RENT CONTROL ACT, 1991 / LOI DE 1991 SUR LE CONTRÔLE DES LOYERS
CONTENTS
Thursday 19 December 1991
Rent Control Act 1991, Bill 121 / Loi de 1991 sur le contrôle des loyers, projet de loi 121
STANDING COMMITTEE ON GENERAL GOVERNMENT
Chair: Brown, Michael A. (Algoma-Manitoulin L)
Vice-Chair: McClelland, Carman (Brampton North L)
Abel, Donald (Wentworth North NDP)
Bisson, Gilles (Cochrane South NDP)
Drainville, Dennis (Victoria-Haliburton NDP)
Harrington, Margaret H. (Niagara Falls NDP)
Mammoliti, George (Yorkview NDP)
Marchese, Rosario (Fort York NDP)
Murdoch, Bill (Grey PC)
O'Neill, Yvonne (Ottawa-Rideau L)
Poole, Dianne (Eglinton)
Turnbull, David (York Mills PC)
Substitutions:
Gigantes, Evelyn (Ottawa Centre NDP) for Mr Marchese
Marland, Margaret (Mississauga South PC) for Mr B. Murdoch
Waters, Daniel (Muskoka-Georgian Bay NDP) for Mr Bisson
Clerk: Deller, Deborah
Clerk pro tem: Mellor, Lynn
Staff:
Baldwin, Elizabeth, Legislative Counsel
Richmond, Jerry, Research Officer, Legislative Research Service
The committee met at 1024 in room 151.
RENT CONTROL ACT, 1991 / LOI DE 1991 SUR LE CONTRÔLE DES LOYERS
Resuming consideration of Bill 121, An Act to revise the Law related to Residential Rent Regulation / Projet de loi 121, Loi révisant les lois relatives à la réglementation des loyers d'habitation.
Section 13:
The Chair: The business of the committee is to review, clause-by-clause, Bill 121. When we completed Thursday, we were discussing subsection 13(4.1).
I had been running a list. Some of those members are not present at the moment. We will allow them into the discussion when they return. According to my list, of the members present, Ms Poole is the next speaker.
Ms Poole: My recollection is that when we adjourned last time we had been in the middle of discussing subsection 13(4.1), which was a government amendment which would basically say that if a landlord had both extraordinary operating expenses and capital repairs for which he or she wished extra remuneration through a rent increase in a certain year, the landlord could not claim both, and one of the things we were discussing at that time was the fact that there are ramifications from this. If the landlord had both extraordinary operating in a year and already had an order for capital repairs, and if the amendment said the landlord could carry those capital repairs forward to another year, then I would not have a problem with the amendment, because I know the government has said time and time again that it is committed to the cap and is unwilling to bend from that.
I say that is all well and good, but if you want to have capital repairs done, if you want to make sure that our buildings are kept to the standard that tenants have a good place to live in, then surely you do not want to discourage doing the capital repairs. With Hydro rates going up astronomically, with municipal taxation going up significantly, with all these extra expenses that are going up and the very real possibility that landlords would have to go for extraordinary operating, very few of them are going to be willing to commit themselves to putting money into the building in the way of capital repairs if they think there is no way they will be reimbursed. They will basically just lose that money.
I would also think it would make financial institutions very hesitant to lend moneys when they are not assured that the rents will be increased in a sufficient way to guarantee that the financial institutions will get their money back. So it really has a lot of ramifications that I am not sure the government has really thought out.
I know that as far as the extraordinary operating expenses are concerned, the minister and staff have said, "Yes, well, it's a three-year moving average, so if there are large municipal tax increases they will be covered by increases in the guideline." But the increases in the guideline certainly do not reflect what kind of increases we may be subject to in the coming years. This past year has been a municipal election year and, lo and behold, a surprise to all of us, tax levels were kept at a very reasonable 5% to 6% increase in most cases. I can assure you that next year we will not have that same luxury, particularly in municipalities which have been very hard-hit by the increase in social services and welfare and have to take on a lot of that burden themselves. That large increase will not be reflected until after the fact, so there will be a lag, and in that lag the landlord is going to be in the position that if he claims the extraordinary operating and if he has done capital, he will not be able to get reimbursed for those capital repairs. The way the legislation is set out makes it quite clear you cannot do both, so what landlord is going to want to put major money into capital repair if there is a real possibility that he will not be able to get his money back? I am really very reluctant to support this amendment for that reason.
If the government were to say that in a year where there was an extraordinary operating increase the carry-forward would be allowed for a future year, then I think that would be reasonable. That would also ensure the landlord that, yes, if he does go and get an order for a rent increase due to doing those major repairs, he will have the funding in place to make sure he can continue to carry the building and to pay back his loans. So I have great hesitation in offering support for this amendment under its current circumstances and in the current way it is drafted.
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Mr Winninger: I think I understand the point Ms Poole is making, but I would also add that in the years where the landlord wants to avail himself of the above-guideline increase, up to 3% for extraordinary cost increases, we cannot forget that the landlord will still be enjoying that 2% for capital repairs that is built into the guideline: 2% the first year, another 2% the second year, another 2% the third year, all cumulated.
I really cannot feel too sorry for the landlord in that situation. I feel much more compassion for the tenant who has to pay above guideline. I certainly do not think we can piggyback the capital costs on the extraordinary operating cost increase and come up with an increase of more than 8%; nor can I see why we should defer certain increases to accommodate both extraordinary operating increases and above-guideline capital repair cost increases, particularly because that miscellaneous allowance, that 2% for capital repairs that the landlord never really has to account for, unless it is under this act, where the landlord asked for more than guideline, is there to cover precisely the kind of contingencies I feel the member is addressing.
Ms Poole: To address the point that Mr Winninger just made, it sounds fine in theory because he is saying there is 2% built into the guideline for capital repairs. But if you look at the reality of the situation, a landlord does not have to justify that 2% unless he applies for an extra rent increase.
You have a landlord who does nothing in the building and gets the 2% for capital repairs, or you have a landlord who does spend the money and gets the 2% for capital repairs. They are both in the same situation. There is no incentive to that second landlord to do capital repairs. It is that simple. He gets the same money whether he does the capital repairs or he does not do the capital repairs. The whole point of having an additional 3% that the landlord could go to rent review for was to ensure that the capital repairs would be done and that the
landlord could do a significant amount in one year. But if you put them in the situation where that 3% extra will be forfeit, then they will not do it. It is that simple.
That is what we are talking about. Whether or not they do the capital repairs they get that 2%. What incentive is there for a landlord to go above and beyond and to maintain that building? I know my colleagues from the NDP will say, "Well, to maintain the investment value." I see at least one head nod, maybe another head half nodding, but that is not the issue here, because the investment value for rental apartment buildings in this province has gone down by a conservative 25%. These are not landlords saying this; these are real estate agents who are saying they have been devalued by 25%. A major portion of that has not been because of the recession; a major portion of it has been because of government legislation. The combination of the recession plus Bill 4 and Bill 121 has devalued these buildings, and there are a number of them that have been devalued by far more than that -- 40%.
As for maintaining the investment, many of these landlords have lost their investment, they have lost their equity. They have put significantly more into the building than the building is worth and it is going to be many years before that is recouped, if ever.
What incentive is there for a landlord to put more money into a building that he or she is already losing the investment on? There is not. That is the problem with this, because what it is saying to these landlords is: "You get the 2% in the guideline whether or not you do the repairs, but we are going to play Russian roulette for you. We are going to put the gun to the head and say we'll give you the 3%. You can go through the expense and the trouble of going to rent review, if you've done capital repairs, to get the extra 3%. However, you're not guaranteed that it's going to click on an empty --
Mrs Y. O'Neill: Barrel.
Ms Poole: " -- barrel." I thank my colleague for Ottawa-Rideau. It is hard to think these days after the long nights.
At any rate, you cannot play Russian roulette, because no investor worth his or her salt, no business person is going to say, "I will do this on the off chance that my extraordinary operating will not be enormous and on the off chance that I will be able to recoup the 3%." They will not be able to get the loan under those conditions, let alone go ahead and do the repairs.
I think this government amendment is ill-crafted and it is going to have ramifications that the government really does not want to see. They have talked about our aging housing stock, they have talked about the necessity for repairs. The bottom line is, pass this government amendment and you will ensure those repairs are not done. Not one incentive is there for the landlord to do it. The landlord is going to get the 2% whether or not he or she does the repairs. What incentive?
Hon Ms Gigantes: No.
Ms Poole: The minister says no. The minister does not comprehend that there is a guideline with 2% built in for capital and that does not have to be justified. The landlord does not have to come forward, give any itemized bills or prove he does the capital repairs, period. That is the end of the discussion. The landlord does not have to justify it.
So what incentive is there for that landlord to go above and beyond and do more capital repairs, go through the hassle of rent review and at the end of the day not know whether he is going to get the extra 3% to recoup what he has spent? It is easier for them not to do anything. I have heard all too many of them -- well, not too many from my point of view but certainly too many from the government's. I have heard a lot of them say they are just going to wait out the term of this government, because this is going to be a one-term government. They will wait until they get a reasonable government and then look to investing in rental housing again. So you have guaranteed with this amendment that nothing is going to be done. Congratulations.
The Chair: Mr Turnbull, you were on the speaking list, a carryover from last Thursday.
Mr Turnbull: I have to agree with everything the member for Eglinton has just said. Whether the government likes it or not, this is nevertheless what landlords are saying. We are not just grabbing at straws. We have heard the odd person saying that. The vast bulk of landlords are saying they cannot operate under these constraints.
It is quite clear that there is a significant philosophical gap between the government and my party; that we accept. Putting that aside, we have to look at the reality of the ownership of these buildings. If the government were to be intellectually honest enough to say, "Look, our intent is to drive private owners out of ownership and we will buy up these buildings at significantly reduced prices," I would respect the government a little bit more. I would still completely disagree with them but I would respect them because at least they would have put their true agenda on the table. But this clause and others are having the effect that landlords are saying they cannot afford to take the risk of doing any significant capital repairs, so they will wait until such time as there is a rent review application, and if there are any work orders they will try to fulfil them.
How you can satisfy the capital requirements to repair an underground parking garage that may cost in excess of $1 million with this clause is totally beyond me. It is quite obvious that not one of you has ever tried to sit down and do the mathematics of it, because it is totally impossible to amortize it over the kind of time frame you are talking about -- utterly impossible.
Hon Ms Gigantes: The agenda of the government is laid out in Bill 121. What you see is what you get.
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Ms Poole: One hundred amendments.
Hon Ms Gigantes: There is no secret theory about what we are doing, quite contrary to what is being suggested. This section is quite clear. We are all agreed on what it means; we are not agreed on the effect, and we have not, so far in this discussion, really looked at how it combines with other elements of Bill 121 to achieve what the opposition members claim they are concerned about.
I want to address one other side issue, the question of devaluation of rental properties during the last two years. If you look at the values that have been placed on other properties, quite apart from rental properties over the last two years, you will find that the values are quite comparable and the changes in the values are quite comparable. To go to the heart of the matter on subsection 13(4.1), we are having a discussion about whether it is fair for landlords to have to live with a guideline amount for such matters as municipal taxes and hydro when they are already getting either a current-year or roll-through-year increase above guideline.
I want to call upon opposition members to remember that while next year's guideline may not reflect next year's tax increase, this year's guideline under the current legislation -- and the guideline will operate very much the same way -- reflects high tax increases in the last two years at the municipal level. There is an averaging out. Everybody has to live with it on both sides of the fence. Tenants have to live with it; landlords have to live with it. What you are asking for here is a special allowance for landlords. Tenants are also in this equation. We think it is fair enough if we are providing -- the current proposal in the government legislation -- not two total years of above-guideline increase but three total years of above-guideline increase at the level of 3% for landlords. We think we are providing a pretty adequate balance of the interests and the costs here.
It has been proposed to us that there is no incentive for landlords to make an investment in capital repairs if they cannot recoup the cost of those capital repairs at the same time as putting in an application for above-guideline increases due to extraordinary operating costs. It is true that we have not presented any special incentive, but there is a disincentive in this legislation for landlords to neglect maintenance. It is the first time we have had legislation proposed in this province where we intend to make that disincentive effective. We are saying to landlords, "You will maintain your property in a livable, suitable way or you will not get guideline increases."
That is the point at which I interjected when Ms Poole was speaking when she said they can always get guideline increases. Not so, Ms Poole. You neglect the section of the legislation which says to landlords: "You neglect maintenance at your peril. You will not get guideline increases if you don't provide adequate maintenance."
So while we have not provided any special bonuses, we have certainly provided flexibility within the legislation, a total of three years during which above-guideline increases to the level of 3% may be permitted a landlord who has been able to justify capital repairs which are necessary in a building or buildings, and we have provided a disincentive to avoid the maintenance, which you claim you want. So I think you can feel assured that landlords will learn to operate within the system because they will find that while they are not being bonused, they have flexibility to do their repair and maintenance work and they will suffer a strong disincentive, including the possibility of rollbacks on rent, certainly not providing for guideline increases, where the level of maintenance is inadequate.
Ms Poole: I have to respond to a number of things the minister says, because it reflects a degree of -- I was going to say one word but I will substitute it for a kinder one -- lack of knowledge that I would not have expected from the minister, although I am learning to.
The first thing is about properties being devalued during current times, particularly the last year and a half, and the fact that the devaluation for apartment buildings has been similar to other comparable properties. If the minister knew anything about the rental market, she would know that the resale value of a building is based on the rents. It is one of the most stable of property values because of that.
It is not like other house valuations which fluctuate quite dramatically depending on all sorts of things, including the economy and whether the real estate market is hot or cold. It is extremely stable and it is basically not in the type of situation where you would have a 25% fluctuation. It is just unheard of. We are talking about income-producing property that in many ways is buffered normally from the vagaries of the economy. Obviously they are affected to a certain degree, but 25%? What the real estate agents are saying is that the most profound impact has been the government legislation. Notwithstanding that it is usually a very stable market, in this case people are anxious to dump their properties and they will take whatever they can get. That is the first point.
The second point: When she is talking about how the three-year averaging basically reimburses and takes into account all the vagaries of inflation, if she thinks municipal taxes have been high in previous years, it is just going to blow her mind when she sees what is going to happen in the years to come, because municipalities cannot, under legislation, incur a deficit. With astronomical costs they have no choice. They can only cut services, raise taxes or a combination of both. Even if they are willing to cut services, we are going to see increases the likes of which we have not seen before. There is going to be a lag.
The other point the minister made was with regard to inadequate maintenance. In a very self-righteous tone she said, "For the first time there is going to be legislation that is effective." Eliminating the guideline increase if there was inadequate maintenance is not a new concept. Two buildings in my riding had it done and had the guideline increases frozen. It was not under your legislation, Minister; it was under its predecessor, the much-maligned Bill 51. It was extremely effective, but the problem is, when I talked to the building inspectors, they said it is like trying to wring blood out of a stone. They said you get into a catch-22 situation because in a number of instances where this is happening, the landlord has mortgages worth more than the building.
You can say to your heart's content, "This was a bad business decision," which is your usual comeback. I can say to you, "Deal with reality." The reality is that if the landlord is in financial jeopardy and then you freeze the rents so he cannot get the guideline increase, it is not helping the problem, because the basic problem is that if there is not enough money there to carry the building, no matter all the good will you want to put into it, you can bring down that heavy stick but you cannot wring blood out of a stone.
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I have had building inspectors who have said to me, because I have contacted them, "Why aren't you acting on this?" They said it becomes a catch-22 situation where you spend months and months trying to work on it with work orders, but the landlord does not have any money. In the final analysis, are you really protecting tenants? So when she is talking about the rent reductions and when she is talking about the guideline and that it is not assured, I can tell you it will only be the most serious of cases where it is not assured. A very strong case will have to be made before they are going to freeze those rents and say there is no guideline increase.
What you are going to find is that the major capital repairs will not get done. They are not going to be able to take the building to rent review and ask for a rent reduction, because the single-glazed windows which are allowing all the heat to escape and which make the apartment freezing cold -- they will not be able to go and say, "Freeze the rents because he has not put in new thermal-paned glazed windows," or he has not replaced the boilers so that when you get up in the morning you can be assured of hot water. It is not called neglect; it is called certain things wearing down after a number of years.
You get to the stage where you say these things have to be replaced. Are you creating an incentive to replace them? The minister said, "We are not creating an incentive, that's true, but we are creating a disincentive." Then it becomes a vicious circle. You have to understand how investment works in the province, how the real estate market works and how rental housing works. It may sound fine and fair to say, "They should and we will ensure they will," but the problem is much broader than that and I do not think these Band-Aid solutions are really going to help.
I thought we had one of the best presentations in Bill 4 and again in bill 121 from the Stormont-Dundas-Glengarry legal clinic when they were talking about the necessity for the carrot, and the stick. We give them the incentive and then if they do not go for it, we use the stick. They said if you just use the stick without the carrot it is going to fail and the ones at the bottom who are going to suffer will be the tenants. What this legislation is doing is creating an adversarial front out there such as you would not believe. Well, maybe you would.
Some of you members must have tenants in your riding. If you had been out there at all and talked to them, you may have discovered that landlord-tenant relations are not in very good shape right now. They are terrible. We have a lot of landlords who are saying to tenants, "I am not doing anything." These are landlords who used to get along with their tenants. I am at a loss because the minister does not seem to comprehend what the market is about, what rental property is about and the fact that saying it does not make it so. There are realities you have to deal with. You just cannot draft legislation in isolation and say it should be this way and therefore we will make it this way. You have to look at reality. The reality is if you pass this amendment, you have just killed any slim chance you had of landlords going for capital repairs.
I will come back to you in three years and I will say, "Look at the number of applications to rent review for that 3% increase." That will be when I prove my point, because they will be much lower, and what you will be saying as an NDP government is, "Look at the money we've saved, because look at the backlog; there's no backlog." Of course there is no backlog because nobody is going to put any money into the buildings. So congratulations, I really commend you on saving the system some money. We are going to need fewer bureaucrats.
The Chair: Through the Chair, please.
Ms Poole: I apologize for not going through you, Mr Chair. I hope the New Democratic Party members on this committee will remember my words several years from now and I hope they will not be too surprised when they are pointing out how smoothly the system is going when we point to the number of applications and say: "That's why the system is going smoothly. You've eliminated financial loss. You've virtually eliminated the applications for capital repairs. You've changed the face of it. You are right. You will give tenants one type of protection against rent increases, but it is at their own expense because they are not going to live in buildings that are as good and as comfortable and as well maintained as they are now. I am not talking about the ones that are slums. I have no use whatsoever for landlords who operate in those kinds of conditions and who abuse their tenants. I am talking about your average building where, if a landlord is on the verge of financial collapse, he is not going to be spending the money where it should be spent. Bring in your hammer, but it is not going to solve the problem.
The Chair: Thank you, Ms Poole. We have Ms Harrington and then Mrs O'Neill.
Ms Harrington: I want to make a couple of points about what the opposition is saying. First, I think we have to be very clear as to the outcome of what they are suggesting and that people in this province should know.
First of all, the intent of this section of the legislation is that there is a cap, and that is for this coming year. The increase is 6%. With the cap for extraordinary operating costs and/or capital costs, it will be up to 9%. What the opposition is saying is that this is not sufficient, that there should not be a cap of 9%, that the landlord, if he wants to do capital repairs and also has extraordinary operating costs, therefore should be able to charge more. That is exactly what they are saying.
Ms Poole: On a point of order, Mr Chair: What the member has said is --
The Chair: That is not a point of order.
Ms Poole: It is, because she has incorrectly attributed remarks to me.
Hon Ms Gigantes: That happens all the time, Ms Poole.
Ms Poole: I do not care. It is does not happen to me. It is very clear that is not what I am saying. I am saying they should be allowed to carry it forward to another --
The Chair: Ms Harrington has the floor.
Ms Harrington: Ms Poole says they should be allowed to carry it forward and just make it go on and on, which is one way of dealing with this. I am not sure where the Conservatives' position on this would be, but basically what both opposition parties are saying is that the cap at 9% is not enough. I just want to point out to the people of Ontario that if we allow both capital and extraordinary operating costs, then obviously it would be up to a 12% increase. What we are talking about in 1992 are people's rents for their homes, and I want everyone to think very carefully how many people across this province who are renting their homes would have an increase in their income of above 6%. Very few, I put to you, are going to have an increase of that magnitude.
I think the opposition may be missing the point here when they think this legislation is to enable landlords to be guaranteed the costs of their buildings. The intent of this legislation is to have some stability for the tenants -- that actually means a cap -- so that people know there are not going to be extraordinary increases, so they will not be evicted from their homes.
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I just noticed in the last few minutes something I do not think we have been doing in this committee in the year we have been together, and that is a tendency to characterize motives or intents behind what people are saying. It is only fair that we deal with the statements that are made here and not go behind and say why people feel this way.
I also want to point out that this is 1991, almost 1992, and let's deal with the reality of running a business in this province. Landlords are business people. I want to ask you and everyone out there, how many people in this coming year are going to have increases in their cash flow in their businesses, whether you think of a corner store or whatever business it is for a small investor? I submit to you that there are very few businesses where there is going to be an increase in cash flow and maybe these people are going to be lucky if they do not have a decrease. If they have the same level of business, I submit to you that maybe that is going to be quite lucky.
What we are dealing with here with landlords is a guaranteed increase of 6%. What the opposition is asking for is something over 9%. This is not the reality of businesses or small businesses in Ontario. So I would just like to make that clear in this kind of atmosphere that we live in, and that is the real world of 1992 in a recession in Ontario.
The Chair: Thank you, Ms Harrington. As we continue this rather broad-ranging discussion of subsection 13(4.1), we have Mrs O'Neill and then Mr Turnbull.
Mrs Y. O'Neill: I have listened very closely to what Ms Harrington has said and I find it very difficult, as I find the entire Bill 121 from the very beginning. The reason -- and the minister used the word "disincentive," but not in the context I want to use it -- is that Bill 121 is built on the theory of disincentive. As far as I am concerned there will not be the quality or the quantity of rental properties that we need in this province as a result of this bill.
This bill, and certainly this particular section of it, totally ignores the fact that there is a marketplace component. There are tenants, there are landlords and there is the marketplace within which these people operate. That has a great effect on what rents can be charged, what properties are there and what kinds of things have to be done to properties to make them competitive or desirable to live in. There is not even thought in this bill, in my mind, about choices. I am sorry, that is what I think Ontarians want. Landlords are small- and medium-sized businesses and the minister's choice of word, "disincentive," is kind of interesting because I feel that is what this entire NDP policy -- no matter where you look, whether it is in the budget or whether it is in Ministry of Industry, Trade and Technology, there is very little incentive to do anything, so the opposite, disincentive, is there on almost every policy, particularly with small- and medium-sized businesses.
We have had enough landlords -- and they are still going to the media all the time, and many of them with the support of their tenants, may I say -- who say they cannot live by this kind of legislation. Their wives have had to go back to work. They are not getting any income from properties they bought for that purpose and, in many cases, maintain themselves.
I find the rhetoric around the tenants -- tenants need housing and people provide housing. The only housing in my riding right now that is getting any kind of improvement, and I am talking about energy-saving improvement, is that which is run by the housing authority. I find that is not the way in which Ontario was built. Ontario was built by people helping themselves when they could and making an income they can depend on. Unfortunately, this bill is not moving in that direction.
Mr Turnbull: Let me try to go through all the various points that have been brought up. The minister totally tries to mislead this --
Interjection.
The Chair: You should rethink that choice of words.
Mr Turnbull: -- is totally distorting the facts of this matter, and I believe "distorting" is quite parliamentary.
The Chair: And you withdrew the first phrase.
Mr Turnbull: I withdrew the first phrase. The watchers can draw their own opinions.
The suggestion that the reduction in value of apartment buildings in this province is totally parallel to the reduction in value of commercial properties is disingenuous, to say the least. There is a component -- I am not suggesting there is no element of reduction in value that could be attributed to that -- and that would be along the lines that capitalization rate expectations are higher now.
However, the basis upon which a value for the commercial property is driven -- and minister, if you do not believe what I am saying is true, I think you should speak to your ministry officials, who will certainly have the sense to confirm that this is correct. The way a commercial property value is driven is you determine the income flowing from that building, and as the income goes down due to vacancies, so goes the value. As you have high vacancies generally, it drives down the whole value of a market segment.
However, in this particular case it is almost entirely due to legislation that values are going down in the respect that you have legislation which controls the ability of landlords to be able to make any money -- not a profit, but any money. Many of them are losing money significantly at this moment.
The vacancy rate is extremely low in this province. Therefore, the income that is coming to these, the gross income, has not gone down; it has gone up because of the guidelines. I emphasize it has gone up. If you know anything about appraisal, anything whatsoever, you cannot make the statement that it is based upon a general trend in the country, because that is just patent rubbish.
The Canadian bankers came in here and they gave the lowest assessment of any group that suggested that the reduction was due to this bill. They suggested 15% of the value of buildings had been reduced as a result of this bill. All the other groups suggested anywhere between 20% and 40%, but the most commonly used number was 25%. The Canadian bankers, who were very small-c conservative in their estimates, said 15% as a result of this bill.
Turning to the other comments that have been made, there has been a total ignoring of the point that has been brought out about major capital repairs such as underground parking garages and the fact that it is totally impossible if you have to repair the whole of an underground parking garage to get it back within the prescribed period of time -- impossible. Therefore it will not happen.
You have ignored the fact that we have two types of buildings. We have older buildings which have been renovated, or new buildings, and on the other side we have older buildings which are unrenovated. The unrenovated buildings are typically the ones with lower rents.
The constituency of people in older, unrenovated buildings and newer buildings is totally unrelated to income. Unfortunately, a lot of the people who are least able to pay rent are the ones who have to go into the higher rent buildings because of the fact that there is a lack of apartments. Therefore there is more availability of expensive apartments than of the cheaper ones.
Every time anybody comes forward with any hocus-pocus and starts talking about cash flows and does not understand the underpinnings of this bill, he does a disservice to this government and to the people of Ontario. I have tenants who cannot afford the rent they are paying now. This bill does nothing to help those people, but it certainly does a lot to help those who drive Mercedeses and BMWs and live in rent-controlled buildings. These people are going to get the benefits.
It is very significant that Jeffrey Freedman, who wrote for the Toronto Star and was a great tenants' advocate , and still is to my knowledge, and for many years championed rent controls, finally decided that rent controls do not work and wrote a very strong article in the Toronto Star suggesting that they were not working in this province. We were getting no buildings built other than the non-profit co-ops funded by government tax dollars, which are costing typically 150% of what the for-profit sector could create those buildings for. He damned rent controls and was sacked by that socialist paper as a result of it.
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The fact that you choose to ignore the difference in the cost of maintaining an older building which has not been renovated and a building which has been renovated totally shows to me that you are not interested in solving the problem. You are more interested in some socialist rhetoric, and I frankly say what socialism did in Britain was destroy Britain. Thank God we got a good dose of Thatcherism to shake it up. That is what will happen in this country unless you wake up now.
Mr Winninger: What happened to Thatcher?
Mr Turnbull: She was in office for more than 10 years, that is what happened to her.
Mr Abel: Look at what happened to England.
Mr Turnbull: England is a lot better off now than --
The Chair: No, we are going to debate 13(4.1). The discussion has been broad-ranging, but not that broad. Mrs Marland.
Mrs Marland: I would like to refer to some comments made by this minister in a rebuttal to me on this subject of whether any of these sections and their applications make any difference as to the age of the building. The minister had said that just because a building is 30 years old does not mean it is going to cost more in repairs or to operate. That is one of her several quotes she made the day that Ms Poole and I were asking her to be reasonable and understand that the age of a building is relevant. Another quote I would like to remind the minister of is where she said again, "The age of the building is not the most relevant factor."
What I find particularly interesting is that although I argued that the age of the building is relevant, I was arguing purely from a base of common sense. I am not a landlord of a residential building, but I have relatives who live in apartment buildings, rental accommodation, and a lot of friends, and I spend a lot of time going in and out of rental accommodation of various ages. From a commonsense point of view, I thought I was correct in saying that older buildings do cost more to maintain and to repair. We are not even speaking of renovations, but just general maintenance and repair.
When I made this point with the Minister of Housing I would have thought that since Housing is this minister's portfolio and it is far more her responsibility and she has a wealth of expertise behind her with the ministry staff -- her own personal expertise may not be in that area, which I respect. I know that when MPPs are appointed to cabinet they do not necessarily have any relative experience in the portfolio to which they have been assigned, but I know that by the time you have been a minister for six months, with the kind of staff our ministries have, there is no reason why a minister could not be brought up to speed, because there is no question that the ministry staff do have the expertise.
Anyway, I thought it was very interesting to come across a publication by the ministry of which this minister is in charge, and it is a consultation paper from the Ministry of Housing, published in February of this year. The title of the paper is Rent Control: Issues and Options and, lo and behold, on page 76 there is a pie chart dealing with rental stock, and beside the pie chart is a description of the percentage of Ontario rental stock. For example, it says that the Ontario rental housing stock is aging. It says that 65% of Ontario's rental stock is more than 20 years old. This legislation is going to apply to everything in this province, so here is the ministry document saying that 65% of the buildings to which this bill applies are already 20 years old.
But it is the next paragraph that is really significant, because it supports the argument I was making and totally contradicts the argument the minister made, and the statement is: "Age of building has an important bearing on the condition of the rental stock. Generally, the older the building the greater the need for repairs and maintenance."
Is that not interesting? It is particularly significant -- not because it was my argument; it is coincidental that it was my commonsense argument that made that statement -- that this minister, who is responsible for housing in this province -- mind you, she is only interested in rental housing.
Mr Turnbull: It is pretty depressing, is it not?
Mrs Marland: She is only interested in rental housing and non-profit housing. She is not interested in helping the private sector and helping people to get into a position where they can afford to buy their own homes. We know that.
There is a statement by Mr Dan Burns, who, I would suggest, as Deputy Minister of Housing, speaks for this minister, and he says that the four main thrusts of his ministry are rent control, non-profit housing production, management of government-owned land, review of the Ontario Housing Corp and a public housing work plan, so we know where this socialist government stands in terms of helping people invest in their own equity by being able to afford to buy their first little home.
In any case, I think that for this minister to contradict both the member for Eglinton and myself on the relevance of the age of buildings when we are talking about the need to spend money on repairs and maintenance is deplorable, and I think it is just great that her own ministry has a paper that confirms the position which the member for Eglinton and I were trying to make with this minister about three weeks ago.
I think that is a depressing commentary on the outlook for the people of this province, with someone in such an important role as Minister of Housing who does not know anything about housing and who is responsible for this rather drastic, draconian piece of legislation that is before us, and as we go through every amendment -- and we happen to be dealing with a government motion now, subsection 13(4.1) -- this argument and these facts have to be repeated over and over again, because it is relevant that we are in this situation with Bill 121 before us, from a minister who, from her own words, says that there are still matters that she has to think about with this legislation, and then those matters that she has thought about and tells us about are totally inaccurate. Those are my comments at the moment on this section.
I did make comments on this section last week on why I am opposed to this amendment. The amendment actually, as far as I am concerned, makes a sham of the exercise of saying to property owners, "We'll give you 3% to spend on capital improvements, and we'll give you two years to pay for it, but the second year you don't get anything of the normal 2% that you are allowed to spend in that category in terms of a rent increase." You see, the worst part is that for the tenants to pay a 2% increase on their rent in order to have a building that is well maintained, that is clean, that the carpets are replaced if necessary, or the walls are painted if necessary -- whatever it is. We are talking about minimal maintenance here. You ask tenants and they would rather pay that 2% more to have that kind of accommodation that they live in, that is their home. Two per cent on their rents, individually, they would not be concerned about, but 2% for the property owners on all of the rents is the difference between them being able to afford something and not being able to afford it.
The Chair: Is it the pleasure of the committee that subsection 13(4.1) carry?
Mrs Marland: No, can we have a recorded vote, please?
The Chair: We can do that.
Mrs Marland: Actually, I would like 20 minutes to get my colleague back.
The Chair: We will have a 20-minute recess. We will return at a quarter to.
Ms Poole: Mr Chairman, the steering committee was to meet at 12. Could we meet now, in this 20-minute intersession?
The Chair: We are missing one of the members, but we can do that, if we can work it out. The committee is adjourned until a quarter to 12.
The committee recessed at 1123.
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The Chair: The committee will come to order. We have a vote on subsection 13(4.1).
The committee divided on whether subsection 13(4.1), as reprinted, should stand as part of the bill, which was agreed to on the following vote:
Ayes -- 6
Abel, Gigantes, Harrington, Mammoliti, Waters, Winninger.
Nays -- 4
Marland, O'Neill, Y., Poole, Turnbull.
The Chair: The next section we need to consider is subsection 13(4). Questions, comments or amendments?
Hon Ms Gigantes: This clause is the same kind of clause as has been in application for four years under rent review and it indicates the amount of notice that shall be given in order for a rent increase application to be made.
The Chair: Further questions, comments or amendments? Seeing none, is it the pleasure of this committee that subsection 13(4) carry?
Mrs Marland: Excuse me, just a moment, please.
The Chair: Yes, Mrs Marland. I am sorry, Ms Poole. I have got ahead of myself. Mrs Marland.
Mrs Marland: I am just reading this, thank you.
The Chair: Fine, then Ms Poole.
Ms Poole: I would acknowledge the assistance of Peter Libman from the landlords' self-help group, who brought this not only to my attention but also to the attention of the ministry staff. The way it was worded previously might have meant that rent increases would be in effect for a 15-month period, just because of the drafting.
Hon Ms Gigantes: Mr Chair, on a point of order: I believe the member is directing her comments to subsection 13(5) rather than subsection 13(4), which we are now considering.
Ms Poole: Have we not --
The Chair: No, we are dealing with subsection 13(4). I apologize for the order, but that is the one we are dealing with, which is, "An application under this section shall be made at least 90 days before the effective date of the first intended rent increase referred to in this application."
Ms Poole: Mr Chair, was there any particular reason why we did 13(4.1) before 13(4)?
The Chair: That is exactly the point. There was no particular reason.
Ms Poole: So my confusion is well founded. Okay, thank you.
The Chair: I am sorry for the confusion.
Mrs Marland: We are not only going backwards in the province with this legislation, we are now going backwards in dealing with the amendments.
Mr Abel: Now, now, be nice, Margaret. Be gentle.
Mrs Marland: Can we read it so we all know which one we are dealing with?
The Chair: I just read it.
Mrs Marland: My copy of the bill does not have an arrow above 13(4).
Ms Poole: It is not a change.
The Chair: It is not a change, Mrs Marland. We just have to carry the section.
Mrs Marland: Okay. I am opposed to this.
Mr Abel: We are not surprised.
Mr Mammoliti: You told us you have not even read it.
The Chair: Mrs Marland has the floor.
Mrs Marland: Now that I have read it, I am opposed to it. I read actually faster, I guess, than Mr Mammoliti. To read 13(4) was quite easy.
Mr Mammoliti: It is a good thing you understand it then.
The Chair: Are there further questions or comments?
Ms Poole: Call the question, Mr Chair.
The Chair: Is it the pleasure of the committee that subsection 13(4) carry? Carried.
Subsection 13(5): This is a government amendment, so it is as the bill is printed. Subsection 13(5), Ms Poole, or first could we provide the minister with an opportunity to explain this?
Hon Ms Gigantes: This was in fact the change Ms Poole was referring to. As the bill was originally presented, it would have allowed a landlord to apply for an increase in rent only every 15 months. This is a correction, one of those technical amendments to which we referred earlier, which says that the landlord can apply in any 12-month period.
Ms Poole: At the risk of repeating myself, but at least this time it is with the right section, I wanted to thank Peter Libman from the landlord's self-help group for bringing this matter to our attention, the fact that the way the wording and the drafting of the clause had gone before, there might be misinterpretation that the landlord would be entitled to file an application for an increase every 15 months, which was certainly not the intention of the legislation. We will be supporting this particular amendment.
Mrs Marland: We are supporting it also.
The Chair: Is it the pleasure of the committee that subsection 13(5) carry, as printed? Carried.
Ms Poole: On a point of order, Mr Chair: I would just like to note that we have reached unanimity at least on one section of this bill.
Mrs Y. O'Neill: A milestone.
The Chair: Subsection 13(6): questions, comments or amendments? Is it the pleasure of the committee that subsection 13(6) carry? Carried. Subsection 13(7).
Hon Ms Gigantes: The government has an amendment to place on subsection 13(7), and it is as a result, I am sure members of the opposition will be gratified to note, of proposals made for amendment to this section by members of the opposition. Essentially, the original printing of the bill defined what is happening in this section by reference only to other sections and it was the proposal, through proposed amendments of members of the opposition, that in fact we should spell out exactly what is happening in this section.
The Chair: Excuse me for a moment. Do members have a copy?
Hon Ms Gigantes: I believe so. This one?
The Chair: No, that is a Liberal motion.
Ms Poole: The government tabled a new set of amendments that were not printed in the revised bill, and I think this is part of the new, not necessarily improved package.
Hon Ms Gigantes: So I should move it.
Ms Poole: I think so, yes.
The Chair: Yes, thank you. I was just trying to clarify that.
Mr Winninger: On a point of clarification, is the amendment that we are referring to now in the reprinted bill?
The Chair: No, it is not.
Mr Winninger: Because I do not see it in my binder, either.
Hon Ms Gigantes: It has been tabled.
The Chair: Maybe the minister could read it in while the clerk is distributing it to members who do not have that particular amendment.
Ms Gigantes moves that subsection 13(7) of the bill, as reprinted to show the amendments proposed by the minister, be struck out and the following substituted:
"(7) Before making an order on an application under this section, the rent officer shall consider whether the amount of the increase should be limited or the maximum rent reduced because of,
"(a) an inadequate standard of maintenance or repair of the residential complex or of a rental unit in it;
"(b) a discontinuance or reduction in the services or facilities provided in respect of the residential complex or a rental unit in it; or
"(c) an extraordinary decrease in operating costs for municipal taxes, hydro, water or heating for the whole residential complex."
Hon Ms Gigantes: As I mistakenly, in terms of procedure before the committee, began to say earlier, this is really to make very clear for anyone referring to the bill exactly what matters are being addressed in subsection 13(7), where previously subsection 13(7) had made reference to other sections of the act. We think this is clearer. We are pleased to have been prompted to do this by suggestions from the opposition.
Ms Poole: I thank the minister for the acknowledgement that it was a concern of the Liberal caucus that the bill was not specific enough nor very clear as to what was meant by the section as previously outlined in the bill. I, in turn, would like to acknowledge the assistance of the Tenant Advocacy Group, which was very helpful in bringing this to my attention and which certainly helped considerably in the drafting that we presented. The government amendment is substantially the same as the Liberal motion, our amendment to subsection 13(7), so we will be withdrawing ours and supporting the government amendment.
Mrs Marland: As you notice, Mr Chair, we also have an amendment to this same section, but I do not think our amendment has been recognized by the government amendment. I wonder if the minister could give us an example of an "inadequate standard of maintenance."
Hon Ms Gigantes: I am happy to address the question of the difference between the government motion supported by the Liberal members of the committee and the proposal which had been put forward by the Conservatives. The question really is one of whether the application of these tests of the suitability of an application for a rent increase shall be mandatory or permissive. You will note that the original legislation, then the reprint and the amendment supported by the Liberals all set out these standards as mandatory tests. In other words, there shall not be a rent increase unless these tests are made. What the Conservative motion proposes as an amendment is to make them permissive. In other words, the rent officer might or might not consider these matters.
We consider it critical to the operation of the legislation that it be known what tests will be applied to the applicability of a rent increase or a request for a rent increase, and we therefore do not accept the proposal that has been put forward by the Conservatives.
Mrs Marland has gone on to ask us to define adequacy and "inadequate." As has been discussed, these matters, which have been discussed before in previous sections that we have dealt with before committee, will be determined by the rent review officer.
The Chair: Thank you. Mrs Marland, would you care to make your amendment to the amendment now and put it on the floor? We will deal with it and then with the question of the government amendment.
Mrs Marland: I would be happy to do that, Mr Chairman. However, whether my amendment is accepted or not -- and I am not at all optimistic that it will be, having just heard the comments of the minister -- in either case and in either wording of this amendment, my wording or the government's, I think the minister should be able to answer my question. I am not repeating a question I have previously asked this minister. I am simply saying that whether the wording is "shall" or "may," which would be my amendment, it still applies to clauses (a), (b) and (c), so I would like the minister to give me an example of an "inadequate standard of maintenance."
The Chair: Mrs Marland, because it is 12 of the clock, and in order to have a debate on this, I think it would be useful for you now to move your amendment. Then we will discuss this in total at 3:30, just to be procedurally helpful, and given the hour.
Mrs Marland: I will be happy to do that then. My amendment would be the same wording except that under subsection 7 where it says, after the comma in that sentence, "the rent officer shall consider" and so on, I would amend it to say, "The rent officer may consider whether the amount of the increase should be limited or the maximum rent reduced because of" the following, (a), (b) and (c).
The Chair: So to understand you, you are moving that subsection 13(7) of the government amendment be amended by striking out "shall" in the second line and substituting "may."
Mrs Marland: That is right.
The Chair: Thank you. I think, given the hour, we will pick up this conversation at 3:30. Before we adjourn, however, I would note that the subcommittee met this morning. There will in future be a report, but the purpose of the subcommittee meeting this morning was to discuss, pursuant to standing order 123, a request by the Liberal caucus to consider a matter of concern. We are adjourned.
The committee recessed at 1204.
AFTERNOON SITTING
The committee resumed at 1554.
The Vice-Chair: I believe, Mrs Marland, you have the floor, speaking to one of your amendments placed prior to adjournment.
Mrs Marland: My amendment addresses the question of the mandate being given to the rent officer in the government motion. That is why my amendment was to change the word "shall" to "may." Because of the strength of judgement being given to the rent officer in this government motion, I think we should have some tone of flexibility in this amendment. I did ask the minister a question, to which I am still waiting for the answer, on this amendment. I will ask the question again.
It says, "Before making an order on an application under this section, the rent officer shall" -- in the government's words, or "may" in my words -- "consider whether the amount of the increase should be limited or the maximum rent reduced because of, (a) an inadequate standard of maintenance or repair of the residential complex or of a rental unit in it."
I would like the minister to describe what clause 13(7)(a) might refer to, as an example.
Hon Ms Gigantes: An existing outstanding work order might be an example.
Mrs Marland: Am I getting just the one example?
Hon Ms Gigantes: Yes.
Mrs Marland: How would an inadequate standard of maintenance without an outstanding work order be described? I understand outstanding work orders, so I guess we need to know what an inadequate standard of maintenance might be.
The Vice-Chair: Is that a question, Mrs Marland? Do you want a definition?
Mrs Marland: Yes, because we are voting on this very significant section and I think we need a definition.
The Vice-Chair: I was just clarifying that this was a question you were putting to the minister.
Hon Ms Gigantes: There are many examples that could be given in a general sense. It would depend on the case that was before the rent officer. The rent officer would consider the state of maintenance and the question of repairs which might be required, whether or not there was a work order, and make an assessment of that.
Mrs Marland: Minister, we are talking here about language used in your bill. You use the words "inadequate standard of maintenance." In fairness to the public in the province, I think you should be able to give an example of what an "inadequate standard of maintenance" might be.
Hon Ms Gigantes: I just did. If we want to go further, I think what the member is asking for is to provide wording that would cover each particular situation that might be brought before a rent review officer. That obviously is an impossibility. We will make no attempt to do that. The mandate of the rent officer under this legislation is to make a judgement on whether "an inadequate standard of maintenance or repair" exists and to determine therefore the eligibility of an application.
Mrs Marland: You said you gave me an answer. The answer you gave me was that it was up to the rent officer to establish what is an inadequate standard of maintenance.
Hon Ms Gigantes: I gave you one example.
Mrs Marland: Yes, one pertaining to a piece of work that required a work order.
Hon Ms Gigantes: Yes, but there are many situations in which work needs to be done where a work order has not been issued. There are many municipalities around this province that do not issue work orders. Therefore, we are providing language so that a rent officer will consider the state of maintenance or repair when judging the eligibility of an application for an increased rent.
Ms Poole: May I ask for a supplementary on that, with Mrs Marland's permission? The minister gave as an example an outstanding work order. In your estimation, would all outstanding work orders be deemed to be inadequate maintenance?
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Hon Ms Gigantes: Those that are related to health and safety under this legislation.
Ms Poole: So any outstanding work orders related to health and safety would be deemed to be inadequate maintenance?
Hon Ms Gigantes: Yes, they would.
Ms Poole: As long as the work order is outstanding?
Hon Ms Gigantes: That is correct.
Ms Poole: What about the scenario of an underground parking garage?
Hon Ms Gigantes: Who has the floor here?
The Vice-Chair: Ms Poole is responding. You had responded and she --
Hon Ms Gigantes: I thought there was a supplementary question.
The Vice-Chair: Ms Poole is pursuing a supplementary.
Mrs Marland: I am allowing it; I agreed.
The Vice-Chair: Do you want to finish this? Then we will get back to Mrs Marland. Conclude your supplementary and then the minister can respond.
Ms Poole: We have heard from various expert witnesses that many times there is a difficulty with underground parking rehabilitation, to know how long it is going to take. Quite often there will be a work order on it and there will not be an adequate amount of time, simply because once they get into doing the work and into the concrete rehabilitation, they find it is much more extensive than they thought. In a case like that, where the landlord is attempting to do the work and the repairs yet cannot meet the deadline, that would be deemed to be an outstanding work order. It would be at the discretion of the municipality and the individual inspector whether they would extend that work order.
Hon Ms Gigantes: That is correct.
Ms Poole: Sometimes when there are backlogs, it takes some time in order to get that extension. Do you have any intention of clarifying the circumstances under which an outstanding work order would be deemed to be inadequate maintenance?
Hon Ms Gigantes: Always.
Ms Poole: In all circumstances?
Hon Ms Gigantes: As long as they relate to health and safety.
Ms Poole: Even if there are extenuating circumstances?
Hon Ms Gigantes: The extenuating circumstances are between the landlord and the municipality to work out. The landlord can appeal a work order at the municipal level. It is up to the landlord to make sure, if that is necessary, that is what he or she does.
The Vice-Chair: Ms Poole, if you want to pursue this line of questioning, you can do so after Mrs Marland. You can get back on the list, inasmuch as it was a supplementary.
Mrs Marland: I am quite happy to have the member for Eglinton complete her line of questioning on this matter. It is easier for both of them to have the continuity.
Ms Poole: Thank you, Mrs Marland.
This is one of the difficulties I have with the way the government has constructed the rent penalty provisions and the maintenance issues we will deal with later on, that there are extenuating circumstances where it is beyond the landlord's control and it is being dealt with.
Hon Ms Gigantes: What is?
Ms Poole: An outstanding work order. It is being dealt with, the time limit has expired and there is a lag before the work order is extended or anything is done to relieve.
Hon Ms Gigantes: What the legislation says in that case is that when it relates to health and safety, I stress again, the rent officer shall rule ineligible an application for an increase in rent above guideline until that matter is straightened out. It is the responsibility of the landlord to straighten that out with the municipality. We are talking here about something that relates to health and safety, in this instance with the work order.
Ms Poole: I can appreciate that. I am just saying there are instances in which the landlord involved is attempting to remedy the situation.
Hon Ms Gigantes: Then the landlord involved is going to have to wait to remedy the situation before having an eligible application. Can you tell me why we should be saying in legislation that we are setting a standard we expect in maintenance and repair -- what we are talking about here in particular is a question relating to health and safety, where there is a problem of such a nature that the municipality has put a work order on -- can you tell me why a landlord in that kind of situation should be eligible to go ahead and get an above-guideline increase?
Ms Poole: Perhaps the minister does not realize how common it is to have a work order put on. There are buildings that are extremely well maintained that might have a work order put on, not because the landlord is unwilling to fix something but because quite often there is a communication --
Hon Ms Gigantes: Related to health and safety?
Ms Poole: Just a moment, Minister. Quite often, there is a lack of communication between the tenant and the landlord. That is sometimes the biggest problem. There is no requirement for a tenant to actually approach the landlord and ask for something to be repaired prior to going to the city and asking for a work order. One of the problems we have is that when you have a work order, it has varying degrees of what time it is going to take to repair it. Sometimes -- and I have seen this happen -- municipal work orders are put on that bear no semblance to reason. They are to do exterior wall work, they are given 30 days to do it and the order is put on in January.
Hon Ms Gigantes: Is that considered a health and safety question?
Ms Poole: It might well be, but if it is freezing weather and you cannot do the construction --
Hon Ms Gigantes: If it is a health and safety question --
Mrs Marland: On a point of order, Mr Chairman: I am having a great deal of difficulty hearing the questions and the answers. To participate in this committee hearing I have to be able to hear the questions and answers. The minister continually interrupts the person asking the questions. I think there is enough time that we can operate this committee so we can all hear.
The Vice-Chair: In fairness, Mrs Marland, I think everybody will take that under advisement. I appreciate that. On the other hand, there has been a fair bit of latitude on both sides, both with the minister and members of the committee. I seek to allow that to happen to the extent that it works. To the extent that it does not will make it much more rigid. I think for the time being if we could try to allow the members of the committee and the minister to conclude their comments and then respond, that would be helpful. I think Ms Poole was finishing a point, and then I will allow the minister to respond.
Ms Poole: If I can put my mind back to what point I was in the middle of. Maybe it would help if we just waited until the end of a sentence before any interruptions. I am quite willing to have give and take, but it is somewhat distracting when you cannot finish a sentence.
Going back to the issue of outstanding work orders, the problem in the minds of some people is that if there is a work order out on a building, they take that to mean their landlord is a bad landlord, the building is in a poor state of repair and there is inadequate maintenance. Sometimes it is a matter of health and safety, but sometimes, in order to remedy that work order, it takes a substantial amount of time. What I am saying is, particularly when you are dealing with things like concrete rehabilitation, one does not know how long that is going to take.
The other factor -- and again building inspectors have talked to me about this problem -- is that you can have an underground parking rehabilitation that costs $1 million. That is certainly not out of line at all. If the landlord does not have the money and cannot get the financing to do that immediately, then sometimes that underground parking rehabilitation takes longer than you or I might like, but the fact of the matter is, if the money is not there, it is extremely difficult to do it in a very concise period of time. I am not talking about a situation you might have in Parkdale or some areas of the city and province where you have a slum landlord, where it would not take a rocket scientist to figure out that the building was in a state of inadequate maintenance.
One concern I have, which we expressed earlier, about the meaning of "neglect" and "inadequate maintenance" is that we would like to see some criteria, some guidelines, for the rent officers as to what is meant by those terms. If the minister tells me this is going to be dealt with in regulation, which it quite often is, I have no problem with that, but I think it only fair that we see what those regulations are, to see whether we can agree with the criteria and with the definitions the minister and ministry have come up with. It is the type of thing you really do not want to leave to either the imagination or the individual opinion of various and sundry rent officers, who may have quite a variance as to what one or the other thinks, depending, as I mentioned at an earlier time, on their background and their perspective on certain things.
I have no problem with the government's amendment as it is stated here, but I would like to know from the minister if she intends to clarify in regulations exactly what is meant by the inadequate standard, what qualifies, what does not qualify, so that we all know and the public knows and the landlords and tenants know what precisely is going to be covered under this particular amendment.
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The Vice-Chair: I am going to allow the minister to respond to your question, but I want to remind you that we are actually at the present time dealing with the amendment put by Mrs Marland.
Ms Poole: Yes, I apologize, Mr Chair.
The Vice-Chair: I know there is some impact but we have strayed a little far from that with respect to your last line of questioning. In fairness, if the minister wants to respond, it is appropriate.
Hon Ms Gigantes: First of all, I want to make it clear that we are not dealing with everything at once here. If we are dealing with a work order that is outstanding, we are dealing with a work order which is related to health and safety. If there is a question about the length of time that a landlord has been given to comply with a work order, we are talking about the question of length of time that has been given to comply with a standard of health and safety.
I think you will have to agree that there is some reason to propose that in fact such a work order would be a good example of an item which should be considered in the decision around assessing adequacy of maintenance by a rent officer in any reasonable approach to trying to maintain standards.
The second point you raise is the question of how we define "inadequate standard." I suggested that the rent officer will use discretion. If you have proposals for a definition, I would certainly be willing to consider them. It is possible, of course, to consider some kinds of directives within regulation. I ask you whether you think that is going to help.
I ask that because if we try to define that this crack in the wall, this fallen-down step, this piece falling out of the ceiling constitutes inadequacy, we are not going to be able to name all the factors that should be considered. We will not be able to do it.
The other way that might be approached in regulation is to suggest a series of factors to be considered. We could list a long list in hopes that within that list we would be able to cover any and every thing which should be looked at by the rent officer.
The problem is that if we start this kind of listing either of situations or of factors to be considered, we are inevitably going to leave some out. It is the intent of the government to have, for the first time, legislation in this province which really does put pressure on to get adequate standards of maintenance and repair in rental buildings.
We think this is the best way to approach it. We expect from the people who are acting as rent officers an understanding of what is reasonable and what is not reasonable in the consideration of clause 13(7)(a). I feel confident that the operation of this section is going to be one which in fact bears out our proposals to make sure that before landlords receive above-guideline increases they get their houses in order, as it were.
The Vice-Chair: Ms Poole, I am going to ask that if you want to pursue it we set it aside for the moment. I draw to the attention of the committee members that we are at the present time dealing with the amendment put forward by the Conservative Party, if we can get back to that.
Any further discussion on that, Mrs Marland? Are we prepared to call the question on it? Let me know. If you want to proceed, we will proceed with your amendment.
Mrs Marland: I would like to proceed. The thing is, you cannot discuss the amendment in isolation of the conditions.
The Vice-Chair: I understand that, but we are wandering a little bit further afield.
Mrs Marland: I have agreed with the line of questioning of the critic for the official opposition. If we cannot be given even an example of what is inadequate standard of maintenance, then how can these rent officers do their job? If the minister is not willing to give us an example -- I am not asking for a list. I am not even asking to have the example enshrined in the legislation. I am just asking for an example so that I can understand the intent behind this wording.
This minister says: "I've given you an example. It is where outstanding work orders exist." Then we hear, "It's outstanding work orders if they are related to health and safety." We already have two kinds of work orders now. The ones that are related to health and safety apply, and the others do not. Is that what you are saying?
Hon Ms Gigantes: In terms of the reduction of rent, what we are dealing with is work orders that --
Interjections.
Hon Ms Gigantes: It is quite clear in my mind -- I do not know whether it is in Mrs Marland's mind -- that there are some kinds of maintenance matters and repair matters which are of a serious nature. Some of them will be covered by an outstanding work order when subsection 13(7) is applied by the rent officer. Some of them will be cosmetic in nature, and I would expect that the rent officer would not judge them to be of great import as far as the application of clause 13(7)(a) is concerned.
We certainly do have some understanding, from the workings of the rental standards board under the current legislation, of the numbers of problems that tenants have experienced with maintenance and repair work. I do not propose that we restrict the assessment that rent officers make under clause 13(7)(a) to a list, nor do I propose that we restrict it to the consideration of a list of factors, because I think that will inhibit the useful application of this section in the way that this legislation means it to be used.
This legislation aims to provide tenants with the guarantee that landlords will not only not get but will not be able to apply for an above-guideline increase when there is inadequate maintenance or repair. The landlord has the responsibility, if there are work orders involved, to make sure that they are cleaned up. If there are not work orders involved, which happens many times because in a great number of municipalities there is not an adequate system of building inspection, then the rent officer will make an assessment of the situation and, on that basis, will determine whether a landlord is eligible to apply for an increase.
Mrs Marland: The minister is not willing to give a definition of inadequate standard of maintenance and yet she says to the member for Eglinton, "If you have proposals for a definition, I would be happy to consider them."
Hon Ms Gigantes: I would.
Mrs Marland: This is really the most ludicrous system I have ever heard of. This is your legislation, Minister. These are your words. It is your bill. It is your responsibility to explain the content of this bill to the people of this province. You have a nerve to sit there, as Minister of Housing, and suggest to any member of this committee -- maybe you can ask your own government members -- but I think for you to say, "If you have proposals for a definition," and not even give a definition yourself, then I cannot believe your attitude with this legislation. You are saying to us, as opposition members who are opposed to the legislation anyway, "If you want to propose a list of definitions, I will consider them."
We are simply asking you. These are your words. It is based on these words that your rent officers are going to do their job.
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Hon Ms Gigantes: That is right.
Mrs Marland: You will not even give an example. I do not know why you are so hairy-scared about giving an example. I am not asking for a list of definitions, and I certainly hope you are not sitting there expecting the rent officers are going to develop the list through experience.
I want to get to the training of the rent officers, because that is a whole issue in itself about who they are and what kind of training they have. As I said last week, I have several pages in response to my question about who is going to be eligible to be a rent officer, to interpret this amendment we are discussing right now, but if you cannot even answer our questions about an example of an inadequate standard of maintenance, I would like to know, when this person goes to train for this job as a rent officer, who in the Ministry of Housing is going to say to these rent officers, "This would be an example of an inadequate standard of maintenance." When are these questions going to be answered?
The Vice-Chair: Do you care to respond?
Hon Ms Gigantes: Quite gladly. I have suggested that I have considered the question of whether we should name a long list, and it would be a long list, but I am convinced it would be an inadequate list of the types of examples of inadequate maintenance or repair that may arise in different situations around this province over time.
I have suggested to members of the opposition that I have considered that I do not think that is a good way to go about it. I have suggested to them that I have considered making a list of factors to be considered in guidelines. Again, I think the problem would be that the list would not cover situations we think should be covered, and I have proposed quite seriously that if there are other ways of approaching this subject members of the opposition can think of, I would be quite prepared to think about them. That is a genuine offer.
I have also given, quite contrary to what Mrs Marland has just said, some examples of what I think any one of us would agree would be inadequate maintenance, inadequate repair. It is the intent of the legislation to make sure that this matter influences the situation of landlords when it comes to the level of rents they can ask for from tenants. That is the intent of the legislation. I know Mrs Marland does not agree with that intent, but that is in fact the intent, and if she can think of a better way of carrying out that intent, we would be happy to consider it, aside from a listing of situations and a listing of factors to be considered.
Mrs Marland: Maybe you can tell me the real reason you do not wish to answer my question directly; I have asked it directly now three times. You said you have given some examples, one being outstanding work orders relating to health and safety. You also have admitted that a large number of municipalities do not issue work orders, and I can assure you that we might as well forget about landlords, property owners, ever getting any rent increases at all. There is no way you will have enough rent officers to deal with this problem in this province, because under this legislation, under this section, anybody is now going to be eligible to make an application and the rent officer is the person who is going to make the decision. I asked you how many rent officers you are going to have in the province. What was the answer? How many rent officers are you going to have to implement this legislation?
Ms Parrish: Actual rent officers? I think about 100.
Mrs Marland: Is that the answer, 100 rent officers?
Ms Parrish: I can go back and find out the exact number planned.
Hon Ms Gigantes: I believe we tabled with this committee written answers to that question. I do not recollect the number at the moment. I believe Ms Marland will find it attached to the material she was looking at a moment ago that outlines the mandate of rent officers' qualifications and so on.
Mrs Marland: That is right, I do have that, but I do not believe I have the number of rent officers. I do have the qualifications for rent officers, but I do not see the number. But for the sake of argument, let's talk about if we have 100. Even if we had 200 or 300 -- I will wait till we get the number.
Hon Ms Gigantes: We do not have to wait, do we? Maybe somebody else has something they would like to say while she waits.
Ms Parrish: I apologize, Mrs Marland; I think it is going to take me a little while to find it.
Mrs Marland: I will wait for the number to continue that particular question. The point I am making is that even if we had 500, which is doubtful, we are looking, according to the ministry's own publication, as of July this year at 1,318,000 rental units in this province, and you are talking about 100 rent officers. It would be funny if it were not so pathetically sad, but you are delegating the implementation of this section of your bill. In fact, you are delegating the majority of your bill to the discretionary power to make a decision by a rent officer. I think the last figure I heard about the rent review board applications is that we have some 2,812 to be heard, and we are told that is going to take two or three years. How long do you think it is going to take? Do you have the answer approximately?
Ms Parrish: We are just confirming. I think about 100 is right, but I just wanted to get someone to phone back and confirm. I do not want to give you the wrong information.
Mrs Marland: So it is around 100. How long do you think it is going to take if you have 100? I might even give you the latitude to 150 or 200, if you want. How long do you think it is going to take with that number of rent officers and over 1.3 million rental units in this province? If you apply for a rent increase -- and we are talking here about 2% of the eligible rent increase -- how long do you think it is going to take to implement that section of this bill throughout the province?
Hon Ms Gigantes: I do not understand the reference to 2%.
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Mrs Marland: This is the section that is dealing with whether or not there would be a decrease in rent, right?
Hon Ms Gigantes: No, also an increase.
Mrs Marland: Pardon?
The Vice-Chair: I think the answer was that it could also be a decrease. Is that correct?
Hon Ms Gigantes: Yes, and it has to do with the landlord's application.
Mrs Marland: Right, landlord's application, okay. What this section says is, "Before making an order on an application under this section, the rent officer shall" -- or "may," according to which amendment is accepted -- "consider whether the amount of the increase should be limited or the maximum rent reduced...." So we are not dealing, I suggest, with just increase; we are dealing with decrease as well.
Hon Ms Gigantes: Yes, that is correct.
Mrs Marland: All right. We are dealing with increasing or decreasing the rent. We have 1.3 million rental units in the province, and is the answer 100 rental officers?
Ms Parrish: I am afraid it is not; it is 106, Mrs Marland.
Mrs Marland: Thank you for your accuracy, Ms Parrish. So we have 106 rent officers. That is incredible. You are bringing in a piece of legislation that is so powerful, and it is to be interpreted by 106 rent officers in this province. In the meantime, if a landlord is entitled to a rent increase, that application for increase can be held up --
I am going to wait until the minister is finished consulting, because I want to ask the minister a question and I want to know whether I am understanding this clearly. If a property owner who has rental units decides he has to have a rent increase, under this section of your legislation could he have a rent increase in the interim until a rent officer rules on whether or not the application is going to be allowed?
Hon Ms Gigantes: The answer is no. There is a 90-day notice period in the same section, as you are aware, and we are very hopeful, because of the way we have attempted to structure the sections of this legislation, that we will have much prompter adjudication on such matters than we have had under Bill 151.
I think Colleen Parrish has a note to add to the discussion around what your questions relate to in terms of the number of rent officers and the potential for delays or complexities that might overwhelm the number of rent officers.
Ms Parrish: The reason we have these provisions is essentially that in the act there are currently two things that could be happening. A landlord says, "I want to increase the rents for these reasons." At the same time, tenants may have decreases they want, either the extraordinary operating cost decrease or allegations that the landlord is inadequately maintaining the property. It would be far less efficient to have two separate hearings going on and it would also be quite confusing for the parties, because what could happen is that one hearing would do X, Y and Z and another something else, all at different time periods. It is far more efficient in terms of the rental process and the time and energy of the parties to put these applications together, and that is what it is really trying to do. This reduces the workload and the need for a lot of rent officers, and it is also clearer to the parties, because all the issues get dealt with together. That is why those sections are there, because the tenants have the ability to have a separate application. The thought was that by putting them together, you are going to have a more efficient process and reduce the necessity for the number of hearings officers.
Mrs Marland: I understand that very clearly, and I agree that if there are two means of having either an increase or a decrease and there are two parties to it, it makes sense that both those applications or appeals are heard together. That is common sense. I agree with that. What I would like to know is how 106 rent officers are going to deal with the obvious demand. As soon as this bill is proclaimed I could wager any amount of money that we are going to have a floodgate of rejections of any rent increases at all because now, as a tenant, I have this clause that says, "(a) an inadequate standard of maintenance or repair of the residential complex or of a rental unit in it; or (b) a discontinuance or reduction in the services or facilities provided in respect of the residential complex or a rental unit in it; or (c) an extraordinary decrease in operating costs for municipal taxes, hydro, water or heating for the whole residential complex."
I think, actually, that last one is a real laugh. When is there ever going to be an extraordinary decrease in property taxes with this current socialist government? We certainly know hydro is going up and we know water and heat are not going to have an extraordinary decrease. So clause 13(7)(c) is hardly worth discussing.
If we cannot have a definition or even an example of what is a discontinuance or a reduction in service in these facilities, and we cannot have a definition or example of inadequate standard of maintenance there is no way, as far as I can see, you are going to get any rent increases at all until a decision is made by a rent officer.
I have an example here that I have just been given and it says: "I have a situation now where the tenant is aware of the new bill. They have asked for a new fridge and stove." -- Why would they not if they were aware of this bill? -- "These are in good working order. Everything in their apartment is in good condition. They just want new appliances or" -- get this, and this is what is going to happen -- "a rent decrease."
The quote following this example is, "I am afraid I have no control over my own destiny and I do not have the money or can finance an expenditure like this." That example is exactly what I have been giving for the last number of meetings we have had on this legislation. Of course a property owner cannot finance the expenditure without being allowed a fair rent increase because he sure as heck will not get the money from the bank. The banks and the lending institutions are not going to lend property owners money with the insecurity this legislation puts their property in.
We now say we are hiring 106 rent officers and we are going to say to them, "Make a judgement on this application," but we are not going to give them any examples. Does this mean that the rent officers are going to develop the examples against which these applications will be measured?
Hon Ms Gigantes: There is a series of questions and statements there and to try and deal with them all would be very difficult.
We have to recognize that in the situation where it is the intent to provide legislation where a landlord's right to an increase, or indeed the landlord's right to maintain an existing rent, is put in question, depending on the adequacy of maintenance and repair in the building -- when we try and put that into legislation there will be plenty of objection. It will come, as it has in the case cited by Mrs Marland, from landlords; it will not come from tenants.
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Mrs Marland seems to think that every apartment unit in the province is going to require adjudication by a rent officer on an almost constant basis. There is going to have to be constant monitoring, some kind of -- how would you say it? -- electrocardiogram, apartment-cardiogram going on where we have to have a rent officer constantly taking the pulse of everything that is happening in rental units across the province. This is not the case. It has not been the case in the past that, in any given year, most landlords have made applications under existing legislation or previous legislation for above-guideline increases. In fact, the minority do.
It has also been the case, and quite well-established under the existing legislation through the Residential Rental Standards Board, that the number of landlords who consistently and constantly provide major problems for tenants because of the inadequacy of repair and maintenance is a relatively small number.
The landlords become kind of notorious within the administration of the system of rent control, or rent review as it currently is. They become notorious to members of this Legislature. They become notorious to building inspectors and municipalities across this province. They become notorious to the media within those localities, and each of us sitting here today can list the landlords who have really exploited the situation of tenants year after year with impunity.
They have done that in some municipalities that have good building inspection systems. They have done it in municipalities which have ineffective building inspection systems. They have done it despite the process set out under previous legislation. We are looking to move forward. We actually wish to make progress on this. We actually wish to see a change in this pattern. We want to see that these landlords have a constant concern about the disincentives that will be applied under this legislation to inadequate maintenance and repair.
We think this is the way to do it. We think the number of cases that are going to be called forward can be dealt with administratively in a reasonable period of time by reasonable people employed as rent officers. I do not wish to allow anybody listening to this discussion to believe that we are rushing out and hiring a whole bunch of new public servants to administer this legislation. We expect to be able to do it with people who have operated under previous legislation, by and large.
All in all, the amendment which was put forward in the Conservative motion changes "shall" to "may". I do not know how that satisfies Ms Marland because if we had "may" instead of "shall" then that really would not change the situation as far as all her concerns about the discretion of the rent officer are concerned. In fact, it would add another element of discretion.
We are saying the rent officer "shall" look to these matters: inadequate standards of maintenance and repair, a reduction in services or an extraordinary decrease in operating costs. We are saying the rent officer "shall" take a look at those situations when receiving an application for above-guideline increase from a landlord. That is what it says and that is what it means.
To change that "shall" to a "may" is not going to solve your problem, Ms Marland, it is going to add another element of discretion and uncertainty about the response of the rent officer, and I put it to the Chair that we have discussed this question pretty well into a state of paralysis.
The Vice-Chair: Mrs Marland, I am going to ask you to consider that and deal with this again if you want to bring some new information or pursue it a little further. We will see how far we are going to go with it.
Mrs Marland: The situation that is going to be thrown into paralysis is rental accommodation in this province and if this minister does not understand it, I can understand it because this minister is not well informed about her ministry.
Hon Ms Gigantes: She can say that. I do not mind if she says that.
Mrs Marland: Mr Chairman, let's just deal with that question.
The Vice-Chair: Yes, let's deal with the amendment and see to that if we can.
Mrs Marland: All right. I am perfectly at liberty to make a statement about whether this minister is informed about her ministry. That is not unparliamentary.
The Vice-Chair: I recognize that, I am just asking --
Mrs Marland: It is important that --
The Vice-Chair: Mrs Marland, excuse me for a moment. I am just asking if you would, as much as possible, focus on the substance of the amendment to the amendment.
Mrs Marland: Yes. The minister has given some answers to this committee that were inaccurate and were contradicted by her own ministry documents. This minister told the committee that in terms of the cost of operating a building, the age of the building was not relevant. However, fortunately for us, the ministry staff are informed about whether it costs more to operate an older building or not, and there is a document put out by the Ministry of Housing which confirms that it is relevant. The age of the building is relevant.
Hon Ms Gigantes: On a point of order, Mr Chairman: I think that even with all the good nature one can bring to bear on the situation, it is truly irrelevant to the motion before us what my character and state of knowledge is. Certainly the question of the age of buildings is irrelevant to the amendment which simply says that we are going to introduce another uncertainty into subsection 13(7). If she wants to defeat subsection 13(7), all she has to do is vote against it. But to change "shall" to "may" does not increase certitude and she is not speaking to it, which is her amendment.
Mrs Marland: It must be nice to have a co-chair sitting beside you.
The Vice-Chair: Mrs Marland, perhaps if we could proceed with your discussion on the amendment to the amendment and if possible confine our remarks to that.
Mrs Marland: It is funny when you say something that is true and you hit the nerve and the minister starts co-chairing the meeting.
To talk about an example of inadequate standard of maintenance is relevant to the age of a building. The application that might be made under subsection 13(7) might be made relative to the age of a building. I am simply saying that this minister said the age of a building was not a relevant factor. It contradicts, fortunately, what her own ministry published, that the older the building the greater the need for repairs and maintenance. Let's just get that on the record.
Hon Ms Gigantes: Inaccurate, for the 14th time.
Mrs Marland: Well, maybe --
The Vice-Chair: We can respond to that later. Mrs Marland has the floor; let her proceed.
Mrs Marland: It may be inaccurate. It is, fortunately, recorded in Hansard and printed in a publication put out by the Minister of Housing. It is there if anybody wants to see whether it is fact or fiction.
In dealing with this section the minister would have to agree -- or maybe she would like to answer the question. I know the answer to this question but I would like to hear what the minister's answer is because it is relevant to her last answer about decreases and increases. Does the existing legislation permit tenants to apply for a decrease?
Hon Ms Gigantes: It does in a section that was never declared. Is that correct?
The Vice-Chair: The minister is seeking counsel from Ms Parrish.
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Ms Parrish: Do you mean the current RRRA? Does it have a section that allows you to apply for a decrease?
Mrs Marland: The minister does not have the answer, I guess. I am asking about the current legislation.
Ms Parrish: There are situations in which you can get a rent decrease where there has been a service withdrawal, for example, where the landlord provided hydro and is no longer providing hydro.
There is the ability to have guideline increases suspended because of inadequate maintenance. The current statute actually does not allow you to go below the actual existing rent unless there has been a service withdrawal. So this statute is different in that respect.
Mrs Marland: That is right.
The Vice-Chair: Is that helpful, Mrs Marland?
Mrs Marland: I knew that was the answer and I wanted to get it on the record from the minister, but obviously the minister did not have the answer.
What I think is significant here is that under the existing legislation we have this backlog of appeals and the minister is saying that under this legislation everything is going to be expedited and we are not going to have that problem. Yet under this legislation, a whole new ball game opens up because under this legislation the tenants now can claim an inadequate standard of maintenance, and it has to be heard. They can claim a reduction in services or a discontinuance in services, and that has to be heard.
The minister says, "There are not a lot of landlords who are bad landlords, and we know who they are and we could read them into the record here." She cannot say both things. If there are not a lot of bad landlords and yet the backlog in rental increase applications is -- what is it, Ms Poole? Is it two or three years?
Ms Poole: The backlog at this particular time?
Mrs Marland: Yes.
Mr Mammoliti: Nice conversation going on here.
Mrs Marland: Maybe I will ask the minister then. What is the backlog approximately in number of cases? What is the number of years that those applications have been waiting for rent increases?
The Vice-Chair: Minister, can you assist?
Hon Ms Gigantes: Yes, indeed. We will get the accurate number. The point of estimation does change from the point when this legislation was first introduced.
Mrs Marland: That is right.
Hon Ms Gigantes: This government has made a mighty effort to work at clearing the backlogs. Bill 51 has been notorious for its backlogs. What does it look like today, as close as we know?
Ms Parrish: We will have to get an exact check on the numbers again, but I would say that to my knowledge there is only a backlog in one area of the province now. The entire province's current excess is in the central office, which is the greater Toronto area. In all other areas of the province, there is no backlog at all at the rent review services level. All the applications are current. I believe that in the central office there is a backlog of about 3,000 cases, which includes tenant and landlord applications.
Hon Ms Gigantes: It is a little lower than that actually.
Ms Parrish: It may be falling now to about 2,500. There has been a real attempt to bring that backlog down. My understanding is that even the backlog in the central area will certainly be cleared in 1992. As a matter of fact, I think the projections are that it will be cleared this summer so that we do not go into the new statute with a significant backlog from cases.
There is some backlog at the Rent Review Hearings Board as it finishes the cases that have come out of hearings at an earlier level, but the backlog has almost disappeared in relation to the existing statute.
Ms Poole: Mr Chair, on a point of clarification.
The Vice-Chair: There is no such thing. Maybe with the indulgence of all members, Ms Poole, if you can help us it would be appreciated.
Ms Poole: There are two backlogs that we are talking about. One is a backlog at rent review and the other is at the hearings board. As of the summer of 1990, I believe the so-called backlog, the number of applications in the system, was somewhere in the vicinity of 7,000 to 8,000. Of that, they estimated that only a couple of thousand would actually be backlog and that the bulk of the rest of them were just normally going through the process.
I think what has become more of a problem in the last while is that because they were backlogged at rent review, this created a backlog at the Rent Review Hearings Board when they were waiting to get the appeals through.
Hon Ms Gigantes: No.
Ms Poole: That certainly was my understanding.
Hon Ms Gigantes: It is the backlog at the hearings board that has created the longest delays.
Ms Poole: Yes, Minister. But I would like to clarify that it was the rent review delays which created that.
Hon Ms Gigantes: No.
The Vice-Chair: What we wanted was some information in response to the question from Mrs Marland in terms of backlog and the numbers. Has that information been provided to your satisfaction, Mrs Marland?
Mrs Marland: The number 3,000 is fine. That was what I asked. But I also asked about the amount of time. Is it two years or three years?
The Vice-Chair: Minister, do you care to respond?
Hon Ms Gigantes: It depends what level you are talking about. If you are talking about clearing right through the total appeals process under Bill 51, we may be looking at a period of around 18 months. That has to do with the fact that there has been big backlog at the hearings board, which we again intend addressing through this legislation. But as it is in another section of this legislation, I suppose this is not the point at which to get into prolonged discussion about it.
Mrs Marland: The point I made has been confirmed, though, which is that under the existing legislation, with whatever your existing staff is -- maybe you can tell us how many people. You said you are not going to spend much money on hiring rent officers to implement subsection 13(7). Do you know how many of your existing rent review people are going now to be called rent officers? How many are going to be new hirees?
Hon Ms Gigantes: Mr Chair, the material tabled with the committee, and which is packaged together with the material Ms Marland has exhibited today by waving it in the air, indicates that the projection the ministry staff believe is accurate is that, if anything, we will be using fewer staff in the administration of Bill 121 than we currently use in the administration of Bill 51. That is a figure which is more or less useful, as a matter of fact. In fact we have increased the number of people who have been administering Bill 51 in order to deal with the backlog to which Mrs Marland refers and we have been extremely determined to get that backlog through the system.
We think it is quite unfair to landlords and quite unfair to tenants to have the kind of overlapping of rent review decisions and rent review appeals, appeals which are going on while a new application is being made and decided. There have been cases which have gone on close to the two-year mark, which really are in a very basic sense unjust to all the parties involved. They have created confusion, they have created some hardship, and it is not the way a system should be operating. Certainly we have made every effort in the measures presented in this bill to try to make a system that is going to be administratively more simple.
The question Mrs Marland has presented us with is whether the rent officer "may" review certain items in determining the eligibility of an application, or "shall" -- the legislation as we have presented it before the committee says "shall" -- review items (a) (b) (c) of subsection 13(7). I remind Mrs Marland that they deal with specific items, standard of maintenance or repair, the discontinuance or reduction in services and/or an extraordinary decrease in operating costs.
What we have suggested and what we would like to see is legislation which says the rent officer "shall" consider these as the important matters to determine whether a landlord is eligible for an above-guideline increase, eligible to make an application which will move forward. What Mrs Marland and the Conservative amendment suggests is that we should enter another element of discretion into this matter and substitute for the word "shall" the word "may." I put it to Mrs Marland that if what she was looking for is more certainty in the legislation, the amendment which she is alleging to speak to does not increase certainty, it increases uncertainty.
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Mrs Marland: The amendment before us refers to rent officers and the mandate they will be given with this legislation. I have asked the minister to tell us if it is going to be up to the rent officers to develop the standards or the benchmark against which the inadequate standard of maintenance would be measured. I wonder if the minister might choose to answer that question.
Hon Ms Gigantes: The rent officers are mandated under this section of the legislation, if it passes, to make a determination about the eligibility of a given application. In each case the rent officer will consider standards of maintenance or repair, discontinuance or reduction of service and extraordinary decreases in operating costs to decide whether the application shall proceed.
If benchmarks get built up over those decisions, what can I say? It is quite possible that there will be benchmarks built up. However, I do not think it is possible for any one of us to determine in advance of a rent review officer looking at a particular case what that is going to mean, and that is what this discussion is all about.
However, I am going to put it to you again, Mr Chair, that while Mrs Marland suggests she does not like discretion around these matters left with the rent officer, her amendment is contrary to her intent to produce certitude. Her amendment substitutes "may" for "shall" and does not increase certitude.
Mrs Marland: That is the minister's opinion. I think what we are hearing very clearly is that, to use the minister's own words now, if the benchmarks get built up, then we will have something to measure applications against.
What we are really saying is that it is wide open and I feel sorry for the first person into the lion's den with his or her application, either a tenant or a property owner, because there are no guidelines for either side. There is no guideline for that tenant as to what inadequate standard of maintenance is, there is no guideline for the property owner, and sure as heck, apparently, there is no guideline for the rent officer.
So what are we going to do here? We are going to pay the rent officers a nice sum of money for their jobs and we are going to say: "Go out and develop your own guidelines to interpret this bill. We are not willing to give you any examples. Why would we? We wouldn't give them to the committee that was passing the legislation. So this is your new job now, Mr Rent Officer. You go out and whether you `shall' or you `may,' this is what the description of your job is: You're to hear applications and sit in judgement in a decision that will deteriorate the living environment of those tenants in those rental buildings."
We have no answer from the minister about what is an example except one, which is a work order dealing with health and safety. This minister will not give examples. She hides behind these words. She will not give an example of an inadequate standard of maintenance or repair. Perhaps the minister might like to give us --
Mr Winninger: Mr Chairman, on a point of personal privilege.
Mrs Marland: Good, you are awake.
Mr Winninger: This is cruel and unusual punishment and I am asking the Chair to make a ruling under the Charter of Rights which prohibits cruel and unusual punishment.
The Vice-Chair: I am not aware that is in fact a point of privilege.
Mr Winninger: You are a lawyer. I think you are well qualified.
The Vice-Chair: In any event, I would not presume to be learned in the law sufficiently to make such a significant judgement. Perhaps we can allow Mrs Marland to continue.
Mr Mammoliti: On a point of information: I bet you everybody is glad the interjection took place, however. Things were getting kind of boring and I am glad he did it.
The Vice-Chair: I am not sure that is helpful, but thank you.
Ms Poole: Mr Chair, on Mr Winninger's point of personal privilege.
The Vice-Chair: There is no discussion on a point of personal privilege. It was not a point of personal privilege.
Ms Poole: Then, on his point of order: He does not realize that members have no privileges.
The Vice-Chair: Mrs Marland, if you could continue, please.
Mrs Marland: It is interesting that Mr Mammoliti says it is boring. It certainly is an indication of his concentration span. He has hardly been here all afternoon, and for the short time he is here he then says it is boring. It will be very boring for his tenants and his property owners if that is the description of what is going on in this legislation.
The Vice-Chair: Mrs Marland, one moment, please. First of all, whether a member is here or not here is inappropriate and you are well aware of that, as am I. I ask you to return, please, to the matter before us, your amendment.
Mrs Marland: I would be happy to. This minister chooses not to give an example of inadequate standards of maintenance. Could I ask her to give an example of clause (b), "a discontinuance or reduction in the services or facilities provided in respect of the residential complex or a rental unit in it."
Hon Ms Gigantes: In answering Mrs Marland's question, I would like to draw to her attention that in spite of her vigorous claims to the contrary, I have indeed presented other examples of inadequate maintenance. It may have been that Mrs Marland was not listening, but I am sure she will check Hansard just to make sure she is not making a mistake when she says I did not present examples.
In terms of the examples she has asked for of a discontinuance or reduction in services, we have had, unfortunately, throughout this province numerous examples. Again, I say numerous examples because there are a fair number of landlords involved and certainly the lives of thousands of tenants have been affected. But given the number of landlords overall in this province, a relatively small proportion of landlords commit these indiscretions and grievances against their tenants.
There have been lots of examples of landlords who have permitted bills to go unpaid and heating or lighting to be shut off. There are examples of landlords who have simply not provided for basic services which tenants had every reason to believe, and under law had the right to believe, should be in place. In fact, the existing legislation provides for remedies under such circumstances.
Mrs Marland will undoubtedly be aware that many municipalities and many hydros have had to take special measures to ensure that tenants caught in these situations -- and often, when there is one landlord involved, the landlord is a repeater when it comes to these offences. We all know at our constituency offices and at the municipal offices and at the hydro offices and at the gas company offices, landlords who have repeatedly failed to provide services which tenants either legally had a right to or in fact contractually had a right to within their leases.
The Vice-Chair: Thank you, Minister. Mrs Marland.
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Mrs Marland: Hansard is going to prove very interesting reading because on the one hand the minister says it is a fair number of landlords and then she says it is a relatively small number of landlords. Here we are using this elephant gun in Bill 121 to get at something for which she gives the example that is already addressed in legislation.
Landlords are not allowed, under existing legislation, to not maintain a certain temperature within certain months of the year for rental accommodations. If we are talking about heating -- oil, gas, electricity -- being cut off, if we are talking about any reduction in that area, that is protected under existing legislation. I thought perhaps an example the minister was going to give of a reduction in services would not be something that would be illegal today under a contract to rent. Today, when you sign your rental agreement, the conditions in there give provision for something as basic as water supply and the temperature of the heating and, of course, electricity, if, in fact, they are paying for electricity. Those things are presently protected under the existing contract. So I guess there is not an example under clause 13(7)(b) then, other than those three areas you have given.
Hon Ms Gigantes: The proposal, legislatively, is not merely one of repeating existing legislative coverage. I put it to you, Mr Chair, that the examples we in this room all know about, that tenants have been asked to suffer under the existing legislation, indicate quite clearly that the existing legislation is not effective when it comes to ensuring that tenants' rights to service are being met. It is precisely for that reason that this section of the legislation provides that an application by the landlord for an increase in the rent above guideline shall be reviewed by the rent officer.
If there are clear indications -- and usually these are quite clear; usually it is not the case, in my experience, and I would suspect in the experience of others, that a landlord has let the heat go off on tenants, and it is a one-time event. What we usually find -- as I say, I do not think there is anybody in this room who has not noted this -- is that there is a relatively small number of landlords, when you compare them, Mrs Marland, to the total number of landlords, but they are a rather large number of landlords when you think about the number of tenants' lives which are put in aggravation, if not some real discomfort and problem related to health. These landlords tend to be repeaters.
The current legislation does not seem to have been effective. We are proposing measures in section 13 which, along with others in this bill, we hope will prove effective by means of directly addressing the level of the landlord's rent. We want to get as close to the self-interest of the landlord as we can with that small number of landlords who have created this large number of problems under existing legislation and previous legislation. We want to get as close to their self-interest as we can, and that has to do with the level of their rents. We want the rent officer to have the discretion to note and to make a determination about the eligibility of the application for above-guideline increase on the basis of such a problem with services.
The Chair: Thank you, Minister. Mrs Marland.
Mrs Marland: Mr Chairman, the minister keeps referring to the application for the above-guideline increase, but this section also pertains to the possibility of having the maximum rent reduced.
Hon Ms Gigantes: Oh, yes.
Mrs Marland: Obviously there is not anyone who condones a landlord not fulfilling his contract to his tenant. We are not talking here in my questions about a bad landlord who does not either heat the water or provide the level of heating to the unit that is agreed to in the rental agreement document. That is not what I am asking about. I do not condone landlords who do not meet their legal commitment under their lease with their tenants. That is common sense. What we are talking about here is the possibility of a landlord applying legally for a rent increase and having the decision made by the rent officer as to his eligibility or a tenant asking for a rent decrease because of these three conditions.
Obviously, under the existing lease -- and I am not a lawyer, but I have a little common sense and I think if you have a lease that entitles you to have an apartment that provides you with heat, light and water and that contract is violated because you do not have one or any or all of those components being met in your lease in your apartment, then you in fact, as I understand, can even withhold rent. If you were taken to court by the landlord, which would be his option, then you would have the option of going before a judge who, if there was evidence that your apartment was cold or if it was an air-conditioned apartment in the summer where you were guaranteed a certain temperature and it was not met, obviously these are not the cases we are talking about. The tenant in that case would, I am sure, with the evidence before a judge, be able to win the case. The interesting thing in that case, of course, would be that it would be the landlord who would be taking the tenants to court because they had not paid their rent because their contract had been violated by the landlord's operation of the building.
That is not what we are talking about here. We are talking about a case where a landlord can face the risk of a reduction in rent for any one of these three areas. I am wondering, for example, if the minister could answer the question about where it says "reduction of services." If there happened to be four elevators in a building that you rent your apartment in and, for reasons beyond the control of the landlord, the one elevator is out of commission for a week or two -- maybe they were waiting for parts to come from overseas. I have had an example of that in my riding with a foreign-made elevator. It was a huge part that could not even be flown over, it had to be shipped over. That elevator was out of commission for three months, so the building was reduced from four elevators to three. In that kind of example, Minister, would you consider it a discontinuance or reduction in service that tenants who rented in a building with four elevators and for three months had three? Is that an example?
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Hon Ms Gigantes: I hesitate to become a rent officer for Mrs Marland, but I would say no, as long as the landlord was making the best effort to make sure the elevator got back in working operation. It seems reasonable to me.
The Vice-Chair: Mrs Marland, is that sufficient explanation?
Mrs Marland: I appreciate the answer from the minister.
With regard to the example the minister gave about gas or hydro being shut off, apparently that is not possible in Toronto. If it was because of arrears in a bill, the city would pay the bill and put it on the tax bill. Apparently there are cases where that has happened. In Mississauga very recently Mayor McCallion gave me an example where she had been phoned on a Friday night because a building was going to have its gas turned off. She had to go to the gas company on behalf of the tenants and ask that -- in fact, I think the gas had been turned off. She went and appealed and it was turned back on. I guess in that case the city of Mississauga said to the gas company that it would add it to the tax bill as well. I am sure there are other examples of that.
If you are giving examples of where the tenants are at risk, Minister, we should be sure of where that could actually happen. It does not happen in Toronto and obviously there has been a remedy for it in Mississauga as well. The greatest number of rental housing units are in the greater Toronto area. I thought earlier, when Ms Parrish was talking about where the backlog in the hearings was -- that is, in the central office, the greater Toronto area -- that would make sense, because that is where the largest number of rental units are in the province.
Anyway, I see we have come to an agreement that if we were to vote on these two votes, we could adjourn.
The Vice-Chair: Mrs Marland, what I wanted to --
Mrs Marland: May I just say, being the Thursday before Christmas, that is a tough call, because I too would like to adjourn and would agree to adjourn, but I have a great deal of concern about this amendment by the government. I guess if we are going to vote on the amendment and my amendment, then I would still have an opportunity, when we get to the amended motion, to speak further on this matter at the next meeting. Is that correct?
The Vice-Chair: Mrs Marland, I think the understanding is that we will vote on your amendment and the amendment at this time. Failing that, I think it is appropriate that we continue discussion.
Ms Poole: On a point of information, Mr Chairman: We still have to deal with section 24 later in the bill, which directly deals with inadequate maintenance. In fact, that is what this amendment, subsection 13(7) in the bill, originally referred to, section 24. This amendment was an attempt to clarify section 24, so there will be another opportunity to continue this debate.
The Vice-Chair: On this subject matter the minister has a point of order and I recognize the minister for her point of order.
Hon Ms Gigantes: My understanding was that people on the committee were agreeable to finish with subsection 13(7) and to vote on amended 13(7) and finish with 13(7), not that we would vote on an subamendment and then vote on an amendment and hold off a vote on the amended 13(7). In other words, I think the understanding did not contemplate that we would have three votes, two of which would be taken today and a third which would be taken at the time of our next meeting.
The Vice-Chair: Thank you, Minister. My understanding is, and in any event my ruling will be, that we will deal with the amendment to the amendment and the amendment, as is appropriate and as is consistent with procedure. We will either deal with both of them or the discussion will continue until such time as we are authorized to continue. I also want to remind the committee that there is the necessity to deal with a report of the subcommittee. I am sorry, I am wrong. The clerk informs me that the subcommittee has been dealt with. I was advised otherwise. I apologize for that.
Hon Ms Gigantes: On a point of order, Mr Chair: I do not know if I expressed myself clearly. There is a potential of three votes dealing with subsection 13(7). My understanding of the understanding that we came to here was that we would deal with all three today, not that we would leave one hanging out for a further vote on a different day.
The Vice-Chair: In which case, if we are going to discuss what kind of arrangements are being made, I am going to ask for a five-minute recess so that the three parties can determine what arrangements they have agreed on. Failing that, we will return promptly -- I emphasize promptly -- in five minutes, at which time discussion will continue until the time we are charged with that responsibility. We stand recessed for five minutes only.
The committee recessed at 1727.
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The Vice-Chair: I understand that we have agreed we will proceed with the vote. We have a motion on the floor for a Progressive Conservative amendment to subsection 13(7). Shall that amendment to the amendment carry? All in favour? All opposed?
Motion negatived.
The Vice-Chair: With respect to the amendment to subsection 13(7) as moved by Ms Gigantes, I believe.
Hon Ms Gigantes: With thanks to the Liberals.
The Vice-Chair: Shall that motion carry? All in favour? All opposed?
Motion agreed to.
The Vice-Chair: On subsection 13(7) itself, I will be asking for that to be voted on. It has been put to us by way of motion. Shall the motion to adopt subsection 13(7), as amended, carry? All in favour? All opposed? That is therefore carried.
Thank you all for your assistance and co-operation.
I would at this moment like to inform members of the committee that the Chair has received a matter for consideration pursuant to standing order 123 from Ms Poole. That is for your information and will be dealt with in due course.
There being no further business for the present time, I declare the committee meeting for today adjourned.
Mrs Marland: Before we adjourn, I would like to use the opportunity to wish the minister and the staff of the Ministry of Housing and the members of the committee and the clerk and Hansard a very happy holiday and healthy new year.
The Vice-Chair: Thank you, Mrs Marland.
Ms Poole: I too would like to join in best wishes for the season and to say I hope that none of the harsh words that have been spoken in committee are taken too much to heart. We are all just doing our job. I hope people come back refreshed after our midnight sittings and our late adjournments next week and everything else. You have a very happy Christmas season and prosperous new year.
Hon Ms Gigantes: I would like to, on behalf of our members of committee, express thanks and best wishes of the season to members of the committee, but I am sure we will all be back here next week.
The Vice-Chair: We very well may be, but having said that, may I say Merry Christmas to all and for the time being, to all a good night.
The committee adjourned at 1742.