SHETLAND TRAILER PARK TENANT ASSOCIATION
UNITED TENANTS OF ONTARIO, NORTH CENTRAL REGION
SUDBURY COMMUNITY LEGAL CLINIC
HOUSING RESOURCE CENTRE (SUDBURY)
SAULT STE MARIE AND DISTRICT SOCIAL JUSTICE COALITION
SAULT STE MARIE HOMEBUILDERS ASSOCIATION
CONTENTS
Tuesday 27 August 1996
Rent control
Mr Lorne Carter
Shetland Trailer Park Tenant Association
Ms Denise Dool
Mr Doug Davey
Elstrong Management Ltd
Mr Dave Elgie
Algoma Community Legal Clinic
Mrs Wendy Bird
United Tenants of Ontario, North Central Region
Ms Nancy Bailey
Sudbury Community Legal Clinic
Mr Terry Copes
Housing Resource Centre (Sudbury)
Mr Barry Schmidl
Sault Ste Marie and District Social Justice Coalition
Ms Lisa Kisch
Miss Marjory Curry
Sault Ste Marie Homebuilders Association
Mr Glen MacIntyre
STANDING COMMITTEE ON GENERAL GOVERNMENT
Chair / Président: Mr Jack Carroll (Chatham-Kent PC)
Vice-Chair / Vice-Président: Mr Bart Maves (Niagara Falls PC)
*Mr JackCarroll (Chatham-Kent PC)
*Mr HarryDanford (Hastings-Peterborough PC)
Mr JimFlaherty (Durham Centre / -Centre PC)
Mr BernardGrandmaître (Ottawa East / -Est L)
*Mr ErnieHardeman (Oxford PC)
*Mr RosarioMarchese (Fort York ND)
*Mr BartMaves (Niagara Falls PC)
Mrs SandraPupatello (Windsor-Sandwich L)
Mrs LillianRoss (Hamilton West / -Ouest PC)
*Mr MarioSergio (Yorkview L)
*Mr R. GaryStewart (Peterborough PC)
Mr Joseph N. Tascona (Simcoe Centre / -Centre PC)
Mr LenWood (Cochrane North / -Nord ND)
Mr Terence H. Young (Halton Centre / -Centre PC)
*In attendance /présents
Substitutions present /Membres remplaçants présents:
Mr AlvinCurling (Scarborough North / -Nord L) for Mrs Pupatello
Mr GerardKennedy (York South / -Sud L) for Mr Grandmaître
Mr John L. Parker (York East / -Est PC) for Mr Young
Mr Peter L. Preston (Brant-Haldimand PC) for Mrs Ross
Mr ToniSkarica (Wentworth North / -Nord PC) for Mr Tascona
Mr BruceSmith (Middlesex PC) for Mr Flaherty
Also taking part /Autres participants et participantes:
Mr BudWildman (Algoma ND)
Mr TonyMartin (Sault Ste Marie ND)
Clerk / Greffière: Ms Tonia Grannum
Staff / Personnel: Ms Elaine Campbell, research officer, Legislative Research Service
The committee met at 1100 in the Water Tower Inn, Sault Ste Marie.
RENT CONTROL
The Chair (Mr Jack Carroll): Good morning, everyone. Welcome to the standing committee on general government hearings on the proposed changes to the rent control legislation. We are happy to be in Sault Ste Marie on this wonderful, cool summer morning. Hopefully we're going to get some good input from the folks in Sault Ste Marie.
LORNE CARTER
The Chair: Our first presenter is Lorne Carter. You have 20 minutes of our time to use as you see fit. Should you allow any time for questions, Mr Marchese would get to lead off the questioning this morning and then we'd rotate equal time. The floor is yours, sir.
Mr Lorne Carter: As a quick introduction to who I am, I'm a northerner. I've lived across this vast piece up here above Barrie for quite a few years. I've listed in there some of the places I've lived, and I understand you may have been in some of them in the past or planning for the future. I'm also a parent and very concerned about where our future generation is going and where the economy of Ontario is and should be.
The process of consultation within the communities across Ontario is a system of considerable value to my government. It provides input from the grass roots, a process which had not been allowed in past governments. While special-interest groups were always heard and should continue to be heard, it is refreshing to see that the silent majority has the opportunity to address issues which will touch everyone in this province for decades to come.
Excuse me, age requires that I put another set of glasses on. Ah, that's much larger.
We are presenters, a focus group gathered together in different communities across this province in search of the right and wrong way to make the system a better place to live and grow.
Recently, I overheard a question posed that we as Ontarians should compel our government to fix the system, rent controls included, for all time, to last for decades and decades to come; a solution forever, so to speak. I reflected on the comment and realized that someone was speaking as our society. We have grown too complacent, comfortable, apathetic and generally adverse to any changes in the way we do things. The situation posed, of course, was an impossible one. We live in a democracy and changes will always be taking place.
The standing committee is here today to listen and note the changes we as Ontarians feel will fix the system for this time. I, as part of Ontario, welcome the opportunity to address this standing committee.
Effectively implementing efficiencies in our systems and our government is the current focus of government and should be for each and every Ontarian. Things are broken, in a mature state, or not in tune with the times. We as Ontarians have to break out of our paradigms. We need to get constructive, be our best critic and do away with the attitude, "We need changes, but not in my backyard." The landlord and tenant control system is no different and in a changing economy is one of the first places for change.
The web of society has become so interwoven that we cannot change one aspect without upsetting the balance of others. It is not an easy task to downsize, re-engineer, right-size, or make efficient, and I thank our government for thinking in that direction.
The change merchants will tell us that making changes requires the input and buy-in of those affected or it won't work. Private and public sectors of the economy are feeling the effects of this each and every day. It is our job to provide input in order that a policy framework conducive and workable overall can be struck. In short, we're only as good as the people we put in place or empower to proceed.
The key issues this standing committee is looking at this particular day involve protection for tenants; improving property maintenance; toughening the penalties for landlords who do not comply with regulations; creating jobs under new construction, renovation and stepped-up maintenance work; streamlining the system to deal with disputes between a landlord and tenant; and demonstrating effective administration from here on.
The theme of this presentation will focus briefly on the need for streamlining the system for dispute resolution and creating cost-effective administration, then correlating the benefits of creating an environment for job creation to meet the increasing demands for the future. The balance of the issues are dealt with in my general statements. Their importance is certainly not less, but due to the time constraints and the limited research, I have restricted this presentation.
Streamlining the system is not only essential but paramount to decreasing confusion for the tenant consumer and the landlord supplier. Currently dispute resolution takes weeks, months and even years, not to mention considerable moneys and non-productive time to reach a solution.
Currently six acts related to tenancy can govern any given situation. No wonder our society is overrun with the need for lawyers. One piece of legislation could overrule another and another, leaving the possibility of redundancy on any issue. No wonder tenants skip out in the wee hours of the morning and the landlords call in legal assistance at the slightest note of a problem. They're confused.
A system that breeds mistrust and confusion is currently at work. Things are broken, and a movement to correcting the situation is not a casual request, it's demanded.
In a closing note on this subject, it is only good sense that the administration and tenant protection act be struck with expediencies and a cost-effective format. This would certainly be in keeping with the government movement to spread efficiency plans throughout all ministries and departments.
Secondly, the economic climate situation in Ontario currently calls for an aggressive approach to rental housing throughout the province. The housing units are aging, the population is aging, new housing starts are down and economically the borrowing charges are in favour of the developer. The underlying advantage is the economic boost aggressive legislation will create.
Statistics tell us that the majority of rental housing units are in need of repair and replacement. Legislation which provides incentives to renovate and replenish to meet demands will have a positive effect on the construction job market and tenant demands for decent, comfortable, updated accommodations. Legislation which encourages building can only be met with a positive response from the consumer.
We have commenced a major growth period of aging populations throughout Ontario and North America. This period will last well into the next century and is not expected to peak until the year 2030. This has a significant effect on housing needs for aging people and the elderly. A need for care housing will spawn a building surge equal to the boom years of the 1970s. This in turn will allow for the transition from owned housing, thus freeing up the housing necessary for younger generation family needs. The empty nesters are another subject. They are in search of an easier lifestyle that rental accommodation custom designed for their needs can provide. These demands are genuine and are expected to last for some time to come.
New housing starts and increased demands for same are not expected to rise in the next 10 to 15 years. This is based on population statistics. Thus we have to make a conscious effort to provide resale homes for the growing family scenario.
The key piece of the puzzle for these opportunities for advancement is the low cost of borrowing available to developers today. Interest rates on the low end of the scale are a welcome sight. The climate is right for building.
Generally speaking, the stage is set to renew our rental housing in a market-driven economy, and I encourage the government to move decisively and progressively to meet the needs of our society. Note that in a market-driven economy, the consumer influences the pricing. We have favourable facts and now we need the process. There are some words of caution, however. It is okay to speak and enact changes in our systems of government and the way in which we govern, but we have to introduce ways for a smooth transition, and phasing in the consumers and providers for these changes is and should be the chosen path to meeting our goals. I urge the government to maintain the consultation process.
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In conclusion, thank you very much for the opportunity to express my views and lend support to my government. I believe a great many Ontarians hold a parallel view on these issues. Ontario was, and still is, a great place to live in. Let's continue to renew our focus, revisit our economic roots and think constructively towards the future. Let's prepare the scene for our youth and experience it with them. Thank you again.
The Chair: Thank you, Mr Carter. We have about three minutes per caucus left for questions, beginning with Mr Marchese.
Mr Rosario Marchese (Fort York): Mr Carter, you say at the beginning of your statement, "It provides input from the grass roots, a process which has not been the case in past governments." Could you explain what that means?
Mr Carter: This is the first instance I've seen of the number of hearings that governments have presented across this particular province.
Mr Marchese: Do you mean having two committees in one day appearing in the same city?
Mr Carter: No. The overall process in the last six months, the next six months.
Mr Marchese: We have had in our government and previous governments committees going across the province on almost every imaginable issue where there has been a legislative change. Nothing is being done today that is different from what we were doing in terms of process. We consult today on this issue, as we consulted in the past on issues that were before the Legislature. I don't see what the difference is in terms of what you are suggesting here, that somehow we did things differently in the past.
Mr Carter: I thank you for that information.
Mr Marchese: There are many things here that you raise but I want to get to the subject of streamlining the system/cost-effective administration. We've heard many deputations where they've said the present system is not working too badly at all, but if you want to change the system, then make some changes so as to make it more effective, if that's the issue. Many are worried that if you change the system, then that system to set in place will take time, it'll be a different set of administration and bureaucracy to deal with. It may become even costlier, because the system that we have in place now is working. They also add that if you create a new tribunal kind of process, you're probably going to hire people who may or may not be neutral, but people are concerned that those who adjudicate need to be neutral, and the present system allows for that. But we're not sure about a future system where politicians make the appointment process. Do you have a comment on that?
Mr Carter: Reduction from six pieces of legislation or acts to one or two processes certainly sounds like an efficient process to me.
Mr Marchese: No, I understand that. But I made two or three statements that sort of would lead you to comment on different parts of what I said. First, do you believe in a tribunal system where appointments are made by the politician, by the government?
Mr Carter: I don't think I have the information available to me to make a comment on it. I would have to know how the tribunal system actually would work and I don't think we're at that point yet.
Mr Marchese: There's a big concern that we're setting up a whole different bureaucracy here that will slow down the process of adjudication. Superficially it seems easy to say, "Well, we're going to all lump it in together and we're going to do it and everything will be in to one process," and it sounds efficient. But we have to work out what all that means and there are implications for that.
Mr Carter: I understand this is a paper that you're putting together in order to draft some legislation so I'm certain that it's in the early stages of discussion.
Mr Bruce Smith (Middlesex): Thanks for your presentation this morning. I know there are a number of issues that you highlighted. One of particular interest is your comment with respect to creating investment and job opportunities. I think one of the most significant pieces of data that the committee received was last week in Toronto from the Ontario Home Builders' Association where they indicated to the committee that approximately 5,000 jobs were lost in this province due to the existing legislation, as it is today. With some minor changes, they anticipate we could recapture about 30% to 40% of those jobs. But I think the most tragic part of it was that in fact we've perhaps lost some of the talents in tradespeople, the pool of tradespeople in this province, that we may not recapture.
In your presentation you said -- and I believe this is what you said, correct me if I'm wrong -- that the stage is set for building. I'm just wondering what, in Sault Ste Marie and region, would draw you to that conclusion because there's been a great deal of criticism that perhaps the stage isn't set for building, especially as it applies to rental accommodation.
Mr Carter: My comment is based on market scenarios and I pointed those particular things out. In terms of rental housing, I was reading some statistics on the fact that it's extremely old and needs a revamping or replenishing. There's new demand by the marketplace. As far as borrowing dollars for development and that sort of thing is concerned, things are very low on the interest scale side of things. We have to start to think about rebuilding the structures within our province. We've fallen a bit into decay. We had the whole argument in the press about our highways across this province. We have a lot of building scenarios almost in the same situation. It's perhaps a case of past governments not paying attention to those sorts of things.
Mr Alvin Curling (Scarborough North): Thank you very much, Mr Carter, for your presentation. It invites many comments, but because of the short time let me make a comment and ask you if you can see this in some of your research. When we make policies as a government, we cannot make them in isolation. What I mean by that is that we're talking about housing, so if we're having a housing strategy, which this is not really, you have to take into consideration areas like Health and Community and Social Services. It has been pointed out to us right through our hearings that on some of the things we will do in regard to home care by trying to change one aspect of it we found the government has not consulted with those areas. Do you see in the New Directions paper -- I have not, but maybe you have -- any way that the government is in touch with the other areas of Health, Comsoc and even Environment, where the trailer home people have had some concerns?
Mr Carter: I am aware of the web of our society, as I had mentioned there; we're interwoven with so many other particular areas. It doesn't take a PhD or years of consultation or reading to come up with that particular answer. I believe that our government, in its process as it goes across this province looking at the changes and the moves for efficiencies and that sort of thing, is taking into account other areas, things that are affected.
Mr Curling: There seemed to be a lot of shock and fright in their face when people make presentations about how we deal with those people who are disabled. If we change this act, as Mr Marchese said, without any realization of the other input, we are into deep trouble. Time after time people are saying: "Don't touch it. It's legislation that is not perfect. If you want to change it, you can improve it, but don't destroy the six other pieces of legislation and make one." You seem to be saying it's a great move to move to one. We're going to say you're going to leave out a whole other dimension of things. You said that you don't see any concern with that.
Mr Carter: We constantly have to be reviewing our processes as we handle things, and I'd rather refer to one or two than six pieces of legislation if I were particularly involved in a dispute of some sort.
Mr Curling: I wish life were that simple.
Mr Carter: I certainly agree with you.
The Chair: Thank you very much, Mr Carter. We appreciate your input this morning, and your ideas and suggestions on our deliberations. Have a good day.
SHETLAND TRAILER PARK TENANT ASSOCIATION
The Chair: Our next presenters represent the Shetland Trailer Park Tenant Association, Denise Dool and Don Maki. Good morning. Welcome to our committee.
Ms Denise Dool: My name is Denise Dool. I represent the tenants of Shetland Trailer Park in the capacity of secretary of the Shetland tenant association. With me is Don Maki, one of the directors of the association.
Shetland Trailer Park is located on Highway 17 north, only a few kilometres north of the Sault city limits and a few kilometres south of Heyden in the unorganized township of Aweres. This park is well established and contains more than 50 units, all privately owned. At present we pay to the landlord, who also lives in the park in a trailer, monthly rent of $164 for our lots. There are no written leases. For this rent we are supplied water from a community well on the premises, sanitary sewer hookup to a community septic system on the premises, and road and general park maintenance. We do not have garbage pickup or disposal. The landlord also collects municipal taxes, which presently average $275 per year per unit, and the landlord is vendor for our electricity, which he in turn buys in bulk from Great Lakes Power.
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The landlord does respect our privacy, and lives very privately himself, but is often very slow to respond to our requests for maintenance, particularly if the complaint comes from a tenant he, the landlord, does not like, sometimes requiring the filing of a tenant complain about maintenance with the Residential Rental Standards Board. Currently there are complaints filed about road grading and about a water supply line leak under one of the trailers.
With respect to the discussion paper, the first thing that stands out is that the Mike Harris government bases the majority of its research and proposals on large cities, particularly Toronto. It is our view that the demographics and social structures, and therefore the requirements, of each city are different, with different requirements within a large city such as Toronto and for rural areas, which, again, vary according to demographics and location within the province. The city of Toronto is not a fair yardstick by which to judge the rest of the province.
Our suggestion is that legislation be enacted which will permit organized areas and cities to overrule the Rent Control Act and other related acts by way of local bylaws. This will enable cities to tailor their requirements to their specific needs and to change these bylaws as needs change or deficiencies are discovered much more quickly and efficiently than is possible with provincial legislation. It will also create competition among cities to develop the best climate for both development and the attraction and retention of residents. The province could save vast amounts of money by getting out of the rent control business and related dispute settlements and enforcement for the greatest percentage of the population, retaining control for the rural and unorganized areas only and retaining final appeal jurisdiction for all.
Another point that becomes clear upon reading the discussion paper is that the government is relying heavily upon statistical evidence and the results of surveys, which are also numerical statistics. We do not accept the government's conclusions unilaterally based upon whatever numbers it is using as justification, because the government has not released that information. What percentages of what specific groups or organizations have responded how to what specific questions? What specific information pointing to what specific needs or deficiencies has been compiled statistically from what specific documents or databases?
With statistical data, including surveys and opinion polls, everything depends upon what question you ask, how you word it, how you ask it, of whom you ask it, when you ask it and especially how you interpret the results. Mr Mike Harris is himself very aware of this and demonstrated the flexibility of interpretation of statistical data liberally whenever an opinion poll was not in his favour during his campaign for election, with statements similar to: "We all know the limitations of poll results. We don't believe this poll is representative of how the people really feel." What we do see is the government's wish to accommodate special-interest groups, namely, the major developers and landlords in general.
The government's claim that developers and landlords need a greater infusion of money because of declining numbers of new rental units since rent control is not supported by simple day-to-day observations of the vast numbers of rental housing units, both large and small, built during the last 25 or more years. Even with existing rent control, these developers have found it sufficiently lucrative and rewarding to proceed. Since the government is using the city of Toronto as its prime example and justification, it should know that Toronto itself is one of the best examples of massive expansion and development over these same years in question.
Another point is one of philosophy: The government claims that landlords need more money to pay for maintenance of existing units. This is a false assumption. When rent is initially set for a given unit, the landlord calculates the capital cost of his investment and, spread out over a given number of years, based upon the life expectancy of the unit for cost recovery, including interest on his mortgage, if any, he estimates the rent needed. In addition, he must add taxes, predictable costs for municipal services and maintenance costs which will be needed on a day-to-day basis, as well as maintenance costs predicted for major repairs to keep the unit up to standard for the anticipated life expectancy. Finally, he will add his desired profit, which may be just to compensate him for his troubles, or it may be to replace the interest he might have made had he simply made passive investments, or it may be because incoming rent is his sole income. Whatever his motivation, he is entitled to his profit just as any wage earner is to his pay. In the case of the landlord, his profit is also his incentive to get into the renting business in the first place.
This form of budgeting is the same for any business and also the same for the vast majority of households. Why then should landlords and developers be given additional moneys to pay for maintenance, which is already budgeted for and paid for monthly by their tenants in advance and in good faith and which said rent has been steadily increasing all these years already, with controlled rent increases and uncontrolled court-awarded capital cost increases to cover cost-of-living or inflation increases? No one says to you, "Gee, bad luck; your roof needs major repair a bit sooner than you had planned for," or, "The cost is more than you had expected, so here, have this extra money."
What we need are much stricter and more realistic guidelines and procedures which the courts must be obliged to follow when awarding permission for above-guideline rent increases for capital expenditures and extraordinary operating costs. For new capital cost investments, such as a swimming pool which was not originally there, no one disputes the landlord's right to cost recovery by way of a limited-time surcharge if the majority of the tenants support the said new development.
The concept of rent guidelines not applying to new construction will be a mistake. Developers will be able to declare a host of buildings as unfit or too expensive to maintain, demolish them, claim capital losses on their taxes and build new units, just to cash in on uncontrolled rent. This will be great for the construction industry and the municipal tax base, and it will create a few new jobs which will briefly make the government look good with its employment statistics, but remember, the government is supposed to represent all the people, not special-interest groups.
If the rent registry is eliminated, of what real value will be the tenants' rights to make application regarding illegal rent increases and illegal charges? How can the tenant research and justify his claim? As to saving taxpayers money by such elimination, that concept is a very shallow justification by the government. The rent registry is computer-based, on computers which already exist, bought and paid for by the taxpayer. The calculations involved are handled by a simple computer program such that only a few operators can operate and maintain the system for the whole province.
On page 5 of the discussion paper, under "Other Issues for Discussion," a question is, "Should there be a requirement that owners be notified in the event of a tenant-initiated inspection...so that owners have a chance to fix the problem?" Yes. If the government really wants to save administration costs, it is obvious. Many owners will give in when they realize they have no more outs and will do the work before the enforcement process goes any further. There is also the human element of fairness to the owner -- ours is not a totalitarian society -- and the benefit of better future relations between landlords and tenants.
As to the dispute resolution system, we feel it is imperative that it remain in the hands of the government, with the courts as the final level of appeal. It is a slow and costly system but has a greater chance for checks and balances, and thus honesty, than would a privatized or contracted-out system which by its very nature would have to operate for profit. Only by safeguarding our court system and the individual's right to his day in court can we protect one of our most treasured civil rights, that is, being innocent until proven guilty.
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Rent control is particularly important in the case of mobile home parks. The majority of such tenants are with low income or fixed income, such as retired persons who have chosen this style of living so as to match their income and still have a few dollars left for quality of life. Mobile home dwellers generally own their units and have a substantial investment at stake relative to their income.
Mobile homes, once established, are not really mobile for a host of reasons, so owners are at the mercy of the landlord. If it becomes necessary for a mobile home owner to sell, and upon vacancy the landlord is allowed to raise the rent for the next tenant without restriction, the mobile home will no longer be an effective, attractive or financially viable alternative for the prospective buyer, leaving the original owner with a great potential loss.
We also note that no mention is made in the discussion paper about the security of mobile home parks. It is obviously important that mobile home dwellers have some reasonable assurance that the land owner does not suddenly decide to close the park, thereby evicting everybody, leaving mobile home owners with no place to go and their units unsellable, thus their investments a complete loss. This has been happening routinely all across Ontario, especially where cities expand, annex rural land upon which a mobile home park exists and then find that the cost of providing city services to the park is more than the tax base for the park, so they force the closure of the park. For the city it's great. Developers get to build big, new, expensive houses where the park was and the city gets a huge new tax base. Is this really the way to treat our fellow citizens?
In summary, we support the government's desire to improve existing rent control and other related acts to make the system more fair to everyone, improve efficiency and save money. However, we also ask the government to remember that it represents all the people, not only special-interest groups.
The Conservative governments, past and present, have always been pro-big-business in philosophy and in practice, as to how to keep Ontario prosperous and thus keep people working. In a capitalistic society, that approach is not generally wrong. It keeps the wheels of industry in motion, and competition is an essential element of our system. However, our society has evolved by becoming much larger than it was at the dawn of the Industrial Revolution and has become much more complex, including peoples of all possible ethnic, racial and social backgrounds. Laissez-faire just does not work any more.
We ask our present Conservative government to remember that a previous Conservative government, that of Bill Davis, when Ontario was at its most prosperous, at its industrial peak with the greatest new development and the lowest rate of unemployment, that same pro-big-business government saw the need for rent control. It was not the enactment of rent control which caused the decline in our prosperity. Our decline is the direct result of our wanting it all, and right away, resulting in dual wage earner family units with above-normal disposable incomes. The first few of our society benefited, but greedy real estate companies saw all this extra money and soon housing costs skyrocketed. With that, the cost of everything else was dragged upwards. Rent control did not cause this, but because of this rent control has become essential as one of the very few elements of our society which can control runaway inflation.
Thank you for your attention and, I hope, your consideration.
Mr Bart Maves (Niagara Falls): Thank you for your very thorough presentation. You talked about how a landlord, when he builds a new building, would take into account all his costs and what his maintenance will be and so on over the year, sets his rent and charges it, therefore all these increases perhaps are not necessary or tougher to justify.
I have a statistic from Royal LePage that said the average cost in 1989 to build a unit in Sault Ste Marie was $555 per month and the average rent in 1990, a year later, was $547 a unit. So the cost to build, without even figuring in profit, maintenance, money for future maintenance, money for major maintenance, hydro, increased property taxes and so on, was higher than the rent he could get for that unit.
I think some governments in the past with rent control systems, in allowing these increases, have recognized there's that shortfall. Do you have any comment about that?
Ms Dool: I don't know a lot about this stuff, but I moved into a townhouse in 1986 at $434 a month. I moved from it two years ago into this trailer park. I know friends who were paying that and they are now paying $625. The rent will have almost doubled by next year from what they're paying. That building is pretty much paid off. The townhouses were only valued at $36,000 in the first place. If they were to be sold individually today they still could get only $54,000 for them. This is all I know. In about 10 years our rent has doubled. It first started out at I think $12 a year, the last year I was there it was $22 and now it's $27. It appears to me as a renter that there's something in there that they can, as far as it costing them less to build, but in the long run --
The Chair: Thank you, Mr Maves. Mr Sergio.
Mr Mario Sergio (Yorkview): Thank you for your presentation. You mentioned that Mr Harris is concentrating his attention on the big cities, especially Toronto. Toronto people feel that he's concentrating his attention on the small town. If this is not the case up here, then we wonder where he's concentrating his attention. I believe your association, trailer park associations, have not been consulted on the presentation of this paper.
Ms Dool: That's what we felt, that we weren't consulted.
Mr Sergio: Exactly. For example, we heard yesterday from three trailer park associations or owners who are going through some very precarious situations at the moment where the test lab has been cancelled or closed, whatever, and the government requires two bottles a week for testing at $60 a bottle. You would think that your own government is working against you when they don't even consult with the people who are being affected, such as your tenants and landlords and trailer parks as well. If you had a message for the government, what would you tell them, that you should be consulted?
Ms Dool: Yes.
Mr Sergio: How the laws that are coming from Queen's Park are affecting your life on a daily basis -- do you think you should be consulted?
Ms Dool: Absolutely. I am a person of Sault Ste Marie. I'm a citizen of Ontario.
Mr Bud Wildman (Algoma): If I could be allowed an aside, I think we should be fair and say this is a discussion paper and this is consultation. Having said that, I want to congratulate you very much for your presentation, which is really thorough and well thought out. I appreciate your bringing it forward.
As your representative in the Legislature I appreciate your bringing forward the views of mobile home park dwellers, particularly those from unorganized townships, because most members of this committee will have no experience with unorganized townships since they only exist in parts of northern Ontario. When you said municipal taxes, you meant mainly education taxes?
Ms Dool: Yes. There's no municipality tax.
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Mr Wildman: That's right, because there's no municipality.
Mobile home parks in the past, when legislation was brought in in the 1970s, weren't included, and we had to fight to get mobile home parks protected under rent control -- first rent review -- the Residential Tenancies Act and so on. I think it's important that you mention here that mobile home park protection is not mentioned in the discussion paper. That's a terrible omission. This affects a lot of people and, as you say, they are particularly vulnerable because they own their homes. They're not like other tenants in apartment buildings, for instance. They own their own homes. If the "building" -- the park, in other words -- closes, then you don't just have the problem of finding another place to live and a place to put your furniture. You have to find a place to put your house, and there aren't very many places.
Mobile home park tenants have always been particularly vulnerable to those few park owners who may be unscrupulous. Without proper protection they will be unwilling to speak out against their landlord because they'd be afraid that he might close the park and they'd have nowhere to put their house. I congratulate you and thank you very much for your presentation.
The Chair: Thank you very much, Ms Dool. We appreciate your input this morning.
Mr Wildman: Mr Chair, just as a matter of information. Members may be aware of this already, but as was indicated, 85% of mobile homes remain on the first lot they're located on, so they aren't really mobile.
DOUG DAVEY
The Chair: Our next presenter is Doug Davey. Good morning. Welcome to our committee. The floor is yours, sir.
Mr Doug Davey: Thank you very much. I don't have any specific thing to state. It's just a matter of concern over the lack of rent control, if they pass this bill, in that all your people who are on welfare and at present living in apartments and homes, with the cutbacks the government has already made to welfare and if landlords jack up the prices, you have eliminated their access to affordable housing.
Secondly, I have been a renter through the years and I have been a landlord. I know the actions and expenses that are there for a landlord. I appreciate wanting to get back your investment, but at the same time you have a lot of landlords who are looking to get back their investment faster than what is normal. It can create a problem, it has in the past, and without the rent control we have now, where you have access to the government and have it kicked back if it's unfair, the minute you remove that you give them unlimited access to kick out undesirables, as they would put it, and jack up the price without doing anything to improve the places they're renting. They would get more money.
It's not something that is new to anybody. We all went through it in the past. We've been in situations ourselves where we had arguments with our landlord and we've been in situations where tenants had arguments with us. It's something I'm very concerned about in that you will wind up possibly having transient people who have no place to live because they cannot afford these houses once you remove rent control. They simply would not be able to afford the rents they're going to charge. You would put a vast array of people out on the street and create havoc all the way down the line.
I'm against welfare, in a sense; I would like to see everyone get back out to work, that we didn't have it, but we have to face the fact that there are people who do not have the income to pay higher rents. It's a concern that I really am worried about if they remove the rent controls.
The Chair: Okay, sir, you've left ample time for some questions. We have about four and a half minutes per caucus, beginning with the Liberals.
Mr Curling: Thank you, Mr Davey. I think you've said it well. What you have said has been said by many people: that the great monster they talk about that is rent control, that must be gotten rid of, the cause for the loss of income by landlords and the exploitation of tenants, is not so. It seems to be the agreement sooner or later that it's a matter of affordability, as you said. The tenants who are needing affordable -- and we're talking about those who are most vulnerable in society with low income, who have not got the money to access rent, access a place to live. The landlords themselves, who the government insist would build, are saying the cost of building is too high, so when they do build, they cannot build for those people who have low income. The great monster is not rent control, in other words.
They have also stated that if rent control is taken off, they would not build; they can't afford to build for the kind of price they are saying. So to change and then take away the protection from those people who have had it is a disaster. It's putting people on the road; it's putting people to other devices in order to get the income to access their rent. We see where crime may go up; we see people on the food banks are greater. So what you're saying is right on, sir.
One of the things I would like to make a comment to you, if you don't mind making a comment about it, is the rent registry. It was one of the tools that tenants had in order to see what's available. They say they can shop around and this government talks about how one can negotiate, but the fact is it's not a supermarket where you see each shelf. You have to go around. They want to destroy the rent registry. How do you feel about that?
Mr Davey: I'm against that totally. The minute that you have a class of people who have no income, below a thing, and you eliminate the affordable housing, whether a landlord says he can't build to accommodate them, the fact of it is there are lots of places out there now that are paid for and have been paid for for years. They don't have to get their cost back on those. That is your affordable thing. The minute that you relieve the rent control, he can tear down those old places. Then he says, "I haven't got a place for you," because he wants to get back his investment. So you have totally eliminated your housing for that class of people, and the minute you do that, you're going to create chaos.
Mr Curling: And this is what is happening. A couple of things the government has done: They have stopped the construction of affordable housing, about 365 projects that were in place. They have reduced the income of the most vulnerable by 22%. They have taken away rent control. Then they say: "Go out now and negotiate. Now you have less money. Now you have less affordable housing to access. Go and talk to the landlord." Do you think that's fair?
Mr Davey: No, I don't think that's fair and I don't think it's realistic for anyone in the government or anywhere else to think of that. If you cut down their money and at the same time remove the controls to allow the rents to go up, you are going two-tier. You're not only putting them down one rung, you're putting them down two or three rungs, and you're putting the people right into the doldrums.
Mr Marchese: Mr Davey, you're obviously a very concerned citizen.
Mr Davey: I am.
Mr Marchese: Are you a tenant or a landlord?
Mr Davey: I was a tenant for years; I was a landlord for years. Now I'm an owner of my own home.
Mr Marchese: You have knowledge, obviously, of the experience of being a tenant and of being a landlord, so you speak from that kind of experience.
Mr Davey: That is correct.
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Mr Marchese: That's very useful to have.
You're worried that when you decontrol, which is the language that is being used here, there is a strong possibility that the owner of a building will obviously raise the rents as much as he possibly can.
Mr Davey: Correct.
Mr Marchese: In your mind that's a very real prospect. Would you say that any increase for some of those tenants would be a serious problem?
Mr Davey: I would think so. In the present form, where a lot of those tenants have been in an affordable place, once you cut back the welfare benefits they had, that place immediately became as affordable a place as they could afford, and in some cases they had to move out of that and get something that wasn't as good. But by taking the rent control off, the landlord not only increases the place that she was in before, which she no longer can afford, but the other one down below puts his up to the price which she came out of, and she can't afford that. So you're putting the people down lower into less --
Mr Marchese: To a worse situation.
Mr Davey: I can't think of the word, but down to the level of poverty below what they were before. And it's a forced thing. The government, in a sense, is forcing the issue.
Mr Marchese: You mentioned the whole point of negotiation, or at least Mr Curling mentioned the point of negotiating. Some of the people who have appeared in front of this committee make it appear like somehow a poor person, a person with a mental disability, a senior who is very frail and very nervous about the relationship they have with the caregiver or the person in whose building they're at somehow can negotiate that in a very equal way. Is that an equal relationship, having had both the experience of a tenant and a landlord?
Mr Davey: There is no thing in the landlord that requires him to have a relationship or make something there except the government regulations on discrimination, which he has recourse to if you refuse him. But as far as a landlord deliberately putting a place out and making something for them, no, he probably won't do it.
Mr Marchese: They have some harassment provisions where you can get a fine, but in your experience, do you think many of these people you have dealt with would simply go to this anti-harassment unit and say, "The landlord is harassing me"? Would they, in the first place, know about it? Would they, in the second place, have the strength to be able to go somewhere and challenge a particular individual? Would that happen, do you think?
Mr Davey: Some it would. It would depend upon the individual. Like any right, one person will fight; the other will lay down and take it. But why put people in this situation when you don't have to? That's my question. I mean, why would the government come along and take a class of people and put them into this situation? The government is supposed to be for the people, not against the people.
Mr R. Gary Stewart (Peterborough): Thank you, sir, for your presentation. I certainly hope you were a better landlord than you're describing here this morning. I'm quite sure you were.
I'd like to reiterate what has been said, that this is a discussion paper only. This is not legislation. This is a discussion paper only.
But I guess one of the things I have concern about, and we've heard it over the last couple of days where we're hearing that in Thunder Bay there were 1,600 on the waiting list and they're concerned about increases etc, is it appears to me that the previous legislation needs reform and didn't particularly work if we're in this situation now. I'm looking at statistics here in Sault Ste Marie that the rent increases have come down since the vacancy rate went up. My concern to you, and you've been on all sides of the fence, is that it appears to me from what we're hearing now that the old legislation needs reform and needs change. Would you agree?
Mr Davey: I would say in some aspects of it, yes. But where you're referring to Sault Ste Marie now, I think that's just a case of supply and demand. If you have a vast vacancy in the area and you haven't got people who are coming, if you want to get the place rented, you have to bring it down to where people will come. It has nothing to do with the economics of removing the rent control. That is strictly a case of supply and demand. The more people who want an apartment, the landlord can and does get more money for his apartment, if it's in good shape.
Mr Stewart: But he also can get less as well, and of course that's what happening.
Mr Davey: He can get less as well.
Mr Stewart: I guess that's what we're suggesting possibly with these types of discussions, that as supply goes up, demand comes down and the cost will come down, and this is where you get some type of negotiations going on if it's taken out of rent control to do the negotiations and then go back in.
My other point, and I'm hearing a lot of it in the last day or two, is the support of access centres being cut. Do you not feel that each one of us, as individuals, should have some type of responsibility for ourselves?
Mr Davey: Oh, certainly.
Mr Stewart: What's happened under some of the previous legislation is that we built so much in that people eventually don't have to do anything for themselves at all. Maybe it's time to get back to where you -- and you do -- and I and everyone else should have that responsibility to do something on our own.
Yesterday the first 12 presenters that we had were assisted program representatives all doing the same thing, many being funded by the province, many being funded by the private sector. What we're trying to say here by these types of discussions is, let's find a better way than what has happened in the past and maybe make those changes.
Mr Davey: I would say in this I would agree with you 100% that we have too many assistant programmers, assistant this, and we have too much that we have in the past given to people to sit on their butts and not work. It has been a policy through the years, from the time they first introduced that -- you give somebody that isn't working and hasn't got anything their income, their rent, you give them their dentist bills, you give them their health care, you give them all kinds of things that the working man has to pay for. So you have created through the years an economy below, or an economy of give and take and not putting out any effort to get it.
I'm a firm believer in making everyone work -- in other words, work at something, even if it's sweeping the street, to earn what money they get. The minute you give somebody something for nothing, they expect that. And you now have third-generation welfare that have no intention of working, and their children won't have any intention of working, because you've put them into that category and done nothing to help them out.
The Chair: Thank you, Mr Davey. We appreciate your coming forward this morning and giving us your input. It's important to us. Thank you very much.
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ELSTRONG MANAGEMENT LTD
The Chair: Our next presenter is David Elgie from Elstrong Management Ltd. Good morning, Mr Elgie. Welcome to our committee.
Mr Dave Elgie: Good morning, Mr Chair and members of the committee. Thank you for the opportunity to speak on the new proposed tenant protection act.
My name is Dave Elgie. I'm president of Elstrong Management Ltd. My company currently manages 450 rental apartment units, most of which are located in the city of Sault Ste Marie. I also have a personal financial interest in many of these rental properties.
To give you a little history on my experience, I was involved in apartment development and construction in the late 1970s and early 1980s. At that time there were no rent controls on new buildings and little or no non-profit housing being built to distort the rental housing market.
Rent controls introduced to new buildings in 1985 and construction of substantial numbers of non-profit housing units in the late 1980s and early 1990s have created a rental market which is obviously not conducive to new construction. In fact, these events have created significant difficulties for the private landlord owning rental housing stock built in the 1970s and early 1980s.
The competition from non-profit housing has prevented private landlords from raising rents regardless of the increases allowed by current rent controls. We have many apartment units in Sault Ste Marie where rents have not been increased since 1992. Brand-new, non-profit housing units provided at market rent have resulted in high turnover of tenants moving from private rental housing units built in the 1970s and 1980s to new apartments at the same or lower rents than the older units were charging. This turnover has resulted in higher expenses such as advertising, redecorating, vacancy losses, you name it. The result has been that many private landlords have been unable to afford to maintain their buildings to the extent that they would like. Examples: Roofs are passing their expected useful life, corridors and common areas need redecorating, mechanical systems need upgrading.
As a property manager and a private landlord, I applaud the new Ontario government for terminating the non-profit housing programs. I am also pleased to be here today to speak on the changes to the rent control legislation.
Overbuilding in the local, non-profit housing market and reduction in welfare payments have resulted in high vacancy rates in the city of Sault Ste Marie. This winter vacancy rates were as high as 20% in some buildings and probably averaged 5% throughout the city. Some landlords have actually reduced their rents due to these high vacancy rates rather than increased rents according to rent controls.
Of the 450 apartment units managed by Elstrong Management Ltd, less than 10% of the apartments are at or near current maximum legal rent under the current legislation. In other words, rent controls in Sault Ste Marie are really not controlling the market. Removal of rent controls on apartments changing occupancy will have little effect on rent levels in this city. Competitive forces will in most cases keep rents from escalating, and as I've previously stated, some rents have been decreasing.
The new act proposes to pass on savings on extraordinary decreases in operating expenses, such as property taxes, to the tenant. However, there doesn't appear to be a proposal to allow rent increases where there is a substantial increase in operating costs, again say property taxes. With funding cuts to municipalities and proposed property value reassessment, the landlords may be caught in a financial squeeze due to increase in costs, rent controls and market forces.
With no increases in rent due to market forces and the possibility of significant municipal tax increases, the landlords may be unable financially to provide needed repairs, yet legislation proposes to punish serious offenders of property standards acts. I think this is implying that the landlords don't want to do the repairs, but the landlords have to have the finances in order to have the repairs done.
It would appear from the information provided that the concept of maximum legal rent will be lost. Under current legislation, the landlord is able to catch up on rent increases in times of improved market conditions, up to the maximum legal rent. As in the case in Sault Ste Marie, under the proposed legislation rents will be locked in at the current rent charged and increases over the annual allowable rent increase will only happen when a tenant vacates and a new tenant takes possession. This means that even if the local market improves for the landlord, his ability to catch up on previous allowable increases will be lost. So you have some landlords caught in a financial squeeze that they can't improve upon.
Many local landlords have been able to remain in business due to decreases in mortgage costs on their properties. However, I'm sure the time will come when the mortgage rates will increase. The increase in financing costs will not be able to be passed on in the increases in rent.
I'd like to briefly summarize my presentation with the following points:
The new legislation will only significantly affect rent levels in markets of low vacancy rates. This is certainly not the case in Sault Ste Marie at this time.
The legislation proposed penalizes the landlord if property taxes increase significantly but gives away any advantage that he may have should the taxes decrease, by allowing tenants to make rent reduction applications.
The concept of maximum legal rent should be maintained to allow landlords in high-vacancy areas the opportunity to some day catch up on previous rent increases not taken.
In the longer term, the new legislation, combined with market forces, will encourage the private market to provide additional affordable housing in the communities where there is a need, for example, very low vacancy rates. This is a far better method of encouraging housing than the previous non-profit programs, where housing has appeared to have been supplied based on politics only, not on need.
The Chair: We've got about four minutes per caucus for questions, beginning with Mr Marchese.
Mr Marchese: A few quick questions. In your summary, in number 2 you say, "Substantial increases should be allowed to be passed on to the tenant." My understanding is that this proposal allows for any tax increase that one has, for the landlord to pass that on to the tenant. What you're saying there is that's not the case.
Mr Elgie: What I read, it appeared that if there was a saving in taxes, the tenant could apply for a rent reduction. I did not see that an increase in taxes could be passed on, if that's the case.
Mr Marchese: As far as I know, that is the case with the proposal. Is that correct? Yes.
In your summary there, number 3, what you would like, then, for clarity, is the elimination of rent control, correct?
Mr Elgie: Likely, eventually.
Mr Marchese: But you want to keep the maximum rent allowable.
Mr Elgie: What I'm saying in communities --
Mr Marchese: No, I understood it carefully. I did understand.
Mr Elgie: Yes, I guess that's what I'm saying.
Mr Marchese: So you want both.
Mr Elgie: You could look at it that way.
Mr Marchese: I did look at it that way; I just wanted clarity for your part.
In number 4, then, you say, "In the longer term, the new legislation, combined with market forces, will encourage the private market to provide additional affordable housing in the communities where there's a real need." We built non-profit housing and cooperative housing because the private sector wasn't building and is not going to build, because to build, you need a demand. The demand requires that we can afford to buy, and then the supply meets it. So no one was building affordable housing. That's why we did it.
What you're saying is it's sad because it competes with you guys, and if they weren't there, you'd be able to increase your rents. Is that more or less correct, what I'm saying?
Mr Elgie: I think the problem is that it's which comes first. In the 1970s and early 1980s, private landlords built apartment buildings. Under some certain programs -- there were graduated payment mortgages, there was the assistant rental program -- there were various programs that supplied either tax deferrals or special mortgage rates, which were not subsidized by the government, to produce housing.
Mr Marchese: I'm telling you that every program that has happened in the past required assistance from the government, and in the future, Mr Lampert, the man who wrote a report for this government, says that if you want us to build, private sector, you're going to have to give us a whole long list of things. They are, eliminate provincial capital tax -- that comes from me, when they do that; from you too -- cut in half the CMHC mortgage insurance fee, streamline regulations on building -- we know what that means -- halve the GST payable, reduce the development charges, equalize property taxes -- all these things, we pay for that, the taxpayer pays for that in the end.
Mr Elgie: I'd like to argue there was a program in the late 1970s called the graduated payment mortgage which was not subsidized by the government. In effect, what you did was not pay the entire interest on the mortgage in the first few years.
Mr Sergio: Somebody must be paying it.
Mr Elgie: Many apartment builders built under that mortgage. The theory was if there was some inflation your payment would go up and your rent would catch up.
Mr Marchese: But Mr Elgie, the future problem we've got is that no one is going to build affordable housing because the developer is not going to build unless that gap is bridged, therefore, people who require housing -- and that list is growing, because we're now having an inequality gap, an income gap that's going to make it worse for the person who's at the bottom. So that demand is going to become greater, the private sector will not build. Who takes care of them then?
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Mr Elgie: I think that demand is better met by programs such as a rent supplement program, which has worked fairly well, I believe, in Sault Ste Marie and many communities.
Mr Marchese: But who will build?
Mr Maves: Maybe I can help Mr Marchese --
Mr Marchese: Oh, you're so kind, Bart.
Mr Maves: A builder I know in Niagara Falls in the early 1990s negotiated a price for some land and was going to build some apartments on it. He had done it verbally. A friend who was the land owner called him back a couple weeks later and said: "I'm getting twice as much as the price we negotiated. I want to sell it to this other person." He said, "Go ahead. That's where you should go," and he asked the question, "I have to know who's going to pay you twice as much," and he said, "The government." The government of Ontario purchased the property and built non-profit housing.
He's frustrated because he was going to build new apartments to add some supply to the market, and his own tax dollars were used to compete with him. Do you feel his frustration as a builder?
Mr Elgie: Certainly. The amount of non-profit housing program and the fact that those beautiful new housing units that cost the government $110,000 or $115,000 or $120,000 were being rented for the same price as my buildings that I built in 1979 at a cost of $28,000 a unit, and I'm lucky to break even on -- how could I possibly go out and build a new unit, which would cost me probably $75,000? So we're seeing the government spending $110,000 or $120,000 on something that the private market could probably produce for $75,000 but can't because we don't have the built-in subsidy allowance. It doesn't make any sense.
Mr Maves: It's actually high-cost, high-subsidy housing.
Mr Elgie: Yes.
Mr Maves: There's no such thing as brand-new low-income housing.
Mr Sergio: I wonder how you're going to do it.
Mr Maves: The next thing I want to ask you is, you talk about vacancy rates as high as 20% in Sault Ste Marie. We heard in Toronto from several people that 75% or 80% of all landlords have buildings of four units or less. They're not included in the CMHC calculations of vacancy rates. We're told that it's 2.8% in Sault Ste Marie right now. You said it's something like 20%. Is that because of that same phenomenon, that there are smaller buildings here that aren't counted?
Mr Elgie: No, the 20% was a phenomenon due to a rapidly changing market and locations. The main change in the market that brought it about was I think a saturation of non-profit housing plus a reduction in the welfare payments. What happened was some people who were receiving welfare went home to mom and dad or doubled up, and those apartments became vacant and the buildings that had a higher percentage of welfare tenants all of a sudden got a high vacancy rate, and there's no private market to replace them.
Mr Wildman: The apartment wasn't affordable --
The Chair: Mr Wildman, this is Mr Maves's time.
Mr Elgie: No. What that indicates to the landlord -- we did not see any of the welfare people go and live on the street. They either went home to mom and dad or they moved in with a friend. As a landlord, I have no problem with that.
Mr Maves: You also talked about, and we saw this in Toronto too, that 50% of units in Ontario are rented already at below their legal maximum. You said something like 90% you believe in Sault Ste Marie are below the legal maximum.
Mr Elgie: Yes, 90% of mine are.
Mr Maves: So if we all of a sudden remove rent controls, it's not logical that rents are going to be jacked way up, because the market won't bear it.
Mr Elgie: Not in Sault Ste Marie.
Mr Smith: One of the issues that's raised, and the discussion paper deals with the issue of property standards and maintenance. From some presenters we've heard a concern or a suggestion that there should be a test of severity applied so that in the event that there is a maintenance problem, a property standards official wouldn't necessarily be able to proceed to ticket you. Would you prefer to see some sort of test of severity -- for example, if it's flaking paint or some minor renovation, or remedial work that has to be done -- applied before we get into some punitive action by a municipal property standards official?
Mr Elgie: I would certainly hope there would be. The property standards is a very broad animal that we deal with, with the city, at all times and in some cases the problem that the tenant has complained to the city about and the property standard person has gone out to look at is a problem created by the tenant, for example, that they've damaged their carpet or poked a hole in the wall. I would hate to think that a landlord would be fined because of an action of a tenant. There certainly needs to be some work on that.
Mr Curling: Thank you for your presentation. I wonder if you could help Mr Maves and myself in this one. The Ontario Housing Corp has 84,000 units that they're speculating they wish to sell, but they want to use taxpayers' money to fix them up nicely and sell them to the private sector. Taxpayers' money. Do you think that's right?
Mr Elgie: I believe the units should be sold to the private market; I'm not sure they need to be fixed up. I think that would depend on an individual basis. In many cases the Ontario Housing units are in quite good shape and are very marketable on a rental and an owner basis.
Mr Curling: So you feel that we shouldn't be fixing it up, we'll sell it the way -- well, I disagree with that.
Mr Elgie: I don't know in all markets. As I say, my experience with Ontario Housing units is that generally they're in fairly good shape.
Mr Curling: I think the government is one of the worse landlords we have. Their buildings are in terrible condition. As a matter of fact, you should be proud, as a private landlord, that you're in better shape than sometimes the government buildings themselves.
You stated here too, and I'm trying to find it -- oh yes, on maintenance. Help me here on this one too since we are talking about that. They're passing around that there's $10 billion worth of maintenance to be done on these buildings. The guidelines that were put in place over the years made provision for maintenance, profits. It's taken into consideration all the operating costs of a building. But the buildings were not being maintained properly, and they still got an additional 3% or 4%. They're asking now in this that an additional percentage should be given to the landlords so they can fix their buildings that they did not fix in the past when they got money to do so. Do you think that burden should be placed back on the tenant again for additional costs?
Mr Elgie: I think if you look in the local market where I have experience, we have been allowed increases that have been built in, money to maintain items in the building, but the landlords have not been able to take those increases due to market forces. So we are sitting in buildings with rents established in 1992 with 1996 costs. We have not been able to take increases that have allowed for the profit or for the shingles or for the repairs to the balconies. That work still needs to be done. The new legislation would in effect cap those rents and we would still not be able to take advantage of that opportunity until market forces allowed us or until a tenant moved out.
You're really talking about two different circumstances: a market where you've had market forces in effect, and a market, say, in Toronto where there has been a tightening of the vacancy and an ability for the landlord to establish a reasonable return on investment and maintain his repairs. I believe in Toronto that's just come about as well.
There has been a long period of time where landlords have been very tight for money. Many have gone bankrupt. Many buildings have not been able to be kept up to standards, and I don't believe it's because the landlord took the money home.
Mr Curling: Would you agree that we are now in a recessionary time where there are layoffs, people are downsizing, people's incomes have been cut, so the access to the kinds of buildings that you have -- you can't afford to drop the rent any further because of the costs to maintain it, therefore the basis of all this is the unaffordability of this for those people to have access to your units. Would you say that one of the main causes about accessibility is because they haven't got the income to do so, and it's not really rent control that is causing this?
Mr Elgie: That's true in many cases, but what happened locally and, I'm sure, happened in other communities, is when welfare payments were reduced, many people who were marginally able to afford apartments doubled up or went home to mom and dad. Two years and three years --
Mr Curling: Some of them have no mom, some of them have no dad. Some can't double up.
The Chair: Thank you, Mr Elgie. We do appreciate your input this morning.
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ALGOMA COMMUNITY LEGAL CLINIC
The Chair: Our next presenter is Wendy Bird from the Algoma Community Legal Clinic. Good afternoon, Ms Bird. Welcome to our committee. You have 20 minutes. Should you allow any time for questions, they would begin with the government. The floor is yours.
Mrs Wendy Bird: Mr Chairman, members of the committee, the introduction of the consultation paper Tenant Protection Legislation: New Directions for Discussion states that the provincial government has identified the problem with Ontario rental housing. They attribute the problem to the fact that "the private sector has no interest in investing in rental accommodation." The basis of the proposals in the government's consultation paper is aimed at getting the private sector back into the rental housing market by encouraging it to build new housing. Unfortunately, I believe the assumptions the government relies on to reinterest the private sector are based on ideals and not reality.
They will not in the end encourage the private sector to build, but they will cause untold hardship to millions of tenants in the province of Ontario by unjustifiably increasing rents and eroding tenants' security of tenure. These proposals will pit tenants against landlords in bitter and acrimonious disputes, with little hope of effective resolution.
Rent control was first introduced in 1975. At that time the Conservative government circulated a consultation paper outlining the reasons why it had no choice but to institute rent control. The consultation paper showed that vacancy rates had fallen dramatically between 1971 and 1974 from about 3.5% to 1%. Private rental housing starts fell from a peak of about 40,000 a year in 1972 to only a few thousand in 1975. Ontario's consumer price index climbed dramatically throughout the 1970s, peaking at close to 12% in 1981, when mortgage interest rates reached 21%. Condominiums were also first introduced in the early 1970s.
These economic factors, coupled with the weak market demand, the weak market demand being caused by increasing numbers of tenants who could not afford the rents charged for new rental housing, caused a market failure. There can be no market supply without a healthy market demand. The private sector will not and cannot build housing where there is insufficient demand. The private sector diminished its involvement in building rental housing before the institution of rent controls. Rent controls in Ontario are a response to a problem, not the cause of the problem. Clearly rent controls are introduced grudgingly by governments in response to severe market realities where the supply and demand mechanism of the market no longer functions.
It is an economic reality that markets consist of supply and demand. If there is little or no demand for a product or service, then there will be no inducement to supply. In the case of rental housing in Ontario, since the private sector is not producing new rental housing, there can be no demand for the product. Although there are millions of tenants in Ontario and vacancy rates are low, most tenants can barely afford the rents that they are presently paying. They cannot pay the high rents necessitated by the high cost of new construction. Since there are not enough tenants who can afford the high rents of new housing, there is no demand to stimulate that market.
The key issue here is the high cost of newly constructed housing. To remove all barriers that make the cost of new construction so high is not possible. To remove some of them would result in significant government subsidy via lost revenues from taxation and other charges. The government decided against subsidizing the cost of housing development when it cancelled the non-profit housing development initiative.
Since so few tenants can afford to pay the cost of new rental housing, there is very little market demand, but there is tremendous social need for housing. Markets do not respond to social need because, of course, it is not economically feasible.
The government assumes that rent decontrol and the removal of other tenant protections such as the Rental Housing Protection Act will remove the barriers to new investment. It is unclear why forcing tenants to pay more for rent for the same units and reducing their security of tenure will lead to more investment. Landlord groups themselves are telling the government that this is not enough. Despite assertions from landlord groups, repeal of the Rental Housing Protection Act and rent control legislation are only minor impediments to the private sector's development of new housing. One has only to look at the Lampert report commissioned by the Ministry of Municipal Affairs and Housing and the market situation in place before this legislation was introduced to clearly see this.
In his discussion paper, The Challenge of Encouraging Investment in New Rental Housing in Ontario, Mr Lampert informs the provincial government that "there is serious doubt whether relaxation of rent controls will itself be sufficient to stimulate private rental investment on the scale required." Mr Lampert goes on to say, "There is a significant gap between the market rent of new rented projects and the rent required to make rental housing an attractive investment, given the current costs of constructing new rental buildings."
What are the real barriers that prevent the private sector from building? Mr Lampert informs the Ministry of Municipal Affairs and Housing that they are taxation issues, development costs and financing.
The problems complained about in relation to taxation are that the federal government has substantially reduced income tax advantages for housing developers, that the imposition of the GST has substantially increased construction costs, that provincial capital taxes have increased the cost of construction and, finally, that municipal property taxes are double or more the property taxes charged for owner-occupied homes.
The development costs that are said to hinder rental housing development mostly relate to those charges levied by municipalities. They are municipal development charges, municipal fees, such as for building permits and inspections, planning application fees and so on, and municipal development requirements such as demand for parkland dedication. The Ontario building code and regulations are also cited as a problem to be overcome.
The last issue involves financing concerns, and Mr Lampert states only that it is clear that there is a restrictive lending environment which discourages investment.
Many of these demands by the private sector are not within the provincial government's power to change. If the provincial government cannot deliver all the demands of landlords and developers, then there is certainly no reason to believe that the private sector will be enticed into investing in the residential rental market. Thus, the removal of tenant protections under the Rent Control Act and the Rental Housing Protection Act will cause hardship to tenants needlessly.
The private sector has also made it abundantly clear that even if all the impediments they view as barriers to building housing are removed, housing will still be very expensive. It will be at or beyond the high end of the rent scale for rental housing, and there are few tenants who can afford this housing, perhaps too few to make investment in rental housing attractive to landlords and developers.
Concerning the situation prior to the enactment of rent control and the rental housing protection legislation, we can see that the market failed to provide housing and that the legislation is in response to that failure, not the cause of that failure.
The government proposes to eliminate rent control gradually by removing it from the unit when a tenant moves out. It is our assertion that the removal of rent control will primarily harm the most vulnerable tenants: the elderly and the disabled who are on fixed incomes, students, the unemployed and families with children.
The major flaw in decontrolling rents in this way is recognized by the government itself. The flaw is that there will be an overwhelming temptation for landlords to force their tenants to move so that the rents can be raised. It is anticipated that landlords will harass tenants and may allow maintenance to deteriorate to force tenants out of their homes.
The government believes it has addressed this flaw by promising an anti-harassment unit and increased fines against landlords to prevent such abuses. This is unlikely to stop harassment. In the first place, given the present climate of fiscal restraint, it is unlikely that an anti-harassment unit would be given the staff and resources to assist large numbers of tenants all over the province. In the second place, many tenants may be afraid or feel too intimidated to utilize the service. This is particularly true of seniors and the disabled. It is also true that although harassment may be present, it can be difficult to prove. Most people who intend to harass and intimidate others do so verbally away from the presence of witnesses.
In looking at the present levying of fines for violations of the Landlord and Tenant Act and other pieces of residential tenancy legislation, we see that although the maximum fines provided for in the legislation are very large, the actual fines imposed are very small. If this trend continues, landlords will find these fines to be a minor annoyance far outweighed by the benefit of being able to raise the rent. Without a requirement for stiff minimum fines to be imposed, this penalty will just be another cost of doing business in Ontario.
There is some concern that the removal of the rent registry and a landlord's ability to charge any amount of rent to a prospective tenant will lead to further abuse in terms of discrimination. Presently, rent control is in effect and tenants can check with the rent registry to ensure the amount a landlord claims the rent to be is in fact the true rent. Without these controls, landlords can quote any outrageous amount for the rent if they do not want to rent to a particular tenant because of their race, religion, marital status or the fact that they may have children.
The government has suggested that tenants will be able and will likely need to negotiate the new rent on decontrolled apartments. This is, at best, very unlikely to happen. At present tenants can in theory negotiate the terms of their leases. That doesn't happen either. Landlords generally have a take-it-or-leave-it approach and are willing to let a unit sit empty for a while rather than negotiate a lower rent that they would be really stuck with until that tenant moves out. Such a view of landlord-tenant relations is naïve at best and is certainly reminiscent of the government's advice to welfare recipients last year when these people were told they could negotiate with grocery stores to pay 69 cents a can for tuna.
There is a presumption that the marketplace will govern the increases in rents and that they will not be much higher than they are at present. This again is a naïve assumption. The fact that it does not work is the reason rent controls were introduced in the first place. Without any guarantees that new housing will be built, there will be a shortage of housing that can artificially drive up the cost of rents. Shelter is not something people can do without in Canada. It may force many tenants to pay a disproportionate percentage of their income on rent, and this will be particularly true of vulnerable tenants on fixed incomes. Others may become homeless because their income is simply not great enough to pay for rent.
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Nothing happens in isolation. There is only so much money available to the people of Ontario. Wages have been stagnant or declining in the past few years, and many people are concerned about losing their jobs. When tenants spend more of their income on rents, they have less to spend on other things. It's estimated that the cuts to general welfare assistance in 1995 removed approximately $2 million from our local economy. How many more millions will go into the pockets of landlords and be removed from circulation in our economy? Local business may suffer greater hardships than they already have.
In terms of maintenance, tenants have long been concerned about the lack of maintenance in their buildings and rental units and the difficulties in enforcing reasonable maintenance. Despite generous allowances built into the rent control system, some landlords refuse to adequately maintain their buildings and rental properties.
Presently, rent control further encourages maintenance by allowing a freeze on the rents if there are outstanding work orders against a rental property. In serious cases the rents can be reduced until the property is brought up to a minimum standard. Eliminating these incentives for maintenance will do more harm than good. It will allow those landlords who presently do not make needed repairs to keep from doing anything at all.
The government proposes to eliminate the present incentives under rent control for good maintenance and download the responsibility on to municipalities. Presently, municipalities have the ability to enact minimum standards for residential premises. Many municipalities have such bylaws, but all do not, as they're not required to have them and they're not required to enforce them. Further, those municipalities that do have minimum standards and do enforce them indicate a wide range of standards and enforcement; there can be a great variation from municipality to municipality. There is no guarantee that there will be any standards or enforcement in a given municipality. This is particularly true at this point in time when the provincial government has drastically cut the money it gives to municipalities, endangering their present services and causing user fees to be charged for some services.
The solution of downloading the enforcement of maintenance to municipalities also does not contemplate the situation where there is no municipal organization. Many parts of northern Ontario are not municipally organized. The area north of Sault Ste Marie is such an area, and it will be left unprotected. Four large mobile home parks are situated in this area, and these tenants will have no recourse where there's poor maintenance. Most of these mobile home parks have already had significant maintenance problems.
The government proposes that increased fines will take care of the problem of landlords who refuse to maintain their rental properties. Again, having a fine of any amount is irrelevant if there are no standards in place and if there is no enforcement of those standards. Historically, the fines imposed tend to be very low, even when the maximum amounts that may be charged are very high. If it's cheaper to pay a modest fine occasionally than to do the maintenance work required, then some landlords will opt for paying the fine.
The Rental Housing Protection Act was enacted in 1986. It was developed by the government of the day to respond to a crisis in the rental housing market. At this time, there was a serious decline in the amount of rental housing available to tenants, and tenants were faced with unreasonable eviction. The decline in the number of rental units was due to the demolition of existing housing, conversion of housing to uses other than residential rental and extensive renovations to affordable rental housing. The Rental Housing Protection Act was enacted with two purposes, the first being to protect the existing stock from eroding to unacceptably low levels, and second, to protect sitting tenants from being unreasonably evicted.
The government proposes to reduce the mandate of the Rental Housing Protection Act to protect only sitting tenants and to remove the requirement for municipal approval before landlords can convert or demolish or extensively renovate rental housing. Removing the requirement for municipal approval effectively repeals the Rental Housing Protection Act entirely. It also removes all protection for the sitting tenants, despite the minister's claims to the contrary. To repeal the Rental Housing Protection Act and call this tenant protection legislation is to make a mockery of the concept of tenant protection. Without the limitations of the Rental Housing Protection Act, landlords will once again be free to convert and renovate units. Conversion to unregulated cooperative and condominium housing gobbled up thousands of rental housing units prior to 1986. There is every reason to believe that this conversion practice will begin again with the repeal of the Rental Housing Protection Act.
This will certainly erode the present supply of rental housing, causing fewer units to be available for tenants to rent. Fewer units available will cause housing shortages, which in turn will drive up the rents because the market supply and demand mechanism no longer functions in these conditions. A lack of rent control will further exacerbate the problem, providing no limit to the amount that can be charged for the rents of the housing that is left.
Existing tenants can seldom afford to purchase their units, and they will end up dispossessed of their homes. The units that will disappear from the rental housing stock will mostly be affordable units since, of course, there is no reason to convert or renovate newer, high-cost housing.
The Rental Housing Protection Act was extended to cover mobile home parks and land-lease communities in 1994. One of the major reasons for this extended coverage was to protect sitting tenants from eviction when landlords closed or converted this type of housing to evade their obligations to make repairs. This type of housing is unique. It's unique because the tenant owns the home and rents only the site on which the home is situated and the site services. Eviction for these tenants can be financially ruinous.
The significant difference between mobile home parks and land-lease situations, as compared to regular rental housing, is the relative captivity of the tenant. Uprooting one's home is a truly expensive proposition when compared with the ease with which may one remove one's belongings from a rented apartment, and in many of the more rural parts of the province, it is not possible to move; there are few other mobile home parks or land-lease communities, so there is simply nowhere for the tenant to move to.
In conclusion, the provincial government is instituting drastic changes to residential tenancy law to entice landlords and developers to build new rental housing. As we can see, the government has based its rationale for these changes on wrong assumptions. They have assumed that ending rent control and repealing the Rental Housing Protection Act will encourage the private sector to invest in new housing. The changes the government proposes to rent control and the repeal of the Rental Housing Protection Act will only benefit existing owners of rental housing, not new developers.
These changes will cause needless hardship to all tenants. There is no conceivable way that any tenant will benefit from the introduction of the government's proposed policies. The imposition of these policies will be particularly devastating for our most vulnerable tenants, seniors and the disabled who are on fixed incomes and those who are receiving social assistance or who have become unemployed. These groups may well become de-housed in increasing numbers as government policies provoke an unprecedented crisis in rental housing.
The government will also be engineering a significant redistribution of financial resources if it proceeds with its plans outlined in the consultation paper. Millions, if not billions, of dollars will be taken out of circulation and instead paid to landlords. Our experience with the cuts to the benefits provided to general welfare recipients showed us that the poor spend what funds they have immediately in their local economies. The well-to-do do not.
Finally, these assumptions and policies were tried in British Columbia in the early 1980s. Now, more than a decade later, we can look at British Columbia and we see that it has the country's lowest vacancy rates along with some of the country's highest rents. The private sector did not respond to these same initiatives in British Columbia as they will not respond to this government's efforts here. Thank you.
The Chair: Thank you, Mrs Bird. We've got just a minute left of your time, so there's no effective time for questions. Did you have a final summary statement you'd like to make?
Mrs Bird: No, that was it.
The Chair: Okay, thank you very much. We appreciate your attendance and your input this morning.
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UNITED TENANTS OF ONTARIO, NORTH CENTRAL REGION
The Chair: Our next presenter is Nancy Bailey of the north central region of United Tenants of Ontario. Good afternoon, Ms Bailey. Thank you for being here. The floor is yours.
Ms Nancy Bailey: This brief is being submitted on behalf of United Tenants of Ontario, the north central region of Ontario, including Sault Ste Marie, Sudbury, Elliott Lake, North Bay, Parry Sound, Barrie, and surrounding districts and counties.
In this vast area we include all types of tenants: mobile home communities, public housing, non-profit and co-op housing, regular rental units and high-end units. We are both city and rural areas. Our organization is presenting this brief because of the concern over the government's proposal, which will hurt the tenants of Ontario, especially in the north.
The government's paper is the biggest attack on tenants' rights in over 20 years. If this is followed through, it will be the end of rent control in Ontario and the beginning of wide-scale homelessness. Funny how another Conservative government of Bill Davis saw it as necessary to have these protections in place, but this government doesn't see the same need.
The proposal will also mean less affordable rental housing, poorer relationships between landlords and tenants and less maintenance being carried out by the landlords.
The government's paper sets out a number of goals for its proposals. On the major goals, these proposals fail miserably.
Premier Harris made two promises to Ontario tenants: (1) that rent control would continue, and (2) that any reforms to rent control would result in lower rents for tenants.
It is unfortunate for Ontario tenants that we have a Premier who doesn't mean what he says. The changes to the Rent Control Act, the Landlord and Tenant Act, the Rental Housing Protection Act, Residents' Rights Act, Land Lease Statute Law Amendment Act and Municipal Amendment Act are unacceptable.
Rent increases: The government is effectively ending rent control in Ontario. With the vacancy decontrol plan of the government, as each tenant moves out, the landlord will be able to increase the rent to whatever they want. The government's own study, the Lampert report, estimated that 25% of tenants move every year; over five years 70% move. This means that within five years the majority of tenants would be paying more rent than under current law and even those tenants who don't move will have less protection than before.
While tenants have been losing ground in the affordability race, landlords have been pocketing the moneys lawfully targeted for necessary capital expenditure. Citibank quotes the annual yield for an apartment in Toronto as 10.8%. The current Rent Control Act provides for a generous rent guideline. Landlords can increase rents by 2.8% plus an extra 3% above this for capital expenditures. At 5.8%, it is far more than the tenant can expect as an increase in wages or pensions.
The government's proposal will raise the limits on rent increases. For capital repairs, rents will be allowed to increase up to 4% a year above the guideline, and there is to be no limit on how much rents can increase based on property taxes and utilities. Right now, 20% to 40% of a tenant's rent is taxes, depending on the municipality. That is why the cities of Toronto and Hamilton passed bylaws that the tenant assessment form has to include how much the taxes for that unit are.
As for utilities, here in the north last year was brutal: three months of never-ending snow to over 200 inches for our six-month winter and over a month of minus 20 degrees Celsius to minus 40 degrees Celsius. So of course heating, gas, electric and snow removal costs were way over budget for all buildings. But if the provincial government won't help the city of Sault Ste Marie pay for its snow removal costs that were astronomical, why should the tenant get another rent increase to cover the building's costs? The year before, we had a green Christmas and most of the winter was very mild. Does this mean we'd get a reduction in the mild years? I don't think so.
If the tenant doesn't have the assessment information and doesn't also get reductions for lower utility costs, these increases should not be included in any new legislation.
The current system proposed by the Ontario government seems to favour the current system in British Columbia. This system gives the tenant the right to appeal, for a $35 fee, an alleged unfair rent increase. The underlying assumption is that all rent increases are fair unless the government hears about it and determines it to be unfair. This system assumes that all tenants are capable of making an appeal and that the relative abilities of landlords and tenants to advocate are equal. In the real world there is a terrible imbalance. In such a system, the majority of tenants would be excluded. This includes low-income people, the elderly, the illiterate, those with disabilities, non-English-speaking, the uneducated, workers without time and often no right to take off the time, and the intimidated. As a result, the tenant with time, energy and $35 can fight the system, but those without pay up or move.
Presently, there are a lot of units not up to building or fire codes that the tenant has not complained about due to not having the knowledge of their rights, intimidation, friendship with the landlord or not knowing who to complain to. If all of a sudden the landlord is given the right to pass through to the tenant the cost of these repairs that should have already been done, you bet they're going to pass them on. There should be an eligibility test for capital expenditures and a fair formula for the allowance of these expenditures. The tenants should not have to cover unnecessary or luxury renovations. To pass on these costs would be unreasonable to the tenant who didn't originally rent a high-end or luxury apartment. The application fees for rent review should be minimal -- under $10 -- to allow for low incomes.
Maintenance: Maintenance is a right paid for in the rent. Even with rent regulation in the Landlord and Tenant Act, some landlords failed to provide adequate maintenance to a reasonable standard. Some have faced consequences, but more have profited.
The major problem is that the system is complaint-driven. If the tenant doesn't know who to complain to, they don't. There are currently three ways a tenant can remedy the situation: municipal property standards bylaws; abatements of rent; and applications for reductions of rent. The problem is that the municipalities have even less money now than they did before to put into property standards. Further reductions from the province to local governments will make the property inspection situation worse.
In a lot of areas the rent freeze was the most effective tool to get work done. If the landlord had property violations, they couldn't get a rent increase until the work was done. This worked because the landlord had a reminder every month that they couldn't get more rent. The province should intervene where a municipality does have the bylaws but doesn't enforce them. It gives the tenant another avenue of approach to the problem.
Landlords should not be notified in the event of a tenant-requested inspection. It is their, the landlord's, unit. They should have known, in writing, that there was a problem by this point.
The Landlord and Tenant Act: The government is proposing to take Landlord and Tenant Act disputes out of the court and have the issues decided by tribunal, which will also decide on rent regulation issues. The discussion paper doesn't provide much clarity on how this tribunal will operate, but under any new system, the decision-makers must be knowledgeable, neutral and not political appointments. Direct accountability to the province is important to maintain proper delivery of the system.
If the government decides to go with appointments, it should be competitive and have criteria. To be included on the tribunal should be people from the areas of legal clinics, tenant advocates and seniors, to keep the balance mixed and fair.
The minister has publicly stated he wants to make it easier for a landlord to evict a tenant. He wants to legislate homelessness. You think it was bad in Toronto last winter with three dead on the streets? In the north there are no emergency homeless shelters for families or men, and very limited for women and children for situations of abuse. I could not imagine anyone surviving one night of 40 below in 200 inches of snow like we had last January. A study by the Ottawa Metro Advisory Committee on Homelessness and Socially Isolated Persons showed that the number of evictions has increased dramatically since the cuts to social assistance recipients.
With the incentive to the landlord of vacancy decontrol, to charge whatever they want when a tenant moves out to the next tenant, harassment will increase. Although the government's proposal includes increased fines and an anti-harassment unit to deal with the problems, this will not prevent harassment. It is reactive to complaints, not proactive to prevent.
Why are the tenants the only consumers required to pay a deposit that is kept for the life of the tenancy? Even Bell Canada can't charge a deposit like this any more. The difficulty is that the landlords don't pay the interest on the deposit. After a year, if the tenant has proven they are reliable and demonstrated they can pay the rent on time, it should be returned with interest, at the bank rate plus 1%.
Unlawful charges such as premiums, fees, commissions, key deposits and other like charges should still be covered in any new legislation. A solution would be to allow sublet fees to a maximum of $50, inclusive of all costs.
Posting of information is currently the most ignored requirement of the Landlord and Tenant Act -- to post the name and address of the landlord and the summary of part IV of the act. If the landlord does not post this information, the tenant does not pay rent. Anyone can understand this, therefore it is meaningful.
Security of tenure and conversions: Giving the landlords the complete freedom to convert apartments to condominiums or be demolished altogether will lower the amount of affordable rental units on the market. Municipalities should still have the right to decide if they need this conversion or not. They know their districts better than someone who is only out for a buck and lives hundreds of miles away. The majority of tenants in a building should agree to conversion, and those who don't want to buy or can't afford to buy should be given the option of staying in their present tenure or given compensation to move.
To maintain the supply of rental stock to low- and middle-income earners, effective non-profit housing programs are needed to be re-enacted and their operating costs maintained.
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Care homes: This government's proposal will take away the privacy rights of care home residents and provide fast-track evictions for these tenants. It also exempts tenants in rehabilitation accommodation. We are concerned about who decides a transfer is necessary and what happens if a bed in an extended care facility is not available in that area. And when conversions of a care home happen, who ensures that all the residents who need extended care are transferred or provided adequate care?
A local care home in Sault Ste Marie recently did this and no government agency has checked on the transfer or if the residents still there should be transferred or are receiving adequate care.
A board consisting of caregivers, tenant advocates, families of the residents and community health workers should exist to oversee these transfers and conversions.
Mobile home and land-lease communities: Mobile home communities are frequently more available in the north and rural areas. They are often underserviced, with inadequate sewage disposal, garbage problems, electrical problems and lack of maintenance of the general areas.
A lot of these parks are known as the public housing of the north. The only difference is that the tenant owns the home but not the land. To allow higher cost pass-through allowances is unreasonable and unfair. The tenants simply cannot afford these charges on top of mortgage payments, rent on the land, maintenance charges, utilities, heating, snow removal and the cost of living out of town and working in town.
These homes and trailers are not recreational vehicles. They have been put on foundations and the wheels have been off for years. Some of the double-wides are the same size as a small bungalow. To allow eviction of the entire structure is illogical, unrealistic and would cause major structural damage to a lot of these homes.
Locally, in one park just inside Sault Ste Marie, the landlord and tenants have been working together trying to get the city to hook them to the city's sewage system. The city's closest outlet is over half a mile away and they figure it would cost hundreds of thousands of dollars to do this. They want the landlord to pay most of the costs or they say they'll condemn the property for inadequate sewage containment. The landlord can't afford it and neither can the tenants, even with cost pass-through. So there it sits for a court to decide if these families are going to become homeless or not. Where will they go? Who picks up the cost of moving the trailers, new foundations, plumbing, electrical and heating? Who compensates those whose trailers cannot be moved? What will be done with the land and the homes left?
Obviously, people who live in downtown Toronto have no idea about mobile home parks, who lives there, the problems in these communities and even what a mobile home really is.
We would prefer that the current land-lease law stands until a committee is formed with government, rural and northern residents of these communities and their landlords so they can work out any changes together.
In conclusion, I'm reminded of the old adage, "If it ain't broke, don't fix it." The major complaint both tenants and landlords had was that the current system's hearing and legal process took too long. We have asked for tribunals for years.
There are 3.2 million tenants in Ontario. We can only see higher rents, less maintenance and laws that no longer protect the tenant. We expect the protections we've had for the last 20 years. Anything less is unacceptable.
When combined with the government's decision to end construction of co-op and non-profit housing, the end of the rent supplement program, the possible sell-off of public housing and the end of community partners funding to United Tenants, the five federations of tenants, the Centre for Equal Rights in Accommodation and the tenant legal clinics, it is clear that the government of Ontario just does not care about the needs of Ontario residents. But we will remember in the next election.
The following are guidelines we'd like included in any new legislation:
A published government guideline for rent at or below the rate of inflation.
A recognition of what's already built into the rents: maintenance.
Actual rent as the starting point, and above-guideline rents have a cap.
Tenant advocates across the province.
Rent decreases permitted, including retroactively.
Building- and complex-wide reductions.
An ability to order work to be done.
Meaningful consequences to landlords who violate their tenants' rights.
Penalties for landlords who charge for routine maintenance.
Proactive building inspections.
A method of ensuring that all tenants have equal access to the system and that all parties have equal access to advocacy.
An ability to add parties to applications and to allow tenant associations to advocate for all tenants in a complex.
A multilingual staff on the tribunal.
Adequate time lines and deadlines for steps in the process.
Evening hearings as a right.
Fees not to exceed $10.
Patterns of activities taken into account.
Quick decisions.
Penalties for retaliatory actions.
Plain language in all parts of the law.
Tenants must have the right to stay in their own home without fear of being evicted unfairly or just because their lease has run out.
Tenants have the right to privacy.
There must be controls to prevent converting rental housing to condos or other uses.
All tenants must be included and covered under any tenants' rights legislation.
Tenants have the right to organize tenant organizations without fear.
There must be an impartial and fair process for deciding rent increases, evictions and other landlord-tenant issues.
Limits on cost pass-through charges.
Protection for all care home residents.
Return to non-profit and co-op funded housing.
No sell-off of public housing.
The Chair: Thank you for your presentation. We have a minute for statements or a quick question from each caucus, starting with Mr Hardeman.
Mr Ernie Hardeman (Oxford): Thank you very much for your presentation. Just a quick question on the decontrolling of units. In Sault Ste Marie in 1995 the allowable rent increases, on average, would have been $36 per unit. The rental market saw fit to increase it by $8 as opposed to $36. Could you explain why that happened and why the decontrol would cause rent increases beyond that?
Ms Bailey: Probably up here it wouldn't be as bad as in Toronto, because up here we have higher unemployment, we have more people on social assistance, and the cuts caused a lot of them to either double up their apartments or move home to their parents. That's why there was such a small increase here last year, because they knew a lot of people, even though it was a medium-priced apartment, couldn't afford it.
Mr Sergio: Ms Bailey, you just mentioned the availability of units and the number of vacancies; it's just that people can't afford those empty units that exist on the market. In Toronto we have something like a four- or five-year waiting period. Throughout Ontario I think we have something like 48,000 people waiting to get into affordable housing.
You have just mentioned that we have people out of work. Salaries are coming down. The government has just cut all funding, all non-profit, all co-ops, stuff like that. Developers say they can't build, even with rent control off. Do you think this is the best of times to lift rent controls and for the government to get out of the affordable housing business, or is this a time that the government should really get into the affordable housing business?
Ms Bailey: This is the worst time for them to pull rent control and get out of the housing business. There are more people who need public housing and non-profit housing than ever before with --
The Chair: Thank you, Mr Sergio.
Mr Sergio: You can at least let the deputant finish the answer, Mr Chair.
The Chair: If you had made the question just a little shorter, we would have had time for the answer.
Mr Sergio: Oh, my goodness. And you've got three cancellations. Be reasonable. You're here to listen to the people.
Interjection.
Mr Sergio: You guys are ridiculous. You are here to listen to the people You've got three cancellations. At least you can have the deputant finish the answer.
The Chair: Mr Martin.
Mr Tony Martin (Sault Ste Marie): I want to thank you for coming before us today and for all the very good suggestions that you've made. For me, this is a bit of a déjà vu experience. I was in Thunder Bay yesterday sitting in on the Employment Standards Act hearings, a package of legislation that's wrapped in paper that suggests this is going to be good for workers and good for tenants when in fact, when we get into it, it really isn't. It's good for developers, it's good for big business, and that's obviously the agenda of this government.
My suggestion there, as it is here, is that if they're not going to do things that are good for the people in this area, perhaps they should have a re-look at the Common Sense Revolution and the promise they made that they would create 750,000 jobs. That's what people want. If people had good jobs, they could afford proper housing and we could do a whole lot of other things in this province that would be positive. Do you have any other suggestions for the government that they might do besides this kind of obvious doublespeak?
Ms Bailey: Yes, we definitely need more jobs up here, and lately they've been cutting all kinds of jobs to the various ministries. The Ministry of Natural Resources is losing a lot of people. They imported Americans to fight fires up here. Let the guys who live here and know the land and have worked summers here fighting fires for 20 years continue to fight their fires.
The Chair: Thank you very much. We appreciate your input today.
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SUDBURY COMMUNITY LEGAL CLINIC
The Chair: Our next presenter is Terry Copes, staff lawyer for the Sudbury Community Legal Clinic. Good afternoon, sir. Welcome to our committee.
Mr Terry Copes: Good afternoon. I welcome the opportunity to speak to the committee. There are quite considerable changes proposed in the discussion paper. While I'd have a lot to say on quite a few of the changes, I'll limit my comments to three particular areas which are of concern to us.
The first involves the proposals for allowing for negotiations in terms of new tenants moving into units which become vacant and also to allow for negotiations between landlords and tenants over tenants "voluntarily" paying and agreeing to extra rent increases, supposedly in return for additional maintenance or improvements to their units.
The whole idea of negotiations is based on a flawed premise of equality of bargaining power. Unfortunately tenants tend to be of lower income, lower educational backgrounds, and also disproportionately recent immigrants and people who have English not as their first language. Under these circumstances a lot of tenants simply do not have or bring to the table the necessary tools to negotiate on an equal basis with their landlords. It's like the average consumer going into the bank and saying, "I want to negotiate service charges," or "I want to negotiate the interest rate on my bank account." It simply is a non-starter. The inequality of bargaining power is there, and to expect the average tenant to be able to approach their landlord on an equal basis and say, "All right, let's sit down and have a serious negotiation about the rent here," just isn't realistic.
Another thing to consider in terms of negotiations, particularly with vacant units and the rent: While we certainly have heard that under the current rent control legislation, for example in Sault Ste Marie, increases have been under the guidelines, that is a situation which may apply where there is a reasonable vacancy rate.
However, in areas where there is a low vacancy rate -- I experienced this in Sudbury back in the late 1980s when Sudbury had the lowest vacancy rate in the country, something under 0.1%, even with rent controls we would experience illegal evictions of tenants. The favourite tactic of a landlord was to say he needed the unit for his own use, and after the tenant moved out in good faith the landlord simply re-rented the unit, often at a higher rent. Prior to the existence of the rent registry, often there was no way for new tenants to check what the previous rent was, thus they had no way of discovering that the rent had been jacked up by an exorbitant amount.
Particularly in low vacancy rate situations a tenant's main concern is finding a place to live. The landlord's concern is trying to maximize his profit from the unit. If a landlord realizes the person will eventually rent the unit, the landlord is in a much better position to hold out for the rent he wants than a tenant out on the street is to hold out for a reasonable rent. In a low vacancy rate situation, the forces acting on the tenant and the landlord are quite different and put additional pressure on the tenant to cave in.
We experience cases where tenants who have low incomes are willing to pay up to 80% of their incomes for a place to live. We notice this particularly after the cuts in social assistance rates; it's quite common to have people coming into our office who are in a real bind because they're getting $900 a month on social assistance as single mothers and they're paying rent of $700 a month, leaving $200 a month to live on for other expenses. If they get hit by any kind of unusual expense, they fall into arrears of rent and end up essentially being evicted as an economic eviction.
Another problem with this negotiation is that it allows and increases incentives for landlords to basically harass their existing tenants out of their units to get them vacant so they can jack up the rent. I'll say a bit more about harassment in a few moments in dealing with proposals for an investigations unit.
The other area where negotiations are proposed in the discussion paper deals with allowing a tenant to voluntarily negotiate with the landlord for an above-guideline increase up to the cap so that improvements can be made to the unit. I must say the discussion paper is unclear here as to whether this would only apply where there was actually something given in return for the above-guideline increase being negotiated. It gives an example of a capital improvement but it doesn't say it would necessarily be limited to those circumstances.
This provides an incentive to landlords not to do maintenance in their buildings, not to do improvements to the units until they can extort some additional money out of their tenants and say: "Yes, you're an existing tenant and it's a rent-controlled unit, but you want your unit painted and we realize it hasn't been painted in 20 years. You want that; you pay for it." Or, "It's hard to estimate how much it costs to pay for it, so we'll just say you pay an additional $20 a month on top of a guideline increase."
The other thing about this is that it bears no relationship to the actual cost of the improvement and it gets built into the rent forever, not until the improvement is actually paid for but forever on the end. In my brief I give an example we ran into a few years ago where admittedly a tenant did some minor damage to a carpet. The landlord turned around and approached the tenant and said: "Look, I'm going to evict you for damaging the carpet unless you agree to pay for the cost of replacing it. By the way, let's not just repair it; let's replace the carpets in your whole unit. Here, this is what it's going to cost. Start payments."
The tenant actually agreed to this and had been paying for several months before she came to our office seeking legal advice. When she did, we told her simply not to pay. She was very fearful of eviction, but we told her: "Check around. Find out how much carpets cost." She found out that the landlord, who was installing the carpet himself, was charging her about three times the actual replacement cost of the carpet. Feeling very intimidated by the whole process, she finally decided to follow our advice. She stopped paying. The landlord verbally harassed her and threatened to evict her, but probably, having gotten some legal advice himself, decided to proceed no further.
The thing is that other than not paying and going through the fear of running the risk of eviction, the tenant had no method of going back against the landlord for what amounted to quite blatant intimidation. These new proposals basically increase the incentives for landlords to do that kind of thing.
This leads me to the harassment provisions in the discussion paper. It seems to be recognized that there will be additional incentives for landlords to harass tenants. It is suggested in the discussion paper that a solution to this would be some kind of investigation unit. Certainly we welcome any sort of investigation unit and any effective method to prevent landlord harassment of tenants. However, we have many concerns. First of all, how does one define "harassment"? Is simply threatening to evict a tenant, where you have no intention of doing so, harassment? Probably not. At what stage does something become harassment?
The other thing is, to be effective, enforcement has to be quick and very vigorous. In order to do that, there have to be resources put into the system and the system has to be based in most local communities. To simply have a toll-free line where a tenant can phone up and reach someone in Toronto or Hamilton or something isn't going to be very effective for someone living in northern Ontario. There also has to be some provision in place for some kind of restraining order to be applied for and immediately put on a landlord to stop the harassment while the investigation goes on. Otherwise it's going to be too late to be effective for any tenant.
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There is mention of increased fines for harassment. As previous speakers have mentioned, the amounts of the fines currently in the act, although they're half of the proposed fines, simply don't matter, because the fines actually being given when these things are taken to court are minimal. Jacking up the level of available fines doesn't do any good if all that will happen is that the court is going to fine a landlord $250.
One possible solution to this is that a jail term be available in addition to a fine in cases of severe harassment. I would say, in all fairness, that not every case of harassment would justify a jail term, but the availability of that would be a way, first of all, of showing that the government is serious about these provisions and, secondly, would provide more of a disincentive to landlords from engaging in serious harassment.
Another part of the discussion paper mentions the possibility of a tenant being able to apply for a rent reduction in the case of harassment. Unfortunately, if one really looks at this seriously, it doesn't work particularly well for a couple of reasons. First, if the harassment is severe enough to drive a tenant out of a unit, the tenant isn't paying any more rent for that unit and so can't recover the rent reduction from future rent.
Also, if the harassment is particularly severe, it likely is to only last a short period of time before succeeding in driving the tenant out. So you'd have an anomalous situation where if a rent reduction was available for the period of time of harassment, the more severe it is and the more successful the harassment is the less of a rent reduction would be available to the tenant. Tenants who stick it out or undergo a bearable form of harassment would potentially be able to get more of a rent reduction than those tenants facing severe harassment.
Instead, I would propose that the act provide for a particular and specific application for damages to be awarded to tenants who face harassment. Such damages could include items such as their moving expenses if they are forced to move, including hookup charges for utilities, some damages for the mental anguish the tenant goes through when faced with harassment and, additionally, the availability of punitive damages against the landlord in cases of extreme harassment.
Another thing which should be considered if such a proposal were put into effect is whether such damages would be treated as income for social assistance purposes, because simply to allow tenants to recover such damages and then deduct them from social assistance payments wouldn't provide very much relief for tenants. It should be pointed out that current social assistance legislation does allow, in terms of personal injury, an exemption of $25,000 in damages for pain and suffering. I would submit that some of the damages which I am proposing are analogous to that kind of situation and perhaps could be covered by those kinds of provisions.
Turning now to the proposals for changing the adjudication system for rent control and landlord and tenant matters, I would suggest that, for one thing, the proposals are very vague; they just say, "We propose changing it into a one-stop or one-window system," and then throw out various different proposals for alternatives. I suggest that merging the two systems of rent control and landlord and tenant matters into one isn't necessarily going to be effective. Rent control issues tend to be matters of calculation; they tend to be very mathematical and simply involve items such as cost pass-through. Landlord and tenant matters, at least the ones which tend to end up in court, deal with adjudication and fact-finding over things such as tenant behaviour, not doing repairs and items which involve more of an adjudicative function than rent control, which is more of an administrative type of function.
Given the dissimilarity of these issues, to design one system to handle both effectively may be very difficult because they don't lend themselves to the same method of handling. Also, an adjudicator who may be very skilled in dealing with fact-finding and what is fair in terms of whether someone should be evicted may not necessarily have the same skills when doing mathematical calculations and figuring out what an allowable rent increase should be. Thus, given the dissimilarity of the issues, it doesn't necessarily follow that the same tribunal needs to deal with both.
It is also, I think, an underlying assumption of the discussion paper that a tribunal is going to act more efficiently and more quickly than a court. If one looks at the actual reality of the current situation, one would tend to find that landlord and tenant matters being dealt with through the court system probably get resolved a lot more quickly than rent control matters currently handled through a tribunal. I would suggest one of the reasons for this is simply the underresourcing of the rent control system as opposed to the courts. In my experience at least in Sudbury, most landlord and tenant matters, if they have to go to a hearing, can get on to a hearing within two months of being brought into the court system, which for any kind of adjudication system, certainly when you compare it with most tribunals, is fairly quick.
The other part of the way the system works in Sudbury, and I realize that the practice is not consistent from district to district in terms of how courts handle these matters, is that after being served with the papers, the first time in court what's known as a pre-trial occurs before the local registrar of the court. The vast majority of cases we're involved with actually get resolved at that point. That can be as little as four days after the initial papers are served on the landlord. The court registrar actually tries to mediate these matters and, as I said, by and large is fairly successful in doing this. We would welcome the proposals for mediation in the discussion paper. That can be very useful.
If the system is taken out of the courts and put into a tribunal, the tribunal must be independent of government and must have qualified people doing it. The proposal to put it out for tender to the lowest bidder would lead to a dump truck kind of adjudication of these matters and would not necessarily have the necessary quality controls to ensure that justice is being done. Certainly if any tribunal is set up, it should be resourced adequately to provide easy access and relatively quick justice.
The Chair: Mr Copes, you've effectively used up your 20 minutes. We appreciate very much your input and your attendance here this afternoon. Thank you.
Our checkout time from the hotel is 2 o'clock. You can leave your bags at the front desk. We will now be recessed until 2:20.
The committee recessed from 1319 to 1420.
HOUSING RESOURCE CENTRE (SUDBURY)
The Chair: Our next presenter is Barry Schmidl, just after his drive in from Sudbury, representing the Housing Resource Centre of Sudbury. Welcome, Mr Schmidl. The floor is yours, sir.
Mr Barry Schmidl: Thank you very much. It's a pretty drive in from Sudbury, so that's quite fine. I think you all got copies of my presentation, but I'll make it anyway, since I don't think everyone's a qualified speed-reader.
Thank you for this opportunity to present the views of the Housing Resource Centre (Sudbury) to your committee. I've been informed there's a time limit on my presentation, so I'll attempt to be brief and to the point.
Allow me to begin by introducing the organization I represent. The Housing Resource Centre (Sudbury) is a non-profit organization that provides assistance to people in need of housing. From its beginnings in 1985 until a few months ago, the organization had been called the Crisis Housing Liaison (Sudbury).
The primary service currently offered by the agency is the housing registry program. This program consists of a computerized list of all available rental units in the regional municipality of Sudbury. These listings are given to client families and singles who register with the program. In 1995, a total of 1,161 families and singles looking for housing used this service. These households added up to 2,240 individuals who received services from the organization.
Housing Resource Centre (Sudbury) has also involved itself largely through the efforts of volunteers in advocating for improved affordable housing and tenant protection programs as well as for the interests of lower-income earners in general. This latter concern and a concern for the future of Ontario's tenants in general is what brings us before this committee.
Our concerns with the legislation suggested in the discussion paper are many and profound, and I hope to cover a wide range of topics in a short period of time. I'd suggest that our concerns would best be grouped into the broad areas of affordability and supply of housing, maintenance and standards, and tenant rights, and that's how I'll approach them.
The point of the legislation outlined in the discussion paper is this: Rent control will be dead, period. In everything but name, the proposed legislation will do away with any meaningful rent regulation. While it's true that the rent control guideline and other niceties will still be there, they will only apply to units that are continuously occupied. There are enough holes in the so-called tenant protection package as it relates to rent control that you could use it as a sieve. Let's look at a few.
Landlords can harass tenants into leaving their units so that the rent can be raised between tenants. Although the proposed legislation makes this illegal, there are many forms of harassment that are difficult to prove, and it's unlikely that a government cutting the public service will add an enforcement unit of any meaningful size.
About 20% of tenants move within a given year, thus allowing big rent increases for a sizeable portion of the units in any one year.
All new units created are free from rent control forever.
The rent increase for capital expenditures is to be increased and more things are to be included as allowable. In fact, depending on how the legislation is worded, the tenants may be liable to pay for non-essential items, such as marble lobbies, in their rent increase.
Costs no longer borne by the landlord will not have to be withdrawn from the rent. In other words, you have to keep paying the landlord for the money he spent on new appliances, even after they are paid off.
Any extraordinary costs will be passed on to tenants through rent increases over the cap on capital expenditures. Hydro and municipal tax rate increases would be passed on 100% to tenants, without regard to any limits.
All of these things mean that tenants could go back to the old days of double-digit rent increases, and this is not rent control.
Housing Resource Centre supports a system of rent control that provides tenants with protection from unreasonable rent increases but allows landlords a fair return on their investment with flexibility for some exceptional costs allowed. We support a system that requires that good repair standards be maintained and provides landlords with the cash to meet these obligations. We support a system that helps both landlords and tenants by allowing for a swift and fair appeals mechanism. The proposed legislation does not meet any of these criteria and, indeed, is the antithesis of them.
The government says that legislation outlined in the discussion paper will cause more affordable housing to be built. This will not happen. The minister and the Fair Rental Policy Organization of Ontario, a landlord lobby group, have admitted as much at different times. British Columbia had no rent legislation at all for years and did not see much in the way of private sector affordable housing built. Indeed, the problem is not rent control; the problem is that developers can't build new units for what the average tenant can afford to pay.
I'd like to talk next about landlords and rent control for a moment. It's truly a shame that a law is required because a few landlords are unscrupulous. The vast majority of landlords are decent people who care about their property and are not in business to exploit others.
Unfortunately, society has to have laws to protect us from exploitation by others, whether it be false advertising, child labour or substandard living conditions. Any system of regulation will no doubt work hardships on some people; however, the fact is that existing landlords can make money and generally do, even with the present rent control and other laws. In the March 10, 1996 Toronto Star, real estate broker J.J. Barnicke stated that people who buy an apartment building can expect a return of over 15% on their equity and that apartment buildings had been one of the most important real estate sales areas in the greater Toronto area. Obviously, someone is making money.
The legislation proposed in the discussion paper increases the fines for non-compliance with property standards. This completely ignores the fact that judges normally impose a minimum fine on offenders and that this amount will not change.
The proposed legislation also allows municipalities greater powers to enforce property standards. This sounds wonderful but in fact is a smokescreen. Many municipalities barely enforce standards now. Provincial cuts to municipalities will not cause property standards enforcement to be prosecuted more vigorously as probably fewer inspectors will be working for municipalities as a result of provincial cuts.
In addition, the elimination of the protections under the Rental Housing Protection Act will mean that it will be easier for a landlord to demolish or convert affordable units to condos or to parking lots. Given the present government's stand on social assistance levels and on housing legislation, there are likely to be growing numbers of former tenants sleeping in both condos and parking lots in the future.
Giving a poor person first right of refusal to buy their unit when it's to be converted to a condominium is like offering the sales clerk receiving minimum wage at a jewellery store first right of refusal over a huge piece of jewellery made out of gold and jewels. They can't afford it, and if they do buy it somehow, they'll be destitute due to loan payments for a very long time.
An attack on tenant rights rounds out our concern with this proposed legislation. Not only is the Harris government pushing tenants out of decent housing through effectively eliminating rent control and allowing buildings to deteriorate because of effective lack of standards enforcement but they are also proposing to eliminate some of the protections the tenants had through this legislation.
Of course, they are also attacking support services for tenants requiring affordable housing through an assault on co-op and non-profit housing and through eliminating funding for groups like ours. We were told a few days ago that we have a 100% funding cut from the province, effective October 31 of this year. As this funding is approximately 90% of our annual budget, it may mean that we'll have to close and at best we'll be able to save a service that is a shadow of its former self.
Some of the rights eroded include increased landlord right to refuse a sublet, and therefore force a rent increase between tenants; removing landlord-tenant matters from the courts and giving them to government-approved adjudicators, thus allowing for potential patronage appointments by government and judgement by unqualified, unindependent and unsympathetic individuals; reducing the ability of tenants to withhold rent when in a dispute with their landlord.
These and some of the changes to provisions relating to care homes and mobile home parks mean that affordable housing will be a tenuous experience for many.
The Harris government is rushing through the process of changing landlord-tenant law in this province, without either caring or knowing what its impact is going to be on real people, in other words, not on the numbers on spreadsheets. With cuts to social assistance rates, co-op and non-profit housing and wholesale slashing and burning of the social, education and health systems in the province, the provincial government has launched not a war on poverty, but a war on the poor.
The Housing Resource Centre echoes the calls of other groups for a study to be done on the potential impacts of this proposed legislation prior to its introduction into the Legislature. A thorough study of what the human costs will be, including the death toll caused by increased homelessness, should be able to show anyone with a shred of human decency -- and, yes, I assume that most politicians have that -- that this proposed legislation and the rest of the war on the poor is sheer folly.
I'd like to thank you once again for the opportunity to make this presentation to the committee and I look forward to your questions.
The Chair: Thank you, Mr Schmidl. We have about three minutes per caucus for questions, beginning with the Liberals.
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Mr Curling: Thank you for your presentation. Some of the concerns that people have -- and I notice in your paper too you talk about legislation and discussion -- people confuse whether this is a consultation process or legislation. You're not making a mistake because most people come in and say the process has already begun. I really don't regard this as a consultation because changes have started to happen before they've even finished listening. The building code has changed, and some of the changes are needed of course, but it's said that we should all get involved.
There are some inadequacies too because of not consulting widely enough in the health area and other areas so that we can have better legislation. I don't feel it's going to be great legislation and I don't intend to put words in your mouth when I tell you how I feel, but the way you're going it seems to me you don't feel that way either.
In considering the non-profit housing sector, what kind of impact do you feel that the cancellation of the non-profit housing will have -- housing that will not be produced by the private sector -- especially on lower-income people? What kind of impact do you think this will have?
Mr Schmidl: Well, effectively, I can only speak for Sudbury here directly. A recent study showed that we had a 6% vacancy rate. Personally, I take issue with that exact figure, but I'll accept it for the moment. From what we've seen, most of that 6% vacancy rate is not at the lower end of the market. While certainly there's a little bit more available at the lower end of the market since our vacancy rate was 0.1% a few years ago, some people with lower incomes still have a difficult time finding a decent place to live for what they can afford, and the impact has just got worse since the cuts in social assistance. With no new non-profit or co-op housing being built, there's nothing there to take up the increase in people who are finding themselves at the low end of the income spectrum who maybe weren't there a couple of years ago.
Mr Curling: Let me share with you something we heard in Thunder Bay where the vacancy rate is much higher. The waiting list for people who need affordable housing is greater. In other words, you're saying it doesn't matter what the vacancy rate is, for those who want access to affordable housing the waiting list is much longer so they have not been served. We can be fooled by the fact that we see a vacancy rate, but it's an average stat that is lumping in those people who need access to affordable housing. I just thought I'd share that with you because you expressed a bit of that in your presentation, saying that is also a concern in Thunder Bay.
Mr Schmidl: My experience would bear that out. I'm a volunteer with Housing Resource Centre but I'm employed with a housing cooperative. If you phone me today saying, "I want to apply for a one-bedroom or a two-bedroom subsidized unit because my income is" -- fill in the blank -- "around $10,000" or maybe less, I would say: "Okay, put in your application. Don't expect to find a place here for a couple of years, though." Honestly, most of the people who disappear off our list are not people whom we've housed, they're people who have been forced to move and haven't thought to inform me what their new address is, so we can't find them. It's not because we're able to accommodate them. They've just gone on to somebody else's waiting list, I'm sure.
Mr Wildman: We've seen significant changes over the last couple of years since the election. You've mentioned some of them, such as the cuts in social assistance, the decision to stop any construction of non-profit, low-income, rent-geared-to-income housing. Those took place without any consultation. They were just announced. Whether this is a true consultation or not, this is a discussion paper. The legislation has at least not been made public and, hopefully, has not been yet prepared. What do you hope will come from these hearings?
Mr Schmidl: I suppose I have two answers. There's the cynical Barry Schmidl and there's the idealistic Barry Schmidl who are both going to have to answer your question. The idealistic one hopes that the government side of the Legislature actually hears what people are saying and will do a serious study of what the impact of what is being discussed will actually be on people. I'm afraid the cynical Barry hopes that this isn't an exercise and everyone just saying what they think while the legislation is already there.
As I said, I think all politicians basically have at least a shred of human decency, so I'm assuming this isn't an exercise just to appease public opinion or something like that. What I'm hoping will come out of this is that the government side of the Legislature will understand that before some of the concepts behind this discussion paper are put into legislation, they should be studied sufficiently to understand what the impact will be. I feel that if that's done, the concepts behind the discussion paper will be changed.
Mr Wildman: I guess you've answered my second question as well. My first question was, what do you hope will come from this? The second was, what do you think is going to come from it? Whether it's an idealistic view or a cynical one or an idealistic view or a realistic one is, I guess, a question for a nominative discussion.
Mr Maves: Thank you for your presentation today. One thing that you mentioned early on in your paper was that rent control will be dead. As you know, we have rent control, decontrol of the vacant unit and then rent control again. The insinuation is that the landlord will just keep kicking people out so he can keep raising up rents. It's logical that the worse thing that could happen to a landlord is to have an empty building, have no income coming in. Why do you see a continual pattern of eviction when the landlord's worst nightmare is an empty building?
Mr Schmidl: That's true. Although particularly in markets where the vacancy rate is lower as opposed to places where it's higher, it's quite easy to fill a vacant unit. Basically what you have here is, we will charge what the market will bear. Although negotiation is mentioned, in a tight housing market -- and believe me, I'm an expert on that. I lived in Sudbury when our vacancy rate was 0.1% for longer than I would care to think about. When you're in a tight vacancy situation like that, there's no such thing as negotiation. The landlord can walk away from the table because he knows he's got X other people waiting to move in. He wouldn't have to necessarily kick somebody out every six months or harass them into leaving every six months or whatever if the first time he raises the rent he gets it right as far as he's concerned.
Mr Maves: Yes, and then rent control is reapplied, though, for the lifetime of that occupant.
Mr Schmidl: Except that as far as this goes, the system that's outlined in the discussion paper, it's kind of like seatbelts: If you're not in the car, the seatbelt has no point. If you're not in the unit, there's nothing holding back the rent. When you're in, that's fine, but what happens when you get out in the parking lot? The fact that your landlord's got a seatbelt on doesn't mean it's going to be any better for you when he runs you down.
Mr Maves: Part of the problem here with this argument about big rent increases is that every year in the last five years in Sault Ste Marie the statistics we have are that the average rent increase has been below the guideline. In fact, one gentleman was here today and 90% of his units are being rented below the legal maximum. We're finding that everywhere we go. They could be renting these units out legally for higher rates right now, but they can't because the market won't allow it. Why would the market all of a sudden allow it under the new conditions?
Mr Schmidl: It won't necessarily allow it in every market, but every market changes from time to time. As soon as the vacancy rate goes down in a given market, the rents are going to start going up and they're going to go up without much control on them.
The Chair: Thank you, Mr Schmidl. We appreciate your input this afternoon. Have a nice drive back to Sudbury.
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SAULT STE MARIE AND DISTRICT SOCIAL JUSTICE COALITION
The Chair: Our next presenter is Lisa Kisch from the Sault Ste Marie and District Social Justice Coalition. Good afternoon. Welcome to our committee. The floor is yours.
Ms Lisa Kisch: Good afternoon. I'm really pleased to be here today. This submission is made on behalf of the Sault Ste Marie and District Social Justice Coalition, which is based in Sault Ste Marie. We've been in existence for two and a half years and comprise approximately 200 individuals, including both grass-roots community groups and individuals. The bulk of our membership is low-income individual women and students and the focus of our work is on poverty issues and issues affecting women and children.
After this committee hearing, most of us will be going back to our homes. Some of us may be living in a residence that falls within our budget and some of us may be living in a safe, secure and modern apartment building that has bright lights at its entrance and recreation programs for seniors and children. Some of us may be living in public housing units like the one I'm living at on Adrian Drive in the Sault, while others may be living in co-ops or non-profit housing units. Maybe some of us are homeowners. Sadly, some of us may also be returning home today to apartments or houses that don't even meet the basic standards of decency and human need. However, all of us here today will be affected by the proposed changes to current laws regarding tenants. In fact, with the repeal of existing tenants rights legislation, a year from now many of us could be facing rent increases, less enforcement of repairs and maintenance, harassment and possibly even eviction from our homes.
I'm here today because I'm one of the 3.5 million tenants in Ontario who will be affected by the proposed changes. I want to speak out on behalf of all the women, men and children in this city, this district, this province, who will be further discriminated against and marginalized if this government moves ahead with its proposed tenants protection legislation.
Who are these people? They are my great aunt, my cousins, my uncle in a care home, the many friends and people I've met through my volunteer work with single mothers, the many friends and people I've come to know at Algoma University, my neighbours in the public housing unit where I live and all the other single parents, families on social assistance, the disabled, people of colour and our first nations people. These are the people whose faces are absent at this committee meeting and who have the most to lose if proposed changes in this discussion paper are followed through.
I also want to speak out on behalf of all the women and children who have had their lives torn apart because of family violence. Many of them have had to flee their homes and have then had a difficult time trying to find safe and affordable housing. I was one of them. Four years ago I arrived in this city after leaving an abusive marriage and spending six weeks in a women's shelter. I arrived in the Sault with my four children, $60 in my pocket and nowhere to live. I searched all over for decent and affordable housing and I faced waiting lists at all of the co-ops, non-profits and public housing units. I also tried the private rental market and I had a multitude of landlords who wouldn't even let me look at their rental units when they found out how many children I had or when they found out that I was now on social assistance.
At the time I was unaware that I could file a formal complaint about this type of discrimination. Therefore, out of desperation I took a substandard rental unit that did not meet my family's needs. The rent and heat cost were extremely high and I had a difficult time trying to feed and clothe my children. I spent most of my time trying to survive. Further, repairs that were promised by my landlord were never done on the house and my children and I lived in constant danger. I'm not going to get into what happened in that house, but it's fairly typical things that were just not repaired.
I didn't know this at the time, but all of these problems are common and everyday occurrences for many poor women and children trying to survive on their own in this province. Fortunately, I was able to receive help and information from the Ontario Ministry of Housing rent review services and they were able to provide a referral to the Residential Rental Standards Board in the Sault. The municipality became involved and inspected the building and they agreed that it was dangerous and in dire need of repairs. They began sending letters to my landlord and they were preparing further action.
I would like to make note at this point in my presentation that I am concerned about the proposal in the discussion paper to have the municipalities administer and enforce the repairs and maintenance alone, without the help of the province. I believe that this is not feasible, because the municipalities are already financially stressed due to the loss of provincial funding and it's going to be extremely difficult for them to enforce the rules and regulations without the financial means to enforce them. When faced with budget decisions regarding public transportation or sewers versus a single mother living in a dilapidated rental unit, I don't have to think very hard about what budget issue will receive the most priority from the municipality.
To get back to my own story, I never did get my rental unit repaired or up to standards. However, I did receive a letter from the Ontario district housing authority informing me that a public housing unit had become available. I had finally obtained decent affordable housing and, to be honest, it felt like I'd won a million dollars.
My life has not been the same since. With our basic safety and housing needs met, my children and I have thrived. I'm happy to say that I'm halfway through a four-year degree program at Algoma University and all of my children are doing very well in school.
I believe that every woman, man and child in this province deserves the same chances I had. I know I wouldn't even be here today speaking to you if I could not have accessed a women's shelter for the six weeks or if I hadn't been able to obtain decent affordable housing. I know at first hand that decent housing is central to an individual and family's wellbeing. Therefore, the government needs to think long and hard before proposing changes that will further eradicate tenants' rights and must instead move towards enforcing the current legislation.
I have shared my personal story with you because I want you to see how real lives and real families are affected by any change in government policies. I'm here because many other tenants in Ontario have not had the educational or the housing opportunities that I've had and because many tenants are not aware of their rights. I need to speak out on behalf of them.
There are other voices that are not present in this committee hearing and they are the voices of the one in five children in Ontario who live in poverty. I thought of these children last night as I took a walk in the Sault. I couldn't help but be saddened by what I saw. Some of the homes that I walked past were fresh and new with paint and they had beautiful coloured flowers dancing from the hanging pots. You could tell that children lived in these homes as the backyards were filled with bright Little Tikes toys, pink doll carriages and sandboxes.
Then I ventured into a poorer neighbourhood where all the old houses stood close together with their peeling paint and broken doors. These homes tell a different story. Gone are the dancing flowers and the bright new toys and instead there are broken bicycles and litter tossed about on the dishevelled lawns. I couldn't help but think there is something intrinsically wrong with a government and a society that remains incapable of providing adequate and safe housing for all -- and I repeat all -- of its children. I have to wonder why we can live in one of the richest countries in the world and yet some of our children can enjoy the security of a toasty warm house in the dead cold of winter while others are living in unsafe, expensive and substandard housing like the ones I walked by last night and the one I had lived in before.
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Like many poor women with children in Ontario, I am disheartened at the politics of rich against poor and of those who have against those who have not. This war is taking its toll and each day is a battle for those of us who are marginalized.
First it was cuts to social assistance, with the result of most poor families using more of their food money to pay the rent. I know that for a fact because I have many friends who are doing that. Then it was direct cuts to programs like the Little Beavers at our local Indian Friendship Centre and the end of funding at our local women's centre, Phoenix Rising. Next was the 20% increase in tuition fees at the university, coupled with the loss of social assistance and its drug and dental card for any single parents trying to better themselves through post-secondary education.
Then, to add insult to injury, the provincial government is now bowing to the landlords of this province and proposing to get rid of rent control; to sell off public housing, my house where I live with my four children; to get rid of social housing, where many of my friends live; and to give greater powers to overburdened and underfinanced municipalities for the enforcement of repairs and maintenance. The most cowardly and coldhearted part of these proposed changes to the legislation is the government's strategy of bringing in these new laws before tenants even know what's happening to them.
I would just like to ask this committee to think long and hard before it recommends that the government proceed full steam ahead with changes to any areas of the Landlord and Tenant Act, in particular the proposed removal of rent controls on vacant units. After all, these changes to the law will affect real people and real lives in a significant way. You just need to ask me and my four children, because we know too well. Thank you.
Mr Wildman: Thank you very much for your presentation. It really hits home because of the fact that you're dealing with real experiences that you can relate about your own family and families that you know.
Without getting into too much about the personal history, what do you think would be your situation now if you had gone through the difficulties you and your children experienced this year rather than two or three years ago?
Ms Kisch: First of all, I would never have left my husband. In a climate like this, I never would.
Mr Wildman: How do you respond to those who might say that they are in favour of the family and that might be a good thing?
Ms Kisch: I guess if "family" means a man taking a gun to a woman's head and keeping her there, if that's the kind of family that we want, with men having power over women, I would say it's a pretty sick society.
Mr Wildman: In terms of your own housing situation, it's been suggested that the reason there's a lack of affordable housing in Ontario is not because of decisions to stop non-profit construction or low-rental housing construction but rather simply that the rent control system has discouraged developers from building affordable housing.
Ms Kisch: But the housing the developers want to build will be at the more expensive end, so I don't really think that's what the problem is.
Mr Wildman: So you don't believe that removing rent control from vacant units will encourage developers to build new units that will be affordable.
Ms Kisch: No, I don't. I believe that by removing the rent control, we're going to be trapped in our homes. We already feel that way. Once you leave, the next place you rent will be a lot higher, so many of us feel that we're going to be trapped now.
Mr Stewart: Thank you for your presentation. I've got two questions. First of all, these last few days I keep hearing the word "substandard." Yesterday "substandard" meant that for a mother with two children, it was substandard if she didn't get a three-bedroom home. I guess what I need to know is what your description of substandard is, and if substandard means broken bikes and litter tossed on the lawn, is that the landlord's problem? Surely then we must get into a life-skills program of education, because surely we have enough responsibility in ourselves to go out and lean the bike up against the house or pick up some of the litter. Have we gone so far that we don't have any responsibility any more within ourselves? And again, what is that "substandard"? Where do we stop on "substandard" descriptions?
Ms Kisch: Have you ever been in any of the homes that have the bicycles thrown on the front lawn?
Mr Stewart: Yes, ma'am, I have.
Ms Kisch: Substandard is the house I lived in that had no banisters on very steep stairs; no covering on the stairs; bare wood, splinters, nails that came up; holes between the floors so that my four-year-old's foot could fall down into the dining room; plugged sinks; a fridge and stove that when I rented the place they changed to ones that had absolutely no shelving unit. It was a big fridge; you threw everything in. There was a stove that didn't work, a backyard that was full of dangerous garbage that was supposed to be removed by the landlord and wasn't. I could just go on and on. My children had socks that always had holes because of all the nails coming up; stairs going down to the basement without any kind of railing at all, that literally just fell down.
I've been in many, many homes. As I said, I work with single mothers, or volunteer my time, and it seems to me that many of them live in substandard units. It's not about having a three-bedroom; it's about a roof over your head, which is a basic human need.
Mr Curling: Ms Kisch, you have brought home what many people have stated exactly and you have said it so well. I think it's an excellent presentation.
One of the things about homelessness in our country is that we hope people like yourself and what you saw will just go away. It's easier. We wouldn't have to deal with it. It's much easier. Or if we could slap them around a bit and teach them some manners, to pick up their paper, pick up the garbage that landlords have left or other people have left, pick up the garbage that other governments are not able to enforce because the people have been subjected to abuse by other people of power and people of money. If you folks would just go away, that would help.
Tell me, how can we get the message over to those who make the laws, those who would give the money to enforce that these things must be done? There are people in Toronto who have organized rallies to bring it home, and they said these are just interest groups. Any suggestion at all, or do we just keep on with the struggle?
Ms Kisch: I think we just need to keep on with the struggle. I've learned a lot. At one point in my life I would have said that these people need to clean up their front lawns. I was there. But I've worn the shoes now and I'm glad that I'm wearing these shoes, because I don't have to sit up high and look down at people any more. We're all people, and government has to realize that it is representing all people, not just the interests of those in power.
Hopefully with all of these rallies -- I have never been politically active, and me, my friends, we've said this is enough. I'm just hoping that at the end of four years, enough people who are marginalized, and women, and my children who I'm teaching we don't have to be treated like this, that we're people and we all deserve respect -- I'm hoping that in four years, or a couple of years from now, the NDP will be back in power.
Mr Curling: No, no.
Ms Kisch: Sorry.
Mr Curling: You were doing so well. Well, it's an improvement.
Interjection: Good question, Alvin.
The Chair: Ms Kisch, we do appreciate your input into our process and sharing your experiences with us. Thank you very much.
We now have a regularly scheduled recess until 4 pm.
Mr Wildman: Mr Chair, just before we leave, I want to thank you for your patience and I just would --
Failure of sound system.
Mr Wildman: -- advise lower-income women that the reason that society is going to hell is because they don't get out and work and they stay at home on social assistance, and then tell middle-class women that society's going to hell because they do get out and work and don't stay at home to look after their children.
The committee recessed from 1500 to 1540.
MARJORY CURRY
The Chair: Welcome back. We've had a special request from a young lady by the name of Marjory Curry, who has sat through most of our deliberations this morning, to have an opportunity to talk to us. The committee has agreed to come back a few minutes early and let Marjory sit and make her presentation to us. Marjory, have a seat there. Welcome to our committee. We're going to give you the customary 20 minutes and you can make a presentation and then we'll kind of open it up for questions among the different parties. We'll be starting with the government.
Miss Marjory Curry: So far we've heard about housing. We've heard about different apartments, condos, everything. Haven't you ever thought about handicapped people who have been in institutions, who have been going through the foster parents plan, who have been in group homes? I'm in Community Living Algoma. I'm on my trial period right now and I'm already from Community Living Huntsville. This is a big step for me because I am really pleased for myself right now. If you want to know, I think Mike Harris is putting a lot of people from institutions out, and where are they going to go? They're going to go to the Ontario Association for Community Living to live. But where is the money going to come from? From Mike Harris's money, because they won't have the money because they've been isolated and everything. What do you think they should live on? Not on bread alone and water.
Think about how the institution people are going to put up with this, especially if they have to live on their own in SIL. That stands for supported independent living, and that's where I am right now: on my own. I've had it, this part, before, and I'm going to tell you how I know it feels to me, because I've been through this for all my life. Since six years of age and up I've been in foster homes. I've also been in one group home in Orillia. When you see the Packet and Times, those papers there, I was in Orillia in the group home there from the family and children's services in Muskoka. So I know where I'm coming from.
These people are not funny. These people do not know how hard I'm struggling to try and teach you guys something. You guys might not know how hard it has been for them, to try and point to them where they are going to go in the future when they reach 18, especially in the family and children's services without their family because they didn't have enough money to support them or they didn't have the skill to teach them because their parents didn't have the schooling or anything. Think about it, the problems they had. This is what I wanted to mention to you guys.
When I was living in a group home in Huntsville, Ontario, I put all my strengths and rights to live on my own after high school. I lived at 112 Main Street West, and it's a basement apartment, for three years, from 1991 to 1994. In the wintertime I've had laryngitis. I couldn't speak, period. You would have to read my sign language or my lips, and if you couldn't read that at all, I would have to write it on a piece of paper, so it was hard to tell. I was in apartment 6 and my neighbour across from me was in apartment 5. Her name is Julie Hilluse. We'd been receiving snow through the doors, like the door that you come into, from those two doors, and then plus our own doors of our apartments, living room, kitchen, bathroom and bedroom windows. We both never received any heat in the apartment, except for 1 to 4, where they had the main floor, and then the next floor higher.
We went through apartment windows -- like, they never received any snow going through. How hard were they? They took it easy for the amount that they had to pay. But us, Julie Hilluse and I, we went through a struggle trying to tell someone to behave. Our landlord's name is Bob Gegoskie. I hope it's highlighted to you guys because that's his name. Every time when Julie Hilluse and I asked him to fix the basement apartment, he said, "Fix it yourself" -- just strictly acting kind of cruel to us. He thinks he owns everything but he doesn't give us the proper utilities renting. I don't think he should be on the board of the landlord section if he's going to act like that.
Julie was working evening shifts for Selfmate company and I did just the vocational alternative program in the daytime but still I had no skills in caulking the bathtub or any other type of construction work, so how could I handle it? Julie and I had to pay $470 per month. I can understand that for spring, summer and fall, but when it got to winter season then I thought we should only pay $50 due to no heat or insulation. The walls weren't insulated from the windows and all that, including the doors weren't insulated. It was just like water coming in even through some of the spring season, only especially in the wintertime season, like I said.
Julie is getting a regular paycheque from her work and I'm getting a Family Benefits Act pension. You heard about it from before. One of the gentlemen was speaking about welfare. That's a Family Benefits Act pension and that is a welfare-type that you've got to know. We don't get enough money from the FBA every month, so Julie never received very much money that she could pay for everything that's in the apartment. So where do you think we should go? If the institution is going to have to put all these other people in here, these situations, where are they going to land from their area? Are they going to land where they're so cold or are they going to have to go outside? Think about it. Where are they going to stand?
Mike Harris doesn't know nothing about this, but he's going to have to hear it from my words because this is politics, I'm saying, because he doesn't know what harassment is and he's doing harassment to them if he doesn't think how other people are going to live. Why don't people think before they say things? Half of the time they don't even think of institutions. They don't think about people who've been in group homes, foster homes or any of that. This is a time that you need to think about it, because where are they going to get the money if Mike Harris doesn't give them the money? Already this year we're starting to pay $2 for our medication fee. When is the institution going to start paying their $2 if they have to take medication, and how are they going to manage to do it on their own if they've been having staff pouring it into their mouth and all that? How are they going to start to learn to do it on their own if they are in supported independent living where they have to do it independent? Where are they going to stand?
You've got to think about this because no one is going to put any problems to them. You're going to hear, Mike Harris, about this, because Mike Harris is putting a lot of problems towards the institution people and other people in this area who do not know about this. But I can guarantee you guys that the Ontario Association for Community Living is going to stand up for me because I am speaking for them as top of the people from the institutions, and I mean it. It is hard. Mike Harris doesn't know a thing.
Please think tight. Think about the handicapped people who do not know any skills. They have to learn some way. They've got to have education some way. You just cannot have them suffer. Give them some chance. I went through high school. I know what it's like. And I'm looking forward to going to college in the Sault. I'm looking forward all the way. I'm not a quitter. People might think you can be a quitter, but I am not a quitter. I am a stand-up person and I'm a self-advocate for the Ontario Association of Community Living.
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We are serving already from the Ontario Association of Community Living 110 different areas in the province of Ontario, and by the time the institution comes we might serve about 50% to 70% more areas surrounding the province of Ontario due to the institution. And where is the staff going to come from? The people who have been in institutions for all their life, almost, working there, because we won't have the staff to hold all the clients. So you guys think of it. Plus when they close those down they're going to be surrounding the other areas too.
Think about the institution and all of them, because you really have to think about them. You cannot only think of families and stuff too, but just think of the other people who have been outside of that, because they need the care. Think. It means a lot when you're thinking of how people will put up with all these stupid behaviours by landlords sooner or later.
I got to admit this too. There was one gentleman who is from the government. He was in an institution in Peterborough. He stood up from when we had -- I think it was Bob from Queen's Park, and we were doing no more cuts at that time. Anyway, he stuck up for everybody from Community Living Ontario, and also he even stuck up for all the institutions and them. Think of it. That gentleman was really smart to help us. And now it was my time from the Ontario Association of Community Living to stick up for them on top of us, because I've been through this and I know it's tough. So think.
The Chair: Okay. Do you feel comfortable maybe answering a couple of questions?
Miss Curry: You bet.
Mr Toni Skarica (Wentworth North): You said that you were in a group home when you were a young girl?
Miss Curry: Yes. From when I was 10 to 15. And that was the Shalom Children's Residence at 105 Beverley Street in Orillia.
Mr Skarica: All right. So you've really never had a real family life like a lot of people have. Isn't that right?
Miss Curry: That's right. It was similar to like an institution, I've got to admit that, but I was transferred from one home to another for almost two to five years. That's how it was towards me.
Mr Skarica: I understand that you've struggled for a long time, but you're getting your life pretty well on track now. Is that right?
Miss Curry: That's right. I'm hoping to move from Huntsville Community Living into Algoma right now so that I can go to college, because I've been waiting since 1991 to look for a college that would suit my needs.
Mr Skarica: How come it's taken you this long to go into a college?
Miss Curry: For one reason, you know when you have your schools you have the guidance counsellor. Well, my guidance counsellor didn't think about college in the north. They just thought Georgian College in Orillia and Barrie and all them, but they never thought like North Bay or Sault Ste Marie or none of them. They said none of them would meet my needs. Last year when I was coming up here to visit my pen-pal David, he told me about a college that has an integration course for slow learners. So I went to it and I spoke to a gentleman named Gary, and he gave me a package and everything and now I'm just getting settled to see if I can get into it the following fall if I get to stay.
Mr Skarica: This is the last thing I have to say to you, but I just want to compliment you because it's obvious that you've grown and I think you're going to do really well in college. It took a lot of courage for you to come here today.
Miss Curry: Well, look, I started going to family and children's services when I was six years old, and now, April 19 of this year, I reached 27. So think of it. Look how far of a struggle I went through. But it shows you how much confidence I do have.
The Chair: Thank you, Mr Skarica. Miss Curry, just quickly, you made some reference to sign language. Do you do sign language?
Miss Curry: Yes.
The Chair: You're one up on most of us. Mr Curling.
Mr Curling: Thank you for your presentation. Of course, we all listened. I should let you know too that the role of government is very, very tough. Even though I'm not on the government side in the sense of making laws, I can help to make laws, and there is no intention at all of any government to put anyone like you on the street to be living in the cold.
What you have done is raise some of the issues that we all have to look at, to be sensitive to, to know that people in community living need special attention. What you have done is you have brought this much more to light, saying that you have lived it, you have passed through that, you have courage. I'm telling you, there are many people who come here to present to us all and I feel very frightened about it. You did an excellent job and I want to commend you for that. I want to wish you all the best in your studies and as you go on to do other studies in life.
Miss Curry: Well, the head office is in Toronto, to tell you that, the head office for the Ontario association, the board. So if it goes through them and the people in Toronto hear it's from me, I hope that Fred and Richard and all them on the board get to hear this and it makes them think that, "Hey, someone that's a self-advocate is keeping their dreams alive, showing them that they can because they stuck up for us."
Mr Marchese: Marjory, one of the messages you're sending governments is that some people in life are not all so fortunate and that because of a variety of reasons some of us need ongoing assistance until we get up on our feet. Is that correct?
Miss Curry: That's correct; 100%.
Mr Marchese: You're also saying that governments need to keep on funding the various programs that assist people like you, otherwise cuts make it impossible for you to stand up on your own two feet. Is that correct?
Miss Curry: That's right, because very shortly if they don't start watching their cuts on the budget, they're going to also cut back on the dental fees that you get from medical and dental forms and all that. Your doctors are going to have to be paid and everything. That's going to cost a bundle of money, especially for people who are just going out of institutions, going into these places and need more care. So why don't they think about them first before they go any further by cutting anything, especially money-wise I'm saying too.
Mr Marchese: Some of the cuts that you're already experiencing are hurting, and you're saying if the cuts get any deeper it's going to get worse?
Miss Curry: You've got it; 100%.
The Chair: Thank you, Marjory, for taking the time and being interested enough. Just for your information, everything that's said here is recorded and it becomes part of what we call Hansard, which is the transcript of official dealings of the government. So everything that you've said is recorded for history. If you would leave your address with the clerk, I'll make sure that you get a copy of that.
Miss Curry: I will have two addresses. So if you want me to give you the one from Huntsville, I'll give you that one. Plus if I do stay permanently in the Sault, I'll give you my previous one right now.
The Chair: Okay. I'll allow the clerk to get that from you, and we'll make sure you get a copy of that so you can show people exactly what you said to us and how well you handled yourself.
Miss Curry: Yes, but also make sure all this information that I said goes to Toronto because I want Mike Harris to hear it, plus I want the whole head office from the Ontario Association of Community Living that's been giving the conference each year like in Toronto that I've been to -- 1994 was in Windsor and so forth. I was also in Niagara Falls, and I've been in Mississauga. And these people from the head office area, where they make these conferences, they will know me. If they hear my voice saying this, they will just jump up and probably cheer for me or more.
The Chair: Thank you very much.
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SAULT STE MARIE HOMEBUILDERS ASSOCIATION
The Chair: Our next presenter represents the Sault Ste Marie Homebuilders Association, Glen MacIntyre, Reg Martin and Sam Pringle. Obviously, not everybody showed up.
Mr Glen MacIntyre: It's okay, I've done this alone.
The Chair: The floor is yours.
Mr MacIntyre: Thank you. I believe you have a copy of the presentation that we have presented before you. My name is Glen MacIntyre and I'm the OHBA representative for the Sault Ste Marie Homebuilders Association. The Sault Ste Marie Homebuilders Association was formed in 1958 and represents over 35 members. Our membership is composed of builders, land developers, renovators, apartment owners, manufacturers and suppliers, financial institutions and real estate and trade contractors.
The Sault Ste Marie Homebuilders Association is a member in good standing of the Ontario Home Builders' Association and the Canadian Home Builders' Association and supports the comments made by the OHBA to the standing committee on August 20.
In addition to meeting the demands of people who have chosen to purchase their homes, our members have tried to address the needs of those who wish to rent. Whether through construction or property management, we have endeavoured to provide the best-quality rental accommodations possible. We appreciate the opportunity to address the committee on this important issue.
We are pleased that the government has recognized that the rent control system is in need of a major overhaul. The introduction of rent controls in 1975 and the tightening of rental legislation, particularly over the past 10 years, have severely diminished the incentive for builders and developers to expand their stock of rental housing in Ontario.
In our community 96 units of private rental were built in 1995. As you see in the list below, in the period from 1981 to 1993, there were a total of 994 units of non-profit government housing built in Sault Ste Marie. From the period 1971 to 1975, there were 819 rental units built before the rent control system came in. Due to the lack of rental units in Sault Ste Marie, from 1976 to 1980, 1,879 units were built. Rent control had no effect. From 1981 to 1990, there were 1,624 units built, averaging 162 units a year. Rent control didn't have an effect on that because of the marginal amount of apartments available in Sault Ste Marie. From 1990 to 1995, there were 520 non-profit units built and 179 private units built. These figures are from the Sault Ste Marie building department.
Rent control has distorted some of the Ontario housing market. The vacancy rate in Sault Ste Marie is only 2.8% and there are no private rental units being built at this moment. In most communities in the United States where healthy construction of rental units is by private interests, even when the vacancy rate is 8% and 10%, it is clearly evident in the American market this has had no effect. It is clear the rent control regime has been a major contributing factor to suppressing private rental units.
Certainly there is a critical element for there to be investment in new rental buildings. We are confident that the government's proposals are going in the right direction to restore balance in the landlord-tenant relationship and encourage new supply. The removal of all rent control provisions for newly constructed units is helpful to our industry but does not provide the certainty which is required for investors that controls could be re-established at a later date.
Repealing the Rental Housing Protection Act: Repeal of the Rental Housing Protection Act will act as an incentive to improve existing stocks through conversion to other more appropriate uses. A building owner has been very restricted under the rental housing act and could not make decisions on renovations, recycling or alternative use of the buildings in their portfolios. The RHPA ignored the natural life cycle of buildings, and extensive capital repairs are not possible because of the capital cost pass-through restrictions. The proposals will allow tenants to purchase units in the case of conversion. We believe that if the majority of the tenants are supportive of conversion, then the owner should be allowed to proceed in a timely manner.
Development charges: We are very fortunate in our community that development charges on apartments or condominiums are zero at the moment. It should encourage builders and developers to build, but it has not. The Ontario Home Builders' Association has communicated with the government Red Tape Review Commission that the regulatory environment in residential construction is stifling and adding unnecessary costs. For example, the energy code, energy-efficient standards, add approximately $1,000 to the construction costs of a typical two-bedroom apartment here.
The industry has made a number of recommendations which are contained in Lampert's report: consolidation of responsibilities governing the design, construction and safe use of buildings under one ministry, for example, the building code, fire code, technical standards act and even health and safety; minimize enforcement overlap; reduce overly restrictive site planning control requirements; allow greater discretion on the part of officials with regard to alternative design. Sprinkling requirements would not be cost-effective and would be a detriment to our industry.
Our industry has been working with the Ontario building code in trying to get back to basic construction needs. As a specific example -- taxation on rental housing -- sales tax in Ontario, combined with the federal GST, has resulted in a level of tax on building materials which is 2% higher today than in the mid-1970s. Materials assume about 30% to 40% of the value of a rental project. With the combined provincial sales tax since 1991, we have a combination of 17%.
A major change occurred when the federal sales tax was replaced by the GST in 1991. The 7% GST is now payable on the full value of new rental units. For new home ownership, the GST paid is approximately 4.5% for houses priced up to $350,000.
Landlords must pay GST on input purchases to operate their projects: management fees, maintenance contracts, supplies etc. Most of these operating inputs are not subject to federal sales tax. Unlike other businesses, residential landlords do not collect GST. The GST must be borrowed by the landlord and the extra cost is not applied as a credit against GST collected. On the other hand, commercial and industrial landlords receive credit for the GST they incur on inputs.
A further threat to the entire new housing industry is the possibility of harmonization of provincial taxes with the GST. We commend the provincial government for the stance that it has taken with the federal government to date, but our industry is continuously leery on the detrimental effect that harmonization could have.
Lampert's report states, "Rental housing is clearly one of the areas where a strong provincial government initiative could redress the wrongs suffered in the current design of the GST -- and ensure that they are not repeated in the new harmonized tax." The construction industry recommends that if harmonization does proceed, it should be, at a minimum, revenue-neutral with respect to our industry. Preferably, the following will be implemented:
Extend the GST rebate to private rental construction; increase the GST rebate enough to offset the full combined impact of harmonization of the GST and the provincial sales tax; remove land from the tax base; eliminate discriminatory treatment faced by private rentals with respect to GST paid on operations. We encourage the provincial government to remember the interests of our sector in discussions with the federal government.
Rental controls: The industry, in conferring with Lampert for his report, recommended that the Rent Control Act be repealed and replaced with a transitional program which will ensure protection against unconscionable rent increases while deregulating the market to the fullest extent possible. The program must contain a sunset provision which will ensure its automatic demise within a specific period, preferably within the term of the existing government, to provide private investors with a greater degree of confidence that we are truly moving towards a market-based system.
While the proposal appears to be transitional in nature, there are no sunset provisions included. This is very disconcerting to the industry. If a new government comes into power, there's a possibility that amendments could be made to this legislation which would undo the positive aspects leading to a market-based system. That is why some industry representatives have called for a contract which would bind the government in the event that a subsequent government reimposes rent controls; for example, post-1975 buildings were not supposed to fall under rental control, but Bill 51 resulted in just that occurrence.
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Dispute resolution: We recommend that the new dispute resolution system be at arm's length from the government so that it has the independence necessary to make impartial decisions. Outsourcing this function would likely be more cost-effective than establishing another government agency to resolve disputes. A fee structure for resolving disputes would have to be established. If decisions are appealed, we would suggest that in most cases the Ontario court system be used to settle the differences between landlords and tenants.
There has been too much rhetoric about tenants being evicted from their units as a result of this legislation. Our reading of the proposals would indicate there is ample protection for the tenants. The penalties which are contemplated are unnecessary, in our opinion. The vast majority of landlords have been unable to achieve legal maximum rents at the moment. Landlords prefer to keep tenants in their buildings rather than absorb the costs associated with tenant turnover. In our opinion, tenants will not be dislocated under these proposals. For the majority of sitting tenants, we predict there will be no noticeable change.
Thank you for listening to my presentation.
Mr Curling: Thank you for your presentation. Your presentation is consistent with what the home builders have been saying, but I continue to disagree with the fact that rent control is the monster in all of this. You have identified other areas, of course. You talked about escalating costs and the fact that the GST that is now being paid by landlords has driven up the cost of operating their buildings.
One of the things that I keep asking, though, is about the disrepair of the buildings that are there now, that landlords have not maintained -- to a tune today of $10 billion. What would have caused landlords not to have done any maintenance to the point where they reached $10 billion of disrepair, an inconvenience borne by tenants today? Why would they not maintain their capital interests?
Mr MacIntyre: I think this is just on an individual basis. As far as the industry is concerned, in the residential factor and rental of the newer parts, property management is up to each property manager as they deem necessary. The repairs are a corporate type of thing that has to work down through the system, which we have no control over and you have no control over. It has to be on a one-to-one basis to keep that control. I have no suggestions on how you would be able to administer this.
Mr Marchese: Mr MacIntyre, I would have several questions of you under normal circumstances, but I'm going to make a statement. Then, if I have time, I'll throw in a question.
What we know is that there is no evidence whatsoever that rent control has restricted or made it impossible for people to build housing. In fact, the statistics you showed are quite clear: From 1971 to 1975, before rent control, there were 819 built; from 1976 to 1980, there were 1,879, in the heart of rent control; from 1981 to 1990, there were as many units built, almost. Then in 1990 to 1995 there were 520 units, and you linked that to rent control in your presentation.
The point Professor Hulchanski made, and Mr Lampert, who wrote the report for the government, is that the reason they've not been building in the last couple of years is because people can't afford to buy or can't afford to rent at high levels. That's really the major problem we've got. The reason some of you folks want rent controls removed is so you can raise rents as much as you think you can and make some money. That's as I see it.
You say there's ample protection for the tenants with respect to decontrolling. If that is so, why are so many tenant groups -- individual tenants, legal clinics that work with tenants, tenant organizations -- frightened about this? Is it their lack of experience in the field that tells them somehow not to worry because the market will take care of things and the rents won't go up? Is that your feeling?
Mr MacIntyre: No, I think every new item or change that comes on stream that is going to affect people -- and it is going to affect people -- is scary to most people who are in the situation. This seems to be the panic situation before a clarification. There has been no clarification of what this whole system is going to work out to. The fear of change is always very detrimental to people, and this is what you're having right now.
Mr Hardeman: Thank you, Mr MacIntyre, for your presentation. I just wanted to quickly go to the Lampert report. We've heard a lot of discussion on the Lampert report through our committee hearings, in particular from the members of the committee who expressed concern that the Lampert report does not deal with a total housing policy but only deals with the industry's view of what is required for the private sector to get back into building housing. In fact that's what Lampert was retained for: to find out what it would take to get the private sector into building.
Beyond that, it's been expressed that rent control is only one of the issues that apply to getting building back on the road; there are a number of other issues. One that you spoke to in your presentation is development charges. You suggested that in your community there are no development charges. But removing that would not bring the private sector back in; you're still not building sufficient houses. Is it fair to say, looking at the Lampert report and in your opinion, that it requires all those items, including rent control? If all the things that were mentioned in the Lampert report were accomplished by government, would the industry build without having the rent control regime that's present today changed to be more reflective of the times?
Mr MacIntyre: I think if most of the Lampert report were implemented, you would have a better chance for development, from the fact that you would have more initiative to the fact that we're less restrictive on the building side. The simple fact is that the development charges and the new educational charges that will be laid on lots are detrimental to the industry, where we're having one sector of the population paying for a lot of the things the government isn't giving any money for any more. It's like a cash cow sitting there and they're just tacking dollars on lots for people to buy new homes -- in some cases $30,000 or $40,000 a lot -- which deters. When you get into this amount of money, it reduces the number of people who can get into housing.
The Chair: Thank you very much, Mr MacIntyre. We appreciate your input here this afternoon.
Our last presenter is from the Phoenix Rising Women's Centre. I understand they've not arrived yet. The clerk has gone to confer with them to see if they are still in fact coming, so we'll take a five-minute recess.
The committee recessed from 1620 to 1622.
The Chair: We're going to reconvene here for a couple of minutes. As usual, five minutes goes by very quickly. The representative from the Phoenix Rising Women's Centre is not able to attend, so we've heard our last deputation for the day. The bus picks us up at 8 o'clock to go the airport. We will be adjourned now until Ottawa tomorrow at 12 o'clock.
The committee adjourned at 1623.