RENT CONTROL ACT, 1991 / LOI DE 1991 SUR LE CONTRÔLE DES LOYERS
CONTENTS
Tuesday 21 January 1992
Rent Control Act 1991, Bill 121 / Loi de 1991 sur le contrôle des loyers, projet de loi 121
STANDING COMMITTEE ON GENERAL GOVERNMENT
Chair / Président(e): Brown, Michael A. (Algoma-Manitoulin L)
Acting Chair / Président(e) suppléant(e): Morin, Gilles E. (Carleton East/-Est L)
Vice-Chair / Vice-Président(e): McClelland, Carman (Brampton North/-Nord L)
Abel, Donald (Wentworth North/-Nord ND)
Bisson, Gilles (Cochrane South/-Sud ND)
Harrington, Margaret H. (Niagara Falls ND)
Mammoliti, George (Yorkview ND)
Marchese, Rosario (Fort York ND)
Marland, Margaret (Mississauga South/-Sud PC)
O'Neill, Yvonne (Ottawa-Rideau L)
Poole, Dianne (Eglinton L)
Turnbull, David (York Mills PC)
Winninger, David (London South/-Sud NDP)
Substitution(s) / Membre(s) remplaçant(s):
Fletcher, Derek (Guelph ND) for Mr Abel
Jackson, Cameron (Burlington South/-Sud PC) for Mr Turnbull
Gigantes, Evelyn (Ottawa Centre/-Centre ND) for Mr Marchese
Morin, Gilles E. (Carleton East/-Est L) for Mr McClelland
Owens, Stephen (Scarborough Centre/-Centre ND) for Mr Bisson
Ward, Brad (Brantford ND) for Ms Harrington
White, Drummond (Durham Centre/-Centre ND) for Mr Winninger
Clerk / Greffier: Deller, Deborah
Clerk pro tem / Greffier ou greffière par intérim: Decker, Todd
Staff / Personnel: Baldwin, Elizabeth, Legislative Counsel
The committee met at 1012 in committee room 1.
RENT CONTROL ACT, 1991 / LOI DE 1991 SUR LE CONTRÔLE DES LOYERS
Resuming consideration of Bill 121, An Act to revise the Law related to Residential Rent Regulation / Projet de loi 121, Loi révisant les lois relatives à la réglementation des loyers d'habitation.
Section 21:
The Chair: The standing committee on general government will come to order. The business of the committee is to consider Bill 121 clause by clause. Today we will be commencing with subsection 21(1), to be precise. Questions, comments, explanations, amendments to subsection 21(1)?
For members' information, this is a clause as printed in the original bill. Shall subsection 21(1) carry? Carried.
Subsection 21(2): We have a government amendment to this section.
Hon Ms Gigantes: Yes, as reprinted in the bill before committee members, Mr Chair. Would you like me to read it or would people prefer to read it by themselves?
The Chair: Minister, if you could help me, is this as printed?
Hon Ms Gigantes: As printed.
The Chair: It is as printed, so there is no necessity to read the amendment. We would appreciate an explanation however.
Hon Ms Gigantes: Essentially, this clause applies the cap of 3% to above-guideline increases.
The Chair: Questions, comments?
Mr Jackson: I believe there is a Progressive Conservative amendment here.
The Chair: To subsection 21(2)?
Mr Jackson: Yes. We would strike out "3." If it is the printed version and not a newly submitted one, then I believe you would be in order to recognize our amendment.
The Chair: All right. I am looking for my copy of that amendment. I am sure it is here somewhere.
Mr Jackson: I am amazed I found mine.
The Chair: Mr Jackson moves that subsection 21(2) of the bill, as reprinted to show the amendment proposed by the minister, be amended by striking out "3" in the fifth line and substituting "5."
Do you have an explanation for the amendment?
Mr Jackson: It probably would take over an hour, but I think the numbers speak for themselves.
The Chair: Further questions or comments to Mr Jackson's amendment?
Mr Jackson: Can I take a recorded vote on this, please?
The Chair: I can, if I am asked. Ms Poole?
Ms Poole: Just for clarification, under subsection 21(2), the Tory amendment, what you are basically doing is saying the cap should be 5%.
Mr Jackson: That is correct.
Ms Poole: Rather than 3%.
Mr Jackson: It would change from 3% to 5%. That is what it would move to.
Ms Poole: Could we perhaps have comments from the minister on this particular amendment?
Hon Ms Gigantes: We have proposed a 3% cap because we believe that provides enough protection for tenants who will be obliged to pay rent increases. On the other hand, the calculations we have done indicate that a 3% cap would provide enough capital, given the proposal also in this legislation for a three-year roll-through, or one year plus two extra years of roll-through for a landlord who is making application for a major capital renovation, and further, that the amount of capital that could be generated, were it necessary under this proposal over any extended period of time, would be sufficient for landlords as a whole in Ontario to undertake the works they might need to do on their buildings.
Five per cent would be too rich in terms of the amount of burden it would place on tenants, because we are talking here about the guideline plus 5% in legislation, which also provides an extra two years' roll-through. Further, we feel the 3% is adequate for the needs of landlords.
Ms Poole: There has been a lot of debate in committee as to what would be the most appropriate cap once the government had signified that it was going ahead with the notion of a cap. We certainly had much testimony that stated that a 3% increase per year, in many landlords' opinions, would not be sufficient to do the capital work, particularly with the government's original proposal that there only be one year carry-forward for large buildings and two years carry-forward for small buildings.
So there appeared to be a problem with how to deal with this. There are basically two options. One option is to increase the cap so that the repairs could be sort of front-end loaded in a short period of time. The other option, which is the one the Liberal caucus has chosen, is to extend the carry-forward so that tenants would have a more phased-out way in which to pay for these improvements. I do not think there is any doubt that there are many capital repairs that need to be done. The government has accepted at least a version of cost pass-through. What is at debate right here is how to ensure that those capital repairs get done, and a sufficient quantity of them, and at the same time protect tenants.
Later on, in subsection 21(5), the Liberal caucus has an amendment which will extend the carry-forward period. In other words, instead of what the government has proposed right now, for there to be only two years of carry-forward, in certain circumstances the Liberal caucus has said there should be a further carry-forward, for instance in substantial concrete restoration, which we discussed yesterday. It is a very expensive proposal which we want to ensure happens or else our buildings will be in jeopardy. So we have proposed, for instance, for concrete restoration, that it have a longer carry-forward. There would still be a 3% cap, but a longer carry-forward.
It is the same for older building stock, which is much more expensive to do repairs in, and certainly we have had expert testimony in that regard. While we can appreciate the intent of the Conservatives in trying extend the limit of the cap, the Liberal caucus felt that the best way to accomplish this, protect tenants, and at the same time ensure there was sufficient moneys there to get the work done would be to extend the carry-forward period, as opposed to extending the amount of the cap. With regret, I have to say to Mr Jackson that the Liberal caucus will not be supporting his amendment to subsection 21(2).
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Mr Jackson: I appreciate the comments of Mrs Poole, and I agree with her that there are two ways of approaching this, but the concern I have is that in either circumstance the tenant will end up paying. However, we have the issue of whether or not capital improvement will actually occur, whether or not we are being honest with the tenant about the real cost of those.
It strikes me that if I am a tenant and I know I need certain capital works done to my building, and they are going to be done almost immediately and part of those costs will flow because the cap is moved, I can therefore budget or plan to move. Under an extended pay-through period, it would appear that a tenant would not realize the full extent until several years later and therefore the option of mobility -- in retrospect, they should have moved, but they did not.
There is no question that there is so much pent-up capital work since most capital work in this province has been halted, or reduced dramatically would be a more appropriate way of putting it, as a result of the uncertainty of the government's approach and the legislation generally. So nowhere are we dealing with the issue of ensuring that a sufficient amount of capital work that is necessary is undertaken, and I think it would be more responsible if we moved the cap in a subsequent period, but not necessarily start out where there is no real incentive to get on with what really amounts to some necessary work in these buildings.
I cannot disagree that it is an alternative approach which the Liberals are proposing, and if this one fails, then I will undoubtedly be supporting theirs.
Hon Ms Gigantes: I would just like to note for members of the committee that when we are talking about major capital works, which is what the focus is here at the moment, over the last few years, under Bill 51, as members will recognize, there really was no inhibition about applications for such projects. Be it under the Conservative government, the Liberal government -- they will build up experience, I guess, as we go under Bill 121 -- but certainly over the last 15 years there has never been a time when landlords have applied for -- I have commonly used the figure of more than $200 million a year above guideline for capital renovations. In fact, the figure is lower than that. It is around $122 million. It has been the height, and there is no doubt that under this legislation the provisions we have made will easily permit that kind of capital to flow with above-guideline increases. There just is no doubt at all about the overall picture.
It may be the case that there will be unusual cases. One has to ask how they arose and whether we make law for unusual cases. I think, however, members should feel assured that the 3% cap will provide the flexibility, the moving room, for landlords in almost all cases to be able to undertake their work in an orderly way, in which rents will rise to the cap maybe one year, maybe two years, maybe three years, and will provide them with the moneys they need to undertake those renovations.
Ms Poole: In relation to some of the comments just made by the minister, when she says there has not been a year when there has been more than $200 million, I am sure the minister is aware there was certainly a large time lag because of the great backlog at rent review, caused primarily by the fact that when the legislation came in you had a lot of buildings backed up to get in to make their applications, but secondarily because of bringing in the rent registry at the same time. It was certainly a tremendous backlog on the system. So there was a time lag in there when the applications were not going through rent review in a timely way, and it is only in the last two years that has started to catch up.
I would first of all say to the minister that I do not think we have seen a very true rendition of how much capital has gone through in any particular year, because of the backlog and because of the fact that it took several years for the system to get going.
The second point I would make to the minister is that I was very disappointed that the Ministry of Housing did not do an empirical study on the need for renovations, rehabilitations and capital repairs to our aging housing stock. The statistics provided from the ministry are singularly lacking, and it has reached conclusions I think many disagree with.
The city of Toronto did a very major study several years ago which looked just in the city of Toronto and our aging housing stock and the type of money that would have to be put into it in order to rehabilitate it. The city of Toronto, as you know, has a large number of older buildings. Certainly, if you take the city of Toronto's figures as symptomatic of many parts of the province where we have older housing stock, you will find that the ministry's estimates will be on the low side.
There is disagreement in the housing industry over whose figures are correct, but certainly other figures go up to double of what the Ministry of Housing has estimated. So there is some real disagreement whether what the minister has proposed is adequate. I hope that they will look at some method of ensuring that these repairs get done.
If the carry-forward is not adequate and the cap is not adequate, what will happen is that a landlord would only do enough repairs in which he could recoup most of his money in, say, that two- or three-year period. That would mean the landlord is back in there in another two years doing more repairs and starting a new project in order to start the process over again so he can recoup the amount of the cap for the new projects.
What we want to avoid happening is the scenario where tenants are in a perpetual state of construction because there is not an adequate amount being allowed to the landlords, so that the landlords only do small projects at a time. An underground parking rehabilitation is an excellent example. If a landlord only does the first phase until such time as he has recouped that part of the money, then starts the second phase of it once he can make another application, what you may very well end up having is a state where tenants are in perpetual renovation. I do not think we want that either.
What we are grappling with in this committee is what is the appropriate cap and what is the appropriate carry-forward, and I think the two go hand in hand. If the government is not willing to give on the one, I hope it is willing to reconsider on the other, whichever way it decides to go.
The government has been adamant since the beginning of the Bill 121 hearings that there was going to be a cap and that 3% was the amount it chose as an acceptable cap. They have not varied from that so I am not overly optimistic, Mr Jackson, that they are going to be willing to accept this amendment.
I hope they are right in their estimations. I hope there is going to be enough money there to do these capital repairs and that in fact landlords will do them. But if the number of calls and letters that have come into my office are any indication, the work is not going to get done, and I think that is the last thing anybody on this committee wants to happen.
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Mr Jackson: Just to respond to the minister's point about her interpretation of capital expenditure statistics: Minister, you must appreciate privately that those statistics are fraught with difficulties. Half of Ontario's rental inventory was not even monitored because it was not even in rent control until 1987, so right off the bat any references you might make to never exceeding a figure -- if you were honest with those statistics, that would become known or would come to light and it would be a dramatic demonstration of the fact that buildings less than 10 years old are now running into extensive capital requirements.
The second point, and this is a sore point with me because it is the case I took before the rent review commission, was the ability of a landlord to do capital expenditures that were unforeseen at the time of the purchase. Those were not part of your inventory for purposes of coming up with this statistic. Yet that loophole, if you may wish to call it that, has been closed in this legislation. I do not necessarily disagree with that because the tests -- unforeseeable expenditures at the time of purchase and immediate pass-through -- those rules were being abused, and I am the first to admit it. We got a 12-point rollback on that point. I respect where you are coming from, and you have made it abundantly clear that you are referring to a level at which a tenant can tolerate the expenditure. That is fair ball.
But I have to come back to my original point. I am concerned about the inventory in this province and that we are not providing some buffer here; we have got an absolute cap. From what I am seeing, the cost of renovating has gone up extensively, and rather than the "flat line" of expenditures you want, we are seeing the total amount of capital renovation in this province dropping like a stone. As an example, the price of roofing in this province has quadrupled in under 10 years just because of the high concentration of petroleum products in the process of repairing roofs. So when you say that it is flat-lined -- which is what you implied; you did not say that -- then I assure you, Minister, that we have a rapidly aging inventory that is depreciating at an alarming rate. That benefits no one.
Your government is charged with the responsibility for ensuring that our infrastructure does not decay, whether it is our roads or our sewer lines. Housing inventory is there for the public good also and government has a responsibility as a partner to ensure that it does not degenerate, or does not devalue to the point that the tenants' level of comfort and enjoyment suffers, and that the availability of that inventory on the market is not ultimately put at risk.
If 5% is too high and 3% is too low, then there should be some method of arbitration or intervention where you can look at that. This system lacks that. It is a flat line, a blunt instrument. So I merely wish to say that I wish we had spent more effort to ensure that those buildings that legitimately qualify in the best interests of tenants and the inventory would be able to succeed, because I know there are a lot of buildings that have not really been touched or worked on for a good number of years. Regardless of who is at fault for that happening, the tenants are still living there. That is why I have submitted it. We will all get an opportunity to look at the Liberal approach and the truth is we will ultimately end up with the 3% blunt instrument.
Hon Ms Gigantes: I think it is fair to say that we are all concerned -- I think members of the opposition recognize this -- about the maintenance of the building stock that we have, particularly those buildings that provide affordable rental housing. I also think it is fair to say, as Mr Jackson has said, that there has been a dropoff in renovation. I believe that once we get Bill 121 in place we will see a change in that. I think Mr Jackson would have to agree that what we have seen in terms of renovation over the last year in affordable rental buildings in Ontario has been a pattern created by many causes, not just one.
He has described the pent-up demand. I think there is some justice in that, considering we are moving from one set of legislative rules to another. I regret the time that it is taking. It has been a complex matter. I think we have all worked as hard as we can to get the job done. The sooner we can get it done, the better it is going to be for everybody to operate within rules which I believe are not blunt instruments.
I think there is flexibility within this legislation that will be a benefit to landlords who are looking to finance the work they need to undertake in the buildings for which they are responsible, and that will benefit tenants. I think the proposal we have put forward here, which, as Ms Poole points out, is a joint proposal and which I have suggested before was a joint proposal, has to do both with the level of the cap and with the number of years of permitted roll-through, on and above guideline increase.
We have not flat-lined costs. We are providing a guideline, much like the guideline that has been used for many, many years in this province, which reflects inflationary costs for the operation of a building, which provides for capital within the guideline. And we are providing an above-guideline flexibility. It is an above-guideline flexibility capped at 3% and it can extend over a three-year period. To my mind, that is pretty flexible.
I also point out to Ms Poole that it is not the case and not accurate to say that the government has not given, as she calls it, on this question. The government started with the position, which had been proposed by many reasonable people around this province, that there should be a different length of roll-through period for smaller apartment buildings as opposed to larger apartment buildings.
It came to the position that there should be a roll-through, not just of one year in addition to the initial year of above-guideline increase, but of two years on top of the initial year for large buildings. That covers many of the buildings about which a lot of the concern has been expressed, those buildings for which large capital works are necessary, and those include roofing jobs and they include underground parking jobs, elevator jobs, balcony jobs. These are the older buildings in the age range of the late 1950s to early 1970s mainly.
Of course, every building is going to need work along the way, but I will say to Mr Jackson that a landlord who did not use provisions available in Bill 51 to undertake work really does not have much excuse. I mean that was --
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Mr Jackson: In fairness, Minister, with an 18-month --
Hon Ms Gigantes: Mr Chair, if I could finish.
The Chair: Mr Jackson, the Minister --
Hon Ms Gigantes: Mr Chair, I would just like to finish my thought on this subject, if I may. I have a couple of other points to make. There was no inhibition on landlords over the last few years to make their applications. Absolutely none. If the work did not get done, it was not because there was not legislative room for it; there was some other factor involved, and whatever it may have done, that is not a good reason for us now to be saying there are buildings that are about to crumble. There may be some buildings that are in very bad shape and they may need different kinds of measures to affect them, but to write the legislation for them is a mistake, in my view. I do not think we should let those exceptions, and there will be some exceptions, write the law. That is not fair and it is not workable in our society at this point in time.
Mr Jackson: Then why are you proceeding with pay equity. It is the same principle.
Hon Ms Gigantes: May I also say, as Ms Poole has suggested, and in fact so has Mr Jackson, that the statistics are questionable for these reasons and those reasons. Mr Chair, we have had now enough experience under Bill 51 so that the system has been flushed through in terms of applications through to rent increases, and it has been flushed through more than one year in absolute terms. We are still getting the same kinds of figures in terms of applications for capital renovations. Given that there was no inhibition on landlords under Bill 51 and still we live with the results, the fact that they should have come in so much below all the claims that we hear from time to time about the billions of dollars that might be required over a two- or three-year period -- there is a lot of work to be done, but we certainly have not seen evidence that where it was most needed it was getting done, because we have some buildings which are exceptions, in my view, which are in bad state. Otherwise, the work that needed to get done was getting done and it was getting done by landlords who made above-guideline applications to the amount of $122 million maximum in a given year. Those are recent statistics. If I were using old statistics you would question that. These are recent statistics.
I think we all understand that there is a balance to be achieved here. We all understand that we have to get a fit between a guideline increase, an above-guideline increase, what the cap on the above-guideline increase should be and the number of years on which, for any particular renovation, a landlord can expect to get an above-guideline increase that will be rolled through for up to the all-inclusive three years. To me that is a good balance: 3% plus three years total on a given application is a good balance. There will be some exceptions. We have always granted that there will be some exceptions. We are not going to write the law for those exceptions at all. We are going to provide what experience tells us will be good flexibility and reasonable capital flow-through for landlords once they justify the capital renovations they are undertaking.
The Chair: I have Ms Poole and Ms Poole.
Ms Poole: Oh, I get to speak twice. I was not sure you saw me the first time, so I think we can take this as one time on the list. Mr Chair, the minister has challenged my assertion that the government has not given on this particular situation of the cap. I would like to challenge the minister in what she has said. She said the government's initial proposal was to treat small buildings and large buildings differently and that this was supported by many people in the province with regards to the carry-over.
I would say to the minister that in all the hearings we held on Bill 121 -- and I think I was here for every single one of those hearings -- we did not have one witness come forward and say it was a good idea to go for a small and big building, so this concept had no support across the province. In fact, the reason the government so-called "gave" and changed its proposal was because people came and said, "This is idiotic." If you want to talk about new buildings and old buildings, if you want to make a differentiation, they said that was fine, although they thought it was confusing. Most people said, "Let's go for one situation, not a different situation for small and large buildings."
To pawn this off as the government changing its mind and giving -- it did not give anything. They were forced with their backs against the wall because people said it was idiotic to go with their proposal in its original form. That is not what I call giving. If we are looking at the Tory amendment to subsection 21(2), which is to change the amount of the cap, and that is the amendment we are discussing right now, the government has not changed from the first day it introduced the legislation when it said the cap was going to be 3%. They have not varied from it regardless of any testimony to the contrary, so I really have a great deal of difficulty with the government saying they have given in this regard. They only retreated where it was absolutely necessary because they looked foolish.
The second thing: The minister said they do not write law for exceptions. We are not talking about exceptions. We are talking about the fact that 70% of the buildings in this province are over 17 years old, so new buildings are the exception, old buildings are the norm. When we are writing legislation, we are writing the legislation primarily for old buildings, and they are the ones that we must ensure are maintained. That is a very compelling reason why we must ensure that the money is there to do these repairs.
As far as landlords being the ones to inflate the estimates of what these repairs would cost, I do not consider the city of Toronto, although it is a very major landlord, to be one that cried like Chicken Little that the sky is falling. I think they are very reputable and they have done a tremendous amount of work in this area. They have said we are going to need astronomical amounts of money to make sure all our buildings are kept in a state of repair.
We may agree to disagree on what the bottom line is as far as the amount in billions of dollars that needs to be put into our buildings over the next decade, but I can tell you that it is the job of this committee to ensure that whatever cap we set, whatever carry-forwards we set, they be adequate to make sure that those repairs take place.
You just cannot write it off by saying these buildings which need more repairs than the 3% cap will tolerate our exceptions. Many of those buildings are the actual norm because they are older buildings. I think two thirds of the buildings were built previous to 1960, so they are then, what, 32 years old. Those are the buildings we are very concerned about, that they have an adequate amount of money put into them to ensure the repairs get done.
If the government wishes to stand by its 3% cap, if it has decided that this is the most that tenants' rents can tolerate -- and I can appreciate that point of view, and I am concerned that we make sure these things are phased in and not in big lump sums which tenants cannot afford in any one given year -- then perhaps the alternative that the minister should consider is to revisit the carry-forward, particularly for exceptional circumstances such as underground parking rehabilitation and our older housing stock and make special circumstances for them -- not because they are an exception, because they are going to be in the majority. We have to make sure they are taken care of.
The Chair: Thank you, Ms Poole. We have Mr White and Mr Mammoliti.
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Mr White: I was struck by some of the phraseology Ms Poole utilized. The phrase "forced with our backs against the wall to give in and retreat" is certainly a mild variation from "receive" and "dialogue" and "consultation," when, after all, we explore an issue and we fine-tune legislation so that it is more workable and more equitable. This is supposedly some retreat from some bastion of ideological purity? I think it is more evidence, as the minister indicated in her presentation, of how responsive a government we have. We do not ram through legislation on the basis that this is where we want to be.
As for the issue of the cap, we have discussed in the past the concerns around neglect. Yes, the issue of maintenance is very keen in this coming decade. They will be some of the most important issues around tenancy and property ownership. If you increase the cap, there is a major danger, I would suggest, of indirectly penalizing the landlords who have been conscientious, responsible stewards of their buildings in favour of those people who have been neglectful and abusive of those buildings. I certainly do not think we want to create two classes of landlords and effectively encourage neglect and degradation of people's living space so that people can utilize an exaggerated cap.
The provision for maintenance costs, I would suggest, is a means that offers some security to tenants. The further we raise those caps, the less comprehensible they are to tenants and the more punitive they can be. I think they are at this point reasonable. I think the whole issue of stewardship is important. If a building is poorly maintained, is that reason to extend the cap so that those additional costs can be borne by tenants for the neglect of the owner of that building? I think not. I think most landlords are responsible. Where the maintenance costs and where the capital improvements are not caused by neglect, that is probably, as you suggest, an exception. But that should not be the exception around which a law is made.
Again, I am struck with this kind of language -- "retreat, devastation, backs against the wall" -- when all we are doing is maintaining the very purpose of our government, which is to provide a full consultation hearing in all parts of the province and not simply on one part of the issue: the landlords.
Mr Mammoliti: I, too, would like to respond to a couple of things Ms Poole has said in relation to Bill 121.
The Chair: More particular, to this clause.
Mr Mammoliti: And to the clause. When she said that we put our backs up against the wall, that cannot be further from the truth. She is absolutely incredible. I do not think she can remember the election in 1990. One of the reasons the Liberals were defeated in 1990 was because of the consultation process they really did not care about. It was because they were too autocratic. That is the reason they lost. Now she has the audacity to sit in committee and continually repeat the same thing: "retreat," "backs up against the wall." I can only say that if we did not change our minds and if we did not consult, then we would hear the opposite at this point from her, that is, that we are not consulting.
Make up your minds. What argument do you want to give us? This is just continuing and I cannot handle it. I cannot handle it. I am about to lose my temper, Mr Chair.
Hon Ms Gigantes: Oh, no.
Ms Poole: Mr Chair, protect me, protect me.
Mr Jackson: I was hoping we would put that to a vote.
Mr Mammoliti: Mr Chair, in relation to the 3% cap, Ms Poole certainly is right when she says a lot of landlords have come in front of the committee and said it is too little. But what she neglects to say and what is very consistent is the fact that she refrains, herself, from saying that the tenants have come out and said that it is too much and that there should be a 0% cap.
So in all fairness, Ms Poole, through you of course, Mr Chair, you should be putting in Hansard, on record, both sides of the story, not just the one. We have chosen the 3% because we believe it is a fair cap. We believe it is a fair amount and we believe it is enough to get the work done in most particular buildings.
I would like to see, a year after the bill has gone through, the amount of work that has been done, the amount of work that maybe could not have been done because landlords could not afford it, and then take a look at the bill and see whether or not we should be making amendments. I am looking forward to that. I certainly have given input; the minister can vouch for this as well. I have certainly had a voice and I have certainly had an opinion on all of this. I am going to continue voicing my opinion even after the bill has gone through, and if I find flaws and if I feel that amendments should be made, I will be suggesting that, and in particular this one. If we need more, and if the landlords need more, if they can prove they need more, then certainly I would recommend it later on down the road. But I think the 3% is fair. Thank you, Mr Chair.
The Chair: Thank you, Mr Mammoliti. Ms Poole.
Ms Poole: Mr Chair, obviously I struck a sore point with several members of the NDP government over there today. Let's address their points in turn. First, Mr White has said, no, no, of course they did not have their backs against the wall; this was evidence of how responsive a government can be. Through you, Mr Chair, I would put to Mr White that this is evidence of how a government can try to recoup from a major mistake, because what it did when it put this in the original legislation, that it be done by small and large buildings, was show its ignorance of the housing industry. That is what it was. It cannot be excused as anything less.
People who came before this committee were just absolutely appalled that the government could even think this was a reasonable way to deal with it, by small and large buildings. The government did not seem to even appreciate that it was not the size, that it was the age of the building and the state of the building that counted when you are looking at the need for repairs. That is something that to every person on the street would actually be quite obvious.
Then very early on the government made statements such as, "It's obvious that it costs more to run a small building than a big building." I am talking here about operating costs. If you are talking about operating costs as opposed to capital costs, then in fact the reverse is true, because one of the most expensive items in operating a building happens to be the elevators, which you do not have in buildings that have under seven units. Certainly the testimony that came forward showed very clearly that the operating costs, if you were to consider those, were actually smaller in a small building than they were in a large building: Normally you did not have a superintendent; as I mentioned, you did not have elevator costs, that type of thing.
That is what really appalled me about this, not that the government changed its mind on something. Governments are free to change their minds and in some cases it is actually a very healthy thing. What appalled me was the level of ignorance about the housing industry and that they would make such an assertion to begin with, because it did show that they did not know how buildings were run and they did not know what the housing market was all about. That is why when they use words like "dialogue" and "consultation" it sounds great, but it is useless unless you listen.
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I would like to hear the word "listen" in there as well as "consultation." If it is all on paper, if it is meaningless because you have already got your mind made up and you are really not going to change it, then why not save the money and just go ahead and autocratically decide what you want to do?
They continue to persist in terms such as, "We're rewarding the neglectful and abusive landlord." I do not know how many times I have said in this committee that buildings age. No matter how well you try to keep up the maintenance on them, there is a natural aging process when things give out. Is it neglectful that the windows are not replaced, that they are 30 years old and that they are single-paned and letting in the cold air? Is it abusive? My opinion might differ very dramatically from Mr White's or Mr Mammoliti's.
A lot depends too on how much cash flow landlords have and whether they can actually afford to do these windows. We consistently hear mixed messages from the members of the government. When they were in opposition, we constantly heard about how terrible all these horrendous rent increases were and how everybody was abusing the system.
The Chair: Perhaps we could speak more directly to Mr Jackson's amendment.
Ms Poole: Mr Jackson, was I straying too far from your amendment? I apologize to you.
Mr Jackson: I think the point you are making is that it is difficult for all government members to move from rhetoric to reality. If that is your point I think it has been made and we could perhaps move on. But you did make it very well.
Ms Poole: Thank you, Mr Jackson. Mr Chair, he is indeed right. That is the bottom line of what I was saying. Governments sometimes find it difficult to move from rhetoric to reality and this government in particular has had an incredible difficulty in doing that.
Then we get to Mr Mammoliti's comments. I do not know where to start, George. First of all, I would like to thank Mr Mammoliti for his glowing endorsement that I shall have on my next brochure that an NDP member said, "Ms Poole, you are absolutely incredible." I thank you for that endorsement.
The Chair: Subsection 21(2), Ms Poole.
Ms Poole: Back to the Conservative amendment. Mr Mammoliti has suggested that there be a one-year period of review after the legislation goes into force, at which time we would take a second look at it and see whether it is working. I would most wholeheartedly support Mr Mammoliti in this.
Mr Mammoliti: On a point of privilege, Mr Chair: I think Hansard will verify that I did not suggest that there be a review; I said that I perhaps would review it. There is a difference, Ms Poole.
Ms Poole: Mr Chair, I am really glad Mr Mammoliti made that clarification. I did not know that by reviewing the legislation, Mr Mammoliti indeed had the power to make the kinds of changes he is talking about. Perhaps it does put a different picture on it. I am sure that if at some stage in these hearings I made a motion that we have a one-year period of review, under the circumstances Mr Mammoliti would be most delighted to support that.
Mr Mammoliti: Hey, you never know.
Ms Poole: He is being nice. Mr Chair, it all comes down to a different perspective on this legislation and what it is supposed to accomplish. All the dialogue and all the consultation in the world will not change the facts. What we will do is that we will have another three years, when this government will have an opportunity to see whether it has indeed allowed enough leeway for capital repairs to be done. In the final analysis, the voters will make the decision on whether they have or have not. Just remember, guys, you heard it hear first.
The Chair: Thank you, Ms Poole. Further questions and comments to Mr Jackson's amendment to subsection 21(2)? Shall Mr Jackson's amendment to subsection 21(2) carry?
The committee divided on Mr Jackson's motion, which was negatived on the following vote:
Ayes -- 2
Jackson, Marland.
Nays -- 8
Fletcher, Gigantes, Mammoliti, Morin, Owens, Poole, Ward, White.
The Chair: Are there further questions, comments on the government amendment to subsection 21(2)? Shall subsection 21(2), as printed, carry?
Mr Jackson: We have a further amendment to subsection 21(2).
The Chair: A further amendment, Mr Jackson?
Mr Jackson: When you said the complete section, that threw me off. Subsection 21(2) is what we are voting on, and I have a new subsection 21(2.1).
The Chair: That subsection would come after this, Mr Jackson.
Mr Jackson: I know. You just said, "Shall the complete section carry?" That threw me off. I apologize.
The Chair: Shall subsection 21(2), as printed, carry? Carried.
Mrs Marland moves that section 21 of the bill be amended by adding the following subsection:
"(2.1) The rent officer may order a maximum rent in an amount greater than that permitted by subsection (2) if 75 per cent of the tenants whose rent would be affected by that expenditure consented to it in writing at the time of contracting for it or if that greater amount is in respect of a capital expenditure that maintains the structural integrity of the building including, but not limited to, an expenditure,
"(a) to repair or replace delaminated concrete and steel in an underground parking garage;
"(b) to replace a roof;
"(c) to convert from galvanized to copper plumbing;
"(d) to replace a boiler;
"(e) to make a repair or improvement to promote the safety of persons;
"(f) to provide access for persons with disabilities;
"(g) to increase energy conservation; or
"(h) to comply with municipal or provincial safety standards."
Mrs Marland, do you have an explanation for your amendment?
Mrs Marland: Yes, I do.
The Chair: Is it as succinct as Mr Jackson's?
Mrs Marland: Oh, we have got a standard set here now, have we?
The Chair: I was just teasing, Mrs Marland.
Mrs Marland: This provides for a democracy clause in which, if 75% of the tenants approve of the above-listed repairs, the repairs are exempt from the 3% cap. This allows the landlord to undertake major projects with no fear of not being able to regain the cost of those projects.
I think we got into a similar argument last week on another clause, where we were asking for the right of 75% of the tenants to be heard. I think that is when I upset Mr Owens. I think he worried about it all weekend and came in and got the reply yesterday morning.
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Mr Owens: Do not be so presumptuous.
Mr Jackson: You have sleepless nights for other reasons.
Mrs Marland: I am sorry; I should have referred to him by his riding, Mr Chairman: Scarborough-Ellesmere.
Mr Owens: Scarborough Centre.
Mr Jackson: That is the Speaker's riding.
Mrs Marland: Sorry, Scarborough Centre. That is right. Anyway, I will try not to unsettle the bears opposite too much, Mr Chairman.
Mr Owens: Tease the bears.
Mrs Marland: "Tease the bears" is the Treasurer's line.
Mr Jackson: You are already a backbencher. You do not need more teasing.
Mrs Marland: I do not think anything works better than a democracy.
Mr White: That is not what you were saying on Thursday, Margaret.
Mrs Marland: I think a democracy, which I would humbly and respectfully suggest that the six NDP members who are present in this room support, is one where 51% can be a fair democracy in their opinion. Those of them who believe in the right to unionize workplaces support a philosophy, and I think that under another piece of legislation that will eventually come before the House in the labour law reforms act. We may well see a proposal where 51% of the workforce in any workplace can vote to unionize that workplace.
We are simply saying in this amendment that we believe 75% of people living in a rental accommodation should be able to have the opportunity in writing to express if they would like to support some major work that has to be done in their building that cannot be funded through a 3% cap on the rental increase.
It does not take a lot of common sense to understand how far you can go with a 3% rent increase to a building in the cost of replacing a roof or in fact even in replacing a boiler or repairing or replacing concrete and steel in an underground garage. These are major, major capital expenditures, and I think everyone in this room understands that. Where rents have been held down and controlled for the number of years that they have, I think the ability of that property owner to put aside money into a fund each year that may have been established for these major projects has really been diminished through rent controls over the last 17 years.
The margin of increase that a lot of property owners have been permitted in the last 17 years in many instances has been less than inflation. Where they have been receiving a certain income from rents and where the costs of operating their buildings have been, with inflation, above the rental increases they have been allowed, the owners simply have not been in a position to accumulate money to meet these major expenditures that are listed in this amendment. If this is a government that truly believes in its policies throughout and the rights of people through democratic vote, I am sure it would want to extend that democracy to people who rent accommodation, for the most part often not by choice but by necessity, because it is impossible for them to get into home ownership.
When you look at some of the areas that are identified in our amendment, I think it is fair also to challenge the government on its support of this amendment in the energy conservation area. This is a government, I would think, that is environmentally conscious. Through their Minister of the Environment, they certainly speak all the time about conserving and protecting the environment, promotion of the 3Rs. Their Minister of Energy certainly speaks at length about energy conservation. He even imports lightbulbs from Quebec to make the point, which is not well made when he imports a product from outside the province. However, energy conservation is one of the items that we have included in this amendment because our caucus firmly believes that, where possible --
Mr White: Isn't there a GE factory in your riding?
Mrs Marland: Pardon?
Mr Mammoliti: Don't you like Quebec, Margaret?
Mrs Marland: We believe that every industry and every commercial venture, office building, retail store and other establishments, plus private property, should be conserving energy where possible. There is a major cost to that, which I am sure the members opposite understand, that where you have to replace inefficient heating units with new units or more efficient fuel or where you have to replace windows because of the heat loss through those windows, or conversely the cooling loss in the summer through the heat coming in through the windows -- it is just basic common sense to conserve energy through any measure that is possible. Wherever those measures would be taken in rental accommodation that is addressed by this bill, it obviously is going to be above the normal expense capability of the property owner.
We are simply saying in this amendment that if you really believe in some of these areas, then you would have to support this amendment to make those beliefs a reality. We are simply saying that if you really believe in improving accessibility for people with disabilities, it really means more than an exterior ramp into that building, it means making the laundry rooms totally accessible, for example, it means making any access to recreational areas totally accessible within those buildings.
Bear in mind that when you look at the age of our rental housing stock in Ontario today, the majority of it was built prior to the requirements, by legislation, to provide access for the disabled. Would you not think that now, if this government cared about the disabled, it would want to make those kinds of changes available to the people who live in these older buildings, who do not have the benefit of accessibility, who still face major physical barriers when they try to get into those buildings or move around inside those buildings?
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In dealing with the kinds of costs we are looking at when we talk about providing access to persons with disabilities, if the people in that building choose, in the majority of 75% of them, as this amendment says, to make those buildings more functional for people with disabilities, then why would this Ontario socialist government not want to see that happen?
I am optimistic again that the government may support this amendment I am placing, and I hope that if it supports it, as it did one of my amendments last week, we will not then be hit over the head with the big mallet that says, "Ho, ha, but that doesn't mean anything, because we're going to reverse when we get you back into the House and we're going to change it in the committee of the whole." I am hoping that when they support it this morning, it will be there truly supported, in view of supporting a democratic vote, and as a demonstration that this government believes in accessibility for people with disabilities as a right and is realistic enough to know that, for the most part, the majority of landlords simply could not make those kinds of renovations to eliminate barriers to people with disabilities; I am talking about the interior of buildings, not just a ramp up to the main exit or through a garage entrance.
When you look at how much we take for granted as able-bodied people who function very easily in any physical environment, it really is deplorable that we would not be allowing a property owner to make a capital expenditure to enable his building to be a more comfortable living environment for those people with disabilities. We are simply saying that those kinds of renovations and repairs should be exempt from the 3% cap. We are not saying to allow any property owner to go hog wild and spend money on -- I mean, we always hear about the marble foyers and we hear about the microwave ovens and the new appliances. We always hear that junk about what it is landlords do to "qualify" for above-guideline rent increases.
Mr Owens: Are you saying it does not happen?
Mrs Marland: That is not what this motion is about. This motion has listed as examples -- it says "not limited to" as an expenditure, but it is with -- one, two -- eight examples.
Mr Mammoliti: You should have numbered them.
Mrs Marland: The problem is that I have lost my glasses, Mr Mammoliti, and you should have respect for someone who is 57 who has now come to the point of needing glasses.
Mr Mammoliti: You do not look 57.
Mrs Marland: In this light, when I glance down vertically on to this page --
Mr Jackson: You did not bring your glasses either, eh? I could not resist that. I am sorry, Margaret. She knows I love her, but --
The Chair: You may continue, Mrs Marland.
Ms Poole: On a point of order, Mr Chair: I notice Mrs Marland did not make this confession on television last week.
Mrs Marland: I did. As a matter of fact, I did talk about them last week, but last week I had them and I said something about, "Just a moment, I have to check," and I put my glasses on. No, I am not vain about it --
Ms Poole: I was referring to the age, not the glasses.
Mrs Marland: -- it is just that I cannot find them. I am not at all vain about it, but I have to admit when I glance down, and the light in this room is --
Interjections.
Mrs Marland: Anyway, the point is that, yes, there are eight examples here, and I think these examples are very clear. I do not think it is at all difficult to understand from the kinds of examples we are giving that they are not minor categories, nor are they in the category of "frills." I do not think there is anything in these eight examples that is questionable as to the necessity or the practicality of that kind of repair or renovation being made.
Also, in this list there is not an example that is inexpensive. For most of those categories, there is not an example where you are talking about a minor investment. They are major investments; they are major expenditures. The last one is "to comply with municipal or provincial safety standards." I think yesterday I gave you an example about the height of balcony railings. That was changed in the Ontario Building Code. It has been changed in my lifetime in politics. I cannot remember what year it was, but I have been in politics 18 years.
The thing is that nothing in safety standards is necessarily ever stationary. That is a good thing, because what that is saying is that where research and development is done, sometimes very serious recommendations are brought forward to elevate safety standards. I know all of you are supportive of safety standards in the workplace, so I am sure you are supportive of improved safety standards where people live, and you would know as well as anyone else that very often those safety standard improvements also are major expenditures. We are simply saying to you through this motion that surely you would not want a 3% cap on expenditures within reason to prohibit that building having a safety standard improvement in it.
I am sure that if you look at each of these items, particularly those that involve safety standards, as under (h); "improvement to promote the safety of persons," as under (e); the "access for persons with disabilities" under (f); and I am sure if you have any experience with underground parking garages, you know that there can be a very real hazard also, I do not think you would want anyone in any environment to be living at risk because none of these things had been affordable because of the 3% cap. In this case, we are simply saying that if the landlord is willing to do that work and is willing to spend the money, would you be willing, if 75% of the tenants were in agreement, to allow that work to be done?
The Chair: Thank you, Mrs Marland. I have Mr Owens, Ms Poole and Mr Mammoliti on my list.
Mr Owens: I would like to begin by asking the minister or ministry staff, in terms of the access issue, is there not funding available through the Ministry of Citizenship, or is that simply for access ramps? How does that work for apartment buildings?
Hon Ms Gigantes: I know of no funding available through Citizenship for access to private buildings. Certainly for public buildings one can make application for assistance. When it comes to private buildings, there is a program run through the Ministry of Housing known as the Ontario home renewal program for disabled persons. As you know, it has had limited funds over the last few years, not enough to meet demand. Most of the demand has come from people living in their own homes who would like to modify their homes.
Mr Owens: Just a further question on that point: Do we have any sense of the numbers of landlords who have actually approached the ministry with respect to obtaining assistance in developing units or access for persons with disabilities, in privately owned buildings?
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Ms Parrish: Since we do not have a specific program, people are not sort of actively applying for this. You do get some cases where a landlord has made an application under the low-rise rehabilitation program and they will put in ramps at that time.
Most of the cases where we do these kinds of renovations are under our non-profit programs where we have requirements of 5% or 10% of the units being accessible to disabled persons, but there is no private program right now. This statute in section 15 where it sets out what capital repairs you can make as a landlord for this 3% specifically includes access for disabled persons as a ground for which a landlord can apply to increase rents above guideline.
Mr Owens: Right. To the amendment from the third party presented by Mrs Marland, she is quite correct in saying we discussed this issue of tenant democracy last week. It still eludes me as to why the member wants to make comparisons between our proposed labour relations amendments and this legislation.
Mr Jackson: Do not worry, it will be by secret ballot.
Mr Owens: I gave you your chance to speak. Now let me have mine.
The issue is around democracy. Buildings are clearly different from what one would experience in the workplace and I do not think this amendment to subsection 21(2.1) addresses that. When you look at a vote being taken on the shop floor as to whether one wants to join a union or not, it is not the same as having some motion or vote taken as to whether someone can do repairs which in effect are going to end up raising the rents.
We have Elinor Mahoney here today from the Parkdale legal clinic and if we were in the hearings process, I would ask Ms Mahoney questions around the issue of economic evictions that have taken place. It is rather unfortunate that the member for Parkdale is not here. He made his comments about tenant democracy in an apartment building that he and the former Premier visited in Italy, but neglected to reflect on some of the buildings in his own riding, where there has been one particular landlord who is absolutely notorious for his tactics in the neglect of his buildings.
I asked the member of the third party, "When faced with situations like that, how, in effect, would you see tenant democracy working?" It would not work. I encourage the members of the third party to get behind our proposals around building cooperatives in order to ensure full tenant democracy to ensure that all tenants have a say in their housing charges where this kind of coercion that seemed to spark some debate last week would not take place.
Again, I ask the question through the Chair and of course in a rhetorical manner, what do you do with the people who cannot afford the increased rental charges if this amendment was passed and the landlord somehow miraculously got his 75%? What would you do with the people who could not afford to stay in these places? As a person who lives in a riding that has a tenant percentage of approximately 46%, it would be a horrendous process to try and find accommodation for these tenants.
The other issue that we discussed last week, and it rears its head again, is the issue of how one monitors the voting processes every time the landlord would like to make a repair. How does one ensure that those votes are run democratically, as the member seems to want to embrace? How does one ensure that the ballots are counted properly? How does one ensure that each and every tenant understands the process of their undertaking? If English is not the first language of the tenant, how does one ensure that one clearly understands the process that is ongoing?
In terms of the section in the proposed amendment to subsection 21(2.1), there is clause (c), which is to convert piping, I gather, galvanized to copper plumbing. Again, a technical question and I am not sure if anyone here can answer it, but is plastic piping not the choice of contractors these days? So in fact copper plumbing may not be an issue. It is a very expensive process to convert galvanized to copper piping.
I think this point goes to the whole problem with this amendment: Energy conservation issues, plumbing issues and underground garage issues are not things that have developed over the last year and a half. I think the minister quite accurately pointed out that one cannot make laws for exceptions; I believe that was the way it was put. Yes, there are going to be some crisis buildings out there and there are some buildings with problems. My question, once again, put rhetorically through the Chair to the mover of this motion, is, what has happened in the past? What happened to the moneys that were collected from tenants? What happened to the double-digit increases that were granted these landlords? What did these folks do with the money? Why did they not do the repairs?
Mr Mammoliti: The landlord said they invested it.
Mr Owens: Obviously the member for Yorkview indicates that one landlord said he invested it. If I were an apartment owner, I would certainly invest in the investment I had purchased rather than some other investment vehicle. I guess once again, with respect to the amendment to 21(2.1), the issue of tenant democracy is not a matter that can be dealt with in a manner that is fair to all tenants, that ensures that the process that would be undertaken would benefit the other tenants. To be fair, one is not sure that it would benefit the landlords either.
As I suggested last week and as I have suggested earlier in my remarks, if the members of the third party are so interested in tenant democracy and think the democratic process is the way to go, they should get behind our co-op programs. Perhaps what they would also like to do is to call their federal cousin and ask the Prime Minister to start sending some of the moneys he owes us under the Canada assistance plan so that we can get down and start building more affordable housing and developing more co-ops so that we can see tenant democracy spread across this province.
In closing, again, the analogy that is drawn between the labour relations amendments and these rent review amendments are clearly not appropriate. If a person chooses not to join a union, his or her livelihood is not affected. Should we pass this amendment and increases are granted to these buildings, a person's tenancy may be affected and there may be a greater increase in economic evictions. Just to make another point on that, it is very difficult to track the numbers of economic evictions and I will be very curious to see what the ministry comes back with in terms of that, because people just up and leave. So while tenant democracy sounds like a warm and fuzzy idea, I think it has its place: Its place is in the co-operative movement, and I would urge the members of the third party to support that. Thank you.
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Ms Poole: I thank Mr Owens for his very thoughtful comments. I think there is some merit to a number of the ones he has talked about. Perhaps I could point out that 75% is quite a stringent test. Sometimes in my riding I figure if I get 75% of tenants to agree to anything I am doing extremely well. Tenants are individuals; they do not think en masse.
I quite often go visit tenants in their lobbies by the elevators when they are going home from work. Last year I was at 45 Dunfield Avenue and I remember this incident very vividly. They had just received a 7% above-guideline increase and I think the repairs would probably match fairly closely with what has been itemized in this legislation as necessary repairs, so we are not talking about luxury-type things. I must have met 75 to 80 tenants as they were coming home from work and about 15 of them said to me that they were very upset by the rent increase. I talked to them about what it was for, and they did not have any problem with that, they just did not want the rent increase.
Then I had another dozen and a half people who came to me and said they wanted new windows because they were on the west side of the building and there was a really cold draft. They were really upset because Greenwin Properties had not put in new windows. I said: "Well, you realize if Greenwin puts in new windows, you will get a rent increase." They said: "Yes, but we need it done and we are willing to pay for it."
Then I started talking to the other tenants and asking them if they thought they needed new windows. They said: "No, I am on the south side of the building and I am quite protected. I don't need new windows." Sometimes you find that even though you might have a large body of tenants in the building who think one particular way, to get 75% is going to be relatively rare and I think a fairly exceptional circumstance.
One of the things that has concerned tenant leaders in particular about tenant consent is cases where coercion is used.
Interjection.
Ms Poole: I see we are getting assistance for Mrs Marland with her glasses at the moment.
The Chair: To Mrs Marland's amendment.
Ms Poole: To Mrs Marland's amendment. One of the concerns has been that if there is tenant consent, there might be coercion. Again, my experience with tenants is that many of them are not the type to be coerced. They are very independent, free-thinking people who are going to stand up for their own. But there are others who are in danger of coercion. They might be seniors who just want to live peaceably and they really do not want to rock any boats. They might be people who do not speak English very well and therefore do not know what is being required of them and might be somewhat intimidated by the same process, or other people may just be of the nature that they are easily intimidated.
Later on in the legislation, in subsection 45(2), the Liberal caucus has moved an amendment concerning coercion, basically saying that if an agreement has been entered into as a result of coercion or as a result of a false, incomplete or misleading representation by the landlord or an agent of the landlord, then the agreement is not enforceable. It was to take care of this particular problem of ensuring that intimidation and coercion are not used when dealing with tenants.
So that is the first point, that 75% is quite a stringent test and if we also put in other mechanisms to ensure that there is not coercion, then I think it then becomes a fair test.
Another example I would give you would be of two buildings up at Jackes Avenue and Rosehill Avenue. The name of the complex has escaped my mind for the moment, but there are two buildings up there where they actually sat down with their landlord. There were a number of repairs that needed to be done in the building. The tenants' association sat down with their landlord, and they made up an agreement. The agreement on the part of the landlord was that the rent increase would not go above 10% -- that was less than 5% above guideline -- and on the part of the tenants, they prioritized what they wanted done in the building. It was a very amicable agreement, and the association, the tenants and the landlord made this agreement.
Then at the time of Bill 4 the president of the association appeared before our committee and said that tenants in the buildings were quite upset because they had worked very hard to reach this agreement and they had agreed the work needed to be done, and yet even though they had reached agreement as to what they felt an acceptable rent increase would be, they were not allowed to proceed.
I do not think your average building is going to use this particular clause, particularly because of the stringent test, but you may have situations such as -- again, I am sorry to be imprecise; it was either London or Hamilton -- a building that had about 60 or 70 units in it. The landlord had done renovations and virtually every tenant in the building signed a petition which they sent to our committee. It was addressed to the Premier, saying, "We feel that the landlord did these repairs in good faith, that they were necessary repairs, and we agree that the rent increase should be paid, and we are willing to pay it." Because they were caught in the Bill 4 freeze, the landlord was not reimbursed for the amount and was in financial jeopardy.
It could be that a building is in financial jeopardy. For instance, if you had something like an underground parking garage repair which was going to be extremely expensive and the landlord could not get financing for it simply because the revenues would not be there to pay off the loan, then the tenants could reach an agreement, or could not, depending on the situation, that it was very important for their own health and safety that this be done. I know in these situations the government has said, "We'll come in with the big stick and there'll be a work order put on and then there'll be a rent decrease. They won't be allowed to get the statutory guideline." But you see, it does not really solve the problem. It does not get the underground parking garage rehabilitated.
In cases like this you are really in a catch-22 situation. You can apply the penalty, but the bottom line is, does the work get done? To allow the tenant consent, 75% in writing, would at least provide a remedy for situations like this. Mr Owens asked some questions about the balloting, the voting. The Conservative caucus members could correct me if I am wrong, but I do not think it was envisaged that it would be balloting. I think subsection 21(2.1) says that 75% of the tenants whose rent would be affected have to consent to it in writing. I know from the Bill 4 hearings at that time that the Conservative Party was very precise about its wording. They did not say a "petition;" they said "consent in writing," so they actually have to write out that they consent in their own handwriting and sign it. This to a certain extent gets away from a number of the problems Mr Owens was talking about.
Energy conservation, item (g), is very important and I think we all agree that it is a goal we have as a province, and as individual people in Ontario we want to see it done and encouraged. We have a Liberal amendment in 22(2) to help facilitate this. But again, if 75% of the tenants believe energy conservation is a prime goal and want to get the new windows I was talking about or other items which would help effect energy conservation, then who are we to say they should not have that opportunity? You come to a stage where what you envisage as protection may well be protection for some but it may become a barrier for others. That is what you want to avoid.
The Conservative amendment does provide some flexibility and a fairly stringent test for tenants: 75%. You are not going to find this section used very often but it will at least provide that opportunity in cases where the tenants feel very strongly on a particular issue and would like it dealt with, so the Liberal caucus will be supporting Mrs Marland's amendment.
The Chair: Thank you, Ms Poole. Mr Mammoliti.
Mr Mammoliti: Regarding some of the remarks Mrs Marland made earlier, I am wondering whether we have converted her into a unionist. If we have, then I am proud of her, and I am proud of us, for that matter.
Mrs Marland: Just call me "sister."
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Mr Mammoliti: I would also like to ask the clerk and some other people in the building to look for a pair of glasses for Mrs Marland. She seems to be wandering and looking for a pair. On a serious note, however, I cannot support this amendment.
Mrs Marland: Did the three little pigs wear glasses?
Mr Mammoliti: I cannot support this amendment and I will give you a number of reasons why. I am not convinced that if this amendment is passed coercion would not exist. I keep looking at my own riding, that example I have been using day in and day out since we came back and have dealt with clause-by-clause: I am not sure whether he is guilty or not, but a superintendent has been questioned and has been seen apparently with a gun, has shown it around and has been taking shots in the underground garage and that sort of thing. Would that be considered coercion? I would say yes. I know if I were a tenant and my superintendent walked around with a gun I would certainly think twice about saying no to him or her. So that strikes me as a problem.
I will get this over with because I would like to address Ms Poole's future amendment on coercion.
The Chair: I think it would be better if we discussed Ms Poole's amendment at the appropriate time.
Mr Mammoliti: No, Mr Chair. She related her amendment to this particular amendment and I would just like to say that I for one, on a personal note, would like to look at that amendment. I have not really studied it. There may be some changes I would like to make to it and suggest, but I certainly would like to look at that myself and see whether I would approve of that amendment.
I just thought I would make you feel good before lunch time, Ms Poole.
Let's talk a little bit, just a little bit, because I do not have much time, about preventive maintenance. Let's look at how many landlords actually practise preventive maintenance. All you members out there who have gone around to the buildings can clearly note when and where a landlord has practised preventive maintenance. How does that relate to the eight items we are talking about now? Let's do this fairly quickly: (a) concrete and steel in the underground parking garages. As you know, salt is a major factor --
Mr Jackson: I don't believe you're going to do this again.
Mr Mammoliti: I am going to do it, because how many of your landlords wash the walls and the floors, and how many of them sweep their underground garages on a regular basis? If you can honestly say they do it on a regular basis then I may support you on it, because I am willing to bet they do not. I am willing to bet that the staff on site will say they do not go down there and wash those walls and wash those floors and sweep those floors and get rid of the salt that damages the concrete.
Mr Jackson: I apologize, Mr Chair. I thought he was still on the stuff he was spouting a year ago about landlords pouring salt in underground and --
Mr Mammoliti: He refers to what I said a year ago.
Mr Jackson: I would like to apologize to a member, Mr Chair, when I spoke out of turn. The member was ignorant of the facts a year ago, and now --
The Chair: Mr Mammoliti has the floor.
Interjection: Mr Chair, let him apologize.
The Chair: Mr Mammoliti has the floor.
Mr Mammoliti: Obviously the member misunderstood what I said a year ago. I am not going to dwell on it. I was referring to the salt that was poured above the garages and the damage it does.
Mr Jackson: Come on, it's in Hansard. They call him the rock salt heavy.
Mr Mammoliti: Oh, please.
Mr Jackson: I cannot believe what you said.
Mr Owens: What was that?
Mr Jackson: He said they should be using new chemicals.
The Chair: Mr Jackson, you are on the list.
Mr Owens: A point of clarification.
The Chair: Mr Mammoliti, you have the floor.
Mr Mammoliti: Perhaps, if the member would like, I would pull him aside afterwards and tell him what I said, and if he thinks it is in Hansard perhaps he can produce it so that we see it.
Mr Jackson: Do you have a gun?
Mr Mammoliti: I think I got my point across about concrete and preventive maintenance. To replace a roof -- let's take a flat roof, for instance, where on a regular basis the flaps have to be checked and gravel and the tar have to be checked pretty much on a weekly basis. I know that when I ran the buildings with Metro housing I had the staff check the roofs on a weekly basis. Those are preventive maintenance tasks that should be done on a regular basis and the money should be spent on a regular basis.
When we talk about repairs to boilers, it is the same thing. How many times do you know, and more specifically to the members across, of your landlords cleaning their boilers on a regular basis? No question, this is a very expensive replacement. Mrs Marland, this item in particular and the rest of them could be very inexpensive when it is time to fix it up and do those capital expenditures if the preventive maintenance were practised.
It is almost 12 o'clock. The point I want to stress again, and I have said it time and time again, is preventive maintenance. A question I would like to give all of you as well is, will landlords, the ones who are looking at profit, the ones who want to make that extra buck, neglect their buildings if this clause goes through? Will those landlords neglect the buildings on purpose? Will they say, "I'm not going to do the preventive maintenance repairs because I want it to get so bad that I could take advantage of subsection 21(2.1)"? Will landlords do this? I would say that a lot of them might. Until we are satisfied that landlords will not -- Mr Chair, I note that it is 12 o'clock.
The Chair: I am sure you would like to continue this this afternoon at 2 o'clock.
Mrs Marland: Do not forget where you were.
The Chair: The committee will adjourn until 2 o'clock.
The committee recessed at 1159.
AFTERNOON SITTING
The committee resumed at 1409.
The Chair: The standing committee on general government will come to order. We are discussing clause-by-clause of Bill 121. This morning we concluded with Mr Mammoliti speaking to Mrs Marland's amendment to subsection 21(2.1).
Hon Ms Gigantes: I wonder if before we pick up the discussion again I could table with the committee members some information on the question of major renovations. These are orders for parking garage expenditures from selected rent review offices under Bill 51. It indicates, certainly to the satisfaction of people in my ministry, that except in a very rare situation -- in this case a 12-unit apartment building where a garage renovation was the subject of an application -- the guideline-plus-3% cap would provide, with the roll-through we are providing for in this bill, the capital necessary for major renovations. I would be happy to table this with members of the committee now, and if they have questions later, I am sure the staff people would be glad to try to answer.
The Chair: Thank you, Minister. I think we will have the clerk circulate this information to all members.
Mrs Marland: Can I comment on that, Mr Chairman?
Mr Jackson: Ask a question.
The Chair: I would be happy to permit that. I was just wondering whether procedurally it would not be wise to give members a chance to review the information before we start to ask questions. Maybe we could pick up the questions following the discussion. However the committee wishes to proceed is fine with me.
Mrs Marland: I do not mean to interrupt Mr Mammoliti, but I think the minister, in tabling some information that could be very relevant from one point of view and maybe not relevant from another point of view, has in fact interrupted him. But I am quite happy to save my comments to when the rotation comes around, in response to the material that the minister has tabled.
The Chair: Thank you, Mrs Marland. Mr Mammoliti.
Mr Mammoliti: I was glancing at the list here, and I am pretty sure the wonderful example I have used pretty much every day at these meetings is a part of this list somewhere. I am going to pay particular attention to it and ask the minister later.
To continue where I left off, as you recall, all of you will note that I spoke a little bit about preventive maintenance and how I felt that some of the landlords out there, even a lot of the landlords, do not necessarily practise preventive maintenance. Because of this, and I gave you a few examples this morning, I find it very hard to support this amendment. There is no need for me to go over what I said this morning. I would like to mention, however, that yesterday and earlier this week I shared with committee a problem I had in my riding in relation to one of the apartments at Weston Road and Finch Avenue, specifically 2397 Finch Avenue West, I believe, where we have been having quite a bit of a problem in terms of slums.
I would be pleased to say that I met with the lawyer representing the landlord recently -- yesterday, actually -- and he has agreed to sit down and have me mediate an agreement between the tenants and himself. So it is good news. The bad news is that during our conversation I talked with him a little bit about this preventive maintenance and how I felt the building had been neglected. He told me that as far as he was concerned it was not the landlord's responsibility to check fire hoses every day and to check roofs every day and to have the superintendent walk around on each floor and make sure things such as elevator signs are replaced, check common areas, locks, that sort of thing -- that he felt going into laundry rooms was not an everyday occurrence and should not be for superintendents.
This is the type of attitude that has to change, Mr Chair. How can I possibly sit here and say I would support this amendment? If this amendment went through, you know exactly what would happen. I talked about it this morning. Landlords such as this one would neglect their buildings on purpose. They would allow the buildings to deteriorate to a point where capital expenditure would have to occur. If this went through, the tenants would have to pay for that capital expenditure again.
Realistically, this is just another form of Bill 51, is it not? In my view it is just another form of Bill 51.
I note that the two members across are talking. I think this is pretty important, something that you should actually listen to, and if you are not listening --
The Chair: Mr Mammoliti, if you could address your questions to the Chair.
Mr Mammoliti: Well, I get emotional, Mr Chair, when we talk about this, because thousands of tenants out there have been neglected, hundreds of them in my riding. I cannot support this bill, at least until I know that landlords would not neglect their buildings so they would deteriorate to that point. I have not heard anything to convince me otherwise from either the Liberals or the Conservatives at this point, so I would have to say that I am not going to support this amendment. We have to keep an eye on what is going on out there, and I think our bill does that.
I will leave it at that, Mr Chair. Thank you.
Mr Jackson: I have given this amendment considerable thought and certainly find it supportable. It has the support of some of the tenants in buildings who have, as a general rule, the most acute concerns about affordability.
During my tenure I have had occasion to participate in organizing tenant groups, in particular in response to social conditions which have degenerated to a point that the quality of life was affecting the children and women who live alone. It is interesting, in that context, how easily people will come together to share their common concerns and how they are prepared, when a problem is identified, to look at all possible solutions.
It is in that context that we have been able to achieve some level of consensus among tenants about the areas for resolution of the conditions that are present in a given building. I am sure the minister would agree with me that those conditions are not necessarily limited to affordability. They can be as broadly based as quality of life or as specific as safety. They can include noise factors -- a whole range of concerns.
If I had not experienced the process where tenants were able to come together, as we were able to do, to participate in a rent review hearing, to win a rollback, to bring the police in on site, as I have done in a case of four buildings which have an incredibly high concentration of disadvantaged and fixed-income tenants -- they were able to sit down with municipal staff, the police, the landlord, legal counsel, their MPP, so I completely disagree with the notion that models that follow along these lines are unworkable. I know they do work. Community-based models work. Community-based models that move towards a consensus on important issues about their living environment are, I think, also worthy, so here are a couple of examples that I have lived through which I want to share, which are the genesis of why I believe this amendment is so important.
If the minister would say to me, "I appreciate the principle, but I want to ensure that it isn't an automatic," then I would say that she understands the principle of community-based decision-making to resolve these broader issues other than price but which are affected by price. Here are the two examples: We found we had a high incidence of single-parent mother-led families. We have incredibly acute waiting lists for subsidized day care spaces, because the current fashion -- at least it has been for over a year -- has been to prefer to develop co-ops and not to expand the grid for subsidies.
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We sat down with this group, and we are talking about a rather large building with a large concentration. There was a case where, according to this resolution, 75% of the tenants could come together and say: "Look, we feel we have a problem with the children in the halls. We have a problem with parents needing time out. We have a problem with parents getting access to life skill programming that we'd like to provide in this environment. We'd like to convert one or two of the common area rooms to those uses so that we can comply with the Day Nurseries Act and a few things like that." We had a ready, willing and able landlord, but who was going to pay for it? Certainly the landlord did not have the money. The rents -- it was low income, they had a high turnover. But to the degree that we would be able to schedule over a longer term and amortize the costs of a modified day care centre, it would be helpful.
The other example that came to light -- and I will be quick -- was women's safety. The Leslie Mahaffy and Nina de Villiers cases in our community have caused our community finally to come to the conclusion that we should be examining all aspects of public safety for women. We are seeing clearly identified with police records those apartment buildings where we have experienced a lot of difficulty. Those renovations and retrofits are not required by law, but are clearly in the context of tenants coming together and agreeing that these are perhaps more worthwhile renovations than, say, painting the balconies for a second time in four years, which we know some landlords will do.
I regret there is more rhetoric flying about whether democracy will work in a tenant environment. I do not wish to get into that debate because frankly I found it awkward in the context of tenants participating in decision-making around their environment. However, I do wish to say that that was the intention of why I was pushing for this amendment. I believe very strongly and I will continue to believe strongly in it, and I see appropriate modifications to buildings which the tenants genuinely and honestly are seeking, and for that reason it has been put forward.
I would ask that the committee entertain a friendly amendment. I believe it is a very valid point that clause 21(2.1)(c) read, "to convert from galvanized plumbing" and delete "to copper." Assuming that we have all accepted that and I present that on Mrs Marland's behalf so it complies with the rules, we would --
The Chair: We have a little bit of confusion which I am sure we can clear up quickly. We are speaking to clause 21(2.1)(c) and you wish to delete the words "to copper plumbing."
Mr Jackson: A friendly amendment on behalf of the mover to delete the words "to copper."
Hon Ms Gigantes: So it will read, "to convert from galvanized to plumbing"?
Mr Jackson: No, "from galvanized plumbing."
Hon Ms Gigantes: Okay, thank you.
Mr Mammoliti: To whatever.
Mr Jackson: To whatever. The reason I think that is even more appropriate is I notice the government is poised and ready to spend $2 billion to assist in the conversion of electrical baseboard heating to gas- and oil-fired forms of heat. Perhaps it is a regret that tenants who realize many of the capital costs through a degree of pass-through are ineligible for the government's generous efforts in this area. Even the language I read in the media reports is that the government will bring in legislation to force Hydro to offer this money. I guess it concerns me that perhaps tenants would like very much to have a piece of the action in this process of being energy efficient and that the landlords of course are barred from this; at least it would appear to be so from the initial press reports.
I think there is a whole area here that is worth looking at in terms of energy efficiency and tenants coming together and saying: "Look, on the one hand, I think we can reduce 60% of our consumption of energy costs if we move in this area, so we'll agree to win on the one side, to lose on the other side." There is no mechanism for that to happen nor is there any incentive, because the incentive plans are strictly for the private sector, according to the government, for freehold home owners and not for tenants in this province.
That is only a current thing that came in today's press release, but it is building on Mr Mammoliti's point that perhaps it is too restrictive to indicate conversion to copper, because galvanized plumbing can imply that that is the heat as well as the water line, and there might be some room there.
That is all I really wanted to say, but I have seen models like this work. I believe they can, and I believe that where it is tenant-based and a consensus -- even 85% -- the point is that a clearly defined majority willingly accepts in the best interests of the building and the environment that these renovations be undertaken and be scheduled in a certain fashion. Those are my comments. Thank you.
The Chair: Thank you, Mr Jackson. Minister?
Hon Ms Gigantes: Mr Chair, I will put aside the temptation, which I must say I do feel, to try and respond to some of the issues that have been raised in the wide-ranging discussion we have just had on this proposed amendment.
Let me draw to the attention of the members this primary fact about the legislation, which is that under section 15, a landlord is permitted to make an application for an above-guideline increase on a number of matters specified in subsection 15(2). I guess that is the main section we are dealing with, section 15. Most of the items which are referred to in the amendment put forward by the Conservative members of this committee are already matters of application available to landlords under subsection 15(2). What the amendment before us proposes is that the cap can be broken. It is not suggesting that the landlord shall be able to apply, because the legislation as printed provides that, and in fact we have passed that section. We have provided, as far as our committee work is concerned, that landlords may apply for a whole list of reasons, again, which are very much like the ones listed in the amendment.
What the amendment says is that the landlord can go above the cap, above the 3%, on these items when there is agreement by 75% of the tenants. Two reponses on that, Mr Chair, to put it most simply: First, we have decided there is a 3% cap. It is unsatisfactory to me and it is unsatisfactory to the government to provide loopholes around that. There is a balance of interest in this bill, and in my view it is a necessary part of that balance that we have a 3% cap. We allow that 3% to be broken for no reason. We say there can be above-guideline increases for any particular application by a landlord for up to three years. That, we think, is a good balance.
The second item, about which we have had an enormous amount of discussion, I understand arose mainly out of a discussion on Monday, if I am correct, about democracy in rental accommodation. This is not a question of democracy or non-democracy in rental accommodation. This is not what we are dealing with here. What the Conservatives are suggesting to us is, if the landlord can get 75% of the tenants to agree in writing that the landlord can break the 3% cap for the listed items, then the bill will permit that, and to that we say no. The 3% cap will remain. We are not going to get into the question of petitioning and deciding whether there is legitimacy of written consent on a matter as complex as getting 75% of tenants involved. Good Lord. How much more complication can we devise for rent regulation? I think we may have reached the ultimate here.
In any case, Mr Chair, I think members will understand that the principal problem with the amendment from our point of view is that it provides an escape. It provides for the breaking of that commitment that we have made in the balance we are providing for tenants and landlords, that for tenants, 3% above guideline on an annual basis is it, and we are not going to accept the Conservative proposal which has as its intent to start providing a route to avoid that cap.
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The Chair: Thank you, Minister. Mr Owens, Ms Poole and Mrs Marland.
Mr Owens: Thank you, Mr Chair. I would like to begin by addressing Mr Jackson's comments with respect to the issue of safety and the two well-publicized murders of young women in his area, Nina de Villiers and Leslie Mahaffy. I would like to gently suggest to the member that within this legislation there exists a 2% item for capital expenditures that are already included, and that if the landlord were doing his work and maintaining the building -- it is not just a "his;" it is a "his" and a "her" as well -- the kinds of retrofitting that Mr Jackson is using as a rationale to support the Conservative motion on this issue would simply not be necessary. Sure, security precautions change, and there are different technologies and whatever, but again, the additional 3% would certainly cover the kinds of expenses Mr Jackson would envision under this process.
I was going to make a comment on the remarks that Ms Poole made before our break this morning regarding the issue of ballot versus a written consent. I understand that Ms Poole is normally a sensitive member. While I do not always agree with her conclusions or the analysis by which she reaches those conclusions, I will certainly say that she is normally a sensitive member, which is why I could not quite understand why she would make a comment stating that written consent is a much easier process in light of the remarks that I made with respect to persons with literacy problems and persons whose first language may not necessarily be English. I find that to be passing strange, that written consent is somewhat easier to obtain or to have a person do than simply a ballot process. But anyway, as I say, I think that once the member thinks about it, she will understand that what she was indicating was not something that simplified the process at all. With that, I will conclude my remarks.
Ms Poole: This morning, in the course of discussing the Conservative amendment to subsection 21(2), we had a discussion about clause 21(2.1)(a), which dealt with an underground parking garage, and there was some disagreement on the committee exactly what was said with regard to parking garages and whether they were indeed something that could be rectified by ongoing maintenance or whether it was simply a matter of technology of some 20 years ago which has proved deficient through time. I have taken the liberty of obtaining the Hansards over my lunch-hour -- I have a strange way of enjoying myself over lunch -- so that we could clear the record in this regard. I would like to take several quotes from the Hansards when this matter was discussed, which would certainly put things in perspective.
Hon Ms Gigantes: Is this directly related to this matter?
Ms Poole: Yes, it is directly related to clause 21(2.1)(a), which deals with repairing an underground parking garage and the significant expense related to it. Mr Mammoliti had talked about the things landlords could do to improve the situation and where landlords were neglectful.
The first one I would like to quote from is the presentation by the Steeplejack and Masonry Restoration Contractors Association, who presented together with the Operative Plasterers and Cement Masons' International Association and Restoration Steeplejacks Local 172. I asked the question: "Mr Mammoliti was of the strong opinion that with proper maintenance they would not have to be retrofitted and this major work would not have to be done. My understanding is that when these parking garages were done 20, 25 years ago the technology was such that it did not protect against rusting of the reinforcement bars that are in the concrete, and that no matter how many times the landlord waterproofed the sides of the garage or anything else, eventually this corrosion from salt, moisture and everything else would get to the stage where massive expenditures would have to be made," and I asked him to comment on it.
He said that the maintenance issue would be true of new buildings. It is not true of the things that were built 20 to 25 years ago. "One of the big problems is the latency of salts in the structures now that have an ongoing effect." Mr Mammoliti picked up the conversation at this particular point and asked if he could ask a question. He said, "We did have the discussion and I referred to the delay of corrosion and what preventive maintenance could do to delay the corrosion. We brought up waterproofing and that sort of thing. My discussion also touched on the neglect of landlords by perhaps not using calcium as opposed to salt on their driveways to prevent this from happening."
My response was that if people only drove in landlords' driveways and not on city roads perhaps the calcium would indeed be beneficial, but as things are, it is not.
There were a number of things these presenters said which I think are very helpful to our conversation on not only the necessity of the underground parking garage but the expense attributed to it. The same presenters showed pictures to the committee, and they said: "Here is an underground garage that has to be supported because the structural engineer felt it was deficient to the point that it could collapse. This is the underside that shows the type of deterioration of water and salts and stuff eroding through the slab. More examples of the deterioration of the underside of an underground parking garage slab.
"As you can see from the slides, the work we do is not cosmetic. It is of a structural nature, often done under the supervision of a professional engineer. The committee might also be asking: Could these repairs not have been avoided through proper maintenance?" This gets to the heart of what Mr Mammoliti was asking about. "The answer is no. From the mid-1960s to the mid-1970s this province saw a dramatic increase in the number of structures built that were over six storeys in height. Many of these buildings form a large part of our existing affordable housing stock. At the time these buildings were built we were unaware of many of the forces causing these buildings to age and deteriorate. We somehow thought these monolithic structures of modern architecture were impervious to the elements. Unfortunately, they are not.
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"Over the past 25 years, we have gained new knowledge about these forces, how to analyse what is happening," etc, etc. But they made it extremely clear that it was not maintenance that was at question.
Regarding the number and effect of these underground parking garages and the cost, I will quote from the Hansard of Tuesday, February 12 in this committee, the Concrete Restoration Association of Ontario. That particular association quoted from the July 1988 report of the Ministry of Housing, Ontario building branch, on the phenomenon which indicated that more than 3,000 structures are affected. He quoted from the report:
"It is now evident that deterioration of concrete parking garages is occurring due to the rapid corrosion, rusting, of reinforcing steel caused by the progressive accumulation of salt in the concrete. It is now generally accepted that the standards and practices applied" --
Mr Owens: On a point of order, Mr Chair: I am just wondering where the member is going with this evidence. Is there a point that is related to the amendment?
The Chair: She has been reading extensively, but I think she is speaking to clause 21(2.1)(a), and I would hope that she is going to conclude the reading of Hansard shortly.
Mr Owens: I am not quite sure where this is leading in terms of the 75% rule the Conservatives are wanting to bring in.
Ms Poole: I would be happy to answer Mr Owens's question.
The Chair: Thank you for your comments, Mr Owens.
Ms Poole: The reason I am reading from this is, first, I have indicated that Mr Mammoliti's supposition to this committee that it was a matter of a landlord's neglect in maintenance is indeed inaccurate, and second, that the Ministry of Housing estimated in July, 1988 that 3,000 structures are affected, and these organizations estimated that up to 5,000 buildings are now affected.
Mr Owens: It still does not go to the point of the motion, though.
Ms Poole: Please, Mr Owens. The next part I was going to read states: "The cost of a typical apartment garage repair ranges from $6 to $40 per square foot. Thus, for a garage with 150 parking spaces, the cost can vary between" --
Mr White: On a point of order: I believe Ms Poole had made her point very succinctly within the first five or 10 minutes of her recitation, and perhaps she can refer us to that document at some later time.
Mr Jackson: I am still waiting for her to make her point. Let her make it, okay?
Ms Poole: That is right. I have many points to make. I have already spoken to the one point about Mr Mammoliti's argument. The second one, which is very important, is the cost. "The cost of a typical apartment garage repair ranges from $6 to $40 per square foot. Thus, for a garage with 150 parking spaces, the cost can vary between $360,000 to $2.4 million."
I will say to the members of the government, through you, Mr Chair, that if you think that your 3% cap is going to touch a $2.4-million parking garage repair, then I am sorry, it just does not wash.
Mr Mammoliti: Wash? That is what they should be doing.
Ms Poole: Mr Mammoliti has said they should wash. I have a quote from Hansard regarding that portion which I was not going to read but I now must. It is from the same presentation by the Concrete Restoration Association of Ontario:
"I hope as well that you understand clearly from what I have said that this is not an issue of routine maintenance. No amount of minor maintenance, as opposed to rehabilitation, could deal with this phenomenon. Waterproofing without major restoration only prevents the ingress of more salt and water but does nothing to restore the integrity of the structure."
One final point they made was that when Bill 4 was introduced, "Within days...over 42 major structural concrete restoration projects were cancelled by building owners and managers."
They went on to say that for every month and every year this is delayed, the cost will be significantly higher and it will be a much more difficult project to accomplish.
I think from the experts, not a bunch of MPPs like us who really are not all that well versed in underground parking garages --
Mr Jackson: Just a minute.
Ms Poole: Some of us are more well versed than others, Mr Jackson, but I do not think any of us can compete with the Concrete Restoration Association of Ontario.
Mr Jackson: That I agree with.
Ms Poole: Or the Steeplejacks, Local 172. They are indeed the experts.
This makes a number of points, aside from what I said about Mr Mammoliti. It says that it is an extremely expensive proposition and it is absolutely necessary that it be done. It cannot be done through routine maintenance; it has to be done by a major retrofitting.
It also becomes very clear that in many cases the cost cannot be recovered through a 3% cap. It is simply going to be insufficient. In situations where the landlord has had a building for a significant length of time and has a very low mortgage on it, he could certainly use his building as collateral to get a loan in order to effect the repair. What I am concerned about is the significant number of buildings, particularly with the recent devaluation of those buildings by an estimated 25% to 35% to 50%, that cannot be used as collateral, because there are already outstanding mortgages on them worth more than the buildings. In those cases, how can you expect those repairs to be done?
If you have a mechanism -- that is all it is, a mechanism; and I do not think this section will be utilized in that many cases -- at least you have the option to remedy some of these very serious matters. Your legislation, I say to the government members, is clearly deficient. I would think you would want these situations remedied for the safety and protection of the tenants of this province for whom you purport to act.
Mrs Marland: There is just so much to comment on, I do not know where to begin. I intend to ask the minister about this information she has tabled, but I think perhaps before I do that, it is appropriate for me to read a letter that actually addresses the concerns I am trying to bring up in this motion. This letter is from a company called Carport Structural Systems Inc in London, Ontario, and it is signed by Norm Riopelle.
Mr Mammoliti: What are you looking at me for?
Mrs Marland: I thought you would appreciate my pronunciation of his name.
Mr Riopelle says in his letter dated August 27, 1991, addressed to Mr David Tilson, MPP, "As you well know, there is legislation already in place to prevent, control and monitor coercion on the part of landlords."
It is unfortunate that one of the members with whom I have had this discussion about coercion is not here at the moment.
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"By keeping the numbers of available carport units below the number of interested tenants will again prevent any potential coercion. An obvious common-sense solution then would be to allow interested tenants to purchase a specific service and meet their needs without going through lengthy and costly applications. Simply including `the provision of covered parking from existing uncovered parking space is a prescribed facility' for the purpose of the act (see Bill 121 and Bill 4) would include our service along with cablevision as a prescribed service."
Whereas we are talking in my amendment about making improvements for a number of reasons, not the least of which, under clause 21(2.1)(f), is "to provide access for persons with disabilities," I would like to read the third paragraph of Mr Riopelle's letter.
"We have found that seniors" --
Ms Poole: On a point of order, Mr Chair: Just for Mrs Marland's information, the Liberals have an amendment to section 45 of Bill 121 which deals directly with Mr Riopelle's request. Not to take away from your reading the letter, but it will address it in another section as well or at least attempt to.
Mr Jackson: But it will save you from having to read his letter when we come to the section, will it not?
Ms Poole: It will save us from having to remember the letter.
The Chair: Thank you for the information. It was not a point of order.
Mrs Marland: I am so deflated to think that Mr Riopelle wrote to both the Liberals and ourselves, but I will continue just this portion because this is directly in support of my amendment.
"We have found that seniors, the handicapped and citizens with special needs are very interested in embarking and disembarking from their vehicles with ease and safety from the elements (rain, sleet, etc) as well as not having the great difficulty of removing snow, ice and frost. Architects and developers are presently incorporating our systems as a great help to these special individuals and as a means of lessening the opportunity for sheltered crime. Therefore, I ask you support for those living in existing complexes to have the benefits of covered parking by having the act amended."
I think Mr Riopelle makes a very good argument for my motion, clause 21(2.1)(f), "to provide access for persons with disabilities" and I think clause 21(2.1)(e), "to make a repair or improvement to promote the safety of persons." Obviously that option must be available to tenants. That is simply what my motion is about. It is giving tenants, by a democratic vote, a choice.
Would it be appropriate for me now to ask the minister some questions on this information which she tabled, which I presume is to do with my motion?
The Chair: We can proceed that way or, if the committee wishes, after this section we could offer that opportunity. I am in your hands. This information is pertinent to this section.
Mrs Marland: Did the minister table this information to be relative to this section?
The Chair: Just proceed. In my view, it is pertinent, so you may ask the minister questions.
Mrs Marland: I would like the minister to explain to us what is pertinent about this information she has tabled. What does it mean across the top where it says, "Orders with Parking Garage Expenditures," and then it is handwritten "for select offices across Ontario." What does "for select offices across Ontario" mean?
Hon Ms Gigantes: These are very good questions. I think because of her much better familiarity with this information than mine, I will call Colleen Parrish from our ministry office for assistance.
Ms Parrish: The discussion this morning dealt with whether the combination of the 3% plus the two years carried forward would generate enough rent revenue to deal with certain kinds of structural repairs. Underground garages were one of the things mentioned. There was quite a bit of discussion about that in the amendments. In the amendment proposed by you there was some reference to the carry-forward period. Mr Jackson was talking about later amendments, as was Ms Poole, related to carry-forward. This issue came up. In the course of looking at the carry-forward period and the 3% cap we actually went through a process of pulling orders to figure out whether there was an adequate amount of money. We instructed our staff to go to the offices that were most likely to have these kinds of buildings in them, mostly the Metro offices. We also took three other cities simply at random. We told them to pull, at random, samples of garages. Then we benchmarked them to see whether in fact the system would generate enough money to pay for these repairs.
Since we had done a global wrapup of all the money and asked, "How much in total?" we went through a process of saying, "Let's take so many things at random and check them." What we found was that it was the rare case where there was not enough money over a three-year period. In fact, there is exactly one in this case. We simply chose these at random. Obviously this information was not collected for the purposes of today's discussion. It was done as part of our research. We just happen to have it because we had done a benchmark on this and remembered we had it, so we thought we would bring it.
Ms Poole: All these low figures. What a coincidence.
Ms Parrish: They were taken at random. I have no reason to mislead the committee. It is simply that this was the material. As the minister mentioned this morning, there are cases where it is not enough, and we show you a case where that is the situation. We simply have given you the information that was pulled at random from our files.
This would be consistent with the other information we have. For example, when you look at the average rent increases in the past, which have averaged about 11% under the previous system, about 2.9% of that has been for capital in total. We have tried to check the cap and the carry-forward several ways. We have done a chart which shows the whole system. We have done sampling. We have looked at the past. We have tried a number of techniques to see whether there is an adequate amount of money. I simply provide this for information. It was not prepared for this committee; it was prepared for internal staff work.
Hon Ms Gigantes: When was it prepared, Colleen?
Ms Parrish: I think we did it in August or so, because that was the time after the hearings when we were debating whether we should extend the carry-forward period. That was a popular request in the hearings, so we went through a benchmarking process to see how much money would be generated. We also looked at the costs-no-longer-borne changes and figured it all out, so this material was prepared during the summer, not in relation to clause-by-clause review.
Mrs Marland: Thank you for the explanation. I think there are two ways to respond. One is that if this indeed is the case, then why would you be worried about my amendment? The other response is that I respect what Ms Parrish is saying in answer on behalf of the minister, that this was not prepared for any reason necessarily to be interpreted as a rebuttal to this morning's discussion of this committee. However, I think this information is highly selective, as it says at the top "for select offices across Ontario." There is nothing in there over -- I think $290,000 is the biggest. It is a parking structure repair. It is the biggest item on this list. Would the committee allow me to table where there may in fact be multimillions of dollars in one repair?
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Hon Ms Gigantes: Could I explain here, Mr Chair?
Mrs Marland: No, I have not quite finished.
Hon Ms Gigantes: If you do have a question about that, I think it would be useful to deal with it before you make the assumption that what we are dealing with here is a total cost of $290,205. If I could just ask Ms Parrish to go back over what that figure means, I think it would be helpful.
Mrs Marland: I read it as an item allowance. It is under the column called "Item allowance."
Hon Ms Gigantes: Yes, that is where I am looking. That is where I just read. Would you like to have a further explanation?
Mrs Marland: Sure, if you want to.
Hon Ms Gigantes: Please, I think it would worthwhile.
Mrs Marland: I am interpreting it, Minister.
Hon Ms Gigantes: I would like your interpretation to be correct. That is why I am suggesting it right now.
Mrs Marland: Would you like to know what my interpretation is?
Hon Ms Gigantes: I just heard it.
Mrs Marland: I am interpreting it as the allowable amount. That is why it is under a column called "Item allowance."
The Chair: Would you care for a response, Mrs Marland?
Mrs Marland: Sure, why not?
Ms Parrish: The item allowance is not the total capital amount. It is the one-year cost, so it is essentially the amortized amount. The amortization period is now somewhere around 15 years, so this is essentially not the total cost of the repair, which would probably be somewhere around $208,000 times 15.
Mrs Marland: Right.
Ms Parrish: This is just the one-year cost.
Mrs Marland: I understand that. I would like to know if members of the committee can also table information.
The Chair: Of course members of the committee can table information at any point.
Mrs Marland: Okay.
Mr Owens: My question around this and --
The Chair: Mrs Marland has the floor, Mr Owens. You are on the list.
Mrs Marland: Do you want to jump in now? I have not finished, but you may jump in.
Mr Owens: I would, actually. My question is to Colleen Parrish. In terms of the process that was used to obtain the figures, we do not have a cost of the repair; we are just looking at the potential rent and the allowance for repair based on the rent.
Ms Parrish: The allowance is based on the total cost amortized over the period the amortization period allows, which I think is about 15 years for concrete. For some of these other things it is less, like garage door openers and lights and so on, probably a 10-year amortization. Essentially what happens is that you ask, how much did it cost to do this repair? It cost $3 million. If you amortize that over 15 years, how much is that each year? Then there are various things: You have to add the landlord's own labour and interest, because the landlord has probably borrowed the money.
Mr Owens: In terms of establishing the cost to base the set of figures on, were site visits made to these buildings by a P. Eng. firm or a concrete restoration firm or somebody, or were they based on mathematical models?
Ms Parrish: You have to have completed the garage repairs before you get any money. They would have had to have completed the repairs. They would have to show evidence that they were completed, what they were for and evidence of payment.
Mr Owens: That is what these figures are based on? I see.
Ms Parrish: These are all actual cases.
Mrs Marland: Can I get the floor now?
Mr Owens: I wanted to make sure we were talking about the same thing at the same time. Thank you.
Ms Parrish: Yes, these are all actual dollars.
Mrs Marland: I think the information is very interesting. It becomes more interesting as you ask the question. The item identified as L-2687 is a 410-unit building. For the parking structure repair the one-year allowance is $290,205.73. You have just said -- I cannot recall exactly the figures you said, but in the millions. Was that what you said that might be?
Ms Parrish: It was probably somewhere around $3.5 million or $4 million.
Mrs Marland: In any case, it is 15 times that amount, so say it is around $4.5 million. Is it not ironic that individual gets 3% a year for two years to pay for that?
Ms Poole: Three.
Mrs Marland: Pardon me, three years to pay for that. Thanks, Dianne. Yet when you are working it out as an item allowance it is amortized over 15 years. I mean, he can increase the rent for three years to pay for it, right?
Ms Parrish: He increases the rent for 15 years, which is when it is taken out of the base. He gets three years to work up to putting in the full amount of $290,000 in rent increases. After that, he charges it for up to 15 years, and that is when it gets taken out of the rent base. Under the current system he charges it for ever even if it has all been paid for.
Mrs Marland: Okay. Well then, where does the 3% per year come in?
Ms Parrish: Essentially it is actually five, because remember, he has already gotten two. In this case he can pull it all in in two years, but just to make the math easy let's say it is five and five. What you do is you say: "Here's this $290,205.73 that you can increase your rent. In the first year we'll allow you to increase your rent by half, $145,000. Then the next year we'll allow you to increase it by another $145,000 a year. Then we'll allow you to charge the tenants that additional rent for 15 years" -- which we will say is the end of the amortization period -- "then it comes out of the rent base." At that time, the repair is completely paid for by increases in rents over this 15-year period.
Mrs Marland: Okay. Thank you for the explanation, because what that says to people who own property in this province is -- I mean, if we are talking about a parking structure repair in that amount of dollars, we are obviously talking about something that has to be done right away. Where in heaven's name do we think the property owner gets the money to pay for it? With the cap of 3% for three years over and above the 2%, although it is amortized for 15 years, which is perfectly correct, he or she has to wait 15 years to recover the full cost of that item. In the meantime that poor soul has upfronted the work. If the work has to be done, and I guess this is what is putting a lot of these property owners into bankruptcy, if they have that amount of work to be done, where are they supposed to get the money from? They cannot pull $4.5 million out of the air, and from your description of what really happens here it is --
Mr White: Probably have to borrow like the rest of us.
Mrs Marland: I have been very good, and actually we all have today, Drummond, without interrupting, so it does help if you do not.
Mr White: Okay.
Mrs Marland: What we are saying is that it is amortized over 15 years, that in 15 years he will have recovered it through his rent. Correct?
Ms Parrish: He will have recovered the full cost of the repair plus the full cost of the interest of borrowing the money over the period.
Mrs Marland: Right, exactly, the full cost of recovering the money he has borrowed over the period. That is assuming he can borrow the money, and that is the crunch right there. You have just said it perfectly. That is the problem facing the property owners in this province today. They cannot go out and pluck $4.5 million out of the air to do these major structural repairs. These are not repairs they would have any choice about, I suggest. If you are going to have to spend $4.5 million, it would not take you very long to want to defer it if you had any choice about it. But your socialist government, Minister, is saying, "It's okay to make it necessary that the repair is done today, and you'll get your money back in 15 years."
It is not going to happen, and if you think the alternative is that when this poor soul goes bankrupt the government comes along and picks up the building, and if you think our children and grandchildren can afford to pay for all this acquired housing with the future taxes of this province, then it is an even more depressing picture. The more you get into this bill, quite frankly, the more depressing it becomes, because the fact is you cannot expect people, I do not care who they are, whether it is Conrad Black or any other -- I do not even know if Conrad Black owns rental property -- corporate entity that has, you would think, a large amount of security behind it, to stay in the business of rental accommodation if, when they are faced with a major increase in their need for funding through some major repair -- why is it that under the Condominium Act it is a requirement for condominium corporations to have a fund where money is contributed so that condominium corporation always has --
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Mr Owens: Capital reserve funds are not part of this amendment.
Ms Poole: No thanks to you guys.
Mrs Marland: The condominium corporations have this fund, under law, in order that they always have this pot of money in reserve so that when they meet a tremendous repair or reconstruction cost they have the money there.
Why do we think that is in the Condominium Act? It is because condominium corporations do not collect rent and somebody has to have that money in reserve. What we are saying to these landlords who have been under rent control for 17 years now -- and as I said yesterday, if you do not care about the 11,000 big landlords who own buildings with more than seven units, would you please care about the 139,000 little guys and gals who own six units and less who may be faced with any one of the categories of repairs that are in my amendment and do not have the money to do it? On the one hand it may be necessary; on the other hand it may be necessary and desired by the tenants.
I think this information that the minister has handed out really points up the fact that, "It's okay because you have 15 years' amortization and eventually you'll get your money back." I have to ask this government where it thinks those poor souls are going to get the money in the first place if they cannot get it from their rent. What individual wants to live in a building where that kind of work is not affordable and is not done? You can issue all the work orders in the world to get these kinds of major structural jobs done, but if the owner of the property does not have the money, you cannot get blood out of a stone.
So what will happen? I ask the minister, what happens where you get these major structural jobs by a work order and there is no money available to do them? What happens to that building and what happens to those tenants in that building if that work cannot be done? I would like the minister to answer that question.
Hon Ms Gigantes: I will try to be very brief. I think what the member is talking about is very much more than she is entitled to talk about in terms of the information we have provided here. The information we have provided here indicates how the landlord, through rents, will recover over the amortization period the amount he pays, including the financing costs, for what he undertakes for a major renovation.
Now that is not the only money the landlord receives during that period. If you want to look at item L-2687-ET, the 410-unit parking structural repair item, you will see that the gross potential rent in that building is $3,195,540.96. We are not dealing here with a small landlord. I do not know about the height of the person, but this person is in charge, obviously, of a major operation. This is not one of the heartstring cases that Mrs Marland was just referring us to; we are talking big time here. Anybody who takes on a 410-unit apartment building and is handling gross rents over $3 million is not going to have too much trouble raising $290,205, all of which is going to be returned through rents quite stably and in quite a certain way using the mechanisms we have provided in this bill.
So I think the information is being looked at through the wrong end of the telescope as far as Mrs Marland is concerned. What this information can and should tell us is that the mechanisms in place are going to work even with very large jobs that will, with financing costs, be very expensive and for which the amortization period is lengthy.
If what she is suggesting is that we are going to provide some kind of legislation in which the tenants in this building have to pay for this whole job and the financing for the job over a five-year-period -- is that what she is suggesting, or would she like a three-year-period? How fast would she like to see the rents rise in this situation? Does she think the landlord should get paid back in one year or two years? How many years does she suggest?
There are not many investments in this world where you put your money in -- this is the hypothesis she is taking us through -- you borrow the money to do an investment and you get all your money back, plus the value of your investment, within -- how long, Mrs Marland? How long do you propose?
The Chair: Mrs Marland.
Mrs Marland: I choose to ignore the minister's sarcasm. I do, however, like to point out that in the example I was using, yes, the gross potential rent is $3 million, but also, by the figures from the ministry, we are talking about a structural repair that is $4.5 million. If there is not some reasonable access to an increase in rent to help cover that tremendous capital outlay -- and I think the record of Hansard shows what kind of percentages we are talking about. We are not talking about huge rent increases; we are talking about fair rent increases.
In my amendment that is before us now I am actually talking about an option where 75% of the tenants agree to having a rent increase to cover work in any one of those eight categories. I do not pretend to be an accountant or a visionary, so I do not know what the actual costs and the rates of returns will be in terms of interest costs down the road, etc, but I certainly have enough common sense to know that if this government wishes to penalize the tenants in the province by penalizing the people who own their property, this is certainly the legislation that will do it.
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It is obvious they are reaching the point where there is no point in trying to discuss it any further. We would not in fact be having this discussion if the minister had not brought this information in. The information is very useful to point out the argument we have been presenting, that there can be tremendous costs to repairs in some of these categories. When the costs for those repairs in some of those categories come to that property owner, it is probably not going to matter whether 75% of the tenants want it or not; the money simply will not be available and the work will not be done.
The minister did not answer the question I asked her: What happens to those poor tenants when major restoration and repair work is not done and the building goes into bankruptcy and there is then nowhere for those tenants to live, as the building is not then receiving electricity or fuel for heating?
If the minister wants to be her usual cavalier, sarcastic self, that is up to her and that is her own option, but my questions are serious and my questions are sincere on behalf of the tenants and the property owners. I think this information should be kept alongside any section in this bill where we deal with capital improvements because it documents just how major those capital improvements can be and what a financial burden, in turn, they become for everyone associated with rental accommodation. Obviously, if the government chooses not to support my motion, then the tenants do not have any choice about it either. If they want to ignore the tenants, that is up to them too.
The Chair: Thank you. I have Mr Mammoliti, Ms Poole, Mr Owens, Mr White and Mr Ward.
Mr Mammoliti: I will start off with a question to Colleen Parrish. How many of the 25% of the landlords in Ontario that applied for an above-guideline increase were small landlords?
Mrs Marland: It is 17%
Ms Parrish: In any given year, and then some people come back more than once.
Mr Mammoliti: Is it 17%?
Ms Parrish: There is a tendency for the majority of applicants to be larger landlords, but small landlords do apply as well. I honestly cannot tell you right off the top of my head. I would have to look into that.
Mr Mammoliti: Where did Mrs Marland get the figure of 17%?
Ms Parrish: No, 17% of the landlords apply for an above-guideline increase in any given year.
Mr Mammoliti: Okay. I thought I heard 25%.
Hon Ms Gigantes: Yes, you did, George. I corrected that figure the other day. I used the figure of 25%.
Mr Mammoliti: All right, it is 17%.
Hon Ms Gigantes: Yes.
Mr Mammoliti: I would be willing to bet that not very many of the small landlords have applied for an above-guideline increase, and of those who did, how many of them would not be satisfied with 3% for three years? I would be willing to bet that it is a very small percentage. If I am right, I would say that Mrs Marland's argument is not valid, in my opinion.
Ms Poole: But they get 2% without applying.
Mrs Marland: Then it will not be a problem, will it?
Mr Mammoliti: No, I think it is an argument you should not have used.
The Chair: Through the Chair, please.
Mr Mammoliti: Using the smaller landlord in this particular case I would say would be wrong.
Going over to Ms Poole's argument and statement earlier in relation to this amendment, she talked a little bit about garages again. She keeps bringing it up time and time again. Earlier this morning Cam Jackson brought it up as well in relation to what I said a year ago. If I do not respond, I will feel guilty. I do not know whether I will sleep tonight if I do not respond.
What I would like to see in Hansard is where I said that the interior part of the garage is at risk. I could say that they will not find that in Hansard and that Mr Jackson's comments this morning were exaggerated. A year ago, as I do today, I spoke of salt being poured like water on driveways. There are quite a bit of driveways that sit on top of garages. I know that most apartments have driveways and parking lots on top of underground garages. That is what I was referring to a year ago when I said that landlords poured salt like water on those driveways and parking lots.
The neglect was where they would not clean it up, where they would not wash it off or sweep it up and where the salt had corroded the asphalt and created potholes which were not repaired, which I believe is pretty consistent around a lot of the apartment complexes. You will find potholes after the winter. Those potholes continue to grow and are never fixed. What does that do? If and when a superintendent or somebody who is working for a landlord continues to throw salt in that pothole, the concrete underneath that asphalt is going to decay. What does that do to the garage?
Let's talk a little bit about some of the complaints that tenants have come up with over the years and perhaps come even into the offices of Ms Poole and Mrs Marland with. They say that this substance falls on their vehicles and it either chips the paint away or it corrodes the paint away. "What am I to do?" they ask. "What is this stuff?" Let's go back to my original argument from a year ago. When the salt on top of the roof of the garage eats through the asphalt, if it is not properly maintained it will corrode the concrete, which in turn will basically melt away that concrete and it will land on top of those cars. That is what I talked about a year ago. I think I have made myself quite clear.
Mr White: You did.
Mr Mammoliti: I hope so.
Ms Poole: You made yourself quite loud, anyway.
Mr Mammoliti: I felt perhaps I had to wake the room up a little bit.
The Acting Chair (Mr Morin): Please address the Chair.
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Mr Mammoliti: I am sorry. When you talked a little bit this morning about reinforcement rods in steel, it would exist as well, Ms Poole, through the Chair. Most of the reinforcement rods that exist in underground garages exist on the top of the garage if there is a parking lot on top of it, and those decay as does the concrete when it has been neglected.
If a landlord or a staff member continues to clean up the salt and the debris outside and perhaps patch up that asphalt that has those holes in it, chances are that the decay will take a lot longer and that instead of replacing or restoring the garage after 15, 16 or 17 years, perhaps that garage could last 25, 30 or 35 years. I think that is something we should remember.
It brings me back to neglect by landlords and how they could have prevented tenants from paying for this in the past as well. I do not want to yell this time, but I hope I have made myself quite clear. At no time did I talk about the interior of the garage. This morning I did because I still feel the same way, that they could delay the process by sweeping it up and by cleaning it up on a regular basis, which they are not doing. I will just leave it at that. I think I can sleep at night now.
The Acting Chair (Mr Morin): Ms Poole.
Ms Poole: With all the patience in the world, I was not going to respond to Mr Mammoliti again, but --
Hon Ms Gigantes: Oh, you are weak.
Ms Poole: I am very weak. I just cannot let it go. Just one more time, one more paragraph; I am going to quote one more time from the Concrete Restoration Association of of Ontario:
"I hope as well that you understand clearly from what I have said that this is not an issue of routine maintenance. No amount of minor maintenance, as opposed to rehabilitation, could deal with this phenomenon. Waterproofing, without major restoration, only prevents the ingress of more salt and water but does nothing to restore the integrity of the structure."
And that is what we are talking about, so I am just going to leave that at that particular point and I hope we do not discuss this any more times.
Minister, the question I have for you, through the Chair, relates to the sheet the Ministry of Housing brought before us where there were selected examples of underground parking garage repairs. It is obvious, from looking at a number of these, although they may say "garage renovation" or "garage restoration," that by the small amounts they are really not a rehabilitation and they are not what we are talking about.
The one I would like to draw to your attention is the second one in the list: L-2343-NY, 12 units, garage renovation, $21,907, which results in a percentage allowance of the gross potential rent of 30.80%. The reason I point that one out is not only that it has a big number, but because I think it epitomizes the type of renovation that we are going to have problems with. The larger ones, even the $4-million one, are not as much a problem as the ones where you have 12 units. That is low, because a lot of buildings with 12 units would not have underground parking.
Hon Ms Gigantes: That is very low. It is very unusual.
Ms Poole: You are talking about buildings with between 35 or 40 and 100 units. Those are the ones which could have a parking garage underneath them and yet, because of the small number of units, not have corresponding rents, not to justify doing the work but so that the landlord could receive reimbursement. They are the ones probably most at risk where the landlord simply would not do them. Of course, when you get to the point where you have 100 units, it is extremely common to have underground parking.
I think those are the ones you will find cannot get enough revenue back from the rents, with your 3% cap, to alleviate the problem. If the ministry's answer is that there is not a lot of these, then I say, what is the harm in having an amendment, whether you want to do it through 21(2.1) or another mechanism? What is the harm in providing relief if there are not too many in this category?
On the other hand, if there is a substantial number, then surely we have to provide that relief. I think you are going to find that it is not the 400-unit or the 600-unit building that gets into difficulty. They will be extremely expensive renovations, no doubt about it, but they have enough tenants in the building that they can spread it out. But some of these smaller buildings are really going to have difficulty in doing it.
It is unfortunate the way this is set out. I know it was not set out for our purposes; I am not trying to be critical of the ministry. You were just providing what you had on hand. But these descriptions that are on this sheet are arranged -- there was one here that was a garage. I am trying to find out where it was. It was listed as something like a garage rehabilitation and yet it was a very small amount of money, so I knew it was not actually a rehabilitation. We have got them called garage rehabilitation, garage renovation, garage restoration, garage concrete. It is hard to estimate from this the depth of the work that is being done other than by multiplying and finding out what the dollar amount is.
If you look again at this situation, I think you are going to find that the smaller buildings are going to have a great deal of difficulty paying for the restoration, and not only that. If all the money has to go to the garage restoration, it means absolutely nothing else would go into the building at that period of time, at least nothing that the landlord would receive reimbursement for. There certainly would not be any incentive for the landlords. If you have taken your full allowance for capital repairs --
Hon Ms Gigantes: For how long?
Ms Poole: For the next three years. If you used it for garage restoration, and you are talking about also using the 2% that is allocated in the guideline for capital repairs, then what happens when the landlord wants to do something like even replacing carpets, which is not on the necessary list but certainly, as far as tenants are concerned, is something they would like to see done? What happens to that type of thing? What happens to the other repairs that might need to be done in that length of time? They are to wait, if indeed the landlord first of all does end up with enough money to do it, if the landlord can get financincing to do it. I will tell you that if I were a bank or a financial institution and I were looking at loaning the landlord the money to do a renovation and saw that it was not going to be fully covered by the rents, particularly in cases where --
Hon Ms Gigantes: In what period?
Ms Poole: Even over the three years.
Hon Ms Gigantes: In three years it all has to be paid for.
Ms Poole: No, I am talking about the rents for that three-year period. I am not saying that you have to pay it. I am saying that if a bank or financial institution makes a loan it has certain terms for that loan. Over the terms of that loan, if it is a five-year loan, they expect to be paid off in five years. If they gave the type of mortgage to coincide with the amortization, say 15 years, they would expect it to be paid off, principal and interest, in 15 years. Whatever the set term is, that financial institution will need revenues coming from rents to satisfy that loan or else it will not grant the loan.
Hon Ms Gigantes: Over 15 years, say.
Ms Poole: Over whatever the financial institution chooses as its particular arrangement. If they cannot be satisfied that the revenues are there from rents to pay off that loan, they will not grant the loan. That is the way finance works.
Hon Ms Gigantes: Why are you suggesting that we should change our legislation? Even in a case where 75% of tenants -- for example, in case L-2343-NY, nine of the tenants said, "Yes, you can break the 3% cap." What about the other three tenant households? What if they cannot afford that? Why should they be sacrificed for your decision? It really basically is your prejudgement that if nine out of 12 households say "Yes, it's okay by us, we can afford to help you pay this back in seven years," so you only have to take out a bank loan for seven years even though the garage might last you for 15 years -- why should those three households be left vulnerable to your prejudgement on that?
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Ms Poole: It is not a matter of my judgement. It is a matter of experts' judgement, which I rely upon because, unlike you, I am not an expert in every area. I rely on those who actually have expertise in the field to tell me what is doable and what is not doable, and 75% for tenant consent is an extremely high ratio.
Hon Ms Gigantes: Are you suggesting that it is not doable to repair garages?
Ms Poole: I am saying that if the money is not there, how is the landlord to do the repairs?
Hon Ms Gigantes: We have just indicated to you several examples in which clearly the money would be there.
Ms Poole: I am giving you an example where it is not there.
Hon Ms Gigantes: There is one example I had indicated, as we tabled this, where clearly the mechanisms provided in the legislation are not going to be sufficient for this landlord to be able to swing the finances for the repair in an easy way.
Ms Poole: So that is tough, eh?
Hon Ms Gigantes: He is going to have to have some cash saved up in this one or be able to borrow it from his mother-in-law or her father-in-law or something, because this building with 12 units has an underground parking garage apparently. It says "garage renovation." That might be an outside garage; we do not know.
In any case, clearly the mechanisms of the bill are not sufficient. Because of that example, (1) you would like three households in the 12 units to be left to your prejudgement that if 75% say yes, they can break the cap, then that is good enough, or (2) you are going to say the bill should be rewritten so that no matter what the situation in terms of the financial capacity of the landlord it is going to go smoothly for that landlord when the garage needs renovating. We are going to make the tenants pay for it and we are going to make the tenants go through rent increases on an annual basis, year after year, to an extent that will meet that landlord's needs, no matter what they are. Otherwise, you say, we are putting the whole system of rental and adequate maintenance in distress. I cannot accept that.
You can find problems; there will be problems. We see one here. If I had not been willing to let you see the problem, why would I have tabled this?
Ms Poole: The fact that we brought up the problem this morning might have something to do with it.
Hon Ms Gigantes: No, no. I said to Colleen, "Have we got examples?" "Yes," she said. I said, "How do they do?" She said, "They don't all cover." I said: "Bring it in. Let's talk about it." Here we are.
Ms Poole: The minister's response gives the typical NDP solution to everything. One solution must cover all. I am not talking about changing the whole system. I am talking about making an allowance. I would like to ask the minister a question. If 100% of the tenants agreed in writing to it, would you accept the amendment?
Hon Ms Gigantes: No, I would not, but that would be for a lot of other reasons.
Ms Poole: Then it all comes down to a very facetious argument by the minister.
Hon Ms Gigantes: Not at all. I will not accept that.
Ms Poole: She talks about the tenants who do not agree to it, who do not feel it is fair, who cannot afford it.
Mr White: Mr Chair, we have had the minister referred to in very undignified language -- "facetious," "cavalier," "sarcastic".
The Chair: I did not hear that, Mr White.
Ms Poole: I said her arguments were facetious.
Hon Ms Gigantes: My arguments are not facetious in the least.
Ms Poole: It must challenge you to say the word.
Hon Ms Gigantes: Do not make fun of my lisp.
Ms Poole: I did know you had one. I was making fun of the fact that I hardly got "facetious" out.
The Chair: Could we come back to a discussion of the amendment?
Ms Poole: I think the fact is that the minister is saying that even if all tenants in the building agree to something, the government is not willing to put in the flexibility to allow it to happen. We are talking about what I would consider to be necessary things; they are not frivolous items. We are not saying if 100% of the tenants or 75% of the tenants want to renovate a lobby. We are talking about pretty substantial stuff like boilers, underground parking and access for people with disabilities. Now that it comes right down to it, when we ask the question to the minister whether, if it is 100%, she would accept it, she still says no.
Hon Ms Gigantes: "No" for different reasons, though, and I say that seriously. That is not facetious.
Ms Poole: What different reasons, perhaps?
Hon Ms Gigantes: Without putting extra tests on it, I can say to you that I would not accept 75%. When you get to 100% I think you have to ask yourself about the capability of some tenants, and in fact a large enough proportion of tenants, of saying no in a situation where everybody or almost everybody in the building is demanding they say yes.
I do not think it is being very realistic to talk about this as if we are talking about a free and easy democratic election situation. This would be a very high-pressure situation in which people who may be quite vulnerable to that pressure would feel it quite intensely and end up having to move. I just am not satisfied with that and I am not willing to try to set up a Magna Carta around the whole issue either. I do not see that we have to set up a whole new electoral regime to deal with what I believe are going to be very few cases where one makes a good argument that we should go above cap. I think there are going to be very few cases.
Ms Poole: Mr Chair, as far as the minister's last point about there being few cases, I believe I made the same point this morning, that I did not think there would be an extensive number because I did not feel there would be that many situations in which 75% of the tenants would agree. If you move that up to 100%, which the minister still has disagreed with and denied, then I think it is highly unlikely that it would be used. In its current form, if it is 75%, if it provides fairness and equity --
Hon Ms Gigantes: That is a big "if."
Ms Poole: If it does, if it gives that opportunity, then it is worth it regardless of whether it is 100 applications you would get or whether it is 200, 500 or 1,000.
I really find it abhorrent that we have legislation here which I do not think has very much flexibility in it. I know the minister disagrees. She thinks that, given NDP ideology and how it is usually so inflexible it practically breaks, this is very flexible. Well, I do not think it is. When you are denying tenants the right if they want to do something, with the further restriction on it that it has to be with fairly important items that are being replaced or being added --
Hon Ms Gigantes: Would you support it for each of those categories?
Ms Poole: I think this list is extremely well compiled. There is probably little likelihood, given the cost of a roof, that in most cases a roof would not be covered under the cap, but certainly it covers situations where you have quite expensive repairs or you have a number of repairs that need doing.
If you as a tenant are suffering without a regular supply of hot water because the boiler is constantly being repaired -- and please do not use the word "neglect" in this situation; I am talking about a situation where the landlord is making best efforts to constantly repair a boiler which should be replaced -- and at the same time your plumbing is leaking because it is galvanized plumbing and it is 40 years old, and if there are other things that you want, such as new windows for energy conservation, if you want those and it is a small building, the landlord cannot make those capital improvements without it costing a significant rent increase.
But suppose a large majority of the tenants wants it. I kind of snickered when the Conservatives called it a democracy clause because I thought that was overstating it somewhat, but it does come down to a person's democratic right to participate in his or her building. I have often heard the phrase used by NDP members that a tenant's apartment is his or her home, and I genuinely believe that, but part of the thing is that if a tenant wants something done, and a majority of his or her peers also want it done, and if it meets a number of the government's criteria for necessary repairs at the same time, then I do not see why you should prevent tenants from effecting the means to have it done. That is basically what it comes down to.
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Mr Owens: I will just take a minute. I would like to begin by thanking the minister for restating the very point I made this morning with respect to making decisions on behalf of people who are not necessarily in a position to afford these decisions. Again, the question comes down to what happens with these people. How do you house them and where do you house them?
I think that mixing the issue of tenant democracy and the issue of the amendment we are discussing is not a real issue. If a landlord is doing his or her job to keep up with the work as it becomes necessary -- and we are not using the word "neglect," that N-word, I suppose -- the percentages we have seen are I think reasonably generous and still allow the landlord to make a generous profit. I know that is the P-word. Perhaps it is not recognized that this government does support people making money, because people making money are creating jobs, and we all need those kinds of jobs here in the province.
I do not see this issue of the 75% or even, in the friendly amendment, of the 100%. I just do not think the member for Eglinton understands the types of coercion or, perhaps a nicer way of putting it, moral suasion. I look at the kinds of people who live in buildings in my riding and I would suggest that they would have some difficulty in saying no.
So what happens? The repair or the capital expenditure is made and what happens? They cannot afford to live there any more. Where do they go? I can tell you they certainly come to my office to try to find housing for themselves. I think that mixing tenant democracy and private rental situations is like trying to mix oil and water, because you have a profit motive there at the end of the day for an owner, whereas in a co-op or in true tenant democracy there is no profit motive at the end of the day. I just think you are mixing apples and oranges and it is not an appropriate comparison.
Mr White: I would like to particularly thank Ms Parrish for bringing this document to our attention, and also for the excellent work and conscientiousness of the ministry. I, as a member, have been continually impressed with the preparations your ministry has offered to me on a number of occasions not related to this bill. But I think this is a good example of the information we need to deal with.
Ms Poole: On a point of order, Mr Chair: I am sorry, Mr White, to interrupt you, but I thought this information is very valuable: Ms Parrish was appointed by the Liberal government.
The Chair: That was not a point of order.
Ms Poole: In spite of that, she is a very good person.
Hon Ms Gigantes: Ms Parrish is a perfect example of a perfect public servant.
Mr White: I did not make any comments as to which party appointed her. I am glad to hear that clarified.
Regardless, this information is very helpful in terms of the amendment in front of us. The discussion which we have had about the cost of these repairs I think is very interesting. From the presentation, it would seem as if somehow landlords should be exempt from the financial realities that most of us have to face.
In the event that my garage were damaged, I would have to pay for it. I would have to go to my credit union to borrow money. I would probably amortize it for 20 or 25 years because I am not that overcome with dollars. That repair would come at my expense. The end point of it would be an enhancement of my family's capital values, just as the repairs cited here are an enhancement of the capital value of this apartment.
A 15-year period seems to me to be a fairly short period. It seems realistic. I would suggest in fact that most of these garages would probably last a little bit longer than that, perhaps 20 to 25 years. The financial arrangements here have been worked out in a way which is not terribly onerous for the tenants. It is difficult, but not terribly onerous. But if the landlords are to be exempted from the financial realities which face most of us, who then would bear those realities? Who would bear the brunt of them? I would suggest to you they would probably come at the expense of those tenants.
The work the ministry has done clearly indicates that there is a middle way. We do not have to have a situation whereby tenants are penalized time and time again by means of onerous rent increases. Rather, a period can be worked out which is reasonable, a rent increase can be worked out which is reasonable, and at the end of that period the cost which is no longer borne can be reduced from their rent.
I have seen from tenants in my riding some of the most incredible submissions that the landlords have made about costs. I would like to give you a couple of examples. Moulding. Now, moulding is just a little tiny piece of wood that goes around a wall.
Mr Jackson: Like a chair rail.
Mr White: Yes, like a chair rail, like that, yes. This landlord was going to be charging, for 20 feet of moulding, $530.
Hon Ms Gigantes: Gold moulding.
Mr Jackson: That includes labour costs.
Interjection: That would be non-unionized labour. Terrible, eh?
Mr White: I have purchased moulding and I know this particular piece of moulding costs something in the neighbourhood of 17 to 21 cents a foot, hardly something in the neighbourhood of $40 a foot.
Mr Jackson: Jeez, that's bordering on usury, isn't it?
Mr White: Indeed, Mr Jackson. In his submission in terms of carpeting, he was suggesting a cost for installed carpeting in the neighbourhood of $95 per square yard. I was dumbfounded.
Hon Ms Gigantes: Maybe he didn't understand the decimal system.
Mr White: Perhaps not. I was dumbfounded. I think that obviously there has to be in these situations some sort of a compromise between the costs which are reasonable for repairs and the cost that tenants can in fact bear. I do not think that landlords should have some sort of special exemption from the financial realities which affect all of us, which affect any investor in terms of their own personal capital equity, or any commercial or industrial concern. All of us in fact have to go occasionally to our credit unions, to our trust companies, banks and other financial institutions and borrow money, the costs of which have been calculated here.
For a landlord with a property with a gross income of more than $3 million, not to be able to borrow a little bit of money on the basis of that capital value would strike me as being passing strange. I would just like to conclude that I think the conscientiousness of the ministry deserves merit and that it is an obvious demonstration of why the amendment, which seems reasonable on the face of it, is unfortunately unnecessary.
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Mr B. Ward: I know the opposition members have some concerns about certain portions of this bill and they make arguments from their perspective. I think that once the bill is passed we will have to see exactly what happens in the rental market to know whether their arguments were valid or were perhaps prone to exaggeration, which I think some were.
I do know what we had, though. I do not have a large population of tenants in my riding, but I know there were some aspects of the previous legislation that led to very large rent increases to tenants. I can think of one particular building, 42%, even though the landlord asked for a quarter of that, if you can believe it.
I think anything is an improvement over what we had. When you look at this amendment, there is a suggestion that costs be flowed through into rent increases for a number of large capital items, such as roof repairs, plumbing, boiler, etc. But it does not say over what time line the rent increases should be added.
The minister asked Mrs Marland what she was looking for, one year, two years, three years, when it comes to the 410-unit apartment building. The question I have -- it is not really clear to me on this paper we received -- if the entire amount were allowed in the wisdom of the rent review officer to be flowed through in one year, what increase would those tenants face? I was wondering if the minister or the staff would answer that question. It could be astronomical.
I really do not think this amendment clearly stipulates what restrictions the rent control officer would have when making the decision. That is why I cannot support this amendment. I do not think the Liberal Party should be supporting it because it had some form of rent regulation in place when it was in power.
I think this amendment would once again create uncertainty and tremendous hardship on tenants, especially ones who were not sure of their rights. We have heard about coercion and intimidation. I can envision buildings that are primarily of seniors, and in Brantford they are not well-organized. I am sure most are aware of their rights, but there are some who are not. I can envision a landlord knocking on individual doors and requesting or telling the tenants that they have to sign this consent form. Here is a senior, all alone, who has lived in the building 10 or 15 years, whose husband or wife has died and he or she has no family. They would sign, not aware that it is their right not to.
Or, as the minister stated, perhaps the majority of the tenants would be double-income people, could afford a tremendous rent increase, yet here are more seniors, on a fixed income, pressured, intimidated, unaware of their rights and once again forced to sign an agreement which perhaps they are not even aware that they do not have to.
I cannot support this amendment; I urge this committee not to. One, it is unclear what restrictions a rent control officer would have. Two, although it mentions 75%, I do not think it deals specifically with the tenants' rights and awareness of their rights so that they know they do not have to sign this consent form. Those are my reasons I am not supporting this amendment.
Hon Ms Gigantes: I am going to make an offer to Ms Poole. I think we have probably said all that really needs to be said on this amendment, so I will not say any more if you will not.
The Chair: You may continue, Minister.
Hon Ms Gigantes: I thought she might want to respond.
Mr Jackson: By definition, she will have broken the offer. This is sort of like High Noon four hours late.
The Chair: It is great to have a colour commentator.
Ms Poole: On a point of clarification: Does that mean I could not respond to Mr Owens, Mr White and Mr Ward?
Hon Ms Gigantes: Well, that would be my offer, sort of.
Mr Jackson: And her hope.
Hon Ms Gigantes: That is what I had in mind.
Ms Poole: That takes away the rest of my fun for the afternoon. Well, I will tell you, Minister, if this is not breaking the terms of your offer, I will agree to it if the Conservatives agree to it.
Hon Ms Gigantes: We might make another offer to Mr Jackson because it is his amendment. I think he probably needs a few minutes to address in a wrapup way. It is a Conservative amendment, so I would not mind if we had some reasonable accommodation.
The Chair: Shall I take the two members off the list?
Hon Ms Gigantes: You can take me off the list.
Ms Poole: You can take me off the list as long as no other government members are speaking on this, because I cannot guarantee I would not respond to George if he did it again.
The Chair: Well, then, if Mr Jackson wishes to make a few comments in wrapup.
Mr Jackson: Strictly because I was invited to.
Hon Ms Gigantes: By popular demand.
Mr Jackson: Not really. I try to speak only once to a motion, and as a Chair of a committee, I am trying to be helpful -- although I am not always; I know that. It is clear, whether we want to state that there are motives or ideologies or whatever backing this approach -- I mean, we have had ample opportunity to discuss why we believe in what we presented and why we cannot support it.
I guess the substance of what I was concerned about is that I do not see in the legislation which the government is presenting opportunities for tenants to come together and express those kinds of needs which they would like to see addressed. Should there be a cost component, because there are other elements of capital need? We do not have that.
The minister and I agree the old system was wrong because it eliminated the step of bringing the tenant and the landlord together, which is one of two dozen reasons why I did not support Bill 51, and I am on record as not having supported it. I stood in the House and voted against my caucus on it. I did not buy the notion of separating the tenants and the landlord from the process. It is a principle I subscribe to.
It is unfortunate, for whatever reason, that, yes, my amendment may have some difficulty, but the concept I am trying to convey is that there may be opportunities, whether it is dealing with public safety or contemporary social challenges, to do something about our police coming in and pleading with landlords and tenants, and the fact that municipalities do not have the legal framework in which to impose them.
Second, Minister, I have been away from the table for about 40 minutes and do not wish to dwell on the document that you have submitted, which has some relevance to the motion, but as I see the stats, my limited university training on how to read statistics says this is not the total picture, it is selection, and it includes all or any renovations to an underpark. If we look at the underpark like an automobile, changing a transmission is incredibly more expensive than changing a tail-light; then surely restorative work is incredibly more expensive than is repairing of lights or exit lights that are no longer functionally within the code.
I see these stats, and without dwelling on them, you have some restorative work which we are talking about that is showing 10%. Some of this is mandatory under the building code if it is an opening and closing garage door, so frankly I think you would have been better served not to have shared this with us than for us to look at 2% to fix lights, which is not what we are talking about. We consider a lot of required maintenance, and we certainly see that will be strengthened once we get minimum maintenance standards bylaws more effectively across this province. What we are talking about are chronic problems that were not foreseen, that this province's building code said were condoned. Those building practices have fallen into disrepute, and now we are looking at the alternatives of a city coming in and shutting down a parking lot because it is no longer safe for tenants.
We disagree that the legislation has given sufficient latitude to meet those kinds of unique cases. I am sure you are not using this sheet which you have tabled with us as the basis for your justification that there is sufficient funding. As I say, it is only from having spent three days in hearings with lawyers and subpoenaing these restoration companies in order to understand the incredible expenditures involved with these buildings that I have come away with an understanding of how expensive they can be. Those were the elements that were contained. I do not wish to dwell on them any longer than that, but simply to say that we have had a very thorough airing of this amendment. It unfortunately will fail, but I appreciate the interest of the government in thoroughly discussing it today.
The Chair: Further questions or comments? Shall Mr Jackson's amendment to subsection 21(2.1) carry? All in favour?
Ms Poole: We are missing some members. Could we request a 20-minute recess?
The Chair: You certainly may. We will reconvene at 4:36.
The committee recessed at 1614.
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The Chair: The first thing we will do is deal with Mr Jackson's friendly amendment to subsection 21(2.1). Would the clerk read the amendment for us.
Clerk of the Committee: Mr Jackson moved that the motion be amended by striking out the words "to copper" in clause 21(2.1)(c).
Motion agreed to.
The Chair: Now we will deal with Mrs Marland's amendment to subsection 21(2.1), as amended.
Motion negatived.
The Chair: Now we will move to subsection 21(3). There is a Conservative amendment, I believe.
Mr Jackson: I am not so sure I am going to submit this. Let me just check.
The Chair: We will give you a few moments.
Mr Jackson: Give me a half a minute, please, Mr Chairman.
The Chair: Having looked at the amendment now, you could signify that amendment by merely voting against the government's clause.
Mr Jackson: Okay. If that is the Chair's ruling, I accept that. Thank you.
The Chair: We will then deal with subsection 21(3). I believe this is a section in the original bill.
Ms Poole: On a point of clarification, Mr Chair: How long is the ban on the minister's and my speaking to last?
The Chair: I think that was by mutual consent and I think it has just been broken.
Ms Poole: I thought it was only for subsection 21(2.1).
The Chair: Questions or comments on subsection 21(3)?
Mr Jackson: Could I just have that explained to me in clearer terms? "The rent officer may order maximum rent in an amount that is less than the previous maximum rent." Could somebody tell me what exactly that means, please?
Ms Parrish: That is a change from the current system. Under the current system if a landlord made an application to have the rent increased and tenants brought forward issues -- for example, inadequate maintenance or service withdrawal -- the best you could do is say, "You can't have this increase." You could not actually decrease the rent. The tenants would have to make another application if they wanted to actually decrease the rent. What we are saying now is that you could actually decrease the maximum rent so that you could have an order, if the evidence was brought forward, that not only would the rent not increase but it would actually be lower than it was when the application started.
Mr Jackson: Less than the previous maximum rent.
Hon Ms Gigantes: That is right.
Mr Jackson: By definition, is the maximum rent the level of statutory increase or is that the quantum of the total increase from the previous order?
Ms Parrish: There may have been a previous order or it may be the amount of rent the landlord is legally allowed to pay plus guideline amounts.
Mr Jackson: So it is the total, not the statutory, or will it allow simply a statutory increase in the previous year?
Ms Parrish: The maximum legal rent is the amount of rent the landlord may charge. It may have been established under an order, in which case it will be more than the guideline. If the landlord does not have a previous order, it will be the base rent he is legally allowed to have plus the guideline amount.
Mr Jackson: So this is the clause that says landlords cannot pass through the statutory increase if the tenants come forward with a request to have a statutory decrease? Maybe I am missing it, but that is how I thought I was hearing it.
Ms Parrish: If in the hearing there is evidence that the rent should actually be decreased -- for example, because services are withdrawn, because there is inadequate maintenance -- this allows the rent officer to make that order as opposed to simply saying, "All I can do is deny the landlord the increase." This says that if the evidence is there -- they have to prove their case -- the rent can actually be decreased.
Hon Ms Gigantes: This allows both applications to be dealt with at one time instead of requiring that there be two applications.
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Mr Jackson: But it is the actual reduction of the application, it is not the reduction from the level of the previous order.
Hon Ms Gigantes: It might be a reduction from the level of the previous order, and that is noted by reference to a maximum rent.
Mr Jackson: That is what I am trying to get at here, because that is another issue. I would agree with you about dealing with the two at the same time, but does that then mean we could be dealing with an order from the previous legislation through this section?
Hon Ms Gigantes: Yes.
Ms Parrish: Yes.
Mr Jackson: My Lord. That will have big implications, will it not?
Hon Ms Gigantes: It will not have any more implications than dealing with a previous order under this legislation once one is made. A maximum rent is a maximum rent. This is a determination of a maximum rent, allowing two applications to be heard at the same time, one from the landlord and another from the tenant.
Mr Jackson: I am not debating that. I think that is a wise decision. Philosophically I am on record as saying that the more we can do when both parties are in the room, the better. That is just plain, simple efficiency. What I am trying to get at is the legal and ethical implications of an opportunity for reduction based on a previous order, and there are other implications for that as well. To my knowledge, that is the first time that principle has been applied. No? The minister shakes her head. That is usually for a reason. I know Hansard will not always record that, so perhaps the minister might explain to me why I am wrong.
Hon Ms Gigantes: Because there is provision under Bill 51 for the reduction of a previously ordered rent. It has just been unusable or almost unusable as far as tenants were concerned. What we are doing here is saying we are going to put the two items together. This is not a new concept in terms of what will happen. It is a new concept only in that we are allowing both things to be considered at one point in time -- at the point when the landlord makes application.
Mr Jackson: In fairness, are we not leaping from one set of legislation to another? I am not challenging you that from year to year under this legislation clearly there is a continuity and a consistency.
Hon Ms Gigantes: The concept --
Mr Jackson: Let me finish with what my frustration is and then you can help me clear it up. Legal counsel has suggested it is the withdrawal of service in items of that year, yet these are denigrations of services in the current-year application but they might manifest themselves in a ruling that there should be a reduction in the previous order's level. It is my understanding that has never been done before.
Hon Ms Gigantes: Colleen Parrish points out to me that there is nothing retroactive about the application because the application of the legislation we are dealing with under this subclause is one that is prospective. It does not affect any rents collected in the past. What it does, with the continuation of the definition of "maximum unit rent," which we have seen throughout legislation that we have passed in this province for year after year, is say that can be varied at a point when a landlord makes an application for an increase above guideline, and it can be varied below the previously established legal maximum rent, which is the same concept --
Mr Jackson: Okay, now stop there.
Hon Ms Gigantes: No, I want to underline --
Mr Jackson: I am in agreement with that concept. Where I am having difficulty is moving from one legislation to the other.
Hon Ms Gigantes: What I think you do not understand here --
The Chair: Order.
Mr Jackson: I think we are doing quite well, Mr Chairman. I want to get this over with quickly.
The Chair: I am concerned that Hansard is not going to be doing quite well.
Mr Jackson: You are right. I apologize.
Hon Ms Gigantes: So do I.
What I think you are failing to understand is that the concept has not changed. In legislative terms, the definition we are dealing with of the maximum unit rent is not changing from one piece of legislation to the other, so that there is nothing on this item that is being varied and there is no application of different definitions of "maximum legal rent."
Mr Jackson: I agree with that statement. What I am having difficulty with is the level of adjustment. You are adjusting a previous order's level, and that causes me great difficulty.
Hon Ms Gigantes: That can happen under the current legislation.
Mr Jackson: Under Bill 51?
Hon Ms Gigantes: Under Bill 51, yes. It takes a separate application by tenants. As we have agreed, that has proved almost impossible.
Mr Jackson: My understanding is that this is a function of when we went on to Bill 51. We went through that two-and-one-half-year adjustment period where we had to define what was the maximum legal rent. We gave landlords an opportunity to come forward and clean up any grey areas and tenants an opportunity to comment. That became a function of Bill 51.
Interjection.
Mr Jackson: If I had not worked with this, I would not be concerned about this issue. I am not arguing about the merging of the process. I am not arguing about a reduction as a denigration of the application before us. I have great difficulty with the rental levels that have been communicated to financial institutions and to others, to assessment courts which are establishing the amount of value for purposes of taxation and assessment based on those levels. If that becomes the ceiling of that year, the maximum rent of that given year, then we have communicated that. We are now moving to a system where we are going back and adjusting that.
If you want to take the subsequent year's application and adjust it -- that is how I thought I read that. I am nervous about adjusting a previous order. I understand the difference from how Bill 51 evolved, where we said to tenants: "We guarantee you that is the maximum legal rent. Now we have in this province a floor or a ceiling" -- depending on whether you are a landlord or a tenant. We did not have that in this province. You could have all sorts of rents all over the place.
Hon Ms Gigantes: I think Colleen could probably help us clarify this.
Mr Jackson: We were doing pretty good there.
Ms Parrish: I will try again. What this is saying is that when the landlords make their applications, they will have a maximum legal rent for each unit. Let's say it is $500. The landlord says, "I would like to increase the rent by 9%," guideline plus 3%, and the tenants say, "Yes, but in the last year you've withdrawn parking," or "You've done this, that or the other thing and, what's more, these conditions are bad." There is a hearing and all those issues are brought to the table.
The landlord is unable to prove, for example, that the 3% he has claimed is actually justified. The tenants are successful in demonstrating that there has been a service withdrawal and that various conditions are inadequate. So what this section is saying is that it is possible for the order to say, "Okay, the new maximum rent for the future is $495, which is less than the previous maximum rent of $500." It would only be for the future. All that $500 that was paid in the past would be paid in the past. This is a consequence of putting those two applications together. So there is that possibility when you do that offset. There is also the possibility that it could be any other number. If the landlord was able to prove a certain amount and then there was a subtraction by the tenants, the maximum legal rent would go up to $525 or something.
That is what this section is saying. It does not affect the validity of the past order and it does not affect the validity of the rent collected in the past. That was legally collected by the landlord. It does permit in future the rents to go down below what they were before to reflect the fact that the tenants are getting less than they got before. Before they got parking, now they are not getting parking.
Hon Ms Gigantes: In fact, that situation can arise under Bill 51. The maximum legal rent under Bill 51 can, in certain circumstances, go down from what financing companies thought or assessment officers thought or whatever. It is a matter of fact that under Bill 51 there are provisions to lower what had previously been the maximum legal rent. This is not a new concept.
Mr Jackson: I do not want to dwell on this. You introduced the notion of a previous order and what I heard legal counsel just say is that it does not affect the previous order, so the $500 rate never changes. What I thought was that if there was a certain reduction, you would set your calculation from the $500 and reduce it and then start adding your statutory increase or whatever. That has significance in terms of the calculation because you have shifted the base because it came from a previous year's order. If the base stays the same and instead of getting 9% they get 8.4%, I can live with that. I cannot live with saying that last year's order, which was the $500 level, now is deemed to be $485 and now we will proceed to add the 8.5%. That is wrong accounting, and that is what I wanted. From the minister's initial comments, that is the impression I got.
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Ms Parrish: There is another section that deals with that.
Hon Ms Gigantes: All right. Perhaps you could refer us to that.
Ms Parrish: I am almost hesitant to raise it. You may recall yesterday we had a discussion about a section that talked about the decrease and the increase, and you may recall that this section, which I believe is subsection 20(1), sets out all the findings the rent officer must make. It says the rent officer must first of all decide what the guideline is for the year. This is 1992; it is 6%. Then they have to say, what is the amount the landlord has requested? Then they have to say, how much should that be decreased because of legitimate evidence brought by the tenants? So what the statute currently says is this: You take the guideline and you add that to the rent. You take a justified amount from the landlord and you add that. You take the decrease justified by the tenants and you subtract that. That is what that language, which people found difficult to deal with yesterday, means. It means you decrease that increase.
Hon Ms Gigantes: The landlord gets the benefit of the order in which that is done.
Mr Jackson: That is what I understood. That is why I could not understand bringing in the previous order and moving the base.
Hon Ms Gigantes: Yes, but you can end up with a figure, once you have gone through that calculation, which is below the previous base and therefore constitutes a new and lower maximum legal rent.
Mr Jackson: Not to be argumentative, but I would be shocked out of my shorts if there was a single building in this province that had evidence of a reduction of service that was greater than 6% or 7% or 8%, which is what the base calculation was. I would be shocked to hear of one.
Hon Ms Gigantes: We are not only talking about reduction of service, though I think you might find instances of that. We are also talking about whether the level of maintenance is adequate and whether the landlord shall then pay a penalty in terms of the rent increase.
Ms Parrish: There are also extraordinary operating cost decreases.
Mr Jackson: Those are increases. We are talking about where --
Hon Ms Gigantes: We do not want to shock you out of your shorts, but it is quite possible that these situations may arise.
Mr Jackson: The minister has not told me she is aware of a single case. She is just saying the legislation was written in such a way. That is what I heard.
Ms Parrish: There have been cases under Bill 51 in which there have been rent reductions related to services being withdrawn, and the rent has been reduced.
Hon Ms Gigantes: That is how legal rent has been reduced.
Ms Poole: May I ask a supplementary?
Mr Jackson: Sure.
Ms Poole: Thank you, Mr Jackson. He has agreed to a supplementary, Mr Chair, with your permission.
The Chair: I see, Ms Poole, fine.
Ms Poole: There is a major difference, though, with Bill 51. With Bill 51 you were dealing with tangibles. You were dealing with the cost of a service being withdrawn, for instance, or an extraordinary operating decrease. What has happened that is different in Bill 121 is that there are two new elements involved which are not tangible and which are not defined in this legislation, nor are criteria set out. They are inadequate maintenance and neglect.
I think Mr Jackson was on a very good point, that when financial institutions make loans to landlords, they make them based on certain revenues coming in and they make them based on certain maximum rents. I too have absolutely no problem with amalgamating the two applications, but I am somewhat concerned if you are going to give the rent officer the arbitrary discretion to grant a rent reduction for undefined terms such as inadequate maintenance and neglect and lower the maximum rent without the landlord having any right of appeal on the basis of facts. To me, I do not see the fairness in that and I see a great deal of difficulty as far as landlords receiving financing is concerned. You might want to take it from there.
Mr Jackson: It also has implications as it relates to assessment matters which concern me even more in jurisdictions where there are going to be radical changes in market value assessment. Metro Toronto is one of them, and we are told that 25% -- you know the statistics better than I -- of all tenants come from this municipality. We are going to have desperate people running to assessment court to get their assessment reduced, especially the way we are treating assessment in Bill 121.
However, I think I had better understand the clause. I do not think it would move me to support it for the point I have said, but I must say I support that the processes are merged, because that was a frustration for me when, in one of my buildings, the swimming pool was shut down, what was previously a common area meeting room was converted to the landlord's use, the lockers were removed -- there was a series of things. We got nowhere in terms of these being services no longer rendered, and to have a rent review officer tell us it is not germane is not a comforting experience.
However, I am very nervous about the concept of adjustments. I would much rather see penalties in subsequent years.
This begs the whole other question about rebates and the equity and fairness of those who benefit from it, but we are really peeling an onion to get to that, I suspect, and legal counsel would agree with that one. Thank you for your explanation.
Ms Poole: I wonder if the minister or Ms Parrish would comment on the effect on the financial institutions. The Conservatives did have an amendment, which I gather really is not in order because all they have to do is vote against this particular section, but the concern expressed was the fact that this would be a direct impediment to any landlord being able to achieve financing with respect to rental complexes. I can certainly understand that concern. I certainly do not think it is the government's intention, but as soon as you start lowering maximum rents, particularly when, as I say, you are dealing with intangibles -- again we come back to that same problem of the fact inadequate maintenance and neglect are not defined nor are criteria given. I think we would certainly be much more comfortable supporting those provisions if the minister and the ministry would define those particular items.
Mr Chair, since we are bordering on 5 o'clock, perhaps we should adjourn the debate until tomorrow.
The Chair: That would be a capital idea, Ms Poole.
Ms Poole: Jolly good.
The committee adjourned at 1658.