair: Welcome to our committee, sir. You have 20 minutes to use however you see fit. Questions, should you allow time for them, would begin with the Liberals.

Mr Bugiel: Thank you very much for your time. I'm going to concentrate on issues and points that may not have been emphasized as much by other speakers and people presenting here.

The first point I would like to make is that landlords are real people. We're just like you. I'm going to share a little bit of my family's background with you. Our family are second-generation landlords. My father bought our building in 1968, totally on his own and as the result of a lifetime of very hard work, and I'm very proud of him for that. He had no help from anyone and certainly did not have any handouts or grants from governments.

My dad immigrated to Canada in 1929 and was homeless during many of the Depression years. So he faced adversity and we knew about adversity in our family as well. He had no welfare, OHIP and couldn't speak English when he arrived. He literally worked day and night so that he could buy some real estate that was to be my parents' retirement security. My mother is now 72 years old and in failing health and for all intents and purposes the rental property represents a large portion of a retirement security fund.

As small landlords, we're typical of the 75% or so of the landlords that make up the vast majority of rental units in this province, and a great number of the small businesses in Ontario as well. We earn a living this way and we're proud of the fact that we provide a service to others. So please, when you talk about landlords, stop thinking and visualizing large corporate landlords that you can cast heaps of scorn on as well as accuse and convict in the media. We're people just like you, with the same wants, needs, dreams and concerns about life. We have spouses and children that we need to provide for, just like you do, and we make a valuable contribution to the Ontario economy year after year after year. We're really no different from anyone else, yet you have chosen to continue to discriminate against me, my family and all of the other small landlords in Ontario by your laws that in effect hold landlords personally responsible for our tenants' level of financial strength and independence.

The second main point is, it is society's duty as a whole to assist those who need assistance, not just the landlords. Let's get an important concept out of the way so there can be no misunderstanding. There will always be some people who will truly need financial assistance to enjoy at least the minimum standard of living, whatever your governments decide that standard of living may be. Those people who truly need assistance should receive it. I have no quarrel with that, so I'd like to get that point right out of the way.

However, like all other social assistance programs, the responsibility to provide for the less fortunate in Ontario is society's duty, government's duty, your duty at large and so should be financed by everyone in Ontario, not just by landlords. It is completely discriminatory and unfair that my family and I should be forced to directly subsidize people where it is actually your duty to provide assistance to people in need. And to rub salt into the wound, we are forced to provide direct subsidy to a lot of people who should not, with any conscience whatsoever, receive any assistance of any kind.

This is the clearest example of trying to buy votes and increase political fortunes by abusing and discriminating against myself, my family and thousands of people like us. It's too bad this sort of thing wasn't outlawed along with paying someone just before they went into the voting booth.

We really know who the needy are, and with a system of transferable shelter allowances in place, they will not suffer and the argument that the needy will suffer, which a lot of people here have been using, will evaporate. We will do the right thing -- help those who need it and create a system that encourages job creation and the construction of rental housing.

Another issue I'd like to bring up is, why is rental housing so different, why is it a sacred cow? Because it really shouldn't be. Where else do you force an entire segment of society spanning thousands of businesses to discount their products or services just because it benefits some portion of the electorate, a great number of which should not be subsidized at all? The fact is that you don't. People need food more than shelter, yet you don't force the food industry to provide discounts to a certain segment, whether they be renters, politicians, students, those earning less than $20,000, or any group that you might choose.

Face it. Rental revenue expropriation -- you call it rent control -- as it now stands, is not about helping those in need, so please don't allow yourselves to be fooled that it is. Many of those who truly need assistance do not get enough, while many people in Ontario are unnecessarily subsidized, and we've heard story after story after story about how people in need are not getting assistance, all at the expense of those people truly in need.

A lot of people have quoted the vacancy rate. In your own papers I believe you bring up some interesting information about the vacancy rate, so let's take a look at that argument that you can't lift rent controls because of the supposed low vacancy rate. Now, this vacancy rate, I believe, and a lot of other people do as well, is a misleading sham. It's totally unrealistic. It only takes into account buildings with six or more units, yet about 75% of the rental stock in Ontario isn't included. There are many more vacant rental units, including vacant condominiums. So if you're citing that statistic as a reason for the continuation of rent controls, it's definitely misleading.

Let's take a look at the new political reality of rental housing. I believe the old paradigm is dead. The message of the last election was loud and clear -- Ontarians are sick and tired of the old ways that didn't work and you were elected to make the necessary major structural changes to all the areas that needed work, including rental housing. Ontarians know that while these changes won't be easy and pleasant, they are necessary if our province is to grow rather than decay. And that's really what your government was elected to do. In almost all other areas the government has displayed the necessary vision, courage and tenacity to undertake major steps towards correcting policies and structures that were ineffective, expensive, unaffordable, and perhaps most importantly, unsustainable -- areas like education, welfare, health and government-subsidized housing, to name a few.

Yet when it comes to rental housing, you've misread the new political reality. You've caved in to the doomsday hysteria put forth by tenant advocacy groups and by the city of Toronto's $1.25-million propaganda campaign to save rent control as if it were the panacea for all of our problems. In short, the government blinked and it did so much too early.

All is not lost. Let's take a look at the reality of the situation. You've just been given a golden second shot at correcting the structure. What was the outcome of the obscene $1.25 million spent by the city of Toronto campaign that culminated in a rally at the beginning of the week? Only about 300 people of a potential of several hundred thousand tenants -- actually there's about 1.9 million renters in the greater Toronto area -- showed up, according to the Toronto Star, as noted in Tuesday's paper. The city even paid for buses to take people to the rally from all the wards. That works out to about $4,167 spent for each attendee. The more than $1.25 million could have been used in social programs to help those who really need it rather than buy political advertising at my and every other taxpayer's expense.

The most important thing is that the incredibly poor attendance at that rally sent a message to you that was loud and clear. Saving rent controls isn't a big issue of concern to the vast majority of tenants. We're talking 300 and perhaps the 200 in the city of York out of 1.9 million. If tenants really thought that what the politicians who support rent controls were saying was true, then they would have been out in force in the tens if not the hundreds of thousands. If this is going to be one of the major things that's going to impact their lives tremendously, you think they can't find an hour, an hour and a half to come down to Queen's Park, bused in for free? I don't think so.

What about the self-proclaimed tenant advocacy groups? The fact is that without continued government handouts, they would have been forced to close their doors, and some already have. If they cannot continue to operate with a potential 3.3 million members in this province, then calling themselves representatives of the tenants is a farce and a sham. They have no grass-roots support and in reality would not be a political threat to any party.

1430

If you have any doubts about the possible fallout of correcting the rental housing situation, again you've been given a golden opportunity to proceed as you knew you originally intended to and make meaningful change to the structure of the system as we now know it.

Let's take a look at part two of the new political reality of rental housing: jobs, jobs, jobs, and jobs create growth for the province and also win elections. What I find hard to believe is that none of the political parties have caught on to the opportunity here that has continually proved to win elections: job creation.

Everyone has said that the current system and the new proposals will not provide the incentive for new construction and will not create jobs, yet repairing the current rental stock will create an incredible number of jobs in Ontario and help bring prosperity back to the province. At least $10 billion is required at this point. This is 12 times or more the amount that would be created by building the Sheppard subway line and certainly would be more useful than a tunnel without tracks. Moreover, the jobs would be spread out among many tradespeople and casual workers who are currently suffering from the lack of work. This point, more than anything else, means certain re-election for a party that recognizes and capitalizes on this opportunity.

You mentioned vacancy decontrol. If you choose to decontrol units when tenants move out, rent on the units should be permanently decontrolled, not just until other tenants move in. This is one mechanism to phase out rent controls and avoid what you fear to be a chaotic situation.

Tenant compensation is another thing brought out in the discussion paper. I feel that's nothing more than theft and blackmail in reality. The concept of paying off tenants whose buildings are converted amounts to nothing more than theft and blackmail.

To see how absurd this is, could you imagine if this were extended to other segments of society? Say someone closed or converted a store or gas station that you've been shopping at for years, or perhaps had taken a product off the shelf that you've grown accustomed to buying -- say a Loblaws or Shell station for illustration. Using the above concept, I should be able to demand money from Loblaws or Shell just because they closed or converted that store.

This is absolutely absurd and demonstrates once again how landlords are systematically discriminated against in Ontario. The things you're doing to landlords you wouldn't even consider doing to most other segments of society. The reality is that we're an easy mark. We just can't pick up and move our buildings like people can pick up and move their businesses and stores.

Harassment provisions should go both ways. I find it offensive that your proposed harassment provisions are aimed mainly at landlords. We've all heard horror stories over the years when a tenant harasses a landlord, most often in a small building setting like a duplex or a triplex, or someone has rented out a basement apartment. If you're going to implement fines and other provisions, they should go both ways to keep this from happening.

Government bodies have in the past created a fiasco in the processing of prior rent control applications. Why do we have a backlog? It shouldn't be there. How will a new body be any different and be fair to both landlords and tenants? I can't see how, under these proposals, they will be.

You have an incredible opportunity at this point in the province's history. Your opportunity is visionary leadership and commonsense solutions. You can choose to be visionary leaders and implement commonsense solutions that will solve the severe shortcomings of the present system, or you can continue to be bullied by those tenant advocates who have no real support and demonstrate the same level of thinking that hasn't worked and has created the problems we have now.

Using the common sense that people want in their elected officials, there is only one real choice if you are to be statesmen or stateswomen rather than politicians: Ultimately scrap rent controls in the Rental Housing Protection Act and replace them with shelter allowances for those who need them.

Mr Maves: Several people have said on this issue that we should have decontrol completely and have shelter subsidy allowances. If we had a system of decontrol and there's a person on a shelter subsidy allowance who is living in a building with decontrol, a landlord could conceivably take the rent from $900 to $1,300, because he can do that, and the person living in that building wouldn't care because he'd be covered by the shelter subsidy allowance. Any thought to how that kind of thing could --

Mr Bugiel: There are a number of ways this has to be implemented. It really has to be implemented as an integrated solution. You might combine decontrol in a phase-out mechanism so this won't hit the street all at once. I think that would avoid a lot of potential chaos. Shelter allowances could be based on average rental, or they have to be based on a reasonable amount, and that concept is found throughout the tax system and every other system.

I really don't believe that landlords are totally stupid when it comes to this. You've heard lots of stories about people who can't even get their maximum rents now. If you're going to move from $900 to $1,300 and somebody is going to move out, and let's say that apartment stays vacant for two months, even at the old rent you've just lost $1,800.

Mr Maves: On the idea of maximum rents, you're right; there's evidence every day that about 40% or 50% of units right now are being rented out at less than the allowable levels. You've put forward an interesting concept, that the vacancy rate is a lot higher than 0.8% because of these other units. Do you know other landlords with the smaller number of units in them who have a great number of vacancies?

Mr Bugiel: You can take a look at the single units, probably condominiums. You just have to take a look through the papers. Probably some of the best people to comment on that would be the landlords' organization. I don't have a landlords' organization. Multiple Dwelling Standards Association represents a lot of small landlords in the province. The Fair Rental Policy Organization represents both large and small landlords. They would be better qualified to give you the statistical background.

Mr Sergio: A good presentation; thank you very much. I would concur with the final word in your presentation that we need shelter allowance of some type. To bring you to the second part of your presentation, would you say that politicians get elected on promises of especially jobs, jobs, jobs and why they hadn't caught on and stuff like that?

Mr Bugiel: Creation of them. Yes.

Mr Sergio: We have a government that championed the cause of creating jobs during the last election. They won an election on some of their major promises, including that, and we are not even near getting those jobs. We are seeing now especially poor people, especially young people, without jobs. There are no jobs. We're seeing downsized companies, throwing people on to welfare, and then we are saying to the government, "Don't give them anything"?

Mr Bugiel: No. We're saying, "Use this as a spearhead for creating all those jobs" because of all those reasons you've just mentioned.

Mr Sergio: That's wonderful, but I'm sure you've been following the situation, and we have developers and builders saying: "This is not enough. Why do we need GST? Eliminate provincial taxes. Eliminate realty taxes." What else do they want? Your father did it without any assistance, didn't he?

Mr Maves: That's bureaucracy.

Mr Sergio: Hold it a second. This brings another question.

Mr Bugiel: I'll be happy to talk about that.

Mr Sergio: If we eliminate the GST and the provincial taxes and this and that, and we're already seeing cuts to hospitals, schools and education, where is the government going to get the money to compensate for that?

Mr Bugiel: First of all, I believe that the creation of jobs will create a lot of spinoff benefits and trickle-downs through society. The people who are now currently unemployed and receiving social assistance will start paying taxes.

Mr Marchese: Monsieur Bugiel, you're probably not aware that we're spending $2.3 billion in shelter allowance at the moment. You asked a question: "At least $10 billion is required at this point," for capital repairs.

Mr Bugiel: That is a common figure that's bandied about.

Mr Marchese: Yes, I understand. "This is 12 times or more the amount that would be created by building the Sheppard subway line," and so on. You want to get people to do repairs and get people working. Who should pay for that?

Mr Bugiel: Initially -- the landlords should pay for that; I'm not going to say that. However, this is not one of those black and white issues. Again, what you need is an integrated approach and solution.

Mr Marchese: I understand. It's just the way you wrote it. You said that $10 billion needs to be spent on capital repairs, and I was wondering who -- should the government be spending that $10 billion?

Mr Bugiel: That's an interesting question you bring up. That's one you might want to give further suggestion to. Again, I'm not an expert in that area. Maybe you could hire some economists to look at the trickle-down effects of that.

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

1440

RENTAL HOUSING SUPPLY ALLIANCE

The Chair: Our next presenters are the Rental Housing Supply Alliance, David Freedman and Richard Lyall. Good afternoon, gentlemen. Welcome to our committee. The floor is yours.

Mr David Freedman: Thank you. I hope I can speak with the same enthusiasm as that last gentleman. My name is David Freedman. I am the president of Goldlist Development Corp, a company involved in all aspects of residential development, construction, ownership and property management.

I sit as a director on a number of industry organizations directly concerned with housing development in Ontario. With me is Richard Lyall. He is the general manager of the Metropolitan Toronto Apartment Builders Association.

The Rental Housing Supply Alliance was formed in 1995 to address the issue of how to overcome barriers to private rental housing development in Ontario. The alliance includes the Metropolitan Toronto Apartment Builders Association, the Urban Development Institute, the Ontario Home Builders' Association and the Fair Rental Policy Organization. They represent in excess of 1,000 landlords and in excess of 5,000 contractors.

The alliance was formed in response to an initiative by the provincial government to examine changes needed to resurrect the rental housing industry in the private sector. The industry has been conditioned over time by government to ignore that segment of the industry.

Among other things, one of the major barriers is the horrendous rental regulatory system. For those who understand investment behaviour -- decision-making, that is -- the system makes long-term risk analysis impossible. Investment in apartment projects as a rule requires long-term commitments, as is evident in the government's $1-billion-plus annual commitment to non-profit housing operations.

All housing forecasts pointed to the greater Toronto area plunging into a long-term housing shortage. It was obvious that decisive action to stimulate private sector investment was needed in the Toronto area particularly. It was apparent that no one had been calculating the cumulative effect of years of government intervention which progressively increased building costs through taxation, development charges, school levies, unnecessary building code changes and regulatory red tape, resulting in delays in approvals.

There are many opposed to changes. They are convinced that in Ontario, unlike other industrial regions, the private rental building industry cannot work. They are right, but for the wrong reasons. The industry cannot work because it has been buried by governments. Having destroyed the industry, they then embarked on investing enormous amounts of taxpayers' money in social housing, including what was called market rents, which often unnecessarily competed with existing rental housing.

While we believe social housing can play a role in housing supply relating to special needs, the publicly financed non-profit housing programs categorically failed to fix the supply problem. Waiting lists continue to grow and costs continue to escalate.

The mayor of the city of Toronto stated earlier this week that with a vacancy rate of 0.5% Toronto is facing a housing crisis. We agree. The situation is made worse by the fact that buildings are deteriorating and becoming overcrowded. The mayor also stated, "The development industry has told this government that the decontrol of rents in and of itself is not enough to begin to build rental units." We agree. She then went on to state, "Of course, the greatest method of creating new rental housing units would be for the government to get back in the business and continue to fill its historical role of funding affordable housing." We strongly disagree.

Just because the changes are not happening quickly enough, that is not a good reason to turn to a mechanism like non-profit housing which, under the NDP and Liberal regimes, proved unable to meet demands or solve problems. The necessary changes can be made with leadership, vision and getting the various levels of government to work together and stop using the housing industry and tenants as political footballs.

The issue has been tackled and resolved in other provinces and states, so why not in Ontario? In the United States in 1995, 177,000 market rental units were built, 50,000 non-profit, subsidized tax programs were built and 51,000 condominiums -- 177,000 rental housing units by the private sector. The vacancy rate average in the United States was nine point something per cent.

We know that the pace of change needs to be accelerated, as it will generally take at least two years to have new apartments ready for occupancy. The time is now to make that decision to get it going. It'll still take between 18 months and two years before they're ready for occupancy.

The city of Toronto neighbourhoods committee, for its part, has resorted to spending scarce public funds on tenant rallies and irresponsible fearmongering, as demonstrated in its literature, which states that the government is throwing the tenants to the wolves. They are simply misleading tenants in the blatant pursuit of votes and not solutions. Tenants are the losers in that game.

The fact is, and it's been quoted a number of times, only 20 private rental units were produced by our industry in the greater Toronto area last year, and a total of only 610 units in the province of Ontario. This is strange, as we now have low land prices, low vacancy rates and low interest rates. The reason the industry is not building has nothing to do with the state of the economy, but with the politics and taxation of rental housing.

In 1972, the industry produced 39,000 units when the vacancy rate was between 5% and 7%. It did not cost the government a dime and all those units are still fully occupied and operational. It would cost the government $1.1 billion to meet basic future housing needs, and that would not include cost overruns. To rehabilitate existing stock would require billions. We've heard that and we've heard the discussion back and forward on that.

It's clearly not going to work. The rent control system and the Rental Housing Protection Act are the biggest job killers in the history of this province. The alliance's economic impact report estimates that if the industry-recommended changes are made, 10,000 units could be built over a three-year period, creating 22,000 -- if you'll pardon the expression -- man-years of work and generate $460 million in federal, provincial and municipal tax revenues. Those are revenues that they are not getting now. I'll answer some questions I heard earlier, if you like, on GST and taxation and some of those other issues.

Mr Sergio: It's coming.

Mr Freedman: I figured. This does not include the renovation of existing stock, which would add another 15,000 man-years of employment. For instance, it has been estimated that there is $10 billion in repair work required. Construction requires high-skilled, well-paid workers, and most of the materials are sourced locally.

With regard to the workers, you heard the very first day of this session Mr George Goldlist, my associate and chairman of Goldlist, address some of the issues from a personal level and that of some of the workers in our industry. I am not going to dwell on that; I thought he did a pretty good job.

Building new stock would lower the burden on social services by housing people and creating good jobs. Thirty-seven thousand jobs are equivalent to 12 Scarborough van plants. The above numbers do not include savings resulting from lowering the burden on social assistance programs, such as employment insurance and welfare, and would certainly improve the quality of life.

Earlier this year the alliance endorsed a number of changes to government policies and programs, most of which are contained in the government-sponsored Lampert report. That report included, among others, the following:

Ensuring tenant protection through a mediation program.

Taxing any new rental projects in the same manner as owner-occupied accommodation; currently, taxes are running two to five times higher and now eat up between two and three months of rental revenues.

Eliminating unnecessary regulatory barriers from the design and approvals process.

Reassessing the practice that allows municipalities to levy development charges on new construction that can add up to as much as $17,000 per apartment unit.

Reducing the rate of GST payable on rental developments to levels consistent with new homes. Currently, the GST payable is 7% on rental accommodation. That compares with 4.448% for condominiums and homes under $350,000 and with 3.5% that was granted to the non-profit housing industry.

These recommendations have not been seriously challenged by any group and can be introduced at no cost to government. Typically, those individuals who would benefit most from changes are those on housing waiting lists and the forgotten first-time renters, who have virtually no advocates outside the industry.

1450

With respect to the current proposals to changing the rent regulatory system, we have reviewed and generally endorsed the detailed comments and concerns raised by the Fair Rental Policy Organization and other recognized representatives of our industry.

Government must address the issue of trust. New apartment development must be backed up by a contractual commitment that will ensure new buildings will no longer be subject to the political whims of changing governments.

Tenants are going to get the best protection with a balanced housing market. The industry is on record in support of adequate tenant protection. We can build without sacrificing health, safety or environmental objectives.

We also recommend the criteria used presently to select and approve non-profit tenants should be examined in detail to ensure that units are going to those in need. It is the government's responsibility for housing the needy and must no longer be confused with housing the greedy. I'd like to point out something that was just brought to my attention on the way down here: "Cityhome Used to House Wealthy." It's an article you should all read, because this is just one example.

We are extremely pleased that this government is taking the situation seriously. However, we are concerned that with the slow pace of change, the industry will not be given a chance to work and will be unfairly blamed for not producing rental units.

Our concerns and positions are known. Therefore, we are putting all levels of government on notice that it is incumbent upon them to deal with the concerns we have outlined today. Failure to do so will result in a housing crisis in this province.

We remain confident that these issues can be successfully addressed. The alliance looks forward to its role in finally resolving this problem towards serving the housing needs of the people of the province.

To the submission that's been distributed I have attached a pro forma financial statement that gives effect to current costs, the current situation and operating conditions, compared with the costs and conditions after giving effect to our recommendations. Just in summary, I point out that those recommendations would reduce what right now currently produces approximately a negative return on capital -- this is a 258-suite building -- of 6.62%, or a $301,000 loss a year for the next five years, compared with a cash flow of $221,000, which is a 5.92% return on equity. Among some of the highlights of this that we're recommending, yes, we are recommending the government at the federal level, your friends, should be talked to to eliminate this discrepancy.

Mr Sergio: They're doing a good job.

Mr Freedman: I'll finish and then you can talk.

We think levies could be deferred. We have a system in which they can still get their money, but don't lay it on to the tenants. Let's put it in through the taxation system that down the road will be able to afford it.

Interjection.

Mr Freedman: Let me finish. We also refer to some of the other costs in the building code. We believe that the cost per square foot could be as much as $3 to $4 less per square foot on a building that's around 200,000 or 300,000 square feet. That cost could be eliminated without harming the tenants, harming the buildings or anything, continuing with the very high standards that built buildings in the early 1970s and even the 1980s.

We believe CMHC, which is now charging a 5% fee on a high ratio mortgage of 85% -- now a building of a decent size costs between $20 million and $30 million. You're putting on a mortgage of 85% and your mortgages are running between $20 million and $25 million. That adds immediately, right away -- 5% is in excess of $1 million that has to be financed and has to go to the rent.

Realty taxes: Realty taxes are currently running at four and even five to one in some municipalities. We have all those facts. Nobody's denied them. Even the mayor of Toronto has not denied them. We haven't done anything about it and it's been there for many years. That can be reduced substantially. That could change as much as $75 to $80 a unit.

While we're at it, let me throw another one in. Provincial sales tax -- have I run out of time?

The Chair: No. You have five minutes.

Mr Freedman: Provincial sales tax on building materials: You're not getting the tax now, so let us build and give us a moratorium on those taxes. We'll get those buildings built. You're not getting any money now, the land is sitting vacant, so why not participate with us?

Gentlemen, that's our presentation, and I would gladly meet with every one of you and go over this pro forma at any time you wish -- not next week; I'm out of town.

The Chair: We've got about a minute and a half per caucus for questions, beginning with the Liberals.

Mr Sergio: Thank you very much for your presentation and for coming down to speak to us. I also would like to show you some facts and figures -- that it was the Liberal government that produced the least costly and the most housing during our term in office. I have the information here for you.

But let me say one thing: I would be delighted, as a member of the House, and I believe every member and every government would be delighted, if we could accomplish exactly what you said would be the ideal thing for developers and tenants both. The only thing that is left is how we are going to do it. You haven't told us how we're going to do it. All right?

Mr Freedman: I think I have.

Mr Sergio: You would like to have the best for both. I don't blame developers for wanting to make a buck; I really don't. I'm really sincere when I say that and I believe everybody wants the same thing. But the government has a responsibility to provide affordable housing for the needy, not for the greedy, as you have said.

You mentioned Mr Goldlist, and he went down the list: lot levies, land levies, house levies, development charges, education levies, GST, provincial taxes, realty taxes, red tape. Tell us, what can we do? You have said that if the industry's recommendations were to be accepted, 10,000 units could be built today. What else would you expect from the government so that you can go and start building?

The Chair: Thank you, Mr Sergio. Mr Marchese. Unfortunately, the question was too long.

Mr Marchese: Two quick questions, if I can. R.P. Applebaum says, "Most evidence suggests that modern rent controls have little or no impact on the amount of investment in rental housing." Do you agree with that?

Mr Freedman: First of all, who is R.P. Applebaum? I don't know who he is. Secondly, I'll answer your question. The answer is, it does have an effect, it has an overwhelming effect. Nobody is going to invest money in such a highly regulated industry as this.

Mr Marchese: So you disagree, in other words.

Mr Freedman: I totally disagree.

Mr Marchese: I need to ask you another question. Mr Lampert also states the same thing, very much saying there is a serious doubt whether relaxation of rent control will itself be sufficient to stimulate private rental investment on the scale required.

Mr Freedman: Right. I agree. I said that here.

Mr Marchese: You consider the government getting involved in co-op and non-profit as a drain on the taxpayer. Do you consider all the giveaways that need to be given to the private sector -- the reduced development charges, equalized property taxes, have the GST payable, that whole long list that Mr Lampert says -- do you consider them to be a subsidy to the developer and that the taxpayer will have to pay for that?

Mr Freedman: No, I don't, because if you balance the revenues that you're going to receive from all the things we're going to do, you will balance and make a profit on it. You're not getting that revenue now. We own some land. We'll build those buildings. It's not going to cost you a nickel. You don't have to put a guarantee on our paper. You don't have to do anything. You do for every nickel you spend on non-profit housing. Don't do away with non-profit housing. There's a need for it.

Mr Hardeman: Thank you very much for the presentation. We've heard a number of discussions in the past week about the issue that changing the rent control legislation as proposed in the tenant protection discussion paper will in itself not create the building of new rental accommodations. The minister said that and it's been expressed numerous times during the hearings.

My question looking at all the other issues that have been brought up by different delegations, the tax advantage for owned properties and so forth, doing all those others without dealing with the rent control issue, would that be sufficient to slow down dramatically or to stop the building of rental accommodations, even if we added all those other things and fixed that, as the Lampert report states, but we left the legislation as it is today in Bill 121?

Mr Freedman: The legislation as it is, right up front, turns people away. They don't want to get involved. They don't want to invest the money. They don't trust government. They don't trust that this legislation will not get tampered with by the next government, maybe even by this government. It may get tampered with. There is no trust. With it gone or amended, so it's controllable and livable, so we can live with it -- we can't live with what we've got now. After all, we only built 20 units. That's telling you right there. So the answer is we think it has to be changed. It cannot function as it is now. Some form of rent control to protect certain tenants is probably necessary, but moderate and something we can all live with and work with, yes.

The Chair: Thank you, sir. We appreciate your input this afternoon and your interest in our process.

1500

RAY IRELAND

The Chair: Our next presenter is Ray Ireland. Good afternoon, sir. Welcome.

Mr Ray Ireland: Mr Chairman, members of this committee, ladies and gentlemen, I consider this paper to be the stepping stone towards the complete dismantlement of rent controls in Ontario, and I don't like this prospect one iota.

In the brief period of time allotted to me to speak to you this afternoon, I wish to discuss a few selected points in the paper that to one extent or another are of concern to me. These points are both pro and con, but I must say, quite frankly, mostly con. Also, I wish to address what I consider to be four major fallacies concerning the overall landlord-tenant situation in Ontario.

Since time is of the essence, I'll get right to the paper. In the first place, the title of this document is highly misleading. It gives the distinct impression that it's all about protecting tenants. Come on now. Where is the tenant protection here? There's nothing in here for tenants they don't already have. I do, however, note that it gives developers and landlords new opportunities to make gains, great gains, yet there is no mention of the word "landlord" or the word "developer" in the document's title. It gives the wrong impression right from the start. It rings a false chord. It's phoney.

Now to page 2 of this document -- we'll get right at it -- about one third down on page 2, I find something here that's highly offensive, extremely offensive to me. If I show a little anger right now, pardon me, but I find it extremely offensive. I think the government, to put it bluntly, has one hell of a lot of gall to try and jail tenants in their apartments with this sitting tenants nonsense. How dare the government try to --

Interruption.

Mr Ireland: Thank you. How dare the government try to restrict the movement of free Canadians in this way, setting forth what is essentially a two-tiered tenant system, saying in effect that some tenants must stay put in their places or face the possibility of being penalized financially while other tenants may move freely if they can pay the financial freight. This is not fair and it should be drummed out. In my view, this nutty notion should be scrapped and pronto. If it goes through, it may even trigger a challenge in the Supreme Court under the Charter of Rights and Freedoms. Stranger things have happened. I'm very angry about that. How dare the government do this? It's an affront to me as a tenant and an affront to other tenants.

Still further down on this page, just why should landlords get incentives to put money into maintenance? Do other businesses get incentives to keep their properties intact? Don't you believe it for a minute.

Now to page 4 of this document -- I told you there would be a lot of cons in it -- starting with the third paragraph on this page and ending at the top of page 5. I like the major thrust of this material. Violating landlords should be brought to task and no question about it. They've been getting away with things for far too long, and I speak with authority too, because I know a lot about landlords. I've had a lot of dealings with them as a tenant.

Still on page 5, "The Landlord and Tenant Act." I agree that resolving disputes right now is too complex and too lengthy. Positive changes are need. Simplify, simplify. That should be the new rallying cry. People are fed up with the red tape. We strangled in red tape in the past 10 years and before that too. But I must say, although I have considered myself to be a highly progressive man, the Liberals and the New Democrats certainly strangled this thing with red tape and made it very difficult for us to get anywhere as tenants. I'm sorry to say that, but it's the truth.

Further down on the page, "Grounds for Eviction." I'm all for a better process to chuck out unruly, inconsiderate and irresponsible tenants who think they can run roughshod over the majority of rule-abiding tenants and the landlords. I'll stop for a moment on that, and I'll tell you that this year has been a bad year for me with bad tenants. The landlord lets them in because they want to fill up the place, and they keep filling up the place. That's money, folks; it's always money, money, money. I listened to the last two speakers. Everything is money. That's the Holy Grail. We must not ever forget money. But don't think about the public good. I want to make it clear I've had a lot of trouble with two tenants in particular. I had to call the police on them and so on. No consideration for people or the landlord.

So there are some bad tenants, but most tenants are good tenants, good people. They just want to live in peace and pay fair rents.

Now to page 6 near the bottom, "Privacy." The hours are too long. Start at 8 am when they come in to check on your property, that's okay, but end it at 5 pm, not 8 pm, and make it clear that it's Monday to Friday only, no weekends or holidays except, of course, for emergencies in all cases. We understand that.

Finally, to page 10, bottom of the page. I believe it's dead wrong to take away municipal control regarding matters concerning demolition, major renovations and conversions of rental buildings to condos or co-ops. This control is necessary. Without it, chaos could ensue.

That's it for my input on the paper. Now I'd like to address what I consider to be four major fallacies in respect to the overall landlord-tenant situation in Ontario.

Fallacy 1: That developers will actually start building new rental stock in Ontario as soon as the government changes the system and eases the rules on rent control. This is a laugh. If this were the case, why haven't the developers shown some sign, just some little signal, however infinitesimal, of intention, of desire to actually build rental stock during the period since the government now in power took office over 14 months ago? I can't understand it. The silence has been deafening. It's most bewildering, particularly when you consider that the developers will never ever get better friends at Queen's Park than Mike Harris and company. Never ever will they get better friends. Believe it. So why the stall? In 14 months, nothing. You ever hear any peekaboo from them? They sit back waiting for everything.

The Premier himself made it clear -- I have it in my briefcase there somewhere -- the Premier himself made it crystal clear last year that he wanted the private sector to make progress in building affordable rental units before he changed the rent control regulations. He made that very clear last fall, so why aren't these people working? Why aren't they as busy now as a bunch of bustling beavers to get this job done, to start building, building, building? They're always talking about it. They've got the friends here at Queen's Park who want them to do it, but they're not doing it.

Frankly, I believe that developers will not build rental stock massively in Ontario because they simply don't like the profit possibilities. That's why. They use rent controls as a big excuse for not building. In all candour, Mr Chairman, ladies and gentlemen, I think the developers, who are in most cases the landlords as well or at the very least buddy-buddy with the landlords, simply want to see rent controls abolished, wiped out, so that they can make more profits out of what they already have or their friends have in rental stock, irrespective of the state of the properties concerned. They just want the profits and use what they can. There's a bit of a con game going on here.

1510

Fallacy 2: That apartment building ownership makes for poor investment in the province. Nonsense. I think landlords are doing very nicely, thank you, and so do others. As reported in the Federation of Metro Tenants' Associations bulletin last fall, the Appraisal Institute of Canada, Ontario association, says that apartment ownership has been a good, long-term investment in Ontario because of, not in spite of, rent controls. Landlords are guaranteed an increase in their legal revenue, a yearly rent increase approved by the government. I ask you, how many other industries get this kind of guarantee? Zilch, to my knowledge. In addition, landlords are covered further by the government if the government sees fit to approve further rent increases for one reason or another.

One last point here: If landlords are indeed suffering financially, how come we never see them going bankrupt? Have you ever heard of landlords going bankrupt? I haven't heard of one. Show me one. They do very, very, very well. I'd like to jump in here with a little point I had written down here. When I was vice-president of our tenants association, I said to the treasurer one day, "How do they make out in profits here, these landlords?" He said, "It always works out to 24% year after year after year." "How do they do that if there are vacancies and things go down?" I said. It's because they keep reducing the services, taking away the services; cheaper materials they buy. They're on the cheap, the cheap, the cheap; everything breaks down. There's a big con going on here. It's a fallacy.

Now I'm going to get to fallacy 3: That the apartment vacancy rate in Metro is considerably lower than 1% right now. From what I've seen and heard, I just don't believe it; I just don't believe it at all. There are loads of discrepancies to be considered here. For example, why are there so many For Rent signs around? Go around and look around the city. Get in your cars and go around and see them. Why are there so many For Rent ads in the papers? Go and look at them. You'll see loads of them.

I have it on good authority that in one large rental complex in Metro the apartment vacancy rate is actually more than 10% at this time; that's more than 10% in this large complex. Even the apartment next door to my wife and me has been vacant for nearly three months now. Could this be a widespread phenomenon throughout Metro, even the province? Has the situation been fully and accurately assessed? If not, it should be. It's important.

The province should obtain all the facts here before basing its case on what I think is a fallacy. I think the truth is that there are lots and lots of vacant rental apartments around Metro but people can't either afford them or they don't wish to live in them because of their substandard, overpriced state. If landlords cleaned up and repaired their properties to a greater degree and made the rents reasonable, they'd fill up their places faster and keep tenants longer. The so-called rental crisis we reputedly have would soon lessen and maybe even disappear altogether in time.

Fallacy 4, the final one: That tenants are getting a free or a light tax ride municipally. Pardon me, but this is a real crock. The housing minister, for one, knows full well and admits freely that renters -- and I have proof in my briefcase here too -- in Metro pay substantially more in taxes than private homeowners pay in Metro. I want to repeat that. The housing minister, for one, knows full well and admits freely that renters in Metro pay substantially more in taxes than private homeowners in Metro pay in taxes. We, the tenants, are getting a bum rap here. Mr Leach, while speaking at a meeting last February sponsored by the city of Toronto, reportedly said that tenants pay three to four times the taxes that private homeowners pay. The minister said that this matter should be addressed. I agree. Why not include it as part of this overall package to change the rent control picture? I could use a few more bucks right now.

In my haste here, I guess, moving along there in my emotion, I think I might have skipped a place here, but I'll try to remember it as much as possible.

There was talk about my credentials for speaking on this matter. I have been a tenant in Metro Toronto for 40 years, low-rise, high-rise and different things in between. Now, I didn't want it that way necessarily. Many times I came close to getting enough loot ahead so I could buy, but it just didn't work out. Something would happen, another depression, another recession, another up-and-downhill matter, and I never quite made it. But 40 years I've been a tenant here. Also, I had two terms as an alderman in East York, fighting hard for rent controls in the 1970s. I was one of those people that the Tories on our council called names because I dared to fight for rent controls.

Mr Marchese: Communist, probably.

Mr Ireland: Well, it was pretty close to it, Mr Red and everything, although I was an independent and I still am, although I used to be NDP years ago and CCF, but I'm an independent. The point I'm making is that there is a con game here, I call them fallacies, and these things should be checked out. What I get constantly, and I've been getting for years, is that it's what the landlord wants. Do they check him out? Do they come down and see the places? Do they come down and see what's happening? They don't bother with us because we're people who are transient a lot. I've been living in this particular place for over 14 years, but the point is that they don't treat us with respect. The very fact that we pay three and four times the taxes that homeowners pay is not being addressed by municipalities or the government. Mr Leach has brought it forth. Why can't it be put in this package? Why can't that be part of it as justice?

The point I'm making is that I think the average tenant simply wants fair play. They're tired of the fear. They're tired that they might be tossed out on the street. They're tired of being pushed around by landlords who have agents, who have money, who have infrastructure, who have the Internet. They have all the stuff. They have the agents. They can wait it out, but the average tenant can't. The average tenant is struggling every week. There must be more thought about the tenant in this thing. To call this "tenant protection legislation" is an insult to me, because it's not. A fairer way to put it would be to call it the Landlord Protection and Tenant Restriction Act, because that's what it is.

I'm going to put this final thing forward here, and I'm just speaking off the cuff. If the tenants ever awaken and come to life in an organized fashion in this province, look out, all of you, because there are 63% of us in Metro and about that same number in the province. If we ever get organized, when the money comes together $10 at a time and we build something like they did in this country, Grey Power -- remember Mulroney saying in 1984 he wasn't going to de-index pensions, oh, no? Have you read the book on that guy, On the Take? Anyway, this guy wasn't going to de-index pensions. The moment he got in, Michael Wilson is busy doing it, and we had to fight like hell, but we came together in massive force, Grey Power. The tenants might do it yet. You might see these buildings filling up with tenants, angry about your daring to threaten them and put them down.

I realize I must have gone over my time, and I apologize to you for that and, members of this committee and ladies and gentlemen, thank you for your patience in listening to me. But some of these things have to be said. I'll take your questions. You can ask me all you want and as long as you want. I thank you for your patience and your forbearance with me.

The Chair: Thank you very much, Mr Ireland. You've effectively used up your 20 minutes allotted to you. We appreciate your input.

1520

PARKDALE TENANTS' ASSOCIATION

The Chair: Our next presenter this afternoon represents the Parkdale Tenants' Association, Bart Poesiat. Welcome to the committee this afternoon. We appreciate your presence here. The floor is yours.

Mr Bart Poesiat: Thank you, Mr Chair and members of the committee. First, an introduction: My name is Bart Poesiat. On my left is a tenant who will also say a few words on behalf of the Parkdale Tenants' Association. Her name is Jill Butler. On my right is Anna Thaker, who is the president of the West Lodge Tenants' Association, a 720-unit complex in Parkdale that has gained some notoriety over the last 10 years, 20 years, and which we will be referring to in our presentation. We'll try to keep our presentation fairly short so there will be some room for questions and answers, hopefully.

First of all, the Parkdale Tenants' Association is a 25-year-old grass-roots organization. We don't survive on any kind of subsidy, on any kind of handout. We survive by the membership dues of $3 or $5 per member. This is Parkdale, so 60%, in some cases, of our people are unemployed, on social assistance. It's a very poor area. But we have survived over the years and we have done a great deal of tenant organizing in the Parkdale area. That has gained some pretty wide reputation.

For instance, organized tenants in Parkdale were able to push out the quasi-conversion from apartments to hotel schemes on Jameson Avenue in the 1980s, in 1988. The Parkdale tenants played a really leading role in that. Parkdale tenants launched one of the first rent strikes in the history of Canada, probably, in the late 1960s, early 1970s, in the West Lodge apartments. Again, we keep on referring to this massive complex. It didn't right away solve all the problems, but it did set a precedent in terms of what tenants could and couldn't do through jurisprudence in the courts. So in a sense you might say that we are veterans of the landlord and tenant wars of the 1970s and 1980s.

Parkdale itself you might describe, especially south Parkdale, as the biggest collection of slum apartment buildings in very bad shape and a large procession of slum landlords who have owned and made money out of those buildings at the expense of tenants, quite often. For that reason, in Parkdale we've gained a lot of experience in terms of maintenance and in terms of what rents should be and in terms of tenant organizing.

Over the years, although things are quite bad in Parkdale, I must say that there have been some improvements, and I will talk about them in a minute. For instance, at West Lodge, the last few years, after endless struggles, rent strikes, legal actions, political actions, the situation has improved, thanks mainly to the efforts of the tenants and ultimately with some support from Toronto city hall. The tenants are now poised to buy their own building and turn it into a non-profit co-op. Again, we have been able to save some buildings in the past from demolition. Also, there are other buildings in very bad shape, but there has been some improvement.

These things, although they were really hard to come by, could never have happened if the recommendations of the New Directions report that we're talking about here were actually law. The recommendations would leave tenants in low-income areas such as Parkdale virtually powerless. I'm not saying that if these recommendations are implemented we're not going to keep on fighting, but certainly low-income tenants would be extremely disadvantaged.

First of all, in the affordability range the whole system seems set up for rent gouging. The rent registry will disappear. Tenants do move a lot, so just by simply moving it would erode the whole affordability of apartments. Over the years in many situations we have been able, through organized action, to keep apartments at a reasonable level. This will disappear with your recommendation. Many previous deputations here have pointed this out, so we're not going to repeat that.

The other thing is that an argument might be made, "If the rents go up, then what about the quality?" There's nothing here that will ensure any kind of quality for apartments, certainly not in Parkdale. There's no enforcement here. Right now, we have an enforcement mechanism. For instance, at West Lodge the rents have been frozen at the October 1990 level because of the extreme disrepair. Under these proposals that would no longer be possible.

Also, to shift the prime responsibility for maintenance of apartments to the municipalities in our experience isn't going to work. The municipalities are already overworked. The city of Toronto, which is one of the better municipalities, we have a heck of a time getting inspectors out and if you say Parkdale, they go: "Oh, boy. There it is again. It's too labour-intensive for us." So that again is a non-starter in terms of maintenance.

Supply: So many times it has been pointed out already that rent control in itself, if you lift rent controls and you ease up the restrictions, that is not going to guarantee that builders are going to build apartments that tenants can afford. They can build apartments where you pay $1,300 a month in rent, but if you can afford that kind of rent, you might as well buy a house or a condo. So people in Parkdale who are averaging $14,000 or $15,000 a year are not going to be able to move into apartments that are going to be built on the open market. We believe, with many other deputants who have gone before you, that this New Directions is not going to ease up any kind of supply in Metro Toronto.

Finally, the security of tenure provisions that you are suggesting, faster evictions and taking things before tribunals, that leaves us aghast. Already there is intense pressure on people in Parkdale; the amount of evictions is horrendous, economic evictions quite often because people can't pay their rents any more and this certainly wouldn't do us any good in terms of fighting for our rights. So the results would be social dislocation, more homelessness, more poverty, more reliance on the food banks. One might even say that the food banks would be subsidizing landlords.

The other important thing to keep in mind is this would greatly increase the adversarial relationship between tenants and landlords. We've had our share of that in Parkdale, as we've pointed out, but it's going to get worse. Already we have large meetings. We had one last winter when we didn't know what the rent control and tenant package would be and 200 people showed up in a snowstorm. I can guarantee you that the adversarial nature which was just starting to ease a little bit at the end of the 1980s and the beginning of the 1990s will increase. There won't be any peace in this sector.

I will now pass on for a couple of minutes to Anna Thaker who, as I said, is the president of the tenants' association at 103-105 West Lodge, which is a very notorious building.

Ms Anna Thaker: My name is Anna Thaker. I have to tell you that my tenant association has worked hard to get -- we had a rent strike with the landlord. We had a slum landlord for 20 years and when we had the rent strike, the landlords ran away from the building. They never paid the bills, any kind of bill, and they only blame the tenants. Everything is tenants. Meanwhile, they get the higher rent and they build a hotel in the Bahamas and Cayman Islands. They didn't build apartments here. Is this government is going to give me a guarantee that when they get more money, they are going to build a building here, or are they going to build a hotel in the Bahamas or the Cayman Islands?

I'm not happy with this government that is trying to abolish the Rent Control Act. By abolishing this, what will be the tenants' rights? Where do we go? I tell you, in my building at one time there was no heat and light. We were freezing in minus-45-degree temperatures for three weeks and the landlord was sitting in Florida.

1530

Another thing I'm here to tell you -- the previous gentleman said that none of the landlords has gone bankrupt, none of the landlords has gone to the unemployment line and they haven't gone to the street. That will be the situation for us if the new government's going to abolish rent control and the rent registry. If the harassment of a landlord is too much and I have to move out, where do I move to? How am I going to find out? Which building am I going to ask if I can afford the rent? Government isn't telling me how I'm going to do it.

This is what I have to say, and I hope that all the tenants in Ontario get together and give the message to this government, because we are the highest taxed. We pay more property tax than all the homeowners. I hope all tenants get together and teach the government that they have to do more for us than landlords because landlords are making more money and getting richer. Because they are getting richer, they can hire the biggest lawyers to fight the tenants.

I tell you, the harassment -- in my building how many times they shoo the dog behind me because I was and am still the president of the association. When I go outside, they shoo the dog behind me. They smash my car. How is this government going to stop landlords doing these kinds of things? How the hell are you going to stop it? I'd like to know this.

I want to stop here. Thank you.

Mr Poesiat: This is Jill Butler.

Ms Jill Butler: I am a tenant, have fairly recently become a tenant through a series of circumstances. I rented accommodation in a house and I was given illegal notice to vacate. I was recovering from a serious car accident at that time and I wasn't given the proper time to find other accommodation.

I approached Parkdale legal services to help me and they responded. I did attempt to communicate with the owner of the house. I was actually a subtenant. The tenant of the house refused to cooperate and give me the information where I could actually sit down and try to work out something so I had the appropriate time to look for other accommodation.

This wasn't given, so Parkdale legal aid services -- and I've just got to commend them so highly -- came to my aid and my case was taken to court. After a couple of court appearances, the judge ruled in my favour that I did have rights as a subtenant and I was given adequate time to be able to find accommodation.

Two important things: My background is in social services. I have worked for over 25 years. I've worked with seniors, I've worked in the mental health system, I've worked with sole-support mothers and I was a director of a youth agency, so I am very familiar with housing issues, specifically affordable housing. It has been part of my job to help people seek out affordable housing and also to be an advocate in landlord and tenant relationships. As I said, at this time I find myself a tenant and my experience as a tenant to date in the way I have been treated by a landlord has certainly left a lot to be desired.

I want to make another point too, that I was able to avail myself of legal aid and that worked for me. I got prompt attention, really good quality help, and my rights were upheld. What this government is doing to the erosion of the legal aid system -- this could not be available to me in the future. Legal aid of course covers many things, but it also covers legal aid for tenants.

Also, if rent controls had not been in place and the other safeguards that tenants have were taken away, my story -- and I was disabled at the time -- in looking for other accommodation would be quite a different story. I probably would be living in real subsidized accommodation at this point.

The other point I want to make is, we talk about homeowners. I think when we look at tenants we should talk about homemakers. Tenants make homes. Men, women, children, families make a home. It isn't just accommodation. It isn't a unit, it isn't an apartment; it is a home and tenants, or homemakers, should be able to live in security, free from harassment and free from fear. If they choose to move, whether it be out of necessity or whether it be out of desire, they should be able to do that freely without restrictions, without the fear of economic disaster and without the fear of moving into subsidized housing with their families, with their children.

The removal of rent controls and the safeguards that tenants have is going to be disastrous for tenants. As has already been said, the tenants are a large and powerful movement, so governments who are thinking of doing these things should really think twice.

The Chair: Thank you. You've got about a minute left, if you've any further comment. There's no time for any practical questioning, so any further comment just to wrap up?

Mr Poesiat: We'd hoped to have some time for questions, but I guess we ran over a little bit. Do you have anything?

Ms Thaker: I have one question. Suppose I move tomorrow from my building to another building and I am on social assistance, getting $510, and my rent will be $1,000, who's going to supplement this difference?

Mr Curling: Good question.

The Chair: I'm not sure there's anybody here who can answer that question, so on that note we'll thank you very much for your presentation this afternoon.

Mr Silipo: Ask the minister that question.

Ms Thaker: Okay. Thank you.

1540

URBAN DEVELOPMENT INSTITUTE APARTMENT GROUP

The Chair: Our next presenter is the Urban Development Institute, Stephen Kaiser, Annette Fogle and Tammy O'Neill. Good afternoon, welcome. The floor is yours.

Ms Annette Fogle: Good afternoon. My name is Annette Fogle, and I'm the chairperson for the Urban Development Institute Apartment Group. Joining me is Tammy O'Neill, our co-chair, and Stephen Kaiser may be on his way. He's the president of the institute.

I would like to thank you for allowing us the opportunity to address your committee this afternoon. The Urban Development Institute Apartment Group was established in 1957 as the voice of Canada's real estate industry. Our members include residential landlords and property managers representing large and small buildings consisting of more than 80,000 apartment suites across Ontario.

UDI Apartment Group members subscribe to a code of ethics and high standards of maintenance and service, which helps us stand out as landlords putting our tenants' needs first and foremost. In response to the invitation of the Minister of Housing through his consultation paper entitled New Directions, the apartment group of the UDI of Ontario makes the following submissions. The issues raised herein are not meant to be exhaustive, and further submissions shall be made in more detail when the draft legislation is introduced.

The New Directions paper released by this government is not what was proposed by this government before and following the election. Our industry has been controlled for 21 years and it is time for landlords to once again do what they do best: serve our tenants in a free market. We are business people, and tenants are our business. This controlled system has pitted tenants against landlords, and we wish to go back to the time when landlords and tenants sat down together and everyone walked away satisfied.

This government refers to "vacancy decontrol"; however, as proposed, this procedure does not constitute a rent decontrol program. The legal maximum rent must remain, as it represents rental levels which have previously been justified and which could have been charged. On turnover, landlords shall have the opportunity to re-rent suites at the prevailing market level, without running the risk of losing previously justified maximum rents. These factors combined will gradually put us in the direction of eliminating rent control.

This will take many years to achieve and will not be a hardship for tenants. It will be a gradual process but will encourage developers to build and add rental suites to the market. It is still our obligation to follow the market, and when the market is down, there are discounts that have to be put in place so that we can rent out the units.

We at the UDI Apartment Group are supportive of the positions adopted by our colleagues in the Fair Rental Policy Organization and the Rental Housing Supply Alliance. This paper is submitted in order to clearly define the position of the UDI Apartment Group on certain issues which we wish to make known to the standing committee on general government.

One proposal contained in the discussion paper is to eliminate the concept of legal maximum rent. One of the government's best incentives to do so is that along with the elimination of maximum rent will be the elimination of the rent registry. However, one can eliminate the rent registry, maintain the concept of maximum rent and still provide protection to the tenants from unfair rent increases.

UDI Apartment Group proposes that the current maximum rent on all units be preserved. These maximum rents will increase annually by the government statutory guideline, and a landlord may not increase the rents above that guideline unless one of the following conditions is met: the landlord makes application for an above-guideline increase or the landlord and tenant agree to a higher amount of rent. In that event, either the ordered rent or the agreed-upon rent becomes the new maximum rent, subject to annual guideline increases. Nothing prevents the landlord from charging a lower rent, their doing so having no effect on the maximum rent.

The tenant is protected from arbitrary above-guideline increases by having either the right to consent or the opportunity to demonstrate why the maximum rent should not increase. This can be done by opposing any application filed by the landlord with the ministry. There is no need to maintain the rent registry, as rents will be set by order or by agreement between the parties.

Where maximum rent cannot be easily established, section 10 and the relevant regulations under the current Rent Control Act provide a method for determining maximum rents and should be adopted with necessary modifications.

The paper proposes that landlords should be able to apply for rent increases above guideline on the basis of capital expenditures and extraordinary operating cost increases from municipal taxes and utilities. In the latter case, an increase would not be capped on the grounds that tax and utility cost increases are outside a landlord's control. Increases resulting from capital expenditures, on the other hand, would be limited to no more than 4% above guideline, with a carryforward of two years, a maximum of three years at 4%, or 12% in total.

UDI Apartment Group has no problem with the proposals related to extraordinary operating costs. However, the implied suggestion that capital increases are somehow optional for landlords and should therefore be capped over three years is flawed. Rent increases as a result of capital expenditures should be subject to a cap of 4%, we agree, but without a limit on the number of years of carryforward. If additional capital work is required during the term of the carryforward, a new application should be allowed, with the approved increases to run consecutively. Work of a capital nature is imposed by code changes from time to time, and basically we're referring to that.

True vacancy decontrol would mean permanent removal of all controls from a unit once it becomes vacant. The proposed legislation only eliminates rent control temporarily. In order to maintain fairness, particularly in the current market, maximum rents must be preserved.

UDI Apartment Group proposes that sections 23 to 28, inclusive, of the current Rent Control Act be eliminated from the new tenant protection act. The grounds set out in these sections constitute duplication with the current Landlord and Tenant Act and have led to a multiplicity of proceedings. Relief for tenants in circumstances where the premises are in a state of disrepair or unfit for habitation has always been available upon application under section 94 of the Landlord and Tenant Act. This avenue of relief should continue; however, there should be no ability to order permanent rent reduction.

Our position on this particular section is simple and strongly held: To reduce a landlord's maximum rent is anathema with respect to the government position on stimulating the economy and, in particular, to the building of more rental housing stock. Rent reduction may lead to reduction or elimination of earnings in the rental housing sector, thus removing the financial ability to carry out needed restoration.

The discussion paper raises issues with respect to maintenance of buildings and increasing the power of property standards officers vis-à-vis landlords only. It is the position of the UDI Apartment Group that there can be no equity under the law unless property standards officers are also given authority to enforce the same proposed powers and measures against offending tenants.

Currently, a property standards officer makes no determination as to who may be responsible for a violation of property standards. It is certainly not unheard of that a tenant may vandalize a property. Under current legislation and that proposed, it is assumed that the liability falls to the landlord; indeed, any and all penalties that may be imposed also fall to the landlord, even where it may be apparent that the property standards violation resulted from the action of the tenant.

1550

It is the recommendation of the UDI Apartment Group that when an in-suite deficiency is reported by a tenant, causing a notice of violation to be issued, a copy of the notice should be given to both landlord and tenant and a determination be made as to who was responsible and which party is to rectify the violation. If the property standards officer is unable to make such a determination, then the landlord will be given the responsibility of clearing the notice of violation. However, such notices shall clearly state that no determination as to the responsibility has been made.

If the government is serious in its announced intent to reduce and eliminate inefficient and wasteful bureaucracy, property standards officers must have the ability to first issue a notice of violation. In many cases the complaint is made directly to the property standards officer without first notifying the landlord. Often landlords are not aware of a violation until such time as a notice of violation is issued. The guiding principle should be to make the landlord aware of a situation before orders and penalties are issued.

Tenants should be required to notify their landlord in writing of any requirements for maintenance and the landlord should be afforded a reasonable time to rectify the problem. Common law dictates that these are but a matter of fairness and common sense. Indeed, required written notification will also reflect some of the case law arising under the Rent Control Act, which suggests that landlords will not be held liable for violations where there is no written verification.

In the event that a landlord fails to comply with a municipal order issued by a property standards officer, it is appropriate that there be consequences for such non-compliance. It is not appropriate, however, that landlords should face double or even triple jeopardy due to non-compliance. Even the worst of society's criminal element is spared that.

Currently, in the event of non-compliance with a municipal work order, a landlord may be prosecuted by a municipality while at the same time facing an abatement of rent under the Landlord and Tenant Act reduction in rent under the Rent Control Act, or an order prohibiting any rent increases under the Rent Control Act. It is important to note that all of the above could arise from deficiencies originally caused by the tenants.

UDI Apartment Group supports the government's intention of eliminating orders preventing rent increases. We would also suggest that the penalties available under the Rent Control Act relating to maintenance standards be eliminated and that those under the current Landlord and Tenant Act be adopted. The existing measures to protect tenants from poor maintenance conditions under the Landlord and Tenant act are sufficient.

The discussion paper indicates a stronger approach to dealing with harassment of tenants by landlords. No one can argue that harassment is intolerable and must be curtailed. However, "harassment" needs to be defined. What a landlord may consider as exercising its legal rights, such as posting notice of termination on a tenant's door, may be, and often is, considered by the tenant to be harassment. In order to prevent many frivolous claims of harassment, it behooves the government to clearly define "harassment" in the legislation.

It is singularly unfortunate that the discussion paper omits the very real problem of tenants harassing their landlords, particularly landlords of small buildings. If the government wishes to be evenhanded, then sanctions for harassment must apply equally to landlords and tenants.

UDI Apartment Group is generally supportive of the proposal made with respect to assignments and sublets in New Directions. It is proposed that the new legislation should give landlords the ability to treat a sublet and transfer as a new tenancy under the vacancy decontrol measures and to adjust the rent to market accordingly.

In the debate respecting the courts vis-à-vis an administrative body for dispute resolutions, one often hears of the time factor delays in the system and the time required to process even the simplest case. This type of discussion is useful and indicative of the symptoms, but does it reveal the underlying problem?

If one examines the Landlord and Tenant Act, particularly section 113, it would be determined that the act does require amendments, but its wording is not the cause of a long court process. Although the question of the registrar's powers must be resolved, few other changes to the act are required to streamline the process.

One recommendation would be to ensure that all moneys owing by a tenant on arrears matters would be paid into court prior to any further court process.

What is definitely required to streamline the process is adequate resources. For example, a three-week delay from the registrar hearing to a trial date is not due to the wording of section 113. The problems lie with the lack of justices assigned by the court to hear landlord and tenant matters, and the restriction on the power of the registrar both to issue final orders when a dispute has no merit and to issue orders for costs where a default judgement is signed. When there are in excess of 50 cases a day routinely set down for hearings before a justice, that reflects a lack of resources, not an inadequate wording of the legislation.

In view of the fact that the justices who currently hear these matters are paid for by the federal government, this government needs to reassess whether true savings would be realized if the venue for dispute resolution is changed to an administrative body with sufficient resources to streamline the process. It would be more advantageous to simply assign the resources necessary to the courts by increasing the registrar's powers to expedite the process.

In the alternative, in the event that an administrative body is the chosen venue, that body should be at arm's length from the government so as to preserve the basic principle of democracy that judicial functions must be separate from legislative powers.

Hearing officers of this body should be appointed by order in council and have appropriate qualifications and experience in residential tenancy law. These officers would be bound by the common law where it is not changed by this legislation and must have consideration for the decisions of their fellow hearing officers. There should be extensive training provided to the adjudicators concerning their duties on evidence, procedure and residential tenancy law. Once a hearing officer has been hired, there should also be ongoing training to keep them up to date on developments in the statute and common law.

We concur with the submissions of our colleagues at the Fair Rental Policy Organization of Ontario with respect to set-aside motions being made, with notice and on reasonable grounds for dispute, with limits on extending the time to bring such motion.

The test with respect to a set-aside motion ought to be twofold. The person hearing the motion should be satisfied that there was good and sufficient reason for not attending the original hearing. Once satisfied, it must be demonstrated that there is a dispute with merit or reasonable grounds for dispute before the motion can succeed. It serves no purpose to set aside a judgement where the results of a new hearing are likely to be the same as that ordered on the default judgement.

The common law currently holds that the court has no jurisdiction to set aside a default judgement after a writ of possession has been executed. This should be reflected in the wording of the new act.

Upon filing of an appeal on rent control matters and in order to maximize the use of the new administrative body, decisions of this body would be subject to review by a senior adjudicator. From this level there would be an appeal to the Ontario Court (General Division) on question of law only. An appeal on landlord and tenant matters should be to the Ontario Court (General Division) on questions of both fact and law.

This appeal procedure eliminates the demands on the Divisional Court, placing the requirements on the Ontario Court (General Division), which has more resources in place, which has always dealt with residential tenancy law issues and is more accessible to the layperson. The result is a more efficient and less costly appeal process.

UDI Apartment Group looks forward to making further submissions with respect to these important issues and will do so in more detail once the legislation reaches its first draft. We also offer our services to the government. We have been sitting with the government on presentation and putting together what is best for landlords and tenants, and our time is still available if called.

The Chair: Thank you very much for that offer and for your presentation this afternoon. You have very neatly used up your 20 minutes, so it doesn't allow any time for questions. We appreciate your input.

1600

MIKE FIDDES

The Chair: Is Mike Fiddes here? Good afternoon, sir, and welcome to our committee. The floor is yours.

Mr Mike Fiddes: When I put my name in for this committee, first off, I didn't think I'd actually get on the list. Apparently the list was quite long; I was surprised I got on. Then I had to wrestle with what I was going to tell you. I figured you'd hear a lot of things about what's going on from both sides. I find that a lot of people don't want to touch on areas that I touch on because they're afraid of ruffling too many feathers.

I've been dealing with tenant issues for, I'd say, about 30 years. I started off in Quebec, and the problems I've come across since I moved here 16 years ago I cannot believe. I would have never guessed that there were this many problems here.

The system is a joke. The first thing wrong with this system is the fact that they insist on taking tenants out of the legal system. Landlords are not charged with anything. They enter your apartment illegally. They can do anything they want. You phone the police and they say, "Oh, it's a landlord and tenant issue; it's not our responsibility."

We pay taxes. We have been given credit for paying taxes only recently. Fifty per cent of my rent is taxes, yet I get next to no services. I phoned the police about two months ago because of a break-in at the back of the building adjoining us by some young people. Within three minutes there were four police cars there. Two months prior to that, there were 34 vandalized cars in the same building, in the parking lot. The tenants were told when they phoned: "We can't be bothered showing up. Just give us the details over the phone." That's ridiculous. The landlord is not paying the taxes, yet they show up like that; but we pay them and we get nothing.

It's the same thing, basically, with the government. We have filed complaints. They go to the landlord first and tell him about it. We used to have a problem that if you filed a complaint with the city, they would go talk to the super and tell him before they even showed up at the tenant's. We had to fight like hell to get that changed, because they'd both come down on us as if we were the culprits. What happened was that the landlord was withholding the heat.

My mother moved into the apartment a year before I did. When she moved in, the bathroom sink had 40% of the porcelain missing and the taps leaked continually, as did the ones in the kitchen. Numerous other things had to be done; walls had to be fixed. They finally fixed the bathroom sink 12 and a half years later and the taps at the same time. They haven't fixed the taps in the kitchen. Oh, they did replace the spout; they gave us a new spout. That was very nice of them. Since then the floor in the kitchen had to be replaced because it collapsed from the water moisture. The counter needs to be replaced. It's cracked and swollen. They've had to replace a couple of doors in the cabinets because there was so much leakage that eventually they just fell apart.

There's damage because of water that was running originally in the dining room to the parquet floor. I have no doubt that when we move out, they're going to walk in and figure they should replace a whole section of the parquet floor and charge us for it, even though it was caused by their stupidity.

In 1982 they tried to evict us because of the dog. There were several other people with animals in the building at the time. The manager sent a registered letter to us stipulating that he had letters of complaint from the tenants in the area that our dog barked and howled at all hours of the day and night. Not only did the dog not do this, but no such letters existed. We managed to get the case thrown out, but the justice wouldn't do anything about it. He refused to press charges against them even though it's illegal to do what they did.

They have tried four times since then to evict us. They've withdrawn the case every time when we've gone into court and gone into the hearing with the clerk. They've simply pulled the case.

I looked into some of the problems and realized that the landlord and tenant courts in this province are not connected to each other. You cannot do research from one area to another to find out what the landlord's doing. I made a proposal to the government, and during that proposal I did research. The best I could come up, based on the information I could get -- it was very hard to get information off the government. Every time a landlord takes it to the point of going to the clerk and they withdraw it, it costs the government somewhere between $1,800 to $2,000 -- our money. They don't charge them. Why isn't the landlord paying for this?

This is simple harassment. He figures if he takes you to court often enough, you're going to get fed up and leave. The last time, I turned around and said to them, "One more time and I will go after the owner and I will slap them with a $5-million lawsuit for malicious persecution." Since then, all they've done is harass us.

I found out by accident about four years ago that there are glass fuses in our building. They're classed as type C and file 102. These fuses were withdrawn by the CSA because they're a fire hazard. How I found out about it is that one of them blew in my stove, and before it blew, it melted all the insulation off the wire, burned the insulation inside, as well as scarring the back cover of the stove, and melted the wire through. We can't get the fire department to look at this. They are concerned. They say, "Anything that causes a fire...." We say, "This causes a fire," and they say, "Well, it's not our responsibility."

On top of that, the landlord several years ago padlocked our fuse boxes. I want the fuses in there out. I put all brand-new fuses in my stove.

I don't know if anybody here knows what a structure fire is. It's a fire that starts in the walls. Fuses go two ways: They either burn or they do what is commonly referred to as a slow burn, until they heat up to a particular temperature at which they burn. The new standard is 50 degrees centigrade. The type C and file 102 fuses are set to a standard of 200 degrees centigrade. That's 392 degrees Fahrenheit. That means if they go through a slow burn, they're going to start a fire in the wall of our building, or any other building. As far as I can tell, they're in every apartment building that I've gone into so far that I've randomly checked. Even in the public housing buildings, I found them. Nobody wants to do anything about it. Nobody wants to take responsibility.

It seems to me that tenants are the only truly representative group of voters in this province. Any group, no matter what it is -- old, young, single parents, female or male, any race, colour, creed, sexual variation, whatever -- there is somebody who is a tenant who represents them. Yet we get no respect.

Our landlord has gone for increases on work that he should have been saving money for. In 1990 we had concrete work done. He spent $660,000 on our building. Two days after the work was finished, the walls were leaking again. It was raining out and they were watering the lawn. They spent $660,000 to have this work done and the underground parking still leaks in the same place as it leaked before.

1610

In 1993, he took us to rent review for an increase in the rent. About seven years ago, we changed management companies. At first, I thought they'd just changed the name, and through research, I found out they started a new company and simply moved our building in with the new company. What they did was that the company we have now ordered the work. They had our old company pay for it. It's paid on their cheques on their accounts. The companies are not connected. They're owned by the same people, but they are separate individual companies, a fact that can be proved by doing what I did, which was to check the registrations. What they've effectively done is they've tried to evade paying the taxes.

We brought this up in the hearing, not about the possible tax evasion but the fact that they had not incurred the debt. We pushed and pushed and pushed. Finally, the adjudicator insisted on having proof that the two companies were the exact same company, which of course the company couldn't produce because they aren't. We got the decision: The landlord got the increase. I'm one of the few people who bothered to read the decision. The testimony was altered so that they could get the increase. That's fraud, misrepresentation, obstruction of justice. I personally have been up to rent control and twice talked to the director, but nothing has been done about it.

Our elevators have a different owner on the licence. I didn't get a chance to pick up the file, but what I have found out is that the company hasn't existed for 12 years. It's been at least 10 years since they have bothered to inspect our elevators. I have been told repeatedly by repair people -- because they have to show up so often -- that they are paid to patch the elevators, not repair them, even though they're required by law to repair them. In one particular case, I was told that a part which was continually breaking down in one of our elevators would cost $1,500 to replace. One of the people said he has access to the files because they have to look at the history of it when they come in to fix the elevators. He says they've spent something between four and five times, by patching it, what it would have cost to fix it properly by replacing the component. Who do you think is paying for this? The landlord, out of the goodness of his heart? The man is hard done by. I would be too if I were wasting money like that.

Being a landlord is a business. If they insist on not treating the landlord like he's running a responsible business, tenants will continually get stiffed and you are going to end up with a serious revolt, because the people are getting real upset, real mad. I can tell you, I've been talking to them, and there are more and more people. They voted the NDP in, and the NDP stiffed us. They said the unions put them in. I went around and talked to the unions. The rank and file said, "No, we didn't put them in; roughly 50% of our members voted Liberal." We put them in. They didn't do anything for us. Bang, they were gone. It will be a cold day in hell before the NDP gets back in again. You know, fool me once, shame on me; fool me twice, shame on you.

The fact of the matter is we've had it. I've got nothing against an honest landlord, and I admit small landlords get stiffed. I've always said the law should be fair. It should be 50-50 right down the middle. If we're entitled to an increase because the landlord really can't afford it, manage to run your business. But we're a captive audience. This is not like a regular business.

This market value -- our landlord has already tried this routine. He put seven more units on the ground floor, because we have an older building. He tried charging market value. He was up to $1,000 when he had to reduce those rents to $700 because he couldn't get anybody to stay in the apartments. The whole idea of market value is ludicrous for an apartment building. If they spent the money on keeping the apartments fixed, that would be something, but they don't, and every time they have to go for an increase, they turn around and they come to us and say, "Hey, we're sorry, we're poor and we can't afford to do this."

Our landlord is now going because of increased heating costs, gas costs. It's very interesting he decided to do this at this time, because a recent article in the Financial Post says they're giving the gas away; they're selling it at less than cost because of the surplus. You think we're going to be able to go next year and say: "Hey, you didn't pay that much for gas last year. We should get the money back"? Do you think we'll get it? I don't. He wastes money. Do we end up paying for it? Sure.

Any other business like that where you've got a problem, you go elsewhere. You just can't up and move every time a landlord wants to do this to you. If the government is prepared to give us the money to move every time we have a problem, hey, we'll do it. You want to pay? It cost me $500 to move last time. If you want to give me the money to move, I'll move. I'll find another apartment, and if I get into a problem with him in two or three months, I'll move again. But the government is not going to do it; the government is complaining it's got no money.

Scarborough will not enforce property standards bylaws. I'm going to tell you something right now: They'll say one thing on one side, but one of our past councillors told me -- the reason he got voted out is because of this -- they don't get the money, so they don't charge. The money goes to the province. They don't want the province to have the money. You don't have any money? There's your reason. I'm willing to bet you right now that last year Scarborough failed to write, conservatively, $100 million in property standards violations, without a joke. That's where your problems lie.

If the landlords can be trusted, fine. You want to solve the problem? Make it 50-50 and stop taking the landlord out of the Criminal Code. When he does something illegally, arrest him. If we do it, fine, arrest us. But do something about it. The biggest problem you've got is they'll get away with holy murder. Go into landlord and tenant court.

Someone recently went in and told me they were told the rules of evidence don't apply. We had a landlord go in and get a judge to rule that those apartment-sized units, double-stacked units for a washer and dryer, are illegal for an apartment. You can imagine the response I got from companies like Maytag when I told them that. They are built to the standards required by law specifically for that purpose.

I'm trying to think. There was another case. In that particular case they never questioned the qualifications of the people giving the testimony.

We had one of their electricians come into my apartment. The guy replaced the cartridge fuses. The peculiar thing is -- I've been living in apartments for about 40 years -- I didn't know there was a block of cartridge fuses that controlled the outlets on the wall over the sink in the kitchen. This guy took some fuses out. One was a 20 amp, which shouldn't have been in there; even I know that. But you're going to love this. It's a disposable fuse, right? He took it apart and he rebuilt it. So I went out and bought brand-new fuses. I took it to Hydro. They took it to their lab and they said flat out, "You may as well put a steel bar in there." It wouldn't have blown no matter what happened. This is a qualified electrician working for this company? I don't think so. I don't think anybody who spends that much time trying to become a qualified electrician would turn around and do something as stupid as that.

I'll tell you something else I found out recently by accident. I found out that a number of the outlets in our building were wired backwards, apparently during construction, and based on a friend of mine who worked for one of the companies that made bricks and some of the stories he told me and other things I've heard, I'd say the wiring was probably done by an apprentice who wasn't being supervised and this got past property standards when they were checking the building out when it was being built. There's a reason for an outlet to be wired a certain way. A large number of the outlets still don't use grounded plugs; in fact, as technology increases and motors and everything become more efficient and require less power, more and more plugs are going to start going back to two-prong. This outlet doesn't work properly. You can use it, but as I said, there's a reason for them to be wired in that way, and when they're reversed what does that do? I'm not sure. I don't particularly want to find out, particularly if it turns out to be a fire.

I went through a fire once, caused by someone's stupidity. I almost didn't get out, and I was on the first floor.

The Chair: Mr Fiddes, your time is up. We appreciate your comments today, your input into our deliberations. Thank you very much for coming and attending with us.

1620

ROSEMARY DUFF

The Chair: Our next presenter is Rosemary Duff. Good afternoon, Ms Duff.

Ms Rosemary Duff: Thank you very much, Mr Chairman and committee, for this opportunity. I'm here just representing myself. I'm a senior citizen and a tenant. I hope my comments are going to be helpful to you.

Abolishing rent controls is going to increase rents. This seems to be about the only point on which everyone agrees -- the government, the opposition, the builders, the developers and the tenants. But many tenants can't afford the rents they have now. A developer or a landlord can make a decision to build something or to renovate something or not. But for many tenants, the decision is going to be whether to live indoors or out on the street, and they won't get to make the decision either.

Ontario represents a very wide range of housing needs and problems, right from the inner city here in a large urban area to small cities, small towns and rural areas. The abolition of controls across this very varied range of tenants will make no great difference to some, the privileged few, but will be catastrophic for others. If there is to be an overall policy, it must be geared to income. Market forces are not an appropriate environment for those who have no force to begin with.

If you link decontrol to vacating you will only tie tenants down unfairly until, in less than 10 years for all practical purposes, apartments will be decontrolled. At present new apartments are already decontrolled, at least for a time, for five years.

Toronto and Ontario -- and we have heard that this afternoon here -- have always been known as a city and a province of homeowners. Renters have been described as the invisible population. But in Metro 52% of households are renters. The further down you go on the financial food chain, the greater the relative percentage of renters. I think it would be more than unfair -- it would be cruel -- to place most of the burden of the risks of decontrol on the shoulders of those who can least afford it.

There's obviously a considerable risk. Nothing is committed to by private developers and the historical record is that they have never provided enough affordable housing, whether rent controls were in place or not, in any jurisdiction at all. That is why a previous Conservative government brought in rent controls in the first place.

The homeowners culture discriminates against tenants in a number of ways, such as partial relief from GST in the building of homes but not apartments, the taxing of apartments at the commercial rate and so on. Metro tenants pay municipal taxes at an average of four times the rate that homeowners do, and in Toronto I'm told it's six times the rate, despite the economy of scale in delivering services to apartments. This discrimination must end under the new assessment and tax system, and benefits to tenants under this change must be clearly seen to reach the tenants. I think the Ontario government should legislate that all municipalities should from now on send tax information directly to tenants instead of to landlords, as they do in Toronto and one or two other local cities.

An apartment is just as much a home as a house is. Security of the home should be the principle that takes precedence over profit and property rights and all other considerations. We have a very insecure economic environment at the moment. Abolishing rent control will only make it worse. Economic evictions are up, homelessness is up and TB is back, together with other diseases that thrive only in conditions of desperate poverty.

The economic arguments in favour of continued government support for non-profit housing seem to me to be very convincing. It costs $190 a month to subsidize a publicly owned unit, $390 a month to subsidize a tenant in a privately owned unit, on the average. Of all housing expenditures before the present government put its policy into effect of getting out of the housing business, 5% was spent on building publicly funded non-profit housing -- $198 million a year -- but 64% was spent on shelter allowances, mainly to the benefit of private landlords, to the tune of $2.8 billion a year. Also, when the mortgage is paid off on a publicly owned building, it becomes a profit centre for public benefit.

Private developers also wish to deregulate in other areas, including the building code and the environment.

A free market is essentially a licence to plunder. This should not be tolerated in housing or in any other essential public service like education or health care.

Conversion to condominiums should never be imposed to any tenant whose rights, even if offered financial compensation, must have priority.

Pressure from developers should not be allowed to dilute the standards of the building code, which is at present under revision. On the contrary, as it is cheaper to build at the beginning with flexibility for adaption for the disabled, this should be mandated. The blind, the deaf and people in wheelchairs should not be subject to any kind of surcharge.

Capital reserve funds should be made mandatory in future, and accountable.

I believe there are better ways of paying down the debt than by borrowing more to give a tax break to the rich while throwing the poor into the streets. The trickle-down theory has been discredited. It is not an economic theory so much as a device for getting elected. There are more moderate and more efficient ways of paying down the debt, including the part of the debt that is necessary to ensure that Ontarians are decently housed: New policies for public-private ventures are being worked out by Central Mortgage and Housing; co-ops can offer mortgages at reduced rates with greater flexibility; municipalities own serviced land which could be made available at less than cost; and the banks could start contributing to the solution instead of to the problem as they withdraw from their one- and two-storey branches, most of which are prime sites for locally financed infill housing.

I believe that the major task for this government is to encourage cooperative, innovative approaches to housing as well as to other problems. The central issue is full employment. Until the unemployment rate is 3% or less, I believe the government must remain in the housing business. There have been serious mistakes made in the implementation of some public housing in the past. They should be corrected, but not at the expense of the homeless.

Mr Marchese: Thank you, Ms Duff, for your well-thought-out presentation. You brought out some different points that many others have not raised. You made a point that I agree with -- and I just wanted to put it out again -- "Market forces are not an appropriate environment for those who have no force to begin with." That's our concern. We're very worried that the private sector is not going to take care of those who don't have economic power.

Ms Duff: Yes, exactly.

Mr Marchese: The other point you mention is, "Nothing is committed to by private developers, and the historical record is that they have never provided enough affordable housing, whether rent controls were in place or not."

Ms Duff: Yes, that's my understanding.

Mr Marchese: A number of people are saying the same thing. Mr Lampert, the person they've commissioned to do a report for the government, says as much. He says rent controls are not going to do it, although they're decontrolling. Mr Lampert also says that if we're going to get the construction going, we're going to have to give a whole list of concessions to the private sector for them to build.

Ms Duff: We're going to have to deregulate everything. If you ask me, that's what they want.

Mr Marchese: There's a question I wanted to ask. Do you think it's fair for the private sector to say: "Don't build cooperative housing, non-profit housing, because that's just a drain on the public and the taxpayer. Let us build, but give us tax concessions to do so"? Do you think that's a fair thing?

Ms Duff: No, I do not, and it's not the only contradiction in the group of landlords that come within the definition of big business. I think there are small landlords who are good landlords. We can't tar all landlords with the same brush, but what I am very much opposed to, and this present government appears to be deeply in favour of encouraging, is the big business approach. I think housing is as essential as three meals a day, free schooling, good health care. It's a necessity.

1630

Mr Marchese: I have to tell you that some of the developers who have come here, and landlords, don't share the view you've expressed that I wholeheartedly support, and that is, security of home should be the principle that takes precedence over profit and property rights and all other considerations. I share that feeling because I think by and large we have to look after people, especially those who don't have the means to be able to protect themselves. Security for them is one of the most important principles that we should be worried about as humans. I share that view very strongly.

Ms Duff: Yes, well, I'm very glad you do.

Mr Marchese: The capital reserve fund is something we need to look at because we have known for a long time that although landlords have been getting money to do the repairs over the last 20 years, many have said, "We don't know what moneys they've spent for capital repairs." Now the Conservative government is saying: "My God, we have a crisis. So we need to get rid of rent control to fix that crisis, because we've got a $10-billion problem that we have to fix."

Do you think that getting rid of rent control is going to fix the $10-billion problem we're going to have in the future because some landlord didn't do the repairs?

Ms Duff: No, I certainly don't and I'm very surprised that an issue that's as important to the economy of Ontario per se as well as to the wellbeing of the people who live here -- nothing I've seen from the government indicates that there probably are possibilities for paying down the debt without going through all this, without shredding people's lives. I think there is a whole range of different kinds of legal instruments that the private market uses when they're in a situation of considerable debt and you don't hear of any alternatives being put forward by the government.

Mr Hardeman: Thank you, Ms Duff, for your presentation. I've a couple of questions: first of all, on the numbers you've provided in the cost of subsidization, the $190 a month to subsidize a publicly owned housing unit and $390 to subsidize a tenant living in private accommodations.

Ms Duff: These were averages. I had these figures. When I became concerned with this I made it my business to search out some reports on these issues and I've read reports from Metro Housing, Metro social services, Toronto Housing, the Lampert report and this document of course, How to Protect the Tenant, and a number of other ones. To tell you the truth, I'm not precisely certain which authority produced these figures, but I have read them. I copied them, literally. They came from a source that appeared authoritative at the time.

Mr Hardeman: Again, I do have some concern with the accuracy of those two numbers. Any numbers I've seen, the difference was not in that direction, in that way.

Ms Duff: I see.

Mr Hardeman: The other ones, I think, are right or they may be proportionately right as the percentage of money that's spent on public housing, but I think of course we have to be a little careful that this also relates to how many people live in the public housing as opposed to the private housing sector.

Ms Duff: Every figure seems to be contradicted by every other figure.

Mr Hardeman: The other question -- I find it interesting -- it's on page 3 of your presentation, "Municipalities should not have the right to prohibit granny flats." Obviously that relates to recently passed legislation by the province --

Ms Duff: Yes, I took these bits out because they seemed to be wrong --

Ms Duff: Yes.

Mr Hardeman: But you do continue on and say: "These decisions should be made on a neighbourhood basis. Granny flats are...welcomed in some areas."

Mr Hardeman: Would you not see then that this should be a decision made by local municipalities?

Ms Duff: No, I think a municipality is too large if you're talking about Toronto or North York, and I realize that this would be everyone's immediate reaction to this. There isn't any mechanism politically at present, is there, to decide things on a neighbourhood basis? Say in Toronto you made it ward by ward. Within a large city you will find wards or neighbourhoods where they're welcome and wards where they're not. I don't think that decision should be up to the municipalities so much as the --

Mr Hardeman: So from your suggestion then the direction that the previous legislation went, taking it from the provincial basis down to the local basis is a step in the right direction --

Ms Duff: But it doesn't go quite far enough.

Mr Hardeman: -- but it should be even more defined to local decisions?

Ms Duff: Yes, I think so.

Mr Hardeman: Another question. On the new construction you suggested that more entities should be included in any new construction for housing developments, such as we should include mud-rooms and professionally staffed day care centres. Do you not have a concern with doing that? I recognize that those would be valuable entities in any type of residential development. Do you not have a concern that that, in fact, would increase the price of that development again to make it unaffordable for the very people who need those entities?

Ms Duff: It would cost more. I don't know that it would cost very much more in terms of the structure, but there would have to be some way, if necessary, to support those who require support in paying a fee for a day care centre and so on. I'm not sure that I would incorporate that into the rent of every tenant, because not every household would take advantage of a day care centre.

Mr Hardeman: My concern would be that if that was included in the building, it would become unaffordable for many more people, because I guess it is accepted --

Ms Duff: My guess would be that it would more affordable over all.

Mr Hardeman: -- that the cost of the entities has to be included in the rent. So if you had all these entities it would become prohibitive for the very people who would require the facilities for their children.

Ms Duff: I don't think it would be anything like prohibitive if you're simply converting a couple of apartments.

Mr Curling: I'll just make a quick comment. My colleague here wanted to ask some questions and maybe make some comments himself, of course. I just want to comment about the granny flats, because I was the minister who introduced granny flats and I fully support what you're saying that it should be reduced down to a community, to an area, because not the entire municipality would cooperate on that. The fact is that the granny flats were really greatly welcomed and then we started playing political football with it afterwards.

The last quick comment is that we always believe that this tenant protection package, some of the Conservative people say, "It's just an urban little area, it's a Toronto issue," but it's right across the province that it has an impact. So I'm glad that you mentioned that.

Mr Sergio: Thank you very much, Ms Duff, for coming down and speaking to us. Before the election last year, the now Premier said that any change to the Landlord and Tenant Act and tenant protection whatever, rent control and so forth, would have to result in a rent decrease.

Ms Duff: Decrease?

Mr Sergio: Decrease. All right? We are seeing now that this is not the case.

Ms Duff: Yes, very clearly.

Mr Sergio: The first objective of the proposed reform says this: "Protect tenants from unfair and high rent increases." If rent control is gone, who is going to say what rent hike is unfair? Certainly not the government, because it would have abdicated its responsibility to the free market and they can raise the monthly rent to whatever amount they want. Then it goes on to say, "harassment and unjust evictions and to provide strong security of tenure."

Knowing what you know, because I've been listening to your presentation, how do you think this new proposed legislation -- and it's only proposed legislation, and as we hear also from our colleagues on the government side, we hope that perhaps at the end the minister and the Premier will have a second thought and they will withdraw this particular piece of legislation. My feeling is that they won't, but let's hope they will if they listen to people such as yourself. How do you view this legislation with respect to the type of protection that the legislation is proposing now?

Ms Duff: I found very little in here that it seems to me is devoted to protecting a tenant. Put it this way: Most foxes I know disguise themselves as a rooster or a hen before they advance on their market objective, but this legislation doesn't. It seems to me to have been written by big business landlords and it emphasizes the specifics of landlord-tenant problems at the expense of the overall situation, which I think the Legislature must concern itself with, which is the social consequences and the possibility of extreme damage to some people in Ontario.

The Chair: Thank you, Ms Duff. We appreciate your attendance and your input into our process.

1640

YORK REGION COALITION FOR SOCIAL JUSTICE

The Chair: Our next presenter represents York Region Coalition for Social Justice, Sharon Matthews, Dennis Bailey and Lee Angus. Good afternoon. Welcome to our committee. The floor is yours.

Ms Sharon Matthews: My name is Sharon Matthews. I have with me Dennis Bailey and Lee Angus. We are pleased to be able to participate in these hearings on the discussion paper concerning the future of tenant protection legislation in Ontario.

The York Region Coalition for Social Justice is a coalition of individuals and organizations living and working in York region. Many of our members are tenants, but some are small landlords I might add, including myself. Others work in the court system and have an intimate knowledge of how it deals with landlord and tenant issues. Many of our members have experience with the rent control system in Ontario. Our reason for being here arises from our concern for the wellbeing of our neighbours, particularly those who, because of economic disadvantage, lack the opportunity to influence the public policy debates that mould our society.

All three of us will be participating in our presentation and I'd ask Lee to continue.

Ms Lee Angus: York region is a conglomeration of nine diverse municipalities that range from the very urban, such as Markham and Vaughan, to the semi-rural, such as Georgina and East Gwillimbury.

In population terms York region is one of the fastest-growing areas in Canada. However, with a population of over 570,000 people, it still has only 4,700 private rental units, an extremely small per capita figure and one that suggests an obvious imbalance in growth.

Given its population growth and lack of rental accommodation, it is not surprising to find that it has also had relatively low vacancy rates in its private residential rental market: 0.8% in April 1995 and 1.6% in the most recent survey in October 1995. CMHC attributes the apparent increase to normal fluctuations in a small sample size rather than to real change. The vacancy rate for the affordable portion of the market is undoubtedly lower.

When York's only emergency shelter for families opened a little over a year ago, they anticipated a maximum stay of three to four weeks. Finding affordable accommodation for their residents to move to has been their largest problem, however, and has forced them to permit stays of up to eight weeks. This has happened despite the fact that people come to the shelter only after they have exhausted the ability of their family, friends and churches to provide temporary accommodation. The shelter insists that residents conduct an active search and assists them in that, yet families have had to leave the area to find affordable accommodation.

A low rental vacancy rate is of concern not merely to the individuals directly affected; employers in the retail, service, hospitality, transportation and small manufacturing sectors are particularly reliant upon the availability of lower-waged employees. A worker's inability to find affordable accommodation is also a problem for the companies that employ or seek to employ them and therefore a problem for our overall economy.

Studies of employers in the region have recorded difficulties recruiting employees, particularly for lower-paying jobs but even for those paying as much as $55,000 per year, as a consequence of this shortage of affordable rental accommodation.

Anything that tends to reduce the availability of affordable rental accommodation will exacerbate this problem and will therefore be economically counterproductive. A stock of affordable rental housing is as much an economic asset as infrastructure or the proper regulatory environment.

Unfortunately Ontario's present government has already taken steps that have reduced or will reduce the supply of affordable rental housing. We refer specifically to the cancellation of funding for private non-profit housing and the elimination, by the Land Use Planning and Protection Act, of the ability of some homeowners to create accessory apartments.

New Directions proposes to continue reducing the housing stock by eliminating the Rental Housing Protection Act controls on the conversion of residential rental properties. The impact of this will be overwhelmingly in the more affordable end of the market.

It's obvious that, all other things being equal, the lower the rent yielded by a property, the more incentive the landlord has to convert it to some other use. It will not be the well-off tenant of the $300,000 single-family home in a subdivision in Richmond Hill who finds himself or herself evicted, but the tenant of the $750-per-month, one-bedroom apartment in a residential-commercial zone in downtown Aurora, Keswick or Thornhill.

Even while reducing the supply of lower-priced rental accommodation, this government has implemented policies that have increased the demand for it. Cutting most social assistance rates 21.6% in October 1995 was one sure measure. Since the vast majority of social assistance recipients rent in the private market, the demand for rent-geared-to-income housing has significantly increased.

One major provider of subsidized housing in York region has seen an increase of approximately 8% in its waiting list in the last year. At the same time the rate at which people have left such housing has dropped. Officials now express a feeling of guilt at even handing out applications, knowing the false hope they are creating. Prospective applicants frequently do not fill out an application once they have been told of the likely waiting period. Many of York region's existing private non-profit housing corporations have closed their waiting lists and refuse to take applications, admitting openly that the waiting period can be from three to five years.

Reducing the supply of basic rental accommodation while increasing the need for it is a classic and certain economic prescription for price and rent increases. Removing unit rent controls would allow this upward pressure on primarily low-end rents to be released, with the result that tenants at the bottom end of the economic scale will be hurt the most. Seniors, the disabled, single parents and low-income workers will be the victims of this policy.

It is somewhat misleading for the government to proclaim that it's maintaining rent controls by protecting sitting tenants of existing buildings. "Hovering" tenants might be a better term, especially in growing urban areas like York region where the population is relatively mobile. As the study done for the government by Greg Lampert illustrated, between 64% and 86% of all tenants move in a five-year period.

Mobility is in itself a desirable economic feature. In the economic realities we face today, do we want to adopt a policy that discourages people from moving, for example, to pursue job opportunities, further training or education? Are not such moves exactly the sort we as a society want to encourage the underemployed and low-income people to make? Yet the New Directions proposal for rent controls discourages such mobility by attaching a significant cost to the giving up of an affordable rental unit. Such a scheme will not prevent people making such moves, but it will be a determinative factor in some cases. Unfortunately its impact will be greatest upon the mobility of low-income people who, because of more limited job options, are exactly the ones in need of the greatest mobility.

1650

Mr Dennis Bailey: Without unit rent controls, the prospect of obtaining higher rent from a new tenant will be an irresistible incentive for many landlords. The use of coercive tactics against tenants will increase. Obviously tenants in the lowest-priced accommodation, who are generally the least able to afford higher rents, will be the prime targets.

Tactics will include deliberate non-repair, intimidation and eviction based on an ostensible need for personal use. The New Directions speculation that an anti-harassment enforcement unit, higher fines and greater municipal powers will effectively curtail such abuses can be reasonably regarded with some suspicion by tenants.

In York region tenants who are articulate and persistent enough to lay private charges get virtually no guidance on how to proceed. Charges against landlords have been dismissed simply because no one informed the complainants when to be in court. There is no compensation for complainants who take the time to attend court in lieu of a provincial prosecutor, and the fines are almost always token.

Offences against tenants go largely unpunished at present because most police forces don't lay such charges as a matter of unwritten policy, nor do they routinely provide such evidence to the crown attorney's office. That could be easily rectified by a directive from the Solicitor General. Given that local police forces are closest to the scene and already expert investigators, how will the new and presumably more centralized New Directions anti-harassment enforcement unit conduct investigations and initiate prosecutions, throughout the province, more successfully? What sort of relief will be possible, fast-tracked or otherwise? In what form will relief be pursued? Will the unit complete the prosecution or merely initiate it, as the document indicates?

The almost total lack of detail about such a key element for tenants reveals much about the lack of seriousness with which this discussion paper really considers tenant protection.

The proposal to increase the powers but notably not the funding of municipalities to deal with property standards violations is a classic example of buck-passing. The major cost to municipalities in enforcing their property standards bylaws is for personnel. In York region competition for resources at the municipal level means that in almost every case property standards inspectors wear other hats. Recent reductions in transfer payments from the province will not encourage municipalities to hire more inspectors, in the absence of which the proposed increase in powers will not have the effect of adequately dealing with tenants' maintenance concerns.

We are deeply concerned that the real thrust of this contemplated legislation has little to do with protecting tenants. The government has taken the unusual step of holding province-wide hearings on this discussion paper rather than a bill. We are understandably suspicious that hearings on the actual bill containing the detail that is conspicuous by its absence in this paper will be abbreviated and the government will claim it has already adequately consulted the people to justify that.

There is a theory that if you assert something once, some people might believe it; twice and most people will believe it; three times and no one will doubt it. The discussion paper has little to offer in terms of real tenant protection, and regardless of how many times you proclaim that as its purpose, no tenant in York region, nor elsewhere in Ontario, will believe that.

We'd be pleased to take any questions that you have.

Mr Wettlaufer: Thank you for your presentation today. I was very interested in your remarks regarding the shortage of housing and shelter; 4,700 units out of a population of 570,000 doesn't seem like a whole lot. Given that the government has a deficit of $8 billion a year, given that we're paying interest on the debt to the tune of $8-billion-plus per year, we are severely handicapped by how much we can put into many programs that we would like to put into programs.

If you took your daughter or your son to a store and he or she needed an item of clothing for 20 bucks but you only had $15, that's all you could afford to pay. That is the problem we face as a government, albeit much bigger dollars, much different needs. What would you suggest, given that we have such a shortage of funds? How do we do this? We would like some recommendations.

Mr Bailey: First off, the rent control program is not one I would typify as a major expenditure in terms of what it saves tenants in this province and the degree to which it makes accommodation affordable that otherwise would not be affordable. If you were to turn around and try to do the same thing by means of a shelter supplement program, I think you'd find that the cost would be astronomical. That's why the rent control system in Ontario works cheaply, relatively speaking, compared to the options.

Mr Curling: I want to commend you for the presentation. It's very focused and direct in some respect. As a matter of fact, I just want to comment on what the government side was saying. They said, "How are you facing this dilemma if you have a great deficit on your hands and are paying all this interest on it?" I would say first don't take a tax cut. If you didn't take a tax cut, you would have some of that money right now to pay off the debt.

However, one thing that you focused on so well was, and many people have commented on that, "The vacancy rate for the affordable portion of the market is undoubtedly lower" than we saw. We say there's a vacancy rate of 0.8%, and no one says that within that, on the affordable end, it is much worse because we throw everything in that component.

Then you said that many people on the waiting list for Ontario Housing, or what have you, take their name off the list because they feel it's a waste of time to drive up their hopes for three or four years' wait.

You also mentioned the contribution. The government sometimes contributed to that disastrous situation in cancelling out non-profit housing, cutting back 22% on the most vulnerable people, creating the demand that is just a disaster, turning around and creating that crisis, then saying to us, "I think the private sector will bail us out on this."

I'm moved to speak a little on this because you're the last presenter we have in Toronto, and some things we have been hearing moved me and many other people here to tears. Do you think it would be a good idea if this committee would visit some of those accommodations that are around to see the kinds of situations people are living in and find out at first hand how tenants are wrestling with the issues each day? Would that be helpful at all to this committee?

Mr Bailey: I think we're all strong advocates of education, and that would probably serve an educational purpose. We would support that.

Mr Marchese: Thank you very much for your submission. Given what some government members have been saying in the last week, it leads me to believe that we have a housing problem and we're going to have a housing crisis in the next short while. I'll explain why. First of all the government has stopped building cooperative and non-profit housing. Second, they are proposing to eliminate the Rental Housing Protection Act, which means rental buildings are likely to be converted, and the condominium people are very worried about that. They already have a glut and it will become seriously worse once they do this.

The private sector says: "Thanks for getting rid of rent control. We like that because it will give us a few more dollars, but we're not going to build unless you give us a few other things." The government says: "Oh, we've got a problem. We have a deficit and we're not about to give them the whole store. We're going to get rid of rent control but we're not about to give you all the other tax concessions, because we're strapped. We're poor." It seems to me that rent control is a shift of money from the poor tenant to the landlord, who's not going to build, and every study says that.

In the context I've given you, don't you think we're going to have a housing crisis where the poor will not be housed?

Ms Angus: The poor are going to be on the street or in other places. They're already there and are going to be there more and more as we move in the direction that the current government is going.

1700

The Chair: Thank you, folks. We appreciate your input into our discussions, our deliberations and being with us this evening.

Mr Curling has a motion that he wants to put forward.

Mr Curling: Whereas the Conservative government has produced no research to support its claims that as a result of their new plan, tenants will not be subject to evictions and massive rent increases; landlords and developers will build new affordable rental units; significant amounts of existing apartments will not be demolished or converted to condominiums;

And the only publicly available report prepared for the government is the Lampert report prepared for the Ministry of Municipal Affairs and Housing by Greg Lampert;

I move that the committee request that Greg Lampert, economic consultant, appear before the committee to allow members to probe him on his findings and recommendations.

If the committee is to prepare the best possible report, it will be necessary for Mr Lampert to appear before members begin discussions on the preparation of a final report, and giving each party 30 minutes to question Mr Lampert.

The Chair: If I may just comment on that, we initially approved a system for this committee whereby, and I'll quote, "Authorization is given to the clerk, in consultation with the Chair and/or subcommittee, to deal with any outstanding matters that may arise concerning public hearings, scheduling, travel arrangements and report writing." On that basis I would suggest that the subcommittee meet to discuss this particular issue and make a decision at that level.

We stand adjourned.

Mr Marchese: Mr Chair, you shouldn't do that.

Mr Curling: You can't do that.

Mr Tony Silipo (Dovercourt): You've got a motion in front of you. You can't just adjourn.

The Chair: Based on a previous motion, I've decided that the subcommittee is empowered to deal with the motion and that's the way we're going to do it.

The meeting is adjourned.

Mr Silipo: You can't adjourn the committee. It's the second time you've done this.

Mr Marchese: Can I ask the clerk to comment on this, please?

Mr Curling: We don't have to have a subcommittee to deal with this. The subcommittee is made up of us.

Mr Marchese: This type of motion is not complicated, really. It's an easy motion the committee needs to deal with and can do it very quickly. You can either decide you don't want to invite him or you do.

I support the motion because I think having Mr Lampert here would answer a lot of questions. We refer to his report on a regular basis, not only we here and the government members but many of the public who come here to deputize refer to his report. I think it would be very useful to find the time, and perhaps the subcommittee can look at when we might find the time for that. It might be a half-hour, it might be whatever time we can find, but I really believe it would be useful to have Mr Lampert appear before this committee. I would urge the government members to support that and for the subcommittee to find the time for us to do that.

The Chair: The problem is, there is no time. It has been allocated and the decision's been made.

Mr Marchese: Let's get the subcommittee to look at that.

The Chair: That's what I've suggested.

Mr Marchese: But if we approve this, then the subcommittee will find the appropriate time.

Mr Hardeman: Mr Chairman, on a point of order: I would suggest the Chairman used wording that was maybe not construed to be what it should be. I would gather that when the Chairman ruled that this was going to a subcommittee, he ruled the motion out of order, and I don't believe it should have any further debate at that point.

The Chair: While I did request that it go to the subcommittee, I don't have the right to adjourn the meeting. However, Mr Marchese is also suggesting that we go to the subcommittee with it.

Mr Marchese: Quite differently. I suggested that if we as a group agree and hopefully the government members agree, we then refer that to the subcommittee to look at when we might find the time to do this; in other words, this whole group here of all three parties saying, "Yes, that sounds like a good idea; let's find the time," and we'll get the subcommittee to agree.

The Chair: Are the members ready to vote on the issue?

Mr Marchese: I'd like to hear from the government members.

Mr Wettlaufer: No, I'm not. If the motion does not conform to the rules that were set up initially, then it does not come to a vote at this committee.

Mr Marchese: No such thing.

The Chair: We do have to deal with the motion. Are the members prepared to vote on the motion?

Mr Marchese: A recorded vote.

Ayes

Curling, Marchese, Sergio.

Nays

Bassett, Boushy, Danford, Hardeman, Maves, Wettlaufer.

The Chair: The motion is defeated.

Mr Hardeman: Mr Chairman, on a point of order: I wish to register an objection. I don't believe you can call the vote without giving people the opportunity to debate the motion.

The Chair: The vote was called and the motion was defeated. We stand adjourned until Monday in Thunder Bay.

The committee adjourned at 1706.