RESIDENTIAL RENT REGULATION AMENDMENT ACT, 1990
KENSINGTON-BELLWOODS COMMUNITY LEGAL SERVICES
CONTENTS
Tuesday 15 January 1991
Organization
Ministry of Housing
Afternoon sitting
Residential Rent Regulation Amendment Act, 1990, Bill 4
Kensington-Bellwoods Community Legal Services
O'Shanter Development Company Ltd
Joseph Tenenbaum
Emil Tancredi, Mario Trelle
Basic Poverty Action Group
George Czumak
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)
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:
Poole, Dianne (Eglinton L) for Mr Scott
Tilson, David (Dufferin-Peel PC) for Mr B. Murdoch
Ward, Margery (Don Mills NDP) for Mr Bisson
Clerk: Deller, Deborah
Staff:
Campbell, Elaine, Research Officer, Legislative Research Service
Richmond, Jerry, Research Officer, Legislative Research Service
The committee met at 1030 in room 151.
ORGANIZATION
The Chair: The committee was called into in camera session this morning at approximately 9 am to deal with a proposal from the Chair as to extended sittings and changes in scheduling pertaining to Bill 4 and the proposed consultation paper that we are to receive from the government in the near future. The committee has dealt by motion and by vote with one of the items that has been put forward by the Chair. We did not get finished with the other items, so before we hear from the Honourable David Cooke, Minister of Housing and Municipal Affairs, it is incumbent on the committee that we finish the work that we commenced this morning and that we deal with the other six points that were placed before the committee this morning by the Chair. I believe we should move right into that discussion immediately.
Mrs Y. O'Neill: I would like to inform the people who are present of the motion that we did vote on in closed session. This committee met for an organizational meeting in early or mid-December and at that time there were requests made to us by the government to discuss a green paper as part of the time that has been allotted by this Legislature for our Bill 4 hearings. None of us -- perhaps government members, but certainly not opposition, including House leaders -- have seen this paper.
We ask you to try to accommodate as many people as possible. We knew there would be high interest in this particular bill. We, and certainly the House leaders, had no idea how high the level of interest was going to be on this bill. You informed us when you entered this room this morning that there are over 150 people in this province to this point, and let me remind the other committee members and those present that we have an advertisement out in the province that says they can submit requests until 27 January, which is two weeks from now.
We have always -- and that has been the reputation of the Ontario Legislature -- heard those who want to be heard. The rent review legislation went on over a two-month period. We have been asked by this government to talk to this bill, which has a very big impact and certainly has retroactivity involved, which is a new principle in government, and we are being asked to squeeze that into three weeks.
The motion that was put forward by Mr Abel, a member from the government side, that we do not even consider looking at three possible weeks between sessions, has been voted on, and I would like to inform those present that not one member of the opposition or the third party could support such a position. We discussed, previous to that motion's coming forward, that we were willing to meet evenings, Mondays, and yet we cannot get further flexibility on something that nobody knows anything about at this moment.
So I find it difficult to discuss the other items when what I think is the key item has been deleted from your presentation. I will try in good faith to discuss the other six items, but certainly item 5, which has been deleted by the government, would have given this committee the flexibility and indeed the ability to hear all those who have wanted to be heard. That vote was not supported by the government.
The Chair: Ms Harrington moves that the proposals from the Chair with regard to the public hearings schedule for Bill 4 be considered and passed at this time.
We have a motion on the floor. We will give the clerk a chance to record the motion. The motion will be read; then I will open the floor for discussion.
Ms Poole: Mr Chairman, on a point of information: Would the member please clarify if she is talking about the Chair's recommendations with the deletion, as stated during in camera sessions, or is she talking about the original proposal?
Ms Harrington: The deletion has been made at this point.
The Chair: In a few seconds, we will have the motion for everyone.
When the motion is read, I would like to read the points so that we all have a general understanding of what we are voting on. Am I to also understand that some of the original changes to my point I -- should that be incorporated in your motion, Margaret? Do you want it to be exactly as I presented to you this morning, or with some of the changes?
Ms Harrington: With the changes that were proposed.
The Chair: With the changes that were proposed. That is fine.
Ms Harrington moves that the Chair's proposal with respect to Bill 4 hearings dated 15 January, as amended, be adopted by the committee.
That means, and I would like to read into the record, since we did not get a chance to do that this morning in closed session, that the following points are going to be voted upon as a group.
1. That the committee sit Mondays from 10 am to 12 noon and from 2 pm to 5 pm and further extend meeting times each day to 6 pm.
2. That consideration be given to a meeting in London, as there are a number of groups and/or individuals from that city who have indicated a desire to speak.
3. That the committee cancel trips to Sudbury or Thunder Bay and fly groups to Toronto.
There are currently seven potential witnesses in Sudbury and four potential witnesses in Thunder Bay and, as I mentioned to the committee this morning, we may further decide to have one of the hearings in Sudbury or Thunder Bay and fly the delegations from one of those cities into the other.
4. That we extend hearings in Ottawa into the evening of Thursday 14 February and the morning of Friday 15 February to accommodate the overflow.
Number 5 was deleted.
6. That we add from one to three night sittings, ie, from 8 pm to 10 pm, to accommodate those who cannot appear during the day: and
7. That we authorize the clerk to review the agenda with respect to time allotments given to organizations.
That is what we are voting on. That is what the motion is asking us to vote on. Is there any discussion?
Mrs Y. O'Neill: I am very happy with item 4, of course, because I do know that the city of Ottawa has very high interest. I would like to make an amendment. I would like to amend the motion as it stands in this public session of this committee that we add that we use the time of the weeks of 18 February, 25 February and 4 March to extend hearings.
The Chair: We will give the clerk a few moments to get the motion.
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Ms Harrington: On item 1, could we put "or I to 5 on Mondays"? I notice in item 3 you are fairly flexible, either one way or the other, so I think in item I we could say either 10 am to 12 or 1 to 5.
The Chair: If that is all right with the committee, the clerk will note that and will try to adjust the schedule accordingly.
Mrs O'Neill moves that the weeks of 18 February, 25 February and 4 March be used to continue hearings on Bill 4.
My advice from the clerk is that we can discuss the motion and the amendment together, but when we call for a vote, we will vote on the amendment first and then the original motion. But we can discuss both at the same time. Mrs O'Neill, you made the motion. You may want to say something in regard to your motion, and I also have a list.
Mrs Y. O'Neill: I made my opening remarks on this motion. I feel very strongly that this is a very important, fundamental change. Housing is certainly something that is near and dear and I feel we have three weeks between sessions when most of us have made a commitment to this committee and I certainly think we owe it to the people of this province to give them as much as possible in the way of time to present their views on this fundamental piece of legislation.
Ms Poole: I would like to support Mrs O'Neill's motion. It has become obvious that there are huge numbers of people on the waiting list to speak to this bill, and I am sure many of them are in favour of it, many of them are against. But the point is that if we are going to cut off public debate, then I think the people of this province will be asking how truly democratic we as members are. Originally, we were hoping, although we felt it probably naive, that we could accommodate people in four weeks of hearings. It has now become obvious that there are some 150 people who have, to date, put forward their names and in fact we have virtually two weeks more before presentation dates are shut off for people, so I think the list is going to be growing substantially from there.
If we are going to cut off discussion and not extend the hearings, then the basic question I have is, how do we determine who will speak before this committee and who will make the determination of who will not be allowed to exercise their democratic right and bring their views forward to this Legislature?
Mr Tilson: Speaking to both the motion and the amendment, I think that our party's position is that obviously there have been many, many applications that have been made to speak to this hearing, and there are a lot of disappointed people from all sectors, not only landlords but tenants, suppliers, people from all walks of life who wish to speak to these hearings, and they are being denied that right. I think our party's position is that we would recommend to the committee that we take whatever time is necessary to hear these people, and we would concur with your item I and the "as amended." In other words, I think we should be flexible. If it is required to sit in the mornings, we will sit in the mornings on Monday.
With respect to item 3, I think that people making calls have been discouraged because of lists being filled and I think that as more publicity is being given to these hearings, more people will wish to speak. I think it is premature to delete the committee travelling to other parts of the province. I think this is that serious an issue that affects the overall economy of the province. It is not a Toronto problem, it is a problem that affects the north, the east, the south. I would prefer that we continue our plan to attend both Sudbury and Thunder Bay, notwithstanding the fact that there may not be sufficient numbers with respect to Thunder Bay at this particular point in time. But I think as this committee proceeds, there will be. I am concerned that item 3 be inserted. I believe we should, for the time being, keep both those cities in place.
The Chair: Can I just interrupt for a moment so we do not lose track of what we are doing? I understand that you want to make an amendment to 3. There is already an amendment on the floor. Maybe your amendment will be viewed as a friendly amendment and we can expand the original amendment to include what you have just said.
Mr Tilson: That is right. It is a friendly amendment. Hopefully all members of the committee will concur that if interest warrants it, we will go to both of those cities. Obviously, if it is not warranted, we will not. Sudbury is another two weeks.
The Chair: That is what 3 says already. We are going to go if it is warranted.
Mr Tilson: Yes, but I think it should be clear to people in Thunder Bay and Sudbury that we are prepared to meet in those cities. I do not want the impression to be given by the committee that we will be cancelling one of those.
The Chair: Basically then, you just want us to be more clear in our wording.
Mr Tilson: Yes.
The Chair: Is that what the committee wishes, for us to be more clear in our wording in number 3? That is what we were trying to say to begin with.
Mr Tilson: I think the difficulty with point 3 is, the word "cancel" is the very first word and the impression is being left. Certainly the impression has been given to the two Davids, at least, that we would be cancelling one.
The Chair: Why do you not leave it to the clerk and me to figure out a more friendly wording. I have an understanding of what the committee wishes. I thought we had accommodated you, but if the wording is not clear maybe -- Don, did you have a comment on this particular point only?
Mr Abel: Yes, as a suggestion, if we added "if necessary." Begin item 3, "if necessary." I think that would address Mr Tilson's concerns.
The Chair: That is what we will do. The committee is all agreed we do not need any formalities on this, so we will proceed right along. Mr Tilson, I cut you off. Can you please proceed.
Mr Tilson: With respect to the amendment which our party is concurring with, I think it is simply preposterous to plan a debate on a discussion paper that has not even been released. We look at the notes on the minister's speech, specifically page 4, which he will be presenting shortly, where he indicates that the committee would consider his ministry's consultation document on a permanent system of rent control to be released next month. That is even prior to this vote being taken, and I think it is absolutely preposterous.
The Chair: We are really pressed for time. I would rather not discuss the minister's speech. We will have the time after. Could we just contain our comments to the work that the committee must vote on within the next few moments?
Mr Tilson: I think you have just made my point that it is preposterous to get into the discussion paper before it has even been introduced. Certainly as far as our party is concerned, we will be wholeheartedly supporting the amendment. Time is needed. Those weeks that have been listed in your point 5 are desperately needed. If they are not used, there will be a great number of people from all walks of life across this province and in the Toronto area at least who will not be heard.
I think if the clerk were to list those off, there have been people calling my office who have asked to be heard and who are complaining that they are not being heard. I think it is incumbent upon this committee to do its best to expand the dates -- and those dates that have been suggested in the amendment are most appropriate -- and to put off the general discussion paper which has not even been introduced. We do not even know what it is. I am willing to bet that the government has not even seen this. My guess is that it does not exist and they are still working on it, so how we can plan to discuss something that has not even been created is absolutely preposterous.
With respect to other items that perhaps should be considered, I would like to hear your thoughts, Mr Chair. There were suggestions in the private session meeting that perhaps consideration would be given to meet if necessary in other cities or other locations.
The Chair: As a point of information, it has been recommended to me that we consider Peterborough and Hamilton, but under the conditions and the instructions that I had previously received from the committee, that was impossible.
Mr Tilson: I think our obligation is to make ourselves available to the public. I was not present at those meetings, and I would wholeheartedly concur, as the clerk is saying, that there are -- and from my list that has been presented to me in both of those areas that have been listed, it is warranted to me to know cities. I would hope that this committee would so meet, and unless the government representatives are prepared to concur, I will be making such an amendment. If the clerk is telling us now that those cities warrant attending, then unless the government concurs with that I would be making such an amendment.
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My final point is that we are making some substantial changes to our procedure. I guess this is a question to the clerk or yourself: I would assume that further advertisements will be placed in the newspapers confirming the changes of times and expanded times being suggested by your recommendations.
The Chair: We can discuss that matter in a few moments, if you wish. I have a running --
Mr Tilson: Again, there does not appear to be concurrence with expanding those. If there is concurrence, then that is --
The Chair: We have not voted yet.
Mr Tilson: But if there is not going to be concurrence in expanding to those cities, I will be making an amendment that those cities be added.
The Chair: We will take that as a notice of motion. My list reads Ms Harrington, Mr Drainville and Mr Mammoliti.
Ms Harrington: With regard to the previous speaker's considerations, I believe the government side would concur with any necessary rearrangements if the clerk finds there are sufficient requests. We will certainly be open to whatever the clerk suggests would be the best way of dealing with it. First, I want to mention --
Mr Tilson: On a point of order, Mr Chairman: Does that mean she is concurring that those cities be added now?
Ms Harrington: If the clerk finds it necessary.
The Chair: I will review the list with the clerk, and we will report back to the committee.
Mr Tilson: But just on a point of order: It is my understanding that there are sufficient names to warrant those cities now.
The Chair: My understanding is that there are 11 in Hamilton and four or five in Peterborough, but that was before the committee said anything public about actually holding hearings in those cities. If the general public finds out that the committee is going to those cities, then the numbers of delegations would probably expand.
Mr Tilson: From the calls that have come to my office alone, the numbers would warrant both of those cities.
Ms Harrington: All I was saying is that we are open on that to the recommendations from the clerk.
I want to start with the point of order when the original amendment was made. It is my understanding that this committee had already decided this and that if a committee decides section 5 should be included that is a decision, and to go back and then put it as an amendment is really wasting time. Second, this decision with regard to when the discussion paper would be brought forward was dealt with by a vote of this committee before Christmas, so that is twice that this particular thing has been dealt with.
The Chair: Can I make a comment on that? In consultation with the clerk, the clerk informs me that the amendment to the motion is legal.
Ms Harrington: I see. I did want to point out that it was going over ground that had already been decided by a vote.
To address the motion, this government realizes that a lot of people want to make submissions to this. It is very important that we hear everyone in Ontario who wants to speak to us. For that very reason we are trying to bring forward the discussion paper as soon as possible. The discussion paper will present options which are for the long-range permanent legislation on rent control. We want to hear people on that as well as Bill 4.
Mr Tilson: On a point of order, Mr Chairman: I do not understand how we can be discussing a paper that does not exist.
The Chair: Order. That is not a point of order.
Ms Harrington: I want to finish by saying that consultations with the public are going to be ongoing through the spring and summer and that the point of bringing in the discussion paper sooner than expected was to get the long-range legislation in place during this year instead of waiting a two-year period. We hope this is what the people of Ontario want, to get the long-term, permanent legislation in place and to hear from all of them this year, as soon as possible, this winter, spring and summer.
Mr Drainville: First, let me begin by saying that the comments that have been made up to this point about denial of people's rights are a little hard to take. The reality is that the government members on this committee have indicated from the beginning that we are willing to spend as much time as is necessary to discuss this issue, and that includes sitting on Mondays, sitting any night of the week and sitting on Fridays. We are willing, and we want to have as many groups and individuals who are concerned with this very important issue come before this committee so we can do our best to ascertain the realities out there and how this legislation will affect the people of Ontario.
Let me be clear, also, about the amendment that has been made here today. The amendment itself reopens the issue that was decided in December and decided just a few moments ago when we deleted section 5 of your motion. The amendment again deals with the reality that we, as a government, in negotiation with the other parties through their House leaders -- which they keep on forgetting -- agreed that we needed to have time to look at this consultation paper.
The reason for the importance of that consultation paper perhaps is lost on a number of people, perhaps even some members of the standing committee. The importance of that consultation paper is the fact that this moratorium is a move which we want to limit as much as possible. We do not want to see the moratorium maintained for any great length of time. Rather, what we want to see is that new legislation be drafted and presented to the Legislature at the soonest possible convenience. To do that, we need to expedite matters and the discussions by ensuring that we begin to look at this consultation paper as it comes to this committee and as it begins its rounds of the province. The importance to us, in terms of how we are approaching this, is that we see this consultation paper as absolutely essential to the establishment of new legislation which will have far-ranging effects for the people of this province.
Finally, let me say that we, on our part, are deeply committed indeed to hearing as many proposals, as many positions as are presented to us. We are willing to sit exceedingly long hours to accommodate that. As to the motion as it has been put forward, we are willing to allow the clerk to make dispositions as to who can come before the committee. She has done a wonderful job to this point in trying to help us with that process and we have great confidence that she can continue to do the same.
In closing, the other thing I want to draw to the attention of the members of the committee is the fact that there are presently discussions going on among the parties as to the week of 4 March indicating that we will probably not be sitting in any committees that week. Those negotiations have to do with the three caucuses and the retreats they will be having. In terms of the amendment that is being made, in all probability we will not even be sitting during that period. That also affects, by the way, the consultation paper, because if we were to do the consultation paper we would not have that week, either. It is important to have that kind of information in the committee so that people know our time is always going to be limited no matter what we do and what dispositions we make as members of this committee.
Mr Mammoliti: There is a cry out there to get some legislation through. The cry is from the public. Tenants and landlords are both saying, "We need some legislation that basically protects both of us." The government and the minister want to do that. We understand that, on this side. We also understand that there is government process and how important it is for this committee to have input on discussion papers. That is why we have agreed as a committee to set three weeks aside to talk about the discussion paper. We talk about the government process and how important that is and we really do feel strongly that it is important for this committee to have input on that.
We also believe there is enough time after today to listen to the public. Let me also state that there will be more consultation during the summer. We have said that from the start; we have said that we are going to be going out and speaking with the public. The public will have another opportunity to speak to us. The legislation is very important and the public expects something and wants us to expedite things and that is how we feel.
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Mrs Y. O'Neill: We know we have a new government in this province. We know one of the words this government uses over and over in describing itself -- itself, I repeat -- is "open." The committee structure of this Legislature is one of the very few places where the public of this province can have access to legislators. They have access to us in various ways, whether that be when we speak in a formal way or when they come into our constituency offices, but for the most part to get three parties together in one room and have their full attention and an opportunity to discuss, the committee structure -- many legislators like the committee structure better than any other work they do for that reason.
We have the opportunity, and it is an opportunity, when the House is not sitting to have new freedoms. We have the freedom to travel; we have the freedom to sit longer and we have more uninterrupted time. This is the big move for committee work, between sessions. We have already heard many people in this room say today that there are cities that are not being heard from where Bill 4 is a big issue. Hamilton is certainly one and I personally have had requests from the city of Peterborough. Those have come.
There have been statements made by government members that this decision was taken in mid-November and that discussing it now is a waste of time. Although I have had other responsibilities at Queen's Park, I have not had responsibility for housing. I did not know the interest would be so high in my own city. and indeed I am getting requests from other parts of the province on this item. We have new information. As legislators we will always have new information, because we deal with people and people's needs change. Sometimes they change more quickly than other times. Today, when we have the first opportunity to come together since the Christmas holiday and, more important, since the ad went into the papers, we have new information. I remind this committee again that we have two more weeks for the ad to circulate during which we will give them consideration. We have at this moment 150 people who still have not been given a time slot. Those are the points I want to make about that.
This government came into office. Many things were said over the summer about housing, and the first thing we are presented with formally in the Legislature on housing is Bill 4. Bill 4 happens to be a moratorium and, may I add, a moratorium that has a clawback or retroactivity. Bill 4, once presented in the House, gained a lot of interest. That was the government's choice. The government could have chosen very easily to present its new legislation, which we hear is in the form of at least a draft consultation paper now, but that was not what happened. We had something else happen. So, as is always the practice in the open Legislature of Ontario, Bill 4 gets sent to committee.
But all of a sudden, Bill 4 is not really that important. We are not going to discuss it nor are we going to have hearings on it. We are going to go to something that is more important, more long-ranging. We are going to have a discussion paper, and we are therefore going to take the time I have described so well is so important to the people of Ontario to do something that is perhaps what we as a government -- speaking now from the NDP perspective -- consider to be more important than the legislation we have already put forward. I am suggesting that the government members on this committee and perhaps government members in general find that Bill 4 is relatively insignificant, not important.
We have three weeks to hear it. The rent review legislation in this province, as I said earlier today, took more than two months of day-after-day hearings across this province. This is much more significant than has been determined, I consider. So I am moving my amendment and I continue to feel it is very significant, because I do not think we should be hurrying these hearings. I think we have important discussions to respond to and to hear from people and see what the needs are both of tenants and of landlords. I have heard from both; in fact, although this government says not, I have heard from public housing.
Mr Brown: I am deeply concerned with democracy and open, accessible government, something the people on the government side, the NDP, ostensibly are for. It strikes me as passing strange that the first set of public hearings the Legislature will have in committee is the ones on Bill 4. As we have heard from numerous people here, these are the shortest hearings in the history of this Legislature on an issue as important as rent control. This bill affects literally millions of Ontarians. It affects people who will not get repairs done in their units which they need done, it affects landlords, it affects many people. There are many views both pro and con and we need to hear them.
I find it really quite suspicious that the government does not want us to discuss this in open session. They think that because we decide this in a secret committee meeting, we should not be talking about it now. I am really quite upset that this government seems to say one thing and wants to do another. I think it is not unreasonable. The Legislature has given us six weeks to hear the views of the people of Ontario. Why can we not do that?
Maybe some of us are suspicious because we have read the Agenda for People. We understood your philosophy, and your philosophy is Bill 4; it is nothing beyond Bill 4. Your promise to the people of Ontario was inflation increases once a year. That is it. That is what Bill 4 is, although Bill 4 may not even be that. That is your promise to the people of Ontario made in an election. That is your promise, so that is what Bill 4 is. This is your party's policy. This is it. There is no other.
Your minister is going to come in here and give us a little tap dance and say we are going to now have consultation, but I will tell you, Bill 4 is here and if he never gets around to putting legislation before the people, he will have kept his promise to the electorate of Ontario if he never does a thing. You can wonder. People in Ontario are a little suspicious about that. We are suspicious about your agenda. We are suspicious about what social democrats believe by keeping their promises, what they believe when they say "open and accessible."
And when you believe that, having an opposition as you do right now, an opposition which has agreed to more in terms of flexibility, in terms of hearing groups, than your party ever would when it was sitting on this side of the House -- we have been far more reasonable than anyone else or at least you would have been over here. If you do not believe that, go read the committee transcripts of previous parliaments.
This is the most draconian step of a socialist government that we have seen, and it is now time for you to rethink your position and say: "Let's have the full six weeks. Let's let the people of Ontario talk about this legislation. Let's give democracy a chance. Let's do the right thing."
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The Chair: I have the following on the list: Mr Tilson, Mr Drainville, Mr Mammoliti, Mr Turnbull. I want to inform the committee that the minister has also told me that he would like to get on this morning if it is at all possible. My job as the committee Chair is to allow full and complete discussion. I think we are getting to the point where I can say that we have had full and complete discussion. I would prefer that we not extend the list but I am at the hands of the committee. I am asking for your co-operation.
Mr Drainville: I am willing to drop off, Mr Chair. We certainly have heard the issues over and over again for the last nearly three hours.
Mr Mammoliti: I too, Mr Chairman.
The Chair: So we have Mr Tilson, Mr Turnbull and Mr Duignan to hear from.
Mr Tilson: I do not wish to debate the matter further other than to make the amendment that I had proposed to, if anything, put Hamilton and Peterborough on the same footing as other cities that we are attending. I am pleased that the government is concurring with that amendment.
Accordingly, I would move that the hearing schedule be amended to have dates added to this public hearing to meet in Hamilton and Peterborough, after, of course, discussion with the clerk and yourself. Obviously, if the two of you conclude at a later date that they are not warranted to meet --
The Chair: Instead of making a motion, why not leave it in our hands? I understand what the committee wants. I have got a good appreciation of what has been said this morning.
Mr Tilson: Mr Chairman, I am concerned specifically about Hamilton, because I know there are a great number of people in Hamilton, and obviously a request has been made. I would like it on the record and I would like a vote. Are you leaving it open-ended? Obviously if you and the clerk feel it is not warranted, that could be discussed at a later date, but I do want it added on to the list of cities that we --
The Chair: What we have is a motion on the floor. We have an amendment to the motion on the floor. It is not --
Mr Tilson: Can we make another amendment, Mr Chair?
The Chair: No. We cannot make another amendment when we have an amendment to the motion already on the floor. We can do it later on. We have to get one out of the way. But I have heard you and I will try to accommodate the committee. It is just a matter of finding a day to sit in Hamilton.
I am informed by the clerk that the numbers in Peterborough are three. That may grow if there is indication that we are going to go there. There are sufficient numbers to go to Hamilton. I have heard the committee, and the clerk and I will try to work it out. If you want to make it more formal later on, we can, but we have a motion on the floor and we have an amendment to the motion. We cannot have a further amendment on the floor.
Can we please proceed? Mr Turnbull and then Mr Duignan.
Mr Turnbull: I would like to catch on the comments of Mrs Harrington and Mr Drainville. They have said that the government wants to fully hear those people who wish to be heard, and yet we seem to be going around the floor ad nauseam talking about the fact that it is unreasonable to bump the discussion of the green paper.
Surely, to the extent that if we cannot book through the clerk time to hear all of the people wishing to be heard, can we not now have the agreement of the government that it will at that point extend the hearings into the time that had been allocated for the green paper discussion? We have many owners of properties in this province who, due to the retroactive aspect of this legislation, are facing bankruptcy, and I emphasize literally facing bankruptcy. Surely, we owe the people of this province enough time to stop people going into bankruptcy. I am very disappointed if we cannot have the agreement from all sides that we will encroach by at least a week to hear people's just concerns.
The Chair: Your point has been duly noted.
Mr Duignan: I support Bill 4 because there are one million tenant households in Ontario that are crying out for justice and equality. Our government knows the financial damage being caused to tenants because of the existing Liberal law. We know the unfairness the tenants face when they have to pay high, double-digit rent increases because of the speculative prices paid for apartment buildings and such and we know that that unfairness has to end. I believe Bill 4 is a necessary piece of temporary legislation.
The Chair: The Chair is going to call for the amendment to the motion. I would ask the clerk to read the amendment --
Mrs Y. O'Neill: I am requesting a recorded vote.
The Chair: A recorded vote has been requested on Mrs O'Neill's amendment. The clerk will read the amendment to the motion.
Clerk of the Committee: Mrs O'Neill moves that Ms Harrington's motion be amended by inserting the words "that the weeks of 18 February, 25 February and 4 March be used to continue hearings on Bill 4."
The committee divided on Mrs O'Neill's amendment to Ms Harrington's motion, which was negatived on the following vote:
Ayes -- 5
Brown, O'Neill, Y., Poole, Tilson, Turnbull.
Nays -- 6
Abel, Drainville, Duignan, Harrington, Mammoliti, Ward, M.
Mr Tilson: I wish to make a further amendment, and that is that the hearing schedule be amended to have dates added to this public hearing to include the cities of Hamilton and Peterborough after consultation with the clerk and the Chairman.
The Chair: Can I make a comment?
Mr Tilson: I am always willing to hear comments from the Chair.
The Chair: Unless we get extra days, how do we --
Mr Tilson: I have put that in the motion quite purposely.
The Chair: The clerk will write the motion and the committee will decide in a moment's time.
Ms Harrington: I would point out that we do have the Mondays that we mentioned for days.
Mr Duignan: Or Fridays.
Ms Harrington: And Fridays.
The Chair: There are two options: Monday and Friday.
Mr Abel: Plus the extension to 6 o'clock.
The Chair: Mr Tilson moves that Ms Harrington's motion be amended by adding that hearings be scheduled in Hamilton and Peterborough after consultation with the clerk and the Chair.
Mr Tilson: On dates to be added.
The Chair: We will reread the amendment to the motion so that we have the exact wording.
Mr Tilson moves that the motion by Ms Harrington be amended by adding that hearings be scheduled in Hamilton and Peterborough on dates to be added after consultation with the clerk and the Chair.
Mr Mammoliti: Point of order.
The Chair: Yes. discussion on the amendments.
Mr Mammoliti: On a point of information, Mr Chairman: Dates to be added. Can the mover just clarify what he means by that?
Mr Tilson: I repeat what I said at the outset: Whatever is required to hear people from Hamilton and Peterborough. Obviously, if there are dates that are unavailable -- I think Mr Drainville mentioned some dates that are impossible to meet on in March, and I understand that -- but dates that presumably would be agreed upon by all three parties.
Mr Drainville: Mondays, Fridays, whatever.
Mr Tilson: I would not rule that out, but I do want it clear that those dates are to be added. If Mondays and Fridays are available then we will meet Mondays and Fridays. If it means meeting after the five-week schedule, then it would be after that time. Obviously, we have to see first of all whether those cities, particularly Peterborough, warrant it. We know that Hamilton does now.
Mr Chair, before I forget, I would also add, of course, that would not rule out Saturdays. I mean, if people are --
Ms Poole: How about Sundays?
Mr Tilson: Well, no. We are opposed to Sunday meeting in the same way we are opposed to the Sunday shopping legislation or lack of it.
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The Chair: We are pressed for time. Let's get right to the point, please.
Mr Tilson: I would request that this amendment be a recorded vote.
The Chair: You are asking for a recorded vote?
Mr Tilson: Yes.
The Chair: We are going to re-read the motion so that we all know what we are voting on and a recorded vote has been requested on the amendment to the motion.
Clerk of the Committee: Mr Tilson moves that the motion by Ms Harrington be amended by adding that hearings be scheduled in Hamilton and Peterborough on dates to be added after consultation with the clerk and the Chair.
The committee divided on Mr Tilson's motion, which was agreed to on the following vote:
Ayes -- 11
Abel, Brown, Drainville, Duignan, Harrington, Mammoliti, Murdoch, B, O'Neill, Y., Poole, Tilson, Ward, M.
Nays -- 0
The Chair: The amendment has been carried. I would like to go right to the original motion. I would ask the clerk to read the original motion to be followed by a vote.
Clerk of the Committee: Ms Harrington moves that the proposal with respect to Bill 4 hearings dated 15 January as amended be adopted by the committee.
Motion agreed to.
MINISTRY OF HOUSING
The Chair: We have dealt with the first order of business. We are now going to hear from the Honourable David Cooke, Minister of Housing and Minister of Municipal Affairs. As has been the custom in all committee hearings, once the minister is finished, then the two opposition critics will have an opportunity to put forward their views. We thank you, Minister, for joining us this morning. We did not get you started right on time, but the committee had some difficult matters to decide. We are glad that you are here and we are happy to hear from you.
Hon Mr Cooke: Thank you very much, Mr Chairman. I will do my best to stay as long as I can, but I had scheduled the opportunity to be here all morning and I thought I would hear the opposition responses at that time. I do have some difficulty with staying much past 12 noon because of commitments that I have made with major groups in Ontario, people who are travelling in from outside of Toronto to meet on issues. If I am not here to hear the entire responses from the opposition critics, I can assure you that I will read them and apologize now for being absent.
I am pleased to have the opportunity to appear before the standing committee on general government. Today we begin a process which, I think it is fair to say, will have a tremendously positive effect on the wellbeing of the citizens of Ontario. There is no doubt that rent regulation is an important issue to many people in our province. There are few other consumer protection initiatives which have such a fundamental and direct impact on people's day-to-day lives.
Let's look at just a few examples of the way the current system of rent review has worked in a cross-section of Ontario's rental market. At one address in Kingston, the rent increase ordered at rent review amounted to over 224%; at another location in Warkworth, the increase was over 192%; there is an instance in Ottawa where the rent increase ordered was almost 189%; here's a case in Timmins, where the rent was increased by more than 176%, and another in Cambridge at almost 156%. We all, as politicians and as MPPs, have had many experiences of our own constituents and other examples of substantial rent increases.
Obviously, the current system of rent review did not serve the purposes for which it was intended: protection of tenants. We have begun to build a new system of rent regulation in Ontario, a system of rent control, a fair and simple system which will provide real protection for tenants.
Bill 4 and this committee's review of it are part of the process of moving to rent control. This committee will also have ample opportunity to have direct input into the long-term rent control policy. It is my hope that this process can be completed within one year and that a new rent control system will be in place in early 1992.
During this time, we plan intensive consultation with the public. This issue deserves public input, and I am also sensitive to the concerns that we move as quickly as possible to reduce uncertainty in the minds of tenants and landlords. I want to work with you and with the public to put permanent legislation in place just as soon as possible.
Given these objectives, we have planned for public input which is meaningful and mindful of the circumstances of tenants and landlords. Allow me to tell you something about the consultation we have in mind.
As you know, this committee will consider Bill 4, the temporary moratorium, and will be holding public hearings in several locations across the province. I understand that the committee will then consider the consultation document on a permanent system of rent control to be released next month. During March and April, I will also be touring the province to talk to landlords, tenants, municipalities and interested individuals on the design of the new rent control system.
Based on those consultations and your report, I will be introducing legislation for the new system. To move ahead more quickly, I am targeting early June for the first reading of the new legislation, and second reading before the summer break. During the summer, that rent control legislation will be referred to a legislative committee for further public hearings. Finally, by end of the year, the legislation should be back before the House for third reading, before the end of 1992.
It is an intense schedule, I realize, but I believe it meets the needs for public consultation on what is clearly an important issue. I think this allows for a great deal of input from members of the House and members of the public. It also allows for a new system to be in place in about a year. I want to work with all of you and the public to make this happen.
I can point out that I understand the concerns that the opposition has as well as concerns of my own caucus and myself about the tight time schedule, but it is very much a balance between what you and we would like to see happen. We can have the current moratorium legislation stay in place for another six months or eight months, or we can look at this as being the first step of consultation, then consultation on the document, then second reading debate on the permanent legislation, then extensive public hearings during the summer on the new legislation, and then third reading debate in the House.
If you add up all of those weeks, plus our own consultation which my parliamentary assistant, Ms Harrington, will be involved in as well, but if you add the weeks up of this committee, we are looking at probably around 10 or 11 weeks of public hearings on rent control between now and the summer. I think that is a significant commitment by this government and by this Legislature to ask for public consultation and public input in developing the permanent system, at the same time as an attempt to get the permanent system in place as quickly as possible to reduce the uncertainty so that landlords and tenants know what the permanent system will in fact entail.
In that regard, I would like to express my appreciation to the members of this committee for agreeing to review Bill 4, then to proceed directly to the consultation document. While there was discussion in committee this morning, I am sure the members of all parties understand that before the discussion took place this morning there was very much negotiation between the House leaders and discussion in this committee. That is why I think it is appropriate that the committee has decided to confirm the agreement that was reached by all three political parties several weeks ago.
In creating the new rent control system, there are a number of important issues which we must discuss. The sooner we get to the long-term legislation, the sooner we can address those issues. Today we take the first step by beginning a review of Bill 4, legislation which amends the current Residential Rent Regulation Act. Bill 4 is temporary legislation which allows us to provide immediate protection for tenants while creating a new system of rent control.
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Let me start by saying that I do not think there is any doubt in the mind of just about anybody that the current system is totally inadequate. It provides little in the way of real protection for tenants. More than 330,000 tenant families have faced rent increases above the guideline. Some tenants have had to pay rent increases of more than 100%. For some tenants this has resulted in literally being economically evicted from their homes.
Tenants are not happy with the current system, and landlords are not happy with it either. This system is too complex and many people in Ontario just do not understand it. Even the Rent Review Hearings Board, which hears appeals of the local rent review decisions, has made it clear in its annual report that the system is not working and should be changed. I agree. We must move away from the system of rent review which offers the ability to pass through expenses to a system of rent control which will offer real protection for tenants. We took the first step in this process when we introduced Bill 4.
As you know, Bill 4 will protect tenants by limiting most rent increases to the guideline amounts of 4.6% in 1990 and 5.4% in 1991. While I repeat that this legislation is not the best course for the long run, it is essential, in my view, in the short term. Specifically, Bill 4 eliminates several loopholes in the Residential Rent Regulation Act which have been used to pass on huge rent increases. I am referring to luxury renovations and the flipping of apartment buildings. I do not think it is fair for tenants to have to pay for luxury renovations to their buildings, renovations which they often do not need or want. I also believe that tenants should not be forced to finance the resale of their apartment buildings through rent increases which can be phased in over five or 10 years.
I want to speak for a moment about maintenance and repairs. Some landlords have claimed that Bill 4 will not allow them to keep up their buildings. This is simply not true. The rent review guideline established each year by the ministry is based on average cost increases which a typical landlord would experience in operating a well-maintained rental property. These increases include the cost of carrying out regular repairs and maintenance to their buildings.
Poor maintenance is a matter of public health and safety and is a regular cost of doing business. This is why Bill 4 allows landlords to claim for certain expenses over which they have no control. These costs include increases in hydro, municipal taxes, heating, water, insurance, cablevision and mortgage rates for renewal of mortgages. We also recognize that major capital expenditures are required to keep rental properties operating to modern standards. Capital expenditures involving roofs, garages, heating, electrical systems and so forth must be considered as part of any long-term rent control legislation, and they will be.
I am prepared to work throughout this year with landlords, tenants, the financial community, municipalities, the building trades and all other interested groups and individuals. We must create a system of rent control which ensures that tenants are protected and that buildings are kept in a good state of repair.
Today we begin the process with a review of Bill 4. Correct me if I am wrong, Mr Chairman, but I believe there will be some opportunity for a presentation from the ministry today on the bill. So as I complete, I would like to introduce to you three representatives from the Ministry of Housing: Anne Beaumont, who is the assistant deputy minister of Housing, policy division; Dana Richardson, who is manager of existing housing stock section; Christina Sokulsky, who is senior solicitor, rent review legal services; and Colleen Parrish, who has also been working on this project.
With those few remarks, I complete. I appreciate the efforts of the committee. I would just like to add one additional comment. I would ask, as much as possible, for all members of the committee to understand. The time frame for this is tight; I understand that.
The consultation document will be ready in February. The consultation document is well on its way to being prepared and decisions on the final draft form are being reviewed now by myself and people within the ministry. If the committee is to have a real opportunity to have input into the final decisions that we must make as a government, the hearings that you have on the consultation document must occur as quickly as possible.
The time that it takes for the ministry to develop permanent legislation and have it drafted and have it checked and go through the approvals process is a considerable period of time. If we waited until the House resumed in March to have public hearings on the consultation document, in all likelihood we would not get a report from this committee until late April. That would mean that we would not be able to have the input and advice from this committee in giving instructions to the ministry on how the permanent legislation is to be crafted.
So while I understand that the time frame is very tight, I think it is the best time line that we can develop together, and result in public input as well at this stage -- there will be more public input in the summer -- and also offer the opportunity for members of this committee to have direct recommendations on how we proceed.
There are, I guess, a couple of other alternatives, and they would be that there would not be input from the committee, which I think would be inappropriate, or that we could delay the introduction of the permanent legislation for six months to eight months and maintain the moratorium, which I think would not be the preferred option either. So I appreciate the decision the committee has made today and I really very much look forward to being with you as often as I can during the public hearings and to receiving your report on the consultation document in the future.
The Chair: Thank you, Minister. We appreciate your comments. As is the customary procedure. we will now hear from the two opposition critics, leading off with the official opposition, Ms Poole.
Ms Poole: I am pleased to make comments on behalf of the Liberal Party relating to Bill 4. I thought I would begin by taking a look at what the minister has described as the intent of the legislation. He has said that he wants to limit outrageous rent increases and that he wants to ensure tenants do not have to bear the burden of unwanted luxury renovations and the flipping of apartment buildings. I can say that our party does not have a problem with the intent. We do not have a problem with those principles. In fact, that is why we voted as a caucus to support Bill 4 on second reading. As you know, Mr Chair, second reading is support in principle.
We do, however, have very serious reservations about the ramifications of this bill and about certain provisions in it. I can put the minister on notice and also the committee on notice at this stage that unless there are some, I think, fairly substantial amendments to this legislation, our caucus will have great difficulty in supporting it on third and final reading. I am hopeful that these hearings will provide that opportunity -- as well as the clause-by-clause analysis -- for us to agree on amendments which will make this interim legislation fair and reasonable.
One of the serious reservations I have about the legislation is that the minister has introduced quite widespread and wide-sweeping legislation to correct what is abuse by a few landlords. The minister himself has actually said that it is a few landlords. I would like to quote his comments at a press conference when he introduced the legislation.
These are the minister's words: "Landlords in this province, in fact most landlords, have kept their buildings up to standards without going through the rent review process. It has been a few landlords that I believe have abused the system, have put in luxury renovations that have resulted in tenants receiving unreasonable and unconscionable rent increases, which is what we're attempting to fix today."
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The question I have to ask the minister is, if this is an abuse by a few landlords, then why such wide-sweeping legislation? I know the minister has described in his statement a number of cases where rent increases vary from 224% down to 176% and 156%, and I agree wholeheartedly with him that these are totally unacceptable and should be unacceptable to any member of the committee. But I will also tell you that rent review statistics show that increases over 100% represent 12/1000 of 1% of all applications to rent review: 12/1000 of 1%, as you can see, is quite a very small number.
I have no problem with having interim legislation which stops that abuse, no problem whatsoever. But the question again that we have to ask is, do we need to go that far? The statistics I am talking about are from rent review and from ministry documents, as well as rent review itself. Later statistics from rent review for the 22-month period, 1 January 1989 to 31 October 1990, which as you can see are very recent statistics, show that in 96.37% of the decisions at rent review, there have been increases of 14% or less. So why do we not deal with the abuse and those abusing the system and not penalize everybody en masse?
The other serious reservations I have about this legislation involve capital replacements. There is no provision in this legislation for capital replacements or major repairs. I know the minister has brought up the point that day-to-day repairs are covered. They are covered under the formula, the statutory guideline, but that is not what we are talking about. We are talking about boilers that break down. We are talking about roofs that are 20 years old and leak. We are talking about corroded plumbing that needs to be replaced and electrical wiring which does not work. We are talking about underground parking garages that must be replaced and repaired. The corrosion is such that the building will fall down if it is not fixed. These are the types of things that are not covered in this legislation.
I know the minister with all good will and intent intends for this to be passed and through and over with in a one-year period so that the long-term legislation can be in place, but I can tell you, having been in this House a number of years, that it is probably an unrealistic schedule, although we will try to assist him in attaining it. But even a one-year situation can create a crisis in many buildings where this repair work was long past due. That is certainly a very major item which I think we will hope to address through amendments.
We are not talking about luxury renovations. I want to make that perfectly clear. I do not have much sympathy for landlords who want to put in Jacuzzis, gold taps and marbleized lobbies. That is not what we are talking about. Let's make that perfectly clear. I think when any government is bringing in housing policy, it is also important that it reconcile its social policy with its economic policy.
I do not think any member of the government envisaged the ramifications from this particular bill. In fact, I doubt if any of us really truly knew it until the calls started to come in, ramifications with the renovation and repair trade. The number of cancellations have induced numerous layoffs. We already have statistics showing that it has already happened. It is not what you would call whistling in the wind. We are not making these up. These are people who have said, "We have laid off our tradesmen because we cannot afford to operate with all these contracts cancelled."
The investment community is extremely concerned. It is concerned because the rules changed halfway through the game and it is extremely difficult for investors in this province to accept this, particularly foreign investors who look at it not as an NDP or a Liberal or a Conservative government; they want continuity and they have the right to expect that the rules they operated under are going to hold until such time as the legislation changes.
Unfortunately, what has happened in this case is that the retroactivity, which is my next major point, has changed the rules of the game far beyond what I think anybody envisaged. If you look at the instance of capital expenditures, according to the legislation capital expenditures for rent increases, I October or later, will be caught under the moratorium. But if you look back, because the landlord has to give 90 days' notice before getting the rent increase, that takes us back to I July.
There is another hitch. The capital expenditures for major replacements have to be substantively completed before the landlord can even apply. That means that a landlord who did work commencing in 1989, most likely the summer of 1989, is caught under this moratorium, and that is not to say anything about the financial loss provisions which have also caught people from two, three, four years.
I can understand the minister's intent. He wants to protect tenants from any further increases by making it all retroactive, but I think that surely we have to take a look at this legislation and see if we can come up with something fairer as far as retroactivity is concerned. I cannot believe the minister intended this legislation to be retroactive two, three, four years past. It just does not make any sort of sense.
I guess the minister can justify all these things happening because he says it protects tenants. I have long been known as a tenant advocate and I have worked for tenants and with tenants for many years, but I have very serious reservations about whether it is going to protect tenants, because equally as important to tenants as keeping reasonable rents is the fact that they want maintenance done on their building. They want a decent place to live. It is their home. They do not want to live in a slum.
I can tell you that this legislation has strained the credibility of the government to such an extent that we are going to have fairly serious reactions from landlords. I think what you are going to find, if this legislation passes in its current form, is that landlords are cutting out services, that they are going to lower standards and that they are going to cut out the extras. There is always a substantial number of calls to my office about maintenance, but I will come back to this committee a year from now and I will bet you that the number of complaints will have doubled, tripled, even quadrupled. So it is not going to be good for tenants.
We have to look at our aging housing stock and ensure that we are not looking at a short-term solution that is going to cause us long-term pain. Our housing stock is 15, 20, 30 years old and more.
I have some statistics here -- the minister will be glad to know I am just winding up now -- that 80% of our housing stock was built pre-1976. So 80% of our housing stock is at least 15 years old to start with. Almost two thirds was built pre-1970. So that is 20 years.
Anybody who knows housing stock will know that the 10- to 20-year mark is the crucial period where roofs give out, boilers give out and elevators break down. There are a lot of substantial repairs and capital expenditures that need to take place.
Over one third, almost 37%, was built pre-1960. So over one third is 30 years or more. And 8.6% was built pre-1920. I can tell you, having been in many apartment buildings, that they have been in serious jeopardy and it has only been in the last couple of years that landlords have been trying to remedy this and repair their buildings in a quite major way.
So let's be realistic. It may be, in the short term, very pleasing to tenants. Somebody would have to be stupid to say, "I do not want to take advantage of the fact that there will be a rent freeze over the next two years," but let's look at what long-term ramifications are going to come from this short-term legislation.
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The final point I would like to make is in the area of stability. Surely any legislation, interim or not, must not only be effective and must not only be fair, but also must create stability in the market. I think this legislation has done exactly the opposite. We have tenants living in half-finished construction, where the landlords have finished their construction and have said they are not going to go ahead because they cannot be reimbursed for it. We have instances where renovators and trade suppliers say they are going out of business. We have landlords who say they will be bankrupt because they have spent many hundreds of thousands of dollars on renovations for which they cannot be reimbursed. We have investors who are saying that Ontario is no longer a beneficial climate in which to invest. This does not sound to me like stability. I think we can work together with amendments to make this legislation fair, effective and create a stabilizing influence. I would ask all members of the committee if we can work towards that. That will make these hearings an exercise in good government, not an exercise in futility.
Mr Tilson: I have several questions to ask of the minister and then I would wish to make some comments, if that is in order. First, I am sure the minister is amused listening to the extensive Liberal objections to his bill, yet they voted for it, of course; they voted for the bill when we last sat. I find it interesting that they list all these objections -- many of which I concur with, which is precisely why we voted against it -- yet they in fact voted for it.
Minister, I have several questions to ask you before I get into my comments, which have to deal with the green paper you are proposing. You have been vague in your statement. You indicate it will be released next month. Can you tell us when specifically? Will it be at the beginning or the end of the month?
Hon Mr Cooke: The plan is to release the document to the committee and across the province as soon as this committee has completed its discussion on clause-by-clause of Bill 4. I do not have the schedule of your committee in front of me so I cannot remember all of the dates --
Mr Tilson: I am confused by that, because we have set aside weeks to discuss the discussion paper, if I recall, prior to the clause-by-clause debate. Perhaps you could clarify what your intention is.
Hon Mr Cooke: I do not have your schedule memorized, so perhaps the clerk --
Mr Tilson: I do not either. All I know is that the discussion on the green paper comes before the clause-by-clause discussion.
Hon Mr Cooke: Rather than trying to fit it into your schedule, the plan, as I have indicated publicly before, is to release the document the week of 18 February.
Mr Tilson: Which is the very week we are starting discussions. I would like you to comment on this, because this gets back to discussion, obviously under your direction, that the committee has taken, that we will allot the weeks of 18 February, 25 February and 4 March to discuss the discussion paper when you are introducing it the week of 18 February. At the same time, both you and members of the committee have indicated that we will be meeting again to discuss this paper some time in the summer.
Hon Mr Cooke: Not the paper. What I said in my opening statement was that it would be our expectation to receive a report from the committee and we will have had our own consultation process on the paper as well, and we will have legislation for first and second reading for the permanent rent control system in June. Then we would like to have public hearings on the permanent bill in the summer.
Mr Tilson: Bill 4 is quite obviously temporary legislation; you have indicated it is temporary legislation. I would go so far as to say it is Band-Aid legislation, piecemeal legislation.
Hon Mr Cooke: That is the nicest thing you have said about it.
Mr Tilson: I am trying to be as kind to you as possible to start these meetings off on a good footing. I hope you will respond, of course, with a similar friendly attitude. I simply say that when you say you will be releasing this paper on 18 February, that is the very week this committee will be considering that paper. To be fair, a paper of this magnitude hopefully will be given to the tenants' associations and the landlords' associations, the very people appearing before this committee. They will not have an opportunity at that time to give their comments to this committee. We will not even have time to get out among the committee and discuss it ourselves.
My suggestion to you is that perhaps our discussion of the discussion paper should be put off for a time, that you revoke the committee position which was made, I believe on your direction: that during the weeks of 18 and 25 February and 4 March we continue to discuss Bill 4, which has very serious implications to the economy of this province. It is going to be almost impossible for us to intelligently review and debate your discussion paper on the very date it is going to be implemented, and those discussions should be delayed until a later date.
Hon Mr Cooke: Again, I assume there has been some discussion with your chair and the clerk in the steering committee. The expectation was that the document would be released and that there would be an opportunity for the committee to go through the document with ministry staff so there would be an understanding of it and that there would be simultaneous release in other centres across the province with the opportunity of briefings for tenant and landlord groups. We are very conscious of what you have said.
I would also indicate that in terms of the decision that was made here this morning, I did not direct the committee. Your House leader, the Liberal Party House leader and the House leader for the government negotiated this arrangement for the committee. There was not an imposition of the government's will on the committee this morning. I have always assumed that a deal is a deal, and the time frame was negotiated between the three House leaders.
Mrs Y. O'Neill: On a point of order, Mr Chairman: I want to reiterate, and I do not think it was stated in public, that it was this committee's decision on the time frames and how we would use them for this committee and it did not need to go to the House leaders. The only thing we were given were the six weeks we could use as we chose, and that is the way this committee decided to go.
Hon Mr Cooke: That is not correct. The House leaders discussed specifically --
Mrs Y. O'Neill: The clerk made the statement to us in private session, and I took her direction. I think the clerk is as impartial as we are going to get in this committee.
On a point of order, Mr Chairman: In conjunction with what has just been said. I agree that I have not won my point this morning about the three weeks and the use of them, but I would like to request that the minister give his plans in writing to this committee now that this decision has been made, though at this moment pretty unsure, that 18 February --
Mr Tilson: Mr Chair, somehow I have lost the floor.
Mrs Y. O'Neill: You are correct, but I want to have given to our committee what his plans of circulation are and what work this committee will be doing.
The Chair: Order, please.
Mrs Y. O'Neill: I think I have a right to ask that, Mr Chairman.
The Chair: Yes, you do. It is not a point of order; a very good question. not a point of order.
Mrs Y. O'Neill: It is a point of order.
The Chair: I consulted with the clerk as I was not quite sure and she said it was not a point of order. Mr Tilson, you have the floor.
Mr Tilson: I acknowledge that the House leaders did meet and, to use the minister's expression, did work out a deal with respect to temporary scheduling, but that was before the many, many applications came not only to the clerk but I am sure copies were directed to your offices; certainly copies have been sent to my office. I think you will acknowledge that there are many, many people across this province who are not going to be heard and who are not going to meet your expectation of consultations that you have repeatedly said in the House.
I will accept for the moment that you do not direct these people over here. I would ask that you caucus or discuss with them the possibility, because they have the votes, they can do whatever they like here -- which troubles me, but they can do whatever they like. Obviously, these three weeks are needed because of the many applications of people who have asked to be heard and are not going to be heard. I simply ask that you reconsider your position. In light of the fact that this discussion paper will only be introduced on the 18th, discussing it on the 18th is premature and it should be put off to a later date. I simply ask that you reconsider that.
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Hon Mr Cooke: The document will be presented to the committee during that week and there will be a briefing session by the ministry, so it is not just a matter of giving you the document and then expecting that there are automatically going to be public hearings. There will be the opportunity, if the committee so wishes, to have representatives from the ministry go through the document with you.
I served long enough in opposition to understand exactly where you are coming from: your caucus, and I understand very clearly why, is very much in principle opposed to Bill 4. Your approach to this is obviously to do your best to see that Bill 4 is stopped. But I want to go ahead with Bill 4 and I want to have a public consultation process with the committee on what the permanent system will involve. The only way we can do that and still accomplish having legislation out to this committee in the summer is to go with really tight time lines. The disadvantage of going on longer on Bill 4 and holding up the legislation is that the permanent rent review-rent control legislation would not get out to public hearings until the winter of 1992, which means implementation several months later. It takes several months to prepare the regulations attached with the bill, and if we want to have real public hearings on the permanent legislation we have to get the permanent bill in for second reading in June. That is why the time lines are tight.
Mr Tilson: I can only say that our party is prepared to consult. I do hope the minister will reconsider and the government will consult, because it is quite apparent that it is not prepared to consult on this legislation. As we have illustrated in the House and will continue to show, and I am sure the applicants before this committee will illustrate, it is having and will continue to have a disastrous effect on the economy of this province.
My second question has to do with his comment regarding capital expenditures. It is at the bottom of page 10. I think you are admitting that not allowing capital expenditures to be included in rent increases was a mistake and you are now saying they must be considered as any long-term rent control legislation. Acknowledging that, and acknowledging that it may be some time before the permanent legislation is implemented, where you will implement this and where you will put forward your proposals with respect to the green paper. would you be prepared to consider now, to save much concern of the people of this province. that Bill 4 be amended to deal with the capital expenditure issue that has been raised many times in the House and again raised in this committee?
Hon Mr Cooke: First, I might indicate that I made comments to the press before we even introduced Bill 4 that a permanent system of rent control would have to recognize the issue of capital investment in buildings. So this is not something that has simply come upon me since the introduction of Bill 4. It has always been the expectation of this government that there was going to have to be a mechanism in the permanent legislation to deal with capital.
I am sure the Liberal Housing critic understands how much difficulty the previous government had of exactly how you deal with the capital issue. It cannot be, in my view, adequately dealt with through an amendment to the current legislation. There has to be a new approach. That is why in the short term there is no provision for capital. In the long term -- when you see the document in February, you will see some of the options, you will see our preferred approach at that point. You may not agree with it but you will certainly understand that we will be dealing with the capital issue in the permanent legislation. I understand that, and I will not prejudge any reaction we might have to any amendments you might present to Bill 4. I will look at your amendments and I, along with my colleagues, will take your amendments and the amendments the Liberal Party proposes very seriously. But, obviously, the moratorium legislation has a principle involved; it is a short-term bill and we are not prepared to deviate from the principle of the bill.
Mr Tilson: I find it difficult, the contradictory statement the minister has just made acknowledging that there is a problem with Bill 4 in deleting the item dealing with capital expenditures, when he says it is going to be in the new legislation but not in Bill 4. I find that a terrible contradiction and I hope he will consider an amendment before Bill 4 is passed. Of course, our party hopes it will not be passed.
The third and final question I have of the minister, because I know he wants to leave --
Hon Mr Cooke: I do not want to leave.
Mr Tilson: I appreciate that, that you would love to sit here and listen to me --
Hon Mr Cooke: I will watch it tonight.
Mr Tilson: I am sure you will. I have listened, as other members of the House have listened, to your comments on the abuses of landlords with respect to -- you used the example -- marble foyers, and terrible abuses the landlords have made. We all acknowledge that those abuses have taken place. I have repeatedly asked you in the House -- I have asked you on two occasions and I think our leader has asked you on occasion -- for your impact analysis on how you came to the conclusion to implement Bill 4. You have indicated to the House that that analysis does exist. Presumably that will clarify your statements with respect to luxury renovations.
My question to the minister is: Will he make that impact analysis available to this committee today where we can listen to his clarifications with respect to the luxury renovations he has spoken of?
Hon Mr Cooke: We have supplied to you all the background information, a compendium of information that is required under the rules. I have never indicated in the Legislature that there is an impact study, as you describe it. I would suggest that the background material we have that helped us come to the conclusion of where we wanted to go in the short term is the same type of information Mr Davis had in the mid-1970s and Mr Peterson had in the mid-1980s when they decided to go with forms of rent regulation. That kind of information is available within the ministry.
But did I go out and hire consultants to make a political decision about a commitment that was made in the election campaign? No, we did not go out and hire consultants and economists, because there is a principle involved here that we believe in: the protection of affordable housing and the protection of tenants in the province. My question to the ministry when I took office was: "This is a commitment that was made by the government. I want to know how we can best implement this decision and I want to know the ramifications based on your professional experience in the field." That is the kind of advice and input I received from ministry personnel. The result is Bill 4. We have supplied to you a compendium of information, I believe, and that is the package.
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Mr Tilson: I guess I am talking through Mrs O'Neill's microphone, Mr Chairman, so hopefully it will pick me up.
The Chair: You will be heard.
Mr Tilson: That is good. I am glad to hear that. Again, the issue of course has been made quite clear to me, the comments you have made that there was an analysis made, and I am disappointed to hear that you now say that was not done. I guess I need clarification and this committee needs clarification as to your very bold statements with respect to luxury renovations -- examples of abuse, numbers of examples of abuse, specifics of examples of abuse. There is no question that we all know of at least one example of abuse because you have quoted it in the House, but I would like to know, specifically, detailed information as to these examples of abuse that you have referred to. List them all. List all the luxury renovation abuses that have been taken by the landlords of this province. Can you give that information to us this morning?
Hon Mr Cooke: The 330,000 units that had rent increases above 11% -- I do not know whether we can bring that in the room here this morning or how we would assemble that information. We will provide you with as much information as we can on the range of rent increases and we have attempted to do that. We have also offered you a briefing from the ministry; I did this back when Bill 4 was introduced. The Liberal caucus took advantage of that briefing. My understanding is that to date you have not. I still am offering to you the opportunity to spend time with the Ministry of Housing personnel for a briefing, if you would like that.
Mr Chairman, I do not want to be rude, but I was supposed to be someplace 15 minutes ago and people will be waiting.
Mr Tilson: I appreciate your allowing me to ask those questions, Minister.
Ms Poole: I have just a very quick point of information. I appreciate that the minister has to go. I refrained from asking questions in my particular section because I did not feel it was fair to the third party critic not to have an opportunity to speak before the minister left. Would it be possible for the minister to come back one time, either at the beginning of one of our sessions or at five o'clock, whenever we are finished, just to answer questions? I am sure members of his own caucus also have some.
Hon Mr Cooke: Yes. If it can be scheduled, I would be glad to, but I hesitate to come at the beginning of a session because I might not get on until an hour and a half after I was scheduled.
Ms Poole: If we promised? Perhaps it would be possible for the clerk to contact the minister on this.
Hon Mr Cooke: We will schedule something.
Ms Poole: Thank you. I appreciate it.
Mr Tilson: My remarks are brief. I will not go into the half a dozen to a dozen criticisms that we have of the bill. They will come to light as the applicants speak. I will say that the main objective, the main concern of our party is the economic wellbeing of Ontario, the job losses, the fairness, and clearly this bill is most unfair, as will be revealed by the applications.
Mrs Y. O'Neill: This is not a point of order; I want to make a formal request. I would like to have provided by the minister's office -- I presume that is the place where this will have its source -- a timetable for the presentation of the discussion document. I feel that I would like to know about its presentation to us, and the opportunity, I understand, to have briefings. How long would those briefings be? One day? Two?
Then I also think it is only fair to this committee, since we are looked upon as the resources on this bill in the province -- I would like to have the information for the people who are going to start asking me this as of this morning, now that the decision has been made, what the circulation plan is for this document. I heard from the minister very vague statements that there would be briefings provided in communities across the province. What does that mean? Does it mean that the Ministry of Housing officials in the large urban centres will be holding quasi-public hearings? I do not know. I would like to know that. I would also like an answer from the minister about the significance of these hearings to that consultation paper.
The Chair: We will duly note your requests, Mrs O'Neill, and we will pass them on to the minister, and when we receive the information we will distribute it to the entire committee.
Mrs Y. O'Neill: Thank you.
Ms Harrington: I just want to say that they are very fair requests, Mrs O'Neill, and I believe that we can try to get the answers to them very quickly.
Mr Tilson: Now that we have disposed of the minister, I have two motions that I would like to introduce to this committee for its consideration. I will read them, but I have written them out.
The first motion has to do with witnesses that hopefully will attend this committee to make presentations. Obviously there is a time consideration, but I do believe, in light of the comments that have just been made by the minister, that there has been very little work done by his ministry in an analysis and that we have seen all that is out there, which I find totally unacceptable, so accordingly I would like to introduce a motion to this committee, which would be seconded by Mr Turnbull, to receive the following witnesses to this committee.
I move that the committee call the following witnesses to provide expert analysis on the impact of this bill on the rental housing market in Ontario.
First -- and of course the minister has indicated that if time permits he would attend -- the Ministry of Housing, the housing supply policy branch. In other words, I would like a conservation expert to detail the exact state of the rental housing stock in the province and provide documentation for the Minister of Housing's $10-billion estimate of outstanding renovation and repair work.
Second, I would like to hear a witness from the low-rise rehabilitation program, specifically, how many units have been renovated under this program; the total program expenditure to date; how many applications are on the waiting list; and the impact of Bill 4 on the program.
Third, from the Ministry of Energy I would like a witness from the energy efficiency section, specifically the energy conservation experts' assessment on the impact of this legislation on the energy conservation goals of the Ministry of Energy.
Fourth, I would like a witness from the Ministry of Financial Institutions specifically to deal with an assessment of the impact of the retroactive clause on outstanding real estate loans, how many loans are at risk and what is the impact for depositors and investors.
Fifth, I would like a witness from the Ministry of Municipal Affairs or the Ministry of Revenue to tell this committee the impact of the anticipated deterioration of the rental housing stock on municipal property tax assessment.
Finally, I would like this committee to hear from Stuart Thom, who is the author of the report of the Commission of Inquiry into Residential Tenancies. I would like to hear his assessment of the impact of this legislation on Ontario's rental housing stock. That is the first motion.
The Chair: While you were reading the motion we had photocopies made. I wish to thank you very much for having a copy of your extensive motion ready for us to photocopy. It helps the entire committee. Any discussion on the motion?
Ms Harrington: We appreciate the intent of bringing these people forward, because as you, I believe, are stating, you want as much information and background as possible to make the best decisions. I certainly would concur with that. The only problem I have is that once you get past three or four we are running into a lot of different groups here, experts, and we have already stated how close and tight our time schedule is, and I think this is going to be virtually impossible.
Now from the point of view of the Ministry of Housing, supplying an expert on housing supply and the effectiveness of the low-rise rehab program and even the energy angle on housing, I think would be no problem. In getting you background information, we will have our staff here at all times. They will be willing to answer questions, but I would think that formally inviting these seven different groups for submissions will not fit with our schedule. What I would like to propose is to ask our staff to supply all this information to you and be at your disposal.
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Mr Tilson: Perhaps I could respond to that little comment. I appreciate that you have, on the one hand, said that you have a time frame. On the other hand, you have stated that you will take whatever time is necessary to complete these hearings, to hear from the public and to make sure that this committee is as informed as possible to deal with all of these very, very important matters. All of the items that are --
Mr Mammoliti: Point of order, Mr Chairman: You have not been consistent, Mr Chairman. You are allowing him to respond to the comments made by Ms Harrington and you have not done that in the past. Let's be consistent here. I was next on the list. I would assume that he could raise his hand and perhaps be put on the list, as I did. Be consistent, Mr Chairman, please.
The Chair: That is correct. The Chair is trying to show some flexibility. I can be very inflexible, if that is what the committee wants. You would have to go a long way to find someone more inflexible, if that is the tack I decide to take.
Mr Tilson: He is perfectly correct.
The Chair: I duly note Mr Mammoliti's concern. He is correct. I had not allowed that before and I will not allow it again.
Mr Mammoliti: Thank you.
The Chair: Mr Mammoliti, please.
Mr Mammoliti: In keeping with consistency, I believe that the committee has given -- I am not sure whether we have given the mandate to the clerk or not or whether it is procedure, but the clerk has determined who is going to be presenting anything in front of this committee, and furthermore, who will be speaking first, second, third, fourth, fifth, sixth, seventh on the list, as well.
I did not know that we could in essence bring our own little list into the room and ask for permission to have people come in front of us and speak. Again, in keeping with consistency, the clerk has determined who has applied to speak and I would just request that we stay consistent.
The Chair: It is not the clerk who has decided. The clerk has decided based on a list that we requested her to obtain. Now, we can request her to obtain other lists that we bring forward. The motion is in order. Other members of the committee can in fact make motions of a similar nature and it is up to the committee then to decide whether or not we would extend the courtesy of presentations to groups and individuals other than those we have already duly noted. I hope that answers your question.
Mr Mammoliti: Yes, it does.
Mrs Y. O'Neill: I want to state that I regret deeply that we are not going to have a presentation from the Ministry of Housing officials, as such. I had a feeling when I came to Toronto this week that we were going to hear from the minister this morning and then from the Ministry of Housing, which would cover off some of the bases that we have just been presented with.
The Chair: I have a proposition for the committee on that point.
Mrs Y. O'Neill: I am going to speak now to the motion, because I do feel -- that is what I was trying to say earlier and this is a perfect example -- that as we progress through our work we, as committee members, often want expert advice or we want to call in a ministry official on a certain finer point, such as the low-rise rehabilitation program, for instance, simply because we have had a lot of presentations and we want to be clear that that which we have been presented with is the same as the data that are in existence in the ministry.
The Ministry of Housing is a very important resource to this committee. To this point, other than what we have heard from the minister, everything else that is scheduled that I can see is a presenter. It is most unusual for a committee to have only presentations. You usually bring in experts to help you put those presentations in a framework. That is what I was talking to in the way of having flexibility with our Monday schedule. It does seem that the government members are open to longer sittings. This could be accommodated within that time frame and I think we have every right to request experts we need. These are not exactly all the same ones I would have chosen, but certainly in principle I will be supporting this motion.
Mr Drainville: Again, on the rhetoric I have heard as to denying people the opportunity to be able to come before this committee, constantly we hear how obstructionist we have been. In fact, the reality is that we are not obstructionist in the least. We are seeking to have as much information flow through this standing committee as we possibly can. This is a new issue that has been brought up, the issue of this particular list and this motion. We have not discussed this kind of thing yet.
We have people from the ministry who are ready, willing and able to give us information, if we request that, as to each of the areas. The parliamentary assistant for Housing has indicated to the members of the standing committee that they are willing to provide exactly this information to each of the members and to have people ready to respond to questions as needed. As far as that is concerned, if we continue to add -- each one of us can come up with any number of units to add to who can come before this committee -- we will move the time line of the committee so that indeed it cannot do the job that it is meant to do.
I would say, following from Ms Harrington's comments, that we allow the ministries involved here to get this information to each of the members, because we need this information, that they be around the committee when we need to ask questions on these areas, and that we do not move our timetable into a situation in which we will not be able to do the work, listen to the people, listen to the reports and the comments that need to be made by both landlords and tenants out in the community.
Mr Tilson: The reason we have put this forward -- I asked the question of the minister very specifically -- is that I think this committee has an obligation to be as informed as possible before we can make our recommendations to the Legislature. We do that in a number of ways. One is to listen to the various applicants who have made applications to this committee. They include tenants, landlords and suppliers and hopefully they will include other people, people who have voted for us, people who have voted for this government.
In addition, there is obviously a very specialized amount of information that is required for us to make an intelligent recommendation to the Legislature. I specifically asked the question of Mr Cooke, and just to remind some of you, I would like to refer to Hansard of Wednesday 28 November 1990 where this question was asked of Mr Cooke by myself. He stated at that time: "When we were looking at the policy options that were open to this government to provide real protection for tenants, we did look at the impact on the economy. We also looked at the impact that the current rent review system has on tenants across this province," and then it continues.
It is that very information that Mr Cooke now appears to say is not available. I am not saying he said an untruth here; I am simply saying that I interpret that the information that was available is not available, because he says that all we have, we have.
I therefore think it is most important that we hear not only from the Ministry of Housing on these very specific areas, but from the Ministry of Energy, the Ministry of Financial Institutions, the Ministry of Municipal Affairs and Mr Thom.
Mr Thom, if you recall, put forward a recommendation to the last government. I think if you check Hansard, the members of the current government thought Mr Thom's remarks were most interesting and in fact supported many of them. Of course, the former Minister of Housing quickly buried that report and it is gone for ever, it seems. I think Mr Thom should have an opportunity to come forward to this committee and give his comments with respect to the impact of this specific legislation on Ontario's housing rental stock.
Therefore, I would hope the government members of the committee will reconsider their position and support this motion.
Mr Turnbull: It is quite clear that this is very wide-reaching legislation and has very significant economic impact on both tenants and landlords. It sets the base, if you will, for the coming permanent legislation. To the extent that there are some significant inconsistencies between what the minister said this morning, talking about fairness in his presentation, and how he is handling capital expenditures or not handling them in Bill 4, it is very important that we have full public discussion.
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At the time that we had our very first meeting of this committee, I recall you, Mr Chair, emphasizing that you had pushed to have all of the meetings of this committee in this room so that television coverage would be available because of the nature of the things we would be considering. We know that to a great extent the tenants and the landlords who will be making presentations will be saying the same sort of things over and over again and what we have to listen for is the nuance of the difference and the slightly different perspective that each presenter brings to it.
It seems unreasonable and I am offended, quite frankly, when I get the suggestion from the government that when we are asking for six specialists from the ministry who can bring a different aspect to it from the majority of the witnesses we are going to hear, there is a suggestion that we do not have enough time to hear them. If we do not have enough time to hear them, why are we having these hearings at all? Is it just theatre? Please, let's have expert testimony so we can understand fully what the impact of this legislation is.
Ms Poole: It appears that we may not have a consensus on this issue. I agree with Mr Tilson and Mr Turnbull and, I guess, Mrs O'Neill. I agree with all those people who have said that these are experts who would be helpful to the committee.
Might I propose -- and you are obviously most welcome to turn it down if you do not like this compromise proposal -- that each caucus could develop a series of questions which we would like these five ministries to answer, that we ask them if they could give a written brief to our committee, and if at that time it appears there are outstanding questions or the briefs themselves generate questions, we could revisit the issue.
I am just thinking that it would be a shame not to get this information simply because we have voted against the proposal due to time restraints. With that type of thing, I think we could eliminate a lot of the time necessary, and if we do have to call them forward, it would be in an abbreviated session.
The Chair: I believe that suggestion was heard by everyone.
Ms Harrington: At the outset, when we said that this committee would hear from everyone, I understood that all of these types of experts were free to come and indeed would be coming, and if any member of this committee wanted them to come, then they would certainly be contacting the clerk and be on the list.
I do not think it is really necessary that we as a committee formally invite these people. I would expect that we would want them here and that they would be here, as this is open to everyone to be here. I do not think we are closing it in any way.
The other point I want to make is that most of the experts that you are feeling need to be here, the ones from the Ministry of Housing, are in fact here every day, all day and I am presuming that there will be times when we will ask them questions in the course of the day or even at the beginning of the day or at the end of the day. They are there as a resource, and it is an integral part of this process that they be involved as a resource.
The suggestion from Ms Poole with regard to getting a paper from them I would certainly go along with.
Mrs Y. O'Neill: On a point of information, Mr Chair, ministries never make application to come to committees. They are only invited and are then at the disposal. Unless they are slotted in to a time, they are very seldom presenting.
The Chair: Most of these people we are referring to are civil servants and they do not invite themselves to committees. They must be invited to come before the committee. Then they would probably clear it through their own ministers and have high-level meetings and prepare whatever they are going to present to the committee.
Ms M. Ward: I would like to say that I think Ms Poole's recommendation is an excellent one and one that I would support. In considering the list that Mr Turnbull has prepared here, there are some of those where I could see, yes, that would be useful information. Others are more questionable to me, and I kind of wonder about the time frame in which some of the information could be prepared in order for them to appear at that time, such as the Ministry of Financial Institutions. I do not know how long it would take them to do this assessment.
But one of the concerns I have about them appearing, not necessarily a concern but a preferred option of mine, I think, is to have written material and not necessarily have to listen. Not that I am opposed to listening, but if it is background information, to me it is just as valuable in a written form as it is with someone appearing and maybe presenting it in written form also. I do think Ms Poole's suggestion is one that is very worth while considering.
Mr Turnbull: I have to say that is totally preposterous. We are hearing oral presentations from witnesses. That was the arrangement. Now, suddenly, when we are getting ministries where we can ask questions and go into the details of it we are told, no, we should get written presentations.
It is appropriate that these presentations be public. This government fought the last election on a platform of open government and this certainly is not open government. You muzzle civil servants when they are making written presentations. If they come and they have a general idea of what they are going to be speaking to and they bring any statistics with them, that is fine. They can do all the preparation they want. But as soon as you start asking them just to cover this in written presentations, it is totally inappropriate and totally contrary to the concept of open government.
Mr Mammoliti: What I find inappropriate is that we had an agreement here as a committee. We set aside some dates and times, we went to the papers and we let the public know that they want to be heard, and then today we hear that Mr Tilson wants six other people to be put on the list. We are starting this afternoon at 2 o'clock. I am not too sure why Mr Tilson did not bring this up two weeks ago or three weeks ago when perhaps there may have been a slot available in the scheduling. I am a little concerned about that.
I, like my colleague Ms Ward, agree with Ms Poole's suggestion that information is crucial; we need it. I would say, yes, I certainly would like to hear what these people have to say. I certainly probably would have some questions that I would want to ask them as well. So maybe we can put together something and give it to them and ask them to respond in writing to us. I do not see anything wrong with that.
The Chair: Before I go on to Ms Poole and Mr Tilson, I want to remind the committee that we are now 40 minutes into what was going to be our recess. We have still not heard from the Ministry of Housing officials who have come here to brief the committee, and I understand that their briefing and possibly our questions will take a minimum of one hour.
We have several delegations that we have already slotted in for the afternoon. We cannot, at this late date, in any way change the order and/or the time frame for the delegations for this afternoon, so I am assuming that we would finish with the delegations at approximately 5 pm and at that point start with the Ministry of Housing briefing. I believe we all have a copy of this large document that was given to us. So we will go at least until 6 o'clock today.
Furthermore. we are not finished discussing Mr Tilson's first motion. We have at least two more speakers on the list and we have a second extensive motion from Mr Tilson to discuss after we have voted on this one and/or any other amendments to the motion which may come forward. I inform the committee of this information just so that we can govern ourselves accordingly.
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Ms Poole: Mr Chair, we have quite a few new members on the committee and perhaps it would help, since I had the pleasure of chairing the committee for two years, just to tell you about how we have worked on other committees.
For instance, when we have a ministry like the Ministry of Housing that is a key player, members of the committee are quite free to make up a list of written questions and tables, particularly when statistics are involved or background information, and file them with the ministry. At the time they are tabled, the ministry representatives might be called forward for a very brief explanation and the Chair would certainly be within his or her right to limit the amount of time for this type of proceeding
It is very common to do this type of thing in writing, but it is not so common when you have experts from other ministries such as Energy, Financial Institutions, Municipal Affairs and Revenue. Normally, if you had those kinds of ministries, you would ask them to come and make an oral presentation, and ask questions.
I just think that since I am hearing no agreement on having the witness come, I would rather have the information than not have the information. I do not know whether you wish to consider this compromise proposal. Otherwise I fear we will end up not agreeing on it and not only will we not have the experts come forward. but we will not have the information we require.
I think it would have far more weight if it came from the committee as a whole to ask these witnesses to prepare written answers to our questions than if we as individuals wrote them.
Mr Tilson: In response to some of the comments that have come from the government with respect to the motion, this motion is asking for expert witnesses that will provide facts. It will not only explain concerns that members of this committee have but will explain facts that hopefully will be understood by the very people we are hearing, the very members of the public, the tenants, the landlords, everyone else that will be appearing before this committee. They too should have an opportunity to hear the facts that are being presented by the various people that are set forth in the motion.
As well, as Mr Turnbull has indicated, statements may be made and we could go on ad nauseam writing letters back and forth from members of this committee to members of the ministry. It would be much easier if the expert witness attended before this committee, made their statement, and all members of the committee, at the same time, had an opportunity to ask those questions.
The Chair: I am going to ask the committee to wrap this up. Mr Turnbull, if you can be brief, please.
Mr Turnbull: Essentially, Mr Tilson has encapsulated what I was going to say. I just want to ask that all members seriously consider the implications if they do not let these expert witnesses come and testify in open forum.
It is -- I am stuck for words -- it is just simply a fact that we need this information. It is reasonable information, nobody could possibly construe it as being obstructionist or some delaying tactic, it is required information. We in our caucus have put in a lot of preparation in considering how these hearings should be conducted and we are coming forward with what we consider to be a very reasonable request. I really would be exceedingly disappointed with my colleagues on the other side of this room if they did not acquiesce to this very reasonable request.
The Chair: We are going to wrap it up with Ms Harrington.
Ms Harrington: Thank you, Mr Chair. I do agree that we want to hear from all the people that we need to hear from, and these people certainly are important. We do feel the pressure right now to get on with these hearings, especially this afternoon, and we do have a timetable that the clerk has made out.
What I want to say is that, as the need arises, we should as a committee, if we feel the need to have the Ministry of Energy, the Ministry of Municipal Affairs or the Ministry of Financial Institutions come, get them. They are only around the block and they will be here. I am sure, very promptly.
At this point, to tie up our schedule with this long list. I feel, is not appropriate. We know that all the Ministry of Housing people are at our disposal, as Ms Poole has said. These other three ministries. I think, are as quick as a phone call away and we will get them if we need them.
Mr Tilson: I ask for a recorded vote on the motion.
The committee divided on Mr Tilson's motion, which was negatived on the following vote:
Ayes -- 4
O'Neill Y., Poole, Tilson, Turnbull.
Nays -- 6
Abel, Drainville, Duignan, Harrington, Mammoliti, Ward, M.
Ms Poole: I just wondered if I might make a second motion. that we contact the ministries involved with a list of questions that members might prepare and submit to the Chair and that we ask them for a written presentation and that at a later date, after the material is received, the committee can revisit whether it is necessary to have these witnesses come forward in person.
The Chair: Okay. I am having a little difficulty here. Mr Tilson gave me advance notice of his two motions. You wish to place a third motion. Possibly you and the clerk can work it out.
Ms Poole: Do we have any consensus on it first?
The Chair: The clerk informs me we may be able to get consensus without a motion for this information. Is there consensus?
Mr Turnbull: On a point of clarification, Mr Chairman, probably because I am new to committee hearings, I am somewhat confused at the fact that Ms Harrington makes the statement that if we need to hear these people, these expert witnesses, then they will be available and then promptly votes against it. I am frankly dumbfounded. I do not understand how to interpret that. Are they going to be available or are they not? Please just clarify that.
The Chair: We have, as a committee, dispensed with Mr Tilson's first motion. I promised Mr Tilson we would immediately move to his second motion. If there is a third motion to be put, it will have to be done in that order. Mr Tilson, can you please give us your second?
Mr Tilson: Yes, the clerk has made copies of this motion, which I would ask be distributed to members of the committee and I will proceed to make the motion, seconded by Mr Turnbull. This has to do with finding out more information about the specific cities that we are going to be attending outside of the city.
The Chair: Possibly we could read the motion and then make comments after.
Mr Tilson moves that the committee request the Ministry of Housing to prepare and provide to the members of the committee a detailed housing profile for each city visited by the committee during the course of its deliberations. This profile should contain, but need not be limited to, the following information:
1. vacancy rate;
2. average market rent -- the average rent for a vacant unit;
3. total number of private rental units in the area;
4. number of assisted housing units in the area average rental subsidy, number of units built in the last five years, number of units coming on stream, number of households on the waiting list for assisted housing;
5. number of building permits for multiple dwelling buildings issued in the last five years -- number and percentage that involve no government subsidy;
6. percentage of ownership households versus rental households in the area;
7. average price of a home -- both new and resale;
8. minimum income required to purchase a home;
9. rent review history -- including the number of units that have gone through the rent review system or are currently being processed, the average rent increase in both dollar and percentage terms, the highest rent increase awarded in a single year, the dollar value of renovation work that the ministry would consider luxury;
10. number employed in the building trades -- current unemployment in the building trades.
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Mr Tilson: Obviously, as I stated by way of preamble, we are going to a number of cities, and two have been added today, Hamilton and Peterborough, where the problems of housing may be quite different than they are in the city of Toronto -- the cost, the problems, the alleged difficulties that have been made by the ministry. Before we hear the applications that are being made in these various cities and surrounding areas. I think that we, as a committee, to better understand what they are saying, need to have this information available to us. I gather, from hearing Mr Cooke's comments this morning, that most, if not all, of this information is already available.
Ms Poole: Briefly, I strongly support this motion. I think this information should be available to members of the committee in order that we can be properly prepared for our visits to various cities. I think most of it should be readily available to the Ministry of Housing and should be no problem to secure.
Ms Harrington: I agree that this is quite appropriate. I would have thought possibly we would have this information without even a motion. I should maybe ask the Ministry of Housing staff who are here how quickly they could get it to us, if there is any problem. Could I ask them that?
The Chair: Sure, that is no problem. We would like a representative from the ministry to please join us. Please identify yourself and your position within the ministry for the sake of Hansard and all viewing, and we can have an open discussion here.
Ms Beaumont: Good morning. My name is Anne Beaumont. I am the assistant deputy minister of housing policy in the ministry. The ministry had anticipated providing material of this kind to the committee as it moved about the province on its deliberations. Most of the material is readily accessible from the ministry records. As I look down the list, the exception might be point 5, the number of building permits. That material can only be ascertained from municipal records. If it is available, we will obtain it from municipal records. If it is not available, we simply will not be able to provide that information.
Ms Harrington: I was wondering if they would be able to get the answers for 10 or if that is outside their realm.
Ms Beaumont: On 10, we would make contact with the Ontario Home Builders' Association. It has indicated to us in the past that it has material of this nature. That may not be entirely comprehensive, because that would indicate the building trades employed by their members, and so it may exclude some.
Ms Poole: While we have you here hot and ready, I would like to ask if perhaps you would be able to provide some of the information in Mr Tilson's first motion after presentation at 5 o'clock this afternoon. In particular, the low-rise rehabilitation program statistics, I assume, would be readily available and could be brought with you.
Ms Beaumont: Yes.
Ms Poole: Second, providing the documentation for the Ministry of Housing's $10-billion estimate of outstanding renovation and repair work, that might be information also accessible. Could you handle that in the short hours left?
Ms Beaumont: Yes. Now that the time of our presentation has been rescheduled to 5 o'clock, we had anticipated including that information in it.
Ms Poole: Excellent. I can appreciate where you may not be able to lay your hands on a conservation expert between now and 5 o'clock. If you can, we will be eternally grateful, but if not, we will see what we can do about that in future.
Ms Beaumont: We will have the information that has been produced from studies in the ministry and elsewhere.
Ms Poole: Excellent. Thank you.
The Chair: If there is no further discussion on Mr Tilson's motion, we do not need to read it. We all have it before us.
All in favour? All contrary?
Motion agreed to.
The Chair: Ms Poole, you have a point to raise before we adjourn?
Ms Poole: It is just the point I raised earlier, whether with the remaining ministries we could reach consensus on at least getting the answers to our written questions initially and we could revisit at a later date whether we need them to appear in person as backup to their written presentation.
The Chair: Are you making a motion, Ms Poole?
Ms Poole: My motion is that, further to Mr Tilson's suggestion that we have questions of the Ministry of Energy, the Ministry of Financial Institutions, the Ministry of Municipal Affairs and the Ministry of Revenue, all members submit to the Chair any questions which they wish to present to these ministries, that we then ask the ministries involved to give us written answers to our questions and that we will revisit at a later date, after receiving the material, whether it is necessary to ask them to appear.
Mr Tilson: Just as a point of clarification, with respect to the motion that is being made, the way it is worded, we are essentially asking for that information now. In other words, I do not want to have to write a letter to all these people asking these various things. I assume that you are doing it now.
Ms Poole: The clerk will actually prepare a letter for the Chair, or research, somebody up there at the front table, will prepare a letter. All we have to do is submit questions. I would take it that these are Mr Tilson's questions and that if any of us have further ones, we could add to that.
Mrs Y. O'Neill: Mr Chairman, I hope this then does leave the door open to do what you have just suggested, I think wisely, to us today, that we have the ministries come between 5 and 6. I know that there will be questions arising, particularly on Financial Institutions. This government, as did our government previously, knew how intertwined the Ministry of Housing is with the Ministry of Municipal Affairs and the Ministry of Revenue and has made one minister responsible.
I think it is most important that we have access to these people once we have the written documentation. I for one am certainly going to be requesting that we have opportunities between 5 and 6, or Monday mornings between 10 and 11 or whatever time, but I do not want the impression to be given today that just getting this in writing is going to be satisfactory to myself. I feel most important that we have to have a dialogue with experts in the field.
Mr Drainville: I want to make it clear that in terms of Ms Poole's motion, very simply, the motion was a request for information, partially based upon the list that is here and also any other questions that may come forth from the standing committee, seeking further information to help us make the decisions that we need to as a committee and that is the focus of your motion.
Ms Poole: That is right. I would just suggest that maybe members could submit their questions in writing some time this week to the clerk.
The Chair: The sooner the better, and of course members have the assistance of our able research staff. Any further comments before I call the question?
Mr Turnbull: With respect to Mrs O'Neill's comments that we should reserve the right to call those ministries after we have received the written submissions, I do not think it is inconsistent with what we asked for originally, or in fact what Mrs Harrington said, that they should be available.
The Chair: The clerk suggests that maybe Ms Poole's motion could be --
Clerk of the Committee: It is already part of that motion.
The Chair: I see it is already part of the motion. I am sorry, I missed that last five- or six-word addition.
I think we have had full discussion. I am going to read the motion and then I will call the vote.
Mrs Poole moves that the committee members submit to the Chair questions to be directed to the ministries outlined in Mr Tilson's first motion and that the committee reconsider inviting these people at a later date.
All in favour? Contrary?
Motion agreed to.
The Chair: This committee stands adjourned until 2 pm this afternoon and the change in schedule is that we will hear from the ministry staff from 5 to 6. Thank you for your co-operation.
The committee adjourned at 1302.
AFTERNOON SITTING
The committee resumed at 1408.
RESIDENTIAL RENT REGULATION AMENDMENT ACT, 1990
Consideration of Bill 4, An Act to amend the Residential Rent Regulation Act, 1986.
The Chair: The Chair sees a quorum. Before we hear our first presenter, I want to inform the committee that some time ago I requested information from the legislative research department concerning the bill that is under discussion. I found the information interesting and useful and I ask the table officers to distribute this document to all members. I hope that you find it useful and interesting also.
KENSINGTON-BELLWOODS COMMUNITY LEGAL SERVICES
The Chair: Our first presenter is Kensington-Bellwoods Community Legal Services. What I would ask the presenters to do, please, is to introduce themselves individually, or the chair can introduce all at the table, state their organization and the position within their organization.
It is now 2:10. The presenters will have until 2:50. Twenty minutes will be allowed for presentation and 20 minutes will be reserved for questions to be divided up equally among the three parties, as has been agreed.
It is nice to have you here.
Ms Pereira: My name is Katryn Pereira. I am a staff lawyer at Kensington-Bellwoods Community Legal Services, which is a community legal clinic located in downtown Toronto serving the area just west of Spadina between Ossington, Spadina, Bloor Street West and the Lakeshore, for those from Toronto.
Ed Smith is head of the 745 Bloor Street West Tenants' Association, which is a tenants' association in a building located at Christie and Bloor Street West. Ralph Rozema is head of the 800 Richmond Street West Tenants' Association, which is an association from the building just southwest, approximately, of Queen Street West and Bathurst.
They will be speaking about the individual situations in their buildings and the kinds of increases they have experienced and the reasons why and how essentially certain maintenance and repair conditions have not changed, but they have experienced certain increases as a result of the present legislation and why they see a need for change.
I will be making more general remarks at the beginning. My remarks are naturally confined to my experience, which has been only in Toronto. So I will be talking mainly about my experience representing and talking to my clients in their responses, largely, to landlords' applications for rent increases, and this will be largely downtown Toronto obviously.
My clients and I welcome this opportunity to make submissions today. It is a shame, however, that evening hearings were not set up or that I have not had the opportunity to bring my clients to evening hearings. A lot of these people, if they work, and many of them do work, are working at jobs where they do not have the flexibility to take time off during the day and also, because of job security, would not be able to take time off. This would certainly not be seen as a valid reason by their employer, to come here.
I could bring you hundreds of people had we had evening hearings, hundreds of very angry and upset and indignant people, to talk about the present legislation, and I am very sorry I have not had the opportunity to do that. However, I am glad that I am able to come and that Ralph and Ed have been able to come as well.
Tenants' groups and community legal clinics have heard rumours that people in government and in the opposition are wondering why there has not been greater support expressed for the proposed amendments or for radical change to the present legislation. I would like to make clear, and this is perhaps a little anecdotal, that my clients anyway expect radical changes to the present rent review system and feel that they made their views known in September when they voted for the present government.
A lot of my clients for the first time told me they were voting the way they were voting simply because I had told them that the kinds of increases they had experienced were perfectly justified under the present legislation and there was not a whole lot I could do to oppose them or appeal them. It was their view that this was extremely unfair. Most of my clients have absolutely no understanding of what justified or underlay these increases.
Should there be any doubt that tenants support radical changes to the rent review system, I would just like to clarify that there should be no doubt. In my experience, tenants expect and would wholly support dramatic changes, but in the short term, the kinds of changes that the amendment act that has been proposed would carry out.
My clients and Kensington-Bellwoods support the Residential Rent Regulation Amendment Act as a whole. We see the need for an immediate amendment to stop the rapid escalation of rents. Landlords have argued that there is a need for consultation over the long term, that immediate legislation is unnecessary and would wreak great hardship on tenants and landlords alike. Our position is that there is a need immediately to stop the rapid escalation of rents.
We see this as preferable to the alternative, which would be rollbacks at a time in the future, one or two years down the road, when permanent legislation might be put in place, simply because at that time rents would be so high that people just could not afford to live in my area of Toronto any more anyway. At that point, however, many tenants would already have moved out of Toronto and lost their apartments or would have been forced into more transient kinds of accommodation.
Kensington-Bellwoods, being a community legal clinic, represents mainly low-income tenants obviously, people who work in the garment industry, minimum-wage jobs, the food preparation industry, security guards and also a lot of elderly and disabled people. These tenants are finding it increasingly difficult to pay rent. If there were no immediate amendments to the legislation, these people would be squeezed out of Toronto and are being squeezed out of Toronto.
As well, a lot of these people are overcrowding their apartments, because they have had to double up their incomes. I have experienced families of four living in bachelor apartments or one-bedroom apartments simply because alternative accommodation is not affordable to them. So we need legislation now, and the tenants groups and my clinic support this amendment act in the short term because it is immediate legislation.
Our vision of society and of the community in downtown Toronto where we live is not a society of families of four living in bachelor apartments, of people being forced to go to rooming houses and hostels because they cannot afford their accommodation. We must stop the escalation now while the situation is studied. We are in a situation of crisis, and I cannot emphasize this strongly enough.
The paramount objective, it is our submission, of any legislation, be it temporary or permanent, must be affordability. I think the issue cannot be clouded with other issues of maintenance and disrepair, as serious as those issues are. The paramount objective must be affordability so that we can preserve the kind of society we want to see maintained, in Toronto in particular, where all classes can live and where it is not simply an élite community, where there are not ghettos leading to greater social costs that have to be paid for out of other budgets, other ministries, with other programs.
I would like, however, to briefly address the issues that landlords in particular have raised about maintenance and disrepair. I think Mr Rozema and Mr Smith will go into this in a little more detail, but both the past and present landlords of their buildings have done essentially nothing in the last five years to maintain or repair or renovate necessary or luxury items in their buildings, and this has been under a system which has allowed costs to be passed through. So it is our position that this situation would not change dramatically over the next two years because of the proposed amendments.
A lot of landlords have said that because they now cannot pass these costs through, capital expenditure costs in particular, they simply will not be able to afford the kinds of maintenance and repair costs they feel they may have to undergo. The reality is that they have not been maintaining or repairing or renovating these buildings in the last five years, so why would they do so in the next two years, except maybe to fulfil certain legal obligations that we are forcing them to fulfil. It is simply a myth that they will have to forgo such costs because of the proposed amendments. Those landlords who are truly concerned about their real estate investments will make an effort to ensure that their buildings are properly maintained, and that has been our experience.
We believe these amendments should be seen as a stopgap measure intended to deal with a crisis situation. However, a rent control system alone should not be seen to be able to solely address the problems of declining housing standards caused in Toronto in particular by an aging housing stock as well as landlords' ongoing deliberate neglect. It is our submission that a network of new legislation, new programs and responsive enforcement mechanisms at all levels of government will be needed before the serious need for repairs and renovations in an aging housing stock is met.
I believe that people should not look to amendments to the RRRA as responding solely to the crisis that exists in deteriorating housing standards. There will be much more consultation and study needed before these issues can be addressed. Tenants would welcome the opportunity to be part of this consultation process and to be part of changes made in addressing these problems. However, we see this as a long-term situation and we do not see this as addressing the immediate crisis now, which is the rapid escalation of rents.
I would like to mention our particular support for two sections of the amendment act, subsections 100f(5) and 100h(3). Subsection 100f(5) ensures that any increase awarded will not be beyond the increase requested on the landlord's application. Subsection 100h(3) allows the minister to provide for the periodic payment of back rent resulting from an order where the order is issued more than three months after the first effective date of rent increase. These two sections, in our view, provide for more predictable planning by tenants for their financial future, something which has been lacking up to this time. As well, the minister has proposed a more easily understandable standard form notice of rent increase.
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Just to touch on these three areas, when landlords apply for a rent increase -- in both of these cases they applied for rent increases and the order appeared several years later after the application was launched -- the notice that tenants receive has four to five columns on it. It has dates all over the place and has legal terms on it, such as maximum legal rent and other terms that tenants simply do not understand, so that they do not have a clear idea of what they may be expected to pay.
They have no idea of when they are going to be expected to pay it and it is impossible for them to really plan for their financial future. It is unrealistic to expect them at that point as well to keep money aside for a possible eventuality that it is going to be paid and a level of rent which is largely undetermined at the time the application is made.
We support a capping of increases at what the landlord anyway has applied for. We are aware of situations where landlords have been awarded more than they have applied for and we feel that this is incredibly unfair given that tenants have had no notice that this is what the rent may end up being.
Second, because applications are taking years to process, tenants have ended up having to pay huge amounts of arrears immediately, as soon as the orders come out. Some landlords have been generous and have allowed tenants two or three months to pay back what could constitute thousands of dollars, but other landlords have not and there is no legal obligation, apart from what is being proposed now, on landlords to allow tenants time to pay back their arrears.
We support the provision in the amendment act that gives the minister discretion to order that back rent be paid back over a 12-month period. Given that a lot of tenants are not represented at the initial application level, we would prefer that that section actually be mandatory, that if the order is issued more than three months after the first effective date of rent increase, the minister in fact has to give tenants the option of periodic repayment over 12 months.
We would prefer actually that it be mandatory, given that tenants may not be represented and, in my experience, often are not represented at the initial level so will not ask for this periodic repayment. The minister will not, in my experience, initiate something which is in the tenants' favour. The problem may then just continue, that tenants have to leave their homes because they are not able to afford the arrears.
The present rent review system is, in our experience, inaccessible and completely incomprehensible to most tenants who have no accounting background and no idea of accounting periods, reference year, base year, projected year, the residential complex cost index, RCCI, and the building operating cost index, BOCI, and the various cost indices that are used, phase-ins.
They are told they are only expected to pay one rent increase a year, and yet last year in this building two orders came out and phase-ins from the first order came through, so they were in fact paying three increases in a period of 12 months. Try to explain this to people and still assure them that the law says they only have to pay one rent increase a year. It makes absolutely no sense to people.
I have spent hours and hours in both group meetings and on an individual basis with people trying to explain how the landlords' financing costs are their responsibility and, believe me, it is completely impossible.
I think if a rent review system is to be politically and otherwise acceptable to tenants, it must be a system that is easily understood by them, and at the moment not only are they being landed with huge increases that are unacceptable and do make their accommodation unaffordable, but they have no idea why they are being given these increases.
This must change. I realize this amendment act will not change that and probably will not address the long delays in the processing of the applications. However, this is something more long-term that has to be addressed, and tenants are extremely concerned about this.
Mr Rozema will talk about 800 Richmond Street West.
The Chair: Sir, you have approximately three minutes.
Mr Rozema: Three minutes; all right. Ed Smith and I will split it.
My name is Ralph Rozema. I represent the tenants' association for 800 Richmond Street West. First, I would like to second all of Ms Pereira's remarks. I would concentrate on a couple of points. One is that we are talking of a building with Vietnamese, Portuguese, Italian and some English people.
This nonsense with an increase in May 1990, an increase on October 31 and phase-ins has resulted in a 23% increase within that time period. We are trying to tell people that this is legal, that they have one increase per year. If you buy a car or any other kind of thing, where do you get a 23% variability going back to September 1988 where you have to pay thousands of dollars in arrears? How can you explain this?
We have consumer protection laws which prevent people from increasing prices by 23% in one year by surprise. This act will stop the changes from going back retroactively, in effect, and will make it happen that the people know next year how much it is.
Mr Smith: I am Ed Smith. I represent the 745 Bloor Street West Tenants' Association at Bloor and Christie. We support the proposed amendments to the Residential Rent Regulation Act and adopt Ms Pereira's remarks.
Our building is tenanted by refugees, immigrants and fixed-income families such as myself on family benefits disability allowance. I personally find it necessary to stay in Toronto for medical treatment and care.
In June 1986 the building was purchased from Karak Apartments by Mr Dhillion and Mr Flora who immediately started various changes, including splitting the apartments in the rear of the building each into two tiny apartments and converting our locker room into an apartment.
By Canada Day 1987 the two ground-floor apartments in the front of the building had been converted to retail space in which the landlord operates a store. Most of these changes were done without a building permit and were all done without Rental Housing Protection Act approval.
In December 1987, Mr Dhillion bought out Mr Flora's share of the building and at the end of December 1987 Mr Dhillion applied to rent review services for a whole building review to get a rent increase to be effective 1 April 1988. This application was allowed on the grounds of financing costs and the illegal and sloppy renovations that were done to parts of the building.
The tenants were not informed of this application until December 1989, when only two of us received an order from the ministry followed by two notices of phase-in received in January 1990. The resulting total rent increase of 15% above the guideline is retroactive to April 1988. This increase is currently under appeal.
You might also note that the long-time tenants in the units that were not renovated or repaired are also facing the largest rent increases as the landlord has been charging illegal rents on the new units and has also attempted to pass the renovation expenses and loss of rent from his store conversion on to the tenants.
As we wait for the results of our appeal, the situation in the building is as follows:
There are numerous city of Toronto work orders outstanding against the building. The building is infested with cockroaches and mice. The tenants still do not have such services as locker room, laundry room and window washing listed in the ministry orders. Ice or snow removal from the walkways is seldom done. We no longer have a building superintendent. The third floor hall ceiling leaks, as does the ceiling in apartment 10. The ceiling in the bedroom of apartment 3 collapsed just this week.
We still do not have a door intercom system as required by the city of Toronto work order dated 16 March 1990. Basic maintenance and repairs are not done. Hallways are seldom cleaned. Heat in the hallways has been cut off. Hot water and water pressure are almost nonexistent. The landlord has been letting himself into apartment 9 without notice or permission contrary to section 93 of the Landlord and Tenant Act, and is also in violation of section 111 of the Landlord and Tenant Act, despite requests and warnings from our tenants' association.
A stop-work order against the landlord has been issued by the city of Toronto, department of buildings and inspections, for starting another illegal addition to his store in December 1990.
I have been subjected to various forms of harassment by the landlord for forming and leading a tenants' association. This harassment includes receiving five notices of termination over the last eight months.
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The Chair: Mr Smith, thank you. We have given you a couple of minutes of grace time. We have approximately 20 minutes for the committee. What I thought I would do is split that time equally, approximately seven minutes for everyone. We will start with the government members and go to the official opposition and then to the third party.
Mr Mammoliti: I have only a couple of questions. You mentioned earlier that for five years there were no minor repairs done to the buildings. I am not too sure which building you were referring to. Throughout this whole ordeal with the renovations, basically did your landlord bring up the fact that something had to get repaired and was that something that could have been prevented by minor repairs? Am I making myself clear at all? I am not? You mentioned minor repairs, but you did not really elaborate on it. You mentioned the fact that for five years minor repairs were not done to the building.
Mr Rozema: Who is the question to, sir?
Mr Mammoliti: I am assuming you went through the whole ordeal of rent review and the basis of the rent being jacked up would include the fact that minor repairs had not been done. Is that the case?
Ms Pereira: Actually, perhaps I had better make something clear. In this building the main reason the landlord was allowed a 23% increase was because he had bought the building two years ago, and then the main reason he was allowed a second increase was that he allegedly increased the superintendents' salaries, although at various times in the last couple of years there have been no superintendents. That is the basis for those increases. Largely, financing costs were passed through.
In this building, it was again largely financing costs as well as renovation costs for these illegal renovations, which I suspect I will lose on, given certain Rent Review Hearings Board members' reactions to my submissions back in September. I still have not got the decision, but I believe those illegal renovation costs will also be allowed in this building.
Again, financing costs were the main grounds for the 15% increase in this building.
In neither case could I raise ongoing deliberate neglect on the landlord's part because the ongoing deliberate neglect had largely been -- you do not get ongoing deliberate neglect for a landlord who has only owned the building for one or two years. It is the past landlords who were guilty of that, largely. However, the present landlords knew the situation, the state of the building when they bought it and probably got a bargain basement price because of it, but it is something that I could not raise to get the increase lowered. In both cases, we will probably have to live with the increase.
Mr Smith: If I might say, the increases that took place in my building were based on repairs and renovations that were not even done to my apartment. They were done to other apartments, conversions to other apartments and converting two of the apartments illegally into retail space.
Mr Mammoliti: Minor repairs or major repairs?
Mr Smith: He split large apartments into small apartments.
Mr Mammoliti: So they are actually renovations now.
Mr Smith: If you want to call them that. The floors are peeling off. The roofs are caving in and everything else -- shoddy workmanship.
Ms Pereira: In both buildings there have been no major repairs done in the last several years, although they have been needed.
The Chair: We are short on time, if Mr Mammoliti will allow his colleague to ask a question. You may not have time.
Mr Duignan: In relation to your building at 745 Bloor Street West, what type of rent increases were you experiencing over the last four or five years?
Mr Smith: We have been getting guideline increases over the last five years, except that suddenly we got this rent review order and phase-in which would increase it 15% above the guideline, and we had no notice of that. We were not informed of it until the order came through.
Mr Duignan: Overall you are looking for an increase of about 20% including the guideline?
Mr Smith: Yes, and as I say, we were not notified that this was happening.
Ms Pereira: That was just over the last two years, the 20%.
The Chair: You have approximately 60 seconds for a question and an answer, Ms Harrington.
Ms Harrington: I want to thank you very much for coming this afternoon. You mentioned that in the long run you wanted a total change of the Residential Rent Regulation Act, which is the residential rent legislation that was passed back in 1986. I just want to clarify that. What you are saying is that you want to work with the government in the long term -- we are hoping that might be this summer -- to establish the legislation which will be totally new. Am I hearing that you are thinking the same?
Ms Pereira: Yes. We want a complete overhaul. We want a rent control system. We do not want a cost-pass-through system. We want the paramount objective to be seen to be affordability of rents and we would like to see the issues of maintenance and disrepair addressed in a more comprehensive manner through other programs and legislation.
The Chair: Thanks for your answer. Ms Poole, your seven minutes starts now.
Ms Poole: First of all, welcome to the committee. We are glad you took the time to come to present because tenants' viewpoints are very important to these hearings. You have made a number of comments which I certainly wholeheartedly endorse, such as the fact that there should not be an amount awarded beyond what the landlord asks. That is something I have felt strongly about for years. To allow tenants to pay the rent back over 12 months is a very reasonable provision which I think we should all support, and certainly your comment that you would like a more easily understood form of rent increase, and for that matter, a more easily understood system of rent review. The latter part I am sure will be addressed in the long-term process.
I was a little bit concerned about your comments vis-à-vis the major repairs and capital expenditures. I can understand that affordability should be of paramount importance. I agree with you on that, but I do not think that we can completely negate the major repairs-renovation issue. In my riding, which is probably a little different in makeup from where your buildings are located, I have 60% tenants so it is heavily populated and I have noticed that maintenance problems are just as important to tenants as affordability. I know that this is not true in all areas, but I know it is certainly a major factor.
You obviously have very good reasons for not wanting the major increases that have accrued from your landlord when your buildings are not in very good repair. You have basically paid a very heavy price for having new landlords who do not appear to be acting with any standards or keeping up the building. We are looking at this legislation and trying to figure out how we can make it work so that tenants are protected against the heavy rent increases and at the same time landlords are encouraged to put maintenance into their buildings.
What would you think of a provision that said that there would be a cap on rent increases for any reason in this interim legislation, and hand in glove with that there would be a provision that the landlord could not even get the statutory guideline amount unless your landlord got a building certificate from the city stating that the day-to-day maintenance was kept up and the building was in a state of good repair? Would you see something like that working, where on the one hand you are forcing the landlords to do the maintenance or they do not even get the 4.6% or the 5.4% or whatever the rent guideline is that year, but at the same time you are saying that there are some necessary repairs that need to be done, but we are going to put a cap on what they could do in any given year and perhaps even over a three-year period?
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Ms Pereira: So you would continue to allow capital expenditure costs to be passed through?
Ms Poole: In the interim legislation what I am proposing is that some capital expenditures could go through, but there would be a cap on what the landlord would be allowed.
Mr Rozema: If I may respond to that, in the present case where landlords were allowed to pass through capital costs, they did not do a decent job or a responsible or a legal job of doing it. There are landlords who do a responsible job, but we are talking about landlords who do not. In terms of work orders of the city we were relying on something. In these buildings there have been numerous work orders. When are they done? I suspect what would happen is the same thing that happens when these buildings are sold, that the work orders are completed once, when the building is actually sold, and to an absolute minimum, arguing about each and every work order, drawing it out to the maximum and then clearing them up and selling them. I do not see it as a workable system, and again we are talking about landlords who just do not have an interest. They are going to take the money and say, "Come after me."
The Chair: Your seven minutes have expired. Mr Turnbull, you have seven minutes.
Mr Turnbull: In the interests of the time constraints I am going to ask you a lot of quick questions and perhaps you could respond quite briefly to me. You speak about your vision of society as affordable housing. What is your definition of "affordable" in terms of gross income?
Ms Pereira: In my written submission I gave a couple. For example, a single person on general welfare allowance or family benefits is allowed $385 per month for shelter. A single parent with two children under 12 years of age on either of those forms of social assistance is allowed $660 per month. A worker at a minimum-wage job, working a 40-hour week, would have gross earnings of $864 a month: that is gross earnings to pay for all his or her needs. Obviously people such as those, because they constitute a large portion of my clientele, will have to be able to afford a rent that is not over 50%.
Mr Turnbull: Do I understand you correctly then that it would very much depend on the tenant as to how much you would consider was affordable?
Ms Pereira: I do not think people should be expected to pay more than 30% of their income on their shelter.
Mr Turnbull: Generally it is accepted at 30%, but that is fine.
Ms Pereira: Yes.
Mr Turnbull: So you would go along with the 30%?
Ms Pereira: Yes.
Mr Turnbull: Do you feel that it really is the job of landlords or possibly government to ensure affordability? We do not disagree on the question of affordability. I think it is essential that we provide people with decent accommodation, but really the question I want to ask is, is it essential that it be the landlords who provide this element of affordability?
Ms Pereira: I think it is essential that the government, in fulfilling its responsibility to the people, does ensure affordability of housing. I think that the landlord is running a business and has to take into account the costs of running this business, which include certain capital expenditures when they buy the building. I do not think the landlord can milk the tenants for all they are worth or beyond that.
Mr Turnbull: I am sorry. I do not want to seem as if I am cutting you off. It is just that I really want to ask these questions so that we get a lot of answers. You have stated that it is important that tenants have predictable financial situations. I think it was Mr Rozema who mentioned this and I think it is reasonable to say that. Are you aware of the fact that landlords had, under the existing legislation, predictable financial circumstances by legislation? No matter how you may say it is wrong, and I would probably be right along with you in some of the clauses in the present legislation are wrong, are you aware that landlords purchased buildings or renovated buildings within the framework of legislation that allowed them to do that with predictable financial results? Are you aware of that, first?
Mr Rozema: Yes, the hardship allowance allowed a profit to be made by the landlord and to pass it through to the tenants. Yes, I am aware of that.
Ms Pereira: Are you referring to the retroactivity measure of the amendment act?
Mr Turnbull: What I am getting at is the fact that if one said, "Okay, as of 1 October we will not allow any more renovations or any pass-through of the financial losses with respect to new transactions," but those people who had gone into transactions prior to that and have spent the money, in some cases their life savings, is it reasonable that they should not enjoy the same kind of predictable financial circumstances? They have not rolled the dice. It is not a crap shoot. They have gone in within the legislation.
Ms Pereira: I agree. However, I think the comparison is a little bit unfortunate. You are talking just about someone who owns a building, in this case worth over $7 million, and comparing him with someone who is about to lose his home and live in a shelter or a rooming house. I just think the comparison is frankly odious.
Mr Turnbull: No, it goes back to my first question as to who should provide the affordability. In your particular example, you have a large building, but I am talking in the general sense, small buildings where people have put their life savings into buying maybe a 20-room apartment building and they are in danger of losing it. I just want to address the retroactivity. We do not disagree with the affordability; please do not misunderstand me.
Ms Pereira: I think I see this situation as being a crisis situation, and yes, there will be people who will suffer, but I am coming here frankly on behalf of tenants. What can I say?
Mr Turnbull: Yes, I understand.
Ms Pereira: They are the people who have suffered for years. Landlords, yes, will suffer in the short term for those few months that they were counting on a certain kind of legislation, but I am afraid that is going to have to be the case.
The Chair: Thank you very much. I want to thank your organization for coming before us. We appreciated your information. The committee has a tight schedule. We are going to move right along. Thank you again.
As the committee schedule shows, O'Shanter Development Co is next on the list. Sir, come forward. While witnesses are moving to the table, the clerk will distribute the information. I note that she has no help. What happened to all of our aides? Sir, will you please introduce yourself and state the organization you are representing and your position within that organization. You have been allocated a total of 40 minutes.
Ms Harrington: On a point of order, Mr Chairman: As an individual, we had agreed as a committee it would be 20 minutes and an organization --
The Chair: I believe the clerk adequately explained it to Mr Abel when he asked why this individual was allocated 40 minutes.
Mr Abel: On the point of order --
The Chair: Your time has not started yet. We are on a point of order.
Mr Abel: -- I did bring this matter to your attention and we feel that it has not been adequately dealt with. The committee does have guidelines. We feel we should follow these guidelines. An individual is entitled to 20 minutes. We do not want this committee or yourself as the Chair to be accused of favouring one side or the other. I do not know this person. I do not know where he is coming from. That is not why we raise this point of order. It is solely based on the fact that the guidelines clearly stipulate that each individual will be allowed 20 minutes and I would recommend that we follow those guidelines.
The Chair: I am going to try not to get angry, Mr Abel. I am going to try very hard.
Mr Abel: Thank you.
The Chair: I want to let you know that we have no hard and fast stipulations, as you referred to. This committee has given instructions to myself and the clerk. We were told to try, to the best of our ability, to allocate the times for organizations and for individuals. It was discussed and if you will check Hansard you will be able to recall it was discussed that there was leeway in that, depending on the individual, what the individual wanted to do and how large an interest the individual had and whether or not that would be fair. I trust the judgement of the clerk. I have asked the clerk for an explanation. I have fully accepted the clerk's explanation, and this committee is going to have to decide --
Mr Mammoliti: On a point of information.
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The Chair: No, let me finish, please. This committee will have to decide whether or not we trust the judgement of the clerk and myself or whether or not we as a committee will sit down and go over each and every person and/or organization that has submitted its intentions to be presenters and decide as a committee. I will not allow for the clerk to go through a procedure, explain the procedure to a point which I think is very fair and then have the rug pulled out from under her or from under me. This committee will have to decide today whether you think the clerk and myself can be fair as two people can be fair or whether or not the whole committee will do it. I will not accept anything in between.
Mr Mammoliti: Point of information: I want to relate to the word that we actually used a few weeks ago. That was "umbrella." Was it not an umbrella group or an umbrella organization?
Clerk of the Committee: Groups.
Mr Mammoliti: I am asking the Chair.
The Chair: I believe I have given as full an explanation as I can possibly give to this committee. The committee will have to decide whether or not you are going to entrust the clerk and myself to be fair and to present the list the best way we possibly can or whether or not the committee is going to do it. There can be no in-between.
Mr Mammoliti: Mr Chairman, you are not listening to me.
The Chair: I am listening to you and I am telling you there cannot be an in-between. The Chairman has the right to make that decision.
Mr Mammoliti: Mr Chairman, hold on. I am asking you a question. Did we not say umbrella organization or umbrella group? That is all I asked you.
The Chair: I believe I understand and recall correctly what was discussed.
Mr Mammoliti: Yes or no?
The Chair: There was the term umbrella organization used and there was flexibility given to us because it is not cut and dried like a one-pound piece of substance that you can wrap up and deliver as 16 ounces. It is not like that, I am sorry to tell you.
Mr Abel: Thank you, Mr Chair. You used the word "fairness" several times in your statements here to this committee and that is exactly why we raise this objection. We feel that it is our responsibility as a committee to be fair to all the presenters. We feel that if we start giving individuals 40 minutes, that is not fair to the people who have been slotted for 20 minutes. We feel in this regard we should be consistent throughout. That is why on those grounds we raise this objection.
The Chair: With all due respect to you, sir, we have been more than fair and the clerk --
Mr Abel: You have only just begun. This is our second presentation.
The Chair: -- has been more than professional, as was stated by your own colleagues this morning. I am not going to countenance this. I do not have to, as the Chairman. I have given you, as the committee, an alternative. If you men and women do not think that the clerk and I can be fair, then we are not going to do it and we are going to do it as a committee. We have the lists. We will finish up with our organizations this afternoon. The committee can reconvene tonight at 8 o'clock and we will go over each and every one until we have some kind of consensus as to how much time each organization is going to get. I am not going to allow any person on this committee to put the clerk or myself in the kind of position that you are trying to put me in today.
Ms Poole: I think part of the misunderstanding has come about because we all have different connotations of what the word "umbrella" means. To me, when we talked --
The Chair: The clerk has referred to some of her notes and the word is "organization." That is in the minute book.
Ms Poole: That is right. I think we as a committee, probably each one of us, was a little remiss in not fully explaining. What was in my mind was province-wide umbrella groups. Other people thought if there was a tenants' association, for instance, or a large number of investors in one company, that it was an umbrella group. Because of the fact that a lot of the timing of this took place over the Christmas holidays, there were not a lot of steering committee meetings to guide the clerk. I think she has truly done a remarkable job in very difficult circumstances. I do not think there was anything untoward but I suspect, when she first started scheduling, that if you had a large number of investments, which I assume this development company has, or if you had -- what is it I saw? -- Parkdale Tenants' Association on next Tuesday, they have 40 minutes and they are an association. How do you draw the line? I think it has happened on both cases simply because we were not specific enough in what we said. I am sure some members of this committee right now feel that if there is one tenants' association, it should be an umbrella group. There are others who feel if there is one investor group with 10 investors, then it should be an umbrella group. I think we are probably being somewhat unfair to have expected the clerk to read our minds and know what we meant.
Mr Turnbull: Mr Chair, first of all I want to support you in this issue and I want to draw the attention of the government members to the first organizational meeting we had of this committee. At the time we discussed it, I particularly drew out the point, and you can look at Hansard if you have any difficulty with this, that large landlords should be treated in the same way as large tenant groups. Clearly if you have a situation where the tenant group is typically for one or two buildings, it would seem unreasonable that the landlord who owns those two buildings and an equal number of units is not afforded the same kind of treatment. If you look at Hansard there will be no doubt about this -- and there was not a great discussion at that time, so I want to support the Chair in this -- this was specifically mentioned at the time. Maybe your memories are a little fuzzy on this issue, but it is very clear that if you have a landlord of a single apartment building, he should maybe be treated the same as a tenant group for that building.
Mrs Y. O'Neill: In my kindest frame of mind, I have found today more than difficult. I have never seen witnesses and/or chairs and clerks treated with so much inconvenience, and if I may add, in some cases disrespect. I feel that if there was a lot of difficulty with this agenda, this is certainly not the moment to bring it forward. You called a meeting at 9 o'clock this morning in private. There were many ways in which the clerk could have been contacted. She is a very open person. You yourself as Chair could have been contacted. But to have an individual who represents a large group of people be here on time to make a presentation, knowing that we have four other presenters plus a group of paid civil servants waiting and now to have this kind of a debate, I fully endorse your ruling, Mr Chairman. I certainly support your decision and I know that you are right, that we have to have you and the clerk in charge. We gave you directions and I will not engage if we do as a committee go into debate over each individual person who is coming. I will remove myself from the debate, because I do not think it is ethical or correct.
Mr Drainville: I guess there are a couple of issues I am going to very briefly address myself to. The first one is the fact that I think this committee needs, at some point, to schedule a time in camera when this committee can talk about a number of issues. I have concerns. I have concerns about process and concerns about understandings that we apparently do not share in the committee. They need to be ironed out a little more effectively if we are going to be able to work expeditiously at the issues that are at hand. So I would recommend that we plan on meeting as soon as possible to clear up some of these procedural questions.
I also can say that I am absolutely positive that any of the comments that have been made on the part of the members who have spoken before were not meant in any sense to question the integrity of either yourself or the clerk. That is again up to you, Mr Chair, how you are going to take that, but certainly myself, I do not mean to impugn your integrity.
What I do mean to say, however, is that I have questions myself about this. That does not mean anything to do with integrity; it has to do with my understanding, which obviously is different from that of some of the members of the standing committee. The fact that there is a difference is a problem. We need to work out these procedural and process issues. I would recommend that we establish a time when the committee can deal with these things out in the open.
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Mr Turnbull: On a point of interest, I want to just get clarification from Mr Drainville. First of all, he was talking about discussing it in camera and now he is talking about in the open. What is it you are wanting?
Mr Drainville: That we need to talk about some of the procedures and some of the understandings that we have. Our understanding of the definitions.
Mr Turnbull: But in the open or in camera?
Mr Drainville: In camera. I think the thrashing out needs to be done in camera.
Mr Turnbull: What happened to open government?
Ms Poole: Mr Chairman, on a point of order: We do have five presenters this afternoon, plus the Ministry of Housing. I wonder if we could agree to meet tomorrow morning prior to the start of our presentations? I hate to keep doing this and warping the committee's schedule, but I do not think it is fair to our presenters to continue this debate at this time.
The Chair: I am available this evening. Unfortunately, I am not available tomorrow morning before 10. I have planned other things around the schedule that we had agreed to.
Ms Harrington: I will be very brief. First of all, I feel a spirit of goodwill and we have to have that. We want to be helpful. The very fact of raising a point of order with this committee does not indicate any kind of ill feeling and, if I can say this without any disrespect, there is no reason the Chair should raise his voice to this committee when it is a simple request for information. I would like to request whether the clerk has agreed that she would make these determinations, whether it is to be a 20 minutes or 40 minutes, because just from looking at the name on the program for this afternoon, it says "co-owner," so we thought this was, at most, two people. In effect, it is one presenter. But I would like to ask the clerk if she has agreed to make these determinations. I did not know that.
The Chair: What annoys me the most, Ms Harrington, is that an explanation was given to Mr Abel and then further to that I asked the clerk to give me again the explanation for her decision. I found her explanation to be more than adequate. As a matter of fact, I believe she made the right decision. I conveyed those comments to Mr Abel. Then Mr Abel took the most unusual step of raising a point of order before the committee, questioning the decision that had been made by the clerk, which had fully been explained to him and had been fully explained to me. I found that to be unusual, I found that to be, and as kind as I can be to Mr Abel, at the very least pulling the rug out from underneath our clerk and myself, who have been following the instructions of this committee.
I would have to say that if all of us got together in a private room and spent 12 hours in that room, when we would leave, the final decisions that we would make on who would get 20 minutes and who would get 40 minutes would probably not diverge very much from what the clerk, who has great experience in this, and myself would probably conclude. I found the manner and the way in which Mr Abel has done this to be highly offensive and I regret deeply that it was brought out in this manner.
I am here to do the committee's will, but at the same time, the committee must work with myself and the clerk. I hope, as all of you gain experience in the Legislature and work on other committees, that some day you will be able to say that when Mancini was Chairman he was pretty fair and pretty competent and the clerk that we have today was the same. I am sorry that some members of the committee feel that I maybe should not have reacted the way I did, but I hope that my comments now fully explain to the entire committee why I am as upset as I am.
Ms Harrington: I am sorry, Mr Chairman. It was not communicated to our members why the decision had been made that way, and maybe that is the cause of the disagreement.
The Chair: The clerk visited my office yesterday afternoon after 5 o'clock. We went over the list again and I said to her, "Can you stay later on and redo everything for me, please, because I'm sure someone on the committee will question us on it." I do not know what time she left. I left close to 6 and I know she was still here. I repeat to the committee, you as a committee either must trust myself and the clerk to be fair or we have to do it together. As the Chairman, I will not accept anything in between, I am sorry to have to tell you.
Mr Drainville: Perhaps, Mr Chair, I should then say what I was going to say in a motion. I move that we meet as a committee to deal with some of these difficulties tomorrow morning.
The Chair: The Chair is not available tomorrow morning; the Chair is available tonight. Unfortunately, I made other arrangements for tomorrow morning, because I assumed we would have our business done this morning from 9 to 10 and we would commence our work tomorrow morning at 10 am. If I could change it I would, but tonight I am available for as long as the committee wishes to sit.
Mr Abel: Is the Vice-Chair available in the morning?
The Chair: If the committee wants to make all these decisions without the Chair.
Mr Tilson: No.
Ms Poole: I personally would be reluctant to do that. The Chair is an integral part of this particular issue, so I do not think that would be fair. The only alternative I could suggest is that perhaps tomorrow, immediately after the third presentation in the morning, we reserve a maximum of half an hour so we can try to get some business done in our offices during the lunch hour.
The Chair: From 12 to 1 tomorrow? That would be fine with me.
Clerk of the Committee: Closed session?
The Chair: We could have a closed session, if that is the will of the committee.
Mrs Y. O'Neill: I find that very objectionable.
Mr Tilson: I do, too. I am prepared to meet, Mr Chair. With respect to closed, either we have open government or we do not.
Mrs Y. O'Neill: The people in Ontario need to know the rules under which we are operating.
The Chair: I am operating under the traditions of the Legislature.
Mrs Y. O'Neill: Exactly.
Mr Tilson: We agree with you, Mr Chairman.
The Chair: I do not think I am any better at the rules than anyone else here, but I think over the last 16 years as a member I have absorbed the rules and traditions of the Legislature. There are some conventions I have learned.
Mrs Y. O'Neill: People have a right to know what we mean by what we say, and I think we should be determining that in public.
Mr Drainville: I move that we continue with the presentations, Mr Chairman. This has gone on quite long enough.
Mr Tilson: Do you withdraw your other motion?
Mr Drainville: I do.
Mrs Y. O'Neill: I do not know why we need closed sessions.
O'SHANTER DEVELOPMENT CO LTD
The Chair: Seeing no objection that we continue, I would like you to introduce yourself, sir, state your name, organization and the position you hold within that organization. It is 3:10. The committee has allotted you 40 minutes, so you have until 3:50.
Mr Krehm: Thank you for the opportunity to appear before you today. My name is Jonathan Krehm. I am one of the principals of O'Shanter Development Co Ltd, a Metropolitan Toronto-based property management firm, a family business which manages some 2,800 apartments in Metro Toronto. We have been in residential property management for over 25 years. In our organization I have overseen our rent review department for the last nine years. In that capacity I have acquired much experience and some knowledge of Ontario's rent control regime.
Bill 4 is terrible legislation guided by a frontier justice mentality: Let's shoot first and ask questions later. It is premised on disinformation and prejudice. The realities of rental housing in Ontario need to be looked at by this committee, as the Minister of Housing has to date been unwilling to do so. Our Premier and Mr Cooke have repeatedly made references to 150% rent increases. The implication has been that this legislation is needed to save thousands of tenants from such increases. The reality is that in the last two years 154 apartment units in this province have had rent increases applied for of more than 100%. Bill 4 affects 1,200,000 units. As far less than 1% of the tenants in this province receive large increases, why was a simple cap not used instead of gutting our rent review system? Billions of dollars of destroyed equity and the loss of thousands of renovation jobs could be avoided. Vandalizing Ontario's private rental industry, I assure you, will not protect tenants in this province. This draconian legislation is based on a belief that landlords make big profits and returns on their capital. Reality for Ontario's rental industry has been otherwise for a long time.
I have brought copies for the members of this committee of three Ontario government-generated studies which deal with the financial state of the industry. I have brought copies of these studies because the older two studies are now out of print. These studies are: (1) The Impact of Rent Review on Rental Housing in Ontario, a staff research report published in July 1982 by the ministries of Municipal Affairs and Housing; (2) Survey of Financial Performance of Landlords, research study 7, prepared by Campbell, Sharp for the Royal Commission of Inquiry into Residential Tenancies published in October 1984; (3) Financial Trends and Other Characteristics of Ontario's Residential Rental Stock, prepared by Royal LePage Real Estate Consulting Services for the Ministry of Housing rent review policy branch in August 1989.
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I would like to run through some of the findings of these studies. The 1982 Laverty study, in its section on comparative rates of return on page 85, concludes, "In general, the buildings in our sample did not perform strongly relative to their landlord's targets, the rate of inflation, the returns in other industries or the stock market."
When I refer to tables, I have attached at the back additional copies of the tables in the copies of the brief which I left. Table 4.12, comparing after-tax returns on capital in various industries, shows that for the period 1971-80 the rental buildings used in the survey had the lowest annual average rate of return; this rate of 5.4% was less than half the 11.7% annual average for industry in general.
The oft-quoted myth used to dismiss the realities of the low rates of returns which are the norm in the rental industry is to talk about high capital gains that are available to landlords. On page 95, the discussion of capital gains presents the facts.
"Some consideration of capital has been incorporated into the calculation of the rate of return in the last chapter. It is useful, however, to give further consideration to the capital gains experience of the past decade to highlight the trends relative to inflation in general and to the increase in the price of other real estate... It should be apparent that while apartment building prices generally increased both before and after rent review, the increases were quite low relative to the general rate of inflation and real estate prices in general.
"The failure of rental apartment prices to keep pace with other increases in recent years is further highlighted in table 5.2. Here, average unit prices are contrasted with the prices that would have resulted had apartment value increases kept pace with general inflation. In five of the six political jurisdictions in Metropolitan Toronto, unit values fell relative to inflation....
"This trend confirms similar evidence collected by L. B. Smith and P. Tomlinson, which is presented in table 5.3. In addition, Smith and Tomlinson have noted the decrease in the value of rental apartments relative to the values of ownership housing, both freehold and condominium. This highlights the fact that the considerable gains of home owners should not be confused with the much lower increases for rental apartments.
"The actual capital gains experience is relevant to the claim that apartment owners need not make profits from the operation of the building because they can rely on capital gains to produce an adequate return on capital. Clearly this is not so, nor should it be expected."
The 1984 Campbell, Sharp study prepared for the Thom commission updates where Mr Laverty's group left off in 1982. On the issue of revenues, on page 9 it states, "After the introduction of rent review legislation, on a per-unit basis, real revenue declined by approximately 18% from 1976 through 1984."
On page 23, landlords' profitability is discussed. Before rent review, on a per-unit, inflation-adjusted basis the above observations are apparently supported. Landlords' profitability was already in a decline on both a percentage-of-revenue basis and on an earnings-dollar-per-unit basis.
On landlords' profitability during rent review: "As outlined above, profitability was already in decline at the date of imposition of the legislation. The introduction of rent review legislation appears to have accelerated the decline.
"On a historical dollar basis, profitability increased subsequent to 1975. However, owing to the mechanics of the rent review cost-pass-through procedure, mathematically the share of expenses to revenue must increase on a percentage basis, thereby reducing profit margins....
"On a per-unit, inflation-adjusted basis, another phenomenon was observed, namely, that rental revenue per unit, in real dollars, decreased. Rent increases have obviously not, for whatever reason, kept pace with inflation."
Some of the studies' conclusions are presented on page 38:
"The following observations can be made with respect to the economics of investment in rental apartments, based upon the financial results of the test group:
"Real profitability has declined by about one third since 1970; most of the decline occurred during 1974 and 1975 and the period 1976 through 1983. Inflation appears to be the cause of the profitability decline in 1974 and 1975. Thereafter, the impact of inflation and the ceilings on rent increases apparently caused the profitability decline.
"Conversely, the increase in actual profits was significantly below the rate of inflation both before and after the implementation of rent review. However, the disparity between the growth in actual profits and inflation was much greater after rent review was introduced.
"Operating expenses did not abate over the period. They actually grew by an amount virtually equal to the rate of inflation.
"In so far as actual rent received grew at a substantially lower rate than the rate of inflation after 1975..., the benefits passed on to tenants through lower rents were paid for by the landlords in the form of a reduced return on investment.
"The declining ROI is reflected in the wide disparity between the estimated market value (using earnings before interest, depreciation and income taxes as the measure of value) and the inflation-adjusted original cost.
"Real earnings (expressed as a percentage of original asset cost) since 1975 can be seen to be well below the range experienced before the first impact of inflation in 1974-75 and rent review in 1975-76. Recent returns are well below returns that may be realized from investing in risk-free securities such as government bonds or term deposits."
Once again, the 1989 Royal LePage study carries on from where Campbell, Sharp left off in 1984. On page XI of the executive summary we find the following comment: "Compared to other investments, residential rental investment has performed poorly. Other real estate markets have higher overall capitalization rates and higher returns. Treasury bills, Canada savings bonds and corporate paper returns have also outpaced rental market returns over the last 20 years. A comparison of the Toronto Stock Exchange, Scotia McLeod and Morguard Property indices show that the rental market index did not perform nearly as well as the other investment markets."
On page 28 we find a continuation of the trends discussed in the two earlier studies with respect to values. "The value of residential rental property is tied to the cash flow and to overall market values. The value of condominium apartments and town houses are based on market value alone. To a large degree, market value is established by the amount someone is willing to pay for either rental or ownership. For this section, market value is represented by actual transactions as provided by brokers in select Ontario municipalities.
"Exhibit II-11 shows rental and ownership apartment sales prices between 1975 and 1989... The rental unit value is significantly less than the ownership unit value. In 1975, the rental value was approximately 66% of that of the ownership units. With the increasing market acceptance of condominiums, owned units skyrocketed in value to $172,000 in 1989, compared to $65,000 for a rental unit. In 1989, rental units represented approximately 17% of the value of owned apartment units. It should be noted that ownership units tend to be newer, and have more amenities than rental units. However, rental units are still worth considerably less in the marketplace. They also increased at a considerably slower annual rate of 6% between 1975 and 1984, compared to 16.9% for an owned apartment unit, 18.3% for an owned town house and 13% for a single-family home. This is because the value for such units is tied to the cash flow or the capitalized value of the net income. Lower rent levels depress capitalized values and market values."
And further on pages 70 and 72: "Capital Appreciation: The buildings included in the Royal LePage sample increased at a modest 6%-8% annual growth rate throughout the period. Considering an adjustment for inflation, real growth has been nominal or, in many cases, non-existent. Therefore, long-term capital gains in the rental market have been minimal, especially given the significant increases of other real estate market sectors.
"Summary: In summary, the returns provided to residential rental investors decreased throughout the period from return on equity in the 8%-9% range in the early 1970s to 3%-4% in the late 1980s. Capitalization rates also declined, from 8%-9% in the early 1970s to 6%-7% in the late 1980s. Many people claim that while annual rates of return are low, capital gains offer long-term potential. However, this was not the case in the past 20 years. The residential rental market increased at a modest 6%-8% average annual growth rate which, adjusted for inflation, translates to minimal or non-existent gains. Therefore, residential rental investors must be satisfied with low annual returns and relatively minimal capital gains.
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"Exhibit V-2 compares corporate paper. Treasury bills and Canada savings bond returns to those of the residential rental market. In the 1968-70 period, all rates of return ranged from 6%-8%. By the early 1980s, with high inflation interest rates, Canada savings bonds earned 13% while Treasury bills earned 12.2% return. By comparison, the residential rental investment was lower and provided investors with 7%-9% returns. By the late 1980s, the gap widened significantly with CSBs and T-bills at 9%-10% and rental returns at 3.4%.
"Exhibit V-3 compares the Toronto Stock Exchange, Scotia McLeod and consumer price and Morguard property indices with that of the residential rental market from 1972-88. The residential rental market index was calculated based on Royal LePage data base market unit values and return on equity....
"The Scotia McLeod index increased from 100 points in 1972 to 476 in 1988. The TSE index increased at a greater rate to 562 points; the CPI increased 326 points and the Morguard property index escalated to 1,040 points in 1988. The calculated rental market index did not perform as well as the others and rose only to 256 points in 1988."
The retroactive nature of this bill transgresses all rules of natural justice and fair play. Mr Cooke has consistently misled the media and the public with statements that the effect of the moratorium will not cover rent increases that were effected before 1 October 1990. The facts once again are otherwise. One of the mechanisms of Ontario's rent review program has been the phasing-in of various kinds of rent increases. This was developed for tenant protection and spread the impact of certain kinds of rent increases over time.
Phase-ins result from orders for financial loss, economic loss and equalization. The phase-ins could have been ordered on applications which date back to 1987. The nullification of increases determined by orders on applications filed as long as four years ago is the sort of travesty of justice that is commonplace in totalitarian regimes. Winning an election is not a licence for bad government.
The ending of capital expenditure allowances has thrown out of work thousands of workers employed in renovations. The need for the refurbishment and upgrading of Ontario's rental housing stock is undeniable. In the LePage study, on page 64, this is discussed. There is a misprint in my submission: I have page 6 there; it should be page 64.
"Capital expenditures: (1) Trends: Ontario's residential rental stock is found in high-rise (40%) and low-rise (60%) buildings. Most of the high-rise buildings were constructed in the 1960s and early 1970s and are now over 20 years old. As such, the need for repairs will increase....
"Low-rise buildings tend to be older. Peter Barnard (1985) found that one quarter of low-rise buildings surveyed were found to be in need of rehabilitation with foundation walls and energy efficiency concerns. Barnard states:
`The rehabilitation needs found within much of the "big city" low-rise stock, coupled with the bare minimum "crisis-management" levels of repair and maintenance currently being invested in many buildings, poses a very real threat to the continued existence of some of this stock.'
"For Canada, Clayton comments that: `The focus is shifting to the maintenance and improvement of the existing housing stock. Since the early 1970s, renovation activity has experienced a rate of growth similar to the rapid growth characterizing new residential construction activity in the first three decades after the Second World War. In the 1990s, a further shift in spending is expected away from new construction and toward renovation.'
"Clayton concludes that: `As the rental housing stock in Canada ages and becomes obsolete, a significant increase will be needed in real spending on maintenance and upgrading. However, the extent to which this increased spending arises will largely be determined by the presence of rent controls through the 1990s, the provisions of these rent controls for allowable rent increases in older buildings and the rate of return allowed on renovation investments... Without the prospect of increased profits, many landlords are likely to defer major renovation work. In addition, it is unlikely that government subsidies to encourage rental renovation work would be of a scale to cause substantial growth in this category of renovation spending.'"
Mr Cooke again has decided to address this issue with disinformation. He has denied all evidence of job loss resulting from Bill 4. What unhappy irony to watch the minister from the party of the workers telling the unemployed that they do not exist.
He has answered the abrupt halt in capital expenditure programs with misleading statistics. Mr Cooke scoffs at industry estimates of stopped work by citing a supposed maximum of $122 million of ordered capital work by rent review orders in any one year. The facts are that the present delays in the system mean that there is still a substantial number of suites waiting for orders on rents as far back as 1987. At O'Shanter, we do not know what our 1988 rents will be on over 95% of our apartments. We cancelled, as a result of NDP policy, over $650,000 worth of work in 1990 affecting some 600 units.
Our plans for 1991 for a program of $1.1 million worth of work in 900 of our units have also been cancelled. Mr Cooke's approach has been to don hobnail boots along with his ideological blinkers. Mr Cooke proposes to police the industry into doing the work we no longer can afford to do. Bill 4 ends the industry's ability to finance the necessary refurbishment and upgrading of Ontario's rental housing stock. My willingness to do this sort of work has not changed; my banker's willingness to finance this work has.
Our 1991 program of capital work would have provided renewed common areas to the 900 apartments in question plus new refrigerators in each apartment.
The Chair: You have about 60 seconds.
Mr Krehm: That will be sufficient.
Additional increases in rent would have been around $15 per month or under 3%. The prospect of the elimination of financial and economic loss provisions has devastated the value of all rental buildings in the province. Estimates of this reduction range between 20% and 30%. This translates to between $10 billion and $15 billion. The wiping out of this magnitude of equity in this province affects a wide net of people and businesses who work in and provide goods and services for Ontario's rental housing stock.
There is no justification for this measure. The flipping that Mr Cooke refers to has not happened. The only study on this issue that I know of was undertaken by the city of Toronto housing department. It concluded that there was no problem of any significance in this regard. The elimination of these provisions takes out the only partial recognition of the capital base of the rental housing industry.
I suggest that this committee recommend the scrapping of this bill. For a short-term measure, the government could keep the same system of rent review with a proviso limiting rent increases to a maximum of 15% for first effective dates of increase of 1 March 1991 and later. For a long-term change, a consultative process involving government, tenants, landlords and other members of the community should be entered into. Thank you very much.
The Chair: Thank you very much. We will continue with our rotation. Ms Poole, Mr Tilson, and then Mr Mammoliti.
Ms Poole: Thank you, Mr Krehm, for your presentation. It was certainly thorough, and I think it has given our research staff a run for their money. They may want to hire you soon.
Mr Krehm: I may need a job.
Ms Poole: You have said that O'Shanter Development Co has ownership of 2,800 units?
Mr Krehm: Yes, along with partners.
Ms Poole: How long have you been in existence?
Mr Krehm: Originally, the company was founded by my father and an uncle, who is no longer in the business, in 1963, but my father's involvement in rental housing would date back to 1949 in this city.
Ms Poole: So you are what you would call long-term landlords?
Mr Krehm: Yes.
Ms Poole: You have mentioned that 95% of your units would be at rent review from 1988?
Mr Krehm: That is correct.
Ms Poole: What kind of percentage increases, generally speaking, are we talking about?
Mr Krehm: Between about 6% and 14% would be my estimate of rent increases with one exception on one unit where there would be a very large increase of probably 100%, but it is an apartment in a triplex in Rosedale where there was a $135,000 addition done on the apartment and there will be a substantial thing, but we are talking about a 2,000-square-foot luxury apartment in Rosedale. Other than that, there is nothing over about 15%.
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Ms Poole: So you do not feel we should have much sympathy for that tenant looking in Rosedale?
Mr Krehm: I do not think they need protection, no.
Ms Poole: That was just a facetious comment. Has most of this work been for capital?
Mr Krehm: There would be some financial loss provisions involved in units that we bought in 1987 and 1988.
Ms Poole: Since you own 2,800 units, I would assume that a substantial amount was for capital?
Mr Krehm: There would be capital involved in all the units in question. There would be financial loss involved in a series of the applications, though. There would be operating cost increases also.
Ms Poole: You have talked and given us, I think, some quite valuable information about the rate of return on investments in the rental housing market. Certainly the figures you have quoted substantiate what I have heard from the various sources and from some of the documentation that you have provided.
Can you answer this question, which is somewhat beyond me: Why would people invest in the rental housing market when they can make more money in Treasury bills, Canada savings bonds, condominiums, office towers, whatever? What has been the historical motivation and how do you see this changing in the future?
Mr Krehm: It would be twofold. For myself, I would no longer invest in Ontario apartment buildings. I made that decision about 1989, obviously not because of this legislation. I have tried to diversify out of Ontario. I think Ontario has been an over-governed jurisdiction and I think the present government will continue that trend. I would not invest in Ontario, period, right now.
In terms of the rental housing, I have an expertise in rental housing. A banker or a trust company will lend me money to invest in rental housing, but if I come to them wanting to invest in office buildings, what do I know about office buildings unless I have been in the business? The availability of capital to me either from partner investors or financial institutions is limited to what I know, to what I have proved expertise in and what our company does. We do some other things, but basically by far the majority of our investments and experience and expertise is in rental housing. That would be true of most people in that business, unless they are wider-ranging.
Ms Poole: Just one final question. You have mentioned the retroactive provisions and given us some indication of how it is going to affect you. You have mentioned the contracts that you have cancelled to date. Would you like to elaborate on the retroactive nature of the --
Mr Krehm: I happen to be in the lucky position of not having one application that will fall under the umbrella or the shadow of the retroactivity here, but I am about the only landlord I know who happens to be lucky enough not to be affected. I would not proceed with work that I -- if I went out and bought $650,000 worth of appliances, which I was planning to do this year, I would probably be put into receivership by several financial institutions that would doubt my sanity.
I have written extensively to the ministers in this government and have received absolutely no answer to my question. Financial institutions in this province at this date will not lend to apartment buildings. The Minister of Housing, the Minister of Financial Institutions, the Premier and the Treasurer want to ignore this fact.
Ms Poole: Thank you for a very comprehensive presentation.
Mr Tilson: Just carrying on with that line, have you had any discussions of any sort with representatives from the banks or other financial institutions as to their theory on this legislation and whether they would be prepared to provide funding for capital expenditures?
Mr Krehm: No financial institution will come forward and oppose the government directly on this. I scurried off very quickly after 26 November: actually after 6 September. I started having conversations with my lenders to explain to them how the policy here affected me or how I thought it would affect me. I had given projections in the summer of work I was going to do. The first question I was asked was, "You are not proceeding with these things, are you?" I had to assure people right off that I was not going out and spending money that was available to me in lines of credit on the basis that revenue that was paying for it became an impossibility.
Mr Tilson: How many units does your firm manage?
Mr Krehm: We manage 2,800.
Mr Tilson: With that number of units, one of the questions that the government has dealt with is the fear, and I suggest it is just that, of luxury renovations. Can you tell me what percentage of work that has been done to your units in the past, if any, has been directed towards luxury renovations specifically in the line that the government has spoken of?
Mr Krehm: I have done luxury renovations to three apartments. Of those three apartments, two are found in a duplex in south Rosedale. The two apartments are about 3,200 square feet and I spent about $75,000 or $100,000 on renovations to them. These are not regular rental units. The third apartment, as I mentioned, was an apartment on which a $135,000 addition was done. They are luxury renovations to luxury apartments.
Mr Tilson: Did you receive any opposition to that?
Mr Krehm: No. As a matter of fact, I renovated all three of those apartments at the end of long-term tenancies -- in one case tenants had been there 20 years -- and they were put back on the market and rented at the time.
Mr Tilson: Dealing specifically with other units and those units, did you undertake any renovations or repair work that would make your buildings more energy-efficient?
Mr Krehm: Yes. We have had an extensive energy management program for a long time. We put in fluorescent lighting, and this would extend beyond -- it is not in the cancelled work, but in the last 10 years I have put in energy-efficient lighting, boiler equipment and de-aerating devices in heating systems in over 4,000 units in this city.
Mr Tilson: Obviously you have had some experience, and presumably talked to other landlords. One of their concerns that you emphasized was the retroactive aspect of the legislation, although you have indicated it does not really directly affect you. Can you tell us, as a result of conversations that you have had or debates that you have had, how that has built up the confidence of people within and without the province with respect to investing in this province?
Mr Krehm: I think people outside of this province who are aware of what is going on -- I know that in Hong Kong there is a great deal of furore over this legislation basically because of what has happened to Hong Kong investors who have invested in this province. What people know, they do not believe. Their first reaction is: "No, that couldn't be so. They wouldn't really be doing that, would they?" It is such a travesty. Shock is the reaction.
Mr Tilson: You have indicated dollars and cents of items that you are simply not proceeding with. Have you been able to reduce that as far as the number of jobs it affects?
Mr Krehm: In our organization we have always done a lot of in-house maintenance and as a strategy to deal with the GST -- one does not pay GST on wages -- we hired extra people throughout the last year and were going to do as much capital in-house as we possibly could. We tried to limit the amount of work we gave to outside contractors to bare minimum. I am laying off people right now.
Mr Tilson: Have you any figures?
Mr Krehm: The worst thing in business is letting people go, and especially in a recession like this in construction trades where people will not have any other work. I am worried that I am going to have to lay off between 10% and 20% of my maintenance staff as a direct result of this proposed legislation.
Mr Tilson: Dealing specifically with contracts that you have been considering, how many contracts have been cancelled or simply will not be entered into as a result of this legislation?
Mr Krehm: When I divided up my figures between 1990 and 1991, the 1991 contracts have not been let; the 1990, there were three contracts that would have been cancelled as a result of that. As I outlined, it is $650,000 worth of work. The bulk of that was appliance purchase, but there was a large painting contract and also I believe a carpeting contract had been entered into for one building for 1991 that was cancelled. I am not positive if it had actually been entered into or if it was just discussions.
Mr Tilson: I think this is just the start of many horror stories that we are going to be hearing throughout this province as a result of this legislation. I thank you for coming and addressing it.
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The Chair: We have Mr Mammoliti, Ms Ward and Mr Duignan.
Mr Mammoliti: Mr Krehm, you mentioned that you have spent hundreds of thousands of dollars in renovations. Did you consult at all with the tenants prior to spending the hundreds of thousands of dollars in those renovations, and were those renovations necessary in your opinion?
Mr Krehm: Absolutely necessary. There was no direct consultation, although we have tenants' associations in the buildings in question. In all the buildings where the work was done I have an open door to any of my tenants' associations at any time and an open, outstanding invitation to meet with them to address any of their concerns at any time.
Mr Mammoliti: But you did not let them know that you were going to be spending hundreds of thousands of dollars on renovations and perhaps for their input on --
Mr Krehm: Well, since we do meet with them, we do --
Mr Mammoliti: -- the best way of spending those hundreds of thousands of dollars for their units. You did not talk to them.
Mr Krehm: Well, to begin with, it is my money that I am spending --
Mr Mammoliti: Yes, I realize it is your money.
Mr Krehm: -- and undertake an obligation with and I do consult with my tenants' associations. Was there a special meeting about it? Was there a signed document about work done? No. But am I aware of my tenants' associations' concerns? Yes.
Mr Mammoliti: You talked about suspending the fact that you were going to buy hundreds of new refrigerators. In your opinion, do you need new refrigerators? Have you talked to the tenants to ask them whether they need a refrigerator?
Mr Krehm: In my opinion, since I am the one who has to keep the refrigerators -- I own the refrigerators; I upkeep them. I know a lot more about the needs for refrigerators as a global thing. For instance, each tenant may know the experience of his or her own refrigerator, but we are talking of 600 refrigerators and I assure you that the tenants overall do not know about each other's refrigerators, but I may have some idea.
Mr Mammoliti: But you would reflect that through rent increases, would you not? They would have to pay eventually for those refrigerators.
Mr Krehm: As I pointed out to you, all this work amounted to about an additional 3% rent increase that we are talking about.
The Chair: Thank you, Ms Ward. We have three others on the list.
Mr Mammoliti: One more question. You own 2,800 units --
Mr Krehm: I said we manage. We have ownership in 2,800 units.
Mr Mammoliti: How many tenants in those units have literally been forced out because of rent increases, say, in the past five years because of affordability? Would you know that?
Mr Krehm: No, I would not know that. But again affordability is not being addressed by this bill, nor has affordability ever been addressed by rent controls. I refer you to the 1982 study I left with you with a chapter on affordability, Mr Laverty's study, that points out that the top richest 20% of tenants gets seven times the benefits of lowered rents by rent controls than the --
Mr Mammoliti: I will be reading it.
Mr Krehm: Could I finish please -- than the 20% poorest tenants.
Mr Mammoliti: If you were the government at this point --
The Chair: Order. As Chairman, I have to divide up the seven minutes. I have three other people left on the list that we have not heard from and unless we move along, Mr Mammoliti, your colleagues will not get a chance. I can give all the time to you if --
Mr Mammoliti: Understandable, Mr Chairman.
The Chair: Okay. Ms Ward, Mr Duignan and Ms Harrington.
Ms M. Ward: I would like to ask our guest what percentage he would consider a large increase -- 15%, 150%? -- if he can give me an indication.
Mr Krehm: I think it is the wrong question to ask. I think 100% of $40 rent is not a large increase. I think a 15% increase on a $3,000 rent may be a very large rent increase. What is more relevant is the actual dollar amount of the rent and the rent increase proposed.
Ms M. Ward: I think you can consider it relevant when you consider that the dollar amount of rent a person is paying is generally tied, not always, but it is an indication of the dollar amount of salary they are making.
Mr Krehm: No, that is not true.
Ms M. Ward: If they were to have an increase of --
Mr Krehm: If that were true -- tenants now pay 17% of their incomes on rent when I believe 10 years ago they paid closer to 25% of their incomes on rent. In that case, overall, tenants have less affordability problems than they did in the past, and that is not to minimize the real affordability problems of the poor, which are not being addressed by this or any other rent control legislation.
Ms M. Ward: So you cannot give me a percentage amount that you would consider a large increase. Can you give me a dollar amount then of what you would consider a large increase?
Mr Krehm: A large increase, as I pointed out to you in my recommendations -- I understand putting a cap on any reasons for increases and I think that this would address the problems and I suggested 15%: no increase, a cap, that every landlord in this province understood that he could not get anything over 15% for whatever reason, would allow the economic functioning of the industry without vandalizing it, as the present legislation does.
Ms M. Ward: My last question is a quick one. I was just trying to clarify for myself your relationship to the issue and it is not clear to me from your presentation here whether you are the owner or the manager or both of the apartment buildings.
Mr Krehm: I am both. I will clarify it. We manage 2,800 units. We own part of or all of each of those buildings. We have partners; we have a financial institution in one case as a participant. So there are various forms of ownership, but we have an interest in every building we manage. We do not do third-party management.
Ms M. Ward: Thank you, that clarifies it for me.
Mr Duignan: You talk about natural justice and fair play for landlords in relation to the backdating of this particular bill. I was wondering, could you comment on natural justice and fair play for tenants when you talk about an increase of capping at 15%? How do you expect someone on a fixed income to be paying 15% or 20%?
Mr Krehm: Again, this is an affordability problem and most tenants in the province do not have fixed incomes. Landlords since 1975 have not been allowed any real increase. Whatever your return was in nominal dollars in 1975 is what rent review allows you, if you kept the building since then, to increase. Do you not believe in COLA and cost of living adjustments for workers or for people? Would not landlords' natural justice allow for the same?
Mr Duignan: That may be the case, but it is not 15%, I guarantee you that. You talk about natural justice and fair play. It is time the tenants of this province had natural justice and fair play. They have been denied it too long.
Mr Krehm: If you would like me to answer about natural justice and fair play, I am an amateur student of history. I have read in my reading of history of only one more retroactive gesture than this and that is when Ivan the Terrible in the 35th year of his reign annulled all property transactions that happened during the beginning of his reign and seized all property. I am not joking; I do not know of anything more retroactive than this.
Ms Harrington: I want to thank you for coming today and for your paper on behalf of the ministry. It certainly has a very good history of what the investment scenario has been with housing over the last 20 years and I think we will certainly make use of that. I will bring it to their attention if they do not already know about this.
It is a long-term problem, as you have illustrated, going back 20 years or more, that people have not been, as you are saying here, in the overall spectrum making a fair amount on their investment. I just wanted to say to you that you will be happy to know that what we want to do as a government is to allow landlords to make a fair return on their investment. We are going to work with you in the long term to try and get legislation which allows that.
Mr Krehm: I certainly hope so. I will be here.
Ms Harrington: I did want to point out that this legislation, which has, as you say, caused this harm to this investment community, was done by the previous two, three or four governments.
Mr Krehm: Rent controls did not initiate with an NDP government. They did initiate with NDP pressure, though.
The Chair: Thank you very much for coming.
JOSEPH TENENBAUM
The Chair: We are going to be moving right along. Sir, you have been allotted 20 minutes. I would like you, for the record, please, and for our viewers, to state your name, the name of the organization, if in fact you are representing an organization, and the position that you may hold in that organization. You will be allowed 10 minutes to make your presentation to the committee and the committee will then have 10 minutes to have discussions with you.
Mr Tenenbaum: Just a point of order. I thought I am given 20 minutes. That is what I understood.
The Chair: Twenty minutes and that includes questions.
Mr Tenenbaum: I did not know that. What do you want, Mr Chairman or members of the committee, quality or quantity? Then give me please the 20 minutes I need.
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The Chair: Sir, we have had a rough day today. Why do we not just stick to the 20 minutes, sir. Do the best you can with your 10-minute presentation. It is very important for the committee members to have some personal dialogue with you. I would ask you to try to keep to the 20 minutes.
Mr Tenenbaum: Mr Chairman, I will stay here to midnight or more, as long as you want.
The Chair: Sir, let us proceed. You have your 10 minutes to make your presentation to the committee and the committee members have 10 minutes to have dialogue with you.
Ms Poole: Under the circumstances, since he has prepared a 20-minute presentation, I have no objection to our party waiving our questioning time.
The Chair: Do you want to give up your questioning time? Does anyone else want to give up their questioning time? We have consensus.
Sir, the committee will give you 20 minutes to make your presentation. Unfortunately, there will not be any time left over for dialogue.
Mr Tenenbaum: I regret that, but thank you very much.
Mr Chairman, members of the committee, good afternoon. My name is Joseph Tenenbaum. I am a private citizen and I represent myself. I am not connected with any organization and I would like to inform you that I have been active for over 50 years in construction, development, management, investments and many facets connected with the building industry, including residential housing.
When I was called by Ms Debbie Deller and asked to appear before you, Ms Deller told me that I would have 20 minutes to make a presentation: 20 minutes, 20 hours, 20 days will not suffice to explore this vital subject which involves everybody.
At this moment, before I begin, I would like to apologize if I unintentionally hurt the feelings of anyone present or not present here today. Please forgive me.
I am sure you all read about housing, rent controls, different commissions, committee reports, newspaper articles and books written on this subject. I do not need to overload you with additional and repetitious information.
I want to thank you for giving me the opportunity to appear before you today and, because of that, I am obliged and would like to share with you my practical experience and knowhow of over 50 years active involvement in all branches of this industry. You might initially think that I am here to criticize everybody and everything. This is not the case. I am genuinely and sincerely interested in assisting to create affordable and available housing for all people and for future generations.
We are fully aware that the government of Ontario was democratically elected by the people of Ontario. I fully believe in the insightful quotation of Cicero, "Salus populi suprema est lex," which translates, "The welfare of the people is the ultimate law." This has been demonstrated by the people of Ontario, who chose to elect the present government. Yet, the fact remains that the combination of affordable housing and politics, like oil and water, does not mix. It just does not work. It is strongly advisable to separate and completely divorce the issue of housing from politics if we are serious in our efforts to succeed and achieve a workable solution.
This is an issue that has to be addressed by the government and private industry, joining forces together to achieve the best workable results. Since rent control was implemented, there has never been a more opportune time than the present to start proceeding to do away with it. It can only bring benefits to everyone if we do it now.
Now, as you know, there are already many display signs advertising vacant apartments. The economy is at its lowest and the number of unemployed is growing with each passing day. It is important to reactivate the construction industry, and in order to activate the industry, we have to find a way to make it attractive to builders and investors. This calls for drastic measures and we have to ask ourselves, what are they to be? The same way as a doctor faced with a patient with gangrene does not ask the patient how to treat him in order to save his life, but goes ahead and amputates, the radical measure has to be applied here if we want to save the housing industry for the long-term benefit of all concerned.
Now is the time to come forward with a genuine program to make housing available and affordable for all the people of Ontario. An unpopular policy must not deter implementation of new ideas that will create invaluable benefits and opportunities for the people of this province.
Some people and politicians were distressed when Menachem Begin became prime minister in 1977, basing their opinions on his early statements and speeches as Israel's leader. However, it was his willingness to negotiate with President Sadat that made the Israeli-Egyptian peace treaty possible. The same thing can happen here in Ontario. Because the New Democratic Party government was chosen by a majority, it has the power to do what is right for the people of Ontario. This is the time to do away with rent control completely. This is the time to show leadership, because a Band-Aid solution will not solve the problem. We have had Band-Aid solutions for many years and look where we are today. The Band-Aid solutions, the delays, the constant debates, arguments, commissions, investigations, committees like this, all remind me of the sailors rearranging the chairs on the deck of the Titanic. This is just another waste of time. This is not the way to create housing for the people of Ontario.
Right now, with increasing unemployment in the building industry, with all the vacancy, "for rent" signs growing like mushrooms in front of apartment buildings and with landlords who are desperate to rent and willing to take cuts in rent, this is the time to show leadership. This is the time for the government to step in and to do away with rent control completely. We who are gathered here today, all of us, have to start acting. The following are a few suggestions.
The best approach that should be used to make shelter and housing available to the people of Ontario is, first, to phase out rent control, to decontrol rents within a period of 5 to 10 years, beginning with decontrolling any apartment that is rented for an amount, let's say, over $1,000. Every year thereafter, there should be an adjustment. Where an occupant or occupants of an apartment earn, separately or jointly, more than $80,000 per year, this apartment should be decontrolled.
Let me stop here for a moment and explain why, under the present system, there will never be vacant apartments for the people who are truly in need. For instance, if a landlord gets an application from a couple and each member of the couple earns $40,000 per year and, at the same time, he gets an application from a single mother with a child and the single mother earns $20,000 to $24,000 a year, who do you think the landlord will rent the apartment to? Who do you think has a better chance of getting the apartment, the single mother with a child about whom the landlord is worried that the cheque might come back NSF every month and from whom he will have problems collecting the rent? Or is he going to rent to the tenants who are earning $80,000 per year, who hold secure jobs with banks or prestigious institutions and where the rent for their apartment is secure? Of course he will rent to the couple.
There are many high-income earners who rent because of the combination of low rent and lack of affordability in the housing market. So what does this do to the availability of apartments? The apartments are again not available for those who really need them. To solve this problem, the government of Ontario, with private industry, will have to build a vast supply of all kinds of housing. The problem is, private industry cannot afford to build with rent control in place.
My suggestion is, if you give enough confidence to the institutions, to the banks and to the builders, that rent is being completely decontrolled, that control is being done away with within a period of 5, 7 or 10 years, there will be an abundance of apartments on the market. Lower-income people will then find plenty of low-rent vacancies. Yes, builders will build apartments once they know they can make some money on them, because money is a commodity that goes where it is safe, where it is secure, where it is bringing a return on its investment. It is like water that goes where the flow is easier. You cannot push the water up the hill. You cannot force investors to invest in apartment buildings in Ontario, where there is no return on their investment or when there is no security for their capital.
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The present system will eventually lead us to no supply at all. Not only will we have no supply, but the nature of the building industry and the nature of what makes it concrete will deteriorate, financially and socially, and it will lead to a complete disaster to this industry, to the social fabric and the total environment in Ontario.
In my view, it will be a complete disaster with terrible social consequences. The problem of New York and other areas will be multiplied manifold in Ontario. The present proposed new regulations are even more stringent than those of other areas where rent control is still in existence. I would like to refer you to the testimony before the Thom commission of Roger Starr, former head of New York's rent control program. He states: "Rent controls are a terrible mistake." On the other hand, if we take the other approach and we do away with rent controls, we can only win. Yes, I realize that we might alienate a few of the organized tenants' votes, but you will bring prosperity to the province. You will bring private investments. People will build. People will invest in construction. Builders will compete on the free market and give one or more months' free rent in order to compete with each other and attract potential renters. We can easily regulate the decontrolling of rents by a few laws which can be introduced.
While we bring in the rules of decontrol, we can also implement a law where overcharging is punished, so there will be no unreasonable overcharging of rents. The people who overcharge are few. We cannot punish the whole of society just because of the actions of a few. By bringing in many apartments on the market, landlords and owners of apartments will realize that in order to have the apartments fully occupied and to avoid foreclosures, they will have to lower the rents. People will have a choice of apartments.
For those people with low incomes or people who are disabled, a new rule should be introduced, that no more than 30% of their income should go for shelter. I firmly believe that those people who are in real need, the disabled and the elderly with low incomes, should be subsidized by the government and the whole community. Taxes should be paid by everyone in order to support these people. The disabled and the elderly must be taken care of. The way our housing laws are structured now, the disabled and the elderly cannot find apartments anyway, and they deserve and need to be supported.
Some of you might feel that I am overdramatizing the seriousness of this situation, but I assure you, I am not. I have the experience of seeing complete decay, of seeing buildings being abandoned by their owners. I remember distinctly that I was once offered a building in New York by a vendor in 1963. The building was at 163rd Street and Broadway. The area is called lower Washington Heights. The vendor offered to sell the entire building to me for $5,000 down and take over the mortgages. I thought, what could be safer than an apartment building at 163rd Street and Broadway? I made an offer subject to my checking out the income, the premises and a few other customary items when this kind of transaction is made. When I entered the lobby in order to inspect the building and came up to the second floor and I saw the people burning the wooden doors on their own apartments in order to heat them, I walked out. When I asked the vendor who was collecting the rent, he said: "What collecting? You must be kidding. I would not dare to go in there. The tenants would kill me."
You might think, as I said before, that I am overdramatizing, but I experienced those things before. They have happened. Therefore I say, because of consequences like those, I suggest we must take the proper, effective, just and beneficial approach that is good for everybody, not just one segment of the society.
If you think for a moment that I am that foolish by making this following statement, again you might be mistaken. I am telling you as truly as I am sitting here, in the long run rent control is bad for tenants. Perhaps it is good for a few tenants who are resting easy, earning good money, whose rents do not go up as per market, but this does not make housing available for the thousands and thousands of people who are looking for apartments. I have applications for apartments submitted in 1979 from people who are still waiting to come into my buildings.
I can also tell you that I remember the time before rent control came into being, particularly in 1964-65 when I had to give away three and a half months' free rent in order to rent an apartment for $180 or $200. It took me three years to break even on the building, and when I broke even I could not raise the rent because there were so many apartments available on the market and I had to be in line with the rent, despite that there was no rent control. Why can that not be again? The point is that we need competition in the apartment marketplace.
Recently, as reported in the Globe and Mail and the Toronto Star, 12 January, Premier Rae, in addressing the Financial Services Institute, stated, "If we have several huge conglomerates which are operating across all the sectors, in my view the long-term effect of that may be to reduce competition." In the Toronto Star on the same day, I quote a passage, an article by Jade Hemeon dealing with the same issue, "Rae said he will insist that whatever reforms take place will also ensure fair competition, access to capital and a degree of choice for the consumer, whether that consumer is an individual or a small- or medium-sized business."
Premier Rae was speaking of the financial industry. He was speaking of the need for competition in order to have a fair marketplace within the financial services industry. This is precisely my point. Competition is necessary and vital. Why are Premier Rae and the Minister of Housing, Mr Cooke, not applying this point to the apartment industry? The exact same principle applies.
With increased competition among landlords, rents will be reduced, supply will increase and tenants will be secure. I may sound paradoxical and landlords may hate me for this, but I can tell you that rent control is good for owners who own apartments now and are not interested in construction, who are not interested in building, because not having a new supply of apartments they are secure with their rents on the old apartments.
But eventually, they too will abandon their buildings because of the proposed legislation; yes, this proposed legislation. This systematically intended tightening of rent control is tantamount to confiscation of private properties, and if this is the intention of the present government, why not come out in the open and proclaim confiscation with little or no compensation? This too I experienced before. In other words, you are stagnating the supply. You are choking the market. The few landlords who still own buildings, because of deterioration of the buildings caused by the proposed stringent laws, will walk away from them. In any event, there will be no real supply of new investment, new blood into the industry.
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If you think for a moment that the tenants are usually the winners, and our politicians will do everything possible to accommodate tenants' demands no matter how unreasonable or self-serving, in the long run it will not work. It is counterproductive.
How can you expect investors to invest in apartments or have builders build any new apartments if the government, regardless if it was Conservative, Liberal or Liberal with the assistance of the NDP, broke its past promises. First, they came in with a temporary measure of rent control which was supposed to be only for a short while. Then they broke their promise that post-1975 construction would not be under rent control. These buildings also came under rent control. The promise that buildings under six units would not be under rent control was also broken. Promise after promise was broken.
Unless we approach this problem with a proper solution and gain the confidence of the people, gain the confidence of the investors, gain the confidence of the builders, what we have here today will be just another game in town.
In conclusion, rent controls can only produce housing shortages and dangerous deterioration in the quality of rental housing. If anyone thinks rent control is a substitute for government intervention to provide decent housing, they are making a tragic mistake. Rent controls destroy the supply of good housing. If the government is really interested in meeting Ontario's future housing needs, it should abandon its ill-conceived proposals, committees, commissions, regulations and other unproductive methods and move instead to phase out all existing schemes of rent control.
If you, Mr Chairman, and members of the committee ask me to tell you in more detail how to solve this vital problem, my answer to you is, "I need another 20 minutes and another 20 minutes and another 20 minutes." Until then, remember Louis St Laurent's words, "Government can, and I believe government should pursue fiscal and commercial policies which will encourage and stimulate enterprise, and wise government policies can do a lot to maintain the right kind of economic climate."
The Chair: Thank you very much for your presentation. We are going to be moving right along. I believe the Basic Poverty -- I am sorry?
Clerk of the Committee: Emil Tancredi.
The Chair: We are farther behind schedule than I thought.
Mr Tenenbaum: Do you have any questions?
The Chair: No. We gave you all the time. Do you remember we made a deal at the beginning?
EMIL TANCREDI MARIO TRELLE
The Chair: Emil Tancredi, the committee has allocated you 20 minutes. We would like you to make a 10-minute presentation if it is possible and then you and the committee can dialogue for a further 10 minutes.
Mr Tancredi: I am with my partner, Mr Trelle.
As it states on page 1, which I am following -- I know all this by heart, but we are just normal workers and we do not know much about all this.
The Chair: Just take your time. Your presentation before the committee can be done at leisure. Present the facts in the best way you know how. I am sure you will have the full co-operation of the committee and we will try to handle your presentation as informally and as amicably as we possibly can. So please feel free and please feel at ease, because we are here to listen to what you have to say.
Mr Tancredi: Thanks.
I want to say that we are sure that all governments' intentions are good, and sometimes they just probably aim at one thing and shoot the other. We are Europeans. We have seen this. We have been in the past in post-war Italy and we know what things are like when these things happen. This is the reason why we came to Canada. Here we found something different. All of us are normal workers. We have been in driver training, dry cleaning. One partner is not here today. My friend Trelle has been in the machine shop business. He just works there.
In 1989, we had some money set aside. Unfortunately, one of our friends told us to maybe invest in a building, as he had one. Things seemed to go good for him so we thought we would do the same thing. Of course, before we purchased, we checked with some friends of ours who are in the real estate business and they checked everything. I personally phoned a few rent review services -- I think it was North York, Mississauga, even Hamilton -- about the possibility of a return one day because we were going to have this money somewhere else. They assured us that for financial loss there was 5% a year and we figured about three or four years, like it is shown on page 2, and this is basically the projection that we were given by the agent we were dealing with.
I am sorry if I omitted something here, but I tried to make this as clear as possible, with the gross rent per month and yearly in 1989 to 1993, the mortgage payments. I gave 6% a year increase, an expense which I think is more or less what it really is. By 1993, we would have been breaking even, even though there are always unexpected expenses, of course.
We went ahead with it and we got a phase-in dated 30 October 1990. I think it was 5% plus the guideline, but now it seems like it is all gone. At this point my partner Mr Trelle would like to say something also about what kind of care we take of the building that we were trying to retire on.
Mr Trelle: My name is Mario Trelle. I am a co-owner.
We try the best we can to maintain the building in proper or top shape the best way we can. To do the renovation or the maintenance required and in order to save or reduce the cost for this expense, we do most of the work ourselves to minimize the expense. Therefore, this will not reflect a larger increase on the rent as well.
We put a in lot of time on weekends. We break away from our family and kids to maintain this building. We accomplished a good relationship with the tenants, which was not previously that good. This seemed to be working fine, the way we maintain it and the way our relationships are.
Of course we put all our life savings into this and now with the proposed legislation it seems this is going to hurt us very much, because the loss will be continued until the year 2000 or even more.
Mr Tancredi: Yes, we will have to keep the building, but according to new legislation we ask you, how can we keep it? We are losing about $33,000 this year. It would have been $21,000 if it was the way we were told and the law under which we bought the building. We do not think it is fair to have a soccer game and after the scores are done at the end, they tell the players: "We're sorry but the rules have been changed. They're not the same as they were at the beginning." That is exactly how we feel.
We do not abuse the tenants. With these increases, we are just trying to keep this building. As you can see by the age and the way it is, it is a nice building and we have put it in good shape since we bought it.
I read in the paper about flipping. I wish I even knew what flipping means, to tell you the truth. I do not even know what it means.
Why are we being punished for this?
If we give it up, if we try to sell it, the same people we bought it with, we checked real estate companies all over because we cannot absorb this loss. It is impossible. We had some money aside to cover the loss. It is finished.
They told us that the interest there is now in the buildings would not even pay our mortgages. It means we would lose our down payment, our life savings and they told us we will be sued by the mortgagees.
Ms Poole: Mr Chairman, I might suggest a very short recess for a moment.
The Chair: We are going to give the gentleman a drink. We are in no hurry. We will take our time. We are right within schedule. Mr Trelle, if you want to add a few comments while your friend has a drink of water, it is more than appropriate.
Mr Trelle: I suppose it is pretty well the same picture that he gave. I am in the same shoes, so to speak. It is a financial problem because of the way we expected it two years ago when we made the purchase. It was laid out in a certain way and now everything has changed.
Mr Tancredi: We are not 20 years old any more to start over again and put $70,000 aside. What am I going to tell my kids?
The Chair: The Chair will ask for a five-minute recess. We will reconvene at 4:30.
The committee recessed at 1623.
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The Chair: I informed the committee we would commence again at 4:30. It is just a little past 4:30. In keeping track of the time, Mr Tancredi and Mr Trelle, you have two minutes left to continue to present your case to the committee. When your two minutes have expired, if you wish to use your two minutes, then the committee has 10 minutes to share among itself to ask questions and to have a dialogue with you. Please commence at your convenience. As I said, these hearings are as informal as we can possibly make them and we are here to listen to what you have to tell us.
Mr Tancredi: I am sorry I lost my emotions there, but I am sure you understand.
The Chair: Yes.
Mr Tancredi: It probably has been the most emotional case, but we would like if it was not picked up just because of this, because we are embarrassing ourselves in front of our friends if they find out about our financial situation. I would appreciate that very much. Just tell us what to do.
The Chair: That is very good then. We are pleased that you took the time to come here today to present your profound views to the committee. The committee deals in rotation. We will start with the PC members first, then we will go to the government members and then we will go to the Liberal members. We will have a dialogue which will take about 10 minutes.
Mr Tilson: Mr Tancredi and Mr Trelle, I have no questions. You have said it all. The Minister of Housing will be viewing the tape of these proceedings later this evening. You are the typical example who hopefully the minister will listen to. I thank you for coming and telling us your story. I am sure he will take your remarks into consideration.
Ms Harrington: I want to thank both of you for coming. I did receive a phone call from Mr Tancredi, I believe it was the first week in December or so, about the situation. I am glad to have it on paper so that I know exactly what the situation is. This is, as we all would agree, very unfortunate, and it is something that our government has to deal with, to look at the whole picture, and this is part of the picture.
Ms Poole: I would also like to echo my colleagues' comments about your presentation and thank you for coming. I know it has been very difficult for you particularly to air this very serious problem that you have before strangers. To be perfectly frank, we need input from real people like yourselves who can tell us what the impact of the legislation is going to be. You have provided a very valuable service and we thank you for it.
You said that before you purchased the building you had phoned rent review to make sure that you would be able to afford it, that you would get a return on the investment so that after a period of time your financial loss would be reduced.
Mr Tancredi: Yes, I did.
Ms Poole: I gather that was a big influence in your decision to buy the property, the fact that they said you could break even at some stage.
Mr Tancredi: Yes, because we had no idea what buildings were like. Mr Trelle works with a co-worker who owns two small buildings. He was talking to him all the time. Then he talked to me and we decided to go ahead with it. Again, we checked all over. I believe we even paid $200 to someone to check the building. I do not know what he checked, I am not sure, but everything was okay. He checked some orders from the previous owner. I do not know why he had to check, but he checked it. Maybe you know it, I do not know it.
We did all the preliminary work we possibly could but, I mean, how in the world were we supposed to know that this was going to happen two years later? I made some projections here. How can we lose money until 2001 ? The other owner is about 60 years old. That means he is going to get some return from this when he is 71.
I do not know what we have not done that we were supposed to do, to tell you the truth. As I said, there are some of you that probably are from Italian origins and one favour I want, besides your help, is also not to let this go to anyone of our friends. Even my son, who is 15, cannot face his friends, knowing that his father is a failure.
Ms Poole: I believe, Mr Chair, that Mrs O'Neill had one other question.
Mrs Y. O'Neill: It is not a question. I do feel that there has been certainly a great deal of personal involvement in this presentation. I feel that the presentation is from the heart, as I mentioned this morning, and that is the way public housing is. This cannot be considered as a presentation by a large property owner. It is a presentation that is made by a person in what we call a low-rise building. It fits that definition.
I am very happy that the accompanying documentation is as complete as it is and I think that it is most unfortunate. It shows the very grave effect that the date of 1 October has in this legislation. We are meeting the first person today who has been affected by that phase-in dated 30 October, a date that was previous to even the presentation of Bill 4 in the House.
It is very difficult for people in Ontario, and these presenters in particular at this moment, to understand government, and it must be extraordinarily difficult for a retroactive piece of legislation of this magnitude to be understood. I want to congratulate you for bringing to our attention your very personal experience and doing it in such a complete and sincere manner.
Ms Poole: Thank you for coming.
Mr Tancredi: Can I say one more thing? I do not know if you will grant me this favour I told you about, being as confidential as possible, but I think I have been assured by Ms Harrington that we will be looked after, and we appreciate it very much that you have listened to us. All we are saying is the truth. Every month we are minus here and minus there and I have been holding bills until the end of the month before paying them. Of course, it is much more work, but emotionally it is really -- I do not know when was the last night I slept eight hours or seven hours. Maybe for someone $75,000 is not much, but for me -- I came here when I was 20 -- it is everything. Thank you.
The Chair: Thank you. I want to thank both you, Mr Tancredi, and Mr Trelle for appearing before the committee. As you could tell, the committee was paying close attention to each and every word that you had to tell us and we are happy that you decided to take part in the process that we are involved in. I am sure that the committee will give further and more serious consideration to the comments that you left with us today. Thank you very much.
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BASIC POVERTY ACTION GROUP
The Chair: The next organization on our agenda this afternoon is the Basic Poverty Action Group. Marnie Hayes is spokesperson for the group. Please have a seat and relax. Could you just introduce yourself formally for the record, and the people who will be appearing with you and the positions that they hold in the organization?
Ms Hayes: Thank you very much, Mr Chair. We would like to thank very much the members of the committee for giving us the opportunity to speak here this afternoon and to make our submissions on this very important bill, Bill 4.
As mentioned, my name is Marnie Hayes. I am a community legal worker with Metro Tenants Legal Services and a member of the Metropolitan Toronto Ontario Coalition Against Poverty, and, as such, will be speaking and making submissions this afternoon.
To my right is Tex Cassidy, who is the president of the Roomers' Association in Toronto and a member of Basic Poverty Action Group. To my far left is Bob Olsen, who is a member of Basic Poverty Action Group also. Behind me is John Clarke, who is the provincial organizer of the Ontario Coalition Against Poverty. Michael Shapcott, who is with Basic Poverty Action Group, will be making a presentation as well as myself.
The Chair: Jointly you have 20 minutes to make your presentation and then the committee will divide up 20 minutes to dialogue with yourself and with your colleagues.
Ms Hayes: The message that we would like to send to you this afternoon is that we very much applaud the government introduction of Bill 4 as an emergency measure to the housing crisis and the growing crisis of poverty in this province. Looking at statistics from a recent study of the Daily Bread Food Bank, in the greater Metro Toronto area alone there are currently 108,000 people per month who must visit food banks in order to survive.
That is in the greater Metropolitan Toronto area. I understand that this committee will be going to Thunder Bay, Sudbury, Ottawa and Windsor, where you will also hear submissions, I am sure, from different people who have to use food banks in order to survive, so it is a growing number and it is not just in the Toronto area.
The Daily Bread Food Bank in its studies has also come to the conclusion that those people who use food banks on average spend 69% of their incomes on rent, which is an exorbitant figure to spend on rent. The point that I want to make is that the more you have to spend on your rent, the closer you are to becoming homeless. As the report by the Minister's Advisory Committee on the International Year of Shelter for the Homeless pointed out, people who spend more than 50% of their income on rent are at very close risk of becoming homeless.
What is the link between spending 70% of your income on rent and the rent review law? I think that the current law that tenants are subjected to, if I may say, is contributing to the problem of homelessness in this province and to the problem of people doubling up in apartments because they cannot find anywhere else to live.
This government and this committee have a chance to address the problem of homelessness in this province, I submit, by amending the existing rent review law and by taking away the financial loss provisions in the existing law that allow landlords to flip buildings and pass the costs on to tenants.
I understand that the rent review services made submissions this morning that pointed out that 96% of all those landlords who receive rent increases -- no, 96% are 14% and below. That figure I believe does not point out the 5% phase-in provision that is allowed under this law. The 5% phase-in provision, for those of you who do not know, is a provision that is allowed each year on top of the guideline increase until the landlord's financial loss is eliminated.
If you are a person on a low income or on a fixed income and you get a rent increase, which is happening daily, a rent increase for the guideline plus 5% for an unspecified limited number of years, your chances of becoming homeless are pretty high.
I work with low-income tenants, as I mentioned, and a few days ago I got a call from a tenant -- and I get many calls from tenants, but this specific case was a tenant whose landlord got a 10% rent increase. She had to pay a 10% rent increase, as well as the financial loss phase-in for an unspecified number of years until the landlord's financial loss was eliminated. Her husband just lost his job. Where is she going to get the money to pay the back rent and how is she going to pay the 5% plus the guideline per year?
Those are the questions that we grapple with working with low-income tenants and what low-income tenants grapple with every day when they get that order that is retroactive saying, "You must pay this amount of rent." Even a 14% increase is high when you do not have a lot of money.
I just want to say also that this provision in the law of the financial loss pass-through, which Bill 4 eliminates in the interim until a new law is passed, is a very positive thing for tenants.
With respect to capital expenditures, I had invited a tenant to come because I understand that the time is limited and there are not a lot of slots for tenants to speak. There was going to be a tenant, a former client of mine, who just received a 43.05% rent increase retroactive to 1989. I know you hear these cases of very high rent increases and you think that they may be isolated cases, but they are not. They are occurring more and more. This tenants' association, on top of 14.71% in 1988, got 43.05% in 1989. The tenants cannot afford to pay and they have to move out.
I could go on speaking about cases that I have worked on or in which I know tenants have received rent increases, but I am going to pass the floor over to Michael Shapcott.
Mr Shapcott: My name is Michael Shapcott. I am speaking today on behalf of Basic Poverty Action Group, which is an anti-poverty organization in Toronto. My paid work over the last four and a half years has been with low-income tenants, primarily in south Parkdale, in Toronto and in the east end of downtown Toronto.
About two years ago when John Sweeney became the Housing minister, I made an invitation to Mr Sweeney on behalf of our organization to come to our part of town and see the actual conditions of real people in our part of town, and Mr Sweeney did in fact come. We took him into a privately owned rooming house in the east end of downtown Toronto and took him down in the basement to show him a room where a person lives, in what might be a typical privately owned rooming house in Toronto or, indeed, typical of many similar kinds of accommodation across Ontario.
That rooming house is still there today, it is still privately owned and the same tenant is still living in this room in the basement. This room is about 6 feet by 8 feet and has no fire separation between it and the furnace, which is right next door. Despite the fact that the furnace is right next door to it, there is almost never any heat. The cockroaches swarm so badly in this particular unit that sometimes you can hear the clacking and it is frightening almost. They have referred to it as "swarming" when the cockroaches come.
The landlord has never supplied any paint. In fact, the tenants have painted some of their rooms but they supply the paint from their own funds, from their own limited funds, because the landlord refuses to. There are cracks in the wall; there are cracks in the ceiling. At one point the landlord even -- now, believe this -- when a tenant complained that there was no heat in one of the rooms, the landlord came in with a saw and cut a hole in the roof to connect with the room up above, which did have heat, so that the person could have heat.
The plumbing is inadequate. The toilet frequently does not work. There is no lock on the door, so the women who live in the house feel unsafe in using the bathroom facilities. There are about 12 people who normally live in this house and they each pay an average rent of close to $350, including the person living in the basement. That is $350 a month rent. That is about $50,000 a year for what is a firetrap. I should say that there are no safety systems in the house, no smoke detectors, no fire detectors, no fire extinguishers. There is not even a telephone in the house for them to phone if something did happen.
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You have already heard today from at least one landlord. No doubt you will hear tomorrow from the Fair Rental Policy Organization of Ontario saying this is not a rent problem, this is an affordability problem. The problem is that these people do not have enough money to pay rent to the landlord for the landlord to fix the place up. This particular landlord and this particular house, like a lot of rooming houses, every year religiously and routinely increases the rent to the maximum allowed under the guideline and every year religiously and routinely refuses to do any work; not a stitch of work. Not necessary maintenance, not fixing up any of the basic fire safety issues.
The tenant living in the basement is afraid to complain to the city building inspector and has directed me on many occasions not to complain on his behalf to the city building inspector even though I would love to get them in there, because this place is a fire trap. They are quite concerned and their fear is, of course, very real, that the minute the landlord gets an order the landlord will either do the work and then raise the rents even higher than they already are -- they are already unaffordable -- and economically evict everyone in the units.
The landlords' response, as I say, is to say, "This is not a rent protection problem, this is an affordability problem." Their solution to the affordability problem is to say: "Let's get rid of rent controls altogether. Let's let this landlord and many other landlords like him who are renting to poor people in this province charge any old rent they want, as high as they want. Let them charge whatever they want. Let the market establish the rent." What they are saying, in effect, is that the only fair rent protection for tenants in this province is no protection at all, nothing, get rid of rent controls, get rid of rent review.
However, they are offering this carrot. They are saying: "Of course this is going to put the squeeze on tenants. Of course this is going to result in the massive, wholesale eviction of people" who are living in what, quite frankly, are fire traps and substandard housing anyway, but it will result in the wholesale eviction of these people. They are saying, "To deal with that problem, what we'll do is create a subsidy scheme for landlords, a welfare system for landlords."
My first response to that, as a person who deals on a daily basis with the welfare authorities on behalf of people who are currently not landlords but who are on welfare and encountering the problems. I would not say to landlords that they want to set up a welfare system for themselves, but no doubt they do think this is another cash cow for them, because they can win both ways: they can get higher rents and they can also get subsidies. So their solution to the problem for these tenants and their only response to tenants living in rooming houses in this city and poor tenants all across the province who are forced to live in substandard conditions is: "Let's get rid of rent controls, rent review, any form of rent protection. Let's let the rents go up to whatever level the landlord, on a whim or a hunch, wants paid for whatever reason and let's create a massive welfare system for landlords."
We are here to say that that is wrong. Not only does it not make any sense financially, but it just does not make any sense in any notion of fairness or justice. We think the current legislation before this committee, Bill 4, is a sensible solution. The current rent review system is in a mess, there is no question; we accept that. Poor tenants are in a catch-22 situation, as I mentioned. They are afraid on the one hand to complain about substandard conditions because they will be evicted, but on the other hand they have to endure fire traps. Many people live and many people die in fire traps.
We think Bill 4 will bring some temporary order to the rent system in this province. We would urge this committee, along with tenants and others who have the best interests of housing at heart to work to create the kind of effective long-term solutions that will bring some sort of sense. We are here to deliver a single and very strong message today on behalf of low-income tenants in this city and across the province: Bring in Bill 4, bring in some real rent protection, and then let's work for the long-term solutions.
That is our formal presentation. We would be happy to deal with any questions.
Ms M. Ward: I simply want to say on our behalf that we concur with everything you say. I have run across many of the cases you are describing in my riding association, increases of 39% and rats in the stairwell and elevators without sufficient lights to see the person on the other side of the elevator. I would like to thank you for your presentation.
Ms Hayes: If I may add something to what I was previously saying about the 43.05% increase, I failed to mention an important point, that there are cockroaches and rats in that building. I was visiting the building recently and it is a hell-hole.
Mr Mammoliti: If I may, just fact-finding. You mentioned the 43% increase. How much is that to the average person in the building? How much would that be as an increase? Do you know?
Ms Hayes: For a one-bedroom apartment, I think the charge is now something like $1,011 a month. That is retroactive. You are talking here about retroactivity and how difficult and draconian and Ivan the Terrible-ish it is to retroactively implement a law, but this law has been retroactively implemented for tenants all along and they have had to pay large increases in lump sums.
Mr Mammoliti: Any relation to income? How much would they make on an average?
Ms Hayes: In this particular building over 50% of the tenants are refugee claimants. Therefore they are abandoning the building; they are just leaving en masse. Do not ask me where they are going. I would assume they are going somewhere with friends or family where they can find refuge. Quite frankly, I have no idea who is going to live there now. I grapple with the question of how the landlord is going to rent out these units, because literally there are rats and mice and the renovations that were done were unnecessary. I do not know who is going to move in there.
Mr Duignan: You have probably answered my question. Mainly the people who live in this particular building and a number of other buildings are people like single moms, people on social assistance, and in fact a 15% increase that some people proposed earlier would have a dramatic effect, because their income is so fixed and so low. An earlier presentation mentioned a cap of 15% annually. Even a cap of 15% annually would have a dramatic impact on the cash flows to those tenants.
Ms Hayes: Absolutely.
Mr Shapcott: If I can jump in, because I do work with a lot of people. In some cases that kind of increase, for a single mom, for instance, means not being able to buy certain necessary things such as fresh milk for her children, fresh fruit; it means relying on food banks. The food banks in this province -- unfortunately, one of the few growth industries other than repossessions and bankruptcies -- are providing food that is not nutritionally very good for people. People cannot survive on food banks, especially young children, so every dollar that is squeezed out of a single mom's income in order to go to a landlord means a dollar less for necessary things like food, clothing in the wintertime. In some cases, in more serious situations, what it will mean is an economic eviction.
In this city about two years ago there was a situation, not an isolated situation, of a schoolteacher named Randy Fraser who was on a fixed pension. He was economically evicted from his apartment because his rent just kept going up so high he missed his rent payments and was kicked out. He was living on the streets and in fact died in the streets of Toronto of hypothermia one winter while he was trying to take shelter in the doorway of an abandoned building. That is the kind of very grim situation. We have to be very clear here that what are fairly abstract percentages, perhaps, being presented to this committee today in very real terms mean nourishment, in some cases life and death for the poor people of this province.
Mr Duignan: What you are actually saying is that any increase above the guideline just adds to the misery and poverty that is already there.
Mr Shapcott: And the solution that is before this committee and the solution the government is presenting, which is in essence to say, "Let's stop all this madness and let's bring in a better system," we think is the only solution.
The Chair: I think one of the panel members has --
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Mr Olsen: Thank you. My name is Bob Olsen. The previous presenter, Mr Tancredi, obviously is a victim. I think he is a victim of land speculation. We have a land speculation system here in Toronto which is quite unique. I think the fact that landlords are able to pass through their losses to the tenants in addition to the allowed rent increases encourages speculators to buy and sell properties at exorbitant prices and the costs are then passed on to the tenant. The rent review legislation has not worked simply because there is this additional speculation profit. As we all know, the gap between the poor and the rich in this country continues to increase every year, is constantly increasing, partly because of the opportunity to speculate in real estate which has been promoted or allowed by the current rent review legislation.
Ms Harrington: I wanted to let you know that, not being familiar with Toronto, I had the opportunity a week ago, on Monday -- it was very, very cold -- to walk around Parkdale and go into some of the buildings and that was quite an experience. What I found was that there was a deterioration. It seemed to me that the landlord was actually allowing buildings to run down. These are buildings that are maybe only 20 or 25 years old. From the outside they look passable, but inside it was another story, and it was quite a revelation to me.
The idea of Bill 4 is that it is a breathing space for long-term legislation, as you know. I just wanted to say that in the long-term legislation I think all of us agree that we have to bring the landlords on side as well as the tenants. When I say "landlords," the bottom line is that we want people who are not interested in selling the buildings but who are interested in operating these buildings and making it work.
The Chair: We will move now to the Liberals. Mrs. O'Neill, seven minutes.
Mrs Y. O'Neill: I understand, Marnie, that you are speaking for one building. Is that correct?
Ms Hayes: I was speaking on behalf of the Ontario Coalition Against Poverty.
Mrs Y. O'Neill: Okay, but you are referring to a building that has a one-bedroom apartment for over $1,000.
Ms Hayes: That is right.
Mrs Y. O'Neill: I do not know whether that is an isolated case. I have had some experience, as has my family, looking for accommodation in Toronto. I find that rather extraordinary, a one-bedroom apartment for more than $1,000 a month, but in any case you have stated that.
Ms Hayes: I could give you the address.
Mrs Y. O'Neill: That may be helpful, although I am not asking for that. Does that building have a tenants' association?
Ms Hayes: Currently, the building does not have a tenants' association. In the past, it had. There is a very transient population in the building, as I mentioned earlier. There is a large number of refugee claimants who do not speak English, so they have found it very difficult to organize. So the answer is no, not now, but in the past, yes.
Mrs Y. O'Neill: You made a passing remark about the rents being at this level because there had been unnecessary renovations. Would you be more explicit about what you consider unnecessary renovations?
Ms Hayes: Yes. This particular tenants' association in September 1987 made submissions to the city of Toronto neighbourhoods' committee with evidence and photographs of the renovations which were carried out in the building in the hopes that the city of Toronto would deem the building to be subject to the Rental Housing Protection Act and not allow the landlord to do the renovations because he was carrying them out in such an unprofessional and unruly manner. In other words, the building was turned into a construction zone. What they were actually doing was putting in new kitchen cupboards and new bathrooms that were unnecessary, that were not needed. The bathrooms and the kitchen cabinets were not old.
Mrs Y. O'Neill: But the renovations went ahead. Was that when the tenants' association disbanded? You said that in 1987 there was a tenants' association and now there is not one.
Ms Hayes: The renovations went ahead and many other things happened in the building, that is, the landlord provided for a subsequent rent increase.
Mrs Y. O'Neill: Are you telling me, though, that there was a tenants' association and now there is not one?
Ms Hayes: That is right.
Mrs Y. O'Neill: Okay. Is there any waiting list to get into the building? You say people are leaving.
Ms Hayes: There is no waiting list. In fact, there are units that are becoming vacant.
Mrs Y. O'Neill: And they are staying vacant?
Ms Hayes: To my knowledge, I believe so, yes.
Mrs Y. O'Neill: Because you asked the committee where these people are going to go. Certainly I, as a member of this Legislature, get requests at least weekly, often daily, to go on public housing waiting lists. This particular spinoff has not been talked about much, and I think we have to consider that as well. Thank you for your information.
The Chair: Mr Tilson, you have seven minutes.
Mr Tilson: I congratulate you for the work you have indicated you are doing, because I think this is the start of what many of us fear is going to continue, in other words, the continuation of a slump. We are in a recession. We have more and more people without jobs who are moving to Toronto specifically, to the large urban areas. Any landlord who wishes to build a new apartment unit is crazy, because it does not pay him or her to do it; they are absolutely crazy. Mr Tenenbaum, I think, gave a complete summary of the problem. Why would anyone build an apartment building? The example you have given of someone paying $1,000 a unit for what you have described as appalling conditions, a slum -- I mean, the place is going to sit vacant. That is the problem and I think that is what is going to continue.
You have listed examples of health violations, fire violations, of property standards bylaws being violated both municipally and probably provincially. You have probably criminal law being broken with drugs and violence and heaven knows what else. You have problems with youth and older people who simply cannot get accommodation. I congratulate your group in doing the work it is doing. I challenge the government in this green paper it is introducing that probably, hopefully, all of these problems will be addressed. If it does not, if it is just more of the same old thing that Mr Tenenbaum has talked about, we are going nowhere. We have a system that does not work. In my opinion, that is what Bill 4 is doing, the same old story. My question to you is with respect to Bill 4. How does Bill 4, whether it is temporary or permanent, solve all of the horror stories you have described to us?
Mr Shapcott: I begin by saying that we also accept the position you put forward that it probably does not make much sense if you have money and you want to invest it to invest it in rental housing. Certainly the figures show that rental housing has not been attracting a lot of investment, and new rental starts have been dropping off since 1973, well before any rent review legislation was even conceived of in this province. That is the private sector's investment decision.
What that suggests to us is that perhaps housing is not something that should be subject to the vagaries of a market. Perhaps we should be moving away from this notion that somehow we should be creating a system that can entice investors into it. If this committee and indeed if the government wants to move in that direction, inevitably they are going to have to follow the Fair Rental Policy Organization's solution, that is, set up a massive welfare system for landlords, because landlords are not going to be able to create rental housing for the more than one million people in this province who are living below the poverty line. That is a simple economic reality, so we think the government has to look at solutions other than the private sector in terms of rental housing, especially for lower-income people.
What Bill 4 does, in our view, anyway, in the situation I described of this privately owned rooming house in the east end of downtown Toronto it gives these people some freedom to be able to go, as you have quite rightly stated, to the various authorities and say: "We want your inspectors to come in. We want this House to be brought up to a standard. We want to live in safety and decency. We want to have our rights under the Landlord and Tenant Act to live in decent accommodation be upheld."
At the moment, they are afraid to do that because they know the minute they do, if they are successful in getting the building inspectors in, the fire inspectors and so on, one of two things will happen. One likely scenario is that the house will be closed down because it will be deemed to be such a firetrap, and then they will be out on the street. For many poor people, the choice between living in a firetrap and living on the street is a difficult choice but one they have to make.
The other scenario, if the place is not closed down, is that the landlord will be ordered to do extensive renovations. Then, under the current system, the landlord will simply jack up the rents which are already unaffordable for the people living in this particular house and many similar houses. The tenants will in fact be economically evicted. So they face a situation where if they attempt to try and improve the quality of their housing, to live in the kind of standard of housing that any of us would take as an absolute bare minimum, things such as fire safety, being free from pests, painting at least once a decade, they face either an eviction because the place is deemed to be unfit for habitation or an eviction because they cannot afford the rent increases. What Bill 4 does, quite simply, is allow the tenants to get their places brought up to standard and not have to worry that big bill is going to hit them.
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The landlords will claim that it is unfair that they should have to pay the costs. In our view it is unfair that a landlord in this house and many houses like it have profited for years and years, to the tune I mentioned, this year, of approximately $50,000 annually without doing the necessary maintenance and repair. They have made their years of profit. Now we think it is completely appropriate that they be asked, directed, ordered, required, legislated, whatever the word is, to do the work that is necessary.
I will just say in summary, for the situation I was describing and the situation that many low-income tenants across this province find themselves in, what Bill 4 does is it gives them the freedom to be able to seek to bring their housing up to a necessary standard without fear of being evicted economically or in other ways.
Mr Tilson: I think that in many ways what you and Mr Tenenbaum say, ironically, is the same thing. Where you differ is that this legislation, in my view, and where I differ greatly with what you are saying -- I support what your problems are; these are terrible, terrible social problems that you have described to us and we are going to hear more as this legislation goes on.
My concern is that Bill 4, if anything, creates slums. It goes on and on. The problem that we have, which with all due respect was created by the last government, is going to get worse. Obviously, I am sitting here. I am concerned with those social problems. I am concerned with the problems you are having. It is called anarchy when you start getting slums and you start getting people not caring. Whether they be landlords or tenants, it creates a downplay of quality of life. Our quality of life deteriorates and I do not think you want that and I do not want that.
The Chair: We have time for one short answer.
Mr Shapcott: May I say to the member that if his option, instead of Bill 4, is to throw everything out the window and let landlords do whatever they want, then I think we would be into a far worse disaster than that.
Mr Tilson: Don't put words in my mouth.
Mr Shapcott: It seems to me those are the options that certainly the landlords' lobby organization has been pushing for over many years and will do doubt push for again tomorrow.
The Chair: I want to thank our panel for appearing before us today, for providing us with some very extensive information and background knowledge, which you have been able to gain over many years of experience and work in the community. We thank you for coming before us.
GEORGE CZUMAK
The Chair: Our next and last presenter -- last but not least of course -- for today is George Czumak. You have been allotted 20 minutes. I would like you for the record to state your name, the organization, if any, that you are representing and any position you may hold in that organization.
Mr Czumak: My name is George Czumak. I am here representing my mother, Helen Balen, who is the owner of a low-rise. It is a sixplex.
The Chair: You have 10 minutes and then you will have 10 minutes to dialogue with the committee.
Mr Czumak: Very good. Basically, I do not know where to start but I will try to do the best I can here.
The Chair: Take you time and start wherever your notes help direct you. It is very informal.
Mr Czumak: First and foremost, I am here with respect to the rent review order which we have received this past December. It had stated that we were entitled to a certain amount of phase-ins. I believe everyone has a copy, pages 11, 7 and 8, with respect to the phase-ins to which we were entitled to satisfy the hardships and loss of income that we had incurred from the purchase of the property.
This building was purchased by my mother, Helen Balen. It is a 50-year-old building. It was not owner-occupied at the time, so as you can imagine it had been in desperate need of repair and so forth. It was just totally neglected.
We are located in a chronically depressed rental area. The rents we were charging at the time of possession or purchase of the property were approximately $350 for an 850-square-foot apartment. The building, as I mentioned, is 50 years old. There is a lot of character in the building. People in the same area were charging approximately $600 to $650 for the same type of dwelling, in worse condition than ours. We found that very hard to swallow. We have owned the building for four years and we lived with that fact for a few years. We felt that was very unfair and very unjust for us.
My mother purchased the building, not for the purpose of flipping it, as I guess Bill 4 has been introduced to dissuade people from doing. My mother is retired. She is on early pension disability. She was involved in a car accident and she would like to retire in this building. My grandfather also lives in the building. I live in the building. We all pay rent.
With respect to repairs, you should have seen the building prior to our renovating it, which we have done extensively in the last year and a half. That was a very stressful time in my life, dealing with contractors and so forth which I had never done in my life before, and I found it to be very stressful. We have improved the building at least 100%. Aesthetically it is a beautiful building now to look at. Many of our neighbours have congratulated us and complimented us on bringing the street back to life, because it was a very scary building prior to our living in it.
My mother had refinanced. We are not well-to-do to start with, so I can appreciate when people come up here and they talk about $20,000, $30,000 and $40,000. That is a lot of money to us. My mom had refinanced basically every penny that she could, and as we have found out now we have overextended ourselves, for the reason that we believed we could bring the rents up to a fair rent, so that I believe I can have my mom live in a comfortable environment where she can be happy and she can just retire and live there with her family, myself included.
Now what has happened with the introduction of Bill 4 is that we understand that any occurring phase-ins will have been deemed to be null and void, which we feel is very unfair again, because this application we had made to rent review was done in November 1989. At that time, as I mentioned, we had put in every cent we could to bring the building up to a normal living standard.
We had not done any exaggerated expenses like satellite dishes or what have you. Basically, everything that was done to the building was required and was needed. There were windows; there were kitchens and plumbing and electrical. Everything we did we had to do, basically, because it was substandard.
I guess basically why I am here is that I would like to at least let someone know that I do not feel it is fair for the introduction of Bill 4 to cut me off from the subsequent phase-ins I was entitled to, as I have marked in yellow. That makes a big, big difference. Although you may feel that it is only 5% per year, I feel that does make a big difference in the cash flow and our being able to carry the mortgage we have incurred. We feel that we would like to be able to get those phase-ins and be able to carry on and have a positive cash flow.
We have been losing money from day 1 from the purchase of the building. It was not purchased as a quick flip. It was just purchased for my mother to be able to retire in and to live comfortably, to have and to keep. It is kind of like being married, I guess, to cherish. It is yours for ever, I guess. That is all I have to say.
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Mrs Y. O'Neill: Would you please state again the figures of the rentals you are charging and the size of the apartments.
Mr Czumak: Currently the rents are now approximately $690.
Mrs Y. O'Neill: How large is that apartment? You gave a square footage.
Mr Czumak: It is approximately 850 to 900 square feet. It is a very large apartment.
Mrs Y. O'Neill: That is a two-bedroom?
Mr Czumak: That is correct.
Mrs Y. O'Neill: What were these rents when you first took over this building which was in such disrepair?
Mr Czumak: They were approximately $325.
Mrs Y. O'Neill: Could you be a little more explicit with the kind of repairs you did.
Mr Czumak: I have 13 pages of my rent review order here.
Mrs Y. O'Neill: These were all discussed with the people in the rent review office?
Mr Czumak: Yes.
Mrs Y. O'Neill: Could you tell, were some of these related to safety and health concerns that you had for the building when you purchased it? If so, could you just give us a couple of examples?
Mr Czumak: With respect to safety, I do not fully understand that question, but first and foremost we have done brand-new windows throughout the entire building, which I believe would be a safety factor because of the area we are in. They were very old and broken windows. People could crawl in and out whenever they wished.
There have been new doors put on. The garage was just totally open. There were no doors on the garages before now. We placed new doors on the garages. They can be locked and secured so no one can go in and out of the garage. All the doors are now working where we can close the building off completely from the outside. We used to find rubbies sleeping in the hallway or downstairs in the basement, which did frighten myself and some of the other tenants in the building.
Although it may not sound important, the kitchens were very bad. As you can appreciate in a 50-year-old building, they were all obsolete, all cracked tiles for counter tops and old sinks. Whenever you would run water, you would get brown water and stuff like that, so the plumbing had to be redone. Kitchen cabinets were installed.
Painting of the building: It had not been painted for many, many years. Light fixtures: New lights were installed in certain areas.
Mrs Y. O'Neill: Are some of the original tenants still there or have you totally changed over?
Mr Czumak: No. Out of the six units we have there, there is one woman who is still there. She had been there for approximately 15 or 18 years. She is very happy with all of the work we have done there. She has not complained or created any problems whatsoever.
Mrs Y. O'Neill: At the moment it is totally rented?
Mr Czumak: Our building? Yes.
Mrs Y. O'Neill: Have you got a waiting list?
Mr Czumak: No one has approached me.
Mr Turnbull: Is there any of the work that you did which you would consider to be of a luxury nature?
Mr Czumak: I think everything we have done to the building definitely adds to the sense of being luxury. I know myself just having all of the apartments and hallways cleaned and painted, I consider that a luxury. I do not know what you mean by "luxury." There are no saunas.
Mr Turnbull: Any marble halls or saunas?
Mr Czumak: No, nothing ridiculous done. Everything was needed.
Mr Turnbull: When you said that you changed the windows, did you find that after you had put the windows on there was a reduction in the energy costs?
Mr Czumak: Since last year, when the windows were installed -- the completion of installation was last year -- yes, we have found there to be very much more heat generated or kept within the building. Again, there is the noise level from the exterior. For example, the streetcar tracks are quite close to us because we are very close to the lakeshore. You can hear the windows rattle and the streetcars go by all the time. Now it has been diminished considerably.
Mr Turnbull: What was the percentage of cash that you put into the deal when you bought it?
Mr Czumak: The percentage of cash? Do you want to know what the down payment was and basically with respect to the mortgage? My mother had put down $50,000.
Mr Turnbull: On a six-unit building.
Mr Czumak: That is correct, and she had assumed a first mortgage of approximately $135,500 at 11.5% for five years, which came due this past Christmas.
Mr Turnbull: What was the effect when it came due?
Mr Czumak: Fortunately enough for myself, it is a two-phase problem. Actually, it was unfortunate that we had to refinance because of the added expenses we had incurred, but that made us basically lock into a new first mortgage at 12.25% last January. Shortly thereafter, the rates started climbing as we are all familiar with now and they are still quite high.
Mr Turnbull: By last Christmas do you mean the one a few weeks ago or the one the year before.
Mr Czumak: Excuse me; one year before.
Mr Turnbull: What would you think the possibility of being able to get that same mortgage on this building today would be in view of Bill 4? Would it make it difficult for you to remortgage the building?
Mr Czumak: It being a vendor takeback, that in itself eliminates a lot of red tape and so forth with qualifying, etc.
Mr Turnbull: The new mortgage.
Mr Czumak: The new mortgage. Could I refinance now on the same terms and conditions? Luckily enough, things are starting to come down again and I believe we might be able to refinance for basically the same interest rate because I understand they are around 12.5% now.
Mr Turnbull: Do you know if there would be any difficulty and reluctance of lenders in view of Bill 4 and your inability to generate a cash flow for the building?
Mr Czumak: That I do not know. I am sorry. I could not answer that.
Mr Turnbull: All of the things that you replaced, the windows, the plumbing, the kitchens, all of this was original to the 50-year-old building. Is that correct?
Mr Czumak: That is correct. Yes, sir.
Mr Turnbull: You are saying that the $690 you are charging for the two-bedroom apartment is typical for the area.
Mr Czumak: Personally, I feel that this rent we are charging now is very fair. I do not feel that there would be any problem. Let's just put aside the rent controls. I think that if there were no rent controls, people would be more than happy to pay, let's say, $800 for these apartments because anybody who comes just says, "Oh, gee, I would be more than happy to pay $800 to live here because it is a very well kept up building."
There are buildings now in the area that were renting and still are renting -- I know people who are living in them -- for $600, $650, perhaps now $700 illegally, so they are not legal rents, but still are being charged and people are living in them and they are nothing compared to ours. I do not mean they are nothing, but I mean they are very much in disrepair. I feel the rents could be more. I personally think the rents we receive now should be $800 or $850.
Mr Turnbull: That would be similar to others in the neighbourhood.
Mr Czumak: I think that would be similar to others in the area, yes.
Mr Turnbull: You are currently making a loss on the building?
Mr Czumak: Yes. We have been from day one.
Ms M. Ward: I have a few quick questions. How long ago did you purchase it? You may have said that. I did not catch it.
Mr Czumak: The building was purchased in January 1986.
Ms M. Ward: You also mentioned that some of your family lived there. How many units are rented to non-family?
Mr Czumak: Three to non-family and three to family. My mom lives there. I moved in, and my grandfather, who is now 81. My mom brought him in because he was living on his own and she felt she had to look after him. It just worked out perfectly. Someone had moved out and we asked him to move in. He did not want to at first, but he did do so and it was a good move.
Ms M. Ward: The rent is now $690?
Mr Czumak: It is $690, approximately $700.
Ms M. Ward: The figure of $300 was mentioned when you purchased it.
Mr Czumak: That is correct.
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Ms M. Ward: That is a $390 increase. Over what period of time did that take place?
Mr Czumak: The increase had taken place in the last year. We had spent in excess of $80,000 on the building and we had received a 65% rent increase.
Ms M. Ward: So the $390 was a one-year, one-shot increase. It happened all at once.
Mr Czumak: Yes, exactly. There were about three years when we had gone by with the $325 payments every month. We just could not make any ends meet with that.
Ms M. Ward: I am sure the information is here, but I have not been able to find it. What rental are you asking for now?
Mr Czumak: I am not asking --
Ms M. Ward: I am sorry, could I back up for a second? What year was the increase to the $690? When did that occur?
Mr Czumak: The $690 occurred as of March 1990.
Ms M. Ward: When did you apply for it?
Mr Czumak: In 1989, so it took over a year to attain. We did attain it and as of this March we were allowed a 5% phase-in above and beyond the 5.4% guidelines which are stipulated this year.
Ms M. Ward: But that is on top of the 65% increase.
Mr Czumak: That is correct, because of our hardships and financial loss.
Ms M. Ward: And what are you asking for in this document? I have not found that.
Mr Czumak: I am basically asking for my phase-ins to take place, because of the loss we have taken in excess of $10,000. I think the government, instead of giving me or my mom the $10,000 back, has allowed us to have phase-ins to compensate for that loss. Now they are telling me that basically they do not care about the 10 Gs that they owe us.
Ms M. Ward: This will be my last question. What you were expecting was 5% plus the guidelining, so approximately an additional 10% each year.
Mr Czumak: For approximately two years. It would have happened this March, next March, and I think the outstanding amount capital loss would have been satisfied after next March, so it is not that I would have been receiving that for the next three, four or five years.
The Chair: We have time for one question.
Mr Mammoliti: You spoke about one tenant remaining in the building and it is a six-tenant building.
Mr Czumak: It is a sixplex, yes.
Mr Mammoliti: A six-unit building. Did the other five tenants leave because they could not afford the phase-in?
Mr Czumak: They all left prior to the rent order being applied for. There were personal problems among them that I had nothing to do with. It is not that I kicked anyone out to bring in family or anything. As I mentioned, I did not evict anyone or give anyone a notice of termination because I was bringing in family or anything. It was in rough shape. They all left. They wanted to go elsewhere and live elsewhere, so it worked out that we were quite lucky also for that reason.
The Chair: Mr Czumak, thank you for the information you have given the committee today. Thank you for appearing before us.
Mr Czumak: Thank you very much for hearing me.
The Chair: You are welcome. Committee members, that basically is the end of the public presentations for the day. We are almost right on time.
We made arrangements earlier today to have Ministry of Housing staff come back. I am under the understanding that staff is here. They left with us this morning a document dated 15 January 1991, I believe. We talked about allocating approximately one hour for staff to take us through their document and also to answer questions on Bill 4 that members of the committee may have and, further, to make note of information that members might be requesting. So I would like to invite the ministry's staff to come and join the committee. Please take a seat.
Mr Tilson: Mr Chairman, I appreciate the problem we are all in with time and understanding the agenda that has been prepared and even extending until 6 o'clock. I do not know how other members of the committee feel, but I have problems sitting past 6 o'clock. I gather from the tone of your comments that we will be sitting past 6 o'clock, but I am just putting you on notice that because of the agenda that was fixed by yourself and the clerk, even anticipating an end at 5 o'clock, I have made other arrangements. I know you perhaps have no comment to that, but I am just telling you for the record.
The Chair: I understand what you are saying. I will endeavour, for the rest of these hearings, to do the best I can to ensure that we stick to our schedule. I was lenient two or three times during the day and we probably lost about 15 minutes.
Mr Tilson: I realize that today there was a lot of technical arguing trying to determine where we are going, but to be fair, it would seem to me that the staff will have some substantial comments and there may be other members who are unable to sit past 6 o'clock. I have no problem going until 6, but they may go on for an hour. they may go on for an hour and a half, what with questions.
The Chair: The other alternative that I would offer the committee is that tomorrow, when we adjourn for our lunch break at noon I could have lunch ordered in and we would have from 12 to 2. That is an alternative that the committee might want to consider. Maybe it is not the right alternative; I see some heads shaking. I am at the mercy of the committee right now. I am trying to keep a schedule. I am getting a big new clock brought in tomorrow so that we try to keep on a better schedule. I hear you, but I do not know what I can do at this stage.
Mr Tilson: Probably the committee has created the problem for you. I guess we either proceed or we make other arrangements. To be fair not only to the members of the committee but members of the public who are perhaps wanting to hear these presentations, sitting past 6 o'clock is unfair.
The Chair: If it is understood and if it is the consensus of all the committee members that 6 o'clock is the end of the day, I will govern the committee accordingly.
Mr Tilson: I make it clear I have no problem sitting past 6 o'clock as long as we know well in advance.
The Chair: I understand. I appreciate that.
Mrs Y. O'Neill: I have the same difficulty because I am committed to another function this evening in my role as MPP. I have stated I would be there by 7 o'clock. There is travelling involved. I thought I would have absolutely no difficulty with that. I think we have obligations to many publics in this position. I certainly at this moment do not feel I can phone and say I am not going to be there two hours from now
The Chair: I appreciate that. Does the committee have any advice for me?
Mr B. Ward: Whatever you wish.
The Chair: Whatever I wish?
Mr Tilson: You have not had an offer like that in a long time.
The Chair: No. That is the best offer the committee has given me. I think I will grab the gavel so that you do not take it back.
Can I ask the ministry staff how long it would take to go through this in an orderly fashion without questions, just to hear you take us through it?
Ms Beaumont: I would estimate approximately 45 minutes.
The Chair: Forty-five minutes. That would take us to 6:25. I know we cannot go through it without at least one question. I know that will be impossible.
Ms M. Ward: Could you determine if anyone has any objection to the lunch-hour suggestion for tomorrow?
The Chair: Is that a problem?
Ms Poole: It is a problem with me because I had arranged a cable taping, with guests and other people participating tomorrow from 12:30 to 1:30.
The Chair: Is it impossible to rearrange it?
Ms Poole: Since that was the only time I could get these guests together before my cable show next Tuesday, it is difficult.
Mrs Y. O'Neill: What about tomorrow morning? We still have a little bit of time there.
The Chair: I am not going to be here at 9:00 am, but the Vice-Chair can be.
Mrs Y. O'Neill: I am sorry, you mentioned that.
The Chair: If it is for a full briefing, sure, that is fine. I do not object, because we are not going to be making policy for the committee; we will just be accepting a briefing from ministry officials. All members have heard the staff. They believe that to give a thorough briefing without questions is going to take 45 minutes. If you allocate from 9 to 10 am, you are only going to have 15 minutes.
Mrs Y. O'Neill: I think we should do something now.
The Chair: I agree. That is fine.
Mrs Y. O'Neill: Maybe half an hour now.
The Chair: Is the Vice-Chairman available tomorrow morning at 9?
Mr Brown: I am available at 9.
The Chair: That is fine with me. I apologize to the ministry staff for bringing some of you back who had not planned on being back, but I understand maybe all of you work until 6 o'clock over there every night anyway. Whether you are here or in the ministry offices, you probably enjoyed what you heard today anyway. The committee will reconvene under the chairmanship of the Vice-Chairman tomorrow morning at 9 am and we will continue to follow the schedule that we have agreed to for the rest of the day.
The committee adjourned at 1740.