REGIONAL MUNICIPALITY OF OTTAWA-CARLETON
OTTAWA-HAWKESBURY LEGAL CLINICS / CLINIQUES JURIDIQUES D'OTTAWA ET HAWKESBURY
CENTRETOWN CITIZENS OTTAWA CORP
OTTAWA REGION LANDLORDS ASSOCIATION
REGIONAL GROUP OF COMPANIES INC
STORMONT, DUNDAS & GLENGARRY LEGAL CLINIC
OTTAWA-CARLETON HOME BUILDERS' ASSOCIATION
UNITED TENANTS OF ONTARIO, EASTERN REGION / LOCATAIRES UNIS DE L'ONTARIO, RÉGION DE L'EST
ONTARIO RESIDENTIAL CARE ASSOCIATION, REGION 2
STRATHCONA TENANTS' ASSOCIATION
EASTERN ONTARIO LANDLORD ORGANIZATION
FEDERATION OF OTTAWA-CARLETON TENANTS ASSOCIATIONS
CONTENTS
Wednesday 28 August 1996
Rent control
Regional Municipality of Ottawa-Carleton
Mr Alex Cullen
Ms Diane Holmes
Aegean Enterprises
Mr George Papadas
Ottawa Hawkesbury Legal Clinics / Cliniques juridiques d'Ottawa et Hawkesbury
Ms Sue Skinner
Ms Lori Pope
Mme Louise Toone
Ms Mary Garrett
Centretown Citizens Ottawa Corp
Ms Catherine Boucher
Ottawa Region Landlords Association
Ms Valerie Wiseman
Ms Marianna Fenton
Ms Joy Overtveld
Ms Suzanne Klein
Mr John Dickie
Ontario New Democratic Youth
Ms Jennifer Smith
Regional Group of Companies Inc
Mr Jeffrey Gould
Stormont, Dundas & Glengarry Legal Clinic
Mr Etienne Saint-Aubin
Ms Bernadette Clement
Minto Developments Inc
Mr Roger Greenberg
Action-Logement
Mme Rosine Kaley
M. Marco Leboeuf
Urbandale Corp
Mr Peter Burns
Ottawa-Carleton Home Builders' Association
Ms Caroline Castrucci
Mr Michael Noonan
United Tenants of Ontario, Eastern Region / Locataires unis de l'Ontario, région de l'est
Mrs Evelyn Shore
Mme Roslyn Denis
Ms June Boucher
Mr Douglas Baird
Mr Gordon Brownlee
Ontario Residential Care Association, Region 2
Mr David Porter
Mr Don Francis
Options Bytown
Mr Michel Lefebvre
Strathcona Tenants' Association
Mr Mark Langer
Eastern Ontario Landlord Organization
Mr Luigi Caparelli
Federation of Ottawa-Carleton Tenants Associations
Ms Della Kirkham
Mr Dan McIntyre
STANDING COMMITTEE ON GENERAL GOVERNMENT
Chair / Président: Mr Jack Carroll (Chatham-Kent PC)
Vice-Chair / Vice-Président: Mr Bart Maves (Niagara Falls PC)
*Mr JackCarroll (Chatham-Kent PC)
*Mr HarryDanford (Hastings-Peterborough PC)
Mr JimFlaherty (Durham Centre / -Centre PC)
*Mr BernardGrandmaître (Ottawa East / -Est L)
*Mr ErnieHardeman (Oxford PC)
*Mr RosarioMarchese (Fort York ND)
*Mr BartMaves (Niagara Falls PC)
Mrs SandraPupatello (Windsor-Sandwich L)
Mrs LillianRoss (Hamilton West / -Ouest PC)
*Mr MarioSergio (Yorkview L)
Mr R. GaryStewart (Peterborough PC)
Mr Joseph N. Tascona (Simcoe Centre / -Centre PC)
Mr LenWood (Cochrane North / -Nord ND)
Mr Terence H. Young (Halton Centre / -Centre PC)
*In attendance /présents
Substitutions present /Membres remplaçants présents:
Mr AlvinCurling (Scarborough North / -Nord L) for Mrs Pupatello
Mr John L. Parker (York East / -Est PC) for Mr Young
Mr 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
Mrs MargaretMarland (Mississauga South / -Sud PC) for Mr Stewart
Mr HowardHampton (Rainy River ND) for Mr Wood
Also taking part /Autres participants et participantes:
Mr RichardPatten (Ottawa Centre L)
Clerk / Greffière: Ms Tonia Grannum
Staff / Personnel: Ms Elaine Campbell, research officer, Legislative Research Service
The committee met at 1202 in the Delta Hotel, Ottawa.
RENT CONTROL
The Chair (Mr Jack Carroll): Good morning, everyone. Welcome to the hearings of the standing committee on general government as we discuss the proposed changes to the rent control legislation. It's our pleasure to be in the fine city of Ottawa on this beautiful summer morning.
Just to explain to you roughly how the process works so those in the audience will understand, each presenter is given 20 minutes. If they allow some time for questioning in that, we rotate the questions so each caucus has an equal amount of time.
REGIONAL MUNICIPALITY OF OTTAWA-CARLETON
The Chair: Our first presenters this morning are a little late getting here, so we're going on to the second group, which is the regional municipality of Ottawa-Carleton, represented by Alex Cullen, councillor, and Diane Holmes. Welcome. As I say, you have 20 minutes. Should you allow some time for questions, they would begin with my good friend Mr Marchese of the New Democratic Party. The floor is yours.
Mr Alex Cullen: Thank you very much, Mr Chairman. I want to say at the outset that we are here on our own behalf. We are members of the regional council for the regional municipality of Ottawa-Carleton but what we have to say to you is our own positions taken after reviewing the New Directions discussion paper.
Mr Richard Patten (Ottawa Centre): You're not speaking for Peter Clark?
Mr Cullen: I'm not yet speaking for Peter Clark. I should tell you that this issue will be coming before our community services committee later on next week. One of the problems with the paper coming out at the late date that it did, June 25, is that our council finished its business the first week of July, and consequently there has not been an opportunity for council to review this material. We will have a response for you, we hope, before the end of the month.
I'd like to introduce my colleague here, regional councillor Diane Holmes, who will have a few remarks after I'm finished with my written presentation, and we hope to have time for questions.
I want to make it very clear to the standing committee that rental housing is important to the region of Ottawa-Carleton and in particular to my own ward and my colleague's ward. My ward is Bay ward in the west of Ottawa and northern Nepean. Rental housing is about 46% of all housing in Ottawa-Carleton, the highest proportion of housing of any city in Ontario. This is what our staff tell us. It includes over 120,000 dwellings, home to over 300,000 people in the region, men, women and children who are tenants. Of the 20,000 homes in my own ward, over 60%, or 12,000, of these are rental units, housing seniors, young families and single mothers. These are people largely from low-income categories who cannot afford the changes being proposed in this discussion paper.
Housing affordability is an important issue in Ottawa-Carleton, particularly for tenants. Between 1990 and 1995, according to CMHC, average rents increased in Ottawa-Carleton between 16% and 20%, depending on unit type, all within legal rent control limits. Yet at the same time, the consumer price index increased only 12.8%. Further, the number of tenants with housing affordability problems, defined as paying 30% or more of their gross income on shelter, has steadily increased in the region since 1981 from 24.9% of all tenant households to 28.8% in 1991. Of all the households in Ottawa-Carleton with housing affordability problems, nearly two thirds were rental households. For those paying 50% or more of their income on shelter, nearly three quarters were tenants.
Further, about three quarters of social assistance recipients in Ottawa-Carleton live in private market housing, making up 40%, or about 39,000 households, in private rental housing. Affordability is clearly a problem here, particularly given the government's 21.6% cut in welfare rates.
As well, Ottawa-Carleton has its share of people living below the poverty line. I use the example of Statistics Canada low-income cutoffs. It's about 94,000 people, according to the 1991 census, or nearly a third of the renting population. This means that for a low-income individual, a person who would be receiving $14,000 annual income, their affordable monthly rent would be $354 or less; for a couple whose annual income is up to $19,000, the affordable monthly rent would be about $480 or less; and for a four-person low-income family with an annual income of about $28,000, the affordable monthly rent would be $702 or less. Considering that one-bedroom apartments in Ottawa-Carleton start at $600 a month, this means that most of the 94,000 low-income people in Ottawa-Carleton, who are overwhelmingly renters, have a housing affordability problem.
Currently the regional municipality of Ottawa-Carleton is conducting an official plan review to cover the next 25 years. As part of that review, planning staff at the region published a series of background papers on housing. They state that there is clearly a crisis in rental housing in Ottawa-Carleton. The problem lies in affordability of rental housing, not land supplies. Ottawa-Carleton has over 3,000 hectares of available urban land capable of supporting 89,000 units. Staff project that 5,700 residential units will be required each year from 1996 to 2011, 46%, or 2,600, of which will be new rental units. The question is how to achieve affordability of this housing. Unfortunately, most of the proposals contained in the government's New Directions discussion paper go in the wrong direction.
Protection from unfair rent increases: The government states as its first goal that tenants should be protected from unfair or double-digit rent increases, evictions and harassment and should be provided strong security of tenure. This is completely supportable. However, the government states as its second goal that protection should be focused on tenants rather than on units and proposes a number of measures consistent with this. This second goal and the associated measures, particularly vacancy decontrol, make a mockery of the first objective and have to be rejected.
The government is proposing that when a unit is vacated, the landlord will negotiate the incoming tenant's rent without regulatory restriction, that rent guidelines will once again apply when the unit is re-rented to the new tenant, and that rent controls not apply to new construction. The government's own studies show that each year between 20% and 25% of tenants move, and that within five years 70% of rental housing will have changed tenants, therefore changing rents under this proposal. This would mean that under the government's proposed scheme, rent control is effectively ended for most of the rental housing market over a relatively short period of time. Simply put, tenants can't afford this.
Tenants move for all kinds of reasons, not all of them voluntary, and the effect of these proposals would exacerbate an already difficult affordability problem for renters in Ottawa-Carleton. Lifting rent control as apartments vacate provides no protection for an historically mobile and vulnerable population, particularly those with modest and low incomes. It sentences renters to their apartments and provides incentives to landlords to turn over the tenants in their units to achieve market rents. This will create significant additional stress to the landlord-tenant relationship, particularly as repairs and service maintenance become negotiable under the government's proposals.
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Other proposals in this section of the discussion paper should be reconsidered. These include those dealing with capital expenditures, repairs and maintenance. The rent control guideline is currently set at 2.8%, in excess of inflation, currently running at 1.2%. Part of the justification for the larger figure is to finance repairs and maintenance. If so, these funds should be directed to capital reserves for these purposes and such expenditures financed from those reserves. This ensures transparency and integrity to the rent increase. This measure would also apply to the additional 4% rent increase for major capital expenditures being proposed in this paper.
As well, the requirement for the calculation of capital expenditures for "costs no longer borne" should continue. To do otherwise creates a windfall rent increase to the landlord in excess of what it was originally granted for, and is simply unjustifiable. You don't pay twice for the same thing.
On the issue of passing through to tenants all utility and property tax increases, the first removes an incentive for energy and water efficiencies by the landlord, a responsibility which should be shared. With respect to property taxes, a more equitable solution, quite frankly, would be to place residential rental units on the same assessment and property tax footing as homeowner residential units. It makes no sense for a tenant on the same street as a condominium, as happens in my ward, with the same services and same square footage, to be paying more property tax. This is a reform identified by the Ontario Fair Tax Commission and is long overdue.
Finally under this section, the rent registry should be retained as it provides good information to the new tenant about the history of rents for his or her unit and it protects against discrimination.
Maintenance: The 1992 Rent Control Act allows tenants to claim rent rebates for inadequate maintenance, and a freeze on rent increases when there is an outstanding property standards order on the property. In this way the enforcement of local property standards bylaws is tied in with rent control legislation. This feature has proven effective and therefore should be retained. The government's proposal to sever this relationship by no longer issuing orders prohibiting rent increases should be rejected.
Landlord and Tenant Act: Currently no landlord may "unreasonably" refuse a sublet. This provision of the Landlord and Tenant Act has worked well and should not be changed. The notion proposed by the government that a sublease could infringe upon a landlord's right to charge an appropriate rent -- read "market rent" -- will lead to some landlords applying inappropriate pressures -- read "blackmail" -- on a tenant whose personal circumstances require him or her to move, in order to hike rents.
The government's proposal to increase maximum fines for landlord harassment will not satisfactorily correct the problem that it has been designed to correct. First, it requires considerable effort and investment by the tenant to initiate such a case. In fact few cases are initiated under this already existing section. Second, it is already difficult to prove intent. Third, the fines awarded under this section have been historically insignificant. Fourth, it simply creates a business case for the landlord who wishes to turn over his or her building to achieve market rents. This proposal, coupled with the proposal to establish a new anti-harassment enforcement unit, clearly shows that it is designed to compensate for vacancy decontrol, and merely highlights the problems that vacancy decontrol will create for sitting tenants.
Dispute resolution system: The government's discussion paper proposes creating a new dispute resolution system independent of the courts to adjudicate both rent control matters and other tenant and landlord issues. To be credible and have integrity, such a system must be independent of the government, must be governed by the rules of natural justice and due process, must provide written reasons for decisions, must allow for appeals to a third party on issues of fact and process and must be subject to judicial review. Further, a tenant's rights to security of tenure must continue until his or her appeal has been judged. Costs for accessing the dispute resolution process should not be awarded, for to do so would create a barrier to exercising legitimate rights.
Tenure and conversions: The government proposes to change the focus of tenant protection legislation from protecting units to protecting the sitting tenant. This, quite frankly, is wrong, as the loss of affordable and accessible rental housing reduces choice and exacerbates an already difficult rental housing situation in Ottawa-Carleton, as I've outlined earlier. In particular, municipal approvals should be retained for all demolitions, major renovations and conversions of rental buildings. Conversion to local ownership tenure has been a major factor in losses of affordable rental housing in Ottawa-Carleton in recent years. Almost 5,000 town homes have been lost from our rental stock between 1989 and 1994. Safeguards must be put in place to protect affordable rental housing designed to meet local conditions. This is best done by the local municipality, in recognition of both local housing needs and heritage conservation. Renovations are not the issue here, as Ottawa-Carleton's housing stock is relatively young, with over 87% built since 1946, nearly a quarter since 1981. According to the 1991 census, only 6.2% of our total housing stock is in need of major repairs.
In conclusion, my involvement at both city and regional council has brought me into contact with many landlords and tenants, both good and bad. There is no doubt that there are individual circumstances crying out for justice. However, many of the proposals contained in the government's discussion paper would create more hardship for tenants, particularly with respect to vacancy decontrol, than would help tenants. Vacancy decontrol must be rejected, as it will reduce the supply of affordable housing and the choice for affordable housing for one of the largest and most vulnerable groups in our community: tenants. This proposal literally bleeds to death rent control, unit by unit, and makes a mockery of the government's initial goal. It does not protect tenants from higher rents and it reduces the supply of affordable rental housing.
In short, the government's proposals contained in this discussion paper are not balanced and will create greater harm than good. Therefore, I would urge you to make the necessary modifications to ensure that this becomes bona fide tenant protection, and not what we have before us today.
Now I turn the microphone over to my colleague, Councillor Holmes.
Ms Diane Holmes: Thank you very much, ladies and gentlemen, for letting us come to speak to you today. I know you're all aware that what we're doing today is talking about how much of a role government should play in the field of housing, whether housing should be just a commodity on the private sector market or whether there is a role for governments in housing. I believe very strongly that in fact there is a role for governments to play in housing. Of course it is mainly a private sector market business, but there is a role for governments, both in legislation and in ownership, for that percentage of our population that is most vulnerable. Most countries in the world, of course, are going through this kind of discussion we have today. As we go through booms and busts in our economy, there are needs for governments to look at how much control they should have.
I represent the downtown ward that we're now in. Approximately 80% of my residents are tenants, and I represent what is in Ottawa-Carleton the immigrant entry area of the city, so my residents are a large percentage of Vietnamese population, Chinese population, some Somalian population. They are even more vulnerable than many others because of the language difficulties and the cultural differences. There is a great need for affordable housing for that population.
I want to talk about a couple of things in your proposed legislation. One is the matter of security of tenure in conversion; the other is the decontrol of rent control.
As you are no doubt aware, RMOC has had a condominium conversion policy since 1976, along with Mississauga, the city of Toronto, the region of Peel and Scarborough. They preceded the region of Ottawa-Carleton in introducing our own condominium conversion policy, which was in the official plan in 1976. Long before the government brought in the Rental Housing Protection Act, many municipalities had their own forms of preventing condominium conversions, and that was based on their own planning departments doing the basic research.
I brought with me the 1976 planning department's proposal to council of the day. The rationale is quite clear: that there were many buildings looking to convert, mainly large buildings with many units. The reason our planning department in 1976 gave for those conversions was the growing acceptance by the public of condominium ownership, because the Condominium Act was becoming more known and more popular, and of course the immediate return developers can receive in building a condominium project or converting to condominium rather than building a rental project. We have had, really, in this area more than 20 years of protection against condominium conversion, and most of the other large cities in Ontario are the same.
For you to contemplate getting rid of the Rental Housing Protection Act and also preventing municipalities from having any control is really going to be a terrific hardship on our tenants in this area. I can understand that you might want to get out of the business of conversions as a government, but to prevent municipalities from having public meetings, dealing with their own public and deciding what is most important for tenants in their municipalities is going to be a disaster for tenants in this area. We will see thousands of units converted, and that will affect those people who are the most vulnerable.
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The other matter is the decontrolling of rents. It is all very well to state that you're going to allow a tenant to be secure in their own unit forever, but we know that 25% of the tenants move in any given year, so over four or five years all the rental units in this municipality will be decontrolled. Since we're now in a major depression in this municipality, that may not have an effect for a year or two, but come the return of better economic times and boom years, we will see the rents really increase significantly, and that will again be a major problem, certainly for the people who live in my ward, who have very low incomes and do need affordable housing and some protection of that affordable housing.
I would ask that you seriously consider the business of conversions and allowing municipalities to retain the ability to deal with their residents as their residents seem to feel the need, because that is all dealt with through public meetings and public discussions; every municipality is different and every municipality goes through different economic booms and busts and has different amounts of housing in different percentages of uses. I also ask that you seriously consider the loss of rent control, that you do not take away rent control as we know it now.
Thank you again, ladies and gentlemen, for listening to us. We hope to take this matter to regional council in time to get a comment in to you from the council before you make your final deliberations.
The Chair: Thank you for your input this morning. We do appreciate it. Unfortunately, there's no time left for any questions, but we do appreciate hearing your thoughts.
AEGEAN ENTERPRISES
The Chair: Is Mr Dickie in the audience yet? No? Mr Papadas, are you interested in making a presentation?
Mr George Papadas: Yes, I am.
The Chair: Have a seat, sir. This is George Papadas, president of Aegean Enterprises. The floor is yours.
Mr Papadas: Thanks. My name is George Papadas. I'm president of Aegean Enterprises. We didn't come here to complain; we came to open the area of seeing if we can coordinate the assessment board and the rent review board, and I'll tell you why.
Since the introduction of MVA, market value assessment, a lot of landlords are paying taxes on rents they are not collecting. I'm going to give you some examples. If you have any problems with my accent, stop me and I'll repeat the words. To give you an example, a two-bedroom apartment for 1995 is assessed for $742, for a category 3 building in downtown Ottawa. The rent review board says you cannot collect that. A lot of apartments are a lot less than that, from $550 to $650. What's happening here is that the landlords are subsidizing the municipal taxes of the tenants. To make it easier to understand, it's like you, Mr Chairman, making $50,000 a year and paying taxes on $75,000. It's as simple as that. A lot of them are going bankrupt.
The paper I'm going to give you -- I had a talk with Daniel Burns last year, October and I've given this exact same paper to everybody else up to Mike Harris. What I'm asking you to do is to let those landlords who are paying taxes on rents they are not collecting pay the assessed taxes. If the assessment board comes along and says, "Okay, you collect $600," let them collect that, because basically we subsidize the tenants' municipal taxes. It's as simple as that. Most of them are going bankrupt anyway. If we can save whatever is left, it will be appreciated.
What we suggest is this, to let the assessed rents be caught up in two years' time and to exempt senior citizens and people on social assistance. Basically, we're going to be on good relations with our tenants. They are our customers. There are a lot of people who do not deserve to stay in a $550 apartment. I have tenants myself who have triplexes in the Glebe and they rent them for $900 and they stay in my apartment, paying $500. Let's help the people who really need help, like the senior citizens, for instance, or people on fixed income or people on social assistance.
For these people to survive, they have to collect the assessed rent. It is only just. It's as simple as that. You cannot pay taxes on money you don't collect. A lot of the landlords I talk to, most of them ethnic and small landlords, think taxation is fair. They also think the way the categories of the buildings are assessed is fine; the city has done an excellent job.
Another thing about the assessment board is this. It does not give an incentive for a landlord to maintain his property. For me, for instance, I'm going to let my property deteriorate, fall down from category 1 to category 3, so I can pay less taxes. Therefore, the way the system is now rewards the slum landlord. Something has to be done about it. Since the introduction of the MVA, also the new fire code was introduced. A lot of these landlords have to come up with extra cash to change the doors, to put in new lighting systems, emergency systems. Basically, there is no money there to do it. It's like asking Donovan Bailey to run the 100 metres in eight seconds. It cannot be done. Humanly, it cannot be done.
I was talking to government employees, and a lot of them don't understand how the economy works. They said to me, "Go and get a loan," so I told them the banks are not giving people loans when they lose money, especially when properties are losing money.
There's another thing. If you let the landlords collect the assessed rents, which is only fair -- the assessed rents, by the way, are below the maximum rents; the maximum rents downtown are about $850, according to the charts I have from the CMHC. The assessed rents are about $750, which is a lot less than the average rents. A lot of people are going to benefit, and I'll tell you how they're going to benefit. First of all, the government is going to lose millions of dollars in expenses. We have these hearings in the municipality; we go to the municipality. When people lose, they have to apply to the Ontario Municipal Board. Going to the Ontario Municipal Board, if they win, the assessment board can apply against them, so we're going in a circle. It's like a puppy chasing its tail, more or less. It's costing a lot of money, million of dollars to taxpayers, and a lot of hardship.
The other thing is that the landlords will be able to repair their properties. The way the system is now, the people are caught below the MVA rents. There is no way; there is no money to make any repairs. So who is losing in the long run? The tenants are losing. This creates a lot of friction and a lot of hardship. We want to be on good terms with our tenants because they're our customers. By the way, the MVA was introduced all over Ontario except Toronto.
If you allow landlords to collect the assessed rent, there won't be any excuse for letting the properties deteriorate or letting the properties come down to a lower category. This is going to create a lot of jobs. What the previous government did was tax us to death and take the money and pay unemployment to drywallers and electricians and roofers. I have in my buildings tradesmen, and they're pretty upset. A lot of them wrote to the ministry. They don't want cheap rent; they just want to work. I had a fellow, a drywaller, who had steady work for about 15 years, and since the introduction of the MVA, he works sporadically here and there. What they've done is tax us to death and pay unemployment to people who should be taxpayers.
The other thing is, as a small developer myself, I do not have any incentive to go and build. I'll tell you why. For me to build now, I have to go to the outskirts of Ottawa; there is no land in downtown Ottawa. If I go to the outskirts of Ottawa, to make it very simple, to break even on a two-bedroom apartment, with land at $65 a square foot, I have to rent it for $850 to $900. That means I don't make any profit, but I break even. That doesn't give me any incentive to do that, because my competition has cheaper rents in more favourable areas. The NDP government had exactly the same idea. They said, "You can build new apartments and they're going to be rent control exempted." Nobody did it. Why? Because the competition was cheap apartments downtown.
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If you allow the landlords to collect the assessed rents, this is going to bring better equity, better buildings, and it is going to cut down on the bureaucracy, the appeals, the OMB, the assessment board, the hearings here in Ottawa. It's going to save a lot of money for a lot of people and a lot of hardship.
By the way, I was talking to an economist from the University of Ottawa, and she looked through the charts we have, and she told me the way the system is now it is like buying tomatoes for $5 and selling them back for $4 to the tenants. That's the way it is -- very simple.
The Chair: Thank you, sir. You've allowed about three minutes per caucus for questions, beginning with Mr Marchese.
Mr Rosario Marchese (Fort York): Mr Papadas, you say, "We believe that if landlords are allowed to collect the rents that we are taxed on, everyone would benefit." What I read from that is that what it would mean to tenants is that they would have to pay more. Is that correct?
Mr Papadas: Absolutely. They have to pay their municipal taxes, like you and me and everybody else. They have to carry their weight.
Mr Marchese: Most tenants pay taxes, of course, but you're saying not enough?
Mr Papadas: Not enough. We subsidize the municipal taxes of the tenants.
Mr Marchese: You're subsidizing?
Mr Papadas: Yes.
Mr Marchese: What you're also saying is that obviously the tenants are doing okay and they could afford an increase very likely. Is that more or less correct?
Mr Papadas: A lot of tenants can afford it. The senior citizens, for instance, on fixed income --
Mr Marchese: No problem? They can afford it?
Mr Papadas: No, they can't afford it. Don't create a hardship to a senior citizen or to a person on social assistance, but there are tenants who can afford it, and I have given some examples.
Mr Marchese: I'm sure there are some tenants who can afford it, but many are spending more and more of their disposable income on rent. When they do that, the more money they take out of their pocket to pay for rent, the less money will be spent in other things that are needed, and if that were to happen, I think the economy would be in worse shape, as less money would be spent.
Mr Papadas: No, sir. You're absolutely wrong, because --
Mr Marchese: I see. Because they help you as a landlord, you believe we'd all be better off?
Mr Papadas: No, you're absolutely wrong. They're going to help themselves, because they're going to become self-reliant, self-sufficient.
Mr Marchese: By paying more, they become more self-reliant and self-sufficient?
Mr Papadas: Yes, and they're going to live in a better building and they're going to create jobs too, and they're going to carry their fair share. What are you trying to tell me?
Mr Marchese: Mr Papadas, I'm asking you. They're paying more rent, and you're saying they would be better off in the end?
Mr Papadas: They have to pay their share of rent. They have to pay their municipal taxes like I do and everybody else. We subsidize the municipal taxes. Is that fair? I don't think so.
Mr Marchese: So you would be supporting this proposal by the government. The landlord can now collect up to 5.8%, the guideline of 2.8% plus 3% extra for other extraordinary capital expenditures, taxes and hydro. This government proposes to increase the capital expense allowance by 1%, which would make it 6.8%, and it would also propose to add on top any extraordinary expenses such as taxes, hydro and the like, which would add, for most tenants, who have not gotten a wage increase for a long, long time, an incredible economic burden, don't you think?
Mr Papadas: Sir, I'm not interested in your philosophical argument. What I'm arguing here is, let me collect the money I'm taxed. I put the question to you. How would you like to pay taxes on $70,000 when you only make $50,000? It just doesn't make sense. Would you like to do that?
Mr Marchese: Can I ask you a question? Are you surviving as a developer or as a landlord?
Mr Papadas: No. I'm that close to going bankrupt.
Mr Marchese: You're close?
Mr Papadas: Yes, and a lot of my friends. I cut clips, and I used to send them to Daniel Burns, because Daniel Burns is the only one who understands the assessment situation in Ontario. He's done a lot of work on the assessment board. I used to cut clips from the Citizen and other newspapers all over Ontario and send them. The bankruptcies are coming out of your ears. We subsidize your standard of living.
Mr Ernie Hardeman (Oxford): Thank you for the presentation. Just to get it clear in my mind, you mentioned that there's an increase in taxation because of the reassessment of your properties, the assessment being based on the value of the rent you were eligible to collect but couldn't collect.
Mr Papadas: Absolutely.
Mr Hardeman: And under the present regulations, you cannot pass through the increased taxation to your tenants.
Mr Papadas: Yes.
Mr Hardeman: Is the problem, then, with the present rent control and not being able to pass it through, or is it with the assessment that rental properties pay, a disproportionate share of the local taxation?
Mr Papadas: That's exactly why I'm here, to have the assessment board and rent review board under the same ministry, the Ministry of Housing. You have to coordinate those ministries. You cannot say to a person, "You collect $800" -- one board says $800, and the other board says, "You can't collect that." That's surreal, that's bizarre. It's not my responsibility to do that. I came here to see if I can help the ministry to find a way to coordinate those.
Mr Hardeman: The rental units you're referring to, have you got comparable units of owner-occupied in the region and how the taxes would be compared?
Mr Papadas: Yes, I'll tell you. The system is complicated. That's why I gave only one example in the paper. It goes by region and also by category of buildings. Let's say the Glebe or the downtown core is more lush, a richer neighbourhood. Therefore, the economic rents or the assessed rents are a little bit higher than Vanier, for instance. Also, if you go in a region like the Glebe, there are different categories of buildings, category 1 and category 3 buildings. I just came halfway myself. I picked up a building, category 3.
Mr Hardeman: When your taxes went up in the rental market in the region, in which sector of the population did the taxes go down in order to accommodate that, recognizing in market value assessment that for every dollar it goes up somewhere, it goes down somewhere else? In the region, where did it go down?
Mr Papadas: It went down mostly to housing in the suburbs, like Kanata and Orleans. But there are not apartment buildings down there; a lot of new houses in Orleans and Kanata. In the outskirts, the new suburbia, their taxes came down. What I'm talking about here is strictly multiresidential, like high-rise buildings.
Mr Bernard Grandmaître (Ottawa East): On MVA, this happened some time ago, and you're saying that because of the formulas being used to calculate MVA, landlords are losing money because of their assessment. You say the landlords should be allowed to collect their rents as the way you are taxed. But as a businessman, when you file your income tax, if you've lost three or four or five months of rents, you can claim it on your income tax as a loss for that property.
Mr Papadas: No, we don't claim any loss.
Mr Grandmaître: Yes, you do.
Mr Papadas: Mr Grandmaître, let me explain to you. I didn't say that landlords are losing money.
Mr Grandmaître: No, no, I didn't say that.
Mr Papadas: Excuse me, sir, that's what you just said, "losing money." What I'm saying to you is, let them collect what they are taxed. Landlords do not lose money, because they have a building that is paid off. How can they lose money? Nobody is losing money.
Mr Grandmaître: You just said --
Mr Papadas: I didn't say "lose." I didn't use the word "lose." What I'm saying to you, sir, is, if you tax me on $70,000, let me collect it. That's all we want.
Mr Grandmaître: But if you lose rent, if you lose, let's say, three or four or five months of rent in your building or buildings --
Mr Papadas: The way we calculate taxes, sir, we don't show losses; we show a general income. If I have half of my apartments rented --
Mr Grandmaître: But you only pay income tax on your profit, not on your losses, right?
Mr Papadas: It's not a loss. Either I collect that amount -- I report the amount I collect.
Mr Grandmaître: I'm sorry, sir, but as a landlord I can claim my losses when I file my income tax.
Mr Papadas: It's not a loss, sir.
Mr Grandmaître: If you're not claiming your losses --
Mr Papadas: Sir, you don't understand how the system works. Excuse me, we're not talking about a loss here. It's not a loss. I have an apartment building. In a good year, I collected $80,000, in a bad year, I collected $60,000.
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Mr Grandmaître: My next question is a very short one. You said you should let your properties deteriorate and so on and so forth. Explain this to me.
Mr Papadas: I have a great incentive. I'll tell you why. The assessors come into the building and say, "Your building is category 1, 2 or 3." If it's an immaculate building, it's category 1. Now, to keep this building in that particular state, you have to spend a lot of money on a lot of maintenance. Usually new buildings are in category 1. I have an incentive, myself, to let my building deteriorate, to let it go from category 2 to category 3, because I pay less taxes. The higher the number of the category, the less the taxes. They go up to category 6.
A lot of landlords -- they don't do it intentionally or maliciously -- have no money to do the repairs any more and things are deteriorating. So when the assessors come and they say the property is deteriorating, they fall into a lower category, a higher number, and they pay less taxes. So I have no incentive to maintain my building; the system penalizes the good landlord and rewards the slum landlord.
The Chair: Thank you, Mr Papadas. We do appreciate your input here this morning.
OTTAWA-HAWKESBURY LEGAL CLINICS / CLINIQUES JURIDIQUES D'OTTAWA ET HAWKESBURY
The Chair: Our next presenters are West End Legal Services, Mary Garrett, Sue Skinner, Louise Toone and Lori Pope. Good afternoon. Welcome to our committee. Should you allow any time for questions in your 20 minutes, the questioning would begin with the government. The floor is yours.
Ms Sue Skinner: I would like to thank the committee for providing some time for the Ottawa and Hawkesbury legal clinics to give some comments. I, from the south Ottawa clinic; Lori Pope, from the Ottawa university student legal aid; Louise Toone, from the Hawkesbury clinic; and finally Mary Garrett, from the west end legal clinic, will be making representations that affect eastern Ontario.
We endorse the brief already presented to the committee by the Legal Clinics' Housing Issues Committee, the LCHIC brief. That brief describes many problems with the proposed legislation, which in our view will not protect tenants, as it purports to do. You will also be given briefs today which go further into the various topics which we will be speaking about.
I would like to talk about problems facing co-tenancies. The government's proposal for the new legislation is silent on this, and we would like to encourage your committee to recommend that co-tenancies be protected. Some of the problems are:
(1) If there's a falling out between two or three co-tenants and one or more of the tenants decide to leave, does this mean, with the new legislation, that the person staying is a sitting tenant, or has a new tenancy been created between the landlord and the tenant?
(2) If one or more tenants breach their obligations, the entire tenancy is terminated, as it stands now. For example, if one tenant doesn't pay their share of the rent, the effect is that the tenancy as a whole is terminated. There should be some process whereby the landlord could evict the non-paying tenant but allow the paying tenants to remain after negotiating some sort of payment scheme to remove the debt from the unit.
(3) If there is a dispute between co-tenants, which is not an uncommon problem, there's presently no mechanism in place under summary proceedings for the tenants to resolve the differences. The government is organizing a landlord-tenant pilot project using mediation in Ottawa. Mediation should be used in situations where there is more or less equal bargaining power. We would recommend that co-tenants in a dispute would be better suited for mediation.
(4) At any given stage of eviction proceedings, there are a great number of forms available for landlords to use. However, there are no forms specified for tenants. For example, there are no forms available for tenants to apply for an abatement of rent; there are no forms available for tenants who are disputing a landlord's application. In our submission, all forms should be designed to be user-friendly and written in plain language.
I will now turn to Lori Pope from Ottawa university student legal aid.
Ms Lori Pope: Good afternoon. I'm going to talk about a particular variation of co-tenant disputes, and that's the situation that arises in the context of violence against women. I believe you should have received my brief, which is called How Landlord-Tenant Law Can Help Stop Violence Against Women.
Violence against women occurs in a situation of accommodation in a number of ways. It can be a threat from a tenant in another unit in the same building. It can be a threat from another person in the same unit that she herself is living in. It can also be a threat from the landlord or the landlord's agent, or from a non-tenant who is simply coming into the building to harass the tenant.
In my submissions I've set out some of the protections in the current act that a woman can use to protect herself against violence from a landlord or an agent or from a non-tenant who's entering the building. I suggest that in these cases as well as in the situation of fear of violence from a tenant in another unit in the same building, the law should allow a tenant to leave without any loss to her if a landlord is unable or unwilling to provide the necessary security for her that is obviously a fundamental part of any quiet enjoyment of the premises, something every tenant is entitled to expect. Otherwise the landlord is not necessarily going to have any incentive to provide that kind of security and it means that society is going to have to pick up the costs, whether those be medical costs, social costs or the costs of going through the justice system.
Now I'm going to look particularly at the situation of a co-tenancy where one tenant fears violence from another tenant in the same unit as she is. One thing that's very important to note is that the Family Law Act, which does allow common-law partners to have certain protections such as restraining orders and orders for exclusive possession of the matrimonial home, does not kick into place until the couple has been living together for three years or they've been in a relationship of some permanence with a child in common. So there are very many people who will be living with their partner in an apartment but will not have the protection of the Family Law Act if there is violence in the relationship.
Our proposal is that the government add as part V to the Landlord and Tenant Act protections that are based on the Victims of Domestic Violence Act. This is an act that was proclaimed about a year and a half ago in Saskatchewan. You have a copy of that attached to my submissions. The three sections of the Saskatchewan act I'd like to draw to your attention are, first of all, section 3, which allows a justice of the peace to provide some immediate protection in the form of a restraining order, orders to allow a police officer to go with someone to collect their goods or to remove someone from the premises.
The second section that is very important for victims of domestic violence is section 7, which provides for the more long-standing protections of the victim assistance order, which gives more powers to the police to pick up somebody who is going into premises where they've been barred; restraining orders again; also orders for compensation for damages that have been incurred by the victim because of the violence.
The third section I'd like to draw to your attention is section 10. This is the section in the Saskatchewan act that talks about the effect of these orders on property and leasehold interest. What this act provides is that in Saskatchewan, if a victim of violence is living in the apartment but is not on the lease, she can't be evicted afterwards; if the tenant on the lease who was assaulting her is barred from being there because of a restraining order, she can still stay in the apartment. This section also provides that she can assume the lease. Our proposal is that she should not be responsible for any of the unpaid rent by the previous tenant or any damage he may have incurred; it's up to the landlord to pursue him. The landlord is not at the same type of risk from retaliation that she faces. So she should be allowed to assume the future obligations to pay rent and live in the apartment.
The final recommendation we have is that although generally we support the idea of a mediation process for co-tenants, that wouldn't be appropriate in a situation where there has been violence, because of course there's an imbalance of power in that situation.
In conclusion, I'd just like to say that for many years the law did not recognize the reality that many women face violence from those who are closest to them. Adopting these provisions will help to make the law reflect the reality of many women's lives, and in doing so, I would suggest that it may help to change that reality, because it's a terrible reality and it's something we have to fight on all fronts.
Maintenant c'est Louise Toone qui va vous adresser.
Mme Louise Toone : Bonjour. Je vais vous entretenir du système des règlements des disputes. Ça, c'est dans votre document de consultation. C'est le sujet aux pages 8 à 11.
Comme noté dans votre document, on explique aujourd'hui deux systèmes. Les gens qui ont un problème peuvent soit aller à la cour, ou bien ils peuvent aller au bureau du contrôle des loyers. Ça dépend de la nature du problème. Le document propose de combiner tout ça ensemble. Alors, on propose en fait d'enlever la cour et de mettre ça dans ce qu'on appelle un tribunal administratif, une agence indépendante.
Votre document propose deux modèles. Je vais élaborer sur un de ces modèles. Je voudrais ajouter qu'on n'est pas nécessairement en désaccord avec cette proposition-là, sauf que si on crée une agence, un organisme administratif, il faut quand même le faire en tenant compte de certains critères de base.
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Un critère, c'est la question de la nomination des décideurs, qui est en fait adressée dans votre document. Nous, on tient à ce que les gens qui vont prendre les décisions soient des gens avec de l'éducation, de l'expérience, les compétences requises. On ne veut pas que ce soit ce qu'on appelle en anglais du «patronage». On ne veut pas avoir des amis politiques nommés à ce genre de poste. En fait, ça touche beaucoup la confiance du public. Le public a beaucoup de confiance dans un système quand on voit que les gens sont impartiaux, qu'ils ont les compétences. Les gens perdent confiance quand ils savent que c'est quelqu'un qui a contribué au parti, qui a un poste qui paie 100 000 $ par année. Ça, c'est très important.
En plus, il y a toute la question de l'accessibilité, la simplicité. Un organisme administratif doit être simple. Quand on enlève la cour et on va le mettre dans un tribunal, on cherche à rendre moins complexe. Alors, pour faire ça on a déjà touché des formulaires vulgarisés, qu'on dit -- il faut aussi que l'agence ait un rôle d'éducation. On réussit à diminuer le nombre de problèmes, de disputes, lorsque les gens sont bien éduqués. Quand et les propriétaires et les locataires connaissent leurs droits, connaissent leurs obligations, il y a moins de problèmes. Alors, une agence devrait avoir un rôle d'éducation avec des lignes téléphoniques, des dépliants et ainsi de suite.
Aussi on sait à ce que les locataires aient un accès égal à ce tribunal. Aujourd'hui, ce sont clairement les propriétaires qui on accès au système judiciaire. Ce sont eux qui commencent la majorité des requêtes, et les locataires n'y ont pas accès. Alors, on trouve que c'est très important qu'on donne autant de priorité aux causes, aux problèmes des locataires qu'aux problèmes des propriétaires, et c'est en dépit du fait que les propriétaires aiment toujours se plaindre que c'est les locataires qui ont tous les droits. Ils n'ont pas accès à la cour.
Finalement, il faut aussi s'assurer qu'une telle agence ait des ressources financières. Ça ne marche pas s'il n'y a pas d'argent. On peut certainement demander aux gens de payer certains frais comme on fait à la cour, sauf qu'il ne faut pas le faire au point où ce n'est plus accessible aux gens à faible revenu, et ça, c'est surtout des locataires.
On tient aussi à ce que ce soit accessible aux francophones. La cour aujourd'hui dessert très mal les besoins des francophones. Je vais vous donner une étude à cet effet. Donc, pour nous il est très, très important que les francophones soient bien servis. Ça veut dire non seulement que la personne qui prend la décision doit être bilingue ou francophone ; ça veut dire que la personne qui répond au téléphone doit être capable de parler en français, que les formulaires doivent être en français. Il faut tout, tout, tout le processus soit disponible et ouvert aux francophones afin qu'ils aient un accès égal.
Finalement, votre deuxième proposition dans votre document, vous avez deux options. Vous suggérez deux façons, soit un organisme indépendant du gouvernement ou un département du ministère. Nous, on s'oppose à cette deuxième suggestion parce que, à ce moment-là, ça demeure dans le ministère. Ce n'est pas indépendant, ce n'est pas impartial, et en plus, ce sont des gens qui deviennent susceptibles aux pouvoirs politiques. Vous êtes peut-être au pouvoir aujourd'hui, les conservateurs, mais vous n'y serez peut-être pas pour toujours. Alors, il faut planifier à long terme.
Interjection: Hear, hear.
Mr Marchese: And you're going to do it?
Mme Toone : Alors, je voudrais tout simplement conclure. J'ai préparé un résumé de ma présentation que je vais vous remettre. D'ailleurs, j'ai deux études annexées à ça. Il y a une étude du professeur Marc Cousineau, qui a fait une étude t}ès élaborée des services en français en Ontario pour le ministère du procureur général -- j'ai des copies pour tout le monde -- et aussi de la professeure Martha Jackman, qui a étudié justement la question de prendre des domaines et de transférer de la cour à un tribunal administratif. Son exemple, c'est les problèmes de propriétaires-locataires, donc c'est très à propos. Malheureusement, je n'ai pas fait 30 copies. Donc, je vais rapporter ça avant la fin de la journée.
Je vous remercie beaucoup. Je vous passe à Mary Garrett.
Ms Mary Garrett: My colleagues have addressed you with regard to what should happen if landlord-tenant issues are removed from the courts. I want to speak to you about not letting that happen.
We believe that tenants are best protected in the courts for such an important thing as the security of their home. I would like to advise you of two examples of ways that the matter can be streamlined to allow the court system to work faster; that is, the duty counsel program and the mediation program. We are sure there are other ways that could also assist the court system, but someone else will have to bring those to your attention.
I have presented a paper which I leave for your information, and that's this one that's been presented you. Because we obviously don't have time to go through all that in my four minutes, I'm just going to summarize it.
I would like to tell you that we have been working in the duty counsel program in Ottawa for almost 10 years. The four legal clinics in Ottawa -- that's South Ottawa Community Legal Services, the Ottawa university and West End Legal Services -- send two to three staff weekly to the courthouse. Each week one of the clinics takes a turn doing this.
The program has been streamlined over the years and I believe it functions well, to the benefit of the tenant, the landlord and the court. We started this because of the large number of set-asides we did. They were time-consuming not only to the legal clinics but also to the courts and to the landlords. A landlord would get a default decision for tenants who actually did show up, and we would have to set them aside and a hearing date would be set for three to four months away.
Like today, most of the evictions were for rent arrears, and tenants needed assistance to get the terms for paying back what they owed. Our duty counsel represents all tenants who appear in court on their own behalf that day. We evaluate the problem, counsel the tenant, negotiate with the landlord and represent the tenant before the court if need be.
Today, of those cases represented by duty counsel, about 60% of the matters before the registrar at first appearance are resolved by duty counsel. Those that are not resolved are either adjourned to another day so that either the landlord or the tenant can provide more information for the court, or a court date is set, and now those court dates are being set anywhere from two to six weeks away. We believe in that because we can resolve so many at the first stage.
Not all duty programs in Ontario are like the one in Ottawa. The one in Toronto may not be as efficient, since they have one person giving advice to tenants despite their large volume of business. This person actually can't do any negotiations because there just isn't time. In other programs in smaller communities, we've been told by the legal clinics, they sit in their office and the courts will call them and say: "We've got a landlord-tenant motion. Someone's here. Do you want to come and help them?" That's how their duty counsel program works. We believe that a proper duty counsel program for the appropriate city or village or town is what we need to streamline the system.
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The government has also started or is in the process of starting a pilot project on mediation in landlord-tenant court. Ottawa and Toronto are going to be the two starting test cases. This is so new that the first meeting in Ottawa to discuss it is next week. We don't know how this is going to affect the court system, but it surely should be given a chance before it gets thrown out by this legislation.
I would again like to thank you for having us all here to speak to you today.
The Chair: You've used up all your time except for a minute. Does someone have a closing statement they want to make for a quick minute?
Ms Garrett: I would like to thank all of the tenants who are concerned about this legislation and showed up today to show you that they're angry with this paper.
The Chair: Thank you very much, ladies. We do appreciate your input here today.
CENTRETOWN CITIZENS OTTAWA CORP
The Chair: Our next presenter is Catherine Boucher, executive director of Centretown Citizens Ottawa Corp. Good afternoon. Welcome to our committee.
Ms Catherine Boucher: I believe I've distributed enough copies of our presentation. I don't know if you've received it yet. I want to thank you and I'm heartened to see regional representation, as well as a previous Minister of Housing, at least one.
I thank you in advance for your time. I just want to introduce our organizations a little bit. I work for a private non-profit housing corporation. We've been around downtown Ottawa for over 20 years and we manage over 1,200 units of housing. We were around just before the introduction of rent control and a lot of the current landlord-tenant legislation and we've been around through vacancy rates as low as 0.1% and as high as the current rates in Ottawa-Carleton, which are at a 15-year high. So we have an experience that's about 20 years of managing rental housing. However, I'm going to speak more specifically about being a manager of social housing, which is in many ways similar but in some ways different.
I'm sure you're somewhat familiar with social housing in that it's government-funded and part of our mandate is to provide housing for low and modest-income people and our units or some portion of them are rented on a rent-geared-to-income basis.
We noted that in the discussion paper there was no mention made at all about the special requirements of social housing and we wanted to at least ask the members to look at that a little bit differently. The current landlord-tenant legislation and Rent Control Act makes very brief requirements or it has some minor clauses referring to social housing. However, the experience over the last 20 years in not having some things more clearly defined in both acts has made it difficult for both tenants and landlords in the courts as far as social housing.
Some of the more specific requirements that we'd like the panel to look at is, one, the issue of subletting. The current landlord-tenant act does have a clause which precludes tenants in rent-geared-to-income units from subletting. The problem that occurs for social housing landlords is where a tenant has allowed someone to move in with them, which is legal. However, our obligation is then to recognize that person by adjusting the rent and there is therefore an assumption that that person is also a tenant.
What happens is, if the initial tenant moves out, then the person who remains essentially can take over the tenancy. What that means in some instances is that tenants who may have moved into a unit two or three months previous have essentially jumped the waiting list, as we say, because we're obligated to keep a waiting list for those units. That's an issue for us in that it isn't clear once we've agreed to receive rent from someone based on their income. If we could clarify in the act that for social housing the original signatory is in fact the tenant, that would be giving a modicum of fairness to people who have waited for many years on a waiting list.
The other issue more specific to social housing has to do with abandonment. This happens in rare instances, but in some instances we have had tenants in rent-geared-to-income units where we're not sure if they've vacated, but they've not been living in the unit for extended periods of time. In some cases those are legitimate due to hospitalization or for whatever reason. If the person is away for an extended period of time, there are instances where other people may be living there and paying the rent on their behalf; however, they're not necessarily eligible for assisted housing. So we would like some recognition of that in some clarification for social housing landlords of how we can deal with those situations.
A whole group of social housing providers are referred to in our sector as supportive housing providers. Our provincial association, the Ontario Non-Profit Housing Association, has tabled with this panel a rather large brief on the specific needs of supportive housing providers, and I just want to take an opportunity to endorse that.
Some of the specific requirements that they're looking to have to do more generally with the fact that a lot of supportive housing is shared in that in some cases bedrooms are shared and in almost all cases common areas, kitchens and washrooms are shared and the special requirements that that has vis-à-vis giving all tenants the right to quiet enjoyment or access and there are specific issues around there. I don't know if you have the brief with you, but I would encourage you to look at it and support the recommendations in it.
Those are some of the more specific issues around social housing.
Generally on the landlord-tenant act we're pleased with some of the recommendations and we have some minor recommendations of our own. One is on the issue of abandonment. Just note that it is a landlord's obligation to mitigate losses as soon as they're made aware of them, by obtaining a writ for an abandoned unit referred to in the document. However, if the court system is not what we end up with as the end product here, then we'd like to know what the process is for obtaining the writ and that it should be a speedy process.
On the issue of privacy and notice of entry, we welcome any clarification on this, which is often the source of friction between landlords and tenants. We have a couple of minor recommendations. One is that on the notice of entry for maintenance, if you could consider the idea that when the tenant has requested the maintenance, that notice of entry could be given verbally at that time.
If a tenant calls our maintenance department and says, "My window is broken," we will see that as an urgent matter, although not an emergency matter. If we're then obligated to give that tenant 24 hours' written notice, then we're causing them a disservice by lengthening the time that we can respond, whereas if they agree that we can go in tomorrow and fix the window and they don't have to be there to allow us entry, if there could be some way that we can get their agreement verbally and then go in and do the work, that would be helpful.
In addition, we would like clarification in the section on showing units to prospective tenants, which now states that it can be done at reasonable times. That also has been a source of friction, if a tenant feels that reasonable times are not what we consider to be reasonable times. There is a suggestion under another notice provision to actually state hours and I think if the hours were stated within the act, that would make it clear, hours such as 10 am to 8 pm or whatever hours seem reasonable to you. I could leave that up to you.
I want to talk briefly about the proposed anti-harassment section. It's our understanding in reading it that this appears to be intended to work hand in hand with the rent decontrol provisions. However, we just want to clarify that that would apply only in cases of harassments by landlords of tenants and should be clearly not used for issues between tenants.
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I'm going to say here that I understand the issue of violence and we'll talk about that later. I think that's a separate kind of issue.
Landlords are often put in the position in disputes between tenants of essentially being a third party who has very little knowledge of what is happening. What happens is, a tenant says, "You must evict my neighbour," and we say okay and we go to court but really have no knowledge of what happens except between the two people and they're essentially the ones in court. We are only there because we're the ones who can write the notice and that's the way it's set up. The word "harassment" I guess rings some bells to us because we're not sure exactly how that could be used and we want to make sure that it's clearly identified as harassment of tenants by landlords.
On the issue of maintenance, there's a proposal to give landlords advance notice of failure to comply with property standards. We strongly support that landlords should have at least an opportunity to remedy. That part of the discussion paper wasn't quite clear because I wasn't sure if it was suggesting that municipalities could automatically fine without giving a landlord an opportunity to remedy, but it's a basic fairness of civil proceedings to give tenants a right to pay rent before evicting them and landlords should have an opportunity to fix a window before being fined or whatever the issue is.
The dispute resolution system was touched upon by the previous speakers. We obviously welcome the opportunity to look at a speedier system. We agree that the current court proceedings are too slow. However, our belief is this is due to lack of resources in the courts and not inherent in the act. Our experience in the mid-1970s was that we were getting court dates the next week on 95% of our cases. That isn't the case today obviously. We caution that regardless of the system, it must provide for adequate representation by both parties. On this side, I guess we mean that tenants should have every resource that is available to landlords.
The suggestion of mediation is worth exploring. However, our assessment of mediation is that it works only if both parties agree to it. So it may not always be possible or it may not be desirable in cases where there are issues of violence, such as was mentioned before, where tenants are threatening either their co-residents or other tenants in the building.
The discussion paper indicates the ministry hasn't yet developed this system and we would encourage you to spend more time than perhaps this consultation allows to actually sit down with landlords, both social housing and private sector landlords and tenants and tenant advocates, to talk at more length about this system.
We'll touch just briefly on rent control because social housing providers are currently and, we assume, will continue to be exempted from rent controls, although the discussion paper doesn't note it. Although we're not directly affected, we obviously are concerned with housing for low- and modest-income people in our communities.
I'm sure you'll hear from the landlords that the decontrol of rents will not, in our estimation and I'm sure theirs, provide the stimulus required for the private sector to build rental housing. Land prices, cost of construction, property tax system, development fees and long-term investment requirements are some of the impediments I'm sure you will hear more about from the private developers.
In addition, the proposal to have rent control in place as long as tenants remain in their unit will impact those who must move due to employment, change in family circumstance or for reasons such as health and age. We give the example that a senior who can no longer manage stairs in her walk-up building will be forced to move and pay much more of her income in rent, and there are other examples. Generally this will affect those at the lowest income on the scale, who tend to be tenants.
Although we can challenge the private sector to build new rental housing, we cannot force it to do so and to provide housing which is affordable to low- and modest-income people. More than half the tenants in Ottawa are below the 30th income percentile, and we feel the removal of rent control will provide them with uncertainty without guaranteeing that the private sector will meet their needs.
In summary, we look forward to your findings and we hope that the issues we brought to you today are addressed. Thank you for your time.
Mr Hardeman: Thank you for the presentation. I just quickly want to point out that the discussion is ongoing as we speak with the landlords and the development industry and the tenants and tenant groups to talk about a workable formula for the dispute-settling mechanisms.
On the property tax, we've heard a lot about it in our presentations. There are a great number of things that need to be corrected to bring the private sector into the building business. One of the ones that seems to be coming up a lot is the inequities of taxation. Are the non-profits involved in that too? Do you have a problem with that.
Ms Boucher: Oh, you bet. It's an interesting thing and I don't want to have my friends in the co-op housing sector calling me when I leave here, but in the social housing sector there are essentially three types of animals, as we call them. There's the public housing sector, and I'm not really sure what their taxation system is, but in the social housing sector, which is made up of housing co-operatives and then municipal and private, non-profit corporations, the latter two, of which we are one, pay commercial realty taxes much as Mr Minto or Urbandale or anyone else, and those, as we know, are much higher than homeowner taxes. It's our second-largest expense in our budget as it is in any landlord's budget.
Interestingly enough, the housing cooperatives, which are funded under the same programs and operate much the same kind of housing as we do, which is subsidized, mixed-income housing, pay residential property-owner taxes. I guess they made a deal at some point in the past. However, in comparing in our case two identical buildings built at the same time, one a co-op and one a private non-profit, the property taxes add 16% to our operating costs versus the cooperative building, so it is a significant expense.
Mr Alvin Curling (Scarborough North): Thank you, Ms Boucher, for your presentation. As we speak, as the parliamentary assistant tells you, they are drafting legislation. As we speak, they have already attacked the people on social welfare, a 21.6% reduction in their income, making it more difficult to access affordable rent.
As we have spoken already too, 365 non-profit housing projects have been cancelled, making it even more difficult for affordable housing. As we speak, the landlords are saying they will not build, even if you take rent control off. What sort of impact has this had in your area on people who are most vulnerable for affordable housing? How is it playing out in your area?
Ms Boucher: After June 1995, prior to the government's announcement regarding the moratorium on social housing, we used to tell people who came to our office that they would have to wait somewhere between two and three years. We are now saying it's going to be at least five years. So right there, that's an impact to people who are on waiting lists.
Mr Marchese: You've raised many issues and I would have liked to touch on the issue of maintenance and the dispute system, but that takes too long so I'll touch on the last two points you made, and that is the whole notion of decontrol and how that affects some tenants who are likely not to want to move if they know they are going to get an increase somewhere down the line.
I think you pointed out that this will affect a lot of people: some seniors obviously; it'll affect students and it'll affect a lot of people who may be in abusive situations where this is a disincentive to move, where they will suffer in a situation that might be very complicated physically or emotionally. So all in all, you would agree that's a problem for many tenants if we have a decontrolled system.
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Ms Boucher: It will force many tenants to remain in situations which are not optimum and in some cases may be dangerous. Yes, I agree.
Mr Marchese: You mention the other point about rent control and decontrol not being sufficient stimulus. We've heard from literally many, many people -- except landlords, who like it -- that it will not be an appropriate incentive for them to build. I think it's an important point that you raise, that many others have raised. If that's the case, why are we doing this?
The Chair: Thank you, Mr Marchese. Thank you very much, Ms Boucher. We appreciate your time here today and your input into our deliberations.
Ms Boucher: Thank you for your time.
OTTAWA REGION LANDLORDS ASSOCIATION
The Chair: Our next presenter is Valerie Wiseman, a member of the Ottawa Region Landlords Association. With her she has Marianna Fenton, Joy Overtveld and Suzanne Klein. Welcome to our hearings. You have 20 minutes. Should you allow any time for questions, they would begin with the Liberals. The floor is yours.
Ms Valerie Wiseman: My name is Valerie Wiseman. I am here representing the Ottawa Region Landlords Association, otherwise known as ORLA. I am also a rent control specialist and a member of ORLA. I am here with Joy Overtveld, lawyer. She's two down from me. She has a practice which focuses on landlord and tenant issues and rent control, and she's also a member of ORLA.
I'd like to introduce you also to two representatives of more than 41,000 who make up the average landlord in the Ottawa-Carleton area. Marianna Fenton sits to my right. She is the owner of a downtown heritage duplex. Suzanne Klein is the property manager for a visible minority landlord of a rooming house, also in the Ottawa downtown, and she sits on the end.
Marianna and Suzanne represent the majority of landlords in the Ottawa-Carleton area. ORLA felt that it was very important that you see the face of the average landlord and hear about their concerns. They will be speaking about two specific problems: chronically depressed rents, which was not addressed in this paper but is none the less an important issue for the Ottawa landlord; the other is the property standards offences that have been proposed. We feel they will lead to serious abuses by tenants who have and do harass landlords and other tenants in a building.
ORLA represents both large and small landlords. However, it is the small landlord who is most affected by chronically depressed rents and is most vulnerable to tenant harassment. The majority of landlords are small investors, owning fewer than six units, and according to Revenue Canada are not making a return on that investment. Far from making a profit, they are not even meeting their expenses and many are suffering from chronically depressed rents. At this point I'd like to refer you to pages 2 to 5 of our submission, which provide a profile of the average landlord in Ottawa.
In a province where 65% of the rental housing stock is over 20 years old, chronically depressed rents must be addressed. These landlords need revenue in order to make the required repairs. Some say that decontrol on vacancy will solve this. However, one problem that the landlord who experiences chronically depressed rents does not have is a vacancy problem. Those tenants aren't going anywhere.
Now I would like to turn this over to Marianna Fenton, who will relate her experiences as a landlord of a building that has chronically depressed rents, and then Joy will present the property standards issue and offer some solutions to this. I would also like to refer you to our submission, which outlines our position in further detail and provides testimonials from other landlords with similar problems to the ones presented here today.
Ms Marianna Fenton: In 1992, I bought a duplex with an inheritance from my grandfather for the purpose of hopefully building a nest egg for my family. The building was more expensive than I'd hoped, but the income stream from the two units was substantial, $1,000 per unit, so I felt basically it could cover my mortgage, heat, hydro, water, tax, expenses. It is essential that the building carry itself. I'm a mother of two children and I was the sole income earner at that time.
I was proud of my purchase. I thought it was a good way to invest, not to spend my inheritance but to use it wisely. It was an immaculately kept heritage home located right downtown, in fact three blocks from here. It had a bevelled glass entry door, wonderful units including private cedar decks, en suite laundry, large floor-to-ceiling windows. It was in mint condition.
As a new landlord, I was learning, so I was in touch with rent control annually to confirm what my rents should be and also what the increase percentages were etc. In 1987, the former owner had registered the rents voluntarily with rent control, so my rents were being based on the information he provided. My tenants were happy and I was happy. Everything was proceeding fine. Out of the blue, in 1994, the ministry issued an order reducing the registered rent for one of the units from $1,000 to $300, where I, the landlord, would continue pay heat, hydro and water costs.
They based this order on a 20-year-old order that they had discovered as a result of a self-initiated search. No tenant had complained. I was initially stunned and then later shocked at the personal financial ramifications of such an order to me personally. My building was now worth $100,000 less than at purchase, based on the income stream, when nothing else had changed. My unit -- I still own the building -- costs me three times more than the rent I'm collecting.
Upon rehearing, the ministry, despite $15,000 worth of renovations by a previous owner, decided not to change its mind, and unfortunately, there's nothing else in the current legislation which could allow me to present my case and have the order overturned.
My tenants, meanwhile, are fully aware of the situation. I've kept them apprised. They do not attend the hearings and they sympathize with my ordeal and the ludicrous nature of the order. We talk about a lineup for 10 blocks next time it's for rent. Now I'm bound, due to the law as it stands, to collect $300 for this $1,000 unit for as long as they decide to stay, which may very well be forever. I cannot carry the building much longer under these circumstances in any case, so I'm heading for personal financial disaster.
Basically I'm here to implore the ministry to include a provision in the new legislation which would address this type of situation. The law, the way it stands now, there's no common sense. People just are flabbergasted when I present what has happened to me. The law in this case is not fair or just. Thank you very much.
Ms Joy Overtveld: Smaller landlords cannot buy or maintain existing rental stock unless banks are willing to finance purchases, repairs and improvements. Banks do not provide financing where income cannot keep pace with costs and market value.
These are the providers of the majority of the private rental stock -- small landlords. Vacancy decontrol is irrelevant for chronically depressed rents. These tenants never move. There is no means test for tenants. Many of these privileged tenants have much higher incomes than the struggling landlord. Marianna's family income is about $20,000 a year. Her tenants earn $60,000 a year. Without your help, this unit and many others will disappear off the market very quickly.
We have a proposed solution in the paper. It's a three-pronged formula. I'm not going to get into detail, but I would just like to say that Mr Leach specifically requested submissions on this topic at the annual meeting of the Multiple Dwelling Standards Association in June. It's in written form on pages 12 to 14 of our paper.
Briefly, it goes like this: For sitting tenants, where the rent in the unit is less than the benchmark -- and for the benchmark you could choose market value assessment or you could choose the Canada Mortgage and Housing Corp average rent or some other accepted benchmark that is a public number, easily calculable by everybody -- the landlord would legally be able to charge more than the annual increase. You would need three ways to calculate to fit the various situations because if you only had one way, for example, an additional percentage above the annual increase, you would have a catch-up rate that would go 20 years or longer.
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So very briefly, the proposal is a three-pronged one. The first one would give you a fixed percentage annual increase, and for example, in Marianna's case, where the market rent is $1,000 a month and the legal rent is $300 a month, if you used method 1, it would be a monthly increase of $25 a month for the first year and the catch-up time would be about 20 years. That's too long.
Method 2 would be an additional fixed amount that you could add on top of the annual increase. This would be good, for example, in mobile home parks, a lot of which are also very destitute. This is a fixed dollar increase. This also would not be appropriate in a case like Marianna's.
There's a third option. The third option would be based on the size of the gap between the market rent and the legal rent or the current rent and there would be a catch-up phase. The proposal results in the catch-up period being somewhere between five and 20 years, depending on the method you choose and you would choose whichever method was appropriate, depending on the circumstances.
The benchmark figures are public. There's no bureaucracy required to administer the calculation. It's accessible to the average citizen, and graduated over five years, a unit like this would have a much greater chance of staying on the market because refinancing would be possible. There would be no instant rent shock to the occupant as there would be if this unit gets taken off the market.
I'd like to introduce our second topic, which is property standards and harassment. We've associated these two topics, even though you haven't done so in your paper. One previous speaker has already addressed this issue.
First, I'd like to introduce you to the average landlord in the Ottawa-Carleton region, and I assume in the rest of Ontario. The profile of the average landlord in this region is addressed on page 4 -- that's private, public, large and small, the percentages -- of our paper, and pages 2 and 3 also give you some statistics and charts.
One out of every six adults in this region, 15% of our adult voting population, is either a landlord or a spouse of a landlord. That's a lot of people. So most of them own very few units. They control about two thirds of the existing rental stock, people who own less than a certain number of units, small landlords, and tend to have a socioeconomic profile identical to or very similar to the average tenant. They include semiretired tradespeople, pensioners on fixed incomes, the elderly, young families who could not otherwise afford to support a mortgage, visible minorities whose first language is not English, and a large proportion of women. The major difference between them and their tenants is that they tend to have a more permanent personal commitment to the local community because they are tied by property ownership, whereas the tenant population, as a previous speaker mentioned, is more transient.
You've proposed property standards provisions which would make landlords subject to ticketing offences without notice and you've also proposed harassment provisions in a particular context. Why could property standards and harassment be connected in some landlords' minds? Many tenants, not all -- it is a significant minority, but it is a minority -- use the system to prey on small landlords and fellow tenants who are unprotected. They use property standards and other methods to harass a landlord if they're behind in rent or they want an easy way out of the lease.
Remember the profile of the typical landlord. We're talking about women, retirees, pensioners on fixed incomes, young families with mortgages, and minority Canadians for whom English may not be a first language. These landlords are extremely vulnerable and have no defence against an abusive or malicious tenant who misuses the system.
Please meet Suzanne, who is property manager of a rooming-house here in town. If you'd like to see pictures of the rooming-house, they're provided in the report.
Ms Suzanne Klein: Hi. I'd like to share with you an experience that I had this summer, about six weeks ago. I'm managing this rooming-house. A tenant moved in. He was very nice when he moved in, and I had no hesitation to rent to him. I soon got phone calls from the other tenants complaining about him. He used threats, he used violence. He would take the lunch out of one person's hand and toss it in the garbage. He was just unbearable to live with and most people would phone me up daily -- a couple of them daily -- to complain about him. I had no means of getting him out. He was a nightmare to live with. He terrorized the other tenants. He pushed one of them out of the kitchen.
I had no means of getting him out because the tenants in the building, most of them were too terrorized, they were too afraid to testify against him because he was still living here and they thought, "If we're going to court, my name is going to appear in court, and he's going to come up beat me up after that." So we had a terrible time to get him out. Police came. Police told me the solution to deal with the problem was to stay out of the building and not to enter the building any more. Then I couldn't do my regular job but I listened to police advice because I myself was too afraid of this tenant.
His girlfriend moved in in the meantime, one Saturday when I was working on a different part of the property. I didn't say hello to his girlfriend. Half an hour later, the front door lock was broken. There was a fire cover for the fire alarm system, its electrical was removed and a couple of other minor things. He phoned up the landlord and he says: "Excuse me, the front door lock is broken. This is very bad maintenance and when are you going to fix it?" Of course we got a locksmith in there. It was after hours on a Saturday. We paid $200 just to get the keys exchanged and the lock exchanged. No problem.
When I read the new proposals on the law, I thought: Under the new proposals this tenant wouldn't have even bothered phoning up the landlord, he would have phoned up a property standards officer right away and said, "This building is very badly maintained." Like, he did his share to it but he phoned that property standards, or he could have under the new system. When you get your law together for the tenant protection legislation, think about people like that who are out to turn the law around and getting it used in their favour.
Luckily he left. He could be still there if he wanted to. He got out anyway. He left his room very messy. He broke a window. He used cat litter and piled dirty cat litter behind the toilet, and you know who's cleaning it up; it's not going to be him. There's no means of getting any money back from him because he's low-income, and right now he's taking the landlord to court for a rent control issue. He doesn't have a case, but we're still going to have to pay for a lawyer to go through all the motions because that's the way the law works.
I'd like also to point out on July 19 there was an article in the Globe and Mail that appeared and it said that now we have youth that have grown up in violent homes. I think it's page A7, the Globe and Mail, July 19. It says youth that have grown up in violent homes are now entering the workplace and making the workplace more unsafe. But they're not only entering the workplace, those people are also entering tenant agreements. They are entering society basically.
I think we have to find a way to protect landlords from putting all their energy and money into dealing with these kinds of people, cleaning up after them. Because then there is no energy and no money left to do any maintenance work, what we are supposed to do. We can't do what we're supposed to do because we're always cleaning up after those people. I also feel strongly, if you don't make provisions for protecting landlords from those kinds of people, the other tenants -- because there's lots of decent tenants out there. I have lots of nice people that I'm dealing with -- but those people who are out to abuse the law, they do live there and I don't think they're decreasing in numbers, I think they do increase, and you have to make provisions in the new law that protects decent people from that. Thank you.
Ms Overtveld: There's an affidavit in your report which is from another tenant in that building who says things like: "I also have rights. I have a right to a safe environment, which I don't feel that I have right now.... There is extreme tension in the air all the time. He is terrorizing all of us by tampering with things in the house. You never know, when you leave, whether the house is going to be there when you get back.... If this continues any longer, there will be no one left in the house, except [him].... We shouldn't have to sneak around like prisoners in our own homes...."
This is only one situation but there are countless others and they're recounted in our newsletters over the past 10 years. We've given you some excerpts of typical situations where landlords and the co-residents in a building are being terrorized by a particular tenant who is using the law to their best advantage and hurting other people as a result.
We have some suggestions on how to perhaps improve the situation. One of them is: By creating instant violation offences and removing notice provisions, you turn the tenant into an instant, unauthorized property inspector. If the landlord doesn't know about the problem or if the problem was recently caused by another, or in some cases, as was in this case, the same tenant, or if the problem relates to an area of the building the landlord has no access to, this is unfair punishment. Landlords require written prior notice of repair obligations before we waste taxpayers' money to send a property standards officer out to the building.
The Chair: Excuse me, unfortunately, your 20 minutes has expired and because we have a full day we have to be quite strict on the 20 minutes. We do appreciate your input today. Obviously, the rest of what you had to say is in your paper and we'll make sure we read that. We do appreciate your input. Thank you.
Ms Overtveld: Thank you. Our suggestions on harassment provisions were the last thing in the brief.
The Chair: Thank you very much.
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JOHN DICKIE
The Chair: We now invite Mr Dickie of the law firm of Yegendorf, Brazeau, Seller. Good afternoon, sir. We appreciate your attendance here. The floor is yours.
Mr John Dickie: Thank you. First of all, I apologize for being late and appreciate you rearranging the schedule to accommodate me. My apologies. You should have a copy of the submission.
Briefly about my ability to speak to this issue, I've been practising rent control law for 15 years, and for the first number of years of that I represented tenants' associations. Then for the last number of years I've represented landlords, both large landlords and small landlords. During all of those periods I've been active in the interest-group activities of tenants and landlords respectively. Besides law, I do have an academic background in economics.
What my submission to you concerns is the way the rental housing market operates and then specifically the impact that the proposal for vacancy decontrol-recontrol will have. In other words, the discussion paper presents that the government, or the Legislature, will permit landlords to reset rents on a vacancy, but then once the rent is reset the guideline will apply. My submission to you is that this is seriously flawed. It will prevent landlords from taking advantage of the good times to make up for the bad times.
The economy has periodic boom times and periodic recessions. In the boom times under a market system the rents rise, in a recession they fall.
I'm going rather quickly through my paper and I'm on page 2.
Buildings also have a life cycle. When they are built they have new technology, like frost-free refrigerators, they have new finishes. The units are valuable. They command high rents. But then as the building ages, they're not so new any more and the rents fall off. So again, the landlord needs an ability to make money on the building when that can be done because it's not always there.
Turning to page 4, the historical background to rent control is that it was introduced as a temporary measure because of unusual economic circumstances.
From 1974-76, Canada experienced inflation at a rate not seen since the Korean War. Landlords who had entered into long leases needed major increases to catch up with inflation. At the same time there was a boom in the Toronto housing market, and that raised the demand for rental units.
Now, in the normal course building would have taken place and the rents would have moderated. But that was interrupted. Rent controls were introduced which significantly limited rent increases. Some owners are still stuck with rents that are based in large part on the rents that the buildings generated in 1972 or 1973, before this substantial inflation. Other owners were caught when there was the recession of the early 1980s; in the early 1980s rents fell off and then they were not able to catch up.
If you could turn to page 7, I've given an example of a composite building that illustrates the problems and gains landlords have experienced for the last 21 years. It is the most accurate picture I can draw for this committee based on my experience representing landlords and tenants. Without doubt, some landlords have done better than what is shown, but at least as many have done worse. Landlords don't like to come and tell you their exact financial situation; particularly they don't like to come when it hasn't been good and they're embarrassed. No one wants to come and say, "Look, this wasn't a good thing I did, and this is what it is."
If you could turn to page 11, I'll just show you, very briefly, what the composite shows. This is a building affected by rent control in 1975. If you go down the left-hand column, the first section shows economic conditions, the consumer price index, the rent control guideline and so on. The next little section shows rental market changes, average rents and market rents. I'll come back to that. Then we have the total rent in a building, the cost in a building, the capital that's financing the building, the operating costs and the financing costs, and in bold there you see the total cost. When you compare the total rent with the total cost you see the cash profit or loss.
If you go back up to the section "Rental market change" -- it's the second or third section, depending on how you count them -- and you see the rows "Market rent" and "Average rent," if you trace your finger across to the right, the first figure you see is $225, and then below that $200. That's the situation many landlords found themselves in in 1975, and when rent control came in the average rent was held down to $216, $233 and so on, whereas the market rent had risen to $248, $267 and so on. Those were the good times when landlords should have been making money to compensate for the bad times, but they didn't. Their rents were held under the market. If you go on, you see later on, in 1981, that the market turned around and the market rent started to fall. At that time the legal rent couldn't go up, so the landlord was locked in to these low rents. The landlord didn't get the good rents when they were available; he got the lower rents later on.
I've introduced in here the example of the landlord doing capital work, because if a landlord did that, they could raise the rent. For 1982 you'll see there are two columns, and the second one shows a 17% rate increase because of a major retrofit to the building, keeping up with the building life cycle, as I mentioned.
If you go off to the right-hand column in my composite here, the landlord keeps the building for 10 years. At the end of the 10 years the landlord sells. First of all, notice that over the whole course of that 10-year period the accumulated profit or loss might only be $2,000. Over that period, because of the good years being cut off, the landlord is not able to make money.
If you turn to page 12, you have to look at more than that in terms of the landlord's return. You have the landlord buying the building in 1978, and if you go down the left-hand column, the fourth group shows a sale price. I'm imagining the landlord buying a 20-unit building for $280,000. Go down to the next group: Equity invested, $53,000. Over the 10 years the value of the building will rise substantially. In the paper I explain the assumptions, which I believe to be accurate and fair. In 1985, one could expect a building to sell for about $470,000, so there would be equity of $170,000. That's the landlord's return. Tenants groups will tell you, "The landlords make all this money in the capital gain," but when you look at that, the total gain would be $111,000. It looks good but it isn't, because the question is, what else could the landlord have done?
If you turn to page 13, if the landlord had put his money into, say, a mortgage fund and just gotten interest at the rate of mortgages, the landlord at the end of the period would have $189,000. Going back to page 12, the landlord could have had a gain -- under "Comparison of return" go down to the third line, "Growth in equity" -- of $136,000, but through owning a building the gain is $111,000. So what's the landlord's reward for his risk, his or her work of being a landlord? It's to make $24,000 less than someone who just put their money into a bond.
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The same thing happens during the next time period. The one thing I would point out in the next time period, which is at page 14, if you look over to the right-hand column it's the same set of figures. Looking in that row called "Market rent," in the very right-hand column you see $525, and average rent of $525, but go down five rows and you can see "Average maximum rent" $602. Because of the concept of legal maximum rent, this landlord, who hasn't made any money yet -- or at least hasn't kept up with a bond -- has an ability to raise the rent so that when times are good the landlord can actually make a return.
In the government's proposal, and I turn to page 17, the government's proposal is to eliminate maximum rent and introduce vacancy decontrol, but after the decontrol the unit will be stuck at the new rent. In that scenario I just showed you on page 14, the new rent will become $525, the lower rent based on depressed market conditions we're in today, and that landlord will never be able to raise the rent to make any money in the good times to catch up for the bad times.
My fundamental submission to you is that decontrol-recontrol, the government's proposal in the discussion paper, will operate in a downward direction. It will prevent landlords from achieving the balance they need and it will ultimately be bad for tenants as well as for landlords. But my most recent experience is with landlords, and on that basis alone and their entitlement to make a return, I would suggest this proposal should be changed and maximum rent should be preserved.
I'm finished my presentation and will happily take questions.
Mr Curling: Thank you for your presentation. It provokes a lot of thought and needs much more than three minutes to go through some of the things you've put forward.
When there's a new building on the market, there's five years of no control. What happened to that time? You have not established anything in your paper.
Mr Dickie: My paper assumed that the building was built in 1965, so it was an existing building. In terms of that time, if a building had been built in 1991, today the landlord would still be in very deep trouble because rents have fallen since then and the landlord would have an enormous loss on an annual basis, let alone the loss that's built up. A five-year exemption simply doesn't do the job.
Mr Curling: Therefore, it's not rent control itself; it's the situation in the market itself that is causing this.
Mr Dickie: The problem is caused by two things: the situation with the market and the fact that when the market rises rent control kicks in. It's a double whammy. It's not the market; it's the market plus rent control.
Mr Curling: As I said, the unit has five years in which to find its level. In that time, if the rent is raised as high as possible, it gets locked in and then it rewards the landlord. Taking into consideration all the operating costs, a decent kind of profit can be made. That's why the guideline comes into place at 2.8% or 2.6% or so. It depends, as you said, very strongly on the market, not on rent control.
Mr Dickie: But the two work together. If the market were smooth, then rent control could work, but the market isn't smooth, so rent control cannot work.
Mr Curling: That's the way of investment. Markets are never static anyhow, you know.
Mr Dickie: Of course, but the damage is done when you cut off the good, and particularly when you cut it off permanently. That's what the proposal will do. That's what the decontrol and recontrol will do.
Mr Marchese: Mr Dickie, I don't want a long history, but a brief explanation. You represented tenants for 15 years.
Mr Dickie: No, for about six or eight years.
Mr Marchese: Then something happened and you decided to change that.
Mr Dickie: That's right. I chose to reorient my practice. I was in on the tenants' side. When I acted for tenants, I acted loyally for tenants, I represented what tenants groups thought their interests to be and I acted on a professional basis. The landlords respected that and so did the tenants.
Mr Marchese: I understand that. So you're advocating for a system that should be decontrolled. You agree with that.
Mr Dickie: Yes.
Mr Marchese: On the other hand, you also would like to have the maximum rents kept. You want both of these things.
Mr Dickie: That's correct.
Mr Marchese: Decontrol because it's important for the landlords, and keep the maximum increase so as to allow them to catch up some.
Mr Dickie: That's correct, and for tenants what should be done is shelter allowances and non-profit housing directed to people who need it. We shouldn't be doing it through the rent control system.
Mr Marchese: I understand. Part of the point you're making is that many of the landlords are not making any money, which is interesting. If that is the case, I argue, they should get out of the business. On the other hand, what we do know from reliable sources is that there has been a 10% rate of return. It's a good business to get into, it was reported in the Globe and Mail, because of the 10% rate of return. It seems to me they're doing okay. What you're advocating, what they're advocating, the Conservatives as well, is for a system that will profit the landlord by and large, and what you are proposing with a maximum increase plus decontrolling is even more rich for the landlord. That's something I can't support.
Mr Bart Maves (Niagara Falls): Thank you for your presentation. Going back to Mr Curling's comments, in a depressed market, quite simply, you're getting a low level of rent because the market won't bear much, but in a better market you can't take advantage of what you lost in the depressed market because of rent control.
Mr Dickie: That's the proposal. Under the current law, with maximum rent intact, the landlord can catch up. That's one of the best features of the current law.
Mr Maves: What proportion of landlords right now are renting their units at below legal maximum?
Mr Dickie: In Ottawa-Carleton it's about 85% or 95%. In Ottawa-Carleton the market has not been good for landlords for the last four or five years, and the vast bulk of units have market rents that are below their legal maximum rents. Fine, landlords live through that in the bad times, but then in the good times they want to catch up. I grant you, there are 15% or 10% of the units which have legal rents below the market. These are chronically depressed rents. These are rents where tenants of course love the units and want to stay, and the vacancy decontrol won't benefit the landlord in that case because the tenants will tend not to move out. Some of them will, but they will tend not to. I cannot believe a rate of return of 10%. If it is, you still have to compare that with the economy and what rates of return are in other investments; 10% in inflationary times is not a good rate of return.
Mr Bruce Smith (Middlesex): You raise an important issue because Mr Marchese has identified the results of a survey. In fact, that survey included just 24 rental properties in the province. I'm not suggesting that test is inappropriate, but I think it would lend some consideration to the numbers being used. During that period of time, we actually saw a rate of return ranging from zero or virtually zero over a 10-year period to as much as 30%. So I think there's some caution that needs to be used when we're referring to that 10% rate of return.
You've given us a considerable number of numbers with respect to capital expenditures. Have you given any thought to new tests of eligibility for capital expenditures, a new means test, anything in that area? I'm specifically drawing your attention to that portion of the report that addresses capital expenditures and their calculation.
Mr Dickie: Yes, certainly. It would be important that there not be an eligibility test. Under the current system, eligibility is one of the things that occupies a considerable amount of hearing time in a number of cases, and to have speedy hearings, to have quick determinations, which everyone wants, including tenants, it's essential that the landlord be able to determine what is appropriate in the building, be able to implement that and that then a cost pass-through be given. The cost pass-through and the market are what mean the landlord will not waste money and do things that are not appropriate.
The Chair: Thank you very much, sir. We appreciate your input this afternoon.
I would just like to make one comment here. It's difficult for the presenters to sit up here and make their positions known to us, not a position that everybody's going to agree with. I would really ask the help of the audience. Let's not get into an applause contest about who's right and who's wrong. We're here to listen to the presenters. It's easier for them if we keep our comments in the audience to ourselves. I'd appreciate your help on that one.
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ONTARIO NEW DEMOCRATIC YOUTH
The Chair: Our next presenter is Jennifer Smith, from the Ontario New Democratic Youth. Welcome to our committee. The floor is yours.
Ms Jennifer Smith: Good afternoon. My name is Jennifer Smith and I'm representing the Ontario New Democratic Youth at this hearing. The ONDY is a group of working youth, of high school students, of post-secondary students and of union youth in Ontario.
Many of us have become involved in the NDP after years of activism in our respective communities or our unions. We have a stake in the health of our province's economy and in the fairness of the legislation which impacts upon us.
Partisan politics aside, whether one is a New Democrat, a Liberal or a Conservative, it must be acknowledged that this legislation will have important effects on the young people of Ontario. This presentation will focus on working youth and students. The ONDY is concerned that one of the groups which will be hit hardest by this legislation is not being fairly represented. I speak out of concern for my own financial future and that of my friends and peers. I ask you to seriously consider the ramifications of rent increase and deregulation on working youth and students.
Vacancy decontrol, which is the major proposed change to the Landlord and Tenant Act and which would allow landlords to charge whatever they wish on new and newly vacated rental units, will have an extremely negative effect on young renters and students. Mine is a generation which does not expect, as many of you likely did, to enter full-time, long-term employment providing job security, built-in opportunities for advancement and consistency of lifestyle. Many of the young people I know have completed degrees and internships and still envision only part-time, contract or inconsistent employment, and many are not working in their intended fields.
University students are facing tuition increases of 20% and more this fall, and changes to the Ontario student assistance program and federal student loan programs are placing young people intending to pursue a post-secondary education in a precarious financial situation. In an economic climate such as this the lifestyles of students and working youth are in a constant state of flux. Should a new campus or city provide an opportunity for an unemployed or underemployed young person, most of us are not in a position to pick and choose. If a young person is having difficulty finding work or educational opportunities in a small rural or northern community, a move to the city is often seen as an answer. I make this point out of personal experience. Approximately 30% of Ontario youth leave their family home following high school to attend post-secondary education in another region. Some young people are forced to leave their homes to escape an abusive domestic situation.
On average, more than one in five, or 20%, of rental units in Ontario are vacated or occupied by a new tenant each year. We've heard numbers even higher than this today. The young people whom I have just described make up a substantial portion of these transient tenants. In fact, many young students move two or three times a year in correlation with the school term. Vacancy decontrol means that these young people would be hit doubly or even triply hard by rent increases. Under vacancy decontrol, tenants would be penalized for moving to look for work in a new region, for working a summer job in one city and attending post-secondary education in another or for seeking to upgrade their qualifications at a different post-secondary institution.
Considering that this is a government which claims to encourage youth initiative and entrepreneurship and which tells us that we must make additional efforts to find opportunities in an unfriendly job market, the imposition of vacancy decontrol is an inexplicably counterproductive move for the government to undertake. Young people will be disproportionately affected by vacancy decontrol.
Subletting is another area which will have ramifications for a lot of young renters. Most renters sign a lease for a period of a year or even longer. However, as I've just explained, many young people find it necessary to leave a residence before the lease is up or for a few months during the period of the lease. Subletting, which is an agreement in which the original renter continues to pay the rent to the landlord but is reimbursed by a substitute resident, provides a framework which is convenient for all parties. It results in no loss of rent for the landlord and little or no loss for the original renter, and it maintains relative consistency of the landlord-tenant relationship.
The ministry is considering the cancellation of the current subletting arrangement simply so that more tenants will be forced to cancel their leases, allowing landlords to declare vacancy and increase the rent through vacancy decontrol. There is no other valid reason for the termination of this arrangement.
The Ontario New Democratic Youth feel that the proposed freedom for increase through vacancy decontrol provides landlords with more than sufficient opportunity to increase their rent. Considering the importance of the current subletting arrangement for many young renters, we feel that this added opportunity for landlords to increase is unnecessary and that the termination of the arrangement will be a severe blow to a lot of young renters.
The rental agreement negotiation process will also have an effect on a lot of young people. Lack of information and harassment could be a problem. Many tenants, and particularly young or first-time renters, don't have a sufficient knowledge of their rights and also of the responsibilities of the landlord. If we are forced to negotiate our rental agreements without guidelines for increases or structured deals, which I will discuss later, we run the risk of being exploited by a landlord. In negotiations between a landlord and a young or a first-time tenant, there's an imbalance of power, an imbalance of experience and also of understanding of the regulations. In my experience and in the experience of many of my acquaintances, such exploitive deals are common enough right now.
Many groups have voiced concern that in a low-vacancy climate, sitting tenants will be encouraged, possibly through harassment, to leave so that the landlord has the opportunity to raise the rent without restrictions. This is of particular concern for young people and young women like myself. In the words of the Federation of Ottawa-Carleton Tenants Associations: "We would like to believe that the anti-harassment measures would work, but we have seen how poorly our government has enforced legal rents and punished cheating landlords. This window dressing only acts as a defence for legislation -- not for tenants."
Without the guidelines for us to use as leverage in negotiating our rental agreement, young people will face problems when trying to find fair and affordable rental accommodations.
Also, many landlords request income projections for prospective tenants. I have already provided you with a profile which corresponds with the financial and the personal situation of many young people in Ontario today. It is virtually impossible for many young people to make projections of our future financial situation. This, along with the credit checks done by many landlords, automatically eliminates many young people relying upon contract or short-term work, student loans or social assistance from acquiring a significant portion of the rental units on the market. With a low vacancy rate for affordable units, landlords will be able to pick and choose their tenants to a degree which will cause serious problems for many low-income youth and visible minorities.
There are also personal and financial costs of complaints and enforcement, and we feel that this will have a particular effect on young people. With either a number of part-time jobs, an ongoing job search or a full- or part-time course load, young people and students are under considerable stress, financial and personal. The time, money and energy required to launch a complaint against a problematic landlord is often sufficient to prohibit a young renter from following through.
The suggested application fee for the launching of a complaint may be one way to guard against the frivolous applications described in New Directions, but it would be a major prohibitive factor for young tenants with legitimate concerns about their living standards. The Ontario New Democratic Youth support the suggestion of the Canadian Federation of Students -- Ontario that a mechanism similar to those used in the court system to prevent such frivolous applications be adapted to this dispute resolution system for rent control.
Structured deals are another area where youth are particularly susceptible to exploitation. Vacancy decontrol and general deregulation of the rental agreement guidelines in Ontario will permit landlords more freedom to make structured deals regarding maintenance. Perhaps I'm mistaken, but I've been under the impression that we pay rent to cover maintenance and that if rent is paid, a landlord is obligated to keep our homes in a safe, livable state. I have personal experience with landlords who seem to think that fumigation, minimal painting and operational ventilation systems are luxuries which merit an increase in rent or an additional charge or some sort of labour on the part of the tenants, for instance, painting.
Since 1986, an annual 2% may be added on to the annual guideline to provide money and incentive to maintain buildings. Thus, in 10 years, this bonus has caused rents to increase 17.6%, an increase which is intended for maintenance only. Using the standard estimate of $10 billion annual rent paid by tenants, there is currently a total of $1.76 billion in current rents which is intended for maintenance only. It is ludicrous to suggest that landlords need to increase rents further in order to maintain their properties. The Ontario New Democratic Youth do not feel that landlords should have to be enticed with extra financial incentives to encourage them to fulfil their obligations and maintain our homes safely.
Shared accommodation and arrangements like that will also have an effect on young people. The sharing of rental accommodations is an important way in which young people can find affordable and flexible rental accommodations. Aside from the potential problems which would result from a landlord being anxious to declare a unit vacant in order to increase the rent, shared rental arrangements may provide landlords with the opportunity for some creative structured deals.
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Additional residents sharing the rent on a unit do not increase the cost of operation for the landlord; they simply decrease the share of rent which each resident pays. I'm in one such arrangement, and that's what makes my home affordable for me. Permitting structured deals could open up rental agreements to the possibility of landlords instituting a per person charge. With temporary subletters and additional tenants moving in and out of the unit, the landlord would be making a substantial amount of money which is no way reflected in a corresponding change in either maintenance costs or inconvenience for the landlord.
This proposed legislation provides no clear guidelines on when precisely such a unit could be declared vacant and subject to a rent increase. It also does not protect young renters from the excessive expense of per person charges.
The real problem here is the lack of new affordable rental accommodations. The stated intention of the proposals put forward in New Directions is to stimulate the creation of new rental units in Ontario. As far as we can see, however, the current proposals are designed to stimulate creation of condominiums and middle- to high-income housing rather than to make more low-income housing available.
The proposed axing of the Rental Housing Protection Act, the RHPA, will contribute to this imbalanced creation of new units. The ministry itself states that the purpose of this act is to "prevent the loss of rental housing stock through conversion to other uses, demolition and renovations." It makes no sense for the government to scrap the RHPA if the intention of these proposals is in fact to stimulate the creation of new units, particularly when the lowest vacancy rates are to be found in the low- to middle-income area.
It also made no sense for this government to kill non-profit housing. A disproportionate number of low-income youth cannot find affordable accommodations because of this decision. Between 1991 and 1995, 12,600 social housing units were built under this program. New private rental units contributed only 800 units during the same time. The cancellation of non-profit and cooperative housing programs will leave some 34,000 households on a waiting list in the Metropolitan Toronto area alone. This is from the Canadian Federation of Students -- Ontario paper, New Directions or Wrong Turns?, an examination of student housing.
We also have concerns about continued commitment to the dispute resolution and enforcement process. We're concerned that although the government has made proposals for a revamped dispute resolution process and enforcement process, such a proposal would be of little use to tenants without the staff and resources to make it work effectively. The day before New Directions was released, the Federation of Ottawa-Carleton Tenants Associations staff was reduced from three to one. How are youth and first-time renters supposed to establish fair rental agreements and make application to the dispute resolution system without the support and resources of tenants' associations, federations and other organizations?
Anyone who has followed the approach of this government to cutting the staff and resources of other ministries would be sceptical at best in their belief that the budgets will be there for the new dispute resolution and enforcement units to function with any degree of effectiveness.
As I've already discussed, one of the major barriers to young tenants asserting their rights is the fact that many young people simply do not know their rights and are not aware of the proposed changes. In addition, young people are not organized, as some of the landlords and senior groups we have seen here today. The Ontario New Democratic Youth feel that a tenants' rights education campaign geared towards young or first-time renters would be a very important initiative to undertake. We've already heard suggestions like phone lines and Franco-Ontarian-accessible services. The problem of tenants' lack of information is not addressed in New Directions, and we would like to see it included in future proposals.
Mr Howard Hampton (Rainy River): Thank you, Jen. I want to go back over something you mentioned earlier. The government makes a big to-do about its anti-harassment proposals and that it will provide a staff of people to ensure that the anti-harassment sections are enforced. To date the government has cut the number of health and safety inspectors; it's cut the number of people who will enforce orders for child support; it's in the business now of cutting the number of hospitals and health care workers and cutting the number of teachers in our schools. Do you have any confidence that these enforcement people would be available, given what's happening elsewhere in terms of public services?
Ms Smith: I have very little confidence that the government will continue to support organizations which offer resources for young people who may not be aware of their rights or of the process through which they can enter the dispute resolution system, especially when you look at the staff cuts to tenants' federations, to the rent control offices and to agencies like the off-campus housing offices on university campuses. That's a big concern for us. I don't feel the harassment guidelines are really going to have that much of an effect, considering the massive risk of harassment for young tenants under vacancy decontrol.
Mrs Margaret Marland (Mississauga South): First of all, Jennifer, I want to congratulate you as a young person coming before a formidable committee and hearing like this and speaking as articulately as you have -- not that I, obviously, can agree with everything you've said.
You talked about what the root problem is and you said that the root problem is the lack of new rental stock. Going back to prior to 1975, which may have been before you were born -- I don't know; I'm not presuming that -- we didn't have rent controls prior to 1975. We did have young people, we did have university students seeking accommodation, but we also had people in Ontario who were willing to invest their own money, as you heard earlier this afternoon, people investing money in fewer than six units. They weren't the big, wealthy, multimillionaire landlords, they were ordinary people, and we saw some ordinary people here today. Then we had rent controls that were brought on by our government in 1975, but not on new buildings. When the Liberals changed that to expand to new buildings in 1986-87, for the first time we started accumulating the huge problem of available rental stock.
I really would like to ask you whether you feel that having had rent controls overall has served the public interest, because now we have deteriorating rental stock and, as you say, we don't have any new rental stock. How have rent controls helped if we have a worse situation than we did 20 years ago?
Ms Smith: I would like to ask you how repealing the RHPA will help create affordable housing starts for young people in Ontario.
The Chair: I'd love to hear the answers to all those questions. Unfortunately, we don't have any time.
Mr Patten: I might just remind Mrs Marland that in 1986 the government of the day was still building some rental housing at that time.
Mrs Marland: At public expense.
Mr Patten: Yes, but there was housing.
By the way, I would share the sentiments and congratulations for your presentation.
I'd like to expand your scenario a little to highlight what I think part of your message is, and that's the special pressure on students: an increase of 20% in your tuition and possible increases in rental. What do you think will happen to university residences, for example? I'm trying to think of very tight markets and the pressure, with less money for universities and less money for colleges, on those institutions to balance their budgets, so you get an increase to the students for tuition fees, plus other things. Do you not think there will be pressure for them to jack up the price on students when they leave one year and then come back the next? Your scenario suggests you may see four increases if you happen to be a student going back to your residence.
Ms Smith: Exactly. The prices of residences are definitely going up right now for a lot of university students, so students are being forced to move out into the surrounding private rental units and are going to be subject to vacancy decontrol there as well.
The Chair: Thank you, Ms Smith. We do appreciate your input today and coming forward with your ideas.
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REGIONAL GROUP OF COMPANIES INC
The Chair: Our next presenter is Jeff Gould, senior vice-president, the Regional Group of Companies. Good afternoon. The floor is yours, sir.
Mr Jeffrey Gould: My name is Jeffrey Gould. I am senior vice-president with the Regional Group of Companies Inc. It's a company having its head office in Ottawa. I have been involved in property management since 1969 and have been with Regional Group since 1981. Prior to Regional and with Regional, I have always been involved as a third-party fee property manager.
When I started to put together what I thought I wanted to say today, it came to my mind that I guess I had forgotten how we got into this whole situation. I don't know whether others have done it, but I'd like to take a couple of minutes and look at a little bit of history.
To refresh our memories, the introduction of rent control in Ontario in 1975 was an example of legislation aimed at short-run objectives which contained the seeds of long-term disruption. To the tenant, the appeal was direct and the payoff immediate in reduced monthly rental payments. To the politician, controls translated into guaranteed votes, a lure that was irresistible. Forgotten in the scramble were the lessons of past experience: the long-term welfare of city residents, the right of the landlord minority and, last but not least, the elementary principles of the behaviour of our economic system.
Let us take a moment to review the chain of events which brought forward the legislated control of rents in 1975. Since Toronto was at the centre, the story focuses there.
In 1960, Toronto was a city with a population of 1.7 million people whose residents predominantly lived in single-family housing. In the next decade, the city underwent tremendous growth. It had a great attraction for large numbers of new immigrants arriving yearly in Canada as well as those seeking a higher level of opportunity within the country. As a result, Toronto was transformed into one of the major cities of North America.
Increasing its population by 35% in a decade, the proportion of residents living in apartments and row housing rose significantly, approaching half the population by the early 1970s. In the mid-1970s, the growth of the city's population slowed, falling from its 3.4% rate of increase in the 1960s to approximately 1.3% annually.
The question could be asked, then why were there no calls for rent controls heard until 1974? In every year from 1960 to 1973, the relative cost of renting accommodations decreased. Only in 1974 did this pattern briefly reverse itself, with rents rising faster than the cost of home ownership. By 1974, relative to their relationship to home ownership in 1963, Toronto's rents had fallen by 30%.
To understand the historic rent pattern and also the outcry of 1975, we must consider that rent increases over the 1963 to 1974 period almost invariably were lower than the overall inflation rate. In fact, statistical analysis shows that the average growth in rents was only some 80% of that in the real price level. Thus, from 1963 to 1974, not just the relative but also the real cost of rental accommodations in Toronto were falling.
In 1974, however, unprecedented inflation took place, with prices spurting by 10.9%. Despite the fact that rents in 1974 rose by only 8.3%, the shift from the historical nominal levels was pronounced. With these rent upsurges, calls for legislation to parallel the federal government's wage and price controls became vocal and seemingly irresistible. Assurances were of course provided that these would only be temporary and would expire with the general controls.
"We do not believe in permanent rent controls. They have been a disaster everywhere they have been tried. They have already distorted the whole housing market in Ontario." This is what former minister Sidney Handleman said in 1976 when he was minister responsible for rent controls. That was just a year after rent controls were instituted in Ontario as a temporary measure. "We haven't any intention of using controls as anything other than a short-term solution. That is built right into the legislation." Mr Handleman was referring to the provisions in the 1975 Ontario Rent Review Act, which provided the controls would last only 18 months.
It is interesting to note that the politicians were advised that the effects of rent controls in Ontario would be no different from in other rent-controlled jurisdictions around the world. These include the decline of rental income, the collapse of new rental construction, a chronic housing shortage, the decline of apartment values, conversion to condominiums, a progressive tightening of the control regime to prevent such conversions, massive increased government housing expenditure to meet the rental shortage, decline of maintenance and the beginning of dilapidation. Also impending would be municipal property tax increases for homeowners as the tax burden shifts from the landlord on account of declining rental incomes and apartment values. Politicians and housing bureaucrats claimed this wouldn't happen in Ontario, but it did.
It is interesting that back in 1975, when rent controls were introduced as a temporary measure, Toronto was experiencing a tight rental market situation while Ottawa was suffering through a soft residential rental market. Here we are today, in August 1996, looking at proposed changes during a time when Toronto is again experiencing a tight rental market and Ottawa is suffering through a soft residential rental market.
It has been argued time and again that what may be happening in Toronto must not and should not be an influence over all other areas in the province, but reality being what it is, Toronto seems to influence.
Regardless, I am pleased to hear that the Minister of Municipal Affairs and Housing, Mr Leach, has acknowledged that the current rent review legislation is flawed and in need of change. It is well known that the controls have been falling all over North America, with New York being one of the only significant remaining jurisdictions with controls still in place. New York is not my idea of an example to follow.
Here we are, 20-plus years later, and we are still looking at ways to make bad legislation better. When will it truly be realized that to tamper with bad legislation only creates the same bad legislation with a different cover? We have seen over the years how different political parties have changed the legislation, each time hearing that it is for the best. The best for whom?
Reality, however, prevails, and we must now look at the recommendations presented. I do not perceive myself to be a genius and therefore I don't think I will be saying anything different from that which you have probably heard several times in the last week to 10 days.
When I first started to read the paper, I was a little uncertain as to the decontrol proposal but felt that maybe it was the way to go. Then I realized that following the decontrol was the recontrol. What a step backwards for those of us in Ottawa or other centres with soft rental markets. The maximum rent concept is more acceptable. Perhaps, just as we saw in the mid-1970s, Toronto was creating the legislation. Ideally, once a unit becomes vacant, then it should become decontrolled.
As an alternative, beginning with the October 1995 CMHC rental survey, any census metropolitan area whose vacancy rate is 3% or greater should be in a position to have vacant units become permanently decontrolled -- plain, simple and easily understood.
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It is also interesting that some years ago the new concept of a cap came into play. Now everything has a cap associated with it. Landlords and tenants will be able to negotiate above guideline increases up to the level of a cap. Capital expenditure increases will be capped at 4% above the guideline and the two-year carryforward provision will be continued. I wonder if anyone has really taken the time to calculate what all this truly means when a landlord faces a one-half-million-dollar bill to repair balconies or garages. Not an awful lot.
We know that we have a deteriorating residential rental stock, but there does not seem to be any incentive for landlords to take proactive action to deal with these concerns. Have we not yet learned from past experiences? Let the market operate as it should.
The discussion paper states: "Tenants expect for their rent that they will have well-maintained and safe homes. On balance, most landlords look after their buildings. However, from time to time there are serious health and safety problems that go unremedied." The paper goes on to state that the current system does not create any incentives for landlords to put money into maintenance and that tools for enforcing property standards are inadequate. The discussion paper also asks the question if there should be a requirement that owners be notified in the event of a tenant-initiated inspection prior to a work order being issued or charges being laid so that owners have a chance to fix the problem.
Firstly, I do not see where there are any incentives in this current paper for landlords to complete the required maintenance on their buildings. Sure, it is said that a market rent can be created when the unit becomes vacant, but what happens when there is a soft rental market and newly established rents will not allow the movement to future market rents should the market become tighter?
Secondly, has anyone thought to consult with the local maintenance standards officers for their input into proposed changes? I believe that if they were consulted they would say the current system is operating satisfactorily. The rapport and communication is there with the good landlords and the changes may be made for those who refuse to comply with a work order. I was taught that the Canadian legal system provided that one was innocent until proven guilty. This proposal presumes that the landlord is guilty until he may be able to prove himself innocent.
I will not deny that there are some landlords who may not be as reputable as others, but let's look at the other side of the coin. There are many tenants today who know the laws backwards and forwards and play them to their fullest. These are the tenants who not only cost landlords hundreds and thousands of dollars but jam up the system, with resulting additional costs. Consider for a moment how the maintenance standards proposal will be played and manipulated by these tenants. Action can be commenced even before the landlord has had an opportunity to correct it, and potentially even before the landlord has been notified of the problem. I believe that property standards officers are comfortable with the current system and would prefer to continue that way.
Before concluding, I would like to mention that we continue to hear the term "affordability." I acknowledge that there is an affordability concern with a portion of our population and that for such people, housing costs absorb a large percentage of their income. These people, however, have affordability concerns in all facets of their lives and it is unjust and inappropriate to single out our industry as a means of solving the problem. The fact remains that over 80% of Ontario's population does not have an affordability problem and to keep using this argument as a justification for rent controls, even as now proposed, is simply not backed up by facts. We have always in the past and will continue to support any positive action taken to provide assistance to those people who require assistance.
In conclusion, thank you for the opportunity to express some of my concerns on this discussion paper. I have touched very briefly on only a few of these concerns, hoping that others will deal and have dealt not only with these concerns but with the many other concerns which this paper brings to the table.
I am somewhat encouraged by this paper, but without some changes and modifications, we may just be adding another chapter to our 20-plus years of rent control history. Thank you.
The Chair: Thank you, Mr Gould. You've got two minutes per caucus for questions, beginning with Mr Maves.
Mr Maves: Thank you, Mr Gould, for your presentation. I have noted on your one page the effects of rent control. In several studies I've looked at they all predict the same thing, and basically it's happened everywhere. One economist in Stockholm said that the quickest way to destroy a city, other than a bomb, is rent controls. Your effects that you've elucidated there are similar.
CMHC tells us that right now in Toronto about 30% of the rental market has substantial enough income that they could become homeowners. They're not becoming homeowners. Is that because they are able to live quite cheaply under a rent control system? If we had decontrol, in your view, do you think a lot of those would move into home ownership and make the vacancy rate increase in Toronto?
Mr Gould: Most definitely. We've always said that rent controls keep the rent levels down and those who are in the low-rent or the chronically-depressed-rent units are going to continue there because there's no incentive for them to move.
Mr Maves: In your experience, is it low-income people who are in those chronically depressed rental units, or is it higher-income, stable people in those?
Mr Gould: I can't give percentages, but I can say from experience that it is not the low-income people generally, in our units, who are in some of the lower-rent units. These are middle-income-and-above people, many with very good jobs, who have just no intention of moving because of the economic situation the low rent provides for them.
Mr Grandmaître: You gave us a brief history of rent control in Ontario and you also admitted that the rental market in Ottawa-Carleton is very, very soft. What would be needed to stimulate investors, developers like yourself and managers like yourself to build more rental units in the Ottawa-Carleton area that would be affordable to people who pay more than 30%, 35%, 40% and sometimes 50% of their revenue to their rent? What would be needed to build more units?
Mr Gould: I am going to, if I may, decline to answer that question. I am a property manager. I am not a developer or a builder and I have never really spent the time to properly answer that question.
Mr Grandmaître: But you won't be in business too long if nobody builds buildings or rental units. I realize that you also manage commercial buildings, but the commercial business in Ottawa is not that great, so what will be happening to you and your people?
Mr Gould: There will always be rental accommodation. Hopefully, people will come to the light and create the situation that we can take our existing stock and bring it up to standards where it should be. I don't want to go back in history, but if we create the economic climate for development, for growth of buildings, then we get the natural progression that we had in the past, where people are moving up through the rental process to the home ownership process. There would always be sufficient housing for those in need, either through shelter allowances or subsidies, and our buildings would be in better condition to accommodate the tenants.
Mr Hampton: I want to follow up on something one of the Conservative members was asking. You agreed with him that there are people living in rental accommodation who could afford their own homes. I don't understand what this legislative package would do about that so-called problem. It would seem to me that those people, if they are the problem you've identified, would want to continue to stay in those apartments.
Mr Gould: I made a statement based on the question. I am not making a statement that --
Mr Hampton: Just logically, wouldn't you agree with me that --
Mr Gould: Potentially, they could stay, yes.
Mr Hampton: They would want to stay in those apartments?
Mr Gould: Yes.
Mr Hampton: So this package does nothing to --
Mr Gould: That's one of the weak points in the package.
Mr Hampton: Okay. I want to ask you a follow-up question. If you were building a new product -- let's say you were building a new car -- and you wanted financing, the bank would want to see your business plan, wouldn't they? How many people would be prepared to buy this car etc?
Mr Gould: I would presume so, yes.
Mr Hampton: Isn't the problem that when a developer or someone goes to look for financing now and they put in all their construction costs etc, and they're asked, "How many people could afford this cost ratio?" the fact of the matter is there's no market for that? Isn't the problem that it's not a question of supply, it's a question of demand? There are a whole bunch of people out there who can't afford to pay what the market would require them to pay. Isn't that the problem?
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Mr Gould: That may be part of the problem, but there are other parts to the equation as well. I think part of the concern today is that even if you go to the bank or the finance company and try to project your rents, you have no idea what you're projecting, because either the market is playing or it's not playing. The costs of construction have to have a bearing on that. We can get into a whole myriad of others, the development costs etc. It's such a mishmash right now, it's very difficult to define it.
The Chair: Thank you, Mr Gould. We do appreciate your input into our discussions.
STORMONT, DUNDAS & GLENGARRY LEGAL CLINIC
The Chair: Our next presenters represent the Stormont, Dundas & Glengarry Legal Clinic, Etienne Saint-Aubin and Bernadette Clement. Welcome to our committee. The floor is yours.
Mr Etienne Saint-Aubin: Thank you. My colleague Bernadette Clement and I are both lawyers with the SD&G legal clinic in Cornwall. As lawyers, perhaps we should be used to the adversarial process where one side is pitted against the other and the outcome is supposed to determine the best result. But we come before you today hopefully free from the confines of that approach. We would like that our presentation be taken in the context of striving to see enacted what's best for the people of this province, and we would like to believe that's what this committee wishes and what this Legislature wishes. It may be naïve for us to hope that approach will be free from ideology and partisanship.
Our submission in a written form is fairly extensive and, as a clinic which has provided services in both official languages of the courts of Ontario for the past 15 years, it is presented in both English and French. Our oral presentation will be, in effect, an overall summary. We've taken, for example, seriously the request to contribute specifics on detailed issues. We won't go into all of those.
It may come as a surprise to some, therefore, that it is our considered opinion that the proposed tenant protection package is a move in the right direction. We do have concerns and reservations, and this submission will endeavour to put forward constructively recommendations for improving the package.
We simply do not agree that hanging on to the status quo is the best solution because we are of the view that the current system is inadequate in achieving what should be the fundamental objectives of a residential rental housing policy. Those would include availability of safe and properly maintained rental housing, availability of affordable housing for low-income tenants, truly protecting tenants from inordinate rent increases and an accessible and fair system to resolve disputes.
I think the number one item in terms of the best means to achieve these objectives is that landlords must find it worthwhile to provide rental housing. This ultimate increase in the availability of units on the market will probably be the true protection for stability of prices. This is already being shown in many parts of the province. There must be a promotion of quality in housing by incentives for adhering to property standards, and those incentives may be in the form of both stick and carrot: providing assistance to lower-income persons to ensure access to housing and establishing a properly funded tribunal -- and I emphasize the words "properly funded" -- to oversee the administration of the legislation and resolve disputes.
It is quite clear that there are two parts of this package which are likeliest to cause most acute problems and upon which the most attention must be focused. It does not take an Einstein to realize that obviously it will be frequently in the interests of an owner that a sitting tenant vacate the premises. Ça ne prend pas la tête à Papineau pour se rendre compte que ça peut être évidemment un grave problème, ce contexte-là. We are therefore of the view that the enforcement unit established to investigate tenant complaints will have to be properly staffed and that tenant applications for relief will indeed have to be fast-tracked. Previous convictions for offences in this regard should be a basis for disallowing rent increases. In the long run, this may prove to be the most effective disincentive.
Secondly, we are not convinced that for the short and medium terms the market will be able to produce a sufficient supply of affordable housing for low-income tenants. In this regard, we take note of a helpful consideration raised by Mr David Tilson, MPP, when he was sitting in another part of this room on August 28 exactly five years ago. I quote:
"The wealthy tenants can afford all kinds of increases, if necessary, because many of them are living in luxury-type apartments and paying good rents and of course are just laughing at the system because they can continue to absorb very minor increases proportionately to what they are paying. My question to you is, realizing that inequity, should we even be putting forward this type of legislation? Should we be perhaps allowing for subsidies or allowances to individuals such as seniors who are on fixed incomes and cannot afford any increases whatsoever?"
Unless we are prepared to witness a growing chasm between the true two nations of this country -- between those who have and those who have not -- it's going to be important to make sure and be vigilant that, for example, social assistance benefits keep pace with the reality of the true cost of housing and not some artificial national average. It may need to be that each region will have varying rates.
The dispute resolution system is one which we think is an improvement over the current situation, without being critical unduly of the Ontario Court (General Division); it has operated the best it can within the confines of the court system and the resources available to it. We think a tribunal system which has worked effectively in other jurisdictions can be an expeditious method of resolving disputes and can include innovative approaches in that regard.
My colleague Ms Clement will deal with the issue of standards of quality.
Ms Bernadette Clement: My name is Bernadette Clement and I'd like to touch on the issue of standards of quality in housing.
Availability of affordable food and shelter are two of the most fundamental human needs. If we look at the supply of food in this province and in this country, prices are determined to a certain extent by free competition in the market. However, there are controls which regulate production and which, most importantly, regulate the quality of the food which is there for consumption with a comprehensive system of standards.
In the area of housing, government involvement has focused on cost controls, but there should be more emphasis on the quality of available housing by making sure that owners or landlords maintain their buildings and respect property standards. There must be greater incentives for owners to adhere to standards of quality. This would benefit everyone, including lower-income tenants.
In our jurisdiction, for example, in Stormont-Dundas-Glengarry, a lot of the more affordable housing or cheaper housing might fail to meet property standards. Now, as my colleague mentioned, I don't think it does us any good to get into landlords being bad and tenants being good and into the adversarial system. Many landlords do take their responsibilities for maintaining their building seriously. However, some don't, and it's often at the expense of lower-income tenants.
This brings us to the importance of enforcing property standards and then possibly achieving consistency of property maintenance across the province. Some municipalities are better than others at enforcing their property standards. Some may choose to allocate more resources in that area. We feel the municipalities should be required to keep statistics and keep records of their enforcement of property standards so that they can be reviewed and periodically compared with the records of other municipalities so all communities are kept accountable for their bylaw enforcement efforts or lack thereof.
In fact, we even suggest that landlords or owners should not be able to go to a market rent unless they have first obtained a type of certificate of standards compliance, which would ensure their unit meets the property standards before they can go to a market rent or before they can increase their rent. This would be issued by a municipality or an appropriate authority, and it would be the owner's responsibility to obtain that certificate or pay the fee required for such a certificate.
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The tenant protection package proposed by the government raises the issue of whether the province should have the power to inspect when municipalities are not enforcing their bylaws. This would probably be a way of achieving consistency across the province. Some municipalities are better than others, and if the province were to have power to inspect, this would help to ensure that Ontarians in communities, including smaller and more rural communities, would have access to properly maintained housing.
Mr Saint-Aubin: Our submission has alluded to other specifics and I might just mention a few in passing.
Policies to encourage home ownership are not irrelevant in a consideration of the issue of rental housing. Again, we think this province can be instructed by other jurisdictions. The fact that it is impossible for persons on lower incomes or on social assistance to be property owners of their own home is not necessarily the absolute way to go.
We think the law can be made more accessible. We hope the Canadian Bar Association -- Ontario can be called upon, for example, to contribute in this regard to the preparation of standard tenancy agreement forms or leases that are in plain, simple language. Again, other places do this. Why can't we?
The tribunal being able to end a tenancy in certain circumstances where a senior, for example, is taken ill with a medical problem which requires a change in physical circumstances: At the moment, the law does not allow a court to end that tenancy and the tenant remains responsible for the balance of the lease. Again, other jurisdictions have a different rule and we could as well.
There's even the issue of updating the terminology, that perhaps after 800 years the time may have come to depart from language which refers to a "landlord," the lord of the manor. I think the legislation, which is a move to update things, can go again to plain language of owner and tenant, which incidentally in French is already accomplished.
In conclusion, I'd simply say that we believe the current package to be a move in the right direction, but it may be a total mistake. I don't know, but it should be tried. People expect of governments in this day and age that they will try, and if it doesn't work, try again. The reality is that the current situation is not ideal. The government must remain vigilant, however, to intervene if people are not being properly protected and must use its moral authority to make it clear that it would be prepared to do so if that should be the case. Thank you very much.
Mr Mario Sergio (Yorkview): Thanks for your presentation. You have brought a number of concerns which we have heard from tenants, and builders and developers also, throughout the hearings, last week in Toronto and the last couple of days in other areas.
You're saying that this is a move in the right direction. However, even builders, developers and landlords are saying that the proposed legislation -- I call it proposed legislation. The government side calls it a working document. If this is not going to help anybody, developers or tenants, what do you think would be the appropriate measures that the government should bring in to assist both: builders to promote new, affordable accommodations and still offer protection for tenants?
Mr Saint-Aubin: It's clear that we cannot move away from rent controls all of a sudden. I think there's general consensus in that. Any transition away from rent controls must ensure that people are not put into a situation of absolute anguish. That's why we think this blend has a chance to work. Again, the weak point is this question of so-called harassment being possible, and I mentioned that we think that is likely to happen.
Mr Sergio: I guess you're saying that in this proposed legislation there is no such measure.
Mr Saint-Aubin: I don't know what the ideal is, but I think this is an approach which has a great deal of merit and should be tried, being aware though that it's going to have to be properly funded. Any attempt to create a system such as this without being properly funded would be a misrepresentation.
Mr Marchese: Monsieur Saint-Aubin, I wasn't clear on what issues you thought this proposal was moving in the right direction on, but you obviously agree that decontrolling is a step in the right direction. Is that more or less correct?
Mr Saint-Aubin: We, perhaps to the surprise of some, are of the view that ultimately the market will take care of itself, with certain intervention when necessary.
Mr Marchese: We don't believe that and most tenants don't believe that. I believe the market leaves a whole lot of victims on the streets and that someone has to be there at the end to protect those victims. That's primarily my concern as a social democrat.
On the issue of the anti-harassment unit, you recognized yourself, and the government recognizes, that some landlords are likely to want to push some people out because it's to their benefit to do so. In doing so, you said you've got to put in that enforcement unit, the people in place to actually deal with it. Beyond that, my concern is that because it's complaint-driven, some of the people who are indeed vulnerable, many of the victims of this system or indeed any system -- students, seniors who are very frail, people with mental disabilities, poor people in general, those who have very few literacy skills -- may not introduce or initiate the complaint. So even if you had people, it may not even get there, as an additional problem. Would you agree with that?
Mr Saint-Aubin: Yes, I think that's a valid point. That's why the assistance, for example, of legal clinics or other community entities can be relevant in that regard. Making sure that the disadvantaged are able to connect up with the legal process is going to be an ongoing concern.
Mr Marchese: Sure. But the legal clinics have been cut off. Funding is going down. Tenant groups are being defunded as well. Where do they go? To this government?
The Chair: Thank you, Mr Marchese.
Mr John L. Parker (York East): Thank you very much for your presentation today. It's clear to me that you've put a lot of thought into this and I appreciate your presentation here today. It's particularly significant to me that as members of a legal clinic who, I presume, work in this field on a regular basis, you recognize that the status quo has its drawbacks and it's appropriate that we search for solutions to those difficulties we currently face.
I'm intrigued in particular by one of your recommendations and I just want to touch on this and see if we can flesh it out a wee bit. That's on the matter of the dispute resolution process. We've received conflicting accounts and recommendations from people in the course of these hearings as to whether staying with the court system as it currently is is the best way to go or whether we should move towards a specialized tribunal. You touched on some recommendations in this area in your presentation. I wonder if you could just flesh that out a bit.
Mr Saint-Aubin: Because we live in Cornwall, which is not that far from Quebec, and we have many contacts with friends and neighbours in Quebec, we're perhaps more aware of how the Quebec tribunal system functions and we think this province can learn a great deal from that approach.
The court system's hallmark certainly has been fairness, but also a certain measure of procedural rigidity, which makes it a very daunting process for everyone concerned. We think perhaps a somewhat less formal setting can not only adjudicate, but also perhaps go the step forward of including the process of mediation, which at the moment just doesn't fit the court process.
The Chair: Thank you very much, folks. We appreciate your input this afternoon.
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MINTO DEVELOPMENTS INC
The Chair: Our next presenters are from Minto Developments Inc: Guy Godin, vice-president, and Roger Greenberg, president. I'm supposed to have been politically correct and should have mentioned the president's name first; forgive me for that. Welcome to our committee, gentlemen. Should you allow some time for questions in your 20 minutes, they would begin with the New Democrats. The floor is yours.
Mr Roger Greenberg: Thank you very much, Mr Chairman. I won't take that as any insult. Good afternoon. My name is Roger Greenberg. I am the president of Minto Developments Inc. I believe that you've been provided with a couple of pieces of paper, one outlining a bit of our company history, and an op-ed piece to which I'll make reference a little later on.
Minto is a fully integrated, family-owned real estate company operating in Ottawa-Carleton, the greater Toronto area and south Florida. For over 40 years we have played an important role in shaping the metropolitan markets where we have chosen to do business. We have provided and continue to provide housing for thousands of families and accommodation for hundreds of businesses.
In Ottawa-Carleton, Minto is the largest provider of rental housing. We presently own and manage a portfolio of approximately 10,000 homes. They're spread throughout the region and range from bachelor apartments to single-family residences, with a majority of the units having rents of under $650 per month.
We do not merely provide families with a place to live, but take great pride in the efforts we make to establish distinctive and much-sought-after communities. Communities such as Bayshore, Parkwood Hills and Herongate are much more than a collection of apartments and townhouses; they are places where we have developed and promoted communities that provide a full range of amenities and services for residents, such as youth centres, seniors' clubs and community-based policing centres -- places truly to call home.
That is why we enjoy such a good reputation in this region's housing market. It is in that context that I am here today.
Unfortunately time does not permit me the opportunity to address in detail the contents of the consultation document Tenant Protection Legislation: New Directions for Discussion. There are many areas of concern, most of which have been sufficiently explored by previous deputants. Rather, I wish to go on record as endorsing wholeheartedly the comments of the Fair Rental Policy Organization of Ontario, the Rental Housing Supply Alliance and the Urban Development Institute Apartment Group, in all of which we are active members.
I am encouraged by the recognition of the government that there is something fundamentally wrong with the current environment related to rental housing. Ever since the introduction of rent control legislation in the mid-1970s we have been heading down a slippery slope, with most serious consequences for the citizens of Ontario. Government policy in a host of areas has completely shut down the construction of new private rental housing, a once vibrant segment of the housing market, and has altered the economic balance to such an extent that it is extremely difficult for landlords to continue to make the investments necessary for the maintenance, conservation and modernization of their existing buildings. Investment in new rental housing is practically non-existent.
It is telling that in south Florida, where we own and manage over 1,500 rental homes, developers are continuing to build new rental housing despite vacancy rates in excess of 5%. Yet in Toronto, where vacancy rates are less than 1%, no new rental housing is being built. The difference? Florida has no rent controls.
I support the need for change, for it is long overdue, but I have serious reservations as to what is being proposed. It is my opinion that what is needed is a more directed move towards a free and less regulated marketplace.
The best protection for tenants is ample choice. In most municipalities today in Ontario, tenants do not have choice. Current market conditions in Ottawa, where the published vacancy rate is well above 3%, clearly demonstrate the benefits of ample choice, but current conditions in Ottawa are temporary. Once the local economy improves, and without any new supply, we will soon find ourselves in the same situation as Metropolitan Toronto.
I have submitted for distribution to members of the committee a copy of an op-ed piece that the Ottawa Citizen published under my name on September 6, 1995. I was pleasantly surprised to see that a majority of what I suggested in the article was supported by noted housing economist Greg Lampert in an independent report prepared for the government earlier this year.
In the time I have today I would like to comment briefly on three substantive areas.
First, the government proposes the introduction of a more open and flexible negotiation process between landlords and tenants; on the other hand the government assumes there is a need for adjudication, ie, government involvement, for every rent increase above the established guidelines. This is clearly contradictory. In my opinion the role of the government should be limited to intervening in landlord-tenant disputes or in landlord-tenant negotiations only to settle disputes where there has been a breakdown between the parties.
From our experience, people in Ontario who are renters are extremely capable of representing their own interests. To suggest otherwise does not speak very highly of tenants and perpetuates a paternalism which is totally inappropriate. The provinces of British Columbia and Quebec operate on a model where tenants and landlords can agree to any terms which are acceptable to themselves. There's no need for an automatic review of every increase. A hearing need only be scheduled if a tenant files a complaint. The savings to all participants in the process are very real and immediate, as well as to the taxpayers at large.
My second concern is with regard to the loss of legal maximum rent on turnover. This will harm tenants because property owners will be less likely to reduce rents in soft markets if they know they will lose the ability to rent to full rent maximums when there's a strengthening of economic conditions. This concern is particularly real in the Ottawa market, which today is experiencing vacancy rates not seen in many years. In response to market conditions average rents have been falling, and incentives of one or two months of free rent are not uncommon.
Without the concept of legal maximum rent, landlords such as Minto will not be able to offer such incentives because such an action would effectively reduce the legal rent. Under the government's proposal, we would be faced with the prospect of having to use maximum rents or risk losing them altogether. With the use-it-or-lose-it option landlords will hold rents steady even if it takes longer to re-rent. The net effect is a loss for both landlords and tenants alike.
My final comment is with respect to the maintenance proposals, which would establish a scheme whereby it would be impossible for any landlord not to break the law on a regular and ongoing basis. Under these proposals, the instant a property standard is violated for something as simple as paint peeling on a windowsill the landlord will be deemed to have committed an offence.
The government says the intention behind eliminating notices of violation and making non-compliance with a work order an offence is to allow for faster pursuit of worst-case landlords. To us this is the proverbial case of using a shotgun to kill a fly.
On any given day our property managers receive some 500 service calls from our tenants; 90% of these service calls are responded to satisfactorily in less than 72 hours, yet in that intervening time frame we would be constantly breaking the law. It gets really ridiculous when one realizes that we could be breaking the law in circumstances where we hadn't even been made aware of the service issue in the first place.
For the legislation to be truly effective, steps should be taken to encourage in a positive way landlords and tenants to work together to resolve our concerns. After all, our tenants are our customers. They pay our salaries. In what other field of commerce in Ontario today is there a comparable situation where a conflict between a service provider and his or her customer is inherently built into the process? It's absurd.
If the government is looking to get at the worst-case landlord, it should craft regulations with this specific intent in mind. Measures should not be advanced which would have the effect of turning thousands of responsible landlords into inadvertent offenders by introducing unreasonable standards which can be easily, overzealously applied.
In closing, there's no doubt in my mind that reform is needed in this province as it relates to rental housing. However, misguided reform can make the situation even worse. If the government is interested in restoring a sense of balance to the rental housing market, serious consideration has to be given to ensuring that the regulatory environment incorporates measures that will truly address the weaknesses in the system.
Companies such as Minto have made a tremendous commitment to the rental housing market. As I mentioned earlier, our family has been in the business of providing quality affordable accommodation for over 40 years. We want to remain in this business, provided that there is a sense of balance and equity. We must be able to conduct ourselves on a sound business footing.
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I believe that the discussed reforms, together with modifications advanced by groups such as the Fair Rental Policy Organization of Ontario, are an important first step. Change does not stop with the proposals being considered here today; it must extend into areas of reform of property taxes, equal application of the goods and services tax, the elimination of unnecessary regulation and red tape and a rationalization of building codes.
I will be happy to answer any questions that members of the committee may have.
Mr Marchese: Thank you, Mr Godin. You support decontrol but you don't support recontrol, obviously.
Mr Greenberg: That's correct.
Mr Marchese: You would like a system of complete elimination of rent control, but you'll be happy with decontrol, "But if you're going to do decontrol, please don't put back recontrol," more or less.
Mr Greenberg: Correct.
Mr Marchese: You are saying that government should get out of the business of regulating, generally speaking, because the market really can take care of things and the market will take care of tenants as well. Is that a fair statement?
Mr Greenberg: Yes.
Mr Marchese: The problem you mentioned was that rent control has been a real problem for the construction business, for the creation of more rental accommodation. I think I heard you say that.
Mr Greenberg: I think rent controls have been a problem for tenants as well.
Mr Marchese: We don't agree, but let's disagree on that for a moment. There is no evidence whatsoever in the Lampert report, which you obviously must have read, that says that just eliminating rent controls is going to get the private sector to build. You know what he said.
Mr Greenberg: Correct.
Mr Marchese: You said: "Please don't give away things, you government, to make things bad. Please get involved, however" -- you do want the government to get involved to give you certain things to be able to create. This is what Mr Lampert says the private sector wants to be able to build. He says you need to eliminate provincial capital tax, you need to lower administration due to reform of rent regulations, you need to cut in half the CMHC mortgage insurance fee, cut in half the GST payable, reduce development charges and equalize property taxes. You do want the government to get involved in those measures, don't you?
Mr Greenberg: No. What I want the government to do is get out of what it's done over the last 10 years. All those items that you've just mentioned are brand-new items that either the provincial government or the federal government has instituted in the last 10 years. That's why I brought this. I produced this before Mr Lampert did his. In my document here I say that if you go back to conditions in 1985, rent control in and of itself is not going to resolve the issue.
Mr Marchese: Absolutely.
Mr Greenberg: I'm asking the government to take back a lot of the steps they've instituted in the last 10 years which, through government action, not through private sector action, have tremendously increased the cost of housing. The things that we control, namely land and building costs, have stayed the same over the last 10 years. It's the government, through regulation, which has dramatically driven up the cost of housing.
Mr Marchese: Mr Godin --
Mr Greenberg: I'm Mr Greenberg. He's Mr Godin.
Mr Marchese: Sorry about that. It's the name that's on that paper.
The point Mr Lampert makes is that construction will not happen in the private sector, and if it does, with all these measures that I have mentioned, it will only build at the high end, not at the low end.
Mr Greenberg: No, I don't agree with that.
Mr Marchese: Professor Hulchanski makes that statement in the end. He says the real issue is affordability. In your typical understanding of good, traditional consumer economics, supply and demand, Mr Hulchanski says the reason why you're not building is because there's no demand; people can't afford it.
Mr Greenberg: I don't agree with that. How many units has Professor Hulchanski built, how many rental units?
Mr Marchese: Yes, but you guys know best.
Mr Greenberg: I know better. We've built many units.
Mr Hardeman: Thank you very much for your presentation. I want to go to the issue of enforcement of the lack of maintenance and the fact that the offence will be lack of maintenance as opposed to not obeying a work order. You expressed the position that the situation should be allowed to be worked out between the landlord, or shall we say the owner, and the tenant. What part of the discussion paper do you feel prohibits that from happening presently? The changing of where the enforcement starts, do you not see that negotiations between the two would take place prior to the official ever being called in?
Mr Greenberg: They could. I'm not suggesting that the legislation prohibits discussion between a tenant and a landlord before, but it doesn't make it mandatory. That's what I'm suggesting needs to be done. The landlord should have an opportunity first to be made aware that there is a problem and be given ample opportunity to address the problem. I believe that the overwhelming majority of landlords in this province do take pride in their properties and do respond, and there are clearly those who don't. It's always the bad apples that spoil the cake for everybody else. But don't hammer everybody because of the one or two, or however many there are, bad landlords in the area. Make it mandatory that landlords be advised that there's a problem, be given an opportunity to respond and clearly fail to respond; then if they still don't, I have no problem.
Mr Hardeman: The ability of property standards officials, assuming that they are an impartial third party, do you feel that the discussion paper says they should immediately lay the charge as opposed to seeing if the issue could be dealt with through mediation?
Mr Greenberg: Again it's not a question that it couldn't happen that way; I'm saying that the discussion paper does not clearly provide that there must be that opportunity for the landlord to correct the problem first. There are situations, even under the present legislation, where a tenant will call the building official over and they haven't even called us; we're not even aware. We don't normally go into a tenant's apartment unless we're asked to, so we would have no idea of what kind of service issues they may have unless they call us. That's all I'm saying.
Mr Patten: Thank you, gentlemen, for your presentation. I have two questions. First, could you elaborate on your comment that rent control is a problem for tenants as well. What did you mean by that?
Mr Greenberg: I believe that the best protection for tenants is the ability to have choice. Where they don't have choice, they're in effect trapped in their existing apartment. The best protection for tenants is where the private sector is continuing to build new housing on a regular basis. That's what happens in many jurisdictions. It's not happening in this jurisdiction. Rent controls are not the only restriction. Removing rent controls in and of themselves would not answer all the problems.
Mr Patten: I concur on that analysis. It seems to me if there was a dollar to be made, somebody would be in there doing something. You'll appreciate that our concern really is the construction of affordable housing, in other words, for the lower-income population. You referred to the Lampert report, which identified a variety of new costs and charges for builders, that this doesn't make it economically worthwhile to be in the marketplace. But if some of those were done -- maybe there are no guarantees -- how can we be assured that there would be building for lower-level tenants?
Mr Greenberg: I have two answers to your question. One you gave in your introduction when you said if there's a buck to be made in it, people will respond. That's the free enterprise system, number one. Number two, let's not fool ourselves: There is a significant segment of our society where no one can build on an economic basis for those people. Somebody who is earning $10,000 to $12,000 a year who can only afford to pay $200 a month in rent, no housing can be produced that will meet $200 a month in rent. That is a society problem; that is not a builder problem. The society response to that should be the provision of some kind of income supplement, called shelter allowances, whereby the general taxpayer addresses the society problem, not a limited, targeted, segmented group called landlords. That's why we have progressive income tax legislation.
Mr Patten: Okay, so you say to provide a degree of equal opportunity you'd shift it from the unit itself to those people in need, who would have some sort of subsidy or support.
Mr Greenberg: Yes.
The Chair: Thank you, gentlemen. We appreciate your attendance here today and your input into our deliberations.
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ACTION-LOGEMENT
The Chair: Our next presenters are Rosine Kaley and Marco Leboeuf from Action-Logement. Welcome to our committee. You have 20 minutes. Should you leave any time for questions, they would begin with the government. The floor is yours.
Mme Rosine Kaley : Bonjour. Je suis Rosine Kaley, directrice, Action-Logement.
M. Marco Leboeuf : Moi, je suis Marco Leboeuf, coordinateur des services à l'externe avec Action-Logement.
Mme Kaley: Je vais tout en premier vous présenter très brièvement notre organisme Action-Logement. C'est un organisme à but non lucratif, donc on offre des services de première ligne pour des personnes qui ont des difficultés dans le domaine du logement. Nous offrons des services d'aide pour la résolution de conflits entre propriétaires et locataires, également pour la recherche de logements. Tous nos services sont offerts dans les deux langues, français et anglais.
Action-Logement oeuvre sur le territoire de la municipalité régionale d'Ottawa-Carleton à partir de trois centres : Vanier, Gloucester et Cumberland. Malheureusement, la demande pour nos services s'accroît d'année en année. Juste pour vous donner un exemple, en 1995 nous avons effectué 24 280 interventions, ceci auprès d'une clientèle variée, aussi bien des personnes sans abri, des chambreurs, des propriétaires et des locataires.
Indépendamment du fait que huit de nos employés sont directement affectés au service à la clientèle à temps plein, nos listes d'attente continuent de grandir. Les cas qu'on juge prioritaires sont traités le jour même, et même à ça on a de plus en plus de mal à traiter les urgences le jour même. Hier, par exemple, nous avons eu 10 personnes qui sont venues avec des cas d'extrême urgence. C'est la raison pour laquelle on n'était pas aussi bien préparés qu'on devrait l'être aujourd'hui.
Pour des raisons diverses, la plupart de ces personnes ont un besoin urgent de recherche de logement. Les logements abordables sont rares. Les conditions de logement sont inacceptables pour trop de gens, puis il y a trop de personnes et de familles qui se retrouvent sans abri, même de manière temporaire. Nous sommes donc entièrement d'accord qu'il faut tout mettre en oeuvre le plus rapidement possible pour remédier à la situation présente.
Il est grand temps de faire quelque chose, mais quoi ? Le document de consultation qui est présentée par le gouvernement propose certaines solutions. En tant qu'organisme communautaire, on a donc pris le temps d'analyser ce qui est proposé. Aujourd'hui nous vous présentons nos réactions au document.
M. Leboeuf : Lorsqu'on a lu le document, il y a deux objectifs qui sous-tendent la révision de la législation actuelle sur le logement. Le premier qu'on a retiré, c'est d'inciter la construction de nouveaux logements. Le deuxième, c'est d'encourager les propriétaires à mieux entretenir les logements existants.
Ces deux principes sont valables. Cependant, nous nous questionnons sur les moyens que le gouvernement ontarien a l'intention de prendre pour atteindre ces objectifs. De plus, nous avons des inquiétudes concernant l'impact de ces mesures sur les locataires.
Action-Logement, comme groupe communautaire, on a parti notre analyse sur la position que nous, on a toujours prise envers les locataires. Donc, le logement pour nous, c'est un droit et non pas un privilège. Chaque personne a le droit d'être logée adéquatement.
Si vous regardez le document, on a divisé en deux parties au niveau de l'analyse, soit au niveau du contrôle des loyers, ensuite au niveau de la Loi sur la location immobilière.
Au niveau du contrôle des loyers, le point qui est ressorti, c'était l'élimination du contrôle des loyers. Le principe, c'est que lorsqu'une unité devient disponible, le loyer peut être augmenté sans aucune limite. La disparition partielle du contrôle des loyers est inquiétant, puis on a sorti les raisons pour lesquelles on trouve ça très inquiétant.
Dans une situation où le taux de disponibilité de logements est bas, les locataires vont avoir de la difficulté à se trouver un endroit. Plus tard dans le document et dans les conclusions vous verrez aussi pourquoi on fait ces liens-là. Dans la région d'Ottawa-Carleton, si le taux de disponibilité est bas, les gens ont de la difficulté à se loger, ce qui veut dire que c'est toujours la loi de l'offre et de la demande. Donc, si on a très peu de disponibles, les prix vont augmenter, et c'est déjà difficile de se trouver un logement à prix abordable dans Ottawa-Carleton. Si les prix augmentent encore, il y énormément de gens qui vont avoir de la difficulté à pouvoir se loger sans avoir à dépenser une très grande partie de leur revenu.
Dans la situation où le taux de disponibilité de logements serait relativement élevé -- actuellement c'est le cas dans Ottawa-Carleton ; depuis un an, un an et demi, le taux a beaucoup augmenté -- il reste encore que les logements à prix abordable sont difficiles à trouver. Les propriétaires sont parfois mal informés. Ils pourraient donc augmenter le loyer d'un logement disponible et ne pas arriver à le louer.
Ce qui se passe présentement, les frais administratifs se sont encore accrus à cause des pertes de loyers. Par ailleurs, les taux de disponibilité fluctuent périodiquement. La situation à Ottawa-Carleton pourrait rapidement redevenir ce qu'elle était il y a quelques années, avec un taux de disponibilité de logements très bas.
Mme Kaley : Dans nos services également, on offre aux propriétaires d'afficher leurs logements. De plus en plus, la demande s'accroît là-dessus. On a remarqué que, au niveau des propriétaires, l'adaptation est très difficile à faire lorsque le marché change. Par exemple, si les locataires qui sont là présentement ne peuvent pas payer le prix du loyer, plutôt que de faire certaines concessions sur les arrangements, ils vont finalement évincer le locataire ou le locataire va partir en disant, «Je ne peux plus payer le loyer», et là ils attendent pendant plus d'un mois ou ont des pertes de loyers avant de réaliser qu'il faut baisser. Ça nous inquiète beaucoup avec le concept que le gouvernement approche, disant qu'il va y avoir un certain équilibre qui va se faire. Ce qu'on remarque là, c'est que l'adaptation des propriétaires est très lente quand il y a des changements.
M. Leboeuf : Le deuxième point est au niveau de la diminution de la mobilité des locataires. L'endroit où on est situé, on a pignon sur rue. Un grand nombre de notre clientèle est également la clientèle d'autres services. Lorsque les différents groupes communautaires se rencontrent, on s'aperçoit que les gens sont souvent appelés à déménager pour diverses raisons. Avoir un genre de législation comme le gouvernement veut proposer actuellement, si les gens déménagent, ça veut dire qu'ils ne sont pas certains qu'ils vont être capables d'avoir un loyer au même prix ou parfois à moindre prix. En enlevant le contrôle du loyer, les propriétaires pourraient augmenter à leur guise au moment où le locataire aura quitté.
Ce besoin de mobilité sera enfreint par l'insécurité d'avoir un nouveau loyer plus élevé et risque d'empêcher plusieurs personnes ou familles d'obtenir un emploi ou une formation professionnelle dont ils ont besoin. Donc, comme je vous l'expliquais tantôt, souvent les gens sont appelés à déménager. Parfois c'est juste d'un quartier à l'autre, parce qu'il doivent suivre une formation ou un nouvel emploi. Si les gens n'ont pas de voiture ou ont de la difficulté à se déplacer, ils doivent donc déménager pour se rapprocher du lieu de formation ou du lieu de travail. Ça pourrait restreindre énormément les locataires à pouvoir changer d'endroit pour suivre ce qu'ils doivent faire.
Le troisième point est au niveau de la vulnérabilité des locataires. Plusieurs propriétaires pourraient avoir tendance à exercer des pressions pour faire quitter les locataires actuels afin de pouvoir augmenter les loyers. Certains locataires sont plus vulnérables que d'autres et ils pourraient se trouver victimes de ces pressions et trop intimidés pour recourir à un système d'appel ou à la Commission des droits de la personne. Malgré les lois qui sont actuellement en place, on a parfois des cas où les gens viennent et les propriétaires font des pressions pour que les locataires quittent pour diverses raisons. Parfois ces gens-là ne sont pas équipés pour faire face et puis être capables de se défendre eux-mêmes. En enlevant la législation actuelle, ça nous inquiéterait que ces situations-là empirent, parce que les propriétaires voudraient que les locataires quittent pour pouvoir augmenter les loyers pour faire un plus gros profit.
La disparition d'un outil important, le registre des loyers. Étant donné que nous prenons position pour conserver le contrôle des loyers pour les raisons énumérées ci-dessus, il est essentiel que le registre des loyers soit maintenu comme un outil essentiel d'application de ce contrôle. Le registre des loyers, même s'il ne couvre pas encore tous les loyers chargés en Ontario, fait l'envie des autres provinces. Il constitue un moyen d'information important et indispensable pour les locataires de l'Ontario. Il est donc important non seulement de conserver le registre des loyers, mais de l'étendre à tous les loyers de l'Ontario.
Un deuxième point est au niveau de l'augmentation des loyers pour dépenses de capitalisation. Le principe qui est retenu, c'était que l'augmentation était plafonnée à 4 % au lieu de 3 %, comme c'est le cas maintenant, après obtention d'une approbation. Notre réaction, nous n'avons pas d'objection majeure à cette augmentation, dans la mesure où (1) elle ne dépasse pas 1 %, et (2) elle demeure conditionnelle à l'obtention d'une approbation. Donc, les propriétaires qui veulent vraiment obtenir cette augmentation devraient obligatoirement avoir la permission, avoir l'approbation. Donc, ça ne pourrait pas être une augmentation qui est un droit, qu'ils peuvent augmenter comme ils veulent. Ils doivent vraiment avoir l'approbation pour pouvoir l'obtenir, comme c'est actuellement le cas.
Ensuite, les réparations exceptionnelles et nouveaux services. Votre principe : entente à l'amiable entre propriétaires et locataires pour faire des travaux additionnels et des augmentations de loyers supplémentaires. Nous craignons que certains locataires se fassent «tordre le bras» pour accepter des travaux additionnels. Il est donc crucial qu'un système d'appel adéquat et accessible à tous et à toutes soit instauré.
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Les normes de bien-fonds ; le renforcement des normes. Votre principe, c'est s'assurer que les normes de bien-fonds soient respectées et augmenter les amendes pour les propriétaires qui ne les respectent pas. En réaction à ça, on est d'accord avec le principe. Nous anticipons cependant quelques problèmes.
Il existe présentement une carence importante dans les services de la plupart des municipalités. Le nombre d'inspecteurs est nettement insuffisant et la période d'attente est souvent inacceptable. Nous vous présentons ci-dessous un tableau avec le nombre d'inspecteurs pour quelques municipalités de la MROC. Donc, si vous regardez à la page 4 de votre document, on a fait la recherche, et vous avez le nombre d'inspecteurs et la population ainsi que le nombre d'appartements et de maisons en rangée, qui vous donne la moyenne du nombre d'unités locatives par inspecteur. Si on regarde pour Ottawa : 4 772 unités par inspecteur. Si on doit faire appel à un inspecteur pour venir chez soi, on risque d'attendre longtemps grâce au nombre d'unités qu'ils doivent couvrir. Ça vous donne une idée parfois de l'attente des gens pour réussir à avoir un inspecteur chez eux.
Les transferts monétaires aux municipalités devraient être augmentés pour permettre des services d'inspection adéquats et proactifs dans toutes les municipalités. Si une municipalité donne l'ordre de faire des réparations et que cet ordre n'est pas respecté dans de brefs délais, les loyers devraient être gelés tant que l'ordre n'est pas respecté. Le montant des loyers devrait être indiqué sur l'ordre afin d'éviter qu'un nouveau locataire paie un loyer augmenté malgré le gel.
Si une municipalité fait des travaux d'urgence, la municipalité devrait pouvoir récupérer le montant avancé en percevant les taxes foncières. Dans ce cas, les augmentations de taxes ne devraient pas pouvoir être transmises aux locataires -- voir la section du document concernant les augmentations exceptionnelles lorsque provenant de l'extérieur.
Le rôle du gouvernement ontarien dans l'application des normes de bien-fonds. Un danger pourrait aussi se présenter lorsque certaines municipalités n'assument pas leurs responsabilités. Dans l'application des normes de bien-fonds, il est donc important que le gouvernement ontarien continue d'assumer un rôle par le biais du contrôle législatif.
Ensuite, on tombe sous la Loi sur la location immobilière. On a ressorti les points qui étaient directement liés avec la Loi sur la location immobilière actuelle. Sur les dispositions des biens personnels, le concept, c'est quand une unité est vacante depuis 30 jours, le propriétaire peut se débarrasser des biens. Notre réaction : le principe voulant préciser un délai dans la législation représenterait une amélioration à la situation actuelle. Dans la législation actuelle ce n'est pas précisé, et on a parfois des problèmes avec ce non précis-là dans la loi.
Par contre, un délai devrait plutôt être 30 jours à partir de la date où le shérif est venu changer les serrures. Autrement dit, un propriétaire devrait avoir obtenu un bref de mise en possession pour disposer des biens. On s'est basé là-dessus d'après certaines de nos expériences. Donc, si une unité est vacante pendant 30 jours, ça ne veut pas nécessairement dire qu'un locataire a quitté l'endroit. On a déjà eu un cas d'une personne qui était rentrée à l'hôpital pour une crise cardiaque et le propriétaire, après 30 jours, a dit, «La personne est partie», et puis il voulait simplement aller de l'avant avec l'avis d'éviction etc.
Si ce principe-là n'est pas mis en place, les propriétaires pourraient avec cet énoncé-là dire : «L'appartement était vacant pendant 30 jours. On n'a pas eu de nouvelles. On peut disposer des biens.» Donc, on doit s'assurer qu'il y a vraiment eu tout le processus d'éviction et l'ordre du shérif pour changer les serrures pour pouvoir disposer des biens.
La sous-location. Le concept est que le locataire devra faire approuver par son propriétaire les personnes à qui il a l'intention de sous-louer son logement. Le propriétaire peut refuser les sous-locataires si le motif est raisonnable. Notre réaction : nous appuyons ce concept dans la mesure où les droits des sous-locataires doivent être respectés. L'officialisation de la sous-location représente donc une meilleure protection pour ces personnes.
Il est cependant important que la loi précise les motifs permettant au propriétaire de refuser un sous-locataire afin d'éviter la discrimination sous toutes les formes. Il faut aussi envisager que certains propriétaires pourraient être tentés d'utiliser ce nouveau pouvoir pour refuser une sous-location, alors que le motif véritable est d'évincer un locataire afin d'augmenter son loyer. Le maintien du contrôle des loyers permettrait de résoudre cette difficulté.
La Loi sur la protection des biens locatifs. Le parc de logements locatifs à prix abordables est insuffisant à travers la province. Les demandes de conversion ou de démolition qui affectent ces logements devraient continuer de faire l'objet d'un contrôle de la part des municipalités afin de maintenir un parc locatif correspondant aux besoins de leurs communautés.
Le ministère des Affaires municipales et du Logement devrait aussi continuer à jouer un rôle de contrôle au niveau législatif pour s'assurer que certaines municipalités ne soient pas dûment influencées par les intérêts de quelques individus ou corporations au détriment des intérêts collectifs et d'une saine planification urbaine.
Mme Kaley : Il nous a semblé assez évident que les mesures proposées par le gouvernement ontarien ne vont pas pouvoir atteindre les objectifs qu'il s'est fixé, c'est-à-dire, augmenter le parc locatif et obtenir un meilleur entretien des logements existants, ce qui est assez inquiétant. Notre analyse même de ces mesures indique plutôt que les résultats risquent d'être l'inverse de ce qui était escompté. Je vais vous expliquer un petit peu dans les quelques minutes qui nous restent.
Pour ce qui est d'inciter le développement de logements locatifs, l'exemption du contrôle des loyers pour les nouveaux logements existe depuis 1992. Cette mesure n'a eu aucune influence sur la construction. La majorité des constructions neuves a été faite par les programmes de logements sociaux et non pas par le secteur privé. Donc, retirer le contrôle des loyers, à notre avis, ne va pas stimuler la construction.
Pour ce qui est d'encourager un meilleur entretien des unités existantes, là non plus on ne pense pas que d'augmenter sans contrôle les loyers aussitôt que les unités deviennent disponibles va nécessairement apporter une amélioration à l'entretien des logements. Des revenus plus grands pourraient permettre aux propriétaires d'augmenter leurs profits ou bien de couvrir des frais plus élevés de vacances, de disponibilité, lorsque les logements ont du mal à être loués.
C'est l'exemple que j'ai donné tantôt. Étant donné que certains propriétaires ont du mal à s'adapter aux fluctuations du marché, ils vont avoir tendance à maintenir les prix qu'ils avaient, des loyers qu'ils avaient précédemment et, c'est ce qu'on voit présentement, avoir des pertes, des frais plus grands, et c'est comme ça que finalement l'argent va être dépensé, pas nécessairement en réparations.
On recommande que le gouvernement revoie les propositions avancées en fonction des ses objectifs et tienne compte de la diminution importante du pouvoir de consommation des Ontariens et des Ontariennes.
Une prémisse de base qui semble être énoncée dans le document de consultation est la capacité des locataires de payer d'avantage le loyer et de payer d'avantage des réparations. Étant donné le contexte économique actuel, on estime que cette prémisse est erronée.
Dans Ottawa-Carleton -- je suis sûre qu'il y a d'autres interventions qui vont donner des chiffres même plus détaillés que les nôtres -- on estime à 14 % ou 15 % des résidents qui vivent sous le seuil de la pauvreté. Sans avoir de chiffres, la pauvreté est de plus en plus évidente, même à Ottawa, sans parler de Toronto. On ne s'étonne plus ici de voir des personnes qui fouillent dans les poubelles, qui vident des boîtes bleues, qui pêchent dans la rivière polluée etc. C'est assez surprenant pour Ottawa.
Selon les statistiques du ministère des Affaires municipales et du Logement de l'Ontario, qui datent de cette année, de quelques mois, les locataires utilisant les services d'agences communautaires de l'est ontarien payient déjà entre 48 % et 67 % de leurs revenus en loyer. Ça dépend de la grandeur du logement. En annexe, d'ailleurs, on vous présente un tableau qui a été préparé par le ministère et qui fait état de la situation dans chaque partie de la province.
Nos propres statistiques sont encore plus dramatiques puisque nos clients payient de 58 % à 86 % de leurs revenus qui passent dans leur logement. De toute évidence, ces personnes n'ont pas assez de revenus pour subir des augmentations de loyer.
Déplacer tous les locataires qui ne peuvent payer, ce n'est non plus une solution. Donc on a, dans la fin du document, présenté quelques autres mesures qui pourraient certainement aider. Ce qui peut être un peu différent des autres interventions, c'est pour le développement de nouveaux logements, de développer des programmes d'aide à la communauté pour des projets innovateurs. On retrouve le même principe pour ce qui est de mieux entretenir les logements existants. L'autogestion de certains édifices pourrait également améliorer l'entretien dans certains édifices.
Nous préconisons également une meilleure formation de certains propriétaires. On constate que, en travaillant beaucoup avec de petits propriétaires, au départ ils n'ont pas les capacités de gestion que ça prend d'être en affaires.
The Chair: Thank you very much. Unfortunately the time goes by rather quickly. We appreciate your input here this afternoon and we'll continue to read the rest of your presentation.
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URBANDALE CORP
The Chair: Our next presenter is the Urbandale Corp, Peter Burns, senior vice-president. Good afternoon, sir. Welcome. Should you allow some time for questions during your 20 minutes, the government would lead off. The floor is yours.
Mr Peter Burns: Thank you. I'm Peter Burns of Urbandale Corp. Who we are is on the second page of the brief.
I don't intend to plow through reading the brief quickly; I'm not even sure how long it would take. I just want to highlight some of the main features. Most of what I've said I know you're hearing a number of times in the various cities you're visiting. I'm not sure there's anything that's that new to you. Mainly I was hoping, from what we were hearing, to be more enthusiastic about the changes.
There are advantages in making it simpler for tenants and small landlords to understand the Landlord and Tenant Act, but keeping the control was a surprise. The way it's being done is a bit of concern in Ottawa, where we're experiencing a vacancy rate. In the fall, CMHC will probably be 4% or 5%, which means we're all offering bargains at this point. With the legal maximum rent concept, we could retain that and the incoming tenant would expect it. When things get better there's a hope that we can move back to that, and that is constantly indexed. Depending on how this works, we may rent at a giveaway rent -- some people are offering two or three months' free rent -- and that's the new legal maximum rent for the new tenant.
Some will say, "That's fine; tenants turn over 30% every year." We have that in Urbandale, 3,000 units, but many tenants have been with us for 30 years, which is an indication of our service, but that's a side issue. If someone goes in at the very worst of the situation, that's the rent for many years, and we don't see any horizon. We think it's a worry for refinancing buildings or the landlord obtaining money to do major work, because the lender looks at the rent potential you give them or the legal maximum rents, even though you may not be collecting them.
If you're going to keep this decontrol when a tenant moves out and then it's back under control, we think the legal maximum rent, unfortunately, has to be dovetailed with it. We think you may be passing up an opportunity to rid yourself of the very high expense of administration in the areas of Ontario where there's a good vacancy rate and the market prevails. Toronto is different, and where goes Toronto has always gone the rest of Ontario. It would be nice to draw the line and say, "Do your own legislation there, but don't saddle the rest of us in small-town Ontario, where 70% of the places are less than 5,000 population." I'm not sure you need it there. Small landlords and tenants know each other; they make their own deal. There's very little recourse to the present system.
I think you could start to decontrol -- at one point there was a decontrol when the rent reached $750. That disappeared. Maybe there's a combination of a number of factors. It's your maintaining whatever controls you need where you feel the situations are pressing; ie, low vacancy rate and still not much happening in new construction.
Property standards: I had 10 years directing that with the city, so I'm comfortable talking about that. We had seven inspectors. It was all virtually verbal; sometimes an order, but only landlords that we probably knew ahead of time weren't going to do something. It's very time-consuming in the court system. I'd say 90% of our work was verbal or a notice of violation, giving them time because they didn't have the money, with a small landlord, to do the work. We'd spread it out over a period of time. As I said in here, it's like straightening teeth: It's long, it's slow, but hopefully in the end you achieve something. I don't know why there's a feeling that you need this immediate kind of ticketing and orders and continuations and these kinds of fines. For a small landlord, that's probably 20 years of his so-called profit if he's saddled with a $25,000 fine, which he's not going to be able to pay.
I was hoping that the retiring chief of the fire prevention bureau would come with me -- he couldn't -- and the director of property standards with the city, who shares my philosophy still and wants the companies in the budget meeting. He's going to do a brief and send it in, not appear. There is a letter in my brief from the chief of the fire prevention bureau, who is comfortable with the philosophy I'm talking about.
A lot of the time we don't know there's a complaint until the tenant, for some reason -- probably because there's an argument over arrears or some other problem -- phones property standards directly. We don't even know what they're complaining of. Quite often, it's legitimate. We go out, agree, do it and that's the end of it. I've been there since 1972. We've never had a work order and we've never had a fire marshal's order. We've had lots of notices, verbal; we do it, we meet the fire code. I think that's generally how it should work, and you should provide that it can work that way. I think there is the fallback now in the legislation to catch someone's attention with a four by four when it's needed. I'm not sure you need to remove the softer approach initially in trying to get something done.
Will the changes create new construction? I think you heard much the same thing from Minto. Our costs are about the same. Land is a good bargain. GST, the Ontario building code, levies -- all are added to it. You can buy a decent used existing building at $40,000 a unit. We figure it's $85,000 or $90,000 to build that new. You can't have a rent that's going to compete in the so-called controlled market. There's a gap that's going to take a while to fill. I think there's a chance with the vacancy rate to start moving to some decontrol, and that will put some daylight on the horizon.
I appreciate the changes to the Landlord and Tenant Act. A very disruptive, noisy tenant is not bothering us particularly; we're sitting in our head office. It's hell on earth for the neighbours. This, hopefully, will let us move in quickly to solve the problem. Now they have to live with this problem. While we're living with it, trying to obtain an eviction, we're losing good tenants because they are giving up and moving out. That's not productive.
I appreciate the handling of the abandoned goods. It's a very vague wording now. This is good.
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I don't know if anyone's mentioned pets. More and more, our standard, old-time tenants are saying: "Why are you allowing all of these dogs? We're frightened of them. They're large dogs. They're soiling the corridors; they're going in the garage. You didn't used to allow it." We say, "We can't any more," and more and more tenants are realizing we can't say no. I think that was a bad step in the wrong direction. Cats -- we didn't want to know they had them. They're in the suite, they use a litter box; that's fine. But dogs are different. They have to go out on a regular basis. People get lazy and just let them out the suite door; they do their job and come back in.
I think I've covered mainly -- there are the letters from the fire prevention bureau in my brief. There's a letter dealing with the vacancy rate and the cost of construction on average rents from PMA. I gave you an article that has some philosophical views on property standards that was done a number of years ago, but I think is still appropriate.
I probably should have read for the whole 20 minutes, so I can get the hell out before I'm attacked, but if I can help you --
Mr Marchese: Keep reading.
Mr Burns: No. I've done this many times and I've plowed through them. I'm not sure it's that productive. If it's interesting, you have it. If I can answer some questions of what's here or not here, I've been with Urbandale since 1972 and was with the city for a number of years before that, and CMHC before that, so maybe I have a few answers.
The Chair: We will turn the members loose on you anyway and see what happens.
Mr Toni Skarica (Wentworth North): I'll be pretty gentle with you, sir. The government's main purpose in dealing with rent control is that it hopes there will be new housing stock built, because it just hasn't happened for a long time now. My impression from what I'm hearing from presenters such as yourself and others is that just getting rid of rent control or changing it in some fashion isn't going to do that. What would get us moving again to building new housing stock?
Mr Burns: Not quite to answer, but to answer, we've over the last few years built 300 town houses in Bridlewood, a suburb in Kanata, because ground-oriented is much simpler to build and you don't have the part of the building code for high-rise. We can build and rent for about $1,350 a month net rent -- in other words, you pay all your utilities -- and we're making a dollar off those. We can't touch a high-rise at this point. So you have to revisit the Ontario building code, and I see some daylight there, moving back on basement insulation in homes and so on. It has become very demanding. Maybe there's a halfway medium. Levies -- it's good for the municipality; it adds to this. There's just a whole bunch of things. If rent control stays to any extent, those controlled rents set the market, which you would have to compete with with a new building. So no, we're not going to start building high-rise tomorrow. Over the last few years we've built 300 townhouses. That's half an answer to you; it's cost.
Mr Skarica: One thing we've noticed when we've travelled to northern Ontario is that in virtually all the centres outside Toronto the rents are going up at a rate less than would be permissible under the current rent controls, so it really is quite irrelevant here.
Mr Burns: And Ottawa too.
Mr Skarica: Yet there's still no new stock being built. Is there a psychological effect on builders, the fact that there is rent control? Even though really it has no impact right now, does it still have an impact on decisions whether or not to build?
Mr Burns: None of us like to be told, and I think in 1975, which was when we built our last high-rise rental, rent control had something to do with it. The Bob Campeaus said, "No more"; Cadillac Fairview said, "No more." That was psychological. Since then we've had all the add-ons to the building code and so on. So there's going to be some inertia to overcome first.
Mr Curling: Thank you for the presentation. Let me follow through. As you said, it may be psychological, and because it is psychological, they will not build. But Lampert said there are many other factors that tell you that even if that psychological thing is removed, you still won't build for the lower end. Let me also say to you that as we go around the northern part -- which the members haven't had time to tell you, and I think they would -- even though the vacancy rate increased, the waiting lists for affordable accommodation increased also. Therefore, you can't really tie in the high vacancy rate to say that there is more affordable accommodation on the market.
One other point: 84,000 units owned by Ontario Housing are vulnerable now to being sold to the private sector. Is that new direction they're heading in helpful for those who need affordable housing?
Mr Burns: How many times did we have this debate in committee and personally when you were housing minister?
Mr Curling: We didn't sell them.
Mr Burns: The clock goes around and around. I know your question and I agree: I don't think we, the private market, are going to house most of the people who are on the waiting list for Ontario Housing Corp units. Their needs are down there; our rents are going to be up there. There's still going to be a need for a portfolio. I also like the rent supplement program that the various governments have used over the years. There's a group in society that needs that kind of help. There's a group in Ontario Housing units that probably are not that welcome by our tenant neighbours if they move in; their lifestyles are different. There's a segment there for whom that portfolio is needed. In many cities the portfolio -- in Ottawa-Carleton the regional housing authority runs a good show. We consult back and forth on maintenance matters and so on, and they do a good job. I think a lot of the non-profit are being ignored because of lack of expertise management, but I don't think you can lose those portfolios where they're subsidized. I don't think the non-profit market rent should be competing, but the subsidized, there's a need, because we're not in the subsidized business.
Mr Marchese: There are many units that are not being rented at the maximum rent. If that is so, and you already can do that if you like, or if many owners like, why would we have a need to remove rent controls, at least in part, as they're doing it, through decontrolling?
Mr Burns: Because those depressed rents are not paying for the improvements that are needed. Most of Ontario's housing stock is from the 1950s and 1960s, and with Bill 4, which the NDP brought in, there's been virtually no major renovation work because there was no cost pass-through. We're all postponing, patching the roof and keeping the boiler plant going. If we get back to a cost pass-through, there's going to be a pent-up demand. It's going to produce a lot of employment. But we all hope that it's a passing phase in this low vacancy rate and we're going to get back to the approved rents. If they're taken away from us, then there's no daylight.
Mr Marchese: What you're saying to them is, "If you're going to have decontrol, please retain the legal maximum rent." I understand that.
I wanted to get into another point Mr Greenberg raised earlier about choice. That's the best protection for people and for tenants, he was arguing, so we need to let the private sector build. The problem is that the private sector hasn't been building too many units over the last six years. We're not quite sure why not.
Mr Burns: The last 20 years.
Mr Marchese: That even confirms more clearly for me why we have a problem. There's a demand problem, because in a traditional capitalist society if there's a demand there will be somebody who will supply it. So the reason why there's no supply is because, by and large, most people can't afford it.
Mr Burns: I don't agree they can't afford it.
Mr Marchese: Why aren't we building then?
Mr Burns: There is some building at the very high end. There are people who are quite happy to pay a high rent and have luxury accommodation. We have people who come to us and say: "Look, would you upgrade our unit? We want a jacuzzi. We want a microwave. We're not worried about the rent." We say, "We'd like to do it, but we can't."
Mr Marchese: I understand that part. So some units are being built at the high end; people will admit that. The problem many tenants here have of course is, who will build at the appropriate end where they can afford it and, more importantly, who will build for those who won't be able to afford it? As you know, a third of all tenants earn less than $23,000 and many tenants are paying more than 30% of their income on housing. We've got a problem.
Mr Burns: That's why I said I support rent supplement. We have a lot of units in rent supplement voluntarily, not through any requirement, because there's a segment who cannot afford and never will afford the so-called market rents.
The Chair: Thank you very much, Mr Burns. We appreciate your input into our deliberations this afternoon.
Mr Burns: I hope it was of some assistance to you in your deliberations.
The Chair: We're now recessed until 5 pm.
The committee recessed from 1600 to 1700.
OTTAWA-CARLETON HOME BUILDERS' ASSOCIATION
The Chair: Good afternoon, ladies and gentlemen. As is our custom, we respect our presenters' time, so we will start on time. Our first presenter is Michael Noonan, the secretary of the board of Ottawa-Carleton Home Builders' Association, and he's accompanied by Caroline Castrucci. Welcome to our committee. You have 20 minutes, and should you allow time for questions, they would begin with the Liberals. The floor is yours.
Ms Caroline Castrucci: Good afternoon. My name is Caroline Castrucci, and I'm president of the Ottawa-Carleton Home Builders' Association, and with me today is Michael Noonan, secretary of our association.
Briefly, the Ottawa-Carleton Home Builders' Association is the voice of residential construction in the Ottawa-Carleton region, representing over 300 member companies. Our members produced 97% of the region's housing last year. The OCHBA supports the proposed rent control reforms as a start in the right direction. The proposals outlined in the New Directions discussion paper address many of the concerns which landlords and developers of rental properties have been identifying for years. We certainly do not believe that the reforms will result in skyrocketing rents, as many critics of the reforms have asserted; however, these reforms will do little to encourage the construction of rental units.
Before the members of the Ottawa-Carleton Home Builders' Association will be lining up to construct rental units, a number of other legislative and regulatory reforms are required. To expand on some of these other required reforms and to revive the ones vital to the rental construction industry, I will now pass the presentation over to Michael.
Mr Michael Noonan: Mr Chairman and members of the committee, we intend not to dwell upon the discussion paper itself, because we believe the committee will have heard from deputants far more versed in the details of the rental business than our members. Our members typically are builders and developers of residential construction throughout Ottawa-Carleton. What I'd like to do is provide our thoughts on what is needed to jump-start the industry so the industry can get back into the business of building rental housing, and affordable rental housing at that point as well.
The very basic premise is that the industry will remain on the sidelines until such time as market rents and economic rents come closer together. At the present time, there is too large a gap to make it an economically viable proposition for any builder. When we look in Ottawa-Carleton at the average market rent for a two-bedroom apartment, we're talking something in the range of $760 a month, and that's CMHC's figure for 1995. If we assume reasonable construction costs -- in the cost environment in which we are working today, the cost to build a two-bedroom, concrete-type apartment unit would be something in the range of $1,300 or $1,400. That reflects the cost to carry as well as the hard and soft costs associated with the construction.
You don't have to be a mathematician to realize that $600 a month would be needed to bump up the market rent to make it an economically neutral position. Any businessman in his right mind wouldn't have to look very hard to say, "That's going to put me into the poorhouse, and I will never see the day where I will be financially neutral, in a break-even position."
Our position is very clearly that there has to be a massive overhaul in the rental environment in order to invite the builders to come back into the market, and to come back into the market without necessarily relying upon direct subsidies from any level of government.
The overhauling of rent control and what is proposed in the discussion paper, as Caroline said, is a good first step. It is an important step at overcoming a lot of the regulatory hurdles that many landlords face today. Let's face it, the cost of regulation is very real, and it's a very real cost that is immediately passed on to the tenants. The landlords don't pay it; the tenants do, as part of their monthly rent.
That's only part of the equation. There are about four or five other key elements that must be looked at, that I believe the government is making a concerted effort to look at. We would only urge that this committee, in their discussions with their colleagues at Queen's Park, continue to reiterate these concerns and these points.
First of all, there has to be an overhauling of the property tax system. I think the committee has heard time and time again that the property tax system discriminates against the owners of rental property. In the case of Ottawa-Carleton, it's to the tune of two to three times; an ownership property would pay a third or half of what a rental property would be paying.
The second issue has to with building regulations. Over the last 10 years, more and more changes have been made to the Ontario building code and the Ontario fire code, and the direct result has been that the cost of construction has increased. I agree that the housing is substantially better than what may have been built in the 1950s. Is it to the point where it's making an appreciable difference in terms of the health and safety of the tenants? I would suggest not. I suggest that in many cases the changes made to the building code have added to the cost of housing, which we and which landlords ultimately have to pass on to their tenants.
Third is the whole notion of regulatory streamlining. The changes which were brought forward earlier this year to the Planning Act I believe represent a good step. We appeared before a committee where they were discussing other changes to the Planning Act which would further streamline the regulations and help allow us to bring forward applications in a more timely fashion. For an application for rezoning or for a plan of subdivision or for a site plan application to take a number of months, if not years, is unconscionable and it adds to the carrying costs a developer has to add to the bottom line of a project and ultimately what would have to be factored in to the rent charged.
Planning and design control is another important consideration which seems to have gotten away from a commonsense approach. More and more, architects and planners are imposing their view of what is good design and what is aesthetically great design, to the detriment of coming forward with reasonable, affordable, modest, low-cost housing. I often say that one of the hallmarks of architecture was that function should follow form, but unfortunately, now function is following form -- or vice versa. I probably got them twisted. Yes, I have got them twisted, so reverse what I just said.
Mr Peter L. Preston (Brant-Haldimand): Are you Liberal? Sorry about that, Richard.
Mr Grandmaître: Your lunch-hour is finished.
Mr Noonan: It is often said that the architects often are our worst enemies in terms of coming forward with some reasonable accommodation. They push forward ideas which are great from an urban perspective, but they are extremely costly and extremely pricey.
Development charges: I'm sure you've heard time and time again of the need to lower development charges. Development charges directly escalate the cost of new housing, whether they be single-family homes or apartments.
The interesting thing we would say about development charges and the construction of rental accommodation is that rental accommodation typically is most suitable to infill situations, situations that are well placed in the urban context, which allow them to take advantage of the established infrastructure that's there.
If they are taking advantage of the established infrastructure, one would suggest that there isn't a need to spend considerable amounts of money in terms of improving the infrastructure necessary to accommodate the new development. Rather than loading up development charges for new rental accommodation, one would suggest that a more balanced and modest approach could be taken whereby the recognition could be made that the infrastructure is largely there and the rental accommodation could take advantage of such.
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The final point, and I recognize fully that it's outside the mandate of the provincial government, is the goods and services tax. The goods and services tax establishes a two-tier system for new housing. It establishes one set of rules for stick-built ownership housing, whereby the consumer is paying what amounts to 4.5% of the gross selling price of the house, whereby in rental accommodation there is no rebate. The builder of rental accommodation is required to pay the full 7%.
If there were a concerted effort to marry together a regulatory package which addressed all the elements I've touched on here this afternoon, I think there would be a strong incentive for our membership and home builders across the province to get back into the market. The clearest step that could be made on behalf of all parties would be to lower that gap between market and economic rent and make it a sound business proposition once again so that the builders could get back in and build reasonable accommodation for the people of the province.
Thank you very much. We're more than happy to address any questions the committee may have.
The Chair: Thank you. We've got about three minutes per caucus, beginning with the Liberals.
Mr Curling: I want to thank you for that presentation. Although you said you wouldn't address what was in New Directions, you've actually addressed what should have been, and what the Lampert report has indicated are some of the impediments, why people like yourselves are not building. You're right on. The economic and the market rents are such a wide gap away that unless those things come together closer, where it's made more profitable for you to build, you will not build. The government would have to put all those in place, as you said, and then you may come into the market, which will take you some time to do that.
The government is speculating about selling off 84,000 units owned by the Ontario Housing Corp and has stopped building on about 365 of those projects that would have given some support to those in the affordability area. If that's the direction in which they're going, what is your feeling about this attack on those who are most vulnerable in our society who need affordable housing? You wouldn't be building within another three or four years, even if you get all those things in place.
Mr Noonan: If within a matter of months a regulatory package was passed through the House, I'd feel fairly comfortable that there'd be a fair number of projects launched in this province. The industry is quite adept at moving to capitalize on emerging opportunities, and if there were a package brought forward whereby the gap between market and economic rent disappeared because of regulatory reform, I am sure the builders in this province would be lining up to build accommodation.
In terms of providing the protection to the most vulnerable members of society, I agree with you 100%. I think it is not necessarily a supply consideration but more of a social policy. It's a policy whereby the individuals who were most vulnerable need the income protection, and they need the income protection in terms of an expanded subsidy program or a housing supplement program. If there were that sort of program, there would be the monetary resources for these individuals to go and shop for the most appropriate housing for their particular situation, rather than having to wait in line for a spot to be made available either in a non-profit, a co-operative or an OHC unit.
Mr Marchese: Thank you for your presentation. I'm focusing on some of the remarks you made in two places, but the one I will focus on is in paragraph 5: "The combined effects of the Landlord and Tenant Act, the Rental Housing Protection Act and Rent Control Act have over the past two decades virtually shut down a once vibrant segment of the local and provincial housing industry." That, in your view, is really what's caused the problem for the developer not to build.
Mr Noonan: No. What I said in my presentation was that it's only one element of it. The other elements are the property tax system, building requirements, design control, development charges --
Mr Marchese: I appreciate that. It's just that the way I read it, it says these three have "virtually shut down...." It doesn't appear like you said it's one of the things, but that these three regulatory measures have shut the whole industry down.
Mr Noonan: I would agree that the regulatory environment, as it's expressed in the rent control system, has played a large role in shutting down a once vibrant industry. The facts are very clear that in the 1970s, there was a substantial and phenomenal amount of rental accommodation being built, but over the next two decades --
Mr Marchese: I appreciate that, but I want to ask you another question.
Mr Noonan: Just let me finish, if I could.
Mr Marchese: But I only have a few moments, and if you do that, I won't be able to ask any other question.
Mr Noonan: You might as well answer my questions for me then, if you won't give me an opportunity to answer.
Mr Marchese: Oh, no. I was reading your paper and that struck me. I don't think that's what's prevented the industry from building. You yourself admit that what's creating the problem is right here: "Builders will not return to the rental market until such time as the considerable gap between market and economic rents is bridged." That's the answer, and the person the Conservative government hired, Mr Lampert, says that. He says the gap is $3,000, not a couple of hundred but $3,000, $2,900, more or less. There's a disagreement of hundreds of dollars, maybe a thousand or two.
You're saying if governments help you out somehow with a nice package, you might be able to come and build. That's basically what you said.
Mr Noonan: I didn't say that. I'm not looking for a handout and our industry has never asked for a handout. Our industry has merely suggested that there should be some sanity restored to the regulatory environment, overcoming many of the reforms that unfortunately your government instituted during the time you were in power.
Mr Marchese: I appreciate that.
You talked about a package -- I wrote down the word "package" -- and part of the package is in your proposal.
Mr Noonan: That's correct.
Mr Marchese: Lampert, of course, makes a whole other list of things that the industry is looking for. My view is that that's a considerable subsidy to the industry in order for them to get in. Why should we have to subsidize the industry with all the measures that you and --
Mr Noonan: I don't believe there's any subsidy there. I think it's just establishing a sense of order and rationality. For one example, for rental accommodation to pay two, three or four times what condominium accommodation does for virtually identical units -- that's nonsensical. There's no reason a renter or a landlord should pay two or three times more than an owner for virtually the same unit.
Mr Marchese: That's one of the issues, but there are so many other things you're looking for.
Mrs Marland: Mr Noonan, I was very interested in your comments about the Ontario building code and the Ontario fire code. In the past, certainly when I was critic for housing and even critic for our revered Minister of Housing for the Liberal government, I had some debates at different times with Ontario Home Builders and the local home builders' groups. There's a moral obligation, I think, on behalf of all builders to do what they can, especially to make people safe. The building code requirements do deal with safety, as does, obviously, the fire code.
You were talking about the cost of those changes over the last 10 years. I was wondering whether you'd like to explain your comment vis-à-vis whether it's in light of retrofit only, which is a different challenge than new construction. Obviously, in new construction it's cheaper to put in sprinkler systems than a whole lot of other things now, which is permissible under the new fire code requirements.
Mr Noonan: You're right in that. Certainly the comments of the home builders' association relate to both aspects. We are concerned with the substantial changes that have been made to the building code. Since 1990, for example, they've added considerable amounts to the cost of producing housing, whether it be ground-oriented housing -- I wouldn't suggest it's contributed to the cost of apartment housing because there simply isn't any apartment housing being built by our members, so we really don't have experience in that.
I agree with you that builders have an obligation to their residents, to their purchasers, to ensure that the housing they're building is the safest it can be and provides for healthy housing. I believe we as an industry are providing that. However, certain changes -- and I'll speak where I'm most familiar, which is the stick combination, the ground-oriented. It does illustrate a point that many changes which have been made to the building code are aesthetic changes. They are changes which don't necessarily improve the quality of housing from a safety or a health consideration but go directly to improving the overall package. But they are added on to the price in a mandatory way and the consumer doesn't have the choice to say, "Well, no, I'd like to keep my house basic and affordable and therefore I don't necessarily want these frills," so to speak.
With issues of apartments in high-rise, certainly the mandatory changes under the building code to deal with sprinklers and safety are good and appropriate measures, and our industry wouldn't be opposed to those.
The Chair: Thank you very much. We appreciate your input here this afternoon.
Speaking of revered former ministers of housing, Evelyn Gigantes is in the audience today.
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UNITED TENANTS OF ONTARIO, EASTERN REGION / LOCATAIRES UNIS DE L'ONTARIO, RÉGION DE L'EST
The Chair: Our next presenters are from the United Tenants of Ontario, eastern region, Evelyn Shore, June Boucher and Roslyn Denis. Welcome. You have 20 minutes. Should you leave any time for questions, they would begin with the New Democrats. The floor is yours.
Mrs Evelyn Shore: Good afternoon, ladies and gentlemen. My name is Evelyn Shore. I'm a tenant and I live here in Ottawa. I have worked for over 30 years in the areas of cooperative, non-profit, public and private housing. As such, I have seen many changes and fluctuations within all aspects of the issues relating to rental housing. I want to thank you, Mr Chairperson and members of your committee, for inviting me to make a presentation to you regarding the proposed new tenant protection legislation.
Today I will be representing United Tenants of Ontario, eastern region. UTOO is a provincial group that has been a voice for tenants in Ontario since 1989. Unfortunately, due to funding cuts by the provincial government, our office in Toronto had to close at the end of July of this year and we lost valuable staff. Eastern region of UTOO has been carrying on as a voice for tenants and will continue to do so.
Since eastern region covers a very large area, I must admit my disappointment that you did not choose additional places for your hearings such as Cornwall, Kingston or Belleville, as well as Peterborough and Ottawa. This would have given you the opportunity to gain a different perspective into the problems the tenants have in other areas of eastern region. For that reason, I have asked two other members of UTOO eastern region to join me. June Boucher lives in Lombardy, which is a rural community. Later, June will give her views on how this new legislation will affect rural tenants. Roslyn Denis lives in Hawkesbury and will express her views on how trailer park and other tenants will be affected. Roslyn is a francophone and will give her report in French.
On August 19, the Legal Clinics' Housing Issues Committee, LCHIC, presented a brief in Toronto to your committee. I understand that the brief is appended to the brief you received this afternoon from West End Legal Services. UTOO eastern region supports these briefs, and I am going to enlarge on the rent control issue as part of my report.
Rent control is a matter affecting real lives and real people in a very significant way. It is very important that the people who are trying to change rent control have a background and expertise with landlord and tenant issues. The original intent of the Rent Control Act was to protect vulnerable tenants in the low-end rental market. The rent registry has helped tenants to determine if their rent was legal and to challenge unscrupulous landlords by legal action. The present legislations are very important to tenants who live on fixed or low incomes, who cannot afford huge rent increases and are unable to compete for rental units when vacancy rates are low. Many tenants will be afraid to move because they will be forced to choose paying higher rents over food, clothing, medication and transportation.
When the provincial government killed the cooperative non-profit housing programs in Ontario in 1995, it also removed a housing option that thousands of tenants relied upon to supply decent, affordable housing.
Government has been cancelling housing policy to the point where there is no housing policy in the province of Ontario.
Rents are to be decontrolled when a tenant vacates a unit. This will only create a financial incentive for landlords to evict tenants. The discussion paper implies that the proposed negotiations between landlords and new tenants will take place in a fair manner between two equal parties. This is not so. Landlords and tenants do not have equal power. People need housing and landlords have more than their fair share of tenants who need to rent.
There are approximately 3.3 million tenants in Ontario, this being one third of Ontario's population, who occupy an estimated 1.5 million rental housing units. Tenants in Ontario pay $10 billion a year in rent. Of this, $1.5 billion goes to yearly property taxes. Based on these figures, you must agree that Ontario tenants are a major contributor to Ontario's tax base. With this in mind, UTOO eastern region strongly believes that the provincial government has no other choice than to listen to tenants and ensure that the present legislation for tenants will not be changed.
Maintenance and repairs: UTOO eastern region does not believe that the government's proposal will necessarily induce landlords to put money into building maintenance. There is nothing in the proposal requiring landlords to use the higher rents negotiated for maintenance. Many tenants do not report property standards violations. They are afraid of landlord harassments and many do not know their rights. The government should establish more programs where tenants could learn what their rights are. Also, what has happened to the 2% increase that landlords have been able to collect each year that was supposed to be used for repair and maintenance?
UTOO eastern region supports increased fines for property standards violations. The discussion paper indicates that one solution would be to strengthen the powers of municipal bylaw enforcement officers, but with the funding cuts to municipalities, these in turn have had to reduce services to the public.
One other solution would be to license landlords. If the landlord does not maintain the premises in good order or commits other breaches of the landlord's obligations, it would lead to a possible increased licence fee, the suspension of a licence, or the licence could be revoked.
The Landlord and Tenant Act: The government is proposing to take landlord and tenant disputes out of the courts and have the issue settled by a tribunal. We do not want this to happen. We see this as taking the right away from citizens of having their case heard in an open court. Instead, their disputes would be heard by a tribunal in a closed-door atmosphere.
If the new system is adopted, the government must ensure that the decision-makers are knowledgeable and neutral in landlord and tenant issues and are not political appointments made by the government of the day. If the government charges application fees for addressing these disputes, a user fee system to protect your rights is unjust for all tenants. UTOO eastern region strongly urges that a user fee system not be adopted.
The Rental Housing Protection Act: UTOO eastern region cannot agree that tenants will be protected if conditions are changed for conversion, demolition and renovations of rental housing. The Rental Housing Protection Act now protects tenants by preserving the province's rental housing stock. It also ensures that developers cannot arbitrarily convert apartments into condominiums. The majority of moderate and low-income tenants cannot afford to buy.
UTOO eastern region believes that changes to the Rental Housing Protection Act will mean that current rental housing will be lost through demolition, to other uses or conversions to condominiums. These changes will not help tenants, as the changes will result in an increase in unaffordable units and less housing options for all tenants. This committee must agree that your government has a responsibility to protect moderate and low-income tenants who depend on the province's rental stock for their housing.
Care homes: Presently tenants of care homes have security of tenure under the Landlord and Tenant Act, the Rent Control Act and the Rental Housing Protection Act, just as any other tenant in Ontario. However, if vacancy decontrol comes into effect, it will result in unaffordable rent increases for new tenants in care homes. Transfer of residents should only be at the consent of the residents or substitute decision-makers. There definitely should not be any special fast-track eviction procedure for care home residents. This would be discrimination with a capital D.
Roslyn is going to give her presentation now. Now, as I said before, she will be speaking in French, so if you wish to --
Mr Marchese: Get ready for it.
Mme Roslyn Denis : Bonjour. Mon nom est Roslyn Denis et je suis ici en tant que porte-parole des locataires francophones de LUDO, Locataires unis de l'Ontario, région de l'est. Je suis aussi présidente de l'association des locataires de ma région au nom des locataires, et membre du conseil d'administration de la Clinique juridique populaire de Prescott et Russell.
J'aimerais vous entretenir sur deux points qui me touchent plus particulièrement, soit les parcs de maisons mobiles et les droits des francophones.
Hawkesbury et les villages environnants est un milieu rural où on trouve un assez important nombre de parcs de maisons mobiles. La grande majorité des résidents de ces parcs de maisons mobiles sont les propriétaires de leur maison. Ils prennent fierté dans leur demeure et entretiennent la maison et la propriété qu'ils louent de façon impeccable. Les locataires font plus que leur part. Ils s'attendent du même engagement de la part du propriétaire du lot.
Les changements proposés concernant la nouvelle loi sur la protection des locataires seraient désastreux pour les locataires. Le gouvernement propose aux propriétaires de ces parcs de maisons mobiles de passer la facture aux locataires. Déjà, ces locataires font plus que leur part. Pourquoi seraient-ils responsables, dans plusieurs des cas, de la négligence des propriétaires ? Pourquoi les locataires doivent-ils payer la facture des réparations coûteuses lorsque le propriétaire n'a pas respecté ses engagements ?
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Cette loi n'offre plus de protection aux locataires, mais vise simplement à enrichir encore une fois de plus les propriétaires. Devrons-nous changer le nom de cette nouvelle loi pour la loi la sur la protection des propriétaires ? Elle permet aux propriétaires qui ne font pas de réparations et qui ignorent les ordres de réparation du gouvernement de s'enrichir encore plus. Ce dont nous locataires avons besoin, c'est la justification pour les augmentations des loyers ainsi que le respect des ordres de réparation émis par les inspecteurs du ministère.
De plus, cette loi réduira de façon importante le nombre de logements abordables pour les locataires à faible revenu. En cas d'une augmentation substantielle du loyer, les locataires ne pourront pas déménager. En voici les trois raisons principales :
Premièrement, la rareté des parcs de maisons mobiles et la longue liste d'attente rendent la tâche difficile, même impossible pour les locataires qui cherchent un nouveau site.
Deuxièmement, le coût relié au déménagement est un autre obstacle important. L'équipement spécialisé et les permis requis sont des facteurs importants qui peuvent facilement faire grimper la facture de déménagement de 10 000 $ à 12 000 $. Il y a aussi le coût relié à l'installation au nouveau site, tels le raccordement de l'eau, de l'hydro et de la fondation de la maison mobile.
Le troisième obstacle, c'est dans le cas des maisons mobiles plus âgées. Elles ne sont plus assez sécuritaires pour pouvoir les déménager. Les locataires devront vendre leur maison à des prix dérisoires.
Le gouvernement doit donc reconsidérer son intention en ce qui concerne cette nouvelle loi. Sinon, nous risquons sérieusement de perdre le peu de logements disponibles à prix abordable pour les locataires. Cette loi n'offre aucune protection aux locataires et vise seulement à enrichir encore plus les propriétaires.
Ma deuxième préoccupation concerne les droits des francophones. Hawkesbury est située dans les comtés unis de Prescott et Russell, où habite une population majoritairement francophone. En fait, 85 % de la population de Hawkesbury est francophone. Avec toutes les coupures, il est déjà difficile de se faire servir en français. Lorsque des informations ou toute autre question est adressée en français au gouvernement, il faut être patient car souvent les préposés ne parlent pas français, et là on essaie de vous transférer à un préposé qui parle français. Alors, il faut s'armer de patience. Des fois on attend cinq minutes et d'autres fois on est moins chanceux ; on peut attendre jusqu'à 20 minutes.
Je sais aussi par expérience que lorsqu'on envoie un document en français au ministère du Logement, il faut compter sur quatre à huit semaines supplémentaires pour la traduction. Quatre à huit semaines, c'est long lorsque tu as besoin des réponses à tes questions.
Maintenant il y aura, avec cette nouvelle loi, un système pour régler les différends entre locataires et locateurs. Mais de quelle façon ce système fonctionnera-t-il ? Les locataires francophones, seront-ils encore une fois pénalisés à cause de leur langue ? Quelle assurance auront-ils d'être bien compris lors des séances de cette nouvelle forme de tribunal ? Les gens qui y siégeront, seront-ils complètement bilingues -- pas seulement dire oui ou non, mais pouvoir parler, et surtout comprendre les discussions qui se dérouleront durant les séances ?
Beaucoup d'inquiétudes surviennent lorsqu'on parle de ce nouveau système. Faire face et défendre ses droits devant un propriétaire imposant, souvent très riche et influent, est très stressant pour un locataire. S'il existe en plus une barrière au niveau de la langue, je ne crois pas que les locataires auraient des chances de faire valoir ces droits. Je crois sincèrement que le gouvernement ne devrait pas réduire les fonds nécessaires aux besoins des francophones, mais les augmenter de façon à ce que les services soient aussi rapides et adéquats en français qu'en anglais. Merci.
Mrs Shore: June will now speak on behalf of rural tenants.
Ms June Boucher: My name is June Boucher. Until March of this year I was the east region organizer for United Tenants of Ontario. Prior to this I was connected for several years with the Ottawa Council for Low-Income Support Services, where I worked as a tenant organizer. My length of involvement with tenant issues dates back to the late 1960s, when I began with the Union of Tenants based here in Ottawa.
My 26 years of working and volunteering with tenants within the province of Ontario have given me a solid understanding of the issues and situations tenants face on a daily basis. Today, though, I am here representing the concerns that rural tenants in the eastern region of Ontario have with the New Directions format. I myself am a rural tenant.
Rural tenants live in a rather unique situation. That situation is for the most part one of isolation. Due to monetary and transportation restrictions, many rural tenants do not have equal access to the information they need on protections that exist even under present legislation. There are no rent registry offices or housing help offices, and for many no legal clinic offices, in rural communities. How else to explain blatant discrimination and ignorance of present law in rental ads within rural communities? This lack of information applies to tenants and landlords alike.
In any given week in local newspapers, rental ads contain phrases such as "adults only," "no pets," "no children," "seeking employed tenants," "welfare okay," or more subtly, "mature tenants only." One can only hope these ads relate to ignorance and not abuse of laws under the present situation.
Rural communities by their nature tend to be close-knit. Everyone knows everyone else. This translates for many tenants to a very untenable situation. If you rock the boat, expose abuses and assert your rights under the law, as a tenant you may find it very difficult to find alternative accommodation. Most landlords know each other.
Repairs and maintenance in rural communities are substandard in several cases. Not only do tenants not know where to go for assistance, but small municipalities do not have the staff or the teeth to enforce even the minimum bylaws.
One area of the New Directions paper in particular is of great concern. That area is in the negotiation proposal relating to leases and rental accommodation. Rural tenants at present come from a situation where the power base is mostly in the hands of the landlord for the abovementioned reasons. This proposal places rural tenants not only at an unfair advantage but at considerable risk. No equitable negotiation can possibly take place under this proposed legislation. Rural tenants need better access to support services and information, not less.
In spite of the aforementioned problems that rural tenants face, some progress has been made over the last several years. Due in a large part to tenants' support and information groups such as United Tenants of Ontario, the Federation of Ottawa-Carleton Tenants Associations, legal clinics, where they exist, and the presence of rent control, tenants have been taking successful steps to overturn and halt some of the ignorance and abuses that were and are taking place.
We strongly feel that the new tenant protection package proposed by the present government will hinder and hurt rural tenants in particular, and Ontario tenants in general.
In closing my section, I would like to say that a tenant protection package that offers tenants no real protection is no different from a health protection package that offers prophylactics that are faulty. At best, it is false protection. At worst, like a condom full of holes; it exposes people to unjustifiable risk.
I realize my aforementioned analogy may be offensive to some, but this proposed legislation is offensive to most. Thank you.
Mrs Shore: First of all I want to apologize that we do not have copies of our report available for the committee, but if you wish copies, they will be made available to you.
In summing up, the United Tenants of Ontario, eastern region, urges the government to slow down and take a good look at the proposed new tenant protection legislation. Will it really protect all tenants in Ontario or will it create a nightmare for tenants? What's your hurry? Please pay close attention to the old saying that advises, "If it ain't broke, don't fix it." Thank you.
The Chair: Thank you for your presentation this afternoon, ladies. We appreciate your input.
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DOUGLAS BAIRD
The Chair: Our next presenter is Douglas Baird. Good afternoon, sir. Welcome to our committee. Should you allow some time for questions in your 20 minutes, they would begin with the New Democrats. The floor is yours, sir.
Mr Douglas Baird: Thank you very much. First of all, I'd like to read a short letter that I wrote to Premier Harris when I sent my copy of what I'm going to talk to you about, so I'll read that first.
"I am enclosing a copy of my comments regarding your Minister of Housing's ideas to dismantle rent control. I will be appearing at the August 28 hearings in Ottawa. According to what I read, your government seems to be rushing into a situation" -- and UTOO also says the same -- "which they are not ready for. Please see that legislation is delayed until all avenues have been explored. The 2.8% increase for 1997 for some seniors, including war veterans like myself, could be demoralizing and is unjustified."
Now we'll come to the actual comments that I made regarding the proposal. The first indication of changes which will affect me came to my attention June 26 in the Ottawa Citizen. I question the government's sincerity for public consultation.
In my building of 10 units, no more than three tenants know of the proposal. How do you let 1.3 million households know about the changes? I can think of three possibilities: Require landlords to post information; mail a flyer to each residence; include information in MPP newsletters. There's probably a lot more, but bring those in and you might reach the people.
Mr Patten: No money for newsletters any more.
Mr Baird: At any rate, a two-month time limit for comments, particularly in the summertime, seems to be poor timing, hasty, and could lead to bad legislation. Please do it right.
My experience includes 35 years as a landlord and 20 years as a tenant -- some of it overlapping, not too much. I had no problem in making a decent return on investment, yet keeping the properties in good condition, and this was up until the early 1980s. No need for capital cost expenditure special rent increase. The Income Tax Act provides adequate means to write off expenses and capital costs. It's still there.
As a tenant, the stove and refrigerator are the same as when I moved in 20 years ago. Yes, the roof had to be replaced and a new heating system installed. I guess that's necessary in a 30-year-old building. It's to be expected. A prudent landlord such as mine would have finances set aside for such, and he did or they did.
I'll give you some facts. These are personal things just about me and people in my area. There's approximately 1,400 units in the project that I live in. There's high-rise, low-rise apartments, town and garden homes; 10 units in the building where I am located. Two tenants in the building have been in it since it was first occupied in the mid-1960s. As for me, my rent in 1976 went from $276 a month till 1997 with the new 2.8% to $772 per month. This is a 292% increase and it figures out at 14% per annum, if you take it all together.
The tenant turnover now -- it wasn't before, but it's starting to go up -- is about two per year in this building.
I'd like to say now that the package was misnamed. It is a proposal to dismantle rent control. How you can call this tenant protection, I cannot see for the life of me.
Mr Sergio: That's what it's called.
Mr Baird: Oh, I'm sorry. First of all, the message from the minister, Mr Leach, the second-to-last paragraph, refers to, "Who are Ontario taxpayers?" or he mentions Ontario taxpayers, but he also mentions tenants and landlords. I thought tenants and landlords were also taxpayers. I hope he thinks that way too, but his letter certainly seems to differentiate between the three.
There's no mention in the package about municipal-regional taxes and the fact tenants through their landlords pay such taxes at double or so the rate of homeowners. In this connection, could there be a sort of equalization considered? That is, reducing rents.
Further in the minister's message -- and I'm not going to say that there's nothing right in the proposal or anything like that, but I feel he has maybe not considered some things, like the true problem, which includes human nature issues as I call it. I'm not talking about landlords or tenants, it's just people. First of all, there's non-acceptance of control for the general good; and then there's overzealous budgets to meet corporate-individual egos and goals. I worked for a very large company and I know what goes through. In fact, I worked for Northern Telecom for 35 years and it was good and I enjoyed it. There's also lack of respect for property of others, and apathy to social problems. Now those are just four; there's probably more, but we'll carry on from there.
Tenants' protection: Most landlords do not want any controls, and I guess I wouldn't either when I was a landlord. Fortunately, because my property was in Quebec, I didn't really run into it, but I was a decent landlord, as are some people. They will exploit loopholes. That's why I said most landlords.
I have been through three rounds of higher-than-guideline increases. None fully succeeded, but landlord manoeuvring and maintenance -- that is cleaning; I call maintenance cleaning and that sort of thing -- and capital expenditure areas was apparent. The landlord took these cases to court, so there were stressful periods of long duration.
This has to do with one of the proposals. When a vacancy occurs, will existing tenants, and I'll be one of them, demonstrate their displeasure with rental price and capital expenditures negotiated with new tenants? I sure as hell will. In fact, I'll be right there at the door asking them, "How much are you paying and what are you getting done that I'm not getting done?" This could be particularly galling when one considers the present guideline includes a 2% annual increase for capital improvements which landlords seem to ignore.
The 4% capital expenditure cap is a sham. A couple of these in successive years could be devastating to a tenant. If you don't think they are, you think of somebody who's paying maybe $600 and then add about another 9% to that, that could be devastating to them.
Tenants' protection: I support retention of the rent registry. It contains such information as hydro included or parking or whatever, as well as maximum rent.
Under privacy, page 7, I'd like you people, ladies and gentlemen, to look at it because it appears landlords can show a unit at any time after a tenant is given notice of termination. I don't think that's really intended, but it's in there and it makes me think that this presentation the minister sent out was not really thought about. There's no way they can come into my home at any time. If it's an emergency, yes, but to classify a termination in the same breath is quite something.
You're probably going to say: "What the hell's this guy going to do now? He's going to make a recommendation here which some of the tenant organizations will not probably agree with." But I see it because I remember the past.
The following to be acted upon, conclusions and recommendations:
Abolish the monetary monthly rental control by the year 2000 in conjunction with enforcement legislation as appropriate to tenants and landlords.
Rescind the 2.8% increase for 1997; freeze rents until revised municipal-regional tax structures are in place. Why in hell you didn't do this before you brought this sort of thing to our attention first I don't know.
Legislate fairness in tax so that municipal-regional tax structures are equal for homeowners and landlords and tenants. I see quite a bit more coming down the line. With your reduction to the regions it's going to cause big problems between landlords and tenants and property owners.
1750
Order landlords to offer leases to tenants reflecting the lowered tax structure. By that, I mean if there's a 10% difference, bring the rent down by 10%.
This you may not like either, and the landlords certainly won't, but maybe you can get this in so everybody would be -- apply a 1% tax on gross rentals to be remitted by landlords for the purpose of supporting accommodation for low-income people.
Believe me, I'm not low income; I'm high enough up the stratosphere that I'm not going to worry as to what happens, but I just thought I would mention these things because I see people in my building who I know will be devastated by some of the changes that are being proposed.
I thank you and I'm open for any questions that you may have.
The Chair: Thank you, Mr Baird. We've got about two and a half minutes per caucus, beginning with the New Democrats.
Mr Hampton: Thank you very much. I want to read to you something since you have some knowledge of this from both sides of the table. The government's own report, the report by Greg Lampert, economic consultant, says a number of interesting things. He says that part of the reason you're not getting new rental housing built is, "There's been a significant change in the way rental housing has been taxed." In other words, in the early 1970s the income tax rules made it very favourable to invest in rental housing. In fact, it was a tax scam. It was a particularly effective tax scam for high-income individuals.
Mr Baird: Yes.
Mr Hampton: He says that people won't reinvest in this form of affordable housing until they get their tax scams back. That's one of the things he says in this paper. He says --
Mr Baird: I've never read his report.
Mr Hampton: Okay. I want to take you to something else that he says.
Interjection.
Mr Baird: The only scams I know about were the quick turnovers and that sort of thing. Unfortunately, or fortunately, although I lived partially in Ontario during that time, I wasn't told. I didn't pay too much attention.
Mr Hampton: He also says a number of things we've heard developers ask for here today. He said developers don't want to pay development costs or they want their development charges significantly reduced.
Mr Baird: I know that. I'm aware of the increased costs, but it's governments who have brought in these increased costs. These could certainly be relaxed. I fully believe if you started to get to work at the bottom level, which is the 1% figure that I mentioned there, you would be getting -- and I'm just throwing this out -- about $6 million a month, believe it or not, that could go right into accommodating poorer people. That's the way I see it.
After the war, when I first bought, I was helped by the government because I was able to get a 4.5% mortgage, and this has to start again. We're getting into roughly the same position. I see people today -- and I'm talking about people in general, especially young people, but I also see the 40-year-olds in my area who aren't working, and they can't afford -- you have to give something.
Mr Maves: Thank you for your presentation. I noticed right at the end of your presentation, one of your recommendations was, "Order landlords to offer leases to tenants reflecting the lowered tax structure."
In the paper we talk about, "The right of tenants to make a rent reduction...application at any time will be preserved. The grounds for decreases will be inadequate maintenance, reduced or withdrawn services and operating cost decreases for municipal taxes."
It's a question to you and maybe a question to ministry staff: If in a building there is a substantial tax reduction -- as we know, in some places, tax on apartments is four and a half times what it is on a residence -- if there was a substantial property tax reduction in a building with 12 units, could one tenant apply and reduce the rent by the property tax reduction for everybody, or would each one of them have to have a certain reduction? Would they all have to be individuals?
Mr Baird: It's a good question coming from a younger person who does not remember before rent controls.
The Chair: Mr Hardeman, did you want to take a shot at answering that?
Mr Hardeman: I would presume, and I stand to be corrected, that it would be the application of one, but if it was for a tax reduction it would have to be for the units involved.
The Chair: Mr Hardeman, do you want to use up the last --
Mr Hardeman: Thank you. I did want to carry on a little bit what Mr Hampton was talking about, the issue of the Lampert report. In fact, it was commissioned by the government. He was asked to look at the building sector, what it would take to make the private sector build housing for the rental market, and he came up with a number of recommendations. During this hearing we've been hearing a lot about how those recommendations are in fact a subsidy to the builder. I would gather from your presentation that you would be more supportive of the principle that it is a way of bringing fairness to the rental market, that in fact it is to reduce the cost of the rental housing so it's affordable for the people.
Mr Baird: I think so. It happened after the war. It's needed now because, as I started to try to say, what I see now is much the same as it was when I was a very young person in 1935, before the war, so many people not working and hanging around and living at home. At my home, which was a three-bedroom apartment because we had lost our home in the Depression, there were two other families. So I can appreciate what went on.
Mr Curling: I really do appreciate your presentation. It's very fair, and your experience of both landlord and tenant are all reflected inside your presentation here.
Let me follow through on one of the things that you said, and raised by Mr Maves too: the costs-no-longer-borne approach, and you really mention that there. Many landlords who have put a roof on came back and then the cost of that was included in their guidelines so they would be compensated for it, and even when that was paid off and tenants would continue paying for that, and then there's another roof goes on, and then they were paying for two roofs. So that will be reflected. That was resisted very much by the landlords at the time because they want that to be continued. So your presentation came very honest and smack face into that, and that is one of the things that should be there so that tenants are not paying two or three times for that same product.
Mr Baird: I figure that the rent that you're paying today pays for that roof tomorrow. That's the way I look at it. It's part of it. And the landlord, unless he's operating on a shoestring, should be putting money away to take care of any capital things that have to be provided, even a new Frigidaire, which I need.
Mr Curling: The other point you made is that it is important that government be involved in housing. When we say that, of course, there are regulations, there are subsidies, there is encouragement, especially to those who are most vulnerable, to access affordable housing.
Mr Baird: That's where the problem lies. If we don't support those who are in poorer circumstances, then we don't deserve to be here.
The Chair: Thank you, Mr Baird. We do appreciate your input this afternoon.
1800
GORDON BROWNLEE
The Chair: Our next presenter is Gordon Brownlee. Good afternoon, Mr Brownlee. If you allow some time in your 20 minutes for questions, the government would be leading off the questions. The floor is yours, sir.
Mr Gordon Brownlee: I guess everybody's telling their own story today, and I think that's what I'm going to do myself as well. To give you a bit of a background, I'm an owner of a 10-unit apartment building here in Ottawa. My father is a firefighter and my mom is a clerk. I'm not from a wealthy background. I bought my first town home when I was 22 because I worked about 60 or 70 hours a week to be able to afford it. Through a succession of investments, when I was 29 I purchased a 10-unit building here in Ottawa.
This is where the story gets interesting. I purchased the 10-unit building. I hired a rental consultant who filed an application. Under the existing legislation I had a rent increase granted which enabled me to charge over and above the guideline increases of 5% per year for about seven years. I purchased the building in June 1990. On October 1, 1990, my rental application became valid. That was, coincidentally, the same date the NDP took power.
So I collected my new rent increase October and November, and then on November 28, the NDP government enacted a bill and retroactively denied my rent increase as of October and subsequently denied all future fees and increases. That left me with a building that I paid $582,500 for, which was losing $2,000 a month. I make $47,600. I could not sell the building; I couldn't give it away.
So what do I do? I continued to incur the losses and try to fund the building as best I could. The building was in need of substantial repair when I purchased it. There was such a thing at that time called the low-rise rehab program, which coincidentally wound up immediately after I purchased the building as well, so I couldn't even really afford to make many of the necessary repairs. It was a very tough go and I just about went bankrupt, but I persevered.
I think it was in 1993 that market value assessment went through in the regional municipality of Ottawa-Carleton. That saw my property taxes increase by about $6,000 a year, 40%. I couldn't pass that amount down to my tenants, because the NDP again enacted a bill which said that such increases in property taxes due to market value assessment were not eligible to be passed on to tenants. So instead of losing about $20,000 or $24,000 a year, I now lost another $6,000, or about $30,000 a year.
So as time went on, I continually lost more and more money until finally I'm at a point where I don't even know if I can survive. Do I walk away from the building after having lost all this money and then be garnisheed for the next seven years by my mortgage company, and do I walk away from the second mortgagee, who's another small guy like myself who can't really afford to give up the money?
So I persevered and I went to the Assessment Review Board to appeal my property tax increase. I won. I won a $5,000 reduction of my property taxes at the ARB. I was very happy with that. I thought, okay, at least I get some relief. But then the regional assessment commissioner, region 13, appealed me to the Ontario Municipal Board based on the fact that I had my property, which I thought was in a pretty poor state of affairs, reduced from a category 3, average building, to category 4, below average.
At the same time, I might add that the city of Ottawa property standards people came on and put a note in my building that my balconies were in such a poor state of repair that it was condemned. Of course, the regional assessment commissioner is arguing at the same time that my property is certainly of average stature and that I should see them at the Ontario Municipal Board to defend this. So after contacting a lawyer -- I was told that to hire him it would cost about $7,000. I guess that's added on to the $30,000 a year I'm losing. I do similar type of work for the federal government.
By the way, I work for Revenue Canada, and to my knowledge we have never, ever enacted a bill which was retroactive. If we enact a bill at Revenue Canada as of September 1, September 1 we don't accept applications any more. I don't drive down the road today doing 30 miles an hour and you'd reduce the speed limit tomorrow to 25 and come back and charge me for speeding yesterday. You can't do business like that; it's insane.
Anyway, I'm still in the process of fighting my appeal to ultimately win at the Ontario Municipal Board, but I'm still in a situation where I'm losing several thousand dollars a month. Through the help of my parents, I've been able to sustain myself. So to be absolutely frank, I just get incensed when I hear tenants complain about wealthy landlords. I don't know the stats and I didn't prepare a speech here today -- I've prepared it for the last six years -- but I'm not a big landlord. I don't make any money.
For the privilege of going and painting and cleaning and dealing with tenants and dealing with the headaches of running a rental building, I get the privilege of losing $30,000 a year. Then I have to listen to tenants do things like argue with things that cost $20 or $30, which I just pay because it's not worth the headache of dealing with them. If somebody wants a new mat because I stepped on it while I was fixing something else in their apartment, I'll buy them a new mat because it's just not worth my time; it's not worth the stress in my life.
I think today the point I really want to get before this committee is that they have to understand that, sure, there's a lot of tenants in dire straits, but there's a lot of landlords out there that if you're going to take away the ability for them to make a profit, they're not going to invest any money in these buildings. I don't do this for compassionate reasons; I did it because, to be absolutely honest, I wanted to provide an income for my family when I retired at some point. That's the reason I'm prepared to work, paint, spend money, spend my time with this building. For that labour, I expect to get a return, and I don't think that's unreasonable. It's a business. Nobody in the rental business is there for the good of their heart. Let's face it: They're there to make a profit. But if you take the profit out of it, they just won't be there any more. It certainly seems to me that the reason you are thinking about doing away with rent control is because it hasn't worked.
Just for argument's sake, I have two one-bedroom apartments for rent right now. I just rented one two nights ago, actually, so I have one left. The legal maximum rent on those units is about $438. The one I'm advertising right now is for $400. So why do I need rent control when I can't get the rents in some of the units that I'm able to charge right now?
So for me, as a landlord, I see two major issues here. I see, first of all, there's rent control; and second of all, there's the Landlord and Tenant Act. What really irks me is that if I have to pay $20,000 a year in property taxes -- and I understand some of the concerns of the tenants here and they're very valid concerns and each of us has their own story. But if I pay to the government $20,000 a year because I own a building, why is it necessary that I must then directly subsidize my tenants to the tune of $300 or $400 in rent on some units, because that's what the market value of those units would be? Why do I have somebody living in one of my units, which is a very large, huge unit, that I could rent for probably $1,100 or $1,200 a month -- he's paying $721 a month when he makes more money per year than I do. So I have to lose $30,000 a year to protect somebody who makes more money than I do?
I know this is just an isolated incident and it may not be the same in every circumstance, but certainly the reason in Toronto right now there's such a lack of rental housing is because you'd have to be a moron to go in and build something. If you want to put up a new building, you probably couldn't charge less than $1,000 a month to break even. Why would you purchase a building in Ottawa or put anything else up right now? You have a glut of available space on the market. You can't rent what you have, certainly not at the legal maximum rent.
The reason I wanted to come today is I just wanted to give you one story of a landlord who, if I could do it over again, I would never have purchased this building. I've lost $160,000 or $170,000, which is going to take me years to get out of debt. The only hope I have to make any money or to even recoup any of my investment is if, in my personal circumstance -- and I'm not speaking for everyone -- rent control is changed so that upon the vacancy of an apartment, I can set my rents at maximum or market rent and then gradually increase my rents and nobody gets hurt. The new tenant's not getting hurt, because he doesn't have to rent my apartment if he doesn't want to.
1810
One final thing. I mentioned that my property taxes had gone up 40%. I'm sure all you knowledgeable individuals here must know this process, how they arrive at a market value assessment for a multi-unit residential property. What they do is, the assessor goes out and takes a poll. He takes a rent survey of all the available units throughout the city, and he divides the city into different areas, my area being the Glebe-Sandhill area. After a survey of all the multiple residential buildings in my area, he comes up with what they call a fair market rent. So the fair market rent for each unit is assigned, based on the average of all those surveys that are returned.
The fair market rent when I purchased my building for my three-bedroom units was $650 per month. They use a formula then to calculate the value of your building for market value assessment purposes. The rent review board said I couldn't charge more than $585 a month for those units. So here we have one government agency saying: "You should be getting $650 a month; therefore, we're going to value your property on that $650 a month, so your taxes are $20,000"; and another government agency saying, "No, you can't charge more than $585 per month for that apartment, because we won't allow you to."
We have one government agency saying, "Your apartment building's in great shape; you won your tax reduction at the Assessment Review Board and we're going to take you to the Ontario Municipal Board," and another government agency saying, "We're property standards, and your balconies are in such poor shape that we're putting an order on your building." I had to go out and borrow another $20,000 to have the balconies replaced before another government agency probably took over and went and built them on me and charged me $500,000.
I see I've got about five minutes left. That's one landlord's personal perspective. The system that you have right now is not working. The only way you're going to get more units built, is not through government intervention, but de-intervention. If the government gets out of the system, then you'll get landlords who can go in, who can build a reasonable property at a reasonable price, and you'll have adequate accommodations. The system you've got now is not working, or why would we be here? There wouldn't be a lack of rental space in Toronto if the system was working. What you have is the government building units which are poorly run, in my opinion, not very clean and in many cases substandard, and certainly no private people are going into the business. That's all I have to say.
The Chair: You've left a couple of minutes per caucus for questions, beginning with Mrs Marland.
Mrs Marland: Mr Brownlee, you didn't need to come with a prepared speech this afternoon. Your presentation was very succinct.
You've been living this, I guess you said, since 1990. You bought it five years ago.
Mr Brownlee: That's right.
Mrs Marland: What you've laid out so graphically, and on the record in Hansard of course, is the confirmation that the majority of landlords in this province are exactly like you are. They own, in most cases, fewer than six units.
The other thing you've put on the record -- and I personally appreciate the way you did this -- is the fact that, yes, you made an investment in a business -- it would have been the same whether you'd bought a grocery store or you invested in a fleet of cabs or whatever it is -- so you're entitled to a return on that investment. But the benefit of your making an investment in that particular business was that it also provided shelter for people.
I don't know where we ever got off on this idea in government that you can have the examples of the contradictions between agencies, which you've also illustrated so beautifully for us; to hear your level of frustration in terms of your personal circumstances which have been imposed on you by different governments and even different levels of government.
Frankly, isn't it interesting to hear you say that you have advertised a two-bedroom apartment in Ottawa today for $400 -- and you have to advertise it. There is the irony as far as I'm concerned. We're concerned about tenants who don't have accommodation and can't afford the right accommodation, but they will never have it, and the fact that we have fewer units now than we had 20 years ago proves that rent controls are not the answer in this province.
Mr Patten: Ditto to Mrs Marland's comments. This is government at its best. I'm sure that's your experience. You should write it up, because it would be a great case study for anybody studying public administration.
I sympathize with you. In fact, we've heard a number of stories from the small landlords just today, and frankly I think there need to be some issues addressed. It obviously shows that government has little capacity for flexibility. One size fits all. Try to address a Toronto problem and it has to apply to the whole province. It's endemic to government. I sympathize with your particular situation. I can't understand why there isn't some mechanism you can go before, why whatever representatives from whatever ministries or levels of government can't assess your situation fairly and say, "Hey, this guy is getting screwed," because that's exactly what's happening to you.
May I ask you, in your opinion, what you feel should be changed in terms of the proposals that are coming forward to at least provide -- because it's an important part of the market -- for small landlords to be able to survive. I see most of them as not trying to make a killing but trying to survive, with a minor investment for the future, and also provide an important service. What do you think are the key elements that should be in this legislation that's coming forward?
Mr Brownlee: There are two things that bother me, where I have problems with your proposal. First of all is the dissolution of the legal maximum rent. If I have a tenant who moves out, because of the economic conditions that exist in Ottawa today where I have to rent below my legal maximum rent, if the economic realities turn around and in the future I wanted to put my rent back up in a couple of years to what my legal maximum would have been, which is a fair market value rent, I would be unable to do so because I would be locked in at the new guideline rate. So I would lose that extra cushion for the legal maximum rent.
Secondly, I have a major problem with the current proposals because you've got bad landlords and you've got bad tenants, but you will not always be able to get along with everyone. That's life and that's the same in every facet of life. If I have a tenant, for whatever reason, who doesn't like me or who wants to get even with me, it's my understanding that if they report a property standards violation, I could be fined up to $10,000, not even having known that this condition exists. Because I can't enter any tenant's apartment at will, which has been illustrated by other people here, I don't think it's fair to me that if I am trying to do a good job and be a good landlord and fix things that need to be fixed, I should be penalized if something hasn't been brought to my attention prior to some individual who shows up and writes me a ticket.
Mr Marchese: Mr Brownlee, I appreciate the predicament you're in. I think everybody does. I'd like to understand. When you bought in June 1990, the building was obviously in great disrepair. Is that not the case?
Mr Brownlee: The building required a substantial amount of repair, that's correct.
Mr Marchese: Was it your sense that the previous landlord put any money back into the building at all?
Mr Brownlee: Well, I can't speak for the previous landlord.
Mr Marchese: But obviously the condition of repair was quite bad and probably it was like that for quite some time.
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Mr Brownlee: There were substantial repairs that needed to be done, but I felt, based on the increases that I was granted through the then legal legislation, that I could bring it up to standard with the increases in rents, which were then subsequently denied.
Mr Marchese: I realize, and I understand that. I just wanted to get a sense of whether or not the previous landlord obviously had neglected his or her responsibility to put some money back into the building, as so many landlords do, as I suspect you would like to do and would have liked to have done. I can see that you would have done that if you were the landlord. But obviously I don't get the impression the previous landlord put money back into the repairs of the building.
Mr Brownlee: I'm not sure. I can't speak for the previous landlord.
Mr Marchese: You were also aware of the rents that people were paying at the time. What were they paying at the time?
Mr Brownlee: For a three-bedroom apartment in June 1990, for my building, they were paying about $565 a month. That's about a 1,200-square-foot apartment.
Mr Marchese: So from there the rent somehow went down.
Mr Brownlee: No. I was allowed to increase the rents up to about $613 for two months, and then it was subsequently rolled back with the denial of the rent increase with the NDP bill on November 28, 1990.
Mr Marchese: The 5% increase was rolled back but also the amount --
Mr Brownlee: I still was allowed to keep the guideline increase, whatever that was.
The Chair: Thank you very much, Mr Brownlee. We appreciate your sharing your personal experience with us this afternoon.
ONTARIO RESIDENTIAL CARE ASSOCIATION, REGION 2
The Chair: Our next presenters represent the Ontario Residential Care Association, region 2, David Porter and Don Francis. Good afternoon, gentlemen.
Mr David Porter: Just by way of introduction, my name is David Porter. I'm executive director of Bearbrook Court Retirement Residence, which is a 122-bed retirement residence in the east end of the city. I'm a CA by profession and currently president of the local region of the Ontario Residential Care Association and also a standards surveyor for the standards process that we have in our association. Don Francis, my colleague, is owner and manager of Thornecliffe Place Retirement Residence, an 81-bed residence in the west end, with 25 years' experience as a property manager and currently treasurer and past president of the association here in town.
Mr Chairman and members of the committee, we applaud the government for differentiating between care home residents and tenants of regular rental units. Changing the focus from units to people is as welcome to residents and their families as it is to care providers. Our specific comments follow.
We support the abolishment of the so-called Residents' Rights Act, which deals with units rather than the needs of the elderly or disabled residents of care homes. We support the removal of care homes from the Rental Housing Protection Act, which acts as a roadblock for providers attempting to respond to the changing needs of residents. Frequently care home operators are called upon to alter suites to accommodate couples or individuals who require more or less space than the previous residents or to convert residential units into additional activity areas, nursing stations and so on. While current rules allow flexibility for operators, it is obviously preferable to have the underlying legislation removed.
We support the abolishment of rent registration, a cumbersome, ineffective and expensive exercise.
We support the strengthening of a landlord's right to refuse sublet tenants with reasonable cause. It is important to our residents that the character of their homes be preserved and, to us as care providers, that admission criteria be maintained.
We support the reduction in the notice period from 60 to 30 days for residents who must terminate their tenancies involuntarily. It should be noted that many ORCA members currently require 14 days or less in these cases and that care homes with residents receiving general welfare assistance cannot charge beyond the last day of occupancy.
We strongly support the change that will give care home staff 24-hour access, when requested by the resident, in order to deliver care or check on the resident's wellbeing. Current legislation requiring 24 hours' written notice or permission at the time of entry, combined with the provision that prohibits contracting out of the Landlord and Tenant Act, means that our nurses must either break the law on a daily basis or leave frail, elderly people unchecked or uncared for. Typically, almost half of our residents need and want nightly checks and require three or four nursing contacts per day for medications or other forms of assistance.
We support the new provisions to permit care home operators to (a) transfer residents to other facilities when care needs change and (b) evict on a fast-track basis residents who pose a threat to others. Even with cooperative clients and a so-called fast-track system for those who resist transfers, long delays are the norm. Normally, when the care needs of a resident approach the maximum, the resident, family members and care home staff agree on a plan. An application to the local placement coordination service, PCS, for placement in a nursing home, home for the aged or chronic care hospital is the most usual result. However, such an application is not an available option until the resident's care needs are close to nursing-home level. Since that is the case, there is usually a long period of residency at the care home during which time the resident's care needs exceed the care home's normal limits.
In May, we were advised that in excess of 2,000 seniors were awaiting placement in the Ottawa-Carleton region. The delay from initial application to final placement is currently six months or more. As an example, one resident at Bearbrook Court who suffers from advanced Alzheimer disease has been waiting since January, and Bearbrook Court has been told to expect another three months' delay.
These cases can be managed if the resident or family agree to pay for extra nursing care either through the care home or private agencies or if they're able to access home care services. Problems arise when the resident or family refuses or delays the placement process and is unwilling to pay for extra care. This places the care home operator and his or her nursing staff in the unacceptable moral and ethical dilemma of choosing between denying necessary care because the resident will not pay or providing the care at the expense of other residents. With per diems which are less than half of those in homes for the aged, or even one quarter in the case of GWA homes, providing the extra care free of charge is not possible.
If the resident is cognitively impaired and in danger of wandering off, the care home provider has a moral and professional responsibility to offer protection but no remedy. Care homes, in most cases, are as open for residents to come and go as apartments. We have no legal right to restrict a resident's movement and insufficient staff in any case. Residents who become aggressive or threatening to others due to Alzheimer syndrome or various psychiatric conditions pose an equal problem. This is especially true in GWA homes where such residents usually share rooms with others.
In all these cases, rapid response is called for. We suggest that, where the resident or family is unwilling to cooperate, the care home operator should be able to initiate the process. Specifically, we suggest that care homes be formally included in the umbrella of services covered by the local placement coordination service. We are fortunate in this area to have an effective and cooperative PCS, but this is not the case province-wide, and even in Ottawa the PCS is restricted by its governing rules. We suggest that the care home operator be able to initiate the placement process but only after the recommendation of a third party such as the local geriatric assessment unit or the house physician. Furthermore, we suggest that in such cases, that is where the resident or family has refused to cooperate, the resident and family be required to accept the first available placement in the PCS's catchment area.
We support the proposed changes for rent controls as improvements to the current system. Rent controls were completely unnecessary for our sector. In the five years prior to the application of rent controls to our sector, our increases were consistently below what would have been allowed under the controls. Furthermore, they are ineffective, since only the rent portion of the fee is controlled. In addition, this arbitrary splitting of charges causes great confusion for residents. Finally, they are inappropriate. The decision to move to a care home is a care decision, not an accommodation decision. Our clients are only interested in the total cost of living in our facilities.
Our preference in the long run is to remove care homes from rent controls and other inappropriate housing legislation. Our provincial office has dealt adequately with this point in its presentation. I just want to stress that point, that the provincial association's position was that they preferred the abolishment of rent controls.
I'll turn it over to Don now, who will deal with the rest of the presentation.
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Mr Don Francis: The following are the additional recommendations regarding issues not dealt with in the legislation:
We strongly recommend that paper flow required under the current and proposed legislation be simplified to accommodate the needs and wishes of our clientele, many of whom have designated powers of attorney precisely to rid themselves of the need to deal with these financial issues. Often they find a telephone bill or a bank statement confusing and possibly threatening. Documentation under the Rent Control Act is overwhelming for anyone.
Specifically, the care home information package and resident agreement should be combined into one simple package. We're presently faced with a situation where I have to put a four-page document in front of a prospective resident just to have proof in my file that I've made full disclosure, and that's whether or not they rent. So they're saying to me, "Why am I signing this?" It's ludicrous.
A single, simplified notice of increase covering rent, care services and meals should be developed with our association's input, we suggest. I'm looking at the situation right now, when I go to increase the rent on an annual basis, I'm giving a resident five pieces of paper. That's 10 pieces of paper by the time I keep a copy in my file. Obviously, the previous government did not like trees.
Mr Marchese: And you do, of course.
Mr Francis: Five pieces of paper makes no sense.
Most importantly, care home operators should be permitted to give notices of increase to the power of attorney or other designated person where the resident or power of attorney agree. We're often requested on an informal basis: "Don't give it to the client, the person actually occupying the room. It will only upset them. The other person's paying the bills; they will deal with it." But the present act requires us to serve that resident.
We recommend that the exemption for short-term stays from the provisions of the RCA and LTA be extended to include respite and convalescent care. These are services which families, residents or doctors often request and which on a short-term basis we can accommodate. However, in most cases such residents are not suitable for long-term residency in a care home. Operators are reluctant to offer the needed services, fearing tenure rights may force them to retain residents they cannot adequately care for over the long term.
We recommend that care home operators be explicitly entitled to require residents to meet reasonable and consistent admission criteria and to accept a minimum service package in addition to accommodation. Despite the arbitrary division of our rates into rent, care services and meals, our rates are set taking all services into account as a complete bundle. We are only able to keep our rates as low as they are if all residents take the package. Residents requiring only accommodation are free to move to apartments, where they will get accommodation at a far lower rate.
We recommend that at the earliest opportunity municipalities be directed to completely revise the purchase of services agreements they sign with care homes serving the GWA clients. The resulting agreements should be in concert with all relevant legislation as updated by the current bill and should be standardized across the province.
General welfare assistance clients would very often be living on the street but for the existence of care homes serving them. They have often been discharged from psychiatric hospitals, frequently have no family support and without medications would not be able to continue functioning at levels required for community living. Very often, their lack of literacy or numeracy skills or their tenuous psychological states make them incapable of dealing with LTA and RCA issues.
In Ottawa, the contract signed by care homes to deal with these clients has not been changed since 1981. In many areas it does not exist at all. Furthermore, enforcement is inconsistent or non-existent.
We recommend that legislation be introduced at the earliest possible opportunity requiring all care homes to meet minimum provincially determined standards. We recommend that such minimum standards be enforced by a municipal inspection system paid for by the care home operators -- that is, at no cost to the government or taxpayers. Care homes inspected under superior and approved inspection programs, such as that used by the Ontario Residential Care Association, would be exempt from these municipal inspections.
Ontario Residential Care Association members must submit to and pass rigorous, periodic standards inspections in order to retain their ORCA memberships. Residents who reside in care homes which are not inspected by ORCA or similar organizations deserve the same kind of protection. The previous NDP government failed completely to address this important issue and instead chose to lump care homes inappropriately and unnecessarily under general housing legislation, thereby ignoring the care component of our services. The care component is the major element people move in for.
In closing, we wish to acknowledge the assistance provided by Sarah and Mark Porter, Dave's son and daughter, and Grant Abrams in the preparation of this document. Thank you for giving us this opportunity to appear before you today.
The Chair: Thank you, gentlemen. We've got just a little over a minute per caucus for questions, beginning with the Liberals.
Mr Grandmaître: I can recall your presentation in Toronto some years ago when the NDP government introduced Bill 120, if I'm not mistaken, when you were lumped in as regular tenants, if I can refer to them as regular tenants.
I must say that I don't agree with the present legislation, but I do agree that you should not be included in this piece of legislation for the simple reason that most of your tenants are independent people who are not receiving any kind of subsidy from the provincial government. Am I right?
Mr Francis: Correct; all of my tenants.
Mr Grandmaître: They're paying cash for what they're receiving.
Mr Francis: Yes.
Mr Grandmaître: And they know the services that they're receiving and they know what to expect, as far as care is concerned, food and lodging and so on and so forth. So now the government will say I'm in favour of their legislation. I'm not saying I'm in favour of your legislation but I'm very, very pleased that finally the government is recognizing that home care residents cannot be lumped into regular rental units.
The Chair: On that note, we'll pass it to Mr Marchese.
Mr Marchese: But I have to say I am happy that the Liberals remain steadfast in their opposition to the removal of rent controls. I'm quite happy that that is the case still.
I have to say that there have been a number of deputations from mental health associations and the like who are very concerned by some of your -- not suggestions, but things that you support that the government is obviously introducing. They see some of the basic protections of vulnerable people affected. So while you say, "Transfer residents to other facilities when care needs change," they argue, "Who determines that?" There's no language about what the criteria might be or how it is that you would do that, under what conditions or circumstances. They're worried and so am I, because we worry about how vulnerable people are dealt with. While we might assume that you're all good people, particularly the two of you, there are situations we've been told of in the past where some of the tenants there or people under your care don't get the kind of treatment they should be getting, are worried about violations of their privacy, worried about how they might be mistreated. Is that something you think people should be concerned about?
Mr Francis: Very much so, because care is a major element in our business, our care for our residents. The problem with the housing legislation in existence is that it does not deal with care. In fact, it throws roadblocks in our provision --
Mr Porter: That's exactly why we included our last recommendation, that all care homes in the province should be inspected under a provincially determined system.
Mr Smith: Thank you for your presentation. I would have to say over the course of the last week and a half that there's, at least in my opinion, generally qualified support for this part of the proposal. Mr Marchese raised an important area of concern, though, with those who haven't expressed complete support for this part of the report. Can you give me your idea of what the transfer process might look like?
Mr Porter: We haven't thought it through as clearly as we would like to eventually, and we understand that the government is inviting more input, which our provincial office is considering. But we understand that concern, and that's why we suggested in our presentation today that there be a third-party opinion prior to this process starting, such as the local geriatric assessment unit, which would do an assessment of the individual, or quite often the house physician. House physicians, please understand, are not on the payroll of the care home; they are just doctors who agree to take all the residents as their patients, or as many as want to be. If that person made a recommendation that this person now needs the care of nursing home level or the geriatric assessment unit, that should be a starting point for the operator to say, "Even though this resident is refusing, we can no longer offer the care they need and the placement coordination service should start the process of finding them a place where they really belong."
The Chair: Thank you, gentlemen. You've effectively used up your 20 minutes. We appreciate your presence today to give us your input.
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OPTIONS BYTOWN
The Chair: Our next presenter is Michel Lefebvre, executive director of Options Bytown. Good afternoon, sir. Welcome to our committee. Should you allow some time for questions in your 20 minutes, they would begin with Mr Marchese.
Mr Michel Lefebvre: Good evening. My name is Michel Lefebvre and I represent Options Bytown, a non-profit housing corporation. I thank the government of Ontario for this opportunity to express myself concerning the possible elimination of rent control.
First, I want to say clearly that I am against the abolishment of rent control. I believe that regulations and controls are necessary. I am here to offer the view that the abolishment of rent control would have a negative impact on our agency and our social housing environment.
Options Bytown is a non-profit housing corporation whose mandate is to provide supportive housing to homeless residents of shelters seeking permanent semi-independent living accommodation.
Since the inception of Options Bytown in 1986, we have received 1,384 applications but have housed only 356 tenants. Options has always maintained an extremely low vacancy rate, and tenants typically wait two years before being offered a one-bedroom unit or apartment.
Two years is very long, considering that 70% of our tenants come from shelters like the Shepherds of Good Hope, the Salvation Army, YMCA/YWCA, boarding-houses, rooming-houses and the streets.
Eighty per cent of Options Bytown's tenants live on disability pensions and GWA benefit -- welfare; 49% of all tenants have a self-disclosed history of alcohol or drug abuse; and at least an estimated 60% have a diagnosed mental illness.
Options offers a non-judgemental intervention and flexible format allowing tenants to live in a pleasant, secure and communal environment. Eighty per cent of our tenants have maintained a successful tenancy with us and in subsequent low-income housing following a move from Options.
In the last decade, our tenants' capabilities and willingness to pay rent have been decreasing. New building rents far exceed the market and are inaccessible to the weakest members of our society. This is why I foresee increasing homelessness resulting from the abolishment of rent control. We will have more homeless than we have ever seen before in Ontario.
As for landlords or developers, they are losing money now in 1996 and would probably lose money anyway with or without an unregulated market in our present depressed economy, simply because the majority of tenants cannot afford to pay excessive rent any more.
The organization of Options Bytown is therefore against the abolishment of rent control and privatization of public housing for the following reasons:
(1) Because more homelessness will result from the abolishment of rent control.
(2) Because it is tough enough to pay rent now, and it will become even harder if there is no one to control rent increases.
(3) Because in Ottawa we don't take care of all our homeless people. Look at our waiting list. There are no new subsidies for housing projects to take care of our homeless people.
(4) Because of the uncertainty and the unfairness of no system. Without rent control, incoming tenants could be charged and treated differently from existing tenants.
(5) Because retaliation on maintenance issues, for example, could be devastating for tenants.
(6) Because of the uncertainty and anxiety created within the weakest members of our society, worrying that there is no one to protect them from exploitation.
(7) Because we believe that landlords have been making a profit and still can make a profit within rent control guidelines.
(8) Because we believe that bureaucratic flaws can be corrected to the satisfaction of all parties.
(9) Finally, because Ontario tenants want and deserve fairness, security and certainty. Effective rent control is necessary to prevent exploitation of vulnerable tenants like ours. Rent control was created to prevent exploitation and government should stand by it.
As a landlord ourselves, we ask that if rent control procedures are modified, measures should be taken to decrease legal bureaucracy and improve the lengthy entanglement involved in administering the law. These often prolonged legalities, such as the difficulties with eviction, have greatly contributed to the loss of faith of landlords in rent control.
We need changes in the law and more skilled advocates to ensure fairness for everyone. "Landlords have enjoyed a 10-year winning streak where annual rent guidelines exceeded inflation." That was a quote by Dan McIntyre in the Ottawa Citizen, June 2, 1996.
Please do not abandon the social housing mandate, because there is simply no safety net in the economic marketplace. "Justice involves protecting the rights of others. It protects against everything that destroys human dignity" -- a quote from Living Faith. In our world we need some guidelines to ensure fairness and satisfaction to all.
Options Bytown also belongs to the Community Housing Resources Coalition, whose mandate is to encourage the development of adequate affordable housing and support services for the needy. As a community, we are concerned that while the act claims to protect tenants, a reduction in rent control makes members wonder how that is going to protect tenants any more.
The Chair: Thank you, sir. We've got about four minutes per caucus for questions, beginning with Mr Marchese.
Mr Marchese: M. Lefebvre, we had a representative from Minto and he was saying that they have been building a number of rental units in Florida. He blessed the Lord because there they don't have any rent controls and they can do that, and he says what we need to do is do the same thing here, basically do like they do in the US, remove rent controls by and large. He says if we do that, the market will find that equilibrium -- he didn't use that word -- that if we deregulate, the market will find that equilibrium and, generally speaking, will reach a level where people can either afford or not afford but, more or less, people will be okay under that system.
You commented on that briefly. Do you think the market will take care of many people at the lower end of the economic scale?
Mr Lefebvre: I don't agree. Maybe it will equilibriate between landlords and rich people and people who have the money to buy some buildings. But at the same time there have been some studies in the United States, particularly in New York and other places, that homelessness is really something that came out of no rent control act. A lot more people are living in ghettos now; even the police won't go there because there are abandoned buildings as there was no one to take care of the buildings. If you go to that kind of thinking, crime will get in. So I don't agree with that.
Mr Marchese: The government has said in one of their papers that when the decontrol the units, rents are not likely to go up too much. They don't say how much. From your experience, in terms of where you come from or the people you deal with, is any small amount a problem for some of the people you work with?
Mr Lefebvre: Our tenants have difficulty living on what they receive right now. If there's a $20 rent increase, they won't be able to do it, so they will go back to the street again.
Mr Marchese: I want to agree with your statement in (7) where you say, "Because we believe that landlords have been making a profit and still can make a profit within rent control guidelines." That is my knowledge of things. We've often quoted people who have said there has been a fairly good return in being in the rental accommodation market. I think that is the case. I think they've done relatively well. We have had examples of some individuals who came here -- I think he got trapped in a particular purchase he made and then found himself in difficulties. I appreciate that kind of problem that individuals have gotten into, but by and large, the big landlord has done very well, and removing rent controls in the way they're proposing is going to hurt a lot of people.
Mr Lefebvre: I agree.
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Mr Parker: Thank you very much for your presentation this evening. I come from Toronto. I have a great many tenants in my riding, and I sense a great degree of dissatisfaction among them about the current system, for a whole host of reasons and on a whole host of points of concern.
One in particular, and I want to address this one right now, is the dispute resolution mechanism. I hear from my tenants that they have no confidence in the dispute resolution system we have at present. They are totally frustrated by it and they've given up even trying to use it. They find it's just not working for them and not worth getting involved in.
You make some recommendations about improving that system. I wonder if you could share with us your experiences with the dispute resolution system in your area, where it works, where it doesn't work and what recommendations specifically you have for improving it.
Mr Lefebvre: In Options Bytown, tenants are involved in everything, so it's working pretty good. Board members are tenants, and when you have a dispute we can take it out and talk with others. It's working well. Sure, there could be some improvement in the way the law permits us to do it; maybe there is a faster way to do it. But I think it takes time for people to get together, and we are taking time with our tenants to make some consensus, have some kind of agreement with tenants and landlords. I do believe it can be worked out, and it does at Options Bytown.
Mrs Marland: I heard you say what a number of tenants have said today. They refer to landlords as being rich people. I think maybe you were here for the last presenter, where Mr Brownlee is actually losing $30,000 a year, minimum, on his investment, which in turn provided housing for people.
When you look at Marianna Fenton, who was an landlord earlier today, and listen to her circumstances, where do you think we get this confrontation between tenants and "rich" landlords? Most landlords are not rich. Most have simply made a small investment of six units or less. I have to ask you very directly whether you have a reason to refer to landlords that way. We're certainly going to alienate anybody else who ever considered being a landlord and then we won't have any rental housing stock because nobody will want to make the investment.
Mr Lefebvre: To my knowledge, there is no requirement to be a landlord. You buy a property, then you're a landlord. It's a business for some, it's a living for others, and it's a place to save for others too. I don't see housing maybe as you see it. If you don't have the money, you can't buy your own property to rent it and see it as a business. I see them as rich, and I guess it's a different perception.
If you want to have my own experience, in my own family, the only person who owns something is my uncle, and he is very rich. Even if we want to get in the business, we can't. I guess the perception is that people must have money to buy some land or property and they can make money out of it. If they don't, well, it's like any other business: Get out of it, do something else.
The Chair: Mr Preston, can you do something with 30 seconds?
Mr Preston: Swear a lot? No. Thank you; I thank you very much for your presentation, sir. If, out of 1.3 million people in Toronto, a whole lot of them are rich, if making money was the be-all and end-all of being a landlord, there'd be a lot more landlords. They had 20 starts last year -- 20 -- so there were not a lot of people getting rich last year, because there were no new landlords.
Mr Lefebvre: It's a difficult economy too.
Mr Sergio: Thank you, M. Lefebvre. Thanks for coming and making your presentation. You have touched on a number of good points that are within and without the proposed legislation. The first thing you mentioned that got my attention is your mention of effective rent control. Of course, it is good to have a good system of rent control, but you've got to have some good, affordable units to have some control upon, otherwise where would you apply this so-good rent control? Unless you have both of them, you are going to have a number of units to provide for those in need and you have to have controls and make sure that those units will always be available for those needy ones.
Among the many things that you have mentioned, I think we have to take into consideration that some of the most transient special groups, if you will, are the students who perhaps move faster than any other group; every two months, we've been told, they tend to move. We have seniors, and not only healthy seniors, but we have those incapacitated by a number of either mental or physical disabilities. We tend to forget some of the most needy in our own society.
Having said that, do you think this is the best of times for the government to get out of the housing business, affordable or not, at a time when wages are going down, companies are laying off people? Do you think this is the best time to tinker with the rent control and one of the major social issues?
Mr Lefebvre: Of course, it's the worst time to get out of it. We have to stay in. It's necessary right now.
Mr Sergio: So if you had one message -- because we hear from the government side, "We are here to listen," and the minister said, "Well, let me have some good recommendations and we'll see." We want to put the government and the minister to the test here. If you had a good recommendation, what would you say to us, to the members of the government?
Mr Lefebvre: I guess it's maintain the necessity of rent control. Maybe we could simplify the bureaucracy that's involved, but make sure it still exists and the government still stands for it.
Mr Sergio: I don't want to put words in your mouth, but in the absence of something better, would you say to us, to the members of the government, that unless you had something better, withdraw this proposed legislation?
Mr Lefebvre: Yes, sir.
The Chair: Thank you, Mr Lefebvre. We do appreciate your input today.
STRATHCONA TENANTS' ASSOCIATION
The Chair: Our next presenters are the Strathcona Tenants' Association, represented by André Wikkerink and Mark Langer. Good evening, gentlemen, and welcome to our committee. You have 20 minutes. Should you allow time for questions, they would begin with the government. The floor is yours.
Mr Mark Langer: Good evening. I'm Mark Langer of the Strathcona Tenants' Association. This is André Wikkerink, who is the president of the association. We are here to submit a brief on behalf of the association, whose members live at the Strathcona apartment building on Laurier Avenue in Ottawa. Some of our remarks are going to be addressed to our specific situation, but we will extrapolate from that towards the more general situation.
The Strathcona is a 97-unit apartment building constructed in 1927. It is a heritage property located in the downtown Sandy Hill neighbourhood. All but two of its apartments fall within the classification of affordable rental housing as defined by the Ministry of Housing.
Members of the Strathcona Tenants' Association have studied the New Directions for Discussion paper and have listened to some of the presentations before this committee. We wish to comment on both.
On August 20, one landlord told this committee about an injustice caused by the fact that smaller rental units occupied by the most transient and poorest tenants were disproportionately more expensive than the larger rental units. He called on the government to address this perceived inequity. However, the government's proposed reforms would not solve this situation. They would exacerbate it, leaving long-term tenants in large apartments, people with stable jobs who are less likely to move, less affected by rent raises than those who move more often.
In this landlord's submission, he stated that one tenant makes $150,000 a year and is chauffeured to work in a large limousine each day. We're not sure why speculation about the income of a single tenant should be entered into a brief when the income of the landlord is omitted. In my five years in the Strathcona, I've never seen a large limousine pick up anyone from the building.
The tenants of the Strathcona Tenants' Association are real people who are typical of most in Ontario. Let me give you some examples. Some are the elderly, who have been in the building since the 1950s and live on modest pensions. One pensioner phoned me last night to say she would be praying for me today. There are a couple of young elementary school teachers who celebrated the birth of their first child a year ago, only to find out a few months later that their jobs were lost when the board of education cut back positions. There are students in my building, there are underemployed and there are unemployed. Yes, there are middle-class people and professionals in the building too. We form a cross-section of the Ontario population, with citizens of all walks of life, colours, creeds, classes and national origins living harmoniously together. We share common interests with our landlord in that we take care of our apartments, love our building, and we pay our rent on time.
1900
Let me tell you what our landlord has planned for our community. Andrex Holdings has a proposal with the city of Ottawa to convert the Strathcona to condominiums. In the process of conversion, Andrex Holdings proposes to evict the current tenants. Its application contains no undertaking to extend tenant residency beyond the minimum notice required by law, 120 days. The result of this is that almost 100 affordable units will be taken off the market, and under the proposed new legislation, their inhabitants will lose all protection of incumbency.
Conversion will not provide affordable home ownership opportunities for tenants. To use our landlord's proposal as an example, my unit will be sold for $150,000. Since I've just written a cheque to my landlord in excess of $900 for my next month's rent, one could hardly call a $150,000 mortgage an affordable option to the present arrangement. Other tenants would be in similar straits. Where are we to go? Under the proposed legislation, to other apartments without the protection of the current rent control guideline formula given to sitting tenants.
We agree with the discussion paper that the present Landlord and Tenant Act and the Rental Property Protection Act are imperfect documents. For one thing, the Rental Property Protection Act does not impose a demand for compensation or give special rights of continued residence for tenants in heritage properties. Those tenants do not enjoy the protection granted to those living in non-heritage properties. Neither does the current act require the consent of the majority of tenants to condominium conversion. More equitable protection should be extended to such people in any proposed legislation. Where a landlord and a significant majority of tenants agree on a condominium conversion that is in the interests of all concerned, it is difficult to think of reasons why they should not be allowed to proceed. But rights extended to one group of tenants should extend to all. The law should not permit a landlord to turn one group of tenants out of their homes without the consent of the majority and without compensation. Under the current legislation, this can and is happening to tenants in heritage properties.
But it is not just the members of my association who will suffer. We will face the same dilemma as hundreds of thousands of other Ontarians who must change accommodations, and you've already heard of people who have lost their spouses through death and divorce, those who have lost their homes through a loss of jobs, young families with new children requiring larger accommodations, the elderly and disabled who must move to new quarters more suitable to their needs. These will all lose their current rent control guideline protection.
The New Directions discussion paper states as a goal for the new tenant protection system reforms to focus protection on tenants rather than on units. The discussion paper proposes that current rent control guidelines be lifted whenever an apartment is vacated. Unless the current rent control protection is transferable from one unit to another whenever tenants move, what the discussion paper proposes under rent control reform is the exact opposite of its stated purpose. It focuses protection on units rather than on tenants. The law would force tenants to stay in their current rental accommodations or else lose protection which is dependent on their continued occupancy of a particular unit. The protection would be inherent in the unit and only as long as the tenant manages to cling desperately to it.
We call upon the government to take concrete steps through legislation to do what they say they will do: focus protection on tenants by making sure that they do not lose their current rent control status when they're forced through circumstance to move. In most cases, the current rent control system does this. By restricting current rent control guidelines to sitting tenants, the proposed legislation does not.
In the hearings so far, we have watched landlord after landlord maintain that maintenance problems are due to rent control. We are waiting in vain for the parade of landlords ready to open their books to this committee to demonstrate what they've been doing with the roughly 2% per year compounded increase in rent that was to go for repair and renovation. Over the last decade, this compounding has accumulated to the point that 17.6% of current rent consists of money that is supposed to pay for building maintenance. Have landlords convincingly demonstrated to this committee that almost 18% of the building's revenue is not enough to pay for necessary maintenance?
The New Directions paper proposes giving landlords up to 4% rent increases to cover capital expenditures. It claims that landlords need more incentives to put money into maintenance. Several people have already testified in front of this committee that $1.7 billion is collected annually that is supposed to be used for maintenance and capital expenditures. Isn't this money sufficient incentive? If it isn't, what would give landlords greater incentives to use this money for its intended purpose? More money, or demands for more scrupulous accounting of already allocated funds, coupled with more vigorous inspection and prosecution for failure to properly maintain buildings?
Why not better police the existing system? The proposal to have the province withdraw from enforcing maintenance standards in municipalities which already enforce their own standards will have the effect of reducing enforcement. Municipalities are already suffering from financial strain and are unlikely to hire more employees to aid already overtaxed enforcement officers.
Before rent control is tampered with in any form, at the very least it would be necessary for landlords and their associations to demonstrate that past and projected future increases under the existing legislation are insufficient to take care of repairs and renovation. The current provincial government is proud of its prudent financial management in a time of fiscal restraint. The principles of prudent management suggest that before this government gives more money to landlords through easing current rent control provisions and allowing landlords more money for maintenance and capital investment, government should, at the very least, demand that landlords demonstrate materially, not just anecdotally, how they've been using the $1.7 billion each year.
The New Directions for Discussion: Tenant Protection Legislation paper states that the ministry wants to reform the tenant protection system to, among other things, create "a better climate for investment in...new construction." Ten years ago, the government attempted to do this through an increase in rents. We are still waiting for the explosion in new construction that was to follow. Before this committee, time and time again, tenant, landlord and construction industry representatives have said that lifting rent controls alone will not produce new construction. Loosening of rent control and higher rent income are not magic bullets. These changes should not even be considered until other factors have been addressed.
Voices as diverse as landlord Lorraine Katryan, the Ontario Home Builders' Association and the Fair Rental Policy Organization point out that high land costs and high taxes are responsible for the lack of apartment construction. Even the Lampert report, whose study was paid for by this government, agrees that the cost per unit to build new construction exceeds the market value rent that tenants could or would pay. We note that builders and owners of rental construction properties are rarely the same companies. The idea that deregulation of rent control and increasing existing landlord income will encourage the construction of economically unviable new apartments by construction firms is little more than wishful thinking. It has not worked in the past.
Before even considering a modification of current rent control legislation, you would have to address the problem of land and construction costs, as well as taxation. Otherwise, think of the future the government would be ushering in. Scrapping the Rental Property Protection Act will cause condominium conversions to increase, diminishing the supply of rental housing.
Although the New Directions document envisages a future where landlord and tenant mutually agree on rent, a lack of supply inevitably will force the cost of rental housing up. A scenario which produces short supply and fewer regulations in the rental marketplace does not provide a level playing field. It significantly tips the scale in favour of the landlord. In an environment of short supply, high demand and few barriers to rising cost of rental units, tenants in now affordable apartments simply will be squeezed out of decent housing or out of an unreasonable amount of their income. Who would this benefit? Certainly not the 47% of Ontario residents who live in rented accommodations.
1910
A number of sources, from Citibank to the Russell report, all agree that the average annual return on equity in the rental housing industry in Ontario is 10%. The Russell report states that this 10% annual return rises as high as 30% in some years. Mr Wayne Wettlaufer of this committee has observed that in some years, the annual return on equity in the industry was as low as minus 10%. We are unsure of the point that Mr Wettlaufer was making. We would like to ask the members of the committee if they can think of any form of investment with annual returns on equity as high as 30% that does not entail any risk. Does the province of Ontario need to ensure a greater than 10% return on equity over a decade for landlords only? Why privilege this group of investors?
In closing, the Strathcona Tenants' Association would like to thank the committee for allowing us to present our brief. We will follow the government's actions in this matter with great interest, both through the press and through our elected representatives.
The Chair: Thank you, gentlemen. You've left about two minutes per caucus for questions, beginning with Mr Smith.
Mr Smith: Thank you for your presentation. I want to focus on the portion of your presentation that dealt with conversion, and obviously it's an issue and a process that you're dealing with on a personal basis right at the moment. As you're aware, the paper outlines three questions that deal with this specific issue. I'm just wondering if you've given any specific thought to the issue of the appropriateness of extended tenure, compensation models, what they might look like, how they might be calculated where conversions are taking place, and what majority-type approval would be required for tenant conversions. Given your recent experiences, have you put any thought towards those issues at all?
Mr Langer: Yes, I've given some thought to some issues and some of them have been discussed within our organization. It is not uncommon in non-heritage properties for tenants to agree with landlords on lifetime continued residency within properties or 25-year continued residency within the property. Of course, because of people's rates of moving, this doesn't mean that all tenants would indeed stay that long, but it would certainly give tenants the right to have security of tenure within their location to continue renting under rent laws.
As far as requiring tenants' consent, it's my view that a significant majority would have to vote in favour, since landlords have the ability to plan far into the future. Since landlords determine who gets to live in the building, a landlord also has the ability to pick and choose people who might favour or not favour a conversion, so I think you would have to have a fairly significant majority to make sure the deck isn't stacked in that sort of way. I think, given the kind of turnover rate within a property, that a 70% or a 75% majority would be a reasonable majority.
Mr Curling: Thank you for the presentation. I think it's an excellent presentation because of the kind of musical chairs this paper tells you about, how the conversion will take place when someone moves out of their home; in regard to decontrolling the rents, what will happen. As soon as you leave, one of those units comes off the supply line of rental, so they will go into the condominium market.
The experiment that they would like to do here was experimented on in England, where they sold off most of those homes, even in the non-profit area, giving them to the tenants. What happened was that the best units went and the worst units remained. Do you see the same thing happening, that people will be buying the best, so therefore those who are stuck with the worst units will be there if you sell off those rental units, leaving the rest for the worst that will not be sold?
Mr Langer: On one hand you're talking about public housing units, and I'd like to limit my response, if I may, simply to the implications of this in regard to condominium conversion, what would happen in condominium conversion. Many of the buildings that come up for conversion are older buildings where larger units have been subdivided in the past. These now form housing for low-income people. To make them more desirable for high-income purchasers of condominiums, many landlords wish to group several existing apartments, knock out walls, do renovations and turn them into one large apartment, which would have a much higher market value. Also, many older buildings have limited parking spaces, which would also encourage the combination of existing rental housing into larger units.
One landlord earlier in the hearings, as I was watching on TV, went on about "Ontarians are overconsuming space." Condominium conversion would actually take a very efficient use of space, many people in relatively small units, and turn it into fewer people in much larger units, which would be a much less efficient use of the already existing housing stock.
Mr Hampton: I want to thank you for doing a very thorough job. You've obviously been following this committee, I would say, on an almost daily basis. That's to be commended.
You refer to the Lampert report and you refer to some of the other information that has come before this committee. I want to just go over some ground that you covered in part. Lampert says that if you want to induce developers and landlords into building more apartments, you'd have to deal with the property tax issues; you'd have to get rid of the application of the GST; you'd have to do some changes to the federal Income Tax Act to make it more lucrative from a tax point of view for people to invest in this kind of property; you'd have to do something about development charges; and also you'd have to find some ways to make it easier to access financing. He goes through these. He says if this whole package isn't dealt with, you will not induce developers and financiers and entrepreneurs and landlords into building more apartments for lower- and middle-income people. They won't come in because they won't make the profit that they want.
I don't see any of these things. I see a Conservative government that brought in the GST; I see a Liberal federal government twisting in the wind now trying to figure out what to do about the GST; I don't see any income tax changes coming. If these things don't happen and the only thing that comes off is rent control, what do you think is going to happen to rents?
Mr Langer: I think I've made my case clearly that I believe rents are going to skyrocket because there will be a smaller supply of apartments and there will be fewer constraining factors to keep things from going up.
One thing that disturbs me very much about this discussion paper is that while the paper itself talks a lot about taking care of tenants, not very far beneath the surface there seems to be a strong ideology of pure free enterprise. I've spent six years living in the United States, although I am a Canadian, and I've experienced living in a country with a much stronger ethos of free enterprise. While I'm not opposed to modified free enterprise system, I've seen how the housing market is dealt with in the United States, where the manufacturers of cardboard boxes are major contributors to the housing needs of people in American cities where, more and more, the wealthy are living in walled enclaves while the poor are being separated into terrible inner-city conditions, and in the walled enclaves, no matter how high those walls go up, they will never get high enough to protect people from the outrage of the ones living outside.
The Chair: Thank you very much, sir. Thanks for taking the time to make a presentation to us. We appreciate your input.
1920
EASTERN ONTARIO LANDLORD ORGANIZATION
The Chair: Our next presenter is Luigi Caparelli, president of the Eastern Ontario Landlord Organization. The floor is yours, sir.
Mr Luigi Caparelli: My name's Luigi Caparelli. I am a small landlord here in Ottawa. I am also a rent control consultant, and I am appearing this evening as president of the Eastern Ontario Landlord Organization.
Our organization has been in existence since the fall of 1990. We currently have approximately 200 members who own or manage some 40,000 rental units in eastern Ontario. Our membership includes some landlords with several thousand rental units, as well as many small landlords with only two or three rental units.
I have provided you with a copy of a fairly extensive brief which responds to most of the issues identified in the discussion paper. I don't propose to go through this whole thing this evening. What I will do is simply go through some of the highlights and some of what we consider the more important issues.
It has been proven in jurisdiction after jurisdiction that rent controls are bad public policy. They distort the housing market and do not deliver affordable housing to the people who need it.
Ontario has now had rent controls for over 20 years. Prior to the introduction of rent controls, the private sector built some 15,000 rental units per year. This figure dropped off dramatically following the inception of rent controls so that by the mid-1990s, the private sector has virtually ceased building rental units.
It is our position that tenants can best be protected by a combination of the free market and shelter allowances for those tenants in need. Rent controls need to be phased out. It appears that this government has no intention of doing that.
We have prepared this brief to respond to what is proposed. All suggestions and recommendations in this brief must be read with the knowledge that our fundamental recommendation is the phasing out of rent controls so that the free market can work.
It is also important to realize that the removal of rent controls will not, by itself, be sufficient to encourage significant investment in the construction of new rental housing. For that to occur, the government will have to remedy the problems of the discriminatory property taxes on rental housing, the building code, the long planning approval process and the discriminatory application of the GST.
Among other goals, the government wants to create a better climate for investment and maintenance and new construction, therefore creating jobs and improving the supply and quality of rental housing.
The discussion paper proposes to give tenants a major benefit in this reform; namely, the elimination of maximum rent. The main benefit for landlords appears to be vacancy decontrol. However, what the discussion paper proposes is not true vacancy decontrol. True vacancy decontrol would see units that become vacant free from the control permanently. That would protect sitting tenants and let the market operate. If the government will not remove rent control entirely, then true vacancy decontrol would be the next best thing for landlords, for taxpayers and ultimately for tenants. Unfortunately, the discussion paper does not propose true vacancy decontrol. What the paper proposes is a system of vacancy decontrol and then recontrol. Will that system meet the government's goals? The answer is no.
Whether there's any benefit to landlords in vacancy decontrol and recontrol depends on how the rents in a building compare to rents that would be available if the building were free of rent control. There's no benefit to landlords whose rents are at or below their legal maximum rents. Because of the depressed condition of the rental market, these units make up 85% to 90% of the rental units in Ottawa-Carleton and the rest of eastern Ontario. In fact, there is serious harm to landlords in this position.
In a falling market such as we have now, vacancy decontrol and recontrol will have little effect on a landlord's revenue. The landlord must absorb the revenue losses. That is what has happened in Ottawa-Carleton for the last three years.
Now consider what will happen in a rising market. On units re-rented at the low rents, the landlord will now be limited to the guideline increase, even though rents are lower than what was charged before. Vacancy decontrol/recontrol will slow the growth in the landlord's revenue because it will only increase significantly on units which turn over. The landlord will not be able to make good the revenue losses experienced during the previous slowdown. The problem will exist even if turnover is constant in good years and bad years. In fact, it will not be. Tenants will tend not to move when other rents are relatively high but their own rent is low; they will move when other rents are relatively low. This will mean that rents will be reset when the market is low. The proposed vacancy decontrol/recontrol will operate in the downward direction, not the upward direction. Landlords do not control vacancies; tenants do.
Decontrol/recontrol does not recognize that landlords need the good years to make up for the bad years. As with other aspects of rent control, it is the possibility of profit which is cut off. The possibility of losses is always with the landlord. The possibility of profit must be there as well.
We understand there have been predictions that there would be large rent increases on many rental units in Toronto if rents were decontrolled completely. We do not know if that is true, although we suspect the predictions are much exaggerated. We do know that in Ottawa-Carleton there would not be large increases on more than a small percentage of rental units. The units in question would be those with chronically depressed rents where the landlords have been subsidizing their tenants for years.
The vacancy rate has long been used as a measure of the tightness of the rental market and whether rental housing is available in sufficient quantities. For example, condominium conversions have been allowed when the vacancy rate exceeds 3%. If the government will not bring in decontrol or even true vacancy decontrol across the province, then it should bring in decontrol in rural areas and in census metropolitan areas where the vacancy rate exceeds 3%.
If the government will not bring in decontrol, then it should preserve maximum rent. Maximum rent is crucial in allowing landlords to balance the good years against the bad years. Maximum rent also encourages capital work. The market moves at times different from the need for capital work in any particular building. Now maximum rent bridges the gap between the need for work and the periodic rises in the market. Maximum rent encourages landlords to do capital work at the optimum time for the cost-effective preservation of the building. Without maximum rent, landlords will be driven to delay work until the rental market rises so they can collect extra rent increases when the market allows.
The current guideline increase is designed to compensate property owners for the fact that each year there are inflationary increases in operating costs, such as municipal taxes, utilities and maintenance. The increase also has a component of 2% above the rate of inflation which is supposed to provide a slight profit for owners as well as provide an incentive for property owners to improve their property. It should be noted that some 70% of all rental units in the province of Ontario are at least 20 years old. The age of these properties dictates that extensive maintenance be performed on an annual basis. Without a realistic expectation of profit, there's little incentive for a property owner to pour ever-increasing amounts of funds into the maintenance and improvement of these properties. The guideline must include the 2% for profit and unclaimed capital expenditures.
All versions of rent control in Ontario have recognized that increases above the guideline are necessary for reasons such as capital improvements, extraordinary operating cost increases or increases in financing costs. If the province of Ontario is to continue to have rent control based on a system of cost pass-through, any such system must incorporate mechanisms which allow landlords to obtain above-guideline increases for the items mentioned above.
Maintenance has been one of the most contentious, problematic areas of the current Rent Control Act. To begin with, it is a duplication of a process already performed by the municipalities. Municipalities, through property standard bylaws, already have a process in place whereby landlords whose properties do not conform to standards can be ordered to carry out the necessary repairs. If a landlord fails to comply with the order, he or she can be fined and the municipality can have the work done and the cost added to the property taxes. In other words, the goal of the process is to ensure the work is done.
The Rent Control Act, on the other hand, imposes an undefined standard of "adequate maintenance." If a rent officer finds the standard is inadequate, he or she has the power to order rent rebates and lower the rent. Once this has occurred, there is no mechanism in place to raise the rent once the work is done. In other words, the goal of the process under the Rent Control Act is to punish the landlord, not perform the required work.
While the maintenance section of the discussion paper is quite vague, there are some comments that are very disturbing. The government states that the violation of a property standard will be made an offence. The government then states that the process will be streamlined so that a notice of violation will no longer be required and fines to individuals will be increased to $25,000 for a first offence and $50,000 for subsequent offences. This is not acceptable. There are numerous bylaws which deal with very minor items that have little or no effect on the enjoyment of day-to-day life. Some of these items involve the inside of a unit. The process envisioned by the government could lead to the absurd situation of a landlord being fined for an item on the inside of an apartment, such as peeling paint, which the landlord did not even know about. There should not be any penalty unless the landlord has received a work order and failed to comply.
1930
Our organization believes that all accommodation should be safe and should not pose any health risk. Beyond this, the standard to which a property is maintained must be a function of the rent being paid. It is not reasonable to expect an apartment renting for $500 per month to be maintained to the same standard as one renting for $1,000 per month. The goal of any maintenance criteria must be to ensure that apartments are safe and to provide landlords with an incentive to bring and maintain units up to standard. This will not be accomplished by slapping a landlord with a fine before he is even aware there is a problem. Landlords must be notified in writing that there is a problem and must be given a reasonable period of time in which to comply. Only once they do not comply within a reasonable period of time should fines be levied. In addition, landlords should not be faced with a permanent reduction in rents for any violation.
The discussion paper also proposes a new dispute resolution system. It is the government's intention to create such a system, independent of the courts, to adjudicate rent control matters as well as landlord and tenant matters. This system is to deal with rent increases and decreases, illegal charges, termination of tenancies, rent rebates, abatements of rents and maintenance provisions.
It is vital that any such system is open, easily accessible, speedy and inexpensive for participants. The largest single complaint from small landlords is the time and cost of resolving issues, both rent control and landlord and tenant. In the past, it has not been uncommon for rent control decisions to take one to two years to be resolved. This is grossly unfair to both tenants and landlords. It often results in tenants owing thousands of dollars in back rent, which places tenants in great difficulty and places landlords in the awkward position of attempting to collect back rent from long-time tenants or trying to find past tenants. In many cases, the cost of collecting the back rent exceeds the amount of the back rent. This process must be altered so decisions will be rendered before they take effect.
The dispute resolution body should be an independent agency responsible to the Ministry of the Attorney General or to the Legislature. The agency should be composed of decision-makers with a support staff. The decision-makers should be qualified individuals, preferably with experience or background in landlord and tenant law, building maintenance and property management. Rules of procedure must be established which the decision-makers and staff would be required to follow.
In conclusion, we are disappointed with the discussion paper. In view of the many statements made by Premier Harris and members of his cabinet, it was reasonable to assume the government would be moving to a true market-based rental housing policy which would encourage the maintenance of existing buildings and investment in the construction of new rental housing. While the discussion paper states that these are its goals, the solutions proposed will not serve to accomplish these goals. The government is not moving towards a free housing market, and thus its hope of encouraging new construction and better maintenance of existing buildings while giving tenants adequate choice of housing will not be met. Thank you.
Mr Curling: Thank you for your presentation. I just wanted to focus on an area of rent increases which also may be taken into consideration with maintenance. I just want to re-read what you said: "The annual guideline increase must continue to adequately compensate landlords for inflationary increases in operating costs," and you list them, "plus an allowance for profit when the market allows it." In your guideline, isn't that what it takes care of?
Mr Caparelli: That's the theory, yes.
Mr Curling: Okay. The maintenance in itself: It is now said that there are about $10 billion worth of repairs to be done to buildings. What did they do with the money all the time they were given it to take care of all these incidentals? Now this huge maintenance has to be done, and it is said, "We can't do it." The question I ask then: What was being done before?
Mr Caparelli: I would suggest that there was a period of time from about 1975 to the 1980s when inflation was running at 13% or 14% a year and rents were frozen at 6% a year. So the money isn't there. Landlords never got the money they should have received so that proper maintenance could have been done. We seem to forget the history of rent controls.
Mr Curling: No, I don't forget it all. In 1985 and 1986, when it came in, the landlords and tenants sat down and came up with a proposal: This is what's to be done. Get a guideline --
Mr Caparelli: That was in 1985.
Mr Curling: That's right. They were looking at all of that. Then it moved on to improve it somehow. Now they say: "Take this away. Leave that in the hands of the landlord now, and they will take care of tenants." They did not take care of their building. Why would people believe now that landlords will take care of those tenants who did not take care of either the building or the tenants?
Mr Caparelli: I'm not sure I entirely agree with that. I think that period, from 1985 to about 1990, did see a tremendous amount of renovations occurring in buildings right across the province. It was only when this legislation was changed again in 1990 that there was a virtual stop in renovations.
Mr Curling: So it's $10 billion between now and then?
The Chair: Thank you, Mr Curling. Mr Marchese.
Mr Marchese: Mr Caparelli, a few questions. The previous deputation made a very good deputation, I felt, and they asked some good questions. One of them was that government should, at the very least, demand that landlords demonstrate materially, not just anecdotally, how they've been using the $1.7 billion they have been getting each year. Would you be opposed to demonstrating how the landlords have been spending the money?
Mr Caparelli: Not at all. We've heard some stories today, and I think a few of those people would be more than happy to show you their books. We also have on record a presenter that you saw earlier today, Minto, which has for years maintained that they would be happy to show you the books on some of their properties.
Mr Marchese: That's great. I'm happy to hear that. Perhaps the government will take that into account as we go through these things.
You mention on page 17 something interesting: "Standard of maintenance must be related to level of rent." Your organization believes that "all accommodation should be safe and not pose any health risk. Beyond this, the standard to which a property is maintained must be a function of the rent being paid. It is not reasonable to expect an apartment renting for $500 per month to be maintained to the same standard as one renting for $1,000 per month."
Basically it means this: If you've got the money and you pay the higher rent, it should be maintained at that level; if you don't have the money because you're not earning a good income, you happen to be at the lower end of the social scale, then we sort of accommodate you as best as we can. Something like that?
Mr Caparelli: What I am suggesting is that an apartment that is being rented for $500 a month isn't going to be decorated as often, isn't going to have appliances replaced as often. A lot of us make do with appliances that are 20 years old. They may still work. If somebody's paying $1,000 a month, they may want appliances changed every five or six years and they may be entitled to that if they are paying that kind of money. I think there is room for differentiation.
Mr Marchese: I get the picture. Your organization believes: "Rent control is bad public policy. It does not encourage new rental housing. In fact, the figures show that new private rental housing virtually ceases to be built in jurisdictions with rent control. It also fails to provide any incentive to properly maintain existing housing." What evidence do you have for that?
Mr Caparelli: I think the evidence is all around us.
Mr Marchese: Anecdotal evidence. Any research?
Mr Caparelli: I think it's beyond anecdotal. I think you can walk into any building and you can see that there has been a decline in the way the buildings are maintained. Surely there's a reason for that.
Mr Maves: Thank you, Mr Caparelli. Continuing on with Mr Curling's discussion, and we're trying to crystallize this in our minds a bit, since 1975 there's been a guideline increase which you've been allowed to take. You haven't necessarily taken it every year because the market hasn't borne it.
Mr Caparelli: Correct.
Mr Maves: That's supposed to help you keep up with inflation and maintenance. As I look at it, from 1976 to 1995, if you had taken your guideline increase every year, you'd be behind inflation by 2%. So if you didn't take it -- and I'm assuming that you, like other landlords we've talked to in Toronto, Thunder Bay and elsewhere, haven't been able to take it -- you're probably much further behind the inflation rate than 2%.
Mr Caparelli: The problem is that from 1975 till 1985, if in any one year the market didn't allow you to take an increase, you lost it forever. Even if the landlord had a good tenant and chose not to take his 6% increase in one particular year, that increase was lost forever. So there are all kinds of reasons and situations whereby a landlord today would be much further behind than the rate of inflation.
Mr Maves: So not only because of the guidelines; if you haven't been able to take it, especially in the last few years, not only are you behind inflation but your argument is that you haven't got anything built in there for profit or maintenance?
Mr Caparelli: Exactly.
Mr Hardeman: I wanted to go back to the issue of the enforcement and the fact that you want to stay with the work orders and the offences, the not complying with the work order as opposed to the landlord being charged with the offence. Do you not feel it's appropriate that if a chief building official comes and checks it and you are in infraction of acceptable standards, that should be chargeable at that time to look after the tenant's needs?
Mr Caparelli: The problem is that there are a lot of situations whereby a landlord would have no knowledge that there is a problem. Landlords do not regularly go into units to see if there is a problem. They should at least be notified that there is a problem. That's all we're saying.
Mr Hardeman: I can accept the need for some type of notification, but do you envision that the chief enforcement officers would be immediately laying charges if in fact the landlord had never been notified of the infraction?
Mr Caparelli: The way the proposal reads, that would be entirely possible. I'm willing to accept that most reasonable people wouldn't do that, but it's possible.
Mr Hardeman: I guess my question was, is it probable?
Mr Caparelli: It's possible.
The Chair: Thank you, Mr Caparelli. We do appreciate your input here this evening.
Our next presenter is Dan McIntyre, executive director of the Federation of Ottawa-Carleton Tenants Associations.
Mr Marchese: I would like to take a moment to make a motion, please. I know we haven't done this too often and I know that Mr McIntyre would like to have an hour to present here today and that's a bit unreasonable, and I know that most of the deputants would have liked to have spoken longer. But this is one of the bigger tenant associations that we've got in the whole of the province and I would like to move that we give this organization half an hour to do their presentations. Given that they're the last to present, I think we can accommodate that.
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Mr Preston: Can I speak to that? I would think that Minto was one of the larger landlord organizations in the province and I didn't hear Mr Marchese ask --
Mr Marchese: Where were you, Mr Preston? You could have made that motion.
Mr Preston: Twenty minutes for everybody.
The Chair: Are we ready to vote? Any further discussion on the motion? All those in favour?
Mr Skarica: Wait a sec. I have something to say too. I really don't mind a half-hour, but that's not fair to the other people who were cut off at 20 minutes, and some of them were totally cut off. I don't care if it's Minto or other tenant organizations; I just don't think that's fair.
Mr Curling: We can go through what is fair and what is not fair. We have some time here and this is a very large tenant association, and I also would like to see many others make some presentation. However, if we're going to start being picky about that, I think half an hour -- we're talking about 10 more minutes, for God's sake, that we are asking the groups to do. I would strongly support this. I understand that some others were denied, but I would support this.
The Chair: All those in favour of the motion?
Mr Hampton: If I could just make one comment on this, it is the end of the day and it is the largest tenants' group in the whole eastern part of the province. They're asking for 10 minutes to give us a more fulsome presentation. I think that's quite a reasonable request.
The Chair: All those in favour of the motion?
Mr Curling: Can we have a recorded --
Mr Marchese: A recorded vote.
The Chair: All those opposed? The motion is defeated.
Mr Curling: No recorded vote we asked for, Mr Chairman?
The Chair: Nobody asked for one.
Mr Marchese: No, we did.
The Chair: Just for your information --
Mr Curling: On a point of order, Mr Chairman: We did ask for a recorded --
The Chair: I did not hear, Mr Curling, anybody ask for a recorded vote.
Mr Marchese: Actually, Mr Curling did.
The Chair: Okay. Sorry; I didn't hear. Just for the information of all the people in the audience, the decision to have the presentations be 20 minutes long was a decision agreed to by one member from each party, so it's not something that was imposed by the government; it was an all-party decision.
Mr Sergio: Are we going to debate it now for 10 minutes?
FEDERATION OF OTTAWA-CARLETON TENANTS ASSOCIATIONS
The Chair: Sir, you now have 20 minutes. If you allow time for questions, they will begin with the New Democrats.
Ms Della Kirkham: I'd like to thank Mr Chair and other members of the committee in advance for your patience and attentiveness today. I know it's been a rather long day for you all, one of the many as you've gone throughout the province and will continue to, but you just have to be a little more patient and a little more attentive to us for a few more minutes and then your day is over.
Allow me to introduce myself. My name is Della Kirkham. I am a tenant and I am the current chair of the Federation of Ottawa-Carleton Tenants Associations.
Our federation has worked for 14 years to represent the interests of tenants in this region. In so doing, we have always advocated a rental system that is both fair and equitable. We are therefore quite happy to be here tonight and to share our views on the proposed tenant protection legislation. Furthermore, we hope the government will continue to listen to tenants after this hearing process is over and to consult with us in a meaningful dialogue prior to implementing any major changes to the rental system.
I would now like to introduce my fellow tenants and colleagues here at the table with me. On my far right is David Loan. He's a vice-chair of the federation. Immediately to my right is Susan Payson, who's involved in the Saville Terrace Tenants' Association here in Ottawa. On my left is Dan McIntyre. He is our executive director and he will speak to you for a few minutes about many of the issues we have raised in the brief we have submitted to the committee. Dan's expertise in tenant issues and tenant law is widely acknowledged throughout the province. His wisdom is derived from about 15 years of diligent work and activism in the tenant community. I trust you look forward to his comments and I urge you to give them serious consideration.
Mr Dan McIntyre: If I might, I'd first like to just talk directly to the government members, and I certainly welcome the opposition members to listen in.
I know that going through a committee process like this is very difficult, because this is about the fifth or sixth time I've appeared before such a committee and every government takes a you-know-what kicking no matter what they're putting on the table, so I appreciate the position you're in.
I know what the position of tenants has been and ours isn't going to be much different, so don't think I'm going down that path, but I do want to say that you've done, as a government, one very wise thing: You've put this out as a discussion paper and not as a policy paper. What that means is you've said to the province of Ontario: "This is what we think. What do you think?" And now you're hearing what we think.
Now you have an opportunity to do something fairly extraordinary for a government, to say: "We've heard from the tenants of Ontario, we've looked at the facts, and we're not on the right track at all. Maybe we should just take some time, sit down with stakeholders from all sides of the issue, really get the facts on the table, and if we're going to make changes, we're going to do it right." That would be an extraordinary step for government to do, rather than bed themselves into the very first thing they happen to say on any given topic. I encourage you to do that.
I'm about to give you a lot of stuff that you're not going to like hearing, and you're getting used to that. I understand that. I'm also going to promise I'm going to say some things that these folks aren't going to like. But I want you to know that we, as tenants, want you to get it right. As a professional advocate for tenants, it would be unprofessional and unethical, if this government gets it right, for me to say, in public, anything but that. It has nothing to do with partisanship. Our job is to help governments get it right. You don't have it right yet, but you've got a chance.
With that, I'd like to do a little bit of a history first, before we get into some of the details of the brief.
My history goes back to 1981. About a year after I got involved, I found myself testifying as an expert at the Thom commission on rent control. If I knew then what I know now, it might have been a different testimony. I don't know. Why did the Thom commission happen? Because the Cadillac Fairview scandal exposed that unfortunately the system that the Conservative government in 1979 brought in was full of holes and needed to be fixed. So you brought in the Thom commission and said, "Help us fix this." The number one mandate of the Thom commission was not to decide whether or not rent regulation, it was to decide how to bring in a good system -- a very commendable objective of that.
However, events passed you by and in 1985 Mr Curling and Mr Peterson got duly brought into government, and they got brought in, in part, because of an accord signed with the NDP which called for reforms to rent regulation. And I'm going to tell you something: They didn't get it right in the accord on how to deal with rent regulation. They put the emphasis in the wrong places. What they said was, "The priority is to bring rent review in to cover all units."
Mr Curling's government took the position: "If we do that, we won't have any supply, but we're committed to it. We signed the accord." Mr Curling and I have differences, but I consider him one of the most honourable men in Parliament. He looked to find a system he could sell that would keep the promises they made but would provide inducements for supply and inducements for capital investment in rental property.
In my view -- and this is 10 years of history -- they didn't get it right. They brought in a very bad piece of legislation. And guess what? They went to the NDP, asked for their support and didn't get it. They went to the Conservatives and got it, and got the votes, including the vote of the Honourable Mike Harris who voted for Mr Curling's Residential Rent Regulation Act of 1986. The only two Tories who voted against it, by the way, were Susan Fish and Cam Jackson. You might want to raise that with him when you get back to Toronto.
This legislation set off two fast tracks of rent increases. One was a high guideline policy which included a 2% inducement throwaway bonus to landlords to be good landlords, to have money for capital repairs and other odds and ends and make more money. It was quite blatantly put there against our objections. It also built in all sorts of giveaways and overallowances for everything under the sun: capital expenditures; rates of return of 300% on every capital dollar spent. If you needed to go to rent review, you hired a consultant and they added a buck and a half to the rent for the tenant to pay for the landlord to have a consultant. You could refinance buildings, get vendor-take-back mortgages and get all sorts of fantastic increases -- 5% a year -- for as long as it might take to pay off the VTB; all sorts of things for extraordinary increases. If interest rates went up, landlords got a rent increase; if interest rates went down, the government didn't care to hear about that.
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It was totally a system that put a fast track on those increases, but also allowed for the guideline increase to be above the level of inflation, starting in 1987 and continuing right through to this year. Ironically, it was above the level of inflation in 1986. Someone quoted my article: "Eleven-year winning streak: landlords 11, inflation nothing."
The NDP came into power -- you all remember that -- and they had a much stronger promise on rent regulation than any government before them. They were met with a vociferous attack by landlords, "If you don't put money in this system for capital expenditures, the buildings will fall apart," after we had seen, for four years, increases commonly 30%, 40% -- in one case 188.9% -- based on capital expenditures. What the NDP did was effectively a compromise. They stopped the fast track on the increases, the skyrocketing 30s and 40s and even 10s, 11s and 12s, and that was good; they didn't stop -- and Ms Gigantes knows I tore a strip off her on this -- the high guideline policy that continued to place 2% into the guideline each and every year.
I'm going to guess a lot of you here are parents. I tried to think of an analogy that might work. Let's say your children say to you, "We need another 150 bucks every year in order to pay for school supplies," and you say, "Well, I guess that's reasonable." So the first year, you give them 150 bucks. The second year, the way it's set up -- you set up a contract with them but they conned you -- you give them 300 bucks. The third year you give them $450. After 10 years, you're giving your kid $1,500 for school books. The nerve of that child to come back and say, "I don't have enough money for school books."
That is effectively what you are hearing on capital expenditures. For 10 years, tenants have been paying the till, feeding the trough in order to finance capital expenditures. It's all there in the rent. If you took the 2% out of the guideline over the last 10 years, it is effectively 17.6% of current rents. A rent of $500 10 years ago today would now be $771 with just guideline, and $136 of that increase is the 2%. If you extrapolate that over the total amount of money being paid in rent, you have the $1.76 billion.
If you want to accept FRPO's estimate -- and that's all it is -- of $10 billion needed for capital works, that means if you could find a way to harness that money in current rents -- we're not saying that's simple to do, we're just saying it's a fairer thing to do -- you'd pay for the whole thing in six years; six years, without a single dime of rent increase.
If you're in a non-profit or a condominium, you must, as a matter of law, put money in a reserve fund. Landlords are not required to do that, and that's bad policy. We told that government that, we told that government that and we're telling this government that. When we start looking at it that way, there are some answers. We're not saying it's simple, we're just saying there are answers within the current rent structure. It's totally unfair to forget the compromises made on capital works and now come and say, "We can't fix up buildings."
That's the history of how we find ourselves paying the rent. Tenants are the ones investing in rental property through their rents. We find ourselves now in a situation where it's being suggested that we've got to give up more in order for more supply to be built. That's one thing I think the landlord people here have agreed with us on: You can't do it with these measures; it's not going to happen. It's probably not going to happen if you do the whole shebang. So why should we pay the higher rents and not get the end result that's desired? You just don't have that right, and that's why our fundamental recommendation to you is that nothing be done until you've had a chance to go through it fact by fact, not misperception by misconception, not political partisan point by political partisan point, not philosophically but realistically.
When you look at what you really want to happen with vacancy decontrol and continued high rent increases, it's to say to one business, the landlord business: "We want you to have more consumer dollars. We're not going to increase the ability of consumers to have those dollars, because we're in the business of lowering wages, freezing wages. We think the minimum wage is too high. We thought social assistance was too high; we reduced that 21.6%." So you're saying, "Give the landlords the money." Where's that money going now? Not in the air. Every dollar that we spend on rent is one dollar less that we can spend at the local restaurant, the video store, on entertainment, on clothes, on food, on cars and every other segment of the consumer spending pie, whatever we choose to spend.
What landlords are looking for -- and I don't blame them; it's part of the motivation of being in the business -- is a bigger piece of the economic pie. If you give them that bigger piece, I suggest you go back to some of your small business friends in other types of business and say: "Well, I'm sorry if there aren't as many consumer dollars around for them to spend, and I'm sorry you didn't make it, but we had to look after landlords. We hadn't given them enough." We've given them 2% extra for 10 years.
In our paper, we talk about the real facts. I was on Mr Curling's committee, the Rent Review Advisory Committee. I was the bad boy of that committee, as Mr Curling will remember. I was on the committee, and we were given lots of good facts by his ministry, for example, that the operating cost of rental property in 1985-86 was 55% of rent. Only operating costs are subject to inflation, by the way. You don't have to rebuild the building, so you don't need an inflationary factor on that. With the changes over the last 10 years, the operating costs are now less than 50 cents on the dollar, so the operating profit is 50%.
Now, every tenant advocate is coming here, and they're saying, "Well, you know, we're quoting Citibank 10% rates of return average." "Average" means that some make more, some make less. There are landlords declaring losses for tax purposes. Those losses are entirely tied to the depreciation allowances and the cost of financing their ownership of the property as a long-term investment. The taxpayer does some subsidizing of those losses in order to pay off that second piece of property or third piece of property the landlord has.
But cash on cash, in terms of what it costs to run the building and what they bring in, they're doing very, very well. Some bought a little high and they're paying a price for it, and we can feel a little sorry for them. But let's not raise every rent in Ontario simply because a couple of people have run into a couple of problems here and there. The evidence is anecdotal, and the facts are that maximum rents have been allowed to go up to such a point that you can pay for everything you want. In fact, if you want to do it right and if you look at amortization schedules, you can not only pay for all that $10 billion of expenditure in capital that you require, but you'd have about $7 billion left for a non-profit housing program.
I don't mean to make these statements in a startling way, but I'm saying that these are the numbers we should start to look at as a government, not: "Oh, I can't make money because of rent controls. Regulating stuff just isn't a good thing to do. This is too complicated." It takes one piece of paper: "Dear tenant, I want to raise your rent in 90 days. Pay up." That's the system.
We can do better. What we're going to get from this direction is higher rents, less maintenance and less supply, because of your conversion practices, which are going to hit people like the folks from the Strathcona right in the teeth. So you're going to reduce supply. You're also going to build in some unfairnesses. There are going to be inequities in the system, different prices for different people, different treatment of different tenants, different value. Even though some tenants could pay more for rent, they can also pay more for a loaf of bread. Nobody asks you your income when you buy a load of bread. Mr Greenberg from Minto can pay more for bread than I can. Does that make it fair that he's charged more?
We have to look at the value of rental housing. Mr Baird pointed out an almost 300% increase in his rent, I believe, over 15 years. That's common. When I moved to Ottawa in 1974 and moved into a Minto building, a three-bedroom unit was $210. That unit is now around $740 or $750. Minto hasn't had to rebuild it. They've had to operate it. That's been taken into account in the inflationary increases.
The facts don't bear out the direction you're going in. I ask you to review that. I talked to Mr Hardeman earlier. I gave him a football analogy: Drop back 10 yards and punt. Take your time, do it right, and that kind of governing will deserve the respect of landlords and tenants and everyone else. I hope you'll do that.
I hope there's time for questions. We are prepared to stay as long as you wish.
The Chair: You've run the clock down to about two minutes, which isn't an effective time to divide up for questions. So if you want to use your two minutes for some further comments, you're more than welcome to do that.
Mr McIntyre: My further comments are this: Tenants look to their government to provide a level playing field. Not only will this tilt the field if we go this direction, but other measures taken in conjunction, including the cuts to legal aid, the cuts to income support, the cuts to all sorts of things, will make things worse.
If I can take one more pitch at the government, this is not a Common Sense Revolution item. We've got lots of campaign literature of Tories saying they won't bring in anything till they can get a system that's proven to be better. I'm saying to you that you don't have the proof. Keep that first promise: Don't bring it in unless you can prove it's better.
We'd be willing to look at that with an open mind. We'll sit down with the minister. We were hopeful that he might be here today. I've invited him to come up and see us some time. We hope he'll do that some time. We'll continue to work with the opposition parties so that they can press you on the very points that you need to be pressed on so they can fight for fairness for tenants as well.
Nothing that we say is meant to drive landlords out of business. I did take some exception to Mr Leach's comments on opening day, and they're referred to in our brief here as well.
I probably blew the two minutes there. I can talk 20 minutes on about 15 different topics in here if you like, and many people here know that as a fact.
The Chair: Okay, thank you, Mr McIntyre, and thank you all for your interest in our process.
The committee now stands adjourned until noon tomorrow in Peterborough.
The committee adjourned at 2002.