Committee Transcript 1996-Aug-20 | Legislative Assembly of Ontario

The Chair (Mr Jack Carroll): The first presenter this afternoon is Phyllis Dutchak, president of Strathcona Mews Ltd. Welcome to our committee. You have 20 minutes. Questions, should you allow the opportunity for them, would begin with the government. The floor is yours.

Ms Phyllis Dutchak: Hello. My name is Phyllis Dutchak and I'm here acting on behalf of Strathcona Mews, where I serve as president on the board. Strathcona Mews is a 30-unit equity co-op townhouse complex located in the city of Toronto. We are having extremely serious problems because we lost our only source of financing and there is no other source available to us. Strathcona is a co-op and we cannot obtain title to property; we can only get shares. Because we have shares, no financial institution will accept us. They demand that there be title to property.

In 1989, the National Bank decided to accept co-ops and we signed on with it. It took two years for our lawyer to work through a series of internal papers, plus working with the National Bank, and we ended up with a legal bill of more than $250,000. But less than three years later the National Bank decided to get out of co-ops. They notified our solicitor and told him that we'd better look for another source of financing. Since the National Bank stopped going into co-ops, it has stopped refinancing new purchasers. This makes it extremely difficult for anybody to sell their unit.

The big worry is, will the National Bank pull out completely? If that is the case, we have no source of financing. We have spent hundreds and hundreds of hours and we've been turned down by all official sources: banks, trust companies and so on. The only source we would have would be a loan shark and we don't want to get into loan sharks. I work for the Small Claims Court and I know about loan sharks.

We filed an application to have Strathcona converted to a condominium with the city of Toronto and we briefed the city of our situation beforehand. We also have renters at Strathcona and we discussed our dilemma with the renters. The renters all agreed to our converting to a condo and they signed a document to that effect. We, in turn, provided the renters with several years of guaranteed rental occupancy without any attachments and the renters agreed to it. However, the city of Toronto has a policy of not allowing conversions unless the vacancy rate is 2.5% for two six-month periods, which is really for one year. With rent controls in effect there are no rental buildings being built in Toronto, so we're caught in a catch-22 situation.

At the neighbourhood meeting our case was lost because the city councillors voted against us. They recommended that we get a long-term lease through the CMHC. The CMHC agreed to that, but no financial institution would accept it because, again, they want title to property. They will not accept a property that has shares. I spent several hundred hours of my own personal time on that and got nowhere.

All the other municipalities in the area, such as North York, Scarborough, Mississauga and Guelph, allow condo conversions because they know that's the only way you can get financing. The city of Toronto is the only municipality that is holding out and we are paying very dearly for this. We are therefore strongly urging that buildings be allowed to convert without municipal approval because in our case it is Toronto that is holding Strathcona back from being converted to a condo.

Our lives are on hold right now. We can't move; we can't sell; we can't do anything. At present, we are living with a great deal of fear and anxiety. The National Bank can stop renewing our loans at any time and we'll have nowhere to go. This is very worrying, not knowing what will happen to us. Surely in 1996 this sort of thing should not be happening in the progressive province of Ontario. Surely we are entitled to have a roof over our heads. We do not want to be victims. Should the National Bank call our loans, we will have to leave our homes just like the characters in the Grapes of Wrath, what John Steinbeck wrote about in his classic novel.

Besides Strathcona there are about 20 or so other co-ops and co-ownership buildings in the city of Toronto that are also experiencing serious problems getting financing. This financial problem for co-ops must be addressed. The only way to address it is to allow them to become condos and at the same time make sure that if there are any renters in these buildings, the renters be well looked after. It is only fair that the renters be considered as well as the owners. Most of us who live in Strathcona had been renters before we bought our units, so we know both sides of the picture -- the rental picture and the owner picture. Therefore, we want to be fair and reasonable.

We have to get this problem solved. It is very unfair that in the past several years industrial, commercial and even warehouse buildings have been allowed to convert to condos, but Strathcona, a residential building, has not been allowed to do so. The city of Toronto is discriminating against allowing Strathcona to become a condo whereas it is allowing other buildings to become condos. That is not fair. We urge that the minister in charge of housing pass legislation that would allow co-op buildings such as Strathcona to convert to a condominium without municipal approval so that we can finally get on with our lives.

It is very difficult at the present time for us to function because technically we've lost control of our buildings. Because the National Bank has withdrawn its financing, if a unit owner doesn't want to pay their maintenance payments, there's nothing we can do about it because we can't sell the unit. We're left high and dry. It is extremely stressful. This problem of financing has to be resolved and that is why I am here today, to bring you this brief. Also, I've supplied you with a copy of a letter we sent to the minister. I'm open for questions, if there are any.

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Mr David Tilson (Dufferin-Peel): Thank you for coming to speak with us this afternoon. The paper that was prepared that this committee is reviewing -- I suppose you've had an opportunity to review it -- states that one of the components of rental housing protection in the proposed tenant protection package is that demolition, major renovations and conversions of rental buildings to condominiums or co-operatives will no longer require municipal approval. I assume from your presentation you obviously support that.

Ms Dutchak: Oh, absolutely. That's what I'm here for.

Mr Tilson: The mayor of Toronto was here yesterday. They've spent $250,000 to fight this whole package that we're putting forward. I find rather shocking that a municipality such as Toronto would spend that kind of money. They came forward with no constructive comments. They made no comments with respect to this issue. All they seem to be doing is spending money on buttons and hiring consultants and other such things to fight this legislation.

One of the questions the paper asks is, "Should majority tenant approval be required for conversions?" Do you have any thoughts on that question?

Ms Dutchak: We contacted all our tenants where we live and all of them were in agreement. I can produce copies of where they signed documentation that they were all in agreement. It's very important to talk to the tenants and work out a deal with them. Tenants are reasonable. Until I bought into Strathcona, I was a tenant all my life.

Mr Tilson: My question really is, should there be majority approval, should there be two-thirds approval? What sort of percentage approval should there be for realizing on a conversion? Have you put your mind to that? Perhaps you haven't put your mind to that.

Ms Dutchak: In our case, it was majority approval.

Mr Tilson: So you feel majority is satisfactory?

Ms Dutchak: More, 51%. I think that should be fair. I really feel that you have to look after the tenants as well as the owners. I want to be fair about this. We don't want just to allow conversion. We want to make sure the tenants are looked after too because they're just as important as we are. We get along very well with our tenants. We've invited our tenants to our board meetings.

Mr Tilson: Thank you very much for coming to us this afternoon.

Mr Ernie Hardeman (Oxford): Going on with Mr Tilson's question, have you given any thought to, when you have 51%, what type of conditions should be in the proposal to protect the other 49% who aren't able to or don't want to be owners but are presently tenants? How would we protect their --

Ms Dutchak: Their interest?

Mr Hardeman: Yes, that in fact they would not be out of the building because the building was all condos.

Ms Dutchak: Perhaps it should stipulate in an internal agreement that they cannot be forced; give them so many years of minimum occupancy, to begin with -- I think that should be reasonable -- so that the tenants know they're protected.

Mr Mario Sergio (Yorkview): Ms Dutchak, I guess your problem is not with the city of Toronto but with the government itself, because if the government were to provide sufficient affordable housing where the vacancy rate would be 1.5%, 2% or 3%, then probably the city of Toronto would say, "Sure, let them go and convert their buildings." But if we're listening to the government side, just be patient for a few months because they will be doing exactly what they did with previous legislation. They will pass this legislation and then you'll be homefree to convert your building to condominiums. Having said that, this will come to pass as well because the mandate of the government is to do certain things. They will be doing exactly that.

Did you offer the units to the tenants?

Ms Dutchak: Yes. We've been trying desperately to sell off units.

Mr Sergio: I'm not saying if you tried to sell them. Do you have 100% agreement?

Ms Dutchak: From the tenants? Yes, we have 100% agreement, signed agreements.

Mr Sergio: And the city still says no?

Ms Dutchak: Absolutely, and we had a hearing on this. That's the article, after the hearing. Yes, we had 100% agreement from the tenants, and the developer we sold to offered all the tenants in the building one year's rent towards down payment on the unit. He was a very reasonable man. Anyone who's a tenant could have bought into that place. Actually, although the requirement was 25%, which is normal for co-ops, I think he was even going to go lower than that with them. All the tenants at Strathcona had an opportunity to purchase their units. It was a very fair deal.

Mr Alvin Curling (Scarborough North): Doesn't the law state that you have to have a certain occupancy rate before you can be a condominium?

Ms Dutchak: Yes. In the city of Toronto a vacancy rate of 2.5% for two six-month periods.

Mr Curling: You have not reached that.

Ms Dutchak: Pardon me?

Mr Curling: You have not reached that level?

Ms Dutchak: Oh, no. There's no way we could reach it with rent controls.

Mr Curling: I don't know if rent control has anything to do with that part of it, really.

Mr Tilson: Sure it does.

Mr Curling: Let me do the questioning. It has nothing to do with it. We're talking about occupancy levels.

Mr Tilson: Tell her how it doesn't.

Mr Curling: Maybe I should ask you the questions then.

The Chair: Mr Curling has the floor, gentlemen.

Mr Curling: Yes. They're so defensive. Go ahead.

Ms Dutchak: The city of Toronto has a policy that it will not allow a building to convert that has renters in it, unless the vacancy rate according to CMHC rental figures -- they collect figures -- is 2.5% for two six-month periods, over a 12-month period. Unless that is so, the city of Toronto will simply turn it down and that's what happened to us.

Mr Curling: Likely so, but all those who are in that condominium had come into that condominium, the co-op, in order to buy later on, is that it?

Ms Dutchak: A number of the people were renters. Quite a few people were renters and then the developer wanted to get out of the building, he wanted to sell off the units and he gave them a wonderful deal, really a deal of their lifetime and some of them bought into the units. There are others like me, I saw the ad in the paper and I bought into the units, the first property I've ever owned.

Mr Rosario Marchese (Fort York): I just want to make some comments with respect to the city of Toronto and their submission here yesterday.

I, for one, was proud of the submission they made, very happy that a diverse group of politicians, very Conservative, very Liberal and very NDP, came here unanimously condemning the proposal and supporting rent controls. It's very telling that a group of politicians from diverse political tendencies came here to convince this government, even Conservative members, that what they're doing is wrong. The fact that they're spending money to protect rights of tenants I think was very responsible.

You see, we're worried about the fact that poor people can't pay any more. Overall, this general package that they are presenting which purports to support tenants does the exact opposite because what they're not saying is that 70% of all tenants within five years will move. Every one of those units, once they move, will be subject to an increase. That's what they're not telling people. Well, maybe they are, but they don't think people understand. So I'm worried about them.

I understand your own personal situation, but as a politician I worry about what happens to poor people who cannot afford the increase, first of all. Secondly, in your paper you talk about the fact that rent controls in place, however, make it impossible for developers to build rental buildings. You make that as a statement of fact.

Ms Dutchak: Why aren't they building?

Mr Marchese: They're not building because they're not making any money in it unless governments make it possible for them to build, meaning you cut taxes, federal capital tax, you cut the GST and so many other things they want on the red carpet, as one individual came here to say yesterday. If you do all of that, as they are prone to want to do, then they will build. Why would you give the store away to builders? Why wouldn't you do it as a government when you can do it more responsibly, we argue. They argue not, because they want the private sector to do it all.

But I wanted to challenge the statement that says the developers are not building because of rent controls. That's not true. So I wanted to present that view.

With respect to your own case in this issue, we're very concerned that when you allow the developer to do what he or she wants, what you in effect will do, for the most part, is to take rental accommodation that many can afford out of the market once again, further squeezing what is available to be rented out to people who can't afford to pay any more than they're paying.

As far as you're concerned, it's a great deal that was being offered here and there's a whole heap of people who've got money to spend on these things. There maybe are a few people who can continue to buy condos, but the majority of people can't afford it. So we want to protect the rental stock.

Now I understand your individual concern, but from my point of view I want to protect what's available for the majority of people who are losing their jobs, who are now working part-time, who are receiving much lower social assistance than ever before, when the economy's being weakened by their policies. I'm worried about what happens to the majority of the public. While understanding your own personal matter, we have to balance out the greater public interest with individual interest, which sometimes may be in conflict, I agree.

The Chair: Thank you very much for your presentation. We appreciate your being involved in the process.

I would like to just caution the committee that we are basically here to hear the presenters, not to argue back and forth with one another.

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ONTARIO HOME BUILDERS' ASSOCIATION

The Chair: The next presenter represents the Ontario Home Builders' Association, Ward Campbell, the past president, and Andy Manahan, director of industry relations. Welcome to the committee, gentlemen.

Mr Ward Campbell: Thank you and good afternoon. My name is Ward Campbell. I am immediate past president of the Ontario Home Builders' Association and I continue to serve on the Ontario Home Builders' Association executive committee. With me is OHBA staff member, Andy Manahan, who is director of industry relations. I'd like to note that Stephen Kassinger, a member of the OHBA's board of directors, had intended to participate today but was unable to attend these hearings. Instead, we've attached an article which Stephen wrote for the Ontario Home Builder magazine.

The Ontario Home Builders' Association represents 3,400 member companies involved in Ontario's residential construction industry. Our membership is made up of all disciplines involved in residential construction, including builders, land developers, renovators, trade contractors, apartment owners, property managers, mortgage lenders, housing consultants, economists, planners, architects and engineers, and lawyers. Together, we produce 80% of the province's new housing.

In addition to meeting the demands of people who have chosen to purchase their own homes, our members address the needs of those who choose to rent. Whether through construction or property management, we have endeavoured to provide the best quality rental accommodation possible.

We are pleased the government has recognized that the rent control system is in need of a major overhaul. The introduction of rent controls in 1975 and the tightening of rental legislation, particularly over the past 10 years, have severely diminished the incentive for builders to expand the stock of rental housing in Ontario. The Premier hit the nail on the head when he said a year ago during a radio phone show in Ottawa that marketplace rent control is the best rent control mechanism there is, and that's what we'd like to be able to move to.

While the proposed tenant protection legislation is by no means a market-based system, we believe it represents a step in the right direction. Cuts to the non-profit program last year were long overdue. Money was thrown at a problem but it did not solve the housing affordability situation. This provincial government recognizes that the private sector can build housing much more efficiently than the government can and wants the residential construction industry to return to building rental apartment buildings. OHBA members will play a major role in the resurgence of this sector under the right conditions.

The Minister of Municipal Affairs and Housing, the Honourable Al Leach, is well aware that without an infusion of new rental buildings, there is potential for a severe shortage of apartment-style housing in the greater Toronto market and in other urban Ontario markets. Last fall, the ministry commissioned a report that clearly spelled out the message which the provincial government, as well as the federal government, must take to stimulate new rental supply.

Housing consultant Greg Lampert's report, The Challenge of Encouraging Investment in New Rental Housing in Ontario, stated, "There is serious doubt whether relaxation of rent controls will in itself be sufficient to stimulate private rental investment on the scale required." We concur with Mr Lampert's opinion and can point to a number of pro formas which were contained in his report to show the difference in project development costs, annual revenues, costs and net income for the potential buildings in Toronto and London under different scenarios of taxation.

These are generic pro formas but they illustrate that there exists a gap between the economic and market rents. In Toronto, the gap between economic and market rent is approximately $260 per month, using typical land, construction and other costs. In other urban Ontario markets such as Kingston, Hamilton or London, the monthly gap would be about $150 a month, depending on the actual costs.

This gap exists largely due to various taxes, such as development charges, property taxes, and the GST. For instance, builders must pay 7% GST on the value of a rental building. By comparison, most single-family housing pays an effective GST rate of 4.5% after the rebate. Lampert's report lists how the financial and regulatory environment contributes to the gap and explains why what was once a healthy industry is languishing. Without the elimination of this gap and the chance for a reasonable rate of return, no investor will proceed with new rental construction.

In our opinion, not all of Lampert's recommendations need to be implemented to spur the construction of rental. In fact, it would be naïve to think that one could wave a magic wand and correct a host of inequities simultaneously. To restore a sense of equilibrium to Ontario's distorted rental housing market will require time and patience. For example, we do not expect that the property tax inequities will be rectified overnight.

Rent controls have contributed to the distortion of Ontario's rental housing market to such a degree that even with ever-tightening vacancy rates there is only a dribble of units coming on stream. With vacancy rates of less than 1% in the Toronto CMA, or census metropolitan area, there were only 20 private units built last year. The provincial average vacancy rate for privately initiated apartment buildings was 2.1% during this period, but only 610 units were built in Ontario. This represents only 1.7% of the 35,818 total starts in Ontario last year. Ownership housing has been in the cellar for the past few years, but by comparison, private rental has been in the 100th level of the underground parking garage.

The new supply of rental housing has been dismally low when one considers Ontario's population growth and immigration levels during the past few years. Even if one factors in the spike in supply of non-profit housing, the role that investor condominiums played in supplying high-end rental accommodation, and the fact that there were families doubling up in the existing housing stock, it's startling how low Ontario's rental supply has been.

In contrast to our situation, the US new rental housing industry is alive and well. Of the 278,000 total multifamily starts in 1995, 65% were private rental starts, 18% condominium units and 18% tax credit units. The share of condominium starts is declining while private rental in the US is rising, and it is forecast by the National Association of Home Builders to continue to rise. You may be shocked to learn that this level of activity occurred with an average vacancy rate of 9.5% in 1995.

Committee members may be wondering what will be required for our rental construction industry to return to a healthy state. Must all of Lampert's recommendations be implemented? We do not think so. For certain investors, it may be sufficient for X number of Lampert recommendations to be fulfilled in order to create new supply, while for others the uncertainty regarding projected return on investment may be inadequate to proceed. But the change must be made quickly for a new supply to be built by the end of this century.

Other than the actual process leading to the investment decision, it will take at least two years to obtain planning approvals and complete construction. Therefore, urgency is critical.

Unfortunately, because of the dynamic nature of real estate investment, it's not possible to provide any estimates of future supply. What we can say is there will not be a surge in supply over the short term, even with the removal of rent control provisions for newly constructed units.

From a builder's perspective, OHBA's main concern is with encouraging new supply. As has been indicated, the proposals in the discussion paper on their own will not result in a major infusion of moneys into new rental investment. There will be some activity in various centres, but it will not be on the scale which is required in Ontario.

The proposals, in our mind, represent a transitional program which will ensure protection against large rent increases for tenants. We believe that Ontario must move from this phased decontrol system -- or, as some have called it, the decontrol-recontrol system -- to complete removal of rent controls. It has been suggested that this be done within a specified time period such as the first term of this government. Such a signal would provide private investors with a greater degree of confidence that we are moving to a market-based system.

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In conclusion, we are supportive of the phasing out of rent controls, but we are not wholeheartedly supportive of the way in which this proposed package attempts to do this. As the Premier indicated, a well-functioning rental housing market is the best form of protection tenants can have. By facilitating a new supply of rental accommodation tenants would have greater choice and landlords, through competition, would be compelled to keep rents at a level the market will bear. In addition, to retain tenants there would be enhanced maintenance and conversion measures.

Having said that, we recognize that transitional measures are appropriate to acclimatize the industry, the public and the provincial government to a new system. We are confident that with time the apartment building industry can be resuscitated, construction jobs created and new supply built. We are confident that the public will be well served by a return to a market-based system and we are confident that the government need not spend a fortune, as it previously did, on social housing to house Ontarians.

Andy and I would be pleased to answer your questions.

Mr Curling: I listened to you carefully. I think you understand the complexity of the housing strategy that must be put in place for us to have a balanced supply of units for people who are not able to plug into the marketplace as it is now; in other words, affordable housing to be built.

You said you applaud the cancellation of the construction of non-profit housing. I wish I had about half an hour to discuss all that with you first because it's the private sector that really built it. What the government had done was they built a community, they just didn't build housing. What most of your industry has done is say, "Millions of dollars to build non-profit housing, taxpayers' money." Yes, it was taxpayers' money that built that community, and it should be.

On the other hand, you state that it is the right direction the government is going in cancelling rent control, and in other words you say, "Oh, don't do it so fast, please." See what happened? When the government cancelled out the non-profit housing and said to you, "Now deliver," you said, "No, we can't, and if we do, we'll deliver at the top end." What time should it give you to deliver affordable housing to the people of Ontario at the bottom end of the market? How long will it take you, your industry, to do that?

Mr Campbell: That would depend on how fast the government moves to get rid of rent control --

Mr Curling: Let's say they cancel it tomorrow.

Mr Campbell: -- and to fix the tax base for property taxes, the federal government comes to the realization that the GST is not correct -- there are a lot of things involved in it.

You talked about the non-profit program. We still firmly believe that was money not well spent, better spent on a housing subsidy allowance to let the tenants have their choice in the market where to move.

Mr Curling: So rent control is not the monster that you talk about then?

Mr Campbell: I didn't say that.

Mr Tilson: He didn't say that; don't put words in his mouth.

Mr Curling: This is a home builders' association member here; I'm asking him.

Mr Campbell: Rent control is a serious problem; it's one of the problems. There are a number of them that affect rental housing markets, as we all know. That is certainly the biggest one. If that is not eliminated and gotten rid of, you will not get the investment that's required to bring rental housing to Ontario.

Mr Marchese: Mr Campbell, what would have happened to your association and to the construction industry if the NDP hadn't been building cooperatives and non-profit housing in the last three or four years?

Mr Campbell: I think our association would have got along just fine without it.

Mr Marchese: No kidding? The only work in construction was what we were building; we were the only ones building.

Mr Campbell: That's not true. Your proportion was a small proportion of the starts in Ontario.

Mr Marchese: Small? So the private sector was building the major portion of the housing starts? The private sector was building the last three or four years?

Mr Andy Manahan: In 1992, social housing accounted for one third of the total housing starts, and that was the peak year.

Mr Marchese: What was the percentage?

Mr Manahan: Thirty per cent.

Mr Marchese: A small amount?

Mr Manahan: That was a very large amount. It was totally out of whack with what we should have been spending.

Mr Marchese: But it was very helpful to you?

Mr Campbell: I think we would have done just as well if we'd had a shelter allowance program in place in a healthy rental market without rent controls and the other problems.

Mr Marchese: I see. So if we had the shelter allowance, which we do -- I mean, we have $2 billion worth of shelter allowance; you already get that now. So you're saying that if we weren't building, you would have been building.

Mr Campbell: No, I said if we had a market-based healthy rental market.

Mr Marchese: How do you get that?

Mr Campbell: I think I stated very clearly how we get that.

Mr Marchese: How do you get that?

Mr Manahan: I can perhaps comment a little bit. I think what we're dealing with here, as Mr Curling previously stated, is a very complex issue. The rental market has been distorted by so much that it's difficult to say categorically what's going to happen, but in essence the rent control system has served to benefit higher-income tenants more so than lower-income tenants. If we had a true market-based system, those, let's say, higher-income tenants wouldn't be benefiting from it and they would be going to other accommodation.

Mr Marchese: What you're saying to people who are tenants is: "Don't worry. You're about to get an increase because as you move out they can charge what they want. But that's okay because the market will adjust itself and everybody will be all right." Is that what I'm hearing from you?

Mr Manahan: I guess you have to look at the number of units and the percentage of units which are below legal maximum rents, the types of household they are living in, rent-controlled buildings. There are a number of units across Toronto, for example, that are chronically depressed, that have been under rent controls for over 20 years. In some cases, those rents are $400 and the household family income is $80,000. Rent controls aren't benefiting the people they're intended to benefit. They're benefiting up --

Mr Marchese: So rent controls will benefit everybody is what you're saying?

Mr Manahan: No, I'm saying the removal of rent control will benefit everyone once we get a balanced system.

Mr Bart Maves (Niagara Falls): Thank you very much, Mr Campbell and Mr Manahan. You've mentioned one of the problems that Lampert points out -- and we discussed it briefly yesterday with Toronto city councillors -- the property taxes. I understand that property taxes in Toronto make up about 40% of the cost of the rent of a unit. Toronto city council, in your eyes and in Lampert's eyes, rather than spending money printing buttons and the like, would their time be better spent perhaps reapportioning their tax system so that there weren't such high property taxes on apartment buildings?

Mr Campbell: We'd like to see property taxes for rental units become more equitable. In the Hamilton area, where I come from, I pay two and a half times for a townhouse unit that I rent out than the ones I sell. It just doesn't make sense; they're getting the same service from the municipality. I think it's even worse in Toronto. It's a problem that has to be dealt with.

Mr Maves: I think it's 4.2 times as high in Toronto, which I believe to be a major portion of the problem in Toronto.

To me, Mr Marchese made a stunning comment, but since it was Mr Marchese, maybe it's not so stunning. He said that he didn't think you should be building. He didn't think we should make any changes so the private sector would build anymore. He decided that we should let the government do it because the government did it more responsibly. Is that your view of how the government built houses. Did they do more responsibly, more efficiently than your membership?

Mr Campbell: My view would be no, they did not. I can give you one example, and it's just one of hundreds. There was a project on the Stoney Creek mountain that was built under the NDP government. The MUP, which is the maximum unit price, on that project was $124,000. It was a nice townhouse project. Within a block, a private developer was selling condominium units for $99,900; just as nice a unit, just as nice a project, same location. You tell me how the government did that cost-effectively? Each one of those units cost the taxpayers of Ontario at least $25,000 more to build, plus the carrying of it overall these years. It's just not efficient.

Mr Maves: That's in Hamilton, so you've heard stories about other cities.

Mr Campbell: Across the province I've heard stories like that.

Mr Maves: The other thing Mr Marchese tried to say to you was --

Mr Marchese: Please quote me as correctly as you can.

Mr Maves: -- that if the NDP wasn't building your association, your members would be a lot worst off. Tell me if this is not a good analogy for your builders: You're making a product. You're making a fair profit over the years. You're complaining about high taxes but they keep getting higher. You keep making your product anyways. All of a sudden, the government decides to use those high taxes, those tax dollars to go into business and compete against you and now you lose your market share, you start to lose money and your profit drops. Isn't the incentive to get out of the business at that point in time? How would you handle that?

Mr Campbell: Yes, the incentive is to get out of the business. There's no question that a lot of the government projects were in direct competition, especially in areas outside of Metro Toronto and the rest of the province. I had people who were renting the market units at $600 a month who could easily afford to pay $1,000 and would have bought a house from me. I would have built them a unit; that unit still would have been built, only they would have owned it and they would have been better off in the long run.

The Chair: Thank you, gentlemen. We appreciate your interest in our process.

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ADVOCACY CENTRE FOR THE ELDERLY

The Chair: The next presenter is George Monticone who represents the Advocacy Centre for the Elderly. Good afternoon, sir. Welcome to our committee.

Mr George Monticone: I'm here on behalf of the Advocacy Centre for the Elderly, which is a legal clinic for low-income seniors funded by the Ontario legal aid plan. The advocacy centre's clients are those people 60 and over who are low-income. We are pleased today to have the opportunity to join with the government in its deliberations about landlord, tenant and rent control issues. We commend the government for conducting these hearings prior to draft legislation to better understand the many complex issues involved in the five or six pieces of legislation that affect landlords and tenants.

Today, I want to focus on care homes, which are but a small segment of the rental market, but an important one to seniors. In closing, I will also make some comments on vacancy decontrol as it affects all tenants.

What are care homes? I think they perhaps are the most misunderstood sector of the rental housing market. They're unlicensed facilities where some care is provided and that care is unregulated. Unlike nursing homes, which are licensed to provide care and accommodation to residents, care homes are neither licensed nor regulated with respect to care.

What are care homes like? They vary immensely. Some are large; some are very small. Some you might live next door to and not even recognize as a care home. Some have a few staff; some have many. Some are luxurious and some are, quite honestly, slumlike. What are the tenants like who live there? They vary immensely also from very high income tenants to the lowest-income tenants in the province. Some have health care needs that are quite many and complicated; others have no health care needs and seek out care homes simply because they want the convenience of meals and other services they may need in the future. People living in care homes vary immensely with respect to age. Some are younger persons with disabilities, and then of course there are many seniors.

Legislation was passed in 1994, the Residents' Rights Act, which brought care homes under the Landlord and Tenant Act, the Rent Control Act and the Rental Housing Protection Act. There was some question prior to that as to whether these types of facilities fell under that legislation. There was in fact a court case that said they do, but the Residents' Rights Act clarified that.

The legislation treats care home tenants the same as other tenants in Ontario with the same rights and obligations, but they have also some special rights, and it's important to understand what those are and why they're there. First of all, care home tenants are entitled to a written tenancy agreement. Other tenants have tenancy agreements, but they need not be in writing. There's a five-day cooling-off period. I won't pretend to second-guess exactly why this requirement was put in the legislation, but I believe it has something to do with the fact that care home tenants are vulnerable and they're contracting with their landlords for not only accommodation but for a range of services, and these are complex agreements. Hence, it is wise to have written tenancy agreements.

Furthermore, care home tenants are entitled to a care home information package, which we like to refer to as CHIPs, which sets out the legal rights of tenants who live in care homes, as well as a lot of very important consumer information that I'm sure any of us in this room would want to know if we were moving into a care home or if we were moving a parent into a care home.

Care home tenants are also entitled to a 90-day notice of increases in meals and services, and for each of these three things I mentioned -- the written tenancy agreement, the CHIP and the 90-day notice -- there is an enforcement mechanism so that the landlord is not entitled to raise the rent unless they happen.

The New Directions paper makes a series of recommendations with respect to care homes, and I want to comment briefly on virtually all of those. It suggests that security of tenure and privacy should continue, and that of course we welcome. It suggests that written tenancy agreements should be continued, and that is good because of the complexity, as I mentioned, of these agreements and the vulnerability of some of the tenants. There's no mention in the paper of continuing the five-day cooling-off period and the enforcement mechanism. I assume the government would have that in mind as the way of enforcing this particular requirement.

New Directions also suggests that the care home information package be continued, and we welcome that. We suggest that you consider a standard form agreement, which we've appended to our submission. That would be, I think, helpful to landlords and tenants in making what can be a fairly complex thing into something that everyone recognizes and understands.

The government is suggesting in the New Directions paper that rent control for accommodation be continued. We welcome that. Of course, there is the caveat of the vacancy decontrol, which I'll address in a minute.

It is also suggested in New Directions that a 30-day notice is adequate if a care home tenant must leave the care home because of health reasons, if they have a sudden illness, have to be hospitalized or, I might add, if they're on a nursing home waiting list. Often how that works is that the nursing home notifies you and you have to take the bed within two or three days. Hence, it would be very good to have a shortened 30-day notice of termination for care home tenants. Of course, I'll add that landlords are always free to waive 60 days or 30 days if they so wish.

The New Directions paper suggests that there be a right to enter to perform bed checks or care. We believe that right already exists under section 81 of the Landlord and Tenant Act, which provides for care home agreements and agreements to provide care. However, there are people who read the legislation differently and it would be welcome to clarify this point to make sure that where landlords and tenants agree, the landlord should be able to come in at night to check on someone and that this kind of agreement could be carried out without any sanctions.

We urge the government to make sure that in allowing that and clarifying that, it is also clear that landlords not have the right to enter for any reason whatever; that it be legitimate and having to do with the care needs the tenant has contracted for.

There is also a suggestion in New Directions that operators of care homes be allowed to "transfer residents to alternative facilities when the level of care needs change, subject to appropriate protections." This one concerns us greatly, because I think at bottom there's a misunderstanding about this. It is not open to anyone to transfer someone into a nursing home or a hospital without the consent of the person who is going to be transferred. That is in legislation, the Nursing Homes Act. The Homes for the Aged and Rest Homes Act also says that the resident or an appropriate substitute decision-maker must consent to entry to those facilities.

So if I, as a care home operator, want to transfer someone to a facility like that because I believe they have higher care needs than I can provide for, I can't do it. I simply can't do it, because the legislation is there saying that the tenant's consent, the person going into the facility, must be there.

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We think that this particular proposal should not be implemented or, if it is implemented, that it be made absolutely clear that it only be done with the consent of the tenant or an appropriate substitute decision-maker as that's determined under the Substitute Decisions Act.

There is also in New Directions a proposal regarding fast-track eviction of tenants who threaten other tenants. I'm happy to say that I agree at least with this much of that proposal: that this be the only reason under which a fast-track eviction procedure be implemented, where other tenants are being threatened. Particularly in congregate living situations where tenants share facilities, they can't get away from each other and when they have someone who is aggressive and threatening, those are the situations, and only those I think, where a fast-track eviction should be considered.

We aren't supporting it, but neither are we opposing it. We say to you that if you hear from enough tenants' groups that this is an important protection for tenants, then fine, provided that there are sufficient procedural protections for the tenant who is being fast-tracked out of the facility.

Finally, I want to comment on vacancy decontrol as it's proposed in New Directions. If rents go up as a result of vacancy decontrol, seniors will be affected more profoundly than others, as they spend a larger share of their income on accommodation than other tenants. I have here with me something that just arrived in the mail yesterday, it's just been published, Facts on Aging in Canada, and it consists of StatsCan and other source materials with charts and so on. We have in here fairly clear evidence -- and I'll leave a copy with the committee -- that seniors spend a larger proportion on shelter than do other segments of the population. So they stand, it would seem, to be more affected by increased rents.

If the thrust of this proposal for vacancy decontrol is to encourage the building of more rental housing, that can be done more directly and more effectively, in my opinion, by tax incentives such as the removal of sales tax on building materials, income tax credits and so on. I think the sky is the limit as far as creativity in this area is concerned.

It need not be done, in effect, by punishing those with the least income through the introduction of mechanisms which, it seems, can only result in generally higher rents. It cannot be denied that this is the purpose of vacancy decontrol, since if it does not generally result in higher rents, I don't see how it can possibly provide incentives for building more rental accommodation.

Low-income seniors have recently been hit by increases in prescription drugs. Those with the lowest incomes, who are on GWA, general welfare assistance, or family benefits, have also suffered a 21% decrease in income. These people who are on fixed incomes simply cannot afford an increase in rent. The advocacy centre receives calls frequently from seniors waiting for rent-geared-to-income housing. As we all know, the waiting list is increasingly long.

The approximately 32% of the population of Ontario who are renters include those people who are least advantaged, who have the lowest incomes and the least flexibility to do something about it. The government has a responsibility to see to it that those people least advantaged in society do not slip so far that they become desperate. If they become suicidal, if they resort to crime, if they suffer from depression and require more medical attention, we all pay and the quality of all of our lives, I believe, is diminished.

We don't want a society which allows seniors to become desperate, to become the target of abuse, harassment and exploitation. The responsibility is the government's to see to it that this doesn't happen. That responsibility must be taken seriously. It's important for the quality of life of everyone living in Ontario.

If there is a problem with too little rental housing, we urge the government to explore approaches to solving this problem other than vacancy decontrol. We encourage those with resources to build and prosper, but not at the expense of those with the lowest incomes. There must be solutions that allow everyone to win.

We at the advocacy centre are not experts on tax policy and building, but we do urge the government to consult with those who are to find that policy which will get the job done. Thank you. We're open for questions.

Mr Marchese: Thank you, Mr Monticone. Some of the concerns you've raised are things I sympathize with, and many sympathize with that view. Barbara Hall came here saying much the same when she said seniors, low- and moderate-income families, low-income singles, the hard-to-house, psychiatric consumers, new immigrants, single-parent families, and I would add students to this list, all of them are going to have a difficult time with this. It's not going to be "if" they get an increase; the intended proposal is for tenants to get an increase. I can't imagine decontrolling without the effect having to be getting an increase.

I'm just as concerned as you are, and many are too, that this will hit those most needy in society, and they are mostly renters. It will have an impact on them, so I hope your comments will have an effect on this government.

Mr Tilson: Your comment with respect to the transfer of residents to alternative facilities: You appear to support that as long as there is approval by the patient or the tenant or someone who has a power of attorney.

Mr Monticone: Yes. I guess it would be fair to say I would support it, but if there is approval by the tenant, there's no need for any special legislation.

Mr Tilson: The possibility of incidents where it might be appropriate because the institution or the facility simply doesn't have the resources, the personnel, to suit that individual's needs, and for whatever reason that person may disagree with that -- would it be more appropriate, or maybe you have directed your comments to the questions that were asked: Should there be a formal process for transferring a resident of a care home to another facility? What would the transfer process be? How can residents be assured of getting the right kind of alternative accommodation? Have you directed your thoughts to those questions?

Mr Monticone: Just in brief, I would say that the consent is necessary. That's our position. The consent of the tenant or a substitute decision-maker is necessary.

There can be situations where the tenant would disagree with the operator, that they don't want to move. I hasten to point out that in those situations the tenants are free to bring in care from outside the building. They do this now. Unless the landlord has some sort of rule that says you cannot make use of home care, which is a public service, or some other private agency for care, then it's open to the tenant who needs the care to get it that way.

Mr Curling: The New Directions that this government has put out is going to drive your people into some chaotic decisions to be made, because quite a few of the elders and quite a few of those who need care who are renting and whose rent will go up, sometimes seek refuge, I have to say, in your area. Many of them come with all of the other things that society has put on them -- psychological, physiological and all manner of economic states -- and then you provide the rest. I can see the great impact in that area.

It tells us how complex housing can be, because if the Minister of Health is not a part of this and many of the people who are maybe unsettled tenants, if you want to call them that, because of reasons, I do hope -- it's unfortunate of course, and the Chairman has that challenge and all of us have the challenge that a well-presented paper like this needs almost an hour and a half to go into detail with you to understand, very much so, the challenges they face.

I'm just going to use those few seconds and say I think the paper is extremely well done and I hope we all have a chance to have a look through this and maybe to reflect in the legislation what they put forward to realize the impact it's going to have when we have that direction in changing the rent control legislation.

The Chair: Thank you, Mr Curling, and thank you, sir. We appreciate your involvement in our process.

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LORRAINE KATRYAN

The Chair: Our next presenter is Lorraine Katryan. Good afternoon and welcome to our committee.

Ms Lorraine Katryan: Good afternoon. My name is Lorraine Katryan. I'm here speaking to you as a small landlord. I have an apartment in my house. I've lived in that house for 15 years, and most of that time I've rented it out. I've also worked for over five years in the housing field, so I know a lot about the issue from both sides of the fence.

Most of the tenants that I get are great. They fulfil their end of the bargain and, like any consumer, they deserve to get a good product in good working order at a reasonable cost. I could come here and I could tell you that, sure, I want to raise my rent and, sure, I want to be able to get rid of tenants more easily, but that's not what I'm here to say.

I've given some careful thought to this issue, and knowing how the situation works from both the landlord point of view and a tenant point of view, I'm here to tell you that I think these changes in this proposed paper are very shortsighted and very dangerous. I want to talk about what that's going to mean for landlords and for our communities from a broader perspective.

I don't think these changes you're proposing that are going to give broad advantages to landlords are necessary. That's the first point I want to make. I don't need to raise my rent. In fact, I don't even charge the maximum rent in my apartment, and that works better for me. I rent the apartment very quickly. I get great tenants. I have a good relationship with my tenants and I know that I'm not gouging them, the food off their tables, because they have an affordable place to live.

The current system creates a relatively fair balance of power between landlords and tenants. As a landlord I know I have more power than my tenant. I can evict my tenant; my tenant can't evict me. So I'm quite satisfied with the current legislation. It presents a level playing field, and I want to know that I can deal fairly with someone. I don't want to rent an apartment to someone who rents it out of desperation because they don't have any other alternatives. That's not the kind of business I want to run in my life.

If I'm a good landlord, I don't have to be afraid of the current legislation. I'm willing then to negotiate on a fair playing field, using fair business practices, as it is now.

Let me talk for a minute about rent controls. You say that removing rent controls will increase the supply of housing, but I think you're completely off on the wrong track here. The fact that there isn't enough housing isn't because there's rent control; the problem is caused by the huge jump in the cost to build. Land costs went up, construction costs went up, interest rates went up over the past 25 years, and that's why landlords don't build rental housing. The rents that landlords would have to charge just to break even if they did build new rental housing now, tenants couldn't afford to pay. If I were a tenant I couldn't afford to pay the average $1,100 it would require for a landlord who builds a new apartment building to break even.

It's a red herring to blame rent controls for the lack of new rental housing. New apartment buildings were never covered by rent controls for the first five years anyway, even under the old system, and they still didn't build new housing. That should be your biggest indication.

You talk about maintenance as being a problem, and certainly from my work in housing I know that maintenance is a huge problem. There are landlords out there who just won't do repairs and are letting their buildings crumble around their tenants, and they don't care. But the main reason for bad maintenance is not because of rent control; it's because of bad monitoring and general greed among some landlords who take no pride in their buildings, who gouge high rents out of their tenants and invest in completely unrelated ventures that can easily be not only outside our communities but outside of Canada. They make me ashamed to call myself a landlord. That's not the kind of business I want to run.

If a landlord is responsible and interested in preserving his or her investment as a businessperson, they understand the value of protecting their investment, and many landlords do understand that. What the province is proposing in order to ensure maintenance is to improve enforcement mechanisms and increase fines. That's all well and good on the one hand, but on the other hand the province is also proposing to take away the right to prohibit a rent increase, and on an ongoing basis we see the province reducing transfer payments to cash-strapped municipalities.

This is going to have landlords laughing all the way to the bank. They know that enforcement mechanisms and high fines are going to mean diddly-squat when there's no money for municipal inspectors to actually do anything about it. They know they can still get their annual rent increase even if the building is falling down, and they can jack the rent up to whatever level they like just by evicting the tenants or harassing them out.

If the government was really concerned about maintenance, your first question should be, what have landlords done with their rental income and their vast profits -- in particular, I'm talking about the big landlords -- over the past decades? Have they done the repairs and maintenance that they have received automatic annual rent increases to do? Big landlords are just crying foul and trying to fool the public into believing that this government-sanctioned robbery is needed and will even benefit tenants. I submit to you that you should not be even contemplating these changes until you've required every big landlord to fully open all of their books over the last 25 years to you and the general public and account for every penny of where their huge profits have gone to. Let's see what kinds of maintenance they've done.

Landlords say they can't survive with rents at the current level, but that's hogwash. Rents are at an adequate level as they are, and in many cases are already very high. Landlords already get a good deal. I know. Landlords get a guaranteed annual income increase when most of us are getting income cuts -- I have an income cut in my job. We can apply to pass on our capital costs to tenants and then still claim the expenses on our taxes. We have no requirement to demonstrate that we're fulfilling our obligation to do repairs. Overall, landlords get about a 10% annual profit return on our investment. Many get more. Personally, it's enabled me to have and keep my home, which I could never have done otherwise.

I want to talk for a bit, though, about the quality of life in our communities, because I think that's really the bigger question here. I'm a landlord, but my life and who I am is an awful lot bigger than that. I live, I work, I shop, I play, I laugh and I cry in a society and in a community with all kinds of people. But already I see huge effects from the recession that we've been in for several years, which is being exacerbated by the Harris cuts that are happening, increased homelessness, poverty on the streets, increased desperation.

Let's look at the overall effect that this legislation is going to have on our communities that we all have to live in over the next few years.

Landlords still aren't going to build any new rental housing -- maybe in the high luxury end where there are already plenty of units, and even then it would probably still be more profitable for them to build condominiums than rental housing, just because of the high cost to build. Therefore, vacancy rates will still remain extremely low. Rents could easily skyrocket, especially in decently maintained units, because landlords can put the rent through the roof whenever a tenant leaves.

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There's going to be lots of incentive for landlords to get tenants out and very little incentive to work things out in this new mediation program that you refer to. Landlords will more than ever be rewarded to push eviction to the fullest extent of the law and harass tenants into leaving. But don't worry, landlords won't be scared off by harassment fines, because tenants won't complain. Complaints rarely get to court and landlords can recoup the cost of any fine anyway by just raising the rent.

Many landlords still won't do repairs, and they'll have even less incentive to do it now because they know their tenants will have nowhere to go if they try to move, and because they can still get rent increases even if the apartment is a total dive.

There's mounting desperation among people today as this recession continues. There are fewer and fewer decent jobs, less job security, drastic cuts to community services, less protection from discrimination and unfair practices, soaring poverty, no way out for a lot of people. When you have this kind of situation and when you're also creating a situation where tenants are going to be more and more at risk in the places they live -- they'll be at risk of losing their homes, they won't be able to get repairs done, rents will be higher and higher, taking more and more of their income -- think about what is going to happen to our communities then. Our communities will deteriorate, slums will arise and get worse, violence and crime will increase. It all sounds pretty dire, but I think that's the reality we're facing.

I can't guarantee that I'll always be a landlord or even a homeowner. I might one day be a tenant again. I might have a child who might one day be a tenant, or another family member or a friend who may be a tenant. I want them, and me if need be, to have security as a tenant and not be forced to live in a hellhole, paying an outrageous amount of my income for rent and living in fear of the landlord who constantly harasses.

I challenge you to get your heads out of the silver-lined clouds where big business interests are destroying our world and get your ears to the ground. Listen to what ordinary people have to say about what is happening in real life, because in the end we'll all pay the costs of this desperation and decay in our communities because of shortsighted, greedy mistakes of today. That's not the kind of world that I want to live in.

Mr Bruce Smith (Middlesex): Thank you very much for your presentation. You certainly touched on a number of issues that are contained in the position paper. I think it's very important that you're experiencing success as a landlord yourself, and you should be congratulated for that.

Mr Marchese raised this yesterday, Mr Kennedy, and I think as well Councillor Gardner, with respect to your comments on the 10% return on investment with apartments. I think that's an important statistic to know of, but it's also important to realize that that return is an average over a 10-year period. So certainly during that period of time we've seen a return of perhaps as high as 30%, and in latter years perhaps a more punitive return, as low as 0% in some areas.

During your presentation you made some reference to the fact that you're satisfied with the system the way it is currently. In your opinion, how would you go about addressing the low vacancy rate that currently exists in this community and what measures would you anticipate pursuing in an effort to negate the impacts this has had in the city of Toronto?

Ms Katryan: I think we should go back to building co-op and non-profit housing as one important source of rental housing. I don't think you can expect or even imagine that private developers and landlords who want a profit from their investment are going to be building housing that ordinary people can afford it; it just doesn't work. I want that housing to be in the hands of the community, not in the hands of some rich landlord who is gouging rents from people who can't pay.

Mr Sergio: I have enjoyed your presentation very much. You have given a good, balanced presentation with good knowledge on both sides, as a landlord and as a tenant.

We have had presenters here; we had developers here yesterday, major ones. Even some of the big developers have said that the legislation in its present form did not get those developers, himself included, to build affordable rental units. You're quite right: Developers are not building today because people can't afford it.

We have had the Ontario Home Builders' Association representative this morning, Mr Campbell, saying that if rent control is lifted, if the GST is lifted, if property taxes are removed, they may consider starting building. What else would we have to do, in your opinion as somebody who is in the field out there? What else do we have to give as a government to those developers to come out and build affordable housing?

Ms Katryan: That's what worries me. What else are we going to have to give? Are we going to have to give and give and then still not see anything? It's easy for them to talk about how, "If you remove rent controls, yes, we'll build all this housing," but I want to see the plans, I want to see the finances and, most of all, I want to see what the rents are going to be. Are people going to be able to afford it -- ordinary, average people? I'm not talking about people with high incomes, because they have lots of options. I'm talking about people who live in our communities, ordinary people. Are they going to afford it?

Mr Marchese: Thank you, Ms Katryan, for your presentation. As a landlord, you have more credibility than some others advocating on behalf of a system that protects tenants, so it's very helpful to hear you speaking in the way that you have.

It's interesting, because I've heard a figure of $1.7 billion being collected under our present system that should be used for capital expenditures. I'd like to validate that figure at some point, but if that is the figure, isn't it being spent for capital repairs? That is the same question you asked. They need to be asking those very questions themselves, but they're not. They simply take the $10-billion figure that some proponent has said is needed for the next 10 years for repairs and say, "Oh, my God, what are we going to do?" If people were spending the money they're getting for capital repairs now, we'd probably be in good shape.

I wanted to thank you for your comment about being a landlord and supporting quality of life, where the purpose isn't just to get as much as you can out of a tenant, but rather to get a fair return, and worried about what happens in your community. I wish all landlords had the same vision of communities and life as you do. Thank you for your presentation.

The Chair: Thank you, Ms Katryan. We appreciate your presence here today and your involvement in the process. Have a nice day.

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ANDREX HOLDINGS

The Chair: Our next presenter is Sandy Smallwood, the owner of Andrex Holdings. Good afternoon, sir.

Mr Sandy Smallwood: I'm a small landlord and I'm from Ottawa. It was almost 20 years ago that I appeared before another government committee. That committee's mandate was to look at alternatives to the Ontario rent control act. My brief contains about 10 pages of research, primarily on the effects of rent controls elsewhere. I specifically looked at the cities of London, Stockholm and New York. Using their experience, I made some predictions on what would be the likely outcome of controls here.

The evidence that rent controls have done more harm than good elsewhere was overwhelming. To quote Assar Lindbeck, professor of economics in Stockholm, a socialist and author of The Political Economy of the New Left, "In many cases, rent control appears to be the most efficient technique presently known to destroy a city -- except for bombing." Now, almost 20 years later, with my predictions proven correct, I suspect that no matter how obvious the adverse effects of continuing rent controls, the government of the day made the decision it did for reasons political, not based on good economic or social policy.

This government now has the opportunity to take steps that will eventually lead to a housing economy that works better for both tenants and landlords. It has been proven over and over that rent controls are not part of that future. In 1949, Frank H. Knight of the Chicago School of Economics wrote in the American Economic Review of December of that year, "If educated people can't or won't see that fixing a price below the market level inevitably creates a shortage...it is hard to believe in the usefulness of telling them anything whatever in this field of discourse."

Part of the reason for this shortage is the increase in consumption of space that occurs. In my brief I refer to statistics which show that over the years tenants have dramatically increased their consumption of space. This, coupled with little or no new construction, leads to a shortage for those who need it most. Attempts to mitigate the problems caused by this legislation have led to an ever-increasing number of amendments which have restricted not only the rights of landlords but those of tenants as well.

In my mind, one of the worst side effects of all of this intervention has been that it encourages an adversarial relationship. These draft proposals continue in that spirit. Even the title, the Tenant Protection Act, reinforces the idea that landlords are out to get tenants. There are some bad landlords, just as there are some bad tenants, but many landlords are like me: a small businessman who wants to run a reputable business with happy customers. Yes, I do care about the community. Once again, I fear that political expediency will win out, and instead of removing controls and dealing with affordability as the separate issue it is, we will see half-hearted tinkering that will lead to more of the same.

It is with this in mind that I suggest the following: With regard to building improvements, it is essential that you allow for a complete pass-through of any code-required capital cost work; an example is the fire retrofit legislation. Rents should be allowed to be increased to fully cover the cost of borrowing the funds required for the length of time required to amortize the improvement. This is what the banks require to lend the funds to do this work.

The new legislation should allow landlords and tenants to negotiate freely increased rents to cover improvements desired by the tenant. Currently, even if a tenant wants an improvement and is prepared to pay the increased cost of it, a landlord cannot legally agree.

Finally, allow vacant units to rise to a market rent and remain uncontrolled. This would eventually provide a way out of what was a very predictable disastrous situation that we are in today.

I'll give you some examples of what has happened to properties we've had and been involved with in Ottawa over the years.

A 1,200-square-foot apartment: The tenant earns in excess of $150,000 per year, is chauffeur-driven to work every day and pays just over $600 a month in rent.

A couple that rent three apartments: One apartment is basically used for storage or as a guest suite when they have a visitor, and they feel that with the low rents they're paying it still represents a great deal.

A 1,300-square-foot apartment where the legal rent is under $200 a month: In the same building, apartments less than half that size have legal rents that run from $400 to $800 per month.

The argument, therefore, that to allow vacant units to rise to market would create a distorted situation or cause confusion among renters is without validity, since that situation already exists thanks to rent controls. If anything, allowing rents to rise to a market level would, over time, bring some semblance of reality back to the housing market.

Finally, evidence in our buildings indicates that tenants with the highest incomes -- those with stable employment and who don't have to move to seek new jobs -- tend to have the lowest-cost-per-square-foot apartments. Conversely, those who tend to be more transient occupy smaller, comparatively more expensive apartments, and it is generally these people who can least afford it. One reason for this is obvious: Stable tenants have the ability to lock in when they get a good deal and the transients aren't so fortunate.

I'd be happy to answer any questions.

Mr Curling: Thank you for your presentation. A couple of things I would take issue with you on here, and maybe you could explain to me a bit more. Quickly, one of them is Frank Knight, Chicago School of Economics, who had said in 1949 that "educated people can't or won't see that fixing a price below the market level inevitably creates a shortage." The line itself sounds all right, but are you familiar with the fact that there are maximum legal rents that can be charged for apartments here now and yet landlords now rent those below those legal maximum rents?

Mr Smallwood: Yes.

Mr Curling: That theory that he had in 1949 got stuck there, because those dynamics have changed now. The fact is that there are prices that are available that are higher, but the people themselves don't have that disposable income, can't afford that rent. Is it because of rent control?

Mr Smallwood: With due respect, I would disagree with you. The reason why tenants won't move into a more expensive apartment is that if they're already in, as I specifically say, a 1,200-square-foot apartment for $400 a month, they're not going to move, even if they're not happy with the apartment they're in. There are two markets that exist out there. What has happened specifically because of rent controls is that we have a distorted market.

We have a group of apartments that may have been more recently built. People have mentioned that there were no rent controls on new buildings. The problem is that the mobility of the tenant has now diminished because anybody who's in a cheap apartment isn't going to move out into one of the new ones. So you have a new series of buildings where the rents are not being paid for by the tenants because they're already in apartments where they're getting a substantially better deal, so there's no incentive to move up.

Mr Curling: I would continue that line of debate with you, but I need another one to be on the table. You said, "It is essential that you allow for a complete pass-through of any code-required capital cost work." Let me just put a scenario here: There's a roof to be put on a building and it costs $20,000 maybe, $100,000 maybe, and it's amortized, say, five years to pay off. After that is paid off, would the landlord reduce the rent after they've passed through that cost and the roof is still there? Would they reduce that rent?

Mr Smallwood: What I suggested in my thing was the length of time required to amortize the improvement. What I'm referring to is not five years; I'm not talking about the length of time to amortize the funds. If you decide to get five years, I'm not suggesting you should be able to raise your rents to cover a five-year loan; I'm saying the length of time to amortize the improvement. To use your example of a roof, the length of time to amortize that improvement would be at least 20 years; a roof is not going to be replaced in five years.

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Mr Curling: In the guideline for a rent increase that has been given out, say, 2.8%, part of that component of increase is the building cost, the maintenance cost, that is involved in that increase of that rent. Would you say, then, that they should take that off?

Mr Smallwood: I guess we're looking at redrawing all of the rules, and I think that's what we should look at. We should look at redrawing the rules so that capital costs in their entirety can be passed through. Yes, if all capital costs can be passed through in their entirety, then I would say you would relook at the amount that's currently in the rents for that.

Mr Curling: So this emotional game of rent control has been political football then.

The Chair: Mr Marchese. Mr Curling took just a few seconds of your time.

Mr Marchese: I'm happy to hear that you're as interested as the previous speaker was about the effects of any legislation on communities, as opposed to how they might affect your own holdings. That's good to know.

There's an interesting fact that we got from Mr Lampert, who wrote this report for the government, that says about 70% of all tenants will move within five years, which means the majority will be moving. Some may stay where they are, for whatever reason are paying very low rents, and I appreciate that will happen. But the majority will move and the majority will likely be hit with an increase when they move out.

The question for you is, is what you are getting now not sufficient? Do you think landlords should be getting more, for some reason? Is that the point? We've been hearing from many that what they're paying now is very high. You're saying that may be, but decontrols are important to you, and I'm just trying to understand why. Are people paying too much? You're not getting enough? You want the freedom to be able to raise them more? What happens in this kind of dynamic, if you could explain to us?

Mr Smallwood: I wish I had more than a three and a half seconds or whatever I have to reply. There are so many issues you are raising. First of all, when you say 20% of the tenants are going to move, you can't say therefore in five years 100% will have moved, because what happens is --

Mr Marchese: The statistic is 70%.

Mr Smallwood: -- some of the tenants will move over and over and some won't move.

Secondly, many of the tenants who move are in those apartments whose rents are already below the legal maximum. In other words, there will not be any increase in the apartment they're leaving, or if they move into one where the rent is already below the legal maximum, there will be no increase in rent for them there either. The only people who will be affected are those who move from apartments where the rent is substantially below the current market level but it's at its maximum legal level.

What I think has to happen, and I mention it here specifically, is -- I have a one-and-a-half-bedroom apartment. The legal rent on it is $800 a month. I've got an apartment across the hall that's twice that size and the legal rent is $400 a month. The tenants don't understand it. They think they're getting ripped off by the landlord. I don't understand it. What I want to see happen is we start to get to some sort of rational, business-like setting so that the rules start making sense, the rents start making sense, and the tenants' own apartments too.

What has to happen is somehow you have to allow things to get to a normal market situation. That's what we live in. Everything else is a normal market situation, and we have this really warped, distorted thing that's bizarre.

Mr Marchese: So the point you're making is this: Decontrol, and the market somehow will settle itself, and there may or may not be victims in that decontrolling. Is that fair?

Mr Smallwood: There's no question in my mind that there will be some rents that increase when the tenants voluntarily leave. There is not going to be a situation where all of a sudden tenants are going to face -- because what has been proposed is that sitting tenants not face any increases; only if they vacate their units. What I hope that will lead to is eventually a market where people pay a market rent for their apartment, not a distorted rent.

Mr Wayne Wettlaufer (Kitchener): Mr Smallwood, thank you for appearing today. You stated something in your presentation that has come out loud and clear but I think nobody has had the courage to say it, and that is that we have an adversarial relationship in the tenant-landlord relationship in the province today.

Part of this is undoubtedly caused by increased government intervention over the years; part of it is undoubtedly caused by bad landlords and bad tenants; and part of it is undoubtedly caused by the fact that landlords haven't communicated to tenants the increased costs that they have faced over the last 10 years in terms of taxes and in terms of utility costs etc.

In view of this, do you think, as a small landlord, that if landlords communicated their cost increases to the tenants, the tenants would be more accepting of rent increases?

Mr Smallwood: No. I think what has happened now is that we live in an environment where everybody immediately looks to what the legislation says. The tenants will look to the legislation and they'll say, "What does it say there?" I would hope that we could sit down with the tenants and say, "There is a common goal."

I think most landlords do want to run a good, clean business and I think there is a common goal there, but I think the legislative environment now prevents that kind of dialogue from occurring because everybody is going back to their strengths and saying, "Here's what it says I have to do and here's what it says you have to do." The battle lines get set and drawn.

Mr Wettlaufer: As a small landlord, you undoubtedly heard about this Russell report that everybody quoted yesterday. When I say "everybody," I mean that the tenants' organizations quoted yesterday. This was based on a sampling of 24 units in the province of Ontario. The Russell report talks about a 10% average return over the last 10 years. I see, using his own figure too, that in 1991 there was a minus 10% return on equity, 1992 about a minus 3%, about a minus 5% in 1993. In fact, the last year that there was any return on equity was 1989 and that was largely due to a dramatic increase in the cost of land, which most small landlords don't realize because they haven't sold their properties. Correct?

Mr Smallwood: Yes.

Mr Maves: There are a lot of folks who have come before us, and we heard it from the previous witness, with bad landlords who apply for and get increases but then don't do the repairs that they were supposed to have done with these increases. How often does this occur in your eye? How many landlords do you know that run this scam?

Mr Smallwood: I know that there are some. I know of them, and they are not good people, they're not good landlords. I would say they're in the minority. I would say they make good headlines when they're found. I think they make great political fodder, but I would say the majority of people do this seriously.

I was in my teens when I first got involved in this business. I want to do this forever. My phone number is listed in the phone book, people don't have a problem calling me at home, and a lot of the landlords I know are the same way. They want to run a good business. It's their asset. The best thing I can have is a good customer who's taking care of my asset for me, and an adversarial relationship doesn't lead to that.

The Chair: Thank you, Mr Smallwood. We appreciate your coming here and being part of our process today.

FAIR RENTAL POLICY ORGANIZATION OF ONTARIO

The Chair: The next presenter is Philip Dewan, president and CEO of the Fair Rental Policy Organization of Ontario. Good afternoon, sir.

Mr Philip Dewan: Our presentation this morning will actually be made by Alan Greenberg, who's the chair of Fair Rental.

Mr Alan Greenberg: Hello. My name is Alan Greenberg and I'm chair of the Fair Rental Policy Organization. Beside me is Philip Dewan, the president of Fair Rental. On behalf of our organization, we'd like to thank you for the opportunity to address this committee.

Fair Rental is the largest residential landlord organization in Ontario. We represent close to 1,000 landlords owning and/or managing almost 200,000 units. Although some of our members own or manage thousands of suites, the majority of our members are owners of small properties, such as duplexes, triplexes and 10-plexes.

In that sense, we are representative of the landlord community as a whole. Less than 25% of all units in the province are in high-rise buildings with 100 units or more. Fully 55% of tenants live in buildings with 10 or fewer units. Public policy must deal fairly with this diverse range.

We are tabling today a detailed submission which responds to each of the issues raised in the government's consultation paper, as well as a few which were not but should have been. We would welcome the opportunity to explore it at length with any member of the Legislature.

This afternoon I will focus my comments on a few points dealing with the issue of greatest concern to Fair Rental: rent controls. By this, I do not mean to suggest that changes to the landlord and tenant legislation, the Rental Housing Protection Act and other issues are inconsequential. Changes in all of these areas are essential. It is just that in 10 minutes we cannot begin to do them justice.

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Let me start by asking, why are we debating yet another variation on the rent regulation game, the third rent control scheme in a decade, the fifth in 20 years since controls were introduced in Ontario? Why, after attempts by all three parties, has no one been able to get it right? The answer is simple. It is that rent controls will never be the right solution to housing problems. Two wrongs cannot make a right and rent controls are wrong in principle and wrong in terms of their economic benefits.

They are wrong in principle because they are discriminatory. Rather than using our progressive income tax system, they are an attempt by the state to foist the costs of a major social policy on to one single element in society: those in the business of providing rental accommodation. Rent controls largely exist because of the need to do something to address the affordability problems faced by low-income tenants. It has been far too easy for politicians of all stripes to say, "Many tenants cannot afford their rent; therefore, we must control rents to keep housing affordable."

But the affordability problems of these tenants are not caused by rents which are too high. They are the result of incomes which are too low. Tenants who are involuntarily spending more than one third of their earnings on rent have an average income of less than $12,000. Their needs will never be met by rent controls when all that they can afford to pay is $300 per month or less. No one, including the government, can supply housing at this level. By regulating the whole rental market in a vain attempt to assist those with affordability needs, all that is accomplished is to pile distortion on distortion.

It is now 21 years since Bill Davis, under pressure from the NDP, interfered in the mechanics of the marketplace. By capping rent increases, the Davis government introduced a form of subsidy from one group of citizens to another. This subsidy is not targeted to needy tenants, but applies equally to all. It is a government social policy being paid for by one component of the tax base, the private rental industry, and we're the only industry in our economy which faces this burden and restriction. This is wrong. As a society, we have a progressive tax system that is supposed to redistribute wealth. It is the government's role to help those who need help, with the cost borne fairly by all taxpayers.

That means an effective, targeted shelter allowance program of the type long advocated by Fair Rental and promised by the PC Party in opposition. It means a smaller scale, non-profit program directed at special-needs groups not well served by the private market, and it means consumer protection for tenants, not price controls.

It also means fair property tax treatment for tenants. Those municipal and provincial politicians who easily decry the plight of tenants and call for tighter and tighter rent controls should skip the hypocritical rhetoric and do something real about affordability by taxing tenants the same as homeowners. That alone would do more to address affordability needs than all the regulation in the world.

As an issue of principle then, rent controls fail a very basic test. They force a minority group in society to pay an undue price to appease a larger political audience. Unfortunately, the facts don't matter; it's all about politics.

The second reason that rent controls are wrong is that while they do not achieve their alleged goals -- one third of tenants were paying more than 30% of their income on rent before controls were introduced and one third are paying more than that today -- they produce quite predictable and devastating consequences for rental housing.

Economists, as well as the people just before me, have agreed for years that rent controls inevitably lead to a decline in the quality and quantity of rental housing. We have seen this come to pass in Ontario. The inability to finance needed capital expenditures, particularly in the past five years under NDP legislation, has meant the quality of the existing stock has suffered. Independent studies have confirmed that there is simply no way under the current rules that aging apartment buildings can be adequately preserved. There's an accumulated backlog of work estimated at $10 billion, far too little of which will be possible without significant legislative change.

As for new supply, the numbers speak for themselves. Prior to rent controls, approximately 27,000 rental units per year were built in Ontario. Last year, there were barely 500. In the greater Toronto area, where the demand is concentrated, there were only 20 units built, despite a vacancy rate of under 1%. Compare this to jurisdictions like Halifax or Houston, Calgary or south Florida, where buildings have gone up in large numbers despite vacancy rates of 5% and higher.

Rent controls were by no means the sole cause of this decline, but they were a major factor. In order to attract investment in new rental housing, the Rent Control Act must be repealed. At the same time, the property tax differential, development charges, the unfair application of GST to apartments and the other impediments addressed in the recent Lampert report must be addressed. The Rental Housing Supply Alliance, of which Fair Rental is a member, will speak to these supply issues in more detail later this week.

Though rent controls are not the only problem, resolution of the dilemma is a prerequisite for everything else which must happen. We thought this government understood the problem and was going to address it. On many occasions the Conservatives have stated that the present system is broken and that the best protection for tenants is a functioning marketplace. To quote the Premier, "Marketplace rent control is the best rent control mechanism there is."

We are convinced that a system that permits competition and encourages investment in service and technology as well as bricks and sticks will create a more dynamic and healthier rental industry. In turn, tenants will have better service and better value as well as more choice of where to live and what quality of housing to live in.

The industry recognizes that moving from 20 years of regulation to a free market system in one step is not responsible. That is why last winter we proposed a transitional system which we believed was fair to tenants and fair to landlords. Our proposal included vacancy decontrol with a complaint-based arbitration system for sitting tenants. It would encourage dialogue between landlords and tenants to individually agree on the quality and the cost of services to be provided.

Where they could not come to an agreement, a government mediator would attempt to help out. Sometimes all it takes is someone to explain to the landlord that the tenant wants a new fridge and their suite painted, and that same person may have to explain to the tenant that a $15 per month increase to cover those costs is not unreasonable. If mediation fails, then a professional arbitrator would be appointed to quickly conduct a hearing and make a determination. Any increases would be based on a CPI-based formula with caps to ensure no unduly large increases.

However, the government chose to go down a different path, which brings me to their regulatory proposals included in the consultation paper. I'll comment briefly on four specific aspects of the paper.

The first issue is one of principle, the idea that the government should not be involved in setting rents unless there is a breakdown between the parties. That means a complaint-based approach, not a universal system like the paper proposes where all increases above guideline must go into the system. If a tenant and a landlord can come to an agreement for a rent increase, why are taxpayers bearing a cost to review this agreement?

The second issue flows from the first: If there is an agreement between the parties, why should this be capped at 4% above the guideline? Whose interests are being protected if tenants want certain services or amenities for which they are prepared to pay a higher price? Tenant associations, who long for a compulsory union model where every tenant must do as they dictate, say tenants will be coerced into agreements. Individual tenants know they are more than capable of deciding for themselves what is in their own best interests.

A few days ago at a landlord-tenant forum in Oshawa, one of the tenants asked about something which had been perplexing him. For several years the tenants in the building had been seeking to have a recreational complex added to their building. They were willing to pay a higher rent for the service but the RCA rules prevented the landlord from collecting the amount needed. "Under the new proposals," he asked, "will we be able to get a larger increase to let us have our rec centre?" When a senior ministry official explained that, no, there would still be a cap on the amount of increase tenants could freely agree to, both the tenants and the landlords in the audience were flabbergasted. "Why?" they asked. It's a question this committee should address.

The third issue I want to touch on is maintenance. The paper proposes a number of significant changes which are directed, we are told, at ensuring the ability to go after landlords who do not maintain their properties. Fair Rental has encouraged the government to crack down on the few bad apples who cause so many problems for the rest of the landlord community. However, some of the measures have not been carefully thought out, nor do the professionals charged with responsibility in these areas appear to have been fully consulted. It is our understanding that both the Ontario building officials and the property standards officers associations are opposed to some of the changes being proposed.

The most significant concern is the proposal to make the violation of a property standard an offence rather than a violation of a work order. It is important to understand what is being suggested: that as soon as an elevator breaks down or a vandal kicks a hole in the wall or a light burns out in the stairwell, the landlord has committed an offence for which he can be ticketed, even before he has had a chance to correct the problem. Moreover, there is no distinction made between common areas and in-suite concerns. He is liable for any defect in an apartment, from peeling paint to a major structural fault, even if the tenant has never notified the landlord that a problem exists.

It is more than illogical; it's simply unjust. It is also impractical. We understand that the Ontario Association of Property Standards Officers is opposed to a ticketing policy because the inspectors would spend their lives trying to figure out how to serve notices on corporations and sitting through court appeals rather than making sure buildings are safe.

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The last concern I want to mention is the loss of legal maximum rents on turnover. In its justifiable desire to reduce administration costs by eliminating the rent registry, the government appears to have made an erroneous assumption that this means legal maximum rents must be disposed of, without recognizing the consequences for tenants as well as landlords. Let's go back to first principles.

The reason the idea of maximum rent was introduced by the Liberals and maintained by the NDP was that it recognized the desirability of allowing landlords the flexibility to move rents down when demand fluctuated, something they would be willing to do only if rents could rise up again as markets recovered. The current proposal will allow the rent to rise back to the market level only on vacancy, meaning there would be a real loss in income for as long as the tenant remained in place. The result would be that landlords would stop discounting rents in soft markets, such as prevail in most of Ontario today. A landlord who is now not taking the guideline rent increase because of the market conditions would be forced to adopt a "use it or lose it" strategy under these proposed rules, charging the guideline increase so as not to lose it for the future, even if this meant increased vacancies. The result would be higher average rent for tenants, something I'm sure was not the intention of the government. Maintaining the existing rules of legal maximum rents which have been supported in the past by all three parties avoids creating this dilemma.

I want to conclude by saying that while Fair Rental does not agree with all the proposals in the government's paper, there are many aspects which we do support. The capital expenditure rules mark a big improvement from the status quo. The LTA proposals are balanced, though more can be done in this area. The repeal of the RHPA, accompanied by responsible tenure protection, will help foster intensification and new development.

We commend the minister for taking the initiative to launch a much-needed reform effort. As it presently stands, the government package does not go far enough to correct the problems. However, if a few modifications are made -- and the critical word is "if" -- the proposals have the potential to encourage investment that will help preserve our existing housing stock and attract new investors willing to build rental units. These are the keys to providing tenants with real protection through choice and competition in the market. I hope the committee will not lose sight of these goals.

Thank you. Phil and I would be pleased to answer your questions.

Mr Marchese: I understand that your idea is that decontrol is the way to go because that's the way markets should work and it will all even out in the end and everybody will be treated equally or fairly and everybody will at both ends be relatively happy. That's one of the points you make.

Mr Greenberg: What we're saying is that the private market should be allowed to work and that we have an affordability problem. We should be dealing with the affordability problem through the tax system.

Mr Marchese: In some jurisdictions there are no development charges, and some of the buildings are listed as condominiums, which reduces their tax, but that in itself obviously is not encouraging some people to build. What more does it take?

Mr Greenberg: I think the Lampert report is quite clear on that. We are taking off the industry hat and putting on our personal hat. We also build in Florida. There are no rent controls in Florida. That's one of the reasons we're there. Number two, there's an adequate supply of low-cost land. Number three, realty taxes are about 10% of revenue, not 25% and 40%. When you start going through all the various taxes that have been thrown on over the last 10 years in this industry, it's easy to understand, combined with an environment which doesn't allow the investor to make a proper return --

Mr Marchese: So it's going to take a lot. Clearly everybody understands rent control is not enough.

Mr Greenberg: The first step is rent control.

Mr Marchese: It's the first step. So people will feel good about the fact that they can charge whatever the fair market will allow. But you're giving a long list of things you will need basically from governments to be able to help you build. Is that not the case?

Mr Greenberg: Every step is a move in the right direction.

Mrs Lillian Ross (Hamilton West): Thank you very much. That was an excellent presentation, very well thought out.

You mentioned that you had done some research and looked at what had happened in New York and in other jurisdictions. I have also done a little reading. What I've read is that, first of all, in Toronto, since rent control was introduced -- let me just read this -- 23% of all rental units were withdrawn from the market within three years, and that introduced a 12% reduction in rental housing stock. In New York City, from 1975 to 1985, landlords walked away from 300,000 apartment units -- enough to house the whole city of Buffalo -- because of rent controls.

Even here in Ontario with rent controls, previous landlords have said to us that they got rent increases anyway even under rent control. Would you agree that in Ontario that's the case with rent control, that landlords still get increases?

Mr Greenberg: Some landlords are still getting increases today.

Mrs Ross: Would you agree that some of those rent increases have in fact been quite high?

Mr Greenberg: In the last few years, no.

Mrs Ross: In the late 1980s, I believe, we had some statistics that proved that some of the rents increased by as much as 100%. But wouldn't you say that when you look at the experience of New York City, that's a very telling tale? Wouldn't you think that would be the wrong way for Ontario to go?

Mr Greenberg: It was said 20 years ago, it was said 10 years ago, it was said last year and we'll say it again today: That is the wrong way.

Mrs Ross: It's quite frightening, isn't it?

Mr Curling: I think it's an excellent presentation and I have great respect for Phil Dewan and Fair Rental Policy. They've come a far way in organizing and making -- I say they're coming a far away again being that, as you said, tenants were quite organized in presenting their case, and here you are presenting your case too. But you made some very important points here that time would not allow us again to go into.

In one part you said, "They are the result of incomes which are too low. Tenants who are involuntarily spending more than one third of their earnings on rent have an average income of less than $12,000." As you were saying, there are some people who are paying too high a portion of their income into rent. But the fact is, sometimes you go back to feel that it's rent control that is causing all of this problem, but as I read on, you said far more other issues have caused the problem which we have today.

In addressing this issue, and all these things are addressed, when would your group be ready to build for the low end of the market, for those who are having the difficulty, who are paying more than 30% and 50% and 60% of their income in rent? What time would you say -- you see, they are stepping in the right direction. How long a step would it take before you start building at the low end of the market?

Mr Greenberg: I think we've addressed it in our paper quite clearly when we said that at $300, not even the government can afford to build without subsidies.

Mr Curling: Let me say this then: In the cancellation of the non-profit housing that the government had done, doesn't that make it more difficult for you? You say the trickle-down voodoo economics that is coming down. Wouldn't that take a much longer time if they were providing supplies at the bottom end for those which are needed, which you wouldn't build for really because you're not making any money off that?

Mr Dewan: There's a difference between building at the bottom end and what the government has been doing over recent years, which is building apartments that cost $1,800 for the province to carry and subsidizing them down to the $300 or $400 which the tenant can afford.

Mr Curling: You ask for the shelter allowance here too, which is the same thing.

Mr Dewan: Sure. We've simply said a shelter allowance can address the needs of those tenants more cheaply. It's a matter of which is the most effective means of getting assistance to the largest number of needy tenants in the province, and the numbers show that shelter allowances are a much more cost-effective means of trying to assist them.

Mr Curling: So you're going to build at a high rent and then --

The Chair: Thank you, gentlemen. We appreciate your being here this afternoon.

GALLERY SPECIALTY HARDWARE

The Chair: The next presenter is Philip Turk of Gallery Specialty Hardware Ltd. Good afternoon, sir. Welcome to our committee.

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Mr Philip Turk: Good afternoon. My name is Philip Turk. I am the chief operating officer of Gallery Specialty Hardware. Our firm is an Ontario manufacturer and distributor of fire safety hardware and a member of the Canadian Fire Safety Association. We have joint-ventured with Ontario manufacturer Eveready Exact Closures to manufacture and distribute ULC-approved 20-minute fire door retrofit kits. Our customers use the kits to upgrade older apartment front doors which do not have a 20-minute fire rating label in accordance with the Ontario fire code.

The purpose of my presentation today is to highlight the importance of fire safety and enforcement of the fire code, and to urge you to address fire safety in new tenant protection legislation.

One of the goals of tenant protection legislation, according to the ministry's June 25 tenant protection discussion paper, is to improve safety and proper maintenance in Ontario's rental housing units. I would like to quote from page 3 of the paper itself: "Tenants expect that for their rent they will have well-maintained and safe homes. On balance, most landlords look after their buildings. However, from time to time there are serious health and safety problems that go unremedied."

I absolutely agree with the view that there are serious safety problems. In fact, the problems I am most familiar with are in the area of fire safety. These are problems which I believe can be resolved quickly and cost-effectively through enforcement of the Ontario fire code. The province has a clear opportunity to make a marked improvement in fire safety, because in its current form the existing system fails to provide tenants with the minimum level of fire safety required by the Ontario fire code. Tenant protection must mean fire protection.

We applaud the government's intent. It is clearly in the public interest that there be new tenant protection legislation and a coordinated effort with the Ministry of the Solicitor General and the office of the fire marshal to enhance tenant safety in the area of fire protection and make landlords more accountable for the condition and maintenance of their buildings. Fire protection is especially critical given Ontario's aging housing stock.

This is the issue. Residential buildings in Ontario fall into two categories: those constructed prior to 1976 and those constructed after 1976. In 1976, the Ontario building code began to require that every apartment unit front door installed in a building be labelled with its fire protection rating. The purpose of this requirement is to provide an accurate measurement of the amount of time the door can withstand exposure to fire. In residential apartment units, all doors installed after 1976 should have a label identifying them as having a 20-minute fire protection rating.

Doors installed in buildings prior to 1976 are not labelled and thus their fire protection is not known. In an effort to provide Ontario tenants living in pre-1976 buildings with minimum building performance requirements essential to life safety, a new section called "Retrofit" was added to the Ontario fire code in 1992. This section requires old doors that do not provide a 20-minute fire protection rating to be either replaced with new labelled doors or retrofitted to meet the 20-minute requirement.

It exempted landlords from removing old doors and replacing them with new doors if the existing doors are 45-millimetre solid-core wood doors. The reason for this exemption is that solid-core wood doors provide a level of fire protection similar to that of a 20-minute fire-rated door. The section states that the chief fire official, which means a municipal fire chief or a member or members of the fire department, has the discretion to approve materials, equipment or systems that will provide protection similar to the protection provided by compliance with the requirement. "Similar to" is an important point which I will return to in a moment.

On February 1 of this year, the office of the fire marshal issued a revised opinion, which differed from its August and November 1995 opinions, on the safety of individual apartment front doors. They advised that a type of door called tubular core is acceptable. Tubular core wood doors have hollow areas and contain sawdust and other materials. Solid-core wood doors are solid; they have no hollow areas. The opinion of the office of the fire marshal is that although they do not meet the 20-minute fire-rating standard, doors of tubular construction provide an acceptable level of protection for openings between suites and a public corridor and thus are capable of achieving the necessary fire performance envisioned by the current fire code requirement. They do not say that they provide a similar level of protection.

This has led to confusion among municipal fire officials across the province. Although it is an opinion and not binding, fire chiefs and inspectors do not know whether to enforce the specific fire code requirements I have described or to follow another new opinion of the Ontario fire marshal, an opinion which, ironically, many fire officials feel threatens tenant safety. These officials have chosen instead to rely on their own knowledge, which tells them that these doors must be either retrofitted or replaced, as is called for in the Ontario fire code.

There is sufficient testing evidence which bears this out. In fact, we have learned that a test conducted as recently as August 1995 by the Underwriters' Laboratories of Canada for the office of the fire marshall concluded that tubular core wood doors provide only seven minutes of fire protection. According to the test, the door began to separate from the frame at three minutes and by seven minutes the door had failed. They wrote that the test data gathered by the Underwriters' Laboratories of Canada over the years relating to the performance of tubular core type door construction is consistent with the results of this test, where tubular core doors failed the requirements of the standard at three to seven minutes of fire exposure. All of this is consistent with the results of another set of tests which we had done at Underwriters' Laboratories of Canada. I have brought with me today photographs of those results for your examination.

Therefore, despite the fact that tubular core doors provide only seven minutes, rather than the required 20 minutes, of fire protection, the fire marshal's office has deemed them acceptable.

The fire marshal's communiqué has significant ramifications for tenants and landlords. In some municipalities, the fire chiefs and inspectors are enforcing the black-letter requirements of the regulation and are not allowing tubular core wood doors to remain. In other municipalities, both fire chiefs and inspectors are using the February 1 communiqué and including tubular core wood doors as being in compliance with the regulation. Further confusion has arisen in other areas, where fire chiefs and inspectors disagree on the issue, and enforcement becomes a matter of an inspector's own judgement.

As a result of this inconsistency, two things have happened. First, tenants in some municipalities, including the city of Toronto, are receiving the full benefit of the fire code requirements. In those municipalities, the fire chiefs and inspectors are requiring that all tubular core doors be retrofitted or replaced. Second, tenants in other municipalities are receiving an inferior level of fire safety and fire code enforcement since fire chiefs and inspectors are permitting tubular core wood doors to remain. This puts tenants' lives at risk.

In preparing this presentation, we have consulted with several tenants' groups and the office of the fire marshal. We believe the current situation means the following:

The lack of fire-rated doors puts tenants' lives at risk. Allowing tubular core wood doors that provide only a seven-minute fire protection rating to remain in buildings puts tenants at risk. If a fire breaks out in the corridor of their building, a tenant will have only seven minutes before their door fails and fire and smoke enter their unit.

The absence of fire-rated doors increases tenants' risk of injury or death from smoke inhalation. Most fire-related deaths and injuries are smoke-related. When a fire starts in an apartment building, tenants are advised to remain in their units and wait for help if there is fire or smoke in the corridor. Tenants relying on the protection of their tubular core wood front door will have only seven minutes until the door fails. When this happens, the door separates from the frame and smoke enters around the perimeter of the door, leaving the tenant without any protection.

The absence of fire-rated doors discriminates against tenants living in older buildings. It is estimated that 780,000 units, or 60% of Ontario's 1.3 million private rental units, are more than 25 years old. By allowing tubular core doors to remain in those buildings, tenants residing in older units are at a greater risk of injury or death from fire than neighbours living in newer buildings.

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The absence of fire-rated doors disadvantages high-rise residents in particular. Residents of high-rise buildings are instructed to remain in their units and wait for instructions before leaving their units. If a fire starts in or spreads to a corridor, tenants cannot safely evacuate and must remain in their units until help arrives. A door with a 20-minute fire protection rating is the only line of defence between tenants and the fire.

The absence of fire-rated doors faces a particular threat to seniors. According to the May-June Ontario Fire Service Messenger, a publication of the office of the fire marshal, statistics indicate that adults over 65 years of age are at the greatest risk of dying in a fire. Since it is difficult for less able-bodied seniors to move quickly, especially in the stressful event of a fire, there is a greater likelihood that they would remain behind their closed front door in the event of a fire instead of trying to run down a corridor into a stairwell where they would be unable to negotiate the stairs.

This situation exposes landlords and perhaps the province to potential liability. Confusion and inconsistent enforcement at the municipal level may expose landlords to significant liability if a fire occurs. If a fire occurs and tenants are injured or die because the tubular core doors of their unit burn down, the landlord may be held liable for failing to comply with the fire code. Since the fire marshal's communiqué is only a statement of an opinion, it is not binding on fire officials. As a result, it is questionable whether landlords can or should rely on it.

We believe that a consistent level of tenant safety and fire protection can easily be achieved throughout Ontario. An overall fire safety and tenant protection policy that includes strict enforcement of the fire code will ensure that tenants across Ontario receive an optimum level of fire protection and eliminate any confusion arising among municipal fire officials and landlords.

We urge the Ministry of Municipal Affairs and Housing to do three things: First, make tenant fire safety a key component of new legislation; second, impose a duty on landlords within the new tenant legislation to meet the requirements of the fire code; third, impose more stringent penalties on fire code violators through new tenant legislation.

New tenant protection legislation must address fire protection. We believe this government has an opportunity to make a break with past governments and seize the opportunity to make older apartment buildings safe for tenants. There is a hierarchy of fire protection devices and equipment. This includes doors, alarms and sprinklers. In an ideal world, all buildings would have all of the necessary equipment. However, at a time when the province is tackling the issue of tenant safety, now is the time to ensure the fire code itself is enforced.

Thank you for the opportunity to present this afternoon. I would be pleased to respond to your questions.

Mr Wettlaufer: Mr Turk, thank you for your presentation. For a number of years I was in the insurance business and I was forced to make inspections of premises. I would try to sell the risk to the insurance company based on recommendations of physical risk. In many cases, I used to have to go to the apartment owners and suggest to them what was an acceptable type of door, for instance, and many other safety features. Could you tell me what one of these doors costs?

Mr Turk: Which type of door are you asking about, sir?

Mr Wettlaufer: A standard, pedestrian retrofit door.

Mr Turk: Retrofit means you can take an existing door and retrofit it to the standard. That would cost a maximum of $135 installed.

Mr Wettlaufer: If you had a four-unit building, we'd be looking at something in the area of $500?

Mr Turk: That's correct.

Mr Wettlaufer: One month's rent for one unit.

Mr Turk: That's a one-shot; you never have to do it again.

Mr Maves: A fire is a terrible thing. I was involved in a house fire at my neighbours the other day and it's very scary. How much would it cost to install the Gallery 20-minute fire door retrofit kit?

Mr Turk: The installation alone would be between $30 and $50, depending on if it was done by union or non-union --

Mr Maves: The cost of the door and all that stuff.

Mr Turk: The maximum is $135.

Mr Maves: So you're looking at $170?

Mr Turk: No, a total of $135.

Mr Maves: With installation?

Mr Turk: The door cost is $80, plus installation.

Mr Maves: Okay. So if I had three apartment units at 500 bucks apiece, and there's a 3% increase -- that's 15 bucks a unit, 45 bucks a year -- it would take me about two and a half years to pay for that, roughly?

Mr Turk: Yes.

Mr Gerard Kennedy (York South): I'm just wondering, why did the fire marshal change the standard? Why did he go from a 20-minute door to one that lasts three to seven minutes?

Mr Turk: We don't know that. That's our concern.

Mr Kennedy: There was no response from the fire marshal's office to your inquiry?

Mr Turk: There was a response, but the response indicated that there was some cost-benefit analysis that they had done and they therefore felt that it provided acceptable, to them, fire protection. However, it does not.

Mr Kennedy: Did I understand your presentation correctly? Is that interpretation in apparent contravention of the Ontario fire code?

Mr Turk: Yes, it is, in my opinion.

Mr Sergio: Mr Turk, thanks for coming down. I'm pleased that you were able to get on the list. Would you recommend perhaps to the government that all new buildings be fitted with the type of doors you're suggesting?

Mr Turk: All buildings that were built after 1976 have rated doors, so it doesn't affect buildings built after 1976. It only affects buildings prior to that point.

Mr Sergio: Every one meets the standards now?

Mr Turk: Most current buildings that are built meet standards, yes.

Mr Sergio: Do you have a figure, let's say, what it would cost to retrofit all the doors prior to that particular date?

Mr Turk: That depends how many doors there are. Our estimate is there are a couple of million doors.

Mr Sergio: A couple of million doors?

Mr Turk: Yes.

Mr Marchese: Mr Turk, you present I think a good argument. The ministry says that this section requires all doors that do not provide a 20-minute fire protection rating to either be replaced with new labelled doors or retrofitted to meet the 20-minute requirement.

Mr Turk: Yes.

Mr Marchese: Then it exempts the landlords from removing all doors and replacing them with new doors if the existing doors are 45 millimetres solid core wood. That seems reasonable --

Mr Turk: That's correct.

Mr Marchese: -- because it provides for a similar kind of protection. The new decision made by the fire marshal talks about acceptable level of protection, which I think you argue may be not so acceptable, given the time difference. One is 20 minutes and the other one is seven minutes in terms of its fire durability. That's a problem.

Mr Turk: That's exactly my point.

Mr Marchese: So you've raised this concern and you've talked to the minister or ministry people or political staff. What have they told you?

Mr Turk: No, we haven't done that. We have met with the fire marshal's office and we've met with some tenants' associations. We have spoken to some political advisory staff.

Mr Marchese: What did they say?

Mr Turk: Indications are they think that it's a no-brainer.

Mr Marchese: A no-brainer?

Mr Turk: That one should retrofit, yes.

Mr Marchese: It seems to me that needs to be pursued, because the argument is a good one. What you need is a provincial look at this in terms of getting provincial direction and not allowing for this kind of discretionary opinion to be made where the language is different, from "similar to," "acceptable" and so on, and you have a confusing kind of standard that people are abiding by. It would seem to me that this Conservative government should be listening to your arguments, and hopefully the minister will address that matter.

The Chair: Thank you, Mr Turk. We appreciate your being here this afternoon.

OLDER WOMEN'S NETWORK

The Chair: Our next presenters represent the Older Women's Network, Grace Buller, Helen Riley, Frances Chapkin, Nina Herman and Eleanor Matlin. Good afternoon, ladies. Welcome to our committee.

Ms Frances Chapkin: I'm going to speak first. Thank you for providing us with this opportunity to address you. Let me start by telling you what the Older Women's Network is and why we are here today.

Ten years ago, a group of women identified the need for older women to empower themselves in order to achieve economic security and social justice in the later stages of life. At that time they advocated to achieve flexible retirement that would terminate mandatory retirement; changes in the spouse's allowance that would include single and divorced women; a more supportive family law legal aid system for women seeking separation and divorce; compensation for primary caregivers; and they even dreamed of building a housing co-op for older women.

In the past few years, because of changes in government policies and proposed legislation, the Older Women's Network has grown in numbers and in determination to advocate on behalf of older women. At all four levels of government in the greater Toronto area we have made presentations regarding the Canada pension plan, old age security, the Beijing platform for action, health issues through Bill 26, such as long-term care, transitional care and hospital restructuring. We spoke against the introduction of drug user fees and the privatization of homes for the aged. We addressed the changes in family law legal aid and in the Advocacy Act, as we are concerned about elder abuse and violence against women, which takes many forms.

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We spoke to support affordable and accessible public transportation. We sought to achieve pay and work equity and we raised our concerns regarding video gambling and the desecration of our environment. Today we are here to address the need for affordable housing.

We are proud that our dream of a co-op for older women is being realized. It is in the downtown area on the Esplanade, and it will be topped in November 1996, 142 units. However we, as stakeholders, are concerned today that if rent controls are removed, too many older women on fixed incomes who are tenants or need to become tenants in the future will be made to suffer.

My name is Frances Chapkin. I am the present chair of the Older Women's Network. With me are Grace Buller and Helen Riley as social issues action committee co-chairs, and Nina Herman, who is one of the original founders of the Older Women's Network. Grace Buller will make the presentation.

Ms Grace Buller: Many of our members are tenants and are therefore concerned that they have access to well-maintained, affordable housing. The present legislation of the Landlord and Tenant Act assures tenants that they are not subject to unfair and unreasonable evictions. The Rent Control Act protects them from larger and more frequent rent increases, and the Rental Housing Protection Act assures the maintenance of rental units and prohibits their conversion to condominiums.

One of the basic human rights in a civilized society is the right to a home. If an elderly person does not feel safe in her ability to maintain that home at a reasonable rent, has constant fear of eviction, is frightened of complaining about poor maintenance of the building, her quality of life is jeopardized.

In Metropolitan Toronto, 52% of the population are tenants and, of those, 50% have incomes of less than $32,000 a year, while 30% have incomes of less than $23,000. Severe affordability problems occur among those with incomes under $23,000, who cannot afford even low, small-unit market rents. Rent control, which is the regulation of market rents, does not even address their problems. Their problems typically require rent subsidies. There are 60% of older single women on guaranteed income supplement, living on less than $13,000 a year. They're waiting for subsidized apartments and are now paying market-based rents.

From 1981 to 1991, the number of Metro households paying over 50% of their income on rents rose from 49,000 to 62,000. The situation now has worsened with increased unemployment and underemployment at depressed wages. Older women who have not reached retirement and are seeking work have relatively low incomes and cannot afford large rent increases.

The proposed legislation will hold tenants hostage. The onus will be on the tenant, often a frail, elderly person, to bring a disputed matter forward. As well, a fee, which may be prohibitive, is suggested for adjudication of a dispute.

The present legislation requires a landlord to justify a rent increase. De-control of rents on vacant apartments will force many seniors to remain in their current apartment, while at the same time landlords may put pressure on them to move, creating a stressful situation. The point also is that older people and disabled people may need to move because as they get physically frailer, they may require apartments more adaptable to their needs. Also, the result of unregulated rents will force many people to double up. There will be overcrowding, homelessness and the development of slums. In short, Ontario residents will face the misery one finds in many American cities.

With controls lifted for the conversion of rental buildings to condominiums, the supply of rental housing will decrease, forcing rents even higher. One of the objectives of this proposed legislation is to free up developers to build more rental housing. This purpose cannot be fulfilled since renters as a group are usually of modest means and will not be able to afford the increased rents necessary to allow substantially higher profits for developers and landlords.

Our recommendations are that we urge the province of Ontario to:

(1) Abandon its proposal to repeal or amend the Rent Control Act, the Rental Housing Protection Act and the Landlord and Tenant Act.

(2) We request the Minister of Municipal Affairs and Housing ensure that heavy fines be imposed on landlords who are found guilty of failing to meet legal maintenance standards.

(3) We urge the Minister of Municipal Affairs and Housing to consider the establishment of a capital reserve fund as a possible solution to the capital expenditure problem, such a reserve to be funded by the landlords out of the guidelines increase and by other means, and not from any extra charge imposed on tenants.

Ms Nina Herman: Good afternoon and thank you for the opportunity to be heard this afternoon. I'm just going to add a few remarks to those of the previous speaker and I would like to pose some questions -- really it's one basic question -- to you, ladies and gentlemen, which I hope you can answer.

The removal of controls on vacant apartments, as the province proposes, will have a particularly devastating impact on older women seeking affordable rental housing. Many low-income older women living alone are already forced to spend a disproportionate share of their income on rent, leaving very little for necessities like a Metropass, to say nothing of amenities. There are long waiting lists for subsidized apartments, and the situation is exacerbated by the government's withdrawal from financing social housing which would offer subsidized rents.

Many women may be seeking rental housing for the first time because their long-term marriages have ended in divorce with a mandatory sale of the marital home, and their share of that sale is not adequate to purchase a high-priced condominium. If these women cannot find a rental unit which they can afford, what are they to do? That's a question I'd like an answer to.

In today's society it's no longer feasible for older women to move in with their children. The children, with young families, can barely afford to house themselves, and mothers do not want to move in with their children. The children may live in cities at great distances from their mothers and if they do move in with their children, those overcrowded conditions and the tensions which result can lead to elder abuse.

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Older women cherish their independence. Even when their health may be frail, they're able to remain in their communities if there are community supports -- which we hope will improve -- providing they can find affordable housing. Are we to give them no choice but to be institutionalized? That's our second question to you.

When a woman is evicted from her rent-controlled apartment, as was the experience of one of our members recently because her landlord said he needed it for his family, which was allowable under the act, where is she to move when landlords will raise rents sky-high on vacant apartments? I ask you that question. We have women who are distraught, who are living in fear of what the government will do with this legislation.

We would appreciate answers to these questions and urge you once again to keep controls on vacant apartments and impose them on new apartments.

The Chair: Thank you, ladies. We've got about three minutes per party for questions.

Ms Buller: Answers.

Mr Kennedy: I'm going to try and give you some of what the government seems to be saying. The minister said yesterday that you should trust this legislation because landlords have the upper hand right now. He actually agreed that landlords have the upper hand and they have no motivation to be concerned for the tenants, but you should see this as a measure to bring more apartments on stream. In other words, the answer to your question comes after whatever shake-out happens when rent controls are lifted. At some point in the future, there will be more apartments.

The minister's recommendation at the end of his presentation yesterday is that even though the landlords are already in charge, we need to go through this for you to have the supply that would put you and the members of the Older Women's Network and other threatened tenants in charge. That was the logic we heard yesterday. I don't know if you want to comment on that.

Ms Helen Riley: Maybe I can comment on that. No, we don't believe there will be an increased supply of rental housing as a result of these proposals. In fact, there will be a decrease and the supply will be more expensive. The idea that tenants can negotiate with landlords what they're going to pay is not exactly an equal power of negotiation. The tenant is in a weak position, particularly if they have an investment in living in a certain place and they don't want to move. We feel these changes would be extremely disadvantageous to tenants in general.

I'd just like to point out too that although we're speaking on behalf of the Older Women's Network and we have these very particular concerns about seniors and women, most people at some point in their lives are tenants and do rent -- as students, as young couples and as seniors. When we're talking about the rights of tenants, we're really talking about the majority of the population. I would like you to keep that in mind.

Mr Kennedy: I want to congratulate you for putting this situation in very understandable terms of people who wish to have their independence. Somehow, I think people who are in more secure situations can take for granted that an affordable rental place is the building block for somebody to have, and that's a point you've made very well.

I'm wondering if you can comment on a question that was asked from the other side yesterday, that somehow people who are older have more stable housing and therefore don't need to be worried about the concerns. That was a proposition put forward, that somehow people -- seniors, others who are older -- are less likely to move, are less likely to have need of the protection from the decontrol standpoint.

Ms Riley: I don't see where that idea comes from. I own my own house now.

Mr Tilson: You made it up. We didn't ask that question.

Mr Kennedy: Check Hansard.

Ms Riley: I'm fortunate in that respect. At some point, I will probably have to move into rental accommodation, when I can no longer afford to or I'm no longer physically able to keep up my own home. Even though I'm not a renter at this point, certainly older people do move from their own homes into rental accommodation, move into, as was mentioned earlier, a more suitable accommodation as they may be more disabled or more frail and need more support.

Mr Marchese: I want to congratulate and thank all of you for the ongoing advocacy work that you do, not just in the field of housing but in a variety of different fields. I've seen some of you in different hearings around different issues. You've raised many concerns, and many have the same anxieties you do. The only ones who don't seem to have that anxiety are the developers, the landlords and the Tories.

There's a connection here. I would urge all of you to keep on watching the television to find out who appears in front of this committee and to hear what they're saying, because when the developers come here they say:

"Governments, those who intervene, have got it all wrong. Rent controls are bad. In fact, it's hurting you, it's hurting Ontario, because we could be building more if we just didn't have them. But we've got to do a little more than just getting rid of rent control. Don't worry, when we decontrol them, somehow the market will take care of itself and all of us in the process."

The Tories argue that government shouldn't interfere with the market, it's too interventionist. On the other hand, the landlords and the developers want the government to interfere for them to build. On the one hand they say, "Don't interfere"; on the other hand these fine Tories say: "We've got to. We've got to get rid of rent controls." They also want us to get rid of something else, so they want the government to get involved. They want the government to eliminate the provincial capital tax. Isn't that interesting? They don't want the government to intervene, but they do want the government to intervene to get rid of the provincial capital tax, reduce the development charges, equalize property tax, streamline regulations and so on. There's a whole list of things they want the government to intervene in on their behalf, because in the end, ultimately, it will be good for us.

Please follow the television network. You need to hear what these fine members on the other side are saying in collusion with the developers and the landlords.

Thank you for your interventions and your advocacy.

Mr Hardeman: Good afternoon, ladies, and thank you for coming in. There are a couple of points in your presentation I just wondered if you could maybe comment on. One relates to what Mr Kennedy spoke to. The statistics are that 20% of the renting population in Ontario move every year and 70% move in a five-year period. Is that number, in your opinion, true for seniors? One of the things that people put forward in that proposition is that people living in rental accommodations tend to rent for one purpose and then, as the family grows, they need a different accommodation, and then, as the family decreases in size, they need a third type of accommodation. Would it not be true that numbers of seniors, when they've found their accommodation for that stage of life, would tend to want to stay in that accommodation and not be considered trapped in that accommodation?

Ms Buller: I think they'd like to stay in that accommodation, but often when they become, as I mentioned, frailer they aren't able to cope with that accommodation. Perhaps their income decreases and they have to move into another apartment. There are many reasons why they would have to move. Although I have no statistics on that -- maybe my friends here have -- I would say that numbers of seniors do move or are forced to move because of the circumstances of their physical life, and therefore they do move.

Ms Chapkin: We would be very pleased if the government would give us a grant of money to do some research in this area; then we would bring you the numbers you're asking for. We do have case histories of a woman, for instance, who is on eight medications and is now concerned because of the user fees, that it's going to cut into the amount of money she has to spend on rent.

She presently lives in a two-bedroom apartment, because she lived in that with her husband, who has died, and she sees herself having to move into a one-bedroom because she won't be able to continue to pay the rent in the two-bedroom apartment. However, if the rent in the one-bedroom goes up, it might even go up beyond what she's presently paying in the two-bedroom apartment. We're not into a numbers game; we're concerned about individual cases. These keep on coming forward to us day after day, particularly since our co-op is moving towards completion. We have hundreds of calls from people saying, "I'd like to move into that location."

Mr Hardeman: The other question I'd like a quick comment on was that earlier this afternoon we had a presentation from a delegation that was talking about a housing co-op and its inability to turn it into condominiums, to convert. With the 100% support of the tenants presently in the building, they still could not convert because the city of Toronto would not allow it. How does that relate to the co-op you're building? Would you or would not ever be considering a conversion?

Ms Chapkin: When we've been struggling for 10 years to have the co-op completed, we certainly wouldn't consider it as a condominium, because this is not what the women who originally planned this and worked through it intended. A co-operative is something that means a lot to us. The term itself is endearing to a group like the Older Women's Network.

The Chair: Thank you, ladies, for coming to visit with us this afternoon. We appreciate your involvement in the process.

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MUSKOKA LEGAL CLINIC

The Chair: The next group is the Muskoka Legal Clinic, Jo-Anne Boulding representing the clinic. Good afternoon, Ms Boulding. Welcome to our committee.

Ms Jo-Anne Boulding: Good afternoon. My name is Jo-Anne Boulding. I'm a lawyer at the Muskoka Legal Clinic. The clinic is located in the district municipality of Muskoka. We have our main office in the town of Bracebridge and a satellite office in Huntsville. The clinic catchment area covers the entire district. We provide a variety of services, including summary legal advice and representation to tenants. In 1995, 11% of our cases were landlord and tenant matters; as well, 37% of our summary advice intakes were landlord and tenant matters. We've been involved in all aspects of tenant matters from rent control to courts. We appeared at the standing committee and provided written submissions on rent control in 1992.

I've prepared some written submissions on some of the changes suggested in New Directions. To summarize, tenants depend upon the government to protect their rights, and New Directions does not offer this protection. Housing is of paramount importance in people's lives. Housing that is substandard is a serious problem in our community. Unlike large urban centres, hydro and heat costs are rarely included in the rent and are the tenant's responsibility. Disrepair and poor maintenance can substantially affect these costs; for example, insulation, windows, roofs, hot lines and pumps.

In the Ontario Law Reform Commission's interim report in 1968 the commission took the position that the landlord should provide premises which are fit for human habitation and in a good state of repair and that the landlord should primarily be responsible for keeping them in that condition. The commission also concluded that it was unrealistic to expect municipalities to strictly enforce maintenance standards and that tenants should have the right to take landlords to court for enforcement of these landlord obligations. This need continues today.

The government's discussion paper offers as a solution strengthening the powers of the municipal bylaw enforcement officers. In our community, the bylaw officers generally do not involve themselves in tenant matters. In the six years that the clinic has been operating, we can count on one hand the number of times we have been able to get a bylaw officer to make an inspection, let alone write a report and give a written notice. The most frequent answer provided in one town is that the tenant must go to town council to get an order for the bylaw officer to attend at the property to do the inspection.

While we have been able in one instance to get a report, and in fact have the officer in court to testify, it is not the normal course of events. Even in that case, no order was made against the landlord by the town, even though the property was designated as uninhabitable and the judge permitted the tenant to terminate her lease. The tenants have to depend upon knowledgeable contractors, Ministry of Environment inspectors, health unit and fire department officials to provide the reports to go to court and have the matter adjudicated.

In our community, as with the rest of the province, cutbacks have been made and it is unlikely that any moneys or personnel will be allocated to property inspections.

It's essential that the province keep the minimum provincial property standards. They must be safeguarded for those communities where the existing bylaws do not adequately protect tenants as well as in unorganized territories. There should also be a mandatory requirement that each municipality have and duly enforce a minimum property standard. If the municipality is not diligent in the performance of the property standards bylaw, the tenant should not be the one who suffers. The province should ensure compliance and charge the cost of the enforcement back to the municipality.

Tenants pay to occupy safe, well-maintained premises. Where the landlord is not prepared to make the repairs and maintenance, especially to vital services like heat, septic system or water supply, there must be a mechanism that provides the tenant with the appropriate remedy. Abatements in rent have proven to be an effective means of enforcement of standards.

Strong safeguards must be added to protect tenants who make an application against their landlord due to harassment. As it appears that this government is leaning towards a single delivery system to deal with all tenant related matters, it would be easy to track various types of applications. In order to protect the tenant, no landlord's eviction application should be dealt with until the tenant's application has been determined.

Rent control: The government's introduction to the Legislature suggested no radical changes to the current system, yet the ability to raise the rent without any control between tenants is a major change to the system and will greatly impact upon tenants' ability to secure safe, affordable housing.

New Directions creates a powerful financial incentive for landlords to evict tenants. The idea that tenants can freely bargain with a landlord over the price of the apartment is as startling as it is alarming. Tenants do not have equal bargaining power with their landlord any more than the rest of us do with our banks, insurance companies or grocery store. Many tenants are poor and elderly and are living on fixed incomes and have limited resources to engage in negotiations with landlords.

Unfortunately, there are landlords who have shown their willingness to harass tenants into vacating the premises through illegal means like cutting off the water or the heat. To be able to raise the rent as much as he or she wishes adds a further incentive to these unscrupulous landlords to harass tenants into leaving their premises. What comfort will an enforcement unit be to the single mother with an infant who has no heat or power? We ask this committee to recommend that the proposal for decontrol of rents of vacant units not be adopted.

Mobile home parks and land-lease communities: In the district of Muskoka, we have a number of mobile home parks. The opening statement in New Directions recognizes mobile home parks' and land-lease communities' uniqueness. The uniqueness lies in the fact that typically, the mobile home or the house in the land-lease community is owned by the tenant. As a result, when these tenants are evicted, they stand to lose more than just their place to live. In a land-lease community, the house is fixed to the land, and the vast majority of mobile homes in this province are truly not mobile. They have been affixed to the land for decades and many have additions that were never meant to be movable.

Residents of mobile home parks and land-lease communities are typically seniors and poor people for whom the mobile home purchase was their only chance for home ownership. Rents are traditionally low, as the only things these tenants are paying for with their rent are hook-up to the sewage, water and electrical utilities, the maintenance of these and common areas, and a fee for the use of the land. This kind of affordable rural housing should be protected and encouraged.

Bill 21, the Land Lease Statute Law Amendment Act, extended the protection of the Residential Housing Protection Act to these communities. It was quite rightly perceived by the Legislature that tenants of mobile home parks and land-lease communities needed extra protection from their landlords' desires to evict them because more is at stake for these tenants. The RHPA protection has meant that landlords could not use conversion as an excuse to get rid of tenants without the municipality's approval. It has also meant that mobile home parks have continued which would otherwise have been closed.

Vacancy decontrol for these tenants would mean they would be even less likely to be able to sell their homes than they are now. Prospective purchasers would have to negotiate a sale price with the tenant, then a rent level with the landlord. Landlords who want to drive tenants to bankruptcy or block the sale of their homes would simply negotiate in bad faith with the prospective purchasers, and these tenants would effectively lose the right to sell their homes and become trapped in a tenancy relationship they no longer want.

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I've made fairly extensive submissions on the cap pass-through, but I'm not going to read through them. I'll leave them for the committee to read. I'm just going to summarize some of the recommendations that we have on other suggested changes in New Directions: that the landlord be required to pay 6% on last month's rent deposit annually, and that all other deposits remain illegal; that there be a complete code of procedure for landlord and tenant matters; that privacy rights be enforced and entry by landlords or their agents be strictly limited.

Rent must be controlled for units rather than tenancies. We recommend a property standards system controlled by the provincial Legislature, with municipalities and townships having sufficient budgets allocated to bylaw enforcement of property standards. Rebates and abatements of rent should be retroactive through the entire period that the problem has existed for the tenant.

The delivery system: The jurisdiction of the superior courts to adjudicate the Landlord and Tenant Act should be maintained. A procedure for voluntary mediation in the court process should be instituted.

It's our submission that the proposals are incomplete and vague and are substantially inappropriate for the tenants in Ontario. We would ask that the proposal not be proceeded with and that the government do extensive community consultations and public hearings prior to any new legislation.

Thank you for your time.

Mr Marchese: Ms Boulding, thank you for your submission. I want to ask you a question, because you're a lawyer and you might have some experience in this field.

Obviously the Conservatives and the builders and the developers think we're wrong, that we are misguided and that rent controls really have ruined this province, and they make fun of us when we say the contrary. They think the market should govern the issue of rents. Are we so far out of whack? Are we not in tune with what people are feeling or saying that somehow makes them think this? Where are we with this? What is your opinion?

Ms Boulding: I think the problem is that we're talking about a social issue and we're trying to do it on some kind of economic cost-benefit, and it doesn't fit. Everybody needs a place to live, and not everybody has the money to afford to bargain in the free market in the way business people talk about it. There are lots of areas in our society where free market bargaining isn't allowed, and it seems to me housing is of such a fundamental importance in our world that it should be exempted. There has to be a way that people can afford to pay where they live and also eat and dress themselves at the same time.

Mr Marchese: But they say, "Let the private sector build and give them all the concessions they need," because there's a whole list of concessions we need to make as governments to make that happen, "and afterwards, we'll just give them shelter allowances." Doesn't that take care of it?

Ms Boulding: I don't know where the shelter allowance is going to come from, because I haven't seen a proposal from this government to replace rent controls with a shelter allowance. So I think we're in dreamland there.

Mr Marchese: Just to be fair, we're paying $2 billion in shelter allowance at the moment. It's not as if it doesn't exist. We're doing that already and we're subsidizing a lot of private sectors with it. They're presumably saying: "Let's continue to increase that, but let's get the private sector to build and let's just give them a shelter allowance and that will take care of things." If I'm not correct on this, please correct me when it's your turn. So that's the way they feel it should be corrected: Government should not be building. Cooperatives are bad because we're wasting money. It's true they get a mortgage and they'll pay it off in 50 years, but it's still bad. And non-profit homes are still bad, even though one of the developers said, for some of them, we're going to have to build because they can't afford to do it at that price. Do you have a response to some of that?

Ms Boulding: I still take the position that tenants need protection, and the most effective means we have at the moment is to control the amount of increases that the landlord can put on their tenancy.

Mr Wettlaufer: Thank you for showing up and making your presentation. One of the things I have trouble grappling with, because I hear so much from the constituents in my constituency: We know that 80% of the apartment units are situated in apartment buildings of four units or less, or rented facilities of four units or less. I hear so often that the people who own these buildings are small landlords. They're individuals like you, me, Marchese. They are relying on this for their income in the case of pensioners. Yet when it comes that a tenant does not want to pay the rent for two, three, four or five months, how do these people, without a smoothening of the eviction process, a speeding up of the eviction process, how do these pensioners pay for their mortgage, how do they pay for their taxes, how do they pay for utilities? You've said you oppose the speeding up of the eviction process or making it easier. I'd like some input on it.

Ms Boulding: If your rent is due on September 1 and you don't pay it, on September 2 you can be served a notice by your landlord. How much speedier would you like it to be?

Mr Wettlaufer: How long then does it take to evict that individual?

Ms Boulding: After you give the initial notice that they haven't paid rent, they have until the date in the notice to pay the rent, and then 20 days after that you can take them into court, and if they don't have a dispute and appear and pay the rent into court, then you get your writ of possession.

Mr Wettlaufer: What happens if they pay into court?

Ms Boulding: Then there's obviously a legitimate beef and it goes in front of a judge who decides it.

Mr Wettlaufer: What happens if they pay just before the court date?

Ms Boulding: Then the matter's over with and the landlord has received their money.

Mr Wettlaufer: So then they can do it the next month.

Ms Boulding: No. There's also a clause for persistent late payment. So if you have a tenant who for some reason likes to get notices from you and waits until the notice to pay the rent, which hasn't really been my experience, then you can evict them under another section of the act, which isn't the arrears section that you are speaking about but persistent late payment. So the landlord is protected there as well.

Mr Wettlaufer: Could you define "persistent late payment"?

The Chair: Mr Kennedy.

Mr Kennedy: Thank you for your presentation. There are some parts that you went over to allow us the time for these questions, but they kind of draw on your final conclusions about the proposals being incomplete, vague, and I'll leave the appropriateness alone for the moment. But you seem to be saying in the case of land-lease tenants that this government doesn't know what it's talking about. A lot of the provisions that they've put in there which are specific to those provisions aren't necessary because they're already in legislation. Is that correct?

Ms Boulding: Yes.

Mr Kennedy: Why do you think this government is making new proposals on top of legislation that already exists and accomplishes the same thing or accomplishes it adequately?

Ms Boulding: I'm not sure who the authors of New Directions are, so it's hard for me to comment, but they have suggested changes and protections for them that are already in existence, specifically around the For Sale and other issues in the mobile home park --

Mr Kennedy: Right. Having a For Sale sign up or having a bulletin board instead -- that's already there.

Ms Boulding: Yes, that's already been taken care of and there are already sections in the Landlord and Tenant Act and the Rent Control Act that specifically recognize the differences between mobile home parks and other units.

Mr Kennedy: I guess you've already said it, but what does that tell you about the due care that the ministry has put into these proposals?

Ms Boulding: It's ill considered, in my opinion.

Mr Kennedy: There was a specific mention you made that was intriguing about the 6% interest payment. Is that not in law currently?

Ms Boulding: Yes, it is, but there's a suggestion --

Mr Kennedy: It's not covered in the proposals?

Ms Boulding: I didn't deal with it other than to suggest it remain, but there is a suggestion that it will not be there any longer. Currently, the landlord can request and receive up to one full month's rent, which is the first and last that everybody talks about. So they can get up to that full month's rent and they're required to pay 6% per year to the tenant because that month hasn't yet been lived. It's some point in the future.

Mr Kennedy: Right.

Ms Boulding: So while they hold the money, they have a little interest.

Mr Kennedy: And that's not necessarily provided for in the new proposals. Would it be too much to characterize the overall new proposals and legislation as reckless in how they've been put together?

Ms Boulding: I wouldn't disagree with you, but I think there needs to some more work done and I think they need to be speaking to more tenants and more landlords and also reviewing what's already there.

Mr Kennedy: Thanks very much.

The Chair: Thank you very much. We appreciate you coming here this afternoon, Ms Boulding, and making a presentation to us.

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ONTARIO RESIDENTIAL CARE ASSOCIATION

The Chair: The next presenter is Mitchell Wexler. Good afternoon, sir. Welcome to our committee. We'll get you to introduce everybody to begin with.

Mr Mitchell Wexler: My name is Mitchell Wexler. I'm a tenant in the city of Toronto. I'd like to introduce to you Rick Winchell of the Ontario Residential Care Association, who I will allow to use my time before the committee today.

Mr Rick Winchell: Thank you for the opportunity to address you this afternoon. Joining me is Ms Debbie Doherty, an association board member and a director of operations with International Care, which is a company of retirement residences both in Ontario and British Columbia.

The Ontario Residential Care Association includes more than 250 residences, employing about 10,000 staff who provide personal care services for about 15,000 residents. Each of you is being handed a detailed association position paper involving the proposed legislation. Due to the time limit I'll restrict my comments to summary points.

In general we commend the government for recognizing the important differences between apartment dwellers and residents of care homes. As you know, apartment laws deal with units; care homes focus on people. For that fundamental reason we've never supported the application of housing laws that restrict our ability to adjust personal services to meet an individual's changing needs. Unlike apartment tenants, accommodation is secondary to care services for people in retirement homes. People move to a retirement setting not as a lifestyle choice but because of a care-driven need. We've always contended that rent control in care homes is an unnecessary and artificial consumer protection. You should also know that the average annual rate increase across our sector has historically been lower than the statutory guideline.

We urge this government to eliminate the meaningless exercise of splitting accommodation from care services and exempt care homes from rent control altogether. Only then will the care home sector be able to focus attention on the most important consumer benefit, that being the best service for the best price. We contend that the abundance of supply that enables consumers to enjoy a full range of care home choices is best protected through deregulation, where providers are forced to constantly add value in order to effectively compete.

We further believe that consumer protection is optimized through full information disclosure of what is and what is not included in the basic service package. Our association fully supports the need for better-informed consumers. In fact, our experience demonstrates that the combination of aggressive consumer education and full disclosure renders the concept of rent control redundant.

Separate from the proposed legislation, we support the removal of care homes from the Rental Housing Protection Act. From the outset we've considered this legislation to be restrictive and inappropriate. The application of the RHPA, initially introduced to limit condo conversion from apartment stock, stands as a superb example of what happens when laws designed for one sector are thoughtlessly applied to another. You end up with the proverbial square peg getting stuck in the round hole and absolutely nobody benefits.

As you know, security of tenure in care homes restricts providers' room access for night checks even when requested by residents. This government wisely recognizes the absurdity of restricting room access, and on behalf of thousands of residents and family member designates who have insisted on room checks over the past 24 months we extend our sincere thanks for understanding and rectifying this problem in the proposed legislation.

The transferring of residents to more appropriate levels of care is also a much-needed change recognized by this government. The New Directions paper asked about a formal process for transferring residents to another facility. You're aware that such a process exists within the long-term-care continuum. Admission to any long-term-care facility is contingent upon an assessment through a regional placement coordination service. We recommend that retirement homes be recognized and formally included in the mandate of all placement coordination services.

We submit, however, that a serious flaw exists in the proposed legislation. Nowhere is there recognition for a growing problem involving those residents who refuse to move to a higher level of care even when it's clear that we can no longer safely meet their needs. We have expressed our concerns to ministry personnel and we've recommended that in these cases residents be required to go through the PCS process. We have further suggested that in cases where a person's needs exceed the resources of a retirement setting, that person should be required to take the first available long-term-care bed. This is very important, because in some regions of the province waiting lists into long-term-care facilities exceed a year.

Those who argue that a requirement to accept the first available long-term-care bed compromises an individual's right to security clearly miss the point. Retirement home residents can and do contract for additional private duty nursing instead of accepting a long-term-care facility placement. However, it's the group of residents who refuse both the private duty option and the long-term-care placement option who pose the most danger to themselves and in some cases to others.

We believe a person's wellbeing should always take precedence over security of tenure. We believe that appropriate care treatment is fundamental and an important right that is in everyone's best interests.

In cases involving transfers to settings which are not part of the long-term-care continuum, and therefore would not involve placement coordination services, we've suggested to ministry staff that an assessment by a house physician would be a fair and appropriate approach.

There are additional suggestions we've discussed with ministry staff which we believe provide important protections for all residential care clients.

First, the proposed legislation fails to address a key issue involving rent increase notices. Currently operators are required to distribute notices directly to each resident. There is no provision to allow for a designate. Increasingly we are approached by family members responsible for finances, very often on an informal basis. For these people we suggest that notices be given to anyone identified as a designate in the resident's tenancy agreement.

I can assure you that this minor amendment will be a major source of relief for residents and families across Ontario. Of course, in those cases where both a resident and a designate request notices, care home operators are happy to respect this directive. We understand the ministry is aware of this situation and is attempting to address the situation in the legislation.

Secondly, it's very important that admission to a care home be contingent upon accepting a total service package. Allowing residents to unbundle services from accommodation clearly compromises the benefits inherent in a congregate setting. Operators would be unable to properly staff key positions such as dietary, nursing and activation if residents were entitled to unbundle their individual service packages. In the best interests of all residents, a clause in the legislation should allow providers to require, through the tenancy agreement, that services not be unbundled from accommodation.

You can appreciate the impossible task facing providers if people were allowed to arbitrarily opt in or out of some or all services. We believe that the full service package detailed in a resident's agreement must be a condition for granting tenancy or continuing to permit occupancy of a care home rental unit.

A tenancy agreement should address this situation, but it's important that nothing in the legislation be construed that might prohibit this requirement. That is why we'd like to see a specific clause confirming the strength of the resident's agreement included in the new legislation.

In the main, our members across Ontario strongly support the changes proposed under the care home section of the tenant protection legislation. We, along with thousands of family members and residents, welcome the logical, clearly thought out improvements that this proposed legislation contains. We believe the care home section resolves several oversights in the current legislation.

Together with the recommendations we offer this committee, it's our sincere belief that the interests of all residents will be best served under the proposed tenant protection legislation. Thank you. We'll happily field questions.

Mr Smith: Thank you for your presentation and your qualified support at least for the home care provisions in the discussion paper. Over the last couple of days we've heard a little bit about the rent registry, and I note on the first page of your summary in your general response under item 2 you indicate you support the abolition of the "rent registry -- something which has been ineffective from the outset."

Would you share with the committee why you would make that statement and what experiences you might have to come to that conclusion.

Mr Winchell: The rent registry has not been very effective from its introduction. But more important, from our standpoint, we have constantly argued that the application of apartment laws on care homes takes away an enormous amount of attention from what we do best, taking care of our residents.

In terms of the rent registry, we've been forced from the outset to separate services from accommodation but we've never, ever had the formula by which to work with that separation. More important, the separation of services from accommodation had done nothing to benefit the families or create more disclosure for residents. It's an artificial benefit; it gives no benefit whatsoever. I can tell you unequivocally that residents and family members across the province keep scratching their heads: "Why is there more paperwork? Why the heck is there more paperwork?"

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Mr Hardeman: You said that the care home should be a package deal, that the placement should not be allowed to pull it apart. I can understand the problem you have in providing someone with services, and some would be impossible to pull apart, but don't you see maybe a need, that some services could be provided that not everyone may wish but some would, and that somehow there should be an opportunity to have some optional and some mandatory?

Mr Winchell: Those options exist today, sir. A resident would contract for a basic level of service and then there would be additional services they can purchase as needed. Depending on the need, they have that option right now.

Mr Hardeman: So your presentation is that this would continue --

Mr Winchell: That would continue.

Mr Hardeman: -- not that you would package it all and it's so much and you can't pick and choose what you want.

Mr Winchell: No. We support the idea of choice but we don't support unbundling the basic service.

Mr Kennedy: I just want to know what you think the problems may be in the part that addresses how much leeway there is in terms of bed checks and so on. How formal does that understanding need to be?

Mr Winchell: With the bed checks?

Mr Kennedy: Yes. Could it present problems in terms of privacy, in terms of an interpretation by staff and so on?

Mr Winchell: I think it's very important to understand that we only support the concept of bed checks when it's requested by a family member or a resident. We have always historically respected those residents who don't want us to come and check on them at night, but since the introduction of the Residents' Rights Act we've had countless requests for staff to go in and do night checks by the resident or by the family designate, and of course the law restricts that.

Mr Kennedy: Would that be an agreement specifically in writing with specific times?

Mr Winchell: Yes.

Mr Kennedy: Would it always be with the concurrence of the tenant? Is that right?

Mr Winchell: It would be at the request of the tenant or the family designate, yes. It would be identified and signed off in the tenancy agreement.

Mr Kennedy: When you look at the provisions that say if facilities are demolished or renovated, what would you think should be the comparable accommodation for residents, and should there be a compensation clause as well for when facilities are taken away?

Mr Winchell: A compensation clause in terms of replacement?

Mr Kennedy: In terms of a facility condition comparable to what's there now, first of all what would you see as comparable? Should it also include the prospect of financial compensation?

Mr Winchell: No. I think our position has been from day one, regardless of whether we're taking a building down or we're transferring someone, we will work with the residents and family members to ensure appropriate replacement of that person in a comparable setting.

Mr Kennedy: That should be a protection they should have in the law?

Mr Winchell: We have no problem with that at all.

Mr Marchese: Mr Wexler, are you a tenant?

Mr Wexler: Yes.

Mr Marchese: Do you have any concerns about this legislation?

Mr Wexler: I'm here because I'd like the Ontario Residential Care Association to get their views across.

Mr Marchese: I see. You support the submission, obviously, and the concerns that he's raising?

Mr Wexler: Yes, and I defer all the questions to Mr Winchell.

Mr Marchese: Okay. You raised the point about the rent registry in the sense that you haven't found it effective and it takes away from what people do best. I think it's been very effective, at least tenants say it is. They see that as a protection for them because in the past, without that, you wouldn't have a sense of whether or not a landlord was charging an illegal rent or an unduly high rent. If there's a registry and they're charging a certain amount, you as a tenant feel protected that you're not going to get into a situation where you were renting at $600 before and now they rent at $700. I'm not sure how you see that as ineffective.

Mr Winchell: Okay, but again I think you're falling into the classic trap of comparing us to apartments. We are far from apartments.

Mr Marchese: I see.

Mr Winchell: We provide far more than just units. In fact, the secondary consideration is the unit itself. It's the personal care assistance that is --

Mr Marchese: I appreciate that.

Mr Winchell: From our standpoint, absolute disclosure with prospects is something we support entirely. For example, our association has a consumer hotline. We encourage people to go out and ask the right questions: Who owns the facility? How long have they been providing services to seniors? What's the history in that particular setting for rent increases? What's the policy for rent increases in the future? From our standpoint, the combination of consumer education and full disclosure is the best protection our residents can get.

Mr Marchese: I appreciate full disclosure at least. In saying that, it makes us feel that obviously you have nothing to hide. On the other hand, I'm a supporter of the rent registry. I think it's a useful instrument for everybody. You're against rent control as well.

Mr Winchell: Yes, I am.

Mr Marchese: You argue that it's simply not effective either; it's a problem.

Mr Winchell: I would ask you to tell me how any of the residents' rights laws have improved the quality of service delivery at a retirement setting. I can tell you unequivocally it hasn't done a darned thing.

Mr Marchese: But as you said, they're two separate issues, right? We're not disputing whether or not you're giving good care; that's a separate issue. We deal with that as an issue and we deal with rent increases as a separate one. That may not improve the care, but finances are clearly connected to people's lives.

Mr Winchell: Absolutely.

Mr Marchese: How you do not interconnect them is incomprehensible to me. Care and whether people can afford it and whether they're being gouged and whether they're getting unfair increases are, for me, interlinked. Don't you agree?

Mr Winchell: Again, I go back to the fact that we work very closely with the consumers to help them ask the right questions. In fact, if there's a problem with a retirement setting and it happens to be a member of our association, we'll step in to resolve that problem. We'll work on behalf of the residents and families.

Mr Marchese: That's laudable, but we've heard from many tenants where you don't have that kind of situation. We hear a lot of people who are saying, "We have a great relationship with our tenants." It seems wonderful that such things exist out there in society. On the other hand, the reason why you have tenant organizations and the reason why you have so many people advocating on their behalf is because there are so many abuses in society. I understand you're working at it, but it's not working out there.

Mr Winchell: I would respectfully submit to you then that the previous government was focusing on the shoelaces as opposed to the whole tuxedo.

Mr Marchese: Is that right?

Mr Winchell: The reason I say that is because the delivery of quality services is the number one priority and that's the focus that we should be looking at.

Mr Marchese: So letting the market --

Mr Winchell: Absolutely. Letting the market effectively compete and add service.

The Chair: Thank you very much. We appreciate your attendance here today and your presentation.

QUEEN STREET PATIENTS COUNCIL

The Chair: Our next presenter is Jennifer Chambers, a facilitator at the Queen Street Patients Council. Good afternoon, Ms Chambers. We appreciate you being here this afternoon.

Ms Jennifer Chambers: The Queen Street Patients Council is a non-profit board of psychiatric consumers and survivors. I'm staff for that council. The council's mandate is to represent people who are or have been patients in Queen Street Mental Health Centre or people with a psychiatric history who live in the Queen Street catchment area.

We try to bring forward to decision-makers like yourselves the issues of people who are very poor, people who are struggling with the issues that brought them into the system as well as with the system itself, and who must cope with few and often very grim options available for housing.

Our people live very close to the edge and we hope our presentation here today will prevent more people being pushed into homelessness and, from there, to an early death.

We'll focus our comments on three areas: economics, tenants' rights and recommendations for accommodation. That's "accommodation" in both senses of the word. I'll summarize the report and hope you might have a chance to read the whole thing at your leisure.

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Even with some rent control, people on social assistance will be hard-pressed to meet housing costs. The sitting tenants will have their rent raised by the current guideline of 2.8% and may also have their rent raised up to 4% for capital expenditures and an unlimited amount for increases related to operating costs such as taxes and utilities. With major renovations and conversions no longer requiring municipal approval, it's not unlikely that capital expenditures will often reach maximum levels in preparation for such conversions. When even tenants in rent-controlled units can have rents raised, at a conservative estimate, 7% in a year, people on social assistance will easily be priced out of the housing market. This is still in reference to tenants with protection.

To offer an example of such a tenant in concrete terms, it's difficult to find a room in Toronto for under $350 a month. For a person receiving $540 a month social assistance, a 7% increase on $350 would be an extra $24.50 a month, leaving $165.50 a month for food, non-prescription medicine, drug user fees, toiletries, transportation, telephone, clothing etc.

Many psychiatric consumers and survivors depend on daily contact with others; indeed, who doesn't? Most people want to be close to their sources of support and often arrange their housing accordingly. The need to stay put to avoid rent increases will mean that people will often have to choose between spending money on transportation to avoid social isolation and being cut off from their supports and other basic necessities like food. This greatly increases the chances of vulnerable people ending up back in an institutional setting, which is, as pointed out, far more expensive than providing people with affordable housing.

The plan for new tenants is for "the landlord to negotiate the incoming tenant's rent without regulatory restriction." A negotiation process such as this puts vulnerable people at a severe disadvantage. It's one thing to figure out what housing a person can afford and to go out and look for it. It's another thing indeed to be involved in a strange and difficult process that involves negotiation, perhaps having to bid for one's housing. The Toronto Star recently reported the case of a psychiatric consumer-survivor who was taken advantage of by salespeople who came to their home and who ended up buying something far more expensive than they can afford.

Economically, it will obviously be to the landlords' advantage to encourage sitting tenants to leave their homes. While there will be some protection for tenants against such harassment, even the economic disincentives proposed in this legislation are inadequate. For example, for the owner of a high-rise a $25,000 fine is not much disincentive when they can so easily be compensated if they get rid of their sitting tenants by increases in many people's rents.

Another apparent protection for tenants proves not to be so on closer inspection. Municipalities might be in a better position to enforce necessary maintenance by the landlords under this legislation and to recover their costs through taxes, but it will be the tenants who will bear the burden of these taxes and who will end up therefore having to pay extra to have their dwelling simply be habitable.

The economic reasoning behind the abolition of rent control supposes that market forces will work things out. More housing units will be built because it will be profitable for landlords to do so. Having more units available will mean landlords will keep rents at a reasonable level to attract and keep tenants in a competitive market. So the argument goes. But this doesn't work for poor people and it especially doesn't work for poor people in Toronto.

This legislation is being introduced in an environment in which the building of non-profit housing has been stopped, rent subsidies are in danger of being taken away and social assistance has been cut. In Toronto, as you know, the vacancy rate is 0.8%. This legislation may encourage some construction of new housing units, but it won't be housing for the poor. Instead, the growing numbers of people in Ontario in desperate poverty will be competing for fewer affordable housing units as landlords are free to renovate and convert units to more expensive housing.

What recourse is there for extremely poor people? Shelters and psychiatric institutions are two places people are likely to end up, both of which cost a great deal more than affordable housing. It costs over $1,100 a month for someone to rely on shelters. It costs over $10,000 a month to keep someone in a psychiatric institution, or at least in Queen Street Mental Health Centre. Yet some people arrive at Queen Street because the squalid boarding house they're in has finally made their burden unbearable. Some people stay in institutions because no housing has been found for them.

The Queen Street Patients Council helped a patient in a wheelchair who'd been in Queen Street for over 30 years find housing. It wasn't easy to find this housing. We had to resort to calling the mayor's office, among other things. In the long and short run, the results of having no housing or horrible housing or housing that costs more than be managed will cost society far more than decent, affordable housing. It will cost in human and social terms, and it will cost more money.

The Residents' Rights Act, Bill 120, established a process for landlords to go through before they could convert, renovate or demolish care homes. There's no indication in this discussion paper of how suitable alternative housing will be evaluated as such, what type of notice would be required and how landlords' actions will be monitored to ensure the changes they're making don't simply rid them of people with certain disabilities.

One wonders about the relationship between ministries. The Ministry of Health's mental health policy recommends affordable housing. Does the Ministry of Housing have any accountability to health if health has to pick up the far greater tab for Ontario's unhoused population? Even inquests cost more than housing would have cost for the people who died.

Looking at tenants' rights, by "rights" we mean equality for tenants who are also psychiatric survivors; that is, equal access to due process and an equal process. A streamlined dispute resolution process is a good idea if it's adequately funded, if it's staffed by impartial and skilled workers, and if it's universally accessible.

The recent inquest into the deaths of three homeless men on Toronto streets made some recommendations to that effect. They recommended that to have staff with a greater sensitivity to the people they serve there should be more hiring from the communities represented by their clients. As part of a dispute resolution system, this would also increase accessibility to the system for many tenants if outreach and rights education were part of the funded process.

The dispute resolution process should not charge a fee, as even $20 is too much for people on social assistance to afford.

It would be a good idea to have further clarification around privacy issues, such as a landlord's entry to a tenant's home. In care homes any agreement about right to entry should be voluntary on the part of a tenant, not a condition of housing. In any case, it's long been the position of psychiatric consumers and survivors that supports should be attached primarily to the individual, not to their housing, because people often change their housing and shouldn't have to change their supports at the same time. Agreements about entry for care would therefore be with the individual or organization providing support, not with the landlord per se.

The Residents' Rights Act gave tenants in care homes the same rights as other residential tenants. We submit that the reversion to inequality proposed in this legislation is being considered only because of a prejudiced perception of people in care homes. A fast-track eviction process for people in care homes seems to suppose that people in care homes are more problematic than other members of society, but there's no evidence that this is the case. If someone is actually a danger to other tenants, there is legal recourse. In fact, the patients council assisted one man to relocate who'd been forbidden to return to his housing by the court.

One of the suggestions in the discussion paper is that landlords in care homes will have the right to "transfer residents to alternative facilities when the level of care needs change." This measure is unnecessary, is invasive, violates people's rights as tenants and treats people in care homes as if they're universally incompetent to make their own decisions. It also violates the Health Care Consent Act and possibly the Long-Term Care Act. The idea of allowing tenants in care homes to give only 30 days' notice if their care needs suddenly change is a far more appropriate suggestion, as long as it is the tenant's decision.

This proposed legislation puts landlords in an idea position to harass, intimidate and physically remove tenants from their homes when it is to the landlord's advantage to do so. It's far too common an occurrence when tenants try to assert their rights for tenants' care needs to suddenly change. This happens in psychiatric institutions and was one of the motivating forces behind the creation of Bill 120.

If tenants in care homes need additional help in their home, this can often be arranged. Once again, we emphasize the stupidity and waste of putting someone in an institution who could manage outside if allowed and supported to do so. Think of the money that could be saved of the $10,000 it costs a month to keep someone in Queen Street if less than a quarter of that amount was designated for housing and supports that would avoid institutionalization. Once again, we hope that the housing and health ministries are heading in approximately the same direction.

A smaller point: Exempting short-stay facilities from legislation poses some danger that we ask you to consider. The criteria should be narrow and specific in this area.

I'll skip to the recommendations that we're making:

(1) Retain rent control. However, we don't actually expect that this is going to be given serious reconsideration despite the consequences for many members of society. This being the case, we hope the government will adopt some measures to accommodate vulnerable people in this situation.

(2) Keep the Residents' Rights Act. The new, decontrolled system will already exert unequal pressure on psychiatric consumer-survivors and other vulnerable people. Please do not compound this by legislating inequality for some tenants. Legislation already exists to deal with many of the situations raised in this discussion paper. Tenants who need more care can either get it where they are or decide to move elsewhere. If they're incapable of deciding, a substitute decision-maker will decide for them. Landlords should not be making care decisions. Dangerous tenants can be dealt with under the law, as with all people. Evictions should follow due process, as with all tenants.

Eviction prevention should be the goal, not fast-track evictions. One of our people died from a lack of protection under the Landlord and Tenant Act. Before Bill 120 was passed, a colleague of mine heard from a distraught father. It was just before Christmas and his son had been evicted from Canadian Mental Health Association housing because his room was so messy. He called back a few days later to tell us his son had committed suicide. A better process and a useful support system could have saved that boy. In fact, another colleague of mine just did that recently. He helped clean up someone's room to save them from eviction. Equal process and funding for individual supports will keep many people housed.

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(3) The recommendation is to develop low-cost housing and to provide rent subsidies. In the unlikely event that building will boom without rent control, low-cost housing will not be the sector expanding. Toronto has a vacancy rate of 0.8%. It is a landlords' market. Perhaps the profits made by a landlord when rent control is removed could be taxed to build non-profit housing and provide rent subsidies. Toronto and any other area with a vacancy rate under 1% should receive government assistance in the housing sector.

In the following paragraph I give a description of a community that uses rent subsidies and operates very well. I won't describe it in detail right now.

In an environment of rent control, social assistance cuts, massive unemployment and a vacancy rate under 1%, the government must take some responsibility for people not being able to find affordable housing. Even if you believe the market will provide in the long run, in the short run government assistance is required.

(4) We ask that you ensure equal access to the dispute resolution process. These are some of the measures discussed earlier.

(5) We ask that costs for repairs and maintenance required by law should not be passed on to the tenants.

(6) We suggest an advisory committee should be struck with representatives from all relevant ministries, tenants, people in care homes, landlords and developers and community groups to review this legislation and consult on the impact of its implementation. This recommendation is supported by a similar recommendation resulting from the inquest into the deaths of three homeless men.

(7) Finally, we suggest that advocates should be funded for tenants. It's too much for some people, such as many psychiatric consumers and survivors, to deal with negotiating rents, possibly being harassed out of a controlled unit, losing their rights as tenants in care homes etc. Tenants in Ontario, especially vulnerable tenants, are going to need some help to deal with these changes.

Mr Sergio: Ms Chambers, you're very familiar with the proposed package for tenants. Do you feel that more protection is put on the unit or the tenants as it now exists?

Ms Chambers: I feel that there will be less protection for the tenant than now exists. Is that what you're asking?

Mr Sergio: There is less protection now. The minister said that himself yesterday, that the landlords have the upper hand on tenants now. But the proposed package, how do you see it? This will be placing more protection on the unit or the tenant?

Ms Chambers: I believe they're inseparable to an extent, given that it's the tenant who's in the unit, and I think protection for tenants is reduced by this legislation.

Mr Sergio: It's reduced. Okay. The proposed legislation also proposes to eliminate six statutes and incorporates them, if you will, within one, but also eliminates all of that protection. How will the rights of tenants be protected without the benefit of those statutes in there?

Ms Chambers: Without the benefits of the statutes of the Residents' Rights Act?

Mr Sergio: Yes. For example, the Rent Control Act is going to be killed completely. Also being eliminated is the Landlord and Tenant Act, the Residents' Right Act as it relates to home care, the Rental Housing Protection Act, the Land Lease Statute Law Amendment Act and also the vital services act.

Ms Chambers: I believe that particularly psychiatric consumers and survivors will be left extremely vulnerable by the abolition of these acts. I think psychiatric consumers and survivors are especially vulnerable to being among the poorest members of society, to any increase in housing costs, especially vulnerable to any harassment by landlords, which is recognized to be a danger of this legislation. I also believe that psychiatric consumers and survivors should have the same rights as other tenants under the Landlord and Tenant, which is what the Residents' Rights Act provides and which people would lose if that was abolished.

Mr Marchese: Ms Chambers, welcome and thank you for your presentation. I want to thank you for the ongoing advocacy that you're doing. On page 6, you say that advocates should be funded for tenants. Good luck. This government is not big on advocacy. If you recall, they eliminated the Advocacy Commission --

Ms Chambers: Yes, I do recall that.

Mr Marchese: -- and they are against rights advice generally. As you may know, they've defunded some of the tenants' groups because they don't like rights advice, they don't like tenant groups that support people and give them advice and all that. It's typical of this government, otherwise they wouldn't be cutting these kinds of activists who are there to support the very people you're talking about. If people like yourself aren't there to advocate for psychiatric survivors, who's going to do it? They've eliminated people who would do that on a full-time basis. So as much as you state a hope that the government will adopt some measures to accommodate vulnerable people in this new system, I'd like to nurture it, but I'm not sure what other advice I can give you around that.

I wanted to comment on some things you talked about in your proposal. In terms of rent control, we believe it gives basic protections to people like that, and you said that in spite of these rent controls, people who have such inadequate incomes are getting high increases, up to 7%. Imagine what will happen without the controls. They argue, "Don't worry, the market will take care of it." Do you really believe the market will take care of people like the ones you're advocating for?

Ms Chambers: I believe the market might in the long run take care of the upper-income levels of society; I don't think the market's going to provide for people living at the lowest income level.

Mr Tilson: Ms Chambers, thank you very much for your comments. I was interested in your recommendations, particularly recommendation 5 on page 6. I hope the thrust of your paper is with respect to vulnerable people and not tenants across the board, some of whom are very poor, some of whom are very rich and some of whom are in the middle.

Ms Chambers: It is, yes.

Mr Tilson: I'm hoping for that, because your comments say: "Costs for repairs and maintenance required by law should not be passed on to tenants. The proposed legislation allows this through municipal taxes." What in fact the ministry said on the opening day was that more than 10% of all rental stock needs substantial repair work. That's across the province, I assume. More than $10 billion in repairs is needed to rental buildings across Ontario. They talked about the number of outstanding work orders. In other words, the housing stock in this province is basically very old, much of it, and in great need of repair. Could you elaborate on that point? Surely you're not saying the general taxpayer should pay for all of these repairs. Surely that's not what you mean.

Ms Chambers: No, I'm not saying that at all. To answer your first point, I'm here to speak for the poorest and most vulnerable members of society. I'm also talking in that point specifically about the section on maintenance in which it talks about the municipality coming in to do work orders for the landlord when the landlord hasn't done them and then suggests that the municipality could recover its costs through taxes. Given that even for rent-controlled apartments people's rent can be increased if the landlord's taxes are raised, my concern is that in those specific cases tenants would end up paying for repairs that simply make their homes habitable, which should be expected under their existing rent.

The Chair: Thank you very much. We appreciate you being here this afternoon, Ms Chambers, and your involvement in our process.

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METRO TENANTS LEGAL SERVICES

The Chair: Our next presenters represent the Metro Tenants Legal Services: Bill Green, the director of the board; Jacquie Buncel, community legal worker; and Toby Young, staff lawyer. Welcome to our committee.

Mr Bill Green: My name is Bill Green. I'm one of the directors of the board of the Metro Tenants Legal Services.

Metro Tenants Legal Services, the MTLS, is a community legal aid clinic formed in 1976 to advocate for rights of tenants in Metropolitan Toronto and to assist tenants in enforcing those rights. We give information and advice to tenants on our telephone information lines, in our offices and by providing a tenants' duty counsel at landlord and tenant court. We also provide legal representation for low-income tenants and we deliver public legal education, targeted especially to groups that generally lack access to information and advice concerning their housing rights.

We have represented tenants since the first rent review hearings were held in 1976, through successive forms of rent regulation. Our experience, as well as our recognized commitment to fairness, have made our voice a credible one in the two-decade-long debate in this province over tenant protection.

During the last several years, we have identified several trends in the problems tenants bring to our office.

More evictions: The most common problem for which tenants seek the help of MTLS is eviction. Tenants seek our legal advice at all stages of the eviction process: when they have received notices that they are behind with their rent -- the most common reason for evictions is arrears of rent -- when the landlord takes them to court, and when they have received a sheriff's notice and they know it's just a matter of days before the sheriff comes to change the locks on the doors.

Indeed, during the last year there has been an increase in economic evictions. That's when tenants have to move because they simply cannot afford the rent. Because of the government's cut to welfare rates by 21.6%, many tenants receiving social assistance cannot afford their rent. Metro Community Services has conducted research on the affordability problems of tenants. They indicate that almost 60% of Metro tenants pay more than 30% of their income in rent, and half of these pay more than 50% of their income in rent.

In April 1996, some 66% of social assistance recipients renting in the private market had shelter costs above the shelter maximums. Families have been particularly hard hit. After the benefit cuts, 83% of all two-parent families with two children had shelter costs above the shelter maximum.

With such severe affordability problems, the inevitable outcome is that people lose their homes. Indeed, Metro Community Services' research points to this finding: Between January 1995 and January 1996, there was a 33% increase in the number of applications for terminations filed at the Ontario court. There was also a 16% increase in the number of executed evictions. That of course is when the sheriff comes and locks people out. This also was between January 1995 and January 1996.

Deteriorating maintenance: Over the past few years we have seen a drastic decline in the standard of maintenance of buildings in the Metro area. Where I live, 35 Walmer Road, is a classic example of the maintenance problems rampant in many of the buildings in downtown Toronto. Poor management has led to elevators constantly breaking down, problems with garbage pickups, security issues, break-ins, infestations of insects and mice, and other problems.

Declining supply of rental units: A third significant trend we have seen is a critical shortage of affordable housing options. Metro Toronto has the lowest vacancy rate in Canada at 0.8%, compared to the Canadian average of 4.3%. Furthermore, there is a critical shortage of housing for low-wage and poor people. This is evidenced by the waiting list to get into public housing. Currently over 50,000 families are on that waiting list for public housing. With the government's cancellation of its non-profit housing program and the cancellation of 385 projects last fall, the government has made its own contribution towards creating more homelessness in the province.

In addition, through the Land Use Planning and Protection Act, the government has reduced the supply of another source of affordable housing, basement apartments. This act will discourage homeowners from installing an apartment in their houses, as apartments in houses will now be illegal in many municipalities. Instead of encouraging the construction of new rental housing, the government is introducing measures to discourage it.

Erosion of support services and options for tenants: Indeed, many of the measures which this government has taken to date are the opposite of tenant protection. The government's cuts to the welfare rates have resulted in many tenants losing their homes. As well, the cancelling of non-profit and co-op housing projects has meant the loss of affordable housing to communities. In addition, this government has cut funding to organizations which provided services to tenants and which worked towards increasing housing options in their communities. Because of these cuts, MTLS itself has lost two full-time and one part-time staff member and has had to reduce our hours of public information service. With these kinds of measures taken by this government in its first year, it is no wonder many tenants and tenant supporters are sceptical when the government introduces a plan called "tenant protection package."

New Directions and the tenants of Ontario: From our place of knowledge and our expertise on these issues, we believe that it is vital that we tell this community that we are categorically opposed to the government's approach as outlined in New Directions. In proposing measures which will eliminate the rent control system as it currently exists, and in taking away an enforcement tool currently available to tenants to pressure their landlords to do repairs, and in repealing the Rental Housing Protection Act, New Directions is taking away the rights of tenants to affordable and safe housing.

In presenting this as tenant protection legislation, the government is using doublespeak, a term George Orwell coined in his famous novel 1984 to describe a society where hypocrisy and deceptions were the norm of the day. Indeed, as many tenants and tenant supporters from across the province will be telling this committee during the next three weeks, these proposed changes are not tenant protection. The move from rent controls to vacancy decontrol amounts to an income transfer program from tenants to landlords.

We will now proceed to outline what these proposals will mean for tenants if New Directions becomes the law of this province.

Ms Jacquie Buncel: Unfair rent increases: The government's proposal of vacancy decontrol will eliminate the system of rent regulation which has existed in this province for 25 years. The government is proposing that rent controls would be lifted when a unit became vacant and a landlord would negotiate with the incoming tenant a rent without regulatory restriction. Rent controls would then apply again when a unit was re-rented to a new tenant.

These free market rents will spell disaster for the tenants of Ontario. Housing is not a commodity like clothes or hardware where if the customer does not like the price that one store is offering they take their business elsewhere, nor is renting an apartment like a flea market where price negotiation is the expected norm. Housing is a basic necessity. Landlords and tenants do not have equal bargaining power. Many tenants are from disadvantaged groups like new immigrants, refugees, single mothers and youth. These groups often do not have the experience, and in the case of new immigrants and refugees the language skills, to negotiate with a prospective landlord about the rent.

In addition, this proposal presumes that tenants have somewhere else to go if they cannot afford to pay the rent which the landlord is demanding. In Metro Toronto, this simply is not the case. As mentioned earlier, vacancy rates are extremely low and getting lower.

If vacancy decontrol becomes a reality, tenants who have to move because of a change in their life circumstances will be subjected to high rent increases. Tenants might find they are unable to avail themselves of new job opportunities because they will not be able to afford to move. As well, tenants may have to put up with intolerable and unsafe maintenance conditions because they cannot afford the high rent increases which moving to another apartment will entail. Tenants will become prisoners in their own homes.

Allowing landlords to charge whatever rent they want is simply a handout to landlords. We wish to remind the government that even under the current system of rent control, landlords are now automatically entitled to raise the rent by a prescribed amount every year. In the last five years, most workers have not been given any salary increases; instead wages have been frozen or cut, with many workers losing their income totally as a result of layoffs.

Ultimately, vacancy decontrol will eliminate the controls which have been placed on rent in this province for over 20 years. Approximately 25% of the rental housing stock is vacated each year. Therefore, in four to five years most rental housing in Ontario will be totally unregulated.

As well, with the elimination of the rent registry and the elimination of the concept of maximum rent, the government is making tenants more vulnerable to high and unfair rent increases. The rent registry ensures that rent control applies to the units, not to the tenants. Shifting the focus from the unit to the sitting tenant will in fact reduce tenant protection, as prospective tenants will not be protected. Landlords will charge whatever they can to a tenant applying for a vacant unit, and the unit will not be protected by the now-existing annual guideline increase.

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The government's rationale for lifting rent controls is to encourage landlords and developers to invest in rental housing. It is our position that this legislation will not have that desired effect, due to the economic realities of housing construction in Ontario. In fact, under the current Rent Control Act, new buildings are now exempt from rent control regulations for the first five years. Even with this exemption, the private sector is not building new housing.

Contrary to the position taken by many developers and landlords, rent controls are not the reason why new construction is not taking place in Ontario. It is not profitable for landlords to build rental housing. Government has always subsidized the private sector to build affordable rental housing. The Lampert report, commissioned by this government, indicates that a typical new unit costs $123,700 to build. This requires rents of $1,100 a month, and obviously this rent would not be affordable to middle- and low-wage earners.

There are a number of measures which could be taken to reduce the costs of operating and building rental housing, such as decreasing property taxes. We recommend that the government investigate other ways of reducing costs to make building affordable rental housing more attractive to developers and landlords.

Metro Tenants Legal Services is also concerned that the government is allowing a maximum of a 4% increase above the guideline for capital expenditures. This is 1% more than what is currently allowed. Allowing higher rent increases will only exacerbate the current severe affordability problems which many tenants in Metro are currently experiencing.

Furthermore, we wish to state our opposition to the government's proposal not to cap extraordinary operating costs. This will allow landlords to automatically pass through to tenants increases in taxes and utility costs. It is our position that there should continue to be caps on these increases. We anticipate that this will prove to be a more significant problem in the future because of the new municipal powers under the Savings and Restructuring Act to charge user fees. For example, municipalities might charge user fees for garbage collection which might be considered as increases in extraordinary operating costs. Tenants should not have to automatically bear the brunt of tax increases without any caps, especially since tenants currently pay three to four times more in property taxes, through their rents, than homeowners.

More evictions and loss of security of tenure: More and more tenants will be evicted, as there will now be a financial incentive for landlords to evict tenants; ie, if landlords get rid of a tenant, they can charge the new tenant whatever rent they want. While the government has proposed to set up an anti-harassment unit to intervene and if necessary prosecute landlords who harass tenants, we do not expect this to be effective at preventing harassment from occurring. Very few resources are presently allocated to the issue of tenant harassment, and there is no reason to expect that this will change. We think it unlikely that sufficient resources will be allocated to make a proposed anti-harassment unit effective in protecting tenants.

Vacancy decontrol will affect tenants' security of tenure, as they will no longer feel that they can stay in their apartments as long as they wish without fear of eviction; ie, as long as they do not breach their responsibilities under the Landlord and Tenant Act. Landlords will pressure and harass tenants to move. Tenants will be increasingly vulnerable to landlords who make their lives difficult in order to evict them.

Mr Toby Young: Continued deterioration of the housing stock due to poor maintenance and disrepair: New Directions proposes to give to municipalities more powers to enforce property standards. For example, there will be stiffer fines for landlords who violate property standards. We do not expect these new powers to be effective in addressing the serious problems with maintenance in Metro Toronto.

Our experience is that municipalities do not use the enforcement powers that they currently have to make sure buildings are properly maintained. Many do not have the resources to hire enough property inspectors, and others do not take their role of property standards enforcement seriously or do not want to intervene between landlords and tenants. Indeed, some tenants have successfully sued municipalities for failing to inspect properties and issue work orders. With cuts in transfer grants from the province to municipalities, municipalities are unlikely to hire more property standards inspectors to exercise their new enforcement powers.

Our experience with the vital services act has demonstrated that municipalities are unlikely to make use of the additional powers that the government proposes to give them. The vital services act was designed to give municipalities the powers to assist tenants if their hydro or another vital service was cut off because the landlord had not paid the bill. Municipalities were given the power to pay the utilities company themselves and charge the cost to the landlord's tax bill. They have not in any great numbers chosen to pass bylaws to use this power. There is no reason to expect that municipalities will exercise additional enforcement powers for property standards on behalf of tenants.

In addition, the province is proposing to eliminate a part of the system which did help tenants to get their landlords to do repairs, and that is the orders prohibiting rent increases or OPRIs. These orders froze the rent when there were outstanding work orders. This created a financial incentive for landlords to maintain their buildings. By getting rid of OPRIs, the province is abandoning its role in maintenance enforcement. Tenants need the province to be actively involved in ensuring that buildings are properly maintained.

The government has stated that there is no incentive for landlords to repair their buildings. This is quite simply untrue. Built into the annual guideline increase is a 2% increase designated specifically for capital repairs. However, there is no monitoring to ensure that the landlords actually spend this on repairs in their buildings.

MTLS, along with many other organizations, has recommended for many years that the province institute a maintenance reserve fund. Landlords would be required to contribute a certain percentage of their rent income to a centralized fund. This fund would act as an insurance plan which landlords could use if major capital expenditures were needed for their buildings. Such an initiative would ensure that the portion of the rent designated for repairs is actually used for repairs.

Decrease in the supply of affordable housing: The government plans to repeal the Rental Housing Protection Act. This act was passed to prevent the loss of affordable rental housing by giving local governments the authority to approve or prohibit demolitions and conversions of rental housing to other uses such as condominiums. New Directions proposes to eliminate this authority so that developers and landlords will be able to demolish or convert their buildings without obtaining municipal approval. This will mean a loss of Ontario's supply of affordable rental housing stock.

Legal representation and the access to justice issue: The government is proposing to do away with the two separate systems which currently deal with rent control and landlord and tenant disputes. Instead of issues being resolved at court and through the rent control system, the government wants to bring in a tribunal which would deal with all disputes.

MTLS has major concerns about what the government is proposing. As mentioned earlier, MTLS operates a tenants' duty counsel pilot project at landlord and tenant court through which tenants get access to legal advice and information. In Metro Toronto, there are on any given day 80 registrars' hearings and another 40 cases before the judge presiding in landlord and tenant court. The duty counsel sees approximately 250 tenants per month, which represents only a small fraction of the tenants involved in disputes with their landlords.

If the delivery system is transferred to tribunals, which will be based in various locations, will the government fund a duty counsel project at each of these locations? Already tenants have difficulties getting legal representation at court and at rent control hearings, especially since it is now very difficult for tenants to get a legal aid certificate for a landlord-and-tenant matter and the community legal clinics are underresourced for the demand on their services. We fear that under the proposed system, tenants will have even more difficulties obtaining legal representation.

We hope that the government is not planning to sacrifice fairness for speed in the new system it is proposing. We know that Mr Al Leach has said many times to landlord groups that he will make it easier for landlords to evict tenants. We agree that the present system has its delays, but these have more to do with a lack of resources than anything else.

Finally, the Minister of Municipal Affairs and Housing has said that this government is going to fix the system in a way that is fair and balanced. What is being proposed in New Directions is neither fair nor balanced. He says tenants are going to be protected from unfair rent increases. However, if these proposals are implemented, the exact opposite will occur. Tenants will be vulnerable to high rent increases every time they move. He says that buildings must be properly maintained. The expertise and knowledge that MTLS brings from working on these issues for over 20 years tells us this will not happen. These changes will not improve the standard of maintenance of buildings in this province, nor will this proposal encourage construction of more rental housing.

Instead, the measures this government is proposing will lead to more social dislocation, more homelessness and a deterioration of already adversarial relationships between landlords and tenants. These New Directions away from tenant protection through government regulation and towards a free-market bargaining model are ill-advised. If these proposals become law, tenants will only be free to pay higher rent and they'll be free to face more harassment from landlords. Finally, they will be free to negotiate from a position of disadvantage.

The Chair: Thank you very much for your presentation. You've used up the 20 minutes that was allotted to you --

Mr Green: We started late.

The Chair: -- so there's no time for any questions, but we do --

Mr Young: Didn't we start late?

The Chair: We've also let you go a little bit late. We've allowed you the full 20 minutes and we appreciate your presentation this afternoon.

We'll now recess until 6 o'clock.

The committee recessed from 1700 to 1800.

KEN DEMERLING
MICHAEL WALKER

The Chair: Good evening, everyone. Welcome to our committee hearings on the proposed changes to the rent control legislation.

Our first presenters are Ken Demerling and Michael Walker. Good evening, gentlemen. Welcome. You have 20 minutes. Should you allow any time for questions at the end, they would begin with the NDP.

Mr Ken Demerling: I'm presenting as an individual who happened to work for Eddie Cogan, the person who flipped the Cadillac-Fairview buildings twice, and a former Tory and a former riding secretary for the provincial Tory party. Being behind the scenes with Mr Cogan I saw how developers work. At the time I worked for him the Rental Housing Protection Act was in place. They were trying everything to turn all the Cadillac-Fairview buildings into condominiums.

The attitude of why landlords should subsidize tenants is wrong. I've attached a 1979 Toronto Star. Rent controls basically have been a guarantee of built-in profit. The only benefit tenants get is that they know what's going to happen next year. In tracing my own building, which is at 145 St George, it cost $900,000 to build in 1959. They take in $900,000 a year now, with $300,000 in expenses. Where else can you get a return like that? Also remember, in discussing about building and everything else, landlords don't own a portable commodity made with 100% of their money. Municipalities allowed massive impact into communities that have sometimes netted increased crime etc. Governments also gave tax breaks and supplied infrastructure to supply rental stock, not "best land use."

The discussion paper talks about a fine going from $25,000 to $50,000. Basically, so what? It might as well go down to $50. In the existence of the Landlord and Tenant Act less than 30 landlords have been charged. The average has been $500 or below. Also under the Landlord and Tenant Act the landlord has to post the legal name of the building and the legal address in the lobby of the building. My landlord has a name and address that's 20 years old and it's a style name; it's not a legal name. I've tried to get the Ministry of Housing to charge the landlord. They won't. They won't even send a letter to the landlord.

Also, under the Business Names Act -- my landlord does 100% of his business with his tenants in an expired style name -- it is not legal to go to court, to enter into a contract in a style name. Yet the government allows them to go to rent review and the courts allow them to get an eviction notice in a style name.

The government should start protecting tenants, not just using the term as window dressing. No law, statute or regulation was put into place for no reason. For those of you who aren't old enough and aren't from Toronto to remember Trefann Court in the 1960s, that is a crucial turning point in landlord-tenant relationships. None of these laws came into effect "just because"; they were there because of need.

I'm finished with that. I've attached two articles. One is on the effects of New York City's deregulation of rent controls, the other one, from the Economist, a British magazine, on how the New York City government has to massively reinvest in public housing because of deregulation of rent controls. I've also put in Al Leach's brochure to his constituents telling them about rent control and I've put in from the Globe and Mail, "How Tenants are Taxed." If for a half-million-dollar house they pay $5,872 a year in tax, an apartment in that price range is paying $23,488.

Mr Michael Walker: Thank you very much, Mr Chair, members of the Legislature and guests.

Back in 1991, when the current rent control legislation was introduced, I was before a committee similar to this arguing with the government of the time. However, at that time I had a very specific complaint: I felt that the legislation didn't go far enough. It didn't include a capital reserve fund or any sort of provisions to ensure that buildings would be well maintained and kept in good repair. Today I am standing up here to say that this government has gone too far, in the wrong direction.

When I first read the government's proposed tenant protection legislation I was shocked to see that all protections for tenants had been effectively removed. Not only were prudent measures like the creation of a capital reserve account missing from this proposed legislation, but the changes proposed represent one of the biggest attacks on tenants' rights in over 20 years, in my opinion. If this proposed tenant protection legislation were ever to be adopted, it would result in less affordable housing, strained relationships between landlords and tenants and less maintenance work being carried out by landlords. It would also result in rental housing becoming a speculative commodity.

According to Minister Leach, when this consultation document was first launched he said that the changes proposed would "give landlords greater incentive to maintain their buildings." How would this be accomplished? The proposed legislation does not suggest any sort of approach where funds are systematically set aside to cover capital repairs. Rather, it suggests that if landlords are able to put the rents up in buildings and charge as much as they can from people who need a home, they will have the incentive to keep their buildings nice. Does this sound like a commonsense approach to you?

To me, the commonsense approach would be to ensure that a portion of each tenant's monthly rent be deposited in a separate bank account, registered to the building and not to the landlord, and this account be used solely for the purpose of making major capital improvements to that building. This is something I've been advocating for six years.

An article which appeared in the Globe and Mail on July 2 showed that rental housing in Ontario is already one of the most stable investments, delivering a 10% annual return on investment. This would suggest to me that there might already be enough funds available to ensure that the rental stock could be well maintained and that a capital reserve fund could be established. That to me is common sense.

What is most alarming is that if this legislation were to go through and the Rental House Protection Act were eliminated, as this government is proposing, then there is a very real possibility that the number of rental units would actually decrease as it becomes easier for developers to tear down rental apartment buildings. As well, tenants would lose their homes if their buildings were converted to condominiums and they couldn't afford to buy their own units.

I'm deeply concerned about the false expectations that have been created around this legislation. Will this new provincial legislation mean that landlords will keep their buildings in any better condition than they do under the current legislation? It will not. Will this new provincial legislation protect the supply of affordable rental housing? It will not.

There are the same false expectations around the words "tenant protection." Tenants' rights will not be protected by this new legislation. In fact, it will be to the contrary.

Under the cloak of tenant protection, landlords will be allowed to apply for above-guideline increases of 4% for capital repairs as well as unlimited increases for higher property taxes or utility costs. What this means is that if property taxes go up the tenant pays. If we have an unusually hard winter and heating costs go up, the tenant pays.

The only way tenants will be protected is if they do not move. As soon as they choose to move, rent control will be lifted and the landlord can charge whatever rent he would like. Does this sound fair?

Clearly it will be in the interest of landlords to get tenants to move so they can increase the rents that they are charging. How will this be done? By reducing the level of maintenance, subtly, or of service quality that the tenants receive, to the point where they become frustrated and move, or by harassing a tenant into moving.

The government itself has more or less indicated that this is a very real possibility of the proposed legislation and has taken steps to introduce stronger anti-harassment measures and stronger maintenance enforcement provisions. What do these measures really mean in terms of tenant protection?

In introducing stronger maintenance enforcement provisions, the government has eliminated the orders for prohibiting rent increases which have been the single most effective tool for the city of Toronto in gaining timely compliance from landlords for property standards violations. As a result, rents can be increased even when there are outstanding work orders on their building, as proposed in this legislation. Previously rents were frozen until the problems were fixed. Does that sound fair?

While the government is trying to suggest that it is giving tenants additional protection, in reality, in my opinion, it is weakening the protections that are already in place.

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There are many other changes being proposed under this tenant protection legislation that seem skewed in favour of the landlords and not in favour of the tenants. I don't have time today to list them, but simply put, the government has lost sight of the fact that, in my opinion, housing is a right and not a privilege. Given the tight rental market conditions and the affordability problems that many renters already experience, the consequences of the changes being proposed are frightening.

With the removal of rent controls there is no doubt that there will be upward pressure on rents and more and more households finding themselves with fewer and fewer options. An increase in the overall level of homelessness is a very real possibility of this legislation.

Changes to this legislation were not part of the government's original election promises. I can't find it in the Common Sense Revolution. There is no statement here about it. Furthermore, why is it so important to make such significant changes to something which has worked reasonably well for the last 20 years? Obviously this government is of the opinion that the previous Conservative government, which introduced the original rent control legislation, lacked the vision and common sense to which this present government now feels it has a monopoly.

In my 15 years on council I have never seen such strong and united opposition building up to something the government is proposing. However, why wouldn't this be the case when it is so evident that this government has abandoned the tenants of this province and ignored the fact that they too can vote? It would seem the government has declared war on tenants with this proposed paper.

To conclude, tenants are electors and tenants aren't a special-interest group. Landlords are a special-interest group. Tenants are today's silent majority that politicians take for granted too often. It is time that we, the tenants, fight back. It is time that we say that tenants have rights equal to every other citizen and it is time for this government and all governments to listen to them.

Mr Marchese: Thank you both for your presentations. I want to thank you as a member of city council for the support you've given tenants. They obviously don't like what you've done; they've said that in previous deputations that other city councillors have made. I think you all have a responsibility towards the tenants of the city of Toronto, and spending the money, as you've done, on buttons and other things is a critical thing to have done. I thank you personally on that note.

I also want to point out while you're here that many of you are not NDPers. Some of them suspect that if you oppose this you're NDPers. Is it fair to say, Michael, you're not an NDPer?

Mr Walker: I'm a Conservative with a conscience.

Mr Marchese: Very good. One of the things they have constantly talked about is that there is just not enough for capital repairs, and built into the rent is capital that is there for that purpose. My concern is that it's perhaps not being spent and that's why you're proposing that a capital reserve fund be set aside to make sure that repairs are done. Is that the argument you're making?

Mr Walker: Yes, it is. That's exactly it. Landlords to date have always thought that all the rent flow is there to pocket and when they want to make improvements they have a right to go back and ask tenants for more, and that's not reasonable. No wise businessperson would ever do that. They would always reinvest part of their cash flow back into their asset.

Mr Marchese: Mr Walker, they obviously argue that you're a misguided Tory, and of course that we're misguided socialists by nature, but they think the marketplace will solve all our problems and that if we allow the marketplace to take care of things, they will build, everybody will be more or less protected, we'll have in place shelter allowances to give to those who can't afford it and everything should be all right. Do you agree with that view?

Mr Walker: No, I don't. I think there is a role for government intervention and I'm proud to have been associated with a government such as Bill Davis's that introduced the first rent control legislation. There is a place for it and there's a long history of government involvement in fettering the freewheeling rights of individuals in a society. Every time government passes legislation it fetters people's individual rights, but in the greater good of society.

Mr Marchese: Thank you for your conscience.

Mr Tilson: Mr Walker, you've appeared before committees that I've been on and I've always admired the way you stick up for tenants and your constituents.

There's quite a political debate that you'll hear as to why we're having housing problems in this province. Some will say it's because there is or there is not rent control, some will say because there's too much bureaucracy, that there is overregulated planning; there's a debate and quite often it becomes very political.

I don't know whether you've had an opportunity to look at the report that came out for the government in November -- Greg Lampert. On page 36 he raised the topic which I'd like you to comment on as a municipal politician and what position you'd be prepared to take when this topic surfaces, and it will surface. It says there are higher property taxes for rental housing for ownership housing.

Mr Walker: Yes, there are.

Mr Tilson: The argument has been made that this is therefore a cause of higher rents, the issue is a cause of that, at least according to Mr Lampert. He talks about the mill rates that are applied to determine property taxes. There's enormous variation among the municipalities, but in general it's clear that rental housing is taxed at a much higher rate than ownership housing. The city of Toronto is right at the top of the list, where rental is taxed at 4.2 times ownership. It's been made quite clear by the minister in his opening comments that this topic is being handed off to Mr Crombie and his committee to look at the overall issue of assessment and that sort of thing. I don't know whether this committee is going to discuss it, but I'd like you to comment on it because it will eventually come forward to the government.

Mr Walker: I like the recommendations of the Libby Burnham commission better. She listened to the people, or her commission did, and made recommendations and they were rejected by this government.

Our proposal --

Mr Tilson: I want to know what you think, Mr Walker.

Mr Walker: I'm going to tell you.

Mr Tilson: I don't want Ms Burnham or anybody else.

Mr Walker: I'm going to tell you. In our proposal, which I am a strong supporter of, there should be one class of residential, and our unit assessment proposal will address that issue and then it will create the introduction into the one assessment system for all residential. We're on record; that was a resolution that I passed and council supported. I support that, but with unit assessment and rent control in place, because I'm not interested in levelling the playing field on taxes if the landlord pockets the tax savings and the tenant doesn't benefit.

Mr Tilson: We happen to be conscientious Conservatives on this side too, Mr Walker, and I will simply say that the issue of high taxes is one that we're concerned with and it's an issue that needs to be addressed. I hope that when the time comes you will speak at your council and debate the issue that clearly people in rental housing are being taxed much higher than ownership housing, and that's not fair.

Mr Curling: The combination that is sitting there, it doesn't take three minutes; it would maybe take half an hour to get some pertinent information. I dealt with Eddie Cogan in 1985 when he wanted to flip and threatened me that he would convert every rental unit into condominiums. I can tell you that he didn't win, as a matter of fact. I told him that Bill 7 would come in. So I want to congratulate you for standing up and coming out openly and supporting the rights of tenants in this respect. As I said, three minutes is not enough.

Mr Walker, I too admire the fact that you were bold enough to come out -- I say "bold" to mean putting forward your ideology and saying that tenants' rights must be protected. I want to commend you on this. You and I disagree on certain things but on this issue we're right on.

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One of the things you have advocated, very much so, is capital costs for capital repairs. I know it's another way to get landlords to be accountable or responsible for what they should be doing, although it has been taken care of in the amount of rent that people pay for fixing those units. Do you think the provincial government behaved responsibly when they were giving work orders and asking the municipalities to carry out those work orders to the municipalities so they could monitor that? One of the complaints we had was that we asked municipalities to do that without any funds, so that fell through the cracks.

Mr Walker: You mean as proposed here?

Mr Curling: Yes.

Mr Walker: No. I addressed that specifically. When we register work orders against a building -- you have the rent registry and you can't get a rent increase if there's a work order on your building -- we found that work orders are complied with 60% within one year and over 50% of the remaining within the next few months because the landlord is fettered in his ability to get even the statutory increase. That's thanks to the last legislation. That is the way to go, because justice delayed is justice denied.

I can assure you we all flex our muscles and say, "We can deal with this issue as is proposed here or deal with noise control issues" or something like that, and the legislation is clear about our rights, but once we lay the charge and they don't comply and then they seek court, then they seek an adjournment -- they always get it -- I can tell you it's two and three years of hanging on to the culprit who has violated whatever the rule is and going through the courts before you get an issue resolved. Most tenants will have thrown their hands up in despair and fled the scene, because it will not work.

The work order process that I outlined here and which the last legislation was clear on worked decisively. The number of non-complied work orders dropped dramatically, most particularly just before the 12-month period when they were going back to get their statutory increase and/or going for the capital increase of 3%.

The Chair: Thank you, gentlemen. We appreciate your attendance here this evening and your involvement in the process.

EGLINTON RIDING TENANTS' ADVISORY COMMITTEE

The Chair: The next presenters are the Eglinton Riding Tenants' Advisory Committee. They've got a lot of names here: David Moscoe, Vivienne Cutting, Marion Bassett, John Carsone, Sue Henry, Brian Munro, Dawn Pilot and Diane Scoville. Are all those people here? Welcome.

Mr David Moscoe: Good evening, Mr Chair and members of the standing committee. My name is David Moscoe. Seated next to me is Vivienne Cutting. We are members of the Eglinton Riding Tenants' Advisory Committee. This committee was organized through the efforts of Bill Saunderson, MPP for Eglinton riding. We are volunteer members of the tenants' advisory committee and are tenants of long standing, with some members having worked actively with tenant committees over the past 20 years.

The committee was formed in January of this year to gather feedback from tenants in anticipation of the proposed changes to the current rent legislation. The tenants' advisory committee actively sought input from within the riding by asking for written submissions as well as holding two open public hearings. This brief reflects the information and opinions of the tenants of Eglinton riding. Please note that over 50% of Eglinton is comprised of tenants. For ease of reading, this brief has been organized in the same order as the discussion paper.

Vacancy decontrol: Our committee does not support vacancy decontrol because rent controls will be effectively removed from what little affordable housing there is within the area of Eglinton riding. Finding decent, affordable housing in the area is a problem now.

Protection from unfair rent increases -- capital expenditure increases: Our committee is supportive of the concept of a capital reserve fund. This fund would be used to pay for capital expenditures of a building. Each building would have a separate trust fund established and the landlord would be responsible for administration of the fund. Should the building be sold, the trust fund would remain with the building. If the landlord applies for a capital expenditure increase, documentation would have to be produced to detail what moneys were in the fund.

One of the main concerns tenants have in the Eglinton riding is the repair and maintenance of their buildings. There must be some way to guarantee that landlords allocate a portion of the tenants' rents back into the repair of their buildings on a continual basis. The rental guidelines since 1990 have always intended to allow for a certain percentage of the rent increase to be used for major repairs to the building. The 1996 guidelines suggest 2% of the 2.8% be applied to major repairs. This was not monitored and enforced, the result being that buildings were neglected and allowed to fall into disrepair.

The discussion paper suggests that over and above the current rent guidelines there should be a 4% capped increase allowed for capital expenditures. Tenants have already paid once for these capital expenditures through the guideline increases. Why should they have to be held accountable and pay a second time through an additional 4% capital expenditure provision? Our committee does not support an additional capital expenditure provision over and above the rent guideline.

Our committee supports the proposal that extraordinary operating costs over and above what is defined in the yearly guideline increase be passed through to the tenant provided those costs are capped.

In response to the proposal for the simplification of administration:

(1) Our committee does not support the suggestion that "costs no longer borne be calculated for capital expenditures." Once the life expectancy of the cost has been reached, it should be removed from the rent.

(2) Landlords should include operating cost information with subsequent notices of rent increase after an above-guideline increase has been approved.

(3) Written explanation of reasons for a rent control decision should be supplied upon request at no charge.

Our committee does not agree with the rent registry being eliminated. The jurisdiction of the rent registry should come under the municipality.

With regard to the section on maintenance, our committee supports the following:

(1) The province establishes the property standards and the municipality is responsible for enforcing these standards.

(2) The proposed changes listed on page 4 of the discussion paper be enforced by the municipality, not the province.

(3) The province should have the power to enforce property standard bylaws if the municipality is unable to enforce the bylaws.

(4) Our committee felt that increases in fines are only effective if enforced. We are unable to find any case law that shows that fines under the current legislation have been enforced to the maximum.

A strict time limit should be adhered to to improve enforcement of property standards.

The Landlord and Tenant Act: The act should remain under the current judicial system.

Sublets: Our committee has stated at the beginning of this brief that we do not support vacancy decontrol; therefore it follows that we do not support the proposed changes to sublet (or assignment) of the lease.

Abandoned property: The landlord can obtain a writ of possession after 60 days and the landlord has the right to recover storage costs.

Sale of single-family dwellings: Our committee agrees with the proposed changes for the sale of single-family dwellings of 60 days' notice at the end of the lease term.

Privacy: Our committee agrees that the landlord is allowed to enter the unit within specified times, with 24 hours' written notice. The only exceptions when a landlord would not have to give 24-hour written notice are: (1) in emergencies; (2) after notice of termination to show the unit only to prospective tenants with reasonable notice when the tenant agrees to time of entry; and (3) where the landlord agrees to clean the unit.

Harassment: Our committee supports the section on harassment provided that the enforcement unit falls under the provincial court system. Other remedies dealing with harassment on a tenant application should include injunctions, standing orders and restraining orders. Our committee supports the idea of fines being levied provided these fines are enforced.

Dispute resolution system re the Rent Control Act: The tenant should pay the current legal rent until the dispute is settled.

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Application to be completed by either party re a dispute action: This application would go before a mediator who would meet with both parties to clarify the issues, discuss how the law works and discuss options. The application would then move from the mediator to an arbitration panel. An arbitration panel would be independent of the ministry but subject to provincial laws and legislation.

The appointment of the arbitrators would be by public tender, as suggested in the discussion paper, where potential bidders would have to meet specific criteria. A three-member panel would be formed, with one member being a paralegal. The minimum qualifications should include knowledge of the Landlord and Tenant Act and the Rent Control Act. The appointment would be for two years.

The idea of a default judgement would still apply with an arbitration panel. If one of the parties did not appear before the panel, the arbitration proceedings would still proceed and the decision made by the arbitration panel would be binding.

Appeals: The committee supports the suggestion that appeals not go before the courts. We support the single-tiered system which only allows reconsideration for serious error and the power to amend an order based on clerical error or omission or matters of fact and law.

Public access and efficiency: The rent control offices should remain. Mediators and arbitration panels could operate from these locations. We recommend a nominal application fee of $50 to be paid to offset processing costs.

Security of tenure and conversions: The Ontario government has suggested that changes to the existing rent legislation are required because there is not sufficient affordable housing available now. There is no proof or documentation to support that affordable rental housing is being built where rent control has been removed. By allowing existing rental units to be converted into condominiums or cooperatives, would you not be reducing the rental stock even further? Our committee is not supportive of conversions.

There have been no barriers to building in the past. Condominiums are being built in all sections of the city. The federal and provincial governments have not offered any incentives to build rental accommodation; that is, no GST or PST on building materials for rental accommodation, reduced property taxes on rental buildings etc.

Our committee supports that the Rental Housing Protection Act not be eliminated. Demolitions, major renovations and conversions of rental buildings to condominiums or cooperatives must be subject to municipal approval. Municipalities are attuned to their own neighbourhoods. If a conversion is approved, tenants must be protected. Our committee is concerned that tenants on fixed, low incomes must be given enough time to find affordable alternative accommodation. Our committee supports the following: (1) that tenants be given the right of first refusal and mortgage financing be guaranteed to be in place for those who qualify; (2) that tenants must be given one year's notice and financial compensation equal to one year's equivalent in rent.

Care homes: Care home operators will be entitled to enter a resident's room without notice to provide care or perform bed checks if agreed to by the tenant or his or her guardian.

Transfer to alternative facilities when the level of care needs change should be subject to a doctor's approval.

We agree to fast-tracking eviction cases for residents who pose a threat to other residents, providing a contingency plan is in place.

Other issues for discussion: Interest on the last month's rent should be paid at the end of a calendar year and based on the average GIC interest rate for that year. Payment can be made by cheque issued to the tenant or the equivalent deducted from one month's rent.

In conclusion, we want you to know that our committee realizes the proposed changes to the rent legislation are a highly charged emotional issue. We are talking about people's homes and we encourage those members of the standing committee who aren't tenants to please identify with the plight of tenants.

We wish to thank the standing committee for the opportunity to present our concerns here today. We are confident you will seriously consider our recommendations.

Mr Wettlaufer: Mr Moscoe, Ms Cutting, thank you for appearing. I have some concern about the number of groups that have been coming and stating their emphasis that the landlord should be putting moneys into a capital reserve fund. When you look at the fact that 80% of the units in the province of Ontario are in buildings of four or fewer units; when you look at the fact that these are owned by individuals generally rather than large landowners; when you look at the fact that these individuals may be immigrants who came here in the 1950s, 1960s with nothing but the clothes on their backs, have worked their tails off to accomplish something in their lives -- this building represents their life savings. We talk about pensioners also being owners of these buildings; this is also their life savings. These people need the income from these buildings to support their pension plan.

Then you talk about, why should tenants pay more than once? I just did some rough figures here. Four units costing $1,000 a month in rent represent $48,000 a year in income. A 2% guideline increase for capital expenditures represents $960 a year. If that would have been put away for 40 years by this landlord, he still wouldn't have enough to cover the cost of retrofitting and roof costs, which need to be redone every 20 or 30 years. How much do we expect these poor individual landlords to --

Laughter.

Mr Wettlaufer: Laugh if you will, but we're talking abut little landlords; I'm not talking about big land owners.

The Chair: Unfortunately, Mr Wettlaufer, the question has been a little too long. We haven't got time for an answer.

Mr Curling: I think some of my colleagues in the Conservative Party should go and visit some of these places where these poor tenants, and their poor landlords, are. There's no doubt there are good landlords out there, and there are bad landlords. But we're talking about a system that exploits many of the tenants, and we can't fix it in the way that we are presenting things today.

I just want you to comment a little bit, because I think it's an excellent presentation. Everyone is stating -- quite a few, not everyone -- many people have come in and said rent control is the cause for affordable housing not being built. What do you think motivates that? Is this a political motivation? It is a politically charged issue. They say rent control is one of the causes that affordable housing is not being built. If rent control was taken off, do you see any way at all that this would stimulate the building of affordable housing?

Mr Moscoe: I think it's already been stated to you -- I watched the proceedings yesterday afternoon -- that rent controls came after a considerable amount of construction in Metropolitan Toronto back in the 1970s. There was a time period when construction stopped; there was no rent control and there was no more building. When I hear that argument that rent control caused the end of the building of affordable housing, I can't buy that. Rent controls didn't stop the building. It stopped for whatever reasons. Maybe taxes were too high; maybe land cost too much. Whatever the reasons were at that time, before rent controls, rental housing wasn't being built.

Mr Marchese: I want to thank you for the presentation and thank all of the members of the advisory groups who have pulled this together. Not every tenant association or building is organized as well as you are, and I hope that people watching can take lessons from that.

I'm beginning more and more to support a capital reserve fund. We already build a capital fund into what landlords are getting. In addition to the 2% they can, if they make a case, argue for 3% more. This government says, "They can argue for 4% more," an increase of 1% more over the other. Presumably, if they were in bad straits, the landlord would be applying for that money to make the repairs, and they have been doing that. But I don't think they're doing it.

Do you believe, as many of the landlords who have come here believe, that it's rent control that has ruined everyone and everything?

Mr Moscoe: We don't, no, for the reasons that I just stated before.

Mr Marchese: Thank you very much. I just want to say, you'll notice the collusion here and the connection between some of the members on the other side and the arguments the landlords are making. You'll see the clear connection.

The Chair: Thank you very much, folks. We appreciate your interest and your presentation here this evening.

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NORTH TORONTO TENANTS' NETWORK

The Chair: The next presenter is Lynn Carleton, president of the North Toronto Tenants' Network. Good evening, folks. Welcome to our committee.

Ms Lynn Carleton: Good evening, everyone. My name is Lynn Carleton. I'm the president of the North Toronto Tenants' Network and I will introduce the people who are here but not sitting up here. We have Janet Humphreys, who is our secretary; Michael Black, who is a director; and Gillian Stewart, who is also a director. These other folks here can introduce themselves.

Ms Lahta Sukumar: I'm Lahta Sukumar. I'm a member.

Mr Herb Heimbecker: I'm Herb Heimbecker, acting treasurer.

Mr Craig McNaught: I'm Craig McNaught, vice-president.

Ms Carleton: We are, among us, a lawyer, a messenger, a secretary, a business executive, a bookkeeper, a writer and an unemployed disabled office worker. This is North Toronto. I'd like to report that we also speak for other tenants' associations that are unable to make their own presentations -- and they are all in North Toronto -- 65 Broadway, 45 Balliol, 88 Erskine, 225 Davisville, 33 Davisville. All together, there are close to 2,500 rental units. It's not just us four here I'm speaking for.

I'd like to ask a question. Are there any tenants on this committee? There are three tenants. Thank you for answering.

A month and a half ago, we celebrated Canada Day. We sang, we marched, we flew flags, we felt good about ourselves, and we had every right to. The United Nations had announced that Canada is the best place in the world to live. What makes us the best is people. People from sea to sea to sea, from rural to urban, from farmers to truck drivers, from secretaries to doctors, from teachers to couriers, from wheat farmers to Bay Street, the majority of us live ethically and morally, and in doing this we create communities, healthy communities. North Toronto is a healthy community. We live there. We play there. We work there. We get married there. We have parks. We have pubs. We have theatres. We have restaurants. We have kids' playgrounds. There are dogs' playgrounds in the works. We have good shopping. We have schools with excellent academic credentials. We have possible Olympians living in North Toronto. It sounds like a great place to live and it is a great place to live. There are 60,000 tenants in north Toronto.

Let's jump forward to 2001. The Conservative government has been defeated, but not before it removed rent control. North Toronto is not so nice any more. Buildings are being converted to condos. Rents are skyrocketing. Tenants are moving out, leaving half-empty buildings behind them. Local stores and pubs are closing. Theatres have boarded up their windows. Break-ins and car thefts are on the rise; there are fewer police. Homeowners are distressed. Their taxes will probably rise. Schools are possibly closing. Is this an exaggeration? Perhaps, but perhaps not. Do we take the chance?

We recognize that this is only the second day of this committee; it may be the first for some of you. I'm sure you will hear statistics as the week goes by. The North Toronto Tenants' Network recognizes that it's hard to keep focused. To make it easier, we would like to come to you as real people. We have statistics, but what we also have is a lot of distress and anxiety. It's very scary to stand here before you politicians who have control over our lives. We are right now, and will continue for the next several months, living with the threat of possibly losing our homes. A home is what identifies us -- our homes, our jobs. We describe ourselves as where we live. We live at Yonge and Eg or we live in the Beaches or we live on the Danforth, and we work at the CBC or wherever it is. This is how people identify themselves, and we are in the danger of losing an identity.

It's very distressing to come before a floating committee. Some of you are here sometimes; some of you are not. Some of you come in and out. I know that you will catch up on what's been heard etc. But I hope there are some people here who are sensitive enough to understand the stress that we will be going through. We did not ask for this legislation to be reviewed, rewritten or repealed. This is a very important time for 3.2 million tenants in Ontario.

We even discussed the benefit of being here. Is it a totally useless, wasteful, frustrating activity to be before you when we also recognize that the majority of the members of this committee are members of the political party that wants to remove rent control? Will we make a difference at all? Is the government going to listen to tenants and our supporters? This government says it wants to represent all people. The ratio of landlords to tenants is one to 22, so whom do you represent?

This government wants to consolidate the Rent Control Act, the Landlord and Tenant Act, the Rental Housing Protection Act, the Residents' Rights Act and the Land Lease Statute Law Amendment Act. First reading, as we know, is scheduled for the fall, and if passed, implementation by spring 1997.

This government also wants to eliminate the orders for prohibiting rent increases and has proposed changes to property standards and maintenance, but it is willing to set up an anti-harassment unit for us. My first question is, why on earth would we need an anti-harassment unit? Who's going to harass us? Does this government know something I don't? I think so. It already knows what some landlords are capable of, and that's why we're getting the anti-harassment unit. There should never be a need, in the best country in the world to live in, for a unit of this kind. What on earth kind of message is that sending us?

Will someone from the government be with us at night when our lights are shut off? I think not. Will someone from the government be with us when we leave in the morning for work, fearful lest someone may enter our apartment? I don't think so. Will you be there when a landlord or a representative is at our door? I don't think so.

In its discussion paper this government says it wants to protect tenants from unfair rent increases, evictions and harassment. It's very simple, it's very cheap. We want to share this with you: Leave the existing legislation alone.

Having said that, we know that won't happen, so I ask you to please respectfully hear our suggestions and recommendations. If this government's purpose is to get builders building, then we need to talk. If you look at the interest rates right now, they are the lowest they have been for a very long time, 4.65%, and they will start rising in the fourth quarter of this year. If this government is serious about encouraging developers to build, then it needs to do it now.

For example, is it possible to have no taxes for the first two years while a developer is building, and then graduated taxes for the next three years? By the fifth year, taxes could be back to 100% when income is coming in. Consider the lot levies, the GST on units. Choice is what we need.

What this government is proposing is not choice at all, but a removal of choice. Let's not end up like New Jersey or New York. There are no affordable apartments available in New York. According to the Globe and Mail last week, the only people leaving rent-controlled apartments in New York are either dead or deranged. There is a booming business in New York selling room dividers for people who are forced to share rents.

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Condo conversion: If the Rental Housing Protection Act is repealed, demolitions, major renovations and conversions will never have to require municipal approval. Statistics from the city of Toronto show that many rental units were lost to conversion before this act came into effect.

We recommend that you keep the Rental Housing Protection Act, keep municipal approvals. Conversions, if happening, should only be provided when a majority of tenants approve; the remaining tenants who cannot afford to buy must not be displaced. Landlords can provide lists of appropriate rental units within the same area for these tenants.

Decontrolled units: We recommend that landlords must post the market rent for units in their buildings in a visible spot where potential renters can see it. There must be a cap on rent increases per year, which can result in easier administration for landlords. There is a very real fear that landlords could create ghettos of exclusion if caps are not in force. Rent could fluctuate, depending on who is knocking on the door asking to rent. Some landlords may not want single mothers, the disabled; others may not want visible minorities. This must not happen in the best country in the world in which to live.

Anti-harassment unit: Tenants who are under threat will want to move. Some tenants will not understand the court system. Non-English-speaking tenants may not be able to access the court system. We won't need an anti-harassment unit if this government acts ethically. We recommend clarification from this government of what an anti-harassment unit is before there is any action taken towards activating one.

Dispute resolution system: In spite of the fact the government is not clear on this issue, it is important to recognize that tenants keep the right to appeal rent increases to an independent body. We recommend that appointees must have experience and knowledge of landlord and tenant issues and not be politically appointed. The system must be kept available and affordable to every tenant.

The elimination of the provincial rent registry: This government says it wants to simplify administration for landlords. Landlords will no longer be required to report operating cost information or maximum rents. Tenants will no longer have access to information to enable us to monitor the fairness of what the landlord is charging. We will not know if a rent reduction is appropriate due to operating cost decreases. If there is a reduction in property taxes or utility costs, tenants will not know and will not have it passed on to them. We recommend that you leave the rent registry on and available to all tenants. Landlords should not be hiding anything.

Then we come to the removal of rent control. We sit here and say, what is there left to say? Just leave it alone. Keep it on.

In closing, I'd like to say that we have a written submission. It will obviously be written and be sent in later. We'd like to entreat this government to listen to us, to listen to all tenants. Remember that Harris and this government have power right now; in four years, we have the power. There are no hostages in Canada. Let's keep the best place in the world in which to live the best place in the world in which to live.

Mr Sergio: Thank you very much, Ms Carleton. I have enjoyed very much your presentation, really, and I also concur with your final recommendation here to keep rent control the way it is. Even yesterday morning when we had the minister himself here, he said that the removal of rent control alone is not going to spur construction of new affordable housing and so forth. So he agrees that this is not the solution.

If this is not the solution, I think they should go back and bring something that is more acceptable, because what we have heard not only from tenants, organized groups such as yourself, but also developers is that this is not acceptable to anyone except the Conservative Party, the government itself. He also said he hopes to have some good recommendations from this committee once the hearings are over, and you're quite right -- let's hope this is not a futile exercise.

I support your views which you have expressed and I sincerely hope that the members of this committee here will recommend exactly that because from what we have heard and from what it is perceived we will hear in the next couple of weeks, it's going to be much of the same. I just make that comment. I don't have any questions that I would like to ask.

Mr Curling: What's the ribbon about?

Ms Carleton: This ribbon?

The Chair: Excuse me, it's Mr Marchese's time.

Ms Carleton: Okay.

Mr Marchese: I just want to thank the network for its presentation and tell you quickly some things. First of all, the minister said that he has listened to tenants and the tenants have been telling him they want reform. I'm not sure this is the kind of reform you were looking for and I'm not sure he's been talking to tenants, because if he were, he would have been listening to your message.

Mr Curling: He would be here.

Ms Carleton: He would be here.

Mr Marchese: To be fair --

Mr Curling: That's fair. He'd be here.

Mr Marchese: Most ministers don't come here.

The second point is, is it futile to come? It's never futile to come.

Ms Carleton: That's why we're here.

Mr Marchese: Your voices will be heard. We're televised. The members hear you, other people hear you and the voice spreads. You come as real people who are worried about the threat to their homes, and that's a very good concern.

You mention another point about if the government is concerned about creating homes or housing, then let's talk about that. The problem is, the landlords and the developers and many Conservative members see the abolition of rent controls as a prerequisite, and that's the tough thing. I wish they could put that aside because I too, like you, would have been able to then look at how we build and you might have gotten more cooperation from us if we talked about how we do that. But when they build in the abolition of rent controls, because that's what it's all about, then they've messed it up. They've messed it up in ways that they have threatened all of the tenants. So I hope you keep up that struggle, as all of you are doing, and I'm sure that they're listening.

Mrs Ross: I want to address a couple of things. First of all, you are aware that this is a discussion paper. There is no legislation in place now and the whole purpose of these hearings is to hear exactly what people are telling us so we can go back and discuss the issue and come up with the best piece of legislation we can. Unlike what some of the opposition members have stated, I am not in collusion with any builder or developer -- never have been, never will be. I intend to listen to what I've heard.

I want to just talk to you about a couple of things. One thing you said was, "Let's not end up like New Jersey or New York." Are you aware that in New York City they have rent control, and have had rent control since 1943?

Ms Carleton: Yes.

Mrs Ross: Isn't that frightening, to think that with rent control there is --

Interjection.

Ms Carleton: There's an addendum to that.

The Chair: Mr Curling, Mrs Ross has the floor.

Mrs Ross: I'm doing a lot of reading and research on this because I want to understand the issue as best I can. In looking at BC, for example, where they've eliminated their rent control, you can get a two-bedroom apartment for $784 in Vancouver, where it costs you $812 in Toronto. Average rent increases were about the same: 1.6% in 1994, and all of this is without a guideline or any cap on rent increases. So can you explain to me why you think rents would skyrocket with the removal of rent controls when in fact with rent controls you see what's happening?

Ms Carleton: I think in BC --

Mr Sergio: This is Toronto.

Ms Carleton: Yes, we're dealing with Toronto.

Mrs Ross: Let's talk about the New York situation then.

Ms Carleton: The New York situation, if you read the Globe and Mail article last week, you would see there's more to it than saying there's rent control there. There's a whole other part of that. I actually have the article here.

Mrs Ross: Oh, I have it.

Ms Carleton: You know that saying "because it's on rent control" is picking one very small part of that, because they explained what happened with the condos in there. But again, we're not living in New York and we don't want to.

The Chair: Okay. Thank you very much. That exhausts our 20 minutes. We appreciate your attendance here this evening.

Ms Carleton: Do you want to know what this ribbon is for? Yellow is the colour of hostages, and we do not want to be hostages to the Harris government.

1900

HIGH PARK TENANTS' ASSOCIATION
BRETTON PLACE TENANTS' ASSOCIATION

The Chair: The next presenters are from the High Park Tenants' Association, represented by Janet Lisboa and Betty Postill. Good evening and welcome to our committee.

Ms Janet Lisboa: Thank you, sir. The High Park Tenants' Association and Bretton Place Tenants' Association would like to thank the Ministry of Municipal Affairs and Housing for giving us this opportunity to make a presentation on the tenant protection proposal entitled New Directions. We represent almost 3,300 suites and we have been in existence for over a decade.

Our associations have studied this discussion paper from cover to cover. We find that while it seems innocuous at first reading, the contents could prove disastrous for a large majority of tenants.

Our association submitted many of the changes that were made by the last government. These changes were good and they are working.

Unlike the minister, we have not found any tenant organizations that seem to be enthusiastic about this discussion paper. Naming it a tenant protection package is so ludicrous that we wonder whether the belief is that tenants and stupidity go hand in hand. We do agree with the minister on one issue: that there is always room for improvement.

Goals for a new tenant protection system: The current legislation protects tenants from unfair or double-digit rent increases and therefore provides security of tenure. In a democratic country such as ours that guarantees freedom of movement, the proposed legislation would in a very subtle way restrict this freedom. For example, a tenant finds a job which necessitates a lot of travelling time. The tenant decides to move closer to the new workplace to be able to spend quality time with the family. However, any prospective dwelling that is viewed turns out to be out of reach because it is decontrolled.

Next, this paper talks about passing through increases for maintenance and other repairs with a view to creating jobs. Many tenants, particularly in high-rise buildings, have been subjected to finance costs to enable landlords to own their new acquisitions. In many cases the landlords had overextended themselves.

Under the legislation in the late 1980s, tenants paid 5% extra each year towards finance costs, besides other increases for a variety of reasons, over and above the guideline increase, including a percentage to guarantee a profit margin. These amounts have been compounded over the years because once they were passed through they were incorporated in the rent. These tenants are bearing that burden even today when many buildings have changed ownership.

In addition, tenants have been subjected to above-guideline increases because of repairs. This discussion paper says that such repairs will create jobs. Tenants, particularly in high-rise buildings, have been and are still paying taxes at higher rates than even the Eaton Centre and Toronto-Dominion buildings, to name only two. Now we have to bear the burden of creating jobs as well. This is a mandate of the government, namely to boost the economy, employment etc but not on the backs of tenants.

One common business practice used to be to invest money to make money. Is it now the norm to rob Peter to pay Paul? Is it asking too much to expect landlords to reinvest some of their profits to increase their own equity?

Nowhere in this paper does it state how long tenants would continue to pay the higher-than-guideline increases. Only reductions have a time frame. Can this be called tenant protection? The present cap is 3%, but this paper wants to change it to 4%. We cannot understand why, when inflation is at its lowest rate in years. The only argument in favour of this appears to be that just the interests of the landlords have been take into account when planning changes.

What is even more frightening is the fact that "Rent increases related to extraordinary operating costs will not be capped (ie taxes and utilities). Landlords have little or no control over these costs and the resulting rent increases tend to be very low." Our question is, what does this government assume to be "very low," and what happens if increases are not very low? We, the taxpayers, have been victims of successive governments increasing taxes time and time again in one form or another. How much of a tax burden does this government expect tenants to carry?

Illegal rent increases and illegal charges, How can these be proven, particularly in view of the fact that the rent registry will now be scrapped? Rent abatement is made to sound so easy and remedial. We would like to point out that it is not always easy to prove situations of harassment, hence rate abatement in many cases would be on paper only.

Appeal procedures: Whom will appeals be directed to, and how will the increase percentage be decided on, particularly in cases where a building or buildings may consist of controlled and decontrolled units? How can these be verified if there's no rent registry? We consider rent registry to be of the utmost importance, especially for rent-controlled units.

Simplification of administration, as set out at the top of page 3, makes tenants vulnerable to higher capital cost increases, restricted freedom of information and no mandatory explanation for rent control decisions made. Sounds dictatorial? It is.

Tenants in most if not all buildings have free visitor parking facilities. Consider the example of Laurie on page 2, who decides that this is no longer going to be made available to tenants. Tenants request a rent rebate. Laurie argues that no rebate is allowable as the landlord never received any money for this service, the money having gone to a municipal law enforcement company. How would such a dispute be resolved?

Moving on to the example of Yori on page 3, we agree that this would not be allowed under the current legislation, and for very good reasons:

(1) It does not specify how long the rent increase would be in effect for this renovation.

(2) If John agrees to the renovation, it would not be out of the goodness of his heart but because it would raise the equity of his property.

(3) Such legislation does not provide any incentive for a tenant to ameliorate his or her abode.

Page 4 contains a whole list of inspectors making enforcements. Nowhere does it mention who will foot the bill, the landlord or the tenant, particularly if the investigation did not uncover any violation. The paragraph at the bottom of this page states that a municipality's ability to recover costs will be improved by treating them as municipal taxes. Tenants pay the taxes, hence it is the tenants who will be punished for the sins of landlords.

In addressing the so-called tenant protection package with reference to the Landlord and Tenant Act, we find, on examining the proposed changes in detail, serious flaws beneath the surface. Dealing in a positive way with the inequities pointed out by our associations would be a good beginning. It still requires a lot more study and needs to be brought back to the discussion table if this government is really serious about tenant protection, as it claims to be.

With reference to the second statement under "Sublets" on page 6, regarding reasonable cause, it does not deal with the situation where it might not be a sublet but rather a caretaker friend.

All the situations referred to under "Harassment" are meaningless, as most people who are realistic know that it is not easy to prove harassment. It is easy to make grandiose statements of fines and rent reductions but they are virtually useless unless and until harassment is proven. The dispute resolution panel should be made up of three well-informed landlords and three well-informed tenants.

Let us consider the example of Celine on page 8. This is easier said than one. In many high-rise buildings it is extremely difficult to distinguish where the disturbance is emanating from. How can one accuse someone and seek eviction if one does not even know who is responsible for the disturbance? On the other hand, sometimes the culprit could be a faulty elevator or pump or even a garbage chute that is the cause of sleepless nights for those tenants whose bedroom walls are in close proximity to those areas. Are those same tenants expected to put up inspectors or other personnel in their bedrooms to verify the authenticity of their complaints?

1910

Once again everything as laid out in this discussion paper appears to be very simple. However, many situations are far more complex and cannot be resolved so easily.

Under "internal appeal" on page 9, no mention has been made of who will bear the cost of the appeals. The repercussions are too serious for either side to allow a single-tier system, and furthermore, to leave such decisions with far-reaching consequences in the hands of one person only. Under "Public Access and Efficiency" this paper quotes that there are 50 local courts, General Division. Elsewhere in this paper mention is made about eliminating court procedures, which makes it a contradictory statement. In addition, mention is made of user fees and cost-effectiveness. It would appear that the government intends to generate additional revenues. In such cases it is almost always the tenants who suffer.

Both our associations feel very strongly about landlords setting up and maintaining a reserve fund as a safety net. There have been cases of landlords who have received rents but not made payments for mortgages, utilities etc. When they get caught with hazardous dwellings and are plagued by collection agencies they just walk away. The reserve fund will prevent such happenings as long as proper safety requirements are put in place. The study says that $10 billion worth of repairs is required to the existing rental stock. This is one of the reasons to justify setting up a reserve fund.

Conversions: Even when a majority of tenants is in favour of conversions, we would strongly recommend that tenants desiring to continue as tenants must be protected in every way possible. We would be very responsive to participating in any discussions on conversions. The topic is too far-reaching and extensive for us to do justice to it in this submission.

At the moment, tenants can either be on an annual lease or on a month-to-month lease without losing benefits either way. This issue has not been touched in New Directions.

In conclusion, we would like to make a strong recommendation that landlords receive adequate training. We have read New Directions in its entirety and we cannot find anywhere a mention that landlords will be trained as such. There are landlords' organizations that are capable of offering informative and efficient workshops and presentations.

Some years ago I was fortunate enough to be asked to address a group of small landlords. I listened and I heard. There were all kinds of horror stories. Tenants are not the only ones who complain. What came across very clearly was that many of the landlords I heard speaking felt that all they needed was property and/or money to qualify as landlords. They failed to see that if they had invested a little time to study their responsibilities as landlords and interpret the legislation accurately, they would have saved themselves, in many cases, grief and money.

Our suggestion is therefore that this panel make a strong recommendation to encourage landlords' organizations to hold training seminars for present and potential landlords. The sources for the recommendations in this paper appear to be the personnel from the Ministry of Municipal Affairs and Housing and the Fair Rental Policy Organization of Ontario. At one time FRPO did have tenant representation. It is our understanding that they no longer do. Our associations feel very strongly that tenants' associations should have had direct input.

Thank you for listening and hearing.

On a personal note, I would like to say that the name of this proposal should be more aptly called the Tenant Persecution Proposal. It's not a protection proposal, and anyone who tells me that I am wrong, obviously I don't understand the language, but I think I do, in some cases better than most.

Mr Marchese: Thank you for your strong presentation. Quite clearly tenants know exactly what they're talking about or they wouldn't be here. In fact, you are all very representative of the anxieties and fears that many are expressing, where they're able to come here and where they're not, because many could not make it here because of time limitations. We know that many of you understand clearly the implications of what this means to your home, because that's what we're talking about: the implications it has to your homes. All of your efforts will be heard, and I think you should keep that up as you do your work.

Ms Lisboa: Oh, we will, Mr Marchese.

Mr Marchese: I have no doubt about that.

You make a good point about education for landlords. In fact, some of them have suggested that tenants need education, and I suspect in some cases that's true. But no one has yet mentioned that landlords could use some of that education, because I think quite clearly some of them believe that all you need to be is an owner of property to be a landlord. There are responsibilities, and I think that's a very good point.

I support very strongly your point about a reserve capital fund. I have more and more become convinced that we need it, because I am not convinced that the money that is permitted now under our current legislation that should be used for that is being used for that purpose. They now say we need $10 billion worth of repairs, forgetting that $1.7 billion is being collected yearly for that purpose. The question is, where is it going?

Mr Boushy: Just a couple of quick questions. You represent 3,300 suites?

Ms Lisboa: The two of us. Betty Postill is the president of the Bretton Place Tenants' Association and I am of the High Park Tenants' Association.

Mr Boushy: I just want to ask you a general question. You said on page 2 that the current legislation is okay; you feel comfortable with it. Can you, in all conscience, say on behalf of the people you represent that you are satisfied with the status quo?

Ms Lisboa: Mr Boushy, let me assure you of one thing. I have not written a thing here that I don't believe in and that doesn't work, because I talk to tenants. I talk to far more tenants than you probably have talked to, even though you are an elected member.

Mr Boushy: My question is, are you satisfied with the status quo?

Ms Lisboa: Yes, I am.

Mr Boushy: And the majority of the people you represent are?

Ms Lisboa: There is always room for improvement. You want me to suggest some more room for improvement, I'll do it.

Mr Boushy: What is the most important thing that you want to change in the present legislation?

Ms Lisboa: That I want to change?

Mr Smith: In the present legislation.

Ms Lisboa: Well, I don't think I see anything. I can see adding to the present legislation.

Mr Boushy: What's the most important thing you'd like to add?

Ms Lisboa: That we deserve to have a roof over our heads, Mr Boushy.

Mr Curling: Thank you very much. I think, again, it's a very excellent presentation. It reflects, very much so, the input of many tenants, and your research, it seems to me, touched the heart and the soul of people. These kinds of presentations are the things we want to hear.

The problem we have, though, is that when we translate that into legislation, we lose all that flavour and we get a one-sided view of things. That's the problem with legislation. We hope the committee listens and the government listens. We hope the ministry is not hurriedly making legislation before the hearings are over.

As you know, there is one part on page 4 of your presentation, the present cap, where you are talking about the capital cost is 3% and they want to change it to 4%. As you know, even with a 2.8% increase, that guideline that has been administered, with this law which they would put in place, the increase in rents would be 7% and not 4%. Rents will go up, while I see in a brochure that Mr Harris stated that rents will go down. Do you see any way that rents will be reduced under this change which they say tenants want to this legislation?

Ms Lisboa: It's just like everything else in this paper. On the one hand you say, oh, the tenants will pay the taxes, but they will be low. Another thing is, the landlords will be fined, but it will be through taxes. Who pays the taxes? It's the tenants, not the landlords. So who foots the bill for the landlords? It's the tenants, through the taxes.

The Chair: Thank you, folks. We appreciate your interest in our process and your coming to make a presentation to us. Have a good evening.

1920

SOCIETY FOR CONFLICT RESOLUTION IN ONTARIO

The Chair: The next presenter is from the Society for Conflict Resolution in Ontario, David Evans from the board of directors. Good evening, sir, and welcome to our committee.

Mr David Evans: Good evening, committee members. My name is David Evans. I am representing the Society for Conflict Resolution in Ontario, and we pronounce our acronym "escrow," which may be unfortunate given the topic tonight.

SCRO would like to thank the committee for providing it the opportunity to make this presentation. SCRO is an organization of professionals who are dedicated to promoting responsible and professional dispute resolution practices in Ontario. SCRO encourages effective, efficient and creative dispute resolution approaches and processes.

On a more personal note, I have been in the business of resolving conflicts since 1980. I am a tenant and I'm also on the board of directors of SCRO.

SCRO wishes to comment solely on the conflict resolution part of the proposed legislation.

In the brochure Rent Control Changes...and You, which arrived in my mail a few weeks back and which echoes the Ministry of Municipal Affairs consultation paper, it is written that: "Under the current system, where a landlord and tenant have a dispute over maintenance or payment of rent, they have no choice but to go to court. The new tenant protection package proposes a less formal, faster problem-solving approach of dispute resolution that will make it easier to resolve landlord and tenant problems."

Collapsing the conflict resolution process solely into an adjudicated process does not -- and I can tell you this from experience -- necessarily reduce emotional, time or financial costs. And adjudication certainly does not get the province out of the financially and politically expensive business of resolving disputes. As well, adjudicated resolutions, like court decisions, usually result in a win-lose situation, sometimes creating new conflicts in an attempt to resolve others.

Depending on the process, decisions made by adjudication boards can be, and often are, appealed either to the courts for judicial review and/or to cabinet for a review of the decision. This results in even more time and costs and increasing, rather than decreasing, the number of steps required for resolution.

Other types of dispute resolution, like mediation, allow those party to a dispute to negotiate a mutually acceptable resolution. These alternative dispute resolution approaches are increasingly popular. They often work better than adjudication simply because people control and craft the resolution to a conflict. However, while alternative dispute resolution approaches often cost less, take less time to complete and result in win-win solutions, processes whereby parties negotiate a resolution are not helpful when resolution is not possible.

So what may work? There has been a lot of good experience, and in this province as well, with a two-stage process called the mediation-arbitration -- or in slang, med-arb -- model. Med-arb allows people to work together first to try and resolve their dispute, allowing, if a resolution can't be reached, for a third-party neutral to then hold a hearing and make an enforceable decision. In the context of the new landlord-tenant legislation, SCRO suggests a mediation-arbitration model with the following elements:

(1) The new legislation should require that landlords and tenants -- tenants either as individuals or as duly constituted associations -- attempt mediation or some other form of consensual negotiation before either can request an adjudication resolution. This step can be easily initiated with a letter from one party to the other requesting an opportunity to discuss the matter in dispute.

(2) Mediation should be a private matter, paid for by the parties if there is a cost, and at no cost to the province. It would be helpful if the adjudication board has members who are also competent mediators, but people should be allowed to hire anyone they decide to assist them. If a board member is asked to assist, the parties should pay for that service at the going rate. The board should not be able to appoint a mediator or have the inclination to appoint a mediator. There's a very fundamental principle of consensual negotiation that revolves around that comment.

(3) The board should only hear those issues that the parties to the dispute can't resolve themselves. A landlord and/or tenant would have to demonstrate to the board that good-faith negotiations have been attempted. The board should establish a set of negotiation and mediation requirements which it would use to evaluate a request for adjudication.

(4) The legislation should allow either landlords or tenants to apply to have negotiated settlements confirmed as legal agreements so the agreements are enforceable. It is critical that agreements can become legal documents so that negotiations are conducted in good faith and so that, most importantly, implementation will occur. It also would be helpful if the board had enforceable powers, including the ability to award costs. I can tell you from experience that the boards that don't have the ability to award costs are much less effective in these ADR processes than boards that do have the ability to award costs.

The ministry's discussion paper asks a number of questions about what an adjudication board might look like and how it may function. I would suggest that if a new landlord-tenant board is to be created, it should be consistent in design and function with whatever reforms are being contemplated for those boards and agencies presently under review by the government. The last thing we need is another or different type of board; it should all be consistent. Above all, users must be provided with a process that is, as the minister says, a "less formal, faster problem-solving approach" and a real and better alternative to using the courts.

I hope these comments have been of help to you. Thank you again for providing SCRO the opportunity to present this brief. I would be pleased to answer any questions you might have.

Mr Maves: Thank you very much, Mr Evans. We can use your type of expertise quite often around here. We'd like to see more of you.

You said in here that there are lots of examples across the province where this med-arb model has worked before. Could you just highlight a few of those?

Mr Evans: I can suggest to you that in my own experience -- I'm a hearing officer with the province -- our board uses all kinds of approaches before hearings to allow the parties an opportunity to try and come to terms with whatever the issue is. Sometimes they're self-negotiation processes, where we simply say to people, "Go and try to resolve this conflict between you," and we have a set of guidelines. If you can resolve it and you do it within the guidelines, we will respect it and we will automatically agree with it and enforce it as long as it's within the law and meets the guidelines. If you can't resolve it, then we'll take it, as an adjudication board, and hear it.

I sit on the Environmental Assessment Board, and in cases where municipalities want to fund the participation of community groups, very often we'll say: "Please, go away and try to work it out. If you can settle it, we'll confirm it. If you can't, call me in and I'll assist you to work together, and if you can't, we'll make a decision." I can tell you that every time I have used it, both in my practice as well as a provincial hearing officer, the parties have resolved the dispute to their satisfaction.

Mr Maves: With the number of disputes that we have, have you given any thought about how many boards you'd have to have, how many qualified folks have to be on these boards?

Mr Evans: No. Whatever it is, it would be less. I'll tell you that one of the frustrations I have as a tenant is that I have no easy access to my landlord. One of the things we're setting forward is a model that says I have to have access to my landlord and my landlord has to have access to me if we decide we need to settle a dispute. So I would suggest to you that many of the frustrations I have as an individual tenant might be resolved, and you might find in the long term that if you force the parties to sit down and in good faith try to work it out -- which is not the process now; the process is appeal -- you might find you need less of a structure, not more of a structure.

1930

Mr Maves: One of the obvious problems I guess people would point to is that if it's financed by the participants, you're going to hear arguments that low-income tenants aren't going to be able to afford this.

Mr Evans: I was very clear in the presentation, and it's in brackets, "if there is a cost." I can tell you again that the med-arb model -- and this is one of the difficulties with using terminology: mediation, by definition, requires a third-party neutral to come in. What I would like to suggest is that any way in which people can come together and try and work these things out is okay, and my hope is that a good number of them -- just the legislation allowing me, forcing me as a landlord to talk to my tenant and me as a tenant allowing access to my landlord. I don't need somebody intervening; I'm smart enough. But sometimes when it's an issue that may incorporate, let's say, 300 or 400 units, an association may want as a corporate body to say, "Let's get someone in because this is a very big issue and we have the ability to fund it."

Mr Curling: Thank you, Mr Evans, for a very good presentation. Could you comment on some of the stripping of the legislation that this government has taken away now? Some of the government members are saying that the status quo is not working, so they're going to strip much of this legislation. We have tenants who have come in and said, "This legislation has been very helpful." By taking it away, when we have conflict resolution and have put this harassment unit in, wouldn't it then put forward that there would be more things they would have to bring before this harassment board because most of the protection they had in this legislation will be gone?

Mr Evans: There are two issues there. I repeat that as a tenant one of my major frustrations is that there is no motivation in the law for landlords and tenants to have to sit down before you get into these things like harassment bodies or adjudication boards. There might be less of a need if people -- and this is the other end of it. One of the real problems is that I think most tenants and, as we just heard from the previous presenters, most landlords don't have enough knowledge of the law and the process and a lot of stuff just simply dissipates because people don't know.

If a proper negotiation-arbitration kind of model were put in along with an educational process to let landlords and tenants know what is out there, you might find it works a lot better. You see, one of the things about living in someone else's building is that person basically would like me to pay the rent and I don't see them unless I cause a problem, and this model changes that.

Mr Curling: People have to have confidence in the system even to be comfortable and to operate within it. Take, for instance, the example of the Human Rights Commission. They have no confidence in it. Why would you feel that people would have confidence in a new system after so much change had been done to the legislation? Do you think they would have confidence in this system? How long do you think it would take before some people would have some confidence in this?

Mr Evans: I can't speculate into the future. I can tell you, again from experience, and I think you can say the same thing, sir, that any process that allows me control of it is much more satisfactory than putting me in a situation where I have no control and it's all up in the air. I suggest to you that a well-designed dispute resolution model could be very satisfactory, because the people in dispute have control. They can decide to resolve it or they can decide not to resolve it. Right now, the dispute's there and you send it to court.

Mr Curling: A simple thing like the rent registry has been taken away when tenants felt that the rent registry was a very important thing for them in order to know what's happening. Would you feel that should be retained, that the rent registry be there for people to feel comfortable about who they're dealing with and what the company name is?

Mr Evans: It's a bit outside of what I'm here to talk about, but if it turns out through some evaluation process that it is a useful thing, I would say keep it of course.

Mr Marchese: Mr Evans, we've found a great deal of unanimity so far with tenants around many issues. This is one around which I don't think we have close to unanimity in terms of how they're going to deal with this. Overall, I think the courts are very intimidating to anybody, generally speaking, and most people don't have a clue how to get there, even if somebody told them they should. Tribunals I suspect are equally intimidating because they have the same aura as a court, so they're all intimidating. But by and large, most tenants don't know how to get there and nobody will tell them or explain to them how to go about doing it. So we're going to have that particular problem in terms of how we deal with that.

What you propose doesn't seem to me unreasonable as some interesting steps that should take place. I suppose where we're going to have problems is in the appointment of the board where they would enforce unresolved problems, where they will have the ability to award costs. The question would be, who gets appointed and how and how fair or neutral are those folks going to be? I suspect that's going to be in part one of the complications around this. Do you agree?

Mr Evans: Absolutely, and I think it's a huge problem that this government is I presume tackling with the review of all boards and agencies as to the proper composition of all boards. So I don't think this would be any different; absolutely not.

Mr Marchese: And so far of course the Tories, as you know, are very non-partisan, even though they only appoint Conservatives, so that complicates this thing a little bit. Your suggestion about forcing landlords and tenants to sit down and talk as a first step I think is a useful thing to happen, but I'm not sure that some of those issues can be resolved.

Mr Evans: I want to be clear. We're saying that adjudication has a role and negotiation has a role. We would prefer negotiation at the front end because the people who are party to the dispute control negotiation, and that's very powerful and very important -- but the legislation should back them up on that, and there are a number of points on that. When you can't get a successful resolution, the backup is the arbitration end where someone who is neutral to the dispute can come in and say, "Okay, I'll resolve it for you."

The Chair: Thank you, sir. We appreciate your attendance here today and your interest in what we're trying to accomplish.

CROWN COMMERCIAL PROPERTIES

The Chair: Our next presenter represents Crown Commercial Properties, Thomas Putman. Good evening, sir. Welcome to the committee.

Mr Thomas Putman: Good evening. My name is Thomas Putman, and I would like to thank you for the privilege of speaking to you this evening. In terms of my background, I have been a rent control consultant and residential property manager for 16 years. While there are many issues of concern regarding landlord and tenants matters, I would like to speak to you with respect to three: maintenance enforcement, capital expenditure and dispute resolution.

With respect to maintenance enforcement, the current maintenance enforcement system is flawed because it does not distinguish with respect to the severity of a problem. The most trivial problem is dealt with in exactly the same manner as the most serious.

The root of the problem is that most municipal property standard bylaws are written in absolutes. There are no tests of severity. If a property owner has some peeling paint, he violates the bylaw. This is without regard to whether the peeling paint is a trivial blemish in the top corner of a room or if half a wall is destroyed.

The problem of writing effective legislation is made difficult because of the nature of real estate. A building deteriorates over time due to the wear and tear of usage and exposure to weather. The simple reality is that all buildings in Ontario have some bylaw deficiencies, including the building I'm in right now. The distinction between a good owner and a bad owner is not the absence of problems but the speed at which those problems are remedied. The good owner has an effective, ongoing maintenance program and promptly completes each repair. The bad owner either doesn't do the repair or takes forever to get the job done.

1940

Some of the proposed changes will make the problem worse. There is still no test of severity in the proposed changes, and now all deficiencies will be made offences. We need to retain the two-step bylaw process, step one where the property owner is advised of a problem and given an opportunity to correct the problem without a penalty, and a second step of enforcement for non-compliance.

Further, we cannot make simple violations an offence. If you do, then by definition you have made all property owners in Ontario guilty of offences. The simple reality is that all buildings have some deficiencies. Deficiencies are a permanent reality, and only in the government would you consider making reality an offence.

With respect to capital expenditures, the current system of rent increases due to capital expenditures does not provide for a recovery of capital or an adequate return on moneys invested. As long as the ownership of multi-residential property in Ontario is voluntary, then the Legislature must recognize that the owners must compete to raise capital with the investment alternatives, such as the stock market or interest-paying bonds.

The proposed capital expenditure limit of 4% is a step in the right direction, but it is not large enough to provide enough capital funding for large projects such as underground garage renovation. The unfortunate reality is that the size of the capital projects gets larger as the buildings get older. With Ontario's aging rental stock, a cap limit of perhaps 10% is more appropriate.

We always need to remember that the issue of building standards and maintenance and the issue of rent increases for capital expenditures is the same issue simply viewed through different perspectives. If the government and the tenants want adequate property standards, then they must recognize the need for adequate funding and thus a reasonable capital expenditure rent increase system is necessary.

If I could take a moment to talk also about the concept of capital reserve funds, the system is very complex and it is very unfair, both to landlords and to tenants. The tenants in the newest buildings, which typically have the highest rents, would end up paying the most into the reserve funds, but those buildings have the least amount of need. The oldest buildings, which have the greatest need, would end up making the lowest amount of contributions, and there simply wouldn't be enough funds to provide for adequate capital expenditures. The old adage should apply that the tenants who receive the benefit of those capital improvements should be the ones who pay and those who do not receive any benefit should not have to pay.

With respect to the dispute resolution system, at present there are three government bodies which deal with some aspect of landlord-tenant disputes: the provincial courts, the rent control programs in the Ministry of Housing and the bylaw enforcement departments of the local municipalities.

The provincial court system is very efficient and very effective. It deals with an incredible caseload. In Metro Toronto it deals with some 30 to 40 cases every day, and with a minimum of manpower. There is one judge who listens to those 30 or 40 cases every day of each week.

In contrast, the rent control programs of the Ministry of Housing are the least efficient, the most expensive and the slowest. The rent control programs are also the most arbitrary process and the process least bound by either legal precedent or due process of law. To give an example, the tenants of a 16-unit building in Metro Toronto made an application to rent control programs for a reduction in rent due to inadequate maintenance. The process started in May 1995 and it continues at present, some 16 months later. We have had 27 days of hearing. The cost to the landlord for lawyers, accountants, consultants and engineers is approaching $40,000, or in excess of one year's maintenance budget. The cost to the ministry must exceed $150,000.

In one of the orders we've received to date, a tenant was awarded a lump sum of $35. In other words, a dispute between a landlord and a tenant, where the economic value of the dispute was less than $100, has cost the ministry and the landlord probably $200,000. This is lunacy. The system is out of control.

We must maintain the role of a court-type system in resolving landlord and tenant disputes. For a reason that I do not properly understand, judges are significantly more effective and efficient in resolving disputes than the bureaucratic model. The bureaucrats are simply not very efficient. They do not have the ability to distinguish between the serious and the trivial. I do not see the value in adding 300 or 400 people to the size of the rent control programs in order to deal with the workload of one good judge. Thank you very much.

The Chair: Thank you, sir. We've left about three minutes each per caucus for questions, beginning with Mr Sergio.

Mr Sergio: Mr Putman, I have enjoyed your presentation very much. Two areas that you mention: One is solving rent disputes, and the other one is maintenance and repairs and so forth. It's an area that I have a big problem with myself, and I think you have really touched on a vital point when you say that judges should be and ought to be the ones to assess the situation in a very quick fashion.

I think the system, as you said, needs some fixing, because especially dealing with maintenance and property standards problems has been a plague, if you will, not only for landlords and tenants, and that's where many disputes sometimes arise, but also for the enforcement people.

Coming from a municipal council, I'll give you a little bit of -- and then perhaps you can tell me that yes, indeed, we should tell the government to go after the judges and be more prompt and more stringent about it. In the city of North York, for example, two years ago they had three people looking after inspections and apartment buildings and deficiencies and stuff like that. They've got to go first to see if indeed there is a problem once they get a complaint. They've got to go and take a look, if they are lucky enough to find a superintendent at the site; otherwise they've got to go back another time. They have to ascertain that there is a problem, there is a leak or whatever it is. Then they say: "I'll come back next week. Are you going to fix it?"

He goes back next week and nothing has been done, so he's got to issue an order. Then in a month's time he's got to go back because they say, "In order to fix that, I need a month." There is a particular time he has to give those people. A month goes by and nothing has been done, so now he issues a summons, whatever, an order, and he goes to court. It takes months and months and months.

It's been postponed once, postponed twice, postponed three times. In the meantime, that particular staffer has to be there every time. At the end, the judge may say, "Are you going to do it?" He says, "Yes, I'm going to do it." "Okay, we'll give you six months." No fines. By the time the landlord gets to fix whatever deficiency there is, something else has cropped up.

How are we going to solve this particular problem, which is a major problem between tenants and landlords? How are we going to solve it?

1950

Mr Putman: First of all, the example you use is an extreme example and is a rarity.

Mr Sergio: It's an everyday problem.

Mr Putman: No, sir, it's not. The vast majority of landlords invest money in their own buildings and once they are notified of a problem, they fix it promptly. I agree with you, sir, there are a few irresponsible landlords, and I would agree with the government's position that it would raise the fines and try and speed up this system to deal with those rare landlords who are irresponsible.

Mr Marchese: Mr Putman, thank you for the presentation. You raised a few points and I want to ask one of the staff of the ministry if they can answer this. The point you made about there being no tests of severity is interesting. There will always be deficiencies, but you're saying in the future a simple violation can become an offence. I'm not sure whether at the moment there is such a test of severity. In the future, will simple deficiencies be violations?

Mr Scott Harcourt: I'm Scott Harcourt from the ministry. Would you like me to answer that?

Mr Marchese: Yes.

Mr Harcourt: Right now, under property standards bylaws you must get a work order before it becomes an offence. In other words, you've got to have it issued, not just violation of a property standards bylaw. The proposal is to make violation of a property standards bylaw an offence under the act.

Mr Putman: Here is an example. Up in that top right-hand corner there is some plaster that's a bit frayed and there are wires that come down that are not properly protected. That is a violation. Under the proposed system, the bylaw inspector would come in and give you a ticket, and you would have no opportunity to correct the problem before there would be a violation. All I'm suggesting is that the landlord should be given that opportunity of a week or two or whatever to effect the repair, and a responsible landlord will do that.

Mr Marchese: Does staff have a response to that?

Mr Harcourt: That is correct. If there's an outstanding issue such as the item described by Mr Putman, you could come in and be ticketed right away.

Mr Marchese: Let me move on to another issue, capital expenditures. You were talking about the present system not being adequate in terms of your being able to recover enough money to be able to do some major repairs. So the 2% that's built in, plus the 3% that you can apply for for major capital expenditures, you're saying isn't sufficient.

Mr Putman: That's correct.

Mr Marchese: The 1%, in addition, is not sufficient either.

Mr Putman: No, sir.

Mr Marchese: So when you get these capital dollars for capital repairs, you're actually spending it all the time, obviously.

Mr Putman: Yes.

Mr Marchese: You make an application saying, "My God, the garage is in bad shape and I need more than 5% this year," and you get a response saying, "Sorry, that's all you can get." Is that the idea?

Mr Putman: Yes. The problem is not when you go to do small repairs like a fridge or a stove or something like that. The problem is finding the $1 million and $2 million and $3 million garage renovations and whatever.

Mr Marchese: Right. I'm presuming that the money you get on a yearly basis should be or is being put into those kinds of things that crop up, unless after the 10 or 15 years you've been in the business, all of a sudden you have a major problem that's developed, you now can't afford it and you need beyond that cap to fix it. Is that what happens, you have a major problem that all of a sudden emerges and you can't afford to fix it? It's not enough under the present system to do that? Is that what happens?

Mr Putman: Yes. One needs to remember that major problems in a sense don't crop up; they are inevitabilities. Sooner or later, you have to repair your underground garage.

Mr Marchese: I understand that, but I'm assuming that you're getting sufficient money to do your repairs and that in fact some of the money you're probably not using is being put aside for things that may emerge at some point down the line. But you're telling me that every cent that you get, you spend. Is that the case?

Mr Putman: Sir, my point was that what there is not sufficient allowance for at the moment is to fund the major items, and that's the problem.

Mrs Ross: You've certainly given me some food for thought here. I'd like to pursue the issue of the dispute resolution. I don't know if you heard our last presenter. He talked about the landlord and the tenant sitting down and trying to work out disputes on their own before any mediation or court or anything like that. What would you think of that idea? Would you think that a lot of the disputes could be handled that way?

Mr Putman: If you look at the functioning of the existing landlord and tenant provincial court system, one of the primary reasons it's so efficient is because the judge stands up at the beginning of the day and tells everybody to go out and settle. When a judge tells you to go settle, you go settle.

The difficulty is the rent program system is designed and developed in a way that the government does not have sufficient confidence in the parties to allow them to resolve their own matters, and it is not possible to have negotiated settlements. So to answer your question, yes, negotiated settlements are critical in speeding up the system, and landlord and tenant is a very good example of that.

Mrs Ross: Okay, but I guess my question was, he said that oftentimes the tenant doesn't have access to the landlord. If access was made so that they could sit down and discuss the issues -- for instance, if it was a fridge that needed replacing -- they could sit down and discuss the issue before going into that very long process of going through the court system, wouldn't you think that would be an easier way to solve the dispute?

Mr Putman: First of all, most tenants, or the vast majority of tenants, have relatively easy access to their landlord. Every month they have to pay their rent to somebody, and that somebody is a representative of the landlord.

There needs to be some method of initiating an application or whatever. That's what triggers a dispute resolution. Okay? Yes, providing easier access is -- but how do you do that? One of the most effective ways is if you can go down to University Avenue and sit in the front of the courthouse with the other person. It's amazing how quick things get resolved.

Mrs Ross: I guess if you look at it, and I think you would agree, most landlords are not unscrupulous people. We've heard there are some, and obviously we all know there are. But most landlords want to keep tenants in their building. That's the whole purpose of putting rental accommodation out there: to get people to come and rent their building. The whole goal is to keep those units occupied, so they would like to resolve things, I'm sure, before going to court.

I guess I'm still pursuing that. I think that's probably the best way to resolve disputes. I agree with him that they should sit down and discuss -- I was on a trip once recently, and I can't even remember where it was, but we were in a bus coming back from somewhere, and the people on the bus were from all different parties and different groups and organizations and the feeling was, "Wouldn't it be great if we could just sit down and talk things out, because it would solve a lot of things?" I guess my whole point here is, I agree with him that I think the first step would be to talk with the landlord and sit down and discuss the dispute.

Mr Putman: Absolutely. You'll find that most landlords make themselves available simply in order to avoid the existing dispute resolution system. They want to stay as far away from the court and as far away from the Ministry of Housing as they can.

The Chair: Thank you, Mr Putman. We appreciate you coming out and presenting to us tonight.

2000

RICHARD FINK

The Chair: The next presenter is Richard Fink, from Fink and Associates. Good evening, sir. Welcome.

Mr Richard Fink: I'll make a few comments and then I'll invite your questions. Let me just introduce myself: I've been practising in the area of landlord and tenant law for 20 years, primarily representing tenants. I've perhaps represented 300 or 400 tenants' associations in the last 20 years and have been involved in all aspects of landlord and tenant law.

A few of the items thrown out in the New Directions paper caught my attention, having had the opportunity to deal with these situations in the past years. One of them was the idea of harassment police. Prior to the Rental Housing Protection Act, our firm represented tenants in the Bathurst and Eglinton area who were having their apartments either demolished or converted to equity co-ops. The current market value of apartments in the Bathurst-Eglinton area is slightly over $50,000 per unit, and the buildings that were converted to equity co-op are selling in excess of $130,000 per unit. If your fine is a maximum of $50,000, obviously the amount of profit to be gained by the conversion would make the fine nothing more than a licence fee for conversion.

The second problem is that the types of harassment that tenants experience in the Bathurst and Eglinton area are sometimes difficult to define as harassment. There was a case that during the Stanley Cup playoffs the cable television mysteriously was cut off; the landlord claimed it was on account of building repairs. During another incident, members of the Satan's Choice motorcycle gang moved into an apartment building. If the harassment police start laying charges in those instances, you're going to have landlords say: "I don't know why the cable television broke. It must have been the carpenter; he cut the wrong wire." "I'm sorry. I made a mistake; I rented the apartment out to a few hooligans. I apologize." Having experienced this type of scenario 10 years ago, there are maybe going to be convictions, maybe not, but the fines on first offences are not going to be anything to dissuade landlords from engaging in this conduct.

Another problem is that you're never going to have sufficient harassment police, because every time something goes wrong in a building that's subject to a rumour of some type of conversion, tenants will be calling the harassment police in a great deal of agony, saying: "My landlord doesn't answer my calls any more. I can't get repairs done." "Some landlord has bought my particular unit and is telling me that if I am thinking about repairs, forget it; I'll never see it again."

Each and every complaint during a conversion period becomes harassment. I remember, as a lawyer, fielding all these phone calls. Some were legitimate, some were not, but it became such an avalanche of calls for each building that obviously I had to have clerks and secretaries deal with it or I'd spend my entire day trying to soothe tenants. Harassment police will never be able to keep up with the deluge in this type of situation.

What separates me, I suppose, from my confrères who also advocate on behalf of tenants is that I have supported from time to time conversion of rental housing into equity co-ops. The reason for that is that over the 20 years I represented tenants at rent review it was quite apparent that tenants were paying for the costs of the actual repairs of the building. If the building required new roofs, new concrete, new pipes, new furbishings, it was the tenants who ended up paying the bill through capital costs passed through the rent increases.

I've heard figures bandied about in the newspapers of $10 billion; the landlords are saying $10 billion worth of repairs. The green paper from 1991 put out by the Ministry of Housing that was a precedent for the current legislation said that the buildings needed $4 billion to $7 billion worth of repairs on $8 billion worth of rents. If you use the cost pass-through method the ministry is currently using, that would raise the rents by about 14% over and above the annual increases.

Given that tenants inevitably end up paying for these repairs, the conversion to equity co-op would give tenants the opportunity of actually having an equity stake in the apartments they're already going to have to make the repairs for. The problem is that if it's allowed to run as it did before 1986, then you're going to have a great deal of displacement and a great deal of unfair treatment of tenants as rapacious landlords -- who get into this type of conversion business particularly, in my experience -- will cause tenants a great deal of harm and grief.

My solution would be that once tenants have voted to do the conversion a government trust agency step in to monitor and provide for the conversion and hold the units in trust where tenants are unable to pay for their equity co-ops, so they could remain in the units indefinitely. If one leaves it to the landlord to monitor the situation, there is a tremendous push to get those tenants who don't wish to be part of the conversion out of their units, and that is obviously patently unfair.

The other side of these equity co-ops is that currently they're governed by absolutely no legislation. They're registered in the Land Titles Act under a clerk's definition that they should receive a separate page in the land titles book. They're based in law from 1860. During the conversion process, I was involved in at least three cases where the developer, the people buying units and the tenants were engaged in three-way legal struggles, primarily over whose responsibility various maintenance items were. Unless there's some statutory definition in this process as well, it will lead to a great deal of chaos.

The second point I wish to make is that it would be a necessity for the government to actually come out with some type of study where it could say how much repairs the apartments in Ontario actually need. If it's more than $10 billion, if it's, say, $20 billion -- and it may well be given that there's been a paucity of repairs that I've observed coming out of the rent review system over the last four years -- you're looking at rent increases approaching 30%.

I noticed that in the New Directions paper they said: We're going to prevent the type of high rent increases we saw during the late 1980s. I'd ask the committee to make the following observation: If inflation is at 1.5% and rent increases under the New Directions paper are 6.8%, is that any difference of a rent increase of 12.5% when inflation was running at around 7% and 8% as it was during the late 1980s? Presumably some of that inflation was higher wage settlements and right now wage settlements are in some cases decreasing, not increasing.

That 12.5% didn't come out of the air; 12.5% was the average rent increase the rent review program was granting in the terrible late 1980s when we had all these unnecessary repairs being done, when we had large capital projects under way, when practically every building in the city had scaffolding on it as landlords took the opportunity of a generous system to repair all their spalling brickwork. But the point is that the increases were only four or five points over inflation.

The current program, which obviously is aimed at trying to correct the lack of repair that's gone on in the last four years, is the same four or five points over inflation. The net result is that tenants are not just going to face 6.8% in one year, they're going to face 6.8% over multiple years, as landlords are compelled, mostly through necessity of losing their investment, to make these repairs.

Let me just touch on two very brief points. One is that the New Directions paper is calling for landlords not to have any confines on unnecessary repairs. Having spent a year of my life fighting for the tenants at Balliol, who were the first tenants in the British Empire to go to court to force a landlord not to do repairs, as a backdoor move to try and avoid the rent increase, I can say that it takes any degree of confidence out of a rent review system where tenants see repairs that are totally unnecessary, see landlords entering their apartments to do their repairs over their protests and refusals, and then see their rents go up by a relatively large amount. I think the failure, particularly in ridings where tenants were seeing this and having this happen to themselves, undermined the Liberal government at that time and led us to the next government.

2010

The final point, which is obviously an important point for lawyers, is the procedure in adjudication of rent review and landlord and tenant. Of course, there is going to have to be some agreement with the federal government if you're going to move landlord and tenant out of its current general court residence, but my experience in landlord and tenant court is that it's practically unaffordable for a lawyer to go there. Clerks thrive there, but in my experience they do a haphazard job in representing tenants -- and landlords as well, I might add. They don't do much research or much work in preparation for the hearing, because even though they don't have law society fees and insurance and overhead to pay, they are hard-pressed not to charge a few hundred dollars for even a small case, which many people find difficult to pay for.

If lawyers were going to be introduced in a meaningful fashion, if the decision-making is more than just the honourable justice telling tenants, "Go out and settle this; I've got too many things on my list," and you end up with a bit of rough justice, if it's going to be something more than that, obviously it should be taken out of that court.

My caution is that over the course of 15 years of being at rent review hearings practically every night, the level of adjudication was extremely poor in its quality. The problem was that most of the appointments to the Rent Review Hearings Board as it existed, to the rent review administrators, to the rent review officers, were political. My suggestion would be to have one large board deal with all these various items but to have some blue ribbon panel make suggestions on the appointments, and obviously as well to provide mediation services that parties can have access to with professional mediators to try and stem some of the flow of litigation. I don't think it has to be a complicated system, but it has to have sufficient resources and it has to have people who are able to adjudicate on these cases so that the parties appearing before them don't consider they're into a kangaroo court.

I always remember one case where the tenants were yelling and screaming at me, "This is not fair; it's all stacked against us," and then in the hallway I was speaking to the landlord, who I went to school with, and he said, "This is a kangaroo court." This was a case of no one being very happy with the process, and a system that has no one happy with the process is just open to further punishment to tenants and a further disaster.

Most of my current practice is devoted now to workers' compensation law, and I might just say on behalf of my employer clients that if the government disrupts affordable housing for workers who are entry level in labouring jobs and factories, who are being paid $8, $9, $10 an hour, those employees are going to be displaced. Although the government talks about creating jobs with repairs and building new housing, the flip side is that you'll lose jobs if you don't keep affordable housing for people who are in entry-level positions. Thank you for your patience.

Mr Marchese: Thank you, Mr Fink, for your suggestions and recommendations. One of the things I know that very few people probably understand is co-ops in general, and then when you throw in the mix of equity co-ops it confuses it as well. When people hear that, they think co-ops are all the same. Could you explain very briefly what the difference is between an equity co-op and a regular housing co-op?

Mr Fink: What you call probably non-profit and equity: Equity co-ops look like condominiums. People more or less own their unit, and if the value of the unit rises or falls, the owner reaps the profit. Non-profit co-ops don't have that profit measure. My experience with, say, 740 Eglinton West or the ones down on Wellington Street in the market area is that they work roughly the same. The tenants participate in day-to-day activities. They farm out a lot of responsibility. The difference is that you can't take it with you, so to speak.

Mr Marchese: Right. You didn't comment on rent control at all and you didn't comment on this government's desire to decontrol. Do you have an opinion on that?

Mr Fink: The problem is that you'll diminish the affordability of housing, obviously. But the bigger problem is that when tenants wish to stay, there's going to be pressure to have them leave, and if there's a major gap between market rents and the rents the tenants are actually paying, those tenants will not be able to stay through the pressure in many units. If there's a housing crisis again, a vacancy crisis -- the one now is mainly in the lower-cost units -- you'll see landlords who can turn their buildings over, make a large buck.

They'll be the ones who take over as opposed to, say, pension funds or conservative offshore holders or banks and what not, because the pension funds will not be making much return; given that they're very conservative, they don't push tenants out. Somebody will say: "Jeez, the rents are so low, the location's so good, I could push tenants out. I could make so much money. I'll try and buy this building from the pension fund." So you get the -- I don't like to use fiery analogies -- scum rising to the surface if you allow this type of displacement.

Mr Smith: Thank you very much. A couple of questions: I'd be interested to find out what your thoughts are in terms of the proposal to eliminate municipal approvals for conversion, and secondly, you raise the issue of no legislation in place to govern equity co-ops. Would you share with the committee what statutory definitions you might anticipate that would be needed for this specific area?

Mr Fink: If you allow demolition you'll see the same pattern as was present in 1985; I think the vacancy rates are roughly equivalent between the current year and 1985, and what you saw was hundreds of units per year being lost as affordable housing. The pressure areas there were along Yonge Street, I think practically entirely along Yonge Street, the length and breadth of it, both small units down at the foot that I remember representing some tenants in and some very large buildings up around York Mills, where there are some very wealthy and swank condominiums now residing.

If the bulwark to prevent demolitions is removed you'll see a lot of demolitions. I've always felt it would be better for landlords to build on undeveloped land than on developed land. The reason these small or moderate apartment buildings are ripe for development is not because it's more attractive to knock down buildings than to go on undeveloped land; it's because the buildings themselves hold the value of the land down, so they become an economic opportunity to demolish the units, because if you just had undeveloped land the property would be worth more. It would be a sad day for tenants' rights and for tenant security if municipalities lost their demolition control.

Mr Sergio: Mr Fink, your many years of experience make you an authority on all the facets of rental, condominium conversion or whatever. Did Mr Leach ever contact you before he wrote this particular piece of legislation?

Mr Fink: No, Mr Leach didn't contact me.

Mr Sergio: That's too bad.

Mr Fink: I spent hours and hours with Charlie Harnick's residents when he was a member of provincial Parliament, giving them legal advice, and since Charlie got elected I haven't heard from him yet.

Mr Sergio: I have one more question for you. Today we had a lady here who is the owner of an equity co-op. She was complaining that because of the Rental Housing Protection Act they can't convert to condominium. That's within the city of Toronto. After, she put all the tenants together wanting to purchase the individual units. If 100% of the tenants want to purchase their own units, I would have to look at that seriously. What would you do in a situation like this?

Mr Fink: It's very rare that 100% want to purchase. If there are maybe five or six tenants in the complex, that's possible, but it's very rare that 100% want to purchase because human nature generally doesn't work like that. I've always felt that conversion is good; it's good for people to own their own properties, and if you take one of the average properties, you can probably look at any apartment and say it needs $15,000 to $20,000 worth of repairs per unit. I think the people who are going to spend that money, who are inevitably the tenants, should own the unit.

The problem is, what do you do with half of the building or a third of the building or even one unit that doesn't want to convert? Do you squeeze them out?

Mr Sergio: A mortgaging problem.

The Chair: Thank you, Mr Fink. We appreciate your attendance here this evening.

Mr Sergio: Mr Chairman, I think it would be of interest to all the members if he could finish the answer, please.

The Chair: Thank you very much, Mr Fink. We appreciate you being here.

Mr Fink: My pleasure. Thank you.

The Chair: The next presenter is Richard Preston from the Canadian Auto Workers. Is Mr Preston from the Canadian Auto Workers here? No.

2020

ARLINGTON PARK ESTATES (1989) LTD

The Chair: Joseph Hacohen from Arlington Park Estates. Good evening, sir, and welcome to the committee.

Mr Joseph Hacohen: First, thank you for giving me the opportunity to appear in front of this committee. I'd just like to make a general comment after listening to the people before me. Everybody talks about rental housing as being a necessity. I believe that food is also a necessity, and we should control prices in supermarkets. Food is more important maybe then shelter, something to be considered.

Mr Tilson: If the NDP had stayed in power much longer, I'm sure they would have been there.

Mr Hacohen: If you cannot control the prices in the supermarket, maybe we shouldn't control rental housing.

Mr Marchese: That's his point. He's on your side.

Mr Tilson: I knew that too.

Mr Hacohen: I've met with Mr Tilson before. Unlike members of the NDP, he was willing to listen; the NDP wasn't listening. I met with Dave Cooke, who was the Housing minister. His response to me was, "I just feel sorry for you, but there's nothing I can do."

My family and colleagues suffered tremendously as a result of controls implemented under the NDP government. Currently I encounter problems such as rent below market value. I have units that legally are charged $380 per month, which includes parking and hydro. In the same building I have many two-bedroom units which are legally registered at much lower rents than the one-bedroom apartments.

Air conditioners are legally not included in the base rent. However, many tenants agree to pay extra for the use of an air conditioner. The NDP government ruled that it would be illegal to charge extra, even though both the tenants and the landlords agree and the usage is not included in the base rent.

In reality, I'm subsidizing my tenants and accumulating losses at the same time. As a landlord I am forced to sell my product, with is a shelter, to my customers, the tenants, below cost. Wouldn't you like to buy a $100 bill for $75? Maybe the NDP people would like to do that. While this seems normal in the case of non-profit organizations, you must keep in mind that my company is still attempting to run a business, hoping to have real profit.

I've suggested several alternatives in the past. In my opinion, the best option is to scrap the NDP's destructive rent control legislation. Closing rent control offices will help reduce the deficit, which will be one of the major steps towards the recovery of the economy, the province, and the expansion of free enterprise and downsizing of government.

This government is suggesting to protect tenants rather than the units. I welcome the proposal of landlords and tenants negotiating rents without regulatory restrictions. I would like to suggest that the landlords and tenants may negotiate and structure their own agreements, without restrictions, which would determine rents, annual increases and separate charges such as parking and other possible charges relating to the usage of an air conditioner.

As a landlord I feel I should have more of a say in the running of my business. I'm not presently in business to subsidize my tenants. I pay the same amount in realty taxes, hydro, heat and water as other building owners; however, my income is much lower. My case may be unique but I feel that I deserve some rights too.

New Directions fails to deal with chronically depressed rents. The new legislation should include higher increases -- say, 5% above guidelines -- for up to three or four years for units which are 15% below the average rent computed by CMHC.

A few years ago I received a letter from David Turnbull. He made a statement in connection with the legislation by the NDP. He said: "The legislation also fails to take into account...a building that has chronically depressed rents. That's unfair." I think it's time that this issue be dealt with, and the new legislation seems to miss that point.

The proposed new legislation claims to decontrol the current system; however, it will recontrol the unit as soon as it is reoccupied. Unfortunately the landlord may be worse off as a result of losing the current maximum rent. In most buildings, landlords are charging rents which are lower than the allowed maximum due to current market conditions. This is done with the hope that one day a better return on investment can be obtained. This legislation is retroactive, as landlords are losing previous increases which were ordered and allowed by the Ministry of Housing, due to losses and capital expenditure, by allowing new tenants discounted rents.

By discounting rents during hard times, landlords are caught in a downturn in the market without the ability to have future increases when a turnaround occurs. When a vacancy opens during a downturn of the market, the lower, discounted rent would become the maximum rent. The new legislation should allow for a total decontrol of the units upon vacancy or have more favourable rules dealing with discounted rents.

New Directions of the proposed legislation deals with issues such as rent reductions, fines, penalties by property standards officers and harassment enforcement units to protect tenants. The new legislation is called "tenant protection legislation," while I believe that it is landlords who currently need more protection than tenants.

As a landlord I am being harassed constantly. My property, the apartment building, is often vandalized by tenants. I believe that your proposal will lead to similar actions taking place. Tenants will sabotage the property, then will be able to call the property standards inspector due to neglected, run-down property conditions. The inspector will impose a fine. The result is obvious: The landlord will be the loser once again. Protection of the landlord is desperately needed and is long overdue.

The new legislation will also deal with subletting of units in a strict form, a direction which I welcome. However, I ask you to assist landlords in the legislation on the subject of non-payment of rents as well as on stricter rules concerning tenants who are constantly late with their rent payments. If I do not pay my mortgage, hydro, gas, water and other bills on time, a late penalty is imposed. Why are tenants exempt from being on time?

Mr Tilson: Thank you, sir, for your presentation. We've talked about these issues in the past. You're right that the paper does not deal with chronically depressed rents, and perhaps this is an opportunity in which you could elaborate more about that. You're right again: My colleague Mr Turnbull and I, when we appeared at Bill 4 and Bill 121 hearings, specifically spent some time on that and expressed a concern about that issue.

Could you elaborate on how that issue can be rectified? There's no question that there are a number of chronically depressed rents across this province, except I suppose one has to be fair to the tenant as to how one rectifies that. Tenants can only sustain increases of certain amounts, and to rectify that properly might be rather difficult. Could you elaborate on what you've said in your paper?

Mr Hacohen: Sure. First I'm suggesting moderate increases, in cases of depressed rents, over time. If an apartment is occupied and the tenant is paying an extremely low rent, he'll never move out and the landlord will never be able to pay his bills. I suggested maybe an extra 5% over so many years. If I have a tenant paying $500 for two bedrooms, that's not a lot of money as far as an increase is concerned. In my specific building I have one bedrooms renting for $650, two bedrooms for $500. My one bedrooms are constantly moving out. Two bedrooms, nobody moves. It's not right. I should be able to cover my expenses at least.

Mr Tilson: You're right. The difficulty of the chronically depressed rent is, why would anyone ever move out? I mean, there are stories about that. I think reference has been made in these hearings to New York, some of the apartments in New York where people are living there indefinitely, because why would you move out? You'd be foolish to move out.

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I have a feeling you've had some experience with respect to process. One of the criticisms of the existing process we have now is that it's too slow. Both landlords and tenants have spoken about that issue, and a mediation dispute resolution system is being proposed. Have you got any specific support or opposition to that?

Mr Hacohen: I would like stricter guidelines when this happens. At the present time, tenants who are not paying their rent, you have to take them to court. The court may issue a judgement. The tenant still doesn't pay. You go and get the sheriff. A day before the eviction, which could be a few months down the road, the tenant comes in, pays you everything he owes you and he's still okay, which means the judgement is meaningless. So what's the point of having the legal system? If you have a judgement it means the guy should go to jail, if he's a criminal. If he's a tenant, then he should be out. If the judgement says you're out, you're out. Why is a judgement for one not a judgement for the other? It's the same thing.

Mr Curling: Thank you very much, Mr Hacohen. A very interesting presentation. But let me follow up on what you just said a minute ago. Someone doesn't pay their rent and the judgement has stated that they should pay the rent. They still pay it later on, but pay up. They should go to prison because they didn't pay the rent?

Mr Hacohen: No, that's not what I meant. If somebody's a criminal and there's a judgement against them, they go to prison.

Mr Curling: No, but they didn't pay the rent.

Mr Hacohen: If the tenant doesn't pay the rent and there's a judgement against them, this judgement is meaningless as long as the guy pays up. If you rob the bank and you take money from the bank and then you give it back, that means everything is okay?

Mr Curling: So not paying the rent, you consider this as like robbing a bank?

Mr Hacohen: No. I knew that you were going to jump on it, but what I meant to say is, a judgement for one should be a judgement for another.

Mr Curling: No, I just want to understand what you're saying because --

Interjection.

Mr Curling: I'm not feeding him. He's the one who stated that.

Mr Tilson: He didn't say that at all.

The Chair: Mr Curling has the floor.

Mr Curling: I just want an understanding, sir, of what you're trying to say.

You're saying also that while you know there's a maximum rent that can be charged, legal rent that can be charged, and sometimes landlords do not charge those --

Mr Hacohen: Many times.

Mr Curling: Yes. They do not do that because they can't get the tenants who are able to pay that.

Mr Hacohen: It's not that the tenant is not able to. That's what the economy dictates.

Mr Curling: That's what I mean. They just don't earn the money. They don't have the kind of income to pay, so --

Mr Hacohen: If you're a millionaire and you come to my building to rent an apartment, I cannot charge whatever you can afford. You'll pay what the market dictates.

Mr Curling: I want to understand this. A maximum legal rent says that you, as a landlord, can charge, for example, $1,000 for this two bedroom, and then you turn around and then you say to them, "I'll give it to you for $850." So what's wrong with that?

Mr Hacohen: There's nothing wrong with that. If that's what the market dictates, it's acceptable.

Mr Curling: That's what the market dictates. You don't blame the tenant --

Mr Hacohen: I'm not blaming the tenants.

Mr Curling: I just want to understand. You're saying later on now that the problem is, if this new legislation comes in, it wipes out maximum rent. You want to have your cake and eat it. I'll read what you say: "Unfortunately, the landlord may be worse off as a result of losing the current maximum rent. In most buildings, landlords are charging rents which are lower than the allowed maximum rent due to current market conditions."

Mr Hacohen: So what I'm saying is, if you want decontrol, leave it decontrolled. Let the economy, let the market, run its terms. But what I'm saying is, if I'm giving everything at half price today, then don't control it again. Leave it decontrolled.

Mr Curling: The New Directions where they are going, you have another direction you could go. As soon as that tenant leaves, you can jack the rent up any amount you want, according to this law. You could go to $2,000. So the legal maximum rent --

Mr Hacohen: I can charge $1 million. I will have an empty building.

Mr Curling: This is even better for you than the legal maximum rent. Why would you want to have your cake and eat it in one respect, to say, "My golly, we're going to lose this legal maximum rent if this tenant leaves"? In the meantime, they're giving it to you. This government, which is going to protect the landlord, is saying, "I'm going to give you a better deal. This legal maximum rent, out the window. You put your price on," not even the legal maximum. You put your price on.

Mr Hacohen: I'm saying perfect, as long as there are no more controls on that unit.

Mr Curling: You're saying both things.

Mr Marchese: Mr Hacohen, how long have you been in business in this field?

Mr Hacohen: Since 1982.

Mr Marchese: Are you doing okay?

Mr Hacohen: Am I doing okay? Let's put it this way: My house was paid off. Now I have a big mortgage on it because of losses which I incurred due to the policies implemented by the NDP.

Mr Marchese: You were doing okay from 1982 to 1990?

Mr Hacohen: I was doing like any businessman would do.

Mr Marchese: And since 1990, when rent controls came in, you've suffered?

Mr Hacohen: Absolutely.

Mr Marchese: How much would you say you've lost in terms of money?

Mr Hacohen: I've lost enough money. It doesn't make a difference for this committee how much money I have lost. If you want to make it look like the landlords are rich and they can afford losing, that's not the case.

Mr Marchese: But you're still doing okay, however? You've survived through it all, have you?

Mr Hacohen: Have I survived? If my net worth is lower --

Mr Marchese: We didn't put you out of business, in other words.

Mr Hacohen: In a way you did. If I had to mortgage my home to the limits, then you put me out of business.

Mr Marchese: Mr Hacohen, we've had the High Park Tenants' Association here tonight and they made a very strong case for keeping rent controls. It was a very lively group, very passionate about their homes and what this measure means to them and what you're supporting. We've had the North Toronto Tenants' Network, which I think is the area where you're -- I'm not sure where you are, actually.

Mr Hacohen: I'm in Mississauga.

Mr Marchese: I see. And we've had the tenants' advisory committee. These types of people here are the real people whom you house, I suspect.

Mr Hacohen: Yes.

Mr Marchese: Very concerned, very anxious and very frightened about the implications of what this is doing. They don't want a system that's decontrolled because they're worried about the implications of what it means to their security. I understand you wouldn't be charging $1 million, because as you said earlier on to a point here, you'd have an empty building. But you will charge however much you can get, and I understand that owners would do that, would want to do that if they can get it. That's the fear the tenants have, that once it's decontrolled, you will raise that rent as much as you can possibly get. Is that not true?

Mr Hacohen: I'll answer you with a question. When you go to buy a car, do you pay what they ask you or do you pay what you should be paying? If there was no choice, you'll just pay whatever they charge you, but the market will dictate the terms. If you let the market run its course, apartments will be available, and probably at a lower rate.

Mr Marchese: You see, I'm afraid of letting the market dictate the terms because that's Conservative and to some extent Liberal politics.

Mr Tilson: We're pals, Alvin.

Mr Marchese: I don't support a market-driven economy that leaves in its trail a lot of victims. You see, that's the problem. This politics leaves the victims, and you obviously -- maybe you care, maybe you don't. But that's why some of us are social democrats and some of us are socialists, because we believe the government needs to be there to protect the majority of people who become victims of your market system. That's our difference. We're probably likely not to agree.

Mr Hacohen: Of course. Your ex-leader wanted to own all the buildings in the city anyway, because that's the socialism approach.

Mr Marchese: No, no. There are many different understandings of socialism and I'm not sure where you're leading to, but we have different understandings on that.

Mr Hacohen: The biggest landlord could have been Bob Rae.

Mr Marchese: Let me tell you, the majority of tenants disagree with you and disagree with them.

Interjections.

The Chair: Let Mr Marchese finish.

Mr Hacohen: Of course. If they can get something -- I'm not saying for nothing -- for less than it costs, why not?

Mr Marchese: We'll just have to let them decide whether or not they agree with Conservative politics and directions and with you, and that will come in three and a half years.

The Chair: Thank you, sir, for coming to our committee and making a presentation. We appreciate your interest.

Mr Hacohen: Is the other person here?

The Chair: The other person's not here but --

Mr Hacohen: Maybe I could keep on going. I suffered long enough.

The Chair: The committee is recessed until 1 o'clock tomorrow.

The committee adjourned at 2040.