RESIDENTIAL RENT REGULATION AMENDMENT ACT, 1990
KINGSTON RENTAL PROPERTY OWNERS
CANADIAN DEVELOPMENT INSTITUTE
CONTENTS
Friday 15 February 1991
Residential Rent Regulation Amendment Act, 1990, Bill 4
Frank MacMillan
Albert Gelinas
City of Ottawa
Mary Ann Franchina
Howard Shaw
Kingston Rental Property Owners
Philip Sweetnam
Canadian Development Institute
Adjournment
STANDING COMMITTEE ON GENERAL GOVERNMENT
Chair: Mancini, Remo (Essex South L)
Vice-Chair: Brown, Michael A. (Algoma-Manitoulin L)
Abel, Donald (Wentworth North NDP)
Bisson, Gilles (Cochrane South NDP)
Drainville, Dennis (Victoria-Haliburton NDP)
Duignan, Noel (Halton North NDP)
Harrington, Margaret H. (Niagara Falls NDP)
Mahoney, Steven W. (Mississauga West L)
Mammoliti, George (Yorkview NDP)
Murdoch, Bill (Grey PC)
O'Neill, Yvonne (Ottawa Rideau L)
Scott, Ian G. (St George-St. David L)
Turnbull, David (York Mills PC)
Substitutions:
Daigeler, Hans (Nepean L) for Mr Scott
Tilson, David (Dufferin-Peel PC) for Mr B. Murdoch
Ward, Margery (Don Mills NDP) for Mr Bisson
Wilson, Gary (Kingston and The Islands NDP) for Mr Mammoliti
Wilson, Jim (Simcoe West PC) for Mr Turnbull
Also taking part: McGuinty, Dalton (Ottawa South L)
Clerk: Deller, Deborah
Staff: Richmond, Jerry, Research Officer, Legislative Research Service
The committee met at 0912 in the Westin Hotel, Ottawa.
RESIDENTIAL RENT REGULATION AMENDMENT ACT, 1990
Resuming consideration of Bill 4, An Act to amend the Residential Rent Regulation Act,1986.
The Chair: This is the standing committee on general government. We are continuing with our public hearings in regard to An Act to amend the Residential Rent Regulation Act, 1986. We are having public hearings on Bill 4.
FRANK MACMILLAN
The Chair: The first presenter was unable to be with us this morning, so we are moving right along to hear Frank MacMillan. Sir, if you would please identify yourself and whom you are representing, the committee has allotted you 20 minutes for your presentation, 10 minutes for an oral presentation to be followed by 10 minutes of questions.
Mr MacMillan: First of all, on the question of who I represent, I represent myself and only myself. I do not represent any vested-interest group at all. I simply represent myself. I am a small landlord. I have a three-unit apartment building in the city of Ottawa. I am also a lawyer acting in a general practice which includes real estate. I do not represent any large developers at all. I would like to speak personally this morning.
In that context, I would like to say I do not know what kind of neighbourhood you grew up in, but I would like to tell you about mine, because I still live in that neighbourhood.
In 1948 my parents bought and moved into a large four-unit apartment building in what is now the more central part of this city. It is called the Glebe and it is about a 12-minute drive from this location by car. The building was originally a double, what we now call a semi-detached, and had been changed into a four-unit apartment building in the 1930s. It is a neighbourhood of tree-lined streets and a mixed bag of small to medium to large houses of various constructions and of various types. These buildings were built primarily in the 1910s and the 1920s, with very little new construction in this area.
At the time my parents moved into it, it was a reasonably good address. My parents had lived in the Glebe for much of their lives as well and were moving to a new location within that neighbourhood. We lived there, my family and I, in one of the apartments throughout most of my life. In the 1950s and 1960s, as you know, it was common that most people were looking to move to the suburbs and there was a movement out of neighbourhoods such as the one in which I lived. Older neighbourhoods became unpopular. Many of the large, old places were converted to apartment buildings and to flats for students, young marrieds, etc. In some cases, with the declining desirability of these properties, the conversions were done cheaply.
This was not the case in my building. It was done reasonably well, having been done in the 1930s at a time when people put some value on properties such as these. With the age of these houses in the 1950s and 1960s -- they were then 40 years old -- they were deteriorating, with rotting porches and deteriorating plumbing, as these properties do. My parents were thinking many times to move out of the neighbourhood and to follow the trend, but could never quite bring themselves to do it. They remained in the neighbourhood, they maintained their property, they had good relationships with their tenants, and in many cases their tenants became their friends. In one such case, three elderly ladies who rented one of these apartments lived there for 37 years, until two of them passed on and the third one moved into an old age home.
In the mid-1970s, while I was still in school, both my parents passed on and I moved back into the apartment building for a short period of time. I maintained the building in accordance with the same standards. I increased the rents at regular intervals in accordance with the rent controls. I kept the building up.
In the very early 1980s, I was married. I started to have a family. I moved out of the apartments. The accommodation I was in was too small to raise children. My wife was also raised in the Glebe. After a few years we decided we wanted to move and were looking around for some place to buy or to move into. We decided to look at renovating the apartment building we lived in because it was easy to renovate, having originally been really two single homes attached and then duplexed on each side. The best advice we got was to renovate one side to become a single-family home again, leaving the other side temporarily as a duplex, and then as the market increased we could sell off that side as we wanted, changing it back into a single-family. We decided not to do that, or perhaps I decided not to do that, convincing my wife that living in an apartment building would not really be so bad.
Part of what probably convinced my wife to do that was that a good friend of hers, who was a single mom and wanted to live in the Glebe as well -- wanted to live near us, I suppose -- rented one of those apartments at a reasonable market rent, a market rent that she could afford. We continued to rent it on that basis. She lived there for a period of approximately five years. Again, the other apartment changed hands, as apartments do, with each tenant living there about one and a half, maybe two years. In most cases, my experiences with my tenants were good, but not always. One tenant trashed the place, unfortunately. I had to ask them to leave. So my rental experience was generally pretty good.
At the end of this five years, after we had been living in the building and had spent in excess of $100,000 renovating our unit, what we did was we took the two smaller apartment units on the ground floor. We converted it into a five-bedroom home with an addition on the back. We spent a good deal of money. We maintained the building as you would want your building to be maintained if you were living in an apartment building. But even though we did maintain the building, eventually the apartment in which my wife's friend was living, because she had lived there for such an extended period of time, it was really time to do some serious renovations to it. There was also an old set of sun porches at the back that were deteriorating and they needed to be repaired.
She advised us in January of 1989 that she wanted to move out, that she and her boyfriend, who was now living with her, wanted to move out and they had found a new place to live, and gave us, incidentally, short notice about it. I was caught kind of short and I can tell you I was a little miffed about having to find someone to renovate the building on such short notice.
I should also say that my other tenant, who had moved in approximately two years prior to that point, I had told her at the time -- told them, a couple, that I would be renovating part of their unit because of the sun porch situation, which needed repairs. That was entirely to their satisfaction. I told them at that time that I would pass this cost on to them. They were quite happy.
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See, my building is a special building, in the sense that -- well, special to me, I suppose, but it is well kept, it is well maintained, it is a very attractive-looking place to live. And the rents were far below the market rents one would normally expect to purchase this type of accommodation at. So they were quite content with that and they understood that I would do that at some time.
When my wife's friends moved out, we commenced the renovations. We spent $30,000 renovating. None of it was frivolous. They were renovations that were needed to maintain the quality of that building. This neighbourhood I live in is an old neighbourhood, and old buildings come to points where they simply need a lot of renovation. You have to spend some time on them. Now, you can do it cheaply, which I could have done. I could have done the bare minimum and rented it. I would have had no trouble renting the place. I do not even have to put an ad in the paper. People will come and rent my apartments. But I wanted to maintain the standards that I have always maintained. So I did that. I spent $30,000, split roughly 25% on the unit that the tenants were still living in, which had been renovated periodically throughout the years. On the other one, which needed more renovations, I spent the balance, some $22,000, or whatever the difference is.
I then rented that apartment, at an agreed rent with a new tenant, on the understanding that the rent would be increased consistent with what was approved under the then existing rent control legislation when the application was made. We estimated what that rent would be. We entered into a lease entirely satisfactory to my tenant. With the other tenant, we sat down and negotiated. I negotiated a lesser rent with her, because I thought it fair. I had not spent as much on her unit; it did not require it. Also, since they had been there for some period of time, we felt that it would be more appropriate not to increase it and jump it such a considerable amount. In truth, they did not have the same type of income as the new person who was moving into the building.
I guess the rest is history. During the period of process that I had brought my rent application, Bill 4 was introduced and I lost, although I had entered into agreements with my tenants, my tenants were satisfied with the rents that I had set, the rents were not out of line with the market, the building needed the renovations and I maintained a high standard of quality accommodation for these people. In other words, no one was being hurt by this, by my arrangement, and the building was being maintained and so on. I repeat myself.
I was cheated out of this $30,000 with no way to recover. The cost to me, on a monthly basis, is approximately $312 per month, which, I think, comes to about $4,000 approximately per year that I have to pay out of my pocket, that I cannot recover. Obviously I am pretty upset about that.
In my role as a lawyer, about the same time, almost exactly the same time --
The Chair: You have about one minute left, sir, for your presentation.
Mr MacMillan: All right, quickly, a client came to me and wanted to buy an apartment building in the east end of the city. The apartment building was $141,000. It was a losing proposition based on current rents of $178 per month. My client was prepared to absorb that and buy the building. It needed $25,000 of renovations urgently, because the foundation was deteriorating. The current owner was also an occupant of the building, was an older gentleman, had been trying to repair it himself He was of modest income. He took a heart attack during the process of trying to do the renovations. He lived in it for another year. The foundation was deteriorating further. He could not afford to do it. He had to sell the building.
My client wanted to buy the building. He entered into an agreement of purchase and sale. When I told him he could not recover any of the $25,000 needed for urgent repairs -- and we are talking about the foundation here; he had an appraisal of the property and he had a construction report with respect to buying it. I said, "Sorry, you can't recover that." He took advantage of a clause in the agreement that permitted him to walk away from the building. That building is still on the market today, it is still deteriorating and there is no way anybody in his right mind is going to buy it at its current price.
The Chair: We have to move to questions. Thank you, sir.
Mr MacMillan: Lest you think --
The Chair: Mr MacMillan, we have to move to questions. I have given you three minutes over your stated time.
Mr MacMillan: All right, but I can finish my point in one line.
The Chair: I cannot, sir.
Mr MacMillan: Somebody please ask me to finish my point.
The Chair: Mr Brown.
Mr Brown: I will ask you.
Mr MacMillan: All right. The bottom line was, lest you think that this guy was gouging, that the vendor was gouging or trying to sell the building at more than its value, let me tell you something: This man was elderly, this was his life savings and he would have realized $16,000 net out of the sale of this building. Now he is stuck with it, the building is deteriorating, nobody will buy it.
Mr Brown: I do have some questions. What were the rents and what would have been the rents if things had proceeded?
Mr MacMillan: For me?
Mr Brown: For the units, yes, your units.
Mr MacMillan: All right. My rents were set, for the two units, at $628.67. With the statutory increase it became $662.62. My proposed increase -- which was permitted, as I understood it, interpreting the then-existing legislation -- would be $950 per month. I did not know whether I was going to get that. I would have been prepared to accept less than that. But we set it with my tenant at $950 on the understanding that I would not increase it the second year -- this was in the leasehold arrangement -- and that the rent would be set at whatever the statutorily agreed amount was.
I want to tell you, these apartments are two-bedroom apartments, living room, dining room, kitchen, front sun porch, back sun porch, fireplace, hardwood floors. They are luxury accommodation.
The other apartment was $770.09, for a better-quality apartment at the time of renovation, which is now $811.67 under the statutory increase and which was agreed to at $870 per month. That was the agreed increase with my tenant. Both of those increases were quite satisfactory to the tenants. In other words, it was not, "It's an old lady in the building and we're going to jack her rent up." It is nothing like that.
Mr Brown: Had you actually made application through the RRRA?
Mr MacMillan: The rent review act?
Mr Brown: Yes.
Mr MacMillan: Oh, yes. I made the application on -- I forget. It was some time in September, late September, or the very beginning of October, just before the bill came.
Mr Brown: Definitely the real problem is the retroactivity.
Mr MacMillan: Oh, I am nailed to the wall, yes.
Mr J. Wilson: Thank you, Mr MacMillan, for your presentation. Your presentation today is, if I may say, typical of what we have been hearing from landlords appearing before this committee. Yet we have the NDP and some of the large tenant groups saying to us that over the years you should have made enough money in your building to then pay these capital costs when they occur and that there should not be an emergency that suddenly comes up that requires you to have, as the government puts it, an exorbitant rent increase. What are your comments on that?
Mr MacMillan: To start with, throughout the period that my parents and I have owned this building, over 40 years, we have maintained the building to the highest standards. But things come to a point when you own an older building -- this building is almost 80 years old now -- where old sun porches and things like that simply have to be redone.
First of all, I just looked at my most recent tax statements. This year I will lose $5,000 on the building, last year I lost $1,000 on the building, the year before that I lost $2,000 on the building, and the year before that I made $1,468 on the building, over the period of time that I have done it. Most years, if I go back, it has been more or less a break-even situation, which is satisfactory. So if there are any savings, my savings are in the increased equity of my building.
Mr J. Wilson: Well, in fact Dan McIntyre, who appeared before us last night, would argue that not only are there savings but they are compounding, totally neglecting the fact that each year landlords are paying out to upkeep their building. He left the impression with this committee that it sits in a bank account and it accumulates; it compounds on its own.
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Mr MacMillan: No. I mean, my parents got into buying a building because that was their savings. That was their pension or their way of accumulating a nest egg for their old age. That is a fact. I did it on the same basis.
I think what you are asking me is, "Is it fair to pass on the costs of your improvements to the consumer, to the tenant?"
Mr J. Wilson: Yes.
Mr MacMillan: I think it is.
Mr J. Wilson: Because that goes to the basis of the NDP's opposition to landlords.
The Chair: Excuse me. Gary Wilson.
Mr G. Wilson: Thanks, Mr Mancini. And in spite of what my colleague Jim Wilson says, the story from landlords is not the same, partly because, unlike you, some landlords own thousands of units. So there is quite a difference there.
Mr MacMillan: That is true. And I think that people like me should be encouraged, and they are not encouraged under the current system. I think that the small landlord is treated the same as the big landlord, and I cannot afford to accumulate large masses of money to do renovations. Where my money comes to do my renovations is by putting a mortgage on the property.
I am like you. I am not rich. I do not have large amounts of money. I cannot form capital in some way to do it. And if I am forced to do what you are proposing, what I understand my friend is saying and proposing, I am not going to be in the business. I do not like to regard it as a business. I just cannot afford to be a landlord and I am not going to be a landlord. I will sell my building. I will buy a house. I will let my house be my source of savings, which, as you know, is entirely exempt from capital gains tax.
Mr G. Wilson: But at the same time, Mr MacMillan, you have the one building and you have had it for a long time, so you are well aware, unlike a lot of landlords -- and I want to say I commend you and your parents for wanting to keep that building and to stay in the neighbourhood with which you had a long association -- you have much more familiarity, say, than landlords who have thousands of units. They would not know necessarily what shape the buildings are in.
Then I think you said that you went with the allowed ceiling for rental increases every year, did you not?
Mr MacMillan: Yes.
Mr G. Wilson: Well --
Mr MacMillan: Actually, I did not. When I went and made my rent applications, I actually found that the amount of rent that I was permitted was slightly more than what I had been charging.
Mr G. Wilson: I see. But you did not find that was adequate to put enough aside for kinds of renovations like the changes your sun porch required.
Mr MacMillan: I lost money in most years I had the building, and that is not through sophisticated accounting procedures. I do not even take depreciation on my building. I lost money because it is very expensive to maintain an old building if you want to maintain it to good standards, you know? And when you finally come to a point where you have a large amount of money, of capital, to spend, you look to the building to pay that, okay?
Where am I going to accumulate this money? If I have to take it from my income, I tell you, I do not have that amount of money. I have got four children. I do not have it. I am not going to be in the business. And there are thousands of other landlords like myself who just will not make that leap of faith, will not do it. And if we do not do it, who is going to provide accommodation for people? I --
Mr G. Wilson: Well, I think, as you said --
Mr MacMillan: Let me just say something.
Mr G. Wilson: Okay, sure.
Mr MacMillan: If you really feel this --
The Chair: You have 10 seconds.
Mr MacMillan: Okay, let me say it in 10 seconds. Here is a challenge I will put out to you. All of you people probably make as much or more money than I do. Buy a small apartment building. I can tell you one that is available in the city of Ottawa right now --
The Chair: Thank you. Somebody may take you up on that offer. Mr Gelinas?
Mr MacMillan: -- for $141,000. Buy the building and try to run it --
The Chair: Order. The committee wishes to thank you for appearing, sir.
Interjection.
The Chair: Sir, I have got to run this meeting in an orderly fashion and we have to keep moving on so we can finish. Thank you. I appreciate it.
Mrs Y. O'Neill: If I may, on a point of order or information, I do not know which it is.
The Chair: Whatever.
Mrs Y. O'Neill: I am sorry that I am late this morning.
The Chair: No problem. We were all late.
Mrs Y. O'Neill: The Ottawa traffic is really interesting these days, with the snowstorm. If I may, I would like to table the amendments of our Liberal caucus.
The Chair: Right now?
Mrs Y. O'Neill: Yes. I would just like to present them so that people would know where we are thinking.
The Chair: You want to have them distributed?
Mrs Y. O'Neill: I have them here to be distributed by the clerk. This certainly does not limit our presentation of further amendments, but it is our immediate response to the presentations we have had to this point.
The Chair: Very good. And I must add, I guess if I was going to court on some matter, I would try to hire Mr MacMillan, because he would fight right to the very last second.
Mr Brown: I just wanted to remind members that the government caucus has also presented amendments to the committee. I think we all have received copies of the government amendments. I was wondering, just for the information of members, if the government is entertaining further amendments, or are these the ones we will be expecting to see?
Ms Harrington: I believe we will have to find out on Monday. I have not got any further to present today.
Mrs Y. O'Neill: I thought Monday we were dealing with the green paper -- then Tuesday, was it?
Ms Harrington: Tuesday, sorry.
Mr Brown: Just for clarification, Mrs Harrington, we may see further amendments on Tuesday from the government? The ones we have seen are largely technical amendments to the bill. There is nothing of substance yet.
Ms Harrington: These are basically technical amendments at this time.
Mr Brown: So your decisions based on what we have heard, we will see those kinds of amendments, if any, next week.
Ms Harrington: That is right.
The Chair: Mr Wilson?
Mr J. Wilson: I was just going to ask the clerk if I could have a copy of the government's amendments. Thanks. You may have given me one last night, but I could not find it this morning.
The Chair: No
ALBERT GELINAS
The Chair: Mr Albert Gelinas? We will be following the same procedure. You have 10 minutes for your oral presentation, followed by 10 minutes of questions. Please have a seat. We just ask you to identify yourself and whom you are representing for the record.
Mr Gelinas: Good morning, ladies and gentlemen. My name is Albert Gelinas and I am representing the view of one tenant, myself, and perhaps the view of some others that I share.
I would like to first of all apologize for the quality of my brief. I had hoped to polish it up this week, but I have been stricken with the flu up until yesterday.
I am a tenant today and have been since renting my first apartment in the late 1970s. I became actively involved in tenant issues about a year ago when I was elected president of my local tenants' association. Since then I have learned a great deal more about problems tenants and landlords face. I have also become involved with the Federation of Ottawa-Carleton Tenants Associations and a province-wide tenant association known as the United Tenants of Ontario.
I cannot give you charts and statistics. I have no expensive consultant's report to present to you. I can only speak common sense. I can only speak from my own experiences with landlords.
Over the years, I have rented from the small to the corporate landlord. In my opinion, whether we are talking of a two-unit landlord or a 2,000-units landlord, their vision is the same; that is, to take every last penny of rental income out of that rental accommodation. I have had to pay for maintenance to units that I have rented. I have seen a decline in services while my rent continued to go up. Yes, my friends, I can only speak of real concerns tenants face regarding affordable housing throughout this province.
In June 1990, I had the good fortune to attend the second annual United Tenants of Ontario conference in Waterloo. It was there that I had the opportunity to speak to tenants from North Bay to Windsor, all across this lovely province of ours. It was there that I heard Bob Rae speak of real rent control. He promised an NDP government in Ontario would introduce rent control, one yearly rent increase tied to the rate of inflation with no exceptions. What a wonderful dream. He spoke of ending big profits landlords enjoy through annual rent increases or speculative real estate deals, all at the expense of tenants.
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Here we are, only a few months after an NDP majority government win in Ontario. The questions I am asking now are: Will this government live up to its promises made to tenants? Will this government live up to the New Democratic Party's aim to end exploitation of one person by another, of one class by another? Will this government stand by the New Democratic Party's rejection of the theory that the unregulated law of supply and demand should control the destiny of society and its members? In my opinion, this NDP majority government at this point in time falls short on these, its own fundamental beliefs.
But there is hope. The Minister of Housing, Dave Cooke, has taken one step in the right direction with the introduction of Bill 4. This is only the beginning. Bill 4 must pass and further reforms are necessary. I can only hope the Minister of Housing will not bend any further to the pressures of the landlord lobby. They have spent much of their rental income to convince the government and tenants that Bill 4 is bad and we will all pay in the end.
Landlords today have to wake up and learn to manage more effectively their rental income. They must realize tenants are not a bottomless source of income. As a tenant, I have paid for landlords' financial mismanagement. I have paid for Band-Aid repairs, only to pay again. I can no longer afford to pay.
Bill 4 must pass as is. It will give the government the time it needs to consider all the issues while saving tenants from any further unnecessary burdens.
In its explanatory notes, Bill 4 states its purpose is "to limit the circumstances under which landlords may obtain rent increases above the annual guideline." This is not real rent control and will not drive landlords to bankruptcy, as they claim. The Minister of Housing is only proposing to tighten the current rent review system, not eliminate it. Bill 4 will allow increases according to a simple cost allowance formula. It would allow for extraordinary operating costs, such as municipal taxes, heating, hydro, water, insurance and cablevision. It will consider renewal or refinancing costs of mortgages or loans. These are costs which some landlords may need assistance with and Bill 4 provides for them.
Another important point to mention here is that, in addition to all of this, the Minister of Housing has also recently announced a $15-million program to assist landlords with necessary repairs.
Bill 4 also offers protection against high rent increases for tenants who face deterioration in standards of maintenance, a reduction in services, and most important, it will consider the degree to which the rental unit complies with maintenance standards.
This bill will serve to simplify an overregulated and overworked system of rent review.
In my own experiences, up until October 1990 I faced rent increases at the annual guideline from most of the landlords I had rented from over the years. With the election of Mr Rae and his government, landlords ran to rent review in record numbers in the Ottawa area. I am now facing a substantial rent increase with the current rent review system. I have no chance. I will have to pay more and more each year. This and all the other cases in the Ottawa area are good reason to end this rent review madness and pass Bill 4 retroactively to October 1990.
The landlord lobby groups claim making this bill retroactive will put them out of business. If this is true, I would like to know why in all the years that I have been a tenant I faced guideline increases. That was enough for my landlords. Why in 1991 is this no longer enough? Liberal Housing critic Dianne Poole recently pointed out that statistics from the rent review commission show 96% of rent review decisions allowed increases of 14% or less in the 22-month period ending in October 1990. Am I supposed to be happy that I face only a 10% increase in rent, especially when my employer is talking about wage controls at 4%? Even with a guideline increase, my landlord would still be ahead of me by 1.4%.
The final and most important point in Bill 4 that I would like to mention is that it amends the definition of rental unit to make it clear that it includes a rented site of a mobile home or a single-family dwelling, even if the tenant of the site owns the mobile home or the dwelling.
This is very important to me as an owner of a mobile home situated on a leased lot. If my rent continues to go up to the point where I can no longer afford it, I will have to sell my house. I do not have the option of moving out, as tenants of apartments can do. I cannot move my house to another area because tough restrictions exist in Osgoode township regarding the placement of mobile homes. I would have to move out of the region altogether to find a suitable site. Mobile home parks must be covered, as Bill 4 intends.
I am sure you have heard and read many eloquent presentations from landlords, and you will likely hear more. In closing, I would like to leave you with one last thought to store in the back of your minds. If landlords were as fair as they claim to be, there would be no need for tenants' associations, no need for federations of tenants' associations, and certainly no need for the United Tenants of Ontario. My friends, Bill 4 must pass as is. The Minister of Housing has opened the door just a crack. Let's give him the opportunity to open it wider, and hopefully landlords will realize their interests can best be served by working with tenants instead of against them. That is it for me.
Mr Tilson: Housing in the province of Ontario is certainly a major social problem, whether it be apartment owners, whether it be the mobile home owners, whether it be the individual who simply owns his own home. I can tell you that there is a large number of people who have purchased homes, probably for amounts that -- I mean, who knows what is affordable any more, whether you are talking apartments or whether you are talking homes; I am not even too sure what the word "affordable" means -- paying unbelievable amounts for their homes, with tremendous mortgages that they will never pay off in their lifetime unless the prices go up even higher and they somehow --
Mr Gelinas: Win the 6/49.
Mr Tilson: Well, that is right. And if people are living in homes with mortgages, and that is all they can pay -- I mean, you talk about tenants paying 30%. I can tell you I know of people who have gorgeous homes and no furniture because they cannot afford to buy it; it is all going into the mortgage payments. And their food is not -- you know, it is a similar type of a problem, perhaps a more expensive type of a problem, but the same problem is there.
Since we are dealing with rental accommodation, the apartment-building type of accommodation, I guess that is where I look at, how do you make these things more realistic, how do you make these accommodations more realistic? I believe that one of the ways is increasing the supply, because obviously if the supply is greater, the competition will be greater, prices will not be as high, whether it be for houses or whether it be for apartment buildings or whether it be for mobile homes.
I guess my question to you therefore is, should governments -- this government -- be encouraging private enterprise to build more apartment buildings or buy trailer parks or whatever, as opposed to governments actually getting involved themselves? In other words, should the governments in fact be going out and building the rental accommodation? We are having landlords saying, "We can't afford to do it." Therefore, should the government be doing it?
Mr Gelinas: I think that it would be the ideal solution for the government to do this, but it would be impossible for it as well. I would like to see the government encourage landlords to do this themselves.
Mr Tilson: I would too, and I guess that is the question that I have for you. How do we encourage private enterprise to increase the supply? Certainly you talk about the history, your history. All you have got to do is look at the history of any of the cities that we have been going to and they are not building new apartment buildings. Why are they not doing any new apartment buildings? Probably because all three governments, and it includes the Progressive Conservatives, have not been encouraging rental accommodation.
Mr Gelinas: Yes.
Mr Tilson: But I submit to you, and I do not agree with you that this is a good bill because I think it is discouraging the supply, it is not encouraging landlords or owners or developers, people with investment, to build new apartment buildings. It is a social issue. There is no question. We have had story after story after story of landlords saying they cannot afford it. My solution is encouraging speculators, developers, people who have money, to build more apartment accommodation. And this government is not doing it.
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Mr Drainville: Before I ask a question, a particular question, I would like to say, as we have said before -- in fact, gave statistics -- in the first week of the hearings, that what we have seen about British Columbia, where they have no controls, is that indeed there has not been an increase in the number of units available in BC. We have seen quite the opposite, that there is a decrease. So to say that just because you get rid of controls you will have an increase on the market of the number of units available just is not so.
I would also like to say that in terms of the issue, again, around the social issue, it is an issue that has social implications, but Mr McIntyre's report yesterday, his deputation to the committee, indicated very clearly that landlords have the opportunity to make a substantial amount of money. Now, not every landlord made, and that could be true, but in terms of the overall system many, many landlords are making a very good living indeed.
I was a little bit confused as I followed your deputation. At the beginning it sounded like you were a tenant in an apartment building, but from the sound of it you are living in a mobile home?
Mr Gelinas: Yes, at a leased site.
Mr Drainville: Okay. If you could tell me just a little bit about that, how much is it presently costing you and how much is that a percentage of your overall earnings, it gives us an idea of where you are coming from on the issue.
Mr Gelinas: Basically, right now my lot rental includes taxes. I am paying a basic lot rental. I pay for all the services; that is, taxes, hydro and everything else. I cannot give you the breakdown in relationship to my income, but that is a total cost of about $189 a month right now, plus the 10.6% increase that is pending.
Mr Drainville: In terms of your present financial situation, is that a significant difficulty for you? That is, I guess, what I am trying to ascertain.
Mr Gelinas: In my position, as far as renting goes, no, it is not that bad.
Mr Drainville: How long have you lived at that particular trailer park?
Mr Gelinas: I have been there for about five years now.
Mr Drainville: Okay. That is all the questions from me.
The Chair: Mrs Harrington, you have one minute.
Ms Harrington: I just want to thank you for coming in this morning -- I understand the driving is not that good out there -- and taking a day off work, or at least a portion of the day off work.
I also wanted to find out what the finances of the increase were, but I also would like to ask how far your trailer park is, or whereabouts it is.
Mr Gelinas: We are just southeast of the city. We are within Osgoode township, which is within the region of Ottawa-Carleton.
Ms Harrington: Highway 16, that area?
Mr Gelinas: Yes.
Ms Harrington: The other point that you mentioned was having to work together with landlords, and we know that is the way of the future. We have to get everyone co-operating. Thank you for coming.
Mr Brown: I believe you are the first presenter who has pointed out that this legislation is at variance with An Agenda for People, with the information that the government party placed before the people of Ontario prior to 6 September. We commend you for your observation and I just would like to let you know that they say: "This is interim legislation. It won't work. We know it's crazy, but we would like to have a pause while we figure out what we will do."
Mrs Y. O'Neill: Mr Gelinas, I am sorry that you have had the experiences you have had, because I have been a tenant for more than half of my life, 23 years of it, in very modest housing -- in fact, it was housing over stores -- and I have not had the same experiences as you have had. I find it very difficult that you have blocked together both large and small landlords, because I have had both large and small landlords.
I am also sorry that you took out of context the statement about 14% average annual increase, because it is necessary to balance that with the statement that more than 80% of rent increases do not go to review. They are not requested. There is no extraordinary reason for them to go and therefore they do not go and tenants and landlords work that out. In accordance with the existing legislation, they do not have to go to review. So we are talking about a much smaller percentage than would be given the impression by your first statement.
I am glad you finally, in your closing remarks, came to the fact that you are a mobile home owner -- or relocatable homes, as I think the phrase is more current. I have talked to the Minister of Housing, Mr Cooke, about this matter, and the reason we have talked about it is because Bill 4 really is not going to help mobile home occupants. Nor did the previous legislation. He and I -- and I think he would back me up if he was sitting here this morning -- had come to the conclusion that neither of these pieces of legislation do much for mobile home owners. We have had presentations on both sides. Some mobile home owners like it, some do not. As a result we think that there should be a separate piece of legislation -- I do -- and that is why I am quite surprised in the amendments that have been tabled from the government side that there is no intent to do that, but hopefully the new legislation will have a special section for mobile home owners, who are a class unto themselves.
The Chair: Time has expired. Mr Gelinas, thank you for appearing before our committee.
CITY OF OTTAWA
The Chair: The next presenter is the commissioner of housing and property, city of Ottawa. Is that correct? I am sorry, director of market housing branch, city of Ottawa. There has been a slight change. I think you have observed the proceedings. We are going to follow the same pattern.
Mr Stankovic: My name is Dan Stankovic and, on behalf of the city of Ottawa, I would like to thank you for the opportunity of presenting our views on Bill 4 and, more so, on the rental housing market in Ottawa.
As a brief personal introduction, I have been working for the city of Ottawa for the last 13 years, I think, and over the last three years have been the director of the market housing branch for the department of housing and property. Our branch is responsible for a number of programs, including the residential rehabilitation programs from CMHC and the province of Ontario. We also administer the Rental Housing Protection Act and we are involved in the preparation of a number of policies that relate to specific issues and problems in the city of Ottawa with respect to housing. One important priority area for the branch, and the city as a whole, is to encourage direct private sector participation in meeting the affordable housing goals, both in terms of new construction and the preservation of existing stock.
I am also accompanied by Anna Lenk. She is the person who was responsible for preparing the discussion paper we prepared and presented here. The paper was presented to our elected reps and I am submitting it here for your information.
The focus of my presentation will not be so much on the decision-making mechanisms of Bill 4 or the specific impacts Bill 4 will have on the process with respect to regulating rent adjustments and passing through maintenance and operating costs. I am sure that representatives from the landlords' and the tenants' groups will be able to express their own viewpoints with strong arguments and some wealth of information.
My interest today is instead on the overall health of the rental housing market in the city of Ottawa, which is influenced by a complex, myriad number of market forces and government programs, as well as government regulations such as Bill 4. As a municipal government entity, the city itself has no direct role in the rent review process per se, but the city has, however, a long-standing commitment to affordable housing and it is generally recognized as one of the leading cities in Ontario in terms of delivering housing programs, including social housing, and proactive promotion of some innovative and new approaches. City Living, for example, the city of Ottawa's non-profit housing corporation, currently manages about 4,700 social housing units housing some 12,000 people and is actively involved in some exciting projects, such as preserving the affordable neighbourhood of Strathcona Heights.
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We are also one of the first municipalities in Ontario to establish and enforce minimum property standards. In the area of residential rehab, although the elimination of the federal residential rehabilitation assistance program has seriously impeded our ability to respond to some of the problems of deteriorating housing stock, the province's low-rise rehab program has been very active. Between 1986 and 1990, for example, the program contributed to rehabilitation of some 1,900 units. Naturally, we welcomed the province's decision recently to extend that program for another year with, I believe, a total annual funding of $15 million province wide. We are also excited about the recent additional $2 million from the province targeted specifically for rooming house repairs in the city.
There are a number of other rental housing activities that the city is involved in. There are briefly described in our discussion paper. I will not get into detail here, but I would like to draw your attention to one particular initiative we undertook back in 1988, which was to sign a landmark housing agreement with the province of Ontario. This agreement contained a number of significant programs and over the lifespan of three years -- which I guess just ended recently -- the agreement did pave the way for accomplishment of some major achievements in the area of affordable housing. We recently met with provincial staff with the intent of trying to maintain the principle of partnership and co-operation with the province of Ontario. I will refer back to this notion of partnership later on in my presentation.
From a policy perspective, the city's efforts are aimed at achieving the following two basic interrelated goals: first, to ensure that the supply of housing, particularly rental housing, remains affordable to tenants in Ottawa; second, to ensure that the existing stock of affordable housing is maintained and retained from a physical standards point of view.
These affordability and physical quality needs are, of course, the basis for much of the debate that we are experiencing over rent review and rent control in the province. I would like to draw on some selected information from our discussion paper to illustrate the problems the city of Ottawa is facing in the rental housing market.
Because of its economic base, Ottawa has historically been a mobile, transient city. From the 1986 census, for example, of the total of some 128,000 dwelling units in Ottawa, 61% were rented. According to an extensive housing affordability survey we undertook just last year, we found that 36% of the tenants were actually paying 30% or more of their income for shelter and 64% of the renters said that they wanted to buy a house but were not able to afford to. The highest incidence of affordability, of course, was found in single-parent families, where 44% of them spent 30% or more of their income on rents. CMHC also has recently introduced a new home ownership affordability index. According to their statistics, only 12% of the renters in Ottawa-Carleton could afford to buy a starter home in 1989. This percentage decreased to 10.6% in the spring of 1990 but increased again to 12% by the end of last year. This recent increase probably can be attributed to the declining interest rates and the general slump in the housing market. Nevertheless, the percentage of renters who can afford to move into home ownership in the Ottawa region is among the lowest in the country.
Another key statistic that is characteristic of not only the city of Ottawa but probably most major cities in Ontario is the largest source of future affordable rental housing will be found by far in the existing housing stock. However, the existing housing stock is also aging and will increasingly require maintenance and repairs. Referring once again to our 1990 affordability survey, it is estimated that 11% of the existing rental units will require major repairs, such as items involving roof leakage, plumbing, floors and electrical components. In addition, over 36% required minor repairs such as replacement of doors, windows, plumbing and so on.
As of 1986, according to the census, there were over 44,000 medium- and high-rise apartments in Ottawa, many of which were built in the 1960s and early 1970s. These units are now some 20 to 30 years old and have reached a point in their life-cycle when, over the next 20 years, they will also require major renovations. Many high-rise apartments right now are experiencing serious deterioration of underground garages, balconies and concrete cladding, due to weather and salt damage. In addition, 43% of all dwelling units, which includes both rented and owned, were built before 1961, and this supply includes an estimated 35% of our affordable housing stock.
Another statistic on the supply side is provided to us by the Ottawa Region Landlords' Association. They have found that about 45% of rental units in Ottawa-Carleton are in buildings with one or two rental units. This would indicate that there is a large number of small landlords who are responsible for maintaining an important source of affordable rental units but do not have the rental income from other properties to cover any extraordinary capital costs. It is also worth noting that the majority of these buildings would not be protected by the Rental Housing Protection Act.
The interaction between continuing demand for affordable rental units and the growing need to maintain the existing stock, combined with the decreasing trend of new private rental construction, has contributed to the problems and dilemma that the committee will be faced with over the next few days. Tenants faced with rents rising faster than their incomes, increases which are also caused by so-called luxury renovations, will find it more difficult to afford the rents. These households are also the most disadvantaged since they have the fewer choices of alternative accommodation. This is a situation that is particularly acute in Ottawa, where our rental vacancy rates have never exceeded 2% over the last 10 years. In fact, according to the last survey by CMHC, our rental vacancy rate is only 0.5%, and that was in October of last year. The consequence may be that more tenants will be forced to join our ever growing list for assisted housing, which is now up to over 4,200 region-wide, an increase substantially from only 2,700 three years ago. CMHC also estimates that about 20% of the renters in the private rental market would qualify for social housing.
On the other hand, landlords are now finding that capital expenditures on repairs cannot be passed through as rent increases, and with reluctance to undertake necessary work, the quality of an aging housing stock will be threatened. These changes are also happening when funding assistance through senior government programs is being reduced or eliminated. I should also add that there has never been a program to assist high-rise rental buildings.
This dilemma is also being experienced directly by the city of Ottawa, in the area of the enforcement of minimum property standards. Beginning in 1990, the city undertook what we call a proactive inspections program to try and respond better to some of the concerns and needs of tenants in buildings that had constant complaints over health and safety concerns. To date, the city's buildings branch has inspected 22 buildings, involving some 1,500 units, under the proactive program. But we are experiencing increasing reluctance by landlords to comply with work orders since they are unable to recover costs for repairs. I should also note as a footnote that renovation work also consists of a fairly substantial portion of our revenue in terms of building permits. Given the nature of property standards enforcement, many of the buildings are marginal properties owned by what I will simply describe as difficult landlords. Unfortunately, these buildings also represent an important source of the most affordable housing stock, but at the same time, the most threatened supply also.
The many problems and issues that the standing committee will experience on Bill 4 and rent review reflect the difficulty of the public sector to take on the necessary steps to ensure a continuous supply of affordable rental housing. The challenge exists to establish a sensitive but difficult balance between protecting tenants and the existing supply of affordable housing and allowing a fair and equitable return on landlords' investments.
The city of Ottawa will continue working towards meeting this challenge within its own resource and legislative limitations. We are about to embark on a comprehensive rental housing strategy to try and deal with some of the problems, but we also believe that such a comprehensive strategy should be implemented as a co-operative effort with the province of Ontario. I refer to the partnership momentum that was created back in 1988.
The Chair: You have about 30 seconds, Dan.
Mr Stankovic: Okay. As in my presentation, we have already taken some action to try and develop some partnership. We have, for example, offered to match, on a 50-50 basis, the province of Ontario for a housing renovation program. The city itself may be able to provide other assistance. One example would be, with its expertise in property standards and residential rehab, the city can perhaps assist in determining what are luxury units versus what are needed repairs, which in turn may be of assistance in determining allowable rent increases.
I will cut it short and I will thank you for your time and attention.
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Mr G. Wilson: Thank you for your presentation, Mr Stankovic. It certainly outlines the problems that a municipality faces and I think, for me at least, it has given me some background in this area.
I was interested though in one area here where you speak of the difficult landlords that you have, and I guess that is where the property standards has had its most activity. I would just like you to elaborate on what you have summed up as being the source of the most affordable but at the same time most threatened units. Affordable would be the lowest priced, I guess; is that what you mean?
Mr Stankovic: Yes. I guess what I mean by marginal properties, they tend to be the older stock which has been nixed due to some neglect in terms of ongoing maintenance. Under normal conditions this older stock usually is also the more affordable in terms of the lower rents, but if it is threatened in terms of deterioration to the point where it might be unsafe and unfit for habitation, then I would say that will cause a deterioration and a decline of that lower end of the rental housing stock.
Mr G. Wilson: Yes. I was wondering, this did not happen just, say, last October. This must have been a problem that has gone on for some time, given the state of these units.
Mr Stankovic: I would say it has been going on for a while, yes. But I cannot speak for the landlords of the properties themselves.
Mr G. Wilson: Of those --
Mr Stankovic: Of those marginal properties, yes.
Mr G. Wilson: Are you satisfied that the city has the wherewithal to enforce the standards act, the standards regarding residential properties?
Mr Stankovic: Yes. I should note that for the past several years we have been enforcing the standards bylaw in terms of a complaint basis. I guess with the growing incidence of complaints over health and safety factors, there was a political decision to enforce a more proactive approach to enforcing property standards, and the cause of this proactive approach is because of health and safety factors. We have had a few instances where there have been some problems with particular properties that have deteriorated and are now becoming unsafe, but at the same time there has been difficulty in trying to get the repairs done unless the city goes and does it and charges it to the property taxes.
Ms Harrington: I certainly appreciate this brief. You are not from one side or the other, but you are more than an interested bystander, you are very much involved in this process and you have given us a lot of nuts and bolts here that we definitely have to deal with.
I wanted to first say thank you for being so much involved in the standards and making sure that they are enforced, because that is one thing that the provincial government will have to work with the municipalities to do. And the other thing that I will have to find out more about is this 1988 agreement that sounds quite novel and very good.
I just wanted to emphasize that you have brought forward the real difficulties of the small landlords, that we need to have maintenance and improvements on the -- and even as you say, the larger buildings as well are aging. I would certainly like to commend the city of Ottawa for sort of going above and beyond what probably has been done in most other places. Maybe we should look to this municipality in the future for some help.
The Chair: Could we have Mrs O'Neill, Mr McGuinty and Mr Daigeler, all in three minutes?
Mrs Y. O'Neill: Thank you so much, Mr Chair.
Mr Stankovic: I have not got a promotion yet.
Mrs O'Neill: Well, I think you have been very modest in your presentation, because we know that you have had awards for the work you have done in this city and I think that it is unfortunate that the new members of the government do not realize that this was the beginning of the real strong partnership of the province and a city for the establishment of affordable housing. I am very proud of that fact and your work, and the team you had is very much part of that.
I also want to say to you that I know that some of the problems you have had in your work, and certainly it is mostly in connection with public housing, is the upkeep on public housing. I have many of the units that you administer in my riding and I hear from the tenants. So I commend you for taking the partnership that you are taking with the province in this study. This is unique, again, and I think that Ottawa is ahead of Bill 4 and ahead of the green paper.
Mr McGuinty: Thank you, Mr Stankovic, for appearing before us today. I am pleased with one of the priorities you have set out in here, and that is "to encourage direct private sector participation in meeting affordable housing needs both in terms of new construction and the preservation of existing stock." And later on in your presentation I think you address in a very fair way the delicate balance that has to be struck between the needs of landlords and tenants.
However, I would like you to hit the nail on the head here today. We are talking about Bill 4. As it exists presently, where does it stand with respect to that delicate balance? Does it help to maintain the balance; does it outweigh it one side or the other?
Mr Stankovic: Is my 10 minutes of questions over yet?
The Chair: You have about 30 seconds.
Mr Tilson: It will not be long.
Mr Stankovic: I would like to maintain a neutral position here too in terms of our responsibility.
We have tried to get direct private sector participation in the actual construction of new rental units through joint ventures, for example. We did manage successfully to get a joint venture that was a mixed 84-unit project involving 42 market units and 42 social housing units.
But in terms of the city's efforts, there are two things that impact directly. One is through property standards and our difficulties in enforcing property standards in what I describe as marginal properties. Bill 4 may have an impact, or rent control may have an impact, on how some necessary repairs to at least maintain minimum property standards will be covered in terms of the costs that are required to do those repairs. At least if you listen to the landlords, if those repairs, those capital expenditures, cannot be passed through the rents, then it will be very difficult for these landlords to recover those costs.
It also affects us in terms of residential rehabilitation work, not so much on Bill 4 itself, but if, for example, these smaller landlords or marginal properties do not have an opportunity to get some assistance through these programs, then it becomes difficult to try and provide some form of incentive for them to do the work too. That is another area we are quite concerned about, the declining assistance available through these rehab programs, not just from the province but CMHC, for example, the RRAP program.
Mr Tilson: A couple of questions on property standards. How large a staff does the city of Ottawa have as enforcement officers?
Ms Lenk: I think it is about eight or 10. It is not in our department, so I am sorry for the vague answer.
Mr Tilson: Right. I am just interested in your comments that there is an increase of inspections. Do you anticipate that your staff may have to be increased?
Ms Lenk: There was an increase of staff to cover the proactive inspections program, because that went beyond the responding to individual complaints.
Mr Tilson: I am sure you have been following these proceedings with interest, particularly hearing landlords who are simply coming and saying: "We don't have the money to do capital expenditures. We're not going to do capital expenditures, no matter what property bylaws there are. We just don't have it. We may want to do them, but we don't have the money to do them." If they go through with that, if that is in fact true -- and I do not know whether it is or not; they say that it is -- how will that affect you?
Ms Lenk: The problem exists already even under present rent review legislation, landlords for one reason or another, some of the ones we have referred to as difficult, not wanting to spend the money. There is the remedy through the courts, but that is a whole other subject of the Planning Act and the building code and I do not think you really want to deal with that in detail today.
Mr Tilson: You have said that you have seen an increase. Do you see the problem getting worse?
Mr Stankovic: Given the experience over the last two years, it is getting worse. Whether it is going to continue we will have to see, but it has been getting worse over the last two years in terms of particular properties that have come to the surface as being problem areas.
Mr Tilson: Have you had any situations yet where you actually go in and correct problems yourself?
Mr Stankovic: Once again, unfortunately, I am not in a position to give you a good answer on those because we are not responsible as a department for the implementation of the property standards bylaw. That is in another department. Unfortunately, we do not have anybody here representing that department.
Mr Tilson: I would like to get to another area, if I have time, and that is an area that arose in the city of Toronto where work orders got so voluminous on a particular building that the owner went to the assessment people and said, "Listen, our building has deteriorated to such a degree we want a reassessment." There was a story last week. I cannot remember the precise figure. It was $400,000, $430,000; some large amount of money. Do you anticipate that happening, not that specific situation or perhaps that extreme a situation, but do you anticipate owners going to the municipalities and saying, "Because of situations" -- whether it be Bill 4 of whether it be whatever -- "our buildings aren't worth what they used to be"?
The Chair: Yes or no.
Mr Stankovic: Once again, it is difficult to anticipate that. There may be one or two properties that come to mind that could potentially come to that situation, but I do not think it would be a tidal wave of concerns of that nature.
The Chair: Very good. Thank you for your presentation today, we appreciate it.
Mr Stankovic: Thank you.
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MARY ANN FRANCHINA
The Chair: The next presenter, Mary Ann Franchina. Mary Ann, you have been allotted 20 minutes for your presentation, 10 minutes for your oral presentation to the committee followed by 10 minutes of questions. I just ask you to identify yourself for the record.
Ms Franchina: My name is Mary Ann Franchina and I am a resident of the city of Ottawa. I am here this morning to share with you some facts about my situation as a small landlord, but first let me tell you something about myself.
I am an ordinary working person with a husband who is an ordinary working person. We have two children, a boy and a girl. My son recently joined the workforce; my daughter is still in university. We are just a normal family and by no stretch of the imagination could we ever be classified as wealthy landlords. Both my husband and I are of retiring age and I personally had planned to retire before now, but this was not possible. Our plan was, before retiring, to invest our savings into a facility that would supplement my superannuation and keep us both occupied. My husband has no pension plan.
After much researching and investigating, we found what we were looking for, a small three-storey building containing 14 units. The building was of the Victorian era and still in its original state. The apartments ranged from 1,000 square feet to 1,500 square feet and of the size of a conventional three-bedroom house. Each had a separate dining room with a bay window, hardwood floors, oak doors and woodwork and a fireplace in the living room. The apartments were quite spacious and bright. To say the least, we were impressed.
The one major drawback was the rents. They ranged from $257.75 per month for a one-bedroom to $460 per month for a three-bedroom. This rent included, among other things, the heat, hot water and free laundry facilities. Some rents were well below one half the average rent for similar accommodation in the same neighbourhood. The building had been owned by an 88-year-old lady who obviously did not increase rents yearly. This one major drawback, we realized, would adjust itself under the existing rent review legislation.
We made our decision to buy and had a good feeling that in the future some returns would be forthcoming, as with most investment, or at the very least the building would at some point in time become self-sufficient financially and we would have some equity to pass on to our children. Under Bill 4 and rent control, this may never happen.
We purchased the apartment building, and being serious and conservative-minded individuals, we invested our complete life savings of $350,000 to keep the mortgage payments to a minimum. Even with this sizeable down payment, our financial loss for the first year was in excess of $17,000. We purchased the building on the assumption that the financial losses would be recoverable over a period of time through phase-in increases.
In June 1990, acting in good faith, we made significant necessary improvements to the building amounting to $25,000. We played by the rules; we made application under the existing legislation to the rent review commission for a rental increase based on the cost of improvements and financial loss. We were awarded a 13.9% increase for the first year commencing 1 October 1990 and phase-in increases of 5% over a period of four years.
If the proposed Bill 4 becomes law and is implemented, with the mere stroke of a pen the increases will be wiped away even though the improvements were made and the money spent, all done legally through proper procedure under the existing legislation.
But the worst part of the scenario is that my husband and I, through no fault of our own, may lose our life savings. I am quite sure that Mr Cooke would not like to go down in history as the Ontario minister who in 1991 designed and implemented legislation that put many, many small landlords like me into bankruptcy.
Let me remind you that the rents in the building were below one half the average rents charged for units of a similar size. Our tenants are mostly young professionals with high disposable incomes and certainly not in dire need of subsidization. Among the 14 tenants I inherited two lawyers, two doctors, a parliamentary librarian, an individual who owns an import-export business, a buyer for ladies' fashions, several public servants and a retired Canadian National official who owns his own apartment building elsewhere but who prefers to live in this building because, to quote him, "It's cheaper." Is Bill 4 on rent control designed to help these people?
Unlike Toronto, the majority of landlords in Ottawa are like us: full-time workers and part-time landlords, just trying desperately to make ends meet. Why should we law-abiding citizens be treated with such disrespect and ultimately penalized retroactively? It makes no sense.
If Bill 4 and later rent control are implemented, I do not know what we will do. We could sell, but who would want to buy? No investor would take such a risk.
I am not sure what the solution is, but I am sure the solution is not Bill 4 and rent controls. They did not work in British Columbia, they did not work in Alberta, they did not work in New York City; what makes the government think they will work in Ontario? The historic ramifications in these centres were incalculable. Let's look at alternatives, perhaps legislation by regions, assessing each region on its own merit. There must be alternatives that would be fair to landlords too.
In conclusion, I would like to thank the committee for affording me the opportunity to shed some light on the turmoil and trauma a small landlord like me feels, caught in a no-win situation, and I want to go on record as being in strong opposition to both Bill 4 and rent control. As many people have so aptly put it, rent controls hurt most those they are designed to help.
Mr Brown: Good morning.
Ms Franchina: Good morning.
Mr Brown: Thank you for your presentation. Just looking at this, we can see that you did everything absolutely according to the rules as were laid down in the 1986 legislation.
Ms Franchina: Yes. We went by the book.
Mr Brown: You had the order in your hand. The government of Ontario had said to you: "This is legal. You can do it. There's no problem. You can recoup some of your money through this legislation." That is correct?
Ms Franchina: That is correct.
Mr Brown: And now, because of the retroactivity of this bill, you may be forced into personal bankruptcy?
Ms Franchina: I may be, yes.
Mr Brown: The government members who get to speak a couple of turns from now are going to suggest to you you made a bad deal, "Too bad, so sad, you guessed wrong."
Ms Franchina: I do not agree with them.
Mrs Y. O'Neill: It is too bad they are not listening.
Mr Brown: You paid a fair market value for the building, I assume; you scoured the market, you made sure that this was a comparable price?
Ms Franchina: Yes. We looked for two or three years before we found what we thought we could handle financially.
Mr Brown: I want to tell you that you are certainly not the first person we have seen at this committee in exactly the same situation, even in Metro Toronto. The suggestion is made this is not the case in Metro. It is the case in Metro. It is the case everywhere in this province that good, hardworking, honest people who made honest decisions are about to lose their life savings. And you would be pleased to know we have offered an amendment this morning that, if considered by the government, will rectify your situation.
Ms Franchina: I hope they take your advice.
Mr J. Wilson: Thank you, ma'am, for your thoughtful presentation. I do have one question about it though, and I will ask it before the NDP ask it. You bought the building, which you were impressed with, which was in good shape, from the 88-year-old lady, who had not been asking for, or had not been receiving yearly rent increases under the guidelines. And then you did what, $25,000 worth of renovations? What type of renovations were those, if the building was in good shape?
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Ms Franchina: I did not say the building was in that good shape. I said that it was of the Victorian era, just the turn of the century. They kept it in fairly good shape. However, it was starting to deteriorate. It needed quite a bit of replacement on the verandas, the roof needed to be replaced, the flashing around the building had to be replaced and painted, we sanded hardwood floors, we did a lot of painting -- the normal things. Some of the plumbing was not working well, so we had it replaced.
Mr J. Wilson: So none of these would be considered luxury renovations by any stretch of the imagination?
Ms Franchina: Oh, definitely not. We did not change the structure at all.
Mr J. Wilson: To reiterate what Mr Brown said, the NDP has told landlords like yourself in the past that you made a bad investment. I guess the problem we have with this bill is that it looks like a bad investment now, because you are not able to recover, in your case, particular capital costs, or I guess financing costs. Are your financing costs significant on this building?
Ms Franchina: No, we have one mortgage, and that was the reason for the large down payment. We cashed in everything we had.
Mr J. Wilson: So it is primarily the inability to recover the money that you spent on renovations.
Ms Franchina: It is basically because the rents were so very low, and under the existing legislation we felt that we were able to bring them up to not above average but at least to average rents in that area. With this Bill 4, there is no chance for that.
Ms Harrington: I will start, and I think Mr Wilson wanted to say something as well.
I think what you have drawn to our attention is basically the problem of a building where the rents initially have been low, for whatever background reason -- you were mentioning this woman who had owned it was very old -- and I guess they had stayed in that condition for a while. But it looks like you have a very good building, a sound building, and that you are willing to do the work on it.
Ms Franchina: Yes, we are.
Ms Harrington: I appreciate your coming here and letting us understand what the situation is, because I think all of us who have bought homes can empathize with the type of situation you are looking at, a good building and a good buy and now you just have to work with that.
Mr G. Wilson: In spite of what Mr Wilson says, my colleague on the other side, in fact we have heard not only from landlords like yourself, but landlords who are more typical perhaps in the province; that is, landlords who have many more units than are in your building. In fact, our figures show that of the 80,000 units in this area, about 50,000 are in buildings of seven units or more, so the vast majority -- not the vast majority, but the majority certainly are in larger buildings.
The other thing is, we have also heard from tenants. In our view, of course, we have got to be fair to everybody in the province. Shelter, I think you would agree, is a necessity, a human right, that we have got to make sure that there is affordable shelter, and the story that has been developing of course, the reason there have been controls for around 20 years now, is because of the squeeze put on a lot of tenants. That is the problem we face. On the other hand though, we realize, as your story suggests, that there are valid reasons why people want to get into a position of being landlords. However, the conditions have changed. I guess it comes back to Mr Wilson's question about your investment, what you took into account in deciding to go into the building and why the rents were so low, in effect. That must have been a concern to you. What did you think of that question?
Ms Franchina: I think that the people who are living in the building, they had a good deal for many years, and I think that under the existing legislation I would have been able to bring those rents up to normal. These people are not suffering. I do not know whether the majority of the tenants in Ottawa are of this nature or of another nature, but I do know that in the Ottawa area most people work for the public service. They make a good salary.
Mr G. Wilson: Still, though, another submission showed that 30% of tenant households in this region paid more than 30% of their incomes on rent. That is approximately 30,000 households. So it is a significant factor. While the tenants that you mentioned would seem to be not in that category, it is true there are a lot of people who are suffering under the present rent control legislation.
Ms Franchina: But I do not think that the rules should be changed in midstream. When I bought the building, the legislation was such. I have never heard of legislation being made retroactive.
Mr G. Wilson: No, it is certainly legal and it has been done before.
Ms Franchina: When? I have never seen it.
The Chair: I would like for it to go on, but I cannot. Our time has expired. Mary Ann, thank you for your presentation this morning.
Ms Franchina: My pleasure.
HOWARD SHAW
The Chair: Next presenter, Howard Shaw. Mr Shaw, you are familiar with the procedures we have been following this morning?
Mr Shaw: Yes, I am, Mr Chairman.
The Chair: Have a seat and take the floor.
Mr Shaw: Please excuse me. I have a breathing problem, so I will be puffing once in a while.
The Chair: Take your time.
Mr Shaw: First of all, I would like to identify myself. I am a tenant at 32 Ontario St in Kingston, Ontario. I have some knowledge of the rent control process. I have done consulting work in that area for the past number of years. Other than that, I will get on with it. I do not have a written presentation per se, but I have some notes here that I would like to consult every once in a while. I am not used to this, so please bear with me.
I would like to start off by saying good morning. With each change of government we go through this sort of process. We had the Thom commission under the Conservatives, we had the Rent Review Advisory Committee and the hearings under the Liberals, and here we are again, rehashing the same old story. As a matter of fact, with this government it seems to be a little different. You are now saying to a landlord, for something he did last July and August, paid for -- not necessarily a luxury item, but a new roof, for example -- you are saying: "That's illegal. And now while you're on the gallows, we're asking you if you have any last words, like, `We want to consult.'" I do not understand this process.
I am having some difficulty trying to determine why I am here, what I can hope to do or achieve. After the Thom hearings, we had the hearings on Bill 51 in 1986 and again we had RRAC, which was made up of nine tenants and nine landlord representatives. It was signed by all but one. Now we are up here with Bill 4. Where do we start with Bill 4? Do we start working from Bill 51 and try and introduce something that will be halfway between zero rent and what Bill 51 has? I do not know. Try to get some middle ground? I do not know what we do here. It seems that the whole process of rent control has been decided upon, except for some form of recognition for necessary capital repairs.
Except that this bulletin put out by the Ministry of Housing says, "All tenants will not face increases arising from capital expenditures," and then I hear through the media that Mr Cooke says, "We've got to allow for something, capital repairs of some nature." I do not know how. I do not know what he is going to do. I do not know how he is going to do this. He has basically made capital repairs illegal, at least for the next two years.
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What is going to happen? What is happening? I do not understand this. But again, I am a tenant and I am looking at the condition of my home, which is a unit in 32 Ontario Street. If my landlord does not have the opportunity to spend some money on that building over the period, I am looking at nothing in the way of a home. It is going to deteriorate. It has to. I lived in a house, my own home, until 1982. It takes an awful lot of money to keep up a building. But no more capital expenditures, which is ridiculous. That is for the public consumption, I think.
Incidentally, too -- my rent is nearly $900 a month -- my unit is subsidized by all the taxpayers of this province to a tune of approximately $54 a month. I hate to use the phrase, but I am a senior citizen on a fixed income. But really, I do not need a subsidized unit. They could spend the money somewhere else. Yes, get that note on the subsidy; I hoped you would.
In the short term, I can understand tenants who would love to pay zero rent because they are transient. They are looking at some reason to move. They are not staying. This is not their home. Anyway, I cannot look at that too much.
I would like to get into Bill 4 and touch on a couple of things on that.
Bill 4 kills equalization. I do not know why. I know the owners could care less about equalization, but the tenants want it. But Bill 4 says no, it is gone.
The lack of anything in the way of capital loss: I can see economic loss as defined under Bill 51 going down the drain, but financial loss under Bill 51, maybe with some slight modifications, is good. If you do not have that, a financial loss provision built in there, forget it, nobody is going to invest a dime in a building, or he is going to make sure that when he buys the building today it is going to give him the return on his investment that he wants. Otherwise he is not going to touch it. I do not know where you are going to get a building today that is going to give you 10% or 15% immediate return on your equity.
Bill 4 does not allow for anything in the way of -- and I will use this example: In Kingston, we have a garbage problem. Everybody has, I guess, but the tipping fees in Kingston have gone from $10 to $60 or $70 a tip. There is absolutely no provision in Bill 4 for working that cost into rents. There is no provision. The owner will recoup it somewhere, somehow. The only area he has is the repair and maintenance portion of his operating costs. Everything else is controlled -- light, heat, hydro, water.
Retroactively, Bill 4 kills the phase-ins of losses, or equalization. The businessman who -- and I just heard my predecessor here at the mike say she had a problem -- Bill 4 retroactively kills financial loss. And the phase-in that was awarded on legitimate ordered rent, it is gone. He is saddled with the loss now that he should not be. Actually, he made a purchase and made a commitment under a set of rules, and now you say, "Sorry, Mr Businessman, don't come to Ontario and do that because look what we can do to you." I do not like it.
This does not sound like a tenant, but I have got to look at it from the point of view of reality. The classic example that I have is, I would like to present this order that was dated 15 November 1990. Here is a small businessman. As a matter of fact, he is 24 years old. His wife is 23. He works at UTDC in Kingston. He just lost his job. He bought this place in May 1989. Now, he made all the mistakes in the world, because I guess he is not too sophisticated. I do not know the man, never met him.
He bought this building in May 1989 under a set of rules. He found out that the rents in the place were illegal. There are three units in it. He found out that the rents were illegal when he went to rent review. After they calculated his loss and worked it into his rents, he ended up with approved rents less than those when he bought the building. The rents when he bought the building -- you will like this -- were $262 a month, $230 a month --
The Chair: Mr Shaw, you are out of time here.
Mr J. Wilson: Mr Chairman, we would be happy to give up our time to Mr Shaw.
Mr Shaw: -- and an owner-occupied unit, apparently. The third unit was not rented. He ended up with approved rents of $186.66 a month, $151.91 a month and $214.66 a month, all 1 December 1990. That is gone now. Bill 4 killed it. It also killed the phase-in of this loss that this kid has got to carry of $6,327.62, according to rent review calculations. He has a mortgage on this place. When I heard about it I said: "Declare bankruptcy. What are you going to do?" Anyhow, that is it on that.
Another thing, too, is that on a retroactive increase in rents the tenant has up to 12 months to pay even though he may not be a tenant. He might have moved on to Sault Ste Marie or someplace, but he still has 12 months to pay. The owner has 60 days, under certain circumstances.
Capital is another point I would like to mention too. What happens to the capital expenditures over the next two years, or until this bill self-destructs in January 1993? What happens to them?
The Chair: You have 30 seconds, Mr Shaw.
Mr Shaw: I will leave this one with you. Tell me, what happens to the capital that you have outlawed now by Bill 4? What happens to that capital over the next two years? Tell me. Thanks for the opportunity of being here.
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Mr G. Wilson: Welcome to Ottawa, Mr Shaw. I am glad you could make the trip from Kingston. Although I am not sure you will want any subsidy, I will be moving that we provide the subsidy that is allowed for in the standing orders for people who come from outside the location.
Mr Shaw: I am a senior citizen on a fixed income, so I will take any subsidy I can get hold of.
Mr G. Wilson: I see. I was not sure from your remarks that, although you are living in a subsidized building, you did not need it.
I would like to know, in 1982 when you moved into the unit, how you thought the upkeep of the building would be maintained. In other words, did you not think that your rent would cover the cost needed to maintain a building? As you pointed out, you lived in a house in --
Mr Shaw: In the operating area, yes. I know that the operating costs are going to carry the everyday costs. The new roof -- bang. That does not come out of operating costs.
Mr G. Wilson: So in 1982 when you moved in there, how did you think that was going to be accounted for?
Mr Shaw: Through rent increases.
Mr G. Wilson: So you thought the landlord would say, "Well, we've got a roof to repair and I'm going to have to raise your rent a lot higher than normal."
Mr Shaw: Yes. Up until this year, he has not even taken the guideline.
Mr G. Wilson: You live on a fixed income. Do you not think that that might be hard to account for with a larger increase than normal? Is it not more difficult to budget under those circumstances, rather than an orderly progression that would be from annual increases that were more in keeping with what you are --
Mr Shaw: No. I still have enough.
Mr G. Wilson: Oh, you do. But the thing is, I also want to say that not all tenants are in that position and that is in fact why subsidized rents --
Mr Shaw: Yes, but why subsidize me? Why do you not direct the money? Why subsidize everybody when only a few need it or deserve it?
Mr G. Wilson: That is what we try to do, and it was a government before ours that set that up, which we approve of, subsidizing those who need it.
I want to say too about your remark about the transient tenants appreciating zero rent that there might be people like that, just as there are landlords who expect a return from their investment that is unconscionable, in our view and that of a lot of people in this province. You are an exception as a tenant. At least the ones who have come to this hearing have generally approved of Bill 4 as providing them with some stability in their living costs. There are tenants in this province who have faced what are generally considered to be exorbitant increases. In something that is as crucial as housing, we think that there should be some stability here. Do you not think that too? Would you not appreciate that kind of thing?
Mr Shaw: I know that you cannot achieve zero rents. Nobody can. Somebody has got to pay for it. Mr Broadbent seems to be shooting -- or used to; he did -- for the day when everything was going to be paid for by somebody else. I hope Mr Rae is not shooting for the zero end of that equation.
Mr G. Wilson: Well, I think you are quoting Mr Broadbent incorrectly.
The Chair: Thank you, Mr Wilson. We are going to move right along to Mr McGuinty and Mr Daigeler.
Mr McGuinty: Mr Shaw, I want to thank you for taking the time to attend before us, and I also want to recognize that you have offered something that has only come before us rarely, and that is you are recognizing merit in the other side's case. I think if we begin with that premise then we will be able to achieve some objectivity in addressing the legitimate concerns of both landlords and tenants.
You expressed some frustration at the outset regarding the fact that we are again addressing landlord and tenant problems, but I think in fairness that is something that we will have to adjust from time to time. This government, like all governments before it, will settle nothing finally, and that will apply and obtain in the case of landlords and tenants as well.
I think if I have a question for you, it would be this: With respect to Bill 4, could you provide us with two or three areas of specific change that you would like to see?
Mr Shaw: Yes. The phase-ins, which are taken care of, I think, in section 100n, or somewhere in there; I forget which section.
Mr McGuinty: I understand.
Mr Shaw: Particularly the phase-ins with regard to the financial losses. When I read something like this, you know, that should not happen to anybody -- not even a landlord, if you want to put it that way.
Mr Daigeler: You have taken the trouble to come up to Ottawa from Kingston and I certainly appreciate that. I would like to get a sense from you of how other people feel in your area. Would you say that the tenants in Kingston would generally share your views? What is the feeling in Kingston about Bill 4?
Mr Shaw: The feeling specifically, in what area?
Mr Daigeler: Would you say that your view is shared by most other tenants in Kingston, from the people that you know, or is it your view that you are presenting?
Mr Shaw: I would say yes, most of the -- I have been associated for 10, 15 years with the rent review or rent control process or whatever you want to call it. There are good landlords, there are bad landlords. There are good tenants, there are bad tenants. I would say that most of the tenants, when they understand the situation, realize that rent increases are necessary and are part of the way of life. I mean, since man first rented the first cave, he paid for it, and he is going to continue to pay for it, one way or another.
The Chair: Our time has expired for your presentation, sir. Thank you for coming.
Mr Shaw: Would you care for a copy of this order?
The Chair: The clerk will take a copy. The clerk will pick it up from you.
KINGSTON RENTAL PROPERTY OWNERS
The Chair: Next presenter, Kingston Rental Property Owners. We are not going according to the schedule, but I believe it is Joe Barrett.
Mr Barrett: Good morning. My name is Joe Barrett. I am a builder-landlord in the Kingston area. Thank you for the opportunity to speak.
I am speaking on behalf of the Kingston Rental Property Owners association, which is made up of approximately 58 members. These landlords represent approximately 7,000 units in the greater Kingston area; 95% of our membership is made up of landlords with a small number of units. The majority of our members own less than 30 units. Our membership is made up of teachers, shopkeepers, tradespeople and not of large conglomerate landlords that you see in the Toronto and Ottawa areas.
Our association has been operating since 1970 and up until recently had an extremely good rapport with our tenants. However, we find with the present regulations and stipulations this relationship is deteriorating at a rapid rate.
Five of our small landlord members made application for rent increases based on capital expenditures. They used the services of an experienced rental consultant to arrive at an approximate cost of their rental increase due to the capital expenditures and went ahead with the expenditures. One landlord we know of spent over $200,000, the president of our organization spent over $80,000, and several others spent large sums as well. In most cases, the renovations were finished or almost finished when this government made the legislation retroactive to 1 October 1990.
The point is, making the law retroactive to 1 October 1990 affects proposed rent increases three months earlier, based on 1 July. How can a landlord continue to operate under the rules and regulations that we believe are in force when a government changes these rules in midstream?
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Because Kingston is made up of so many small landlords, we are not as sophisticated and/or educated and do not use the services of property managers. We have been reluctant to use the rent review system in the past, and therefore possibly did not increase the rent to keep up to the market. Bill 4, and the retroactivity of it, made it even more unjust for these small landlords.
Many tenants complain about the large conglomerate landlord, and up until now many of these units have been owned by the smaller landlord. However, with the present regulations these people, not understanding, through lack of education, do not want to take the trouble or the time and maybe cannot afford to use property management and as a result have not necessarily gone to rent review. These people will very shortly be totally out of our rental market and these units will possibly be torn down or taken over by the large landlords. If things continue at this rate, the units may well end up back at the mortgage companies.
We find in the greater Kingston area that the majority of the tenants do not need a subsidy. We realize and agree that there are some tenants who do need some help. Our organization feels it is better to subsidize the needy and not all tenants. We all know and in many cases have tenants in our buildings who are making more income than the landlords themselves. As a result, they do not leave the buildings, because the rents are so low. These people in the past would generally move out and buy single-family homes and move up in the chain. However, with rents being so low, these people do not move out and as a result do not make accommodation available for the legitimate tenant who cannot afford more.
As an example, a tenant in a 900-square-foot apartment in the Kingston area is paying $500 to $600 a month in rent, all-inclusive. If that individual decided to buy a 900-square-foot home, single-family or semi-detached, these buildings in the greater Kingston area are presently selling for around $110,000. That similar person would pay $110,000, which would cost him, with an 11.5% mortgage amortized over 20 years, $1,153 in mortgage payments to carry, $100 monthly in taxes, $20 monthly in insurance and approximately $100 a month for heat. The total cost would be about $1,373 per month -- more than double the rent they are paying.
What is the market cost of accommodation? Why are landlords being made their brothers' keepers? As wages increase, costs go up and the economy expands, our incomes are being eroded. Why would any tenant want to go out and buy a home when he can live in similar conditions for half the price?
This, as you all know, is not good for our housing industry and does not create jobs. The construction industry in the Kingston area is at an all-time low. And we have some rents a lot less than the example given.
There is an 11-unit apartment building at 184 Wellington Street, built by an elderly couple 32 years ago for their retirement. The male spouse died and the building was offered for sale at $600,000. Prior to Bill 4, there was an offer of $540,000 on this property. The prospective purchaser heard that government rent review policy might change and removed his offer. These one-bedroom units rent for $350 to $400 per month, with a building income of $51,000 yearly. The total expenses, without management costs or repaying the building cost, are $18,000. This leaves $32,000 to repay or service the debt. With 11.5% financing, the maximum mortgage is $260,000. But wait: The mortgage company will only finance 60% of the disposable rents, or a mortgage of $156,000. This building did sell for $352,000, or $31,000 per unit, far below the replacement $60,000 cost per unit. This elderly owner received $150,000 to $200,000 less than the building replacement cost and as a result is being severely penalized. This is not an isolated case.
The government was concerned that our capital expenditures were of a luxury nature. In many cases, these buildings are 20 to 35 years of age. The air-conditioning needs replacing, with a more efficient system installed, as Hydro is continually trying to tell us to upgrade and make things more efficient. Appliances and roofs are worn out and needing replacing. Hot water tanks are gone; so are floorings, for example carpet and linoleum. Many of these buildings need upgrades. The balconies are cracking, the mechanical systems are worn out, and the tenants are continually requesting upgrades. The landlord has no money to spend on these items.
When Bill 4 was introduced, several landlords were in the process of doing some renovations. All tradespeople were immediately laid off or renovations stopped. This resulted in many tradespeople in the Kingston area being laid off. As a result, renovations do not get done. New appliances do not get installed. Carpeting and painting have all been drastically reduced.
These unemployed workers are also trying to make a living and these people in turn spend money in the community. This has a continuous spinoff effect. The products purchased and the services required are in many cases related to the jobs that many of our tenants have. If this continues, it may lead to unemployment for the tenants. What good are low rents if they cannot afford to pay for them?
Mortgage institutions today are basing their calculations on 60% to 65% for financing and 35% to 40% for operating costs. At this rate, why would anyone want to continue being a landlord when you can get a much better return with a Canada Savings Bond or Treasury bills? Is it not better to have a small landlord participating in direct ownership of this country than to leave the money in the banks where only big companies can deal with the bureaucracy?
One of our members is now being challenged by Revenue Canada. She owns a small four-unit apartment building. She wanted to write off her losses. Revenue Canada is now saying that there is no chance to make a profit on this building in the future and as a result is saying that it will possibly not allow her to write off her losses as there is no potential for gain. With this threat over her head, as well as everything else that has happened in the rental industry, this person is very seriously considering giving the building back to the mortgage company.
We can see in the very near future that for anyone who has bought the buildings recently and does not have a lot of equity in it, it is not a very good position. It is most unfortunate for any landlord who has bought the building for his retirement, because his equity is being eaten away faster than ownership provides.
Faith in the economy, with government and the free enterprise system, has been what Canada has prospered and succeeded on. As we make laws that infringe on these basic policies, we jeopardize the democratic system we all grew up with. Thank you.
Mr G. Wilson: Welcome to Ottawa, Mr Barrett, another person from Kingston. I am pleased to welcome you here. Of course your presentation covers a wide variety of landlords, as you pointed out, and one thing I was interested in hearing you say is that many of your members were not I guess that familiar with the legislation as it has applied in the past. They did not know what raises were allowed. In fact you mentioned one who had to enlist the services of a consultant for recent ones, but I think you said also that -- I took it to mean the legislation is so confusing that they did not really know what it amounted to even prior to this so there were not regular increases in the rents. Is that what you were saying?
Mr Barrett: I think what our organization tried to do was to educate the landlord and make him more aware of what is happening. A lot of our members, being small, have not had the resources or the time. They have invested in rental property as a sort of a means of retirement, participation in the growth of the country, and as a result have not always had enough time to maybe spend on the -- call it the bureaucracy, the red tape that is involved in making the proper decisions. We in the association have tried to educate them and bring them up. We have encouraged them, if they have legitimate costs based on the rent review system, to bring them forward and go to rent review to get their rents to a proper, realistic level.
Most times they have been reluctant, hesitant, hold back because of a lot of restraints, uncertainty of knowing what they are really doing, but they have not really gone to this process. This has kept the rents at unusually low values and in so doing has not helped. Now when you look at it you are being eliminated even more.
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Mr G. Wilson: We are hoping -- and this is a moratorium, as you know -- that we will have more easily understandable legislation for both landlords and tenants. The other thing is I was just wondering, in your educational efforts what do you say about the rights of tenants to affordable housing? What is enterprise involved in as far as providing homes for people?
Mr Barrett: Basically we lost a long time back, I think, when the country led itself drift a little bit farther away and we allowed the enterprise as far as -- I am a builder too, and we allow cost to fluctuate with the marketplace. What we have actually done is stopped, that we are going to control where these costs are. If I get you right, your meaning, how do we afford for these other people, basically you are putting it back on my shoulders and saying, from a builder's point of view, let's build cheaper accommodation for them, but based on the bureaucracy of red tape of getting land zoned, getting holding costs, fluctuating costs that can keep going --
Mr G. Wilson: Sorry, no, actually I meant specifically to say, what are the responsibilities of landlords in looking after their tenants to make sure that the housing is of a good standard?
Mr Barrett: Under the previous, we went to our tenants, we asked them ahead of time --
Mr G. Wilson: No, I was thinking of the landlords. I mean, you know --
The Chair: Thank you, Mr Wilson. Mr McGuinty.
Mr McGuinty: Mr Barrett, one of the things that you touched on, I guess, highlights one of the problems inherent in Bill 4, and that is that it does not distinguish between big landlords and small landlords, landlords whose buildings are located in larger urban centres and landlords whose buildings are located in smaller urban centres, and it does not distinguish between landlords with legitimate expenses and landlords with expenses whose legitimacy would be questionable.
I would like you to touch on some of the concerns of tenants in Kingston and how those might be addressed by us.
Mr Barrett: It is hard to get a feeling of. You are referring to what the tenants' concerns are of us as a landlord? In other words, if you went to them with a proposal that you wanted to increase your costs of your rent, but you are going to be basically upgrading, whether it is new appliances or whether it is, say, upgrades around the place, superficial things, not necessarily the structure of the building but maybe to put in more landscaping, decorate the place in a little more of an aesthetic nature, yes, as far as I am concerned, my feeling has been that the tenants have been quite happy to pay this extra cost based on that they can see the value of what they are getting. If you went to them with the proposal and said, "Here, this is what your extra dollars are going to buy," yes, they were willing to go ahead with that.
Mr J. Wilson: Thank you, Mr Barrett. Just picking up on that, we have had a lot of discussion about small landlords versus large landlords. But would you not agree that on a per-unit basis the arguments of landlords are essentially the same, the arguments that capital costs should be passed through and a number of the other arguments that landlords of all sizes have made, that really when you boil it down to a per-unit basis it is the same principles involved? Because we tend to get caught up in the large revenues of large landlords like Minto, and you end up with some astounding figures, but if you boil that down, I would argue, and I wonder if you agree, that on a per-unit basis all landlords have similar arguments to make.
Mr Barrett: Yes, in a manner of speaking we are similar, the large and the small landlords. Basically when you get into large landlords you get into the high-rises. When you get into small landlords, basically their expertise is more in the smaller units. Kingston is quite an older community and there are an awful lot of buildings that, for the small landlord, the stock needs refurbishing, redoing; if it is not plumbing, electrical, a tremendous amount of things.
I think the flow-through of the capital expenditures is a prime concern. Landlords like to have pride in their own property. Granted, I know they are out there to make money, they are trying to make a living off it, but based on what we have seen with this Bill 4, it is going to be staggered, it is going to be cut back. We are going to be caught on one side by having property standards say, "Hey, you've got to do this fixing up and that." That is true, you are going to have to, but it is the difference between those minimum standards and having a good product out there that people can be proud of, that when they go in and they do live in a place they do not demolish it when they move out.
Mr Tilson: The government, the NDP, has always taken the position that with respect to losses: "Oh well, you can write those off. No problem, you can write them off." I would like you to elaborate more on your comment that one of your members has had a problem with Revenue Canada, that these losses are not going to be allowed to be written off, because if that is the case and that is a trend, then it is a double whammy that the government is doing, with respect to the losses and with respect to the ruling of Revenue Canada.
Mr Barrett: In a way, I hated to get into specifics in this because taxation and that sort of thing is a sort of a touchy issue and I did not want to use any people's names and that.
Mr Tilson: I do not think you have to.
Mr Barrett: Anyway, yes, I feel that Revenue Canada has actually come down -- if you are going to write off a loss, they want to see that there is a potential gain in the near future, whether it is one year, two years or whatever. And we have been going on a feeling where we have been able to write off some losses -- and this is not the capital cost allowance, this is direct loss. If the government now, whether you call it the government or Revenue Canada -- I guess that is not really the government; it is sort of -- if Revenue Canada is actually looking at the cases of these buildings and saying that, "Now we are not allowing this loss because there is no potential gain, based on the fact of similar laws like Bill 4," then it has taken away a lot of the incentive that was there and it is not going to be allowed. People are not going to see these buildings as being any potential gain. They are stuck with them is what they are, if they have them right now.
The Vice-Chair: Thank you, Mr Barrett, for appearing before us. Your intervention was most useful to the committee.
Mr Tilson: Mr Chairman, I would like to speak on a question of information.
The Vice-Chair: Yes.
Mr Tilson: Allegations have been made by some people making presentations to this committee, and specifically members of the government side of the committee, that landlords are making vast profits and have made vast profits to the detriment of the tenants. It has been drawn to my attention that there was a study done by the government last year on that very subject, on the subject of profits of landlords, and I believe that this committee should see that study.
The Vice-Chair: So you are asking that the ministry provide that study. Is that what you are asking?
Mr Tilson: I would like that study as soon as possible if the study has been made, and I understand it has been. I do not know if there are any government people here, staff people here.
The Vice-Chair: Perhaps we could have someone from the Ministry of Housing come to the table and address that subject.
Mrs Y. O'Neill: While that is happening, Mr Chairman, certainly a new fact has been brought to our attention by the last witness. Revenue Canada is usually quite cooperative in giving out information about its judgements if they are of a general nature. I think this is important, that we know this, is Revenue Canada deciding to have as one of its base points now that properties of a certain quality or size are not going to be eligible as a property gain?
The Vice-Chair: I think that is a very relevant fact. I think we could ask our legislative researcher to get that information for us, Mrs O'Neill.
Mrs Y. O'Neill: Okay.
Mr Tilson: I agree. I think that is as important as the first piece of information I requested.
The Vice-Chair: I think that can be done. Mr Richmond? Yes.
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Ms Parrish: My understanding is that you are looking for a study that was done on landlords' incomes?
Mr Tilson: Profits.
Ms Parrish: Profits. I do not think there has actually been a study done on profits. There has been a study, I believe, done by Royal LePage on --
Mr Tilson: That is it.
Ms Parrish: Right. Okay.
Mr Tilson: That is what I would like to see, that study.
Ms Parrish: Yes. It is not quite profits. It is on income, or I guess it is on rate of return.
Mrs Y. O'Neill: Rate of return, yes, that is it.
Mr Tilson: That is fine. Would it be possible to have that to the committee on Monday?
Ms Parrish: I will make my best efforts. I will have to go back and inquire as to the status of the report and to see if I can obtain enough copies between now and then.
Mr Tilson: I really think, Mr Chair, that that study would be most useful to have prior to our going clause by clause.
Ms Parrish: I will do my very best, Mr Tilson.
Mr Tilson: If I had known about it before, I would have requested it. Someone in the audience drew it to my attention that this study was made, or I would have requested it sooner.
Ms Parrish: I will phone back. I will get my staff to phone back and we will make our best efforts over the weekend.
The Vice-Chair: I think, Mr Tilson, your request is useful and we will take the undertaking by the ministry to supply that as important and certainly, if possible, before we get to clause-by-clause, because it is the kind of information the committee needs to make intelligent judgements about the bill.
Mrs Y. O'Neill: I am sorry that I was having such difficulty expressing myself a few moments ago, but it is the financial loss qualification of the income tax return that I want to see if there are new criteria for.
Mr Tilson: Mr Chair, carrying on with Ms O'Neill's request -- and I totally support her -- I guess while the staff person is here, I believe with this issue -- it is unfortunate that it has arisen on the very last day; it is an obvious issue but sometimes that is the way it goes; I am speaking with respect to the tax issue -- because of a position that has been taken by the New Democratic Party in the past that these are able to be written off, that losses can be written off, and it may well be that the government was not aware of this ruling or these rulings, I believe it would be useful, Mr Chairman, to have a tax expert present at the green paper discussions on Monday to discuss that concept, because the whole issue of capital expenditures, the whole issue of losses from year to year, I believe that is a foundation of the government's presentation, the New Democratic Party's presentation on how this problem is going to be solved.
The Vice-Chair: Mr Tilson, my understanding is that Monday has been set aside for a briefing by the ministry on the green paper, and as no member of the committee has any idea what is in the green paper, we do not even know what issues will be presented within the green paper. I have no problem with that request but I would look for some -- maybe the parliamentary assistant could help us with this. It is not my decision; it is the committee's.
Ms Harrington: The meeting on Monday is a meeting of this committee with the minister. It is an open meeting, so I would think it would be a good time at that point to have anyone such as this with expertise to sit in on that meeting and then possibly come back later to discuss his concerns with us. But I believe Monday there probably would not be a lot of time to bring this other person into the discussion.
The Vice-Chair: In other words, you are concurring, or not?
Ms Harrington: It is an open meeting.
Mr Tilson: Mr Chairman, if it is impossible -- and I do not know the length of the green paper -- I am sure that the government members of the committee are. I hear rumours of it but obviously nothing is available at this time. If what I am hearing now is that it is simply physically impossible for a tax expert to make comments to the hearing, to this committee, I would hope that there would be consent of all members of this committee to have a tax expert present to discuss this subject somewhere. I look at the clerk and she is shrugging her shoulders -- I do not mean that in a derogatory sense -- but I think it is one of the most important issues that has come forward. It has come forward very innocently, but I think that before we deal with making our report we should have a tax expert comment on the ramifications with Revenue Canada.
The Vice-Chair: I understand your point and I agree with you. I am just looking for direction of the committee when that could happen and whether the committee, again, thinks it is useful.
Ms Harrington: I am sorry but I know the agenda on Monday is fairly full. I hesitate at this point to put this person on the agenda for Monday, because I think that we are pretty well full and I would not want to do that without checking with the ministry, but what I said was that since it is an open meeting I would certainly have no problem with this person being there.
Mrs Y. O'Neill: Mr Chairman, we are having a special session, as I understand it, with Dr Thom on Tuesday evening, so I would suggest that we could ask this person to either take a half an hour before or after, and he or she would at that point have had a chance at that point to look through the green paper. How does that sit?
The Vice-Chair: Well, it is a suggestion and it is up to the committee to decide on that. I would caution the committee, however, that this is rather short notice to invite a tax expert and the clerk and the researcher may have some difficulty in contacting the appropriate person and having him be available.
Mrs Y. O'Neill: Not if we are in Toronto, I do not think.
Mr Tilson: The way the three parties have agreed at this stage is that Monday we would listen to the minister present the green paper; Tuesday, Wednesday and Thursday would be clause-by-clause; the following week we would in some form, which really has not been finalized, deal with the green paper.
I suppose one would say, "Oh well, let's put the tax expert the following week." The difficulty is I quite frankly would like to hear the tax expert -- like, I do not want to have to go through clause-by-clause and then have someone in the government say, "Well, no more amendments. You're out of luck," and the tax expert comes the following week and makes some suggestions which the government side of the committee may agree on -- they may not -- and then be told, "Sorry, you're out of luck." That is my problem of allowing the time set for clause-by-clause to expire and then hear the tax person later.
So I guess I am looking to the government, to the NDP members of the committee, for some sort of guidance, assuming they agree with me, and I hope they do.
The Vice-Chair: The clerk has said she does not think that this is a particular problem, if someone can give her a suggestion as who that tax expert might be.
Mr Richmond: Can I?
The Vice-Chair: Yes, Mr Richmond would like to --
Mr Tilson: Do you want to ask my brother-in-law the accountant?
The Vice-Chair: Are his fees reasonable, and is that a conflict?
Mr Tilson: I have no idea, Mr Chair, as to who an acceptable accountant would be, whether the staff have recommended people --
The Vice-Chair: Mr Richmond may be helpful here.
Mr Richmond: Mr Chairman, of course it is up to the committee to decide how it wishes to deal with the tax expert issue. One thing I might suggest when we are back in Toronto, or I could phone the office at our break, is we could contact the Institute of Chartered Accountants of Ontario in Toronto. They may have a staff person, an executive director, or they may be able to suggest an accountant who does work for developers and is familiar with the treatment of rental property. We could come back. With Debbie, I could suggest, through the Chair, people that they might suggest. But there might be some difficulty because we are here in Ottawa today and I believe the institute is in Toronto.
Mr Daigeler: It is quite easy to reach Toronto.
Mr Richmond: Yes, that may be an avenue to pursue.
Mr Tilson: Mr Chair, when this person is heard -- I realize here we are coming on the last day of the hearings and asking for something very immediately -- I just do not want someone coming to me who knows the rules a little bit better than I do and saying: "Sorry, you're out of luck. The amendments, this part of the debate is over. Tough." I just do not want that happening to me. So if it is understood that that will not happen to me, then that could be put off even the following week, I suppose, if we can be flexible enough on that. But that means I would have to have some undertaking from the members of the committee that they will not use that on us.
Mr Duignan: The week of the 25th looks good.
The Vice-Chair: We may be finished with the bill by the week of the 25th, Mr Duignan. We do not know how long clause-by-clause will take, and I think Mr Tilson's concern is that if an amendment to Bill 4 is necessary, he will not have an opportunity to present it and have it discussed at the committee on Bill 4 if we wait longer than the first of next week. That would be correct, I guess, your position. I would suggest to the committee, just looking at the schedule, that if we started, say, a half-hour early on Tuesday morning that would be an opportunity for us to hear the tax expert and then move to clause-by-clause. I do not know if that is a useful suggestion or not. I am looking for direction.
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Mr J. Wilson: Your tax person would need more than just Monday afternoon to study it, I would think, both Bill 4 and the green paper.
The Vice-Chair: Well, that may be so, but the committee is committed at this point to starting clause-by-clause Tuesday morning at 10 o'clock. That is a decision of this committee, and if we are going to change that, we will have to do that right now. Mrs Harrington, could you be helpful at all here?
Ms Harrington: As far as I understand, the week of the 25th would be appropriate, some time during that week.
The Vice-Chair: Does that mean you believe that clause-by-clause will still be going on in the week of the 25th?
Ms Harrington: Until the bill is passed, there is still time for amendments at any time.
Mr Drainville: You could introduce them in the House.
Ms Harrington: Yes.
The Vice-Chair: Is that acceptable? Mr Tilson?
Mr Tilson: Someone from the government side, the NDP side, has just said, "Well, you can introduce it in the House." This is a committee that is making recommendations, and if this committee is going to make an intelligent report, I hope it will hear as much information as it can. So I simply do not accept the fact that, "Oh, well, you can make an amendment in the House." Probably we will, but I am looking at this committee making an intelligent report, and if it is making a report without hearing information that it knows it should have, I would hope that this committee would make time somewhere to hear such testimony.
Mr Duignan: I understood that we are not making a report but we are examining a bill and making recommendations back to the House on the bill. And we have witnesses and we have guests here who have come to this committee hearing this morning and we are delaying this.
I would like to move a motion that we would invite a tax expert in to this committee on the week of the 25th.
The Vice-Chair: We have a motion before us by Mr Duignan. To clarify Mr Duignan's remarks, we are not making recommendations, we are reporting a bill. There are no recommendations; it is being reported.
Mr J. Wilson: Would the government members agree to your suggestion, Mr Chairman, then, of starting earlier on Tuesday morning? No? I fail to understand the inflexibility on that.
The Vice-Chair: Mr Wilson, there is a motion on the floor. I think we know what the government's position is and in the interests of time I think we should be putting the question.
Mr J. Wilson: The motion is for a tax expert on the 25th?
The Vice-Chair: During the week of the 25th, I believe, is the motion. I will call the question. Those in favour of Mr Duignan's motion?
Mr J. Wilson: Just one moment, Mr Chair.
The Vice-Chair: Oh, I am sorry.
Mr Drainville: Just more discussion on this. Let me clarify perhaps some of our position, and that is, we are in the bind of saying that although we do not feel the same need as Mr Tilson obviously does, we are trying to accommodate Mr Tilson.
Interjection.
Mr Drainville: Well, I mean, we do not. That is not a problem, it is just a difference, but we are trying to accommodate --
Mr Tilson: Hopefully you care.
Mr Drainville: Mr Tilson, let's not look at motivations right now. I am trying to figure out how we can accommodate you and at the same time be supportive.
Mr Tilson: Mr Chair, as I understand the motion, and I --
The Vice-Chair: Mr Drainville has the floor.
Mr Drainville: Thank you. Basically, since we do not feel the same as Mr Tilson on this issue, we are trying to accommodate Mr Tilson by saying on the week of the 25th. And the reason for that is we really feel that next week already is so overburdened with the kinds of concerns and the debates that we are going to be getting into around the consultation process on clause-by-clause and we feel that the information that we have received at this point in time is reasonably sufficient to be able to make a disposition for the direction that we are going with on this bill.
So that is some of the background. If indeed we need to have a tax expert and there is one that is mutually agreeable to both sides, then let us by all means have that person come on the week of the 25th.
The Vice-Chair: Mr Tilson.
Mr Tilson: You know, I really do not think that this matter is going to take that long to deal with, and we have extended our times on certain days beyond when we normally sit. I see no reason that we cannot find time some time next week for a tax expert to come and make comments on the legislation in so far as it affects the subject that has been raised, and there may be others. I see no problem with that.
If the NDP are insistent, however, that they will not allow a half an hour next week for this matter to be heard and they are insistent upon the following week, again my only concern is that I do not want some technicality thrown at me, that it becomes an obvious position for an amendment, or whether it is obvious to them and not obvious to us, or vice versa, that an amendment be allowed to our report. I do not want someone coming along with some technicality that, "You had your chance," the previous week. So if there is a condition --
The Vice-Chair: Mr Tilson, so we can clarify this, perhaps I could ask the clerk, who understands the procedure of the House, to clarify the position of a bill going through committee.
Clerk of the Committee: When you are going through clause-by-clause consideration of the legislation, you may move amendments on each clause as it comes up. Once the amendment has been moved and carried, or if there is no amendment and the clause is carried, then you move on to the next clause. You cannot reopen that clause without unanimous consent of the committee.
In addition, at the end of clause-by-clause, the committee authorizes the Chairman to report the bill either as amended or without amendment to the House, and again, that cannot be reopened without unanimous consent of the committee.
Mr Tilson: Thank you, and that was my understanding, and all the more reason why I am concerned that the clause-by-clause debate ends and then the tax expert comes and says, "I recommend to you that the following amendment be made," which may or may not be accepted by the government side or this side, and hence the whole purpose would be useless: Why call in a tax adviser? So if the government side of the House agrees with that position, that would not preclude us from having the right at least to make an amendment. It may be turned down by the committee, but at least allow a member of this committee to make an amendment, having heard the submissions of the tax accountant. If that is agreeable, then I have no problem supporting the motion.
Mr J. Wilson: I just want to remind all members that the opposition just did not cook this up, that it arises directly from testimony that we just heard and I think it is absolutely essential, once again, that we get agreement from the government to allow a tax expert before clause-by-clause.
Mrs Y. O'Neill: May I have the motion repeated, please?
Clerk of the Committee: Mr Duignan moved that a tax expert be invited to appear before the committee during the week of 25 February.
Mrs Y. O'Neill: Before we vote on that, I would like to clarify that my request is separate from Mr Tilson's, and my request involves making a phone call to Revenue Canada. I would presume that that can be done.
The Vice-Chair: The researcher has already undertaken your request, Mrs O'Neill.
Mrs Y. O'Neill: So this is not pre-empting that information for a week?
The Vice-Chair: No.
Mrs Y. O'Neill: Okay.
The Vice-Chair: All right. That seems to have concluded the discussion. Those in favour --
Mr Tilson: Mr Chair, I think we wish to make an amendment to the motion.
The Vice-Chair: Yes, Mr Tilson. Mr Wilson.
Mr J. Wilson: I suggest an amendment to the motion, something along the effect that -- we agree with the first part of the motion, that a tax expert be called in on the week of the 25th, but second, that that does not preclude any member of the committee introducing amendments during that week, notwithstanding the status of clause-by-clause.
The Vice-Chair: You have heard Mr Wilson's amendment.
Mr J. Wilson: I will ask the clerk to put it into the English language.
The Vice-Chair: She is working very hard to try that.
Mr Tilson: As you can tell, I do not know a lot of the rules of the committee, but my question is to the clerk, or perhaps yourself. Is that amendment --
Interjection: Constitutionally --
Mr Tilson: Constitutionally correct -- constitutionally correct; who knows what that means any more?
Interjection: Under an order.
Mr Tilson: Is that amendment proper under the rules of this committee?
Clerk of the Committee: It would be more proper if it said, "The motion be amended by adding that the committee gave unanimous consent to reopen clause-by-clause, if necessary, after 25 February."
Mr J. Wilson: One second. That the committee give unanimous consent at this point?
Clerk of the Committee: I think that is what you are asking for.
Mr J. Wilson: With the -- okay, yes.
The Vice-Chair: Is what you are saying, Ms Deller, that we are giving unanimous consent in advance?
Clerk of the Committee: That is right.
The Vice-Chair: Is that possible?
Clerk of the Committee: Yes.
The Vice-Chair: That is in order?
Clerk of the Committee: Yes.
The Vice-Chair: Terrific. We have an amendment by Mr Wilson which apparently is in order. Further discussion on Mr Wilson's amendment?
Ms M. Ward: I have a question. What does that really mean by opening it up again? Does that mean that everything is open again and things previously agreed to are all fair game for further change?
Clerk of the Committee: If you simply say unanimous consent to reopen clause-by-clause, then yes. If you want to narrow it down to a specific section, then you have to say that section.
Ms M. Ward: And there is no way of knowing at present what sections you might be interested in.
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Mr J. Wilson: We do not know what comments the tax expert might make.
The Vice-Chair: We have an amendment on the floor. Those in favour of Mr Wilson's amendment will signify. Those opposed?
The amendment is lost.
We have a motion by Mr Duignan. Those in favour of Mr Duignan's motion will signify. Those opposed?
The motion is carried.
I think we have done a fair bit here now. I am not exactly sure what. I often get lost in these things, but we have an undertaking from the Ministry of Housing that they are going to provide some information regarding rates of investment in regard --
Ms Parrish: I do not think it will be a problem. It is quite a thick report and we are doing our very best to get it copied by Monday, but, you know, 30 copies this thick -- we will do our very best.
The Vice-Chair: And to recap, we are also getting from Revenue Canada the information that Mrs O'Neill has asked for and we have passed the motion. Okay. Everything is straight. Back to business.
PHILIP SWEETNAM
The Vice-Chair: The next presenter is Philip Sweetnam, secretary-treasurer, Relocatable Homes Ltd. Mr Sweetnam, the way we deal with this is that you will have 10 minutes to make a formal presentation to the committee. Following that there will be 10 minutes of discussion with you by the members of the committee done by caucus, each caucus getting precisely three minutes and 20 seconds to do that. You may start by introducing yourself and your organization.
Mr Sweetnam: My name is Philip Sweetnam. I am the secretary-treasurer of Relocatable Homes Ltd. It is a company which has used the modular home concept in the Stittsville area over the past few years to build approximately 270 housing units for Ottawa-Carleton. Our background was in the mobile home business, so our early commitment was to renting the lots and selling the homes. From that we have gradually evolved into using the modular housing business to provide more of the traditional type of housing in the Stittsville area. From that perspective I thought it might be worth while to comment to your committee on a few things that I thought would be common objectives between landlords and tenants.
If you have my presentation, I have outlined five items that I thought we might be able to agree on regardless of the colour of our political hat. Those were: to strive for a cost-effective way of using taxpayers' money in providing housing for Ontario; to try and keep our aging stock of rental units in good and usable condition; to provide a realistic access to people at all income levels; and finally, to try and develop a little bit of a rental partnership where, instead of a conflict situation, there is a partnership between landlords and tenants.
I thought I would start out with the first goal, which is to do a cost-effective approach. If there is any way that this committee could make it cost-effective for landlords to continue to provide your stock of rental housing, it is obviously less expensive than if you have to do it with the public sector.
On page 2 of the presentation I have outlined for you what has happened with the Ministry of Housing's budget over the past few years. I see from 1985 up to the present it has gone up by about 266%, or about 22% a year. So if you could have more of the housing provided by the private sector it would certainly be less costly.
Below that there are the statistics of what the subsidy is in our communities. I noted that in Goulbourn in a typical senior citizens' housing unit the subsidy is $350 per unit per month. In West Carleton, where I live, the subsidy gets to $550. In Nepean, where Mr Daigeler is from, I noted the last rent-geared-to-income housing subsidy was $723 per unit per month -- and understand this is after the tenants pay their share; this is the public subsidy.
I understand there is a commitment to build another 30,000 new units, and based on my interpretation of the budget, $833 per unit per month would be the subsidy that we have to put in, and I understood there was an upfront commitment for $100,000 of public investment at the front in addition to this $833 per unit.
On page 3 of the presentation I am suggesting that it is obvious, looking at those statistics, it is more effective for what we can do to stay in the private sector to do our development.
I would also like to say that, you know, many people feel that business people only wear the hat of the cold, crass businessman. I have taken the opportunity to be chairman of the Mississippi Valley Conservation Authority, and we spend about $1.2 million of public money in pursuit of viable projects. There always seems to be a shortage of public funds to do the kinds of things that we think are appropriate in the environmental sense that I am sure is valid for each and every member of this committee.
I am saying that the supply of public funds is not unlimited, so if there is any way we can foster co-operation, and that is what I want to talk about later on in the presentation, it would be really appropriate for the best utilization of the provincial resources.
I would just point out that in the scale of things, the $45 million that it takes to run the rent review machine is similar to what it takes to run all of the conservation authorities in Ontario. The public commitment for all of the conservation authorities in the province of Ontario is about $50 million, just to kind of put that in perspective. That is not talking about the subsidy portion, that is just the machine of making sure nobody cheats on the system and the like.
I think the second one is a really important one for this committee, and that is trying to keep that old housing stock in reasonable repair. In looking at that, I would just mention to you that the rent increases here in Ottawa-Carleton have not been excessive. The final chart on the back page illustrates that rental increases for the past couple of years have been 3.7% and 4.1%. That is what CMHC gives us as the average increase here in Ottawa-Carleton. We have not been without the occasional headline-making problem where people have gotten the large rental increases, but on the whole we have not had something that really makes a big dint on the average. We have been below the guideline in the recent years.
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I think what I would like to say about how my particular problem comes up is we have a 65-unit mobile home park that was probably built in the early 1950s. It is on a seven-and-a-half-acre plot of land and it is at a stage where sewers are essential to be put into the development. We have never asked for an increase beyond the guidelines that have been set out by the rent review machine.
True, we have gone through putting in a lot of upgrades of septic tanks. We have put in municipal water in the course of doing that, quite an expensive project, but I simply do not have the resources to go ahead and put in the sewer system now. I had gone as far as taking a permit from my township to get the sewers installed, but without being able to pass on some of that capital cost, I do not feel that I can go ahead and put sewers in. I think there is an environmental problem that is there, and we will try and keep it held back, but I assure you it is an imminent problem or we would not have gone to this stage. I hope I can say to you, having gone since 1969 without anything beyond the guidelines, I feel I have earned the title to be looked at as a responsible landlord.
I have said to you what hurts me in particular is the issue of not allowing some form of capital cost increase. What I think the committee, though, should be most aware of, and what I hear from the landlord group that is really going to divert their attentions from future commitments to housing, is the one of retroactivity. I do not care about retroactivity. I have got no orders out there that are going to affect me, but as a person who is interested in my community, who sees the need for rental housing in our community, I want to say to you, look and see if there is not some way you can meet, on one hand, your political commitments and, on the other hand, not really gore people with taking away the awarded rental increases.
Interjection.
Mr Sweetnam: I am watching quite closely, thank you very much. Is there a light that goes on somewhere or something that tells me the time is up?
Interjection.
Mr Sweetnam: I would simply say if there is a way that you could say, "Look, any rent increases that went beyond" -- and I have suggested it in this little brief, the figure -- "14%, up to that we'll accept those and we won't ask for retroactivity. Beyond that we're going to review all of them." I have suggested there is about 4%.
I think from the other point of view, if you look at this page it tells you 75% of our units that have come on the housing market in Ottawa-Carleton have been condominium units, and they have been the tax-shelter type. These people have the option of opting out of the rental system by simply selling. I am in the same situation at Fringewood. I have gone through a plan of subdivision. I can opt out by selling. It does not help our housing stock in Goulbourn. So if you can try to make the terms just a little fair, or could I even say perceived as being fair by the rental community, then we can keep our housing stock up, and it is really essential. We in Goulbourn have been sort of the starter housing group and then people have gone up. Now the Ministry of Housing says $142,000 is an affordable house in Goulbourn.
There are some other things, if you are really interested, in my presentation, and it is difficult to cover all the issues of partnership. One thing in closing: I think you might find that an appropriate way to deal with the issue of rent review might be to fund the individuals rather than to try to restrict rents in all cases. In other words, give people the income to do the rents. Then they can get it where they need it and they do not have to go to a particular community and say, "There's all the public housing community." Could I close with that, Mr Chairman?
Mrs Y. O'Neill: Thank you very much, Mr Sweetnam. I am very pleased with the five objectives you opened with because I think, if anything in this series of hearings, we have found that the objectives of Bill 4 are not the same objectives that you have listed and that I think could generally be accepted by the population of Ontario.
I am very happy with the way you have talked about partnership because we had a good presentation this morning. As you know, the city of Ottawa made a presentation this morning that highlighted the necessity for partnership in any provision of housing. I know your community, Fringewood, I know the reputation it has and I know that it has a reputation of being affordable. You are talking about Bill 4 and what that will do to that and the message Bill 4 sends to the community. What I would like to ask you is -- yours are not quite mobile homes; they are relocatable homes or modular homes -- do you see this as being a special kind of housing that needs a certain bill to stand on its own or do you feel that Bill 51 and/or Bill 4 can cover that kind of housing?
Mr Sweetnam: I think it covers the issue quite well, Mrs O'Neill. The issue that we have that is unique to Fringewood is that originally we offered people 35-year leases and as those leases shorten, as I have mentioned in the presentation, the problem comes down that we would like to extend those leases so people can get better mortgage terms. With someone who had a 25-year lease and it is now a 15-year lease, he can only get mortgaging for 10 years, or go the chattel mortgage route, which is very expensive. Again, I say to the committee, if there is any way you can make a little stability in the system so that it is worth my while to extend the leases, then we go on to do that. Otherwise we say, "Look, my only option is we want to go the sale route."
Mrs Y. O'Neill: Which I think is the option of many small landlords as well as yourself.
Mr Sweetnam: Yes.
Mr Daigeler: Mr Sweetnam, the government says: "Well, you don't have to really worry about that limit on capital cost pass-through. This is just a temporary measure and in the permanent rent review legislation that we are going to introduce there will be some recognition of that cost." How would you respond to that?
Mr Sweetnam: That is what Mr Handleman told me when he introduced the original rent review.
Interjection.
Mr Sweetnam: I understand that, and I had a lot of time for Sid Handleman, but I would simply say to you that income tax was introduced as a temporary measure. I do not know how you make the commitment to the landlord community, talking about the partnership, to make sure that they really believe you when you say it is a temporary measure.
Mr Daigeler: That investment that you had planned to do, can I ask the amount? What are we talking about in terms of -- obviously we are in the midst of a recession and I think there is an economic impact on the province as well, in terms of some of the projects that are being lost.
Mr Sweetnam: My engineers had come up with approximately a $65,000 figure for the park that we had planned to do.
Mr J. Wilson: Thank you, sir. You have had this mobile home park for 22 years?
Mr Sweetnam: Yes. I have two developments: Fringewood North for 22 years, and the other one we have started from scratch in 1975, so it is about 15 or 16 we have had it.
Mr J. Wilson: That is the mobile home park, and that is the one that requires sewers?
Mr Sweetnam: The one in the north development, the 22-year-old one, is the one that requires sewage, yes.
Mr J. Wilson: Oh. The government would argue that for 22 years you have been collecting rent and as part of that rent you should have been keeping money aside or you should now have money to meet that capital cost of installing a new sewer system. What is your comment on that?
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Mr Sweetnam: Of course, what I have set aside in capital costs has really been by way of maintaining, and I have put good money into maintaining a septic tank system. To maintain, in my mind, you set aside maybe a little bit of money to try and do the status quo things. I have maintained the septic tanks. I do not embarrass anybody by letting sewage get out on the streets or whatever. But I am saying to you, as our community changes -- you know, Stittsville is really a developing community. All around us there are houses going in and the density is coming up and that is what is promoting -- if it is something I have screwed up on and have not done my work right and I have been falling behind on my maintenance, you have got a good point. You say, "Hey, you should spend a little bit on maintenance or set aside something for maintenance." But I am saying the whole nature of the community is changing.
Mr J. Wilson: That you are now required to put out a large capital outlay on a sewage system.
Mr Sweetnam: Yes, a large capital outlay of the sewers. I tried when sewers were installed in our area to get the Ministry of the Environment to help and it felt it should not help a private enterprise.
Mr J. Wilson: You had an application before rent review? Did you get to rent review with this?
Mr Sweetnam: No, I got the permit from the township and was as far as getting the study from my engineer. As my accountant says, "Thank gosh we got stopped when we did."
Mr J. Wilson: I just have one more question. On page 2, you have that little chart, "Local Statistics of Subsidized Units." We have a "Maximum Rent" column and we have a "Monthly Additional Subsidy." Just quickly reading this, do I add the two columns to come up with the total monthly rent?
Mr Sweetnam: That is the net cost to operate the system. A tenant in Goulbourn, a two-bedroom renter at Goulbourn would pay $400 a month, but it costs another $350. All the renter pays is $400, but to keep the system going you really should add the two up.
Mr J. Wilson: So that the rents that the government feels that unit needs to keep up --
Mr Sweetnam: These are non-profit housing organizations that the senior citizens are in. They are excellent facilities and we need them. All I am trying to illustrate to you --
Mr J. Wilson: But they would be well above market rent if you got the same services, the same unit, if it was not in a non-profit. That is the way I read this.
Mr Sweetnam: Probably $600 to $700 would not be an unfair rent in Goulbourn. I have a couple of small houses with 1,200 square feet and I get $750. It is in the range, but because it is a public institution, it is a little more expensive to operate a public type system than it is to operate the private system.
Ms Harrington: Just a final comment: We want as many different types of housing as possible to work together in this province. Certainly mobile-home-type units are affordable housing and a very good start for many people. I know a couple of members of my family who have lived in mobile homes in trying to get established. I do agree that your five points here are certainly a good starting point.
We did want to give you whatever time was remaining to further explain your brief if you did want to say anything further.
Mr Sweetnam: I think the only thing that I would really like to point out or perhaps enlarge a little on is my concept that if you were going to try and meet the needs of people who have restricted incomes and you need to help them, then I think it would be appropriate to try and help the individuals so that they are not spending a large portion of their income. I think CMHC, as I have indicated in here, says the average Ontarian spends 18%, but when people start to spend more than 30% of their income on rent, I think that person needs help.
When you do it through the rent review legislation, you are saying, "You landlords help them," where I think it may be a public responsibility. And this does two things. It gives people the independence that they can approach anyone and say, "Look, I would like to live here because there's a French school there," or "My husband works down the road and it's a convenient place for us to be." I think that is the most important aspect of trying to get a system that could work well.
As I was mentioning to you, if you look at the ones that Mr Daigeler announced just around July or August, the $723, I think you could almost go out and rent in Nepean units at $723 let alone a third of the people are paying market rent and other people are paying figures geared to their income. I am suggesting to you I think we could do it cheaper that way, and somebody has to do the balancing statistics of saying how much additional income that would require.
The Vice-Chair: Thank you very much for appearing before us today.
CANADIAN DEVELOPMENT INSTITUTE
The Vice-Chair: Our next presentation will come from the Canadian Development Institute, Nicholas Patterson, executive director.
Mr Patterson: Has everyone a copy of our brief?
The Vice-Chair: I believe it has been distributed. If you would have a seat, you have had the opportunity to see the workings of the committee and you realize that you have 10 minutes for your presentation and the committee will follow with 10 minutes of discussion. I apologize to you for running a little late, but that is how it goes sometimes.
Mr Patterson: As the Chairman has said, my name is Nicholas Patterson. I am executive director of the Canadian Development Institute, an Ottawa-based, privately funded, non-partisan think tank evaluating government policy in a wide range, including official languages, education, the deficit, US-Canadian relations, Third World debt, etc. Appendix 1 at the back of our brief is a description of our institute.
In addition to the topics that I have cited before, we have done a good deal of research, perhaps more than any group in the country, on the subject of rent control, starting with our book on rent control published in 1985. I must confess, after five years of it, in the end our work on rent control has been a pretty depressing experience.
Why is it depressing? Because when I founded our institute, almost 10 years ago, I firmly believed that research was important and that the truth mattered and if you could just show people and politicians the true facts, then you could contribute something towards change for the better. In fact this has generally been borne out, to one degree or another, in most other areas of our activity.
But rent control has been the outstanding exception. Despite our very wide reach through the media, in publishing far and wide the most factual and comprehensive research on rent controls and the grave harm that they bring, the situation only grows worse and worse every year in Ontario. For 15 years straight, the rules have been progressively tightened to the final hallucination: where rental owners will now be forbidden even from recovering the cost of actual capital expenditures -- for example, a new roof to replace a leaky one -- and denied from recovering even a portion of the actual cash losses from operations in cases where rents do not cover expenses. It is nuts. It is truly astonishing. It defies common sense that the provisions for capital expenditure and the financial loss provisions are being cancelled through this ridiculous bill.
The bottom line is this government has introduced a grossly unreasonable and harmful bill, giving Ontario, according to our extensive research, the toughest rent controls in the entire western world, and the government has sought to justify this by a shameless program of falsehoods to mislead the citizenry of Ontario about the true facts of Ontario's rental economy. I will return to this aspect concerning the bill in a moment.
But the first and foremost issue of integrity which the committee must consider is whether we need rent control at all. Almost everywhere else, both in Canada and abroad, they have done away with it because controls have been such a disaster. The harmful effects of rent controls, along with the international experience of them and the unanimous opinion of virtually every single international leading economist, these are all documented in appendices attached to our brief.
Mr Chairman, if you and your committee are to be honest in serving taxpayers, then it is imperative that you face the fundamental issue of rent control as a public policy, and if you do not, then this committee is just another government waste of taxpayers' money and a public scandal to boot if you avoid this issue.
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Here is another thing your committee should look into as a matter of integrity. It is the fact that Bob Rae regularly cites the Swedish model, as he calls it, to illustrate what he is aiming at through his program of tighter rental controls along with more public and less private rental housing. An example of his claims along this line was in the Tenants' Bulletin of the fall of 1989, as documented in appendix 5 of our brief.
But the sad part of it is that, unfortunately for the hapless citizens of Ontario, who must rely on Bob Rae for the proper management of this province, he is totally out to lunch and misinformed about the basic facts of the Swedish model. This is shown in the second page of appendix 5 in our brief.
In what sense has Rae got it all mixed up about his vaunted Swedish model? First is the fact that Sweden does not even have rent controls, having eliminated them 15 years ago as a disastrous failure. In other words, he does not know this. Second, it is untrue that Sweden has "a very small percentage of private ownership and a very large percentage of non-profit housing," as Rae avers. Third, Rae seems to be under the delusion that Swedish non-profit/co-op housing is basically a government-funded operation similar to our own ridiculously expensive and massively subsidized co-op housing program. This too is not true, as documented by Sven Rydenfelt in the Fraser Institute paper of 1981 in our brief.
Mr Chairman, do you not agree that this committee should look at Rae's Swedish model and get the facts so we can see whether this model supports rent controls and subsidized co-op housing, as Rae claims, or whether Rae has just goofed up and got all his facts wrong? That is the truth of the matter.
Getting down to the specifics of this bill, we need to get some integrity into how this government is promoting the legislation. It is our proven contention, documented fully in our brief, and I have noticed that many others have said the same thing before your committee, that the government is engaged in a shameless program of falsehood, claiming all kinds of widespread abuses under the current system in order to mislead the public about the need for a radical tightening of rent control rules as part of this bill.
For example, Mr Chairman, how do you personally deal with the fundamental falsehood underlying this bill, clamping down on rental owners to prevent "gouging rent increases in excess of 100%," to use Rae's and Cooke's own words? This, when the government's own Housing ministry statistics show that there are only 85 rental households in the entire province with 100% increases in a year. That is out of 1.2 million; 85 households out of 1.2 million. That is less than one in 8,000 households which received increases of 100% in a year.
The Vice-Chair: Mr Patterson, if I might be helpful, you have about a minute.
Mr Patterson: Yes, well, I think this will take a minute and a half.
Mr J. Wilson: We would be happy to give Mr Patterson our time.
Mr Duignan: We would be happy too.
The Vice-Chair: You have six minutes longer.
Mr J. Wilson: It is quite an informative brief.
Mr Patterson: My question to you, Mr Chairman, is, should your committee not look into this and at least set the record straight by pointing out that rent increases in Ontario over 14% account for less than 1.5% of tenants in a year? In other words, this bill is based upon false premises. It is full of baloney and promoted by falsehoods from the Premier of this province and it is a disgrace.
Another crucial area of dishonesty about this bill: Part of the rationale of this bill, cited ad nauseam by Messrs Rae and Cooke, is the issue of "flipping," that is, multiple sales of apartment buildings which purportedly account for widespread rent increases. False. This is the rationale for cancelling these financial loss provisions of the existing law which allow supplementary rent increases for a new owner of an apartment building who is having actual cash losses.
But the flipping allegations, like so many of their claims, are simply false, as proven in a study by the city of Toronto, adopted by the city council in October 1989. Anyone can get a copy. This is documented in our brief, based on this report. This report clearly proves that there is very little flipping, as outlined in our brief, and consequently this bill is based on false premises. It is ridiculous.
Should you people not -- and I am asking you, Mr Chairman -- deal with these falsehoods? Should you not look into it and see, is it true or is it false? Are the fundamental bases of this bill false? Is that not important for your committee? Would you agree that you should do this, Mr Chairman? I am asking you. Do you not think, Mr Chairman -- I am addressing you, a direct question -- it is incumbent upon you and your committee to look at these allegations which are the basis of the bill and see whether they are true or false? Is that not basic, Mr Chairman? Can you tell me what you think of that?
The Vice-Chair: I can tell you that the Chairman only speaks for the committee on --
Mr Patterson: I am asking your opinion, as a Chairman, whether you think there is any sense in what I am saying.
Mrs Y. O'Neill: As a point of information, Mr Chairman, I think we have asked for definitions of flipping, we have asked for actual statistics on this, what we consider exaggerated situations, so I think, sir, we have begun to do this, but we have not got the answers yet.
Mr Patterson: Well, why did you not start 10 years ago when all this BS about flipping started?
Mrs Y. O'Neill: Well, I --
Mr Patterson: This has been going on for decades.
The Vice-Chair: Order.
Mrs Y. O'Neill: Very few of us, in fact none of us, were here 10 years ago.
The Vice-Chair: Just continue with your presentation, sir.
Mr Patterson: I would like to comment on what the member has said.
The Vice-Chair: She has an opportunity to ask some questions following.
Mr Patterson: I just do not understand the game you guys are in. It is ridiculous.
Mrs Y. O'Neill: That is rather disrespectful.
Mr Patterson: Of course it is disrespectful, because citizens of this province have growing, grave disrespect for the political leaders of this country and this province. Of course it is disrespectful, and it is meant to be, because the public has little respect for the political leaders of this province, growingly. That is a fact.
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Mrs Y. O'Neill: That may be your opinion.
Mr Patterson: If the shoe fits wear it, Madam.
On a final point, from a purely political standpoint -- in other words, if you are not interested in the merits, if you are not interested in the facts, if you are not interested in the welfare of this province -- on a purely political standpoint, in other words getting elected, is it not about time you politicians finally woke up and smelled the coffee about rent control? Why do you think England, France, Cuba, the Soviets, the Chinese, along with other provinces in Canada, have turned or are turning away from regulated rents? The reason is simple: These other politicians elsewhere have come to appreciate that the public now understands the folly of rent controls as a silly, unworkable, disastrous scheme with harmful side effects.
That is my brief, Mr Chairman.
The Vice-Chair: Thank you, Mr Patterson. The Progressive Conservative caucus would have about a minute, the New Democrats about a minute and the Liberals about three minutes.
Mr J. Wilson: I think we will pass, Mr Chairman.
Mr Abel: We will pass too.
Mrs Y. O'Neill: I am sorry, Mr Patterson, that you have decided to give such a sweeping statement to every politician who exists and who is serving. Some people, I think, do deserve some qualifiers on some of those statements you made, the same as some tenants and some landlords. You cannot paint every single person in any situation with a brush, and I am sorry you chose to do that with politicians.
I wanted to say to you that I did appreciate --
Mr Patterson: I would like to respond to that.
Mrs Y. O'Neill: Well, sir, if I have only got three minutes, you have had some time.
Appendix 6, I think, is an excellent appendix and I am very glad that you have stated this clearly, as you have. I think it is the clearest statement we have had as far as graphics go, because Bill 4 does not do what it is intended to do and I think you have shown this, that most of the people in this province will see no difference in their rents with Bill 4, because 96%, as you are suggesting and which is an accurate fact, are under the guidelines and there are 74% under 4.6% in this province. So we see that the people's rents are not all going to change, as Bill 4 seems to send the message out.
Mr Patterson: Yes.
Mrs Y. O'Neill: That distresses me greatly.
I wanted to tell you, if you were not here earlier this morning, that you are in total agreement with what I consider another very excellent source, and that is the city of Ottawa's housing department. "The proposed provincial changes to rent review will add further to the uncertainty and problems concerning the future supply of affordable rental units." That is another point that you made very clearly and I think it is true. It is the message of Bill 4 that is so difficult.
I think those of us who have been in the Legislature a shorter time or a longer time know that Bill 51 does have its difficulties and I think we would work towards those. But Bill 4, in my mind, is a very big blimp and it also is a very bad signal to the economic development of this region and the entire province.
So I am sorry, sir, that we got off to a bad start, because we do agree on some fundamental issues.
The Vice-Chair: Thank you, Mr Patterson. We certainly appreciated your intervention this morning.
Mr Patterson: Thank you.
The Vice-Chair: For the committee members, there is at least one small item of business. The Ministry of Housing has requested that we permit it to use the names and addresses of the presenters so that it may distribute the green paper to all of those who expressed interest in these hearings, and I trust also those who asked to be on our entire contact list. I need a motion from the floor for the committee to release that list to the Ministry of Housing.
Ms Harrington: I would so move, Mr Chair.
Clerk of the Committee: I just need agreement.
The Vice-Chair: Or agreement.
Mrs Y. O'Neill: Is this to be done Monday?
Mr Tilson: What is the motion that you wish, Mr Chair?
The Vice-Chair: We need, Mr Tilson, to authorize the clerk to give to the Ministry of Housing the committee's contact list so that the ministry can distribute the green paper to all those who are on the committee's list. The ministry has no access unless we provide authority for it to have the list.
Ms Harrington: I would assume it would be handled --
The Vice-Chair: If we have agreement, we can move on from there.
Mrs Y. O'Neill: Can we ask, is this going to be done Monday? It is going to be released to them at the same time as it is released to the general public? I would hope that it could begin to be posted and put in the mails on Monday.
The Vice-Chair: I cannot speak for the ministry, maybe Ms Harrington can, but we can start the process by allowing the lists to be available to it.
Ms Harrington: We would like to turn over the list today or Monday at the very latest.
The Vice-Chair: I take it I have consent?
Mr Daigeler: What are the precedents for this in other committees? Can you ask the clerk this?
The Vice-Chair: I could ask the clerk. What are the precedents for this, giving the list to the ministry?
Mr Tilson: Does it matter?
Clerk of the Committee: In general, a contact list remains a confidential document for committee use only. I would have to check with other committees and other clerks to find out in fact whether a list has ever been released for this purpose in the past.
Mrs Y. O'Neill: This whole thing has been very --
Mr Daigeler: Just a minute. You have been clerk for a while. You are not aware of any --
Clerk of the Committee: I would have to check with the other clerks.
Mr Daigeler: According to your own experience, it is --
Clerk of the Committee: In general, a list like that remains confidential for committee use only. The reason for that is there are private names, addresses and phone numbers.
Mr Drainville: On the same point, I was speaking with two or three landlords this morning, Mr Chair, and I just assumed -- and I must say it was a total assumption on my part, because I am new; I would not have known this -- that the ministry would be sending these papers. The landlords I was speaking to were very interested in receiving that and being part of the consultation process. I do not know whether we are between a rock and a hard place here, but it just seems to me to make good sense to provide them with the very document that they are so interested in. If we do not do that, then we will have to send letters through the committee to ask them to go back to the ministry.
Interjection: Mr Chair --
The Vice-Chair: Just one moment. If I could be perhaps helpful here, I also know there is a lot of interest in having this green paper distributed. Perhaps we could release it to the ministry on the proviso that it is only used to distribute the green paper --
Mrs Y. O'Neill: Yes, that is a good.
The Vice-Chair: -- to the people who should get it and the ministry will not use it for any other purpose whatsoever. Would that be acceptable?
Mr Daigeler: I would like to put on the record that I have some grave reservations about this. Obviously this is a government paper and has a particular policy priority. I think if the legislative committees are going to do that, they probably should send then the reactions to these particular papers from the other parties as well. I am just here today to substitute. The committee might want to do that, but I think if anyone is interested to get information from the government, all they have to do is call the Ministry of Housing or call the government. I think we are a legislative committee and we are not here to do the work of the government.
The Vice-Chair: Mr Daigeler, unfortunately you have not been with us through this period and we are dealing in a rather different procedure here where we are actually dealing with two different but related subjects almost simultaneously, the hearings on Bill 4 but also the permanent legislation being determined upon the green paper that is to be announced by the Minister of Housing on Monday. All groups, to my knowledge, that have come before us have been very interested in the green paper issues and at times I think it was disconcerting to this committee somewhat that people sometimes tended to address what might be considered green paper issues rather than Bill 4 issues. Because of that, there is a direct relationship between presenters and their interest in this particular subject. I recognize your difficulty with --
Mr Daigeler: My point was that I am sure that people would be interested in the reaction to the green paper from the two other parties as well.
The Vice-Chair: Well -- Mr Tilson.
Mr Tilson: Mr Chair, I do not, quite frankly, object to releasing information to members of the public. What I do object to and what our party has objected to from the very outset is that we must remember the original terms of reference of what this committee was to do, and this committee was set up to comment on Bill 4. All of a sudden, Bill 4 has become redundant and we are now into a green paper discussion. So I wanted to reiterate, our party's position is that the whole thing is a shambles, it is a mess. But certainly for the purposes of releasing information and making as much information to the public as available, with that proviso our party would consent to the releasing of the list.
Mrs Y. O'Neill: I feel that we talked about the green paper so often in our discussions that people are curious. But I do feel that releasing names to a ministry, people who came before us, we did not say we were going to do this, we never got their permission, and I have some difficulty with that.
I also would like to suggest that we use the same method that was used with the select committee on Ontario in Confederation, which I think has been quite effective. It did take a little bit of time, maybe we have learned from that distribution, but we did get it into the constituency offices and we could certainly give that message to whoever wanted to know about this, that it will be in their own MPP's office. I think that gives a fair way of distributing any government document that we want response to, that every member of the Legislature then has the opportunity to be contacted and to be part of the discussion purposes.
So I would suggest that I do not support this motion the way it stands this morning.
Mr Duignan: I could maybe suggest a compromise here. If the clerk could get over the number of people who are on the mailing list to the ministry, and say it is 300 or whatever the case is, and they do up 300 envelopes with this particular information in it and get it over to the clerk of the committee, her office can put the labels on it.
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Mr Daigeler: I do not think the point that I am making is being understood. It is not a question of making the information available. Of course the information should be made available, and it is the minister's responsibility to make it accessible inasmuch as possible. The point is that this is a legislative committee that represents all three parties, and if we are giving the government that privilege to use the list of the presenters, that privilege should be given the two other parties. If you wish to extend that to the two other parties, fine, no problem.
The Vice-Chair: I am having some difficulty getting a sense of exactly where we are at here.
Ms Harrington: Maybe I can try and clarify. I do not understand Mr Daigeler's concern with regard to three parties. This is a committee of three parties, and certainly --
Mrs Y. O'Neill: But the paper is not a three-party paper. That is the simple fact of the matter.
Mr Daigeler: Right. It is a government policy paper.
Ms Harrington: Which people would like to examine, yes.
Mr Daigeler: They have every right to do so, but it is not the legislative committee's responsibility to make only the views of one particular party known.
Ms Harrington: Whatever is the wish of the committee.
Mr Duignan: Let's withdraw the request, Mr Chairman. It is quite obvious that the Liberal Party does not believe in open government or does not want to get the information out there. So we withdraw the request.
Mr Daigeler: Mr Chairman, on a point of order.
Mrs Y. O'Neill: I suggested another method. Noel always has wonderful remarks.
Mr Daigeler: I specifically said that if we give the privilege of providing that information through the legislative committee to one party, we should give it to all three parties.
Mr J. Wilson: Directly to the motion --
Mr Duignan: There is no motion, we withdrew it.
Mr J. Wilson: Withdrew the motion?
The Vice-Chair: Actually, it was never a motion to withdraw, it was a suggestion --
Mr J. Wilson: Well, directly to the concept, all I would like to say is we will reconsider our position too in allowing the ministry to have the list and distribute the green paper, because when you come to think of it, we had a number of witnesses appear for us and quote out of recent Ministry of Housing bulletins and brochures. And if the green paper is going to be written with the same socialist slant and pap that we have seen in some of the brochures --
Interjections.
Mr J. Wilson: -- then it may very well turn out that it is political propaganda, and we would not consent to a legislative committee ever, ever indulging in political propaganda.
Interjections.
The Vice-Chair: Order. I think that settles the matter. Moving on --
Mrs Y. O'Neill: Mr Chairman, so the distribution is in the hands of the Honourable David Cooke, is that correct?
Interjection: Yes.
Mr J. Wilson: But you cannot give him the legislative committee list, even though you have it. You cannot give it to him.
Interjection: No.
Mr J. Wilson: Right, okay.
The Vice-Chair: That is the property of the committee. The ministry will no doubt have some names, they are public knowledge.
Anyway, I think that settles that. Moving on --
Mrs Y. O'Neill: I would like to request that we get a copy of it in our constituency office, if that has not already been determined.
The Vice-Chair: I think that has already been determined.
Interjection: Yes.
Mr Abel: In a somewhat different vein, it has been brought to my attention that we did have some presenters who had to travel to Ottawa and I was told that each day we have to make a motion if we want these people to be reimbursed. So I would like, if I may, Mr Chair, to move that travel, meal and accommodation expenses incurred by the following witnesses in travelling to Ottawa for these hearings be paid by the committee: Etienne Saint-Aubin, Joe Barrett and Howard Shaw. I do not think I missed anybody.
The Vice-Chair: Is it the wish of the committee that the motion carry? Carried.
Mr Abel: Thank you.
The Vice-Chair: The clerk informs me that members should be checked out of their hotel rooms and down in the front lobby for 1:30 this afternoon for transportation to the airport.
I would like to thank the committee. This is the final day of public hearings. For virtually all of us it is a new experience, either in opposition or in a new role or just being plain new members of the Legislature, and I would like to commend the committee on how hard it has worked through this period and I also would like to thank the staff. We have had the Hansard staff, the people who have travelled to do the translations; everyone involved. This is a major sortie out into the province and they have done an excellent job, and I would like to compliment the clerk. So with that I will adjourn the committee until Monday.
Ms Harrington: When we will see your smiling faces again.
The Vice-Chair: And as Ms Harrington said, we will see all our smiling faces again Monday morning. The committee begins, as I understand it, at 10 o'clock. For members who wish, there is a lockup at 8 o'clock, from 8 to 10, provided by the Ministry of Housing for a pre-briefing on the green paper, or an opportunity to peruse the green paper before the briefings start I guess would be the better way to say it.
Interjection: Which committee room?
The Vice-Chair: Committee room 1. Thank you.
The committee adjourned at 1238.