Committee Transcript 1991-Feb-13 | Legislative Assembly of Ontario

The Chair: The standing committee on general government is called to order. The standing committee is visiting communities across the province during deliberations, and we are happy to be in Sudbury today. We have a full slate of presenters today.

NORM CAMPEAU

The Chair: Norm Campeau is slated to present at 9 am. You have been allocated 20 minutes by the committee, 10 minutes of which can be an oral presentation, and we will reserve 10 minutes for questions by the committee members. Mr Campeau, the floor is yours.

Mr Campeau: First of all, I would like to say that I have a prime building in a prime location. It is a tenplex, all one-bedroom apartments of different sizes. Three years ago, I fully renovated the entire building. I spent $100,000. I rented eight units at $350 and two larger units at $450. After a year, rent review reduced the rents, and today the lowest is at $211.62 and the highest is at $364.67. My total revenue is $2,798 per month. My payments total $3,675 per month, which means that I run short each month by $877.

Now, here is why I think this new bill does not make any sense. As for my own application, I submitted on 19 November. This bill was announced a week later. You made this retroactive to 1 October. This means that I spent $450 for nothing, because I have to get it done all over again under new rules.

Example: I have extraordinary operating costs of two categories. My taxes and water increased by $5,500. If the new bill comes into effect, I have to go back and get four more categories. This is another $450 or more to redo them.

Additional problems: My papers are with the accountant for income tax, and they are all filed separately. Second, this creates a large problem with tenants. I am trying to collect rents that are now due or will be due 1 March. My proposal was to be approved by 1 March, but I was told yesterday that they have not even been touched yet. My taxes are not and cannot be put on hold. I am presently in the red at the bank by $10,000, which is my maximum line of credit.

As far as the financial loss or phase-in is concerned, that was one way to have gradual increases. With this new bill, apparently that eliminates that completely. How can a landlord get a 280% increase in taxes and water and then try to pass that on to the tenants?

The Chair: The rotation will start with Mr Tilson.

Mr Tilson: I think the retroactive aspect of the bill is certainly one of the most devastating parts to the legislation, and I think the difficulty we have been seeing is that a lot of the capital expenditures are made on buildings during the summer. We have been hearing landlord after landlord after landlord who has made capital expenditures, made improvements during the summer months, even before an election was called, and of course those are canned. The government people of course say, "We want a breathing space." You can ask them. They are here. They are on that side of the table. Their answer to you is: "Tough, there's a breathing space. We have to have a moratorium, we have to have a breathing space, and it is doesn't matter. You're simply out of luck."

I guess my question to you is, what is going to happen to you?

Mr Campeau: I do not know. That is what I am here to try to find out. The way I read it, they just will not give us room to do any work. If we cannot pass the increases on, then what is the sense trying to do any work whatsoever? In other words, we are creating a slum area here.

Mr Tilson: Have you been to any financial institutions, the banks, trust companies?

Mr Campeau: As far as borrowing is concerned?

Mr Tilson: Yes.

Mr Campeau: Certainly. I have two mortgages on the building. Like I say, nobody is putting anything on hold. My payments come due every single month, and the bottom line is that I am running at $877 and my taxes, my second payment is due the beginning of March, and there is absolutely nothing I can do. I am waiting for my March rent. Nobody has paid me rent yet, and I am just waiting for my rent to make my payments.

Mr Tilson: Prior to this legislation, how would you classify your profit in the building?

Mr Campeau: My profits?

Mr Tilson: Yes.

Mr Campeau: Like I am saying --

Mr Tilson: I am saying that tongue in cheek, sir.

Mr Campeau: Yes, definitely. I have a credit line on that building of $10,000. I am at my credit line right now. As a matter of fact, I have passed that credit line. I have been putting money out of my own pocket to pay my taxes. My taxes in one year increased from $3,300 to $8,500.

Mr Tilson: If your building starts to deteriorate, you might do what happened in Toronto. A landlord applied and the taxes were reduced. That is another problem that is going to affect the whole property structure. Landlords will be forced, because of increasing taxes, to apply where their buildings are deteriorating and taxes will be reduced.

Ms M. Ward: First of all, I want to comment on what Mr Tilson said about we were saying, "tough." We are here to listen to what you are telling us and that is not our attitude that it is tough.

You were talking about your taxes and water increasing by $5,500 and you said you have to go back and get four more categories. I did not understand your comment there. Do you think you have made a new application which covers everything that is listed in the new bill?

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Mr Campeau: This is what my colleagues are talking about. Apparently I need two categories for my application. With this new bill, apparently you need six applications, so you have to go back and redo them all.

Ms M. Ward: I do not believe that is the case. I think you should check that out further, because you could have an increase in your taxes, an extraordinary increase in your taxes, and not necessarily in your insurance and all those other categories. I do not believe that is the right interpretation and I would suggest you check that further.

Mr Campeau: Okay.

Mr Mammoliti: I too take particular offence to Mr Tilson's remarks, Mr Chairman. Just for the record, we are here to listen, and we are here to listen to landlords and tenants. Yesterday we had a tenant representative in front of us who was pretty clear in saying that at all times somebody suffers when it comes to a piece of legislation, and for years tenants have been suffering. Perhaps there may be some landlords, with this piece of legislation, who may suffer, but for the long run it will be a fair system. This is what this tenant was saying. How do you feel about that particular tenant and the comments that were made yesterday to this committee?

Mr Campeau: It is very simple. Like I told you, my rent comes up to $2,798. Okay? That is what I am collecting right now, and 1 March is my deadline. My taxes were increased last year. I had to pay that out of my pocket last year. I could not do anything about it, because I could only put in my application in December. The taxes were not out yet. There is no retro on the taxes, yet I have to pay it out, an increase of $5,200 or $5,300. I lost that last year. Now what you are asking me is to lose it again this year. How can I survive losing $877 a month?

Mr Mammoliti: That does not answer my question. Again, the tenant said that with all pieces of legislation, somebody along the line will suffer, but with this particular piece of legislation, in the long run it will prove to be positive. How do you feel about that, that tenants have been suffering for years, and now that we hear from some landlords who may be suffering, in essence may be suffering, how do feel about that particular remark? That was my question.

Mr Campeau: Okay. I have had approximately 24 or 25 apartments in the past couple of years, and believe me I have not seen a tenant who suffered yet. When you are paying $212 for a one-bedroom apartment, I would not call that suffering. Right now I am suffering and I would like to sell it, and if you would like to buy it you are welcome to it, believe me. I cannot even dump the place. I cannot sell it. Who would buy it? I am stuck with it. I am the one who is stuck with it. If you want it, it is yours.

Ms Harrington: How many units do you own?

Mr Campeau: Presently 10. I am on my last building, yes. I sold one last year.

Ms Harrington: You just own one building?

Mr Campeau: One building of 10 units, yes.

Ms Harrington: Okay. So you did have another building last year?

Mr Campeau: Yes.

Ms Harrington: And how many units did that have?

Mr Campeau: It had 12.

Ms Harrington: Over the past, say, two or three years, have you had rent increases in those buildings?

Mr Campeau: Rent increases? Well, yes, yearly.

Ms Harrington: How much?

Mr Campeau: Last year in this building I had 5.4%, plus I had a phase-in of 5%.

Ms Harrington: Okay. So it was a 10% increase last year?

Mr Campeau: Yes.

Ms Harrington: In this building?

Mr Campeau: Yes. This apartment last year, was $192 for a brand-new apartment. Do not forget I put $100,000 in that building renovating it three years ago. It was $192 for that apartment.

Ms Harrington: Did you get a pass-through on that renovation cost, above the guideline cost?

Mr Campeau: Oh yes, that was a phase-in. That was an approved phase-in and it was for three years.

Ms Harrington: And how long will that phase-in go?

Mr Campeau: It was for three additional years, but I cancelled it this year when I made a new application. I had to cancel that phase-in because of my taxes and water going -- you know, I am showing an increase here of $5,500.

Mr Mahoney: The example that Mr Mammoliti gave you, Mr Campeau, was of a tenant in the Toronto market, and I think that is part of the problem. This legislation is being brought forward to deal with some serious problems in the Toronto market that certainly would not be the same in Sudbury or outside of -- we refer to it as the province of Toronto. It is not the province of Toronto, it is the province of Ontario, and I do not think it takes into account concerns in communities like this.

I would like to get an idea of the difference between regular maintenance that you might spend -- if you could even quantify it down to that $212 a month rent, as a percentage -- on regular maintenance, general upkeep if there is a plumbing problem or something along those lines that occurs, if a tenant contacts you that the fridge is not working; whatever it happens to be. Is there a percentage that you build into your base rent to cover ongoing maintenance, as opposed to capital renovations?

Mr Campeau: No, I do not have any set figures to say so many dollars per apartment. Because of the fact that they are new apartments, my maintenance would not be that great, but I do have a superintendent who looks after it who does cost me $200 a month, and naturally there is -- you know, the refrigerator is not working, sure, he goes over, he might have to buy a part for plumbing. Yes, this goes on every single month.

Mr Mahoney: So you do provide an ongoing level of maintenance for your tenants?

Mr Campeau: Oh, definitely.

Mr Mahoney: Part of the argument to justify this bill is that rent should be used to pay for ongoing maintenance. I cannot argue against that. There should be a certain amount of regular maintenance covered in every landlord's statement of cash flow, whatever, and yet the implication is that all landlords do is stick the rent in their pockets or pay off their mortgages with it and then if there is any maintenance required they apply to rent review for some kind of increase. I guess there are examples where there have been very outrageous landlords, primarily in the Toronto area, but I guess I am trying to make the point that there is a difference between regular, responsible maintenance, dealing with a tenant who would have a right to call your superintendent and say, "I've got a problem, my plumbing is backed up," or whatever it happens to be, and get some assistance, and you provide that on an ongoing basis.

Mr Campeau: Most definitely.

Mr Mahoney: What kinds of increases have you looked at, say over the past four years? How long have you owned the building?

Mr Campeau: This building here I have owned for three and a half years.

Mr Mahoney: So what kinds of rent increases, say for that, was it $212 you said, for a one-bedroom?

Mr Campeau: What happened was, this was a sixplex which was converted to a tenplex. It was completely rebuilt. I will just give you a quick rundown on the building here. When I purchased the building I got the approval to change it to a tenplex. This is where the $100,000 comes in. My application was made with rent review, and in fact it was filled out with them and I was told to put it on as a new unit. I rented those apartments. The market value was approximately $350 for those units, which is what they were rented at, which was all done through rent review. Then a year later, they came back and said, "You cannot make application as new units because you need a 10% increase on the exterior of the building." This is where everything became very, very confusing.

Mr Mahoney: What I am trying to get at is, from a tenant's perspective, I am a tenant renting a one-bedroom that I moved into three years ago. How much has my rent gone up each year?

Mr Campeau: Actually, it went down. My tenants who are in there presently, when I finished the units, moved in at $350 a month. Presently that same tenant, like I say, in this apartment here is now paying $212. It went from $350 to $212, okay? That is what I am stuck with. My taxes then were approximately $2,800. They are now $8,500.

The Chair: There is time for one more short question, Mr Mahoney.

Mr Mahoney: I am almost aghast at that. You have applied to recover that loss and are awaiting a hearing, but now that this bill has come in that hearing is virtually shot.

Mr Campeau: That is right.

Mr Mahoney: So you are not only facing the fact that this bill is going to restrict you in the future, you are looking at the fact that your tenants received a substantial decrease of almost a third of their rent, for goodness' sake, almost a 30% decrease in their rent, and you have no opportunity now, because of Bill 4, to increase their rent back up or even close to that level?

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Mr Campeau: That is right, plus the rents were retro.

Mr Mahoney: Are you facing bankruptcy?

Mr Campeau: If it was for that building, most definitely I would have been declared bankrupt a long time ago, if it would not have been for putting my own personal money into it. I may also say that those rents were retro. After a year, I have to give those tenants back their rent. That is what I was stuck with.

Mr Mahoney: Did you do that?

Mr Campeau: Most definitely; I had to.

The Chair: Mr Campeau, thank you for your presentation this morning.

STEVEN DRAVES

The Chair: Steven Draves is next on our agenda. Sir, we are going to follow the same procedure. You will have approximately 10 minutes to make your presentation to the committee, followed by 10 minutes of questions.

Mr Draves: Okay. I have typed out what I am going to say and people can follow it if they have copies.

Good morning. My name is Steven Draves and I am a landlord in Matheson, Ontario. I started to renovate an eight-unit apartment building in April 1990. I am now in a financial bind, only because of the provincial government's proposed rent legislation.

I am 27 years old, a licensed general carpenter and an apprentice electrician. I got married on 30 June 1990 and my wife and I have been living apart and will be living apart until the renovations of the apartment building are finished. I have received all of my building experience from my grandfather, who just turned 74 years old.

The building in question was a stable in the day of my great-grandfather. Somewhere in the 1940s my grandfather began building apartments in the stable. Over the duration of several years, the building eventually ended up with eight apartments and an area my grandfather used as an office for his construction business. My grandfather also built a house next to the apartments for his family of six to live in. This building was a way for my grandfather to do something that he knew how to do and provide his family with a little extra income.

I entered into an agreement with my grandfather to purchase the apartment building and the house next door in January of 1989. The reason my grandfather wanted to sell me the building was that he saw a way for me to take what I had learned and turn this building into something that would benefit my wife and me in the future. The construction of the building was outdated and needed to be upgraded. My grandfather and myself searched for the best way to complete this task and discovered a grant called low-rise rehabilitation. This involved having the building inspected by a government inspector, who completed a list of items that had to be addressed in order to receive the grant of $5,000 per apartment. The inspector's list of items to complete cost much more than the $40,000 grant that would be received after the work was complete.

My grandfather and I realized that in order to do all the work that was demanded of myself, I would have to raise the rents of the apartments. My desire was to have the rents of one-bedroom apartments all the same, and the same idea with two- and three-bedroom apartments. I talked with rent review and I was told that if I wished to raise the rents due to capital expenditures, I would have to borrow the money, do the renovations and then apply for rent increases. If the increases were allowed, I would have to wait 90 days before they could be approved. I followed their instructions as closely as I was able. When I started to renovate, it was possible to spend the money, do the work and raise the rents so that I would at least be able to pay the mortgage and expenses for the building. I do not believe this was mismanagement and I find it hard to believe that you might as well.

The renovations that I was forced to do involved upgrading the roof, replacing all exterior doors and windows, replacing all the entrance doors inside the apartments, specific upgrades to the foundation, replacing all the electrical wiring and bringing the wiring up to code, installing fire code drywall between apartments and in storage areas. The motive for the upgrade was to extend the life of the building for 15 years. We had to open many walls, so I made the decision to replace all the plumbing in the building because of how old it was and the way it was installed. This also involved new sinks, toilets, tubs and showers. I also installed some new kitchen cabinets and replaced much of the wood chips that were used for insulation with fibreglass insulation. The brick chimneys were removed and replaced with B-vents to reduce fire risk. Almost all the flooring was destroyed in the renovations, and not from neglect, so much of it had to be replaced, and of course we had to repaint all the apartments. We also changed the layouts of most apartments to increase storage and reduce wasted space.

I think it is imperative that you understand that I took every measure to keep spending to a minimum. We reused as much of the old building material as we could: lumber, flooring, plywood, doors, fixtures, etc. Anything that we could not use, but still might be of use to someone, I gave away. I established accounts with distributors of building materials so as to decrease my costs of construction and watched flyers for sales in case better deals could be found elsewhere on any items I would require. I always shopped around for the best price for a good to excellent quality. I hired one employee through Futures and had his wages paid for by the government for 26 weeks. This worker was also an unemployed tenant of my building. I hired a second employee who was also an unemployed tenant of my building. I hired two of my brothers to work with me; and another brother, both my parents and my wife helped me a lot on weekends and holidays. My mother went to the hospital with pleurisy and pneumonia aggravated by painting with enamel paint. I did not pay myself during the renovations and had to take a contract to work at a job site where five houses were being built. Between the income from the contract and my wife's income, my wife and I were able to survive and I was able to go on with the work. During the renovations I lived with my grandparents and my wife lived with her parents in North Bay. This kept our living expenses to a minimum.

Previously, if everything went well and I was able to collect all my rents, I could possibly realize a profit of $6,351. I was willing to accept less profit per year for the apartments in order to do the renovations, but I would have to raise the rents. A one-bedroom apartment would rent for $225, a two-bedroom apartment for $275 and a three-bedroom apartment for $325 per apartment, and the tenants would be responsible for hydro, natural gas, water, telephone and cable. I believe these rents are better than any subsidized rentals the government could provide.

My tenants are comfortable with the rents I proposed, and I have done these upgrades and repairs for much less than it would have cost anyone else to do. I do not believe these renovations were excessive or unnecessary, but I do believe I was trying to extend the life expectancy of this building by 15 to 25 years. If I did not do these renovations, this small town would lose eight apartments because the building in question was at the end of its lifespan and my grandfather never budgeted to overhaul the building, nor does he wish to at the age of 74. If he had, the tenants would not have enjoyed such low rents for as long as they did. Currently there is one apartment with a legal rent of $52.84 for a two-bedroom apartment as of 1 January 1991. This woman makes more money than I do and yet I am forced to subsidize her rent. I could have chosen to be a slum landlord and ignored all of the problems in the building. I suppose I should have, because if I had done nothing to this building I would not be in a financial bind.

By taking the initiative that I did, I extended the life expectancy of this building at the end of its lifespan. I directly created at least four jobs, as well as using much material that would indirectly keep people employed. This was an investment that I was hoping would provide me with security as I get older, not make me rich in a few short years.

I have never seen such a display of pure ignorance as this government has shown to hardworking, honest landlords. I followed the rules in regard to rent increases and I was trying to give the people of this building a better place to live while at the same time being able to pay the bills. The government changed the rules without any fair warning and also made the legislation retroactive. If the government's concern is to provide affordable rental units to the voters of this province, then I am at a loss to understand why they are destroying the landlords who, to me, are their allies. I realize there are landlords who do take advantage of tenants, but do not kid yourself, there are tenants who take advantage of landlords as well. This new legislation sides only with the tenants and does nothing for landlords.

I met with the Minister of Housing, Dave Cooke, in Toronto and he explained to me that this government was not going to allow landlords to gouge tenants with rent increases for unnecessary renovations. I believe this is a problem that is mostly restricted to large centres of southern Ontario. This is just another example of how we in northern Ontario have to suffer through rules and regulations that really should not apply to us. I would like to point out that 5% of $52.84 is $2.64 whereas 5% of $850 is $42.50. All of my expenses have gone up more than 10% in the past two years for each year.

I believe this government assumes that all landlords are evil and are gouging tenants, and I am here to tell you that this is fundamentally incorrect. Hard-working landlords like myself help to provide affordable housing for this province. This proposed legislation is already harming small landlords and if this continues affordable housing will dwindle quickly. Small landlords are being forced to bear the brunt of this legislation, which is completely inappropriate and unfair. Controls may be required to manage the activities of large landlords in major urban centres, but the same controls cannot apply to smaller landlords in smaller rural areas.

I hope I have given you a better understanding of the situation that faces me. I am now not able to get a mortgage on the building and I am not able to raise my rents. I have spent much money and I am having extreme difficulty figuring out any way to repay the money I have borrowed. Time is not on my side.

I have also included some correspondence that I had with a gentleman in Hamilton, Ontario. He wrote me after seeing an article about me in the Hamilton Spectator. I wrote him back and we exchanged some correspondence. I think you might find it interesting.

Ms Harrington: Mr Draves, I want to thank you for coming here and giving us exactly what you have been doing in the last while. Personally, I would say that I commend you on all your efforts in trying to make these apartments viable and make them affordable and also invest in Ontario and invest in your future. I see nothing at all wrong with this.

I am glad that you met with the minister and that he is personally aware of your situation. I know he mentioned it to me, that he was talking to you in Matheson, or that you actually came --

Mr Draves: I met with him in Toronto.

Ms Harrington: -- to Toronto. But he did talk to you.

Mr Draves: Yes, he talked to me.

Ms Harrington: He let me know where Matheson was. All I can say is I realize that you are caught in this situation and that something has to be done to accommodate these types of situations.

Mr Draves: As I said, time is not on my side. As the gentleman before me said, the bank wants its money when the payment comes due. I cannot tell them anything. I can tell them all they want about the government's intentions and what the government might do and I have even had specialists from Toronto write me letters saying that maybe this legislation might turn around and allow me an out. The bank does not care.

Ms Harrington: Do you have a final deadline?

Mr Draves: I have been concerned with finishing the building. I have done this upon myself. I could have hired people to do this, but I did it all myself to keep my costs as low as possible. I figure in the next two weeks we will finish. I have called rent review and asked about submitting an application. They say I am wasting my time. They say, why would I even bother going through the efforts of doing an application to rent review when I might be just turned around and made retroactive? Why should I waste two or three weeks of my time?

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Ms Harrington: In filling out the application.

Mr Draves: Yes, and going through and doing all of the things that have to be required for me to tell what I did so that they can base the increases on that. I am going to finish the building and then I am going to sit down with my grandfather and my parents and my lawyer, who is also my uncle, and we are going to see if there is any avenue for us to take to get me out of this situation. But as I said, time is not on my side.

Ms Harrington: I will again tell the minister that I met with you.

Mr Draves: As the other gentleman said before, if you want the building you can have it, because this has taken a severe toll on me. I think I am an ally to this government, and any government, in building. I am a carpenter. I work with my hands. I am doing something that I know how to do that is helping this government. And you have burned me, you have burned me, and I am not going to step back into this again. You think I am stupid?

Ms Harrington: No, I did not --

Mr Draves: No, I am not advocating that you think I am stupid, but why would I go back into a rental housing market of any kind and take an old building and fix it up when this has happened to me now? I am not going to go back in and do this, and you and I cannot foresee how many buildings I might have renovated in the next 30 years. So what am I going to do? I am going to go and find a job somewhere and work for somebody on an hourly basis because I tried to make a go of it myself and I got hurt severely.

Ms Harrington: I just want to end by saying that I do not know -- I could ask you whether or not you agree that the system we had in place was working for landlords and tenants.

Mr Draves: I am not here to analyse the system that was there. I ran by the rules.

Ms Harrington: Yes, I know.

Mr Draves: I worked by the rules and you have changed them without any fair warning to me. A renovation cannot be completed in a month. It takes a long time to do. You said, "Okay, we're going to change the rules and make it retroactive back to 1 July 1990." What kind of fair warning is that to me? The minister said, "You knew the government was going to be elected," and I said, "Come on, who thought in April the NDP would be elected?"

Ms Harrington: I just want to let you know that we are doing this to get a better system in Ontario.

The Chair: I am sorry. We are running over time here.

Ms Poole: Welcome to the committee, Steven. As a former resident of Matheson, I can assure members of the committee that nobody in Matheson would have believed in July or any time that there would ever be an NDP government in this province.

Mr Mahoney: Nobody in Ontario would believe that.

Mr Mammoliti: Well, we are here.

Mr Draves: I think Dianne Poole would also be able to advocate that my grandfather is probably the most honest man anyone could ever meet, and if anybody thinks that people are being ripped off of rents or anything in Matheson, then he is seriously wrong.

Ms Poole: I can certainly confirm that your grandfather is a man of very high integrity and is a community leader in the Matheson area. Thank you for your presentation, Steven, and for bringing your case before us. I think you have personified some of the problems that are happening with the retroactivity.

In your closing sentence, you said, "Time is not on my side," and you reiterated that with Ms Harrington. The government members on many occasions have said this is interim legislation so we are not to worry. There is a long-term solution coming down the pipe. But this legislation can go till 1 January 1993, two years.

Mr Draves: I will be finished by then.

Ms Poole: Will that be too late for you?

Mr Draves: I will be finished. We are talking months in my case; we are not talking years. As I said, the bank wants its money. I will hold out as long as I can, hoping for some kind of solution, but at some point somebody is going to tell me, "Hey, we want our money," and then I will have to deal with that situation when it comes.

Ms Poole: We certainly hope it will not come to that and I think we will be looking for amendments to this legislation to ensure it does not come to that.

You have said in your brief that a one-bedroom apartment would rent for $225, a two-bedroom apartment for $275 and a three-bedroom apartment for $325. I just want to confirm these are the new rents if the rent increases had gone through.

Mr Draves: If I was allowed. I am not really concerned. Rent review might have said I could have any of them higher. I just want them standardized and I want them at a rate that I do not have any trouble getting tenants in there but I am able to pay my bills. I have a waiting list of people to get into this building. I have told them, "Look, your rent might go up to $225 or $275," and they say, "Hell, I'll pay that." It is cheap for this area and they are nice apartments. We spent a lot of time and effort.

My motto is that I would want to be able to live in that apartment before I finished it, and that is a motto that our whole family used when we renovated those buildings. We took no shortcuts. We wanted to make them comfortable and livable, and we do that in hope that we will not have any trouble renting these apartments out in the future. I think that is a sound argument, a sound way to do something.

Mr Tilson: One of the comments that has been made by the government side of this committee throughout the hearings, and by people who have come to us, tenants' associations mainly, is the submission that what landlords have been doing is they have not been maintaining their buildings on a regular basis, which means of course then they have to say, "We have to generate large amounts of money for capital expenditures." In other words, the suggestion has been that the buildings have been purposely allowed by landlords to become rundown so that they would therefore be able to go to rent review and say, "I have to make a major capital expenditure." Have you seen any evidence of this in this area?

Mr Draves: No, I think the rents indicate it. I would have trouble believing how anybody could tell me I could afford to make renovations on the rents that were being collected. Even if my grandfather had set money aside for renovations, it would not have been anything nearly enough to cover what I have done, especially if he had gone out and hired someone else to do it.

What this government is advocating with this new legislation is it wants landlords to budget for capital expenditures in the future. I cannot even start to imagine what rents might go up to because nobody knows what is going to happen in the next 20 years. Who would have thought 20 or 25 years ago that we would have this stuff we have now? I do not know what the future holds. I do not know how electrical is going to change or how plumbing or anything is going to change. So how can I budget for something I do not even know? You deal with it when it comes to you. If my grandfather was told this 25 years ago, these people would not have had these low rents for as long as they did.

Mr Tilson: On that note, I appreciate the comment in your presentation too where you state there is one legal rent in your building of $52.84, which I assume is per week.

Mr Draves: No, that is per month. My grandfather's motto was when someone moved into a building, he did not raise the rent until that person moved out. This is something he has lived by since before 1950, and it is not funny.

Mr Tilson: I did not mean it as funny, sir.

Mr Draves: No, this gentleman over here is laughing at it. My grandfather had the highest integrity, but if people were honest and fair to him, he kept their rents at one level. This lady has been in it since before 1960 and he has not raised her rent.

Mr Tilson: Sir, there was an article in the Globe and Mail at the end of January where this very point was made. It states the rich will get richer. The experience in the United States and worldwide shows that rent controls benefit the middle and upper class and leave the poor in deteriorating units. I think your story here this morning is an example of that. Obviously, when you get rents that low, they are going to stay that way and there are not going to be any renovations done to your building to improve it.

Mr Draves: How can you budget for it? How can you put any money aside?

Mr J. Wilson: How many tenants are in your building?

Mr Draves: The building is fully occupied.

Mr J. Wilson: Are any of them low-income individuals who would require --

Mr Draves: I have a handicapped senior. I have two other seniors. I have one woman with a young child who is on some kind of mother's allowance and works part-time. I have another tenant who is currently working for me and will go on unemployment when he is finished. I have another gentleman who has just been hired on as a salesman and another gentleman I am not familiar with at all.

Mr J. Wilson: If the government had not brought in this bill, would they have been able to handle the rent increases?

Mr Draves: They all think the rents are fair. They have all advocated to me that -- the one lady I have got who has been there since away before 1970, she wants to pay the rent. They all want to pay the rent, but legally I cannot accept it.

Mr Tilson: I would say they will think $52.84 is fair.

Mr Draves: Can you imagine how much of a waiting list I have for that apartment?

Mr Tilson: I guess, and the list is going to get longer, too.

Mr Draves: It already is.

The Chair: Thank you, Mr Draves, for your presentation this morning. We appreciate your coming.

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UNITED TENANTS OF ONTARIO

The Chair: The next presenter is United Tenants of Ontario: Rick Desormeaux, chairperson.

Mr Desormeaux: I am not the chairperson yet. UTOO is a provincial coalition and I am a representative for the north central region.

The Chair: Okay, just identify yourself for the record and your official position.

Mr Desormeaux: Yes, it is Rick Desormeaux, north central rep for United Tenants of Ontario.

The Chair: Thank you very much, Rick. We are following the same procedure. You will have 10 minutes for your oral presentation and we will reserve 10 minutes for questions by the committee members.

Mr Desormeaux: I am very concerned and our group is very concerned about the politicization of housing. We do not believe that housing is only an economic matter, although there must no doubt always be an economic component to it, and we certainly do not believe housing must be a giant political football. We suggest that our local group, which is Sudburians Organized Against Poverty, really pushed the idea that housing is a right and it should not be locked into commodity thinking or partisan bickering between landlord groups and tenant associations.

I do not believe that people who need adequate, appropriate, affordable housing and do not have it particularly care about the power games. They care about securing adequate, appropriate, affordable housing and Bill 4 is a stopgap measure designed to ensure that rent increases are based on real and realistic bases. As a stopgap measure, designed to be replaced by fully-thought-out legislation which will answer the concerns of both organized tenants, landlords and people in economic poverty situations, it is acceptable.

In the long run, government, landlords and tenants will have to hammer together legislation which moves adequate, appropriate, affordable housing out of the adversarial arena into a co-operative one. There is no good reason for people who need a place to live to be pitted against home providers. Legislation which is co-operative would recognize landlords' need to make a fair return on their property and tenants' need for adequate, appropriate, affordable housing, and neither need be victims or villains of this.

When I come down to meetings in Toronto about housing, there is very much a "them and us" kind of feel to these meetings, and that is not right that it is a "them and us." I do not believe that tenants' groups and landlord groups have to be enemies. I believe -- this is personally -- that most landlords are basically good and they are trying to do their best and most tenants are basically good and trying to do their best and that it is -- well, it is kind of realistic at this point that it is assumed that one side is to blame and the other side is not to blame. It is kind of the way things work, but personally, from my experiences with the politics of housing, I think there should be like a no-fault housing situation where we say it is not the landlord's fault, it is not the tenant's fault, it is not anybody's fault, but it is the housing that has to be created for the people who need it and cannot afford it. And that is the end of my presentation.

The Chair: Ms Poole?

Ms Poole: Just let me get the breath mint out of my mouth there. Please do not put that on Hansard.

Mr Owens: Too late.

Ms Poole: Too late?

Mr Owens: It is done.

Ms Poole: Rick, I really want to congratulate you on your presentation today. Unfortunately, what has happened on this committee is, most presentations have been extremely polarized to one viewpoint or the other and there have been very few in the middle. I particularly appreciate your comments that you do not believe landlords and tenants have to be enemies and there should be a no-fault provision for housing where you are not trying to blame but to try to work together.

One of the problems I have with Bill 4 is I think it is going to polarize tenants and landlords. I do not think that some of the tenant protections that should be in it are there, and I also think that the retroactivity is unfair to the landlords. Do you have any ways that you would like to see Bill 4 changed so that landlords and tenants would be encouraged to co-operate more together?

Mr Desormeaux: I see it as more of a basic problem than the legislation. I see the legislation as a symptom of something else and not as a cause of a problem. I think that really it was apparently put together solely by politicians, and maybe I am wrong, in consultation with some tenants' groups. And I think that if you want to make amendments to this legislation, it should be a three- or four-sided kind of decision, that there should be input from the landlord representatives, who have very strong feelings, and from the organized tenants, from the unorganized tenants, who do not have the power to say what they want like the organized tenants can, and politicians and other experts. I think that is what I would say, but that would be more in the future.

Immediately? Let's say you are considering cases like, oh, they bought toasters for each apartment in a building and they charged extra rent for putting in toasters, this kind of thing. You say, "That's a frivolous expense," and this kind of thing. Obviously, this is not the kind of situation that we have had so far today. Or there is the situation where they put in new carpeting, nicer carpeting, and they charge more rent. I think that is the kind of thing that this bill was primarily meant to avoid; that you wanted only capital expenses that actually are necessary.

Ms Poole: So you would like to see a provision in this bill where capital expenditures for necessary repairs are allowed but luxury renovations and frivolous repairs are not.

Mr Desormeaux: That is one thing that confuses me about this hearing, because the amount I have read about this legislation seemed to say that it was luxury renovations, as opposed to renovations that are necessary.

Ms Poole: No repairs, necessary or other, are allowed --

The Chair: Order, please. Mr Tilson?

Mr Tilson: Just carrying on with that issue, sir, that is one of the areas that our party has been concerned with, the lack of communication between landlords and tenants, specifically dealing with capital expenditures. I mean, we have tenants' groups that have come to this hearing, and I have experienced it in my own riding, that the first time the tenants may even have any connection with the landlord is during some application for a rent increase, which is really too bad. In fact, it is not only too bad, it is not acceptable, because there are examples of expenditures that may not need to be made that have been made.

Our party will be putting forward a proposal of what we call a democracy clause, which will give tenants input into specific capital expenditures that may be made, and obviously the landlord cannot make those expenditures or those capital improvements without consultation with the tenants. Would you support such a clause as that?

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Mr Desormeaux: Yes, because basically I do not think most tenants would disapprove of renovations where, let's say, the building really is falling apart and the landlord is trying to make sure that the building lasts longer. I do not think most tenants would really disapprove of a fair increase for that kind of use. Now, like I say, I thought that was in the legislation that it was something like an emergency repair that would be covered and luxury renovations, something like a carpet that does not need to be replaced or toasters that the tenants do not need, would not be receiving it.

But in general, sure, I think that the tenants know that buildings have to be renovated from time to time and that there may be some rent increases and that if the rent increases are fair --

Mr Tilson: I think, sir, too, just communicating with the landlords, I know in my own riding this past Friday I had that exact situation happen where the tenants had never met their landlord, believe it or not. They had owned the building for, I do not know, three years. I know it sounds hard to believe. All the communications had been through the superintendent. By coincidence, both the landlord and the tenant wrote me letters, as someone sitting on this committee, from opposite points of view. So I invited them both to attend a meeting and they met each other for the first time and they had it out. Not a great deal was resolved because of the complexities of this issue, Bill 4, but at least they met and discussed some of the problems.

I would like to ask you one final question, sir, and that has to do with statistics that have been presented to us by the ministry from the Canada Mortgage and Housing Corp where the vacancy rate in the Sudbury area as of October of last year was 0.7, the lowest of the cities we are going to, and at the same time the rents are the lowest of any of the cities that we are going to, which I guess emphasizes the problem of capital expenditures. You seem to be experienced in or have had some experience province-wide. Do you think that the situation in Sudbury is different from the situation perhaps in Toronto?

Mr Desormeaux: I am experienced in certain situations. For example, there is a difference because there are no real organized tenants' groups in the north the way there is in the south, so there is not -- in our meetings we are more concerned with what we can bring to the north to help the northern situation and I find in the south they are more interested in who wins and who loses in landlord-tenant disputes.

Ms Harrington: I am glad you brought up the point about the tenants feeling polarized and the opposite side from the landlords. That is something our new government would like to address and get people working together.

I know there has been a lot of difficulty on behalf of the landlords looking at Bill 4. What it is is a breathing space to cap the rents at 5.4% this year. Now 5.4% is a decent increase, and of that, that has to go to maintenance and repairs. A lot of landlords do not go to rent review to get increases more than the guideline of 5.4%, so I submit that many good landlords can get by very well with that cap without getting more and more expenses on top of that. But what I am saying is that Bill 4 is a breathing space so that we can see where we should go from here and how to bring people together.

A point I think you made -- let me just check on this -- is that the legislation we had is polarizing people and it was not working. Would you agree with that?

Mr Desormeaux: I am not an expert in housing. I am part of UTOO, but my first responsibility is for an antipoverty group here.

Ms Harrington: That brings me to the point I wanted to get to. What kind of per cent increases do you personally know about, say, in the building you have lived in? What kind of per cent increases have you experienced here?

Mr Desormeaux: Personally, I cannot afford to get an apartment, so I moved back with my parents several years ago, because I cannot get the two months of rent together at one time to get a home of my own.

Ms Harrington: Do you know of buildings through the group that you are associated with, the poverty group, where there have been rent increases of over the guideline of 4% last year or 5% this year?

Mr Desormeaux: Not personally.

Ms Harrington: Do you know of people who have been evicted or had to leave because of the cost of the apartments, even though, as Mr Tilson said, it is lower than the rest of Ontario? Do you know of people who have had to leave because of the rent?

Mr Desormeaux: Mostly I know of people who are having trouble getting a place, because, unlike some of the landlords we have had this morning, a lot of places are closer to $350 and upwards than $200.

Ms Harrington: Usually this is what happens. All the lower-priced apartments you cannot get hold of at all, but there are some available in the higher levels.

Mr Desormeaux: Yes, so our problem is more people trying to find accommodations than people in accommodations worried about being kicked out.

Mr Mammoliti: One of my biggest concerns personally, and I think I am safe in saying that it is the committee's concern as well, is that communication is something that we have to learn about. What has been happening in Ontario, and what we are finding, is that there has not been any communication between landlords and tenants. You brought it up earlier; my fault, your fault. Again, I am concerned about this, and what I am finding is that for the most part tenants have been trying to communicate with landlords, but landlords have not wanted to give them the time of day. That is what we are hearing. Has this been happening in Sudbury? Has this been happening in the smaller towns? It certainly has been happening in the bigger cities.

Mr Desormeaux: There has been some of that, but I think there is a bigger problem, which is the stereotyping, which would hamper the communication even before that stage, because I think there are some basic assumptions by landlords of what tenants are like, there are some basic assumptions by the tenants of what landlords are like, and they both have some pretty strong assumptions about what the government is like. It is sort of --

The Chair: Very good. Thank you, Rick, for your presentation. We appreciated all the information you brought to us this morning.

ZULICH ENTERPRISES

The Chair: The next presenters, Dario Zulich and Matt Szalai. Gentlemen, we will be following the same procedures. We will just ask you to identify yourselves for the record and any organizations that you may represent so that we are clear.

Mr Owens: Excuse me, Mr McCarthy.

Mr Szalai: I am Matt Szalai, controller of Zulich Enterprises, and to my left is Dario Zulich, general manager of Zulich Enterprises. I will be commenting on the information provided on the schedule submitted with our brief. Dario Zulich will be expressing his views and recommendations concerning Bill 4 and rent controls.

Thank you for allowing us to present our information and views on the RRRA and Bill 4. Zulich Enterprises is a family business and has been involved in residential real estate for 25 years. The first apartment building purchased 25 years ago is still owned and managed by our company. Needless to say, we are in the real estate business on a long-term basis.

In more recent years we have diversified into other real estate sectors that provide better investment returns. We own approximately 700 apartment units, 200,000 square feet of various types of commercial properties and 200 acres of raw undeveloped land throughout the Sudbury area.

We have prepared a schedule summarizing information relating to our applications for whole-building review under the RRRA. The majority of our applications for rent review were for a capital expenditure allowance. Our weighted average total justified increase amounted to 12.69%. The rent increase was recovered over an average of three years in order to minimize the economic impact for all concerned. This translated into an average annual rent increase for buildings under review of 7.56%, these statistics again supporting the fact that high rent increases, as the government refers to, are few in number.

During the past three to four years we have spent in excess of $2.1 million on capital expenditures. These capital expenditures could not have taken place without provisions for the recovery of these expenditures and the resultant availability of financing. Again, I want to stress that the majority of our capital expenditures were financed.

With respect to capital reserve funds, it would have taken approximately 41 years to build up a 1% capital reserve fund to fund the $2.1 million of necessary capital expenditures. These capital expenditures were not a result of neglect of ongoing repair and maintenance but were the result of other factors.

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The retroactivity of Bill 4 has created great uncertainty in the investment community. In our particular situation, we had made a business decision concerning a capital expenditure as far back as April 1989, and this decision has been affected by the retroactivity of Bill 4. In total, $459,000 of our capital expenditures have been affected by the retroactivity of Bill 4.

Now I would like to pass the mike over to Dario.

Mr Zulich: Again, thank you for everyone listening to us today.

I want to start off by first analysing and seeing what exactly is Bill 4. Simply put, it is a "stop everything" measure which enables politicians, the government, landlords and tenants to step back and notice that there is a problem, step back and try to come up with some workable solutions to be implemented to solve this problem. For this I am actually grateful that the new government has proposed Bill 4, and I am proud of this government. Its intent is admirable, but the content, especially with retroactivity, is very questionable.

As Matt said, we are standing to lose $500,000 because of this retroactivity. We had made decisions based on the laws at the time and we feel that those laws should still be standing because the money is already spent. We cannot take back our money.

Just as with the last presenter, and I have been seeing these hearings, I find that the hearings deal with a lot of very important issues, but I think they are going on a tangent away from Bill 4. They are very important issues and problems that Ontario is facing, but they are problems that, with or without Bill 4, will not be resolved. These problems are the availability of apartments -- there is a vacancy rate of less than 1% -- and the affordability/poverty issue, where as rents increase by inflation they still are greater than increases in the salaries of people in apartments, especially the poorer people. There are large rent increases, which is another big issue, but these rent increases have been justified. There is large discrimination because there are large waiting lists, and of course landlords can choose the cream of the crop of tenants on their waiting list. There is also deterioration; no money has been spent over the years because the money was not there for the landlords to spend it on the buildings. I guess the reason why all these problems are here is because rent controls had caused them.

We are diversified also into the commercial market, and the commercial market is similar to the residential market -- we have customers or tenants -- but the problems in the residential market are not to be found in the commercial market. There is high availability and affordability for tenants. There is abundance of space. In fact, lately rates have been coming down in the commercial market. Tenants can chose when or where they want to be, how much they want to pay, how long a lease term should be. Landlords such as ourselves, to attract tenants, we give them substantial improvements or incentives, free rent to take care of their moving costs and their startup costs. We would turnkey their unit to provide them with carpet, painting and brand-new leaseholds. We pour capital expenditures into commercial buildings not to increase the rents but just to keep tenants. The reason is because there is more space than there are tenants. And, of course, there is no discrimination in the commercial market as long as you have your rent cheque. I do not care what nationality or what level of poverty you are at, that is all that matters, especially with such a high vacancy rate.

All of these problems are faced by commercial landlords. They are not problems faced by residential landlords. Conversely, I guess, these problems are faced by residential tenants. So, to almost throw a wrench into the whole rent review process, because most landlords do not like rent review, I almost am in favour of it, for those reasons, that I am not subject to the same problems as I am in the commercial market. There are no vacancies in the residential market. I do not have to advertise. There are large waiting lists. I get to pick the cream of the crop, and I find that lately tenants are becoming more educated. They are selling their homes to start to live in apartments because it is cheaper. So I get quality tenants in our apartments.

The non-essential capital assets in a residential market get stretched beyond their expected life, like, for instance, carpeting. Most landlords will not change carpets or pave the driveways unless it is absolutely necessary because the apartments are still going to rent regardless of whether you pave or not because, unlike in commercial, tenants have no choice; they cannot move.

Given all these issues, I guess what we would like to propose, through this Bill 4, to the government is that when it makes up its solutions to the problem the retroactivity must be eliminated to restore the confidence of most business sectors in Ontario and, as we found through the hearings, around the world -- such as those Koreans there. If decisions were based on laws of the time, these decisions cannot be reversed. We do not believe the law should be retroactive.

We agree on putting a cap on rental increases on capital expenditures to 10%. You will find that in our applications we have done that anyway just to help tenants digest their rental increases. We believe that landlords should be able to increase their rent based on financial losses only if those financial losses occur from an operating point of view, as opposed to a financing point of view. I guess the government is controlling our operating revenues. Then if operating costs go up, I think that the rents should be going up with them. But of course the government is not controlling the extent of leverage on our properties and I do not believe that financing costs should be passed through to the tenants. We own our first building from 25 years ago and I think that most of the losses caused by financing are caused by the speculators who flip the apartments. Banks will not lend us more than 75% and they will not lend us money on a building that cannot make the repayments. On that basis, if you are in it for the long term, you will never have a building that will lose money because of financing unless of course you pick the wrong time to finance, and that is just a risk of business.

In conclusion, apartment buildings, as in all kinds of businesses, have risks associated with them. There is the business risk, as I said, which is the operating risk of the building as it pertains to the operating revenues and costs. There is financial risk, which is the amount of debt on the building, and that is at the discretion of the landlord and should be borne by the landlord. The more leverage, the more his return will be. But the introduction of the retroactive law is putting a component of risk into the marketplace that has not been seen in Canada, or in a capitalist market, which is a political risk. I would not know where to begin to calculate what kind of premium I would have to put on a business if I have to start wondering how much risk the government is going to play.

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The Chair: Mr Zulich, thank you very much. We are going to start our questioning with Mr Wilson.

Mr J. Wilson: Thank you very much, Mr Chairman. You began your presentation by observing that we are hearing a number of issues that technically fall outside of the contents of Bill 4, and I suggest to you one of the reasons for that is the government has used the heavy-handed approach of bringing in Bill 4 and then next week we are going to be seeing a green paper, so this committee is dealing with a bill -- which they are calling a stopgap measure -- that is going to proceed at the same time as broader discussion on housing policy will occur. It is important, though, for this committee to hear all of the issues involved, which may appear to be a duplication in efforts, because I do not believe that, politically, this government can retract on Bill 4. Once it is passed, it is very difficult, after the two-year moratorium, to go back to the Legislature and back to the voters and say, "By the way, now we're going to let rent increases at 10%, we're going to allow capital cost to flow through and a number of other things."

I also suggest, and would ask you to clarify, that you start off also by saying that you are really in favour of Bill 4, but I would say the balance of your arguments, which require amendments to Bill 4, will be, first of all, very difficult amendments. You mentioned that there should be necessary maintenance and repairs, which is not in Bill 4 right now. You also mention we should eliminate the retroactivity -- there is retroactivity in the bill; it is one of the major concerns -- and cap rent increases at 10%. The bill does not provide for 10% now; it is almost half that. Do you want to clarify that at all?

Mr Zulich: I agree with Bill 4, the intent of Bill 4, which is that something has to be done about the rental policies in Ontario, and what it is doing is bringing this issue into the light of the public and that is how I agree with Bill 4, by putting on a moratorium, stepping back and trying to figure out a workable solution, because right now it is not working and I think --

Mr J. Wilson: But do you think the government should have brought in the moratorium and then discussed? Should they have discussed and then brought in Bill 4, or something similar, as a result of discussions?

Mr Zulich: I think the moratorium is actually quite lengthy. I do not think it should be that long if there is in fact one. The problem should have been discussed before coming up with any type of bill.

Mr Tilson: Your comments about the vacancy -- I would like to raise it again, the vacancy rate in the Sudbury area. The statistics, as we indicated before, were 0.7 as of October last year, and that is the lowest of the cities that we are going to. I listen to landlords who particularly come forward in saying: "In spite of the interest rates that are coming down, in spite of construction costs that are not as great during this recessionary period -- in other words, it pays to put up buildings right now, but because of Bill 4, why would we do it? Why would we build another building?" Do you have any thoughts, looking specifically at Sudbury? Because Sudbury has obviously a major problem as far as the rest of the province is concerned. What sort of amendments should this government put forward to encourage new buildings?

Mr Zulich: You hit on a beautiful point there. Before this Bill 4 came out, we had purchased a piece of property to build residential apartments. We are in construction as well, and the land costs are fixed and we can build them to rent. After Bill 4 I had shelved it and lately, because construction costs are down and now it is favourable to build, it looks like we are going to be proceeding to build condominiums, because of Bill 4. I think now is the time to do the building and Bill 4 really stopped any advancement in building apartments that was going to happen and in order to create that, maybe a type of government grant, Renterprise, a system that they had once in the past, could work again.

Mr Owens: I am looking at the spreadsheet that you provided for us. Under "Total Justified Increase," is that what you were actually given as a rent increase or that is what you asked for?

Mr Szalai: That would be the amount that we were given by rent review in the order. That would have been the total justified increase.

Mr Owens: Looking through this list, I see increases of 13%, 16%, 20%, 14%, 12%, 29%, 14%, 15%, 26%, 13%, 10%, and we hit 31 October 1990 and all of a sudden we drop to 9% and, in February of this year, 6.4%, and, in June of last year, 9.1%. Can you tell this committee whether you have suffered under the rent review process with increases such as you have listed?

Mr Szalai: We have not suffered under the RRRA. We have made capital expenditures and been able to recover those costs through the legislation and also been able to arrange the necessary financing in order to proceed with those necessary capital expenditures. The total justified increase of, for example, 13.79%, we phased in over a three year period and so the maximum amount of rent increase that the tenants were faced with in any one year was, say, approximately 8%.

I think the government is proposing to only allow the landlords to recover through the rent review process what they are asking for. Well, most landlords either hire a consultant or are sophisticated enough to be able to number crunch; and if you are allowed a 15% increase, because of extraordinary operating costs, you are not going to ask for 10%. You are going to ask for 16% to make sure you recover it. But the way the RRRA worked, that at least went into the rents and you could phase it in over a period of time, which reduced the economic impact on the tenant, and not only the tenant, but the landlord as well. It reduced turnovers and the costs associated with turnovers.

Mr Owens: So with respect to your comment about number crunching, did you find you came out on top of this, or did you end up being dead on?

Mr Zulich: I think all parties benefited. You are looking at not large percentage increases in rents, but if you are looking from the other point of view, a large amount of money was spent. So I think, in our situation anyway, the tenants received a fair tradeoff and we received a fair tradeoff on the money that we spent.

Mr G. Wilson: I am interested in the first submission. You mentioned that, "These capital expenditures were not a result of neglect of ongoing repair and maintenance but were the result of other factors." What are some of those other factors? More generally, the previous intervenor mentioned the need for discussion. In fact, I think you are saying too that your support for Bill 4 suggests that it is a good time to sit down and look at the whole issue of the rental procedure in Ontario. What contact do you have with your tenants, for instance, and would the other factors that came up here be in consultation with them?

Mr Szalai: In most cases we did not hold a full-blown meeting with the tenants. These improvements were a result of a decision we made, as well as a result of feedback we were getting from the tenants on an ongoing basis. We have an open-door policy with tenants and regularly hear their feedback concerning the property and everything relating to the property.

Mr Mahoney: Sir, I am having some difficulty reconciling your support of this bill -- as you have stated, you support it in principle -- and your pride in this government, which you referred to, with the fact that you have shown us a document that shows your company losing $500,000 as a result of this bill.

It is nice to be in a community where somebody was actually thinking of building some rental accommodation. That does not happen in southwestern Ontario very often, but that is stopped as a result of Bill 4. So we have got two pretty major factors.

[Laughter]

Mr Mahoney: Well, you can laugh, but it was the gentleman's statement that Bill 4 stopped him from building new rental accommodation and his firm has $500,000 at risk.

If this committee -- in the majority, government members -- turns down the amendment that would eliminate the retroactivity, and there is nothing to indicate that anything other than that will occur, are you still going to be proud? Are you still going to be in support of a bill that has put you out of the new rental housing market completely and that has cost you $500,000?

Mr Zulich: No, sir, you are right. I will not support the bill. I guess I was facetious in supporting it. I was supporting the idea that someone is taking a stance and bringing this issue to light. Of course I support it without the retroactivity and with the various other comments I had made on it. But in general there is a problem and if we can address it, I think sooner or later we will see that the only way to get rid of all the problems is to get rid of rent controls in total.

Mr Mahoney: Once again, I have that difficulty that you come full circle to the point of opposing rent controls completely, which would not be too compatible with the support for Bill 4. I would suggest to you that there has been nothing to indicate that the government is willing to eliminate this retroactivity; in fact, quite the contrary with many of the statements made in Toronto.

I know that Ms Poole has some comments or questions.

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Ms Poole: Thank you for your presentation today. It has been very helpful to us and I think it has also dispelled a couple of myths and some of the confusion that is out there about Bill 4.

The first item of confusion is that Bill 4 only deals with luxury renovations. There is absolutely nothing in Bill 4 that will allow a landlord to put through costs for necessary repairs, even if the building structure is in jeopardy or even if the health and safety of the tenants are in jeopardy or endangered. So that is one of the first myths about Bill 4. It does not make any provision for necessary repairs. So I appreciate the fact that we are in the same position on this, that there should be allowed necessary repairs and it should be capped, because we have to stop the outrageous rent increases.

The second myth is that the retroactivity only goes back to 1 October. Some people believe that it is only major repairs done between 1 October and 28 November that are affected. But that in fact is not at all true either. If you had a rent increase that was effective 1 October, you would have had to apply on or prior to 1 July, and not only that, your capital repairs would have been done before you even applied, so this retroactivity affects people who actually did capital repairs back in the fall of 1989 and spring of 1990. Do you agree with that?

Mr Zulich: Yes, I agree totally. That retroactivity goes back as far as 1989.

The Chair: Gentlemen, thank you for appearing before our committee today. We have used up our time and your brief was interesting. We appreciate it.

SUDBURY AND DISTRICT PROPERTY OWNERS ASSOCIATION

The Chair: We are going to move right along to the Sudbury and District Property Owners Association: Roger Hawkins, chairperson. If everyone at the table would just identify themselves, we are following the same procedure. You will have 40 minutes for your presentation, 20 minutes' oral presentation followed by 20 minutes of questioning. Your time is starting.

Mr Hawkins: I must say that you all look much better in person than on TV and I congratulate you for that.

Mr Tilson: Flattery will get you nowhere.

Ms Poole: How bad do we look?

Mr Hawkins: I hope this repartee that is occurring is not charged against our time. We are going to all speak very quickly, because we do have five presenters today. We will certainly try to fit in within the 20 minutes, and I certainly hope if we are 30 seconds or so over you will give us a bit of leniency, Mr Chairman.

The Chair: I have been giving everybody leniency.

Mr Hawkins: Thank you. On behalf of the Sudbury and District Property Owners Association, I would like to thank the Chair for affording us the opportunity to speak today. As part of our presentation, a number of my colleagues will speak on a variety of issues which relate to Bill 4. We are going to relate specifically to Bill 4. Steve Malcho is going to give you a northern perspective, and I am very pleased to see one of our northern members is on the committee; Bill Snow will be discussing issues and recommendations with respect to Bill 4; Lynda Beavis will be discussing legal concerns; and Peter Faggioni, who is president of the Sudbury and District Home Builders Association, will be discussing the impact on the construction industry. So I think it is an all-encompassing type of presentation which we hope the members will find helpful.

As an introduction, and having viewed most of the hearings from Toronto, we would like to clarify some general concerns that we feel have presented an atmosphere which has been neither helpful nor productive to this process.

We accept the premise that there is a rental unit shortage in the province and that new starts have consistently dropped off, leaving the vast majority of stock old and over time in need of major improvements. We feel to effectively deal with and hopefully resolve these difficulties, the government, tenants and property owners must work together, co-operatively and in a spirit of compromise, if it is the desire of all parties to come up with a long-term solution to a difficult problem. Setting an adversarial tone between us and polarizing us into warring camps, in our view, is not in the interests of this province or its residents. If it is the intention of all participants to work out solutions that reflect the input of all constituencies so that the housing problem in this province can be improved, then perhaps political concerns should be set aside in the interests of working out solutions. We can recognize the grave dilemma facing this committee. How does this committee balance the needs and rights of the tenants and the needs and rights of property owners? But we feel strongly that in order to begin resolving a very difficult problem, all parties must be active participants and all views respected.

Bringing about financial ruination retroactively upon many hardworking citizens of this province by changing the rules of law in midstream does not encourage a harmonious working relationship with property owners of the province or the related construction trades, suppliers or in fact the business community as a whole. The resolution of these and other questions can be resolved to everyone's satisfaction in the spirit of a fair and reasonable approach. It is not in the interests of this province or the people of this province for any segment of society, tenants or landlords, to be treated unfairly or in an unjust manner.

At this time I would like to call upon Steve Malcho to give us the northern perspective.

Mr Malcho: Over the last 20-some-odd years, Sudbury has gone through significant changes, not the least of which has been to move from being a one-industry town to a diversified, multifaceted centre serving the needs of northeastern Ontario. The change has not been swift and it has not been painless. In 1971 over 25,000 people, or more than 37% of the workforce, were employed in the mining industry, compared to a little less than 11,000, or 14%, today. The implications to the owners of rental property in Sudbury as a result of the reduced workforce were devastating, and where some aspects of the local economy were able to quickly adapt, the rental property market was not. Why? Very simple: rent controls.

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The enactment of rent controls in 1975 as a temporary measure and subsequent extensions and modifications by the provincial governments served to penalize an already suffering rental housing market. Landlords of buildings in Sudbury, which at that time were almost exclusively 20-unit buildings or less, found themselves with an abundance of vacant units and tenants without the resources to pay their rent. These were tough times for the people of Sudbury, and landlords suffered along with the masses. With little recourse but to reduce the tenants' rent to stave off economic ruin, the landlords were placing themselves in a position where future years' rent increases would be based on these discounted rents. Still today it is commonplace for rent review orders dating back to the late 1970s and early 1980s to be affecting registered rents and current applications, reducing already low rents further still.

The reality of the residential rental market in Ontario is that landlords and their rental units are not homogeneous across the province, let alone within the confines of a single city. To illustrate the wide variances that exist in the province, consider these statistics compiled by CHMC:

1. The average rental of a one-bedroom apartment in Kitchener is $439, in Ottawa $509, Toronto $559 and here in Sudbury $399. Sudbury landlords receive $160, or 28%, less than comparable units in Toronto.

2. The average rental of a two-bedroom apartment in Kitchener, $517, Ottawa $640, Toronto $689, here in Sudbury only $489. Once again, landlords in Sudbury are receiving the short end of the stick with a monthly rental of $200 less than a two-bedroom in Toronto.

There are several reasons why such a variance exists in the province, the least of which is supply and demand. If vacancy rates were the sole dictating force behind rental rates, then Sudbury would not have the lowest monthly rental rate of any major centre in the province. Our combined vacancy rate for public and privately initiated rental accommodation here in Sudbury is 0.4%; 0.7% is the privately initiated, the 0.7% that was discussed earlier. Only two other cities in Canada, Ottawa and Victoria, BC, have lower vacancy rates than Sudbury, yet our two-bedroom apartments rent for an average of $200 per month less.

If rental rates were determined based on some derivative of the operating costs, would Sudbury's two-bedroom apartments rent for $200 less per month? Certainly not. The average annual temperature in Toronto is seven to 10 degrees warmer than in Sudbury, which translates into much higher heating costs for us up here. As for municipal taxes, another big-ticket operating cost, Sudbury is not cheap. As a rent review consultant, I have made application to rent review on a 362-unit complex that saw in excess of a 71% increase in its municipal taxes between 1989 and 1990. The landlord now pays more than $1,430 per unit in taxes and 31% of his units are bachelor apartments. Single-family dwellings in this province, with market values twice that of these individual apartment units, are paying less than this in municipal taxes.

Landlords in the Sudbury region are predominantly hardworking individuals who operate with no hidden motives. They take pride in their buildings and provide their tenants with the highest level of maintenance possible while asking for nothing but fair treatment from their tenants vis-à-vis the legislation of the province of Ontario. Canada Mortgage and Housing Corp's rental market report for Sudbury dated October 1990 provides unbiased third-party confirmation of the overall fairness of this city's landlords. Between 1987 and 1990, when the provincial guideline increase without application to rent review ranged from a high of 5.2% to a low of 4.6%, the landlords of Sudbury on average took only a 6.3% increase on their one-bedroom units and a 4% increase on their two-bedroom units. Lose the notion of landlords being money-hungry, rent-gouging predators seeking out tenants to provide them with lavish lifestyles. That breed is not common.

It is clear regional differences go well beyond rental rates and that inequalities exist and will continue to exist in this province. But the complexity and the difficulties of the residential rental market in Ontario are not going to be solved by Bill 4. This legislation, with its retroactivity, is grossly unfair to a significant sector of this province's citizens, the landlords. We encourage changes to the Residential Rent Regulation Act, but not in a manner that brings about financial ruin to many of the landlords. The retroactive penalization of landlords who, in good faith, made business decisions concerning their rental properties is an obscene attempt by the current government to correct the legislative bunglings of their predecessors at the expense of the landlords of Ontario. This committee and the government of Ontario must not ignore the implications to the landlord of Bill 4.

Mr Hawkins: I would like to call upon Lynda Beavis, who is chair of our legal committee.

Mrs Beavis: In 1975 the Conservative government introduced an unusual intrusion into the forces of the free market with the introduction of rent control legislation. Under successive governments, the legislation is still badly flawed. However, it is important to note that the 1985 amendments resulted from compromise through intensive consultation between landlords and tenants who worked together extensively to produce the result. While not perfect, the consultative process and resulting compromises formed the framework of the current Residential Rent Regulation Act, 1986, the framework within which landlords and tenants have been working for the past few years.

It is now important to note the proposed amendments to the current legislation have been made with no consultation with landlords whatsoever. The proposed legislative changes, if enacted as law, pose the question, do landlords as a group have rights as opposed to obligations? Whenever a landlord-tenant situation arises, it is always set out as tenants the oppressed and landlords as the oppressors, the tenants having rights, the landlords obligations. Do landlords as a group, as citizens, as people, as taxpayers, as voters, have rights? Do they have the right to know the rules of the game and the right to be treated fairly and the right to be protected under the law?

In its present form, Bill 4 purports to wipe out retroactively legal and equitable rights which have been accrued to property owners under existing legislation. In its existing form, Bill 4 is open to challenge, both constitutionally and under the Charter of Rights. The fundamental question is, does the retroactive provision in the legislation infringe on the rights of landlords as citizens, as people, as taxpayers, as Canadians, as voters?

It is our position that the proposed legislation discriminates against responsible landlords. It is unfair, it is punitive and contrary to the government's statement of being fair and just. The essence of the proposed legislation is discriminatory, as it eliminates cost recovery of capital cost projects, it voids existing orders, it stays phase-in orders and it prevents landlords from recovering the full cost of normal, non-discretionary operating costs.

The conclusion is that unless the fundamental question is first determined by the courts, the government should seriously consider not making this law but introduce a transition period so the government could legitimately follow its goals of protecting tenants.

In our opinion, it is unfair to penalize landlords for problems they did not create. Virtually overnight, some landlords and property owners found themselves in or on the brink of financial ruin. Landlords and property owners must have a chance, they must have time to regulate their affairs. Our position is that there should be a commercially reasonable period of time to make changes and to get their affairs in order. If a single landlord in the province of Ontario is forced into financial hardship or bankruptcy as a result of this moratorium, the social contract between the citizens and their government will be broken. The result will be many challenges under the Constitution and under the Charter of Rights by landlords and property owners as citizens, as taxpayers, as voters and as Canadians.

Currently there is a trend developing with landlords and experts in the field that if this legislation is passed into law, it will be very closely scrutinized and subject to judicial challenge.

A spirit of consultation and co-operation is our first choice. We urge this committee to hear our concerns and urge you to remove the unjust retroactive features of this legislation. Failure to do so will lead to confrontation and litigation.

Mr Hawkins: I would like to ask Bill Snow to comment on issues and our recommendations with respect to Bill 4.

Mr Snow: I am previously from rent review services and was a rent review assistant for over two years. I am currently a rent review consultant working solely for landlords in the Sudbury area. I have chosen this avenue after employment with the ministry for two reasons. One is because of my interest in the field and the other is to help landlords through a difficult task of operating revenue property. Since beginning my venture, I have had 29 old-building reviews brought forth to rent review for increases above the guideline amount. All buildings I have worked on are directly affected by Bill 4.

There are three situations that the bill affects. Mainly, these situations deal with the retroactivity of the bill.

First, I have clients who have done capital work to their complexes based on the current legislation. Some have borrowed funds based on the revenues that would be obtained via a rent review application. Landlords based the decision to do capital work on the legislation that was in place at the time, so many of my clients have extended their personal line of credit for a long period of time, believing that the money spent today will hopefully pay for tomorrow.

Second, I have clients who recently purchased buildings. They have based the purchase price according to revenues that could be obtained by making an application to the ministry. Now, with Bill 4, they can no longer increase the rents to relieve them from a financial loss position. May I remind you that it is very difficult to properly maintain a building if there are no funds available to do repairs.

Third, I have clients who have gone through the process in the past and have been allowed an increase for financial loss. These clients were given phase-ins and now have been denied any further increases which were given so they may get out of their loss position. I have one client who loses $3,800 per year now. Is he to remain in this loss position and still maintain the rental unit in a good state of repair?

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These are the concerns of most landlords. These are the concerns which can be rectified by fair and just changes to Bill 4. I would like to inform you of the proposed changes in the bill we would like to see.

First is the retroactivity of the legislation. There are three areas of concern. First, capital expenditures: The landlords who have started or completed capital work to their buildings before 28 November 1990 should be allowed to make application under section 74 or 86 of the RRRA. The treatment of such applications should be regulated in the same manner as capital expenditure changes of 23 April 1990. With these 23 April changes, any capital expenditures with a start date before 23 April applied the previous regulations while any capital expenditures started after applied the new regulations. We are of the opinion that similar treatment should be considered with Bill 4. Therefore, any capital expenditures done before 28 November 1990 should be treated by the current legislation and any capital work started after would be treated under the new Bill 4.

The next area of concern is the existing orders. According to Bill 4, orders issued before 1 October 1990 will remain in effect except for provisions for phasing in the amount of increase determined for financial loss, relief from hardship and economic loss. Such losses are eliminated over a period of time by phasing in the amount of the loss. According to the proposed Bill 4, all phase-ins will stop. Where the ministry understands fully that the landlord is in a loss and has indicated so in an order, the landlord will not be able to increase the rents according to what was determined and allowed in a prior order. In these situations, phase-ins should be continued.

Next is the orders as of 1 October 1990. Orders issued on or after 1 October 1990 will be reordered, adapting the new Bill 4. We are of the opinion that these increases have been allowed by the current legislation in place at the time and should remain.

Last is financial loss applications. Section 79 of the RRRA allows for any rent increase above the guideline amount for findings concerning increases in financing resulting from the landlord's purchase of a residential complex. Many landlords have purchased buildings recently, based on the current legislation. Therefore, we believe these people should be able to make application based on the RRRA, 1986. Certain regulations can be formed, such as, buildings purchased prior to 28 November may make application.

The Chair: You have two minutes max.

Mr Hawkins: Okay. The ramifications of Bill 4 are indeed very serious. In summary, the government and committee would aid in avoiding a major crisis by eliminating the retroactivity of the legislation, allowing orders to stand if deemed necessary to protect tenants, capping increases and spreading out increases to avoid overly high rents. After grandfathering the legislation, freeze activity, if necessary, as of 28 November 1990 in order to begin an extensive consultation process with all sectors involved in providing housing directly or indirectly, with the aspiration of developing a long-term housing program which will be fair and reasonable for all.

I would like to ask the president of the Sudbury Home Builders Association to make some comments.

Mr Faggioni: Good morning. My name is Peter Faggioni.

Mr Hawkins: He is going to speak very fast.

Mr Faggioni: The Sudbury Home Builders Association represents some 80 companies involved in this city's residential construction industry. Our members comprise all aspects of the home-building sector, including builders, developers, renovators, landlords, trade contractors, material suppliers and other professionals.

The housing market is affected negatively by Bill 4. In the past, our market relied on renters to upgrade their living conditions. Simply, as a renter's income increased, he would want to seek higher-priced housing, either through rental or ownership. As rents increased, in a properly functioning market, our system, there existed a direct relationship between apartments and single-family homes. If the tenants will not have the incentive to purchase a home, our sales will be greatly reduced. First-time home buyers will not want to buy a home, either new or old, and the buyers who want to buy a new home cannot afford it. As a result, they cannot sell their existing home.

Rent controls in Bill 4 are a disincentive to move up. Therefore, a smaller percentage of existing renters' incomes will in fact be spent on their housing costs. The standing committee has already heard that 43% of tenants pay less than 20% of their total income towards their rental cost. More than three quarters of those tenants earning more than $45,000 per year spend less than 20% of their income on rent. As one developer has put it: "We've got plenty of low-income housing. We've just got upper-income people living in it."

Bill 4 will not only affect the families who really are in desperate need of apartments, but it will take away the incentive for renters to better their housing requirements. The housing industry is in a major slump today due to a bleak economic picture and it seems when you turn for help another blow follows suit.

Renovators and subcontractors are very seriously affected by Bill 4. In northern Ontario, where the winters are harsh, many builders and renovators rely on renovating apartment buildings to keep some key employees working over the winter months. Many renovators work strictly for apartment building owners. Due to Bill 4, landlords will not perform capital expenditures; therefore, our qualified renovators will be out of work and perhaps may have to close their doors due to lack of work.

Here in the Sudbury area, the day after the legislation was announced, landlords who had committed to capital expenditures or were preparing to do so shelved their plans indefinitely. To mention a few renovators and trades that will be affected adversely by Bill 4, there are: architects, draftspersons, landscapers, pavers, masons, carpenters, roofers, drywallers, insulators, painters, electricians, plumbers, decorators and flooring installers, the manufacturers of carpeting, lumber, drywall, plumbing equipment, insulation, cupboards, roofing material, windows, appliances, furnishings, electrical equipment, doors, the asphalt industry, concrete industries, paint manufacturers, and the list goes on. Should all the above be remotely affected, tens of thousands of Ontarians will be out of work. Tens of thousands of voters who are strongly counting on the present government will be looking to the government for answers, help and guidance.

In conclusion, Ontario has a serious housing crisis which must be addressed too, immediately. Rather than creating a battlefront between the business of Ontario and the government of Ontario, let's work on a permanent solution which will not be opposed to private industry or jeopardize the serenity of paying tenants. Let's work on a permanent solution that will in fact help the Ontarians who sincerely need crisis housing.

We, as the people of this great province, cannot discourage foreign investment, discourage our provincial business leaders or divert our business focus. We must reassure ourselves that it is well worth doing business in this province. Let's assure the business community that Ontario is still and always will be a growth-oriented province. Through industry and free enterprise comes employment, consumer confidence and growth. Let's abolish Bill 4 and work on an equitable equation that will hopefully benefit our whole province and permanently solve our housing crisis.

The Sudbury Home Builders Association appreciates the opportunity to present our views on this most important subject.

The Chair: We are each going to have six minutes for questions. We have Mr Owens and Ms Harrington and we are going to have six minutes per party.

Mr Owens: My question is to Mr Faggioni. Perhaps it is because I am a politician that I do not understand how the connection is made between the passage of Bill 4 and the shattering of the home-building industry.

Mr Brown: We understand. Some politicians understand.

Mr Mahoney: Speak for yourself.

Mr Owens: My understanding is that the high interest rate policies of our Conservative cousins across the table here at the federal level, as well as the speculators being in the housing market, have caused people to be unable to afford houses, whether new or old, rather than this recent introduction of Bill 4. Could you explain how you came about developing this kind of rationale for not supporting the bill?

Mr Faggioni: Simply, we are not only opposed to Bill 4, we are opposed to the high interest rates and the rest of the issues that go along with housing requirements. Bill 4 is one more obstacle that will create a disincentive for renters to purchase a new home, so along with all the other economic factors that fall into play, it is just one more obstacle that we are trying to lobby and abolish.

Mr Owens: The opposition has stated that as a result of Bill 4, much-needed repairs will not be done and as a result the health and safety of tenants is in danger. I wonder if it is the feeling of your association that repairs should be done in a prudent and forthwith manner, as opposed to waiting until the repairs are at a point that if they are not done, they will endanger the health and safety of your tenants.

Mr Hawkins: I said I was going to pass all the hard questions over to my colleagues, but they want me to try and tackle this one. I think that, in fairness, the situation in northern Ontario is quite different perhaps from Metro Toronto's situation, because approximately 1,000 landlords are in this area and most of them are in low-rise type of accommodation. They may be in duplexes, triplexes -- you understand where I am coming from -- and in fact most of our members do want to do repairs and maintenance on a regular basis to protect their investment. But, my friend, when you have an $8,000 or $9,000 loss on your building per year, where does the money come from? Do you understand what I am saying? It is not that you do not want to do the repairs and maintenance, you do. You do want to, because it is stupid not to, you are going to lose your investment, and for many of our people, that investment is the security and pension for their future.

Mr Owens: How is this loss coming about, for instance, the $9,000 losses that you are talking about?

Mr Hawkins: A lot of it could be due to the high interest rate factor when people have purchased buildings. It could be caused by capital improvements. A lot of the losses that are occurring now are due to Bill 4; because of retroactivity the rules have changed. I do not know of any landlord in our organization, and we represent thousands of units in this area, who is not concerned about repairs and maintenance, but they have got to have the money to be able to do it.

Ms Harrington: I understand that your group is a fairly new group of landlords organized here in Sudbury.

Mr Hawkins: Actually, the group existed in 1975 and then it kind of petered out for a while and I would like to thank the government for allowing us, through Bill 4, to resurrect the organization, which is growing daily.

Ms Harrington: As an organization, I would like you to be involved in the ongoing formulation of a rent control system that is going to be fair for everybody.

Mr Hawkins: I would like the government to recognize that, and I hope that we came across that way. In all sincerity, we have watched the hearings and we have tried to present a moderate, compromising approach to a difficult problem.

Ms Harrington: You have made a very substantial presentation and you have made your position very clear, and I thank you for your suggestions. I wanted to ask you, personally, you own a building?

Mr Hawkins: I own two nine-unit blocks. My brother and I used all of our equity, money, investments, RRSPs, everything, to purchase these blocks.

Ms Harrington: In the last, say, three years, how much increase have your tenants been paying as a percentage?

Mr Hawkins: We had an outstanding order, ma'am, and because of the financial loss situation -- we purchased the buildings in March. We spent a fair amount of capital to find out what we could do if the buildings were in a loss situation because of mortgaging costs, and at that time our experts told us that we could apply to at least break even. We have a fair amount of capital improvements which we wanted to do over a five-year plan to help in terms of window-changing and what have you, but we are stuck.

Ms Harrington: I just wanted to know what percentage your tenants are paying.

Mr Hawkins: In rent?

Ms Harrington: Yes.

Mr Hawkins: Our average two-bedroom unit in New Sudbury, which is in an upper area of town, is $440 for a huge two-bedroom unit.

Ms Harrington: What has their increase in percentage been in the last three years?

Mr Hawkins: Because of the order in 1 July, there was 11%.

Ms Harrington: And for how many years are they going to pay --

The Chair: Thank you.

Mr Brown: Welcome to the committee. Being the only northern MPP here, I am certainly pleased to see you.

Mr Mahoney: I was born in northern Ontario.

Mr Brown: Actually, my two Liberal colleagues were both born in the north.

Ms Poole: This is a northern contingent.

Mr Brown: Sorry I opened the subject, Mr Chair.

The Chair: Just in case anybody is interested, I am from Essex county.

Mr Owens: Where is that?

The Chair: The government knows where that is at.

Mr Brown: Getting back to where I was starting, you are aware that the government has said that this bill is a reaction to the abuses of the former rent review situation that existed, as you pointed out in your brief, of legislation that was created in 1986 as a result of a consultation between landlords' and tenants' groups. You also recognize that the abuse they are talking about is that 5.8% was the average rental increase in the province of Ontario last year. This is the abuse. You also realize that the luxury renovation problem that they like to talk about, which so far we have barely been able to find out exists, was also addressed last spring by the former Minister of Housing by a regulation which stopped that particular difficulty. So I guess, like me, you are probably confused about why we need this draconian legislation in order to stall a problem we are busily trying to find.

You would also know that yesterday this committee was charged by a group of people who wanted to be heard because 150 presenters have been denied the ability to come before this committee because the government has refused to give this committee more time, and you would also be aware that this is the shortest period of consultation on any rent review legislation in the history of this province.

Mr Hawkins: I would like to make one comment very quickly and then I will pass it over to Lynda, who is just chomping at the bit to jump in here. What has confused us is that we were pleased that a committee was given a mandate to start a consultation throughout the province regarding housing and we certainly feel that the government was taking a step in the right direction, but now we understand that the minister is coming around and we are going to go at it again, and I guess maybe your committee is going to come around again and we are going to go around again, and I do not know how many times we are going to do this before we can sit down with tenants and landlords and the government and say, "Okay, we've got a problem. If we recognize it as a problem, how can we reasonably address it and solve it?" This is what is confusing us, all of this, and we really do not know what the mandate of your committee is now with all of these other things going around.

Mr Brown: We share your confusion. Coming back --

Mr Hawkins: Lynda?

Mr Brown: Oh, sorry.

Mrs Beavis: Part of what you started out to say, Mr Brown, was that in this particular legislation the capital cost provisions that are being disallowed to landlords are not capital cost provisions for marble lobbies. You know, you take one thing and the press just blows it out of proportion, or the government feeds the press or whatever happens here, but what I am saying is that I represent landlords extensively in the legal area of the Landlord and Tenant Act and under the Residential Rent Regulation Act, and I see the opposite side. A lot of capital cost expenditures that landlords have to use their money for are renovations and repairs that are required as a result of tenants who have totally trashed buildings.

I will give you a perfect example, and this is not an uncommon example and anyone who wants to get a court order and look at my files can come and have a look at them: Last week I had a landlord who had to evict a tenant because the tenant was in arrears of rent for a huge two-bedroom apartment in Sudbury; $292 a month was the rent. The tenant had refused to pay the rent for two months running. The tenant is on social assistance, so we are all paying for the $292 a month, and in addition to that, the tenant moved out in the middle of the night and left the landlord with over $4,000 in major repairs that have to be done to this particular unit. I have the pictures, and this is not an uncommon event.

I am not saying that all tenants are bad. By and large, the majority of tenants are good, and there is no question about that, but capital cost expenditures as a result of a repair that is necessary to rerent a unit -- this unit cannot be rerented without at least a minimum of $4,000. Where does the landlord get that money? Certainly not from the tenant. We have a court order against the tenant. It is not worth as much as that tablecloth. You cannot collect it.

What we are saying here is, the unfairness of this whole proposition that capital cost expenditures cannot -- and by the way, capital cost expenditures were arrived at as a result of the government's understanding of what capital costs should be. Just recently, I might remind the committee, paint was removed as a capital cost expenditure instead of a normal maintenance cost. Certainly painting a unit every couple of years is not a capital cost expenditure; it is just routine maintenance. It is normal wear and tear. So some of these items that you were looking at in this retroactive legislation are poorly drafted, we have no argument with that. We would like to see some changes. Mr Brown, this is where you started. There are some incidents where these capital cost expenditures are directly resulting from tenants, not landlords who choose to spend their money in that direction. They have no choice, and now they have no recourse.

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Mr J. Wilson: On the capital cost expenditures, I guess one of the problems we were hearing down south anyway that needs to be addressed -- I will do it before the government does it -- is that under the RRRA you get an increase for capital cost expenditures and they are not sunsetted, then you get your percentage, and it is not sunsetted at any point. Would you be able to live with, once you have amortized and paid for a major capital cost, that the rents then be lowered proportionally?

Mr Hawkins: As a matter of fact, Mr Wilson, I am very pleased you brought it up because in my conclusion we stated very clearly, trying to compromise with the government's position, that we agree that if a rent increase is exorbitant, cap it. Cap the rent increase and have a reasonable length of time, or what have you, to pay it off. We see that as a natural compromising position between the two alternatives.

Mr J. Wilson: We have been talking in our party about the democratization clause. It would force landlords and tenants to get together and to discuss major capital costs and projects prior to them being approved and to come to some sort of consensus. Would that work from your side of the equation?

Mr Hawkins: Sure, we do not have any problem with talking. We are small landlords, okay? We have to talk to our tenants on a regular basis and many of our tenants in our buildings are our friends. Certainly I talk to our people. I have tenants who have lived in our buildings who want to go on a waiting list and come back to our buildings. In northern Ontario we have to have a good rapport. It is small; we have to.

Mr J. Wilson: The other argument that is put forth by the government from time to time is that over the years when you were receiving rent increases a portion of that percentage granted was to be set aside for capital costs and maintenance and repairs. Do you have any comment on that?

Mr Malcho: I believe Matt Szalai or Dario Zulich mentioned in their presentation, for example, that on the $400,000 or $500,000 they spent on their building this scheme about putting away X number of dollars of the revenue would have taken them 41 years to be able to build up a fund large enough to provide for those repairs or their capital expenditures to be completed. It is an interesting idea, but I do not see that it is at all manageable, and this idea that it would go along with the building would also be of serious concern to the landlord.

Mr Hawkins: Another point I would like to mention: When we initially purchased these buildings we wanted to change all the windows in both buildings. The tenants pay their own heat. There is a fair amount of leakage. But we are in a financial loss situation and we are facing a major financial crisis between the two blocks. We had a five-year plan where we wanted to change all the windows, reduce the heating costs for our tenants and so on and so forth. We just do not have the money to do it. To set aside a capital fund to do that when you are in a loss situation is impossible.

Mr J. Wilson: Okay. Further, despite what Mr Owens may have suggested to the contrary, there has been ample evidence before this committee that there has been significant job losses as a result of the introduction of Bill 4. You have reiterated that today, but in general terms. Specifically, do you know how many people in the Sudbury area would have been affected?

Mr Faggioni: Right now we are accumulating statistics, which we will hopefully have completed within two months, to see how the impact directly affected the construction industry. That we are working on right now. We did not want to go and take statistics from down south. We want to concentrate on the Sudbury area particularly. We have suffered because of it already, but statistics-wise, in actual numbers, we do not have that ready yet.

Mr Hawkins: I can say that we know of a number of developments that have been shelved or put on hold, large developments, because of Bill 4, and other reasons, in fairness.

Mr Tilson: Mr Chairman?

The Chair: Thirty seconds.

Mr Tilson: Yes, just to clarify one item, Mr Hawkins, and that has to do with the retroactive aspect. I think you said you would support the bill being effective the date of the introduction of the bill. I hope that is not what you said because that is not our party's position. Our party believes that it should be at the date of proclamation because you will still be caught by the three-month notice period, which would put you back three months prior to 28 November, and it would, second, catch problems with phase-ins that were legally granted for what, five years, so I suggest you clarify that.

Mr Hawkins: Yes, I appreciate your expertise on this because I believe we have just resolved our position, that it should be the date of proclamation.

The Chair: Thank you very much. I want to thank all of you for coming today and making your presentation.

HOWARD CUSTOM BUILDERS LTD

The Chair: Howard Custom Builders Ltd. As I said earlier, we are going to follow the same procedure. We just need you to identify yourself and your organization for the record. You have 10 minutes for your oral presentation, followed by 10 minutes for questions.

Mrs Pask: We are pleased to have this opportunity to present this brief on behalf of our company, Howard Custom Builders Ltd, of which I am president and my daughter, Ellen Tambeau, is secretary-treasurer.

The Chair: Order, we have to give every presenter the opportunity of being heard, and if we are going to have private conversations we have to do it in the hallway. Please continue.

Mrs Pask: We are landlords of a town house project in the small northern town of New Liskeard, with a population of approximately 5,500 people.

In 1975, we built 12 town house units under the CMHC limited dividend program. The rents were geared to moderate- and low-income families. Due to the CMHC regulations and rent review controls, our rental income for the past 15 years has barely covered our basic expenses.

Mr Clark, the building inspector of the town of New Liskeard, noted structural problems and requested that we hire a structural engineer to assess the building, at a cost to us of $1,000. H. Sutcliffe Ltd's engineer's report indicated structural deficiencies. In order to comply with the report, we talked to contractors, tenants, CMHC and rent review services, trying to make the best decision possible for our tenants and our company.

We submitted our application to rent review on 19 July 1990, requesting a rent increase of 12.9% over and above the guidelines of 4.6% to commence 1 November 1990. This is the first time we have asked for an increase above the guidelines. The capital costs included the structural repairs, replacement of deteriorated patio doors and the upgrading of attic insulation and ventilation. The work was planned over a two-year period in order to keep the rental increases as low as possible. Today, I find myself in the position of having signed legally binding contracts for a total of $60,000, one half of which were completed and paid for by 1 November 1990 and the rest contracted for 1991. Additionally, we replaced four complete wood decks which were not included in our application.

In 1990, the three-bedroom, two-storey town house units rented for $441 per month. The year's taxes were $15,815 or $110 per month, the mortgage payments $140, leaving $191 to cover building, liability and boiler insurances, plus cable TV, garbage and snow removal, painting, audit, office, hydro, repairs and maintenance. The guideline increases each year have not allowed extra funds to be set aside for the required upgrading or major repairs.

We strongly object to capital cost retroactivity, proposed in part VI-A, section 100n. We followed the government's process of application in good faith. We certainly would not have signed contracts for a two-year period had it not been indicated we would qualify for the increase requested. We have little control over our business due to government promises and changing rules. We object to the restrictions in Bill 4. In the long term, it will create an overall decline of the rental housing market. Tenants will have deteriorating buildings, repairs patched and not fixed, minimum maintenance and unsympathetic landlords. Neighbourhoods will be downgraded and slums created. No investor will build rental housing, leading to rental shortages. Workers in construction will lose jobs. Suppliers will suffer at a time when government should be concentrating on job creation. Businesses and landlords will go bankrupt. Government will lose corporation taxes. Municipalities will lose tax dollars.

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We are not surprised that the tenants are embracing rent control. In the short term, they enjoy the benefit of affordable housing while the landlord is restricted by government interference. Any tenant has the option to move out of a unit, but the landlord is stuck with few options, including a depressed resale market.

We recommend that all applications stamped before the NDP freeze be processed under the previous regulations. Priority should be given to those applications with signed contracts for work. Any newly elected government should morally honour the existing laws and allow a transitional period before enacting new legislation.

We recommend that individualized consideration be made for small landlords of 40 units or less. Small landlords cannot be compared to multi-unit management companies. Small landlords have less revenue, more personal contact and invest more personal time and energy. Do not punish the 99% of the landlords of Ontario for the unscrupulous 1% or less who might have abused the system.

We recommend that the rent control increase for major structural repairs be limited to 15% over the guidelines per application.

Should a reserve fund be required, we recommend that an increased percentage over basic rent guidelines be allowed.

Prior to the introduction of Bill 4, we experienced a cordial, co-operative relationship with our tenants. They expressed appreciation for the size, location and low rent of the units. Their concerns of excess hydro costs and draughty patio doors led to the capital cost expenditures. A turnover rate of less than 50% in the last five years indicates an amicable relationship. Within the last three months, both financial and emotional hostility has developed between landlord and tenants. Any further delay in rescinding Bill 4 will create a back charge of rent not collected, a hardship for tenants and landlords.

In conclusion, we urge you to reconsider the implementation of Bill 4. The retroactivity clause must be deleted and the entire rent control system be re-evaluated. The government should subsidize the low-income tenant, but not force the landlord to do so. The right of the landlord must be considered equal to the right of the tenants. Thank you.

The Chair: Thank you. Anything further to add before we have questions?

Mrs Pask: Oh, I just had one little personal remark.

The Chair: Certainly, please go ahead.

Mrs Pask: These units were built 15 years ago as a pension plan of a small construction company. For all these years we have tried to be caring, honest landlords and to keep our rental units in the best condition funds would allow. Now I am retired and our so-called pension plan has become a worrisome, stressful, money-juggling, government-interfering nightmare.

Mr Mahoney: Mrs Pask, I would like to thank you and your daughter for travelling this distance today to come to this committee. We appreciate you taking the time to do that and the details that you have provided us with. I think your analysis, on page 2, of the three-bedroom, two-storey town house unit at $441 and the expenses -- there is certainly not an unreasonable mortgage payment. The units are not heavily indebted so as to require additional rents. I think that is obvious, and it is obvious that it leaves a minimal amount. In fact, I do not know how you do it. Perhaps you have opportunities for local labour to do some of the snow removal or something to save you some money, but to run the whole thing on $191 is quite remarkable. Could you give the committee some indication as to what your increases have been, on average, over, say, the last four years, on a percentage basis?

Mrs Pask: It has been whatever the rent controls would allow us, the 4.6% or whatever.

Mr Mahoney: So you have never gone above the guidelines.

Mrs Pask: No, I have never gone above the guidelines.

Mr Mahoney: That was your first experience.

Mrs Pask: My first application, yes.

Mr Mahoney: Is there much of a vacancy rate in your area?

Mrs Pask: No, not really. Nobody wants to move out because of the low rents that I am charging.

Mr Mahoney: Yes. Travelling around the province, we have come to realize -- some of us suspected it or knew it -- that there is a substantial difference when you get out of the city of Toronto. You might have seen some of our hearings on television and they, of course, were Toronto people coming in with some pretty unbelievable horror stories of infested apartment units and holes in walls and terrible deterioration. Do you set aside a portion of your revenue from the rents for ongoing maintenance as opposed to capital repairs?

Mrs Pask: No, because I have not had the money to do so in that project.

Mr Mahoney: So what do you do when you have a plumbing problem in one of the units?

Mrs Pask: I just happen to have an apartment building of 18 units next to it and I am getting enough income from that that it sort of balances out the two projects. Otherwise I would really be in trouble with this one.

Mr Mahoney: In other words, you do your ongoing maintenance. We are not talking about capital work here.

Mrs Pask: Yes.

Mr Mahoney: You do your ongoing maintenance out of the total revenue of your company regardless of where that revenue comes from.

Mrs Pask: That is right.

Mr Mahoney: You do not go to your tenants seeking additional rent increases because you have to fix the plumbing or an appliance or something of that nature.

Mrs Pask: No.

Mr Mahoney: I just had a thought. First of all, I agree with you totally. I am totally, and our party is certainly totally, opposed to the retroactivity and the unfairness of it. Frankly, I believe that this government, if it proceeds as stubbornly as it is doing so far, will find itself in a very serious court challenge. I can see that happening. But if we are unable to get the government to agree to eliminate the retroactivity, whether it is 28 November or whatever that date is, governments in the past have always looked at northern Ontario with a different view, due to increased costs that northerners face. Drivers' licence renewals, stickers, those kinds of things, are less expensive. What would you think of an exemption for northern Ontario from Bill 4?

Mrs Pask: Oh, I think that would be an excellent idea because our costs are higher up here. Our hydro is higher. Our taxes, I think, are high. Just living in northern Ontario is more expensive than down south.

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Mr Tilson: Thank you very much, Mrs Pask. The comments that you have made I think summarize what our party has been concerned with, and that has to do with the effect that Bill 4 is having on job losses, bankruptcies, loss of homes because of people who are putting mortgages on their own homes to put into the apartments that they are putting capital expenditures on, lowering of quality of life of the tenants because of capital expenditures not being put forward, and contracts of suppliers being cancelled and the effect that that has on the economy.

I suppose my real question goes to you with respect to the capital expenditure issue. With respect to Bill 4, and we will probably be back next week on a whole different set of issues, but dealing with respect to Bill 4 and this moratorium period that the government has set aside, the government is saying that the capital expenditures that you make should be taken out of the money that you have been literally hoarding over the years, and out of the 4.6% and 5.4% increases that are allowed during this two-year period. That is what they are saying.

I would like to repeat to you a brief section out of the Financial Post of 8 February, a comment which deals somewhat with what you were talking about. This comment is:

"The reality is average rents have barely kept up with inflation. In 1990, five of six Ontario tenants paid rent increase of less than 5% while just 84 of the province's 1.2 million apartments faced increases of 100% and above.

"Landlords should be able to pay for major repairs, such as replacing a roof, out of rents. With the average monthly rent in Ontario hovering around $748" -- which of course is more than what it is here -- "and about 40% of operating costs going towards municipal taxes and another 30% to utilities, this is not feasible. What maintenance allowance is left -- just pennies on the dollar -- is used for ongoing work like janitorial services and minor appliance repairs."

I guess I am looking as to, during the two-year moratorium, specifically Bill 4, what do you think that will do to the buildings and the quality of life for the tenants in northern Ontario?

Mrs Pask: Well, I am sure no landlord is going to be anxious to make it more comfortable for the -- I am just thinking about myself. I am certainly not going to do any more than I have to, because I do not have the money and it does not look as if I am going to get it.

Mr Abel: I just have a couple of questions. On page 2 you are outlining your expenses. You started saying that the year's taxes were $15,815, or $110 per month. My quick mathematics shows that $110 per month only comes to $1,320, so I take it that is per unit. Is that correct?

Mrs Pask: Per unit, yes.

Mr Abel: So that means we are looking at about 12 units here.

Mrs Pask: That is right.

Mr Abel: So when you say that you only have $191 to cover building liability, etc, that is $191 per unit. So we are not looking at $191, in fact we are looking at $191 per unit.

Mrs Pask: That is right.

Mr Abel: Okay, I wanted to make that clear.

Mrs Pask: Oh, sorry.

Mr Abel: There were some comments by Mr Mahoney there that led us to believe that that is all you had for the whole month to cover expenses.

Mrs Pask: Oh, I see. Sorry.

Mr Abel: Also, near the end of your presentation you were saying that 99% of the landlords should not be penalized for 1% or less. I am curious, where did you get that information, those facts?

Mrs Pask: I think it was out of the Toronto Star. It was in one of the Toronto papers.

Mr Abel: And they claim that 99% of the landlords are the good guys?

Mrs Pask: That is right. Well, it said less than 1%.

Mr Abel: That was from the Toronto Star.

Mrs Pask: I believe a Toronto paper. It was from a Toronto paper.

Mr Abel: Okay, I will pass to my colleagues.

Mr Mammoliti: Just a point of clarification here. On page 2 you also mention that capital costs included the structural repairs, which included patio doors and insulation and ventilation. Is that all you did? It says "included." Is there more work that was done?

Mrs Pask: Yes, I mentioned that we had to replace some wood decks. We have wooden balconies, and we had to replace some that we had not planned to when I had put them in the application.

Mr Mammoliti: Did you communicate with the tenants and ask them if they wanted this work completed?

Mrs Pask: They had many times complained about the patio doors. When the building inspector did his inspection, he had written down on a report that the doors were warped and should be replaced, and the insulation was of a 1975 standard, and being electric heat, that they should be brought up to a 1990 standard.

Mr Mammoliti: So they were aware of the work?

Mrs Pask: Yes, certainly.

Ms Harrington: I wanted to let you know that under Bill 4 there is a pass-through for operating in five different categories, and that is above the 5.4% increase granted this year. So if there are extraordinary costs with regard to, say, the taxes or other utilities, then that can go on top of the 5.4%.

Mrs Pask: Yes, I understand that, but I am more concerned about my capital expenditures. I was more concerned about that right now because I have this extra $30,000 contracted. I have signed legal contracts for 1991.

Ms Harrington: Oh, yes.

Mrs Pask: So I am $60,000 that I am not sure I am going to be getting paid back on.

Ms Harrington: The one thing that we are stopping is the pass-through for losses in financing. I do want to let you know that we do want landlords like yourself to make a fair profit, and we are trying to get a new system in place which will balance the needs of landlords and tenants in this province.

The Chair: I want to thank both of you for your presentations.

JAMES MAURO

The Chair: The next presenter is James Mauro, who has come in from Thunder Bay. Mr Mauro, the floor is yours.

Mr Mauro: I come from northern Ontario. My brief is very short because obviously you are going to be hearing basically the same sentiments that have been echoed throughout the province. But I want to beg the indulgence of this committee, after I have finished this report, to allow me just to step outside for a moment of the frame of reference, to an item which basically dovetails with some of the concerns that have been mentioned here today. I am not asking for any more time, but if you will allow me my time for it.

Basically, attached to this brief are the signatures of landlords in the city of Thunder Bay who are opposed to the possible implementation of Bill 4. We are sure the standing committee has heard many reasons why Bill 4 should not proceed, and quite possibly the same complaints are being echoed in the cities where these hearings are being held.

It is probably safe to say that many or all landlords will hold back on capital improvements if there is no avenue open to them to recover these costs. Some tradesmen will not be working, carpeting will not be sold, replacing of appliances will be put on hold, and the list will go on and on.

If the reason for increasing the 1991 allowable to 5.4% from the 1990 allowable of 4.6% is to implement Bill 4, then consideration should be given to leave the 1991 increase the same as 1990 and allow landlords the avenue of appeal to recover capital expenditures and other above-normal costs.

Just what does it mean by going from 4.6% to 5.4% on an apartment that rents for $400? This would give the landlord an extra $40 a year. An apartment that rents for $600 would give the landlord an additional $57 a year. While there is a two-year moratorium, even in 10 years $570 would probably not cover the cost of painting a two-bedroom apartment.

At a recent council meeting in Thunder Bay it was stated that the Thunder Bay District Housing Authority has 1,377 households on its waiting list for non-profit housing, with 790 of these families in desperate need. Thunder Bay District Housing Authority has over 700 units that it subsidizes in apartment buildings in Thunder Bay. These figures are to show the desperate need for rental accommodation in Thunder Bay.

Bill 4 will do nothing to encourage the construction of residential rental accommodation. A positive factor of 0.8% increase over 1990 does not compensate for all the negatives that will come about as the result of Bill 4.

Attached to this is a petition by some of the landlords, not all of them, I could have got more, but they represent some major apartment owners there. As far as Bill 4 is concerned for myself, it does not affect me personally from a capital cost point of view. My building is seven years old. Basically, it is still in good shape.

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Again, I can get into the retroactivity. Basically, you have heard it all before. But I would like to take a little time to step outside, because as of last fall, the Honourable Lyn McLeod had set up a meeting between you and I -- I do not know if you recall that or not -- when you were Minister of Revenue, I believe. Again, if you gentlemen want to take out the other brief that is in there, we hear talk about rents, etc, I think, and a factor that is going to probably come up in the House some time this year, and if some of you are aware of it, all well and good, and if you are not, you should be aware of it, another big impact on apartments in this -- I do not know about all of the province, but at least in the city of Thunder Bay -- is the class factor. And that class factor is creating -- it is devastating what is happening.

If you want to look on illustration 1, just to give you an example of what is happening with the class structure in Thunder Bay, down at the bottom, the first building is my apartment block, which shows in 1966 what my taxes were per unit and then up to 1990. I have in my possession Teela books on most of the major comparable cities to Thunder Bay, and I have yet, I think, to find an apartment -- and I am talking Burlington, Oshawa, whatever -- that pays as much per unit as I do. My taxes are $1,924 a unit, and right below that, and next door to me, within 100 feet, is a sixplex. This is where this class factor comes into business, and it can show you how devastating it is.

That gentleman in 1986 paid $530. Today he pays $835. The difference between him and I, per unit, is $1,089 of taxes per unit per year. Now if you want to equate that to this market value, that works out where my building actually is being shortchanged right now by about $138,000 in market value. Should I be in the same class as him? I am losing. He is gaining $1,089 a month for his six units for the last four, five, six years. It goes into his pocket. Mine goes down to city hall.

So this is a problem that I think is going to come up in the House some time this year that you people, if you are not aware of it, should be aware of because it is devastating.

You talk about rent control? I will tell you what the Premier of this province can do, and I have the backing of pretty near all the apartment owners in Thunder Bay. Put us in the same class as all residential accommodation. That is all in the briefs there. I do not want to go over the whole thing, but I would really beg of you to read what is in that at your leisure. Put all residential accommodation in the same class back home and you could freeze our rents for two years. You do not have to raise our rents, just treat me the same as everybody else. You can freeze my rents for two years, freeze everybody's rents for two years. You might get a complaint from the guy in the sixplex, the guy in the fourplex, the guy in the triplex; he has had a free ride for the last six, seven years. We basically have been paying his load really, and that is just part of it, but I think; you should be aware of it. All section 63 with the class factors does is make for the raping of land. There is an illustration in here where a person, instead of building 24 units on a piece of property, he built three sixes, and all it ended up doing was he used 90 feet of land for driveways instead of 34 feet for driveways. He ended up owning 18 units and paid considerably less tax dollars than I did.

It is not fair. We are not being treated fairly. Recently in Thunder Bay, a chap just built 11 duplexes, brand-new, they are sitting on the street right now, so he has 22 units, renting for over $800 a month, paying maybe $1,000 in taxes. He is in the rental business just like me, but what an edge he has.

Basically, again, I hope you gentlemen and ladies will read that material that is in there, because somewhere along the line -- we have a brief before the Minister of Revenue right now. I have been in contact with that office. We have had some dialogue going and in fact she has got to get back to me next week. I am free to answer any questions.

The Chair: Thank you very much. We are going to proceed. Mr Tilson, do you have questions? Mr Wilson, do you have questions?

Mr J. Wilson: I think this brief was very thorough and I appreciate it. The question I did have was, in the Thunder Bay case with 1,377 households on waiting lists for non-profit housing, if Bill 4 does proceed, and there is every indication that the government is going to bulldoze ahead with this, do you have any thoughts -- it is a little outside of Bill 4, but do you have any thoughts on how the government should handle those people in terms of providing affordable housing?

Mr Mauro: I think the biggest thing, just getting back to what I am talking about, is this class factor elimination can help, because I know we can keep rents down. From what I hear here, the rents are basically higher in Thunder Bay for a two-bedroom apartment. A brand new two-bedroom apartment in Thunder Bay is going anywhere from $600 to $700 a month. Yet, again, without government assistance back in 1984,1 could not have built my block if I had not gotten that $7,500 grant from CMHC. My property would still be sitting empty. That is on account of that class factor.

There is some building going on, but what the builders are doing to circumvent this class structure is they are putting up -- in fact there is a case right now of a 16- or 19-unit apartment building, brand-new, but this chap applies for condo status. It is an apartment block really, there is no elevator in it, but all he is doing is circumventing the class, so his taxes are going to be cut in half. Instead of an 11.7 factor, he is going to have a 5.4 factor. And that is all he is doing. In addition to that, he has increased the value of that unit. Whereas an apartment block might be worth $50,000, $55,000 on the market, he has got something now that he can sell for $70,000, $75,000. This is the class structure again. It has been the biggest hodgepodge of this whole outfit, never mind even Bill 4. It has got to go. It has to go.

Mr J. Wilson: You are probably right in the suggestions you make and the changes you suggest. I think the politics of it the government will have to deal with is, while your taxes may go down, several other peoples' will go up.

Mr Mauro: Definitely. But basically, where are we going back to by doing that? We are just going back in that brief also, when you look at it. We are just going back to square one. Like, somewhere in this province -- and I have never been able to find out from the assessment people, from city hall -- there is a genius somewhere who instituted this class structure. To this day, I have tried to find him. Nobody knows who he is.

Mr J. Wilson: I suggest you give up your search.

Mr Mauro: You are right.

The Chair: We are still looking for that genius.

Mr Mauro: And this is what I am saying. Previous to the province going on this market value, whatever, I went back and did studies in 1978, 1979 --

The Chair: Mr Mauro.

Mr Mauro: Sorry.

The Chair: We are going to have Ms Harrington and Mr Abel with questions.

Ms Harrington: I just wanted to comment on your taxes situation. This is really astounding and I am really glad you gave it to us. I was not aware of this. In fact, just recently some of our members were talking about this situation. I want to tell you two things. First of all, we are allowing pass-through of the great increases in taxes, above the guideline. You are aware of that?

Mr Mauro: I am not aware of it, but I do not feel I even want it.

Ms Harrington: Okay, because you want a fair situation for your tenants as well.

Mr Mauro: Exactly.

Mr J. Wilson: You had better take what you can get.

Ms Harrington: And the other thing I wanted to point out -- I think you have mentioned it here also -- is that you have to pay commercial tax rates whereas the condominium right next door pays residential.

Mr Mauro: No, we are paying the same mill rate. We are paying the same mill rate as residential, but where we get nailed is --

Ms Harrington: Is the class.

Mr Mauro: We have the same market value basically.The sixplex and myself have the same market value per unit, but when you go to take its assessment, you multiply his market value by 5.4 to get his assessment. You take my market value and you multiply it by 11.7. That is it.

Ms Harrington: So you are still under residential then, you are not at commercial?

Mr Mauro: Oh, yes. We still have the residential mill rate, sure.

Mr Abel: Mr Mauro, in your brief you seem to be focusing on your tax problem, and it would appear that you have done the responsible thing and contacted the Minister of Revenue.

Mr Mauro: For the last four years.

Mr Abel: Well, it is a new minister.

Mr Mauro: And she is in our backyard too. That helps a little bit.

Mr Abel: So hopefully the issue will be dealt with. However, I would like to focus on Bill 4. In your presentation you made the comment that you thought the cheaper rent would not enhance construction of homes.

Mr Mauro: I am sorry?

Mr Abel: Did I hear you correctly?

Mr Mauro: What was that?

The Chair: He did not hear you correctly.

Mr Abel: I am sorry. You said that cheaper rent will not enhance the construction of homes.

Mr Mauro: I do not think I said that, did I?

Mr Abel: I do not know. It was not in your brief, but I thought you had said that.

Mr Mauro: No, I do not think I did. I think I was asked, would rents be held down, and again, I would say more so than Bill 4 would be elimination of a class structure would hold rents down. Like I said, you could freeze mine for two years, even three; I will give you three. Freeze my rents for three years.

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Ms Poole: I just wanted to commend you on bringing this forward to our committee. Having come from the north, I know that many times northerners like to say they do not really much like anything from the south, and they particularly do not like anything from Toronto. But that being as it is, I think you are going to get support from a surprising sector, and that is from the city of Toronto. We are very concerned in the city about the classification system and that it unfairly penalizes both tenants and small landlords who do not pass on the costs to their tenants. This is something that we are actually investigating right now. I too have written a letter to the Minister of Revenue about this and in fact one of the city councillors has sent a package from Toronto city council to the Minister of Revenue and asked her to do a review of the issue and change the system. You have raised an extremely valid point, and while it may not be something within the scope of us to handle with Bill 4, it has, I think, brought awareness to the committee members. We will make sure that this issue is pursued.

Mr Mahoney: First of all, thank you for coming all the way from the big Thunder. We appreciate your coming down here and taking the time and the expense. I understand, Mr Chair, that the expenses for this gentleman, for coming here, are being covered by the committee. That is a result of course of we, this committee, received a letter from the Honourable Shelley Wark-Martyn, quite upset that the committee was not travelling to Thunder Bay, saying that it would damage the NDP politically, etc, not that I want to bring politics into it. But I appreciate that notwithstanding the fact that this committee -- in its government majority -- refused to go to Thunder Bay, you have taken the time to come here.

Mr Chair, could I also ask that the people from New Liskeard have their expenses covered as well? Because they did travel some extended period of time and I think that committees should agree to pick up whatever costs are involved for any out-of-town people to come to a particular locale where we happen to be. I do not know, Mr Chair, if you need a motion on that, but if you do I would be happy to put it.

Mr Owens: There is allowance made in the standing orders for the provision of travel.

Mr Mahoney: I am well aware of that, but I understand the New Liskeard folks were not aware of that and did not submit a request, so that is why I put it on the floor. I would like to make sure that their expenses, as in the case of this gentleman, are taken care of.

The Chair: I am sure we will have the concurrence of the committee for that.

Mr Mahoney: Do I have any time left?

The Chair: Not really, Mr Mahoney.

Mr Mahoney: Thank you for coming. I have talked myself out of time.

Mr Mauro: Can I make one more comment, please, in closing?

The Chair: Certainly.

Mr Mauro: I was quite perturbed. This goes back to 12 February 1988, when Premier Rae at that point in time was a member of the opposition. I purposely cut this out and have saved it, never knowing that this moment would come. Basically, what he went on to say at that time in the House was that, "The Liberal government is ignoring the housing needs of residents and allowing them to be `gouged' by profit-making landlords." I want to be on record that I am not one of these gouge landlords and likewise I do not think landlords really want to be gouged by any government legislation that might go into effect. All I am saying, again, is treat me the same as my brother back home and I will freeze rents. You can freeze rents on me. That is just one item.

The other one is in another article, and I think maybe if you have not heard it, it bears a little bit of consideration. It talks about municipal taxation being less fair than personal income or corporate taxation. Basically, what it says is: "It taxes what is today the most expensive basic need of all -- shelter (whether rented or owned). It is applied unequally to different classes of property and unevenly between municipalities." That is basically what I was trying to get at with my brief.

The Chair: Mr Mauro, thank you again for your presentation. Thank you for coming in from Thunder Bay.

SUDBURY COMMUNITY LEGAL CLINIC

The Chair: The last presenter for this morning will be the Sudbury Community Legal Clinic. We have 20 minutes for the presenter. Please identify yourself. You have 10 minutes for your presentation.

Ms Marcuccio-Rocheleau: Yes. My name is Anna Marcuccio-Rocheleau. I was not to come here alone today. I was supposed to have two others accompanying me. However, one is home with the flu and the other could not fly in from Thunder Bay. Although I do appear alone, I assure the committee that I have many, many concerned tenants behind me. I will first of all commence with my brief and then continue on with Sally Colquhoun's brief, who is a staff lawyer at the Kinna-aweya Legal Clinic.

I am a staff lawyer at the Sudbury Community Legal Clinic. It is a legal service clinic offering summary advice and legal representation in poverty law areas, including landlord and tenant matters and rent review matters. We assist people whose income and assets are within guidelines set out by the Ontario legal aid plan. The clinic is staffed by three lawyers, I being one of them, two community legal workers and support staff.

Adequate housing is a basic human right recognized by the international community. Housing is a human need not unlike health care and education. Rent controls are measures to ensure that people's housing rights are met. It is not a policy to ensure business rights or even labour rights. These feelings have been expressed before the committee by advocacy groups speaking on behalf of tenants in Ontario. From the landlord's perspective, however, housing is viewed as a business, and the construction and maintenance of housing as an economic issue. The role and intent of the Residential Rent Regulation Act, 1986, will be viewed very differently, therefore, from the perspective of the tenant versus the landlord's perspective. If one looks at the present act for guidance, none is found, since the act remains silent in this regard. It does not have a preamble, nor does it contain any provision which sets out the purpose of the act. We must then ask ourselves why the act is necessary and what its purpose should be. Should it not be to ensure that all people in Ontario have access to secure, affordable housing?

According to the statement to the Legislature by the Honourable Dave Cooke, Minister of Housing, on 28 November 1990, more than 330,000 tenant families in the province have faced increases above the rent review guideline, in some cases paying rent increases of more than 100%. According to the 1981 census, the city of Sudbury had a total of 32,030 occupied dwellings of which 17,800, or 55.6%, were owned by the occupant and 14,230, or 44.4%, were rented. About 22% of the existing stock was 40 years old, built before 1946, of which 6% of the total was built before 1920. It is safe to say, therefore, that a notable percentage of rent increases referred to in the Honourable Dave Cooke's figures occurred right here in the city of Sudbury. It is a fact that often those with less negotiating power, such as women with children, people of visible minorities or people on public assistance or low incomes, are in a situation where they are paying too much rent. When landlords complain that the balance of rights should not be tipped too far in favour of tenants, the government must recognize the validity of the inequality of bargaining powers seen, which underlines part IV of the Landlord and Tenant Act, and then incorporate it into the Residential Rent Regulation Act. That is, the landlord and tenant relationship is not one where tenants have a real freedom to contract. Landlords who maintain that tenants are free to seek other accommodations if not satisfied with what is provided to them do not present a realistic approach to the problem at hand. After all, the shortfall in rental housing is well illustrated by the apartment vacancy rate, which has stayed below 1% in the region of Sudbury for the past two years.

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Landlords will argue that the shortfall of rental housing is a direct result of rent control. Landlords argue that the present legislation has discouraged developers from investing in the rental housing business. It is fact, however, that investors who enter into the area of rental housing are aware that the investment is long-term in nature, that their profit will be realized when the property is paid off, via the rents received, and the property is sold. When investing, landlords are interested in finding buildings that maintain themselves and are not necessarily interested in realizing a monthly or yearly profit.

Landlords argue that during periods of high demand for rental accommodation comes the provision of higher rents. History has shown, however, that when there was an increase in the rate of apartment building and a brief oversupply of rental accommodation, this being during the period of 1963 to 1965, the tenants did not receive compensating advantages. The rent did not go down.

The only conclusion one is able to reach is that, in order to be fair, the balance of rights should be tipped in favour of tenants. And the government need not apologize for this result in its amended legislation. Protection is necessary for tenants and a balance of interests of the landlord and tenant relationship must be undertaken in drafting the new Residential Rent Regulation Act.

Landlords have argued before the committee that buildings throughout Ontario will deteriorate to unacceptable conditions if landlords are prevented from claiming a capital expenditure allowance at rent review. They support this argument with stating that because of lack of funds, repairs that need immediate attention will have to be postponed and it is tenants who will suffer in the long run. It should be properly assumed that a landlord will do some painting, plumbing, electrical repairs and general building maintenance on an annual basis. The present guideline increases approximately double the rate of operating cost increases and is intended to cover many types of maintenance. What has occurred under the present legislation is that landlords have obtained greater increases than allowed pursuant to the guideline, by underspending on maintenance one year, returning to normal spending and then applying for an extraordinary operating cost increase in addition to the guideline.

It is the tenants' position that the landlords neglect their obligation of ongoing repair and then carry out major catch-up repair programs, so that they have been the ones to suffer all along. A present fundamental concept in the rent review legislation is the concept of cost pass-through. Certain costs experienced by the landlord, including the costs of carrying certain losses, are passed through into justified rent increases. Tenants have found that money has been spent by landlords and accepted by rent review offices on capital expenditures regardless of the appropriateness or necessity of such expenditures. Although section 96 of the present act allows the minister or the board to disallow all or part of capital expenditures when they "are substantial and became necessary as a result of the landlord's ongoing deliberate neglect in maintaining the residential complex or any rental unit therein," to date there has been little application of this section, although it has been frequently raised by tenants in response to a whole building review application.

The present Residential Rent Regulation Act also contains provisions that allow the minister to consider a change in the standard of maintenance and repair in respect of the residential complex or any rental unit located therein in determining the justified rent increases. The act and regulations do not, however, provide guidance as to how a finding that the maintenance has deteriorated is to affect the rent increase. To date, this section has been applied in few decisions, although tenants have frequently argued that there had been a deterioration in the standard of maintenance.

Finally, if the rent review operating guide that is provided to rent review services staff is looked at, it sets out three major responsibilities for the staff. They are: (1) to ensure efficient, timely, consistent and accurate treatment of all applicants under the act; (2) to facilitate communication between landlords and tenants leading to increased understanding and harmony; (3) to foster confidence in the system, particularly among builders and developers, so that the private sector will return to the rental market.

The committee will most likely come to the conclusion after the hearings, after hearing from landlords and tenants in Ontario, that these responsibilities have been met on behalf of neither the tenants nor the landlords. In speaking on behalf of tenants, the legislation is too complex and vague. It contains loopholes that benefit large corporate landlords. In fact, in the city of Sudbury a number of rent review staff have left their employment and opened their own firms to assist landlords in pursuing successful applications with rent review. What message do we receive from this reality?

We are in agreement with earlier submissions made before the committee by other tenant advocacy groups that the enforcement of the rent control system be a high priority, that sufficient numbers of enforcement officers be hired and provided with the training and commitment to investigate in a proactive way alleged violations and that they be given requisite power to issue immediate orders and initiate prosecution.

We ask the government to provide us with legislation that allows the rent review services staff to fulfil their responsibilities as they are presently set out in their guide and to provide us with legislation that will rightfully protect tenants in balancing the scales found in the landlord and tenant relationship.

The time slot that was reserved for me was to include time for the presentation of a brief prepared by Sally Colquhoun, who is a staff lawyer at the Kinna-aweya Legal Clinic in Thunder Bay. I do not know if the committee would rather I answer questions on my brief and then read hers. It was faxed to me this morning. She was not able to fly down. I do not know what order you would like.

The Vice-Chair: The difficulty we have here is that we are presently almost four minutes over the time limit for presentation. Perhaps we could pursue questioning in the committee and if there is any time left, if any party wants to waive its speaking time, we could permit the other one. But otherwise, to be fair to all presenters who have been here, we really must restrict the time. I know that all members do have a copy of that brief and can study it.

Ms Marcuccio-Rocheleau: Yes. I did provide copies, so if they wish simply to review the written format, that is fine.

The Vice-Chair: The clerk will see that everyone gets a copy. Okay. I believe the New Democratic caucus is first: Mr Abel, then Ms Harrington.

Mr Abel: I just have a very brief question. I did listen to your presentation very intently to make sure that I heard you correctly, so the people sitting opposite will not laugh at my hearing impairment.

Ms Marcuccio-Rocheleau: I am sorry. My voice does not carry that well.

Mr Abel: Some I hear better than others. My question is, obviously from your presentation, you feel that the current legislation just does not --

Ms Marcuccio-Rocheleau: That is correct.

Mr Abel: It is just not enough, it causes a lot of problems. Is that right?

Ms Marcuccio-Rocheleau: Yes. I must explain, however, that we do not deal simply with rent review and landlord and tenant matters. Most of our cases deal with applications or appeals of income maintenance type of decisions, and we have been flooded with those, so for the past two years our involvement with rent review has been on a summary advice basis. I do not lack concrete examples to give you today, but on a summary advice basis I can advise the committee that we receive numerous, numerous calls with respect to rent review.

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Mr Abel: And because of these obvious deficiencies that you have been faced with, do you feel that Bill 4 is taking us in the right direction?

Ms Marcuccio-Rocheleau: I think it is a responsible action taken by the government to put a moratorium and study the legislation that has not acted very well on behalf of either the landlord or the tenant and come up with something that will address the concerns of both parties, yes, but I would ask that when drafting the legislation, the imbalance of the parties, of their power, be taken into consideration.

Ms Harrington: That is a very good point. Thank you very much for bringing that to our attention. You have stated, I think, quite clearly that the system was not working and is not working. It has been open to abuse for some time. And you started off by saying that you are trying to seek a balance, and that is what we have to be doing, and a co-operation as well. So we have to have a good attitude, hopefully, on both sides. And in fact, I wanted to tell you that most landlords, 80%, do not go to rent review in order to get an above-guideline increase and they seem to be probably the good landlords who are managing quite well, in at least some parts of Ontario.

What per cent increases have you here in Sudbury been faced with, you know, the people you deal with, and have you found any people who have had to leave their apartments because of these increases?

Ms Marcuccio-Rocheleau: Again, I have to repeat that for the past two years, I would say, we have been flooded in other areas such as social assistance areas and we have been restricted in the services we could supply as far as rent review applications are concerned. So my knowledge is limited as far as numbers are concerned.

Ms Harrington: Just one further comment. We have heard a lot this morning about the retroactivity of the bill and I did want to point out that all the other rent regulation legislation in this province has been retroactive in its nature. Retroactivity is something that we dislike. That is a very difficult issue, but placing a date which is fair to both sides is a problem. The 1 October date also allows 130,000 increases which were already on the books to still flow through, so those tenants are still getting increases above the guideline even though we have put the date of 1 October. It is really difficult to satisfy both sides.

Ms Marcuccio-Rocheleau: Since I did explain that we are flooded with areas of social assistance and are not able to do very many rent review matters, there was earlier a comment made, "Well, perhaps there should be an exemption included in the legislation for tenants of northern Ontario," that they would be exempted from any sort of freeze. Again, we deal with very low-income parties and I do not see how any sort of exemption would address their concerns. There is a very large number of low-income earners and people in social assistance in the region, and I wanted to address that one question that was put forward.

Mr Mahoney: I feel I must just make a brief statement on the issue of all former bills being retroactive. There is a major difference that should be highlighted, and really it is that the retroactivity in the past just simply applied to drawing certain buildings into the rent control scenario. There has been no attempt by any former government to take money out of people's pockets when they actually spent it based on the rules that were in place. So there is really a big, big difference between retroactivity of former bills and retroactivity of this, which is clearly, in my view, discriminatory and likely will face a court challenge.

I would like to ask you some questions as a tenant advocate about the kind of rent increases that your clients have been experiencing and some of the difficulties. The people who have been before us today have given us certainly a perception that rents are very reasonable in this area. The ones we have heard, of course, would not say any different, but they have painted a picture of very nice accommodation for very fair rents. That is what we have heard. Do you have something that would put a different balance on that?

Ms Marcuccio-Rocheleau: Again, I have to repeat that the people we deal with are on social assistance, mostly on very limited income. So of course they cannot agree with the statement that the rents here in the region are reasonable. They do not have much income available to them. So, no, on their behalf I cannot agree to that.

As for comments that were made that we are not seeing in the north what we saw down south as far as buildings deteriorating and the maintenance issue not being addressed by landlords are concerned, that is not true. In the north it occurs also. It is not a different situation here. We do get a lot of calls where repairs are required and are not being done by landlords.

Mr Mahoney: What I guess I am trying to get at is that when we get out of Toronto and we go to other parts of the province, we do not hear the specifics of the same kinds of horror stories that we hear from certain groups in certain areas of Toronto. We hear the opposite --

Ms Marcuccio-Rocheleau: Perhaps because the services are available there and we do not have the manpower that they do in Toronto to deal with all the areas. As I say, the only service that is available here --

Mr Mahoney: No, sorry, it is tenant groups that are coming forward mainly and telling us that, as opposed to government agencies. What I am trying to get at is, can you give us specific examples that would refute the testimony that has been placed here today with regard to the Sudbury rental market? We are specifically in Sudbury for a reason.

Ms Marcuccio-Rocheleau: I understand that.

Mr Mahoney: We want to talk about northern Ontario, and if there are problems, all members of the committee would like to hear about them. Can you give me details?

Ms Marcuccio-Rocheleau: As far as figures are concerned, again, as far as the rent review area is concerned, we have not been able to open files on an ongoing basis. The person who gets summary advice calls is, again, away sick. So I cannot give you percentages, but I can tell you that 55% of the calls that do come in are for landlord and tenant matters, which include rent review concerns.

Mr J. Wilson: Anna, you spoke eloquently about the social contract. I think one of the big problems with rent controls over the years is that government has not levelled with both landlords and tenants in the sense that, from a landlord point of view, they are being more and more, increasingly over the years with new rent regulations, dragged into being part of the social safety net. Landlords are business people, and governments, as I say, have not -- and it is time we did -- levelled with them and said, "Yes, it is your obligation, it is a moral obligation" -- or whatever -- "to subsidize tenants." Many landlords who appear before us feel that that is exactly what they are doing.

I think that is unfair to landlords and I think we are getting to the point where many landlords are saying to us with Bill 4, which is another giant leap into further entrenching rent controls as part of the social safety net, and the landlords would argue, and have argued, on their backs -- the good landlords. We have had some not-so-good landlords.

What do you think about subsidies for individuals?

Ms Marcuccio-Rocheleau: The government has indicated its wish to implement home renewal programs and subsidies, that sort of thing. I would be in favour of that. The tenants would benefit in the long run themselves, because repairs that needed to be addressed would be addressed because the funds would be there.

We do not want to see the landlord suffer. That is not our intent. Simply, the tenants we see do need protection and that is the interest that I want the committee to see and consider.

Mr J. Wilson: Just to clarify that, from our party's point of view, that is one of the reasons we are opposed to Bill 4, in addition to reasons stated previously by my colleague. Bill 4 comes in, entrenches, again, rent controls, further entrenches the current system, and makes some corrections to it and some amendments, but there has not been any prior consultation. Do you believe the government, rather than taking this step now -- because it has the green paper coming out next week and it is all very confusing -- should perhaps hold off on Bill 4 and continue these hearings and consult?

Ms Marcuccio-Rocheleau: No, because the rent review act as it was, the Residential Rent Regulation Act, was not assisting anyone. It was not addressing landlords' concerns or tenants' concerns, it was creating problems more than anything else. So I think it was responsible for the government to put a stop to things and analyse things before they got out of hand. They have got out of hand, but more problems were created than have resulted. If something is not working, it should be stopped right away and looked at and then put something that can work into place.

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Mr J. Wilson: The problem with that though is, with Bill 4 and its retroactivity and that, it is difficult, as I said earlier in the hearings here, politically for the government. To me, Bill 4 already lays out where the government is going, because politically you cannot go back, and once tenants are used to increases at a certain level and not having capital costs passed through, it is very, very difficult to change something once it is given out. That is why if this bill goes through, I think it is already the road-map for the green paper.

Ms Marcuccio-Rocheleau: I think the government has indicated that the moratorium has been placed there to give it time to analyse the concerns of landlords and tenants and to come up with something that will address both parties' concerns, so I do not understand your fear. I am sorry.

The Vice-Chair: Thank you very much for appearing before us today. Your presentation was most helpful.

Mr Mahoney: Mr Chair, in light of the comments earlier about folks who have had to travel to this committee because we have not had an agreement to extend the hearings, I would like to put a motion that travel, meal, and accommodation expenses incurred by the following witnesses in travelling to Sudbury for these hearings be paid by the committee: James Mauro, Vickie Marsh, Audrey Pask and Ellen Tambeau.

The Vice-Chair: Mr Mahoney has made a motion. Is there discussion?

Mr Mammoliti: I am just wondering what we have done in the past as a government.

Mr Mahoney: You have not done anything in the past as a government. You have not been in long enough.

The Vice-Chair: Perhaps the clerk could clarify the --

Mr Mammoliti: On a point of order, Mr Chair: I am asking a question. This heckling has got to stop, Mr Chairman.

Interjections.

Mr Mammoliti: Point of privilege, Mr Chairman: I would just like to find out what we have done in the past. I am sorry, maybe I should have said it differently. Maybe if I had, Mr Mahoney would have restrained from his riff-raff.

The Vice-Chair: I think that is an excellent question and I think the clerk could probably bring us up to date on precedence in this matter.

Clerk of the Committee: Committees have in the past paid travel, meal, and accommodation expenses for witnesses who have to travel for the hearings, especially if one destination has been cancelled in favour of another.

Ms Harrington: We do not need a motion for it then; it should already be done.

Ms Poole: No, we do need a motion.

The Vice-Chair: We do need a motion, apparently. Ms Poole.

Ms Poole: I was just going to say that we would either need a motion or at least agreement of the steering committee, so I think that it is perfectly reasonable, and if there are any other presenters who have incurred expenses, they could please give their names to the clerk to be included.

Clerk of the Committee: Just to add to that, the finance branch will require a copy of the motion by this committee in order to put in its files to pay expenses for witnesses, so a motion is required.

Mr Owens: I support my colleague's intent, but the motion is redundant. Set out under standing 129(a) and (b) is the process for claiming for travel and the approval thereof.

The Vice-Chair: The clerk informs me we have a motion. If it is redundant, it is redundant, but let's do it.

Mr Mahoney: Mr Chair, could I just point out that I said I would put a motion if it was necessary. The clerk informed me that it was necessary and in fact drew the motion. So I am not pulling something out of the air, I just think the people who have had to spend money to come here should be paid for that.

The Vice-Chair: All in favour of Mr Mahoney's motion? Agreed.

Ms Poole: Finally, a unanimous motion.

The Vice-Chair: We will adjourn for lunch.

Clerk of the Committee: Can I maybe do this? Just to let the committee know, the committee will be reconvening this afternoon at 1:40, not 2 o'clock, as shows; that is a mistake on the agenda. I apologize for that. In addition to that, the Social Services Research and Advisory Group scheduled for 3 pm has cancelled and the 1:20 witness has agreed to take that slot.

The Vice-Chair: Thank you. I expect to see all the committee members back at 1:40, bright-eyed and bushy-tailed.

The committee recessed at 1215.

AFTERNOON SITTING

The committee resumed at 1341.

LUCILLE GERMAIN

The Vice-Chair: We have Lucille Germain. Good afternoon. Identify yourself and any organization you may represent for the purpose of Hansard. You have 10 minutes to make your presentation. It would be followed by 10 minutes of discussion with the committee.

Ms Germain: My name is Lucille Germain. I am here as a landlord. I would like to thank you for giving me the opportunity to voice my deep concerns as a landlord regarding Bill 4.

I believe this legislation to be unjust to landlords and punitive in nature. This government implies that Ontario's landlords are a group of rich, unscrupulous people, out to gouge the poor tenants of this province, and that flipping properties and conducting luxurious renovations is prevalent in the rental property market. I disagree with this government analysis. I concede that there might be some landlords who are unscrupulous and who abuse the system, as well as there are bad tenants, but most landlords are conscientious, hardworking people from all walks of life who simply expect a fair return on their investment. I suggest to you, committee members, that Bill 4 discriminates against landlords by not allowing rent increase for capital expenditure for financial loss and only a limited operating cost. Please allow me to present my case and the facts of the hardship I personally will have to endure upon application of Bill 4.

Let me give you a few personal facts. I am on fixed income. I am a widow. My husband was killed in a mining accident in 1977. I was left with seven children, one only still at home, I must admit, but it is a big responsibility. Like many rental property owners in Sudbury, I am a small-time landlord. In the spring of 1988, after careful considerations, in order to supplement my income I used part of the proceeds from the sale of my home as a down payment on a rental property here in Sudbury. It consists of three units.

My objective at the time was mainly long-term investment, capital gain. Major repairs were done to the property. All of them, I assure you, were necessary; none of a luxurious nature. I applied and was granted a rent increase at the time, but unfortunately for me I had not completed the repairs, so in January 1990 additional repairs had to be done to the building. I used up close to $5,000 of my own personal savings to cover the costs of these repairs. My tenants were the ones who benefited from this. I did not.

The law current at the time allowed me to recover those expenses. All the repairs were done prior to the Bill 4 announcement, but then came Bill 4 with all of these retroactive components. Where does that leave me, I ask you, committee members?

I have here with me a financial statement which, with your permission, I would like to read to you. This statement is a monthly statement for the year 1990. I just broke it down into months and I just gave you the overall. Revenue for a month is $1,300; mortgage expenses, $819.06; hydro and heating, $291; water, $43.16; land lease, $8.50; insurance, $76.25; property taxes, $73.80; superintendent fees, $50, which bring my expenses up to $1,361.77, and my revenue is only $1,300. But that is not all. Maintenance and repairs in that year have cost me over $510.33 a month, which brings me to a total loss of $570.10 a month. Those are facts. Those are cold facts.

I am asking you, committee members, am I gouging my tenants? I have in fact been subsidizing my tenants at the rate of $570.12 a month for the year 1990. This represents 42% of my personal monthly income.

If Bill 4 is enacted it would make it impossible for me to recover the cost of these repairs. I will not be able to carry on. I am facing bankruptcy. Those are facts. I am in a financial loss position. My personal savings are being eroded by this constant drainage on my savings to keep up the expense of this property.

My other alternative is to dispose of the property and risk losing my initial investment. It is a well-known fact that Bill 4 would depreciate the value of my property by at least 25% and those numbers have been in the papers. I did not pick that out of the blue. Those are facts. It took me 25 years to accumulate those savings. Seven children -- I am telling you, you do not save a lot a month. And that is the proceeds from my own home; I want you to remember that.

I assure you I did not take this very lightly. I am upset and I think I have a right to be. Would you not be upset?

I do not believe that rent regulation serves the needy I do not believe that the poor are being served by this rent regulation. It is the middle-class people who can afford the rent who are abusing it. They stay in those units because they are saving a lot of money. But I ask you, if you were a landlord, if you had a choice between a wage earner who is making $30,000 and one who is on welfare, which one would you pick? And here in Sudbury, fortunately, we landlords have a choice because, as you know, the vacancy is less than 1%.

I protest very strongly the retroactivity of Bill 4. We landlords are required by law to give tenants three months' notice, as you all know, for a rent increase. Yet this government has the audacity to come in with a retroactive legislation and tell us landlords: "Too bad, tough luck, but this is the way it is. We want to take care of the problem." Well, I ask you, be fair. Give us two months' notice. Please. That is courtesy. That is why I would demand -- I believe most of you would agree with me, that it is just fair. What is fair for the goose is fair for the gander.

By changing the rules in the middle of the game, this government has shown a lack of concern for the landlords of this province. We landlords find ourselves in bad situations. This government is not living up to its social responsibility. Subsidizing should not be carried on by the private sector, namely, the landlords. It is the government's responsibility and there are needy people out there and they should be subsidized but, I beg of you, not by me. I cannot afford it. I am poor. Do you believe that I am poor? I am poor. I still have my dignity, but it is pretty hard to keep, believe you me.

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The implications of Bill 4 are far-reaching. Landlords are not the only victims. The construction business as well as all related businesses will suffer. Unemployment, bankruptcy, declining rental stock, slums are but a few of the problems this government will have to rectify should this legislation be enacted.

I ask all of you members, please consider the hardship you are putting on some of us; I am not saying everybody, but some of us. I would like to believe that this government has the best interests of all its constituents at heart and that it is prepared to work with landlords and tenants alike in a constructive, unbiased manner in order to find a solution to the housing problem of this province. It will not be easy, but it can be done.

In conclusion, I would like to say that I do not doubt that this government acted in good faith; it was trying to rectify an injustice, so it feels. But I ask you, consider my side as a landlord. I am also a tenant, as a matter of fact. I am renting for my own personal use, and I know both sides of the matter.

Obviously this government has been grossly misled, and I will sure hope that it will rectify that problem. I can only hope that my presentation will help committee members to reach the right conclusion regarding the proposed legislation. Thank you, ladies and gentlemen.

The Vice-Chair: Thank you, Ms Germain. Mr Mahoney has a question.

Mr Mahoney: Thank you for your presentation. I think it is probably one of the most germane that we have heard because it really cuts to the quick of the issue. There has been a perception that landlords are just mysterious numbered companies out there, megacorporations treating tenants badly. And the reality is, and it is particularly so, as I said this morning, when we get outside of metropolitan Toronto we see the real face of the small entrepreneurial landlord, in many cases, individuals such as yourself, who in good faith and with a lot of heartache and struggle invested to establish a future for yourself and your family. My mother had nine kids. I can imagine raising seven and being left on your own to do it.

But I think your points are -- to me anyway; I can only hope that the government members feel some empathy and sympathy in that regard, too, to understand the concerns. Otherwise, we are not going to be successful at making changes, because the opposition members simply cannot do it alone. We can put amendments, and will.

Could you give me some indication, some statistics, on -- you have got a three-unit project. Do you live in one of them or do you rent outside?

Ms Germain: No, I do not. I rent outside.

Mr Mahoney: Could you tell us just very briefly what the rents are, what the rents have increased over the last say, three or four years and on what basis?

Ms Germain: I only purchased the property in the spring of 1988. Major repairs were done to the property, as I have mentioned. I spent $36,000 at the time, and those were all necessary repairs.

Mr Mahoney: This was 1980?

Ms Germain: In 1988. That is the year I purchased the building, and I did receive some increase, but it is not sufficient. Like I said, when I bought the complex I was making about $200 on the rent clear to me. But I decided to repair the building. It did need the repairs, and I thought any tenants deserve to have a clean place, and it was not in very good condition. I did that for my tenants. I did not have to do it. As a matter of fact, I was making money at the time.

Mr Mahoney: Could you tell me the rents?

Ms Germain: The rents at the time were $450. This is three bedrooms, 1,000 square feet, all utilities paid. The one bedroom is about 600 square feet, fridge and stove included, all utilities paid. Again, this is what is killing me, the expenses. If they were paying their own utilities I could probably manage better, but as you all know everything has gone up. Now I am faced with GST. Nobody likes GST, but this adds up; only the hydro and heating costs are costing me $20.30 more. I have no way of recovering that until next year.

Mr Tilson: I try not to agree too often with my friend to my right, but in this particular case I will.

Mr Mahoney: There is only me here. I am sure not to your right, I will tell you that.

Mr Tilson: Your presentation was very succinct, and I think does express the concerns of certainly our party. And as Mr Mahoney said, I think all we can do is try to emphasize to the government the economic damage that this bill is doing not just to landlords but to tenants, to people who are doing the renovations to these -- in other words, the jobless situation, the people whose contracts are being cancelled. I think that all we can do is try and persuade them to revise their thinking.

I would like to ask you one specific question, and that has to do with maintenance of your building, because you have indicated your thoughts on that. According to the current rent review provisions, 1% of last year's 4.6% guideline, 1% of that was for normal maintenance, at least from the information that has been given to me. Now, based on your rental of your building, can you tell me how much rental income, how much of that would generate a 1% increase?

Ms Germain: At this point I do not have 1% increase. I am in the red.

Mr Tilson: I guess I am getting to the question, how are you going to maintain your building, let alone make capital expenditures?

Ms Germain: I do not know. I honestly do not know. So far, I have been using my personal funds, but they are getting close to being gone altogether. I am facing bankruptcy, and that hurts.

Mr Tilson: This breathing-space legislation, as the government describes it, could go on for another year at minimum. How long can you last?

Ms Germain: Well, I do not think I can go on welfare. I am getting a fixed income. I will have to find some odd jobs to support it. I do not want to lose that investment. I am here -- those are facts. I do not know. Luckily for me, I must say that this was the last part of the repairs, and that was the end of it. So, now, I do not anticipate too many repairs in the future, but I still have to live with this. If Bill 4 retroactivity was cancelled I could live with this, I could I would somehow survive and then I would be able to just go on, you know, maybe not making a profit, but at least breaking even. I am not asking more than that, but at this point I cannot, I am not.

Mr Tilson: We have had small landlords come to us while we have been hearing comments like yours, and the reaction from the government side of this committee has been, "Well, did you make, perhaps, a bad investment?" In other words, in 1988 did you check out the difficulties of these buildings and did you make a bad business decision?

Ms Germain: No, I did not. It was a sound decision. It was done after careful consideration, and it was a good investment, and it would have paid off if I had been able to get over these repairs, because, like I said, I put a lot of money into it, and now it is in good shape except that I am stuck with the bills.

Mr Tilson: Thank you for coming and telling us your story.

Mr Mammoliti: Mr Mahoney touched on perhaps a concern -- I am not too sure -- about whether corporations own a significant amount of property, buildings out there. We just received something here today that tells us that 76% of the units are controlled by corporations. I think that is something that we should be aware of; 76% of the units in Ontario. But that is that, and I want to address a couple of points with you.

First of all, you mentioned that you have a choice when it comes to tenants, and I am a little concerned because I got the impression that you would sooner take the tenant who is not on social assistance rather than somebody who is. Is that the case?

Ms Germain: Okay, I would like to clarify this point. What I was saying is, most landlords would take somebody who is earning $30,000 a year. As a matter of fact, I have had many clients who have been on welfare, and I cannot complain. I had one tenant who was on welfare and I am going to court because of the damage he caused, but I am not going to put down the people on welfare.

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Mr Mammoliti: Okay, you have clarified that for me. The second point I would like to make is actually clarification on my part again. You mentioned that you were poor. I have seen a lot of poor people. I come from Toronto. There are a lot of poor people in Toronto, people who are being forced out on the street because of the previous legislation, because of rent review. They are being forced to shelters and to food banks because of the fact that they cannot afford rent increases. Madam, will Bill 4 force you to go to a shelter and to a food bank?

Ms Germain: I do not know yet. It might. If I did not have the fixed income, I would have to go there, and I am saying to you, since you represent the government, this is your responsibility. It is not my responsibility to support every person. I am a socially minded person. I am. And I care for those people and I am getting along very well with my tenants. We have a good relationship. As a matter of fact I went to them not long ago and we discussed this, and one of them said to me, "I know this place is worth at least $700 with all the utilities included, but of course I'm not going to pay if the government says I don't have to." That is their point of view. I mean, you have to listen. Not everybody is gouging the tenants. Believe me, I am trying my very best.

Ms M. Ward: Some of my questions were answered. I did not hear you actually say that you had an application in for rent review now but I assumed you had.

Ms Germain: Yes, I do, and I am afraid I missed that part.

Ms M. Ward: If that is the case, what increase are you asking for?

Ms Germain: I was asking for a 10% increase.

Ms M. Ward: Including the guideline, 10% total?

Ms Germain: Yes.

Ms M. Ward: Mr Mahoney was asking some questions and did not get a chance to finish. You were talking about the rents. What have been the increases previous to this time? What increase did you last --

Ms Germain: I was allowed $100, from $450 to $550.That was $100 but those rents have not been increased in three years.

Ms M. Ward: So it is three years since you have had an increase.

Ms Germain: I have not had an increase.

Ms M. Ward: You have taken the guideline though?

Ms Germain: Nineteen eighty-seven was the last time that I had an increase on those rents.

Ms M. Ward: Aside from the guideline?

Ms Germain: No, no. I did not.

Ms M. Ward: Oh, nothing.

Ms Germain: No, nothing.

Ms M. Ward: Is that because your applications are backlogged?

Ms Germain: No, at the time I was doing repairs on the property and I felt that the tenants had to suffer through all them and I did not want to impose that on that. At the time, you have to remember I was making a bit of money on it and I was trying to be fair. All I want is a small monthly income. That is all. I want a return on my investment.

Ms M. Ward: You have answered my questions. Thank you very much.

NORTHWESTERN PROPERTY MANAGEMENT LTD

The Chair: I believe Northwestern Property Management from Thunder Bay is next.

Ms Marsh: It has been a long day.

The Chair: Good, well, I hope you consider it worth your while.

Ms Marsh: We will see.

The Chair: All right. I think you have observed the procedures and you will have 10 minutes for your oral presentation and 10 minutes for questioning.

Ms Marsh: Okay. My name is Vickie Marsh. I am a senior property manager with Northwestern Property Management in Thunder Bay. Before I begin I would like to say that our firm is a member of the Fair Rental Policy Organization of Ontario. I have used a lot of their statistics that have been provided to us by them, although we agree with all of them.

First I will tell you a little about our company. We are the largest company in northwestern Ontario with a portfolio of income-producing and non-profit projects. We are also speaking on behalf of several other landlords, as was Jim Mauro this morning. We welcome the committee's public hearings as an opportunity to examine both the realities of the rental situation in Ontario and the fairness and efficacy of the government's proposed legislation.

The first thing that really bothered me about all the government publications and the media was the politicizing of the information services of the government. While we can expect this from the media, government publications should reasonably be expected to be objective. I quote from a Ministry of Housing guideline: "Tenants will no longer be required to pay rent increases to finance luxury renovations or the flipping of apartment buildings. As well, tenants will not face rent increases arising from capital expenditures." This paragraph was included in a circular that we picked up and the message it conveyed to us was: Capital expenditures are not a major concern but will be affected incidentally, luxury renovations are widespread throughout the province, and all apartment sales are flips. Although none of the above are true, the government was implying they were. It is beyond our time today to discuss these concerns but I just wanted to bring them up.

We are going to focus our attention on the following: that rents in Thunder Bay and district are not excessive and rental housing is not beyond the reach of the average tenant. The average rent for bachelor, one-bedroom and two-bedroom units in Thunder Bay is $303, $451 and $567 per month respectively. These figures are taken from a CMHC rental market report of October 1990 and I have included it in the back. Further, the average rent in the province of Ontario is $550 per month. Even the Metropolitan Toronto averages are $456, $556 and $683 per month. Again, these figures were given to us by the FRPO and I know they were included in its presentation also. A rent of $567 per month would require a gross annual salary of $23,000 to stay within the 30%-of-income ceiling for housing expenditure. The average income in Thunder Bay as per Statistics Canada is over $36,000. This is well above the income needed to afford an average rent in Thunder Bay. Provincially the average tenant family in Ontario has an income of $32,298, also well above what is needed for the provincial average rent.

This is not to say that there are not those with affordability problems. Almost one third of tenants spend more than 30% of their income on rent -- not because their rents are too high, but because their incomes are too low to afford even the most reasonable housing. These people are desperately in need of income assistance and the bill should be addressing a means of subsidizing these particular people, not penalizing all landlords.

The next area of concern was the very unfactual statement in the first page of Minister Cooke's speech to the House: "In some cases, tenants have been required to pay rent increases of more than 100%. For many, this was tantamount to ordering them to leave their homes." The dispassionate facts from the Ministry of Housing's own statistics tell quite a different story. Of Ontario's 1.2 million private rental units, in a given year more than 86% receive rent increases of under 5%. Less than 1% receive increases of 30% or more and only 7/100ths of 1%, 84 units out of 1.2 million, fall into the 100% and over category.

These few 100% increases are then charged back in the press and by politicians to greedy landlords ripping off the system. Again, this is patently untrue. The very few large rent increases which do exist are almost always the result of a combination of at least two out of three important factors: extremely low base rents, a requirement for extensive structural renovation due to age and deterioration, and small building size, usually under 10 units. We ourselves manage a project which had two of the above requirements and had an over 100% increase. We applied for a low-rise rehabilitation program on a 30-year-old 152-unit town home project and, let me add, it was the biggest in Ontario to the time. We had government people coming out our ears up there. Starting rent at this project for a three-bedroom town house was $192 a month. Some $3.9 million and three years later, rents are now $405 a month. The units were completely refurbished both inside and outside, requiring the tenants to physically move out for three to four weeks, with an approximate cost of about $32,000 being put into each unit. Comparable rents on another three-bedroom town house project we manage right now in Thunder Bay are $699 per month. We are still way under market rent.

Further, of the 152 tenants only 28 left the project. Of these 28, 23 could afford to purchase their own homes and did. These figures were kept by ourselves as we were interested in how a project of this scope would affect the tenancy. A rent supplement agreement was also entered into by ourselves with the Ministry of Housing to directly address and assist the problem of those who could not afford housing. Therefore we disagree with the statement that "thousands of tenants are being economically evicted" by huge increases. Our own experience proves this not to be true.

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Our third concern is with capital improvements to rental stock. The vast majority of capital improvements are both necessary and far from luxurious. These include concrete repairs to balconies and garages, replacement of plumbing risers, exterior cladding, roof repairs and replacements, electrical lighting upgrading, replacement of single-pane windows and so on. These are also the most expensive types of improvements, accounting for the bulk of all capital-related rent increases. Over 80% of Ontario's rental housing was constructed before 1975. Government studies have estimated that at least $10 billion worth of capital investment is needed to conserve this existing stock. If landlords cannot make these investments because they will never be able to recover the funds that they would have to borrow, there are only two choices: Either the work will not get done, to everyone's detriment, or the long-suffering taxpayers will pick up the bill. The money for major repairs and renovations is simply not provided for in the allowable rents.

The formula for calculating the annual guideline includes provision for normal maintenance, defined as such work as snow removal, janitorial services and minor appliance repairs. It also contains a 1% increment for small capital, meaning those items for which it is not realistic to apply to rent review because their total value will never generate a rent increase sufficient to overcome the 1% penalty for applying. However, please note that the 1% is deducted if there is an application for an above-guideline increase. Therefore, there is no double accounting. There is no provision in the guideline for funding major capital items since if there were, every tenant would be paying the cost regardless of whether capital improvements were actually conducted in his or her building. It was for this reason that during the development of the current rent review regime both the tenant and landlord representatives endorsed the concept of a separate justification system to provide for higher rent increases to fund capital improvements.

There is a popular misconception that landlords should be able to pay for capital improvements out of their "excessive profits." Owning an apartment building is not a profitable business. Most landlords are small business people who own a few units as a long-term investment, often with the view that this would provide retirement income. In many cases their buildings would show a loss in operation were it not that the owner provided most of the unpaid labour to maintain the property. Further, even in larger operations with professional management, returns are not impressive.

In 1989 the Ministry of Housing commissioned a study to examine this issue. This study found that the average returns on equity to investors in residential rental real estate decreased from 7.9% annually in 1970 to only 3.4% in 1989. Further, operating costs were substantially higher at the end of that period than at the outset. A government T-bill becomes very attractive compared to these figures. Add to that the absence of night calls for maintenance, emergency problems and other headaches of managing an apartment building and one wonders who wants to be a landlord.

Should the small owner decide to sell, the capital appreciations on sale are not great. Studies have shown that bonds, T-bills and other forms of real estate perform better. This is the dilemma. Supply and demand, the basic economic principle, would correct the situation. Further rent control will only worsen it.

An analogy that we were tossing around the office was this: If you have 40% unemployment in Newfoundland, you do not change interest rate policies for the whole country to stimulate investment and employment during inflationary times. Further, you do not freeze rents across 1.2 million apartments in Ontario to help the 20% of tenants in need.

Rent control does not control costs and, like wage and price controls, you cannot have one without the other. An unrealistic reserve fund approach has been put forward by several groups as their solution to funding these improvements. These groups do not seem to realize that there is a huge difference between trying to establish a fund for a new structure like a condominium, where you can get large, up-front levies on the initial residents, compared to existing apartments with widely varying ages, capital needs, tenant profiles and existing rent levels. Not to mention that apartment reserve levies would have to be twice as large due to federal income tax treatment.

Also, any building which is under the auspices of an assisted rental program would run into immediate difficulties. Canada Mortgage and Housing Corp did allow for a reserve fund to be established but provincial rent control did not and would not recognize this. Therefore, none could be established. Upon maturity of the ARP, CMHC took the position that the mortgage was due and fully payable. As rents, under rent control, were not allowed to rise enough over the term of the ARP to accommodate repayment, many apartments with assisted rental programs have had to become involved with the deferral of these payments. Further, CMHC has taken away any equity position and disallowed reserve fund establishment until payment has been made. The question can then be posed, how is the apartment owner to make capital repairs if the government disallows any accumulation of funds until these mortgage payments, which current rents cannot accommodate, are met?

Now we go back to retroactivity. One of the simplest tests of fairness of a statute is to question whether a law-abiding citizen could have been aware of a law to be capable of complying. We cannot think of a better analogy than the one FRPO used in its presentation. It is fair for the state to say that as of tomorrow it is illegal to make a right turn at a red light, and it is the responsibility of all drivers to be aware of this change. It is patently unfair for the state to say that this change is retroactive to last month and that because you made a right turn at the time you will be penalized under the new law.

Yet the latter is exactly the situation in which landlords find themselves today. They have obeyed the law as it was on the books and relied on the legislation to guide their investment decisions. In some cases they have even received certificates from the government stating the rent increases to which they are entitled. Now they are being told that the rules have been changed after the fact.

Our firm just finished a rent review application for a purchaser in Manitouwadge. The building needed a new roof, which was put on, and there were some $200,000 in acquisition costs to be dealt with. These were under the then legislation. Now, due to the retroactivity of the NDP legislation, the phased-in rent increases have been disallowed. The owner may very well face bankruptcy. It is outrageous that after he followed all the proper procedures and rules the rules can be changed after the fact. It makes a mockery of any attempt to plan a future rationally.

When it is impossible to know under what rules you will be making investment decisions, these decisions will not proceed. The retroactivity clause should be removed totally from this legislation.

Although retroactivity is unfair and must be dealt with, the proportionality of this bill must also be addressed.

Simply speaking, the government is using a sledgehammer to kill a flea. This is eminently clear from the statistics already mentioned. If, as the government has said, the intention is to eliminate flipping, which it has never shown to be a significant problem, and large rent increases, which are equally uncommon, then this bill is definitely taking a sledgehammer approach.

With regard to financial loss, the bill simply removes the provision instead of addressing the issue. A small investor who perhaps has owned the building for 15 to 20 years and decides to sell to recoup his retirement savings is treated the same way as the speculator who resells several times, if you can find such an example. The impact of this change will be tremendous. Residential rental buildings will be devalued by at least 26% to 30% regardless of whether the building has been sold before, and thousands of small investors will watch their retirement savings disappear, all to correct a minor problem to which they have never contributed.

Would it not be much easier to address the question of flips directly instead of legislating everyone? Indeed, the regulations introduced last year have already dealt with that problem to some extent by discounting the allowance for capital improvements if a building is sold after a rent increase for capital is granted. Further, regulatory changes under the act to remove any incentive to resell a building for a set term would resolve this problem.

With regard to capital improvements, the same sledgehammer approach is being used. Should the minister wish to stabilize the market by stabilizing large rent increases, it can be accomplished without eliminating all capital improvements. A simple cap on the size of rent increases attributable to capital in a single year would eliminate large increases without preventing necessary work. Using the same 5% annual phase-in, which applies for financial loss, would mean that 86% of tenants would still receive increases at or below guideline. The vast majority would receive 10% increases and a small fraction would pay 15%. Larger increases would effectively be eliminated, yet necessary capital work could still proceed.

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Further, changes made last year have already begun to end these double-digit increases. Landlords can now do capital work on a multi-year plan without losing 1% of rent each year as a penalty. Please note that this change was approved by both landlord and tenant groups. Unfortunately, should this bill pass, it will affect all of Ontario. The building stock will deteriorate, jobs will be lost, and investment confidence will decline. Mr Cooke, when appointed as Minister of Housing, indicated that he wished to engage in consultation with landlords and tenants to develop a new rent regulation system that would be equitable to all. However, none of this dialogue has occurred and instead the government has chosen to put in place interim policies to stabilize a crisis which, in fact, does not exist.

We believe that the minister's original commitment should be honoured. Discussions between all concerned should proceed and this bill placed on hold until said discussions are complete. We would look forward to participating in those dialogues.

Mr J. Wilson: I was going to ask some questions, but I think you have given us a very thorough brief. There are a number of points in here that we, the PC caucus, would agree with you on and we will work very hard to try and make amendments, if we can, to the bill. Having said that, I conclude.

Mr Owens: I am curious about the number of units that you, through your company, manage.

Ms Marsh: About 1,500 right now.

Mr Owens: About 1,500, and in your comments on page 3 with respect to the average income you talk about the rents not being too high but, in fact, people do not have enough money, which is a paraphrase of what you are saying. I am curious to know, out of those 1,500 units that you have, how many are rent-subsidized by the government?

Ms Marsh: We are right in there for those. We have a very large rent supplement program signed with the local ministry. In almost every one of our buildings, at least 10% of our units are rent supp. We also manage a lot of non-profit housing, seniors and, in fact, we have the only psychiatrically impaired unit, other than in Windsor. It is in Thunder Bay and we manage that also.

Mr Owens: So you have all these progressive projects on stream, but then we have the statistics from the Fair Rental Policy Organization.

Ms Marsh: What we are saying is that there is an affordability problem for certain people. We are not saying that it applies to everybody.

Ms Harrington: There is one point that you make about the sledgehammer to kill a flea. Well, I would submit to you that this certainly is not a flea that we are dealing with. We have a very serious problem across Ontario and our government is very serious about trying to address it. And I do like your last comment that we look forward to participating in these dialogues and I certainly will see to it that you are part of that.

Ms Marsh: That would be great.

Mr Brown: Welcome to a fellow northerner. I just have one quick question in the interests of time here.

Ms Marsh: Oh, I get to come back again.

Mr Brown: We will see you in a few minutes, then. In regard to your low-rise rehabilitation program, this sounds like an extraordinary success.

Ms Marsh: It was. You should have seen it. It was a two-year project. We were six months late starting because of CMHC problems and then six months when we were late, they started giving us penalty fees for being late. It was really fun.

Mr Brown: Bureaucracy is always wonderful. Do you have any idea what you would have to charge, given the investment in these buildings, if the public funds were included in the investment? What would the rents have to be? Would they be in the $600 or $700 range?

Ms Marsh: They would have to be. We never did figure that out, but that is a good question, but it would have to be. Market rents in Thunder Bay for a three-bedroom town house in all of our projects are around the $700 mark everywhere else except that project.

The Chair: As Chair, I would like to make a request of Ministry of Housing staff. Are they nearby? Could you have someone come forward? I was quite interested in the 100% increase that was brought to our attention here. Do we have a catalogue of all the 100% increases available, and could we find out what the actual rent in dollars was before the 100% increase, what the actual rent is after the 100% and actually how many people were economically evicted because of such an increase? Do you have all that?

Ms Marsh: Mr Mancini, we can provide you with information about the rent increases and what the rents were before and after the rent increases. We would not have information about economic evictions, however.

The Chair: Could we ask the owners of the buildings how many tenants did not renew their leases. We could find out that way.

Ms Marsh: That would be information that you could ask directly to those individuals, but it is the kind of information that might otherwise be covered by the Freedom of Information and Protection of Privacy Act.

The Chair: I think in the past the committee here has expressed to me and to all staff their concerns about economic eviction. Once we compiled the buildings, the addresses and locations of these buildings, we would know who the owners are. Why could we not make a phone call and ask these property owners how many people did not renew their leases. Mr Mahoney?

Mr Mahoney: Mr Chair, to try to quantify economic evictions might involve some difficulties in people almost having to provide a means test, and you might have some difficulty in people doing that. They may say, "It is none of your business whether or not I can afford it," but I think the original question of 100%-plus or 50%-plus increases should clearly be something we can get through rent review. I doubt that it would be a catalogue. It would probably be more like a sheet of paper.

Ms Richards: We can certainly provide the information about the rent increases.

The Chair: And can we have it compiled in such a manner that we could see the location of the building, say, Ouellette Avenue, Windsor, what have you, and the amount of rent in dollars, the percentage increase and what it means in dollars after, and I still would like to know, how many of the tenants in those buildings did not renew leases? Now I agree with Mr Mahoney, we do not want to pry into anyone's personal lives and appear as if we are trying to embarrass anyone, but I would like to know, if there were 100 units in that building before the increase, how many of those 100 different signed leases were not renewed. I think that might give us an indication of what is going on without prying into someone's private life.

Mr Owens: Are you asking for buildings which have gone under whole-building rent review?

The Chair: Wherever there have been these huge increases, I am interested in that.

Mr Owens: How would you quantify something like that?

The Chair: It is a piece of data that we could use or not use. We have requested --

Mr Owens: I am not arguing its utility, I am wondering how you would actually draw that kind of data.

The Chair: Exactly the same way our presenter did today. She said that she had a building. There were 158 separate tenants, 158 separate signed leases. They had 100% increase in 23 apartments. People in different apartments did not renew. We can decide ourselves whether or not that was because of the 100% increase. Yes, Mr Wilson and then Mr Mahoney.

Mr J. Wilson: Mr Chairman, I would agree with the first part of your question. The second part, I would have to agree with Mr Owens, which is rare, that --

The Chair: I agree with all the requests you guys make.

Mr J. Wilson: The thing is, you are asking for a potentially misleading statistic in the sense that, unless you did -- I understand from my presenter that you purposely did a follow-up and that most of those people moved into houses of their own, purchased houses. Now that, in that case, becomes a useful statistic, but if we are unable to find out -- you know, people may have not renewed their leases because they were moving because of jobs or something. If you end up with a high number of people, a lot of people will run around and say, "Well look, the effect of this 100% increase, 80% moved out of the building." There is no direct correlation unless you did a very careful study, and I am not sure how the ministry would do that, so I agree with the first part of your request, but certainly not the second. A very dangerous assumption is being built into that statistic.

The Chair: Anything else? Anybody else? Okay, so we are going to request -- the original suggestion was, we will compile all of the 100% increases.

Mr Mahoney: I just ask for one breakdown. Not to bog this down but I would like Metro Toronto to be done totally separately from the rest of the province.

The Chair: Do you want the GTA or just Metro Toronto?

Mr Mahoney: Well, I think you could extend it to the GTA perhaps.

Ms Poole: I think you would already have that breakdown, would you not?

Ms Richards: We compile our statistics according to regional information. Our central region includes Metro Toronto and Mississauga. Would that be sufficient?

Mr Tilson: I always like coming into these things at the end. We do have a document that I think you gave us, somebody gave us, from the Ministry of Housing dealing with 100% increases; 12/1000ths of 1% is the number of units which obtained 100% increases. Now I do not know whether you need any more than that, but that is the factor.

The Chair: I have requested something somewhat different.

Mr Tilson: Okay.

The Chair: Okay, thanks, Vickie. We are going to move right along, since we have used up about 10 minutes of our time making this request.

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CRISIS HOUSING LIAISON

The Chair: The Crisis Housing Liaison is the next presenter. Just identify yourselves and whom you are representing, please, and we are following the same procedure.

Mr Schmidl: Good afternoon, I am Barry Schmidl. I am the president of Crisis Housing Liaison.

Ms Mayer: My name is Donna Mayer and I am the vice-president of Crisis Housing Liaison.

Mr Schmidl: I would like to give you a little bit of background information on who we are and what our agency does before we get into talking about the bill.

Crisis Housing Liaison is a non-profit organization that has existed for the last six years. We provide assistance to people who are in need of housing. As the name indicates, at least some of those people are in need of housing in a hurry, because they are in a housing crisis, although we deal with people who are not necessarily in a housing crisis as well.

We operate a computerized housing registry of vacant apartments, rooms and houses generally in the Sudbury region, but we also go a little bit outside of the region. Last year we served a total of 1,353 families and single people so, of course, the actual number of individuals is greater than the 1,353, and we have seen this year an increase in the last quarter of 11.5% over the previous year and over 66% over 1988.

Getting down to the bill itself, I have just been sitting here since the committee resumed this afternoon, so I have only heard two of the presentations. But it seems to me that from those presentations, as well as from some of the things I have been hearing in the media, people have missed the fact that this bill is meant to implement an interim rent review system. It is not meant to be a permanent bill. It is meant to be there for, I believe, a period of two years. We believe that will provide some stability in the market. One of the things we have found, and the members of the committee can see in the brief that you have been handed, is that the average rent for vacant units, which is what we have, of course, the listings that we provide to people, exceeds the individual's ability to pay on average. Obviously, there are some individuals who can afford the average rent that is being charged for a unit of size appropriate to their family. However, on the average, for almost every size unit, almost every quarter we issue our statistics, we see that, in fact, the average rent in every class is above the average ability to pay. I am not even suggesting saying, "Oh, an arbitrary 25% of their income, an arbitrary 30% of their income." We ask each client who comes to us, "How much? What is the most you are able to pay for a unit?" That is what goes into the average. We do not take their annual income. We do not do a means test. We ask, "What is the most you can pay?" And I will tell you, if you wanted to sit down with a calculator, in almost every case, you would see it is significantly more than 25% or 30% of their income. I use those figures because those are the figures that are used by government when determining rent-geared-to-income housing, government-sponsored projects like co-ops or non-profit housing, or in housing authorities.

The thing is, if you will look at the statistics that we have here, particularly on page 3, you will see that CMHC lists its average rents. We list our average rents. Ours appear to be a lot higher than theirs. That is because we list vacant units. They list all units, at least in buildings of more than three apartments.

I think you will see that if someone is going to be paying $584 for a four-bedroom unit, as CMHC suggests, they are likely going to stay there rather than go looking for something that is vacant which, according to our statistics, would cost them an average of $878. I think that a system of rent control has to be defined, and I am talking past the implementation of this bill, which will give landlords a fair return on their investment because that is certainly what it is. It is an investment. They are business people. But of course, as business people they have to expect some regulation. You cannot just completely scrap rent review. You cannot get rid of rent control or it would move to a system of anarchy in the marketplace.

We have heard this afternoon that most landlords do not gouge. Well, that is quite true. Most landlords do not gouge. And while scientifically I could not tell you exactly how many people have been gouged because it would depend on exactly what your definition of the word "gouge" is, I will tell you, people have to be protected because when there is no protection there, that is when you are going to see gouging.

Part of the reason why a lot of landlords do not gouge now is they know they cannot get away with it. Even under the previous government's rent review system they could not get away with it. I must say that the previous government's rent review system is not something that I would care to put in place if I were sitting at your end of the table, because far too many landlords got away with far too high rent increases for something like replacing the carpets in the hallway when they did not need to be replaced. I am thinking particularly of a case that I am aware of. I cannot tell you where or who because of confidentiality, but I know that people have moved out of that building because there is a rent increase or a threat of a rent increase, and so they move because they are not going to be able to afford it. This was, as I say, prior to the election of this government, prior to the introduction of this bill. It was under the previous government's rent review system. The thing is, as I said, Bill 4 is temporary. It is meant to last for two years while a new system is put in place. That is where the discussion and the consultation is hopefully going to take place that the previous presenter was talking about. We would be happy to take part in that and I would invite your questions.

Mr Owens: The Sudbury Star on 4 and 6 February of this year reported stories about a 97% rent hike in a trailer park. I believe it was the Lakeview Mobile Home Park. I guess my question is that with respect to rent increase requests to the tune of 97% -- and we have heard that these kind of problems only happen in Toronto, that the bad landlords are only in Toronto. We do not have maintenance problems in Sudbury, it is all in Toronto, but yet we have a lead story in the Sudbury Star about this type of a rent increase. If Bill 4 were not to be passed, if we just decided to drop it and put a moratorium on it --

Mr Mahoney: Is that a motion?

Mr Owens: With respect to economic evictions, again this is not something that happens in Sudbury, it only happens in Toronto. What kind of effect would that have on your case load if this type of protection that we are proposing under Bill 4 were not put into place?

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Mr Schmidl: I will tell you, there are cases of people moving out because they cannot afford the rent. There are also cases of people paying the majority of their income towards rent because in a tight rental market like Sudbury, which has been under or around 1% for the past several years, they do not see a decent place to go. And, you know, that latter case I am talking about is, you know, where people go to food banks because they do not have the money to put on food because they are paying it all for rent. There are problems with affordability in the Sudbury area, that is for sure.

Mr Owens: Now, is that affordability, as one group has argued, because simply people do not make enough money, or is it affordability because the rents are too high?

Mr Schmidl: I would say certainly there are some people who need rent-geared-to-income assistance. I am certainly not going to say that that is not the case, and there is a need for more rent-geared-to-income assistance. However, it is also a problem with affordability for people who work. We are not talking about welfare moms. We are not talking about people on disability pensions. We are talking about people with jobs. And 40% of the people whom we saw in the third quarter of 1990 were people who were either living with a friend or family because they did not have a place of their own, or they listed the street as their address -- 40%. And a lot of those people are there because they cannot afford something.

Mr Owens: Do you have a waiting list at your place of business for affordable housing?

Mr Schmidl: We do not have a waiting list as such. We deal with people as they come in. We provide them with listings of vacant units, appropriate size for their situation, a single or family as the case may be, and send them off with whatever assistance we can give them. And if they come back, we assist them the next day. We did see, as I said earlier on, over 1,300 individuals or families last year.

Ms Poole: Thank you for your presentation today. You are to be commended for the work that you are doing. lt is obviously a very necessary service that you are providing and we are glad to see it in place.

I was intrigued by your comments, actually, that you felt that most landlords were not gougers and that the rent review system that is currently in place, although it would not have been your first choice, does provide a fair amount of protection.

Mr Schmidl: No, I actually did not say that exactly. I said that even under the previous government's rent review system certain things were not approved. I did not say it gave them a lot of protection because in fact I do not believe that it did.

Ms Poole: I think you said it prevented gouging or protecting against gouging.

Mr Schmidl: I said it prevented some gouging. I did not say it prevented it all.

Ms Poole: But the interesting thing is when you made the comment that it was not the system that you would necessarily put in place if you were sitting in our position, that the rent review system that we have in place right now came as a result of consultation between landlords and tenants. In fact there were nine tenants on the committee and there were nine landlords and together they fashioned recommendations which resulted in the legislation.

The other interesting aspect is that some of the things, for instance, that the tenants wanted ended up being things that worked to the landlord's advantage and vice versa. I will give you one example. The tenant representatives felt that there was a repair component already built into the statutory guideline, so that if a landlord was going to go to rent review for major repairs the landlord should pay a penalty of 1% of the gross rents, and that would be deducted from any rental application at rent review. So this sounded like a fine idea in theory, but in practice what ended up was that they all bunched together. The landlords bunched together their capital expenditures, so instead of paying a 1% penalty of gross rents three years in a row and going to rent review, they would go one year and you would get large rent increases. Did you experience that in Sudbury, where certain landlords or a large number of landlords would actually bunch their capital expenditures together so that there would be a very large rent increase, or did you find just generally speaking any rent increases by your clientele they could not afford, no matter how modest or how large?

Mr Schmidl: I cannot comment on whether a large number of landlords lump things together as you say, because I simply do not have the information on that. However, I can say that according to the CMHC last year the average increase in the Sudbury region for one- and two-bedroom units was, I believe, almost 8% and almost 10%.

Ms Poole: Were these applications going to rent review or general?

Mr Schmidl: No, this is all the increases.

Mr Tilson: I would just like to refer to some of the statistics that have been given to us by the Ministry of Housing, because I must agree with the final paragraph in your letter as to what the real problem is. The real problem in this province with rent is that there are a large number of people who cannot afford anything. They cannot afford any rent. They cannot afford food. They cannot afford clothing. That is called poverty. And I guess my concern is, as our party's is, that this bill is affecting the overall economy of the province at that risk. It is the wrong way to solve the problem. For example, in the period from 1 January 1989 to 31 October 1990 -- and these are statistics produced by the Ministry of Housing -- 74% of all units did not apply for increases above the statutory guidelines of 4.6%. So a very small percentage applied that were over the statutory amount. The number of units receiving increases in the magnitude spoken of by Messrs Rae and Cooke is infinitesimal. Only 4/100ths of 1% of all units in Ontario received increases in excess of 30%. And again, 12/100ths of 1% is the number of units which obtained such increases.

I guess, getting back to the final paragraph in your presentation, there are the working poor, there are the seniors on fixed income, there are the single mothers, there is a whole range of people -- and this has been said several times today -- who cannot afford any increases whatsoever. Now, I would like to hear your thoughts as to a different approach, which is direct assistance to those people in the same way you would assist them with respect to food and clothing and other such assistance, specifically subsidies.

Mr Schmidl: I think that subsidies or rent-geared-to-income housing -- let's be direct: that is what it is -- is a necessary component of the fight against poverty in Ontario. And I think it forms part of the solution to poverty in Ontario. There are many other parts of it, but that is one part that specifically impacts on housing.

I think, really, you have to look at not only the person's income but also his expenses. And of course in rent-geared-to-income housing it is 25%, give or take a few odds and ends, of their income.

Mr Tilson: I am looking at people, for example, sir -- some tenants that I spoke to last week, who were mainly seniors in a building, and they simply cannot afford any increases. In fact, 11 of those people recently have just left the building and gone to live in lower-standard accommodation at lower rents. Now, if you continue on with the process -- in other words, this style of what Bill 4 is doing -- that means that even more of those people are going to be in that predicament.

Mr Schmidl: You can either build hundreds of thousands of units of rent-geared-to-income housing, which will cost billions and billions of dollars, and solve the problem that way -- and, you know, I could suggest that to Floyd Laughren and he would probably laugh at me, and I think quite justifiably he would laugh at me -- or, as an interim measure, while the problems of poverty are being worked at from other angles --

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Mr Tilson: That is the question I have for you.

Mr Schmidl: What are the other angles?

Mr Tilson: Yes.

Mr Schmidl: Well, gee, I could spend the afternoon on that.

The Chair: Thanks, Barry. I would like to thank the Crisis Housing Liaison for coming today and making their presentation.

POLI RENTALS

The Chair: Poli Rentals, Thunder Bay.

Ms Marsh: This is Dan Chrusz's presentation. This is going to be a short one. Mr Chrusz is in Florida. He was expecting the hearings to be in Thunder Bay, so his vacation was already scheduled.

I would just like to, before we begin, make one comment. Mr Owens's example of the 97% increase might be a good one to also look at, but you also had better look at your beginning rents on that project. From my understanding, they were $83.

The Chair: Ms Marsh will be making the presentation for Poli Rentals.

Ms Marsh: Okay. I am not 100% familiar with all of Dan Chrusz's portfolio. I know that he owns everything that he manages and has some 400 to 500 apartment units. Did everybody get a copy?

Ms Poole: I just wondered if I might point out for the benefit of the people in the audience why we are having the same presenter twice. The other party was from Thunder Bay and so when he could not make it asked this other presenter if she would also do his brief. Is that correct?

Ms Marsh: Yes.

Ms Poole: That was pointed out to committee members, but I thought that people in the audience might appreciate knowing why you are here again.

Ms Marsh: I do a lot. No. We were scheduled for Thunder Bay for 23 January and it was cancelled and the option was either we come to Toronto or we were to come to Sudbury.

The Chair: Very good.

Ms Marsh: Dan's presentation basically is about new furnaces and roofs on a 20-year-old building, that he urgently needs these new roofs but has no funding available. Poli Rentals owns and operates 149 town houses in northwestern Ontario, 24 of which are in Kenora, 24 in Dryden and 101 in Thunder Bay. I happen to be familiar with all these projects, if you need to ask any questions on those.

All of these town houses are limited dividend projects built in 1970-71 whereby the rents have been controlled by CMHC and the tenants have enjoyed reasonable rents. Poli Rentals has enjoyed a good relationship with its tenants, keeping costs down and fair rents for years. However, Poli Rentals will be devastated by the effects of Bill 4. We have a situation here where the landlord has only been able to receive a fixed income as set out in the operating agreement with CMHC back in 1970-71. The landlord, Poli Rentals, receives $1,085 a year or $90.42 per month dividend to operate the 24 units in Kenora. We receive $1,172 a year or $97.67 a month dividend to operate the 24 units in Dryden. In Thunder Bay the dividend is very similar, so Poli Rentals is not braced for such a blow such that Bill 4 would deliver.

We have a situation where, up to now, the buildings have operated reasonably satisfactorily. However, these buildings are 20 years old and now the furnaces, roofs, siding, windows and doors have had their useful life and need replacing. Poli Rentals has started a program of replacement, but Bill 4 says, "Don't spend money for two years." Furnaces do not wait. Roofs that have been patched for the sake of economy do not wait. The money we have spent, the money we must spend, has to come from somewhere. We have replaced 12 furnaces and a major roof this fall in Kenora and are replacing 24 furnaces in Dryden this moment. These are items that could not wait and had to be done. In the next two years, more furnaces will have to be replaced and more roofs will have to be refinished.

We are talking about megabucks each year that is required that cannot be lent, that the landlord does not have and Bill 4 is responsible for. Will Bill 4 tell the gas company to hold the replacement directives or the furnaces for two years and put the tenants in jeopardy? Will Bill 4 ask the tenants to excuse the leaks in their roofs for two years and take care of the lawsuits because we know the roofs must be replaced? Gentlemen -- obviously he did not know there were ladies on the board also -- Poli Rentals needs some answers. The tenants need the work done. The landlord realizes this and wants to do the work. The industry could use the boost in economy, but Bill 4 says no because we cannot get the funds to do the work from the tenant. The landlord does not have the money. The institutions will not lend it because income is so marginal. Where will the money come from?

Poli Rentals rents out three-bedroom town houses for $380 and four-bedroom town houses for $444. If allowed to increase rents modestly, we can put new furnaces in and put on new roofs, replace the siding, windows, doors and do some major interior work for about $10,000 per unit. The results would be that our units would look and act respectable, we would pump $1.4 million worth of work into the economy and the rents would increase $108 per month per unit. A three-bedroom town house would then be $488 a month and a four-bedroom town house would be $552 a month, both of which are respectable figures.

The alternative to the above is total chaos, and Poli Rentals has no intention of being a slum landlord. Our units are 20 years old. We need the work done. The tenants want the work done. The economy wants the work done. We do not have $1.49 million. We cannot borrow it because of Bill 4. Please give us an answer.

Ms M. Ward: Are we receiving that presentation?

Clerk of the Committee: I have two copies which I will have copied and distributed.

The Vice-Chair: For the information of the committee, they are being photocopied and everyone will get a copy of the presentation. The Liberal caucus has the first questions.

Ms Poole: I guess I had better think of one then, had I not?

Ms Marsh: Do you want me to just tell you some more about the buildings?

Ms Poole: I think I will think of some of the ones that I was going to ask you the last time you were up.

Ms Marsh: Sure. No problem.

Ms Poole: You may answer this either on behalf of Poli Rentals or on behalf of yourself. As far as maintenance for the buildings, do you put a certain amount aside?

Ms Marsh: Yes.

Ms Poole: What proportion of the rent or --

Ms Marsh: I do our budgets every year and right now operating costs run anywhere between 43% and 46% of our total budgets per year, and that includes all maintenance. We break down maintenance into two categories: maintenance and what we consider janitorial kinds of things, which include garbage removal, snow removal, cleaning supplies, things like that, and then general maintenance which is repairs and maintenance, plumbing, electrical appliances, elevators, carpeting, things like that. And yes, we do have a regular scheduled program of replacements and I consider that normal.

Ms Poole: This is for common areas only?

Ms Marsh: Oh, everything. We clean and paint on turnover.

Ms Poole: Does that include property taxes, for instance, or is that in a separate category?

Ms Marsh: No, that is in a separate category and they are very heavy.

Ms Poole: Do you have any breakdown of the costs of the units that you operate? Do you have anything in writing that you would have saying how much goes to property taxes, operating -- the reason I am asking, a number of presenters have forwarded the idea that major capital should be included in the rent and it may be possible for people who have held their building for a long time and the mortgage is paid off, but it appears to be very difficult for many landlords who have a mortgage plus property taxes plus maintenance, all sorts of operating.

Ms Marsh: Right. We would have a real problem with that in Thunder Bay in that I am already $150 below maximum legal allowed rents. Market will not bear it up there, so I have nowhere to go. I cannot raise rents to put any money in an account because the market just will not bear it.

Ms Poole: So the fact that Bill 4 makes no provision for necessary major repairs will have an impact on your buildings as they simply will not get looked after during the moratorium.

Ms Marsh: Yes. I have one building right now that needs $250,000 worth of capital work. I plan on asking the shareholders. I wonder what the reaction will be.

Ms Poole: I think we can guess. Thank you very much.

Mr J. Wilson: I just want to ask you a general question.

Ms Marsh: Sure.

Mr J. Wilson: You have a very large portfolio, yourself and Poli Rentals. I am a tenant myself, down in Collingwood, Ontario, and the same thing happens in my building where tenants, when we get together, cannot believe that the landlord does not have money because, you know, everyone pays out a large chunk of rent every month.

Ms Marsh: Yes.

Mr J. Wilson: And they get to adding it all up and think, "This person has got to be a millionaire," and, "Why don't you have money for capital improvements and that sort of thing?" Do you want to comment further on that? Because it is a line that the government keeps touting. These guys are rich, corporate bums and they have got to have millions of dollars and they are just pocketing it. And maybe they are. I do not know. We are trying to find out.

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Ms Marsh: I could give you a breakdown of what income on one building and expenses on one building are a month. I am in a situation right now, I was referring to earlier, with ARP repayment. A lot of buildings were built under that, the assisted rental program, and they subsidized for 10 years. The government subsidized our rents to the tune of up to $100 a month, until such time as the rents came up to market.

Rents have never come up to market in Thunder Bay, so I am stuck with this repayment program, my ARP has matured. I have absolutely no money to repay that back. I have never, ever once on that building made the promised return in equity to CMHC, not once, and right now we have stalled for two years on any repayment on that. I have already built up over $1 million of interest on that second mortgage.

Mr J. Wilson: And because you are involved with CMHC and the ARP, I mean, they are looking over your shoulder, so you would have --

Ms Marsh: All the time.

Mr J. Wilson: -- so you cannot be skimming off the books.

Ms Marsh: No. They also come in and examine our rents, examine our books and that is one of the things, too. "Why aren't your rents up at maximum?" "Market won't bear it." So on one hand we have CMHC telling us one thing and on the other hand we have the provincial government telling us something else and in the middle there is us.

Mr J. Wilson: I have no further questions, Mr Chairman.

The Vice-Chair: Thank you, Mr Wilson. Mr Mammoliti and Mr Wilson.

Mr Mammoliti: Thank you, Mr Chairman. I am guilty of that; I believe that most landlords can afford capital expenditure costs. So when you say that the government is concerned, yes, and I am guilty of that. That is one of the reasons I am glad I am here and I am glad I am touring the province. You mentioned earlier that Mr Chrusz was in Florida? Does he have --

Ms Marsh: He also owns another company, Poli Fiberglass (1987) Ltd, which subsidizes a lot of his rental stuff.

Mr Mammoliti: So it is not only here in Ontario that he owns 400 or 500 units?

Ms Marsh: Oh, no, it is all in Ontario. It is all in northern Ontario, Thunder Bay --

Mr Mammoliti: But he also owns --

Ms Marsh: He owned that other company long before he picked up some of his --

Mr Mammoliti: In --

Ms Marsh: No, he is just down vacationing.

Mr Mammoliti: Oh, on vacation.

Ms Marsh: It is just a holiday. He had this set up for, like --

Interjections.

Ms Marsh: Yes, yes.

Mr Mammoliti: It is nice to know that some --

Ms Poole: Point of order, Mr Chairman.

Mr Mammoliti: Mr Chairman, point of order.

The Vice-Chair: Point of order, Ms Poole.

Ms Poole: Is he with Mr Cooke?

Mr Mammoliti: I hope you are going to add on some time here.

The Vice-Chair: Well, I can. I was really wondering about the relevance of the line of questioning.

Mr Mammoliti: I am glad this individual can afford a trip to Florida. I mean, that is great.

Are you aware of the complaints that Mr Chrusz has had in regard to some fridges that he has taken away and dishwashers from tenants in his buildings?

Ms Marsh: The dishwashers, the withdrawal of services in a three-storey building? Yes, the building is right behind one of mine.

Mr Mammoliti: So you are aware of it.

Ms Marsh: Yes, but the rents were adjusted accordingly.

Mr Mammoliti: They were.

Ms Marsh: Yes, for a withdrawal of services.

Mr Mammoliti: And that his application in front of rent review is trying to get some money for capital expenditures. Is that related in any way? I mean, capital expenditures that he is going after.

Ms Marsh: No, those are different projects.

Mr Mammoliti: The money he is going after and the fridges and stoves?

Ms Marsh: Totally different projects. Totally different buildings. Some of them are under limited dividend projects and some of them are not.

The Vice-Chair: Perhaps you would let Mr Wilson continue?

Mr Mammoliti: Yes, Mr Chairman, I will.

Mr G. Wilson: My interest is the way the tenants view this predicament, because it does sound as though it is unstable in that they, I guess, are aware of the problems that Mr Chrusz faces.

Ms Marsh: Very much aware. We have meetings with our tenants.

Mr G. Wilson: I see. What, with all of them, or how do those meetings go?

Ms Marsh: No, actually there is a group of 5 to 10 core tenants in the one building, the 160-unit building, that I meet with quite regularly to let them know where we are coming from.

Mr G. Wilson: And what would you say their attitude is toward the problems?

Ms Marsh: They are actually very understanding because of the fact we just had two big emergency repairs to do. I had to do $150,000 worth of repair work to the garage structure that had shifted three quarters of an inch. At that point in time I had to defer carpet replacement on nine floors and painting on five floors, and that in no way covered the cost of this, but it was a bit of a cost-saving measure until we can start building up a little bit of cash again to do that.

Mr G. Wilson: Now as far as the roofs and the furnaces go in these buildings, is it not to be expected that they would have to be replaced after 20 to 25 years?

Ms Marsh: Not all of them at once. And my understanding from this is that the gas company in Dryden has put out an order that these ones have to be replaced. We are finding right now in one of our town house projects that the blocks are cracking on several furnaces and that is a major to do all at once.

I do budget for appliance replacement to a certain extent every year, but I do not budget for all of them. And if all of a sudden you find -- and this town house project, when we did our inspections this year we found 33 of them have cracked blocks and we are sitting there, "Whoa."

Mr G. Wilson: That is pretty unusual, though, would you not say?

Ms Marsh: That is very unusual. We usually budget for anywhere from three to five a year. The same with fridges, I will budget for five to 10 in one building, because that is normal, but when that happens, then you are just kind of going, "Whoa."

Mr G. Wilson: Sounds like you should buy better fridges.

Ms Marsh: No, they are good.

The Vice-Chair: Thank you, Mr Wilson, and thank you, Ms Marsh. Have a good trip home to Thunder Bay.

Ms Marsh: Oh, thanks.

The Vice-Chair: We appreciated your interventions today.

KEN KALTIAINEN

The Vice-Chair: The next presenter will be Ken Kaltiainen. Welcome to the committee, sir. You have been observing the proceedings. You know you have 10 minutes for your presentation, followed by 10 minutes of discussion with the committee.

Mr Kaltisinen: Thank you. My name is Ken Kaltiainen. It is Finnish. I am a senior architectural draughtsperson here with a local architectural firm in Sudbury. I would like to welcome you all to northern Ontario.

In 1975, I graduated as an architectural technologist and I returned to Sudbury to look for work in my field. I could not find a job with local architects for two basic reasons. One is I had no experience and, two, the architects stated that there was no housing being built. At that time in Sudbury we had a vacancy rate in excess of 10% and also the Sudbury area was in financial ruin due to a lengthy mining strike that literally crippled the economy.

Over the next 14 years in Sudbury, we had a negative population growth. Therefore, forecasts were proving that no housing would be needed, nor my services. I had to go to Edmonton, Alberta, to work and gain experience in my field. I had to leave my home, travel 2,500 miles to get something I could not get in the biggest, greatest province in Canada.

Once out there, I concentrated on three areas. One was the housing industry; second, the commercial industry, which covers retail and office buildings, and the third being educational types of buildings, such as high schools, colleges and universities. As proven by my return, this was the best type of experience that would increase my chance of getting a job here in northern Ontario.

The architectural community must know a great deal in all disciplines of buildings in order to give a client what he or she is paying for, as well as the very best of services in order to retain that person as a permanent client. After 10 years of experience in Alberta, I returned to my place of birth with a variety of experience not readily available to architects here in the north.

Once back in Sudbury, I soon realized that all construction was in the private sector. The construction in the multifamily sector was very little to non-existent. Also, there were no new schools, new colleges or universities being built. The renovation jobs in the educational industry are few and far between. Once I realized what was happening, I sat back and evaluated why there was no housing in Ontario, the bottom line being that if no housing was being built, one third of my capabilities were no longer valuable to architects.

Today there is very little commercial work in northern Ontario for the simple reason that in Sudbury alone we have a 5% vacancy rate in the retail area. Let me ask you: How does Bill 4 affect me, a draughtsman? Well, if no new commercial or educational facilities are being built, that leaves only the multiple-family sector. With Bill 4, who in the private sector would take their money and invest in a multiple-family dwelling with all the headaches and, as proven, an average 3% return on their investment? Most clients we know would much rather take their capital that they have, secure it in a financial institution, get at least a 10% return on their money with no headaches.

With the present scenario in Ontario, I quite often ask myself, "How are we to build investor confidence with legislation that makes it so difficult to produce effective, affordable housing for all sectors and financial groups?" And building multiple-family units, I can count offhand 38 different trades, not to mention unions, financially related personnel, building material suppliers, that will be without jobs, and myself very shortly, if this continues. With Bill 4 and rent controls, not only will I be unemployed, but I will be standing beside thousands and possibly hundreds of thousands of people affected by this bill.

From public figures available -- yes, and through the Fair Rental Policy Organization of Ontario, but I checked as to where they got their figures from, which was from public documents -- there is a shortage of 100,000 units in Ontario. If the average draughtsman can produce a 20-unit building in one month, that would create 458 years of employment for that one draughtsman, not to mention the structural engineers, the mechanical engineers, and so on and so forth, affected by that.

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Also, if I am to follow the news and believe it, the government is to build these 110,000 units -- and we use the figures available here in Sudbury for building co-operative housing units of $78,000 per unit -- that would cost $8.5 billion to build the housing shortage that we need. Who is going to pay for the $8.5 billion? Who is going to finance that?

In my experience it would be far more economical to have the private sector build a majority of these units because they have proved they can build the same unit for 30%-35% cheaper, and the burden of financing these units would not be on the public sector.

When Premier Rae visited Wall Street, I was watching very closely. He was there to reassure the international investors that Ontario was still a good place to invest in. I do not recall Premier Rae mentioning to the investors in New York that you can invest anywhere you like in Ontario but leave our housing units alone. Is that not what Bill 4 is doing to us right now?

I would remind you of the presenters in Toronto whom I witnessed on TV, they have an option of $500 million to invest in Ontario and they are pulling out.

From my investigation in Sudbury here alone, we could use in excess of 1,000 units right now. And this is according to the CMHC report, readily available, just completed. In the next few years, that 1000 units will become 5,000 units. I cannot see how, with the present legislation, let alone the government building co-operative housing the way they are, they are going to achieve this task.

It is a known fact as well that 80% of the housing stock in Ontario is over 25 years old. With this present legislation, the property owners will have no legal way of paying for fire code and building code upgrades that are required. This forms part of my job as well. I walk into these buildings with these owners, or so-called landlords, and I review the code requirements and implementations with them to see what the bare minimum requirements are to fix these buildings. God, it is horrible in some of them. I would not put my dog in them.

So with the existing legislation, nobody is going to be fixing these buildings and upgrading them, bringing them up to code. They are going to become firetraps, at whose cost?

While in Alberta, I was in rental housing. I was a renter and I was monitoring that industry. There were no rent controls. Out there, I had a choice at any given time, whether boom or bust, where I can rent, how much I was going to pay for rent, what I was going to pay for with that rent, what I was going to get and what kind of amenities I was going to have. If I did not want to pay for a certain apartment, when I went to put an application to view it, the landlord knew I was not renting it because of this, this and this. I had a choice.

Here in Ontario, the only things the tenants know, and especially in Sudbury here, is that if an apartment comes up for rent there are 100 people standing behind them. The only other thing they know for sure here in Ontario is that, boom or bust, the rents are always going to go up.

Since 1973, government parties have been applying Band-Aid legislation to rent control. The private sector, their own government studies, have all proved that rent controls do not work. Who is listening? Why are we doing these reports if nobody is going to listen to them? The housing problem is going in one direction. I have been back in Ontario four and a half years and it is only going to get worse.

People in the north who buy a revenue property as you heard earlier today are doing it basically for one simple reason and that is to secure a future, a pension. Part of the baby boomers -- when I come to retire, there is not going to be any money there. So these guys are taking the added step. Some people do it for other reasons but they are few and far between. These northern Ontario pension seekers as I like to call them, also known as landlords, are a minority. Their industry is being choked to the point that they are being forced into bankruptcy. We have heard one lady here today already. By taking this portion of the industry, you are also sending me into bankruptcy. My best guess right now, with no commercial work and no educational work in the city of Sudbury, with 15 years' experience in the architectural industry, in six months I give myself unemployment. And man, I am not looking forward to that.

In my opinion, there are a couple of things that can be done. First of all, through the government and their co-operative housing programs, shelter those who really need it. Eliminate the geared-to-income for those who do not need it. People earning $35,000 to $45,000 a year do not need subsidized housing. Bill 4 and all its tenant supportiveness and its landlord objections should be eliminated completely. The government should provide shelter allowances to tenants and not be in the construction business. Tenants should have accessibility to a sheltered allowance so that the $1.4 billion spent annually by the government is better distributed to those who really need it. The government should work with the private sector to create new housing and allow the private sector a fair return on their investment.

The last item that I would like to touch on is that, my God, you know, this is a perfect opportunity for the elected NDP government to create housing, to create jobs, thousands of jobs. Who knows, with the unemployment rate in Sudbury now at 11%, the economic route that we are taking right now in Ontario, we could create a miniature upturn in the economy. Would that not be a nice feather in the hat right now? If this government is unsure of some of the suggestions I have made, why not use northern Ontario, or even Sudbury, as a test area? I know a lot of people in the industry who would gladly sit on a board to help set this thing up, and monitor or police it, whatever you want to call it.

These are some of the solutions. I do not have them all. Like they say, "The ball is in your court." My employment is also in your hands.

Mr J. Wilson: Thank you, Ken, for your presentation. I was glad to see that you included a local example of units being built under a government program for $78,000 a unit. As building a co-op unit, it is a point that I have raised in the House and brought to the attention of the minister on a couple of occasions because in my own riding, down in Alliston, they proceeded to plan to build a non-profit housing project at an astronomical cost per unit. In fact, it was at least 30% above what the private sector, if left on its own, would have built it for. But because it was a government program, I guess everybody was in for the take and up goes the price. And no sooner had we brought that to the minister's attention when one week later in the House he is announcing that the government is going to continue with the homes now programmed without review and build another 22,000 units.

That, you know, is not really a question but more of a statement. But do you know what the per-unit price would have been, or should be, versus the $78,000 figure you have?

Mr Kaltiainen: Let me make a correction there. We have had some dialogue with the local Ministry of Housing here and I am going to mention this and you can have your own people chase it up. I have had a figure thrown at me that $100,000 per unit is what it now costs in 1991 in Sudbury here. The difference between public sector and private sector is -- when you are dealing with public money there are so many steps you must go through to ensure that that money is not being abused that the administrative costs, the bureaucracy procedure to build the same unit that a private sector would build, are running 30%, 35%.

The average unit in Sudbury here right now, depending on what kind of construction and how many units, will vary from $50,000, $55,000 to $65,000. There is a local developer here that I know of myself who is doing it for $40,000. He is building apartments for $40,000 a unit. Some builders and developers here do not know how he is doing it, but he is doing it. And he is building very few of them because there is no return even at that margin.

Mr Tilson: You have just answered a question and this whole subject has come up in both Toronto and Windsor. People who would come and say it is cheaper to build private enterprise units as opposed to public enterprise units.

Mr Kaltiainen: That is right.

Mr Tilson: The minister, Mr Cooke, happened to be at the hearing in Windsor when this statement was made and his comment simply was, "Prove it to me." Of course, my response was that the onus is on the minister to provide that information and I still challenge that. I am encouraged by your providing the facts that you have just given to us because now there are facts the minister will look at, that it is cheaper for private enterprise to build houses or apartment units as opposed to public enterprise.

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Mr Kaltiainen: It is very easy, if I may interrupt here, to get those figures.

Mr Tilson: I find, though, your figures rather alarming because even the figures that were given in Windsor and Toronto were not as high as that 30% and 35%. You say up here it could get up as high as that.

Mr Kaltiainen: It does vary, yes. They are there.

Mr G. Wilson: I am impressed with your presentation. It shows that you have given this a lot of thought, and I guess in some circumstances a desperate point of view. I am interested, though, to know -- we had an earlier presentation that described housing as a human right and I am wondering what you think of that view.

Mr Kaltiainen: I would agree with housing is a human right, but I do not believe that housing the needy or the unfortunate is the responsibility of the private sector. Housing the needy and the deprived, in my opinion, is the responsibility of government. And that goes right back to the true definition that government is to govern the state to ensure the welfare and wellbeing of all concerned, not to be in business. It is a proven fact that government cannot be in business and make a profit and make the books balance. Take a look at our budgets.

Ms Harrington: Just a quick comment. I did not hear the beginning of your presentation; I am sorry. We really believe that apartments are more than just investments; that apartments are people's homes and that we have to balance between the people living in those apartments and those owning them. We want to work out a fair system which will give a fair return for those who are in the business. We understand you have a job to do. So I hope that will reassure you to some extent.

My comment with regard to the costs of non-profit housing and co-ops, you are right when you say that we are responsible for the public's money that is going into this. Therefore, it seems, and I know from my own local experience, there is a fair amount of red tape. And I assure you, from my background in trying to get this non-profit housing built in Niagara Falls, we are going to have to streamline some of that. But mind you, I cannot walk into the Minister of Housing and say, "Look, let's change all this," although some things have to be done and there is a mandate of this government over the next four years to do it.

What I would just like to mention is that this particular co-op housing project that I was involved in, the bids that we got from the private sector to build it, we got less per square foot. We worked out a real good deal, better than had ever been done before, to try to get this project of, I think it was, 60 units put up. And, I will tell you, we tried very hard and we were not getting any remuneration for this. We were just a group of citizens who were trying to get involved in putting up more housing that was needed.

So I am saying that we are going to cut the red tape, we are going to get this process working. That construction company, Kenmore Construction, gave us an excellent deal and we want that across the province to get people working, the trades and the builders busy.

Mr Kaltiainen: That is the key: communication.

Mr Brown: Yesterday I had the pleasure of attending a federal task force that was in Sudbury looking at the economy and then later on, last night, I was in Elliot Lake looking at the economy. And one of the presenters was the mayor of Sudbury here and he pointed out that although Sudbury's unemployment is rising -- I think it has gone up 2% or 3% in the last while --

Mr Kaltiainen: That is right.

Mr Brown: -- most of the unemployment has come from the fact that labourers and other people who have been laid off from places that have just been devastated, like Elliot Lake, have come here to find work. That has also put great pressure on the rental stock at the same time. I wonder, knowing the cyclical nature of the northern economies and the situation in Sault Ste Marie, for example, which might even put greater pressure on Sudbury, what your opinion is. You talk here about 38 trades that are conceivably losing work.

Mr Kaltiainen: That is right.

Mr Brown: It would seem to me that this is the time for landlords to be doing work, repairing their buildings, building their buildings. They could do it for less money; the labour force is available, ready.

Mr Kaltiainen: Exactly.

Mr Brown: They are not being taken up by commercial projects, for example -- all those sorts of things -- and now is the time we should be employing people in the north rather than putting them on UIC.

Mr Kaltiainen: That is right. Right now, today, at this time, even in Sudbury's economy, we might be saying, "Yes, we're doing better than other centres." We have also suffered longer and we have protected ourselves against it. Now in Ontario, anywhere in Ontario, now is the time to build. You would be nuts if you do not build now because the organized labourers are hungry, every tradesman is hungry, every contractor is hungry, the architects are hungry, the engineers are hungry.

Let me give you a fact here. A job that hits my desk, eight months later it will hit the public sector; it will hit the construction industry. So, gentlemen, if I have nothing on my board right now, what is going to happen next August and September? You are going to have all those 38 trades out of work, and then what are you going to do? And just think of this: Here we are such a large province, you are out of work in Sudbury; "Fine, we'll go down to Toronto." Why will you go down to Toronto? They are worse than we are. Or, "We'll go down to southern Ontario somewhere." Well, there is no housing there either. Where are all our qualified people going to go? They are going to have to do like I did: pack up your bags and head to the only place where you have opportunity. Do we have to go back to Alberta again? If that happens, I am not coming back.

Mr Brown: Along that same line, we have heard presentation upon presentation that there are various centres around the province where tradespeople -- some union, some not -- have come before us and told us, recounted, occasion after occasion where they have had contracts cancelled, agreements entered into that land owners just cannot go through with, not because the land owner does not want to, but because he cannot borrow the money; no bank, trust company will do it.

Mr Kaltiainen: Exactly.

Mr Brown: So could you give me a percentage of how many people in Sudbury you think are directly affected by Bill 4?

Mr Kaltiainen: I would say everybody in the construction industry, most financial institutions, all property managers. Like I said, you are cutting out a third of the construction industry; one third; 33%. Let me state another fact here.

The Chair: Ken, we are already over our time. We appreciate your presentation today. Thank you for joining us.

FRED TWILLEY

The Chair: The next presenter is Fred Twilley. Just identify yourself and whom you are representing for the record.

Mr Twilley: My name is Fred Twilley and I am representing my wife and me. First I wish to convey my sincere thanks for this opportunity to express my opinions and provide what I believe to be useful feedback to our legislators. I believe that my wife and I, with our past experience as tenants and now as landlords, have a good perspective of the issues.

Working as landlords, we realize the importance of some of our decisions to our tenants and the responsibility that that entails. Like other small landlords we know personally, consideration for tenants' needs factors into our decisions. This is not to deny that the primary reason for our investing in revenue housing was to make a profit; that is, a profit sufficient to compensate us for the considerable time and effort we spend by ourselves in servicing and maintaining the properties and for the invested family savings.

Whenever we have chosen to modify our units, we have endeavoured to keep our tenants' welfare in mind at the same time as achieving a reasonable rate of return. The improvements we have made have been welcomed, if not recommended, by our tenants even when rents were increased as a result. For example, in one building we replaced all the windows and insulated two outside walls when replacing collapsing stucco. In this building the tenants pay their own heat. The old windows were aluminum framed and in need of significant repair. There were a lot of drafts and large heat losses through the aluminum frames.

Without some recourse to recover the costs of about $15,000, we would not have bought new windows but simply repaired the existing ones as well as possible. We would not have added insulation underneath the vinyl siding. The exact cost savings to the tenant in electricity were not determined. However, the improvement in comfort was repeatedly praised. The cost of these improvements represented 12% of the total value of the property purchased two years earlier. The rent increase in total was 9.8%, which is about 5% above the normal increase.

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The second example is a building severely damaged by fire accidentally set by a tenant who is now living in the same rebuilt unit. The fire insurance on the building only covered the depreciated cost of the structure, leaving a $5,687 shortfall. Before construction began, I was given the choice of taking the amount of the claim to a builder of my choice. With that money I might have been able to restore the units to building code, but not near to the quality and comfort they now have. The extensive reconstruction required as a result of the fire also afforded me an opportunity to make some very beneficial improvements at a very small fraction of what the cost would normally be.

One improvement was to insulate under siding on walls damaged by fire. Another was to change the layout in one unit to allow better heat distribution and better utilization of a limited floor space. We had wiring brought up to today's standards in the same unit. Two more electrical panels were changed to allow for future improvements in the two undamaged units of this building. In total, we invested $9,382 in this building to be amortized over 15 years. Now as a result of Bill 4 we cannot expect to recover these costs. We made these spending decisions in June and July of 1990 based on regulations in existence at the time. In view of the types of improvements made, I do not believe it is unreasonable to expect to recover these costs, nor is it unfair to the tenants. The absolute maximum rents for these one-bedroom units would be $202 and $229. Had Bill 4 been in force as it now stands we would have found it necessary not to make these improvements. We might have sought to restore the building to the bare minimum required or torn down the two damaged units or possibly the whole building. This would have meant that two or four very affordable units would have been lost to the market. If Bill 4 is enacted unchanged we will have to compensate with our employment income as we were already in a financial loss position on this building.

I believe that I have clearly illustrated in two actual examples how Bill 4 can deter appropriate capital expenses that on the whole benefit the tenants well compared to the cost. I know of other examples of planned improvements already delayed or cancelled directly as a result of Bill 4. This bill, I feel, will shift the economics such that many more buildings will be demolished and rebuilt from scratch instead of restored, with the result of much higher rents.

As buildings age the repair costs and upkeep costs rise. With Bill 4, landlords will strive harder to reduce repair costs, leading to less effective short-term solutions. They may even try to withdraw the capital from some problematic buildings as they let them depreciate to the point of no return. This approach may simply be necessary for some small investors who do not have other business profits to offset the rental income losses. Even if major repairs are not abandoned, simply delayed, serious inconvenience can result for tenants. More slum buildings and less affordable housing will be the end result. In Sudbury I believe that most landlords operate on a relatively small scale compared with southern Ontario operations. Small landlords have invested in their own community, often in hard times when large investment companies and lenders show little interest. We survive in lean times by doing as much maintenance as possible by ourselves. As small, unincorporated investors, we are the most vulnerable to the negative effects of Bill 4. The retroactive effects are unnerving.

We cannot afford to invest lifetime savings, including funds for retirement, in what may be a far too risky business, a business that will not permit any flexibility to soften the effects of a myriad of unpredictable problems. These higher risks will also demand a higher rate of return for future investors. This will certainly lead to higher rents in new buildings or converted private residences. A reduction of small investors, probably among the most efficient, from revenue housing can only be viewed as a negative factor, especially for northern communities. As more small investors switch over to other investments such as those offered by banking institutions, I venture that much less of their capital will stay in the northern communities where it is badly needed. Small landlords often develop a very good rapport with most of their tenants. Good co-operation is often experienced with tenants in dealing with problems of mutual concern. Flexibility and compassion are not uncommon when approached openly up front about problems, even including paying rent.

In short, our business is a very personal one. Many of us appreciate the value of some form of rent control, especially in times of housing shortage, but it must be used in conjunction with positive solutions. This rent control legislation in itself will not lead to more units being built as it attempts to deal with high rents, which are only a symptom of the problem. The problem is a shortage of rental units. I sincerely believe that the government's primary objective in this legislation is in the best interests of the tenants. I am also certain that the short-term benefits will be far outweighed by the negative effects later on.

First and foremost, the retroactive approach will almost certainly deter investment in this sector. I believe it could set a disturbing precedent that will discourage investment in many business avenues across Ontario. It will unfairly harm many investors who acted honestly and in good faith.

Second, the blanket approach to capital investment will turn many investors away from restoring structurally sound buildings, which will lead to a waste of scarce resources this province cannot afford. Certain structural improvements could lead to extending the lives of good buildings, again economizing on resources. Some consideration should be also given to rising repair costs for older buildings as it is far less expensive than new construction.

If any member of the committee or those they choose to represent them would like to examine the buildings I have used as examples, I would gladly help them. I believe I can rely on the co-operation of the tenants.

Bill 4, in effect, paints all landlords with the same brush as excessive profit-takers without consideration for tenants. This generalization is no more appropriate than others about dentists, engineers, plumbers or even politicians. Do not penalize all landlords for the behaviour of a few. Let us work together for solutions. As Bob Rae has repeatedly spoken of, there is a partnership between business and government.

Mr Mammoliti: I just want you to elaborate a little more on the problem you have had with the fire in your unit and why you cannot recover any moneys, and relate that to the application that you have.

Mr Twilley: Okay. I have commercial insurance on the property and it only covers the depreciated cost. When they rebuild they cannot rebuild the same condition it was. New construction is new construction, and insurance companies do not insure you for that on a commercial basis. And so in a sense the building has been renewed not through choice but through the fire. I might have been able to go and say, "Well, look, just cut out the burnt siding and replace it with something that looks almost the same and on the two sides and save cost that way," and possibly gotten away without this shortfall. I was not sure I could do that. I did look at the possibility of tearing down two of the units but there might have been a problem getting the insurance to cover the reconditioning and clearing away of the old building. And if I had torn down the old building, which would have left me actually in a better economic position than I am now, and just taken the insurance, I would have put two people out on the street who badly needed the apartments: an old, retired man who could not afford any other place that is available on the market and an Indian and his wife who has been on disability pension for years.

Second, it has provided an opportunity. To add insulation when you are putting new siding on, the cost is a very small fraction as opposed to tearing off siding, putting insulation on and adding it. So it became economical as a result of the fire, where it was not before. The buildings are heated with gas space heaters, quite safe, and they can be effective if the layout is sufficiently open. In one building, the two doors were sort of a triangle out of the wall and it was very difficult for the heat to get into the small areas, and the way the doors are set up the small, limited areas in the thing, it was hard to position beds and what not.

So I made these improvements. Also, I was able to change one window that was not damaged sufficiently by the fire to require replacement. I changed it at the wholesaler's price of the window. He says, "Pay me for the window what it costs me and I will put a new window in rather than repairing the old." And this meant that I went to side-sliding thermal pane windows instead of the old double-hung windows with storms put on in the winter, and much better, much more efficient. I believe that the cost saving in gas is going to take care of a large portion, if not all, of their rental increase.

Ms M. Ward: You own two small buildings.

Mr Twilley: My wife and I have a total of 23 tenants.

Ms M. Ward: In two buildings, you own 23 units.

Mr Twilley: Yes, my assets.

Ms M. Ward: I would just like to comment that I see a big difference between the small landlord like yourself and the large complexes such as I have in my riding, one complex with 1,300 people in three buildings. Two weeks ago I spent about 10 hours over there dealing with problems. Do you have any suggestions for us as to how to deal better with the small landlord and still take care of the problems that we are having with the very large landlords who are not in touch with their tenants, such as you are?

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Mr Twilley: One of the areas where they are talking about these excessive increases that were due to cosmetic things -- I understand that in order for this to be economically positive, the thing to do was the rapid amortization rates. Possibly we could put a limit on. That might be one thing. Instead of allowing things to be amortized over five years, there is a minimum number of years it has to be amortized over, and then that can get away -- as mine is amortized over 15 years, I cannot. My investment really was just more or less the adding of $10,000 to this building. If I had been allowed the rent increase, it may have increased the value of the property by $11,000, $12,000.

Mr Brown: You are just one of many small landlords who have come before us, and I would suggest you are one who is going to be very much hurt by Bill 4. And in discussing the large landlords vis-à-vis the small landlords, we have been told even by the large landlords who have come before this committee that, while this is not to their liking and they are not happy with this legislation, because of their size and because of their diversified portfolio, they really can deal with this legislation reasonably well in the interim. But it is the small landlord, the real people -- you did not come in a stretched limousine, I just know it -- you are here and you are the one who is going to be affected. We have heard of people who are going bankrupt. You have not suggested that is going to happen to you, but it is going to be a severe financial hardship to you and your family. Can you suggest to us any outs along the lines that Ms Ward suggested? What can we do to accommodate your specific interests here?

Mr Twilley: Well, I think that we have to recognize certain types. I think that there is good economic efficiency in restoring some old buildings and in upgrading old buildings, and I would love to show you the buildings to see the difference between an old and the new. I think we have got to allow for capital expenses in those ways and encourage them. And I think this retroactivity really destroys confidence in the government's recognition of what is important in business. And although I am not really a big businessman, I analysed this on the basis of business when I approached it and I took choices that were for the benefit of my tenants; hopefully, their cost savings came close to the rent increase. And I think the retroactivity destroys confidence in investment. I would be hesitant to invest in other areas as well as rental housing.

Mr Brown: Assuredly, I note the retroactivity is the most repugnant thing to anyone in the business community. It is not just landlords who are being very disturbed by this proposed legislation. Although I have heard some hopeful signs today that maybe they are going to entertain real amendments next week, I really would hope that we can move forward and eliminate totally the retroactive provisions of this so that we can get on with providing a good rental stock for the people of Ontario.

Mr Twilley: I hope this is done quickly because the government speaks of some breathing space for it to figure things out. This breathing space is a suffocating period for a number of landlords.

Mr Brown: Really, what the government is suggesting right now is that, "What we're going to do is bang your head against the wall for a couple of years and hopefully when we stop, you'll appreciate it."

Mr Tilson: I was interested in your comments about energy conservation with windows. I did ask a question on behalf of the PCs back in the fall of the Minister of Energy as to whether or not she felt that her policy of making buildings more energy-efficient conflicted with the policies that were being suggested by the Minister of Housing, and her answer was that she would talk to the Minister of Housing. I have not heard what those discussions were and, of course, I am looking forward to it.

I will say, though, sir, that my prediction is, as you know, the green paper that is coming out on Monday that is going to be presented to this committee by the Minister of Housing will talk about the more permanent legislation and I do not think for a minute that this breathing space is going to be a breathing space at all. I think it is going to be a continuous space, and it troubles me. I would like to know where you think that the people in Sudbury are going to go if this so-called temporary legislation becomes permanent legislation.

Mr Twilley: I cannot say. We will struggle by; we will find ways of economizing -- it is those or this. I am unincorporated. I have not got a choice. I cannot sort of say well, I can abandon this and let the business go under, because if I get caught in a continual squeeze on my finances I lose my house, which I mortgaged to buy properties. I would lose everything I have. I would lose everything I had hoped to help my six kids get a kickstart in life. This is what I look forward to; there is a retirement and helping my kids get established so that they have a foundation to work from. I do not know. I will have to find some ways of economizing because the finances and the money is not there. I do not know what else is in the green paper. I do not know what else is going to come down in there that will make things even more difficult. I do not know. I had certainly stopped any consideration of additional purchases and I am presently trying to sell one unit, hopefully, to get out before I lose --

Mr Tilson: Before the crash.

Mr Twilley: Yes.

The Chair: Mr Twilley, thank you very much for your presentation today.

Ms Poole: Mr Chair, while we are waiting for the next presenter to appear, might I make a request of the clerk, with the permission of the committee? We have heard a lot of presenters over the last week, and many of them have indicated a real interest in the long-term process. The document is available on Monday. Could we ask the Ministry of Housing to provide sufficient numbers of this document to the clerk so that every person who has presented a brief to our committee or who is on the waiting list should be provided with a copy of the long-term consultation paper? Would that be agreeable?

The Chair: Sounds reasonable.

Ms Harrington: Personally, at this moment, I am not sure exactly the distribution system that has been planned. I know that the briefs are going out and I am not too sure exactly to whom, but this seems a very good suggestion, and I would like to recommend it.

Mr Tilson: I am glad Ms Poole raised that because I think, trying to look ahead to the week after next, where we had discussed perhaps asking invited people to come to make presentations, the three parties have agreed to that process. I have difficulty, however, as to how that is going to come about. In other words, the number of copies of the green paper that are going to be made available to members of the public, is it going to be a limited number or how do they propose to distribute the green paper to the public?

Ms Harrington: I am saying at this moment I could not tell you the exact details. I know there is a distribution process that they talked about. I cannot give you exactly what it is. Are the ministry people here? Oh, good.

Mr Tilson: Just while she is coming, Mr Chair, I appreciate that, but I for one have not canvassed anyone who I think might be useful to come and make presentations on that because I do not know when it is going to be made available, how it is going to be made available and how many copies are going to be made available.

Interjection: Which means we will get ours Wednesday.

Ms Richards: Perhaps I could address some of those issues.

The Chair: Please.

Ms Richards: We certainly can undertake to make a copy of these, of the paper, available to everybody who has made a presentation to this committee, and we will indeed put them on the list. We have a number of ways that we hope to reach the public with the discussion paper and it will be released on Monday. The minister intends to bring it forward to this committee. Anybody who has made a formal presentation in the past is on the waiting list already for distribution. We will have a hotline for people to call and ask for a copy to be sent to them. There will be copies available in our local offices and --

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The Chair: I think Mr Tilson's question was, do you have a substantial list already made out that you are sending out 2,000 copies or 5,000 copies? Does that exist?

Ms Richards: Yes, indeed, we have a list that we are preparing and there are several thousand names on the list already.

Mr Owens: Will all members of the House receive copies at their constituency offices or how will that work?

Ms Richards: Yes. They will be receiving copies.

The Chair: That is a very good answer.

Mr Tilson: Do not go away. You just talked about the process. Are you prepared to tell the committee what recommendations you have for this committee to participate in that process other than the two or three days that are being considered?

Ms Richards: I am afraid I could not make any comments like that. I do not have any recommendations for this committee at this point.

Mr Tilson: It just seems that the minister has asked this committee for comments and I assume there will be more time allowed before he prepares a bill other than the three days that --

The Chair: That will be up to the committee members to decide, Mr Tilson. The staff cannot appropriate our time. We will have to decide ourselves.

Interjection: We are outvoted.

Mr Tilson: Sorry I asked.

The Chair: Order. If the committee will allow me I am prepared to make some recommendations, but since all my previous recommendations were shot down I am not going to do so unless you ask me.

Ms Harrington: We can discuss that on Monday with the Management Board.

The Chair: Unless you ask me. I am just having a little fun.

MAURIZIO VISENTIN

The Chair: Maurizio, you are the last presenter for this afternoon. We need you to identify yourself for the record, whom you are representing, and you have been allotted 20 minutes, 10 of which is oral presentation and we reserve 10 for questions.

Mr Visentin: Mr Chairman, before I begin, I would ask you some leniency of about 30 seconds on my 10 minutes.

The Chair: No problem.

Mr Visentin: In my speech I will identify who I am representing and I will identify myself. First of all I wish to thank you for permitting me the opportunity to express views in reference to the government's proposed Bill 4.

My name is Maurizio Visentin and, beyond representing and speaking for myself, I am also expressing and representing the views of four other family members who, in the spring of 1987 after a few years of consideration, made a decision to enter the property rental market as small rental property owners. As five members of a family, my parents, a sister, my wife and myself, who are listed in the brief, we purchased two apartment buildings totalling 24 units. We invested combined life savings and mortgaged our homes to undertake the purchase.

The prime motive for our purchase was, and still is, a long-term investment directed towards my father's retirement. At the time, my father was 50 years old and he had another 15 years of work prior to reaching retirement age. His work, in the construction industry as a carpenter, has taken its toll on him. His family physician and specialist advised him to stop working altogether because of irreversible damage to his hands due to mine work and outside construction work. As a family we thought that by investing in rental property our father could perhaps retire a few years prior to the age of 65, avoiding complete loss of the function of his hands and have him maintain the buildings.

Bill 4 and rumours of impending legislation completely wipes out our contemplations and plans. Our initiative to be independent and self-sustainable has completely been wiped out by the present government's intentions. It appears my father will have to continue working in the harsh winter climates and physically strenuous construction industry until the age of 65, if he makes it that far, so that as a family we can avoid financial ruin and continue to subsidize this government's policies which stem not from a realistic approach to the housing industry but rather a reaction to a reminder from a large voting block that if they not maintain their campaign promises, that large voting block will remember it in the next election.

I trust there is no question in your minds, ladies and gentlemen, where we stand on Bill 4 and proposed legislation in the field of property rental market. The present government, given its present course of legislation, should rename itself the Non-Democratic Party.

As I examine the composition of the government's committee, it is very evident that you are answering the demands of a vocal constituency. The very composition of the committee is unbalanced. Would it not have been more appropriate to have a member from northern Ontario? Are you, perhaps, affirming that the problem at hand is a problem with southern Ontario? It is time northern Ontario be recognized legitimately as a separate area with its own concerns.

In your Election 90 campaign paper, released 18 August 1990, you claim, "Tenants across Ontario have spent the last three years fighting a Liberal rent review system that gives to landlords with both hands." Such an approach to directing people to confront the critical problem of housing in Ontario is confrontational from the outset. It rings of the old phrase, "The history of all hitherto existing societies has been the history of class struggles."

That type of thinking and mentality, ladies and gentlemen of the government side, has been long refuted. To portray all rental property owners as bad and all tenants as good is simple overgeneralization and emotional reasoning.

There is a housing crisis in Ontario, but rental property owners did not create it. This province's present government and past governments have created it. The rental property owners of this province have, by and large, been conscientious solvers of the problem, not contributors to the problem. The government's present attitude towards rental property owners is one of using them as scapegoats for a problem the government cannot handle. When unable to handle a situation, many governments turn to a portrayed evil scapegoat. Ladies and gentlemen, what is in store for the rental property owners of Ontario after Bill 4? Will it be concentration camps, and then what?

As a family of small property owners, my family and I have put in thousands of hours of work to upgrade the properties we own. Anything that we can do to maintain costs at a minimum, we do it ourselves. Like most small landlords of this province, we scrub floors and walls, spend weekends and holidays carrying out maintenance, get up early and go to bed late to assure that walkways and parking lots are clear of snow and are salted and sanded. We have so far owned our properties almost four years and yet every year invested our own personal earnings to meet expenses. As unfair as the existing legislation introduced in 1986 may seem, it is at least fair in that it recognized that rents are not geared to permit rental property owners to carry out all aspects of maintenance and capital costs and still maintain a fair return.

In our ongoing plan to improve the quality of accommodation for our tenants, following existing legislation, we spent, at the request of tenants, over $10,000 from July to October 1990. At the request of tenants, we furnished a number of apartments with good-quality used fridges and stoves, where the Ministry of Housing's order clearly states that the unit's rent does not cover fridges and stoves. The tenants were provided with all required documentation and were even given an estimate as to the rent increase that would be incurred due to their additional service request.

With the implementation of the retroactive element of Bill 4 we find ourselves in a situation where we have provided a service requested by tenants for which they do not pay any rent. Is this fair? We have used our own personal earnings to purchase the services with the clear understanding under the existing and still existing law that said service would be remunerated in an increase in rents. Now under the proposed Bill 4, which is not law but is being treated as law, we cannot ask for a rent increase for the services provided. In fact, we are advised by our tenants that the Ministry of Housing locally has told them that we cannot remove the appliances and we must continue to service them if they break down.

Ladies and gentlemen, you propagandize that tenants subsidize rental property owners. The situation created by Bill 4 and its retroactive element has forced us to continue to further subsidize our tenants. Is this fair?

Mr Mammoliti, I would appreciate it if you could stay and listen.

Furthermore, is it fair to other tenants who are paying for their services? Ladies and gentlemen, under the provincial election expenses act you find your election expenses --

The Chair: Order, please. We have a point of order.

Mr Mammoliti: Point of order, Mr Chair. I am really sorry, but I do have a plane to catch and it is unfortunate that I cannot stay, but I have no choice.

Mr Visentin: Then I trust you will carefully read the brief.

Mr Mammoliti: I have got it and, as I have been doing, I have been reading all of them and I will read yours. Thank you.

Mr Visentin: Thank you. It is just that I saw a name that I could pronounce in Italian; I thought I would take advantage of it. May I continue?

As I was stating, ladies and gentlemen, under the provincial election expenses act you planned your election expenses and once the election was over you were publicly reimbursed for some of your expenses. Bill 4 to the rental property owners of this province is the equivalent of having the existing government change the election expenses act and have it apply retroactively so that you could not collect the full amount due to you. Would this be fair?

The present government is unrealistic to expect rental property owners to provide proper housing without allowing them to operate in a free market system. Two years ago we had a tenant on social assistance who skipped out without paying $1,300 in rent. We were told: "That's the system. Take your losses." She was getting her social assistance. We did not have access to it. There are many risks in the rental market. We can accept those risks. We cannot accept unfairnesses.

1600

One of the two buildings we own is presently 20 years old. We have so far managed on our own to patch a number of roof leaks that could have cost several thousand dollars in repairs, but in the next few years the roof will require replacement at a cost of no less than $30,000. Even if we had owned the building from the day it was constructed, the amount allocated to capital costs under rent increases is not sufficient to accumulate the required repair costs. The building also requires external brickwork since our extreme northern Ontario winter weather conditions can cause bricks to break apart. The replacement of some 250 bricks plus work along terraces and other exterior parts of the building is estimated at $5,000, and the list of maintenance and capital costs goes on.

Rents at $436 per month cannot cover such costs. If you think they do, I would suggest that members of the government caucus who presently rent a second residence in Toronto consider pooling some of their money together, purchase a few apartment buildings, live in them. If rental property is so inexpensive to maintain, so profitable, then you will save money from what you are presently paying to the property owners you call landlords and characterize as greedy people. I suggest you appoint someone to be in charge of the property and rotate the responsibility to truly savour all of the joys. Please call him or her when your fuses or lights burn out or when your toilets plug up. When you accumulate enough profits -- and according to your version of rental property ownership, that should be overnight -- why not buy a few buildings and rent them out to the opposition?

Members of the government claim landlords are profiteering from tenants. The private sector is providing the most affordable housing on the market. In the non-profit sector of rental housing the average rent for a two-bedroom apartment is roughly $612 plus utilities. This may seem like a favourable figure, but for non-profit housing projects the provincial government provides grants for 10 to 15 years to keep unsubsidized rents at an affordable level and further provides grants for ongoing management and maintenance. So realistically, what is the true rental price? In the public housing sector the Ministry of Housing will provide to the Sudbury District Housing Authority nearly $5 million this year for maintenance and minor capital repairs to 1,900 units. To this one must add the administrative costs. That means that each unit costs nearly $2,500 to maintain per year plus administration. When major capital expenditures are undertaken, the costs are considerably higher. Why are there two standards? The government expends massive amounts of money to keep up its rental properties and yet it tells the private sector it must carry out capital expenditures purely and solely from rents without seeking increases.

Between October 1987 and October 1990 the cost of a two-bedroom apartment in Sudbury rose by $54. As I analysed CMHC reports for Sudbury for the past five years, all figures fail to indicate an astronomical increase in rental prices. The sum of $50 per month over three years is more than realistic.

The figures that I presented to you on page 10 clearly point out that it is not shelter that is eating away at Canadians, at Ontarians, at Sudburians, at Torontonians; it is taxes. Shelter consistently in 1988 dropped in cost. Shelter in 1989 dropped in cost. Taxes rose, ladies and gentlemen. From 1 August 1985 until 31 December 1990, a total of 449,671 units in Ontario received increases above the guideline. The average increase for these units was 11.1%. That is roughly 6.5% more than what was allowed by the guidelines.

Ladies and gentlemen, the statistics I have presented clearly demonstrate a different picture from the bellicose self-serving rhetoric the government has been spreading.

Ladies and gentlemen that are remaining on the government side, has your government carried out an impact study to properly assess your assertions? And I wait for an answer. Has it carried out an impact study? I trust your lack of answer is a no. Why? Because Ministry of Housing figures reveal that from 1 January to 31 October 1990 74% of all units in Ontario did not apply for an increase above 4.6%; only 44/100ths of 1% received increases in excess of 30%; 12/1000ths of 1% obtained increases of 100% or more. Fabrication of the facts by a party, by a Premier? I would like to get an answer from that, hopefully.

Your claims of abuse by rental property owners are irresponsible, an outright creation for media hype for self-serving purposes. Anyone who has appeared before this committee to date to say that he has had rent increases of over 100%, the Ministry of Housing does not have any records, so I would like to know where they got that, unless they were personally affected.

The Premier, along with other government members, has hinted at devaluing the private rental property market and then buying it out. Ladies and gentlemen, how many new apartments will you have created by buying out the private sector? Creative mathematics. By the way, some 10,000 families in Toronto and thousands of families across Ontario go to bed hungry every night. Will you be placing price controls on the food industry? Sudburians are paying higher gas prices than any city in Ontario. Will you mandate price controls? If Inco and Falconbridge curtail their workforce due to the declining economy, will you nationalize them?

This government did not discriminate in seeking help from landlords to get elected, yet once in power it turned on them and discriminated against them. You took with both hands and once in power you stabbed while our backs were turned. I am not going to apologize for calling you back-stabbers. I am a former supporter of the NDP who campaigned for years for this party. I campaigned locally for Bud Germa, if you recall who he was, and the Martels. I have shaken hands and conversed with the Lewises, Mr Cassidy, Mr Broadbent, and I can call up Audrey any time and speak to her or her secretary. Well, not every time. I can assure you that there are many former supporters of the party in government who will not forgive it for its present actions. Just remember, you do not have a copyright on righteousness.

If this government wants to take the right approach to solving the problems associated with the rental housing industry, it will abandon the retroactive elements of Bill 4. The small landlords of this province cannot live in lull land for two years while you contemplate a Band-Aid solution to a political promise conceived for electoral purposes.

I have enclosed submissions of letters sent to various MPPs, some of which have not received any type of a reply, and I trust that you will read them. I want to apologize if I have raised my voice. It is my normal speaking tone when I get excited. I mean that in sincerity.

[Interruption]

The Chair: Order.

Mr Visentin: I may answer that I was asked by local organizers of the NDP on several occasions if I would consider being a candidate. I am thankful I have reneged on that.

The Chair: Order, please. Order. That has nothing to do with Bill 4.

Mr Visentin: I would have provided a different view, perhaps, on it.

The Chair: We have one minute for each party.

Mr Brown: I will be first. A very enlightening presentation. I guess we, over here, see it much the same as you do. First the government has made a number of assertions about this bill and has provided exactly zero evidence that any of it is the truth. In fact, we have asked the Ministry of Housing to come before us with numbers. Either they do not exist or they completely refute the government's case. One of my colleagues made a very eloquent speech in the House about NDP election promises, and what he said was, "They can't possibly keep all their promises, and probably no-one wants them to. The difficulty they have is deciding which ones to keep and which ones not," and I am with you. What they are doing is they are keeping the wrong ones. As a northerner, and I am a northern MPP --

Mr Abel: That is a political comment.

Mr Visentin: But thankfully not of that side, and that is what I was referring to.

Mr Brown: I can think of some promises I would like them to keep. I would like the 60% school funding that we found out yesterday is some kind of silly election promise. I would have liked them to spend $100 million on the Trans-Canada Highway this year as they promised, across northern Ontario, and I am looking forward to Mr Laughren announcing the $200 million for the north in his budget of this spring. I have a feeling we are not going to see any of that. In other words, they are keeping the wrong promises.

Mr Visentin: I would tend to agree with you.

Mr Tilson: I congratulate you on your speech, and depending what your other policies are, if you ever want to come and write speeches for the Tories, we would be glad to talk to you. I will say that the very questions you asked about impact studies is a question that I asked in the House at the very outset when this whole policy was introduced, and the minister, at one point, said he had them and I am not too sure whether he does or not. I do not think he has or we would have seen them by now. We are asking the staff to produce things, and they just do not have them. So I think if you are asking this committee have we seen anything, we have not seen anything and I do not think there are.

Mr Visentin: I have a feeling he probably forgot them in Florida last week.

Ms Harrington: Thank you very much for your presentation. It was quite an experience, and I thank you for this paper. I did want to make two comments.

First of all, you call this basically a political promise conceived for electoral purposes, and I would like to deny that. I really feel that the mandate of our government is to look at some very serious situations in Ontario and one of them is the rental housing situation, that we want to find a solution to it, and it is not easy at all. And the second thing I want to say to you is, on the two-year period, we are hoping, the way we are pushing this through now so that next Monday we have the green paper and discussions starting on that, then consultations all through the spring and trying to get the legislation in place this year with all the regulations by the end of the year, but it will not be two years, that we will have a workable system that landlords can work with and that we can work with and tenants can live with.

Mr Visentin: If I may make two comments on that, I can appreciate your view, but I think you have chosen the wrong people to address at this time. I am a small landlord. I am part of a group that has purchased into a building. We have put life savings. We have provided services that are not covered under the existing order. Is it fair that the tenants ask for those services, they are enjoying those services, and because of your pending legislation I cannot get reimbursement for that? Is that fair?

Ms Harrington: I understand what you are saying.

Mr Visentin: Your Bill 4 does not address that. It says, "In the next two years we'll come up with a solution for you." I appreciate that, but would you like to put $10,000 on the table and let me walk away for two years with it? It does not solve my problem. Furthermore, I realize that there are landlords who have abused the system, as I pointed out in the paper, what, 1%? Three per cent of the Canadian population abuse the social programs. Is your party prepared to remove all social programs because of 3%? Why should all landlords be penalized? Why does the NDP not resign because a couple of members of this government were up on possible charges and election irregularities at the beginning? You have two or three and you are saying, "Well, we should all resign." I did not see Mr Rae undertaking that.

Ms Harrington: The problems are much broader than the 1% you are talking about.

The Chair: Okay, Maurizio, thank you very much for your presentation. That completes the committee's work for today. We are travelling to Ottawa tonight and the committee will commence hearings again tomorrow morning at 9 am in Ottawa.

The committee adjourned at 1612.